================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
ABC BANCORP
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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:
----------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
ABC Bancorp
24 2/nd/ Avenue, S.E.
Moultrie, Georgia 31768
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 14, 2002
To the Shareholders of ABC Bancorp:
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of ABC Bancorp (the "Company") will be held at Sunset Country Club,
South Main Street, Moultrie, Georgia, on Tuesday, May 14, 2002, commencing at
4:15 p.m., local time, for the following purposes:
(1) to elect four Class II directors for a three-year term of office;
(2) to ratify the appointment of Mauldin & Jenkins, Certified Public
Accountants and Consultants, LLC, as the Company's independent
accountants for the fiscal year ended December 31, 2001; and
(3) to transact any other business that may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The close of business on March 15, 2002, has been fixed as the record date
(the "Record Date") for the determination of shareholders entitled to notice
of, and to vote at, the Annual Meeting or any adjournment or postponement
thereof. Only shareholders of record at the close of business on the Record
Date are entitled to notice of, and to vote at, the Annual Meeting.
Shareholders may receive more than one proxy if they own shares registered
in different names or at different addresses. Each such proxy should be marked,
dated, signed and returned. Please check to be certain of the manner in which
your shares are registered--whether individually, as joint tenants, or in a
representative capacity-- and sign the related proxy accordingly.
A complete list of shareholders entitled to vote at the Annual Meeting will
be available for examination by any shareholder for any purpose germane to the
Annual Meeting, during normal business hours, for a period of at least ten (10)
days prior to the Annual Meeting at the Company's corporate offices located at
the address set forth above.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to do so, please mark, date and sign the enclosed proxy and mail it
promptly in the enclosed postage-prepaid envelope. Returning your proxy does
not deprive you of your right to attend the Annual Meeting and to vote your
shares in person.
By Order of the Board of Directors,
/s/ Kenneth J. Hunnicutt
Kenneth J. Hunnicutt, Chairman and
Chief Executive Officer
Moultrie, Georgia
April 9, 2002
ABC BANCORP
24 2/nd/ Avenue, S.E.
Moultrie, Georgia 31768
-----------------
PROXY STATEMENT
-----------------
GENERAL INFORMATION
This Proxy Statement and the accompanying form of proxy (which were first
sent or given to shareholders on or about April 9, 2002) are furnished to
shareholders of ABC Bancorp (the "Company") in connection with the solicitation
by and on behalf of the Board of Directors of the Company (the "Board") of
proxies for use at the Annual Meeting of Shareholders (the "Annual Meeting") to
be held at Sunset Country Club, South Main Street, Moultrie, Georgia, on
Tuesday, May 14, 2002, at 4:15 p.m., local time, and any adjournment or
postponement thereof.
A proxy may be revoked at any time before the shares represented by it are
voted at the Annual Meeting by delivering to the Secretary of the Company
either a written revocation or a duly executed proxy bearing a later date or by
voting in person at the Annual Meeting. All shares represented by a properly
executed, unrevoked proxy will be voted on all matters presented at the Annual
Meeting on which the shares are entitled to vote, unless the shareholder
attends the Annual Meeting and votes in person. Proxies solicited will be voted
in accordance with the instructions given on the enclosed form of proxy. UNLESS
AUTHORITY IS WITHHELD IN THE MANNER INDICATED ON THE ENCLOSED FORM OF PROXY, IT
IS INTENDED THAT PROXIES IN THE ACCOMPANYING FORM WILL BE VOTED FOR THE
ELECTION AS A DIRECTOR OF EACH OF THE NOMINEES NAMED HEREIN.
Only shareholders of record at the close of business on March 15, 2002 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting.
On the Record Date, the Company had 9,878,679 shares of common stock, $1.00 par
value per share (the "Common Stock"), outstanding and entitled to vote. All
holders of Common Stock are entitled to cast one vote per share held as of the
Record Date.
The cost of preparing and mailing proxy materials will be borne by the
Company. In addition to solicitation by mail, solicitations may be made by
officers and other employees of the Company in person or by telephone,
telecopier or telegraph. Brokerage houses, custodians, nominees and fiduciaries
will be reimbursed for the expenses of sending proxy materials to the
beneficial owners of Common Stock held of record on behalf of such persons.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of the Record Date by (i)
directors, (ii) nominees for election as directors, (iii) executive officers
named in the Summary Compensation Table set forth in this Proxy Statement under
the caption "Executive Compensation and Other Information," (iv) all directors
and executive officers as a group, and (v) each person who, to the knowledge of
the Company, is a beneficial owner of more than five percent (5%) of the
outstanding Common Stock.
Common Stock Beneficially
Owned
Name of Beneficial Owner as of March 15, 2002 (1) /+/ Percent of Class (2)
------------------------ --------------------------- --------------------
Johnny W. Floyd (3)............................ 62,310 *
J. Raymond Fulp................................ 30,598 *
Kenneth J. Hunnicutt (4)....................... 261,451 2.6%
Daniel B. Jeter................................ 4,186 *
W. Edwin Lane, Jr. (5)......................... 15,081 *
Robert P. Lynch (6)............................ 123,311 1.2%
Mark D. Thomas (7)............................. 48,135 *
Eugene M. Vereen, Jr. (8)...................... 68,546 *
Doyle Weltzbarker (9).......................... 90,718 *
J. Thomas Whelchel (10)........................ 38,203 *
Henry C. Wortman (11).......................... 55,639 *
All directors and executive officers as a group
(16 persons) (12)............................ 832,499 8.3%
Wellington Management Company, LLP (13)........ 549,500 5.6%
--------
*Less than 1%.
/+/All fractional shares have been rounded up to the next whole number.
(1) Except as otherwise specified, each individual has sole and direct
beneficial ownership interest and voting rights with respect to all shares
of Common Stock indicated.
(2) Percentage calculated based on 9,878,679 shares of Common Stock
outstanding as of March 15, 2002.
(3) Includes 9,349 shares of Common Stock owned by Mr. Floyd's wife and 26,978
shares of Common Stock owned through accounts for the benefit of Mr.
Floyd's children, of which Mr. Floyd is custodian.
(4) Includes 62,199 shares of Common Stock issuable pursuant to options
exercisable within 60 days of March 15, 2002; 76,400 shares of restricted
Common Stock over which Mr. Hunnicutt exercises voting power; 3,182 shares
of Common Stock owned by a partnership of which Mr. Hunnicutt's wife is a
partner; 20 shares of Common Stock owned jointly with Mr. Hunnicutt's
wife; and 400 shares of Common Stock owned by Mr. Hunnicutt's wife.
(5) Includes 10,368 shares of Common Stock issuable pursuant to options
exercisable within 60 days of March 15, 2002; and 4,000 shares of
restricted Common Stock, over which Mr. Lane exercises voting power.
(6) Includes 121,876 shares of Common Stock owned by members of Mr. Lynch's
family, over which Mr. Lynch has voting and investment power.
(7) Includes 28,576 shares of restricted Common Stock over which Mr. Thomas
exercises voting power and 7,200 shares of Common Stock issuable pursuant
to options exercisable within 60 days of March 15, 2002.
(8) Includes 2,131 shares of Common Stock owned by Mr. Vereen's wife, with
whom Mr. Vereen shares voting and investment power.
2
(9) Includes 24,426 shares owned by the West-End Milling Company ESOP Trust,
of which Mr. Weltzbarker serves as trustee and as to which Mr. Weltzbarker
disclaims beneficial ownership.
(10) Includes 1,206 shares of Common Stock owned by Mr. Whelchel's wife, with
whom Mr. Whelchel shares voting and investment power. In addition to the
shares of Common Stock listed, Mr. Whelchel also owns 1400 shares of the
preferred securities of ABC Bancorp Capital Trust I, a Delaware business
trust and a subsidiary of the Company (the "Trust"), which represent less
than 1% of the 3,450,000 shares of such preferred securities outstanding.
(11) Includes 14,393 shares of Common Stock owned by Mr. Wortman's wife, with
whom Mr. Wortman shares investment and voting power; 10,629 shares of
Common Stock owned by Mr. Wortman as co-trustee with Mr. Wortman's wife
for the benefit of their two children; 1,270 shares of Common Stock owned
jointly with the estate of Mr. Wortman's father-in-law; and 1,706 shares
of Common Stock owned jointly with Mr. Wortman's wife. In addition to the
shares of Common Stock listed, Mr. Wortman also owns 30,000 shares of the
preferred securities of the Trust, which represent less than 1% of the
3,450,000 shares of such preferred securities outstanding.
(12) Includes 93,427 shares of Common Stock issuable pursuant to options
exercisable within 60 days of March 15, 2002; and 117,476 shares of
restricted Common Stock.
(13) Represents shares of Common Stock over which Wellington Management
Company, LLP ("Wellington") does not have sole investment or sole voting
power. Wellington exercises shared investment power with respect to all
such shares and shared voting power with respect to 341,300 of such
shares. Wellington's address is 75 State Street, Boston, Massachusetts
02109.
PROPOSAL I: ELECTION OF DIRECTORS
The Company has a classified Board currently consisting of three Class I
directors (Messrs. Floyd, Jeter and Thomas), four Class II directors (Messrs.
Fulp, Lynch, Whelchel and Wortman), and three Class III directors (Messrs.
Hunnicutt, Vereen and Weltzbarker). The Class II directors currently serve
until the Annual Meeting, and the Class I and Class III directors currently
serve until the annual meetings of shareholders to be held in 2004 and 2003,
respectively. After the Annual Meeting, the Class I, Class II and Class III
directors will serve until the annual meetings of shareholders to be held in
2004, 2005 and 2003, respectively, and until their respective successors are
elected and qualified. At each annual meeting of shareholders, directors are
elected for a full term of three years to succeed those whose terms are
expiring. Vacancies on the Board and newly created directorships can generally
be filled by a vote of a majority of the directors then in office. Executive
officers are elected annually by the Board and serve at the discretion of the
Board.
At the Annual Meeting, shareholders are being asked to elect four directors
to serve as Class II directors until the 2005 annual meeting of shareholders
and until their successors are duly elected and qualified.
In order to be elected, a nominee for director must receive an affirmative
vote of a majority of the shares of Common Stock present or represented at the
Annual Meeting and entitled to vote.
Unless otherwise directed, the persons named as proxies and attorneys in the
enclosed form of proxy intend to vote "FOR" the election of the nominees listed
below as directors for the ensuing term and until their successors are elected
and qualified. If any such nominee for any reason should not be available as a
candidate for director, votes will be cast pursuant to authority granted by the
enclosed proxy for such other candidate or candidates as may be nominated by
management. The Board is unaware of a nominee who is unable to serve as a
director or will decline to serve as a director, if elected.
The following sets forth certain information as of the Record Date
concerning the nominees for election as directors of the Company and the other
directors whose terms of office will continue after the Annual Meeting. Except
as set forth below, each of the nominees has been engaged in his principal
occupation during the past five years.
3
Nominees for Election as Class II Directors with Terms Expiring in 2005
------------------------------------------------------
J. Raymond Fulp (age 57) has served as a director of the Company since 1989
and has served as a director and Chairman of Citizens Security Bank, a
wholly-owned subsidiary of the Company, since 1987 and 2000, respectively. Mr.
Fulp is a pharmacist and was the co-owner of Midtown Pharmacy in Tifton,
Georgia from 1974 until its sale in 1999.
Robert P. Lynch (age 38) has served as a director of the Company since
February 15, 2000. Mr. Lynch currently operates Motor Finance Co. in
Jacksonville, Florida. Mr. Lynch's family owns seven automobile dealerships in
Florida and Georgia. The family also owns Shadydale Farm, a beef cattle
operation located in Shadydale, Georgia.
J. Thomas Whelchel (age 66) has served as a director of the Company since
August 21, 2001. Between 1996 and 2001, Mr. Whelchel served as the Chairman and
Executive Officer of Golden Isles Financial Holdings, Inc. ("Golden Isles"), a
Georgia corporation which merged with the Company in 2001. From July 1995 to
October 1996, Mr. Whelchel served as Vice Chairman of Golden Isles, and from
July 1988 through July 1995, he served as President of Golden Isles. Mr.
Whelchel has served as Chairman and a director of The First Bank of Brunswick,
a wholly-owned subsidiary of the Company, since February 1990. He is also a
senior partner in the law firm of Whelchel, Brown, Readdick & Bumgartner
located in Brunswick, Georgia.
Henry C. Wortman (age 63) has served as a director of the Company since
1990. Mr. Wortman has also served as Vice Chairman and a director of Heritage
Community Bank, a wholly-owned subsidiary of the Company, since 1988. Mr.
Wortman has served as a principal partner of Jackson & Wortman LLC, a dairy,
pecan, timber and general farming operation based in Quitman, Georgia, since
1965. Mr. Wortman is also President of JWIT, LLC and is a member of the Georgia
Agricultural Commodity Commission for Milk and a member of the Board of
Directors of the Georgia-Florida Fertilizer Company.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" EACH OF THE
NOMINEES LISTED ABOVE.
BOARD OF DIRECTORS
Directors
-------
Kenneth J. Hunnicutt (age 65), Chairman of the Board, has served as a
director of the Company since 1981 and Chairman of the Board since May 15,
2001. Mr. Hunnicutt has also served as Chief Executive Officer of the Company
since 1994 and President of the Company from 1981 to May 15, 2001. Mr.
Hunnicutt served as Senior President of American Banking Company from 1989 to
1991 and as President of American Banking Company from 1975 to 1989. Mr.
Hunnicutt currently serves as a director of American Banking Company, Heritage
Community Bank, Bank of Thomas County, Citizens Security Bank, Cairo Banking
Company, Southland Bank, Central Bank & Trust, First National Bank of South
Georgia, Merchants and Farmers Bank, Tri-County Bank, and The First Bank of
Brunswick, each of which is a wholly-owned subsidiary of the Company. Mr.
Hunnicutt also serves on the advisory board of Norfolk Southern Corporation,
which owns Norfolk Southern Railroad. Mr. Hunnicutt's term expires in the year
2003.
Eugene M. Vereen, Jr. (age 81) has served as a director of the Company since
1981. Mr. Vereen served as the Chairman of the Board from 1981 to April 1995
and served as Chief Executive Officer of the Company from 1981 to 1994. Mr.
Vereen has also served as a director of American Banking Company, a
wholly-owned subsidiary of the Company, since 1971. Mr. Vereen also served as a
director of Heritage Community Bank, Bank of Thomas County, Citizens Security
Bank and Cairo Banking Company, each of which is a wholly-owned subsidiary of
the Company, from the time the Company acquired each such subsidiary until
1995. Mr. Vereen has previously served as Senior President of American Banking
Company. He now serves as Chairman of the
4
Board Emeritus of the Company and President Emeritus of American Banking
Company. Mr. Vereen served as Chairman of the Board of Moultrie Insurance
Agency from 1951 until its sale in 1983. Mr. Vereen is President and director
of M.I.A., Co., a real estate holding and investment company. Mr. Vereen's term
expires in the year 2003.
Doyle Weltzbarker (age 67) has served as a director of the Company since
1985 and as Chairman of the Board from August 1998 to May 15, 2001. Mr.
Weltzbarker has also served as Vice Chairman of the Board from 1995 through
1998 and again from May 15, 2001, through the present. Since 1975, Mr.
Weltzbarker has served as director of Heritage Community Bank, a wholly-owned
subsidiary of the Company, where he currently serves as Chairman. Since 1985,
Mr. Weltzbarker has served as a director and President of both West End Milling
Company, a feed manufacturing business, and Brooksco Dairy, LLC, a livestock
and farming business. Mr. Weltzbarker also serves as a director and officer of
each of Southeast Milk, Inc., Georgia-Florida Fertilizer Co. and the Georgia
Agribusiness Council. Mr. Weltzbarker serves on the advisory board of Norfolk
Southern Corporation. Mr. Weltzbarker's term expires in the year 2003.
Johnny W. Floyd (age 63) has served as a director of the Company since 1995.
Mr. Floyd currently serves as the Chairman of the Board of Directors of Central
Bank and Trust, a wholly-owned subsidiary of the Company, where he has served
as a director since 1986. Mr. Floyd serves as the President of Floyd Timber
Company, a forestry products company, and the President of Cordele Realty. Mr.
Floyd has also been a member of the Georgia House of Representatives since
1989. Mr. Floyd's term expires in the year 2004.
Daniel B. Jeter (age 50) has served as a director of the Company since 1997.
Mr. Jeter is the Vice President and a majority shareholder of Standard Discount
Corporation ("Standard"), a consumer finance company. Mr. Jeter joined
Standard, a family-owned business, in March 1979 and is an officer and director
of each of Standard's affiliates, including, Colquitt Loan Company, Globe Loan
Company of Hazelhurst, Globe Loan Company of Tifton, Globe Loan Company of
Moultrie, Peach Finance Company, Personal Finance Service of Statesboro, Globe
Financial Services of Thomasville, Classic Insurance Company, Ltd. and Cavalier
Insurance Company (of which he serves as President). In addition, Mr. Jeter
serves as a director and officer of the Georgia Industrial Loan Corporation and
a director of the Georgia Financial Services Association. Mr. Jeter's term
expires in the year 2004.
Mark D. Thomas (age 48) has served as a director and Chief Operating Officer
of the Company since July 20, 1999, and President since May 15, 2001. Mr.
Thomas also served as Executive Vice President of the Company from July 20,
1999, to May 15, 2001. From September 1977 through July 1999, Mr. Thomas was
employed by First Union National Bank, where he served as Senior Vice President
and State Consumer Banking Executive for First Union's Tennessee subsidiary.
Mr. Thomas currently serves as a director of American Banking Company, Heritage
Community Bank, Bank of Thomas County, Citizens Security Bank, Cairo Banking
Company, Southland Bank, Central Bank & Trust, First National Bank of South
Georgia, Merchants and Farmers Bank, Tri-County Bank, and The First Bank of
Brunswick, each of which is a wholly-owned subsidiary of the Company. Mr.
Thomas is on the Board of Directors of the United Way of Colquitt County, the
Moultrie YMCA and the Colquitt Regional Hospice. Mr. Thomas also serves on the
Asset Liability Committee of the Georgia Bankers Association and as the State
Host for the Georgia Chamber of Commerce's Red Carpet Tour. Mr. Thomas' term
expires in the year 2004.
Recent Changes to the Board
----------------------
John G. Briggs, who had served as a director of the Company since he was
appointed by the Board in July 2000, died on August 17, 2001. In accordance
with the Company's Bylaws, on August 21, 2001, the Board unanimously appointed
J. Thomas Whelchel to fill the vacancy created by the death of Mr. Briggs. Mr.
Whelchel began serving on the Board effective as of the date of his appointment
and serves as a Class II director until the Annual Meeting, which is the next
meeting of the Company's shareholders at which Class II directors are elected.
5
Committees of the Board
------------------
The Company's Executive Committee is currently comprised of five directors,
a majority of whom are not current or former employees of the Company or any of
its subsidiaries. The current members of the Executive Committee are Messrs.
Fulp, Hunnicutt, Jeter, Thomas and Weltzbarker. Mr. Briggs served on the
Executive Committee until his death in August 2001. The Executive Committee is
authorized to exercise all of the powers of the Board, except the power to
declare dividends, elect directors, amend the Company's Bylaws, issue stock or
recommend any action to the Company's shareholders. The Executive Committee,
among other things, considers and makes recommendations to the Board regarding
the size and composition of the Board, recommends and nominates candidates to
fill Board vacancies that occur and recommends to the Board the director
nominees for whom the Board will solicit proxies.
The Company's Executive Loan Committee is currently comprised of six
members. Five members of the Executive Loan Committee are directors of the
Company, and the remaining member is the Company's Director of Credit
Administration. The current members of the Executive Loan Committee are Jon S.
Edwards, the Company's Director of Credit Administration, and Messrs.
Hunnicutt, Jeter, Thomas, Weltzbarker and Wortman. The Executive Loan Committee
is responsible for reviewing and approving all of the loan and credit requests
involving principal amounts between $2.5 million and $4.0 million for the
Company and each of the Company's eleven subsidiary banks (collectively, the
"Banks").
The Company's Compensation Committee is currently comprised of five
directors, Messrs. Fulp, Hunnicutt, Jeter, Thomas and Weltzbarker. Mr. Briggs
served on the Compensation Committee until his death in August 2001. Messrs.
Hunnicutt and Thomas served as non-voting members of the Compensation Committee
during the year ended December 31, 2001. The duties of the Compensation
Committee are generally to establish the salaries, bonuses, management
perquisites and other compensation of the officers of the Company and the
Banks. The Compensation Committee also has the authority to administer and
interpret the Company's 401(k) Profit Sharing Plan, the ABC Bancorp Omnibus
Stock Ownership and Long Term Incentive Plan, and the 1997 Incentive Stock
Option Plan for Mr. Hunnicutt, including the selection of eligible participants
in such plans and the type, amount, duration, acceleration and vesting of
individual grants and awards made thereunder. During 2001, the Compensation
Committee also administered and interpreted the Company's Money Purchase
Pension Plan, which plan merged into the Company's 401(k) Profit Sharing Plan
effective March 20, 2002.
The Company also has an Audit Committee consisting solely of directors who
are not current or former employees of the Company or any of its subsidiaries
and are, in the opinion of the Board, free from any relationship that would
interfere with the exercise of independent judgment in the discharge of the
Audit Committee's duties. The current members of the Audit Committee are
Messrs. Fulp, Jeter and Wortman. The Audit Committee represents the Board in
discharging its responsibility relating to the accounting, reporting and
financial practices of the Company and its subsidiaries and has general
responsibility for surveillance of internal controls and accounting and audit
activities of the Company and its subsidiaries.
The Company has an Asset Liability Management Committee (or "ALCO")
currently comprised of ten members, four of whom are directors of the Company
and the rest of whom are employees of the Company. The directors who serve on
the ALCO are Messrs. Hunnicutt, Jeter, Thomas and Wortman. The ALCO manages the
Company's assets so as to minimize risk and maximize profits by managing the
Company's mix of assets so that non-earning assets are minimized. The ALCO
guards against any concentration of assets (e.g., excessive amounts of loans to
one borrower or excessive amounts of investment securities from the same
issuer) to minimize risk and ensures that reserves against losses are adequate
to prevent depletion of earnings. The ALCO also approves the overall strategy
of the Company's investment portfolio.
The Company also has an Investment Committee (or "INCO") currently comprised
of six members, two of whom are directors of the Company (Messrs. Hunnicutt and
Thomas) and the rest of whom are employees of the Company. The INCO is
responsible for overseeing the implementation of overall investment portfolio
strategy approved by the ALCO.
6
The Company does not have a standing nominating committee.
In 2001, the Board held 12 meetings and acted by unanimous written consent
in lieu of a meeting three times, the Executive Committee held 12 meetings, the
Executive Loan Committee held 20 meetings, the Compensation Committee held
seven meetings, the Audit Committee held three meetings, and ALCO and INCO each
held 12 meetings. Each director attended at least 75% of all meetings of the
full Board and of those committees on which he served and was eligible to
attend in 2001.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
------------------
The following table and notes present the cash and non-cash compensation
paid or accrued during each of the last three fiscal years to the Company's
Chief Executive Officer and to any other executive officer whose total cash
compensation exceeded $100,000.
Summary Compensation Table
Long Term Compensation
----------------------
Annual Compensation Awards
----------------------- ----------------------
Restricted All Other
Stock Annual
Name and Year Salary Bonus Award Options/SARs Compensation
Principal Position ---- -------- -------- ---------- ------------ ------------
Kenneth J. Hunnicutt,....... 2001 $304,815(1)(2) $ 66,813 $525,000(3) -- $ 87,331(4)
Chairman and Chief 2000 $294,300(1)(2) $116,168 $274,032(3) -- $ 66,144(4)
Executive Officer 1999 $277,400(1)(2) $ 78,310 $274,296(3) -- $ 51,302(4)
Mark D. Thomas,............. 2001 $208,358(1) $ 46,672 $ 21,000(5) 12,000(6) $ 26,561(7)
President, Chief Operating 2000 $194,100(1) $ 75,240 $ 20,760(5) 12,000(6) $ 15,550(7)
Officer and Director 1999 $ 84,423(1) -- $286,802(5) -- $ 2,048(7)
W. Edwin Lane, Jr.,......... 2001 $117,650 $ 23,059 $ 21,000(8) 12,000(9) $14,195(11)
Executive Vice President 2000 $107,025 $ 37,459 $ 20,760(8) 12,000(9) $12,086(11)
and Chief Financial Officer 1999 $ 98,400 $ 8,715 $ 12,468(8) 2,263(9)(10) $ 9,422(11)
--------
(1) Includes directors' fees.
(2) Contributions to the investment accounts under the Deferred Compensation
Agreement and the Salary Continuation Agreement are included in "All Other
Annual Compensation." See footnote (4) below.
(3) On January 16, 2001, the Board awarded Mr. Hunnicutt 50,000 shares of
restricted Common Stock with a fair market value equal to $10.50 per share
on the date of grant. On January 18, 2000, the Board awarded Mr. Hunnicutt
26,400 shares of restricted Common Stock with a fair market value equal to
$10.38 per share on the date of grant. On January 19, 1999, the Board
awarded Mr. Hunnicutt 26,400 shares of restricted Common Stock, adjusted to
take into account a 6 for 5 stock split for all shareholders of record as
of December 15, 1999, with a fair market value equal to $10.39 per share on
the date of grant.
(4) For 2001, the Company made contributions for the benefit of Mr. Hunnicutt
to the Company's 401(k) Profit Sharing Plan in the amount of $4,585, to the
Company's Money Purchase Pension Plan in the amount of $8,500, to the
investment account under the Deferred Compensation Agreement in the amount
of $15,100, and to the investment account under the Salary Continuation
Agreement in the amount of $15,802. The amount for 2001 also includes
dividends paid on shares of restricted Common Stock during 2001 in the
amount of $43,344. For 2000, the Company made contributions for the benefit
of Mr. Hunnicutt to the Company's 401(k) Profit Sharing Plan in the amount
of $5,950, to the Company's Money Purchase Pension
7
Plan in the amount of $8,500, to the investment account under the Deferred
Compensation Agreement in the amount of $15,300, and to the investment
account under the Salary Continuation Agreement in the amount of $15,802.
The amount for 2000 also includes dividends paid on shares of restricted
Common Stock during 2000 in the amount of $20,592. For 1999, the Company
made contributions for the benefit of Mr. Hunnicutt to the Company's 401(k)
Profit Sharing Plan in the amount of $5,600, to the Company's Money Purchase
Pension Plan in the amount of $8,000, to the investment account under the
Deferred Compensation Agreement in the amount of $15,300, and to the
investment account under the Salary Continuation Agreement in the amount of
$15,802. The amount for 1999 also includes dividends paid on shares of
restricted Common Stock during 1999 in the amount of $6,600.
(5) On January 16, 2001, the Board awarded Mr. Thomas 2,000 shares of
restricted Common Stock with a fair market value equal to $10.50 per share
on the date of grant. On January 18, 2000, the Board awarded Mr. Thomas
2,000 shares of restricted Common Stock with a fair market value of $10.38
per share on the date of grant. On July 20, 1999, the Board awarded Mr.
Thomas 24,576 shares of restricted Common Stock, adjusted to take into
account a 6 for 5 stock split for all shareholders of record as of
December 15, 1999, with a fair market value equal to $11.67 per share on
the date of grant.
(6) On January 16, 2001, the Board awarded Mr. Thomas an option to purchase
12,000 shares of Common Stock at an exercise price of $10.50 per share
with such option vesting at a rate of 20% per year over a five-year
period. On January 18, 2000, the Board awarded Mr. Thomas an option to
purchase 12,000 shares of Common Stock at an exercise price of $10.38 per
share with such option vesting at a rate of 20% per year over a five-year
period.
(7) For 2001, the Company made contributions for the benefit of Mr. Thomas to
the Company's 401(k) Profit Sharing Plan in the amount of $4,585 and to
the Company's Money Purchase Pension Plan in the amount of $8,500. The
amount for 2001 also includes dividends paid on shares of restricted
Common Stock during 2001 in the amount of $13,476. For 2000, the Company
made contributions for the benefit of Mr. Thomas to the Company's 401(k)
Profit Sharing Plan in the amount of $1,670 and to the Company's Money
Purchase Pension Plan in the amount of $2,385. The amount for 2000 also
included dividends paid on shares of restricted Common Stock during 2000
in the amount of $11,495. The amount for 1999 also includes dividends paid
on shares of restricted Common Stock during 1999 in the amount of $2,048.
(8) On January 16, 2001, the Board awarded Mr. Lane 2,000 shares of restricted
Common Stock with a fair market value equal to $10.50 per share on the
date of grant. On January 18, 2000, the Board awarded Mr. Lane 2,000
shares of restricted Common Stock with a fair market value of $10.38 per
share on date of grant. On January 19, 1999, the Board awarded Mr. Lane
1,200 shares of restricted Common Stock, adjusted to take into account a 6
for 5 stock split for all shareholders of record as of December 15, 1999,
with a fair market value equal to $10.39 per share on the date of grant.
(9) On January 16, 2001, the Board awarded Mr. Lane an option to purchase
12,000 shares of Common Stock at an exercise price of $10.50 per share
with such option vesting at a rate of 20% per year over a five-year
period. On January 18, 2000, the Board awarded Mr. Lane an option to
purchase 12,000 shares of Common Stock at an exercise price of $10.38 per
share with such option vesting at a rate of 20% per year over a five-year
period. On February 16, 1999, the Board awarded Mr. Lane an option to
purchase 2,263 shares of Common Stock at an exercise price of $9.90 with
such option vesting at a rate of 20% per year over a five-year period.
(10) Reflects a 6 for 5 stock split for all shareholders of record as of
December 15, 1999.
(11) For 2001, the Company made contributions for the benefit of Mr. Lane to
the Company's 401(k) Profit Sharing Plan in the amount of $4,184 and to
the Company's Money Purchase Pension Plan in the amount of $7,755. The
amount for 2001 also includes dividends paid on shares of restricted
Common Stock during 2001 in the amount of $2,256. For 2000, the Company
made contributions for the benefit of Mr. Lane to the Company's 401(k)
Profit Sharing Plan in the amount of $4,479 and to the Company's Money
Purchase Pension Plan in the amount of $6,399. The amount for 2000 also
includes dividends paid on shares of restricted Common Stock during 2000
in the amount of $1,208. For 1999, the Company made contributions
8
for the benefit of Mr. Lane to the Company's 401(k) Profit Sharing Plan in
the amount of $3,756 and to the Company's Money Purchase Pension Plan in
the amount of $5,366. The amount for 1999 also includes dividends paid on
shares of restricted Common Stock held by Mr. Lane in the amount of $300.
Option Grants in Year Ended December 31, 2001
-------------------------------------
The following table sets forth information with respect to options granted
under the ABC Bancorp Omnibus Stock Ownership and Long Term Incentive Plan to
the Company's Chief Executive Officer and to any other executive officer whose
total cash compensation exceeded $100,000 for the year ended December 31, 2001.
Option Grants During 2001
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term (2)
- --------------------------------------------- --------------------
Percent of
Number of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price Expiration
Name Granted (1) in 2001 (per share) Date 5% 10%
---- ----------- ---------- ----------- ---------- ------- --------
Kenneth J. Hunnicutt -- -- -- -- -- --
Mark D. Thomas...... 12,000 16.8% $10.50 1/16/11 $79,200 $200,760
W. Edwin Lane, Jr... 12,000 16.8% $10.50 1/16/11 $79,200 $200,760
--------
(1) All options were granted at an exercise price equal to the fair market
value of the Common Stock on the date of grant. Such options may not be
exercised later than 10 years after the date of grant.
(2) These amounts represent certain assumed rates of appreciation as set forth
by the rules of the Securities and Exchange Commission. Actual gains, if
any, on stock option exercises are dependent on the future performance of
the Common Stock and overall market conditions. The amounts reflected in
this table may not necessarily be achieved.
Stock Option Exercises During 2001 and Stock Option Year-End Values
------------------------------------------------------
The following table sets forth information with respect to options exercised
in the last fiscal year by the Company's Chief Executive Officer and any other
executive officer whose total cash compensation exceeded $100,000 for the year
ended December 31, 2001, together with the number and value of unexercised
options and stock appreciation rights ("SAR") held as of the end of the last
fiscal year for each such person.
Aggregated Option Exercises and Fiscal Year-End Option/SAR Values
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options/SARs
Acquired On Value Options/SARs at FY-End (#) at FY-End ($) (1)
Name Exercise Realized -------------------------- ---------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ------------ --------------
Kenneth J. Hunnicutt -- $-- 52,751 24,750 $ 174,864 $ 49,995
Mark D. Thomas...... -- $-- 2,400 21,600 $ 7,128 $ 62,712
W. Edwin Lane, Jr... -- $-- 4,663 23,863 $ 10,250 $ 67,397
--------
(1) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise multiplied by the number of shares to which the exercise relates.
9
Deferred Compensation Agreement with Mr. Hunnicutt
------------------------------------------
The Company has entered into a Deferred Compensation Agreement with Mr.
Hunnicutt, pursuant to which the Company has agreed to pay Mr. Hunnicutt
deferred compensation in the event of his retirement, disability or death or
the termination of his employment in the amounts and for the periods set forth
below. In the fiscal year ended December 31, 2001, $18,291 was accrued, but not
paid, to Mr. Hunnicutt pursuant to the Deferred Compensation Agreement.
Event Amount Number of Months
------------------------- ------------------------- -------------------------
Normal retirement $3,750/month 180
Early retirement value of investment
account (1) 120
Disability $3,750/month if during
normal retirement 180
value of investment
account if prior to
retirement (1) 120
Death during normal
retirement $5,000/month Balance of 180 months
Death during early
retirement $5,000/month Balance of 120 months
Death prior to retirement $5,000/month 180
Termination of employment Value of investment
account (1)(2) 120
--------
(1) The balance of the investment account as of December 31, 2002, will be
$365,000.
(2) Mr. Hunnicutt may elect not to receive the value of the investment account
upon termination of his employment and instead receive normal retirement
benefits of $3,750 per month for 180 months when he reaches age 68.
Salary Continuation Agreement with Mr. Hunnicutt
---------------------------------------
The Company has entered into a Salary Continuation Agreement with Mr.
Hunnicutt. The Salary Continuation Agreement provides, among other things, that
Mr. Hunnicutt is entitled to receive 15 annual payments of $33,750 each.
Executive Employment Agreement with Mr. Hunnicutt
-----------------------------------------
The Company entered into an Amended and Restated Executive Employment
Agreement with Mr. Hunnicutt effective as of May 24, 1999 (the "Hunnicutt
Employment Agreement"), pursuant to which Mr. Hunnicutt has agreed to serve as
the Chief Executive Officer of the Company for a term of five years. The term
of the Hunnicutt Employment Agreement will not expire prior to the expiration
of 24 months after the occurrence of a Change of Control (as such term is
defined in the Hunnicutt Employment Agreement) of the Company. The Hunnicutt
Employment Agreement provides that Mr. Hunnicutt will receive a minimum base
salary of $250,000 and is further entitled to receive an annual bonus and to
participate in all present and future employee benefit, retirement and
compensation plans of the Company consistent with his salary and his position
as the Chief Executive Officer of the Company. The Hunnicutt Employment
Agreement also provides certain additional benefits to Mr. Hunnicutt if he is
terminated by the Board for "cause" (as defined in the Hunnicutt Employment
Agreement) or if he terminates his employment for "good reason" (as defined in
the Hunnicutt Employment Agreement).
If Mr. Hunnicutt elects to terminate his employment upon 90-days notice, or
the Hunnicutt Employment Agreement is terminated because of Mr. Hunnicutt's
"disability" (as defined in the Hunnicutt Employment Agreement), then the
Company is obligated to pay him his annual salary and annual bonus through the
date of
10
termination. In the event of Mr. Hunnicutt's death, the Company is obligated to
purchase, under certain circumstances, all outstanding stock options previously
granted to Mr. Hunnicutt, whether or not such options are then exercisable, at
a cash purchase price equal to the amount by which the aggregate fair market
value of such options exceeds their exercise price. The Hunnicutt Employment
Agreement also includes certain restrictive covenants which limit Mr.
Hunnicutt's ability to compete with the Company or to divulge certain
confidential information concerning the Company.
Executive Employment Agreement with Mr. Thomas
---------------------------------------
The Company entered into an Executive Employment Agreement with Mr. Thomas
dated as of July 12, 1999 (the "Thomas Employment Agreement"), pursuant to
which Mr. Thomas has agreed to serve as the President and Chief Operating
Officer of the Company for an initial term of two years, which initial term is
automatically renewed for additional consecutive one-year terms unless timely
notice of non-renewal is given by either the Company or Mr. Thomas.
Notwithstanding any notice by the Company not to extend, the term of the Thomas
Employment Agreement will not expire prior to the expiration of 24 months after
the occurrence of a Change of Control (as such term is defined in the Thomas
Employment Agreement) of the Company. The Thomas Employment Agreement provides
that Mr. Thomas will receive a minimum base salary of $180,000 and is further
entitled to receive an annual bonus and to participate in all present and
future employee benefit, retirement and compensation plans of the Company
consistent with his salary and his position as the President and Chief
Operating Officer of the Company. The Thomas Employment Agreement also provides
certain additional benefits to Mr. Thomas if he is terminated by the Board for
"cause" (as defined in the Thomas Employment Agreement) or if he terminates his
employment for "good reason" (as defined in the Thomas Employment Agreement).
If Mr. Thomas elects to terminate his employment upon 90-days notice, or the
Thomas Employment Agreement is terminated because of Mr. Thomas' Disability (as
defined in the Thomas Employment Agreement), then the Company is obligated to
pay him his annual salary and annual bonus through the date of termination. In
the event of Mr. Thomas' death, the Company is obligated to pay him his annual
salary and annual bonus through the date of death. The Thomas Employment
Agreement also includes certain restrictive covenants which limit Mr. Thomas'
ability to compete with the Company or to divulge certain confidential
information concerning the Company.
Executive Employment Agreement with Mr. Lane
-------------------------------------
The Company entered into an Executive Employment Agreement with Mr. Lane
dated as of August 21, 2001 (the "Lane Employment Agreement"), pursuant to
which Mr. Lane has agreed to serve as the Executive Vice President and Chief
Financial Officer of the Company for an initial term of one year, which initial
term shall be automatically renewed for additional consecutive one-year terms
unless timely notice of non-renewal is given by either the Company or Mr. Lane.
Notwithstanding any notice by the Company not to extend, the term of the Lane
Employment Agreement will not expire prior to the expiration of 12 months after
the occurrence of a Change of Control (as such term is defined in the Lane
Employment Agreement) of the Company. The Lane Employment Agreement provides
that Mr. Lane will receive a minimum base salary of $120,650 and is further
entitled to receive an annual bonus and to participate in all present and
future employee benefit, retirement and compensation plans of the Company
consistent with his salary and his position as the Executive Vice President and
Chief Financial Officer of the Company. The Lane Employment Agreement also
provides certain additional benefits to Mr. Lane if he terminates his
employment for "good reason" (as defined in the Lane Employment Agreement)
within 12 months after an occurrence of a Change of Control.
If Mr. Lane elects to terminate his employment upon 90-days notice, or the
Lane Employment Agreement is terminated because of Mr. Lane's Disability (as
defined in the Lane Employment Agreement), then the Company is obligated to pay
him his annual salary and annual bonus through the date of termination. In the
event of
11
Mr. Lane's death, the Company is obligated to pay him his annual salary and
annual bonus through the date of death. The Lane Employment Agreement also
includes certain restrictive covenants which limit Mr. Lane's ability to
compete with the Company or to divulge certain confidential information
concerning the Company.
In connection with the execution of the Lane Employment Agreement, the
Company and Mr. Lane agreed to terminate the Severance Protection and
Non-Competition Agreement between the Company and Mr. Lane dated as of November
1, 1998.
Compensation of Directors
--------------------
All directors serving on the Board receive a fee of $500 per month. Mr.
Weltzbarker receives an additional $300 per month for his service as Vice
Chairman of Board, which position he has held since May 15, 2001. Board
meetings are held monthly. Members of the Executive Committee (except Messrs.
Hunnicutt and Thomas) receive a fee of $300 per month, and members of the Audit
Committee receive a fee of $200 per meeting. Mr. Wortman receives $200 per
meeting for his services on the Executive Loan Committee and is the only member
of the Executive Loan Committee to receive compensation for service thereon.
Messrs. Jeter and Wortman each receive $125 per meeting attended for their
services on the ALCO and are the only directors on the ALCO to receive
compensation for services thereon.
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------
Mr. Hunnicutt, who served as the Company's Chief Executive Officer during
2001 and as the Company's President until May 15, 2001, also served as a
non-voting member of the Compensation Committee during 2001. Mr. Thomas, who
served as the Company's Executive Vice President until May 15, 2001, the
Company's President after May 15, 2001, and the Company's Chief Operating
Officer during 2001, also served as a non-voting member of the Compensation
Committee during 2001. No other member of the Compensation Committee is a
current or former employee of the Company or any of its subsidiaries.
The Company and the Banks have had, and expect to have in the future,
banking transactions in the ordinary course of business with members of the
Compensation Committee, corporations, partnerships and other organizations in
which such members have an interest. The Board believes that the terms of such
loans (including interest rates, collateral and repayment terms) are fair and
equitable and are substantially the same as terms that were prevailing at the
time such loans were made with respect to comparable transactions with
unrelated parties. Such transactions do not involve more than the normal risk
of collectibility or present other unfavorable features.
12
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD
The Company's executive compensation programs are administered by the
Compensation Committee. During 2001, the Compensation Committee was composed of
Messrs. Briggs, Fulp, Hunnicutt, Jeter, Thomas and Weltzbarker. Mr. Brigg's
service on the Compensation Committee ended upon his death in August 2001.
The Company's executive compensation is designed to attract and retain
highly qualified executives and to motivate them to maximize shareholder
returns. The base salary for executives is determined in relation to their
level of responsibility. Salary ranges are reviewed on an annual basis, taking
into consideration, among other things, the financial performance of the
Company, and are adjusted as necessary. Salaries are reviewed on an annual
basis, and salary changes are based primarily upon individual performance.
In reviewing the performance of Mr. Hunnicutt, the Compensation Committee
took into account the Hunnicutt Employment Agreement, which establishes Mr.
Hunnicutt's base compensation from year to year. In determining Mr. Hunnicutt's
compensation, the Compensation Committee considered the effects of inflation,
adjustments to the salaries of other senior management personnel, Mr.
Hunnicutt's past performance and the contribution which he made to the business
and profits of the Company during fiscal year 2001. The Company's performance
in 2001 reflected net income of $9.6 million, or $1.05 per basic share of the
Common Stock, a decrease of 5% from net income for 2000 of $10.1 million. The
Company's total assets increased from $826 million at December 31, 2000, to
$1.2 billion at December 31, 2001, an increase of 42%. The Company experienced
an increase in total loans of 37% from $587 million in 2000 to $805 million in
2001, and an increase in total deposits of 37% from $680 million in 2000 to
$931 million in 2001. Based on the Company's overall operating performance
during fiscal year 2000 and projections with respect to the Company's overall
operating performance for fiscal year 2001, the Compensation Committee
increased Mr. Hunnicutt's base salary by $28,450 for the fiscal year ended
December 31, 2001. The Compensation Committee also adjusted Mr. Hunnicutt's
base salary for the fiscal year ended December 31, 2001 by $30,150 to transfer
compensation previously received as director fees for his services as a
director of each of the Banks. Mr. Hunnicutt did not participate in the
deliberations of the Compensation Committee concerning his compensation.
Submitted by the Compensation Committee
J. Raymond Fulp
Kenneth J. Hunnicutt (non-voting member)
Daniel B. Jeter
Mark D. Thomas (non-voting member)
Doyle Weltzbarker, Chairman of the Compensation Committee
13
REPORT OF THE AUDIT COMMITTEE OF THE BOARD
The Board has adopted a written charter for the Audit Committee. The primary
functions of the Audit Committee are set forth in its charter and include: (i)
recommending an accounting firm to be appointed by the Company as its
independent accountants; (ii) consulting with the Company's independent
accountants regarding their audit plan; (iii) reviewing the Company's financial
statements with its accountants; and (iv) determining that management placed no
restrictions on the scope or implementation of the independent accountants'
report. The members of the Audit Committee are independent within the meaning
of the rules of the National Association of Securities Dealers, Inc.
The Audit Committee reports as follows:
(i) the Audit Committee reviewed and discussed the Company's audited
financial statements for the year ended December 31, 2001, with the
Company's management;
(ii) the Audit Committee has discussed with Mauldin & Jenkins, Certified
Public Accountants and Consultants, LLC ("Mauldin & Jenkins"), the
Company's independent accountants, the matters required to be discussed
by Statement of Accounting Standards 61; and
(iii) the Audit Committee has received the written disclosures and the letter
from Mauldin & Jenkins required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and has discussed
Mauldin & Jenkins' independence with representatives of Mauldin &
Jenkins.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board that the audited financial statements be included in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001, for filing with the Securities and Exchange Commission (the "SEC").
Submitted by the Audit Committee
J. Raymond Fulp
Daniel B. Jeter
Henry C. Wortman, Chairman of the Audit Committee
14
PERFORMANCE GRAPH
Set forth below is a line graph comparing the change in the cumulative total
shareholder return on the Common Stock against the cumulative return of The
NASDAQ Stock Market (U.S. Companies) and the index of Nasdaq Bank Stocks for
the five-year period commencing December 31, 1996, and ending December 31,
2001. The graph shows the value at December 31, 1996, December 31, 1997,
December 31, 1998, December 31, 1999, December 29, 2000, and December 31, 2001,
assuming an investment of $100 on December 31, 1996, and reinvestment of
dividends and other distributions to shareholders.
Pursuant to the regulations of the SEC, this graph is not "soliciting
material," is not filed with the SEC and is not to be incorporated by reference
in any filing of the Company under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
15
PROPOSAL II: RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company has appointed Mauldin & Jenkins as its independent accountants
for the fiscal year ended December 31, 2001. Mauldin & Jenkins has served as
the Company's independent accountants since 1985. Services provided to the
Company and its subsidiaries by Mauldin & Jenkins in the fiscal year ended
December 31, 2001, included the examination of the Company's consolidated
financial statements, limited review of quarterly reports, services related to
filings with the SEC and consultation with respect to various tax matters.
Representatives of Mauldin & Jenkins 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 by shareholders.
Audit Fees
--------
For the 2001 audit of the Company's annual financial statements, including
the review of the quarterly financial statements included in the Company's
Quarterly Reports on Form 10-Q filed in 2001, the Company has agreed to pay
Mauldin & Jenkins approximately $260,000. As of December 31, 2001, $137,000 of
these fees had been billed.
Financial Information Systems Design and Implementation Fees
------------------------------------------------
For the fiscal year ended December 31, 2001, Mauldin & Jenkins was not
engaged to and did not provide any of the professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X.
All Other Fees
-----------
For the fiscal year ended December 31, 2001, Mauldin & Jenkins billed
$130,000 to the Company for services other than those described above. Included
in such amount are fees totaling approximately (i) $96,000 for services related
to mergers and acquisitions and related regulatory filings, and the
registration of trust preferred securities with the SEC; and (ii) $32,000 for
income tax services.
Compatibility of Audit Fees
---------------------
The Company's Audit Committee has considered the provision of non-audit
services by Mauldin & Jenkins and the fees paid to them for such services and
believes that the provision of such services and their fees are compatible with
Mauldin & Jenkins maintaining independence (see "Report of the Audit Committee
of the Board").
Ratification of the appointment of Mauldin & Jenkins as the Company's
independent accountants for the fiscal year ended December 31, 2001, requires
the affirmative vote of a majority of the outstanding shares of Common Stock
which are entitled to vote at the Annual Meeting. Unless otherwise specified,
the proxy holders designated in the proxy will vote the shares covered thereby
at the Annual Meeting "FOR" ratification of the appointment of Mauldin &
Jenkins. In the event that the shareholders do not ratify the appointment of
Mauldin & Jenkins, the appointment will be reconsidered by the Audit Committee
and the Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF PROPOSAL II.
16
CERTAIN TRANSACTIONS
The Company and the Banks have engaged in, and in the future expect to
engage in, banking transactions in the ordinary course of business with
directors and officers of the Company and the Banks and their associates,
including corporations, partnerships and other organizations in which such
directors and officers have an interest. At December 31, 2001, certain
executive officers and directors, and companies in which, as of such date, such
executive officers and directors had a ten percent (10%) or more beneficial
interest, were indebted to the Banks in the aggregate amount of approximately
$8.0 million. The Board believes that the terms of such loans (including
interest rates, collateral and repayment terms) are fair and equitable and are
substantially the same as terms prevailing at the time such loans were made for
comparable transactions with unrelated parties. Such transactions do not
involve more than the normal risk of collectibility or present other
unfavorable features.
Since November 1, 1991, the Company has leased a building from Mr. Hunnicutt
and Lynn Jones, who serves as a director of one of the Banks, that is used as
the Company's operations center in Moultrie, Georgia. On November 1, 1996, the
Company renewed the lease, increasing the rent payments from $2,500 to $3,334
per month. After renovations and an addition to such building, this lease was
extended and rent payments were increased beginning October 1, 1998, to
$5,666.67 per month. Rent payments under the extended lease, which expires on
November 1, 2003, totaled $68,000 for 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than 10% of the Common Stock to
file with the SEC initial reports of ownership and reports of changes in
ownership of the Common Stock. They are also required to furnish the Company
with copies of all Section 16(a) forms they file with the SEC.
To the Company's knowledge, based solely on its review of the copies of such
reports furnished to it and written representations that no other reports were
required, during the fiscal year ended December 31, 2001, all of the Company's
officers, directors and greater than 10% shareholders complied with all
applicable Section 16(a) filing requirements.
OTHER MATTERS
The Board does not contemplate bringing before the Annual Meeting any matter
other than those specified in the accompanying Notice of Annual Meeting of
Shareholders, nor does it have information that other matters will be presented
at the Annual Meeting. If other matters come before the Annual Meeting, signed
proxies will be voted upon such questions in accordance with the best judgment
of the persons acting under the proxies.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the Company's annual
meeting of shareholders to be held in 2003 and to be included in the Company's
proxy statement and form of proxy for that meeting must be received by the
Company, directed to the attention of the Secretary, not later than November
16, 2002. Any such proposal must comply in all respects with the rules and
regulations of the SEC.
17
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders is enclosed with this
Proxy Statement. The Annual Report to Shareholders is not a part of the proxy
soliciting material enclosed herewith. The Company's Annual Report to the SEC
on Form 10-K for the fiscal year ended December 31, 2001, will be filed with
the SEC prior to the Annual Meeting. Upon receipt of a written request, the
Company will, without charge, furnish any owner of its Common Stock a copy of
its Annual Report to the SEC on Form 10-K for the fiscal year ended December
31, 2001, including financial statements and the footnotes thereto. Copies of
exhibits to the Annual Report on Form 10-K are also available upon specific
request and payment of a reasonable charge for reproduction. Such request
should be directed to the Secretary of the Company at the address indicated on
the first page of this Proxy Statement.
By Order of the Board of Directors,
/s/ Kenneth J. Hunnicutt
Kenneth J. Hunnicutt, Chairman and
Chief Executive Officer
Moultrie, Georgia
April 9, 2002
18
PROXY
ABC Bancorp
24 2/nd/ Avenue, S.E.
Moultrie, Georgia 31768
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Mark D. Thomas and Kenneth J.
Hunnicutt, and each of them, with full power of substitution, the proxies
and attorneys of the undersigned at the Annual Meeting of Shareholders
(the "Annual Meeting") of ABC Bancorp (the "Company") to be held on
Tuesday, May 14, 2002, at Sunset Country Club, South Main Street,
Moultrie, Georgia, at 4:15 p.m., local time, and at any adjournment or
postponement thereof, and hereby authorizes them to vote as designated
below at the Annual Meeting all the shares of common stock of the Company
held of record by the undersigned as of March 15, 2002. The undersigned
hereby acknowledges receipt of the Annual Report of the Company for the
fiscal year ended December 31, 2001, and the Notice of Annual Meeting and
Proxy Statement of the Company for the Annual Meeting.
I. Election of the following nominees to the Board of Directors in Class
II for three-year terms of office:
[_]FOR all nominees listed [_]WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below
Class II
J. Raymond Fulp Robert P. Lynch J. Thomas Whelchel Henry C. Wortman
Instructions: To withhold authority to vote for any individual nominee(s),
write the name(s) of such nominee(s) in the space provided below. If this
Proxy is executed by the undersigned in such manner as not to withhold
authority to vote for the election of any nominee, this Proxy shall be
deemed to grant such authority.
II. To ratify the appointment of Mauldin & Jenkins, Certified Public
Accountants and Consultants, LLC, as the Company's independent
accountants for the fiscal year ended December 31, 2001:
[_] FOR [_] AGAINST [_] ABSTAIN
III. To transact any other business that may properly come before the Annual
Meeting or any adjournment or postponement thereof:
[_] FOR [_] AGAINST [_] ABSTAIN
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made,
this proxy will be voted for the election of each nominee and in the
discretion of the proxy holders as to any other matter that may properly
come before the Annual Meeting.
Print Name(s): __
Signature: __
Signature If
Held Jointly: __
Dated: __, 2002
Please date and sign in the same manner in which your shares are
registered. When signing as executor, administrator, trustee, guardian,
attorney or corporate officer, please give full title as such. Joint
owners should each sign.