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
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ------------------------------------------------------------------------------
(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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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
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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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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 13, 1999, at 12:00 Noon (EST) in the Shrine
Building located at the Kosciusko County Fairgrounds in Warsaw, Indiana. The
purpose of the meeting will be: (1) to elect four members of the Board of
Directors; and (2) 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 5, 1999, will be entitled to vote at the annual meeting.
A Proxy Statement accompanies and forms a part of this Notice. Your copy
of the 1998 Annual Report To Shareholders is also enclosed.
Michael L. Kubacki R. Douglas Grant
(Michael L. Kubacki), President (R. Douglas Grant), Chairman
and Chief Executive Officer
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 13, 1999.
Lakeland Financial Corporation owns all of the outstanding shares of Lake
City Bank, Warsaw, Indiana (the "Bank") and Lakeland Capital Trust (the
"Trust"). 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 15, 1999.
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.
VOTING OF SECURITIES
--------------------
Only shareholders of record as of February 5, 1999, will be entitled to
vote. The Corporation presently has, as its only class of voting securities,
5,794,743 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.
1
SECURITY OWNERSHIP
------------------
As of February 5, 1999, the following persons or groups, as best known to
the Corporation, were beneficial owners of more than five percent of the
Corporation's voting securities. The sole class of voting securities is common
stock.
Amount and Nature
Name and Address of Beneficial Percent of
of Owners Ownership Class
- ------------------------------ ----------------- ----------
Lakeland Financial 650,399 (1) 11.22%
Corporation 401(k) Plan
Post Office Box 1387
Warsaw, Indiana 46581-1387
(1) 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 held in their
respective participant accounts. The Bank exercises sole investment power
over those shares not allocated to any participant account.
As of February 5, 1999, the following table shows the number of common
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
voting 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 140,160 (2) 2.42%
Anna K. Duffin 3,000 (3) (10)
L. Craig Fulmer 2,988 (10)
R. Douglas Grant 94,659 (4) 1.63%
Jerry L. Helvey 64,848 (5) 1.12%
Michael L. Kubacki 7,000 (10)
Allan J. Ludwig 4,392 (6) (10)
Charles E. Niemier 2,000 (10)
Richard L. Pletcher 1,240 (7) (10)
Terry L. Tucker 5,280 (10)
M. Scott Welch 850 (10)
George L. White 1,640 (8) (10)
Officers and Directors 395,800 (9) 6.83%
as a Group
(16 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 112,172 shares held by CB Farms, LLC, as to which Mr. Creighton
shares voting and investment powers; 8,288 shares held by Mr. Creighton's
Individual Retirement Account as to which he exercises both voting and
investment power; and 3,960 shares, held by Mr. Creighton's wife, with
respect to which shares he disclaims any beneficial ownership.
(3) All of which shares Mrs. Duffin owns jointly with her husband and shares
voting and investment power.
(4) This includes all shares which have been allocated to Mr. Grant under the
401(k) Plan through September 30, 1998, and for all prior years.
(5) Includes 50,620 shares held individually by Mr. Helvey's wife, as to
which shares he disclaims any beneficial interest.
(6) Includes 1,200 shares held by Ludwig, Inc., as to which Mr. Ludwig
exercises voting and investment power.
(7) Includes 400 shares held by Mr. Pletcher's Individual Retirement Account.
Also included are 400 shares held by Mr. Pletcher's wife's Individual
Retirement Account, with respect to which shares Mr. Pletcher disclaims
any beneficial interest.
(8) Includes 1,210 shares held jointly with Mr. White's wife, with whom he
shares voting and investment power.
(9) This includes shares which have been allocated to executive officers
under the 401(k) Plan through September 30, 1998, and all prior years.
(10) The named director's percentage ownership of the Corporation's common
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 13, 1999. The information
includes service to Lake City Bank prior to the formation of Lakeland
Financial Corporation.
Term
Name Age Date Expires
- ---- --- ---- -------
Eddie Creighton 66 Director since 1970 4/1999
Mr. Creighton is General Manager of CB Farms, LLC, which owns and
operates Creighton Brothers, LLC and Crystal Lake, LLC, which are
involved in poultry and egg production and sales, although they also
produce and sell other agricultural and food products.
Michael L. Kubacki 47 Director since 1998 4/1999
Mr. Kubacki presently serves as President and CEO of the Corporation and
the Bank. He first joined the Corporation and the Bank during 1998 as
President and became CEO of the Corporation and the Bank in January,
1999. Prior to joining the Corporation and the Bank in 1998, Mr. Kubacki
served as Executive Vice President of the Northern Trust Bank of
California, NA.
3
M. Scott Welch 38 Director since 1998 4/1999
Mr. Welch is the Chief Executive Officer of Welch Packaging Group, Inc.,
which is primarily engaged in producing industrial and point of purchase
packaging.
George L. White 66 Director since 1984 4/1999
Mr. White retired as President of United Telephone Company of Indiana,
Inc. on December 31, 1991.
INCUMBENT DIRECTORS
-------------------
In addition to the foregoing incumbent directors who shall stand for
election at the annual meeting April 14, 1998, the following named individuals
serve on the Board of Directors.
Term
Name Age Date Expires
- ---- --- ---- -------
Anna K. Duffin 65 Director since 1994 4/2001
Mrs. Duffin is active in civic affairs in the Goshen area.
L. Craig Fulmer 56 Director since 1993 4/2001
Mr. Fulmer is Chairman of Heritage Financial Group, Inc., a real estate
investment and management company based in Elkhart, Indiana.
R. Douglas Grant 65 Director since 1980 4/2000
Mr. Grant presently serves as Chairman of the Board of Directors of the
Corporation and the Bank, positions which he has held since 1993. Prior
to January, 1999, he also served as President and CEO of the Corporation
and the Bank.
Jerry L. Helvey 65 Director since 1974 4/2000
Mr. Helvey is President of Helvey & Associates, Inc., a group of
collection agencies.
Allan J. Ludwig 60 Director since 1996 4/2000
Mr. Ludwig is an entrepreneur and industrial developer.
Charles E. Niemier 43 Director since 1998 4/2001
Mr. Niemier is presently Sr. 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.
4
Richard L. Pletcher 57 Director since 1992 4/2000
Mr. Pletcher is President of Pletcher Enterprises, Inc., a holding
company, and CEO of its principal subsidiary Amish Acres, LLC, a heritage
resort.
Terry L. Tucker 58 Director since 1988 4/2001
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.
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. Fulmer who is a director of Starcraft
Corporation and Mr. Niemier who is a director of Biomet, Inc.
EXECUTIVE OFFICERS
------------------
The following named individuals in addition to Mr. Grant and Mr. Kubacki
serve as executive officers of the Corporation.
Name Age Date
- ---- --- ----
D. Jean Northenor 66 Officer since 1983
Mrs. Northenor presently serves as an Executive Vice President of both
the Corporation and the Bank. She first joined the Bank as the Marketing
Officer in 1983.
Paul S. Siebenmorgen 49 Officer since 1980
Mr. Siebenmorgen presently serves as an Executive Vice President of both
the Corporation and the Bank and has served as an officer of the Bank
since 1980.
Walter L. Weldy 58 Officer since 1990
Mr. Weldy presently serves as an Executive Vice President of both the
Corporation and the Bank. He first joined Lake City Bank as a Senior Vice
President in 1990.
Terry M. White 41 Officer since 1993
Mr. White presently serves as an Executive Vice President, Secretary and
Treasurer of the Corporation and the Bank. He first joined Lake City Bank
as a Senior Vice President in 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.
5
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.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
----------------------------------------------
All members of the Board of Directors of the Corporation also serve as
members of the Board of Directors of the Bank. The Board of Directors held 12
regularly scheduled meetings during 1998. The Board of Directors has, in
addition to other committees, an Audit Committee and a Compensation Committee.
There is no Nominating Committee.
The Audit Committee, comprised of Anna K. Duffin, Richard L. Pletcher,
Terry L. Tucker and George L. White, held 11 meetings during 1998. The
functions performed by the Audit Committee include: making recommendations to
the Board of Directors with respect to selection of the Corporation's
independent auditors; reviewing the independence of the independent auditors;
reviewing actions by management on the independent auditors' and internal
auditors' recommendations; meeting with management, the internal auditors and
the independent auditors to review the effectiveness of the Corporation's
system of internal control and internal audit procedures; and 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.
The Compensation Committee, comprised of L. Craig Fulmer, R. Douglas
Grant, Jerry L. Helvey, Michael L. Kubacki and George L. White, held 4
meetings during 1998. The functions performed by the Compensation Committee
include making recommendations to the full Board of Directors with respect to
officer's salaries and setting awards in accord with the Corporation's benefit
plans.
DIRECTORS' ATTENDANCE
---------------------
During 1998, no director attended less than 75% of the total number of
meetings they were eligible to attend, except Mr. Ludwig who attended 67% and
Mr. Niemier who attended 67%.
6
EXECUTIVE COMPENSATION
----------------------
Shown below is the compensation paid by the Corporation, and its
subsidiary, for the years 1998, 1997 and 1996 to each of its executive
officers in an amount exceeding $100,000.
SUMMARY COMPENSATION TABLE
--------------------------
Long Term
Annual Compensation Compensation
---------------------------------------------------- ---------------------
(a) (b) (c) (d) (e) (g)
Name and All other Securities Underlying
Principal Position Year Salary($) Bonus($) Compensation($)(2) Options
- ----------------------------- ---- ---------- ----------- ------------------ ---------------------
R. Douglas Grant 1998 301,154 166,000 18,622 6,000
Chairman and Chief 1997 260,000 73,500 25,090 -0-
Executive Officer 1996 210,000 66,500 22,914 -0-
Michael L. Kubacki (1) 1998 111,993 -0- 305 20,000
President
Paul S. Siebenmorgen 1998 135,239 29,541 9,568 12,000
Executive Vice President 1997 112,538 24,998 10,200 -0-
1996 95,230 22,727 12,476 -0-
Walter L. Weldy 1998 108,623 23,470 8,818 6,000
Executive Vice President 1997 89,408 17,436 8,763 -0-
1996 73,534 11,425 10,534 -0-
Terry M. White 1998 103,898 18,487 5,891 12,000
Executive Vice President 1997 82,742 12,206 7,601 -0-
1996 69,750 10,749 10,275 -0-
(1) Mr. Kubacki was first employed by the Corporation and Bank in 1998
and accordingly no information is given with respect to his compensation
for 1997 and 1996.
(2) The amounts set forth in column (e) for Mr. Grant, Mr. Kubacki, Mr.
Siebenmorgen, Mr. Weldy and Mr. White include the following:
401(k) Plan matching contributions, including Supplemental 401(k), paid
by the Corporation($)
Mr. Grant Mr. Siebenmorgen Mr. Weldy Mr. White
1998 - 9,600* 8,114* 6,517* 5,195*
1997 - 19,798 8,440 6,706 6,690
1996 - 18,000 11,427 8,824 9,504
*1998 Supplemental 401(k) matching contributions not yet available.
7
OPTION GRANTS IN 1998
---------------------
Potential Realizable
Value At Assumed
Number of Percent of Annual Rates Of Stock
Securities Total Options Price Appreciation For
Underlying Granted To Exercise Option Term
Options Employees In Price Expiration -----------------------------
Name (#) 1998 ($/sh) Date 5%($) 10%($)
(a) (b) (c) (d) (e) (f) (g)
-------------------- ------------ ------------ ------------ ------------ ------------ ------------
R. Douglas Grant 6,000 3.21% 24.375 4/12/2008 91,976 233,085
Michael L. Kubacki 20,000 10.71% 23.000 6/28/2008 289,292 733,122
Paul S. Siebenmorgen 6,000 3.21% 24.375 4/12/2008 91,976 233,085
6,000 3.21% 27.500 5/10/2008 103,768 262,968
Walter L. Weldy 6,000 3.21% 24.375 4/12/2008 91,976 233,085
Terry M. White 6,000 3.21% 24.375 4/12/2008 91,976 233,085
6,000 3.21% 27.500 5/10/2008 103,768 262,968
AGGREGATED OPTION EXERCISES IN 1998
AND YEAR END OPTION VALUES
Shares Number of Securities
Acquired Value Underlying Value of
On Exercise Realized Unexercised Unexercised In the Money
Name (#) ($) Options At Year End Options At Year End
(a) (b) (c) (d) (e)
- ------------------------ ----------- ---------- ----------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
# # $ $
------------- ------------- ------------- -------------
R. Douglas Grant -0- -0- -0- 6,000 -0- -0-
Michael L. Kubacki -0- -0- -0- 20,000 -0- -0-
Paul S. Siebenmorgen -0- -0- -0- 12,000 -0- -0-
Walter L. Weldy -0- -0- -0- 6,000 -0- -0-
Terry M. White -0- -0- -0- 12,000 -0- -0-
8
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
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 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, Mr. Kubacki, Mr. Siebenmorgen, Mr. Weldy and Mr. White approximate
covered compensation under the plan. It is estimated that Mr. Grant, Mr.
Kubacki, Mr. Siebenmorgen, Mr. Weldy and Mr. White had 20, 1, 18, 8 and 6
years of credited service respectively at December 31, 1998.
COMPENSATION COMMITTEE INTERLOCKS
and
INSIDER PARTICIPATION
---------------------------------
During 1998, this Committee consisted of Mr. Fulmer, Mr. Grant, Mr.
Helvey, Mr. Kubacki 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, Chairman and
Chief Executive Officer of the Corporation, participated during 1998 in
establishing the salaries of all executive officers except his own. Likewise,
Mr. Kubacki, President, participated during 1998 in establishing the salaries
of all executive officers except his own and Mr. Grant's.
9
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 1998, the Corporation 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 the Corporation. 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. When establishing
the salary of executive officers other than Mr. Grant, Mr. Grant participates
and makes recommendations to the Committee. Likewise, Mr. Kubacki participates
in establishing the salaries of executive officers other than himself and Mr.
Grant. 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 LLP. 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 1998, as shown
in the Summary Compensation Table of the Proxy Statement, was based upon the
Board's satisfaction in 1997 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 and Mr. Kubacki's 1999 salaries.
Bonus
- -----
Executive officer bonuses, including Mr. Grant's and Mr. Kubacki'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 1998 review, the Committee
chose not to modify the Bonus Program or withhold payment for fiscal year
1998. The Corporation and Bank have 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.
10
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 bonuses and
contributions to the 401(k) Plan. The year end Return on Investment computed
on the January 1 shareholders' equity must equal or exceed 12% or 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 receive two (2) times the established
percentage for their bonuses and the Executive Vice Presidents receive one and
one half (1 1/2) times the established percentage for their bonuses. For 1998,
the Return on Investment established a 12.5% bonus payable in 1999. Bonuses
for officers receiving promotions during the year are prorated.
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 an established schedule based
upon the net earnings of the Corporation, before making any deductions for
employee incentive plans, expressed as a percentage of the preceding January 1
equity capital of the Corporation.
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 termination of employment 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 vesting provisions of the
Plan.
The matching contributions made to the Plan for 1998, 1997 and 1996 on
behalf of Mr. Grant, Mr. Siebenmorgen, Mr. Weldy and Mr. White 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
senior executive 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
officers who participate in this Supplemental 401(k) Plan have no interest in
the trust established under the plan, but are general creditors.
At the annual meeting held in April, 1998, the shareholders approved the
Lakeland Financial Corporation 1997 Share Incentive Plan (the "1997 Plan").
The purpose of the 1997 Plan is to enhance the long term financial performance
of the Corporation by (a) attracting and retaining executive and other key
employees of the Corporation and the Bank through incentive compensation
opportunity; (b) motivating such employees to further the long term goals of
the Corporation and the Bank; and (c) furthering the identity of interests of
participating employees with Corporation shareholders through opportunities
for increased employee ownership of the Corporation. During 1998, the
Compensation Committee recommended, and the Board of Directors approved, the
granting of options for a total of 195,145 shares to 128 employees and
directors. The number and terms of shares for which options were granted to
11
Mr. Grant, Mr. Kubacki, Mr. Siebenmorgen, Mr. Weldy and Mr. White during 1998
are shown in the Table of Option Grants in the 1998 Proxy Statement.
Approved by the Lakeland Financial Corporation Compensation Committee as
of December 31, 1998.
L. Craig Fulmer Jerry L. Helvey, Chairman George L. White
R. Douglas Grant Michael L. Kubacki
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
-------- ----------- --------- ---------
1/1/94 $ 100.00 $ 100.00 $ 100.00
12/31/94 135.16 102.54 104.99
12/31/95 163.72 129.15 136.18
12/31/96 243.97 161.85 169.23
12/31/97 393.64 266.21 207.00
12/31/98 305.39 251.74 291.96
* Assumes $100 invested on January 1, 1993 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.
12
DIRECTORS' COMPENSATION
-----------------------
During 1998, 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 $325.00 for each meeting of the Board attended and $325.00 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. 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. During 1998 each director who
was not a full time employee of the Corporation or the Bank was granted an
option to acquire 925 shares at the price of $28.00. The option is not
exercisable for 5 years, except in case of retirement or disability. Neither
Mr. Niemier nor Mr. Welch were directors on the date of the grants and as a
result did not receive any options during 1998.
INDEBTEDNESS OF MANAGEMENT
--------------------------
During 1998, 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 1998, Crowe, Chizek and Company LLP 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 1999. 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. A representative of
Crowe, Chizek and Company LLP 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 2000 must be received by the Corporation on or before
the 16th day of November, 1999, if such proposal is to be included in the
Proxy Statement and Form of Proxy pertaining to the 2000 Annual Meeting.
13
GENERAL
-------
ON YOUR WRITTEN REQUEST ADDRESSED TO SECRETARY, LAKELAND FINANCIAL
CORPORATION 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.
As of the date of this Proxy Statement, management knows of no matters to
be brought before the annual meeting other than the matters outlined in this
Proxy Statement. If, however, further business should properly be introduced
by others, proxy holders will act in accordance with their own best judgment.
Michael L. Kubacki R. Douglas Grant
- ------------------------------------- --------------------------------
Michael L. Kubacki, CEO and President R. Douglas Grant, Chairman
14
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, Michael L. Kubacki 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 5, 1999, at the annual meeting of shareholders on April 13, 1999, or
any adjournment thereof.
1. Election of Directors for all nominees listed below [ ]
Withhold authority to vote for all nominees listed below [ ]
Eddie Creighton, Michael L. Kubacki, M. Scott Welch, George L. White
Instruction: To withhold authority to vote for any individual nominee
write that nominee's name on the space provided below.
--------------------------------------------------------
2. 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 , 1999
- ------------------------ ------------------------ ----------
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.