SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
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(as permitted by Rule 14a-6(e)(2))
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[ ] Definitive Additional Materials
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OHIO VALLEY BANC CORP.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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or the Form or Schedule and the date of its filing.
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ANNUAL MEETING OF SHAREHOLDERS
Wednesday, April 9, 2003
TO OUR SHAREHOLDERS:
We take pleasure in inviting you to our Annual Meeting of Shareholders, which
will be held on Wednesday, April 9, 2003, at 5:00 p.m., Eastern Daylight Time,
at the Morris and Dorothy Haskins Ariel Theatre, 426 Second Avenue, Gallipolis,
Ohio.
The Annual Meeting will be held for the purpose of electing Directors and
transacting such other business as may properly be brought before it. At the
meeting, we shall also report to you on our operations during the past year and
plans for the future.
The close of business on March 12, 2003 has been fixed as the record date for
determination of shareholders entitled to notice of the Annual Meeting and to
vote at the Annual Meeting or any adjournment thereof.
The formal notice of Annual Meeting, the Proxy Statement and a proxy card are
enclosed. After reading the Proxy Statement, will you please promptly fill in,
sign and return to us the enclosed proxy card in the envelope provided. In lieu
of returning the enclosed proxy card, you may vote by either visiting the
proxyvote.com Web site or calling the toll-free number on the proxy card. Polls
will close promptly at 5:00 p.m. on the day of the Annual Meeting, April 9,
2003. We urge you to vote to insure that your shares are represented.
Last year, more than 81% of the Company's shares were represented in person or
by proxy at the Annual Meeting. The Company appreciates this interest on your
part.
We hope to see many of you in person at the Annual Meeting. There will be a
social hour beginning at 4:00 p.m. Hors D'oeuvres and beverages will be served,
and we hope you will take this opportunity to become acquainted with the
officers and Directors of your Company.
Sincerely,
James L. Dailey Jeffrey E. Smith
Chairman of the Board President and Chief Executive Officer
Dated: March 19, 2003
OHIO VALLEY BANC CORP.
P.O. Box 240
Gallipolis, Ohio 45631
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Wednesday, April 9, 2003
5:00 p.m.
Gallipolis, Ohio
March 19, 2003
To the Shareholders of
Ohio Valley Banc Corp.
Notice is hereby given that the Annual Meeting of Shareholders of Ohio
Valley Banc Corp. (the "Company") will be held at the Morris and Dorothy Haskins
Ariel Theatre, 426 Second Avenue, Gallipolis, Ohio, on Wednesday, the 9th day of
April, 2003, at 5:00 p.m., Eastern Daylight Time, for the following purposes:
1. To elect three Directors of the Company to serve for three-year
terms until the 2006 Annual Meeting of Shareholders and until
their successors are elected and qualified.
2. To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
Holders of common shares of the Company of record at the close of business
on March 12, 2003, will be entitled to vote at the meeting. If you attend the
Annual Meeting and desire to revoke your proxy, you may do so and vote in
person. Attendance at the Annual Meeting will not, in and of itself, constitute
revocation of a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
James L. Dailey
Chairman of the Board
Jeffrey E. Smith
President and Chief Executive Officer
OHIO VALLEY BANC CORP.
P.O. Box 240
Gallipolis, Ohio 45631
March 19, 2003
PROXY STATEMENT
This Proxy Statement is first being mailed on or about March 19, 2003,
to all shareholders of record at the close of business on March 12, 2003,
regarding the Annual Meeting of Shareholders of Ohio Valley Banc Corp. (the
"Company") to be held at the Morris and Dorothy Haskins Ariel Theatre, 426
Second Avenue, Gallipolis, Ohio, on Wednesday, April 9, 2003, at 5:00 p.m.,
Eastern Daylight Time (the "Annual Meeting").
Proxy Solicitation
A proxy for use at the Annual Meeting accompanies this Proxy Statement
and is solicited by the Board of Directors of the Company. A shareholder of the
Company may use his proxy if he is unable to attend the Annual Meeting in person
or wishes to have his common shares voted by proxy even if he does attend the
Annual Meeting. Without affecting any vote previously taken, any shareholder
executing a proxy may revoke it at any time before it is voted by (1) filing
with the Secretary of the Company, at the address of the Company set forth on
the cover page of this Proxy Statement, written notice of such revocation; (2)
executing a later-dated proxy which is received by the Company prior to the
Annual Meeting; or (3) attending the Annual Meeting and giving notice of such
revocation in person. Attendance at the Annual Meeting will not, in and of
itself, constitute revocation of a proxy.
The cost of this solicitation will be borne by the Company. Although the
solicitation of proxies will be made primarily by mail, proxies may also be
solicited by some of the Company's Directors, officers, and regular employees
who may communicate with shareholders by further mailings, by telephone or by
personal contact to request the return of the proxies.
The Annual Report of the Company for the fiscal year ended December 31,
2002, including financial statements, is enclosed with this Proxy Statement.
Voting Securities and Principal Holders Thereof
Only shareholders of record at the close of business on March 12, 2003,
are entitled to vote at the Annual Meeting. As of February 27, 2003, the Company
had 3,473,766 outstanding common shares, without par value ("Common Shares").
Each Common Share entitles the holder thereof to one vote on each matter
submitted to the shareholders at the Annual Meeting. Additional Common Shares,
which are currently authorized but not issued, may be issued by the Company
prior to March 12, 2003, for a variety of purposes, including pursuant to the
voluntary purchase provisions of the Company's Dividend Reinvestment Plan. These
additional Common Shares which may be issued after February 27, 2003, but prior
to March 12, 2003, would be entitled to the same voting rights as referenced
above.
1
Principal Shareholder of the Company
The following table indicates the only holder known by the Company to
be the beneficial owner of more than five percent (5%) of the outstanding Common
Shares of the Company.
No. of Common
Shares and
Nature of Percent of
Name and Address Beneficial Ownership Class (1)
---------------- ----------------------- ---------
Morris E. Haskins Revocable Living Trust 233,782 (2) 6.73%
Paul D. Wedge, Jr. - Trustee
1767 Chestnut Street
Bowling Green, KY 42101
(1) The percent of class is based upon 3,473,766 Common Shares outstanding
as of February 27, 2003.
(2) Based on information contained in a Schedule 13G filing with the
Securities and Exchange Commission, dated February 11, 2003, the
Morris E. Haskins Revocable Living Trust beneficially owns 233,782
Common Shares. That filing shows Paul D. Wedge, Jr. - Trustee has sole
voting and investment power over 233,782 Common Shares.
The following table indicates, as of February 27, 2003, the number and
percentage of outstanding Common Shares of the Company beneficially owned by
each Director of the Company, by each nominee for election to the Board of
Directors, and by all Directors and Executive Officers of the Company as a
group.
No. of Common
Shares and
Nature of Percent of
Name and Address Beneficial Ownership(1) Class (2)
---------------- ----------------------- ---------
Anna P. Barnitz 481 .01%
9491 Leiving Road
Letart, West Virginia 25253
Phil A. Bowman 49,762 1.43%
20 Robin Hill
Jackson, Ohio 45640
W. Lowell Call 15,583 .45%
399 Maple Drive
Gallipolis, Ohio 45631
Steven B. Chapman 1,206 .03%
544 Second Avenue
Gallipolis, Ohio 45631
2
James L. Dailey 24,048 .69%
5434 Hessler Circle
Hilliard, Ohio 43026
Robert H. Eastman 65,248 1.88%
4551 State Route 588
Gallipolis, Ohio 45631
Jeffrey E. Smith (3) 15,303 (4) .44%
20 Cedar Street
Gallipolis, Ohio 45631
Lannes C. Williamson 3,288 .09%
2764 U S 35 South
Southside, West Virginia 25187
Thomas E. Wiseman 10,820 .31%
619 Fourth Avenue
Gallipolis, Ohio 45631
All Directors and Executive 197,042 5.67%
Officers as a Group
(11 persons)
(1) Unless otherwise indicated, the beneficial owner has sole voting and
investment power with respect to all of the Common Shares reflected in
the table. All fractional Common Shares have been rounded to the
nearest whole Common Share.
(2) The percent of class is based on 3,473,766 Common Shares outstanding on
February 27, 2003.
(3) Executive Officer of the Company and/or The Ohio Valley Bank Company
(the "Bank").
(4) Includes 10,131 Common Shares held by Mr. Smith pursuant to the
Company's Employee Stock Ownership Plan.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company's Directors, Executive Officers and any persons holding
more than 10 percent of the Company's outstanding Common Shares are required to
report their initial ownership of Common Shares and any subsequent changes in
their ownership to the SEC. Specific due dates have been established by the SEC,
and the Company is required to disclose in this Proxy Statement any failure to
file by those dates. Based on its review of (1) Section 16(a) reports filed on
behalf of these individuals for their transactions during the Company's 2002
fiscal year and (2) documentation received from one or more of these individuals
that no annual Form 5 reports were required to be filed for them for the
Company's 2002 fiscal year, the Company believes that all SEC filing
requirements were met, except for those listed below.
3
Phil A. Bowman, a Director of the Bank and the Company, did not timely
file a Form 4 for November 2002 reporting the acquisition of 73.7559 of the
Company's Common Shares as a result of dividend reinvestment on shares held in
an Individual Retirement Account.
Robert H. Eastman, a Director of the Bank and the Company, did not
timely file a Form 4 for September 2002 reporting the acquisition of 1,500 of
the Company's Common Shares.
Harold A. Howe, a Director of the Bank and an Officer of the Company,
did not report on a Form 3 filed December 15, 1998 the ownership of 95 of the
Company's Common Shares. An amended Form 3 was filed on November 12, 2002. This
ownership of Common Shares was also reported on a Form 4 dated November 14,
2002.
PROXY ITEM 1: ELECTION OF DIRECTORS
The Company's Board of Directors consists of nine (9) members divided
into three (3) classes. The terms of office of three (3) Directors of one (1)
class expire at the Annual Meeting. Directors elected at the Annual Meeting
shall serve a three (3) year term until the 2006 Annual Meeting of Shareholders
and until their respective successors are elected and qualified. The individuals
named as proxies in the enclosed proxy card intend to vote the Common Shares
represented by the proxies received under this solicitation for the nominees
named below who have been designated by the Board of Directors, unless otherwise
instructed on the proxy card.
The Board of Directors of the Bank has followed a policy that a
Director of the Bank shall retire at the Annual Meeting of Shareholders
following the calendar year in which the Director attains the age of 70. The
policy does not apply to any member of the Board of the Bank who was a member of
the Board on December 2, 1980, the date of the adoption of this policy, except
for Merrill Evans, who has specifically requested that this policy apply to his
tenure on the Board of the Bank. In observance of this policy, a Director of the
Company will not stand for re-election as a Director of the Company following
the completion of the term during which he attains the age of 70.
Article Two of the Company's Code of Regulations prescribes the method
for a shareholder to nominate a candidate for election to the Board of
Directors. Nominations, other than those made by or on behalf of the existing
Board of Directors of the Company, must be made in writing and must be delivered
or mailed to the President of the Company not less than 14 days, nor more than
50 days, prior to any meeting of shareholders called for the election of
Directors. Such notification must contain the following information:
a. name and address of each proposed nominee;
b. principal occupation of each proposed nominee;
c. total number of shares of capital stock of the Company that will be
voted for each proposed nominee;
d. name and residence address of the notifying shareholder; and
e. number of shares of capital stock of the Company owned by the notifying
shareholder.
As of the date of this Proxy Statement, no persons have been so nominated for
election at this Annual Meeting.
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The table below sets forth information concerning the age, principal
occupation and employment and business experience of each nominee for election
as Director and each Director who will continue to serve after the Annual
Meeting.
If for any reason, any nominee named below should not be a candidate
for election at the time of the Annual Meeting, the proxies may be voted for a
substitute nominee in the discretion of those persons designated by the Board to
serve as proxies. The Company's Management has no reason to believe that any
nominee will be unavailable. The three (3) nominees receiving the greatest
number of votes will be elected. Common Shares represented by the enclosed proxy
card will be voted FOR the election of the Board of Directors' nominees named
below unless authority to vote for one or more nominees is withheld.
Shareholders may withhold authority to vote for the entire slate as nominated or
one or more nominees. Common Shares as to which the authority to vote is
withheld will not be counted toward the election of Directors or toward the
election of the individual nominees specified on the form of proxy.
Director
Director of the
of the Company
Name Age Principal Occupation(1) Bank Since Since
---- --- ----------------------- ---------- ------
NOMINEES FOR ELECTION FOR TERMS EXPIRING IN 2006
Anna P. Barnitz(2) 40 Treasurer and Chief 2001 2003
Financial Officer, Bob's
Market and Greenhouses, Inc.
Lannes C. Williamson(2) 58 President, 1997 2000
L. Williamson Pallets, Inc.
(Sawmill; Pallet Manufacturing;
and Wood Processing)
Thomas E. Wiseman(3)(4) 44 President, 1992 1992
The Wiseman Agency, Inc.
(Insurance and Financial Services)
The Board of Directors recommends that shareholders vote FOR the election of the
above nominees.
DIRECTORS WITH TERMS EXPIRING IN 2004
Steven B. Chapman(2)(4) 56 Certified Public Accountant 1999 2001
(Public Accounting Practice;
Real Estate Holding & Management)
Robert H. Eastman(3)(4) 62 President of Ohio 1986 1992
Valley Supermarkets, Inc.
(Retail Grocery Stores)
Jeffrey E. Smith 53 President and 1986 1992
Chief Executive Officer of
the Company and the Bank
5
DIRECTORS WITH TERMS EXPIRING IN 2005
Phil A. Bowman(2) 57 Mining Consultant and 1997 1999
Developer
W. Lowell Call(2)(3) 66 Retired Officer of 1986 1992
Bob Evans Farms, Inc.
(Restaurant and Food
Production Industry)
James L. Dailey 68 Chairman of the Board 1970 1992
of the Company and
the Bank
(1) Each of the Directors has held the respective position with the
Company or the other companies listed for a period of at least five
years.
(2) Member of the Audit Committee of the Company. The Audit Committee is
also charged by Ohio law with responsibility for the Bank's audit. The
Committee met twelve (12) times during 2002. The Bank's annual audit is
reviewed by the entire Board of Directors.
(3) Member of the Compensation Committee of the Company. The Compensation
Committee establishes the compensation of Executive Officers of the
Bank. The Compensation Committee met four (4) times during 2002.
(4) Member of the Nominating Committee of the Company. The Nominating
Committee met one (1) time during 2002.
During the past year, the Board of Directors of the Company met twelve
(12) times. Each of the Directors attended more than 75% of the aggregate of the
total number of Board meetings and the total number of meetings held by Board
committees on which the Director served during the year.
Remuneration of Executive Officers
The following table shows, for the three fiscal years ended December
31, 2002, compensation paid by the Company for services in all capacities to the
following executive officers of the Company who earned salary and bonus in
excess of $100,000.
6
SUMMARY COMPENSATION TABLE
Annual Compensation
--------------------------------------------------------------------------------
Name and Principal Year Salary(1) Bonus(2) All Other Compensation
Position ($) ($) ($)
--------------------------------------------------------------------------------
James L. Dailey 2002 $98,500 $29,900 $1,780 (3)
Chairman of the 2001 108,373 27,681 1,557
Board of the Company 2000 105,077 81,628 14,008
and the Bank
Jeffrey E. Smith 2002 $127,770 $67,412 $12,744 (4)
President and Chief 2001 122,009 81,093 11,484
Executive Officer of the 2000 96,994 81,304 13,026
Company and the Bank
E. Richard Mahan 2002 $62,360 $48,989 $7,126 (5)
Executive Vice President 2001 58,812 44,621 6,457
and Secretary of the 2000 42,767 41,935 6,576
Company and the Bank
Larry E. Miller 2002 $61,687 $48,989 $7,426 (6)
Executive Vice President 2001 58,327 44,621 6,806
and Treasurer of the 2000 42,000 41,935 6,357
Company and the Bank
(1) "Salary" for Mr. Dailey during 2002 consists of Outside Chairman
Compensation of $68,500; Executive Committee Fees of $24,000; and
Director's Fees of $6,000. "Salary" for Mr. Smith during 2002 includes
Director's fees in the amount of $3,600. Mr. Dailey received Director's
fees in the amount of $6,000 during fiscal year 2001 and $2,400 during
fiscal year 2000. Mr. Smith received Director's fees in the amount of
$3,600 during fiscal year 2001 and $2,400 during fiscal year 2000.
Messrs. Mahan and Miller received no fees for fiscal years 2002, 2001
and 2000.
(2) "Bonus" includes Director's Retainer received by Messrs. Dailey and
Smith during 2002 in the amount of $14,000; and Director's Bonus during
each of 2001 and 2000 fiscal years in the amounts of $13,221 and
$12,977, respectively.
(3) Includes $1,780 of premium paid by the Company for a life insurance
policy on the life of Mr. Dailey, pursuant to the terms of the
Company's group life insurance contracts.
(4) Includes $2,395 allocated to Mr. Smith pursuant to Company
contributions and reallocated forfeitures under the Ohio Valley Banc
Corp. Profit Sharing Plan; $1,884 allocated to Mr. Smith pursuant to
Company contributions and reallocated forfeitures under the 401-K plan
which is provided for under the Ohio Valley Banc Corp. Profit Sharing
Plan; $7,982 allocated to Mr. Smith pursuant to Company contributions
and reallocated forfeitures under the Ohio Valley Banc Corp. Employee
Stock Ownership Plan and $483 of premium paid by the Company for a life
insurance policy on the life of Mr. Smith, pursuant to the terms of the
Company's group life insurance contracts.
(5) Includes $1,327 allocated to Mr. Mahan pursuant to Company
contributions and reallocated forfeitures under the Ohio Valley Banc
Corp. Profit Sharing Plan; $1,043 allocated to Mr. Mahan pursuant to
Company contributions and reallocated forfeitures under the 401-K plan
which is provided for under the Ohio Valley Banc Corp. Profit Sharing
Plan; $4,422 allocated to Mr. Mahan pursuant to Company contributions
and reallocated forfeitures under the Ohio Valley Banc Corp. Employee
Stock Ownership Plan and $334 of premium paid by the Company for a life
insurance policy on the life of Mr. Mahan, pursuant to the terms of the
Company's group life insurance contracts.
7
(6) Includes $1,434 allocated to Mr. Miller pursuant to Company
contributions and reallocated forfeitures under the Ohio Valley Banc
Corp. Profit Sharing Plan; $1,128 allocated to Mr. Miller pursuant to
Company contributions and reallocated forfeitures under the 401-K plan
which is provided for under the Ohio Valley Banc Corp. Profit Sharing
Plan; $4,779 allocated to Mr. Miller pursuant to Company contributions
and reallocated forfeitures under the Ohio Valley Banc Corp. Employee
Stock Ownership Plan and $85 of premium paid by the Company for a life
insurance policy on the life of Mr. Miller, pursuant to the terms of
the Company's group life insurance contracts.
Compensation of Directors
No member of the Board of Directors of the Company received
remuneration in 2002 for his services as such. All of the Directors of the
Company serve as Directors of the Bank. In 2002 and 2001, each individual who
was not a salaried officer of the Bank received $500 per month for his service
as a member of the Board of Directors of the Bank; in 2000 those individuals
received $300 per month. Directors who were employees of a subsidiary of the
Company received $300 per month in 2002 and 2001 and $200 per month during 2000
for their services. The Bank Board met thirteen (13) times in 2002. In addition,
in 2002, each active Director of the Bank received a retainer of $14,000. In
2001, each active Director of the Bank received a bonus of $13,221. In 2000,
each active Director of the Bank received a bonus of $12,977. The retainer and
bonus figures were pro-rated for time served for new Directors of the Bank and
specifically includes amounts participating Directors may have chosen to defer
under the Company's deferred compensation plan for Directors and Executive
Officers implemented in 1996. Each non- employee who is a member of the
Executive Committee received an additional $39,900 in 2002, $38,460 in 2001 and
$35,569 in 2000 for his service as a member of the Executive Committee of the
Board of Directors of the Bank; which met fifty-one (51) times in 2002,
fifty-two (52) times in 2001 and fifty (50) times in 2000. This figure was
pro-rated for time served for new members. Executive Committee members who were
not employees of the Bank in 2002 included Phil A. Bowman, James L. Dailey,
Robert H. Eastman, Merrill L. Evans and Thomas E. Wiseman. Executive Committee
members who are employees of the Bank receive no compensation for serving on the
Executive Committee. Executive Committee members who were employees of the Bank
in 2002 include Jeffrey E. Smith, E. Richard Mahan and Larry E. Miller. The
Company maintains a life insurance policy for all Directors with a death benefit
of two times annual Director fees reduced by 35% at age 65 and terminates at age
70.
In December 1996, life insurance contracts were purchased by the
Company for all Directors and certain officers. The Company is the owner of the
contracts. The purpose of these contracts was to replace a current group life
insurance program for Executive Officers, implement a deferred compensation plan
for Directors and Executive Officers, implement a director retirement plan, and
implement a supplemental retirement plan for certain officers. Participants in
the deferred compensation plan, upon reaching age 70, are eligible to receive
distribution of their contributions, plus accrued interest earned at a
permissible rate on reinvestment of the contributions. If a participant dies
before reaching age 70 and the participant qualifies, distribution will be made
to the participant's designated beneficiary in an amount equal to what the
Director would have accumulated if the participant had reached age 70 and had
continued to make contributions to the plan. The cost of providing the benefits
to the participants will be offset by the earnings on the life insurance
contracts. Participants in the director retirement plan, upon reaching age 70,
are eligible to receive 50% of the three (3) prior years' average total
8
directors' compensation. The benefit is payable for 120 months for Directors
with 10 years of service or less. The benefit is payable for 240 months for
Directors with more than 10 years of service. If a Director dies during active
service, payment will be made to the Director's designated beneficiary in an
amount equal to what the Director would have received had the Director reached
age 70, except the benefit term will be reduced to 60 months. If the Director
dies during the payment of benefits, payment will be made to the Director's
designated beneficiary for the lesser of the remaining term or 60 additional
months. The cost of providing the benefits to the Directors will be offset by
the earnings on the life insurance contracts.
Report of the Compensation Committee of the Board of Directors
on Executive Compensation
This Report and the graph set forth on page __ shall not be incorporated by
reference into any filings of the Company under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, that might
incorporate future filings.
On April 10, 2002, the Board of Directors of the Company re-elected the
following non-employee Directors to the Compensation Committee:
Thomas E. Wiseman, Chairman
W. Lowell Call
Robert H. Eastman
Philosophy and CEO Compensation. The compensation philosophy of the
Company and the Bank is that compensation of its Executive Officers and others
should be directly linked to corporate operating performance. To achieve this
correlation, executive compensation is heavily weighted toward bonuses paid on
the basis of corporate operating performance. It is a historical fact,
therefore, that in years when the Bank has performed well, its officers have
received greater compensation and in less profitable years, the officers' pay
has been negatively impacted to a substantial degree. The cash compensation
program for Executive Officers consists of two elements, a base salary component
and a bonus component.
The objectives of the bonus component are to (i) motivate Executive
Officers as well as all others and to reward such persons for the accomplishment
of annual objectives of the Company and the Bank, (ii) reinforce a strong
performance orientation with differentiation and variability in individual
awards based on contribution to annual and long-range business results and (iii)
provide a fully competitive compensation package which will attract, reward, and
retain individuals of the highest quality.
Decision-Making Process. The Executive Officers of the Company receive
no compensation from the Company. Instead, they are paid by the Bank for
services rendered in their capacity as Executive Officers of the Company and the
Bank.
In 1993, the Bank engaged Crowe, Chizek and Company LLP, the Company's
and the Bank's independent auditors, to construct a comprehensive wage and
salary administration plan for the Bank to be used for all its employees,
including its Executive Officers.
In 1993, in 1996, and again in 2001, a marketplace range was developed
by Crowe, Chizek and Company LLP for all jobs of the Company including that of
Jeffrey E. Smith. These ranges were revised in 2002 using the Crowe Chizek Bank
Compensation Survey and the 2002 Ohio Bankers League Compensation Survey.
9
Base Salary. The Compensation Committee evaluated the ability of Mr.
Smith to achieve or exceed the expected requirements of his job based on 10
specific criteria in his job content questionnaire. This evaluation conducted by
the Compensation Committee evaluates each criteria of Mr. Smith's performance in
a range from 1, the lowest, to 5, the highest, in increments of .25. The
performance rating of Mr. Smith and his position in the marketplace range
generated a non-Director base salary of $124,170 in 2002, $118,409 in 2001, and
$94,594 in 2000; which is included in the Summary Compensation Table on page 7.
Bonuses. Each year key goals are identified and communicated to senior
management. The Compensation Committee met with Mr. Smith four (4) times during
2002 to review his performance as well as the progress toward the accomplishment
of the eight (8) specific goals established by the Company. The bonus range for
Mr. Smith in 2002 was $18,104 to $70,412. The evaluation by the Compensation
Committee of Mr. Smith's accomplishment of the specific annual goals generated a
non-Director bonus of $53,412 in 2002, $67,872 in 2001, and $68,327 in 2000;
which is included in the Summary Compensation Table on page 7.
Profit Sharing and Retirement Plan. The Company sponsors a Profit
Sharing and Retirement Plan, a qualified plan, for all of its employees
including Executive Officers. Each employee who is 21 years of age, has
completed one (1) year of service, one thousand (1,000) hours, and is employed
on the last day of the plan year is qualified to participate in the plan. In
December 2002, the Board of Directors voted to contribute $148,800 to this Plan.
Each participant received a pro rata share of this contribution as well as a pro
rata share of reallocated forfeitures (such pro rata share, in each case, based
upon such participant's eligible compensation). Mr. Smith's share of the 2002
contribution and reallocated forfeitures is included in the Summary Compensation
Table on page 7.
401(k) Retirement Plan. The Company sponsors a 401(k) Retirement Plan,
a qualified plan, under the Profit Sharing and Retirement Plan. Participant
qualifications are identical to those of the Profit Sharing and Retirement Plan.
In cases where participants made deferrals to the 401(k) plan, the company
contributed 25% of the first 4% of the deferral amount, not to exceed 1% of plan
compensation. Mr. Smith's share of the 2002 contribution and reallocated
forfeitures is included in the Summary Compensation Table on page 7.
Employee Stock Ownership Plan. The Company sponsors an Employee Stock
Ownership Plan, a qualified plan, for all of its employees including Executive
Officers. Participant qualifications are identical to those of the Profit
Sharing and Retirement Plan. In December 2002, the Board of Directors voted to
contribute $297,600 to this plan. Each participant's share of contributions and
reallocated forfeitures is also identical to those of the Profit Sharing and
Retirement Plan. Mr. Smith's share of the 2002 contributions and reallocated
forfeitures is included in the Summary Compensation Table on page 7.
Executive Deferred Compensation Plan. The Company maintains a
non-qualified executive deferred compensation plan. Participants in the
executive deferred compensation plan are subject to the same terms and
conditions as participants of the Director deferred compensation plan, as
detailed in Compensation of Directors on page 8. The cost of providing
benefits to the participants of the deferred compensation plan will be offset by
the earnings on the life insurance contracts.
Supplemental Executive Retirement Plan. The Company maintains a
non-qualified supplemental retirement plan for certain of its Executive
Officers. Participation in the plan is at the discretion of the Board and is
designed to supplement the retirement benefits of such participants. Currently,
James L. Dailey and Jeffrey E. Smith are participants in the plan. Under the
plan, life insurance contracts were purchased by the Company in December 1996,
based upon a formula determined by the Board of Directors for each participant.
The Company is the owner of the contracts. Generally the target benefit is equal
to:
10
70% of a participant's final year's annual compensation at age 65
o less the participant's projected benefit under the Company's
qualified retirement plans and
o less the participant's projected Social Security benefit.
In the event of a participant's death while actively employed by the
Company, the participant's designated beneficiary will be entitled to the
payment of such benefits. The cost of providing the benefits will be offset by
the earnings and death benefits of the life insurance contracts.
The decision-making process and compensation philosophy of the Company
and the Bank were considered by the Compensation Committee when determining 2002
compensation for Jeffrey E. Smith, President and Chief Executive Officer, of the
Company and the Bank. The Compensation Committee believes that the compensation
earned by Mr. Smith in 2002 was fair and reasonable when compared with executive
compensation levels in the banking industry as reported in the marketplace range
developed. Mr. Smith ranked in the middle one-third of the total compensation
marketplace range for his grade.
Submitted by:
Compensation Committee Members
Thomas E. Wiseman, Chairman
W. Lowell Call
Robert H. Eastman
Report of the Audit Committee of the Board of Directors
Audit Committee. The Audit Committee met twelve (12) times in 2002. The
Audit Committee recommends the appointment of the Company's independent
accountants, reviews and approves the audit plan and fee estimate of the
independent public accountants, appraises the effectiveness of the internal and
external audit efforts, evaluates the adequacy and effectiveness of the
Company's accounting policies and financial and accounting management,
supervises the Company's internal auditor, and reviews and approves the annual
financial statements. Members of the Audit Committee are Anna P. Barnitz, Phil
A. Bowman, W. Lowell Call, Steven B. Chapman and Lannes C. Williamson. The
Company's Board adopted a written charter for the Audit Committee on May 16,
2000. A copy of the charter which was amended by the Company's Board on February
25, 2003 is included with this Proxy Statement as Appendix A.
Audit Committee Independence. In the opinion of the Company's Board,
Directors Barnitz, Bowman, Call, Chapman, and Williamson do not have
relationships with the Company that have or will in the future interfere with
their exercise of independent judgment in carrying out their responsibilities as
Directors and as members of the Audit Committee. None of them is or has for the
past three years been an employee of the Company, and no immediate family
members of any of them is or has for the past three years been an Executive
Officer of the Company. Each member of the Audit Committee qualifies as
"independent" under the rules of the NASDAQ Stock Market.
11
Audit Committee Report. The Audit Committee has submitted the following
report for inclusion in this Proxy Statement:
The Audit Committee has reviewed and discussed with management the
audited financial statements of the Company for the year ended December 31,
2002. The Audit Committee has also discussed with Crowe, Chizek and Company LLP,
independent accountants, the matters required to be discussed by Statement on
Auditing Standards No. 61 (having to do with accounting methods used in the
financial statements). The Audit Committee has received the written disclosures
and a letter from Crowe Chizek required by Independence Standards Board Standard
No. 1 (having to do with matters that could affect the auditor's independence),
and has discussed with Crowe Chizek the independent auditor's independence from
the Company. Based on this, the Audit Committee recommended to the Board that
the audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2002.
Submitted by:
Audit Committee Members
Steven B. Chapman, CPA; Chairman
Anna P. Barnitz
Phil A. Bowman
W. Lowell Call
Lannes C. Williamson
This report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Exchange Act of 1934, except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such act.
Other Transactions with Management
The Company through its subsidiary, the Bank, has had and expects to
have in the future banking transactions in the ordinary course of the Bank's
business with some of the Directors, officers and principal stockholders of the
Company and entities with which they are associated. All loans and commitments
to loan included in such transactions were made on substantially the same terms,
including interest rates and collateral on loans and repayment terms, as those
prevailing at the time for comparable transactions with other persons and, in
the opinion of the Management of the Company, each such loan and commitment to
loan did not involve more than a normal risk of uncollectibility or present
other unfavorable features. All of such loans comply with Regulation "O" of the
federal banking regulations. The aggregate amount of loans to officers and
Directors of the Company, entities in which such officers and Directors have an
interest, and affiliates and other associates of officers and Directors was
$19,164,339 at December 31, 2002. As of the date hereof, all of such loans were
performing loans.
In 2002, Ohio Valley Financial Services Agency became a wholly owned
subsidiary of Ohio Valley Banc Corp. 50% of the membership interest of Ohio
Valley Financial Services was formerly owned by The Wiseman Agency, Inc., a
corporation which is principally owned or controlled by Director Thomas E.
Wiseman and his family. Neither the Company nor The Wiseman Agency, Inc.
received any income from Ohio Valley Financial Services during the past year.
12
Performance Graph
The following graph sets forth a comparison of five year cumulative
total returns among the Company's Common Shares (indicated "OVBC" on the
Performance Graph), the S & P 500 Index (indicated "S & P" on the Performance
Graph), and SNL Securities SNL $500 Million-$1 Billion Bank Asset-Size Index
(indicated "SNL" on the Performance Graph) for the fiscal years indicated.
Information reflected on the graph assumes an investment of $100 on December 31,
1997 in each of the Common Shares of the Company, the S & P 500 Index, and the
SNL $500M-$1B Bank Asset-Size Index. Cumulative total return assumes
reinvestment of dividends. The SNL $500M-$1B Bank Index represents stock
performance of one hundred two (102) of the nation's banks located throughout
the United States with total assets between $500 Million and $1 Billion as
selected by SNL Securities of Charlottesville, Virginia. The Company is included
as one of the 102 banks in the SNL Index.
INDEX OF TOTAL RETURNS
OVBC, S&P 500 and SNL $500M-$1B
1997-2002
Q4 97 Q4 98 Q4 99 Q4 00 Q4 01 Q4 02
----- ----- ----- ----- ----- -----
OVBC $100 $173 $178 $137 $135 $119
S&P 500 $100 $129 $156 $141 $125 $ 97
SNL $500M-$1B $100 $ 98 $ 91 $ 87 $113 $144
[Insert Graph Here]
13
Information Concerning Independent Certified Public Accountant
Independent Auditors for the Year Ending December 31, 2003. The
Company's independent auditor for the fiscal year ended December 31, 2002 was
Crowe, Chizek and Company LLP. The Board has retained Crowe Chizek to be the
Company's independent auditor for the fiscal year ending December 31, 2003. A
representative of Crowe Chizek is expected to be present at the Annual Meeting.
Audit Fees. The aggregate fees billed or estimated to be billed for
professional services rendered by Crowe Chizek for the audit of the Company's
annual financial statements for the year ended December 31, 2002 and for Crowe
Chizek's review of the financial statements included in the Company's Form 10-Q
for the quarters ended March 31, 2002, June 30, 2002, and September 30, 2002 and
Form 10-K for the year ended December 31, 2002 were $70,250.
Financial Information Systems Design and Implementation Fees. In 2002
Crowe Chizek performed no services and therefore billed no fees relating to
operating or supervising the operation of the Company's information systems or
local area network or for designing or implementing the Company's financial
information management systems.
All Other Fees. The aggregate fees billed for other services rendered
to the Company by Crowe Chizek in 2002 were $42,540.
Auditor Independence. The Audit Committee of the Board believes that
the non-audit services by Crowe Chizek are compatible with maintaining the
auditor's independence.
Annual Report - Form 10-K
The Company will provide without charge to any shareholder of record on
March 12, 2003, on the written request of any such shareholder, a copy of the
Company's Annual Report on Form 10-K, including Financial Statements and
Schedules thereto, required to be filed under the Securities Exchange Act of
1934, as amended, for the Company's fiscal year ended December 31, 2002. Such
written request should be directed to E. Richard Mahan, Secretary, Ohio Valley
Banc Corp., P.O. Box 240, Gallipolis, Ohio 45631, telephone number
1-740-446-2631.
Proxy Statement Proposals
Each year, the Board of Directors submits its nominations for election
of Directors at the Annual Meeting of Shareholders. Other proposals may be
submitted by the Board of Directors or shareholders for inclusion in the Proxy
Statement for action at the Annual Meeting. Any proposal submitted by a
shareholder for inclusion in the Proxy Statement for the 2004 Annual Meeting,
presently scheduled for April 14, 2004, must be received by the Company on or
before November 19, 2003. If a shareholder intends to present a proposal at the
2004 Annual Meeting, but has not sought the inclusion of such proposal in the
Company's proxy materials, such proposal must be received by the Company prior
to February 22, 2004, or the Company's management proxies for the 2004 Annual
Meeting will be entitled to use their discretionary voting authority should such
proposal then be raised, without any discussion of the matter in the Company's
proxy materials.
14
Reports to be Presented at the Meeting
There will be presented at the meeting the Company's Annual Report for
the year ended December 31, 2002, containing financial statements for such year
and the signed opinion of Crowe, Chizek and Company LLP, independent certified
public accountant, with respect to such financial statements. The Annual Report
is not to be regarded as proxy soliciting material, and the Company's management
does not intend to ask, suggest or solicit any action from the shareholders with
respect to such Annual Report.
Other Matters
The only business which the Company's management intends to present at
the Annual Meeting consists of the matters set forth in this Proxy Statement.
The Company's management knows of no other matters to be brought before the
Annual Meeting by any other person or group.
If any other matters should properly come before the Annual Meeting,
the proxy holders will vote thereon in their discretion.
All duly executed proxies received will be voted.
You are requested to vote by either visiting the proxyvote.com Web
site; calling the toll-free number on the proxy card; or signing and dating the
enclosed proxy and mailing it promptly in the enclosed envelope. If you later
desire to vote in person or to change or withdraw your vote, you may revoke your
proxy either by written notice to the Company, to the attention of James L.
Dailey, Chairman, or in person at the Annual Meeting (without affecting any vote
previously taken). Polls will close promptly at 5:00 p.m. on the day of the
Annual Meeting, April 9, 2003.
BY ORDER OF THE BOARD OF DIRECTORS
James L. Dailey
Chairman of the Board
Jeffrey E. Smith
President and Chief Executive Officer
15
Appendix A
OHIO VALLEY BANC CORP.
AUDIT COMMITTEE CHARTER
I. PURPOSE
The Audit Committee shall provide assistance to the Ohio Valley Banc Corp.
directors in fulfilling their responsibility to the shareholders, potential
shareholders, and investment community relating to corporate accounting,
reporting practices of the corporation, and the quality and integrity of the
financial reports of the Corporation. The Audit Committee's primary duties and
responsibilities are to:
o Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control.
o Oversee the certification process of the Corporation's quarterly and annual
financial statements and disclose controls by the CEO and CFO under the
Sarbanes-Oxley Act.
o Review and appraise the audit efforts of the Corporation's independent
accountants and internal auditing department.
o Provide an open avenue of communication among the independent accountants,
financial and senior management, the internal auditing department, and the
Board of Directors.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board would interfere with the exercise
of his or her independent judgment as a member of the Committee. At the
discretion of the Board, bank directors may be selected to serve on the
Company's Audit Committee. However, at all times, the majority of Audit
Committee members must be directors of the Company. All members of the Committee
shall have a working familiarity with basic finance and accounting practices,
and at least one member of the Committee shall have accounting or related
financial management expertise as determined by the Board of Directors.
Committee members may enhance their familiarity with finance and accounting by
participating in educational programs conducted by the Corporation or an outside
consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Committee Chairman shall also be elected by the full
Board.
III. MEETINGS
The Committee shall normally meet on a periodic basis, or more frequently as
circumstances dictate. The Committee may ask members of management or others to
attend meetings and provide pertinent information as necessary. The Audit
Committee's Chair will discuss financial reporting issues with the independent
accountants and management quarterly.
A-1
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and update this Charter periodically, at least annually, as
conditions dictate. The Charter is to be published as an Appendix to
the proxy statement every three years.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or
the public, including any certification, report, opinion, or review
rendered by the independent accountants. It is not the duty of the
Audit Committee to plan or conduct audits or to determine that the
Company's financial statements are complete and accurate and are in
accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor.
3. Review the regular internal reports to management prepared by the
internal auditing department and management's response.
4. Review with financial management and independent accountants the 10-Q
and recommend to the Board that the financial statements be included in
the Company's annual report on Form 10-K. The Chair of the Committee
may represent the entire Committee for purposes of this review.
5. Maintain minutes of Audit Committee meetings and activities.
6. Pre-approve all audit and non-audit services provided by the
Corporation's external auditors.
Independent Accountants
7. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants.
On an annual basis, the Committee should review and discuss with the
accountants all significant relationships the accountants have with the
Corporation to determine the accountant's independence.
8. Evaluate the performance of the independent accountants and make
recommendations to the Board of Directors regarding the appointment
or termination of the independent accountants.
Ethical and Legal Compliance
9. Review activities, organizational structure, and qualifications of the
internal audit department.
10. The Audit Committee shall have the power to conduct or authorize the
investigations into any matters within the Committee's scope of
responsibilities. They shall be empowered to retain independent
counsel, accountants, or others to assist it in the conduct of any
investigation.
11. Perform any other activities consistent with this Charter, the
Corporation's By-laws, and governing law, as the Committee or the Board
deems necessary or appropriate.
A-2
PROXY
OHIO VALLEY BANC CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints James L. Dailey, Jeffrey E. Smith, and
E. Richard Mahan, and each of them with full power of substitution to each, the
true and lawful attorneys and proxies of the undersigned to vote all of the
Common Shares which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Ohio Valley Banc Corp., to be held at the Morris and Dorothy
Haskins Ariel Theatre, 426 Second Avenue, Gallipolis, Ohio, on Wednesday, April
9, 2003 at 5:00 p.m., Eastern Daylight Time, and at any adjournment(s) thereof,
for the purposes stated on the reverse side.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, dated March 19, 2003, and the Proxy Statement furnished
therewith. Any proxy heretofore given to vote the Common Shares covered herein
is hereby revoked.
Address changes/Comments:
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(THIS PROXY CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE)
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
OHIO VALLEY BANC CORP.
1. ELECTION OF DIRECTORS: VOTE WITHHOLD VOTE
FOR VOTE FOR ALL To withhold authority to
01)ANNA P. BARNITZ ALL EXCEPT vote, mark "For All
02)LANNES C. WILLIAMSON Except" and write the
03)THOMAS E. WISEMAN [] [] [] nominee's number on the
line below.
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2. To transact such other business as may properly come before the meeting
or any adjournment(s) thereof; with all powers the undersigned would
possess if personally present, giving unto said attorneys and proxies, or
substitutes, full power and authority to do whatsoever in their opinion
may be necessary or proper to be done in the exercise of the power hereby
conferred, including the right to vote for any adjournment, hereby
ratifying all that said attorneys and proxies, or substitutes, may
lawfully do or cause to be done by virtue hereof.
A majority of said attorneys and proxies, or substitutes, who shall be
present and shall act at the meeting (or if only one should be present and act,
then that one) shall have and exercise all the powers of said attorneys and
proxies hereunder.
UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN, THE COMMON SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE PERSONS NAMED
AS NOMINEES IN THE ACCOMPANYING PROXY STATEMENT.
NOTE: Please fill in, sign, and return this proxy in the enclosed envelope. When
signing as Attorney, Executor, Administrator, Trustee, or Guardian, please give
full title as such. If signer is a corporation, please sign the full corporate
name by authorized officer. Joint Owners should sign individually.
For address changes and/or comments, please check this box and write them
on the back where indicated. [ ]
Please indicate if you plan to attend meeting. [ ]
Shareholder sign name here exactly as it appears hereon.
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Signature Date Signature(Joint Owners) Date