SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 under Rule 14a-12.
Lakeland Financial Corporation
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(Name of Registrant as Specified in Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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LAKELAND FINANCIAL CORPORATION
P.O. Box 1387 Warsaw, Indiana 46581 (574) 267-6144
March 5, 2004
Dear Shareholder:
On behalf of the board of directors and management of Lakeland
Financial Corporation, we cordially invite you to attend the annual meeting of
shareholders of Lakeland Financial Corporation to be held at 12:00 p.m. on
April 13, 2004, at Westminster Hall located at 200 Seminary Drive in Winona
Lake, Indiana. The accompanying notice of annual meeting of shareholders and
proxy statement discuss the business to be conducted at the meeting. We have
also enclosed a copy of our 2003 summary annual report to shareholders and a
copy of our annual report on Form 10-K for your review. At the meeting we will
report on operations and the outlook for the year ahead.
We have nominated four persons to serve as directors, each of whom
are incumbent directors. Additionally, our Audit Committee has selected and we
recommend that you ratify the selection of Crowe Chizek and Company LLC to
continue as our independent public accountants for the year ending December
31, 2004. We recommend you vote your shares for the director nominees and in
favor of the ratification of our accountants.
We encourage you to attend the meeting in person. Please return the
enclosed RSVP card if you plan to attend. Whether or not you plan to attend,
however, please complete, date, sign and return the enclosed proxy card in the
enclosed envelope. This will assure that your shares are represented at the
meeting.
We look forward with pleasure to seeing and visiting with you at the
meeting.
Very truly yours,
/s/Michael L. Kubacki
Michael L. Kubacki
Chairman of the Board, President and
Chief Executive Officer
LAKELAND FINANCIAL CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 13, 2004
To the shareholders:
The annual meeting of the shareholders of Lakeland Financial
Corporation will be held on Tuesday, April 13, 2004, at 12:00 p.m. at
Westminster Hall located at 200 Seminary Drive in Winona Lake, Indiana, for
the following purposes:
1. to elect four members of the board of directors;
2. to ratify the appointment of Crowe Chizek and Company LLC as
independent public accountants for the fiscal year ending
December 31, 2004; and
3. to transact such other business as may properly be brought
before the meeting and any adjournments or postponements of
the meeting.
Only shareholders of record on our books at the close of business on
February 25, 2004, the record date for the annual meeting, will be entitled to
vote at the annual meeting. In the event there are an insufficient number of
votes for a quorum or to approve or ratify any of the foregoing proposals at
the time of the annual meeting, the meeting may be adjourned or postponed in
order to permit us to further solicit proxies.
By order of the board of directors
/s/Michalel L. Kubacki
Michael L. Kubacki
Chairman of the Board, President and
Chief Executive Officer
Warsaw, Indiana
March 5, 2004
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON. WE HOPE THAT YOU WILL BE ABLE TO ATTEND THE MEETING, AND IF
YOU DO YOU MAY VOTE YOUR STOCK IN PERSON IF YOU WISH. YOU MAY REVOKE THE PROXY
CARD AT ANY TIME PRIOR TO ITS EXERCISE.
LAKELAND FINANCIAL CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 13, 2004
Lakeland Financial Corporation, an Indiana corporation, with its
principal executive offices located in Warsaw, Indiana, is the holding company
for Lake City Bank. We also own all of the common securities of Lakeland
Statutory Trust II, a Delaware business trust created for the issuance of
trust preferred securities. Lake City Bank owns all of the common stock of LCB
Investments Limited, a subsidiary formed in 1999 to manage a portion of the
bank's securities portfolio.
This proxy statement is being furnished to shareholders in connection
with the solicitation by our board of directors of proxies to be used at the
annual meeting to be held at Westminster Hall, located at 200 Seminary Drive
in Winona Lake, Indiana on Tuesday, April 13, 2004 at 12:00 p.m., or at any
adjournments or postponements of the meeting. Our summary annual report to
shareholders, including the consolidated financial statements for the fiscal
year ended December 31, 2003 and a copy of our Form 10-K that we filed with
the Securities and Exchange Commission, accompanies this proxy statement,
which is first being mailed to shareholders on or about March 5, 2004.
The following is information regarding the meeting and the voting
process, presented in a question and answer format.
Why am I receiving this proxy statement and proxy card?
You are receiving a proxy statement and proxy card from us because on February
25, 2004, the record date for the annual meeting, you owned shares of Lakeland
Financial's common stock. This proxy statement describes the matters that will
be presented for consideration by the shareholders at the annual meeting. It
also gives you information concerning the matters to assist you in making an
informed decision.
When you sign the enclosed proxy card, you appoint the proxy holder as your
representative at the meeting. The proxy holder will vote your shares as you
have instructed in the proxy card, thereby ensuring that your shares will be
voted whether or not you attend the meeting. Even if you plan to attend the
meeting, you should complete, sign and return your proxy card in advance of
the meeting just in case your plans change.
If you have signed and returned the proxy card and an issue comes up for a
vote at the meeting that is not identified on the card, the proxy holder will
vote your shares, pursuant to your proxy, in accordance with his or her
judgment.
What matters will be voted on at the meeting?
You are being asked to vote on the election of four directors of Lakeland
Financial for a term expiring in 2007 and the ratification of Crowe Chizek and
Company LLC as our independent auditors for the 2004 fiscal year. These
matters are more fully described in this proxy statement.
How do I vote?
You may vote either by mail or in person at the meeting. If you are a record
holder of shares, you may complete and sign the enclosed proxy card and mail
it in the enclosed pre-addressed envelope. No postage is required if mailed in
the United States. If you mark your proxy card to indicate how you want your
shares voted, your shares will be voted as you instruct.
If you sign and return your proxy card but do not mark the card to provide
voting instructions, the shares represented by your proxy card will be voted
"for" all four nominees named in this proxy statement and "for" the
ratification of our auditors.
If you are a beneficial owner and a broker or other fiduciary is the record
holder (or in what is usually referred to as "street name"), then you received
this proxy statement from the record holder. The broker should have given you
instructions for directing how your broker should vote your shares. It will
then be your broker's responsibility to vote your shares for you in the manner
you direct.
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If you want to vote in person, please come to the meeting. We will distribute
written ballots to anyone who wants to vote at the meeting. Please note,
however, that if your shares are held in the name of your broker, you will
need to arrange to obtain a proxy from your broker in order to vote in person
at the meeting. Even if you plan to attend the annual meeting, you should
complete and return your proxy card in advance of the annual meeting in case
your plans change.
If I hold shares in the name of a broker, who votes my shares?
Under the rules of various national and regional securities exchanges, brokers
may generally vote on routine matters, such as the election of directors and
the ratification of independent auditors, but cannot vote on non-routine
matters, such as an amendment to the certificate of incorporation or the
adoption of a stock option plan, unless they have received voting instructions
from the person for whom they are holding shares. If your broker does not
receive instructions from you on how to vote particular shares on a matter on
which your broker does not have discretionary authority to vote, your broker
will return the proxy card to us, indicating that he or she does not have the
authority to vote on these matters. This is generally referred to as a "broker
non-vote" and will affect the outcome of the voting as described below, under
"How many votes are needed for approval of each proposal?" Therefore, we
encourage you to provide directions to your broker as to how you want your
shares voted on all matters to be brought before the meeting. You should do
this by carefully following the instructions your broker gives you concerning
its procedures. This ensures that your shares will be voted at the meeting.
What does it mean if I receive more than one proxy card?
It means that you have multiple holdings reflected in our stock transfer
records and/or in accounts with stockbrokers. Please sign and return ALL proxy
cards to ensure that all your shares are voted.
What if I change my mind after I return my proxy card?
If you hold your shares in your own name, you may revoke your proxy and change
your vote at any time before the polls close at the meeting. You may do this
by:
o signing another proxy card with a later date and returning that proxy
card to our transfer agent at:
American Stock Transfer and Trust Company
59 Maiden Lane
New York, New York 10038;
o sending notice to us that you are revoking your proxy; or
o voting in person at the meeting.
If you hold your shares in the name of your broker and desire to revoke your
proxy, you will need to contact your broker to revoke your proxy.
How many votes do we need to hold the annual meeting?
A majority of the shares that are outstanding and entitled to vote as of the
record date must be present in person or by proxy at the meeting in order to
hold the meeting and conduct business.
Shares are counted as present at the meeting if the shareholder either:
o is present in person at the meeting; or
o has properly submitted a signed proxy card or other form of proxy.
On February 25, 2004, the record date, there were 5,811,094 shares of common
stock issued and outstanding. Therefore, at least 2,905,547 shares need to be
present at the annual meeting.
What happens if a nominee is unable to stand for re-election?
The board may, by resolution, provide for a lesser number of directors or
designate a substitute nominee. In the latter case, shares represented by
proxies may be voted for a substitute nominee. Proxies cannot be voted for
more than four nominees. We have no reason to believe any nominee will be
unable to stand for re-election.
What options do I have in voting on each of the proposals?
You may vote "for" or "withhold authority to vote for" each nominee for
director. You may vote "for," "against" or "abstain" on any other proposal
that may properly be brought before the meeting.
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How many votes may I cast?
Generally, you are entitled to cast one vote for each share of stock you owned
on the record date. The proxy card included with this proxy statement
indicates the number of shares owned by an account attributable to you.
How many votes are needed for each proposal?
The four individuals receiving the highest number of votes cast "for" their
election will be elected as directors of Lakeland Financial.
The ratification of our auditors and all other matters must receive the
affirmative vote of a majority of the shares present in person or by proxy at
the meeting and entitled to vote. Broker non-votes will not be counted as
entitled to vote, but will count for purposes of determining whether or not a
quorum is present on the matter.
Where do I find the voting results of the meeting?
We will announce voting results at the meeting. The voting results will also
be disclosed in our Form 10-Q for the quarter ended June 30, 2004.
Who bears the cost of soliciting proxies?
We will bear the cost of soliciting proxies. In addition to solicitations by
mail, officers, directors or employees of Lakeland Financial or its
subsidiaries may solicit proxies in person or by telephone. These persons will
not receive any special or additional compensation for soliciting proxies. We
may reimburse brokerage houses and other custodians, nominees and fiduciaries
for their reasonable out-of-pocket expenses for forwarding proxy and
solicitation materials to shareholders.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
the beneficial ownership of our common stock at February 25, 2004, by each
person known by us to be the beneficial owner of more than 5% of the
outstanding common stock, by each director or nominee, by each executive
officer named in the summary compensation table which can be found later in
this proxy statement, and by all directors and executive officers of Lakeland
Financial as a group. Beneficial ownership has been determined for this
purpose in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), under which a person is deemed to be
the beneficial owner of securities if he or she has or shares voting power or
investment power in respect of such securities or has the right to acquire
beneficial ownership of securities within 60 days of February 25, 2004.
Name of Individual or Amount and Nature of Percent
Number of Individuals in Group Beneficial Ownership(1,2) of Class
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5% Shareholders
Lakeland Financial Corporation 401(k) Plan 512,836(3) 8.83%
Post Office Box 1387
Warsaw, Indiana 46581-1387
Directors and Nominees
Robert E. Bartels, Jr. 100 *
L. Craig Fulmer 14,721(4) *
Michael L. Kubacki 68,248(5) 1.17%
Allan J. Ludwig 34,028(6) *
Charles E. Niemier 11,986(7) *
Emily E. Pichon 300 *
Richard L. Pletcher 11,937(8) *
Steven D. Ross 2,200 *
Donald B. Steininger 10,507(9) *
Terry L. Tucker 12,146(10) *
M. Scott Welch 7,154(11) *
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Other Named Executive Officers
David M. Findlay 1,402 *
Charles D. Smith 40,324(12) *
Robert C. Condon 7,952(13) *
Kevin L. Deardorff 10,333(14) *
All directors and executive officers as a group
(19 persons) 255,081(15) 4.34%
*Indicates that the individual or entity owns less than one percent of
Lakeland Financial's common stock.
(1) The total number of shares of common stock issued and outstanding on
February 25, 2004 was 5,811,094.
(2) The information contained in this column is based upon information
furnished to us by the persons named above and as shown on our transfer
records. The nature of beneficial ownership for shares shown in this
column, unless otherwise noted, represents sole voting and investment
power.
(3) This information has been supplied by Lake City Bank which serves as
trustee of the trust for the plan. Participant employees of Lakeland
Financial and Lake City Bank exercise investment power over the shares
held in their respective participant accounts. Lake City Bank exercises
sole investment power over those shares not allocated to any
participant account. On February 25, 2004, there were 487,164
unallocated shares held for the plan.
(4) Includes 1,453 shares held by Mr. Fulmer's individual retirement
account, as to which shares he shares voting and investment power; 300
shares held by Mr. Fulmer's wife's individual retirement account, as to
which shares he shares voting and investment power; 1,500 options,
which are currently exercisable, over which Mr. Fulmer has no voting
power and sole investment power; and 5,899 shares credited to Mr.
Fulmer's account as of January 26, 2004 under the terms of the Amended
and Restated Lakeland Financial Corporation Directors Fee Deferral
Plan.
(5) Includes 100 shares owned by each of Mr. Kubacki's minor son and
daughter and 300 shares held in a trust in which he serves as
co-trustee and 30,000 options, which are currently exercisable, over
which Mr. Kubacki has no voting power and sole investment power.
(6) Includes 17,492 shares held by Ludwig Investments, as to which shares
Mr. Ludwig exercises voting and investment power; 8,000 shares held by
Mr. Ludwig's individual retirement account, as to which shares he
exercises voting and investment power; 2,000 shares held by Mr.
Ludwig's wife's retirement account, as to which shares Mr. Ludwig
disclaims any beneficial interest; 1,500 options, which are currently
exercisable, over which Mr. Ludwig has no voting power and sole
investment power; and 5,036 shares credited to Mr. Ludwig's account as
of January 26, 2004 under the terms of the Amended and Restated
Lakeland Financial Corporation Directors Fee Deferral Plan.
(7) Includes 2,016 shares held by Mr. Niemier's individual retirement
account, as to which shares he shares voting and investment power;
1,434 shares held by Mr. Niemier's wife's individual retirement
account, as to which shares he disclaims any beneficial interest; 1,848
shares held in Mr. Niemier's 401(k) plan, as to which shares he shares
voting and investment power; 575 options, which are currently
exercisable, over which Mr. Niemier has no voting power and sole
investment power; and 3,920 shares credited to Mr. Niemier's account as
of January 26, 2004 under the terms of the Amended and Restated
Lakeland Financial Corporation Directors Fee Deferral Plan.
(8) Includes 1,170 shares held by Mr. Pletcher's individual retirement
account. Also included are 904 shares held by Mr. Pletcher's wife's
individual retirement account, with respect to which shares Mr.
Pletcher disclaims any beneficial interest; 1,500 options, which are
currently exercisable, over which Mr. Pletcher has no voting power and
sole investment power; and 8,363 shares credited to Mr. Pletcher's
account as of January 26, 2004 under the terms of the Amended and
Restated Lakeland Financial Corporation Directors Fee Deferral Plan.
(9) Includes 507 shares credited to Mr. Steininger's account as of January
26, 2004 under terms of the Amended and Restated Lakeland Financial
Corporation Directors Fee Deferral Plan.
(10) Includes 1,500 options, which are currently exercisable, over which Mr.
Tucker has no voting power and sole investment power; and 5,366 shares
credited to Mr. Tucker's account as of January 26, 2004 under the terms
of the Amended and Restated Lakeland Financial Corporation Directors
Fee Deferral Plan.
(11) Includes 700 shares held by Mr. Welch's wife's individual retirement
account, as to which shares he shares voting and investment power; 575
options, which are currently exercisable, over which Mr. Welch has no
voting power and sole investment power; and 2,929 shares credited to
Mr. Welch's account as of January 26, 2004 under the terms of the
Amended and Restated Lakeland Financial Corporation Directors Fee
Deferral Plan.
(12) Includes 278 shares owned by Mr. Smith's wife, as to which shares he
disclaims any beneficial interest and 8,000 options, which are
currently exercisable, over which Mr. Smith has no voting power and
sole investment power;.
(13) Includes 5,000 options, which are currently exercisable, over which
Mr. Condon has no voting power and sole investment power.
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(14) Includes 8,000 options, which are currently exercisable, over which
Mr. Deardorff has no voting power and sole investment power.
(15) This includes shares which have been allocated to executive officers
under the 401(k) plan through December 31, 2003 and all prior years.
ELECTION OF DIRECTORS
Shareholders will be entitled to elect four directors for a term
expiring in 2007 at the annual meeting. Our board is divided into three
classes of directors having staggered terms of three years. We have no
knowledge that any nominee will refuse or be unable to serve, but if any of
the nominees is unavailable for election, the holders of the proxies reserve
the right to substitute another person of their choice as a nominee when
voting at the meeting.
Set forth below is information concerning the nominees for election
and for each of Lakeland Financial's other directors, whose terms of office
will continue after the meeting, including the age, the year first elected as
a director and the other positions held by the person at Lakeland Financial
and Lake City Bank. The nominees, if elected at the annual meeting, will serve
as directors for a three-year term expiring in 2007, except as noted below. We
recommend that shareholders vote "FOR" each of the nominees for director.
Unless authority to vote for the nominees is withheld, the shares represented
by the enclosed proxy card, if executed and returned, will be voted "FOR" the
election of the nominees.
NOMINEES
Name Director Positions with Lakeland
(age) Since Financial and Lake City Bank
Term Expires 2007
L. Craig Fulmer 1993 Director of Lakeland Financial and Lake City Bank
(age 61)
Charles E. Niemier 1998 Director of Lakeland Financial and Lake City Bank
(age 48)
Donald B. Steininger 2001 Director of Lakeland Financial and Lake City Bank
(age 61)
Terry L. Tucker 1988 Director of Lakeland Financial and Lake City Bank
(age 63)
CONTINUING DIRECTORS
Term Expires 2005
Robert E. Bartels, Jr. 2002 Director of Lakeland Financial and Lake City Bank
(age 39)
Michael L. Kubacki 1998 President, Chief Executive Officer and Director
(age 52) of Lakeland Financial and Lake City Bank
Steven D. Ross 2000 Director of Lakeland Financial and Lake City Bank
(age 49)
M. Scott Welch 1998 Director of Lakeland Financial and Lake City Bank
(age 43)
Term Expires 2006
Allan J. Ludwig 1996 Director of Lakeland Financial and Lake City Bank
(age 65)
Emily E. Pichon 2002 Director of Lakeland Financial and Lake City Bank
(age 40)
Richard L. Pletcher 1992 Director of Lakeland Financial and Lake City Bank
(age 62)
Except as noted above, all directors will hold office for the terms
indicated, or until their earlier death, resignation, removal or
disqualification, and until their respective successors are duly elected and
qualified. There are no arrangements or understandings between any of the
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nominees, directors or executive officers and any other person pursuant to
which any of our nominees, directors or executive officers have been selected
for their respective positions. No nominee, member of the board of directors
or executive officer is related to any other nominee, member of the board of
directors or executive officer. No nominee or director is a director of
another "public corporation" (i.e. subject to the reporting requirements of
the Securities Exchange Act of 1934) or of any investment company, except for
Mr. Niemier, who is a director of Biomet, Inc.
The business experience of each of the nominees and continuing
directors for the past five years is as follows:
Mr. Bartels, Jr. is President and Chief Operating Officer of Martin's
Supermarkets, Inc., a regional supermarket chain headquartered in South Bend,
Indiana.
Mr. Fulmer is Chairman of Heritage Financial Group, Inc., a real
estate investment and management company based in Elkhart, Indiana.
Mr. Kubacki presently serves as President and Chief Executive Officer
of Lakeland Financial and Lake City Bank. He first joined Lakeland Financial
and Lake City Bank during 1998 as President and became Chief Executive Officer
of both in January 1999. Prior to 1998, Mr. Kubacki served as Executive Vice
President of the Northern Trust Bank of California, NA.
Mr. Ludwig is an entrepreneur and industrial developer.
Mr. Niemier is Senior Vice President - international operations of
Biomet, Inc., which is a manufacturer of medical and orthopedic devices. He
also serves as a trustee of Valparaiso University.
Ms. Pichon is a director of the Cole Foundation, a private charitable
foundation focused on northeast Indiana education, economic development and
conservation.
Mr. Pletcher is President of Pletcher Enterprises, Inc., a holding
company, and Chief Executive Officer of its principal subsidiary, Amish Acres,
LLC, a heritage resort.
Mr. Ross is President of Bertsch Services, which is a regional food
service and vending company based in Warsaw, Indiana.
Mr. Steininger is President of Steininger Development, a real estate
development company based in Ft. Wayne, Indiana.
Mr. Tucker is President of Maple Leaf Farms, Inc., which is primarily
engaged in duck production, processing and sales, as well as the production
and sale of other food products.
Mr. Welch is the Chief Executive Officer of Welch Packaging Group,
Inc., which is primarily engaged in producing industrial and point of purchase
packaging.
In addition, the following individuals serve as executive officers of
Lakeland Financial and are named in the compensation tables included in this
proxy statement:
David M. Findlay, age 42, became an Executive Vice President and
Chief Financial Officer of Lakeland Financial and Lake City Bank in September,
2000. Prior to his arrival, Mr. Findlay served as the Chief Financial Officer
of Quality Dining, Inc., a publicly traded company with its headquarters in
South Bend, Indiana. Prior to that, he served in various capacities with The
Northern Trust Company in Chicago.
Charles D. Smith, age 59, presently serves as an Executive Vice
President of Lakeland Financial and Lake City Bank, positions he has held
since 2000. He has served as an officer of Lake City Bank since 1983.
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Robert C. Condon, age 62, presently serves as an Executive Vice
President of Lakeland Financial and Lake City Bank, positions he has held
since 1999. Prior to that he was Managing Director of the Northern California
region of The Northern Trust Company for eight years. Before that he was Vice
President and Division Head for Trust Division A for The Northern Trust
Company in Chicago.
Kevin L. Deardorff, age 42, presently serves as an Executive Vice
President of Lakeland Financial and Lake City Bank, positions he has held
since 2001. He has served as an officer of Lake City Bank since 1993.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that
our executive officers, directors and persons who own more than 10% of our
common stock file reports of ownership and changes in ownership with the
Securities and Exchange Commission. They are also required to furnish us with
copies of all Section 16(a) forms they file. Based solely on our review of the
copies of such forms, and, if appropriate, representations made to us by any
reporting person concerning whether a Form 5 was required to be filed for
2003, we are not aware that any of our directors, executive officers or 10%
shareholders failed to comply with the filing requirements of Section 16(a)
during 2003 except for Mr. Fulmer who did not timely file three Form 4 reports
concerning four acquisitions of our common stock totaling 1,046 shares.
CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS
General
There are currently eleven directors serving on our board of
directors. Generally, the board oversees our business and monitors the
performance of our management. In accordance with our corporate governance
procedures, the board does not involve itself in the day-to-day operations of
Lakeland Financial, which is monitored by our executive officers and
management. Our directors fulfill their duties and responsibilities by
attending regular meetings of the board, which are held on a monthly basis,
and through committee membership, which is discussed below. Our directors also
discuss business and other matters with Mr. Kubacki, our President and Chief
Executive Officer, other key executives and our principal external advisers
(legal counsel, auditors and other consultants). All members of our board of
directors also serve as members of Lake City Bank's board of directors.
With the exception of Mr. Kubacki, all of our current directors are
"independent" as defined by the Nasdaq Stock Market, Inc. The board of
directors has established an Audit Committee, a Nominating and Corporate
Governance Committee and a Compensation Committee, among other committees. The
current charters of each of these committees are available on our website at
www.lakecitybank.com. Also posted on the web site is a general description
regarding the company, many of our corporate polices, and links to our filings
with the Securities and Exchange Commission.
Our board of directors held twelve meetings during 2003. With the
exception of Messrs. Creighton, Grant and Ludwig, all of the directors
attended at least 75% of the board meetings and meetings of committees of
which they were members. While we do not have a specific policy regarding
attendance at the annual shareholder meeting, all directors are encouraged and
expected to attend the meeting. Last year's annual meeting was attended by
eight of the eleven incumbent directors.
At the beginning of 2003, there were sixteen members on our board.
Since last year's annual meeting, Eddie Creighton, R. Douglas Grant, D. Jean
Northerner, Jerry L. Helvey and Anna K. Duffin each retired from the board
upon reaching the age of 70, which is our mandatory retirement age. In 2003,
the board considered whether to maintain the size of the board or to reduce
the size as directors retired. The board decided not to appoint new directors
to fill any of the vacancies created by the retiring directors and reduced the
size of the board to eleven.
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Audit Committee
In 2003, the Audit Committee was comprised of Charles E. Neimer,
Robert E. Bartles, Jr., Anna K. Duffin, Emily E. Pichon, Richard L. Pletcher,
Terry L. Tucker and M. Scott Welch. Steven D. Ross also served on the
committee until October, 2003. Ms. Duffin retired from the board in January
2004 and is no longer on the committee. Each of the members is considered
"independent" according to the Nasdaq listing requirements and the regulations
of the Securities and Exchange Commission. The board of directors has
determined that Mr. Niemer qualifies as an "audit committee financial expert"
under the regulations of the Securities and Exchange Commission. The board
based this decision on Mr. Niemier's education, his professional experience at
an audit firm and his experience as Chief Financial Officer and board member
of Biomet, Inc., a company with its common stock quoted on the Nasdaq National
Market System.
The functions performed by the Audit Committee include, among other
things, the following:
o overseeing our accounting and financial reporting;
o selecting, appointing and overseeing our independent auditors;
o reviewing actions by management on recommendations of the
independent auditors and internal auditors;
o meeting with management, the internal auditors and the independent
auditors to review the effectiveness of our system of internal
control and internal audit procedures; and
o reviewing reports of bank regulatory agencies and monitoring
management's compliance with recommendations contained in those
reports.
To promote independence of the audit function, the committee consults
separately and jointly with the independent auditors, the internal auditors
and management. In 2003, the committee met four times. The Audit Committee has
adopted a written charter, which sets forth the committee's duties and
responsibilities. Our current charter was attached to our 2003 proxy statement
as Appendix A and is available on our website at www.lakecitybank.com.
Compensation Committee
During 2003, the Compensation Committee was comprised of L. Craig
Fulmer, Charles E. Niemer, Emily E. Pichon, Richard L. Pletcher and Terry L.
Tucker, each of whom is expected to serve on the committee through 2004. R.
Douglas Grant and Jerry L. Helvey each served on the committee during 2003
until their retirement. Allan J. Ludwig also served on the committee until
November, 2003. Each of the members is considered "independent" according to
the Nasdaq listing requirements. The purpose of the Compensation Committee is
to determine the salary and bonus to be paid to Mr. Kubacki, our Chief
Executive Officer, and to review the salaries and bonuses for our other
executive officers. The committee also administers our stock option plans and
meets either independently or in conjunction with our full board of directors
to grant options to eligible individuals in accordance with the terms of the
plans. The committee's responsibilities and functions are further described in
its charter, which is available on our website at www.lakecitybank.com. In
2003, the committee met five times.
Nominating and Corporate Governance Committee
We recently established the Nominating and Corporate Governance
Committee. The members of our nominating committee are Allan J. Ludwig, Steven
D. Ross, Donald B. Steininger and M. Scott Welch, and each is considered
"independent" according to the Nasdaq listing requirements. The primary
purposes of the committee are to identify and recommend individuals to be
presented to our shareholders for election or re-election to the board of
directors and to review and monitor our policies, procedures and structure as
they relate to corporate governance. The committee's responsibilities and
functions are further described in its charter, which is available on our
website at www.lakecitybank.com. The committee met one time in 2003.
9
Director Nominations and Qualifications
For the 2004 annual meeting of shareholders, the full board of
directors, including all of the current members of the Nominating and
Corporate Governance Committee, nominated for re-election to the board the
four incumbent directors whose terms are set to expire in 2004. This action
was taken in connection with the board's long-term planning relating to
director retirements that have occurred since the last shareholder meeting.
The Nominating and Corporate Governance Committee was formed in November 2003
and will act on nominations in the future. We did not receive any shareholder
nominations for director for the 2004 annual meeting.
The Nominating and Corporate Governance Committee evaluates all
potential nominees for election, including incumbent directors, board nominees
and those shareholder nominees included in the proxy statement, in the same
manner. Generally, the committee believes that, at a minimum, directors should
possess certain qualities, including the highest personal and professional
ethics and integrity, a sufficient educational and professional background,
demonstrated leadership skills, sound judgment, a strong sense of service to
the communities which we serve and an ability to meet the standards and duties
set forth in our code of conduct. Additionally, all nominees must be under the
age of 70, which is the mandatory retirement age established by the board. The
committee also evaluates potential nominees to determine if they have any
conflicts of interest that may interfere with their ability to serve as
effective board members and to determine whether they are "independent" in
accordance with Nasdaq requirements (to ensure that at least a majority of the
directors will, at all times, be independent). The committee has not, in the
past, retained any third party to assist it in identifying candidates.
Shareholder Communication with the Board, Nomination and Proposal Procedures
General Communications with the Board. Shareholders may contact
Lakeland Financial's board of directors by contacting David M. Findlay,
Secretary, at Lakeland Financial Corporation, P.O. Box 1387, Warsaw, Indiana,
46581 or (574) 267-6144. All comments will be forwarded directly to the
Chairman of the board of directors.
Nominations of Directors. In accordance with our bylaws, a
shareholder may nominate a director for election to the board at an annual
meeting of shareholders by delivering written notice of the nomination to our
President not fewer than 10 days nor more than 50 days prior to the date of
the annual meeting. The shareholder's notice of intention to nominate a
director must include the name and address of the proposed nominee, the
principal occupation of the proposed nominee, the name and address of the
shareholder making the nomination, and the number of shares of capital stock
of Lakeland Financial owned by the notifying shareholder. We may request
additional information after receiving the notification.
For a shareholder nominee to be considered to be included in our
proxy statement, the nominating shareholder must file a written notice of the
proposed director nomination with our corporate secretary, at the above
address, at least 120 days prior to the date the previous year's proxy
statement was mailed to shareholders. Nominations must include the full name
and address of the proposed nominee and a brief description of the proposed
nominee's business experience for at least the previous five years. All
submissions must be accompanied by the written consent of the proposed nominee
to be named as a nominee and to serve as a director if elected. The committee
may request additional information in order to make a determination as to
whether to nominate the person for director.
Other Shareholder Proposals. For all other shareholder proposals, to
be considered for inclusion in our proxy statement and form of proxy relating
to our annual meeting of shareholders to be held in 2005, shareholder
proposals must be received by our corporate secretary, at the above address,
no later than November 5, 2004, and must otherwise comply with the rules and
regulations set forth by the Securities and Exchange Commission.
Independent Director Sessions
Consistent with the Nasdaq listing requirements, the independent
directors regularly have the opportunity to meet without Mr. Kubacki in
attendance. In 2003, the board of directors created the position of a lead
independent director and appointed Allan J. Ludwig to serve in this position.
The lead independent director assists the board in assuring effective
corporate governance and serves as chairperson of the independent director
sessions.
10
Code of Ethics
We have a code of conduct in place that applies to all of our
directors and employees. The code sets forth the standard of ethics that we
expect all of our directors and employees to follow, including our Chief
Executive Officer and Chief Financial Officer. The code of conduct is posted
on our website at www.lakecitybank.com. We intend to satisfy the disclosure
requirements under Item 10 of Form 8-K regarding any amendment to or waiver of
the code with respect to our Chief Executive Officer and Chief Financial
Officer, and persons performing similar functions, by posting such information
on our website.
EXECUTIVE COMPENSATION
The following table shows the compensation earned for the last three
fiscal years by the Chief Executive Officer and our four other most highly
paid executive officers:
- ---------------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------------------
Long Term
Compensation
Annual Compensation Awards
----------------------------------------- --------------------
(a) (b) (c) (d) (g) (i)
Securities
Underlying All Other
Name and Options/SARs Compensation
Principal Position Year Salary($) Bonus($) (#) ($)(1)
- --------------------------------- ------------ ---------------------- ------------------ -------------------- --------------------
Michael L. Kubacki 2003 $ 315,000 $ 106,000 10,000 $ 12,556
President and Chief Executive 2002 290,000 56,000 - 11,791
Officer 2001 280,000 52,000 10,000 10,936
David M. Findlay 2003 $ 197,000 $ 51,000 5,000 $ 12,120
Chief Financial Officer 2002 182,500 26,250 - 12,307
2001 177,296 7,615 15,000 3,680
Charles D. Smith 2003 $ 165,000 $ 43,000 5,000 $ 12,791
Executive Vice President 2002 152,500 21,750 - 11,184
2001 145,423 18,377 7,000 8,719
Robert C. Condon 2003 $ 135,000 $ 21,000 2,000 $ 9,480
Executive Vice President 2002 125,000 18,000 - 8,098
2001 120,000 16,500 6,000 7,772
Kevin L. Deardorff 2003 $ 135,000 $ 23,000 5,000 $ 10,062
Executive Vice President 2002 125,000 18,000 - 9,178
2001 120,000 10,645 5,000 7,772
(1) The amounts set forth in column (i) for Messrs. Kubacki, Findlay, Smith,
Condon and Deardorff include life insurance premiums paid by us as well
as the following 401(k) plan matching contributions, including
supplemental 401(k) matching contributions, paid by Lakeland Financial as
follows:
Mr. Kubacki Mr. Findlay Mr. Smith Mr. Condon Mr. Deardorff
2003 $ 12,000 $ 12,000 $ 12,000 $ 9,360 $ 9,506
2002 $ 10,500 $ 11,000 $ 10,455 $ 7,500 $ 8,580
2001 $ 10,096 $ 2,845 $ 8,029 $ 7,200 $ 7,200
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The following table sets forth information concerning the number and
value of stock options granted in the last fiscal year to the individuals
named above in the summary compensation table:
- ----------------------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
- ----------------------------------------------------------------------------------------------------------------------------------
Potential realizable value
at assumed annual rates of
stock price appreciation
for option term
- ------------------------------------------------------------------------------------------------ ---------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options
Options Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#)(1) Fiscal Year ($/Sh) Date 5%($) 10%($)
- ---------------------------- ------------------ ---------------- ---------------- -------------- ---------------- ----------------
Michael L. Kubacki 7,091 10.94% $ 34.37 12/09/13 $ 153,273 $ 388,423
2,909 4.49% 34.37 12/09/13 62,878 159,346
David M. Findlay 2,091 3.23% $ 34.37 12/09/13 $ 45,197 $ 114,539
2,909 4.49% 34.37 12/09/13 62,878 159,346
Charles D. Smith 2,091 3.23% $ 34.37 12/09/13 $ 45,197 $ 114,539
2,909 4.49% 34.37 12/09/13 62,878 159,346
Robert C. Condon 2,000 3.09% $ 34.37 12/09/13 $ 43,230 $ 109,554
Kevin L. Deardorff 2,091 3.23% $ 34.37 12/09/13 $ 45,197 $ 114,539
2,909 4.49% 34.37 12/09/13 62,878 159,346
(1) All options vest five years after grant.
12
The following table sets forth information concerning the exercisable
and nonexercisable stock options at December 31, 2003 held by the individuals
named in the summary compensation table:
- ----------------------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTIONS VALUES
- ----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Shares Number of Securities Value of Unexercised In-the-
Acquired on Value Underlying Unexercised Money Options at
Name Exercise Realized Options at FY-End(#) FY-End ($)
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Michael L. Kubacki --- --- 20,000 50,000 $ 270,000 $ 864,425
David M. Findlay --- --- --- 35,000 $ --- $ 690,900
Charles D. Smith --- --- 4,000 26,000 $ 48,500 $ 456,025
Robert C. Condon --- --- --- 21,000 $ --- $ 406,260
Kevin L. Deardorff --- --- 4,000 23,000 $ 48,500 $ 393,150
Pension Plan Table
Our defined benefit retirement plan covers certain employees over 21
years of age with more than one year of service. Effective April 1, 2000, we
amended the plan to freeze the accrual of benefits to participants under the
plan. As a result of this amendment, employees who were not participants in
the plan as of March 31, 2000 are no longer able to become participants under
the plan. In addition, all benefits previously accrued under the plan by
participants were frozen in place, and continuing employment with us will not
increase the employee's benefits upon retirement. Normal retirement age is 65.
Participants received credit for 2-1/2% of their average salary for each year
up to 20 years of service or through March 31, 2000, whichever occurred first.
The principal benefit under this plan is a lifetime annuity for the
joint lives of participants and their spouses. This amount is offset by social
security benefits. On December 31, 1985, the then existing plan was terminated
and the latest plan (which is now frozen) was adopted effective January 1,
1986. Participants in the terminated plan were paid cash or received annuities
for their earned benefits as of December 31, 1985. The amounts paid for
annuities purchased, as a part of the plan termination will reduce the
benefits to be paid out of the latest plan.
Years of Credited Service Through March 31, 2000
Remuneration 15 20 25 30 35
- ------------ ------------ ------------ ------------ ------------ ------------
100,000 37,500 50,000 50,000 50,000 50,000
150,000 56,250 75,000 75,000 75,000 75,000
200,000 75,000 100,000 100,000 100,000 100,000
250,000 93,750 125,000 125,000 125,000 125,000
300,000 112,500 150,000 150,000 150,000 150,000
350,000 131,250 175,000 175,000 175,000 175,000
400,000 150,000 200,000 200,000 200,000 200,000
450,000 168,750 225,000 225,000 225,000 225,000
500,000 187,500 250,000 250,000 250,000 250,000
The amounts shown above include benefits payable under a supplemental
employee retirement plan, which is a non-qualified plan payable as a general
creditor of Lakeland Financial. This plan was created in 1989 when changes to
the Internal Revenue Code that apply to defined pension plans could have
13
resulted in a reduced pension benefit for certain highly compensated
employees. This supplemental plan did not create any new benefits, but was
adopted to offset any such reduction in pension benefits. Benefits under this
plan were frozen as of December 31, 1999, by a resolution of our board, and
continuing employment will not increase the employee's benefits under the
plan. At the time the defined benefit plan was frozen, Mr. Kubacki was
credited with 2 years of service, Mr. Smith was credited with 14 years of
service, and Mr. Deardorff was credited with 8 years of service. Mr. Findlay
and Mr. Condon, who joined Lakeland Financial in 2000 and 1999, respectively,
never participated in the plan.
Employment Agreements
We have change of control agreements with several of our executive
officers, including Messrs. Kubacki, Findlay, Smith, Condon and Deardorff. The
agreements provide that upon the termination of the executive's employment
within one year prior to, or following, a change of control of Lakeland
Financial, Mr. Kubacki has the right to receive a payment equal to
approximately two times 120% of his base salary and all other executives have
the right to receive a payment equal to approximately two times 115% of the
executive's base salary. Also, the executive shall continue to receive certain
benefits, including medical insurance coverage. Pursuant to the agreements, a
"change of control" shall be any of the following events: a merger or
attempted hostile takeover; a person acquiring 30% of our voting securities
followed by the election of that person's representative of a director to the
board of directors; a person acquiring more than 50% of our voting securities;
and any other event that has the effect of placing control of Lakeland
Financial in someone other than its current shareholders.
In addition, the agreements provide that the executive shall not
compete with us, or our successor, for two years following a change of
control. If the executive elects, he may forego the severance benefit and not
be subject to the restrictive covenant. The restrictive covenant extends to a
60 mile radius of Warsaw, Indiana.
Report of the Compensation Committee on Executive Compensation
The report of the Compensation Committee below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent Lakeland Financial
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
General. We annually review executive officer compensation in
December with the new compensation to become effective the following February.
In establishing executive compensation, we have historically divided
compensation into the two separate components of salary and bonus. When fixing
an individual executive officer's compensation, these two components are
intended to work together to compensate the executive officer fairly for his
or her services and reward the executive officer based upon our performance
during the year. We further encourage the executive officers and all employees
to acquire a personal interest in the long-term success of Lakeland Financial
by participating in stock ownership under our 401(k) plan. In 1998, we
established the Lakeland Financial Corporation 1997 Share Incentive Plan to
enhance the opportunity of the executive officers, as well as other covered
employees, to acquire stock in Lakeland Financial. The board of directors
retains final approval over executive compensation.
Salary. The Compensation Committee reviews each executive's base
salary on an annual basis. The committee believes that the base salaries
should offer security to each executive and allow us to attract qualified
executives and maintain a stable management team and environment. The
committee targets base salaries at levels comparable to those of similar
positions within the market place. The committee may adjust salaries to
reflect our financial performance, including, but not limited to, our earnings
per share, net income and return on average assets, although no specific
weight is given to these factors. Additionally, base salaries are determined
examining, among other things, an executive's level of responsibility, prior
experience, education, breadth of knowledge, internal performance objectives
and the current market level. All of the factors described herein are
considered on a subjective basis in the aggregate, and none of the factors is
accorded a specific weight. When establishing the salary of executive officers
other than his own, Mr. Kubacki participated and made recommendations to the
committee.
The salary paid to Mr. Kubacki, as President and Chief Executive
Officer, during 2003 was based in part upon the committee's satisfaction with
14
the following factors; profitability, revenue growth, expense control and
credit quality. The committee determined that Mr. Kubacki's leadership had a
significant impact on our attaining this level of performance while
maintaining our excellent safety and soundness ratings. Additionally, the
committee considered Mr. Kubacki's personal performance as President and Chief
Executive Officer, as well as his employment contract, his previous years'
salaries and the salary levels of other similarly situated financial
institutions in setting his base salary at $315,000 for 2003.
Bonus. Executive officer bonuses that were paid in 2003, including
Mr. Kubacki's, were determined by an established executive incentive
compensation program, which is periodically reviewed by the committee. This
program applied to all of our executive officers, as well as designated
officers of Lake City Bank. As established, the committee retains the right to
modify the program and/or withhold payment at any time. Historically, payments
have not been withheld since its adoption. The bonus program for 2003 was
designed to encourage the executive officers to achieve a strong return on
shareholders' equity and perform well versus personal goals. Bonuses paid in
2003 were computed in part on our return on beginning shareholders' equity. It
was based upon net income after the 401(k) match and incentive compensation
costs and excluding non-recurring gain/loss on sale of fixed assets. For
payments made in 2003, the year end return on shareholders' equity as of
January 1 of each year must equal or exceed 13% in order for a bonus to be
paid that year. Thereafter, based upon an established schedule, the award
eligibility increases with improved return on shareholders' equity. Bonuses
under the plan provide for bonus payments of 5% to 40% of eligible salary.
For bonus payments made in 2003, the bonus program provided that our
President and Chief Executive Officer would receive up to 40% of his salary
and that the Executive Vice Presidents would receive from 20% to 30% of their
salary. Bonuses for officers receiving promotions during the year were
prorated.
The committee made changes to the executive incentive compensation
plan in 2003 for bonus payments to be made in 2004. Eligible participants in
the plan may earn a performance-based bonus based on the Company's performance
versus budgeted net income and the employee's performance versus personal
goals. For purposes of determining the performance against budgeted net
income, net income after the 401(k) match and incentive compensation costs and
excluding non-recurring gain/loss on sale of fixed assets, investments and
extinguishment of debt is used. The actual net income for each year must equal
or exceed 70% of budgeted net income in order for a bonus to be paid that
year. Thereafter, based upon an established schedule, the award eligibility
increases with improved performance versus budgeted net income. Bonuses under
the plan provide for bonus payments of 5% to 40% of eligible salary.
Stock Ownership. At the annual meeting held in April 1998, the
shareholders approved the Lakeland Financial Corporation 1997 Share Incentive
Plan. The purpose of this incentive plan is to enhance our long term financial
performance by:
o attracting and retaining executive and other key employees of
Lakeland Financial and Lake City Bank through incentive compensation
opportunity;
o motivating such employees to further the long term goals of Lakeland
Financial and the Lake City Bank; and
o furthering the identity of interests of participating employees with
our shareholders through opportunities for increased employee
ownership of Lakeland Financial.
During 2003, the compensation committee recommended, and the board of
directors approved, the granting of options for a total of 64,790 shares to 64
employees and directors. The number and terms of shares for which options were
granted to Messrs. Kubacki, Findlay, Smith, Condon and Deardorff during 2003
are shown in the table of option grants above.
We have a 401(k) plan, effective January 1, 1984, which allows the
participants to choose between several different investment options, including
shares of our common stock. Under the plan, employees are eligible to redirect
up to 12% of their regular basic compensation into a tax-deferred trust. We
make matching contributions of up to 6% of each participant's regular basic
compensation. All participants are always 100% vested in their salary
redirections and become 100% vested in our contribution upon retirement,
15
disability or in accordance with the vesting provisions of the plan.
Participant accounts are distributed to the individual participants upon
termination of employment and may include our stock.
Conclusion. The Compensation Committee believes these executive
compensation policies and programs effectively serve the interests of
shareholders and Lakeland Financial. The committee believes these policies
motivate executives to contribute to our overall future success, thereby
enhancing the value of Lakeland Financial for the benefit of all shareholders.
Approved by the Lakeland Financial Compensation Committee as of
December 31, 2003.
L. Craig Fulmer, Charles E. Niemer, Emily E. Pichon, Richard L.
Pletcher and Terry L. Tucker
Compensation Committee Interlocks and Insider Participation
During 2003, none of the directors serving on the Compensation
Committee was an officer or employee of Lakeland Financial or Lake City Bank,
and none of these individuals was a former officer or employee of either
organization. In addition, during 2003 no executive officer served on the
board of directors or compensation committee of any other corporation with
respect to which any member of our compensation committee was engaged as an
executed officer.
STOCK PRICE PERFORMANCE GRAPH
The stock price performance graph below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent Lakeland Financial
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The graph below compares the cumulative total return of Lakeland
Financial, the Nasdaq Market Index and a peer group index.
16
The following table was presented as a graph in the proxy material
mailed to shareholders.
INDEX 1998 1999 2000 2001 2002 2003
-------------------------- ------- ------- ------- ------- ------- -------
LAKELAND FINANCIAL CORP. $100.00 $ 82.66 $ 71.95 $105.42 $144.48 $223.43
PEER GROUP INDEX 100.00 185.95 113.19 89.65 61.67 92.90
NASDAQ MARKET INDEX 100.00 87.35 83.42 112.58 138.69 188.53
* Assumes $100 invested on December 31, 1998 and dividends were reinvested.
The peer group index is comprised of all financial institution
holding companies in the United States with total assets between one billion
dollars and three billion dollars whose equity securities were traded on an
exchange or national quotation service.
DIRECTORS' COMPENSATION
During 2003, directors who were not full time employees of Lakeland
Financial or Lake City Bank, were paid an annual fee of $8,500 and an
additional $500 for each board meeting attended and $400 for each committee
meeting attended. In 2004, the directors will receive an annual fee of $9,000
and an additional $600 for each board meeting attended and $500 for each
committee meeting attended. Mr. Kubacki, who is a director and also our
President and Chief Executive Officer, is not paid a director's fee.
Non-employee directors are not permitted to participate in our 401(k) plan.
Directors are permitted to defer receipt of their directors' fees and earn a
rate of return based upon the performance of our stock. We may, but are not
required to, fund the deferred fees into a trust which may hold our stock. The
plan is unqualified and the directors have no interest in the trust. The
deferred fees and any earnings thereon are unsecured obligations of Lakeland
Financial. Any shares held in the trust are treated as treasury shares and may
not be voted.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2003, Lake City Bank had extended, and expects to continue to
extend, loans to its directors and officers and to their related interests.
Such loans were, and will continue to be, made only upon the same terms,
conditions, interest rates, and collateral requirements as those prevailing at
the same time for comparable loans extended from time to time to other,
unrelated borrowers. Loans to directors and officers do not and will not
involve greater risks of collectibility, or present other unfavorable
features, than loans to other borrowers.
AUDIT COMMITTEE REPORT
The report of the Audit Committee below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent Lakeland Financial
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The Audit Committee assists the board in carrying out its oversight
responsibilities for our financial reporting process, audit process and
internal controls. The Audit Committee also reviews the audited financial
statements and recommends to the board that they be included in our annual
report on Form 10-K. As of December 31, 2003, the committee was comprised
solely of independent directors.
The Audit Committee has reviewed and discussed our audited financial
statements for the fiscal year ended December 31, 2003 with our management and
Crowe Chizek and Company LLC, our independent auditors. The committee has also
discussed with Crowe Chizek the matters required to be discussed by SAS 61
(Codification for Statements on Auditing Standards) as well as having received
and discussed the written disclosures and the letter from Crowe Chizek
required by Independence Standards Board Statement No. 1 (Independence
Discussions with Audit Committees). Based on the review and discussions with
17
management and Crowe Chizek, the committee has recommended to the board that
the audited financial statements be included in our annual report on Form 10-K
for the fiscal year ending December 31, 2003 for filing with the Securities
and Exchange Commission.
Approved by the Lakeland Financial Audit Committee as of December 31,
2003.
Charles E. Niemier Emily E. Pichon Richard L. Pletcher
Robert E. Bartels, Jr. Terry L. Tucker M. Scott Welch
INDEPENDENT PUBLIC ACCOUNTANTS
Shareholders are also being asked to ratify the appointment of Crowe
Chizek and Company LLC ("Crowe Chizek")as our independent public accountants
for the year ending December 31, 2004. If the appointment of Crowe Chizek is
not ratified by shareholders, the matter of the appointment of independent
public accountants will be considered by the Audit Committee and board of
directors. A representative of Crowe Chizek is not expected to be present at
the annual meeting.
Accountant Fees
Audit Fees. The aggregate amount of fees billed by Crowe Chizek for
its audit of Lakeland Financial's annual financial statements for fiscal years
2003 and 2002 and for its required reviews of our unaudited interim financial
statements included in our Form 10-Qs filed during fiscal 2003 and 2002 were
$130,175 and $106,165, respectively.
Audit Related Fees. The aggregate amounts of audit related fees
billed by Crowe Chizek for fiscal years 2003 and 2002 were $22,950 and
$17,605, respectively. The majority of these services were related to Employee
Benefit Plans.
Tax Fees. The aggregate amounts of tax related services billed by
Crowe Chizek for fiscal years 2003 and 2002 were $21,355 and $28,595,
respectively, for professional services rendered for tax compliance, tax
advice and tax planning. The services provided were included assistance with
the preparation of Lakeland Financial's tax return and guidance with respect
to estimated tax payments.
All Other Fees. We did not incur any other fees from Crowe Chizek for
fiscal years 2003 and 2002 other than the fees reported above.
The Audit Committee, after consideration of the matter, does not
believe that the rendering of these services by Crowe Chizek to be
incompatible with maintaining Crowe Chizek's independence as our principal
accountant.
Audit Committee Pre-Approval Policy
Among other things, the Audit Committee is responsible for
appointing, setting compensation for and overseeing the work of the
independent auditor. The Audit Committee's policy is to pre-approve all audit
and permissible non-audit services provided by Crowe Chizek. These services
include audit and audit-related services, tax services, and other services.
Crowe Chizek and management are required to periodically report to the Audit
Committee regarding the extent of services provided by Crowe Chizek in
accordance with this pre-approval, and the fees for the services performed to
date. The Audit Committee may also pre-approve particular services on a
case-by-case basis that the committee had not already specifically approved.
In 2003, all of the services described above were pre-approved by the Audit
Committee.
18
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of our Annual Report to Shareholders for the 2003 fiscal year,
which also includes our Annual Report on Form 10-K for the fiscal year ended
December 31, 2003 (including financial statements), accompanies this Proxy
Statement.
Michael L. Kubacki
Chairman, President and Chief Executive Officer
March 5, 2004
Warsaw, Indiana
ALL SHAREHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
19
PROXY FOR COMMON SHARES SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
LAKELAND FINANCIAL CORPORATION TO BE HELD ON APRIL 13, 2004
The undersigned hereby appoints David M. Findlay and Michael L. Kubacki,
or either one of them acting in the absence of the other, with power of
substitution, attorneys and proxies, for and in the name and place of the
undersigned, to vote the number of common shares that the undersigned would be
entitled to vote if then personally present at the annual meeting of
shareholders, to be held at Westminster Hall located at 200 Seminary Drive in
Winona Lake, Indiana, on the 13th day of April, 2004, at 12:00 p.m., or any
adjournments or postponements of the meeting, upon the matters set forth in the
notice of annual meeting and proxy statement, receipt of which is hereby
acknowledged, as follows:
1. ELECTION OF DIRECTORS:
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees listed below
below)
[ ] [ ]
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Term Expires 2007: L. Craig Fulmer, Charles E. Niemier,
Donald B. Steininger and Terry L. Tucker
2. RATIFY THE APPOINTMENT OF Crowe Chizek and Company LLC as the Company's
independent public auditors for the year ending December 31, 2004:
[ ] [ ] [ ]
For Against Abstain
3. In accordance with their discretion, upon all other matters that may
properly come before said meeting and any adjournments or postponements of
the meeting.
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 NOMINEES LISTED UNDER PROPOSAL 1 AND FOR PROPOSAL 2.
Dated: , 2004
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Signature(s)
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NOTE: PLEASE DATE PROXY AND SIGN IT EXACTLY AS NAME OR NAMES APPEAR ABOVE.
ALL JOINT OWNERS OF SHARES SHOULD SIGN. STATE FULL TITLE WHEN SIGNING AS
EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC. PLEASE RETURN SIGNED PROXY
IN THE ENCLOSED ENVELOPE.