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 Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
OHIO VALLEY BANC CORP.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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of Schedule 14A.
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14a-6(i)(3).
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(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
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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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ANNUAL MEETING OF SHAREHOLDERS
Wednesday, April 14, 2004
TO OUR SHAREHOLDERS:
We take pleasure in inviting you to our Annual Meeting of Shareholders, which
will be held on Wednesday, April 14, 2004, 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 17, 2004 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 are
enclosed. After reading the Proxy Statement, will you please promptly fill in,
sign and return to us the enclosed proxy in the envelope provided. Polls will
close promptly at 5:00 p.m. on the day of the Annual Meeting, April 14, 2004. We
urge you to vote to insure that your shares are represented.
Last year, more than 75% 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 24, 2004
OHIO VALLEY BANC CORP.
P.O. Box 240
Gallipolis, Ohio 45631
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Wednesday, April 14, 2004
5:00 p.m.
Gallipolis, Ohio
March 24, 2004
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 14th day
of April, 2004, 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 2007 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 17, 2004, 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 24, 2004
PROXY STATEMENT
This Proxy Statement is first being mailed on or about March 24, 2004,
to all shareholders of record at the close of business on March 17, 2004,
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 14, 2004, at 5:00 p.m.,
Eastern Daylight Time (the "Annual Meeting").
Pursuant to notice delivered to eligible shareholders who share the
same address, the Company and a number of brokers send only one proxy statement
and annual report to shareholders residing at the same address, unless different
instructions have been received from the affected shareholder. Accordingly,
those registered and beneficial shareholders who share an address will receive
only one copy of the 2003 Annual Report to Shareholders and this proxy
statement. A separate proxy will continue to be included for each shareholder at
the shared address.
Registered shareholders who share an address and would like to receive
a separate 2003 Annual Report to Shareholders and/or a separate proxy statement,
or have questions regarding the householding process, may contact Deborah A.
Carhart, Assistant Vice President, Shareholder Relations, by calling
1-800-468-6682 or 1-740-446-2631; or by a written request addressed to Ms.
Carhart at The Ohio Valley Bank Company, P.O. Box 240, Gallipolis, Ohio 45631;
or by an e-mail to InvestorRelations@ovbc.com. Promptly upon request, a separate
2003 Annual Report to Shareholders and/or a separate proxy statement will be
sent. By contacting Ms. Carhart, registered shareholders sharing an address can
also (i) notify the Company that the registered shareholders wish to receive
separate annual reports and proxy statements in the future or (ii) request
delivery of a single copy of annual reports or proxy statements in the future if
they are receiving multiple copies. Beneficial shareholders should contact their
broker/dealers, financial institution, or other record holders for specific
information on the householding process as it applies to those beneficial
shareholders.
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 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,
2003, including financial statements, is enclosed with this Proxy Statement.
1
Only shareholders of record at the close of business on March 17, 2004,
are entitled to vote at the Annual Meeting. As of February 27, 2004, the Company
had 3,507,555 outstanding common shares, without par value. 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
17, 2004, 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, 2004, but prior
to March 17, 2004, would be entitled to the same voting rights as referenced
above.
(i) OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates, as of February 27, 2004, certain
information concerning the only shareholder 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 and Dorothy Haskins 262,888 (2) 7.49%
Foundation, Inc.
1767 Chestnut Street
Bowling Green, KY 42101
(1) The percent of class is based upon 3,507,555 common shares outstanding
as of February 27, 2004.
(2) Based on information contained in a Schedule 13G filing with the
Securities and Exchange Commission, dated February 12, 2004. Carol H.
Wedge and Paul D. Wedge, Jr. share voting and investment power over the
262,888 common shares owned by the Foundation.
The following table indicates, as of February 27, 2004, certain
information concerning the common shares of the Company beneficially owned by
each current Director of the Company, by each nominee for election to the Board
of Directors, by each executive officer named in the Summary Compensation Table
and by all current 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 819 .02%
9491 Leiving Road
Letart, West Virginia 25253
W. Lowell Call 16,222 .46%
399 Maple Drive
Gallipolis, Ohio 45631
Steven B. Chapman 1,239 .04%
544 Second Avenue
Gallipolis, Ohio 45631
2
James L. Dailey 22,327 .64%
5434 Hessler Circle
Hilliard, Ohio 43026
Robert H. Eastman 67,721 1.93%
4551 State Route 588
Gallipolis, Ohio 45631
Brent A. Saunders 4,121 .12%
330 Third Avenue
Gallipolis, Ohio 45631
Jeffrey E. Smith (3) 15,909 (4) .44%
20 Cedar Street
Gallipolis, Ohio 45631
Lannes C. Williamson 3,447 .10%
2764 U S 35 South
Southside, West Virginia 25187
Thomas E. Wiseman 11,331 .32%
619 Fourth Avenue
Gallipolis, Ohio 45631
All Directors and Executive 161,804 4.61%
Officers as a Group
(12 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 3,507,555 common shares outstanding on
February 27, 2004.
(3) Executive Officer of the Company and/or The Ohio Valley Bank Company.
(4) Includes 10,392 common shares held by Mr. Smith pursuant to the
Company's Employee Stock Ownership Plan.
(ii) 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 Securities and Exchange Commission (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 2003 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 2003 fiscal year, the
Company believes that all SEC filing requirements were met.
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PROXY ITEM 1: ELECTION OF DIRECTORS
The Company's Board of Directors consists of nine members divided into
three classes with regular three-year staggered terms. The terms of office of
three Directors of one class will expire at the Annual Meeting. Directors
elected at the Annual Meeting shall serve a three-year term until the 2007
Annual Meeting of Shareholders and until their respective successors are duly
elected and qualified.
Phil A. Bowman, who was in the class of Directors whose terms expire in
2005, resigned effective September 30, 2003. Upon recommendation from the
Nominating Committee, the Board of Directors at their meeting on October 21,
2003 elected Brent A. Saunders to serve for the remainder of Mr. Bowman's term.
Mr. Saunders has been a Director of the Company's subsidiary, The Ohio Valley
Bank Company (the "Bank"), since 2001.
The Board of Directors has reviewed, considered and discussed each
Director's relationships, both direct and indirect, with the Company and its
subsidiaries and the compensation each Director receives, directly or
indirectly, from the Company and its subsidiaries in order to determine whether
such Director meets the current independence requirements of The NASDAQ Stock
Market, Inc. ("NASDAQ") Corporate Governance Standards, and has determined that
the Board has at least a majority of independent Directors. The Board of
Directors has determined that each of the following Directors has no financial
or personal ties, either directly or indirectly, with the Company or its
subsidiaries (other than compensation as a Director of the Company and its
subsidiaries, banking relationships in the ordinary course of business with the
Bank and ownership of common shares of the Company as described in this proxy
statement) and thus qualifies as independent: Anna P. Barnitz, W. Lowell Call,
Steven B. Chapman, Robert H. Eastman, Lannes C. Williamson and Thomas E.
Wiseman.
The Board of Directors proposes that each of the three nominees
identified below be re-elected for a three-year term and until his successor is
duly elected and qualified or until the earlier of his resignation, removal from
office, or death. The three nominees for election as Directors in the class
whose terms expire in 2007 receiving the greatest number of votes will be
elected. Common shares represented by properly executed and returned proxies
will be voted FOR the election of the Board of Directors' nominees unless
authority to vote for one or more nominees is withheld. Common shares as to
which the authority to vote is withheld will be counted for quorum purposes, but
will not be counted toward the election of Directors or toward the election of
the individual nominees specified on the form of proxy.
The following table gives certain information concerning each nominee
for re-election as a Director of the Company. Unless otherwise indicated, each
individual has had the same principal occupation for more than five years.
Position(s) Held with the Director
Company and Its Principal Director of the
Subsidiaries and of the Company
Name Age Principal Occupation(s) Bank Since Since
---- --- --------------------------- ---------- ------
NOMINEES FOR ELECTION FOR TERMS EXPIRING IN 2007
Steven B. Chapman 57 Certified Public Accountant 1999 2001
(Public Accounting Practice;
Real Estate Holding & Management)
4
Robert H. Eastman 63 President of Ohio 1986 1992
Valley Supermarkets, Inc.
(Retail Grocery Stores)
Jeffrey E. Smith 54 President and 1986 1992
Chief Executive Officer of
the Company and the Bank
The Board of Directors recommends that shareholders vote FOR the election of the
above nominees.
While it is contemplated that all nominees will stand for re-election,
if one or more nominees at the time of the Annual Meeting should be unavailable
or unable to serve as a candidate for re-election as a Director, the individuals
designated as proxy holders reserve full discretion to vote the common shares
represented by the proxies they hold for the election of the remaining nominees
and for the election of any substitute nominee or nominees designated by the
Board of Directors. The Board of Directors knows of no reason why any of the
nominees named above will be unavailable or unable to serve if elected to the
Board.
The following table gives certain information concerning the current
Directors who will continue to serve after the Annual Meeting. Unless otherwise
indicated, each individual has had the same principal occupation for more than
five years.
DIRECTORS WITH TERMS EXPIRING IN 2005
W. Lowell Call 67 Retired Officer of 1986 1992
Bob Evans Farms, Inc.
(Restaurant and Food
Production Industry)
James L. Dailey 69 Chairman of the Board 1970 1992
of the Company and
the Bank
Brent A. Saunders 45 Attorney 2001 2003
DIRECTORS WITH TERMS EXPIRING IN 2006
Anna P. Barnitz 41 Treasurer and Chief Financial 2001 2003
Officer, Bob's Market and
Greenhouses, Inc. (Horticultural
products for wholesale distribution
and retail landscaping stores)
Lannes C. Williamson 59 President, L. Williamson 1997 2000
Pallets, Inc. (Sawmill; Pallet
Manufacturing; and Wood Processing)
Thomas E. Wiseman 45 President, The Wiseman Agency, 1992 1992
Inc. (Insurance and Financial Services)
5
The Board of Directors held a total of thirteen (13) meetings during the
2003 fiscal year. Each incumbent Director attended 75% or more of the total
number of meetings held by the Board of Directors and the total number of
meetings held by all committees on which the Director served, in each case
during the Director's period of service.
The Company encourages all incumbent Directors and Director nominees to
attend each annual meeting of shareholders. All of the incumbent Directors and
Director nominees attended the Company's last annual meeting of shareholders
held on April 9, 2003.
The Company recently adopted a process by which shareholders may
communicate directly with Directors. Any communication to the Board may be
mailed to James L. Dailey, Chairman, in care of Investor Relations at the
Company's headquarters in Gallipolis, Ohio. The mailing envelope should contain
a clear notation indicating that the enclosed letter is a "Shareholder-Board
Communication" or "Shareholder-Director Communication". There is no screening
process, and all shareholder communications that are received for the Board's
attention will be forwarded to all Directors. In view of recently adopted SEC
disclosure requirements related to this issue, the Board may consider the
development of more specific procedures, including procedures whereby
shareholders may communicate directly with specific Directors.
Committees of the Board
The Board of Directors has four standing committees: The Audit Committee,
the Compensation Committee, the Executive Committee and the Nominating
Committee.
Audit Committee
---------------
The Audit Committee is organized and conducts its business pursuant to a
written charter adopted by the Board of Directors, which is attached to this
proxy statement as Appendix A. A current copy of the charter of the Audit
Committee is also posted on the "Investor Relations" page of the Company's
website at www.ovbc.com. At least annually, the Audit Committee reviews and
reassesses the adequacy of its charter and recommends any proposed changes to
the full Board for approval. The Audit Committee is responsible for:
o overseeing the accounting and financial reporting process of the Company and
audits of the Company's financial statements;
o monitoring the Company's financial reporting process and internal control
system;
o overseeing the certification process and other laws and regulations impacting
the Company's quarterly and annual financial statements and related
disclosure controls;
o reviewing and evaluating the audit efforts of the Company's independent
auditors and the Company's internal auditing department;
o providing an open avenue of communication among the Company's independent
auditors, financial and senior management, internal auditing department and
the Board of Directors;
o appointing, compensating and overseeing the independent auditors employed by
the Company for the purpose of preparing or issuing an audit report or
performing related work; and
o establishing procedures for the receipt,retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls or
auditing matters.
6
The Audit Committee will also carry out such other responsibilities as may
be delegated to the Audit Committee by the full Board. The Audit Committee held
thirteen (13) meetings during the 2003 fiscal year.
The members of the Audit Committee are Anna P. Barnitz, W. Lowell Call,
Steven B. Chapman (Chairman) and Lannes C. Williamson. Phil A. Bowman served as
a member of the Audit Committee until his resignation effective September 30,
2003. Each member of the Audit Committee qualifies as independent under the
NASDAQ Corporate Governance Standards and Rule 10A-3 promulgated under Section
10A(m)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). None of the members of the Audit Committee is an affiliated person of the
Company or any of its subsidiaries other than in the member's capacity as a
member of the Board of Directors of the Company and the Bank (and committees
thereof). No member of the Audit Committee has received or accepted, directly or
indirectly, any consulting, advisory or other compensatory fee from the Company
or any of its subsidiaries other than ordinary fees and benefits received in the
member's capacity as a Director of the Company and the Bank.
The Board of Directors believes that each member of the Audit Committee has
substantial financial experience and is highly qualified to discharge such
member's duties. Under rules adopted by the SEC, the Company is required to
disclose whether it has an "audit committee financial expert" serving on its
Audit Committee. The Board of Directors has determined that Steven B. Chapman
qualifies as an "audit committee financial expert" under the SEC's rules. The
Board of Directors has determined that, based on Mr. Chapman's training and
experience as a Certified Public Accountant, he is capable of (i) understanding
accounting principles generally accepted in the United States ("US GAAP") and
financial statements, (ii) assessing the general application of US GAAP in
connection with the accounting for estimates, accruals and reserves, (iii)
analyzing and evaluating the Company's consolidated financial statements, (iv)
understanding internal control over financial reporting, and (v) understanding
audit committee functions, all of which are attributes of an "audit committee
financial expert" under the SEC's rules.
Compensation Committee
----------------------
The Compensation Committee is comprised of three Directors who satisfy the
independence requirements of the NASDAQ Corporate Governance Standards and
applicable rules and regulations of the SEC: W. Lowell Call, Robert H. Eastman
and Thomas E. Wiseman (Chairman). The Compensation Committee is organized and
conducts its business pursuant to a written charter adopted by the Board of
Directors. A current copy of the charter of the Compensation Committee is
attached to this Proxy Statement as Appendix B. A copy is also posted on the
"Investor Relations" page of the Company's website at www.ovbc.com. The
Compensation Committee periodically reviews and reassesses the adequacy of its
charter and recommends any proposed changes to the full Board for approval.
The purpose of the Compensation Committee is to discharge the
responsibilities of the Board of Directors relating to compensation of the
Company's Directors and executive officers and to prepare an annual report on
executive compensation for inclusion in the proxy statement for the Company's
annual meeting of shareholders. The Compensation Committee will also carry out
such other responsibilities as may be delegated to the Compensation Committee by
the full Board.
The Compensation Committee is responsible for reviewing and approving goals
and objectives relevant to the compensation of the Company's executive officers
(including the Chief Executive Officer), evaluating such executive officers'
performance in light of those goals and objectives and determining compensation
based on that evaluation. The Compensation Committee is also responsible for
reviewing the Company's incentive compensation programs and retirement plans,
and recommending any proposed changes to such programs and plans to
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the Board of Directors. The Compensation Committee also reviews any severance or
other termination arrangements to be entered into with the Company's executive
officers. The Compensation Committee held four (4) meetings during the 2003
fiscal year.
Executive Committee
-------------------
The Executive Committee is comprised of six (6) Directors: Steven B.
Chapman, James L. Dailey, Robert H. Eastman, Brent A. Saunders, Jeffrey E. Smith
(Chairman) and Thomas E. Wiseman. The Executive Committee is authorized to act
in the intervals between meetings of the Directors on matters delegated by the
full Board. There were five (5) meetings of the Executive Committee during the
2003 fiscal year.
Nominating Committee
--------------------
The Nominating Committee consists of three (3) members, Steven B. Chapman,
Robert H. Eastman (Chairman) and Thomas E. Wiseman. The Board of Directors has
determined that all of the Nominating Committee members meet the current
independence requirements of the NASDAQ Corporate Governance Standards and
applicable rules and regulations of the SEC. The purposes of the Nominating
Committee are to:
o identify qualified candidates for election, nomination or appointment to the
Board and recommend to the full Board a slate of Director nominees for each
annual meeting of the shareholders of the Company;
o make recommendations to the full Board regarding the Directors who shall
serve on committees of the Board; and
o undertake such other responsibilities as may be referred to the Nominating
Committee by the full Board.
The Nominating Committee is organized and conducts its business pursuant to
a written charter adopted by the Board of Directors, which is attached to this
proxy statement as Appendix C. A current copy of the charter of the Nominating
Committee is also posted on the "Investor Relations" page of the Company's
website at www.ovbc.com. The Nominating Committee periodically reviews and
reassesses the adequacy of its charter and recommends any proposed changes to
the full Board for approval. The Nominating Committee held four (4) meetings
during the 2003 fiscal year.
Nominating Procedures
As described above, the Company has a standing Nominating Committee that
has the responsibility to identify and recommend individuals qualified to become
Directors. When considering potential candidates for the Board, the Nominating
Committee strives to assure that the composition of the Board, as well as its
practices and operation, contribute to value creation and to the effective
representation of the Company's shareholders. The Nominating Committee may
consider those factors it deems appropriate in evaluating Director candidates
including experience, reputation and geographic location. Depending upon the
current needs of the Board, certain factors may be weighed more or less heavily
by the Nominating Committee. From time to time, the Nominating Committee may
deem it prudent to recruit individuals with education and expertise in a
specific discipline, such as accounting, finance or law.
In considering candidates for the Board, the Nominating Committee evaluates
the entirety of each candidate's credentials and does not have any specific
minimum qualifications that must be met by a Nominating Committee-recommended
nominee. However, the Nominating Committee does believe that all members of the
Board should have the highest character and integrity; a reputation for working
constructively with others; sufficient time to devote to Board
8
matters; and no conflict of interest that would interfere with performance as a
Director. Additionally, the Company is a highly-regulated institution and all
Director candidates are subject to the requirements of applicable federal and
state banking laws and regulations.
The Nominating Committee considers candidates for the Board from any
reasonable source, including shareholder recommendations and recommendations
from existing Directors. The Nominating Committee does not evaluate candidates
differently based on who has made the recommendation. The Nominating Committee
has the authority to hire and pay a fee to consultants or search firms to assist
in the process of identifying and evaluating candidates. No such consultants or
search firms have been used to date and, accordingly, no fees have been paid to
consultants or search firms.
Shareholders may recommend Director candidates for consideration by the
Nominating Committee by writing to the Chairman of the Nominating Committee at
the Company's executive offices in Gallipolis, Ohio, giving the candidate's
name, age, business address, residence address, principal occupation or
employment and number of common shares beneficially owned. The recommendation
should also describe the qualifications, attributes, skills or other qualities
of the recommended Director candidate. A written statement from the candidate
consenting to be named as a Director candidate and, if nominated and elected, to
serve as a Director should accompany any such recommendation.
Shareholders who wish to nominate an individual for election as a Director
at an annual meeting of the shareholders of the Company must comply with the
Company's Code of Regulations regarding shareholder nominations. Shareholder
nominations must be made in writing and delivered or mailed to the Chairman of
the Nominating Committee not less than 14 days nor more than 50 days prior to
any meeting of shareholders called for the election of Directors. However, if
less than 21 days' notice of the meeting is given to the shareholders, the
nomination must be mailed or delivered to the Chairman of the Nominating
Committee not later than the close of business on the seventh day following the
day on which the notice of the meeting was mailed to the shareholders. Each
nomination must contain the following information to the extent known by the
nominating shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
common shares of the Company that will be voted for each proposed nominee; (d)
the name and residence address of the nominating shareholder; (e) the number of
common shares of the Company beneficially owned by the nominating shareholder;
and (f) any other information required to be disclosed with respect to a nominee
for election as a Director under the proxy rules promulgated under the Exchange
Act. Nominations not made in accordance with the Company's Code of Regulations
will not be considered.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Remuneration of Executive Officers
The following table shows, for the three fiscal years ended December 31,
2003, compensation paid by the Company for services in all capacities to Jeffrey
E. Smith, the President and Chief Executive Officer of the Company, and the four
other most highly compensated executive officers of the Company.
9
SUMMARY COMPENSATION TABLE
Annual Compensation
--------------------------------------------------------------------------------
Name and Principal Year Salary(1) Bonus(2) All Other Compensation
Position ($) ($) ($)
--------------------------------------------------------------------------------
James L. Dailey 2003 $99,100 $31,395 $1,984 (3)
Chairman of the 2002 98,500 29,900 1,780
Board of the Company 2001 108,373 27,681 1,557
and the Bank
Jeffrey E. Smith 2003 $131,559 $89,352 $12,283 (4)
President and Chief 2002 127,770 67,412 12,744
Executive Officer of the 2001 122,009 81,093 11,484
Company and the Bank
E. Richard Mahan 2003 $65,243 $53,429 $6,816 (5)
Senior Vice President 2002 62,360 48,989 7,126
and Secretary of the 2001 58,812 44,621 6,457
Company; and Executive
Vice President and
Secretary of the Bank
Larry E. Miller 2003 $64,531 $53,429 $7,060 (6)
Senior Vice President 2002 61,687 48,989 7,426
and Treasurer of the 2001 58,327 44,621 6,806
Company; and Executive
Vice President and
Treasurer of the Bank
Katrinka V. Hart 2003 $59,674 $42,351 $5,848 (6)
Senior Vice President 2002 57,347 42,519 6,415
of the Company; and 2001 55,100 38,767 5,908
Executive Vice President
and Risk Management Officer
of the Bank
(1) "Salary" for Mr. Dailey during 2003 consists of Outside Chairman
Compensation of $68,500; Executive Committee Fees of $24,000; and
Director's Fees of $6,600. "Salary" for Mr. Smith during 2003 includes
Director's fees in the amount of $4,200. Mr. Dailey received Director's
fees in the amount of $6,000 during each of fiscal years 2002 and 2001.
Mr. Smith received Director's fees in the amount of $3,600 during each
of fiscal years 2002 and 2001. Mr. Mahan, Mr. Miller and Ms. Hart
received no fees for fiscal years 2003, 2002 and 2001.
(2) "Bonus" includes Director's Retainer received by Messrs. Dailey and
Smith during 2003 in the amount of $14,700. Messrs Dailey and Smith
received Director's Retainer in the amount of $14,000 during fiscal
year 2002; and Director's Bonus during fiscal year 2001 in the amount
of $13,221.
(3) Includes $1,984 of imputed income in 2003 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 $2,210 allocated to Mr.Smith pursuant to Company contributions
and reallocated forfeitures under the Ohio Valley Banc Corp. Profit
Sharing Plan (the "Profit Sharing Plan"); $2,012 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 (the "401-K Plan"); $7,542 allocated to Mr. Smith
pursuant to Company contributions and reallocated forfeitures under the
Ohio Valley Banc Corp. Employee Stock Ownership Plan (the "ESOP"); and
$519 of imputed income for a life insurance policy on the life of Mr.
Smith, pursuant to the terms of the Company's group life insurance
contracts.
10
(5) Includes $1,206 allocated to Mr.Mahan pursuant to Company contributions
and reallocated forfeitures under the Profit Sharing Plan; $1,099
allocated to Mr. Mahan pursuant to Company contributions and
reallocated forfeitures under the 401-K Plan; $4,118 allocated to Mr.
Mahan pursuant to Company contributions and reallocated forfeitures
under the ESOP; and $393 of imputed income for a life insurance policy
on the life of Mr. Mahan, pursuant to the terms of the Company's group
life insurance contracts.
(6) Includes$1,309 allocated to Mr.Miller pursuant to Company contributions
and reallocated forfeitures under the Profit Sharing Plan; $1,192
allocated to Mr. Miller pursuant to Company contributions and
reallocated forfeitures under the 401-K Plan; $4,468 allocated to Mr.
Miller pursuant to Company contributions and reallocated forfeitures
under the ESOP; and $91 of imputed income for a life insurance policy
on the life of Mr. Miller, pursuant to the terms of the Company's group
life insurance contracts.
(7) Includes $1,078 allocated to Ms. Hart pursuant to Company contributions
and reallocated forfeitures under the Profit Sharing Plan; $981
allocated to Ms. Hart pursuant to Company contributions and reallocated
forfeitures under the 401-K Plan; $3,679 allocated to Ms. Hart pursuant
to Company contributions and reallocated forfeitures under the ESOP;
and $110 of imputed income for a life insurance policy on the life of
Ms. Hart, pursuant to the terms of the Company's group life insurance
contracts.
Report of the Compensation Committee of the Board of Directors
on Executive Compensation
Philosophy. 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. 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 LLC ("Crowe
Chizek"), the Company's and the Bank's independent auditors, to construct a
comprehensive wage and salary administration plan for the Company and the Bank
to be used for all employees, including executive officers. In 1993, in 1996,
and again in 2001, a marketplace range was developed by Crowe Chizek for all
jobs of the Company including that of Jeffrey E. Smith. These ranges were
revised in 2003 using the Crowe Chizek Bank Compensation Survey and the 2003
Ohio Bankers League Compensation Survey.
11
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 $131,559 in 2003, $124,170 in 2002, and
$118,409 in 2001.
Bonuses. Each year key goals are identified and communicated to senior
management. The Compensation Committee met with Mr. Smith four (4) times during
2003 to review his performance as well as the progress toward the accomplishment
of three (3) specific goals established by the Company. The specific goals
targeted: earnings growth; returns on assets and equity; and asset quality. The
bonus range for Mr. Smith in 2003 was $19,009 to $73,933. The evaluation by the
Compensation Committee of Mr. Smith's accomplishment of the specific annual
goals generated a non-Director bonus of $72,652 in 2003, $53,412 in 2002, and
$67,872 in 2001.
Profit Sharing and Retirement Plan. The Company sponsors a qualified
Profit Sharing and Retirement 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 2003, the Board of
Directors voted to contribute $151,925 to the Profit Sharing and Retirement
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
2003 contribution and reallocated forfeitures is included in the Summary
Compensation Table on page 10.
401(k) Retirement Plan. The Company sponsors a qualified 401(k)
Retirement 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 2003 contribution and reallocated
forfeitures is included in the Summary Compensation Table on page 10.
Employee Stock Ownership Plan. The Company sponsors a qualified
Employee Stock Ownership Plan for all of its employees, including executive
officers. Participant qualifications are identical to those of the Profit
Sharing and Retirement Plan. In December 2003, the Board of Directors voted to
contribute $303,850 to the Employee Stock Ownership 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 2003
contributions and reallocated forfeitures is included in the Summary
Compensation Table on page 10.
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 13. 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 70% of a participant's final year's
12
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 2003
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 2003 was fair and reasonable when compared with executive
compensation levels in the banking industry as reported in the marketplace range
developed. Mr. Smith's compensation ranked in the lower 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
Compensation of Directors
All of the Directors of the Company also serve as Directors of the
Bank. Members of the Board of Directors of the Company receive compensation for
their services rendered as Directors of the Bank, not the Company. In 2003, each
Director who was not an employee of the Company or any of its subsidiaries
received $550 per month for his or her service as a member of the Board of
Directors of the Bank; in 2002 and 2001 those individuals received $500 per
month. Directors who were employees of a subsidiary of the Company received $350
per month in 2003; and $300 per month during 2002 and 2001 for their services.
In addition, in 2003, each Director of the Bank received a retainer of
$14,700; in 2002 those individuals received $14,000. In 2001, each Director of
the Bank received a bonus of $13,221. The retainer and bonus figures were
pro-rated for time served for new Directors of the Bank.
Each non-employee Director who was a member of the Executive Committee
of the Bank received fees of $40,695 in 2003, $39,900 in 2002, and $38,460 in
2001. This figure was pro-rated for time served for new members. Executive
Committee members who are employees of the Bank receive no compensation for
serving on the Executive Committee. The Executive Committee met fifty (50) times
in 2003, fifty-one (51) times in 2003, and fifty-two (52) times in 2001.
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; 50% at
age 70; and terminates at retirement.
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 a
distribution of
13
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, the distribution will be made to the
participant's designated beneficiary in an amount equal to what the participant
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 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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 shareholders 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
$5,489,749 at December 31, 2003. As of the date hereof, all of such loans were
performing loans.
Brent A. Saunders rendered legal services to the Company and its
subsidiaries during the Company's 2003 fiscal year and is expected to render
legal services to the Company and its subsidiaries during the Company's 2004
fiscal year.
AUDIT COMMITTEE MATTERS
Report of the Audit Committee of the Board of Directors
The Audit Committee has submitted the following report for inclusion in
this Proxy Statement:
The Audit Committee consists of four (4) Directors who qualify as
independent under the NASDAQ Corporate Governance Standards and Rule 10A-3 under
the Exchange Act. The Audit Committee operates under a written charter adopted
by the Board of Directors.
The Audit Committee appoints the Company's independent accountants and
oversees the Company's financial and reporting processes on behalf of the Board
of Directors. Management has primary responsibility for the consolidated
financial statements and the accounting and financial reporting processes,
including the establishment and maintenance of an adequate system of internal
control over financial reporting for the Company.
As part of its oversight responsibilities, the Audit Committee reviewed
and discussed with management the audited financial statements of the Company
for the year ended December 31,
14
2003, including a discussion of the quality, and not just the acceptability, of
the accounting principles applied, the reasonableness of significant judgments
and the clarity of disclosures in the audited financial statements.
Crowe Chizek and Company LLC ("Crowe Chizek") served as the Company's
independent auditors for the 2003 fiscal year. The Audit Committee discussed
with Crowe Chizek the matters required to be discussed with the Audit Committee
under generally accepted auditing standards, including those required by
Statement on Auditing Standards No. 61 (having to do with accounting methods
used in the financial statements). The Audit Committee also discussed with Crowe
Chizek the auditor's independence from the Company and its management, including
the matters in the written disclosures required by Independence Standards Board
Standard No. 1. The Audit Committee considered the non-audit services rendered
by Crowe Chizek to be compatible with maintaining Crowe Chizek's independence.
Based on the reviews and discussions outlined above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2003.
Submitted by:
Audit Committee Members
Steven B. Chapman, CPA; Chairman
Anna P. Barnitz
W. Lowell Call
Lannes C. Williamson
Under applicable SEC rules, the Audit Committee is required to
pre-approve the audit and non-audit services performed by the independent
auditors in order to assure that they do not impair the auditors' independence
from the Company. The SEC's rules specify the types of non-audit services that
an independent auditor may not provide to its audit client and establish the
Audit Committee's responsibility for administration of the engagement of the
independent auditors. Accordingly, the Audit Committee has adopted, and the
Board of Directors has ratified, an Audit and Non-Audit Services Pre-Approval
Policy (the "Pre-Approval Policy"), which sets forth the procedures and the
conditions pursuant to which services proposed to be performed by the
independent auditors may be pre-approved.
The purpose of the Pre-Approval Policy is to set forth the procedures
by which the Audit Committee intends to fulfill its responsibilities. It does
not delegate the Audit Committee's responsibilities to pre-approve services
performed by the independent auditors to management.
Consistent with the SEC's rules, the Pre-Approval Policy provides two
different approaches to pre-approving services. Proposed services may either be
pre-approved without consideration of specific case-by-case services by the
Audit Committee ("general pre-approval") or require the specific pre-approval of
the Audit Committee ("specific pre-approval"). The combination of these two
approaches in the Pre-Approval Policy results in an effective and efficient
procedure to pre-approve services performed by the independent auditors. As set
forth in the Pre-Approval Policy, unless a type of service has received general
pre-approval, it will require specific pre-approval by the Audit Committee if it
is to be provided by the independent auditors. Any proposed services exceeding
pre-approved cost levels or budgeted amounts will also require specific
pre-approval by the Audit Committee.
The Audit Committee may delegate either type of pre-approval authority
to one or more of its members. The member to whom such authority is delegated
must report, for informational purposes only, any pre-approval decisions to the
Audit Committee at its next scheduled meeting.
15
Appendices to the Pre-Approval Policy describe the Audit,
Audit-Related, Tax and All Other services that have the general pre-approval of
the Audit Committee. The term of any general pre-approval is 12 months from the
date of pre-approval, unless the Audit Committee considers a different period
and states otherwise. The Audit Committee will annually review and pre-approve
the services that may be provided by the independent auditors without obtaining
specific pre-approval from the Audit Committee. The Audit Committee will add or
subtract to the list of general pre-approved services from time to time, based
on subsequent determinations.
All requests or applications for services to be provided by the
independent auditors that do not require specific approval by the Audit
Committee will be submitted to the Internal Auditor and must include a detailed
description of the services to be rendered. The Internal Auditor will determine
whether such services are included within the list of services that have
received the general pre-approval of the Audit Committee. The Audit Committee
will be informed on a timely basis of any such services rendered by the
independent auditors.
Requests or applications to provide services that require specific
approval by the Audit Committee will be submitted to the Audit Committee by both
the independent auditors and the Internal Auditor, and must include a joint
statement as to whether, in their view, the request or application is consistent
with the SEC's rules on auditor independence.
The Audit Committee has designated the Internal Auditor to monitor the
performance of all services provided by the independent auditors and to
determine whether such services are in compliance with the Pre-Approval Policy.
The Internal Auditor will report to the Audit Committee on a periodic basis on
the results of this monitoring. Both the Internal Auditor and management will
immediately report to the chairman of the Audit Committee any breach of the
Pre-Approval Policy that comes to the attention of the Internal Auditor or any
member of management.
Services Rendered by the Independent Auditor
In April 2003, the Audit Committee appointed the accounting firm of
Crowe Chizek to serve as independent auditors of the Company for the 2003 fiscal
year. Fees billed for services rendered by Crowe Chizek for each of the 2003 and
2002 fiscal years were:
A. Pre-Approved Audit Services
---------------------------
2003 2002
Fees and Fees and
Service Expenses Expenses
------- -------- --------
Consolidated financial audit of $114,310 $70,250
the Company, including quarterly
reviews, review of Forms 10-Q and 10-K
Attestation of management reports on 3,200 2,800
internal controls under FDICIA -------- --------
Total $117,510 $73,050
16
B. Pre-Approved Audit-Related Services
-----------------------------------
2003 2002
Fees and Fees and
Service Expenses Expenses
------- -------- --------
Audits of the Company sponsored benefit $11,900 $10,600
plans
Consultations with the Company's 2,750 2,145
management as to the accounting or
disclosure treatment of transactions or
events and/or the actual or potential impact
of final or proposed rules, standards or
interpretations by the SEC, FASB, or other
regulatory or standard-setting bodies
Audit of required eligible mortgage loan 700 650
collateral pledged to the Federal Home Loan
Bank of Cincinnati.
Educational materials related to the -0- 4,000
requirements of SEC rules or listing standards
promulgated pursuant to the Sarbanes-Oxley Act
of 2002
-------- --------
Total $15,350 $17,395
C. Pre-Approved Tax Services
-------------------------
2003 2002
Fees and Fees and
Service Expenses Expenses
------- -------- --------
U.S. federal, state and local tax planning $3,450 $9,205
and advice
U.S. federal, state and local tax 7,850 13,140
compliance -------- --------
Total $11,300 $22,345
D. Pre-Approved All Other Services
-------------------------------
There were no fees or expenses billed for Other Services rendered by Crowe
Chizek for each of the 2003 and 2002 fiscal years.
Notification of Appointment of Independent Auditors
---------------------------------------------------
Pursuant to the appointment by the Audit Committee, Crowe Chizek will
serve as the Company's independent auditors for the 2004 fiscal year. Crowe
Chizek has served as the Company's independent auditors since 1992. The Board of
Directors expects representatives of Crowe Chizek will be present at the Annual
Meeting. They will have the opportunity to make a statement if they desire to do
so, and will be available to respond to appropriate questions.
17
PERFORMANCE GRAPH
The following graph sets forth a comparison of five year cumulative
total returns among the Company's Common Shares (indicated "Ohio Valley Banc
Corp." on the Performance Graph), the S & P 500 Index (indicated "S & P 500" 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, 1998 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 seventeen (117) 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 117 banks in the SNL Index.
TOTAL RETURN PERFORMANCE
OVBC, S&P 500 and SNL $500M-$1B
1998-2003
Period Ending
----------------------------------------------------------
12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
-------- -------- -------- -------- -------- --------
OVBC $100 $102.92 $ 79.38 $ 78.15 $ 68.56 $ 91.61
S&P 500 $100 $121.11 $110.34 $ 97.32 $ 75.75 $ 97.40
SNL $500M-$1B $100 $ 92.57 $ 88.60 $114.95 $146.76 $211.62
[Insert Graph Here]
Source : SNL Financial LC, Charlottesville, VA (434) 977-1600
18
ANNUAL REPORT - FORM 10-K
The Company will provide without charge to any shareholder of record on
March 17, 2004, 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, 2003. Such
written request should be directed to E. Richard Mahan, Secretary, Ohio Valley
Banc Corp., P.O. Box 240, Gallipolis, Ohio 45631, telephone number
1-800-468-6682 or 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
materials for action at each year's annual meeting. Any proposal submitted by a
shareholder for inclusion in the proxy materials for the 2005 Annual Meeting,
presently scheduled for April 13, 2005, must be received by the Company on or
before November 25, 2004. A shareholder proposal received after November 25,
2004, but on or before February 28, 2005, will not be included in the proxy
materials for the 2005 Annual Meeting, but may still be presented by the
shareholder at the 2005 Annual Meeting. The individuals named as proxies for the
2005 Annual Meeting will be entitled to use their discretionary voting authority
on proposals received after February 28, 2005, without any discussion of the
matter in the Company's proxy materials.
Shareholders desiring to nominate candidates for election as directors
at the 2005 Annual Meeting must follow the procedures described in "ELECTION OF
DIRECTORS - Nominating Procedures".
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, 2003, containing financial statements for such year
and the signed opinion of Crowe Chizek and Company LLC, 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.
19
Please sign and date the enclosed proxy and mail 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 14, 2004.
BY ORDER OF THE BOARD OF DIRECTORS
[Insert Signature Here]
James L. Dailey
Chairman of the Board
[Insert Signature Here]
Jeffrey E. Smith
President and Chief Executive Officer
20
Appendix A
OHIO VALLEY BANC CORP.
AUDIT COMMITTEE CHARTER
PURPOSE
This Charter identifies the purpose, composition, meetings, authority, and other
responsibilities and duties of the Audit Committee (the "Committee") of the
Board of Directors (the "Board") of Ohio Valley Banc Corp. (the "Company"). The
Committee shall provide assistance to the corporate 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 Oversee the accounting and financial reporting processes of the Corporation
and its subsidiaries and audit of the Corporation's financial statements.
o Serve as independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
o To oversee the certification process and other laws and regulations
impacting the Corporation's quarterly and annual financial statements and
related disclosure controls.
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.
COMPOSITION
The 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. All committee
members must satisfy the independence requirements of the Nasdaq Stock Market
and Section 10A of the Securities Exchange Act of 1934 and the rules promulgated
by the Securities and Exchange Commission thereunder. All members must be able
to read and understand fundamental financial statements, including the balance
sheet, income statement and cash flow statement. At least one member shall have
past employment experience in finance or accounting or other comparable
experience or background that results in the individual's financial
sophistication including being or having been a CEO or CFO. Committee members
may enhance their familiarity with finance and accounting by participating in
educational programs conducted by the Corporation or an outside consultant.
Based upon the recommendation of the Nominating Committee, the members of the
Committee shall be elected by the Board at the annual organizational meeting of
the Board and shall serve until the next organizational meeting or until their
successors shall be duly elected and qualified. Committee Chairman shall also be
elected by the full Board.
MEETINGS
The Committee shall meet at least four times annually or more frequently as
circumstances require. The Committee will meet in separate executive sessions
with management, the
A-1
independent auditors and the internal auditors periodically to discuss any
matters that the Committee or one of these groups believes should be discussed
privately. The Committee may ask members of management or others to attend
meetings and provide pertinent information as necessary. Minutes of all meetings
of the Committee shall be submitted to the Board.
AUTHORITY
Independent Accountant
o Responsible for the selection, evaluation, retention, or discharge of the
independent accountant.
o The independent accountant shall report directly to the Committee.
o Discuss the financial and/or MD & A with the independent accountant before
each 10Q and 10K is filed.
o Recommend to the Board whether the audited financial statements should be
contained in the Corporation's Annual Report on Form 10K.
o Oversee the work of the independent accountant, including the resolution of
disagreements between management and the independent auditors.
o Review the performance of the independent accountant and consult with the
independent accountant outside the presence of management about internal
controls and the effectiveness thereof and the completeness and accuracy of
the Corporation's financial statements.
o Review the matters required to be discussed by Statement on Auditing
Standards No. 61 and an explanation from the independent accountant of the
factors to be considered by the independent accountant in determining the
audit scope.
o Pre-approve all audit and non-audit service fees paid to the independent
accountant.
o Confirm the independence of the independent accountant.
Internal Auditor
o Responsible for the appointment, engagement, performance and replacement of
outside vendors performing internal audit functions.
o Review with the internal auditor the responsibilities, qualifications, and
staffing of the internal audit department.
o Review with the internal auditor the annual audit plan and the process used
to develop the plan.
o Review with the internal auditor any deficiencies found in the internal
audit process and the action of management to correct any such deficiencies
o Review the internal auditor's assessment of the performance of the
independent accountant.
OTHER RESPONSIBILITIES AND DUTIES
Documents/Reports Review
o Review and reassess the adequacy of the charter at least annually and
submit any proposed revisions to the Board for consideration and approval.
o Review the Corporation'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.
A-2
o Meet with the internal auditor,the independent accountant and management in
separate executive sessions at the Disclosure Committee Meeting to discuss
any matters the Committee or these groups believe should be discussed
privately with the Committee.
Ethical and Legal Compliance
o Review legal and regulatory matters that may have a material effect on the
Corporation's financial statements, compliance policies and programs and
reports from regulators.
o Establish procedures and require the Corporation to obtain or provide the
necessary resources and mechanisms for the receipts,retention and treatment
of complaints received by the Corporation regarding accounting, internal
accounting controls, or auditing matters, and the confidential, anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters.
o Review the process for communicating the Corporation's Code of Conduct and
Ethics to company personnel and for monitoring compliance.
o Conduct or authorize investigations into any matters within the Committee's
scope of responsibilities. The Committee shall be empowered to retain
independent counsel, accountants,or others to assist it in carrying out its
duties. The Corporation shall provide appropriate funding, as determined
solely by the Committee, for payment of compensation to the independent
auditors engaged for the purpose of preparing or issuing an audit report or
performing other audits review or attest service for the Corporation,
compensation to any other advisors retained by the Committee and ordinary
administrative expense of the Committee that the Committee determines are
necessary or appropriate in carrying out its duties.
o Perform any other activities consistent with this Charter,the Corporation's
Code of Regulations and governing law, as the Committee or the Board deems
necessary or appropriate.
o Pre-approve all "related party transactions" as defined by Regulation S-K,
Item 404.
LIMITATION OF AUDIT COMMITTEE'S ROLE
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 and applicable
rules and regulations. This is the responsibility of management and the
independent auditor.
A-3
Appendix B
OHIO VALLEY BANC CORP.
COMPENSATION COMMITTEE CHARTER
PURPOSE
This Charter identifies the purpose, membership, organization, duties and
responsibilities of the Compensation Committee (the "Committee") of the Board of
Directors (the "Board") of Ohio Valley Banc Corp. (the "Company"). The purpose
of the Committee is to (1) discharge the Board's responsibilities relating to
compensation of the Company's directors and executive officers, and (2) prepare
an annual report on executive compensation for inclusion in the Company's proxy
statement in accordance with applicable laws, rules and regulations.
MEMBERSHIP AND ORGANIZATION
The Committee shall consist of no fewer than three members, each of whom shall
be a director of the Company. Each member of the Committee must: (1) satisfy the
independence requirements of the Nasdaq Stock Market; (2) be "Non-Employee
Directors" as defined by Rule 16b-3 under the Securities and Exchange Act of
1934 as amended; and (3) be "Outside Directors" as defined by Rule 162(m) of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder. The Committee will meet at least two times each year and at such
other times deemed necessary to fulfill its responsibilities. Meetings can be
called by any member of the Committee and a majority of the members of the
Committee shall constitute a quorum. The Committee will maintain written minutes
of its meetings, which will be filed with the minutes of the meetings of the
Board of Directors. The Chairman and Committee members shall be appointed and
replaced by the Board of Directors upon the recommendation of the Nominating
Committee.
DUTIES AND RESPONSIBILITIES
1. Review and approve on an annual basis the corporate goals and objectives
with respect to compensation for the Chief Executive Officer. The Committee
shall evaluate at least once a year the Chief Executive Officer's
performance in light of these established goals and objectives and based
upon these evaluations, shall determine the Chief Executive Officer's
annual compensation, including base salary, equity-based awards, long-term
compensation and other incentives. The Committee shall also consider
compensation at peer companies.
2. Determine the compensation of the Company's other executive officers in
light of the Company's overall compensation objectives and policy, and in
keeping with (a) reestablished performance goals and objectives, (b)
Company performance, (c) strategic leadership consistent with the Company's
long term strategies, and (d) a review of compensation paid to executive
officers by peer group.
3. Evaluate the performance of the Company's senior executive officers and
approve the annual compensation for such senior executive officers. The
Committee shall also provide oversight of management's decisions concerning
the performance, compensation and benefits of other Company officers and
employees.
4. Review the Company's incentive compensation and recommend changes in such
plans to the Board, as needed.
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5. Review and make recommendations regarding the Company's retirement plans.
6. Review and approve any severance or other termination arrangements to be made
with any executive officer of the Company.
7. Review and reassess the adequacy of this Charter periodically and recommend
any proposed changes to the Board for approval.
8. Perform any other duties or responsibilities delegated to the Committee by
the Board from time to time.
B-2
Appendix C
OHIO VALLEY BANC CORP.
NOMINATING COMMITTEE CHARTER
PURPOSE
The Charter identifies the purpose, membership, organization, duties and
responsibilities of the Nominating Committee (the "Committee") of the Board of
Directors (the "Board") of Ohio Valley Banc Corp. (the "Company"). The purpose
of the Committee is to (1) identify and select, or recommend for the Board's
selection, director nominees for each meeting of the Company's shareholders at
which directors are elected; and (2) recommend to the full Board the directors
that shall serve on each committee of the Board.
MEMBERSHIP AND ORGANIZATION
The Committee shall consist of no fewer than three members, each of whom shall
be a director of the Company. Each member of the committee must meet the
independence requirements of the Nasdaq Stock Market and any other applicable
requirements, standards, laws or regulations relating to the Nominating
Committee's duties and responsibilities. The Committee will meet at least two
times each year and at such other times deemed necessary to fulfill its
responsibilities. Meetings can be called by any member of the Committee and a
majority of the members of the Committee shall constitute a quorum. The
Committee will maintain written minutes of its meetings, which will be filed
with the minutes of the meetings of the Board of Directors. The Chairman and
Committee members shall be appointed and replaced by the Board of Directors.
DUTIES AND RESPONSIBILITIES
1. Actively seek, recruit, screen and interview individuals qualified to
become members of the Board for recommendation to the Board. The Committee
may consider management's recommendations for director candidates.
2. Evaluate the qualifications and performance of incumbent directors and
determine whether to recommend them for re-election to the Board.
3. Establish and periodically reevaluate criteria for Board membership and
selection of new directors; and determine as necessary the portfolio of
skills, experience, perspective and background required for the effective
functioning of the Board.
4. Recommend to the Board the director nominees for each annual meeting of
shareholders.
5. Recommend to the Board director nominees for each of the committees of the
Board, including the chairperson of each committee.
6. Recommend to the Board removal of a director, if appropriate.
7. Monitor the orientation and training needs of directors and recommend
action to the Board, individual directors, and management where
appropriate.
C-1
8. Review and reassess the adequacy of this Charter periodically and recommend
any proposed changes to the Board for approval.
9. Perform any other duties or responsibilities delegated to the Committee by
the Board from time to time.
10.In case of a vacancy on the Board, the committee shall recommend to the Board
an individual to fill the vacancy through appointment by the Board or through
election by the shareholders.
C-2
OHIO VALLEY BANC CORP.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 14, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder(s) of common shares of Ohio Valley Banc Corp. (the
"Company") 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
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Shareholders of the Company, to be held at the Morris and Dorothy Haskins
Ariel Theatre, 426 Second Avenue, Gallipolis, Ohio, on Wednesday, April 14, 2004
at 5:00 p.m., Eastern Daylight Time, and at any adjournment(s) thereof, as
follows:
1. To elect the following three (3) Directors to the Board of Directors for a
term of three years each:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES.
Nominees:
Steven B. Chapman
Robert H. Eastman
Jeffrey E. Smith
[ ] Vote For All [ ] Withhold Authority to Vote For all Nominees [ ] Vote for
all except _________
2. In their discretion, the individuals designated to vote this proxy are
authorized to vote upon any other matter (none known at the time of
solicitation of this proxy) which properly comes before the Annual
Meeting or any adjournment thereof.
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 NOMINEES LISTED ABOVE AS
DIRECTORS OF THE COMPANY. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE
ANNUAL MEETING OR ANY ADJOURNMENT THEREOF OR IF A NOMINEE FOR ELECTION AS A
DIRECTOR NAMED IN THE PROXY STATEMENT IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL
NOT SERVE, THE COMMON SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE
DISCRETION OF THE INDIVIDUALS DESIGNATED TO VOTE THIS PROXY, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ON SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEE(S)
AS THE DIRECTORS MAY RECOMMEND.
(THIS PROXY CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE)
OHIO VALLEY BANC CORP.
420 Third Avenue
P.O. Box 240
Gallipolis, Ohio 45631
No. of OVBC Shares:________
Acct No. ________
Please indicate any address change above.
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.
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Shareholder Signature Date
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Shareholder Signature Date