SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
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Check the appropriate box:
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14a-6(e)(2)
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[ ] 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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LAKELAND FINANCIAL CORPORATION
P.O. Box 1387, Warsaw, IN 46580 (219) 267-6144
March 15, 2000
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
stockholders of Lakeland Financial Corporation to be held at 12:00 Noon (EST)
on April 11, 2000, at the Shrine Building located at the Kosciusko County
Fairgrounds in Warsaw, 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 the 1999 annual report to
shareholders for your review. At the meeting we shall report on operations and
the outlook for the year ahead.
Your board of directors has nominated four persons to serve as
directors, each of whom are incumbent directors. We recommend you vote your
shares for the director nominees.
We encourage you to attend the meeting in person. 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,
Michael L. Kubacki
(Michael L. Kubacki)
President and Chief Executive Officer
LAKELAND FINANCIAL CORPORATION
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD APRIL 11, 2000
To the shareholders:
The annual meeting of the shareholders of Lakeland Financial
Corporation will be held on Tuesday, April 11, 2000, at 12:00 Noon (EST) in
the Shrine Building located at the Kosciusko County Fairgrounds in Warsaw,
Indiana, for the following purposes:
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 and any adjournments or postponements of
the meeting.
Only shareholders of record on our books at the close of business on
February 22, 2000 will be entitled to vote at the annual meeting. In the event
there are not sufficient 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
R. Douglas Grant
(R. Douglas Grant)
Chairman of the Board
Warsaw, Indiana
March 15, 2000
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON. IT IS HOPED THAT YOU WILL BE ABLE TO ATTEND THE MEETING, AND IF YOU DO
YOU MAY VOTE YOUR STOCK IN PERSON IF YOU WISH. THE PROXY MAY BE REVOKED AT ANY
TIME PRIOR TO ITS EXERCISE.
LAKELAND FINANCIAL CORPORATION
202 East Center Street
Post Office Box 1387
Warsaw, Indiana 46581-1387
(219) 267-6144
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation
of proxies by the board of directors of Lakeland Financial for use at the
annual meeting of shareholders of Lakeland Financial to be held at the Shrine
Building located at the Kosciusko County Fairgrounds in Warsaw, Indiana on
Tuesday, April 11, 2000 at Noon (EST), or at any adjournments or postponements
of the meeting.
At the annual meeting, shareholders are being asked to consider and
vote upon the election of four directors and to conduct any other business
which is properly brought before the meeting.
The accompanying notice of meeting, proxy card and this proxy
statement are first being mailed to shareholders on or about March 15, 2000.
Certain of the information provided in the proxy statement relates to Lake
City Bank, our wholly owned subsidiary. We also own all of the common
securities of Lakeland Capital Trust, a Delaware business trust. Lakeland
Capital Trust was created for the issuance of trust preferred securities to
the public.
We will pay the total expense of this solicitation. In addition to
use of the mails, proxies may be solicited personally or by telephone or
telegraph by officers, directors and certain employees of Lakeland Financial
and Lake City Bank, who will not be specially compensated for such soliciting.
Voting Rights and Proxy Information
We have fixed the close of business on February 22, 2000, as the
record date for the determination of stockholders entitled to notice of, and
to vote at, the annual meeting. Our transfer books will not be closed between
the record date and the date of the annual meeting. The board of directors
hopes that all stockholders can be represented at the annual meeting. Whether
or not you expect to be present, please sign and return your proxy in the
enclosed self-addressed, stamped envelope. Stockholders giving proxies retain
the right to revoke them at any time before they are voted by written notice
of revocation to the corporate secretary and stockholders present at the
meeting may revoke their proxy and vote in person.
On February 22, 2000, we had 5,788,992 issued and outstanding shares
of common stock. For the election of directors and for all other matters to be
voted upon at the annual meeting, each share of common stock is entitled to
one vote. A majority of the outstanding shares of the common stock must be
present in person or represented by proxy to constitute a quorum for purposes
of the annual meeting. Abstentions and broker non-votes will be counted for
purposes of determining a quorum. Directors will be elected by a plurality of
the votes present in person or represented by proxy at the meeting and
entitled to vote. In all other matters, the affirmative vote of the majority
of shares of common stock present in person or represented by proxy at the
annual meeting and entitled to vote on the subject matter shall be required to
constitute stockholder approval. Abstentions will be treated as votes against
a proposal and broker non-votes will have no effect on the vote.
1
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 22, 2000, 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.
Name of Individual or Amount and Nature of Percent
Number of Individuals in Group Beneficial Ownership(1) of Class
- ------------------------------ ----------------------- --------
5% Stockholders
Lakeland Financial Corporation 645,128(2) 11.14%
401(k) Plan
Post Office Box 1387
Warsaw, Indiana 46581-1387
Directors and Nominees
Eddie Creighton 140,160(3) 2.42%
Anna K. Duffin 3,000(4) *
L. Craig Fulmer 2,188 *
R. Douglas Grant 101,305(5) 1.75%
Jerry L. Helvey 64,848(6) 1.12%
Michael L. Kubacki 18,982(7) *
Allan J. Ludwig 19,492(8) *
Charles E. Niemier 2,000 *
Richard L. Pletcher 1,628(9) *
Terry L. Tucker 5,280 *
M. Scott Welch 850 *
George L. White 2,640(10) *
Other Named Executive Officers
Paul S. Siebenmorgen 32,820(11) *
Walter L. Weldy 10,628 *
Terry M. White 625 *
All directors and executive
officers as a group
(18 persons) 462,884(12) 8.00%
*Indicates less than one percent.
2
(1) 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. These amounts do not include any shares held in the
directors deferred compensation plan.
(2) 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 voting and 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.
(3) Includes 112,172 shares held by CB Farms, LLC, as to which Mr.
Creighton shares voting and investment power; 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.
(4) All of which shares Mrs. Duffin owns jointly with her husband and
shares voting and investment power.
(5) This includes all shares which have been allocated to Mr. Grant under
the 401(k) plan through December 31, 1999 and for all prior years.
(6) Includes 50,620 shares held individually by Mr. Helvey's wife, as to
which shares he disclaims any beneficial interest.
(7) Includes 10 shares held jointly with Mr. Kubacki's daughter, as to
which shares he disclaims any beneficial interest.
(8) Includes 15,492 shares held by Ludwig, Inc., as to which shares Mr.
Ludwig exercises voting and investment power; 2,000 shares held by
Mr. Ludwig's individual retirement account, as to which shares he
exercises voting and investment power; and 2,000 shares held by Mr.
Ludwig's wife's retirement account, as to which shares Mr. Ludwig
disclaims any beneficial interest.
(9) Includes 664 shares held by Mr. Pletcher's individual retirement
account. Also included are 664 shares held by Mr. Pletcher's wife's
individual retirement account, with respect to which shares Mr.
Pletcher disclaims any beneficial interest.
(10) Includes 2,420 shares held jointly with Mr. White's wife, with whom he
shares voting and investment power.
(11) Mr. Siebenmorgen resigned as executive vice president, effective
February 25, 2000.
(12) This includes shares which have been allocated to executive officers
under the 401(k) plan through December 31, 1999 and all prior years.
ELECTION OF DIRECTORS
At the annual meeting to be held on April 11, 2000, shareholders will
be entitled to elect four directors for a term expiring in 2003. The directors
are divided into three classes 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 the other persons whose terms of office will continue after
the meeting, including age, year first elected 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 2003. We recommend that shareholders vote FOR each
of the nominees for director.
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NOMINEES
Name Director Positions with the Lakeland
(Age) Since(1) Financial and Lake City Bank
- ----- -------- ----------------------------
Term Expires 2003
R. Douglas Grant 1980 Chairman of the Board and Director of Lakeland
(Age 66) Financial and Lake City Bank
Jerry L. Helvey 1974 Director of Lakeland Financial and Lake City Bank
(Age 66)
Allan J. Ludwig 1996 Director of Lakeland Financial and Lake City Bank
(Age 61)
Richard L. Pletcher 1992 Director of Lakeland Financial and Lake City Bank
(Age 58)
CONTINUING DIRECTORS
Term Expires 2001
Anna K. Duffin 1994 Director of Lakeland Financial and Lake City Bank
(Age 66)
L. Craig Fulmer 1993 Director of Lakeland Financial and Lake City Bank
(Age 57)
Charles E. Niemier 1998 Director of Lakeland Financial and Lake City Bank
(Age 44)
Terry L. Tucker 1988 Director of Lakeland Financial and Lake City Bank
(Age 59)
Term Expires 2002
Eddie Creighton 1970 Director of Lakeland Financial and Lake City Bank
(Age 67)
Michael L. Kubacki 1998 President, Chief Executive Officer and Director
(Age 48) of Lakeland Financial and Lake City Bank
M. Scott Welch 1998 Director of Lakeland Financial and Lake City Bank
(Age 39)
George L. White 1984 Director of Lakeland Financial and Lake City Bank
(Age 67)
(1) Includes service as a director of Lake City Bank. Messrs. Grant,
Helvey, Creighton and White have served in this capacity since the
formation of Lakeland Financial in 1984.
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All of our 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 directors, executive
officers or any other person pursuant to which any of our directors or
executive officers have been selected for their respective positions. No
member of the board of directors or executive officer is related to any other
member of the board of directors or executive officer. 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 for Mr. Fulmer, who is a director of Starcraft Corporation and
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. Creighton is a former partner and 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, as well as the
production and sale of other agricultural and food products.
Mrs. Duffin is active in civic affairs in the Goshen, Indiana area.
Mr. Fulmer is chairman of Heritage Financial Group, Inc., a real
estate investment and management company based in Elkhart, Indiana.
Mr. Grant presently serves as chairman of the board of directors of
Lakeland Financial and Lake City Bank, positions which he has held since 1993.
Prior to January 1999, he also served as president and chief executive officer
of Lakeland Financial and Lake City Bank.
Mr. Helvey is president of Helvey & Associates, Inc., a group of
collection agencies.
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 presently 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.
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. 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.
Mr. White is former president of United Telephone Company of Indiana,
Inc.
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In addition, the following individuals serve as executive officers of
Lakeland Financial:
Robert C. Condon, age 59, 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. Prior to that he was
vice president and division head for Trust Division A for The Northern Trust
Company in Chicago.
D. Jean Northenor, age 67, presently serves as an executive vice
president of Lakeland Financial and Lake City Bank, positions she has held
since 1998. She first joined Lake City Bank as the marketing officer in 1983.
Charles D. Smith, age 55, presently serves as a senior vice president
of Lakeland Financial and Lake City Bank, positions he has held since 1992. He
has served as an officer of Lake City Bank since 1983.
Walter L. Weldy, age 59, is presently an executive vice president of
Lakeland Financial and Lake City Bank, positions he has held since 1996. He
first joined Lake City Bank as a senior vice president in 1990.
Terry M. White, age 42, presently serves as an executive vice
president and secretary of Lakeland Financial and Lake City Bank, positions he
has held since 1997. He first joined Lake City Bank as a senior vice president
in 1993.
Compliance With Section 16(a)
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
1999, we are not aware that any of our directors, executive officers or 10%
stockholders failed to comply with the filing requirements of Section 16(a)
during 1999.
Board of Directors and Committees of the Board
Our board of directors held twelve regularly scheduled meetings
during 1999. The board of directors has, in addition to other committees, an
audit committee and a compensation committee. There is no nominating committee
as the full board acts on nominations. All members of our board of directors
also serve as members of the board of directors of Lake City Bank. During
1999, no director attended less than 75% of the total number of meetings they
were eligible to attend, except Messrs. Helvey, Ludwig, Niemier and Welch.
The audit committee, comprised of Anna K. Duffin, Richard L. Pletcher,
Terry L. Tucker, M. Scott Welch and George L. White, held eleven meetings
during 1999. None of the members of the audit committee are employed by us or
Lake City Bank. The functions performed by the audit committee include:
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- making recommendations to the board of directors with respect to
selection of our 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 our 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 two
meetings during 1999. The functions performed by the compensation committee
include making recommendations to the full board of directors with respect to
officers' salaries and setting awards in accordance with our benefit plans.
EXECUTIVE COMPENSATION
The following table shows the compensation earned for the last three
fiscal years by the chief executive officer and our executive officers whose
1999 salary and bonus exceeded $100,000:
7
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------------------
Long Term
Compensation
Annual Compensation Awards
----------------------------------- ------------------
(a) (b) (c) (d) (g) (i)
Securities
Underlying All Other
Name and Options/SARs Compensation
Principal Position Year Salary($) Bonus($) (#) ($)(3)
- ------------------------------- ---------- -------------------- -------------- ------------------ ------------------
R. Douglas Grant(1) 1999 $ 172,884 $ 72,500 6,000 $ 94,581(4)
Chairman of the Board and 1998 301,154 166,000 6,000 18,622
Chief Executive Officer 1997 260,000 73,500 --- 25,090
Michael L. Kubacki(2) 1999 $ 237,500 $ 28,125 10,000 $ 7,616
President and Chief Executive 1998 111,993 --- 20,000 305
Officer
Paul S. Siebenmorgen(5) 1999 $ 140,230 $ 24,418 4,000 $ 8,541
Executive Vice President 1998 135,239 29,541 12,000 9,568
1997 112,538 24,998 --- 10,200
Walter L. Weldy 1999 $ 110,600 $ 19,612 4,000 $ 6,879
Executive Vice President 1998 108,623 23,470 6,000 8,818
1997 89,408 17,436 --- 8,763
Terry M. White 1999 $ 108,050 $ 18,759 4,000 $ 5,142
Executive Vice President 1998 103,898 18,487 12,000 5,891
1997 82,742 12,206 --- 7,601
8
(1) Mr. Grant resigned as chief executive officer of Lakeland Financial on
January 1, 1999. He still is the chairman of the board.
(2) Mr. Kubacki became chief executive officer of Lakeland Financial on
January 1, 1999. Mr. Kubacki was first employed by Lakeland Financial and
Lake City Bank in 1998. Accordingly, no information is given with
respect to his compensation for 1997.
(3) The amounts set forth in column (i) for Messrs. Grant, Kubacki,
Siebenmorgen, Weldy and White include the following:
401(k) plan matching contributions, including supplemental 401(k)
matching contributions, paid by Lakeland Financial
Mr. Grant Mr. Kubacki Mr. Siebenmorgen Mr. Weldy Mr. White
1999 - $ 7,166 $ 5,755 $ 6,310 $ 4,977 $ 4,488
1998 - $ 9,600 $ --- $ 8,114 $ 6,517 $ 5,195
1997 - $ 19,798 $ --- $ 8,440 $ 6,706 $ 6,690
(4) In connection with Mr. Grant's retirement, he received his company car
and other considerations, valued at $82,606. This amount is reflected in
column (i) in addition to the 401(k) matching contributions.
(5) Mr. Sienbenmorgen resigned as executive vice president, effective
February 25, 2000.
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The following table sets forth information concerning the number and
value of stock options granted in the last fiscal year to the individuals
named above in the summary compensation table:
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
- ----------------------------------------------------------------------------------------------------------------------
Potential realizable value
at assumed annual rates of
stock price appreciation
for option term
---------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options
Options Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#)(1) Fiscal Year ($/Sh) Date 5%($) 10%($)
- -------------------------- -------------- ---------------- ---------------- -------------- ------------- -------------
R. Douglas Grant 6,000 6.37% $ 19.4375 02/09/09 $ 73,345 $ 185,870
Michael L. Kubacki 10,000 10.62% $ 19.4375 02/09/09 $ 122,241 $ 309,784
Paul S. Siebenmorgen 4,000 4.25% $ 19.4375 02/09/09 $ 48,897 $ 123,913
Walter L. Weldy 4,000 4.25% $ 19.4375 02/09/09 $ 48,897 $ 123,913
Terry M. White 4,000 4.25% $ 19.4375 02/09/09 $ 48,897 $ 123,913
(1) All options will vest five years after grant.
10
The following table sets forth information concerning the exercisable
and nonexercisable stock options at December 31, 1999 held by the individuals
named in the summary compensation table:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTIONS VALUES
- --------------------------------------------------------------------------------------------------------------------------
Number of Securities
Shares Underlying Unexercised Options Value of Unexercised
Acquired on at FY-End In-the-Money Options at
Name Exercise Value Realized (#)(d) FY-End ($)(e)
(a) (#)(b) ($)(c) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------- --------------- --------------- -------------- ----------------- ------------- ----------------
R. Douglas Grant --- $ --- --- 12,000 $ --- $ ---
Michael L. Kubacki --- $ --- --- 30,000 $ --- $ ---
Paul S. Siebenmorgen --- $ --- --- 16,000 $ --- $ ---
Walter L. Weldy --- $ --- --- 10,000 $ --- $ ---
Terry M. White --- $ --- --- 16,000 $ --- $ ---
Pension Plan Table
Our defined benefit retirement plan covers all employees over 21
years of age with more than one year of service. We recently amended the plan,
effective March 31, 2000, to freeze the accrual of benefits to participants
under the plan. As a result of this amendment, employees who are not
participants of the plan as of March 31, 2000 will not be able to become
participants under the plan. In addition, all benefits previously accrued
under the plan by participants will be frozen in place, and continuing
employment with us will not increase the employee's benefits upon retirement.
Normal retirement age is 65. Participants receive credit for 2-1/2% of their
average salary for each year up to 20 years service or through March 31, 2000,
whichever occurs first.
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.
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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's retirement plan, which is a non-qualified plan payable as a general
creditor of Lakeland Financial. This plan was created in1989 when changes to
the defined pension plan could have 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. All benefits as of this date are frozen, and
continuing employment will not increase an employee's benefits under the plan.
The salaries and bonuses shown above in the summary compensation
table for Messrs. Grant, Kubacki, Siebenmorgen, Weldy and White approximate
covered compensation under the plan. It is estimated that Messrs. Grant,
Kubacki, Siebenmorgen, Weldy and White had 21, 2, 19, 9 and 7 years of
credited service, respectively, at December 31, 1999.
Compensation Committee Interlocks and Insider Participation
During 1999, the compensation committee consisted of Messrs. Fulmer,
Grant, Helvey, Kubacki and White. Inside directors (full-time employees of
Lakeland Financial) serving on the compensation committee leave the meeting
during the time the committee is deliberating on that individual's
compensation or that of the individual's superiors. Inside directors do
participate in evaluating and establishing the salaries of other executive
officers. Mr. Grant, the chairman of Lakeland Financial, participated during
1999 in establishing the salaries of all executive officers except his own.
Likewise, Mr. Kubacki, president and chief executive officer of Lakeland
Financial, participated during 1999 in establishing the salaries of all
executive officers except his own and Mr. Grant.
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.
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The compensation committee has furnished the following report on
executive compensation.
General
We annually review executive officer compensation in December with
the new compensation to become effective on the following January 1. 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. During 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
Executive officer salaries are 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 participated and made recommendations to the
committee. Likewise, Mr. Kubacki participated in establishing the salaries of
executive officers other than himself and Mr. Grant. This policy will continue
as Mr. Kubacki has replaced Mr. Grant as chief executive officer.
The committee reviews the annual survey of financial institution
salaries paid by Indiana banks published by the Indiana Banker's Association
as well as 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 our overall profitability is a factor in
establishing executive officer salaries, no specific weight is given to
financial performance. Likewise, consideration is given to the performance of
our common stock during the preceding several years, but no specific weight is
given to this factor. The salary paid to Mr. Grant, as chairman, during 1999,
as shown in the summary compensation table above, was based upon the
committee's satisfaction in 1998 with our overall profitability and
performance of our common stock and retaining his services for future years,
without any specific reference being made to qualitative or quantitative
performance factors.
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. This program applies 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 is designed to encourage the executive
officers to maximize the annual profits of Lake City Bank with an incentive to
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conserve capital. During the December 1999 review, the committee chose not to
modify the bonus program or withhold payment for fiscal year 1999. We 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 Lake City Bank's investment securities portfolio at
year end. For purposes of the bonus program, unrealized gains and losses in
the investment securities portfolio of Lake City Bank are excluded from equity
capital.
Bonuses are computed on our 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 shareholders' equity as of January 1 of each year must equal or
exceed 12% in order for a bonus to be paid that year. 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 our president and
chief executive officer would receive two times the established percentage for
their bonuses and the executive vice presidents receive one and one half times
the established percentage for their bonuses. For 1999, the return on
investment established a 10% bonus payable in 1999. Bonuses for officers
receiving promotions during the year are prorated.
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:
- attracting and retaining executive and other key employees of
Lakeland Financial and Lake City Bank through incentive compensation
opportunities;
- motivating such employees to further the long term goals of Lakeland
Financial and the Lake City Bank; and
- furthering the identity of interests of participating employees with
our shareholders through opportunities for increased employee
ownership of Lakeland Financial.
During 1999, the compensation committee recommended, and the board of
directors approved, the granting of options for a total of 113,910 shares to
121 employees and directors. The number and terms of shares for which options
were granted to Messrs. Grant, Kubacki, Siebenmorgen, Weldy and White during
1999 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. Under the
plan, employees are eligible to redirect up to 9% of their regular basic
compensation into a tax-deferred trust. We make matching contributions on 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
contributions upon retirement, 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.
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The plan formerly allowed participants to invest in our common stock
through the plan. Effective December 31, 1999 the plan no longer allows this
investment option. However, any stock already purchased and allocated to a
participant's account will remain in that account, unless otherwise directed
by the participant. All of our stock held by the trust was purchased by
independent agents in open market transactions and voting power is exercised
by the individual participants.
Approved by the Lakeland Financial compensation committee as of December 31,
1999.
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
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, the Nasdaq Market Index and two peer group indexes.
The following table was presented as a graph in the proxy material
mailed to the shareholders.
Lakeland
Financial Peer Peer
Date Corporation Group(1) Group(2) NASDAQ
-------- ----------- --------- --------- ---------
1/1/95 $ 100.00 100.00 100.00 100.00
12/31/95 121.13 124.98 128.93 129.71
12/31/96 180.50 156.73 156.71 161.18
12/31/97 291.24 252.17 258.23 197.16
12/31/98 225.95 241.88 254.86 278.08
12/31/99 186.77 210.92 228.76 490.46
* Assumes $100 invested on January 1, 1994 and that all dividends were
reinvested.
Included in this graph are two peer groups. One was chosen in 1993
based on Lakeland Financial's asset size and consisted of all banks in the
United States with total assets of less than one billion dollars whose equity
securities were traded on an exchange for the last five consecutive years. The
other was chosen in 1999 to recognize our growth and consisted of all banks in
the United States with total assets of one billion dollars or more but less
than three billion dollars whose equity securities were traded on an exchange
for the last five consecutive years.
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DIRECTORS' COMPENSATION
During 1999, directors who were not full time employees of Lakeland
Financial or Lake City Bank, were paid an annual fee of $6,000 and an
additional $325 for each board meeting attended and $325 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 Lakeland Financial or Lake City Bank) are not paid a director's fee.
Directors are permitted to defer receipt of their directors' fees and earn a
rate of return based upon Lake City Bank's six-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 our stock
rather than the certificate of deposit rate. 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.
During 1999 each director who was not a full time employee of Lakeland
Financial or Lake City Bank was granted an option to acquire 11,750 shares at
the price of $19.4375. The option is not exercisable for 5 years, except in
the case of retirement or disability.
INDEBTEDNESS OF MANAGEMENT
During 1999, 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 collectability, or present other unfavorable
features, than loans to other borrowers.
INDEPENDENT PUBLIC ACCOUNTANTS
During 1999, Crowe, Chizek and Company LLP again served as our
independent public accountants. As of this date no determination has been made
as to selection of independent public accountants for the 2000 fiscal year. As
a matter of practice for the past several years, we 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.
PROPOSALS OF SHAREHOLDERS
Any proposal which any shareholder may intend to present at the
annual meeting to be held in 2001 must be received by us on or before November
10, 2000, if such proposal is to be included in the proxy statement and form
of proxy pertaining to the 2001 annual meeting.
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GENERAL
On your written request addressed to the Corporate 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, we know 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
President and Chief Executive Officer
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APPENDIX
FORM OF PROXY
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 11, 2000
The undersigned hereby appoints R. Douglas Grant 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
stockholders, to be held at the Shrine Building located at the Kosciusko
County Fairgrounds in Warsaw, Indiana, on the 11th day of April, 2000, at Noon
(EST), 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 2003: R. Douglas Grant, Jerry L. Helvey, Allan J. Ludwig
and Richard L. Pletcher
2. 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 STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES LISTED UNDER PROPOSAL 1.
Dated: , 2000
--------------------------------
Signature(s)
---------------------------------
---------------------------------
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.