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 Rule 14a-11(c) or Rule
14a-12
THE PEOPLES HOLDING COMPANY
---------------------------------------------------
(Name of Registrant as Specified in its Charter)
THE PEOPLES HOLDING COMPANY
P. O. BOX 709
TUPELO, MISSISSIPPI 38802-0709
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders of The
Peoples Holding Company (the "Company") will be held at the principal office of
The Peoples Bank & Trust Company at 209 Troy Street, Tupelo, Mississippi, on
April 17, 2001, at 2:00 p.m., CDT, for the following purposes:
(1) To elect as members of the Board of Directors for
the terms specified the five (5) nominees presented
in the proxy material;
(2) To ratify the appointment of the independent auditors
for 2001; and
(3) To transact such other business as properly may come
before said meeting.
Information regarding the matters to be acted upon at the meeting is
contained in the Proxy Statement accompanying this Notice.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ E. Robinson McGraw
March 19, 2001 -------------------------------------
E. Robinson McGraw
President and Chief Executive Officer
IMPORTANT
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE MARK,
SIGN, DATE, AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED. IT REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
THE PEOPLES HOLDING COMPANY
PROXY STATEMENT
MARCH 19, 2001
INTRODUCTION
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of The Peoples Holding Company (the "Company") for use at the Annual
Meeting of Stockholders to be held on April 17, 2001, and any adjournments
thereof. The time and place of the meeting is set forth in the accompanying
Notice of Meeting. All expenses of preparing, printing and mailing the Proxy and
all materials used in the solicitation thereof will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by personal interview
and telephone by directors, officers and other employees of the Company, with
none receiving additional compensation for their services. This Proxy Statement
and the accompanying Proxy are first being sent or given to Stockholders of the
Company on or about March 19, 2001.
PURPOSE OF THE MEETING
The annual meeting will be held for the purpose of:
1. Electing five members of the Board of Directors of the Company
for terms specified;
2. Voting on independent auditors for the Company for the current
year;
3. Transacting such other matters as properly may come before
the meeting.
VOTES REQUIRED FOR APPROVALS
As of February 16, 2001, the Company had issued 6,212,284 and had
outstanding 6,048,500 shares of Common Stock, par value of $5.00 per share,
which is the only class of stock outstanding. Only the holders of record of
Common Stock of the Company at the close of business on March 15, 2001, are
entitled to notice of and vote on the matters to come before the Annual Meeting
of Stockholders or any adjournment thereof.
Presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock of the Company entitled to vote at the Annual
Meeting is necessary to constitute a quorum at the Meeting or any adjournment
thereof.
A stockholder is entitled to one (1) vote, in person or by proxy, at the
Annual Meeting for each share of Common Stock of the Company held of record in
his or her name at the close of business on the record date, March 15, 2001.
Affirmative vote of a majority of the outstanding shares of Common Stock of
the Company is required to elect directors. Each shareholder shall have the
right to vote, allocable to the number of shares owned by him, for as many
persons as there are directors to be elected, or to cumulate such votes and give
one candidate as many votes as the number of directors multiplied by the number
of votes allocable to his share equal, or to distribute such votes, on the same
principle, among as many candidates as he shall see fit, without any conditions
precedent to such action.
Affirmative vote of a majority of outstanding shares of Common Stock of the
Company is required to approve independent auditors.
Stockholders may designate a person or persons other than those named in
the enclosed Proxy to vote their shares at the Annual Meeting or any adjournment
thereof. As to any other matter or business which may be brought before the
Annual Meeting or any adjournment thereof, a vote may be cast pursuant to the
accompanying Proxy in accordance with the judgment of the person or persons
voting the same, but the management and Board of the Company do not know of any
other matters or business to come before the meeting. Any stockholder has the
power to vote his or her Proxy at any time, insofar as it has not been
exercised, by written notice or subsequently dated Proxy, received by the
Company, or by oral revocation given by the stockholder in person at the Annual
Meeting or any adjournment thereof.
PRINCIPAL HOLDERS OF VOTING SECURITY
The Company has only Common Stock outstanding and as of February 16, 2001,
the Company had 2,745 stockholders of record. To the knowledge of management of
the Company, no stockholder owns beneficially more than five (5) percent of the
Company's outstanding Common Stock. As of February 16, 2001, policy making
officers and directors as a group beneficially owned, directly and indirectly, a
total of three hundred thirty-five thousand, two hundred and sixty (335,260)
shares, or five and fifty-four hundredths percent (5.54%) of total shares of
Common Stock outstanding.
ELECTION OF DIRECTORS
The charter of incorporation and bylaws of the Company provide for a board
of not less than seven nor more than twenty members to be determined annually by
the affirmative vote of a majority of the entire Board of Directors of the
Company. The number of directors is currently fixed at fifteen, and the Board
of Directors has voted to fix the number of members at fifteen for the ensuing
year. The Board of Directors is divided into three classes having staggered
terms. The five directors whose terms end in 2001 have been nominated for
re-election to another term.
The five persons named below will be nominated for election to serve terms
for the period indicated below and until their successors are duly elected and
qualified. It is the intention of the persons named in the Proxy to vote for the
election of the five nominees. The following table sets forth the name, age,
principal occupation or position, periods of service as a director, number of
shares of Company stock beneficially owned and certain other information as to
said directors and nominees:
NAME; AGE; SHARES OF COMPANY STOCK
POSITION; and OWNED DIRECTLY and
PRINCIPAL DIRECTOR (INDIRECTLY) and
OCCUPATION SINCE (1) PERCENTAGE OF TOTAL (2)
NOMINEES FOR THREE-YEAR TERMS ENDING IN 2004:
John M. Creekmore; 45; 1997 1,336 *
attorney (251)
E. Robinson McGraw; 54; 2000 3,526 *
President and Chief Executive (458)
Officer; The Peoples
Holding Company and
The Peoples Bank and
Trust Company
John W. Smith; 65; 1978 7,183 *
Vice Chairman of the Board, (7,826)
retired President and Chief
Executive Officer; The
Peoples Holding Company and
The Peoples Bank and
Trust Company
Robert H. Weaver; 69; 1980 82,367 1.36%
retired attorney; Watkins (0) (3)
Ludlam Winter & Stennis, P.A.
J. Larry Young; 62; 1982 3,141 *
retired pharmacist, (262)
formerly partner;
Ramsey-Young Pharmacy
DIRECTORS WITH TERMS ENDING IN 2003:
George H. Booth, II; 47; 1994 4,310 *
President; Tupelo (2,025)
Hardware Company (whole-
sale and retail hardware)
Frank B. Brooks; 57; 1989 13,460 *
farmer (710)
Robert C. Leake; 68; 1973 18,249 *
President; Leake & (5,772)
Goodlett, Inc. (building
supplies and contractors);
Chairman of the Board of
Directors; The Peoples
Holding Company and The
Peoples Bank and Trust Company
NAME; AGE; SHARES OF COMPANY STOCK
POSITION; and OWNED DIRECTLY and
PRINCIPAL DIRECTOR (INDIRECTLY) and
OCCUPATION SINCE (1) PERCENTAGE OF TOTAL (2)
C. Larry Michael; 55; 1997 6,240 *
President; Transport Trailer (0)
Service, Inc., Rent-A-Box, Inc.,
and Precision Machine and Metal
Fabrication, Inc.
J. Heywood Washburn; 70; 1982 26,500 *
self-employed, investor (24,000)
DIRECTORS WITH TERMS ENDING IN 2002:
William M. Beasley; 49; 1989 25,344 *
attorney; Phelps (4,521)
Dunbar, LLP
Marshall H. Dickerson; 51; 1997 4,661 *
owner and manager; (0)
Dickerson Furniture Company
Eugene B. Gifford, Jr.; 66; 1987 41,750 *
attorney; Gifford, Allred (18,511)
and Tennison
J. Niles McNeel; 54; 1999 12,626 *
attorney; McNeel and (5,804)
Ballard
H. Joe Trulove; 63; 1999 14,427 *
Senior Vice President; (0)
York Casket Company;
formerly President; West
Point Casket Company
(1) The Company was formed in 1982. Dates stated for years prior to 1982
indicate the first year of service as a director of The Peoples Bank and Trust
Company. Persons who were serving as directors of The Peoples Bank and Trust
Company in 1982 also became directors of the Company at that time.
(2) Less than 1% ownership is marked with an asterisk (*).
(3) Excludes 10,872 shares owned by his wife for which Mr. Weaver disclaims
beneficial ownership.
All of the directors and nominees for the terms listed above presently
serve on both the Board of Directors of the Company and of The Peoples Bank and
Trust Company. All shares of the Bank are owned by the Company.
COMPENSATION, MEETINGS AND COMMITTEES OF
THE BOARD OF DIRECTORS
Compensation of Directors. Directors who are officers of the Company
receive no additional compensation for their service as directors. The Board of
Directors fixes the compensation for outside directors and currently, outside
directors are paid a monthly fee of $300.00 plus an additional monthly fee of
$250.00 for each regular board meeting they attend. Directors are also paid an
additional fee of $250.00 for each committee meeting or special called board
meeting which they attend. The Chairman of the Board is paid $1,833.33 per month
plus a fee of $250.00 for each committee meeting which he attends.
Meetings and Attendance. The Board of Directors of the Company met nine
times during 2000. No director attended less than 75% of the aggregate of the
total number of meetings held by the Board of Directors and the total number of
meetings held by all committees of the Board on which they served. The Board of
Directors of the Bank met thirteen times during 2000.
Executive Committee. The Executive Committee has charge over all matters
under the direction and control of the Board of Directors which may require
attention between regular meetings of the Board of Directors. The members of the
Executive Committee are Robert C. Leake, Chairman; William M. Beasley; Eugene B.
Gifford, Jr.; E. Robinson McGraw; Robert H. Weaver; and J. Larry Young. The
committee met ten times during 2000 with no member attending less than 75% of
the meetings.
The Board of Directors of the Company performs the functions of the
Compensation Committee, the Personnel Committee and the Nominating Committee.
Mr. McGraw does not attend or participate in board meetings when executive
salaries and other executive benefits are discussed and approved. The members of
the Board that make up the Compensation Committee and the Personnel Committee
are: William M. Beasley; George H. Booth, II; Frank B. Brooks; John M.
Creekmore; Marshall H. Dickerson; Eugene B. Gifford, Jr.; Robert C. Leake; E.
Robinson McGraw; J. Niles McNeel; C. Larry Michael; John W. Smith; H. Joe
Trulove; J. Heywood Washburn; Robert H. Weaver; and J. Larry Young.
Compensation Committee Interlocks and Insider Participation. E. Robinson
McGraw serves on the Board which acts as the Compensation Committee. He does not
attend or participate in any board meetings when executive salaries or other
executive benefits are discussed and approved.
Audit Committee. The Audit Committee of the Board of Directors of the Bank
also functions as the Audit Committee of the Company. The Audit Committee is
composed of independent directors for which information regarding the functions
performed by the Committee, its membership, and the number of meetings held
during the fiscal year, is set forth in the "Report of the Audit Committee,"
included in this annual proxy statement. The Audit Committee is governed by a
written charter approved by the Board of Directors. A copy of this charter is
included in Appendix A.
Report of the Audit Committee
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the auditors' independence from management and the
Company including the matters in the written disclosures required by the
Independence Standards Board and considered the compatibility of nonaudit
services with the auditors' independence.
The Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Committee
meets with the internal and independent auditors, with and without management
present, to discuss the results of their examinations, their evaluations of the
Company's internal controls, and the overall quality of the Company's financial
reporting. The Committee held eleven meetings during fiscal year 2000.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended December 31, 2000 for filing with the Securities and Exchange
Commission. The Committee and the Board have also recommended, subject to
shareholder approval, the selection of the Company's independent auditors.
Frank B. Brooks, Audit Committee Chair
Marshall H. Dickerson, Audit Committee Member
Eugene B. Gifford, Jr., Audit Committee Member
J. Niles McNeel, Audit Committee Member
J. Heywood Washburn, Audit Committee Member
March 1, 2001
EXECUTIVE OFFICERS
All executive officers of the Company are elected by the Board of Directors
and hold office for a term of one year and thereafter until their successors are
elected and qualified. The following information with respect to executive
officers of the Company is provided:
NAME AGE POSITION HELD AND YEAR FIRST ELECTED
E. Robinson McGraw 54 Director, President, and Chief Executive
Officer of the Company since November 2000.
Executive Vice President of the Bank from
September 1993 until October 2000; Director,
President, and Chief Executive Officer of the
Bank since November 2000.
The Administrative Committee of the Employee Stock Ownership Plan is
composed of three participants of the Plan, none of whom are executive officers
of the Company.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
NAME OTHER ALL
AND ANNUAL OTHER
PRINCIPAL COMPEN- COMPEN-
POSITIONS YEAR SALARY(1) BONUS(1) SATION SATION
John W. Smith 2000 $260,934 $ 0 (2) (3)
President and 1999 $259,231 $47,336 (2) (3)
CEO from August 1998 $240,000 $ 0 (2) (3)
1993 until
October 2000
E. Robinson McGraw 2000 $183,820 $ 0 (2) (3)
President and
CEO since
November 2000
The Policy- 2000 $655,130 $ 0 (3)
Making Officers 1999 $443,229 $47,336 (3)
and Directors 1998 $429,099 $ 0 (3)
as a Group
Compensation for the executive officers was set based on an evaluation of
the salary records of the peer group of bank holding companies in the state and
in the region and on the performance of the Company. John W. Smith retired from
the Company and Bank on October 31, 2000, but remains a director of both boards.
(1) Salary and bonus forms of compensation are composed of salary and
directors' fees paid currently and salary and directors' fees that were deferred
under either the Directors' Deferred Fee Plan or the Executive Deferred
Compensation Plan.
(2) No disclosure is necessary of the aggregate amount of personal benefits
if less than the lesser of $50,000.00 or 10% of the cash compensation disclosed
in the cash compensation table. Officers and employees use their personal
automobiles for bank business. During 2000, mileage was reimbursed at a rate of
$.325 per mile.
(3) See pages regarding Directors' Deferred Fee Plan and Executive Deferred
Compensation Plan.
COMPENSATION COMMITTEE
The Board of Directors of the Company performs the function of the
Compensation Committee. Mr. McGraw recuses himself during the board meeting when
the executive salaries and other executive benefits are discussed and approved.
The members of the Board that make up the Compensation Committee are: Robert C.
Leake, Chairman; William M. Beasley; George H. Booth, II; Frank B. Brooks; John
M. Creekmore; Marshall H. Dickerson; Eugene B. Gifford, Jr.; E. Robinson McGraw;
J. Niles McNeel; C. Larry Michael; John W. Smith; H. Joe Trulove; J. Heywood
Washburn; Robert H. Weaver; and J. Larry Young.
The Company has designed its Executive Compensation Program for the purpose
of attracting and retaining executives who will contribute to the Company's
success through achieving designated goals that have been approved by the Board.
The Company's Executive Compensation Program consists of a base salary and an
annual incentive.
The executive's base salary is set after a thorough review of his progress
toward achieving objectives identified in the Bank's strategic plan. Those
objectives include profits, growth in assets, cost control, quality of loan
portfolio, technology enhancements, customer service, and bank expansion.
Growth in assets was 4.2% while net charge-offs were up approximately
105.0% from the prior year and represented .72% of average loans. From a profits
point-of-view, earnings per share was $1.83, down 23.1% from the prior year.
This decline reflects the variance from an after tax gain of approximately $2
million recognized during 1999 on the sale of our credit card portfolio as well
as the increase in net charge-offs for 2000. While the Company's performance
fell short of expectations for 2000, the efficiency ratio improved from 63.8% in
1999 to 63.1% for 2000. Improvements in generating non-interest income resulted
in a 17.6% increase from the prior year, excluding the aforementioned gain from
the sale of the credit card portfolio. Also, a continued effort to contain
non-interest expenses resulted in a moderate growth of 2.4%.
In addition to the above factors, peer comparisons, through the
Mississippi Bankers Association survey, are made for comparable positions in the
relevant marketplace. The Committee reviews the executive's salary periodically,
and adjusts it to reflect changes in the market place as well as the
individual's performance and responsibilities.
The Company has an incentive program that determines the executive's
incentive based upon economic improvement from the prior year. This plan is
referred to as "Performance Compensation for Stakeholders." The executive's
participation in that program is the same as for all other employees.
Individuals must be employed with the Company through December 31 in order to
participate in the incentive program. In addition, the executive participates,
with nine (9) other executives of a subsidiary, in a management incentive which
is a part of the "Performance Compensation for Stakeholders" program. The
incentive compensation in both programs is based on economic standards for
growth, profitability, asset quality, and productivity. Each of these key
performance indicator categories is quantified in determining the economic
improvement achieved by the Company.
Under the incentive plan, a minimum threshold is set before an incentive
will be paid. The reward pool ranges from 32% to 41% of the Company's economic
improvement. Based on the Bank's performance in the key performance indicator
categories, participants in the incentive program, including the executive, did
not receive an incentive payment for 2000.
Other benefits that are provided to the executive include the participation
in a Company-wide medical plan, Money Purchase Pension Plan, 401(k), Deferred
Compensation Plan, and ESOP. (The Bank's Defined Benefit Pension Plan, in which
the executive participated, was curtailed by the Bank and benefit accruals were
frozen as of December 31, 1996). These benefits are offered to other employees
of the subsidiary, The Peoples Bank & Trust Company.
The Company has employment contracts with E. Robinson McGraw and six
executive vice-presidents of a subsidiary of the Company. These contracts will
not be effective unless there is a change of control of the Company and the
executive is terminated for other than cause or elects to terminate his
employment for good reason. A severance amount of up to 2.99 times the
executive's compensation could be payable as a result of such termination.
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
The Bank adopted an Employee Stock Ownership Plan effective as of January
1, 1981, and the Company adopted said plan effective as of November 1, 1983. The
Plan has subsequently been amended to comply with all law changes. This plan
covers all employees who have attained the age of twenty-one and have at least
one year of continuous service. The non-officer directors of the Company do not
participate in the Plan. The amount set aside is used to purchase shares of the
Company stock and other stock which is held in trust for the employees until
retirement, death, or break in service. The Bank did not make a contribution in
2000 for this Plan. The Plan presently owns 344,343 shares of the Common Stock
of the Company or 5.69% of the total outstanding shares. These shares are voted
by the employees participating in the Plan. Eligible employees participate in
the Plan based on their salary compared to total eligible salaries for the year.
Benefits are distributed in the form of shares held for the employee's account.
At the beginning of 2000, the Plan held 354,221 shares of Common Stock of
the Company. Between January 1, 2000, and December 31, 2000, 15,236 additional
shares were purchased less 25,114 shares distributed to retired and terminated
participants, bringing the total at the end of 2000 to 344,343 shares. All
Company stock purchased for the Plan was either purchased on the open market or
from terminated ESOP participants. John W. Smith was not eligible to participate
in the Plan. However, E. Robinson McGraw did participate in the Employee Stock
Ownership Plan, and like other participants in the Plan, he did not receive a
contribution for 2000.
DEFINED BENEFIT PENSION PLAN
The Defined Benefit Pension Plan of the Bank was adopted by the Company.
The non-officer directors of the Company do not participate in the Plan. The
Plan allows early and delayed retirement. The Company's funding policy is to
contribute annually an amount that falls within the minimum and maximum amount
determined by consulting actuaries in accordance with the Employee Retirement
Income Security Act of 1974. The Company did not make a contribution to the Plan
for 2000. Said evaluation is based on data concerning all employees
participating in the Plan as a group. The actuary does not compute and assign
any part of a total contribution as the current cost of retirement benefits for
a specific employee.
The Plan was curtailed as of December 31, 1996; accordingly, participant
accruals were frozen as of that date. John W. Smith's monthly pension benefit at
age 65 under the normal form of settlement was frozen at $5,822.65 per month for
ten years certain. E. Robinson McGraw's monthly pension benefit at age 65 under
the normal form of settlement was frozen at $3,645.60 per month for ten years
certain. For this reason the pension table included in past years is not
included this year. Effective January 1, 1997, a Money Purchase Pension Plan and
a 401(k) Plan were established to take the place of the Plan.
MONEY PURCHASE PENSION PLAN
The Company adopted a Money Purchase Pension Plan effective as of January
1, 1997. The Plan covers all employees who have attained the age of twenty-one
and have at least one year of continuous service. The non-officer directors of
the Company do not participate in this plan. The contribution amount is 5% of
total compensation plus an additional 5% of compensation in excess of the social
security wage base.
401(k) PLAN
The Company adopted a 401(k) Plan effective as of January 1, 1997. The Plan
covers all employees who have attained the age of twenty-one and have at least
one year of continuous service. The non-officer directors of the Company do not
participate in this plan. Employees may contribute up to 10% of their
compensation and the Company will match 100% of this contribution up to a
maximum of 3%.
INCENTIVE COMPENSATION PLAN
The Board of Directors of the Bank adopted an Incentive Compensation Plan
titled "Performance Compensation for Stakeholders," in 1997. Incentive benefits
are paid to eligible officers and employees after the end of each calendar year
and are determined based on established criteria relating to growth,
profitability, asset quality and productivity. Management sets key performance
indicators (KPI) for all applicable profit centers. The centers are rewarded for
improved economic benefit to the Bank. Based on the amount of improved economic
benefit derived from the center, incentive compensation is calculated as a
percentage of salary. The President is covered under this plan.
The "Performance Compensation for Stakeholders" covers all eligible
employees. An employee is credited for the pro-rata amount of time employed
during the year. Employees must be employed by the Bank at December 31 to be
eligible. Based on performance in the selected criteria, the Bank did not make a
contribution to this plan for 2000.
DIRECTORS' DEFERRED FEE PLAN AND EXECUTIVE DEFERRED COMPENSATION PLAN
On November 12, 1985, the Board of Directors adopted the Directors'
Deferred Fee Plan and the Executive Deferred Compensation Plan, hereinafter
referred to as Part A, and effective January 1, 1989, eligible directors and
employees were given the opportunity to defer additional compensation under Part
B of these Plans. Under the terms of the Plans, non-employee directors and
eligible employees may elect to defer, respectively, up to 100% of directors'
fees and retainers and up to 10% of salary, as approved from time to time by the
Administrative Committee of the Plans. Amounts deferred under Part A of the
Plans accrue interest annually at 130% of the Moody's Average Corporate Bond
Rate for the month of October preceding December 31 of each preceding year, and
amounts deferred under Part B of the Plans accrue interest annually at the
Moody's Average Corporate Bond Rate for the month of October preceding December
31 of each preceding year. If a Participant remains an employee or director
until his or her normal retirement date and shall then retire, the Company is
obligated to pay to the Participant an amount equal to the amount originally
deferred under Part A as annually compounded by 130% of the Moody's Average
Corporate Bond Rate and at the Moody's Average Corporate Bond Rate for the
amount originally deferred under Part B until the Participant's normal
retirement date. That result will then continue to be annually compounded by the
appropriate percentage (130% in the case of Part A and 100% in the case of Part
B) of the Moody's Average Corporate Bond Rate being used at the time of normal
retirement until the time the total retirement benefit, which will generally be
paid monthly over a fifteen-year period, is completed. If a Participant
terminates his or her employment prior to normal retirement, he or she will
receive a termination benefit upon the earlier of (i) the Participant's death or
(ii) attainment of his or her early retirement date or (iii) at the time said
Participant ceases his or her employment if such date is later than his or her
early retirement date. This benefit shall be determined by improving the
Participant's deferrals under Part A by the Moody's Average Corporate Bond Rate
and under Part B by 75% of the Moody's Average Corporate Bond Rate, each as
compounded on an annual basis if said Participant has been an employee or a
director for less than ten years or if employment is discontinued for cause and
by 130% and 100%, respectively, of the Moody's Average Corporate Bond Rate as
compounded on an annual basis if said Participant has been an employee or
director for ten or more years with such amount being computed from the date of
entry to the termination date of the Participant. This benefit will normally be
paid monthly over a fifteen-year period.
If a Participant shall die after he or she begins receiving a benefit but
before receiving 180 installments of his or her benefit, the amount will be
continued to the Participant's beneficiary until the balance of 180 monthly
payments have been made. If a Participant dies prior to the time he or she
begins receiving a benefit, his or her beneficiary is entitled to the higher of
the Pre-Retirement Death Benefit or the Participant's Accrued Benefit under the
Plan. This benefit will normally be paid monthly over a fifteen-year period.
The Plans are administered by an Administrative Committee which is
appointed by the Board, and the Committee has the authority to amend the Plans
or extend them for additional years, subject to the right of the Board to
terminate the Plans. The committee has approved deferrals under the Plans for
2000 at the rates provided for under the terms of the Plans. The Plans are
unfunded, and it is anticipated that they will result in no cost to the Company
over the term of the Plans because life insurance policies on the lives of the
Participants have been purchased in amounts estimated to be sufficient to pay
benefits under the Plans. The Company is both the owner and beneficiary of all
the insurance policies. On December 31, 2000, there were five directors,
fourteen officers, and five former employees participating in Part A of the Plan
and twelve directors, thirty-nine officers, and fourteen former employees
participating in Part B of the Plan. During 2000, $12,213 was paid from the
Directors' Deferred Fee Plan as widows' benefits of deceased directors and
$42,955 was paid in benefits to retired directors. In addition $48,674 was paid
in benefits to retired non-executive officers, and $45,691 was paid to the widow
of a deceased non-executive officer. Amounts deferred during 2000 by the
individuals in the groups specified in the cash compensation table are included
in the totals disclosed in the table. Amounts accrued during 2000, including
deferrals, were as follows: Mr. Smith, $9,864 in Part A and $9,568 in Part B;
Mr. McGraw, $5,039 in Part A and $10,468 in Part B; all other executives and
directors, including retired executives and directors, as a group, $79,874 in
Part A and $394,155 in Part B.
OTHER BENEFITS
The Company has adopted certain broad-based employee benefit plans in which
executive officers participate and certain other retirement, life and health
insurance plans providing customary personal benefits. The benefits under these
plans are not tied to company performance. The executive officer named in the
Summary Compensation Table participates in the other benefits described above.
PERFORMANCE GRAPH
This graph sets forth the cumulative total shareholder return (assuming
reinvestment of dividends) to The Peoples Holding Company's shareholders during
the five-year period ended December 31, 2000, as well as the American Stock
Exchange (AMEX) market index and an industry group of 59 Regional Southeast
Banks.
1995 1996 1997 1998 1999 2000
THE PEOPLES HOLDING CO. $100 $132.28 $190.15 $175.75 $161.41 $105.01
REGIONAL SOUTHEAST BANKS 100 127.65 220.89 210.37 174.97 178.63
AMERICAN STOCK EXCHANGE 100 105.52 126.97 125.25 156.15 154.23
Note: The graph above assumes $100 is invested on January 1, 1996, in The
Peoples Holding Company stock and an identical amount in the AMEX market index
and the peer group of bank holding companies, the Regional Southeast Banks
Industry Index.
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will not make nor endorse any predictions as to future stock
performance.
TRANSACTIONS WITH MANAGEMENT
The Bank has had in the past, and expects to have in the future, banking
transactions in the ordinary course of its business with directors, officers,
stockholders of the Company and their associates, on the same terms, including
interest rates and collateral on loans, as those prevailing at the same time for
comparable transactions with others, and do not involve more than normal risks
of collectibility or present other unfavorable features. Other than these
transactions, there were no material transactions with this group during 2000.
SHAREHOLDERS' PROPOSALS
Proposals of security holders intended to be presented at the next meeting
must be received by the Company for inclusion in the Company's Proxy Statement
and form of Proxy relating to that meeting by December 17, 2001.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP as independent
auditors of the Company for 2001. The Company has been advised by Ernst & Young
LLP that, to the best of its knowledge, no member of the firm has any direct or
material indirect financial interest in the Company or any of its subsidiaries,
nor has any such member had any connection during the past three years with the
Company or any of its subsidiaries in the capacity of promoter, underwriter,
voting trustee, director, officer or employee. Fees for the last annual audit
were $173,000 and all other fees were $75,000, including $35,000 for a computer
security review, and nonaudit services of $40,000.
A representative of Ernst & Young LLP will attend the Annual Meeting of
Stockholders and be available to respond to appropriate questions.
RELATIONSHIP WITH LEGAL COUNSEL
The Company and its subsidiary have retained the law firm of Mitchell,
Voge, Corban, and Morris as general counsel. W. P. Mitchell is a partner in said
law firm and is Chairman Emeritus of the Board of Directors of the Bank. The
Company and its subsidiary paid this firm fees and expenses totaling $252,813
during 2000.
During 2000, the Bank retained the firm of Edwards, Storey, Marshall and
Helveston as local counsel for the branch bank at West Point, Mississippi. A. M.
Edwards, Jr., a Director Emeritus, is a partner in said law firm. During 2000,
the Bank retained the firm of Gifford, Allred and Tennison as local counsel for
the branch bank at Booneville, Mississippi. Eugene B. Gifford, Jr. is a partner
in that law firm. During 2000, the Bank retained John M. Creekmore as local
counsel for the branch bank at Amory, Mississippi. During 2000, the Bank
retained McNeel and Ballard as local counsel for the branch bank at Louisville,
Mississippi. J. Niles McNeel is a partner in that law firm.
FINANCIAL STATEMENTS
THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO EACH STOCKHOLDER REQUESTING
SUCH A COPY OF ITS ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND THE SCHEDULES THEREOF REQUIRED TO BE FILED WITH THE COMMISSION
PURSUANT TO RULE 13 a-1 UNDER THE ACT FOR THE COMPANY'S MOST RECENT FISCAL YEAR,
TO A BENEFICIAL OWNER OF ITS SECURITIES UPON RECEIPT OF A WRITTEN REQUEST FROM
SUCH PERSON. EACH REQUEST MUST SET FORTH A GOOD FAITH REPRESENTATION THAT, AS OF
THE RECORD DATE FOR THE ANNUAL MEETING OF THE COMPANY'S SECURITY HOLDERS, THE
PERSON MAKING THE REQUEST WAS A BENEFICIAL OWNER OF SECURITIES ENTITLED TO VOTE
AT SUCH MEETING. REQUEST FOR THE ABOVE INFORMATION SHOULD BE DIRECTED TO: THE
PEOPLES BANK & TRUST COMPANY, P. O. BOX 709, TUPELO, MISSISSIPPI 38802-0709,
ATTENTION: STUART R. JOHNSON, EXECUTIVE VICE-PRESIDENT AND CHIEF FINANCIAL
OFFICER.
OTHER BUSINESS
Management at present knows of no other business to be brought before the
meeting. If further business is properly brought before the meeting or an
adjournment thereof, it is the intention of management to vote the accompanying
proxies in accordance with management's judgment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ E. Robinson McGraw
-------------------------------------
E. Robinson McGraw
President and Chief Executive Officer
APPENDIX A:
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
THE PEOPLES HOLDING COMPANY AND
THE PEOPLES BANK & TRUST COMPANY
I. Audit Committee Purpose
The Audit Committee is appointed by the Boards of Directors of The Peoples
Holding Company ("Company") and its subsidiary, The Peoples Bank & Trust
Company, to assist the board in fulfilling its oversight responsibilities. The
Audit Committee's primary duties and responsibilities are to:
- Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.
- Monitor the independence and performance of the Company's independent
auditors and internal auditing department.
- Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Company's expense, special legal, accounting,
or other consultants or experts it deems necessary in the performance of its
duties.
II. Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of the American Stock
Exchange. The Audit Committee shall be comprised of not less than three nor more
than five directors as determined by the Board, each of whom shall be
independent nonexecutive directors, free from any relationship that would
interfere with the exercise of his or her independent judgment. All members of
the Committee shall have a basic understanding of finance and accounting and be
able to read and understand fundamental financial statements; and at least one
member of the Committee shall have accounting or related financial management
expertise.
Audit Committee members shall be appointed by the Board. If an Audit
Committee Chairman is not designated or present, the members of the Committee
may designate a Chairman by majority vote of the Committee membership.
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. The Audit Committee Chairman shall prepare and/or
approve an agenda in advance of each meeting. The Committee should meet
privately in executive session at least annually with management, the director
of the internal auditing department, the independent auditors, and as a
committee to discuss any matters that the committee or each of these groups
believe should be discussed. In addition, the Committee, or at least its
Chairman, should communicate with management and the independent auditors
quarterly to review the Company's financial statements and significant findings
based upon the auditors' limited review procedures.
III. Audit Committee Responsibilities and Duties
Review Procedures
A. Review and reassess the adequacy of this Charter at least annually and
recommend any proposed changes to the Board for approval. Submit the
charter to the Board of Directors for approval and have the document
published at least every three years in accordance with SEC regulations.
B. Review the Company's annual audited financial statements prior to filing or
distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting and
auditing principles, practices, and judgments.
C. In consultation with the management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial
reporting processes and controls that could materially affect the Company's
financial statement. Discuss significant financial risk exposures and the
steps management has taken to monitor, control, and report such exposures.
Review material findings prepared by the independent auditors and the
internal auditing department together with management's responses,
including an update on the status of previous recommendations.
D. Review with financial management and the independent auditors the Company's
quarterly financial results prior to the release of earnings and/or the
Company's quarterly financial statements prior to filing or distribution.
Discuss any significant changes to the Company's accounting principles and
any items required to be communicated by the independent auditors in
accordance with Statement of Auditing Standards No. 61. The Chairman of the
Committee may represent the entire Audit Committee for purposes of this
review.
Independent Auditors
E. The independent auditors are ultimately accountable to the Audit Committee
and the Board of Directors. The Audit Committee shall review the
independence and performance of the auditors and annually recommend to the
Board of Directors the appointment of the independent auditors or approve
any discharge of auditors when circumstances warrant.
F. Approve the fees and other significant compensation to be paid to the
independent auditors. In addition, the Committee shall review and approve
requests for significant management consulting engagements to be performed
by the independent auditors' firm and be advised of any other significant
study undertaken at the request of management that is beyond the scope of
the audit engagement letter.
G. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships the auditors have with
the Company that could impair their independence and, if so determined by
the Committee, recommend that the Board take appropriate action to satisfy
itself of the independence of the auditor.
H. Review the independent auditors audit plan and engagement letter - discuss
scope, staffing, locations, reliance upon management, and internal audit
and general audit approach.
I. Prior to releasing the year-end earnings, discuss the results of the audit
with the independent auditors. Discuss certain matters required to be
communicated to audit committees in accordance with Statement of Auditing
Standards No. 61.
J. Consider the independent auditor's judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
K. Evaluate together with the Board the performance of the independent auditor
and, if so determined by the Audit Committee, recommend that the Board
replace the independent auditor.
Internal Audit Department and Legal Compliance
L. Review the budget, plan, changes in plan, activities, organizational
structure, and qualifications of the internal audit department, as needed.
M. Review the appointment, performance, and replacement of the senior internal
audit executive. The internal audit department shall be responsible to
senior management but have a direct reporting responsibility to the Board
of Directors through the Committee. Changes in the senior internal audit
executive shall be subject to Committee approval.
N. Review significant reports prepared by the internal audit department
together with management's response and follow up to these reports.
O. On at least an annual basis, review with the Company's legal counsel, any
legal matters that could have a material impact on the organization's
financial statements, the Company's compliance with applicable laws and
regulations, and material reports or inquiries received from regulators or
governmental agencies. Review all reports concerning any significant fraud
or regulatory noncompliance that occurs at the Company. This review should
include consideration of the internal controls that should be strengthened
to reduce the risk of a similar event in the future.
Other Audit Committee Responsibilities
P. Annually prepare a report to shareholders as required by the Securities and
Exchange Commission. The report should be included in the Company's annual
proxy statement.
Q. Perform any other activities consistent with this Charter, the Company's
by-laws, and governing law, as the Committee or the Board deems necessary
or appropriate.
R. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
S. Establish, review, and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
Advise the Board with respect to the Company's procedures regarding
compliance with this Code and with applicable laws and regulations.
T. Periodically perform self-assessment of audit committee performance.
U. Review financial and accounting personnel succession planning within the
company.
V. Annually review policies and procedures as well as audit results associated
with directors' and officers' expense accounts and perquisites. Annually
review a summary of directors' and officers' related party transactions and
potential conflicts of interest.
W. Obtain reports from management, the Company's senior internal auditing
executive and the independent auditor that the Company's
subsidiary/affiliated entities are in conformity with applicable legal
requirements and the Company's Code of Conduct.
X. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
- Any difficulties encountered in the course of the audit work, including
any restrictions on the scope of activities or access to required
information.
- Any changes required in the planned scope of the internal audit.
- The internal audit department responsibilities, budget and staffing.
Y. Meet at least annually with the chief executive officer, the senior
internal auditing executive, and the independent auditor in separate
executive sessions.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's Code of Conduct.
APPENDIX B:
THE PEOPLES HOLDING COMPANY PROXY
P. O. Box 709 THIS PROXY IS SOLICITED ON BEHALF OF
Tupelo, Mississippi 38802-0709 THE BOARD OF DIRECTORS
The undersigned hereby appoints George H. Booth, II,
Frank B. Brooks, Eugene B. Gifford, Jr., and J. Heywood
Washburn as Proxies, each with the power to appoint
his or her substitute, and hereby authorizes them to
represent and to vote, as designated below, all the
shares of Common Stock of The Peoples Holding Company
held on record by the undersigned on March 15, 2001,
at the Annual Meeting of Shareholders to be held on
April 17, 2001, or any adjournment thereof.
(1) Election of Directors.
NOMINEES:
FOR THREE-YEAR TERM ENDING IN 2004: John M. Creekmore; E. Robinson McGraw;
John W. Smith; Robert H. Weaver; and J. Larry Young.
VOTE FOR all nominees listed VOTE WITHHELD for all
(except as written to the nominees listed [_______]
contrary below) [_______]
(Instructions: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
- --------------------------------------------------------------
(2) To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for 2001.
FOR[___] AGAINST[___] ABSTAIN[___]
(3) In their discretion, the Proxies are authorized to vote such other
business as properly may come before 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 PROPOSALS 1 AND 2.
Please sign below exactly as your name appears on back of this Proxy card. When
shares are held by joint tenants, both should sign. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated ____________________, 2001 __________________________________
Signature
__________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.