SCHEDULE 14A INFORMATION
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)
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
[x]Definitive Proxy Statement Commission Only (as permitted
[ ]Definitive Additional Materials by Rule 14a-6(e)(2))
[ ]Soliciting Material Under Rule 14a-12
HCB BANCSHARES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
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[ ] Fee paid previously with preliminary materials:___________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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[LETTERHEAD OF HCB BANCSHARES, INC.]
October 21, 2002
Dear Stockholder:
We invite you to attend the annual meeting of stockholders of HCB
Bancshares, Inc. to be held at the Camden Country Club, located at 1915
Washington Street, Camden, Arkansas, on Thursday, November 21, 2002 at 10:00
a.m., local time.
The accompanying notice and proxy statement describe the formal business to
be transacted at the meeting. During the meeting, we will also report on the
operations of the Company's subsidiary, HEARTLAND Community Bank. Directors and
officers of the Company, as well as representatives of BKD, LLP, the Company's
independent auditors, will be present to respond to any questions the
stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN, DATE AND RETURN
THE ACCOMPANYING PROXY CARD AS SOON AS POSSIBLE EVEN IF YOU CURRENTLY PLAN TO
ATTEND THE ANNUAL MEETING. Your vote is important, regardless of the number of
shares you own. This will not prevent you from voting in person but will assure
that your vote is counted if you are unable to attend the meeting.
Sincerely,
/s/ Cameron D. McKeel
Cameron D. McKeel
President and Chief Executive Officer
HCB BANCSHARES, INC.
237 JACKSON STREET, S.W.
CAMDEN, ARKANSAS 71701-3941
(870) 836-6841
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 21, 2002
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the "Annual
Meeting") of HCB Bancshares, Inc. (the "Company") will be held at the Camden
Country Club, located at 1915 Washington Street, Camden, Arkansas, on Thursday,
November 21, 2002 at 10:00 a.m., local time.
A proxy statement and proxy card for the Annual Meeting accompany this
notice.
The Annual Meeting is for the purpose of considering and acting upon:
1. The election of three directors of the Company for three-year terms;
and
2. The transaction of such other matters as may properly come before the
Annual Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to come before
the Annual Meeting.
Any action may be taken on any one of the foregoing proposals at the Annual
Meeting on the date specified above or on any date or dates to which, by
original or later adjournment, the Annual Meeting may be adjourned. Stockholders
of record at the close of business on October 7, 2002 are the stockholders
entitled to vote at the Annual Meeting and any adjournments thereof.
A list of the stockholders of the Company entitled to vote at the Annual
Meeting shall be open to the examination of any stockholder for any purpose
germane to the Annual Meeting during ordinary business hours for a period of ten
days prior to the Annual Meeting. Such list will be held at the Company's office
located at 237 Jackson Street, S.W., Camden, Arkansas.
You are requested to fill in and sign the accompanying proxy card which is
solicited by the Board of Directors and to mail it promptly in the accompanying
envelope. The proxy card will not be used if you attend and vote at the Annual
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Paula J. Bergstrom
PAULA J. BERGSTROM
SECRETARY
Camden, Arkansas
October 21, 2002
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. THE ACCOMPANYING
PROXY CARD IS ACCOMPANIED BY A SELF-ADDRESSED ENVELOPE FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
PROXY STATEMENT
OF
HCB BANCSHARES, INC.
237 JACKSON STREET, S.W.
CAMDEN, ARKANSAS 71701-3941
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 21, 2002
GENERAL
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of HCB Bancshares, Inc. (the "Company") to be
used at the annual meeting of stockholders (the "Annual Meeting") which will be
held at the Camden Country Club, located at 1915 Washington Street, Camden,
Arkansas, on Thursday, November 21, 2002 at 10:00 a.m., local time. This proxy
statement and the accompanying notice and proxy card are being first mailed to
stockholders on or about October 21, 2002.
VOTING AND REVOCABILITY OF PROXIES
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Annual Meeting and all adjournments thereof. Proxies may be revoked by
written notice to Paula J. Bergstrom, Secretary of the Company, at the address
shown above, by filing a later-dated proxy prior to a vote being taken on a
particular proposal at the Annual Meeting or by attending the Annual Meeting and
voting in person.
Proxies solicited by the Board of Directors of the Company will be voted in
accordance with the directions given therein. WHERE NO INSTRUCTIONS ARE
INDICATED, PROXIES WILL BE VOTED FOR THE NOMINEES FOR DIRECTORS SET FORTH IN
THIS PROXY STATEMENT AND FOR THE OTHER PROPOSITIONS STATED. The proxy confers
discretionary authority on the persons named therein to vote with respect to the
election of any person as a director where the nominee is unable to serve or for
good cause will not serve, and matters incident to the conduct of the Annual
Meeting. If any other business is presented at the Annual Meeting, proxies will
be voted by those named therein in accordance with the determination of a
majority of the Board of Directors. Proxies marked as abstentions, as well as
shares held in street name which have been designated by brokers on proxy cards
as not voted, will not be counted as votes cast. Proxies marked as abstentions
or as broker non-votes, however, will be treated as shares present and eligible
to vote for purposes of determining whether a quorum is present.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP
Stockholders of record as of the close of business on October 7, 2002 (the
"Record Date") are entitled to one vote for each share then held. As of October
11, 2002, the Company had 1,498,436 shares of common stock, par value $.01 per
share (the "Common Stock"), issued and outstanding. The presence, in person or
by proxy, of at least one-third of the total number of shares of Common Stock
outstanding and entitled to vote will be necessary to constitute a quorum at the
Annual Meeting.
Persons and groups owning in excess of 5% of the Company's Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The following
table sets forth as of October 11, 2002, certain information as to the Common
Stock believed by management to be beneficially owned by persons owning in
excess of 5% of the Company's Common Stock and by all directors and executive
officers of the Company as a group.
1
PERCENT OF SHARES
NAME AND ADDRESS AMOUNT AND NATURE OF OF COMMON STOCK
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OUTSTANDING
------------------- ----------------------- -----------------
HCB Bancshares, Inc. 195,925 (2) 13.08%
Employee Stock Ownership Plan ("ESOP")
237 Jackson Street, S.W.
Camden, Arkansas 71701
Joseph Stilwell 150,150 (3) 10.02
26 Broadway, 23rd Floor
New York, New York 10004
All directors, nominees for director
and executive officers as a group (10 persons) 267,494 (4) 16.80
__________
(1) Includes all shares as to which the beneficial owner had sole or shared
voting and/or investment power.
(2) These shares are held in a suspense account for future allocation among
participating employees as the loan used to purchase the shares is repaid.
The ESOP trustee, Regions Bank, Little Rock, Arkansas, votes all allocated
shares in accordance with instructions of the participants. Unallocated
shares and shares for which no instructions have been received, if any, are
voted by the ESOP trustee in the same ratio as participants direct the
voting of allocated shares or, in the absence of such direction, as
directed by the Company's Board of Directors. As of October 11, 2002,
111,285 shares had been allocated and 84,640 shares were unallocated.
(3) The information provided herein is based upon Amendment No. 3 to a Schedule
13D, dated May 2, 2002, filed jointly by Joseph Stilwell, Stilwell Value
Partners IV, L.P., Stilwell Associates, L.P. and Stilwell Value LLC
(collectively, the "Group"). The Schedule 13D reported that each member of
the Group shared voting and investment power with respect to all 150,150
shares reported as beneficially owned.
(4) Includes 160,992 shares which all directors and executive officers as a
group had a right to purchase pursuant to the exercise of stock options
exercisable within 60 days of October 11, 2002. To the extent available,
such shares are assumed to be transferred upon the exercise of options to
directors and executive officers from the HCB Bancshares, Inc. 1998 Stock
Option Plan Trust, while the remaining shares are assumed to be newly
issued. Does not include 66,945 shares held by the HCB Bancshares, Inc.
Stock Option Plan Trust, 21,009 shares held by the Company's Management
Recognition Plan Trust, 27,000 shares held by the HEARTLAND Community Bank
Executive Officers' Grantor Trust and 8,077 shares held by the HEARTLAND
Community Bank Non-Employee Directors' Grant Trust, which shares are voted
by Directors Akin, Murry, Parker and Steelman as trustees for such trusts.
Such shares are required to be voted in the same proportion as the
unallocated shares under the ESOP.
PROPOSAL I -- ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors consists of seven members. The Company's
Certificate of Incorporation requires that directors be divided into three
classes, as nearly equal in number as possible, with approximately one-third of
the directors elected each year. The Board of Directors has nominated Cameron D.
McKeel, Bruce D. Murry and F. Michael Akin, all to serve as directors for a
three-year period. Under Oklahoma law, directors are elected by a plurality of
all shares present and entitled to vote at a meeting at which a quorum is
present.
If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute as the Board of
Directors may recommend or the size of the Board may be reduced to eliminate the
vacancy. At this time, the Board knows of no reason why any nominee might be
unavailable to serve.
The following table sets forth the names of the persons nominated by the
Board of Directors for election as directors. Also set forth is certain other
information with respect to each person's age, the year he or she first became a
director of the Company's subsidiary, HEARTLAND Community Bank (the "Bank"), the
expiration of his or her term as a director and the number and percentage of
shares of Common Stock beneficially owned. Each
2
director of the Company is also a member of the Board of Directors of the Bank.
With the exception of Messrs. Akin and Rich, all individuals were initially
appointed as a director of the Company in 1996 in connection with the Company's
incorporation.
SHARES OF
YEAR FIRST COMMON STOCK
ELECTED AS CURRENT BENEFICIALLY
AGE AS OF THE DIRECTOR TERM OWNED AS OF PERCENT
NAME RECORD DATE OF THE BANK TO EXPIRE OCTOBER 11, 2002(1) OF CLASS(2)
---- ------------- ----------- --------- ------------------- -----------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2005
Cameron D. McKeel 63 1996 2002 58,596 3.79%
Bruce D. Murry 63 1994 2002 21,794 1.44
F. Michael Akin 46 2000 2002 500 *
DIRECTORS CONTINUING IN OFFICE
Carl E. Parker, Jr. 55 1981 2003 42,294 2.79
John G. Rich 46 2001(3) 2003 -- --
Vida H. Lampkin 64 1983 2004 71,685 4.63
Clifford O. Steelman 61 1984 2004 42,194 2.79
__________
(1) Includes all shares as to which the beneficial owner had sole or shared
voting and/or investment power. Amounts shown include 47,612, 15,872, 0,
15,872, 0, 50,784 and 15,872 shares which may be acquired by Directors
McKeel, Murry, Akin, Parker, Rich, Lampkin and Steelman, respectively, upon
the exercise of options exercisable within 60 days of October 11, 2002.
Does not include unallocated shares held by the ESOP (see above) or shares
held by Directors Akin, Murry, Parker and Steelman as trustees for the
Company's Management Recognition Plan Trust, which shares are required to
be voted in the same proportion as the unallocated shares under the ESOP
or, in the absence thereof, as directed by the Company's Board of
Directors. Does not include 18,000 and 9,000 shares held in the HEARTLAND
Community Bank Executive Officers' Grantor Trust for the benefit of
Directors Vida H. Lampkin and Cameron D. McKeel, respectively, or 2,900
shares held in the HEARTLAND Community Bank Non-Employee Directors' Grantor
Trust for the benefit of Director Carl E. Parker, Jr., as to which shares
such directors have a precuniary interest but do not have or share voting
or dispositive power.
(2) Assumes shares issued upon exercise of options are newly issued shares.
(3) Mr. Rich was appointed as a director by the Board of Directors in October
2001 pursuant to an agreement with Joseph Stilwell, Stilwell Value Partners
IV, L.P., Stilwell Associates, L.P. and Stilwell Value LLC.
* Less than 1% of the outstanding Common Stock.
3
Set forth below is information regarding the Company's directors and
nominees for director. Unless otherwise stated, all directors have held the
positions indicated for at least the past five years.
CAMERON D. MCKEEL has served as President and Chief Executive Officer of
the Company and Bank since December 1999. From November 1997 to December 1999,
Mr. McKeel served as Executive Vice President of the Company and from December
1996 to November 1997 was Vice President of the Company. In addition, from May
1996 to December 1999, Mr. McKeel served as Executive Vice President of the
Bank. He is a member of the Camden Lions Club and is a past President of the
Ouachita Area United Way.
BRUCE D. MURRY is owner of Bruce's, Inc., a retail establishment, located
in Camden, Arkansas. Mr. Murry is a current member of the Camden Lions Club and
the Camden Chamber of Commerce.
F. MICHAEL AKIN has served as President and CEO of Akin Industries, a
manufacturer of furniture for the healthcare and hospitality industries, for the
past 14 years. Mr. Akin currently serves on the Arkansas Economic Development
Commission, of which he is a past Chairman. He is a charter board member of the
Arkansas Wood Manufacturers Association and served as President in 1995-96. In
addition, Mr. Akin is a board member of the Monticello Economic Development
Commission and is Chairman of the Drew County Work Force Training Advisory
Council.
CARL E. PARKER, JR. has been General Manager of Camden Monument Company
from 1970 to the present. He is a member of the Camden Rotary Club.
JOHN G. RICH is Of Counsel to the New York, New York law firm of Eppenstein
& Eppenstein, where he has practiced since 1995.
VIDA H. LAMPKIN served as President and Chief Executive Officer of the
Company from December 1996 until December 1999 and served as President and Chief
Executive Officer of the Bank from January 1990 until December 1999. Mrs.
Lampkin is currently the Chairman of the Board of the Company as well as
Chairman of the Board of the Bank. Mrs. Lampkin is currently a Board member of
the Arkansas League of Savings Institutions, a member of the Governmental
Affairs Council of America's Community Bankers and a Board member of Arkansas
Quality Award.
CLIFFORD O. STEELMAN retired in 2001 as Senior Human Resource Administrator
for Atlantic Research Corporation located in Camden, Arkansas. Mr. Steelman
retired from the Camden Kraft Packaging Plant, International Paper, Camden,
Arkansas, in 1997 after having been employed there since 1968. Mr. Steelman is a
member of the Board of Directors of the Camden Fairview School District and a
member of the Camden Chamber of Commerce.
4
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth information regarding the executive officers
of the Company who do not serve on the Board of Directors.
AGE AT
JUNE 30,
NAME 2002 TITLE
---- --------- -----
Charles T. Black 51 Senior Vice President and Chief Lending Officer
Of the Company and the Bank
Paula J. Bergstrom 47 Senior Vice President Administration and
Secretary of the Company and the Bank
Scott A. Swain 40 Senior Vice President and Chief Financial Officer
of the Company and the Bank
The following paragraph sets forth information regarding the principal
occupations of the executive officers designated above.
CHARLES T. BLACK has served as Senior Vice President and Chief Lending
Officer of the Company and Senior Vice President and Chief Lending Officer of
the Bank since May 2002. Prior to joining the Bank, Mr. Black was President of
BancorpSouth, Melbourne, Arkansas, and from June 1990 to January 2002 served as
President of BancorpSouth, Lewisville, Arkansas. Mr. Black is currently a board
member of the Arkansas Red River Commission and Red River Valley Association.
Mr. Black currently serves on the Arkansas Bankers Association Subsidiary Board
and has previously served as Treasurer and Executive Board Member of the
Arkansas Bankers Association. Mr. Black has also served on the board of the
Caddo Council Boy Scouts of America, as President of the Lewisville Chamber of
Commerce, and as Chairman of the Southwest Arkansas Workforce Investment Board.
PAULA J. BERGSTROM has served as Secretary of the Company since December
1996 and was named Senior Vice President Administration of the Company in
November 2000. From February 1992 to December 1997, Mrs. Bergstrom served as
Vice President Compliance & Data Processing of the Bank. In January 1997, Mrs.
Bergstrom was named Secretary of the Bank and served as the Bank's Vice
President Administration from December 1997 to November 2000 at which time she
was named the Bank's Senior Vice President Administration.
SCOTT A. SWAIN served as Vice President and Chief Financial Officer of the
Company from February 1999 to November 2000 at which time he was named the
Company's Senior Vice President and Chief Financial Officer. Mr. Swain served as
Vice President and Chief Financial Officer of the Bank from February 1999 to
November 2000 at which time he was named the Bank's Senior Vice President and
Chief Financial Officer. Mr. Swain also serves as the Treasurer of the Company
and as the Bank's Interim Compliance Officer. Mr. Swain is a 2001 Camden Area
Leadership Graduate.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company holds regular monthly meetings and
special meetings as needed. During the year ended June 30, 2002, the Company's
Board met 16 times. No director attended fewer than 75% in the aggregate of the
total number of Board and committee meetings held while he or she was a member
during the year.
The fiscal year 2002 Board of Directors' Audit Committee consisted of
Directors Akin, Murry, Parker, Rich and Steelman, who serves as Chairman. The
members of the Audit Committee are "independent," as "independent" is defined in
Rule 4200(a)(15) of the National Association of Securities Dealers listing
standards. The Audit Committee met five times during the year ended June 30,
2002 to examine and approve the audit report prepared by the independent
auditors of the Company, to review and recommend the independent auditors to be
engaged by the Company, to review the internal audit function and internal
accounting controls, and to review and
5
approve Company policies. The Company's Board of Directors has adopted a written
charter for the Audit Committee.
The Compensation Committee for fiscal year 2002 consisted of Directors
Akin, Murry, Parker and Steelman. This committee reviews the performance of the
officers of the Company and determines compensation. The Compensation Committee
met one time during the year ended June 30, 2002.
The Company does not have a standing nominating committee. Under the
Company's current Bylaws, the Company's full Board of Directors selects the
management nominees for election of directors. The Board of Directors met once
in this capacity with respect to the nominees for election as directors at the
Annual Meeting. The Company's Certificate of Incorporation sets forth procedures
that must be followed by stockholders seeking to make nominations for directors.
In order for a stockholder of the Company to make any nominations, he or she
must give written notice thereof to the Secretary of the Company not less than
thirty days nor more than sixty days prior to the date of any such meeting;
provided, however, that if less than forty days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed, as
prescribed, to the Secretary of the Company not later than the close of business
on the tenth day following the day on which notice of the meeting was mailed to
stockholders. Each such notice given by a stockholder with respect to
nominations for the election of directors must set forth (i) the name, age,
business address and, if known, residence address of each nominee proposed in
such notice; (ii) the principal occupation or employment of each such nominee;
and (iii) the number of shares of stock of the Company which are beneficially
owned by each such nominee. In addition, the stockholder making such nomination
must promptly provide any other information reasonably requested by the Company.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the cash and
noncash compensation for each of the three fiscal years ended June 30, 2002
awarded to or earned by the Company's Chief Executive Officer for services
rendered in all capacities to the Company and its subsidiaries.
LONG-TERM COMPENSATION
AWARDS
-------------------------
ANNUAL COMPENSATION(1) RESTRICTED SECURITIES
FISCAL ---------------------- STOCK UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY BONUS AWARD(S) OPTIONS COMPENSATION(2)
----------------- ------ ------ ----- ---------- ---------- --------------
Cameron D. McKeel 2002 $ 103,935 $ -- $ -- -- $ 48,025
President and Chief 2001 103,935 -- -- -- 63,527
Executive Officer of the 2000 98,224 -- -- -- 70,690
Company and Bank
Vida H. Lampkin 2002 $ 114,150 -- -- -- $ 96,975
Chairman of the Board 2001 114,474 -- -- -- 139,035
of the Company and the Bank 2000 108,485 -- -- -- 140,199
____________
(1) Executive officers of the Company receive indirect compensation in the form
of certain perquisites and other personal benefits. The amount of such
benefits received by each named executive officer in fiscal year 2002 did
not exceed 10% of each executive officer's salary and bonus.
(2) For Mr. McKeel for fiscal 2002, includes life, health, dental and
disability insurance ($6,193), the value of shares allocated under the ESOP
($9,060) and the annual contribution under the Bank's Directors' Retirement
Plan ($32,772); for Mrs. Lampkin for fiscal 2002, includes life, health,
dental and disability insurance ($3,189), the value of shares allocated
under the ESOP ($9,950), and the annual contribution under the Bank's
Directors' Retirement Plan ($83,836).
6
Year-End Option/SAR Values. The following table sets forth information
concerning the number and potential realizable value at the end of the fiscal
year of options held by officers listed on the Summary Compensation Table.
Neither Mr. McKeel nor Mrs. Lampkin exercised any options during fiscal year
2002.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Cameron D. McKeel 47,612 -- $ 277,340 $ --
Vida H. Lampkin 50,784 -- 295,817 --
1 Based on the difference between the fair market value of the underlying
Common Stock of $14.95, which was the average of the high and low sale
price for the Common Stock on June 30, 2002, as reported on the Nasdaq
Small Cap Market and the exercise price of $9.125 per share.
EMPLOYMENT AGREEMENTS
The Company and the Bank maintain separate employment agreements (the
"Employment Agreements") with Cameron D. McKeel who as of December 16, 1999
became President and Chief Executive Officer of the Company and Bank and Vida H.
Lampkin, who served as President and Chief Executive Officer of the Bank and the
Company until December 16, 1999 and currently serves as Chairman of the Board
(together, the "Employees"). In such capacities, the Employees are responsible
for overseeing all operations of the Bank and the Company, and for implementing
the policies adopted by the Board of Directors. Such Boards believe that the
Employment Agreements assure fair treatment of the Employees in relation to
their careers with the Company and the Bank by assuring them of some financial
security.
The Employment Agreements provide for terms of one year and an annual base
salary of $103,935 and $114,150 for Mr. McKeel and Mrs. Lampkin, respectively.
On each anniversary date of the Employment Agreements' effective date (the
"Effective Date"), the term of employment will be extended for an additional
one-year period beyond the then effective expiration date, upon a determination
by the Board of Directors that the performance of the Employee has met the
required performance standards and that the Employee's respective Employment
Agreement should be extended. The Employment Agreements provide each Employee
with a salary review by the Boards of Directors not less often than annually, as
well as with inclusion in any discretionary bonus plans, retirement and medical
plans, customary fringe benefits, vacation and sick leave. Each Employment
Agreement will terminate upon the Employee's death, may terminate upon the
Employee's disability and is terminable by the Bank for "just cause" (as defined
in the Employment Agreements). In the event of termination for "just cause," no
severance benefits are available. In the event of (i) the Employee's involuntary
termination of employment for any reason other than "just cause," or (ii) the
Employee's voluntary termination within 90 days of the occurrence of a "good
reason" (as defined in the Employment Agreements), the Employee will be entitled
to receive (a) his or her salary up to each Employment Agreement's expiration
date (the "Expiration Date") plus an additional 12-month salary, (b) a put
option requiring the Bank or the Company to purchase Common Stock held by the
Employee to the extent that it is not readily tradeable on an established
securities market, and (c), at the Employee's election, either cash in an amount
equal to the cost of benefits the Employee would have been eligible to
participate in through the Expiration Date or continued participation in the
benefits plans through the Expiration Date. If the Employment Agreements are
terminated due to the Employee's "disability" (as defined in the Employment
Agreements), the Employee will be entitled to a continuation of his or her
salary and benefits through the date of such termination, including any period
prior to the establishment of the Employee's disability. In the event of the
Employee's death during the term of the Employment Agreements, his or her estate
will be entitled to receive his or her salary through the last day of the
calendar month in which the Employee's death occurred. The Employee is able to
voluntarily terminate his or her Employment Agreements by providing 90 days'
written notice to the Boards of Directors of the Bank and the Company, in which
case the Employee is entitled to receive only his or her compensation, vested
rights and benefits up to the date of termination.
In the event of (i) a "change in control," or (ii) the Employees'
termination for a reason other than just cause during the "protected period (as
defined in the Employment Agreements)," the Employees will be paid within 10
7
days following the later to occur of such events an amount equal to the
difference between (i) 2.99 times their "base amount," as defined in Section
280G(b)(3) of the Internal Revenue Code, and (ii) the sum of any other parachute
payments, as defined under Section 280G(b)(2) of the Internal Revenue Code, that
the Employee receives on account of the change in control. "Change in control"
generally refers to (i) the acquisition, by any person or entity, of the
ownership or power to vote more than 25% of the Bank's or Company's voting
stock, (ii) the transfer by the Bank of substantially all of its assets to a
corporation which is not an "affiliate" (as defined in the Employment
Agreements), (iii) a sale by the Bank or the Company of substantially all the
assets of an affiliate which accounts for 50% or more of the controlled group's
assets immediately prior to such sale, (iv) the replacement of a majority of the
existing board of directors by the Bank or the Company in connection with an
initial public offering, tender offer, merger, exchange offer, business
combination, sale of assets or contested election, or (v) a merger of the Bank
or the Company which results in less than seventy percent (70%) of the
outstanding voting securities of the resulting corporation being owned by former
stockholders of the Company or the Bank. The Employment Agreements provide that
within 10 business days of a change in control, the Bank shall fund, or cause to
be funded, a trust in the amount of 2.99 times the Employee's base amount, that
will be used to pay the Employee amounts owed to the Employee. The aggregate
payments that would be made to the Employees, assuming their termination of
employment under the foregoing circumstances at June 30, 2002, would have been
approximately $320,055 and $346,092 for Mr. McKeel and Mrs. Lampkin,
respectively. These provisions may have an anti-takeover effect by making it
more expensive for a potential acquiror to obtain control of the Company. In the
event that the Employee prevails over the Company and the Bank in a legal
dispute as to the Employment Agreements, the Employee will be reimbursed for his
or her legal and other expenses.
DIRECTOR COMPENSATION
General. Non-employee directors receive fees of $1,000 per month. This fee
includes any committee meeting(s), as well as service on the board of directors
of one or more subsidiaries of the Company. Employee directors do not receive
fees for service as directors. For fiscal year 2002, directors' fees totaled
$65,000. In addition, directors are eligible to receive awards under the
Company's Stock Option Plan and Management Recognition Plan. During the year
ended June 30, 2002, no new awards were made to directors under these plans.
Because of their concern for the level of the Company's earnings, each director
voluntarily suspended further vesting of their MRP awards until May 1, 2003.
Directors' Retirement Plan. The Bank's Board of Directors adopted a
directors' retirement plan, effective June 13, 1996, for directors who are or
were members of the Board of Directors at any time on or after the plan's
effective date, provided that an employee who becomes a director after June 30,
1996 will not become a participant unless the Board of Directors adopts a
specific resolution to that effect. On the first day of each calendar month,
each participant who is a director on said date, with the exception of Directors
Lampkin and McKeel, has his account credited with an amount equal to the product
of $158.33 and the Safe Performance Factor for the preceding fiscal year. With
the exception of Directors Lampkin and McKeel, the aggregate principal credits
to a director's account may not exceed $38,000. The Safe Performance Factor is
determined annually by the Board taking into consideration the Company's
performance as compared to targets set for the fiscal year. In addition, each
participant's account is credited with a rate of return, on any vested amounts
previously credited, equal to any appreciation or depreciation determined
according to the participant's investment election. Amounts credited to the
accounts of participants other than Directors Lampkin and McKeel will be fully
vested at all times. The amounts credited to Director Lampkin and Director
McKeel vested at the rate of 1.18% for each full month of service as a director,
starting with 15% vested interest on January 1, 1996, and became fully vested on
January 1, 2002. During the year ended June 30, 2002, the Company accrued
$83,836, $32,772, $623, $3,964 and $2,749 under the directors' retirement plan
for the benefit of Directors Vida H. Lampkin, Cameron D. McKeel, Carl E. Parker,
Jr., Clifford O. Steelman and Bruce D. Murry, respectively.
Upon a non-employee director's termination of service on the Board due to
death, disability, or mandatory retirement due to age restrictions, the
director's account will be credited with an amount equal to the difference
between $38,000 and the amount previously credited to her or his account,
exclusive of investment returns. In the event of Director Lampkin's or Director
McKeel's disability or death prior to her or his attainment of 50% vesting, the
vested percentage on her or his account will be increased to 50%. If Director
Lampkin's or Director McKeel's service on the Board is terminated for any reason
other than "just cause" following a change in control, the vested percentage of
her or his account will become 100%. Distribution of account balances will be
made in cash, over a
8
ten-year period, unless the participant elects to receive a lump sum or annual
installments over a period of less than ten years. If a participant dies before
receiving all benefits payable under the plan, distribution will be made to her
or his beneficiary or, in the absence of a beneficiary, to her or his estate, in
a lump sum, unless the participant has elected to have the distribution made in
installments over a period of up to ten years. Benefits under the Directors'
Plan are nontransferable. The Bank will pay all benefits in cash from its
general assets, and has established a trust in order to hold assets with which
to pay benefits. Trust assets will be subject to the claims of the Bank's
general creditors. In the event a participant prevails over the Bank in a legal
dispute as to the terms or interpretation of the Directors' Plan, he or she will
be reimbursed for his or her legal and other expenses.
TRANSACTIONS WITH MANAGEMENT
The Bank offers loans to its directors, officers and employees. These loans
currently are made in the ordinary course of business with the same collateral,
interest rates and underwriting criteria as those of comparable transactions
prevailing at the time and do not involve more than the normal risk of
collectibility or present other unfavorable features. At June 30, 2002, the
Bank's loans to directors, nominees for director and executive officers totaled
approximately $1.8 million.
COMPENSATION COMMITTEE REPORT ON EMPLOYEE COMPENSATION
The Compensation Committee of the Board of Directors consists of the
non-employee directors, which for fiscal 2002 consisted of Directors Akin,
Murry, Parker and Steelman. This committee reviews the performance of the
executive officers of the Company and its subsidiaries and recommends employee
compensation structures and amounts to the Board.
The Compensation Committee's compensation philosophy for all employees,
including executive officers, is to provide competitive levels of compensation,
integrate employees' pay with the achievement of the Company's performance
goals, reward exceptional corporate performance, recognize individual initiative
and achievement and assist the Company in attracting and retaining qualified
employees. The committee expressly endorses the position that equity ownership
by employees is beneficial in aligning employees' and stockholders' interests in
the enhancement of stockholder value.
Salaries are determined by evaluating the responsibilities of each position
and by reference to the competitive marketplace for qualified employees,
including with respect to executive officers comparisons of salaries for
comparable positions at comparable companies within the banking industry. Annual
salary changes are determined by evaluating changes in compensation in the
marketplace, the performance of the Company and the responsibilities and
performance of the employee.
For fiscal year 2002, the base salaries of the chief executive officer and
other executive officers were established in accordance with the foregoing
policies. The Compensation Committee reviewed proposed salaries for all bank
employees, individually and in total, then reviewed each executive's salary
history. Executive officers Lampkin and McKeel did not receive any increase in
salary for 2002 as compared to 2001 levels.
In establishing Mr. McKeel's compensation the Committee takes into account
his experience, tenure, abilities, job performance and other considerations. Mr.
McKeel's base salary is established in accordance with the terms of the
employment agreement entered into between the Company and Mr. McKeel on February
17, 2000 (see "Executive Compensation -- Employment Agreements") and is
currently $103,935.
Members of the Compensation Committee
F. Michael Akin
Bruce D. Murry
Carl E. Parker, Jr.
Clifford O. Steelman
9
STOCK PERFORMANCE
The following graph shows the cumulative total return on the Company's
Common Stock from June 30, 1997 through June 30, 2002 compared with the
cumulative total return of the CRSP Index for Nasdaq stocks of savings
institutions (U.S. Companies, SIC 6030-39) (the "Industry Index") and the CRSP
Index for the Nasdaq Stock Market (U.S. Companies, all SICs) (the "Market
Index") over the same period, as if $100 were invested on June 30, 1997 in the
Company's Common Stock and each index. Total cumulative return on the Common
Stock or the index equals the total increase or decrease in value since June 30,
1997, assuming reinvestment of all dividends paid. The shareholder returns shown
on the performance graph are not necessarily indicative of the future
performance of the Common Stock or of any particular index.
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
JUNE 30, 1997 THROUGH JUNE 30, 2002
[Line graph appears here depicting the cumulative total shareholder return of
$100 invested in the Common Stock as compared to $100 invested in all companies
whose equity securities are traded on the NASDAQ Stock Market and savings
institutions traded on the NASDAQ Stock Market. Line graph plots the cumulative
total return from May 7, 1997 to June 30, 2002. Plot points are provided below.]
6/30/97 6/30/98 6/30/99(1) 6/30/00 6/30/01 6/30/02
------- ------- ---------- ------- ------- -------
HCB Bancshares, Inc. 100 118.1 71.4 54.6 106.6 125.5
Savings Institutions 100 144.2 126.1 104.2 169.4 234.7
Nasdaq Stock Market 100 131.6 189.1 279.6 151.6 103.2
_________
(1) The Common Stock was not listed on the Nasdaq Stock Market on June 30,
1999. The total return figure at June 30, 1999 is based on the average of
the high and low sales price for the Common Stock on that date. The Common
Stock was relisted on the Nasdaq SmallCap Market on November 22, 1999.
10
RELATIONSHIP WITH INDEPENDENT AUDITORS
On November 2, 2001, the Company's Board of Directors dismissed Deloitte &
Touche LLP as its independent accountants. On November 9, 2001, the Company
engaged BKD, LLP as its successor independent audit firm. The Company's
dismissal of Deloitte & Touche LLP and engagement of BKD, LLP was recommended by
the Audit Committee of the Board of Directors and unanimously approved by the
Board of Directors on November 2, 2001.
Deloitte & Touche LLP served as the Company's independent accountants to
audit the Company's consolidated financial statements as of June 30, 2001 and
for the years ended June 30, 2001, 2000 and 1999. Deloitte & Touche LLP's
reports on the Company's financial statements as of and for fiscal years ended
June 30, 2001, 2000 and 1999 did not contain any adverse opinion or disclaimer
of opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles.
During the Company's fiscal years ended June 30, 2001 and 2000 and for the
subsequent interim period from July 1, 2001 through November 2, 2001, there were
no disagreements with Deloitte & Touche LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Deloitte
& Touche LLP, would have caused Deloitte & Touche LLP to make reference thereto
in their report on the financial statements for such years.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors (the "Audit Committee") has:
1. Reviewed and discussed the audited financial statements for the fiscal
year ended June 30, 2002 with the management of the Company.
2. Discussed with the Company's independent auditors the matters required
to be discussed by Statement of Accounting Standards No. 61, as the
same was in effect on the date of the Company's financial statements;
and
3. Received the written disclosures and the letter from the Company's
independent auditors required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), as the same
was in effect on the date of the Company's financial statements, and
discussed with the independent auditors the independent auditors'
independence.
Based on the foregoing materials and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial statements for
the fiscal year ended June 30, 2002 be included in the Company's Annual Report
on Form 10-K for the year ended June 30, 2002.
Members of the Audit Committee
F. Michael Akin
Bruce D. Murry
Carl E. Parker, Jr.
Clifford O. Steelman
John G. Rich
11
AUDIT AND OTHER FEES PAID TO INDEPENDENT ACCOUNTANT
AUDIT FEES
During the fiscal year ended June 30, 2002, the aggregate fees billed for
professional services rendered for the audit of the Company's annual financial
statements and the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q filed during the fiscal year ended June 30, 2002
were $97,290, of which $85,123 was paid to BKD, LLP and $12,167 was paid to
Deloitte and Touche, LLP.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage BKD, LLP or Deloitte & Touche, LLP to provide
advice to the Company regarding financial information systems design and
implementation during the fiscal year ended June 30, 2002.
ALL OTHER FEES
For the fiscal year ended June 30, 2002, the aggregate fees paid by the
Company to BKD, LLP for all other services (other than audit services and
financial information systems design and implementation services) were $34,073.
For the fiscal year ended June 30, 2002, the Company did not pay any fees to
Deloitte & Touche, LLP for all other services (other than audit services and
financial information systems design and implementation services). The Audit
Committee has considered whether the provision of these other services is
compatible with maintaining the principal accountant's independence.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to regulations promulgated under the Exchange Act, the Company's
officers, directors and persons who own more than ten percent of the outstanding
Common Stock ("Reporting Persons") are required to file reports detailing their
ownership and changes of ownership in such Common Stock (collectively,
"Reports"), and to furnish the Company with copies of all such Reports. Based
solely on its review of the copies of such Reports or written representations
that no such Reports were necessary that the Company received during the past
fiscal year or with respect to the last fiscal year, management believes that
during the fiscal year ended June 30, 2002, all of the Reporting Persons
complied with these reporting requirements.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
The Company's annual report to stockholders, including financial
statements, is being mailed to all stockholders of record as of the close of
business on the Record Date. Any stockholder who has not received a copy of such
annual report may obtain a copy by writing to the Secretary of the Company. Such
annual report is not to be treated as a part of the proxy solicitation materials
or as having been incorporated herein by reference.
12
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's main office at 237
Jackson Street, S.W., Camden, Arkansas 71701-3941, no later than June 23, 2003.
Stockholder proposals, other than those submitted pursuant to the Exchange Act,
must be submitted in writing to the Secretary of the Company at the above
address not less than thirty days nor more than sixty days prior to the date of
any such meeting in accordance with procedural and substantive requirements
under the Company's Certificate of Incorporation; provided, however, that if
less than forty days' notice of the meeting is given to stockholders, such
written notice shall be delivered or mailed, as prescribed, to the Secretary of
the Company not later than the close of business on the tenth day following the
day on which notice of the meeting was mailed to stockholders. For consideration
at the Annual Meeting, a stockholder proposal must be delivered or mailed to the
Company's Secretary no later than October 31, 2002.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Paula J. Bergstrom
PAULA J. BERGSTROM
SECRETARY
Camden, Arkansas
October 21, 2002
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JUNE 30, 2002 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE
FURNISHED WITHOUT CHARGE TO EACH STOCKHOLDER AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO THE SECRETARY, HCB BANCSHARES, INC., 237 JACKSON STREET, S.W.,
CAMDEN, ARKANSAS 71701-3941.
13
REVOCABLE PROXY
PLEASE MARK VOTES
AS IN THIS EXAMPLE HCB BANCSHARES, INC.
--------------------------------------------------------------- -------------------------------- -------------------------------
ANNUAL MEETING OF STOCKHOLDERS WITH-
NOVEMBER 21, 2002 1. The election as directors FOR HOLD EXCEPT
of all nominees listed
The undersigned hereby appoints Carl E. Parker, Jr. and (except as marked to the
Clifford O. Steelman, with full powers of substitution, to contrary below): [ ] [ ] [ ]
act as proxies for the undersigned, to vote all shares of
common stock of HCB Bancshares, Inc. (the "Company") which CAMERON D. MCKEEL
the undersigned is entitled to vote at the Annual Meeting of BRUCE D. MURRY
Stockholders, to be held at the Camden Country Club, located F. MICHAEL AKIN
at 1915 Washington Street, Camden, Arkansas, on Thursday,
November 21, 2002 at 10:00 a.m., local time, and at any and
all adjournments thereof, as follows:
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INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, MARK "EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED BELOW.
__________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED
NOMINEES. THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
NOMINEES. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE
BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
ANNUAL MEETING. THIS PROXY CONFERS DISCRETIONARY AUTHORITY ON
THE HOLDERS THEREOF TO VOTE WITH RESPECT TO THE ELECTION OF
ANY PERSON AS DIRECTOR WHERE THE NOMINEE IS UNABLE TO SERVE OR
FOR GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT TO THE
CONDUCT OF THE ANNUAL MEETING.
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| THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. |
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| Please be sure to sign and date Date |
| this proxy in the box below |
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| Stockholders sign above Co-holder (if any) sign above |
| |
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| DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE-PAID ENVELOPE ENCLOSED. |
| |
| |
| HCB BANCSHARES, INC. |
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| |
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| DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE-PAID ENVELOPE ENCLOSED. |
| |
| HCB BANCSHARES, INC. |
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SHOULD THE ABOVESIGNED BE PRESENT AND ELECT TO VOTE AT THE ANNUAL MEETING OR AT
ANY ADJOURNMENT THEREOF, AND AFTER NOTIFICATION TO THE SECRETARY OF THE COMPANY
AT THE ANNUAL MEETING OF THE STOCKHOLDER'S DECISION TO TERMINATE THIS PROXY,
THEN THE POWER OF SAID ATTORNEYS AND PROXIES SHALL BE DEEMED TERMINATED AND OF
NO FURTHER FORCE AND EFFECT.
THE ABOVE SIGNED ACKNOWLEDGES RECEIPT FROM THE COMPANY PRIOR TO THE EXECUTION OF
THIS PROXY OF NOTICE OF THE ANNUAL MEETING, A PROXY STATEMENT DATED OCTOBER 21,
2002 AND A 2002 ANNUAL REPORT TO STOCKHOLDERS.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY CARD. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR FULL
TITLE. IF SHARES ARE HELD JOINTLY, EACH HOLDER SHOULD SIGN.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY TODAY
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