March 27,
2009
To Our
Shareholders:
On behalf of the Board of Directors, I
cordially invite you to attend the Annual Meeting of Shareholders of City
Holding Company to be held at the Pullman Plaza Hotel located at 1001 Third
Avenue, Huntington, WV 25701, on Wednesday, April 29, 2009 at 2:30
p.m.
The notice of meeting and proxy
statement accompanying this letter describes the specific business to be acted
upon.
In addition to the specific matters to
be acted upon, there will be a report on the progress of the Company and an
opportunity for questions of general interest to the shareholders. We
hope that you will join us at this year’s Annual Meeting and look forward to
personally greeting those of you who are able to attend.
It is important that your shares be
represented at the meeting. Whether or not you plan to attend the
annual meeting, please vote your shares by: (1) accessing the Internet at the
website included on the proxy card, (2) calling the toll-free number shown on
the proxy card, or (3) completing, signing and returning the enclosed proxy card
as soon as possible in the postage-paid envelope provided.
City Holding Company thanks you for
your consideration and your continued support.
Sincerely,
Philip L. McLaughlin
C
hairman of
the Board
Charles R. Hageboeck
President & CEO
CITY
HOLDING COMPANY
25
Gatewater Road
Post
Office Box 7520
Charleston,
West Virginia 25356-0520
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To Be
Held April 29, 2009
Notice is hereby given that the Annual
Meeting of Shareholders of City Holding Company will be held at the Pullman
Plaza Hotel located at 1001 Third Avenue, Huntington, WV 25701, on Wednesday,
April 29, 2009 at 2:30 p.m. (local time) for the following
purposes:
|
1.
|
To
elect four Class I directors to serve for a term of three
years. The names of the nominees are set forth in the
accompanying proxy statement.
|
|
2.
|
To
ratify the Board of Directors’ appointment of Ernst & Young LLP as the
independent registered public accounting firm for City Holding Company for
2009.
|
|
3.
|
To
transact such other business as may properly come before the
meeting.
|
Shareholders of record at the close of
business on March 20, 2009 are the only shareholders entitled to notice of and
to vote at the annual shareholders meeting.
By Order of the Board of
Directors,
Victoria A. Faw,
Secretary
March 27,
2009
IMPORTANT
NOTICE
We
urge you to sign and return the enclosed proxy as promptly as possible
regardless of your plans to attend the meeting. If you attend the
meeting, you may vote your shares in person, even though you have previously
signed and returned your proxy.
CITY
HOLDING COMPANY
25
Gatewater Road
Charleston,
West Virginia 25356-0520
PROXY
STATEMENT
Information
Concerning the Solicitation
This statement is furnished in
connection with the solicitation of proxies to be used at the Annual Meeting of
Shareholders of City Holding Company (the “Company”) to be held on April 29,
2009.
The solicitation of proxies in the
enclosed form is made on behalf of the Board of Directors of the
Company. The cost of preparing, assembling, and mailing the proxy
material and of reimbursing brokers, nominees, and fiduciaries for the
out-of-pocket and clerical expenses of transmitting copies of the proxy material
to the beneficial owners of shares held of record by such persons will be borne
by the Company. The Company does not currently intend to solicit
proxies otherwise than by use of the mail, but certain officers and regular
employees of the Company or its subsidiaries, without additional compensation,
may use their best efforts, by telephone or otherwise, to obtain
proxies. The proxy materials are being mailed, on or about March 27,
2009, to shareholders of record at the close of business on March 20, 2009 (the
“Record Date”).
Annual
Report
The
Company’s Annual Report for the fiscal year ended December 31, 2008, is being
furnished with this Proxy Statement to shareholders of record on the Record
Date. The Annual Report to Shareholders does not constitute a part of
this Proxy Statement or the proxy solicitation material.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 29, 2009
This Proxy Statement and the 2008
Annual Report and any amendments thereto that are required to be furnished to
shareholders are available online at
www.ViewMaterial.com/CHCO
.
Householding
The
Securities and Exchange Commission (“SEC”) has adopted rules that permit
companies and intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements and annual reports with respect to two or more
shareholders sharing the same address by delivering a single proxy statement
addressed to those shareholders. This process is commonly referred to
as “householding.”
The Company has implemented
“householding” in an effort to reduce the number of duplicate mailings to the
same address. This process benefits both shareholders and the
Company, because it eliminates unnecessary mailings delivered to your home and
helps to reduce the Company’s expenses. “Householding” will not be
used, however, if the Company has received contrary instructions from one or
more of the shareholders sharing an address. We will continue to
“Household” indefinitely until you instruct us otherwise. You may
notify the Company that you would like to receive separate copies of the
Company’s annual report and proxy statement in the future by calling
Computershare Investor Services, LLC at 1-800-568-3476, or by mail to the
attention of City Holding Company, c/o Computershare Investor Services, LLC, P.
O. Box 43078, Providence, RI 02940-3078. Even if your household
receives only one annual report and one proxy statement, the Company will
continue to send a separate proxy card for each shareholder residing at your
address. Please note, however, that if you also hold shares of the
Company in “street name” (e.g., in a brokerage account or retirement plan
account) you may continue to receive duplicate mailings.
Voting
Methods
The accompanying proxy is for use at
the Annual Meeting if a shareholder either will be unable to attend in person or
will be able to attend but wishes to vote by proxy. Shares may be
voted by completing the enclosed proxy card and mailing it in the postage-paid
envelope provided, voting over the Internet, or using a toll-free telephone
number. Please refer to the proxy card or the information forwarded
by your bank, broker or other holder of record to see which options are
available.
(If your
shares are held in the name of a bank, broker or other holder of record, you
must obtain a proxy, executed in your favor, from the holder of record to be
able to vote at the meeting.)
Shareholders who vote over the
Internet may incur costs, such as telephone and Internet access charges, for
which the shareholder is responsible. The Internet and telephone
voting facilities for eligible shareholders of record will close at 6:00 a.m.,
Eastern Time, on April 29, 2009. Specific instructions to be followed
by any shareholder interested in voting via the Internet or telephone are shown
on the enclosed proxy card. The Internet and telephone voting
procedures are designed to authenticate the shareholder’s identity and to allow
shareholders to vote their shares and confirm that their instructions have been
properly recorded. In the event that a shareholder’s proxy does not
reference Internet or telephone information because the shareholder is not the
registered owner of the shares, the shareholder should complete and return the
paper proxy card in the self-addressed, postage-paid envelope
provided.
The proxy may be revoked at any time
before the shares subject to it are voted by (i) notifying, in writing, Victoria
A. Faw, Corporate Secretary, City Holding Company, P. O. Box 7520, Charleston,
WV 25356-0520, (ii) executing a proxy bearing a later date (including a proxy
given
over the Internet or by telephone), or (iii) voting in person at the Annual
Meeting the shares represented by the proxy. (Your attendance at the
Annual Meeting will not, by itself, revoke your proxy; you must vote in person
at the Annual Meeting.) All shares of the Company’s common stock (the
“Common Stock”) represented by valid proxies received pursuant to this
solicitation, and not revoked before they are exercised, will be voted in the
manner specified therein. If no specification is made, the proxies
will be voted
FOR
proposals 1, 2, and 3. If any other matters are properly presented
for consideration at the Annual Meeting, the persons named as proxies and acting
thereunder will have discretion to vote on those matters according to their best
judgment to the same extent as the person delivering the proxy would be entitled
to vote. At this time, the Company is not aware of any other matters
that may come before the Annual Meeting.
Outstanding
Voting Shares
Only shareholders of record at the
close of business on March 20, 2009 are entitled to vote at the Annual
Meeting. On that day, there were issued and outstanding 15,909,494
shares of Common Stock (after deducting an aggregate of 2,603,788 shares held in
treasury). Each share has one vote. Directors are elected
by a plurality of the votes cast. The affirmative vote of a majority
of the shares represented and entitled to vote at the Annual Meeting is required
to approve the appointment of Ernst & Young LLP. In elections of
directors, each shareholder shall have the right to cast one vote for each share
of stock owned by him for as many persons as there are directors to be elected,
or, upon notice to the Company at least 48 hours before the meeting and in
accordance with West Virginia law, he may cumulate such votes and give one
candidate as many votes as the number of directors to be elected multiplied by
the number of his shares of stock, or he may distribute them on the same
principle among as many candidates and in such manner as he shall
desire. If one shareholder duly gives notice in accordance with West
Virginia law that he intends to cumulate votes, all shareholders may do
so. If any shares are voted for the election of directors, the
persons named in the accompanying proxy card may, unless otherwise directed,
cumulate their votes at their discretion and vote for less than all such
nominees. For all other purposes, each share is entitled to one
vote.
The presence, in person, or by properly
executed proxy, of the holders of a majority of the outstanding shares of the
Company’s Common Stock entitled to a vote at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. Abstentions will be
counted as shares present for purposes of determining the presence of a
quorum. Because director nominees must receive a plurality of the
votes cast at the meeting, a vote withheld will not affect the outcome of the
election. Additionally, because a majority of the votes cast will be
sufficient for the approval of the ratification of the appointment of Ernst
& Young LLP, neither broker non-votes nor abstentions will affect the
outcome of the proposals. Any shares held in street name that are not
voted (“broker non-votes”) in the election of directors or the proposal to
ratify the Company’s appointment of Ernst & Young LLP will not be included
in determining the number of votes cast.
COMMON
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND
MANAGEMENT
The Company’s only authorized voting
equity security is its Common Stock, par value $2.50 per share.
Beneficial
Ownership of Directors and Named Executive Officers
The table below presents certain
information as of March 1, 2009 regarding beneficial ownership of shares of
Common Stock by directors, named executive officers listed under “Executive
Officers of City Holding Company” on page 11, and all directors and executive
officers as a group.
BENEFICIAL
OWNERSHIP
|
|
Name
of Beneficial Owner
|
|
Sole
Voting and Investment Power
|
|
|
Other
(1)
|
|
|
Common
Shares Subject to a Right to Acquire
(2)
|
|
|
Aggregate
Percentage Owned
|
|
|
CHCO
Shares Held as Collateral
for
Loans
|
|
|
|
|
(#
|
)
|
|
|
(#
|
)
|
|
|
(#
|
)
|
|
(%)
|
|
|
|
(#
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hugh
R. Clonch
|
|
|
21,378
|
|
|
|
91,984
|
|
|
|
-
|
|
|
|
*
|
|
|
|
75,812
|
|
Oshel
B. Craigo
|
|
|
12,253
|
|
|
|
2,912
|
|
|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
John
R. Elliot
(3)
|
|
|
20,601
|
|
|
|
7,600
|
|
|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
William
H. File III
|
|
|
15,127
|
|
|
|
999
|
|
|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
Robert
D. Fisher
|
|
|
14,778
|
|
|
|
-
|
|
|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
Jay
C. Goldman
|
|
|
14,753
|
|
|
|
-
|
|
|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
Charles
R. Hageboeck
|
|
|
7,000
|
|
|
|
9,244
|
|
|
|
61,000
|
|
|
|
*
|
|
|
|
-
|
|
David
W. Hambrick
(3)
|
|
|
36,707
|
|
|
|
3,671
|
|
|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
Tracy
W. Hylton II
|
|
|
20,288
|
|
|
|
-
|
|
|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
C.
Dallas Kayser
|
|
|
17,830
|
|
|
|
526
|
|
|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
Philip
L. McLaughlin
|
|
|
31,312
|
|
|
|
16,398
|
|
|
|
-
|
|
|
|
*
|
|
|
|
180
|
|
James
L. Rossi
(3)
|
|
|
11,860
|
|
|
|
-
|
|
|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
Sharon
H. Rowe
|
|
|
27,762
|
|
|
|
-
|
|
|
|
-
|
|
|
|
*
|
|
|
|
5,800
|
|
Mary
H. Williams
(3)
|
|
|
9,102
|
|
|
|
-
|
|
|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
Named
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
L. Bumgarner
|
|
|
2,850
|
|
|
|
1,687
|
|
|
|
12,500
|
|
|
|
*
|
|
|
|
-
|
|
Craig
G. Stilwell
|
|
|
15,763
|
|
|
|
1,308
|
|
|
|
29,000
|
|
|
|
*
|
|
|
|
-
|
|
John
A. DeRito
|
|
|
3,325
|
|
|
|
-
|
|
|
|
19,000
|
|
|
|
*
|
|
|
|
-
|
|
John
W. Alderman III
|
|
|
3,100
|
|
|
|
2,852
|
|
|
|
4,500
|
|
|
|
*
|
|
|
|
-
|
|
Directors
and Executive Officers as a group (18 persons)
|
|
|
285,789
|
|
|
|
139,181
|
|
|
|
126,000
|
|
|
|
3.40
|
%
|
|
|
81,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Less
than 1%.
(1)
Includes shares (a) owned by or with certain relatives; (b) held in
various fiduciary capacities; (c) held by certain corporations; (d) held in
trust under the Company's 401(k) Plan and Trust.
(2)
Includes options to acquire shares of the Company's Common Stock that are
exerciseable within 60 days of December 31, 2008.
(3)
Messrs. Elliot, Hambrick, Rossi and Ms. Williams are nominees for re-election to
the Board of Directors as Class I directors.
GOVERNANCE AND NOMINATING COMMITTEE
REPORT
The
Governance and Nominating Committee of the Board of Directors (the “Governance
Committee”) is comprised of seven independent directors and operates under a
written charter adopted by the Board of Directors. The Governance
Committee is charged with the responsibilities of: (i) identifying
individuals qualified to become Board members; (ii) selecting or recommending
that the Board select the director nominees for the next annual meeting of
shareholders; and (iii) overseeing corporate governance matters for the
Company.
Director
candidates are nominated by the Governance Committee. The Governance
Committee will consider director candidates recommended by shareholders (see
“Shareholders Proposals and
Nominations”
on page 29), other members of the Board, officers and
employees of the Company and other sources that the committee deems
appropriate. The Governance Committee’s written charter directs the
committee to evaluate the candidates based upon the totality of the merits of
each candidate and not based upon minimum qualifications or
attributes. In considering individual nominees, the committee takes
into account the qualifications of other Board members to ensure that a broad
variety of skill sets and experience beneficial to the Company and its business
are represented on the Board of Directors. The Governance Committee
evaluates all director candidates in the same manner regardless of the source of
the recommendation. Some of the criteria used by the committee to
evaluate the candidates, including those selected for nomination at the 2009
Annual Meeting, include:
§
Personal
and professional integrity
§
Prior
business experience, including knowledge of the banking business
§
Education
§
Age
§
Skills
that may be relevant to the Company’s business
§
Geographic
distribution of the candidates
§
Prior
Board experience with the Company or other publicly traded
companies
§
Involvement
in community, business and civic affairs
The
Governance Committee is also empowered to retain and to terminate outside
advisors to assist in the performance of its functions with the sole authority
to agree to fees and other terms of engagement. The committee did not
hire any outside advisors to assist them with respect to the selection of
candidates for director nominations in 2009.
The
Governance Committee has nominated for election as Class I directors, all of
whom currently serve as Class I directors of the Company: John R.
Elliot, David W. Hambrick, James L. Rossi and Mary H. Williams, to serve
three-year terms expiring at the 2012 Annual Meeting.
Respectfully
submitted,
Jay C.
Goldman, Chairman
Hugh R.
Clonch
Oshel B.
Craigo
John R. Elliot
William
H. File III
Robert D.
Fisher
C. Dallas
Kayser
|
ELECTION
OF DIRECTORS (Proposal 1)
|
The Board of Directors of the Company
currently consists of fourteen (14) members. In accordance with the
Company’s Bylaws, the Board of Directors is classified into three classes as
nearly equal in number as the then total number of Directors constituting the
whole Board permits. Each class is to be elected to separate
three-year terms with each term expiring in different years. At each
Annual Meeting, the directors or nominees constituting one class are elected for
a three-year term. The term of Class I directors expires at the 2009
Annual Meeting. There are four nominees for election as Class I
directors to serve for terms of three years expiring at the Annual Meeting in
2012. Messrs. Elliot, Hambrick, Rossi and Ms. Williams currently
serve as directors of the Company and will stand for re-election as Class I
directors.
Each director elected will continue in
office until a successor has been elected. If any nominee is unable
to serve, which the Board of Directors has no reason to expect, the persons
named on the accompanying proxy card intend to vote for the balance of those
named and, if they deem it advisable, for a substitute nominee. The
names of the nominees for directors of the Company and the names of the
directors of the Company whose terms of office will continue after the Annual
Meeting are listed in the following table.
Name
|
Age
(1)
|
Director
Since
|
Principal
Occupation During The Past Five Years
|
Class
I Nominees (Terms Expire in 2012)
|
|
John
R. Elliot
|
63
|
2007
|
Owner
and President, AMFM, Inc. (nursing homes). Owner and President,
Capitol Conference Center (high tech conference center). Owner
and President, Continental Health Care, Inc. (construction
company). Owner and President, John Elliot Associates
(architectural company).
|
|
|
|
|
David
W. Hambrick
|
67
|
1993
(2)
|
Self-employed
attorney since 2004.
|
|
|
|
|
James
L. Rossi
|
54
|
2001
(3)
|
Chief
Financial Officer, Valtronics, Inc. (manufacturers of products for
commercial and industrial customers) since July 2008. Owner
& President, James Rossi CPA, A.C. (public accounting) from September
1978 – July 2008.
|
|
|
|
|
Mary
E. Hooten Williams
|
47
|
2001
(3)
|
Vice
President, Virginia Street Properties Corp. and Manager, Hooten Properties
(real estate rental companies) since January 2006. Treasurer,
Hooten Equipment Company (dealers/distributors of commercial heating and
air conditioning and suppliers of food service equipment) until December
2004.
|
The
Board of Directors recommends that shareholders vote “FOR” all of the
Class I nominees listed above.
|
Continuing Directors
|
|
Class
II Directors (Terms Expire in 2010)
|
|
Oshel
B. Craigo
|
71
|
2001
(3)
|
Owner
and Chief Executive Officer, Better Foods, Inc.
(restaurants).
|
William
H. File III
|
61
|
2001
(3)
|
Partner,
File Payne Scherer & File, PLLC (law firm).
|
Tracy
W. Hylton II
|
60
|
1993
(2)
|
President,
Eller, Inc. (construction and reclamation company). Member,
Harper Hotel LLC (management company). Member, HMTWH, LLC (real
estate investments). President, Lightning, Inc. (lease holding
and coal sales). Member, M & T, LLC (partner in coal
loading dock). Vice President, Nell Jean Enterprises, Inc.
(retail sales of mining, construction, sporting
goods). President, New Land Leasing Company, Inc. (lease
holding company). President, Patience, Inc. (surface coal
mining). Member, T & M, LLC (land owner and lessor). Member, Southern
WV Industrial Park, LLC (industrial land sales). Member, South
Slope Estates, LLC (residential land sales).
|
|
|
|
|
C.
Dallas Kayser
|
57
|
1995
|
Senior
Partner, Kayser, Layne & Clark, PLLC (law firm).
|
|
|
|
|
Name
|
Age
(1)
|
Director Since
|
Principal Occupation During The Past Five
Years
|
Class II Directors (Terms Expire in
2010)
|
|
Sharon
H. Rowe
|
58
|
2001
(3)
|
Senior
Consultant, Charles Ryan Associates (formerly Gallagher/Goodwin-Gregg
Communications Group) (marketing/public relations) since May
2006. Vice President of Communications, The Greenbrier Resort
and Club Management Company and Director of Communications, The Greenbrier
(luxury resort/hotel) from 1978 – December 2005.
|
Class
III Directors (Terms Expire in 2011):
|
|
Hugh
R. Clonch
|
69
|
1995
|
President,
Clonch Industries (lumber manufacturer).
|
Robert
D. Fisher
|
56
|
1994
|
Managing
Member, Adams, Fisher & Chappell, PLLC (law firm).
|
Jay
C. Goldman
|
65
|
1988
|
President,
Goldman and Associates (real estate).
|
Charles
R. Hageboeck
|
46
|
2005
|
President
and Chief Executive Officer, City Holding Company and City National Bank
since February 1, 2005. Executive Vice President and Chief
Financial Officer, City Holding Company and City National Bank from June
2001 – January 31, 2005.
|
|
|
|
|
Philip
L. McLaughlin
|
68
|
1993
(2)
|
Chairman
of the Board, City Holding Company and City National Bank of West Virginia
since April 2007. Retired from active banking in April
2002.
|
(1)
Directors’
ages are as of the Annual Meeting Date, April 29, 2009.
(2)
|
On
December 31, 1998, the merger of Horizon Bancorp, Inc. (“Horizon”) into
City Holding Company (“City Holding”) was consummated and certain
directors of Horizon became directors of City
Holding.
|
(3)
Prior
to 2001, the director served on the City National Bank of West Virginia
Board.
ADDITIONAL
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Board
of Directors
The Company is managed under the
direction of the Board of Directors, which has adopted a Code of Ethics and
charters for the Governance and Nominating Committee, Compensation Committee and
the Audit Committee that set forth certain corporate governance
practices. These documents are available on the Company’s Internet
website at
http://www.cityholding.com
under the Corporate Governance link.
Independence
of Directors
The Board of Directors has determined
that the following directors are “independent” within the meaning of the general
independence standards in the listing standards of The NASDAQ Stock Market,
Inc., the market on which shares of the Company’s Common Stock are
quoted: Messrs. Clonch, Craigo, Elliot, File, Fisher, Goldman,
Hambrick, Hylton, Kayser, McLaughlin, Rossi and Mmes. Rowe and
Williams.
Meetings
of Independent Directors
Independent members of the Board of
Directors generally meet in executive sessions without management following
every regularly scheduled Board meeting. Other sessions may be called
by the Chairman in his or her own discretion or at the request of the
independent members of the Board. The independent directors met
eleven times in 2008. Mr. McLaughlin, the independent Chairman, leads
both the regular meetings of the Company’s directors as well as the executive
sessions of independent directors.
Shareholders
and other interested persons may contact the Chairman of the Board or the
independent members of the Board of Directors as a group through the method
described in “Communications with the Board of Directors” below.
Attendance
at Annual Meeting
Although there is no formal written
policy, the Company expects all directors to attend the annual meeting of
shareholders each year. We encourage directors to attend and
historically more than a majority have done so. Fifteen directors
attended the annual meeting of shareholders held on April 30,
2008.
Communications
with the Board of Directors
The Board of Directors has unanimously
approved a process for shareholders to send communications to the Board of
Directors and individual directors. Shareholders and other interested
persons may communicate with the full Board of Directors, a specified committee
of the Board, the independent directors or a specified individual member of the
Board in writing by mail c/o City Holding Company, 25 Gatewater Road, P. O. Box
7520, Charleston, WV 25356-0520, Attention: Victoria A. Faw, Corporate
Secretary. All communications will be forwarded to the Board of
Directors, the specified committee of the Board or the specified individual
director, as appropriate. The Company screens all regular mail for
security purposes.
Availability
of Code of Ethics and Committee Charters
The Company’s Code of Ethics and the
charters of the Audit Committee, Compensation Committee, and Governance and
Nominating Committee are available on the Company’s Internet website at
http://www.cityholding.com
under the Corporate Governance link.
Committees
of the Board of Directors and Meeting Attendance
The full Board of Directors met fifteen
times during the fiscal year ended December 31, 2008. No member of
the Board of Directors of the Company attended less than 75% of the aggregate
meetings of the Board of Directors and all committees on which such director
served during 2008.
Membership
on Certain Board Committees
The Board of Directors of City
Holding Company has established an Audit Committee, Executive Committee,
Nominating and Governance Committee, Compensation Committee and Legal Oversight
Committee. The following table sets forth the membership of such
committees and the independence of each director as of the date of this proxy
statement.
|
Director
|
Executive
Committee
|
Audit
Committee
|
Nominating
and
Governance
Committee
|
Compensation
Committee
|
Legal
Oversight
Committee
|
Independent*
|
Hugh
R. Clonch
|
--
|
--
|
X
|
X
|
--
|
X
|
Oshel
B. Craigo
|
--
|
--
|
X
|
X
|
--
|
X
|
John
R. Elliot
|
--
|
--
|
X
|
X
|
--
|
X
|
William
H. File III
|
--
|
--
|
X
|
X
|
X
|
X
|
Robert
D. Fisher
|
--
|
--
|
X
|
X
|
Chairman
|
X
|
Jay
C. Goldman
|
X
|
--
|
Chairman
|
X
|
X
|
X
|
Charles
R. Hageboeck
|
X
|
--
|
--
|
--
|
--
|
--
|
David
W. Hambrick
|
--
|
X
|
--
|
--
|
X
|
X
|
Tracy
W. Hylton II
|
--
|
X
|
--
|
--
|
--
|
X
|
C.
Dallas Kayser
|
X
|
---
|
X
|
Chairman
|
X
|
X
|
Philip
L. McLaughlin
|
Chairman
|
--
|
--
|
--
|
--
|
X
|
James
L. Rossi
|
X
|
Chairman
|
--
|
--
|
--
|
X
|
Sharon
H. Rowe
|
--
|
X
|
--
|
--
|
--
|
X
|
Mary
H. Williams
|
--
|
X
|
--
|
--
|
--
|
X
|
|
|
|
|
|
|
|
Number
of Meetings Held in 2008
|
1
|
6
|
5
|
3
|
1
|
|
*
Director meets the independence requirements as defined in the listing standards
of The NASDAQ Stock Market and SEC Regulations
Executive Committee
For the
fiscal year ended December 31, 2008, the Executive Committee consisted of
Messrs. Goldman, Hageboeck, Kayser, McLaughlin (Chairman) and
Rossi. Subject to limitations imposed by the West Virginia Business
Corporation Act, the Executive Committee has the power to act between meetings
of the Board on virtually all matters that the Board could act upon, but
generally as a matter of practice reserves its function for special or emergency
purposes. The Executive Committee met one time during fiscal year
ended December 31, 2008.
Compensation
Committee
During
2008, the Compensation Committee consisted of Messrs. Kayser (Chairman), Clonch,
Craigo, Elliot, File, Fisher, and Goldman. The Board of Directors has
determined that each of the current members of the Compensation Committee is
“independent” within the meaning of the general independence standards of the
listing standards of The NASDAQ Stock Market, Inc. For a description
of the function of the Compensation Committee, see “
Board Compensation Committee Report
on Executive Compensation
” beginning on page 16. The
Compensation Committee met three times during the fiscal year ended December 31,
2008. No Compensation Committee member, except Mr. Craigo, attended
fewer than 75% of the committee meetings held during the fiscal year ended
December 31, 2008.
Audit
Committee
In 2008,
members of the Audit Committee included Messrs. Rossi (Chairman), Hambrick,
Hylton and Mms. Rowe and Williams, none of whom is employed by the
Company. The Board of Directors has determined that each of the
current members of the Audit Committee is “independent” within the meaning of
the enhanced independence standards for audit committee members in the
Securities Exchange Act of 1934 and rules thereunder, as amended, and as
incorporated into the listing standards of The Nasdaq Stock Market,
Inc. The Board of Directors has also determined that James L. Rossi,
Chairman of the Audit Committee, is an “audit committee financial expert” within
the meaning of the rules promulgated by the Securities and Exchange Commission
pursuant to the Sarbanes-Oxley Act of 2002 and is “independent” within the
meaning of the general independence standards of the listing standards of the
listing standards of The NASDAQ Stock Market, Inc. The Audit
Committee held six meetings during fiscal year 2008. The Audit
Committee selects the Company’s independent registered public accounting firm
(subject to shareholder ratification), considers the scope of the audit, reviews
the activities and recommendations made by the Company’s internal auditors, and
considers comments made by the independent registered public accounting firm
with respect to the Company’s internal control structure. No Audit
Committee member, except Mr. Hylton, attended fewer than 75% of the committee
meetings held during the fiscal year ended December 31, 2008.
Governance
and Nominating Committee
During
2008, the Governance and Nominating Committee (“Governance Committee”) consisted
of Messrs. Goldman (Chairman), Craigo, Clonch, Elliot, File, Fisher, and
Kayser. The Board of Directors has determined that each of the
current members of the Governance Committee is “independent” within the meaning
of the general independence standards of the listing standards of The Nasdaq
Stock Market, Inc. For a description of the function of the
Governance Committee, see the “
Governance and Nominating Committee
Report
” on page 4. The Governance Committee met five times
during fiscal year 2008. No Governance Committee members, except Mr.
Craigo, attended fewer than 75% of the committee meetings held during the fiscal
year ended December 31, 2008.
Director Candidate Recommendations
and Nominations by Shareholders.
The Governance Committee’s
Charter provides that the Governance Committee will consider director candidate
recommendations by shareholders. Any shareholder entitled to vote for
the election of directors may (1) recommend candidates for election to the Board
of Directors or (2) nominate persons for election to the Board or Directors if
such shareholder complies with the procedures set forth in the Company’s Amended
and Restated Bylaws, which are summarized in “Shareholder Proposals and
Nominations” beginning on page 29.
Governance and Nominating Committee
Process for Identifying and Evaluating Director
Candidates.
For a description of the Governance Committee’s
process for identifying and evaluating candidates for election to the Board of
Directors, see the “Governance and Nominating Committee Report” on page
4. The Governance Committee received one or more recommendations from
shareholders in connection with the Annual Meeting and, after due consideration,
decided not to nominate the suggested persons.
Legal
Oversight Committee
During
2008, the Legal Oversight Committee (“Legal Committee”) consisted of Messrs.
Fisher (Chairman), File, Goldman, Hambrick, and Kayser. The Legal
Committee met one time during fiscal year 2008. The Legal Oversight
Committee meets annually or as necessary with the Company’s Senior Vice
President and Chief Legal Officer to review the Company’s outstanding litigation
and to advise management on such matters as requested. No Legal
Committee members attended fewer than 75% of the committee meetings held during
the fiscal year ended December 31, 2008.
Compensation
of Directors
During 2008, non-employee directors of
the Company received an annual retainer of $12,500, $500 for each Board meeting
attended, $400 for each Audit Committee meeting attended and $250 for each other
committee meeting, other than Audit, attended. In addition, Messrs.
File, Goldman, Kayser, McLaughlin and Rossi, received committee chair and
Chairman fees of $2,500, $5,000, $5,000, $5,000 and $10,000,
respectively. Expenses associated with attending meetings, such as
travel costs and meals, are considered integrally and directly related to the
performance of their duties as directors, they are not considered to be personal
benefits or perquisites and are not separately disclosed.
On February 25, 2009, the Board awarded
non-employee directors $16,000 of Company Common Stock, par value $2.50, to each
non-employee director of the Company on December 31, 2008. The market
price on the date of grant, February 25, 2009, was $26.62 per
share.
Bank
of Raleigh Directors Deferred Compensation Plan
Between 1987 and 1998, ten directors of
the former Bank of Raleigh deferred all or part of their director fees in
exchange for compensation that was deferred until their 70
th
birthdays. The Bank of Raleigh was part of Horizon Bancorp, which
merged with the Company on December 31, 1998. The shareholders of both
corporations ratified that merger and the benefits due under the Bank of Raleigh
Directors Deferred Compensation Plan when they approved the merger in
1998. Directors File, Hylton and Songer were directors of the former
Bank of Raleigh, and are covered by these plans. Under the terms of
these plans, directors were given the opportunity to defer all or a portion of
their directors’ fees for their service to the Bank of Raleigh beginning in 1987
through 1998. As a result of such deferrals, these directors (or
their survivors) are entitled to payments for a period of 15 years upon reaching
retirement age, as defined by the plans, or death. The methodology
for calculating future benefits for these directors was established at the time
that the deferrals were made, and is unaffected by their current service on the
Board of the Company. The Company accrued the present value of these
obligations on its Consolidated Balance Sheet. Their deferred
benefits under the plan are as follows:
|
|
Monthly
Pension Benefit
|
|
Pension
Start Date
|
|
Present
Value of Benefit @ 12/31/08
|
|
|
Expense
Recognized In 2008 In Regard to Benefits
|
|
William
H. File III
|
|
$
|
6,631
|
|
7/1/2017
|
|
$
|
477,226
|
|
|
$
|
27,724
|
|
Tracy
W. Hylton II
|
|
$
|
4,790
|
|
9/1/2018
|
|
$
|
321,451
|
|
|
$
|
18,675
|
|
James
E. Songer, II
|
|
$
|
3,000
|
|
5/1/2026
|
|
$
|
127,246
|
|
|
$
|
7,392
|
|
2008
DIRECTOR COMPENSATION
DIRECTOR
COMPENSATION
|
|
Name
|
|
Fees
Earned
or
Paid in
Cash
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All
Other
Compensation
|
|
|
Total
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hugh
R. Clonch
|
|
|
22,000
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
37,999
|
|
Oshel
B. Craigo
|
|
|
17,500
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33,499
|
|
John
R. Elliot
|
|
|
21,750
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
37,749
|
|
William
H. File III
|
|
|
22,875
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,724
|
|
|
|
-
|
|
|
|
66,598
|
|
Robert
D. Fisher
|
|
|
22,250
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38,249
|
|
Jay
C. Goldman
|
|
|
27,500
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
43,499
|
|
Charles
R. Hageboeck
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
David
W. Hambrick
|
|
|
23,050
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39,049
|
|
Tracy
W. Hylton II
|
|
|
21,100
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,675
|
|
|
|
-
|
|
|
|
55,774
|
|
C.
Dallas Kayser
|
|
|
27,000
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
42,999
|
|
Philip
L. McLaughlin
|
|
|
32,000
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
47,999
|
|
James
L. Rossi
|
|
|
33,050
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,049
|
|
Sharon
H. Rowe
|
|
|
22,800
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38,799
|
|
James
E. Songer, II
(2)
|
|
|
24,325
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,392
|
|
|
|
-
|
|
|
|
31,717
|
|
Mary
H. Williams
|
|
|
22,300
|
|
|
|
15,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38,299
|
|
(1)
Mr.
Hageboeck, President and CEO of the Company, does not receive fees for director
or committee service or for meeting attendance.
(2)
James
E. Songer, II resigned as a director
of
the Company on September 25, 2008.
REPORT
OF THE AUDIT COMMITTEE
The Audit Committee of the Board of
Directors (the “Audit Committee”) is comprised of five independent directors and
operates under a written charter adopted by the Board of Directors. The Audit
Committee selects the Company’s independent registered public accounting firm,
subject to shareholder ratification. Management is responsible for the Company’s
internal controls and the financial reporting process. The independent
registered public accounting firm is responsible for performing an independent
audit of the Company’s consolidated financial statements and management’s
assessment of the effectiveness of internal control over financial reporting in
accordance with the standards of the Public Company Accounting Oversight Board
(United States) and for issuing reports thereon. The Audit Committee’s
responsibility is to monitor and oversee these processes. In this context, the
Audit Committee has met and held discussions with management and
Ernst & Young LLP (“Ernst & Young”), the Company’s independent
registered public accounting firm.
Management represented to the Audit
Committee that the Company’s audited consolidated financial statements were
prepared in accordance with U.S. generally accepted accounting principles, and
the Audit Committee has reviewed and discussed the audited consolidated
financial statements with management and Ernst & Young.
The Audit Committee has discussed with
Ernst & Young the matters required to be discussed by Statement on
Auditing Standards No. 61 (Codification of Statements on Accounting
Standards), as amended.
The Audit Committee has also received
the written disclosures and the letter from Ernst & Young relating to
the independence of that firm as required by Public Company Accounting Oversight
Board’s Ethics and Independence Rule 3526 (Communication with Audit Committees
Concerning Independence), as currently in effect, and has discussed with
Ernst & Young that firm’s independence from the Company. The Audit
Committee has also considered whether the provision of non-audit related
services by Ernst & Young is compatible with maintaining
Ernst & Young’s independence and determined that Ernst &
Young’s independence has not been impaired.
Based upon the Audit Committee’s
discussions with management and Ernst & Young and the Audit Committee’s
review of the representations of management and the report of Ernst &
Young to the Audit Committee, the Audit Committee recommended that the Board of
Directors include the audited consolidated financial statements in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008 filed with
the Securities and Exchange Commission.
Respectfully
submitted,
James L.
Rossi, Chairman
David W.
Hambrick
Tracy W.
Hylton II
Sharon H.
Rowe
Mary H.
Williams
February 24,
2009
This report shall not be deemed to be
incorporated by reference into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, unless the Company
specifically incorporates this report by reference. It will not be
otherwise filed under such Acts.
EXECUTIVE OFFICERS OF CITY HOLDING
COMPANY
The following table sets forth the name
of each executive officer as of December 31, 2008, and the principal positions
and offices held with the Company. Unless otherwise indicated, each
of these officers has served as an executive officer of the Company for at least
five years.
Name
|
Age*
|
Business
Experience
|
Charles
R. Hageboeck
|
46
|
President
and Chief Executive Officer, City Holding Company and City National Bank
since February 2005. Executive Vice President and Chief
Financial Officer, City Holding Company and City National Bank from June
2001 – January 2005.
|
|
|
|
Craig
G. Stilwell
|
53
|
Executive
Vice President of Retail Banking, City Holding Company and City National
Bank since February 2005. Executive Vice President of Marketing
& Human Resources, City Holding Company and City National Bank May
2001 – February 2005.
|
|
|
|
John
A. DeRito
|
59
|
Executive
Vice President of Commercial Banking, City Holding Company and City
National Bank since June 2004. Credit Officer, Central West
Virginia Region, BB&T from November 2000 – June
2004.
|
|
|
|
John
W. Alderman, III
|
44
|
Senior
Vice President and Chief Legal Officer, City Holding Company and City
National Bank since April 1997.
|
|
|
|
David
L. Bumgarner
|
44
|
Senior
Vice President and Chief Financial Officer, City Holding Company and City
National Bank since February 2005. Audit Senior Manager, Arnett
& Foster, PLLC from August 2000 – January
2005.
|
* Executive Officers’ ages are as of
the Annual Meeting Date, April 29, 2009.
COMPENSATION
DISCUSSION AND ANALYSIS
General
Plan Design
The Company’s executive compensation
program includes five components: base salary, an incentive program tied
directly to the Company’s financial performance metrics, annual bonuses
reflecting the Board’s discretion to reward the Company’s executives based upon
results achieved that were not contemplated in the incentive program or are
otherwise not easily quantified, long-term compensation (stock awards), and
other non-cash perquisites. Each element of the Company’s executive compensation
program has a somewhat different purpose. The Compensation Committee
believes that its principal responsibility is to ensure that the Company’s
compensation practices allow the Company to keep qualified management and to
incent and reward executive performance in ways that are aligned with increasing
shareholder value. Further, the Compensation Committee believes that
overall compensation should be significantly dependent upon performance as
measured by the Company’s profitability, the market price of the Company’s
Common Stock, performance relative to peers, and progress made toward achieving
the Company’s long-term strategic objectives. As a result, a significant portion
of the compensation of executive officers of the Company is tied to incentive
compensation, bonuses, and stock awards. The Compensation Committee may meet to
consider compensation at any time during the year. Traditionally, the
Compensation Committee meets after each fiscal year has ended to review the
Company’s performance, consider increases in base salaries, approve incentive
compensation based upon previously agreed upon targets, consider bonuses in
light of performance, and recommend long-term stock-based grants. The President
and CEO may make recommendations to the Committee based on these matters and
based upon the performance of the Company, but decisions regarding compensation
for the named executive officers rest entirely with the Compensation Committee.
The Compensation Committee then recommends actions for approval of the Board of
Directors. During 2008, the Company hired Amalfi Consulting to advise the Board
of Directors with respect to compensation for the executive management team as
well as with respect to board compensation issues.
Peer
Group
The Committee believes that it is
important to measure the Company’s performance against peers – companies of
similar size, markets, and products. The Company has traditionally looked at two
peer groups. The Company looks at the peer group of publicly traded banks with
total assets between $2 and $5 billion (100 banks at December 31, 2008). Within
this peer group, the Company was the 68
th
largest
based upon total assets at December 31, 2008 but was the 14th largest based upon
total net income in 2008. The Company’s return on assets (ROA) in 2008 and 2007
was 1.12% and 2.03%, respectively, ranking it 10
th
on ROA
in 2008 and 2
nd
on ROA
in 2007 within this peer group. The Company’s return on average tangible equity
(ROTE) in 2008 was 11.44% and 20.99% in 2007 ranking it 28
th
and
4
th
within this peer group in 2008 and 2007, respectively. The Company’s
tangible common equity to tangible assets ratio was 9.72% at December 31, 2007
and 8.83% at December 31, 2008 ranking the Company 7
th
and
15
th
in 2007 and 2008 respectively, with respect to this level of common equity
capitalization. Within the context of the peer group of 100 banks with total
assets of $2 to $5 billion, the Company has been a top performer.
The Company also compares itself to a
“Regional Peer Group.” This peer group was selected from publicly traded banking
companies of similar size operating in West Virginia, Pennsylvania, Ohio,
Kentucky, Virginia, Maryland and up-state New York. Most operate in similar
markets to the Company in terms of urbanization and demographic trends. The
banks included in this Regional Peer Group are: Community Bank Systems, Inc.
(NY), Community Trust Bancorp Inc. (KY), First Commonwealth Financial
Corporation (PA), First Community Bancshares, Inc. (VA), First Financial Bancorp
(OH), First Place Financial Corp. (OH), F.N.B. Corporation (PA), Harleysville
National Corporation (PA), NBT Bancorp Inc. (NY), National Penn Bancshares Inc.
(PA), Park National Corp. (OH), Peoples Bancorp Inc. (OH), S&T Bancorp Inc.
(PA), Republic Bancorp Inc. (KY), Sandy Spring Bancorp Inc. (MD), Union
Bankshares Corp. (VA), United Bankshares Inc. (WV), Univest Corp of Pennsylvania
(PA), StellarOne Corporation (VA), and WesBanco Inc. (WV). Within this peer
group, the Company is the 11
th
largest
based upon the number of branches, 16
th
largest
based upon total assets, 9
th
largest
based upon Net Income in 2008, and 9
th
largest
in terms of market capitalization at February 24, 2008. With respect to ROA, the
Company ranked first in 2007 and 2
nd
in
2008.
Peer
Group Performance – 2008
|
CHCO
|
$2
to $5 Billion
Peer
Group
|
Regional
Peer Group
|
Total
Assets at 12/31/08 (median for peers)
|
$2.6
billion
|
$2.9
billion
|
$3.8
billion
|
Net
Income (median)
|
$28.1
million
|
$13.1
million
|
$23.0
million
|
ROA
(median)
|
1.12%
|
0.50%
|
0.68%
|
ROTE
(median)
|
11.44%
|
6.41%
|
10.55%
|
Number
of Offices (median)
|
69
|
47
|
71
|
Number
of Companies
|
|
100
|
20
|
Base
Salary
The Compensation Committee has
established salary ranges for all executive positions (in a manner consistent
with how it has evaluated all positions in the Company) reflecting the nature
and scope of the executive officer’s responsibilities, the strategic importance
of each position within the organization, and comparable compensation levels at
peer financial institutions. Within these ranges, executive officer
salaries are determined based upon performance, experience, and credentials.
Annual salary adjustments reflect performance as measured against both
quantitative and qualitative measures of performance as well as changes in peer
compensation levels. The factors used to evaluate each executive officer reflect
his ability to contribute to overall Company performance as well as the
performance within his own area of responsibility. The CEO is evaluated based
entirely upon the success of the entire organization; the EVP-Retail is
evaluated based partly upon the overall Company’s performance and partly upon
the success of the Company’s retail businesses; the EVP-Commercial is evaluated
based partly upon the overall Company’s performance and partly upon success in
the Company’s commercial business; the CFO’s performance is evaluated based
partly upon the overall Company’s performance and partly upon the performance of
the Company’s financial team; and the Chief Legal Officer is evaluated based
partly upon the overall Company’s performance and partly upon his contributions
in guiding the Company as it relates to legal matters.
Incentive
Compensation Plans
Incentive plans for executive officers
are designed at the beginning of the fiscal year to reflect the Company’s
performance objectives and to quantitatively tie the executive’s compensation
directly to factors that are judged important to the success of the Company and
within each executive’s own sphere of influence. The CEO’s incentive
compensation plan reflects an Employment Agreement signed by the Company and Mr.
Hageboeck on July 25, 2007. Payments under Mr. Hageboeck’s plan are
determined by the Company’s total profitability as measured by return on
tangible equity. The incentive compensation plan for the EVP-Retail reflects an
Employment Agreement also signed by the Company and Mr. Stilwell on July 25,
2007. Payments under Mr. Stilwell’s plan are determined by the
Company’s total profitability as measured by return on tangible equity. The
incentive compensation plan for the EVP-Commercial, Mr. DeRito, is tied both to
the Company’s performance with respect to net income for the current fiscal
year, growth in commercial loan balances outstanding, interest income
achieved on the commercial loan portfolio, credit quality, and achievement of
referral goals by the commercial lending staff. The incentive compensation plan
for the CFO, Mr. Bumgarner, is tied to the Company’s performance with respect to
net income for the current fiscal year, as is the incentive compensation plan
for the Company’s Chief Legal Officer, Mr. Alderman. The annual incentives for
Mr. Bumgarner, Mr. Alderman and Mr. DeRito are also partially dependent upon the
achievement of specific annual objectives tied to the Company’s long-term
goals.
Bonuses
The Compensation Committee recognizes
that the Company’s performance cannot always be fully characterized by a single
measure of profitability and that efforts to improve the long-term performance
of the Company and to maintain the bank’s conservative balance sheet may in fact
be at odds with maximizing current fiscal year profitability. Therefore, the
Compensation Committee reviews the Company’s performance in its totality and has
the discretion to award bonuses to executive officers in excess of factors
specifically identified within the Incentive Compensation plans specified at the
beginning of each fiscal year. Bonus awards allow the Compensation
Committee to reflect measures of success that are non-quantitative. In looking
at the totality of the Company’s performance, the Compensation Committee looks
at factors such as: measures of profitability such as return on assets (ROA) and
return on tangible equity (ROTE), measures of asset quality, internal and
external audit results, regulatory ratings, strategic objectives specified by
the CEO or the Board of Directors, as well as other strategies employed by
management throughout the year to lay the foundation for future
growth.
Long-term
Compensation (Stock Awards)
The Compensation Committee believes
that long-term compensation is an appropriate element of the total compensation
package for Company officers. The committee further emphasizes long-term
compensation for those officers it believes are most able to influence the
Company’s long-term financial success. As such, the percentage of long-term
compensation within the total compensation package will tend to be largest for
the Company’s executive officers. The Company believes in achieving the
appropriate balance between short-term incentive compensation programs that
reward management for maintaining strong current financial performance and
long-term compensation that rewards management for increases in the long-term
underlying value of the Company. The Compensation Committee
recognizes that the Company’s main business is to provide retail and commercial
banking services – a business considered to be relatively mature – and that the
Company operates in relatively stable markets with limited growth prospects.
Further, the Company performs well in the industry as discussed above. Within
the $2 to $5 billion peer group for 2008, for instance, the Company maintains a
strong net interest margin placing it 7
th
of 100
banks, fee income as a percent of total revenue that places it 5
th
of 100
banks, and relatively low levels of non-interest expense as a percent of total
revenues placing it 10
th
of 100
banks. Because the Company already performs well in a mature industry
and in stable markets, the Compensation Committee intends to target relatively
lower amounts of long-term compensation in the form of stock option awards
(discussed below) and to target relatively larger amounts to short-term cash
incentives, bonuses and long-term compensation in the form of restricted stock
awards (discussed below) to emphasize maintenance of the Company’s financial
performance within the total compensation package. This contrasts with
growth-oriented companies in industries such as technology, health-care, etc.
that tend to encourage long-term risk-taking focused on building share in fast
growing industries over strong current financial performance through a mix
emphasizing long-term compensation.
With respect to long-term compensation
(stock awards), the Company currently awards both stock options and restricted
stock. Stock options provide officers the ability to purchase shares of common
stock in the future (generally at any time up to 10 years) from the date of
grant at the current market price on the date the grant was awarded. The options
may vest, or become exercisable, only after the passage of time or the
occurrence of specifically agreed upon objectives. Stock options have
the advantage to the Company of aligning the rewards for officers with those of
shareholders. The officer is rewarded only when the stock price
increases. However, stock options have no monetary value to the
officer if the price of the stock decreases. Such a decrease may occur because
of a general decline in the entire market for common stocks. Therefore, the
Compensation Committee recognizes that it is possible that the Company might
perform well but the stock price could decline due to an overall decline in the
stock market, resulting in no benefit for the officer, as has been experienced
in 2008.
Restricted stock awards immediately
transfer shares of the Company’s Common Stock to the officer subject to certain
restrictions (generally that the shares revert to the Company if employment is
not maintained through certain time frames or if the achievement of specific
objectives is not met). Restricted stock has the advantage to the
Company of providing the officer with an immediate benefit that is forfeited if
he or she leaves the Company’s employment prior to the vesting of the
restrictions. This tends to increase the officer’s incentive to be a long-term
part of the Company’s success. Unlike stock options, while the
monetary value of restricted stock declines proportionately with a decline in
the Company’s common stock price, the value of restricted stock does not become
zero as is true with a stock option when the price of the common stock is
trading below the grant price.
The Committee believes that both types
of stock awards have a place in executive compensation programs. In
the case of restricted stock, the Company expenses the estimated fair value of
the stock on the date of grant over the (expected) vesting period. In the case
of stock options, the Company expenses an estimate of the fair value of the
award over the expected vesting period. Because both stock awards
result in similar expense, and because each serves slightly different needs, the
Compensation Committee utilizes a combination of restricted stock and stock
options to balance the incentives for executive officers.
Stock awards are granted under the City
Holding Company 2003 Incentive Plan (the “Plan”), under which the Compensation
Committee is charged with responsibility for administering the Plan. However,
under the Compensation Committee charter, the Committee will recommend grants to
the Company’s executive officers for full approval by the Board of
Directors. The Compensation Committee may consider recommendations
for stock grants to the Company’s executive officers at any time, at its own
discretion, and as circumstances necessitate. Traditionally, the Compensation
Committee has considered stock awards to executive officers on an annual basis,
and generally in conjunction with its annual review of compensation for these
officers (which has generally been conducted in February or March of each fiscal
year). It is the Company’s policy that all option grants and
restricted stock grants to these executive officers will be dated on the date
that they are approved by the Board of Directors and at an exercise price equal
to the closing price of the Company’s common stock on that day.
Because the Compensation Committee
believes that stock awards should be a part of the compensation of more than
just the five top executive officers, the Compensation Committee has also
provided the CEO with the authority to make stock awards under the Plan in any
fiscal year totaling no more than 100,000 stock options or 25,000 restricted
shares or in some combination of stock options and restricted
shares. The CEO’s authority to make stock awards in any given fiscal
year is subject to certain constraints on the total amount that may be awarded
to any single officer, and may not include stock awards to the executive
officers of the Company. Likewise, stock awards offered to officers other than
the executive officers will reflect the closing stock price on the date the
stock award is provided to the officer. With respect to timing, these
stock awards are entirely at the discretion of the Company’s CEO in order to
reflect the needs of the Company in rewarding and retaining talent within the
organization. The Compensation Committee recognizes that it may be in
the Company’s best interests to make stock awards in excess of the amounts
described above during certain fiscal years, and reserves for itself the right
to make any such awards at its discretion.
Non-Cash
Perquisites
With respect to non-cash perquisites,
the Compensation Committee believes that executive officers should participate
in all employee benefit programs available to the Company’s officers, but has
not generally utilized non-cash perquisites not otherwise available to
non-executive officers. The Company does not have a defined benefit
pension plan for executive officers, a SERP or other forms of non-qualified
deferred compensation programs.
All forms of compensation provided to
officers of the Company (including base salaries, incentive compensation,
bonuses, stock options, restricted stock awards, and non-cash perquisites)
result in expense being recorded in the Company’s income
statement. The Company has reflected all compensation earned by its
executive officers in the
2008
Summary Compensation Table
on
page 17. The Compensation Committee balances the total compensation
of each executive officer among base salary, incentive compensation, bonus,
stock options, restricted stock, and non-cash perquisites to appropriately
reward the executive officers for their achievements and results on behalf of
the Company and to balance the incentives provided to each executive officer to
encourage, reward, and to maximize the executive’s performance on behalf of the
Company.
Chief
Executive Officer Compensation
Charles R. Hageboeck has served as CEO
since February 1, 2005. Mr. Hageboeck is employed under an Employment Agreement
dated July 25, 2007. In negotiating this or prior employment agreements with Mr.
Hageboeck, and in setting Mr. Hageboeck’s compensation, the Board utilized the
services of Clark Consulting and the Company’s attorneys, Jackson Kelly
PLLC. Mr. Hageboeck’s base compensation was determined by the
Compensation Committee and approved by the Board and reflects Mr. Hageboeck’s
demonstrated experience and achievements as CEO of the Company since 2005, as
CFO of the Company between 2001 and 2005, his previous experience at other
institutions within the industry, his academic credentials (Ph.D. in Economics),
as well as compensation levels at comparable peer companies.
Mr. Hageboeck’s employment agreement
calls for incentive compensation based upon the Company’s return on tangible
equity (ROTE). The Company’s ROTE was 11.44% during 2008, below the minimum
threshold under which incentive compensation can be paid. Mr.
Hageboeck also received no long-term stock-based compensation during 2008, after
receiving options to purchase 37,500 shares at an exercise price of $39.34 on
February 27, 2007.
Mr. Hageboeck’s cash compensation for
2008 (base salary and incentive compensation) was $379,792. The
following chart shows comparable information for the Company’s peer groups for
2007, which is the latest data uniformly available. As such, Mr. Hageboeck’s
cash compensation for 2008 was lower than the average or medians of either the
Regional Peer Group or a peer group of 100 publicly traded banks with total
assets between $2 billion and $5 billion in 2007. Nevertheless,
City’s net income was the 14
th
highest
of the 100 publicly traded banks with total assets between $2 billion and $5
billion and was also higher than the median for the Regional Peer
Group.
Cash
Compensation
|
|
Average
|
|
|
Median
|
|
$2
to $5B Peers – 2007
|
|
$
|
452,252
|
|
|
$
|
425,000
|
|
Regional
Peers – 2007
|
|
$
|
525,265
|
|
|
$
|
467,661
|
|
Source: SNL Datasource
Mr. Hageboeck’s “Total Compensation”
for 2008 (including all forms of compensation), was $388.386. Mr. Hageboeck’s
Total Compensation for 2008 was significantly lower than average or median peer
institution total compensation for 2007.
Total
Compensation:
|
|
(Average)
|
|
|
(Median)
|
|
$2
to $5B Peers – 2007
|
|
$
|
859,537
|
|
|
$
|
716,136
|
|
Regional
Peers – 2007
|
|
$
|
858,703
|
|
|
$
|
805,137
|
|
Source: SNL Datasource
Compensation
for Other Executive Officers
In February 2008, the Compensation
Committee and Board approved increases ranging from 2.1% to 11.5% for the other
executive officers based upon their responsibilities, experience, achievements,
and compensation levels at similar institutions.
With respect to incentive compensation,
Mr. Stilwell is employed under an Employment Agreement dated July 25,
2007. This employment agreement calls for incentive compensation
based upon the Company’s return on tangible equity (ROTE). As such, no incentive
compensation was earned in 2008 as described above. The Committee
granted Mr. Stilwell a bonus of $10,000 in recognition for his efforts leading
the retail bank during 2008. Mr. DeRito’s incentive compensation is
based upon quantitatively measured goals for commercial loan growth,
profitability, asset quality, and referrals (50% weight), the Company’s earnings
(25% weight), and performance of specific annual objectives identified by the
CEO and the Board. Based upon these factors, Mr. DeRito’s incentive
compensation for 2008 was determined to be $63,531. Mr. Bumgarner,
the Company’s Chief Financial Officer, received incentive compensation of
$24,704 based upon the Company’s earnings in 2008 and performance of specific
annual objectives identified by the CEO and the Board. Mr. Alderman serves the
Company as in-house counsel. Based upon the Company’s earnings in 2008 and
performance of specific annual objectives identified by the CEO and the Board,
Mr. Alderman received incentive compensation of $21,208 for 2008.
On March 26, 2008, the Company
granted Messrs. Stilwell, DeRito, Bumgarner, and Alderman stock options on 3,000
shares, 2,500 shares, 1,500 shares, and 1,500 shares of the Company’s common
stock, respectively. These options were granted with an exercise price of $40.88
and will vest on March 26, 2013 with an expiration date of March 25, 2018. On
the same date, the Company granted 750 shares, 625 shares, 350 shares, and 350
shares of restricted stock, respectively, to Messrs. Stilwell, DeRito,
Bumgarner, and Alderman. These shares will vest on March 26,
2013. The Company believes that these restricted shares and options
align the executives and the Company’s long-term interests.
BOARD COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board
of Directors (the “Compensation Committee”) is comprised of seven directors, all
of whom (i) satisfy the definition of “independent” under the listing standards
of The NASDAQ Stock Market, Inc. (ii) are “non-employee directors” as defined by
Rule 16b-3 under the Securities Exchange Act of 1934 and (iii) are “outside
directors” as defined by Section 162(m) of the Internal Revenue
Code. The Compensation Committee operates under a written charter
(attached as
Appendix
A) adopted by the Board of Directors. Committee members are appointed by
the Board and may be removed by the Board in its
discretion. The Compensation Committee has the authority to
delegate any of its responsibilities to subcommittees, as the committee may deem
appropriate, provided the subcommittees are composed entirely of independent
directors.
The
Compensation Committee also has the authority, to the extent it deems necessary
or appropriate, to retain a compensation consultant to assist in the evaluation
of directors, the Chief Executive Officer (CEO) or senior executive
compensation. The Compensation Committee has sole authority to
retain and terminate any such consulting firm, including sole authority to
approve the firm’s fees and other retention terms. The Compensation Committee
also has the authority, to the extent it deems necessary or appropriate, to
retain other advisors. The Company provides for appropriate funding, as
determined by the Compensation Committee, for payment of compensation to any
consulting firm or other advisors employed by the Compensation
Committee. In addition, the Compensation Committee makes regular
reports to the Board and proposes any necessary action to the Board for full
Board approval.
The Compensation Committee has reviewed
and discussed the Compensation Discussion and Analysis (“CD&A”) with
management and based upon such review and discussions with management and the
representations of management relating thereto, the Compensation Committee
recommended that the Board of Directors include the CD&A in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008 filed with the
Securities and Exchange Commission, and as applicable, in the Company’s proxy
statement sent to shareholders in connection with the annual
meeting.
Respectfully
submitted,
C. Dallas
Kayser, Chairman
Hugh R.
Clonch
Oshel B.
Craigo
William
H. File III
Robert D.
Fisher
Jay C.
Goldman
March 23,
2009
This report shall not be deemed to be
incorporated by reference into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, unless the Company
specifically incorporates this report by reference. It will not be
otherwise filed under such Acts.
2008 SUMMARY COMPENSATION TABLE
The following table provides
information concerning the compensation of the named executive officers for our
three most recently completed fiscal years.
SUMMARY
COMPENSATION
|
|
Name
and
Principal
Position
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
(1)
|
|
|
Option
Awards
(1)
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Change
In
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All
Other
Compensation
(2)
|
|
|
Total
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
R. Hageboeck
|
2008
|
|
|
379,792
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,594
|
|
|
|
388,386
|
|
President,
Chief Executive Officer and Director
|
2007
|
|
|
356,333
|
|
|
|
-
|
|
|
|
-
|
|
|
|
475,284
|
|
|
|
195,983
|
|
|
|
-
|
|
|
|
8,560
|
|
|
|
1,036,160
|
|
(Principal
Executive Officer)
|
2006
|
|
|
336,131
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
225,041
|
|
|
|
-
|
|
|
|
8,085
|
|
|
|
569,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
L. Bumgarner
|
2008
|
|
|
166,354
|
|
|
|
-
|
|
|
|
14,308
|
|
|
|
25,458
|
|
|
|
24,707
|
|
|
|
-
|
|
|
|
10,700
|
|
|
|
241,427
|
|
Senior
Vice President & Chief Financial Officer
|
2007
|
|
|
150,417
|
|
|
|
-
|
|
|
|
98,350
|
|
|
|
-
|
|
|
|
55,454
|
|
|
|
-
|
|
|
|
6,693
|
|
|
|
310,914
|
|
(Principal
Financial Officer)
|
2006
|
|
|
140,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
62,250
|
|
|
|
-
|
|
|
|
4,476
|
|
|
|
206,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig
G. Stilwell
|
2008
|
|
|
222,292
|
|
|
|
10,000
|
|
|
|
30,660
|
|
|
|
50,915
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,690
|
|
|
|
323,557
|
|
Executive
Vice President, Retail Banking
|
2007
|
|
|
210,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
119,772
|
|
|
|
135,500
|
|
|
|
-
|
|
|
|
8,647
|
|
|
|
473,919
|
|
|
2006
|
|
|
197,700
|
|
|
|
10,093
|
|
|
|
-
|
|
|
|
-
|
|
|
|
138,748
|
|
|
|
-
|
|
|
|
6,847
|
|
|
|
353,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
A. DeRito
|
2008
|
|
|
189,167
|
|
|
|
-
|
|
|
|
25,550
|
|
|
|
42,430
|
|
|
|
63,531
|
|
|
|
-
|
|
|
|
13,474
|
|
|
|
334,152
|
|
Executive
Vice President, Commercial Banking
|
2007
|
|
|
184,667
|
|
|
|
-
|
|
|
|
98,350
|
|
|
|
-
|
|
|
|
78,760
|
|
|
|
-
|
|
|
|
9,601
|
|
|
|
371,378
|
|
|
2006
|
|
|
177,569
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
111,980
|
|
|
|
-
|
|
|
|
6,967
|
|
|
|
296,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
W. Alderman, III
|
2008
|
|
|
172,771
|
|
|
|
-
|
|
|
|
14,308
|
|
|
|
25,458
|
|
|
|
21,208
|
|
|
|
-
|
|
|
|
6,821
|
|
|
|
240,566
|
|
Senior
Vice President & Chief Legal Officer
|
2007
|
|
|
169,478
|
|
|
|
-
|
|
|
|
59,010
|
|
|
|
-
|
|
|
|
65,250
|
|
|
|
-
|
|
|
|
6,719
|
|
|
|
300,457
|
|
|
2006
|
|
|
166,458
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
72,824
|
|
|
|
-
|
|
|
|
5,348
|
|
|
|
244,630
|
|
(1)
No
executive officers received either stock options or restricted stock awards in
2006.
(2)
“All
Other Compensation” for 2006, 2007 and 2008 consists of the
following: (i) the Company’s matching contribution under the City
Holding Company 401(k) Plan & Trust, (ii) group term life insurance premium
payments, and (iii) dividends paid on restricted shares.
Grants
of Plan-Based Awards
Each of the executive officers is
compensated under a pre-defined incentive plan tied to quantifiable goals. Each
officer’s incentive plan has a targeted payout if the officer hits predefined
goals (Target). Each officer must hit certain minimum goals in order
to have any payout at all (Threshold). However, these incentive plans have no
proscribed maximum, and it is anticipated that the officers will receive more
than their targeted payouts if performance is good.
For example, Mr. Hageboeck’s incentive
plan is based upon the formula contained in the Employment Agreement dated July
25, 2007. The incentive is tied to the Company’s return on tangible equity
(ROTE). A targeted incentive of 50% of Mr. Hageboeck’s base salary is
earned if the ROTE is 20%. If the ROTE is lower, the incentive earned is lower.
If the ROTE were 14%, the incentive would be equal to 20% of Mr. Hageboeck’s
base salary. If the ROE is lower than 14%, no incentive is earned. However, if
the ROE exceeds 20%, the incentive can increase. At an ROE of 26%, for instance,
incentive compensation would be 80% of base salary.
The table
below sets forth information concerning the targets, thresholds and maximums for
each executive officer’s non-equity incentive plan-based awards as of December
31, 2008.
GRANTS
OF PLAN-BASED AWARDS
|
|
|
|
Estimated
Future Payouts
Under
Non-Equity Incentive Plan
Awards
|
|
Estimated
Future Payouts Under
Equity
Incentive Plan Awards
|
|
|
|
|
|
|
|
|
Name
|
Grant
Date
|
|
Threshold
|
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or
Units
|
|
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
|
|
Exercise
or
Base
Price
of
Option
Awards
|
|
|
|
($)
|
|
|
($)
|
|
($)
|
|
|
(#
|
)
|
|
|
(#
|
)
|
|
|
(#
|
)
|
|
|
(#
|
)
|
|
|
(#
|
)
|
($/sh)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
R. Hageboeck
|
|
|
|
77,000
|
|
|
|
192,500
|
|
none
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
L. Bumgarner
|
|
|
|
19,932
|
|
|
|
59,500
|
|
none
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Principal
Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig
G. Stilwell
|
|
|
|
45,000
|
|
|
|
112,500
|
|
none
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
A. DeRito
|
|
|
|
11,875
|
|
|
|
95,000
|
|
none
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
W. Alderman, III
|
|
|
|
20,342
|
|
|
|
60,725
|
|
none
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
HOLDINGS
Outstanding
Equity Awards At Fiscal Year-End
The following table sets forth the
number of exerciseable and unexerciseable stock options, option exercise prices
and expiration dates, the number of unvested stock awards along with their
market values and the number and value of equity incentive plan awards held by
the named executive officers as of the fiscal year ended December 31,
2008. Each outstanding award is represented by a separate row, which
indicates the number of securities underlying the award.
For option awards, the table discloses
the exercise price and the expiration date of the options. For stock
awards, the table provides the number of shares of stock that have not vested
and the aggregate market value of shares of stock that have not
vested.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unearned
Options
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares
of
Units
of
Stock
That
Have
Not
Vested
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
|
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
or
Other
Rights
That
Have
Not
Vested
|
|
|
|
|
(#
|
)
|
|
|
(#
|
)
|
|
|
(#
|
)
|
|
($)
|
|
|
|
|
|
|
(#
|
)
|
|
($)
|
|
|
|
(#
|
)
|
|
($)
|
|
|
|
Exerciseable
|
|
|
Unexerciseable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
R. Hageboeck
(1)(2)
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
28.000
|
|
|
2/25/2013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(Principal
Executive Officer)
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33.900
|
|
|
2/24/2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
32,000
|
|
|
|
18,000
|
|
|
|
-
|
|
|
|
32.925
|
|
|
1/30/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
37,500
|
|
|
|
-
|
|
|
|
39.340
|
|
|
2/27/2017
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
L. Bumgarner
(3)(4)(5)(6)
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32.925
|
|
|
1/30/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(Principal
Financial Officer)
|
|
|
2,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
36.900
|
|
|
12/20/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,500
|
|
|
|
91,050
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
1,500
|
|
|
|
-
|
|
|
|
40.88
|
|
|
3/25/2018
|
|
|
|
350
|
|
|
|
12,747
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig
G. Stilwell
(7)(8)(9)(10)
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
28.000
|
|
|
2/25/2013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33.900
|
|
|
2/24/2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
3,000
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
31.320
|
|
|
2/24/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
36.900
|
|
|
12/20/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
39.340
|
|
|
2/27/2017
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
3,000
|
|
|
|
-
|
|
|
|
40.88
|
|
|
3/25/2018
|
|
|
|
750
|
|
|
|
27,315
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
A. DeRito
(11)(12)(13)(14)
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32.410
|
|
|
6/27/2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
3,000
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
30.650
|
|
|
2/22/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
36.900
|
|
|
12/20/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,500
|
|
|
|
91,050
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
2,500
|
|
|
|
-
|
|
|
|
40.88
|
|
|
3/25/2018
|
|
|
|
625
|
|
|
|
22,763
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
W. Alderman, III
(15)(16)(17)
|
|
|
4,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
36.900
|
|
|
12/20/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,500
|
|
|
|
54,630
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
1,500
|
|
|
|
-
|
|
|
|
40.88
|
|
|
3/25/2018
|
|
|
|
350
|
|
|
|
12,747
|
|
|
|
-
|
|
|
|
-
|
|
(1)
Mr. Hageboeck was awarded 50,000 options on 1/31/2005. Those
options vest and become exerciseable in six separate installments as follows:
5,000 on 1/31/2005; 9,000 on 2/1/2006; 9,000 on 2/1/2007; 9,000 on 2/1/2008;
9,000 on 2/1/2009 and 9,000 on 2/1/2010.
(2)
Mr. Hageboeck was awarded 37,500 options on 2/28/2007. Those
options vest and become exerciseable in three separate installments as
follows: 12,500 on 2/28/2011; 12,500 on 2/28/2012 and 12,500 on
2/28/2013.
(3)
Mr. Bumgarner was awarded 10,000 options on 1/31/2005. Those
options vest and become exerciseable in four separate installments as follows:
2,500 on 2/1/2005; 2,500 on 2/1/2006; 2,500 on 2/1/2007 and 2,500 on
2/1/2008.
(4)
Mr. Bumgarner was awarded 2,500 shares of restricted stock on
2/28/2007. The restricted shares will vest in their entirety on
2/28/2012.
(5)
Mr.
Bumgarner was awarded 1,500 options on 3/26/2008. The options will
vest in their entirety on 3/26/2013.
(6)
Mr.
Bumgarner was awarded 350 shares of restricted stock on
3/26/2008. The restricted shares will vest in their entirety on
3/26/2013.
(7)
Mr.
Stilwell was awarded 5,000 options on 2/25/2005. Those options vest and
become exerciseable in five separate installments as follows: 1,000 on
2/25/2006; 1,000 on 2/25/2007; 1,000 on 2/25/2008; 1,000 on 2/25/2009 and 1,000
on 2/25/2010.
(8)
Mr.
Stilwell was awarded 10,000 options on 2/28/2007. Those options vest and
become exerciseable in two separate installments as follows: 5,000 on
2/28/2011 and 5,000 on 2/28/2012.
(9)
Mr.
Stilwell was awarded 3,000 options on 3/26/2008. The options will
vest in their entirety on 3/26/2013.
(10)
Mr.
Stilwell was awarded 750 shares of restricted stock on 3/26/2008. The
restricted shares will vest in their entirety on 3/26/2013.
(11)
Mr.
DeRito was awarded 5,000 options on 2/23/2005. Those options vest and
become exerciseable in five separate installments as follows: 1,000 on
2/23/2006; 1,000 on 2/23/2007; 1,000 on 2/23/2008; 1,000 on 2/23/2009 and 1,000
on 2/23/2010.
(12)
Mr.
DeRito was awarded 2,500 shares of restricted stock on 2/28/2007. The
restricted shares will vest in their entirety on 2/28/2012.
(13)
Mr.
DeRito was awarded 2,500 options on 3/26/2008. The options will vest
in their entirety on 3/26/2013.
(14)
Mr.
DeRito was awarded 625 shares of restricted stock on 3/26/2008. The
restricted shares will vest in their entirety on 3/26/2013.
(15)
Mr.
Alderman was awarded 1,500 shares of restricted stock on 2/28/2007. The
restricted shares will vest in their entirety on 2/28/2012.
(16)
Mr.
Alderman was awarded 1,500 options on 3/26/2008. The options will
vest in their entirety on 3/26/2013.
(17)
Mr.
Alderman was awarded 350 shares of restricted stock on 3/26/2008. The
restricted shares will vest in their entirety on 3/26/2013.
Option
Exercises and Stock Vested
During the fiscal year ended December
31, 2008, there were no stock options exercised by or stock awards vested for
the Named Executive Officers.
POST-EMPLOYMENT
PAYMENTS
Post
Employment Compensation
The tables shown below summarize the
estimated payments to be made under each contract, agreement, plan or
arrangement which provides for payments to a named executive officer at,
following or in connection with any termination of employment including by
resignation, retirement, disability, a change in control of the Company, a
change in the named executive officer’s responsibilities or a constructive
termination of a named executive officer. The information shown below
is as of the most recent fiscal year ended December 31, 2008.
Estimated
payments include items such as restricted shares that would vest in the case of
death, disability, or upon a Change of Control. It should be noted
that the value of these awards would have been reportable under the Summary
Compensation Table in the year in which they were granted and will have been
expensed over the vesting period. For purposes of calculating values for these
tables, all restricted shares outstanding for each Named Executive Officer were
deemed to have fully vested as of December 31, 2008 and the closing price of
Company common stock on that date was $34.78. With respect to
unexercised but fully vested options, the estimated payments reflect the
“spread”, which is the difference between the market price and the exercise
price of any unexercised but fully vested options as of December 31, 2008 whose
exercise price was lower than the market value of the Company’s common stock on
that day.
The
Company maintains a self-insured health plan. As a result, the cost of providing
health care coverage to the Company’s executive officers is estimated based on
the current average cost of care across the base of the Company’s insured
employee base. The actual costs to the Company would depend upon the health
experience of the executive officer and his or her dependents during the period
that coverage was in effect. The Company carries reinsurance for claims for any
covered employee or dependent in excess of $100,000.
Life insurance benefits for officers of
City Holding Company are calculated at base salary times 2.00. Life
insurance is subject to a maximum of $800,000 under the Company’s plan, and is
available to all of the Company’s full-time equivalent employees.
Charles
R. Hageboeck
The following table describes potential
payments upon termination for various reasons for Charles R. Hageboeck, the
Company’s President and Chief Executive Officer.
POST-EMPLOYMENT
PAYMENTS – HAGEBOECK
|
|
Executive
Benefits and Payments
Upon
Termination
|
|
Cash
Payments
($)
|
|
|
Health
Insurance
($)
|
|
|
Life
Insurance
($)
|
|
|
Option
Awards
In-the-Money
($)
(1)
|
|
|
Restricted
Stock Awards
($)
|
|
|
Total
Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
for Just Cause
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Termination
without Just Cause
(2)
|
|
|
1,683,516
|
|
|
|
43,825
|
|
|
|
-
|
|
|
|
135,960
|
|
|
|
-
|
|
|
|
1,863,301
|
|
Voluntary
Termination at 12/31/2008
(2)(5)
|
|
|
1,217,778
|
|
|
|
43,825
|
|
|
|
-
|
|
|
|
135,960
|
|
|
|
-
|
|
|
|
1,397,563
|
|
Death
|
|
|
1,683,516
|
|
|
|
-
|
|
|
|
770,000
|
|
|
|
135,960
|
|
|
|
-
|
|
|
|
2,589,476
|
|
Disability
(2)(3)
|
|
|
1,683,516
|
|
|
|
43,825
|
|
|
|
-
|
|
|
|
135,960
|
|
|
|
-
|
|
|
|
1,863,301
|
|
Change
of Control
(2)(4)
|
|
|
1,683,516
|
|
|
|
43,825
|
|
|
|
-
|
|
|
|
187,900
|
|
|
|
-
|
|
|
|
1,915,241
|
|
(1)
Vested
Option Awards In-the-Money for Mr. Hageboeck are exerciseable for 90 days
following his termination of employment for Termination without Just Cause,
Voluntary Termination, Death or Disability. All Option Awards
In-the-Money will become 100% vested upon a change in control. For
purposes of calculating the amounts in this column, the “spread” between the
exercise of 52,000 vested option awards and the market value of the Company’s
common stock on December 31, 2008 of $34.78 has been calculated for a
Termination without Just Cause, Voluntary Termination, Death or
Disability. In the event of a change in control, 70,000 Option Awards
In-the-Money were deemed to have been 100% vested and the amount shown is the
“spread” between the exercise of the option awards and the market value of the
Company’s common stock on December 31, 2008 of $34.78.
(2)
The
Employment Agreement for Mr. Hageboeck provides for a continuation of health
insurance coverage on the same terms as were in effect prior to his termination
of employment for a period of up to 60 months under either the Company’s plan or
comparable coverage. The estimated value of this benefit is $43,825 and would be
effective if Mr. Hageboeck’s employment were terminated voluntarily by Mr.
Hageboeck, if terminated by the Company Without Just Cause, due to a Change of
Control, or due to disability.
(3)
In the event of
disability, the employment contract for Mr. Hageboeck provides that he have up
to 12 months of continuous disability before his employment agreement may be
terminated. After that, the Company may terminate his employment and
he is entitled to receive an amount equal to “Termination Compensation” times
three (which represents three years of compensation). Termination
Compensation will be the highest amount of cash compensation received by the
officer in the prior three fiscal years. Thus, Termination Compensation for Mr.
Hageboeck will be determined in reference to the calendar year ended December
31, 2006 as $561,172 reduced by the amount of any compensation received pursuant
to any applicable disability insurance plan of the Company.
(4)
The
Employment and/or Change in Control Agreements for each of the NEO's provides
for salary continuation for a period following termination as a result of a
Change in Control as defined by the respective agreements. Amounts
shown in this row are payable in either a lump sum or over a severance
period. The amount shown in this row for Mr. Hageboeck reflects
“Termination Compensation” of $561,172 times three (which represents three years
of compensation), as provided for in his employment agreement and amendments
thereto.
(5)
Mr.
Hageboeck and Mr. Stilwell joined the Company in 2001 when the Company was
significantly troubled as part of a “turnaround team”. The Company signed
agreements with Mr. Hageboeck, Mr. Stilwell, and three other executive officers
providing them the opportunity to voluntarily resign and receive a severance
benefit following four years of service to the Company. These benefits for Mr.
Hageboeck and Mr. Stilwell became fully vested in 2005. Three of the other
executives with such benefits terminated their employment with the Company
during 2004 and 2005 and received payments under their respective 2001
employment agreements. The Company asked Mr. Hageboeck and Mr.
Stilwell to accept positions as the Company’s CEO and Executive Vice-President
in 2005, and the voluntary termination benefits remain vested and have been
preserved in subsequent employment contracts with Mr. Hageboeck and Mr.
Stilwell. The voluntary termination benefits grow each year at an
amount equal to the one-year constant maturity treasury rate and cannot be
forfeited except where the officer personally profits from willful fraudulent
activity that materially and adversely affects the Employer. The costs of this
vested severance benefit have been fully accrued and expensed by the Company
between 2001 and 2008.
David
L. Bumgarner
The following table describes potential
payments upon termination for various reasons for David L. Bumgarner, the
Company’s Senior Vice President and Chief Financial Officer.
POST-EMPLOYMENT
PAYMENTS - BUMGARNER
|
|
Executive
Benefits and Payments
Upon
Termination
|
|
Cash
Payments
($)
|
|
|
Health
Insurance
($)
|
|
|
Life
Insurance
($)
|
|
|
Option
Awards
In-the-Money
($)
(1)
|
|
|
Restricted
Stock Awards
($)
(2)
|
|
|
Total
Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
for Just Cause
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Termination
without Just Cause
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,550
|
|
|
|
-
|
|
|
|
18,550
|
|
Voluntary
Termination at 12/31/2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,550
|
|
|
|
-
|
|
|
|
18,550
|
|
Death
|
|
|
-
|
|
|
|
-
|
|
|
|
340,000
|
|
|
|
18,550
|
|
|
|
99,123
|
|
|
|
457,673
|
|
Disability
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,550
|
|
|
|
99,123
|
|
|
|
117,673
|
|
Change
of Control
(3)(4)
|
|
|
205,871
|
|
|
|
8,765
|
|
|
|
-
|
|
|
|
18,550
|
|
|
|
99,123
|
|
|
|
332,309
|
|
(1)
Vested
Option Awards In-the-Money for Mr. Bumgarner are exerciseable for 90 days
following his termination of employment for Termination without Just Cause,
Voluntary Termination, Death or Disability. All Option Awards
In-the-Money will become 100% vested upon a change in control. For
purposes of calculating the amounts in this column, the “spread” between the
exercise of 10,000 vested option awards and the market value of the Company’s
common stock on December 31, 2008 of $34.78 has been calculated for a
Termination without Just Cause, Voluntary Termination, Death, Disability and a
Change In Control.
(2)
Restricted Share Awards for Mr. Bumgarner become 100% vested upon death,
disability or a change in control. For purposes of calculating the
amounts in this column, Mr. Bumgarner’s 2,850 restricted shares were multiplied
by the closing price of the Company’s stock on December 31, 2008 of
$34.78.
(3)
The Change in Control
Agreement for Mr. Bumgarner provides for a continuation of health insurance
coverage on the same terms as were in effect prior to his termination of
employment for a period of up to 12 months under either the Company’s plan or
comparable coverage. The estimated value of this benefit is $8,765
and would be effective if Mr. Bumgarner’s employment were terminated by the
Company because of a Change of Control.
(4)
The Employment and/or
Change in Control Agreements for each of the NEO's provides for salary
continuation for a period following termination as a result of a Change in
Control as defined by the respective agreements. Amounts shown in
this row are payable in either a lump sum or over a severance
period. The severance period for Mr. Bumgarner is 12
months. The amount shown in this row for Mr. Bumgarner reflects
“Termination Compensation” of $205,871 times one (which represents one year of
compensation).
Craig
G. Stilwell
The following table describes potential
payments upon termination for various reasons for Craig G. Stilwell, the
Company’s Executive Vice President, Retail Banking.
POST-EMPLOYMENT
PAYMENTS – STILWELL
|
|
Executive
Benefits and Payments
Upon
Termination
|
|
Cash
Payments
($)
|
|
|
Health
Insurance
($)
|
|
|
Life
Insurance
($)
|
|
|
Option
Awards
In-the-Money
($)
(1)
|
|
|
Restricted
Stock Awards
($)
(2)
|
|
|
Total
Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
for Just Cause
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Termination
without Just Cause
(3)
|
|
|
1,039,624
|
|
|
|
43,825
|
|
|
|
-
|
|
|
|
86,980
|
|
|
|
-
|
|
|
|
1,170,429
|
|
Voluntary
Termination at 12/31/2008
(3)(6)
|
|
|
752,042
|
|
|
|
43,825
|
|
|
|
-
|
|
|
|
86,980
|
|
|
|
-
|
|
|
|
882,847
|
|
Death
|
|
|
1,039,624
|
|
|
|
-
|
|
|
|
450,000
|
|
|
|
86,980
|
|
|
|
26,085
|
|
|
|
1,602,689
|
|
Disability
(3)(4)
|
|
|
1,039,624
|
|
|
|
43,825
|
|
|
|
-
|
|
|
|
86,980
|
|
|
|
26,085
|
|
|
|
1,196,514
|
|
Change
of Control
(3)(5)
|
|
|
1,039,624
|
|
|
|
43,825
|
|
|
|
-
|
|
|
|
93,900
|
|
|
|
26,085
|
|
|
|
1,204,434
|
|
(1)
Vested
Option Awards In-the-Money for Mr. Stilwell are exerciseable for 90 days
following his termination of employment for Termination without Just Cause,
Voluntary Termination, Death or Disability. All Option Awards
In-the-Money will become 100% vested upon a change in control. For
purposes of calculating the amounts in this column, the “spread” between the
exercise of 23,000 vested option awards and the market value of the Company’s
common stock on December 31, 2008 of $34.78 has been calculated for a
Termination without Just Cause, Voluntary Termination, Death or
Disability. In the event of a change in control, 25,000 Option Awards
In-the-Money were deemed to have been 100% vested and the amount shown is the
“spread” between the exercise of the option awards and the market value of the
Company’s common stock on December 31, 2008 of $34.78.
(2)
Restricted Share Awards for Mr. Stilwell become 100% vested upon death,
disability or a change in control. For purposes of calculating the
amounts in this column, Mr. Stilwell’s 750 restricted shares were multiplied by
the closing price of the Company’s stock on December 31, 2008 of
$34.78.
(3)
The
Employment Agreement for Mr. Stilwell provides for a continuation of health
insurance coverage on the same terms as were in effect prior to his termination
of employment for a period of up to 60 months under either the Company’s plan or
comparable coverage. The estimated value of this benefit is $43,825 and would be
effective if Mr. Stilwell’s employment were terminated voluntarily by Mr.
Stilwell, if terminated by the Company Without Just Cause, due to a Change of
Control, or due to disability.
(4)
In the event of
disability, the employment contract for Mr. Stilwell provides that he have up to
12 months of continuous disability before his employment agreement may be
terminated. After that, the Company may terminate his employment and
he is entitled to receive an amount equal to “Termination Compensation” times
three (which represents three years of compensation). Termination
Compensation will be the highest amount of cash compensation received by the
officer in the prior three fiscal years. Thus, Termination Compensation for Mr.
Stilwell will be determined in reference to the calendar year ended December 31,
2006 as $346,541, reduced by the amount of any compensation received pursuant to
any applicable disability insurance plan of the Company.
(5)
The
Employment and/or Change in Control Agreements for each of the NEO's provides
for salary continuation for a period following termination as a result of a
Change in Control as defined by the respective agreements. Amounts
shown in this row are payable in either a lump sum or over a severance
period. The amount shown in this row for Mr. Stilwell reflects
“Termination Compensation” of $346,541 times three (which represents three years
of compensation), as provided for in his employment agreement and amendments
thereto.
(6)
Mr.
Hageboeck and Mr. Stilwell joined the Company in 2001 when the Company was
significantly troubled as part of a “turnaround team”. The Company signed
agreements with Mr. Hageboeck, Mr. Stilwell, and three other executive officers
providing them the opportunity to voluntarily resign and receive a severance
benefit following four years of service to the Company. These benefits for Mr.
Hageboeck and Mr. Stilwell became fully vested in 2005. Three of the other
executives with such benefits terminated their employment with the Company
during 2004 and 2005 and received payments under their respective 2001
employment agreements. The Company asked Mr. Hageboeck and Mr.
Stilwell to accept positions as the Company’s CEO and Executive Vice-President
in 2005, and the voluntary termination benefits remain vested and have been
preserved in subsequent employment contracts with Mr. Hageboeck and Mr.
Stilwell. The voluntary termination benefits grow each year at an
amount equal to the one-year constant maturity treasury rate and cannot be
forfeited except where the officer personally profits from willful fraudulent
activity that materially and adversely affects the Employer The costs of this
vested severance benefit have been fully accrued and expensed by the Company
between 2001 and 2008.
John
A. DeRito
The following table describes potential
payments upon termination for various reasons for John A. DeRito, the Company’s
Executive Vice President, Commercial Banking.
POST-EMPLOYMENT
PAYMENTS – DERITO
|
|
Executive
Benefits and Payments
Upon
Termination
|
|
Cash
Payments
($)
|
|
|
Health
Insurance
($)
|
|
|
Life
Insurance
($)
|
|
|
Option
Awards
In-the-Money
($)
(1)
|
|
|
Restricted
Stock Awards
($)
(2)
|
|
|
Total
Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
for Just Cause
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Termination
without Just Cause
(3)(4)
|
|
|
334,095
|
|
|
|
19,210
|
|
|
|
-
|
|
|
|
36,090
|
|
|
|
-
|
|
|
|
389,395
|
|
Voluntary
Termination at 12/31/2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
36,090
|
|
|
|
-
|
|
|
|
36,090
|
|
Death
|
|
|
-
|
|
|
|
-
|
|
|
|
380,000
|
|
|
|
36,090
|
|
|
|
108,688
|
|
|
|
524,778
|
|
Disability
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
36,090
|
|
|
|
108,688
|
|
|
|
144,778
|
|
Change
of Control
(3)(5)
|
|
|
579,098
|
|
|
|
19,210
|
|
|
|
-
|
|
|
|
44,350
|
|
|
|
108,688
|
|
|
|
751,346
|
|
(1)
Vested
Option Awards In-the-Money for Mr. DeRito are exerciseable for 90 days following
his termination of employment for Termination without Just Cause, Voluntary
Termination, Death or Disability. All Option Awards In-the-Money will
become 100% vested upon a change in control. For purposes of
calculating the amounts in this column, the “spread” between the exercise of
13,000 vested option awards and the market value of the Company’s common stock
on December 31, 2008 of $34.78 has been calculated for a Termination without
Just Cause, Voluntary Termination, Death or Disability. In the event
of a change in control, 15,000 Option Awards In-the-Money were deemed to have
been 100% vested and the amount shown is the “spread” between the exercise of
the option awards and the market value of the Company’s common stock on December
31, 2008 of $34.78.
(2)
Restricted Share Awards for Mr. DeRito become 100% vested upon death,
disability or a change in control. For purposes of calculating the
amounts in this column, Mr. DeRito’s 3,125 restricted shares were multiplied by
the closing price of the Company’s stock on December 31, 2008 of
$34.78.
(3)
The Change in Control
Agreement for Mr. DeRito provides for a continuation of health insurance
coverage on the same terms as were in effect prior to his termination of
employment for a period of up to 24 months under either the Company’s plan or
comparable coverage. The estimated value of this benefit is $19,210
and would be effective if Mr. DeRito’s employment were terminated Without Just
Cause or if terminated by the Company because of a Change of
Control.
(4)
Mr. DeRito’s Change in
Control Agreement provides that if Mr. DeRito is terminated Without Just Cause,
Mr. DeRito will be paid an amount equal to his “Termination Compensation” for 60
weeks and provided health care for 60 weeks.
(5)
The Employment and/or
Change in Control Agreements for each of the NEO's provides for salary
continuation for a period following termination as a result of a Change in
Control as defined by the respective agreements. Amounts shown in
this row are payable in either a lump sum or over a severance
period. The severance period for Mr. DeRito is 24
months. The amount shown in this row for Mr. DeRito reflects
“Termination Compensation” of $289,549 times two (which represents two years of
compensation).
John
W. Alderman, III
The following table describes potential
payments upon termination for various reasons for John W. Alderman, III, the
Company’s Senior Vice President & Chief Legal Officer.
POST-EMPLOYMENT
PAYMENTS – ALDERMAN
|
|
Executive
Benefits and Payments
Upon
Termination
|
|
Cash
Payments
($)
|
|
|
Health
Insurance
($)
|
|
|
Life
Insurance
($)
|
|
|
Option
Awards
In-the-Money
($)
|
|
|
Restricted
Stock Awards
($)
(1)
|
|
|
Total
Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
for Just Cause
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Termination
without Just Cause
(2)
|
|
|
239,282
|
|
|
|
17,530
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
256,812
|
|
Voluntary
Termination at 12/31/2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Death
|
|
|
239,282
|
|
|
|
-
|
|
|
|
347,000
|
|
|
|
-
|
|
|
|
64,343
|
|
|
|
650,625
|
|
Disability
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,343
|
|
|
|
64,343
|
|
Change
of Control
(2)(4)
|
|
|
239,282
|
|
|
|
17,530
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,343
|
|
|
|
321,155
|
|
(1)
Restricted Share Awards for Mr. Alderman become 100% vested upon death,
disability or a change in control. For purposes of calculating the
amounts in this column, Mr. Alderman’s 1,850 restricted shares were multiplied
by the closing price of the Company’s stock on December 31, 2008 of
$34.78.
(2)
The Change in Control
Agreement for Mr. Alderman provides for a continuation of health insurance
coverage on the same terms as were in effect prior to his termination of
employment for a period of up to 24 months under either the Company’s plan or
comparable coverage. The estimated value of this benefit is $17,530
and would be effective if Mr. Alderman’s employment were terminated without Just
Cause or if terminated by the Company because of a Change of
Control.
(3)
In the event of
Disability, Mr. Alderman could be compensated for up to 12 months of continuous
disability. Following 12 months of continuous disability, the Company
may terminate his employment at no further expense.
(4)
The Employment and/or
Change in Control Agreements for each of the NEO's provides for salary
continuation for a period following termination as a result of a Change in
Control as defined by the respective agreements. Amounts shown in
this row are payable in either a lump sum or over a severance
period. The severance period for Mr. Alderman is 12
months. The amount shown in this row for Mr. Alderman reflects
“Termination Compensation” of $239,282 times one (which represents one year of
compensation).
Employment
and Consulting Agreements
The Company entered into employment
agreements with Charles R. Hageboeck and Craig G. Stilwell on July 25, 2007
replacing agreements previously entered into during 2001. These agreements have
a term of two years, but automatically renew each month for an additional month
unless either Employer or Employee serves notice to the other to fix the term to
a definite two-year term. Both Mr. Hageboeck and Mr. Stilwell’s
employment agreements address salary, incentives and other benefits. In the
event that Mr. Hageboeck or Mr. Stilwell, respectively, voluntarily terminate
their employment with the Company for any reason or at any time, Employee will
be entitled to receive a certain sum of money, plus interest from and after
December 31, 2006, such amount paid over 36 months. This covenant
within the Employment Agreements between the Company and Mr. Hageboeck and Mr.
Stilwell preserves termination benefits available to the Employee that were part
of the original employment agreements between the Company and the officers
originally signed on June 11, 2001 and May 15, 2001, respectively. At
December 31, 2008, Mr. Hageboeck could have voluntarily resigned, in which case
the Company would be obligated to make payments to him over 36 months totaling
$1,217,778 plus interest at the Treasury One-Year Constant Maturity rate, reset
each December 31
st
. At
December 31, 2009, Mr. Hageboeck could voluntarily resign and the Company would
be obligated to make payments to him over 36 months totaling $1,222,284 plus
interest at the Treasury One-Year Constant Maturity rate until paid in full. At
December 31, 2008, Mr. Stilwell could have voluntarily resigned, in which case
the Company would be obligated to make payments to him over 36 months totaling
$752,042 plus interest at the Treasury One-Year Constant Maturity rate, reset
each December 31
st
. At
December 31, 2009, Mr. Stilwell could voluntarily resign and the Company would
be obligated to make payments to him over 36 months totaling $754,825 plus
interest at the Treasury One-Year Constant Maturity rate until paid in full.
Additionally, the Company is required to make health care available to either
employee for a period of up to five years following voluntary
termination. The Company accrued expense between 2001 and 2008 to
reflect the costs of this benefit totaling $1,969,821. These benefits just
described for Mr. Hageboeck and Mr. Stilwell are deemed fully vested and shall
not be subject to risk of forfeiture under any circumstances, including any of
the reasons that qualify for “Just Cause” as described below and as provided
under the Agreements, except where Employee personally profits from his willful
fraudulent activity and that activity materially and adversely affects
Employer.
In the event of termination with “Just
Cause” for any of the named executives, no payments would be made (except as
provided above). “Just Cause is defined to include (a) Employee’s
commission of an act materially and demonstrably detrimental to the Company or
City National Bank of West Virginia (together, the “Employer”), which act
constitutes willful misconduct by the Employee in the performance of his
material duties to the Employer not authorized, directed or ratified by City
National’s or the Company’s Board of Directors; (b) Employee’s material breach
of any provision of the Agreement, provided that Employee has received written
notice from Employer of such material breach and such breach remains uncured 30
days after the delivery of such notice. No act or failure to act will be
considered “willful” under the Agreement unless it is done, or omitted to be
done, by the Employee in bad faith or without reasonable belief that his action
or omission was in the best interests of the Employer.
In the event of termination without
“Just Cause”, death, or disability, either Mr. Hageboeck or Mr. Stilwell are
entitled to receive three times his “Termination Compensation”, which is defined
as equal to the highest amount of cash compensation paid to or for the benefit
of the Employee in respect of any of the three most recent calendar years ending
prior to the date of termination, determined by reference to the annual cash
compensation (including salary, cash-based incentive compensation, and
cash-based bonus but not including equity incentive compensation) of the Summary
Compensation Table set forth in the Company’s proxy statement for such year.
Additionally, both Mr. Hageboeck and Mr. Stilwell’s employment contracts require
the Company to provide health care for five years in the event that their
employment terminates due to disability or without “Just Cause”.
The Company entered into a Change in
Control and Termination Agreement on June 28, 2004, with John A.
DeRito. Under this agreement, in the event of a Change in Control,
Mr. DeRito may voluntarily terminate his employment with the Company until the
expiration of the 24-month period after the Change in Control for “Good Reason”
as defined in the Agreement and be entitled to receive benefits as described in
the Post Employment Compensation Table above. Mr. DeRito’s Change in Control and
Termination Agreement also provides that if Mr. DeRito is terminated “Without
Good Cause”, he will receive benefits as described in the Post- Employment
Compensation Table above.
The Company entered into an Employment
Agreement with John W. Alderman, III, on July 25, 2007, replacing an earlier
agreement signed by the Company and Mr. Alderman on March 14, 2002, which had
terminated on March 14, 2007. The Employment Agreement provides that
Mr. Alderman will serve as the Chief Legal Officer and Senior Vice President of
the Company. Under this agreement, in the event of termination
without “Just Cause”, death, or disability, Mr. Alderman is entitled to receive
benefits as described in the Post-Employment Compensation Table
above.
The Company entered into a Change in
Control Agreement with David Bumgarner on February 1, 2005. Mr.
Bumgarner’s Agreement provides that in the event of a Change in Control of the
Company, Mr. Bumgarner may voluntarily terminate his employment with the Company
until the expiration of the 12-month period after the Change in Control for
“Good Reason” as defined in the Agreement and receive benefits as shown in the
Post Employment Compensation Table above.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's
officers, directors and persons who own more than 10% of a registered class of
the Company's equity securities to file reports of ownership on Form 3 and
changes in ownership on Form 4 or Form 5 with the SEC. Such officers, directors
and 10% shareholders are also required by SEC rules to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely upon the review of copies
of such reports furnished to the Company through the date hereof, or written
representations that no reports were required, the Company believes that during
the fiscal year ended December 31, 2008, all filing requirements applicable to
its executive officers and directors were met except as follows.
In August 2008, Sharon H. Rowe filed a
late Form 4 with respect to one open market sale transaction of 2,000
shares.
CERTAIN
TRANSACTIONS INVOLVING DIRECTORS AND
EXECUTIVE
OFFICERS
During 2008, the Company’s subsidiaries
had, and expect to have in the future, banking transactions with directors of
the Company, their immediate families and entities in which they are principal
owners (more than 10% interest). The transactions are in the ordinary course of
business and on substantially the same terms, including interest rates and
security, as those prevailing at the same time for comparable transactions with
others and do not involve more than the normal risk of collectability or present
other unfavorable factors.
The Company’s loan policy requires that
all credits to directors and executive officers and their interests, as defined
in Item 404 of SEC Regulation S-K, must be reviewed and approved by the
Executive Loan Committee and promptly reported to the Board of
Directors. If required by the procedural and financial requirements
of Regulation O of the Board of Governors of the Federal Reserve System, such
credits will be approved in advance by a majority of uninterested
directors. Directors and executive officers may not be present for
discussions on their own loans, loans involving their related interests or loans
involving any other conflict of interest situation and must abstain from voting
on such credits.
The Company has entered into employment
agreements and an employment and consulting agreement with certain of its named
executive officers and directors and provided other compensation to certain of
its directors. See “
Employment
and Consulting Agreements
” above under the section titled
“Post-Employment Payments” and
“Compensation of Directors”
above under the section titled “Additional Information Concerning the Board of
Directors.”
APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal
2)
Subject to ratification by the
Company’s shareholders, the Company’s Audit Committee has appointed Ernst &
Young LLP (“Ernst & Young”) as the Company’s independent registered public
accounting firm to audit the consolidated financial statements of the Company
for the year ending December 31, 2009.
Representatives of Ernst & Young
are expected to be present at the Annual Meeting and will have an opportunity to
make a statement if they so desire and are expected to be available to respond
to appropriate questions.
Recommendation
The Audit Committee and the Board of
Directors unanimously recommend the shareholders vote “FOR” such
ratification.
Principal
Accounting Fees and Services
During
the fiscal years ended December 31, 2008 and 2007, the Company engaged Ernst
& Young LLP as its independent registered public accounting firm principally
to perform the annual audit of its consolidated financial statements and the
effectiveness of the Company’s internal control over financial reporting, and to
render other allowable services. The following table lists fees paid
to Ernst & Young, for services rendered in fiscal years 2008 and
2007:
|
|
2008
|
|
|
2007
|
|
Audit
Fees………………….
|
|
$
|
577,874
|
|
|
$
|
542,230
|
|
Audit-Related
Fees…………
|
|
|
10,150
|
|
|
|
-----
|
|
Tax
Fees……………………
|
|
|
85,620
|
|
|
|
61,330
|
|
Total
Fees…………………..
|
|
$
|
673,644
|
|
|
$
|
603,560
|
|
Audit
Fees include fees associated with the annual audit of the Company’s consolidated
financial statements, incorporated by reference in its annual report on Form
10-K filed with the Securities and Exchange Commission, the audit of the
effectiveness of the Company’s internal control over financial reporting as of
December 31, 2008, and 2007, reviews of the Company’s quarterly reports on Form
10-Q filed with the Securities and Exchange Commission and the issuance of
consents in filings with the Securities and Exchange Commission.
Audit-Related
Fees include fees and expenses associated with the filing of an S-3 Shelf
Registration with the Securities and Exchange Commission.
Tax Fees
primarily include fees related to tax return preparation, a state income tax
examination, research and planning.
Pre-Approval
Policies and Procedures
The Audit
Committee charter requires that the Audit Committee pre-approve all audit and
non-audit services to be provided to the Company by the independent registered
public accounting firm, provided, however, that the Audit Committee may
specifically authorize its chairman to pre-approve the provision of any
non-audit service to the Company. All of the services described above
which Ernst & Young LLP provided and for which they billed the Company, were
pre-approved by the Company’s Audit Committee. For the fiscal year
ended December 31, 2008 the Company’s Audit Committee did not waive the
pre-approval requirement of any non-audit services provided to the Company by
Ernst & Young.
SHAREHOLDER PROPOSALS AND
NOMINATIONS
Under the
regulations of the SEC, any shareholder desiring to make a proposal pursuant to
Rule 14a-8 of the SEC’s proxy rules to be acted upon at the Company’s 2010
annual meeting of shareholders must present such proposal to the Company’s
Secretary at the principal executive offices of the Company at 25 Gatewater
Road, Charleston, West Virginia 25313, not later than November 27, 2009 in order
for the proposal to be considered for inclusion in the Company’s proxy statement
for the 2010 annual meeting of shareholders. SEC rules establish a
different deadline for submission of shareholder proposals that are not intended
to be included in our proxy statement with respect to discretionary
voting. The deadline for these proposals for the 2010 annual meeting
is February 10, 2010. If a shareholder gives notice of such a
proposal after this deadline, the proxies will be allowed to use their
discretionary voting authority to vote against the shareholder proposal when and
if it is raised at the annual meeting.
Pursuant
to the Company’s Amended and Restated Bylaws, a shareholder may nominate persons
for election to the Board of Directors and, pursuant to the Governance
Committee’s Charter, the Governance Committee considers nominees recommended by
shareholders, in each case, if written notice is submitted to the Company’s
Secretary at the principal executive offices of the Company not less than 120
calendar days prior to April 28, 2010.
The
shareholder’s notice must include:
|
o
|
as
to each person whom the shareholder proposes to nominate for election as a
director:
|
§
all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest or is
otherwise required pursuant to Regulation 14A under the Exchange Act;
and
§
such
person’s written consent to being named in the proxy statement as a nominee and
to serving as such as a director if elected; and
|
o
|
as
to the shareholder giving the notice and the beneficial owner, if any, on
whose behalf the nomination is
made:
|
§
the
name and address of such shareholder, as they appear on the Company’s books, and
of such beneficial owner;
§
the
class and number of shares of the Company’s Common Stock that are owned
beneficially and of record by such shareholder and such beneficial
owner;
§
a
description of all arrangements or understandings between the shareholder and
each nominee and any other persons (naming them) pursuant to which the
nominations are to be made by the shareholder;
§
a
representation that such shareholder is a holder of record of the Company’s
stock entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to propose such nomination; and
§
a
representation whether the shareholder intends to solicit proxies from
shareholders in support of such nomination.
In order for a shareholder to bring
other business before a shareholder meeting, timely notice must be received by
the Company’s Secretary within the time limits described in the immediately
following paragraph. The shareholder’s notice must
contain:
§
a
brief description of the business desired to be brought before the
meeting;
§
the
reasons for conducting such business at the meeting;
§
in
the event that such business includes a proposal to amend the Company’s Articles
of Incorporation or Bylaws, the language of the proposed amendment;
and
§
any
material interest in such business of such shareholder and for the beneficial
owner, if any, on whose behalf the proposal is made; and
|
o
|
as
to the shareholder giving the notice and the beneficial owner, if any, on
whose behalf the proposal is made, the information described above, with
respect to the shareholder proposing such
business.
|
The requirements found in the Company’s
Amended and Restated Bylaws are separate from and in addition to the
requirements of the SEC that a shareholder must meet to have a proposal included
in the Company’s proxy statement.
OTHER
MATTERS
As of the
date of this proxy statement, the Board of Directors is not informed of any
matters, other than those stated above, that may be brought before the annual
meeting. However, if any other matters are brought before the annual meeting or
any adjournments or postponements thereof, the persons named on the accompanying
proxy card or their substitutes will vote with respect to such matters in
accordance with their best judgment.
Directions
to the 2009 Annual Meeting location at the Pullman Plaza Hotel, 1001 Third
Avenue, Huntington, WV 25701 are shown below:
From
Interstate 64 East/West
Take Exit 11 (Hal
Greer Blvd/Marshall University). Follow 16th St. (Hal Greer Blvd.) to the
intersection with 3rd Ave. Turn left onto 3rd Avenue. Continue six blocks ahead
to Pullman Plaza Hotel.
By Order of the
Board of Directors,
Victoria
A. Faw
Secretary
March 27,
2009
Appendix
A
City
Holding Company
Compensation
Committee Charter
(rev.
11/2005)
Purpose
The
Compensation Committee is appointed by the Board of Directors to discharge the
Board’s responsibilities relating to compensation of the Company’s
executives.
Committee
Membership
The
Committee will be composed of at least three directors, all of whom satisfy the
definition of “independent” under the listing standards of The Nasdaq Stock
Market. All Committee members shall also be “non-employee directors”
as defined by Rule 16b-3 under the Securities Exchange Act of 1934 and “outside
directors” as defined by Section 162(m) of the Internal Revenue Code. The
Committee members will be appointed by the Board and may be removed by the Board
in its discretion. The Committee shall have the authority to delegate
any of its responsibilities to subcommittees as the Committee may deem
appropriate, provided the subcommittees are composed entirely of independent
directors.
Meetings
The
Committee shall meet as often as its members deem necessary to perform the
Committee’s responsibilities.
Committee
Authority and Responsibilities
The
Committee will have the authority, to the extent it deems necessary or
appropriate, to retain a compensation consultant to assist in the evaluation of
director, Chief Executive Officer (CEO) or senior executive
compensation. The Committee shall have sole authority to retain
and terminate any such consulting firm, including sole authority to approve the
firm’s fees and other retention terms. The Committee shall also have authority,
to the extent it deems necessary or appropriate, to retain other advisors. The
Company will provide for appropriate funding, as determined by the Committee,
for payment of compensation to any consulting firm or other advisors employed by
the Committee.
The
Committee will make regular reports to the Board and will propose any necessary
action to the Board. The Committee will review and reassess the adequacy of this
charter annually and recommend any proposed changes to the Board for
approval.
In carrying out its
responsibilities:
·
|
The
Committee shall have responsibility for developing and maintaining an
executive compensation policy that creates a direct relationship between
pay levels and corporate performance and returns to
shareholders. The Committee shall monitor the results of such
policy to assure that the compensation payable to the Company’s executive
officers provides overall competitive pay levels, creates proper
incentives to enhance shareholder value, rewards superior performance, and
is justified by the returns available to
shareholders.
|
·
|
The
Committee shall have the responsibility to review and to make
recommendations to the full Board of Directors for the approval of
compensation and benefit plans, which may include amendments to existing
plans, cash- and equity-based incentive compensation plans, and
non-qualified deferred compensation and retirement
plans.
|
·
|
The
Committee shall establish annually subjective and objective criteria to
serve as the basis for the Chief Executive Officer’s compensation,
evaluate the Chief Executive Officer’s performance in light of those
criteria and determine the Chief Executive Officer’s compensation based on
that evaluation.
|
·
|
The
Committee shall establish annually subjective and objective criteria to
serve as the basis for the other executive officers’ compensation,
evaluate the other executive officers’ performance in light of those
criteria and determine the other executive officers’ compensation based on
that evaluation.
|
·
|
In
establishing the compensation to be paid or provided to executive
officers, the Committee shall utilize, where it deems appropriate,
comparative data regarding compensation practices. The
Committee may utilize flexible compensation structures to attract, retain,
motivate and appropriately reward executive officers, consistent with the
Company’s compensation philosophy. The Committee may retain one
or more compensation consultants or other advisors to assist the Committee
with these duties. The Committee shall have sole authority to
approve the fees and other retention terms of any such consultant or
advisor.
|
·
|
With
respect to the Company’s equity-based compensation plans, the Committee
shall review and recommend for the approval of the full Board of Directors
grants of stock options, restricted stock, performance shares, stock
appreciation rights, and other equity-based incentives to executive
officers to the extent provided under the compensation
plans. The committee may delegate to the President and Chief
Executive Officer all or part of the committee’s authority and duties with
respect to grants and awards to individuals who are not subject to the
reporting requirements and other provisions of Section 16 of the
Securities Exchange Act of 1934 as in effect from time to
time
|
·
|
The
Committee shall from time to time review and make recommendations to the
Board of Directors regarding the compensation of non-employee
directors.
|
·
|
The
Committee shall provide, over the names of the Committee members, the
required Compensation Committee report for the Company’s proxy statement
for the annual meeting of
shareholders.
|
·
|
The
Committee shall have available to it such support personnel, including
management staff, outside auditors, attorneys and consultants as it deems
necessary to discharge its
responsibilities.
|
·
|
The
Committee shall consider the application of Section 162(m) of the Internal
Revenue Code to the Company and its compensation practices and develop a
policy for the Company with respect to Section
162(m).
|
·
|
The
Secretary of the Committee shall be the Corporate Secretary or his or her
designee. The proceedings of all Committee meetings shall be
documented in minutes. At the next regular Board meeting
following any Committee meeting, the Chairman of the Committee shall
report to the Board of Directors on behalf of the
Committee.
|
·
|
The
Chairman of the Committee shall discuss the Committee’s performance with
each member of the Committee, following which discussions the Chairman
shall lead the Committee in an annual evaluation of its
performance. The annual evaluation shall include a review of
the Committee’s charter.
|
·
|
The
Committee shall cause to be provided to Nasdaq appropriate written
confirmation of any of the foregoing matters as Nasdaq may from time to
time require.
|
c/o
Corporate Election Services
P. O. Box
1150
Pittsburgh,
PA 15230-1150
Vote
by Telephone
Have your
proxy card available when you call
Toll-Free 1-888-693-8683
using a touch-tone phone and follow the simple instructions to record
your vote.
Have your
proxy card available when you access the website
www.cesvote.com
and follow the
simple instructions to record your vote.
Please
mark, sign and date your proxy card and return it in the
postage-paid envelope
provided
or return it to: Corporate Election Services, P.O. Box 1150, Pittsburgh, PA
15230.
Vote
by Telephone
|
|
Vote
by Internet
|
|
Vote
by Mail
|
Call
Toll-Free using a
|
|
Access
the Website and
|
|
Return
your proxy
|
touch-tone
telephone:
|
|
cast
your vote:
|
|
in
the postage-paid
|
1-888-693-8683
|
|
www.cesvote.com
|
|
envelope
provided
|
Vote
24 hours a day, 7 days a week.
If
you vote by telephone or Internet, please do not send your proxy by
mail.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF
SHAREHOLDERS ON APRIL 29, 2009.
The City
Holding Company Notice of Annual Meeting, Proxy Statement and Annual Report to
Shareholders are available at www.ViewMaterial.com/CHCO.
Proxy
card must be signed and dated below.
ê
Please
fold and detach card at perforation before mailing.
ê
City
Holding Company
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE
ANNUAL MEETING OF SHAREHOLDERS ON APRIL 29, 2009.
The
undersigned shareholder of City Holding Company hereby appoints John W.
Alderman, III and Victoria A. Faw and each of them, with full power of
substitution, as proxies and hereby authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of City Holding Company held of
record by the undersigned on March 20, 2009 at the Annual Meeting of
Shareholders to be held on April 29, 2009 or any adjournment or adjournments
thereof. The undersigned shareholder authorizes the proxies to
cumulate their votes at their discretion.
Dated:
|
|
,2009
|
|
Signature
|
|
Signature,
if held jointly
|
Please
Please date and sign exactly as name appears hereon. If shares are
held jointly, each shareholder should sign. Agents, executors,
administrators, guardians, trustees, etc. should use full title, and, if more
than one, all should sign. If the shareholder is a corporation,
please sign full corporate name by the president or another authorized
officer. If a partnership, please sign in partnership name by
authorized person.
Your
vote is important
If you do
not vote by telephone or Internet, please sign and date this proxy card and
return it promptly in the enclosed postage-paid envelope, or otherwise to
Corporate Election Services, P.O. Box 535300, Pittsburgh, PA 15253, so your
shares may be represented at the Annual Meeting. If you vote by
telephone or Internet, it is not necessary to return this proxy
card.
Proxy
card must be signed and dated on the reverse side.
ê
Please
fold and detach card at perforation before mailing.
ê
CITY
HOLDING COMPANY PROXY
This
proxy, when properly executed, will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will
be voted FOR Proposals 1 and 2. You may revoke this proxy at any time
prior to the time it is voted at the Annual Meeting.
1. Proposal
to elect four Class I directors to serve for a term of three years.
CLASS
I NOMINEES:
|
(1) John
R. Elliot
|
(2) David
W. Hambrick
|
(3) James
L. Rossi
|
(4) Mary
E. Hooten Williams
|
q
FOR
(except as marked to the
contrary above)
q
WITHHOLD
authority
To withhold authority to vote for any
individual nominee, strike a line through the nominee’s name above.
2.
|
Proposal
to ratify the Audit Committee and the Board of Directors’ appointment of
Ernst & Young, LLP as the independent registered public accounting
firm for City Holding Company for
2009.
|
q
FOR
q
AGAINST
q
ABSTAIN
Please
mark, sign, date and return the proxy promptly using the enclosed
envelope.
|
3.
|
In
their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting of Shareholders or
any adjournment or adjournments
thereof.
|
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