LAKELAND FINANCIAL CORPORATION
P.O. Box 1387 Warsaw, Indiana 46580 (219)267-6144
March 14, 2001
Dear Shareholder:
On behalf of the board of directors and management of Lakeland
Financial Corporation, we cordially invite you to attend the annual meeting of
shareholders of Lakeland Financial Corporation to be held at 12:00 Noon (EST)
on April 10, 2001, 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 our 2000 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. Additionally, our management
has selected and recommends that you ratify the selection of Crowe, Chizek and
Company LLP to continue as our independent public accountants for the year
ending December 31, 2001. We recommend you vote your shares for the director
nominees and in favor of the proposal.
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 10, 2001
To the shareholders:
The annual meeting of the shareholders of Lakeland Financial
Corporation will be held on Tuesday, April 10, 2001, 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;
2. to approve the appointment of Crowe, Chizek and Company LLP
as independent public accountants for the fiscal year ending
December 31, 2001; and
3. to transact such other business as may properly be brought
before the meeting and any adjournments or postponements of
the meeting.
Only shareholders of record on our books at the close of business on
February 21, 2001 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 14, 2001
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. WE HOPE THAT YOU WILL BE ABLE TO ATTEND THE MEETING, AND IF YOU DO YOU
MAY VOTE YOUR STOCK IN PERSON IF YOU WISH. YOU MAY REVOKE THE PROXY 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 10, 2001 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, to ratify the appointment of our
accountants 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 14, 2001.
Certain of the information provided in the proxy statement relates to Lake
City Bank, our wholly owned banking subsidiary. We also own all of the common
securities of Lakeland Capital Trust, a Delaware business trust created for
the issuance of trust preferred securities to the public. Lake City Bank owns
all of the common stock of LCB Investments Limited, formed in 1999 to manage a
portion of the bank's securities portfolio.
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 21, 2001, as the
record date for the determination of shareholders 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 shareholders 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. Shareholders 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 shareholders present at the
meeting may revoke their proxy and vote in person.
On February 21, 2001, we had 5,779,932 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
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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 shareholder approval. Abstentions will be treated as votes against
a proposal and broker non-votes will have no effect on the vote.
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 21, 2001, 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% Shareholders
Lakeland Financial Corporation 646,911(2) 11.19%
401(k) Plan
Post Office Box 1387
Warsaw, Indiana 46581-1387
Directors and Nominees
Eddie Creighton 144,160(3) 2.49%
Anna K. Duffin 3,000(4) *
L. Craig Fulmer 3,614 *
R. Douglas Grant 93,645 1.69%
Jerry L. Helvey 70,483(5) 1.22%
Michael L. Kubacki 30,999(6) *
Allan J. Ludwig 27,492(7) *
Charles E. Niemier 2,581 *
D. Jean Northenor 32,054(8) *
Richard L. Pletcher 1,768(9) *
Steven D. Ross 300 *
Terry L. Tucker 5,280 *
M. Scott Welch 1,850 *
George L. White 2,640(10) *
2
Name of Individual or Amount and Nature of Percent
Number of Individuals in Group Beneficial Ownership(1) of Class
------------------------------ ----------------------- --------
Other Named Executive Officers
Charles D. Smith 26,121 *
Walter L. Weldy 11,128 *
Robert C. Condon 0 --
All directors and executive
officers as a group
(19 persons) 462,040(11) 7.99%
*Indicates less than one percent.
(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.
(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 and 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) Includes 56,255 shares held individually by Mr. Helvey's wife, as to
which shares he disclaims any beneficial interest.
(6) Includes 100 shares owned by each of Mr. Kubacki's minor son and
daughter, as to which shares he disclaims any beneficial interest.
(7) Includes 15,492 shares held by Ludwig, Inc., as to which Mr. Ludwig
exercises voting and investment power; 2,000 shares held by Ludwig
Investments, 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.
(8) Includes 475 shares held jointly with Ms. Northenor's husband, with
whom she shares voting and investment power.
(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) This includes shares which have been allocated to executive officers
under the 401(k) plan through December 31, 2000 and all prior years.
3
ELECTION OF DIRECTORS
Shareholders will be entitled to elect four directors for a term
expiring in 2004 at the annual meeting. Our board is divided into three
classes of directors having staggered terms of three years. We have no
knowledge that any nominee will refuse or be unable to serve, but if any of
the nominees is unavailable for election, the holders of the proxies reserve
the right to substitute another person of their choice as a nominee when
voting at the meeting.
Set forth below is information concerning the nominees for election
and for each of 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 2004. We recommend that shareholders vote FOR each
of the nominees for director.
NOMINEES
Name Director Positions with Lakeland
(Age) Since(1) Financial and Lake City Bank
----- -------- ----------------------------
Term Expires 2004
Anna K. Duffin 1994 Director of Lakeland Financial and Lake City Bank
(Age 67)
L. Craig Fulmer 1993 Director of Lakeland Financial and Lake City Bank
(Age 58)
Charles E. Niemier 1998 Director of Lakeland Financial and Lake City Bank
(Age 45)
Terry L. Tucker 1988 Director of Lakeland Financial and Lake City Bank
(Age 60)
CONTINUING DIRECTORS
Term Expires 2002
Eddie Creighton 1970 Director of Lakeland Financial and Lake City Bank
(Age 68)
Michael L. Kubacki 1998 President, Chief Executive Officer and Director
(Age 49) of Lakeland Financial and Lake City Bank
Steven D. Ross 2000 Director of Lakeland Financial and Lake City Bank
(Age 46)
M. Scott Welch 1998 Director of Lakeland Financial and Lake City Bank
(Age 40)
George L. White 1984 Director of Lakeland Financial and Lake City Bank
(Age 68)
4
Name Director Positions with 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 67) Financial and Lake City Bank
Jerry L. Helvey 1974 Director of Lakeland Financial and Lake City Bank
(Age 67)
Allan J. Ludwig 1996 Director of Lakeland Financial and Lake City Bank
(Age 62)
D. Jean Northenor 2001 Director of Lakeland Financial and Lake City Bank
(Age 67)
Richard L. Pletcher 1992 Director of Lakeland Financial and Lake City Bank
(Age 59)
(1) Includes service as a director of Lake City Bank. Messrs. Grant,
Helvey, Creighton and White have served as a director of Lakeland
Financial since its formation in 1984.
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.
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Mr. Kubacki presently serves as president and chief executive officer
of Lakeland Financial and Lake City Bank. He first joined Lakeland Financial
and Lake City Bank during 1998 as president and became chief executive officer
of both in January 1999. Prior to 1998, Mr. Kubacki served as Executive Vice
President of the Northern Trust Bank of California, NA.
Mr. Ludwig is an entrepreneur and industrial developer.
Mr. Niemier is senior vice president - international operations of
Biomet, Inc., which is a manufacturer of medical and orthopedic devices. He
also serves as a trustee of Valparaiso University.
Ms. Northenor retired in February, 2001 as an executive vice
president of Lakeland Financial and Lake City Bank, positions she had held
since 1998. She first joined Lake City Bank as the marketing officer in 1983.
Mr. Pletcher is president of Pletcher Enterprises, Inc., a holding
company, and chief executive officer of its principal subsidiary, Amish Acres,
LLC, a heritage resort.
Mr. Ross is president of Bertsch Services, which is a regional food
service and vending company based in Warsaw, Indiana.
Mr. 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 retired as president of United Telephone Company of
Indiana, Inc. in December, 1991.
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.
Kevin L. Deardorff, age 39, presently serves as an executive vice
president of Lakeland Financial and Lake City Bank, positions he has held
since 2001. He has served as an officer of Lake City Bank since 1990.
David M. Findlay, age 39, became an executive vice president and
chief financial officer of Lakeland Financial in September, 2000. Prior to his
arrival, Mr. Findlay served as the chief financial officer of Quality Dining,
Inc., a publicly traded company with its headquarters in South Bend, Indiana.
Prior to that, he served in various capacities with The Northern Trust Company
in Chicago.
6
Charles D. Smith, age 55, presently serves as an executive vice
president of Lakeland Financial and Lake City Bank, positions he has held
since 2000. He has served as an officer of Lake City Bank since 1983.
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.
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
2000, we are not aware that any of our directors, executive officers or 10%
shareholders failed to comply with the filing requirements of Section 16(a)
during 2000.
Board of Directors and Committees of the Board
Our board of directors held 12 regularly scheduled meetings during
2000. 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 2000,
none of the directors attended less than 75% of the total number of meetings
they were eligible to attend, except Messrs. Ludwig and Welch and Ms. Duffin.
The audit committee, comprised of Anna K. Duffin, Richard L.
Pletcher, Steven D. Ross, Terry L. Tucker, and George L. White, held 11
meetings during 2000. Each of these members were considered "independent"
according to the Nasdaq listing requirements. In February, 2001, in connection
with her retirement as an executive officer, Ms. Northernor was appointed to
the audit committee and, because she was recently employed by the company, she
is not considered "independent" under Nasdaq rules. By appointing Ms.
Northernor to the committee, and pursuant to Nasdaq's rules and regulations,
the board has determined that her membership is required for the best
interests of Lakeland Financial and its shareholders because of her knowledge
and familiarity with the company and the bank which she has garnered over her
17 years of service.
The functions performed by the audit committee include:
- 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;
7
- 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 audit committee charter, which sets forth the duties and
responsibilities of the audit committee, is attached to this proxy statement
as Exhibit A.
The compensation committee, comprised of L. Craig Fulmer, R. Douglas
Grant, Jerry L. Helvey, Michael L. Kubacki and George L. White, held 5
meetings during 2000. 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 four other most highly
paid executive officers:
8
--------------------------------------------------------------------------------------------------------------------
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($) Bonus($) (#) ($)(5)
------------------------------- ---------- -------------------- -------------- ------------------ ------------------
Michael L. Kubacki(1) 2000 $ 260,000 $ 47,500 20,000 $ 16,657
President and Chief Executive 1999 237,500 28,125 10,000 7,616
Officer 1998 111,993 --- 20,000 305
Charles D. Smith(2) 2000 $ 128,462 $ 11,003 10,000 $ 9,862
Executive Vice President
Walter L. Weldy 2000 $ 115,000 $ 16,590 8,000 $ 24,954
Executive Vice President 1999 110,600 19,612 4,000 6,879
1998 108,623 23,470 6,000 8,818
Robert C. Condon(3) 2000 $ 110,000 $ 11,250 8,000 $ 934
Executive Vice President
D. Jean Northenor(4) 2000 $ 105,769 $ 13,511 8,000 $ 10,552
Executive Vice President
(1) 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.
(2) We have not been required to disclose Mr. Smith's salary information in
the past. Accordingly, no information is given with respect to his
compensation for 1998 and 1999.
(3) Mr. Condon joined Lakeland Financial in 1999 and we have not been
required to disclose his salary information in the past. Accordingly, no
information is given with respect to his compensation for 1998 and 1999.
(4) Ms. Northenor retired as an executive vice president of Lakeland
Financial effective February 9, 2001. We have not been required to
disclose Ms. Northenor's salary information in the past. Accordingly, no
information is given with respect to her compensation for 1998 and 1999.
(5) The amounts set forth in column (i) for Messrs. Kubacki, Smith, Weldy and
Condon and Ms. Northenor include the following:
401(k) plan matching contributions, including supplemental 401(k)
matching contributions, paid by Lakeland Financial:
Mr. Kubacki Mr. Smith Mr. Weldy Mr. Condon Ms. Northenor
2000 $ 15,755 $ 8,408 $ 23,434 $ 0 $ 7,589
1999 $ 5,755 $ --- $ 4,977 $ --- $ ---
1998 $ --- $ --- $ 6,517 $ --- $ ---
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The following table sets forth information concerning the number and
value of stock options granted in the last fiscal year to the individuals
named above in the summary compensation table:
----------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
----------------------------------------------------------------------------------------------------------------------
Individual Grants
----------------------------------------------------------------------------------------------------------------------
Potential realizable value
at assumed annual rates of
stock price appreciation
for option term
---------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options
Options Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#)(1) Fiscal Year ($/Sh) Date 5%($) 10%($)
--------------------------- -------------- ---------------- ---------------- ------------- ------------- -------------
Michael L. Kubacki 10,000 4.61 $ 15.13 02/08/10 $ 95,120 $ 241,054
10,000 4.61 $ 13.50 06/13/10 $ 84,901 $ 215,155
Charles D. Smith 4,000 1.84 $ 15.13 02/08/10 $ 38,048 $ 96,421
2,000 .92 $ 14.13 05/09/10 $ 17,766 $ 45,023
4,000 1.84 $ 13.50 06/13/10 $ 33,960 $ 86,062
Walter L. Weldy 4,000 1.84 $ 15.13 02/08/10 $ 38,048 $ 96,421
4,000 1.84 $ 13.50 06/13/10 $ 33,960 $ 86,062
Robert C. Condon 4,000 1.84 $ 15.13 02/08/10 $ 38,048 $ 96,421
4,000 1.84 $ 13.50 06/13/10 $ 33,960 $ 86,062
D. Jean Northenor 4,000 1.84 $ 15.13 02/08/10 $ 38,048 $ 96,421
4,000 1.84 $ 13.50 06/13/10 $ 33,960 $ 86,062
(1) All options vest five years after grant.
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The following table sets forth information concerning the exercisable
and nonexercisable stock options at December 31, 2000 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 (#)(d) FY-End ($)(e)
Realized
(#)(a) (#)(b) ($)(c) Exercisable Unexercisable Exercisable Unexercisable
--------------------------- --------------- -------------- --------------- ---------------- ------------- ----------------
Michael L. Kubacki --- --- --- 50,000 $ --- $ ---
Charles D. Smith --- --- --- 18,000 $ --- $ ---
Walter L. Weldy --- --- --- 18,000 $ --- $ ---
Robert C. Condon --- --- --- 13,000 $ --- $ ---
D. Jean Northenor --- --- --- 16,000 $ --- $ ---
Pension Plan Table
Our defined benefit retirement plan covers certain employees over 21
years of age with more than one year of service. Effective April 1, 2000, we
amended the plan to freeze the accrual of benefits to participants under the
plan. As a result of this amendment, employees who were not participants of
the plan as of March 31, 2000 are no longer able to become participants under
the plan. In addition, all benefits previously accrued under the plan by
participants were frozen in place, and continuing employment with us will not
increase the employee's benefits upon retirement. Normal retirement age is 65.
Participants received credit for 2-1/2% of their average salary for each year
up to 20 years of service or through March 31, 2000, whichever occurred first.
The principal benefit under this plan is a lifetime annuity for the
joint lives of participants and their spouses. This amount is offset by social
security benefits. On December 31, 1985, the then existing plan was terminated
and the latest plan (which is now frozen) was adopted effective January 1,
1986. Participants in the terminated plan were paid cash or received annuities
for their earned benefits as of December 31, 1985. The amounts paid for
annuities purchased, as a part of the plan termination will reduce the
benefits to be paid out of the latest plan.
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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 retirement plan, which is a non-qualified plan payable as a general
creditor of Lakeland Financial. This plan was created in 1989 when changes to
the Internal Revenue Code that apply to defined pension plans could have
resulted in a reduced pension benefit for certain highly compensated
employees. This supplemental plan did not create any new benefits, but was
adopted to offset any such reduction in pension benefits. Benefits under this
plan were frozen as of December 31, 1999, by a resolution of our board, and
continuing employment will not increase the employee's benefits under the
plan.
Compensation Committee Interlocks and Insider Participation
During 2000, 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. Kubacki, president and chief executive officer of Lakeland
Financial, participated during 2000 in establishing the salaries of all
executive officers except his own.
Employment Agreements
The Company has entered into change of control agreements with
several of its executive officers, including Messrs. Kubacki, Smith, Weldy and
Condon. The agreements provide that upon the termination of the executive's
employment within one year prior to, or following, a change of control of
Lakeland Financial, the executive has the right to receive a payment equal to
approximately two times 120% of the executive's base salary. Also, the
executive shall continue to receive certain benefits, including medical
insurance coverage. Pursuant to the agreements, a "change of control" shall be
any of the following events: a merger or attempted hostile takeover; a person
acquiring 30% of our voting securities followed by their election as a
director to the board of directors; a person acquiring more than 50% of our
voting securities; and any other event that has the effect of placing control
of Lakeland Financial in someone other than current shareholders.
12
In addition, the agreements provide that the executive shall not
compete with us, or our successor, for two years following a change of
control. If the executive elects, he or she may forego the severance benefit
and not be subject to the restrictive covenant. The restrictive covenant
extends to a 60 mile radius of Warsaw, Indiana.
Report of the Compensation Committee on Executive Compensation
The report of the compensation committee below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent Lakeland Financial
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
General
We annually review executive officer compensation in December with
the new compensation to become effective 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 his own, Mr. Kubacki participated and made recommendations to the
committee.
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. Kubacki, as president and chief
executive officer, during 2000, as shown in the summary compensation table
above, was based upon the committee's satisfaction 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.
13
Bonus
Executive officer bonuses, including 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 conserve capital.
During the December 2000 review, the committee chose not to modify the bonus
program or withhold payment for fiscal year 2000. 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
his bonus and the executive vice presidents receive one and one half times the
established percentage for their bonuses. For 2000, the return on investment
established a 10% bonus payable in 2000. 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
opportunity;
- 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 2000, the compensation committee recommended, and the board of
directors approved, the granting of options for a total of 217,150 shares to
132 employees and directors. The number and terms of shares for which options
were granted to Messrs. Kubacki, Smith, Weldy and Condon and Ms. Northenor
during 2000 are shown in the table of option grants above.
14
We have a 401(k) plan, effective January 1, 1984, which allows the
participants to choose between several different investment options, including
shares of our common stock. Under the plan, employees are eligible to redirect
up to 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 contribution 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.
Approved by the Lakeland Financial compensation committee as of
December 31, 2000.
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 a peer group index.
The following table was presented as a graph in the proxy material
mailed to shareholders.
INDEX 1995 1996 1997 1998 1999 2000
-------------------------- ------- ------- ------- ------- ------- -------
LAKELAND FINANCIAL CORP. 100.00 149.01 240.44 186.54 154.19 134.21
PEER GROUP INDEX 100.00 126.71 202.62 192.10 156.17 153.32
NASDAQ MARKET INDEX 100.00 124.27 152.00 214.39 378.12 237.66
* Assumes $100 invested on December 31, 1995 and that all dividends were
reinvested.
15
The peer group was chosen in 1999 based on size 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.
DIRECTORS' COMPENSATION
During 2000, directors who were not full time employees of Lakeland
Financial or Lake City Bank, were paid an annual fee of $7,000 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 2000, each director who was not a full time employee of Lakeland
Financial or Lake City Bank was granted an option to acquire 1,100 shares at
the price of $15.13, with the exception of Mr. Grant who received an option to
acquire 3,600 shares. In addition, Mr. Ross received an option to purchase 500
shares at the price of $12.38 because he joined the board in July, 2000. The
options are not exercisable for 5 years, except in the case of retirement or
disability.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2000, 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.
AUDIT COMMITTEE REPORT
The report of the audit committee below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent Lakeland Financial
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The audit committee assists the board in carrying out its oversight
responsibilities for our financial reporting process, audit process and
internal controls. The audit committee also reviews the audited financial
statements and recommends to the board that they be included in our annual
report on Form 10-K. As of December 31, 2000, the committee was comprised
solely of independent directors.
16
The audit committee has reviewed and discussed our audited financial
statements for the fiscal year ended December 31, 2000 with our management and
Crowe, Chizek and Company LLP, our independent auditors. The committee has
also discussed with Crowe Chizek the matters required to be discussed by SAS
61 (Codification for Statements on Auditing Standards) as well as having
received and discussed the written disclosures and the letter from Crowe
Chizek required by Independence Standards Board Statement No. 1 (Independence
Discussions with Audit Committees). Based on the review and discussions with
management and Crowe Chizek, the committee has recommended to the board that
the audited financial statements be included in our annual report on Form 10-K
for the fiscal year ending December 31, 2000 for filing with the Securities
and Exchange Commission.
Approved by the Lakeland Financial audit committee as of December 31,
2000.
Anna K. Duffin Steven D. Ross Richard L. Pletcher
Terry L. Tucker George L. White
INDEPENDENT PUBLIC ACCOUNTANTS
Shareholders will be asked to approve the appointment of Crowe,
Chizek and Company LLP as our independent public accountants for the year
ending December 31, 2001. A proposal will be presented at the annual meeting
to ratify the appointment of Crowe Chizek. If the appointment of Crowe Chizek
is not ratified, the matter of the appointment of independent public
accountants will be considered by the board of directors. A representative of
Crowe Chizek is not expected to be present at the annual meeting.
Accountant Fees
Audit Fees
The aggregate fees and expenses billed by Crowe Chizek in connection
with the audit of our annual financial statements as of and for the year ended
December 31, 2000 and for the required review of our financial information
included in our Form 10-Q filings for the year 2000 was $92,000.
Financial Information Systems Design and Implementation Fees
There were no fees incurred for these services for the year 2000.
All Other Fees
The aggregate fees and expenses billed by Crowe Chizek for all other
services rendered to us for the year ended December 31, 2000 was $76,000.
The audit committee, after consideration of the matter, does not
believe that the rendering of these services by Crowe Chizek to be
incompatible with maintaining Crowe Chizek's independence as our principal
accountant.
17
PROPOSALS OF SHAREHOLDERS
Any proposal which any shareholder may intend to present at the
annual meeting to be held in 2002 must be received by us on or before November
2, 2001, if such proposal is to be included in the proxy statement and form of
proxy pertaining to the 2002 annual meeting.
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
March 14, 2001
Warsaw, Indiana
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
18
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 10, 2001
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
shareholders, to be held at the Shrine Building located at the Kosciusko
County Fairgrounds in Warsaw, Indiana, on the 10th day of April, 2001, at
Noon, 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 (except as marked to the contrary below) [ ]
---
WITHHOLD AUTHORITY to vote for all nominees listed 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 2004: Anna K. Duffin, L. Craig Fulmer, Charles E. Niemier and
Terry L. Tucker
2. APPROVE THE APPOINTMENT OF Crowe, Chizek & Company LLP as the Company's
Independent public auditors for the year ending December 31, 2001:
[ ] [ ] [ ]
For Against Abstain
3. In accordance with their discretion, upon all other matters that may
properly come before said meeting and any adjournments or postponements of the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES LISTED UNDER PROPOSAL 1 AND FOR PROPOSAL 2.
Dated: , 2001
----------------------------------------
Signature(s)
----------------------------------------
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NOTE: PLEASE DATE PROXY AND SIGN IT EXACTLY AS NAME OR NAMES APPEAR ABOVE. ALL
JOINT OWNERS OF SHARES SHOULD SIGN. STATE FULL TITLE WHEN SIGNING AS EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC. PLEASE RETURN SIGNED PROXY IN THE
ENCLOSED ENVELOPE.