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 Pursuant to ss.240.14a-11(c) or ss.240.14a-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 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:
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2) Aggregate number of securities to which transaction applies:
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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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5) Total fee paid:
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[ ] 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
by 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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4) Date Filed:
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NOTICE OF ANNUAL MEETING
OF THE SHAREHOLDERS OF
LAKELAND FINANCIAL CORPORATION
------------------------------
The annual meeting of the shareholders of Lakeland Financial Corporation
will be held on Tuesday, April 8, 1997, at 12:00 Noon (EST) at the Shrine
Building located at the Kosciusko County Fairgrounds in Warsaw, Indiana. The
purpose of the meeting will be: (1) to elect four (4) members of the Board of
Directors; (2) to adopt an amendment of the Articles of Incorporation reducing
the vote required to adopt an amendment of the Articles of Incorporation; and
(3) to transact such other business as may properly be brought before the
meeting.
Only shareholders of record on the Corporation's books at the close of
business on February 10, 1997, will be entitled to vote at the annual meeting.
A Proxy Statement accompanies and forms a part of this Notice. Your copy
of the 1996 Annual Report is also enclosed.
R. Douglas Grant
--------------------------------------------
(R. Douglas Grant) President
Lakeland Financial Corporation
P.O. Box 1387
Warsaw, IN 46581-1387
(219) 267-6144
IMPORTANT - PLEASE SIGN, DATE AND MAIL YOUR PROXY PROMPTLY.
In order to have adequate representation to assure a voting quorum at the
meeting, you are urged to return your signed proxy in the enclosed envelope,
which requires no postage. If you are able to attend the annual meeting, you
may revoke your proxy prior to commencement of the meeting and vote in person.
LAKELAND FINANCIAL CORPORATION
202 East Center Street
Post Office Box 1387
Warsaw, Indiana 46581-1387
(219) 267-6144
PROXY STATEMENT
PERSONS MAKING THE SOLICITATION
-------------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Lakeland Financial Corporation (the "Corporation")
of proxies for use at the annual meeting of shareholders of the Corporation to
be held on April 8, 1997.
Lakeland Financial Corporation owns all of the outstanding shares of Lake
City Bank, Warsaw, Indiana (the "Bank"). The total expense of this
solicitation will be paid by Lakeland Financial Corporation. In addition to
use of the mails, proxies may be solicited personally or by telephone or
telegraph by officers, directors and certain employees of the Corporation and
the Bank, who will not be specially compensated for such soliciting.
The approximate date on which this statement and accompanying form of
proxy are first mailed to shareholders is March 13, 1997.
REVOCABILITY OF PROXY
---------------------
Any shareholder giving a proxy has the right to revoke it at any time
before it is exercised. Therefore, execution of the proxy will not in any way
affect the shareholder's right to vote in person if he or she attends the
meeting. Revocation may be made prior to the meeting by written notice sent to
the President of the Corporation at the offices of the Corporation at 202 East
Center Street, P.O. Box 1387, Warsaw, Indiana, 46581-1387; or it may be done
personally upon oral or written request at the annual meeting. The shares
represented by proxies will be voted as instructed by the shareholders giving
the proxies. In the absence of specific instructions to the contrary, proxies
will be voted "FOR" the election of the nominees for directors listed and
"FOR" the amendment of the Articles of Incorporation.
VOTING OF SECURITIES
--------------------
Only shareholders of record as of February 10, 1997, will be entitled to
vote. The Corporation presently has issued and outstanding, as its only class
of voting securities, 2,903,799 shares of common stock. Each share entitles
the holder thereof to one vote upon each matter to be voted upon at the annual
meeting. The affirmative vote of a majority of the shares present at the
annual meeting will be sufficient to elect nominees. It will require the
affirmative vote of at least two-thirds (2/3) of the total shares outstanding
to amend the Articles of Incorporation, or 1,935,867 or more affirmative
votes.
SECURITY OWNERSHIP
------------------
As of February 25, 1997, the following persons or groups, as best known
to the Corporation, were beneficial owners of more than 5 percent of the
Corporation's voting securities. The sole class of voting securities is common
stock.
1
Amount and Nature
Name and Address of Beneficial Percent of
of Owners Ownership Class
- ------------------------ ------------------------ ------------------------
Helen Koch 157,210 Shares (1) 5.41%
1511 Locust - Apt. 201
Elkhart, IN 46514
Lakeland Financial 319,586 Shares (2) 11.00%
Corporation 401(k)
Plan
Post Office Box 1387
Warsaw, Indiana 46581-1387
(1) This includes 157,052 shares held in the Ola Sloan Testamentary Trust for
Helen Koch. This information has been supplied by the trust for which the
Bank serves as trustee. Helen Koch, the beneficiary of this trust,
exercises voting power but not investment power over the shares held in
the trust.
(2) This information has been supplied by the Bank which serves as trustee of
the trust for the plan. Participant employees of the Corporation and the
Bank exercise voting and investment power over the shares. The Bank
exercises sole investment power over those shares not allocated to any
participant account.
As of February 25, 1997, the following table shows the number of equity
shares beneficially owned by all directors and nominees naming them, and of
all directors and officers as a group, not naming them. The sole class of
equity securities is common stock.
Name of Individual or Amount and Nature
Number of Persons of Beneficial Percent of
In Group Ownership (1) Class
- ------------------------ ------------------------ ------------------------
Eddie Creighton 70,080 (2) 2.41%
Anna K. Duffin 1,500 (3) (13)
L. Craig Fulmer 1,494 (13)
R. Douglas Grant 47,083 (4) 1.62%
Jerry L. Helvey 32,424 (5) 1.12%
Kevin L. Lambright 0 (6) (13)
Allan J. Ludwig 2,196 (7) (13)
J. Allan Morgan 2,138 (8) (13)
Richard L. Pletcher 620 (9) (13)
Joseph P. Prout 7,940 (10) (13)
Terry L. Tucker 2,640 (13)
George L. White 1,320 (11) (13)
Officers and Directors 187,226 (12) 6.45%
as a Group
(15) individuals
including those
named above)
(1) The information contained in this column is based upon information
furnished to the Corporation by the persons named above and as shown on
the transfer records of the Corporation. The nature of beneficial
ownership for shares shown in this column, unless otherwise noted,
represents sole voting and investment power.
2
(2) Includes 56,086 shares held by Creighton Brothers L.P., as to which Mr.
Creighton shares voting and investment powers; 4,094 shares held by Mr.
Creighton's Individual Retirement Account as to which he exercises both
voting and investment power; and 1980 shares held by Mr. Creighton's
wife, with respect to which shows he disclaims any beneficial ownership.
(3) All of which shares are owned jointly with her husband, with whom she
shares voting and investment power.
(4) This includes all shares which have been allocated to Mr. Grant under the
401(k) Plan for 1996 and all prior years.
(5) Includes 25,310 shares held individually by Mr. Helvey's wife, as to
which shares he disclaims any beneficial interest.
(6) Mr. Lambright was appointed to the Board in February, 1997 to fill the
vacancy created by Mr. Spear's retirement and is presently seeking shares
in the Corporation.
(7) Includes 600 shares held by Ludwig, Inc., as to which Mr. Ludwig
exercises voting and investment power.
(8) Includes 158 shares held individually by Mr. Morgan's wife, with respect
to which shares Mr. Morgan disclaims any beneficial interest.
(9) Includes 200 shares held by Mr. Pletcher's Individual Retirement Account.
Also included are 200 shares held by Mr. Pletcher's wife's Individual
Retirement Account, with respect to which shares Mr. Pletcher disclaims
any beneficial interest.
(10) Includes 2,000 shares held individually by Mr. Prout's wife, with respect
to which shares Mr. Prout disclaims any beneficial interest.
(11) Includes 1210 shares held jointly with Mr. White's wife, with whom he
shares voting and investment power.
(12) This includes shares which have been allocated to Executive Officers
under the 401(k) Plan for 1996 and all prior years.
(13) The named director's percentage ownership of the Corporation's equity
securities is less than one percent (1%).
ELECTION OF DIRECTORS
---------------------
It is intended that all shares represented by proxy will be voted "FOR"
the re-election of the incumbent directors listed below, unless otherwise
instructed.
The following table contains information with respect to nominees, whose
terms as incumbent directors expire on April 8, 1997. The information includes
service to Lake City Bank prior to the formation of Lakeland Financial
Corporation.
Term
Name Age Date Expires
- ---- --- ---- -------
R. Douglas Grant 63 Director since 1980 4/97
Mr. Grant has served as President of the Bank since October, 1980 and as
President of the Corporation since its formation. In January, 1993, Mr.
Grant was elected as Chairman of both the Corporation and the Bank.
3
Jerry L. Helvey 63 Director since 1974 4/97
Mr. Helvey is President of Helvey & Associates, Inc., a group of
collection agencies.
Allan J. Ludwig 58 Director since 1996 4/97
Mr. Ludwig is an entrepreneur and industrial developer.
Richard L. Pletcher 55 Director since 1992 4/97
Mr. Pletcher is President of Pletcher Enterprises, Inc., a holding
company, and CEO of its principal subsidiary, Amish Acres, LLC, a
heritage resort.
INCUMBENT DIRECTORS
-------------------
In addition to the foregoing incumbent directors who shall stand for
election at the annual meeting April 8, 1997, the following named individuals
serve on the Board of Directors.
Term
Name Age Date Expires
- ---- --- ---- -------
Eddie Creighton 64 Director since 1970 4/99
Mr. Creighton is President of Creighton Brothers, the general partner of
Creighton Brothers L.P. and Crystal Lake L.P., both of which are involved
in poultry and egg production and sales, although they also produce and
sell other agricultural and food products.
Anna K. Duffin 63 Director since 1994 4/98
Mrs. Duffin is active in civic affairs in the Goshen area.
L. Craig Fulmer 54 Director since 1993 4/98
Mr. Fulmer is Chairman of Heritage Financial Group, Inc., a real estate
investment and management company based in Elkhart, Indiana.
Kevin L. Lambright 38 Director since 1997 4/99
Mr. Lambright is President of Shipshewana Auction, Inc., an auction
service, flea market and food service business based in Shipshewana,
Indiana.
J. Alan Morgan 61 Director since 1974 4/99
Mr. Morgan is retired.
Joseph P. Prout 68 Director since 1971 4/98
Mr. Prout is President of Owens Supermarkets, Inc., a food supermarket
chain.
Terry L. Tucker 56 Director since 1988 4/98
Mr. Tucker is President of Maple Leaf Farms, Inc., which is primarily
engaged in duck production, processing and sales, although it also
processes and sells other food products.
4
George L. White 64 Director since 1984 4/99
Mr. White retired as President of United Telephone Company of Indiana,
Inc. on December 31, 1991.
No 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 Mr. White who is a Director of United Telephone
Company of Indiana, Inc.
AMENDMENT OF ARTICLES OF INCORPORATION
--------------------------------------
It is intended that all shares represented by proxy will be voted "FOR"
the amendment of the Articles of Incorporation.
At the time of the formation of the Corporation, the Board of Directors
included several provisions in the Articles of Incorporation for the purpose
of slowing down or preventing a hostile takeover by another financial
institution. This was deemed prudent at the time because we were then entering
a period of rapid change and consolidation for financial institutions. The
directors wanted to be in a position where they could act on any takeover
attempts in an orderly fashion to protect the interests of the shareholders,
the employees and the community.
In recent years, the threat or prospect of a hostile takeover of an
Indiana financial institution has proved to be much less likely than
originally anticipated. Most of the consolidation that has occurred has been
as a result of voluntary associations or to protect the depositors of
financial institutions which were in financial difficulty. In connection with
their oversight of the Corporation, the Board has now decided that some of
these earlier provisions designed to work against hostile takeovers hamper
their flexibility. As a result, the Directors have proposed elimination of one
of these provisions and as their review continues, additional changes may be
proposed at future meetings. Article IX, Section 12(a)(4) of the Articles of
Incorporation of the Corporation provides in relevant part:
"(a) The affirmative vote of the holders of not less than two-thirds of
the outstanding shares of common stock of the Corporation shall be
required for the authorization or adoption of the following transactions:
* * *
(4) any amendment of the Articles of Incorporation of the Corporation."
At the regular meeting of the Board of Directors of the Corporation held
on February 11, 1997, a resolution recommending that Article IX, Section
12(a)(4) be deleted from the Articles of Incorporation and that the question
of such amendment be presented to the shareholders at the annual meeting of
the Corporation on April 8, 1997 was unanimously adopted by the Board of
Directors.
At the present time, amendment of the Articles of Incorporation requires
the affirmative vote of two-thirds (2/3) or more of the holders of all of the
issued and outstanding common capital stock of the Corporation. The effect of
approval of the proposed amendment would be to reduce the required vote to
amend the Articles of Incorporation to a simple majority of those shares voted
in person or by proxy at the annual or a special meeting of the shareholders
of the Corporation. No substantive requirement of the Articles of
Incorporation can be amended without the submission of the proposed amendment
of the shareholders for a vote.
5
EXECUTIVE OFFICERS
------------------
The following named individuals in addition to Mr. Grant serve as
executive officers of the Corporation.
Name Age Date
- ---- --- ----
Paul S. Siebenmorgen 47 Officer since 1980
Mr. Siebenmorgen presently serves as an Executive Vice President of both
the Corporation and the Bank and has served as Senior Vice President,
Vice President, Assistant Vice President, Branch Manager, Loan Officer
and Assistant Cashier of the Bank at various times since 1980.
Walter L. Weldy 56 Officer since 1990
Mr. Weldy presently serves as an Executive Vice President of both the
Corporation and the Bank which positions he assumed May 14, 1996. He
first joined Lake City Bank as a Senior Vice President in 1990.
Terry M. White 39 Officer since 1993
Mr. White presently serves as Secretary and Treasurer of the Corporation
and as Senior Vice President and Cashier of the Bank, all of which
positions he assumed effective January 1, 1994. He first joined Lake City
Bank as a Senior Vice President in April, 1993. Prior to joining Lake
City Bank, Mr. White served as First Vice President-Chief Planning and
Investment Officer of Norwest, Indiana, Fort Wayne and its predecessor
Lincoln Financial Corp. from December, 1985 to March, 1993.
There are no arrangements or understandings between any of the directors,
executive officers, or any other persons pursuant to which any of the
Corporation's directors or executive officers have been selected for their
respective positions.
COMPLIANCE WITH SECTION 16(a)
-----------------------------
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Corporation pursuant to Securities and Exchange Act Rule
16a-3(e) during its most recent fiscal year and Form 5 and amendments thereto
furnished to the Corporation with respect to its most recent fiscal year, no
director or executive officer failed to file on a timely basis, as disclosed
in the above forms, reports required by Section 16(a) of the Securities
Exchange Act of 1934, except Mr. Spear who filed one late report and Mr.
Ludwig who filed one late report.
DIRECTORS' COMMITTEES
---------------------
The standing committees of the Board of Directors are the Audit
Committee, the Loan and Investment Committee, the Trust Committee and the
Compensation Committee. There is no standing Nominating Committee.
The Audit Committee was first established during 1985. Currently, Mrs.
Duffin, Mr. Pletcher, Mr. Lambright, Mr. Tucker and Mr. White serve on the
Audit Committee. Its duties as established by the Board of Directors are:
1. Provide an open avenue of communications between management, the
independent and internal auditors and the Board of Directors.
2. Review annually the engagement of the independent auditors,
including the scope and general extent of their review, the audit
procedures to be utilized and the basis for compensation. Recommend
for consideration the independent auditors to be appointed by
6
the Board of Directors.
3. Review at least annually the programs and functions of the internal
auditors.
4. Review and participate in the establishment of the broad scope of
the joint independent internal audit program with both independent
and internal auditors at least once each year and review the
implementation thereof during the year. The Compensation Committee
was created during 1996, with Mr. Fulmer, Mr. Grant, Mr. Helvey and
Mr. White being the members. Its duties are to review executive
officer compensation and make recommendations for changes in
executive officer compensation.
DIRECTORS' ATTENDANCE
---------------------
During 1996, the full Board of Directors held 12 meetings; the Audit
Committee held 11 meetings; the Loan and Investment Committee held 12
meetings; the Trust Committee held 11 meetings; and the Compensation Committee
held 2 meetings. No director attended less than 75% of the total number of
meetings they were eligible to attend, except Mr. Morgan who attended 54%, Mr.
Ludwig who attended 63% and Mr. Tucker who attended 74%.
EXECUTIVE COMPENSATION
----------------------
Shown below is the compensation paid by the Corporation, and its
subsidiary, for the years 1996, 1995 and 1994 to each of its executive
officers in an amount exceeding $100,000.
SUMMARY COMPENSATION TABLE (1)
------------------------------
Annual Compensation
-------------------
(a) (b) (c) (d) (i)
Name and All other
Principal Position Year Salary($) Bonus($) Compensation($)(2)
- ------------------ ---- --------- -------- ------------------
R. Douglas Grant 1996 210,000 66,500 22,914
Chairman, President 1995 190,000 66,000 27,714
and Chief Executive 1994 165,000 52,500 24,012
Officer
Paul S. Siebenmorgen 1996 95,230 22,727 12,476
Executive Vice President 1995 86,580 23,529 11,345
1994 78,430 19,202 10,278
(1) The Corporation does not maintain any Long Term Compensation Plans or
programs for its executive officers.
(2) The amounts set forth in column (i) for Mr. Grant and Mr. Siebenmorgen
include the following:
(a) Group Term Life Insurance Premiums Paid by the Corporation($)
Mr. Grant Mr. Siebenmorgen
1996 - 4,914 1,049
1995 - 4,914 955
1994 - 4,212 867
7
(b) 401(k) Plan Corporation Contributions Paid by the Corporation($)
Mr. Grant Mr. Siebenmorgen
1996 - 18,000 11,427
1995 - 22,800 10,390
1994 - 19,800 9,411
PENSION PLAN TABLE
------------------
The Corporation's defined benefit retirement plan covers all employees
over 21 years of age with more than one year of service. The benefit is
computed on the basis of average salary or wages for the five (5) years
preceding retirement which produces the highest benefit. Normal retirement age
is 65. Participants receive credit for 2-1/2% of their average salary for each
year up to 20 years service. The principal benefit under the 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 current plan 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 new plan. Mr. Grant and Mr.
Siebenmorgen received annuities costing $33,286 and $1,878, respectively, as a
part of the plan termination.
Remuneration Years of Credited Service
- ------------ -------------------------
15 20 25 30 35
--------------------------------------------------------
100,000 37,500 50,000 50,000 50,000 50,000
125,000 46,875 62,500 62,500 62,500 62,500
150,000 56,250 75,000 75,000 75,000 75,000
175,000 65,625 87,500 87,500 87,500 87,500
200,000 75,000 100,000 100,000 100,000 100,000
225,000 84,375 112,500 112,500 112,500 112,500
250,000 93,750 125,000 125,000 125,000 125,000
275,000 103,125 137,500 137,500 137,500 137,500
The amounts shown above include amounts payable under a Supplemental
Employees Retirement Plan which is a non-qualified plan payable as a general
creditor of the Corporation. In 1989, the Corporation amended its defined
benefit plan and the amendments could result in highly compensated employees
receiving a reduced pension benefit. The Supplemental Employee Retirement Plan
did not create any new benefits, but was adopted to offset any such reduction
in pension benefits.
The salaries and bonuses shown in the Summary Compensation Table for Mr.
Grant and Mr. Siebenmorgen approximate covered compensation under the plan.
Mr. Grant and Mr. Siebenmorgen had 18 and 16 years of credited service
respectively at December 31, 1996.
COMPENSATION COMMITTEE INTERLOCKS
and
INSIDER PARTICIPATION
---------------------------------
The Corporation established a Compensation Committee during 1996. During
1996, this consisted of Mr. Fulmer, Mr. Grant, Mr. Helvey, and Mr. White.
Inside directors (full-time employees of the Corporation) serving on the
Compensation Committee are asked to leave the meeting during the time the
Committee is deliberating their compensation or that of their superiors, but
inside directors do participate in evaluating and establishing the salaries of
other executive officers. Mr. Grant, the President and Chief Executive Officer
of the Corporation, participated during 1996 in establishing the salaries of
all executive officers except his own.
8
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
------------------------------------
The Compensation Committee has furnished the following report on
Executive Compensation.
General
- -------
The Corporation annually reviews executive officer compensation in
December with the new compensation to become effective on the following
January 1. In establishing executive compensation the Corporation has
historically divided compensation into two (2) separate components: salary and
bonus. When fixing an individual executive officer's compensation these two
(2) components are intended to work together to compensate the executive
officer fairly for his services and reward the executive officer based upon
the Corporation's performance during the year. The Corporation further
encourages the executive officers and all employees to acquire a personal
interest in the long term success of the Corporation through stock ownership
under the Corporation's 401(k) Plan. During 1995 and all prior years,
executive compensation was administered by the Board of Directors. In 1996,
the Board of Directors established a Compensation Committee for this purpose.
The Board of Directors retains final approval over executive compensation.
Salary
- ------
Executive officer salaries are established by the Corporation based upon
a wide variety of factors, including prior years salary, duties and
responsibilities, evaluations by supervisors, and salaries for comparable
positions paid by similarly situated financial institutions in Indiana. When
establishing the salary of executive officers other than Mr. Grant, Mr. Grant
participates and makes recommendations to the Committee. Furthermore, the
Committee has available copies of an annual survey of financial institution
salaries paid by Indiana banks published by the Indiana Banker's Association
and also a salary survey prepared by Crowe, Chizek and Company. Using this
information the Committee establishes salaries using an informal and
subjective analysis, primarily focused upon paying competitive salaries
sufficient to retain the services of its executive officers without paying
salaries which are significantly greater than those paid by similarly situated
financial institutions. Although overall profitability of the Corporation is a
factor in establishing executive officer salaries, no specific weight is given
to financial performance. Likewise, consideration is given to the performance
of the Corporation's stock during the preceding several years, but no specific
weight is given to this factor. The salary paid to Mr. Grant, as President and
Chief Executive Officer, during 1996 as shown in the Summary Compensation
Table of the Proxy Statement was based upon the Board's satisfaction in 1995
with the overall profitability of the Corporation and performance of the
Corporation's stock and retaining his services for future years, without any
specific reference being made to qualitative or quantitative performance
factors. Similar considerations were used in establishing Mr. Grant's 1997
salary.
Bonus
- -----
Executive officer bonuses, including Mr. Grant's, are determined by an
established Executive Incentive Compensation Program which is periodically
reviewed by the Committee. The Bonus Program applies to all executive officers
of the Corporation, as well as designated officers of the 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 is designed to encourage the Executive
Officers to maximize the annual profits of Lake City Bank with an incentive to
conserve capital. During its December 1996 review, the Committee chose not to
modify the Bonus Program or withhold payment for fiscal year 1996. On December
31, 1993, the Corporation and Bank adopted provisions of Statement of
Financial Accounting Standard ("SFAS") 115 which requires recognition of
unrealized gains or losses on certain debt and equity securities held in the
Bank's investment securities portfolio at year end. For purposes of the Bonus
Program, unrealized gains and losses in the investment securities portfolio of
the Bank are excluded from equity capital.
Bonuses are computed on the Return on Investment (Shareholders' Equity).
It is based upon net profit (after taxes) and includes all realized securities
gains and losses (including tax effect), before payment of
9
bonuses and contributions to the 401(k) Plan. Unless the year end Return on
Investment computed on the January 1 shareholders' equity equals or exceeds
12%, no bonus is paid. Thereafter, based upon an established schedule, a
percentage of each eligible officer's salary is paid as a bonus.
As established, the Bonus Program provides that the President and Chief
Executive Officer of the Corporation receives two (2) times the established
percentage for his bonus and the Executive Vice Presidents receive one and one
half (1 1/2) times the established percentage for their bonuses. For 1995 the
Return on Investment established a 17.5% bonus payable in 1996. Since Mr.
Grant's percentage is multiplied by two (2) he received a bonus equal to 35%
of his 1995 base salary during 1996 and Mr. Siebenmorgen received bonus equal
to 26.25% of his 1995 base salary during 1996.
Stock Ownership
- ---------------
The Corporation encourages all employees, including executive officers,
to acquire its stock and participate in its long-term growth. To facilitate
this, the Corporation has adopted the Lakeland Financial Corporation 401(k)
Plan (the "Plan") effective January 1, 1984, which includes as an option
investment in Corporation stock. Under the Plan employees are eligible to
redirect up to 9% of their regular basic compensation into a tax deferred
trust. All employees 21 years of age and older having more than 1 year service
with the Bank or the Corporation are eligible to participate in the Plan;
however, participation is voluntary. The Plan requires that the Corporation
make matching contributions for participants under certain conditions
described below. Corporation matching contributions are made on up to 6% of
each participant's regular basic compensation. In those years in which the
Corporation has paid a dividend to its shareholders, the Corporation will make
a matching contribution to the Plan according to the following schedule based
upon the net earnings of the Corporation, before making any deductions for
employee incentive plans, expressed as a percentage of the January 1 equity
capital of the Corporation:
Percentage of Percentage Match of
Equity Capital Participant Contributions
---------------- -------------------------
Less than 13.00% 25%
13.00% to 14.99% 50%
15.00% to 16.99% 75%
17.00% to 18.99% 100%
19.00% to 20.99% 125%
21.00% to 22.49% 150%
22.50 % to 23.99 175%
24.00% or more 200%
Due to the adoption of SFAS 115 requiring the recognition of unrealized
gains and losses in certain of the investment securities portfolios,
commencing in 1993, equity capital is defined as the total of the capital
stock, surplus and retained earnings accounts, excluding the equity accounts
relating to market valuation adjustments as defined in SFAS 115. The matching
contributions may, at the election of each participant, be invested in any one
or more of six equity and income accounts, one of which holds stock of the
Corporation exclusively. All Corporation stock held by the trust is purchased
by independent agents in open market transactions and voting power is
exercised by the individual participants. Participant accounts are distributed
to the individual participants upon retirement and may include Corporation
stock. All participants are always 100% vested in their salary redirections
and become 100% vested in Corporation contributions upon retirement,
disability or in accordance with the schedule shown below.
Years of Service 401(k) Percentage Vested
----------------- ------------------------
Less than 3 years 0%
3 years 20%
4 years 40%
5 years 60%
6 years 80%
7 years or more 100%
10
The contributions made to the Plan for 1996, 1995 and 1994 on behalf of
Mr. Grant and Mr. Siebenmorgen are shown in footnote 2 to the Summary
Compensation Table of the Proxy Statement. During 1994, a Supplemental 401(k)
Plan was adopted to offset benefit reductions for highly compensated officers.
This new plan did not create any new benefits and is used solely to offset
required reductions in the 401(k) Plan. Contributions to the Supplemental
401(k) Plan may not be invested in Corporation stock. The highly compensated
officers who participate in this Supplemental 401(k) Plan have no interest in
the trust established under the plan, but are general creditors.
Approved by the Lakeland Financial Corporation Compensation Committee as
of December 31, 1996.
L. Craig Fulmer Jerry L. Helvey, Chairman
R. Douglas Grant George L. White
STOCK PRICE PERFORMANCE
-----------------------
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
Corporation specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
The graph below compares cumulative total return* of Lakeland Financial
Corporation, the NASDAQ Market Index and a Peer Group Index.
The following table was presented as a graph in the proxy material mailed
to the shareholders.
Lakeland
Financial Peer
Date Corporation Group NASDAQ
-------- ----------- --------- ---------
1/1/92 $ 100.00 $ 100.00 $ 100.00
12/31/92 118.30 138.05 100.98
12/31/93 156.91 175.07 121.13
12/31/94 212.09 185.50 127.17
12/31/95 260.06 245.98 164.96
12/31/96 395.23 306.13 204.98
* Assumes $100 invested on January 1, 1992 and that all dividends were
reinvested.
The Peer Group selected for display in the above graph is all banks in
the United States with total assets of less than one billion dollars whose
equity securities were traded on an organized exchange for the last five (5)
consecutive years.
11
DIRECTORS' COMPENSATION
-----------------------
During 1996, directors who were not full time employees of the
Corporation, or its subsidiaries, were paid an annual fee of $6,000.00 and an
additional $250.00 for each meeting of the Board attended and $250.00 for each
committee meeting attended. They are not eligible to participate in the 401(k)
Plan or the Defined Benefit Plan. Inside directors (those who are full time
employees of the Corporation or its subsidiaries) are not paid a director's
fee. For 1997 the fee for meeting attendance was increased to $275.00 per
meeting attended. Directors are permitted to defer receipt of their director's
fees and earn a rate of return based upon the Bank's six (6) month certificate
of deposit rates. Effective January 1, 1997, this plan was broadened to add an
option to permit the directors to earn a return based upon the performance of
Corporation stock rather than the certificate of deposit rate. The Corporation
may, but is not required to, fund the deferred fees into a trust which may
hold Corporation 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 the Corporation. Any shares held in the trust are
treated as treasury shares and may not be voted.
INDEBTEDNESS OF MANAGEMENT
--------------------------
During 1996, the 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 collectability, or present other unfavorable features, than loans to
other borrowers.
INDEPENDENT PUBLIC ACCOUNTANTS
------------------------------
During 1996, Crowe, Chizek and Company again served as the Corporation's
Independent Public Accountants. As of this date no determination has been made
as to selection of Independent Public Accountants for 1997. As a matter of
practice for the past several years, the Directors have not made a final
decision on selection of Independent Public Accountants until after the
completion of all audit services for the prior year. This includes portions of
the Corporation's 10-K which is not completed as of the date of this proxy
statement. A representative of Crowe, Chizek and Company is not expected to be
present at the annual meeting of the Corporation.
PROPOSALS OF SHAREHOLDERS
-------------------------
Any proposal which any shareholder may intend to present at the annual
meeting to be held in 1998 must be received by the Corporation on or before
the 16th day of November, 1997, if such proposal is to be included in the
Proxy Statement and Form of Proxy pertaining to the 1998 Annual Meeting.
GENERAL
-------
ON YOUR WRITTEN REQUEST ADDRESSED TO TERRY M. WHITE AT P.O. BOX 1387,
WARSAW, INDIANA 46581-1387, A COPY OF LAKELAND FINANCIAL CORPORATION'S ANNUAL
REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO,
WILL BE PROVIDED WITHOUT CHARGE TO YOU.
12
As of the date of this Proxy Statement, management knows of no matters to
be brought before the annual meeting other than the review of the annual
report, the election of 4 directors and the amendment of the Articles of
Incorporation. If, however, further business should properly be introduced by
others, proxy holders will act in accordance with their own best judgment.
R. Douglas Grant
-------------------------------
(R. Douglas Grant, President)
13
APPENDIX
FORM OF PROXY
LAKELAND FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R. Douglas Grant and Terry M. White
proxies with full power of substitution to vote all Common Stock of Lakeland
Financial Corporation held of record by the undersigned on February 10, 1997,
at the annual meeting of shareholders on April 8, 1997, or any adjournment
thereof.
1. Election of Directors for all nominees listed below [ ]
Withhold authority to vote for all nominees listed below [ ]
R. Douglas Grant, Jerry L. Helvey, Allan J. Ludwig, Richard L. Pletcher
Instruction: To withhold authority to vote for any individual nominee
write that nominee's name on the space provided below.
--------------------------------------------------------
2. Directors' proposal to amend the Articles of Incorporation
[ ] For [ ] Against
3. In their discretion the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(continued and to be signed on the other side)
- ------------------------------------------------------------------------------
(CONTINUED FROM OTHER SIDE)
Unless otherwise specified, the proxies are appointed to vote for the
proposals.
This proxy when properly executed will be voted in the manner directed by the
undersigned shareholder(s).
DATE , 1997
- ------------------------ ------------------------ ----------
Signature of shareholder Signature of shareholder
Please sign exactly as your name is printed hereon. When signing as
attorney, executor, administrator, personal representative, trustee or
guardian, please give full
title. If a corporation,
please sign in full
corporate name by authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
Please mark, sign, date and
return promptly in the
enclosed envelope.