SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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[ ] Preliminary Proxy Statement
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(AS PERMITTED BY RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240-14a-12
Capital City Bank Group, Inc.
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(Name of Registrant as Specified in Its Charter)
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NOTICE OF 2006 ANNUAL MEETING
OF SHAREOWNERS AND PROXY STATEMENT
[Capital City Bank Group Star Logo]
[Capital City Bank Group Logo]
217 North Monroe Street, Tallahassee, Florida 32301
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CONTENTS
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LETTER TO SHAREOWNERS
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
PROXY STATEMENT
General Information.......................................................1
Corporate Governance......................................................3
Board and Committee Membership............................................5
Nominees for Election as Directors........................................8
Continuing Directors and Executive Officers..............................10
Share Ownership..........................................................12
Executive Officers and Transactions with Management......................14
Compensation Committee Report............................................16
Executive Compensation...................................................20
Retirement Plans.........................................................22
Five-Year Performance Graph..............................................23
Audit Committee Report...................................................24
Ratification of Auditors.................................................26
Other Matters............................................................28
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LETTER TO SHAREOWNERS
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CAPITAL CITY BANK GROUP, INC.
217 North Monroe Street
Tallahassee, Florida 32301
March 31, 2006
Dear Fellow Shareowners:
You are cordially invited to attend the 2006 Annual Meeting of Shareowners
at 10:00 a.m., local time, on Tuesday, April 25, 2006, at University Center
Club, Building B, Floor 3, University Center, Florida State University,
Tallahassee, Florida.
At the meeting, I will give an update on Capital City's business and plans
for the future. Also, we will elect four Class III directors to the Board
of Directors and ratify our accountants for fiscal 2006.
Your Board of Directors encourages every shareowner to vote. Your vote is
very important. Whether or not you plan to attend the meeting, please
review the proxy materials and return your proxy instructions by Tuesday,
April 11, 2006.
The meeting will begin at 10:00 a.m. I hope you will come early and join
your friends for light refreshments at 9:30 a.m.
Sincerely,
/s/ William G. Smith, Jr.
William G. Smith, Jr.
Chairman, President,
and Chief Executive Officer
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NOTICE OF ANNUAL MEETING OF SHAREOWNERS
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BUSINESS TIME
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(1) Elect four Class III directors 10:00 a.m., local time,
to the Board of Directors; April 25, 2006
(2) Ratify the appointment of -----------------------------------
KPMG LLP as the auditors for PLACE
the fiscal year ending -----------------------------------
December 31, 2006; and
University Center Club
(3) Transact other business properly Building B, Floor 3
coming before the meeting or any University Center
adjournment of the meeting. Florida State University
Tallahassee, Florida
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DOCUMENTS VOTING
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The Proxy Statement, proxy card, Even if you plan to attend the
and Capital City Bank Group Annual meeting in Tallahassee, Florida,
Report are included in this mailing. please provide us your voting
instructions in one of the
following ways as soon as possible:
- ------------------------------------- (1) Internet - use the internet
RECORD DATE address on the proxy card;
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(2) Telephone - use the toll-free
Shareowners owning Capital City number on the proxy card; and
Bank Group shares at the close of
business on February 28, 2006, are (3) Mail - mark, sign, and date the
entitled to attend and vote at the proxy card and return in the
meeting. A list of these shareowners enclosed postage-paid envelope
will be available at the Annual
Meeting and for 10 days prior to the
Annual Meeting between the hours of
9:00 a.m. and 5:00 p.m., at our
principal executive offices at
217 North Monroe Street, Tallahassee,
Florida 32301.
By Order of the Board of Directors
/s/ J. Kimbrough Davis
J. KIMBROUGH DAVIS
Executive Vice President, Chief Financial Officer
and Corporate Secretary,
Tallahassee, Florida
March 31, 2006
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PROXY STATEMENT - GENERAL INFORMATION
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Why am I receiving this Proxy Statement and proxy card?
We are providing these proxy materials in connection with the
solicitation by the Board of Directors of Capital City Bank Group, Inc.
("CCBG," the "Company," "we," "us," or "our"), a Florida corporation, of
proxies to be voted at our 2006 Annual Meeting of Shareowners and at any
adjournments or postponements of this meeting.
We will hold our 2006 Annual Meeting at 10:00 a.m., local time, Tuesday,
April 25, 2006, at the University Center Club, Building B, Floor 3,
University Center, Florida State University, Tallahassee, Florida.
We are providing this Proxy Statement and the proxy card to our
shareowners on or about March 31, 2006.
What is being voted upon?
You are being asked to elect four Class III directors and to ratify our
appointment of KPMG LLP as our auditors. The proposals to be considered
will not create appraisal or dissenter's rights.
Could other matters be decided at the Annual Meeting?
We are not aware of any matters to be presented at the meeting other than
those referred to in this Proxy Statement. If other matters are properly
presented at the meeting, the holders of the proxies (those persons named on
your proxy card) will have the discretion to vote on those matters for you.
Who can vote?
All shareowners of record at the close of business on the record date of
February 28, 2006 are entitled to receive these proxy materials. On that date,
there were 18,662,689 shares of our common stock outstanding and entitled to
vote, and these shares were held of record by approximately 1,716 shareowners.
How much does each share count?
Each share counts as one vote. For the proposals scheduled to be voted
upon at the meeting, withheld votes on directors, abstentions, and shares
held by a broker that the broker fails to vote are all counted to determine
a quorum, but are not counted for or against the matters being considered.
There is no cumulative voting.
How many votes are required to have a quorum?
In order for us to conduct the Annual Meeting, a majority of the shares
entitled to vote must be present in person or by proxy.
How many votes are required to elect directors and to ratify KPMG's
appointment?
Directors are elected by a plurality of the votes cast. "Plurality"
means that the nominees receiving the largest number of votes cast are
elected as directors up to the maximum number of directors who are
nominated to be elected at the meeting. At our meeting, the maximum number
of directors to be elected is four. The ratification of KPMG's appointment
requires a majority of the votes cast at the Annual Meeting.
How do I give voting instructions?
You may attend the meeting and give instructions in person or by the
Internet, by telephone, or by mail. Instructions are on the proxy card.
The appropriate individuals named on the enclosed proxy card will vote all
properly executed proxies that are delivered in response to this
solicitation and not later revoked in accordance with the instructions
given by you. If you want to vote in person at the Annual Meeting, and you
hold your shares
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through a securities broker (that is, in street name), you must obtain a proxy
from your broker and bring that proxy to the meeting.
How will my voting instructions be treated?
If you provide specific voting instructions, your shares will be voted
as instructed. If you hold your shares in your name and sign and return a
proxy card or vote by telephone or Internet without giving specific voting
instructions, then your shares will be voted as recommended by our Board of
Directors.
If you hold your shares in the name of a bank, broker, or other nominee,
and you do not give instructions to that nominee on how you want your
shares voted, then generally your broker can vote your shares on certain
"routine" matters. At our meeting, both proposals 1 and 2 are considered
routine, which means that your nominee can vote your shares on these
proposals if you do not timely provide instructions to vote your shares.
If you hold your shares in the name of a bank, broker, or other nominee,
and that nominee does not have discretion to vote your shares on a
particular proposal and you don't give your broker instructions on how to
vote your shares, then the votes will be considered broker nonvotes. A
"broker nonvote" will be treated as unvoted for purposes of determining
approval for the proposal and will have the effect of neither a vote for
nor a vote against the proposal.
Can I change my vote?
Yes, you may revoke your proxy by submitting a later proxy or by written
request received by our corporate secretary before the meeting.
You may also revoke your proxy at the meeting and vote in person.
Who pays for soliciting proxies?
We pay the cost of soliciting proxies. Our officers or other associates
may solicit proxies to have a larger representation at the meeting.
What does it mean if I get more than one proxy card?
You will receive a proxy card for each account you have. Please vote
proxies for all accounts to ensure that all your shares are voted.
What is "householding" and how does it affect me?
We have adopted a procedure approved by the SEC known as "householding."
Under this procedure, shareowners of record who have the same address and last
name will receive only one copy of our Notice of Annual Meeting, Proxy
Statement, and Annual Report, unless one or more of these shareowners notifies
our transfer agent that they wish to continue receiving individual copies. You
may contact our transfer agent, American Stock Transfer & Trust Company in
writing: 59 Maiden Lane Plaza Level, New York, NY 10038; by telephone in the
U.S., Puerto Rico, and Canada, 800-937-5449; outside the U.S., Puerto Rico,
and Canada, 718-921-8124; or on the Internet at www.amstock.com. This
procedure will reduce our printing costs and postage fees.
Shareowners who participate in householding will continue to receive
separate proxy cards. Also, householding will not in any way affect dividend
check mailings.
If you are eligible for householding, but you and other shareowners of
record with whom you share an address currently receive multiple copies of
our Notice of Annual Meeting, Proxy Statement, and Annual Report, or if you
hold stock in more than one account, and in either case you wish to receive
only a single copy of each document for your household, please contact our
transfer agent as indicated above.
Beneficial owners can request information about householding from their
banks, brokers, or other holders of record.
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CORPORATE GOVERNANCE
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GOVERNING PRINCIPLES
We are a financial holding company managed by a core group of officers and
governed by a Board of Directors. We are committed to maintaining a business
atmosphere where only the highest ethical standards and integrity prevail. An
unwavering adherence to high ethical standards provides a strong foundation on
which our business and reputation can thrive, and is integral to creating and
sustaining a successful, high-caliber company.
INDEPENDENT DIRECTOR MEETINGS IN EXECUTIVE SESSIONS
Our independent directors, as defined under the Nasdaq rules, have
established a policy to meet separately from the other directors in regularly
scheduled executive sessions at least twice annually, and at such other times
as may be deemed appropriate by our independent directors. Any independent
director may call an executive session of independent directors at any time.
In 2005, the independent directors met in an executive session five times.
Cader B. Cox, III serves as the lead independent director.
INDEPENDENT DIRECTORS
Our common stock is listed on the Nasdaq National Market. Nasdaq requires
that a majority of our directors be "independent," as defined by Nasdaq's
rules. Generally, a director does not qualify as an independent director if
the director or a member of a director's immediate family has had in the past
three years, certain relationships or affiliations with us, our external or
internal auditors, or other companies that do business with us. Our Board has
affirmatively determined that a majority of our directors are independent
directors under the Nasdaq rules. Included among our independent directors
are the following current directors and nominees for director: DuBose Ausley,
Frederick Carroll, III, Cader B. Cox, III, J. Everitt Drew, John K. Humphress,
Lina S. Knox, Ruth A. Knox, and Henry Lewis III.
SHAREOWNER COMMUNICATIONS
Our Corporate Governance Guidelines provide for a process by which
shareowners may communicate with the Board, a Board committee, the non-
management directors as a group, or individual directors. Shareowners who
wish to communicate with the Board, a Board committee or any other directors
or individual directors may do so by sending written communications addressed
to the Board of Directors of Capital City Bank Group, a Board committee or
such group of directors or individual directors:
Capital City Bank Group, Inc.
c/o Corporate Secretary
217 North Monroe Street
Tallahassee, Florida 32301
Communications will be compiled by our Corporate Secretary and submitted to
the Board, a committee of the Board or the appropriate group of directors or
individual directors, as appropriate, at the next regular meeting of the
Board. The Board has requested that the Corporate Secretary submit to the
Board all communications received, excluding those items that are not related
to board duties and responsibilities, such as: mass mailings; job inquiries
and resumes; and advertisements, solicitations, and surveys.
CORPORATE GOVERNANCE GUIDELINES
The Board has adopted Corporate Governance Guidelines that give effect to
the Nasdaq corporate governance listing standards and various other corporate
governance matters.
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CODES OF CONDUCT AND ETHICS
The Board has adopted Codes of Conduct applicable to all directors,
officers, and associates and a Code of Ethics applicable to our Chief
Executive Officer and our financial and accounting officers, all of which are
available, without charge, upon written request to:
Capital City Bank Group, Inc.
c/o Corporate Secretary
217 North Monroe Street
Tallahassee, Florida 32301
These codes are designed to comply with Nasdaq and SEC requirements.
BOARD AND COMMITTEE EVALUATIONS
The Corporate Governance Committee uses written questionnaires to
evaluate the Board as a whole and its committees. The evaluation process
occurs annually. Directors submit completed questionnaires to the Chair of
the Corporate Governance Committee, who summarizes the results without
attribution. The full Board discusses the summary of the Board evaluation,
and each committee discusses the summary of its own evaluation.
DIRECTOR NOMINATING PROCESS
The Nominating Committee annually reviews and makes recommendations to the
full Board regarding the composition and size of the Board so that the Board
consists of members with the proper expertise, skills, attributes and personal
and professional backgrounds needed by the Board, consistent with applicable
Nasdaq and regulatory requirements.
The Nominating Committee believes that all directors, including nominees,
should possess the highest personal and professional ethics, integrity, and
values, and be committed to representing the long-term interests of our
shareowners. The Nominating Committee will consider criteria including the
nominee's current or recent experience as a senior executive officer, whether
the nominee is independent, as that term is defined in Rule 4200(a)(15) of the
National Association of Securities Dealers listing standards, the business
experience currently desired on the Board, geography, the nominee's banking
industry experience, and the nominee's general ability to enhance the overall
composition of the Board.
Our Nominating Committee will identify nominees for directors primarily
based upon suggestions from shareowners, current directors, and executives.
The Chair of the Nominating Committee and at least one other member of the
Nominating Committee will interview director candidates. The full Board will
formally nominate candidates for director to be included in the slate of
directors presented for shareowner vote based upon the recommendations of the
Nominating Committee following this process.
DIRECTOR SERVICE ON OTHER BOARDS
Directors may not serve on more than three other Boards of public
companies in addition to our Board.
CHANGE IN DIRECTOR OCCUPATION
When a Director's principal occupation or business association changes
substantially during his or her tenure as Director, that Director will
tender his of her resignation for consideration by the Nominating
Committee. The Nominating Committee will recommend to the Board the
action, if any, to be taken with respect to the resignation.
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BOARD AND COMMITTEE MEMBERSHIP
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BOARD OF DIRECTORS
Our Board of Directors oversees our business, property, and affairs
pursuant to the Florida Business Corporation Act and our Bylaws. Members of
our Board are kept informed of our business through discussions with our
senior management team, by reviewing materials provided to them, and by
participating in Board and Committee meetings.
Our Board met 12 times in 2005. All of our directors attended at least
75 percent of the total aggregate number of Board and Committee meetings on
which they served.
We expect all directors to attend our Annual Meeting. All directors,
who were directors at the time of our Annual Meeting in 2005, attended the
Annual Meeting.
COMMITTEES OF THE BOARD
Our Board of Directors has five standing committees: Audit, Compensation,
Corporate Governance, Executive, and Nominating. Other than the Executive
Committee, the Board has adopted written charters for each of its other four
standing committees. The Nominating and Audit Committee charters are
published on the Corporate Governance section of our website at www.ccbg.com
and were included as appendices to our proxy statement filed with the SEC on
April 1, 2004. The Board has determined that all members of the Audit,
Compensation, Corporate Governance, and Nominating Committees are independent
as that term is defined in Rule 4200(a)(15) of the National Association of
Securities Dealers listing standards.
Corporate
Name Audit Compensation Governance Executive Nominating
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DuBose Ausley Chair
Thomas A. Barron
Frederick Carroll, III* Chair X X
Cader B. Cox, III X Chair X X
J. Everitt Drew X X
John K. Humphress* Chair X
L. McGrath Keen, Jr.
Lina S. Knox X
Ruth A. Knox X X Chair
Henry Lewis III X X
William G. Smith, Jr.** X
* Qualifies as a financial expert
** Chairman of the Board of Directors
Audit Committee
The Audit Committee met 13 times in 2005. The Audit Committee (a)
oversees our auditing, accounting, financial reporting, and internal
control functions; (b) monitors and reviews our compliance with Section 112
of the Federal Deposit Insurance Corporation Improvement Act of 1991 and
reviews regulatory reports; (c) reviews independent auditors' report on our
financial statements, significant changes in accounting principles and
practices, significant proposed adjustments, and any unresolved
disagreements with management concerning accounting or
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disclosure matters; and (d) recommends independent auditors and reviews
their independence and qualifications, services, fees, and the scope and
timing of audits.
Compensation Committee
The Compensation Committee met seven times in 2005. The Compensation
Committee: (a) reviews and approves corporate goals and objectives relevant
to the Chief Executive Officer's compensation, evaluates the performance of
the Chief Executive Officer in light of those goals and objectives, and sets
the Chief Executive Officer's base salary, short-term incentive
compensation, and long-term incentive compensation based on this evaluation;
(b) reviews and approves base salary, short-term incentive compensation, and
long-term incentive compensation of our executive officers; (c) reviews the
compensation of our senior management team other than our executive
officers; (d) reviews and approves benefits, including retirement benefits
and perquisites of our executive officers; (e) reviews and approves
employment agreements, severance agreements, and change-in-control
agreements for executive officers; (f) evaluates and recommends the
appropriate level of director compensation, including compensation for
service as a member or chair of a Board committee, and ensures that
payments, if any, to directors other than in their capacity as directors are
proper, and are fully and properly disclosed; and (g) establishes and
reviews stock ownership guidelines for directors and executive officers.
None of the members of the Compensation Committee is an executive officer
of a public company of which one of our executive officers is a director.
Nominating Committee
The Nominating Committee met three times in 2005. The Nominating
Committee (a) develops and reviews background information for candidates for
the Board of Directors, including candidates recommended by shareowners, and
makes recommendations to the Board of Directors about these candidates; (b)
evaluates the performance of current Board members proposed for standing for
reelection; (c) recommends to the Board for approval a slate of nominees for
election to the Board; (d) reviews all candidates for nomination submitted
by shareowners; and (e) develops plans for our managerial succession.
Corporate Governance Committee
The Corporate Governance Committee met four times in 2005. The Corporate
Governance Committee: (a) develops, implements and monitors policies and
practices relating to corporate governance; (b) coordinates director
orientation and appropriate continuing education programs for directors; (c)
oversees the annual self-assessment of the Board and Board Committees; and
(d) reviews all shareowner proposals.
Executive Committee
The Executive Committee has the delegated authority to exercise the power
and authority of the Board of Directors between meetings (except for matters
requiring the full Board or the shareowners). The Executive Committee did not
meet in 2005.
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DIRECTORS' FEES
Only non-employee directors are compensated for board service. In 2005
the pay components were:
Annual Retainers:
* $12,500 for each non-employee member of the Board of Directors
* $1,250 additional annual retainer if serving as chairman of a Board
committee (except Audit Committee)
* $2,500 additional annual retainer if serving as Audit Committee
Chairman
Meeting Fees:
* $1,000 for each month in which a director attends a Board meeting
Directors were also permitted to purchase shares of common stock at a 10%
discount from fair market value under the 2005 Director Stock Purchase Plan.
This Plan had 93,750 shares reserved for issuance. During 2005, 6,589
shares were purchased. Purchases under this Plan were not permitted to
exceed the annual retainer and meeting fees received. Our shareowners
adopted the 2005 Director Stock Purchase Plan at our 2004 Annual Meeting.
Mr. Keen is employed by Capital City Bank. His compensation in 2005 was
$178,200.
2005 NON-MANAGEMENT DIRECTORS' COMPENSATION TABLE
Annual Annual
Board Chair Meeting
Name Retainer Retainer Fees Total
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DuBose Ausley $ 12,500 $ 1,250 $ 11,000 $ 24,750
Frederick Carroll, III 12,500 2,500 11,000 26,000
Cader B. Cox, III 12,500 1,250 12,000 25,750
J. Everitt Drew 12,500 0 11,000 23,500
John K. Humphress 12,500 1,250 12,000 25,750
Lina S. Knox 12,500 0 12,000 24,500
Ruth A. Knox 12,500 0* 11,000 23,500
Henry Lewis III 12,500 0 12,000 24,500
* Ms. Knox was appointed as Chair of the Nominating Committee in February
2006 replacing John R. Lewis who retired from the Board of Directors.
STOCK OWNERSHIP EXPECTATIONS
We maintain stock ownership expectations for all non-management
directors. Under our current guidelines, all non-management directors are
expected to own our common stock equal in value to 10 times their annual
director compensation. Directors have 10 years from the date they are
first appointed or elected to our Board to meet the stock ownership
expectations.
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NOMINEES FOR ELECTION AS DIRECTORS
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ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
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The Board of Directors is divided into three classes, designated Class
I, Class II, and Class III. The directors in each class are elected for
terms of three years or until their successors are duly elected and qualified.
At the meeting, the shareowners will elect four Class III directors.
The affirmative vote of a plurality of shares present and entitled to vote
is required for the election of directors. The Board of Directors proposes
the following four nominees for election as directors at the Annual
Meeting. The individuals named on the enclosed proxy card will vote, unless
instructed otherwise, each properly delivered proxy for the election of the
following nominees as directors.
If a nominee is unable to serve, the shares represented by all valid
proxies that have not been revoked will be voted for the election of a
substitute as the Board of Directors may recommend, or the Board of
Directors may by resolution reduce the size of the Board of Directors to
eliminate the resulting vacancy. At this time, the Board of Directors
knows of no reason why any nominee might be unable to serve.
The Board of Directors has been set at 13 members. If all four director
nominees are elected, the Board of Directors will have two vacancies.
There is no requirement for the Nominating Committee to nominate directors
to fill these vacancies. As of the date the Proxy Statement went to print,
the Nominating Committee has not determined replacements. Although two
vacancies exist, proxies cannot be voted for a greater number of persons
than the nominees named.
NOMINEES TO SERVE FOR A THREE-YEAR TERM EXPIRING IN 2009
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DuBOSE AUSLEY
[photograph of DuBose Ausley]
Mr. Ausley, 68, has been a director since 1982. He is employed by the law
firm of Ausley & McMullen and was Chairman of this firm and its predecessor
for more than 20 years. Since 1992, he has served as a director of TECO
Energy, Inc. In addition, Mr. Ausley has served as a director of Huron
Consulting Group, Inc. since 2004.
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FREDERICK CARROLL, III
[photograph of Frederick Carroll, III]
Mr. Carroll, 55, has been a director since July 1, 2003. Since 1990, he
has been the Managing Partner of Carroll and Company, CPAs, an accounting
firm specializing in tax and audit based in Tallahassee, Florida.
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JOHN K. HUMPHRESS
[photograph of John K. Humphress]
Mr. Humphress, 57, has been a director since 1994. Since 1973, he has been
a shareholder of Wadsworth, Humphress, Hollar, & Konrad, P.A., a public
accounting firm.
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HENRY LEWIS III
[photograph of Henry Lewis III]
Dr. Lewis, 56, has been a director since July 1, 2003. He is a Professor
and Director of the College of Pharmacy and Pharmaceutical Studies at
Florida A&M University. Prior to Dr. Lewis's appointment to his position
as director in 2004, Dr. Lewis served as Dean of the College of Pharmacy
and Pharmaceutical Studies at Florida A&M University since 1994.
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The Board of Directors unanimously recommends a vote "FOR" the nominees.
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CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
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CONTINUING CLASS I DIRECTORS (Term expiring in 2007)
----------------------------------------------------
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CADER B. COX, III
[photograph of Cader B. Cox, III]
Mr. Cox, 56, has been a director since 1994. Since 1976, he has served as
President of Riverview Plantation, Inc., a resort and agricultural
company.
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L. MCGRATH KEEN, JR.
[photograph of L. McGrath Keen, Jr.]
Mr. Keen, 52, has been a director since October 2004. He served as
President (since 2000) and director (1980-2004) of Farmers and Merchants
Bank, prior to its merger with CCBG. He was a principal shareowner of
Farmers and Merchants Bank at the time of the merger. Since October 2004,
Mr. Keen has served as an associate of Capital City Bank.
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RUTH A. KNOX
[photograph of Ruth A. Knox]
Ms. Knox, 52, has been a director since 2003. Since 2003, she has served
as President of Wesleyan College, Macon, Georgia. Prior to this
appointment, she practiced law in Atlanta and Macon, Georgia for 25 years.
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WILLIAM G. SMITH, JR.
[photograph of William G. Smith, Jr.]
Mr. Smith, 52, is our Chairman of the Board and has been a director since
1982. In 1995, he was appointed our President and Chief Executive Officer
and Chairman of Capital City Bank. In 2003, Mr. Smith was elected our
Chairman of the Board of Directors. Mr. Smith was elected as a director of
Southern Company in February 2006. Mr. Smith is the first cousin of Lina
S. Knox.
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CONTINUING CLASS II DIRECTORS (Term expiring in 2008)
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THOMAS A. BARRON
[photograph of Thomas A. Barron]
Mr. Barron, 53, has been a director since 1982. He is our Treasurer and
was appointed President of Capital City Bank in 1995.
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J. EVERITT DREW
[photograph of J. Everitt Drew]
Mr. Drew, 50, has been a director since 2003. Since 2000, he has been the
President of St. Joe Land Company where his duties include overseeing the
sale and development efforts of several thousand acres of St. Joe property
in northwest Florida and southwest Georgia.
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LINA S. KNOX
[photograph of Lina S. Knox]
Ms. Knox, 61, has been a director since 1998. She is a dedicated community
volunteer. Ms. Knox is the first cousin of William G. Smith, Jr.
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NON-DIRECTOR EXECUTIVE OFFICER:
-------------------------------
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J. KIMBROUGH DAVIS
[photograph of J. Kimbrough Davis]
Mr. Davis, 52, was appointed our Executive Vice President and Chief
Financial Officer of the Company in 1997. He served as Senior Vice
President and Chief Financial Officer from 1991 to 1997. In 1998, he was
appointed Executive Vice President and Chief Financial Officer of Capital
City Bank.
11
- ---------------------------------------------------------------------------
SHARE OWNERSHIP
- ---------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and parties owning beneficially more than
10% of our common stock, to file reports with the Securities and Exchange
Commission to reflect their interests in our common stock. Copies of these
reports must be furnished to us.
Based solely upon on a review of these reports received by us for fiscal
2005 and any written representations from reporting persons, we believe
that during 2005 each required Section 16(a) report for 2005 was filed on
time.
SHARE OWNERSHIP TABLE
The following table sets forth information, as of February 28, 2006,
with respect to the number of shares of our common stock beneficially owned
by our directors, executive officers named in the Summary Compensation
Table, and all executive officers and directors as a group. The following
table also provides information with respect to each person known by us to
beneficially own more than 5% of our common stock.
As of February 28, 2006, there were 18,662,689 shares of our common
stock outstanding.
Percentage of
Shares Beneficially Outstanding
Owned Shares Owned
------------------- -------------
- ---------------------------------------------------------------------------------------------
DuBose Ausley 672,381 3.60%
Thomas A. Barron 309,708 1.66%
Frederick Carroll, III 5,514 *
Cader B. Cox, III 398,284 2.13%
J. Kimbrough Davis 63,697 *
J. Everitt Drew 3,624 *
John K. Humphress 533,003 2.86%
L. McGrath Keen, Jr. 543,032 2.91%
Lina S. Knox 68,163 *
Ruth A. Knox 2,502 *
Henry Lewis III 1,896 *
Private Capital Management 1,119,150 6.00%
8889 Pelican Bay Blvd., Naples, Florida 34108
Robert H. Smith 3,140,280 16.83%
Post Office Box 11248
Tallahassee, Florida 32302
William G. Smith, Jr. 3,396,053 18.17%
Post Office Box 11248
Tallahassee, Florida 32302
All Directors and Executive Officers as a Group 5,621,842 30.08%
(12 Persons)
*Represents less than one percent.
12
For purposes of this table, a person is deemed to be the beneficial
owner of any shares of common stock if he or she has or shares voting
or investment power with respect to the shares or has a right to
acquire beneficial ownership at any time within 60 days from the
record date. "Voting power" is the power to vote or direct the voting
of shares and "investment power" is the power to dispose or direct the
disposition of shares.
Includes (i) 285,431 shares held in trust under which Mr. Ausley
serves as trustee and has sole voting and investment power; (ii)
12,500 shares owned by Mr. Ausley's wife, of which he disclaims
beneficial ownership; and (iii) 350 shares owned by Mr. Ausley and
his wife.
Includes (i) 56,031 shares held in trusts under which Mr. Barron
serves as trustee; (ii) 713 shares for which Mr. Barron has power of
attorney and may be deemed to be a beneficial owner; and (iii) 28,906
shares owned by Mr. Barron's wife, of which he disclaims beneficial
ownership.
Includes 376,015 shares held in a trust under which Mr. Cox shares
voting and investment power as a co-trustee; and (ii) 2,500 shares
owned by Mr. Cox's wife, all of which he disclaims beneficial ownership.
Of the shares beneficially owned by Mr. Cox, 376,015 shares are also
beneficially owned by Mr. Humphress.
Includes (i) 1,485 shares in accounts for his children for which Mr.
Davis is custodian; (ii 19,710 shares owned jointly by Mr. Davis and
his wife; and (iii) 5,496 shares owned by Mr. Davis's wife, directly
and through an Individual Retirement Account, all of which he
disclaims beneficial ownership.
Includes 624 shares in accounts for his children for which Mr. Drew is
custodian.
Includes (i) 90,890 shares held by a limited partnership of which Mr.
Humphress is a general partner and shares voting and investment power;
(ii) 4,112 shares owned jointly by Mr. Humphress and his wife;
(iii) 2,812 shares in accounts for his children for which
Mr. Humphress is custodian; (iv) 376,015 shares held in a trust under
which Mr. Humphress shares voting and investment power as a co-trustee,
of which he disclaims beneficial ownership; and (v) 1,722 shares owned
by Mr. Humphress's wife, directly and through an Individual Retirement
Account, all of which he disclaims beneficial ownership. Of the shares
beneficially owned by Mr. Humphress, 376,015 shares are also beneficially
owned by Mr. Cox.
Includes (i) 118,490 shares held in a trust of which Mr. Keen serves as
trustee; (ii) 199,385 shares held in a trust under which Mr. Keen serves
as co-trustee; and (iii) 682 shares owned by Mr. Keen's wife, of which
he disclaims beneficial ownership
Includes 3,750 shares owned jointly by Ms. Knox and her husband.
Robert H. Smith and William G. Smith, Jr. are brothers, and Lina S.
Knox is their first cousin.
As reported in a Schedule 13G amendment dated February 14, 2006.
Private Capital Management, L.P. ("PCM"), a registered investment
adviser, reported that it is deemed to be the beneficial owner of the
shares held by PCM's clients and managed by PCM. PCM reported shared
voting and investment power over 1,119,150 shares. Gregg J. Powers,
President of PCM, reported shared voting and investment power over the
same 1,119,150 shares. Bruce S. Sherman, Chief Executive Officer of PCM,
reported shared voting and investment power over the same 1,119,150
shares of Common Stock, and sole voting and investment power over an
additional 14,062 shares.
Includes (i) 100,183 shares in accounts for his children for which Mr.
Smith is custodian; (ii) 567,051 shares held in certain trusts under
which Mr. Smith shares voting and investment power as a co-trustee;
and (iii) 615,784 shares held by a partnership under which Mr. Smith
shares voting and investment power. Of the shares beneficially owned
by Robert H. Smith, 1,182,835 shares are also beneficially owned by
William G. Smith, Jr.
Includes (i) 39,143 shares in an account for his son for which Mr.
Smith is custodian; (ii) 567,051 shares held in certain trusts under
which Mr. Smith shares voting and investment power as a co-trustee;
(iii) 615,784 shares held by a partnership under which Mr. Smith
shares voting and investment power; (iv) 44,478 shares owned by
Mr. Smith's wife, of which he disclaims beneficial ownership; and (v)
27,840 shares that may be acquired pursuant to non-voting stock options
that are or will become exercisable within 60 days. Of the shares
beneficially owned by William G. Smith, Jr., 1,182,835 shares are
also beneficially owned by Robert H. Smith.
13
- ----------------------------------------------------------------------------
EXECUTIVE OFFICERS AND TRANSACTIONS WITH MANAGEMENT
- ----------------------------------------------------------------------------
EXECUTIVE OFFICERS
Executive officers are elected annually by the Board of Directors at its
meeting following the annual meeting of shareowners to serve for a one year
term and until their successors are elected and qualified. Messrs. Barron
and William G. Smith, Jr. serve as directors and executive officers and
Mr. Davis is an executive officer. For information pertaining to the
business experience and other positions held by these individuals, see
"NOMINEES FOR ELECTION AS DIRECTORS" and "CONTINUING DIRECTORS AND EXECUTIVE
OFFICERS."
TRANSACTIONS WITH MANAGEMENT AND RELATED PARTIES
During 2005, Capital City Bank, our wholly owned subsidiary, had
outstanding loans to several of our directors, executive officers, their
associates and members of the immediate families of these directors and
executive officers. These loans were made in the ordinary course of
business and were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with others. These loans do not involve more than the normal
risk of collectability or present other unfavorable features.
DuBose Ausley, a director, is employed by and is the former Chairman of
Ausley & McMullen, our general counsel. During 2005, we paid legal fees to
this law firm of approximately $700,880.
Capital City Bank's Apalachee Parkway Office is located on land leased
from the Smith Interests General Partnership L.L.P. ("SIGP") in which
William G. Smith, Jr., Chairman of the Board, President, and Chief Executive
Officer, Robert H. Smith, a Vice President, and Lina S. Knox, a director,
are partners. In addition, a trust for the benefit of Elaine W. Smith, a
relative of Messers. Smith and Smith and Ms. Knox, of which Mr. Ausley is
trustee, is also a partner of SIGP. As trustee of this trust, Mr. Ausley
has the power to vote the SIGP interests owned by the trust. Under a lease
agreement expiring in 2024, Capital City Bank makes monthly lease payments
to SIGP. Lease payments are adjusted periodically for inflation. Actual
lease payments made by Capital City Bank to SIGP in 2005 amounted to
$109,000.
Capital City Bank leases its East Dublin Office from a partnership of
which McGrath Keen, Jr., a director, has one-half ownership interest. The
annual lease provides for payments of $46,500, to be adjusted for inflation
in future years.
Under an agreement with Keen Insurance Agency, Capital City Bank shares
one-half of the commissions received from the sale of credit life and
accident/health insurance in Dublin, Georgia with the agency. Payments made
to the agency during 2005 were approximately $30,000. McGrath Keen, Jr., a
director, has a 60% ownership interest in Keen Insurance Agency.
CHANGES IN CONTROL
In the event of a change in control, our named executive officers will be
credited with an additional two years of credited service for purposes of
computation of retirement benefits payable under the Supplemental Employee
Retirement Plan ("SERP"). Accrued benefits based
14
upon normal retirement are payable to the named executive officer upon a
change in control. A "change in control" under the SERP means the sale of
substantially all of our assets, a change in share ownership of greater than
50% within a 24-month period. For more information regarding our SERP,
please see page 22 under the heading "Retirement Plans."
In the event of a change in control, any stock options previously granted
to one of our named executive officers under the 1996 or 2005 Associate
Incentive Plans would become immediately vested. A "change in control" for
purposes of the immediate vesting of options means a change in share
ownership of a fixed percent, or, during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board
cease for any reason to constitute at least a majority thereof, unless the
election or the nomination for election by our shareholders of each new
director was approved by a vote of at least three-quarters of the directors
then still in office who were directors at the
beginning of the period.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors were the members of the Compensation
Committee of the Board of Directors during 2005: Cader B. Cox, III
(Chairman), J. Everitt Drew, Henry Lewis III, and John R. Lewis. None of
the members of the Compensation Committee is a current or former officer or
employee of ours.
15
- ----------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT
- ----------------------------------------------------------------------------
What is the Company's Executive Compensation Philosophy?
We, as a Committee, have established the Company's compensation
philosophy. This compensation philosophy provides broad guidance on
executive compensation and more specifically on the compensation of the
named executive officers including the Chairman, President, and Chief
Executive Officer of the Company, the President of Capital City Bank, and
the Executive Vice President and Chief Financial Officer of the Company.
Specifically, the compensation philosophy is to:
* Align compensation with shareowner value;
* Provide a direct and transparent link between the performance of the
Company and pay for the CEO and top management;
* Make wise use of the Company's equity resources to ensure
compatibility
between management and shareowner interests;
* Align the interests through performance-based incentive plans of the
Company's senior executive officers with that of shareowners; and
* Award total compensation that is both reasonable and effective in
attracting, motivating and retaining key associates.
We believe that accomplishing corporate goals is essential for the
Company's continued success and sustained financial performance. Therefore,
we believe that executive compensation should be largely performance-based.
Specific targets and weightings used for establishing short-term and long-
term performance goals are subject to change at the beginning of each
measurement period, and are influenced by the Board of Directors' desire to
emphasize performance in certain areas. Each year, we review and approve
all performance-based goals.
What Comprises Total Executive Compensation?
* Base salary
* Short-term incentives
* Long-term incentives
* Benefits and perquisites
Total Executive Compensation
During 2004 and 2005, we employed an outside compensation consultant who
conducted a study comparing the total compensation of the Company's named
executive officers to a peer group of comparable commercial banks. The
banks in the peer group were chosen based on their similarities to the
Company relative to asset size, performance, and markets served. A
compensation study is one of the many tools we use to determine the level of
compensation for the Company's named executive officers.
Base Salary
Base salaries for the named executive officers are determined by
assessing the competitive market, the responsibilities required by the
position, and the experience and performance of the individual. Mr. Smith
was elected as President and Chief Executive Officer in 1995 and, in
16
2003, he was appointed Chairman of the Board of the Company. In 2005,
Mr. Smith's base salary was set at $210,000 per year. We have increased his
salary to $230,000 per year for 2006.
Short-term Incentives
Cash Bonuses. Each named executive officer has the opportunity to earn
annual cash bonuses. These cash bonuses, paid through the profit
participation plan, are based solely on the Company achieving a target
earnings per share (EPS). EPS goals are set at the beginning of the year as
recommended by management and approved by the Compensation Committee and the
Board of Directors. In 2005, no bonuses would be paid if the Company's
actual EPS is 75% or less of the targeted EPS. Bonuses ranging from 4% to
200% of a specified target award are paid to named executive officers if the
Company's actual EPS is between 75% and 125% of targeted EPS of $1.65. In
2005, based on achieving EPS of $1.66, Mr. Smith's cash bonus was $230,423,
which was 102% of his target award of $225,000.
Performance Share Units. The Company maintains an Associate Incentive
Plan, which was approved by the Company's shareowners. Under this plan, the
named executive officers are eligible to earn annual Performance Share
Units, based on the achievement of short-term performance goals. For 2005,
there were two separate components to the named executive officers' short-
term stock bonus awards.
First, we set an award based on revenue growth, loan and deposit growth,
achieving an efficiency target, and loan credit quality measures. For
achieving short-term performance goals in 2005, Mr. Smith received a payout
of 498 shares under the Associate Incentive Plan, with a fair market value
of $34.29 per share. The opportunity at maximum performance was 995 shares.
In addition to stock earned in 2005, the Company provided a cash bonus equal
to 31% of the value of stock as a partial offset to the tax liability
incurred by Mr. Smith.
Second, we set an award based on the Company's Project 2010 goal of
annual earnings of $50 million by the year 2010, which requires a 10%
compound annual growth rate for the seven year period ending December 31,
2010. Named executive officers could earn 100% of the target award if the
Company achieved its Project 2010 goal for 2005 of $30.6 million or 75% of
the target award if the Company fell short of its Project 2010 goal, but
achieved its budget goal of $30.1 million. Below $30.1 million no award is
earned. In 2005, the Company earned $30.3 million, therefore Mr. Smith
received a payout at the 75% level, which equated to 746 shares at a fair
market value of $34.29 per share. The opportunity at maximum performance was
995 shares.
Total Annual Bonus of Chief Executive Officer. Mr. Smith's annual bonus
was tied directly to the Company's actual profitability for 2005 compared to
targeted profitability. We believe his performance and influence are best
measured by the Company's profitability and performance goals. In 2005, Mr.
Smith earned short-term incentive compensation of $286,304. This annual
bonus includes a cash bonus of $230,423, a stock bonus award of $42,657, and
a 31% tax supplement bonus of $13,224.
Long-term Incentives
Stock Options. Mr. Smith is the only named executive officer who is
currently eligible to be granted stock options. On March 24, 2005, the
Company and Mr. Smith entered into an agreement to award stock options as
provided for in the Associate Incentive Plan. Under the agreement, the
Company agreed to award a fixed dollar Black-Scholes equivalent value of
stock
17
options based on achieving a three-year compound growth rate in EPS. The
target award for achieving a 10% compound growth rate in EPS is $250,000.
No award is earned if actual performance is below a 7.5% compound growth
rate in EPS, the minimum performance level. A maximum award of $500,000 is
earned if the EPS compound growth rate equals or exceeds 12.5%, the maximum
performance level. If the compound growth rate in EPS is greater than the
minimum performance level and less than or equal to the maximum performance
level, then the award will be made on a pro-rata basis. The compound growth
rate in EPS for the three-year period ending on December 31, 2005 was 6.1%;
therefore Mr. Smith did not earn any stock options in 2005.
Benefits and Perquisites
In addition to the benefits that are available to all of our associates,
we provide retirement benefits under the Company's supplemental employee
retirement plan, as discussed on page 22. Moreover, we provide the named
executive officers with perquisites that we believe are reasonable,
competitive and consistent with the Company's overall executive compensation
program. The value of the perquisites for each named executive officer in
the aggregate does not exceed the lesser of $50,000 or 10% of the executive
officer's compensation.
Executive Compensation Policy Decisions
In addition to establishing the compensation elements described above, we
have adopted a number of policies to further the goals of our executive
compensation program, particularly with respect to strengthening the
alignment of our executives' interests with our shareowners' long-term
interests.
Stock Ownership Expectations. We maintain stock ownership expectations
for all senior managers, including our executive officers. Under our
current guidelines, all senior managers are expected to own Company common
stock equal in value to at least two times their annual compensation. The
Committee has determined that as of December 31, 2005, all named executive
officers have met our ownership expectations and all other senior managers
covered by this program are making significant strides in meeting the
ownership expectations.
Expensing Stock Options. The Company has expensed stock options since
2003.
Prohibition on Repricing Stock Options. By the terms of the 2005
Associate Incentive Plan, repricing stock options is prohibited without
shareowner approval.
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on
the amount that a publicly traded company may deduct for compensation paid
to a named executive officer who is employed on the last day of the fiscal
year. "Performance-based compensation" is excluded from this $1 million
limitation. In general, our policy is to provide compensation that is fully
deductible by the Company for income tax purposes. However, in order to
maintain ongoing flexibility of the Company's compensation programs, we may
from time to time approve annual compensation that exceeds the $1 million
limitation. We recognize that the loss of the tax deduction may be
unavoidable under these circumstances.
Summary
The Compensation Committee continues to monitor and review all of the
compensation programs for the Company to ensure that each plan provides a
fair and equitable return for both the shareowners and the executive
officers of the Company. We frequently review the various pay plans and
policies and modify them, as we deem necessary to continue to meet the
Company's business objectives and philosophy. We believe that the policies
and programs described in this report provide a substantial link between
executive pay and Company performance and serve the best interests of
shareowners.
COMPENSATION COMMITTEE:
CADER B. COX, III, CHAIRMAN
J. EVERITT DREW
HENRY LEWIS III
19
- ----------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- ----------------------------------------------------------------------------
The following summary compensation table shows compensation information
for our Chief Executive Officer and each of our other two executive officers
who earned over $100,000 in aggregate salary, bonus, and other compensation
in the fiscal year ended December 31, 2005.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
-----------------------------------------------
- --------------------------------
Securities Long-Term
Name and Other Annual underlying Incentive
Plan
Principal Position Year Salary Bonus Compensation options Payouts
(a) (b) (c) (d) (e) (g) (h)
- ---------------------- ------ ------------ ------------ ----------------- --------------
- ---------------
William G. Smith, Jr. 2005 $210,000 $273,080 $13,224 37,246 $ --
Chairman, President, and 2004 $195,000 $216,901 $ 6,339 23,138 --
Chief Executive Officer 2003 $185,500 $237,719 $38,066 -- 97,959
Thomas A. Barron 2005 $200,000 $255,283 $12,469 -- --
President, Capital City Bank 2004 $190,000 $202,862 $ 6,047 -- --
2003 $181,000 $222,331 $37,225 -- 96,441
J. Kimbrough Davis 2005 $185,000 $113,521 $ 8,206 -- --
Executive Vice President 2004 $175,000 $ 86,906 $ 3,934 -- --
and Chief Financial Officer 2003 $165,000 $ 95,637 $22,868 -- 58,637
Includes cash bonuses and the dollar value of short-term incentive
stock awards.
Consists of cash bonuses paid as a tax supplement to participants in
the 2005 Associate Incentive Plan for 2005. The cash bonuses paid in
2003 and 2004 were paid as a tax supplement to participants in the 1996
Associate Incentive Plan.
Stock options are typically granted in March based on our previous
year's financial results.
Consists of the dollar value of all payouts made for long-term
performance awards earned under the Associate Incentive Plan.
20
STOCK OPTIONS
As discussed in the Compensation Committee Report, stock options are
granted only when we achieve superior performance. Each stock option permits
the associate to purchase one share of our common stock from us at the market
price of our stock on the date of grant. Stock options generally expire 10
years from the date of grant.
The following tables provide information, for our executive officers
named in the Summary Compensation Table, on stock option holdings at the
end of 2005. No options were earned for the calendar year 2005. In addition,
there were no stock options exercised last year.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning stock options granted
during the fiscal year ended December 31, 2005, to the executive officers.
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
- ------------------------------------------------------------------------------------------ --------------------------
Number of Percent of
Securities total options
Underlying granted to Exercise or
Options employees in base price Expiration
Name granted(#) fiscal year per share date 5%($) 10%(S)
(a) (b) (c) (d) (e) (f) (g)
- ------------------------------------------------------------------------------------------ --------------------------
William G. Smith, Jr. 37,246 100% $32.69 3/14/2015 $765,731 $1,940,444
Thomas A. Barron -- -- -- -- -- --
J. Kimbrough Davis -- -- -- -- -- --
The options granted will vest in three equal annual installments beginning on the first anniversary of the
date of grant. The options granted will be immediately exercisable if a change in control, as defined on page 14,
occurs.
OPTION EXERCISES AND HOLDINGS
The following table contains information with respect to options exercised
during 2005 and the value of unexercised options held as of December 31, 2005
for our executive officers.
Number of securities underlying Value of unexercised
unexercised options in-the-money options
at fiscal year-end (#) at fiscal year-end ($)
(d) (e)
-------------------------------- -----------------------------
Shares
acquired on Value
Name exercise (#) realized ($)
(a) (b) (c) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------- ------------------------------
William G. Smith, Jr. -- -- 7,713 52,671 $10,258 $80,109
Thomas A. Barron -- -- -- -- -- --
J. Kimbrough Davis -- -- -- -- -- --
We calculated the value of the unexercised options using the difference of the option exercise price
and the closing price of our common stock on NASDAQ on December 30, 2005 of $34.29 per share, multiplied
by the number of shares underlying the option.
21
- ---------------------------------------------------------------------------
RETIREMENT PLANS
- ---------------------------------------------------------------------------
SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
We have a Retirement Plan, which is a qualified, noncontributory,
defined benefit retirement plan. The Retirement Plan covers all full-time
associates and part-time associates with 1,000 hours of service annually
who are employed by our subsidiaries and us. In addition, we have a
Supplemental Employee Retirement Plan or SERP, which is a non-qualified
defined benefit plan. The SERP is designed to restore a portion of the
benefits Messrs. Smith, Barron, and Davis would otherwise receive under our
Retirement Plan, if these benefits were not limited by U.S. tax laws.
A portion of the retirement benefits for our named executive officers
will be paid under our Retirement Plan. The remainder of their retirement
benefits will be paid under the SERP. The SERP provides additional
benefits, which, when combined with benefits payable under the Retirement
Plan, approximate 60% of average monthly cash compensation, which more
closely aligns the benefits payable to Messrs. Smith, Barron, and Davis
with those of Retirement Plan participants. We have no obligation to fund
the SERP but accrue for our anticipated obligations under the SERP on an
annual basis. The following table shows the estimated annual pension
benefits payable to an executive officer, assuming retirement on January 1,
2006, at age 65 after selected periods of service. The benefits listed
below do not reflect deductions for Social Security or other offset
amounts. However, benefits payable under non-qualified retirement plans are
subject to deduction for Social Security upon vesting.
Years of Accredited Service
Compensation 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
250,000........ $ 56,500 $ 84,800 $113,100 $141,400 $150,000 $150,000
300,000........ 68,000 102,100 136,100 170,100 $180,000 $180,000
350,000........ 79,500 119,300 159,100 198,900 $210,000 $210,000
400,000........ 91,000 136,600 182,100 227,600 $240,000 $240,000
450,000........ 102,500 153,800 205,100 256,400 $270,000 $270,000
500,000........ 114,000 171,100 228,100 285,100 $300,000 $300,000
550,000........ 125,500 188,300 251,100 313,900 $330,000 $330,000
Benefits for retirement plan purposes are calculated based upon the
average monthly compensation for the highest five consecutive years in the
last 10 years of employment. Our SERP also provides pre-retirement
disability and death benefits. The following table shows the current
applicable compensation levels, years of pension service, and annual
pension benefit for the named executive officers accrued as of December 31,
2005, assuming payment at age 65:
Current Applicable Accredited Annual
Name Compensation Level Service Pension Benefit
William G. Smith, Jr. $412,793 27 $245,800
Thomas A. Barron 389,404 31 255,000
J. Kimbrough Davis 263,150 24 129,000
22
- ---------------------------------------------------------------------------
FIVE-YEAR PERFORMANCE GRAPH
- ---------------------------------------------------------------------------
This performance graph compares the cumulative total shareholder return
on our common stock with the cumulative total shareholder return of the
NASDAQ Composite Index and the SNL Financial $1B-$5B Bank Index for the
past five years. The graph assumes that $100 was invested on December 31,
2000 in our common stock and each of the above indices, and that all
dividends were reinvested. The shareowner return shown below represents
past performance and should not be considered indicative of future
performance.
[Omitted Stock Performance Graph is represented by the following table.]
Period Ending
Index 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05
- ------------------------------------------------------------------------------------------------
Capital City Bank Group, Inc. 100.00 98.41 165.39 247.03 228.49 238.46
NASDAQ Composite Index 100.00 79.18 54.44 82.09 89.59 91.54
SNL Financial LC $1B-$5B Bank Index 100.00 121.50 140.26 190.73 235.40 231.38
23
- ---------------------------------------------------------------------------
AUDIT COMMITTEE REPORT
- ---------------------------------------------------------------------------
The Audit Committee, which operates under a written charter adopted by
the Board of Directors, monitors the Company's financial reporting process
on behalf of the Board of Directors. This report reviews the actions taken
by the Audit Committee with regard to the Company's financial reporting
process during 2005 and particularly with regard to the Company's audited
consolidated statements of financial condition as of December 31, 2005 and
2004, and the related statements of income, changes in shareowners' equity,
and cash flows for each of the years in the three-year period ended
December 31, 2005.
The Audit Committee currently is composed of four persons, all of whom
are "independent," as defined under Nasdaq rules. None of the committee
members is or has been an officer or employee of the Company or any of its
subsidiaries, has engaged in any nonexempt business transaction or has any
nonexempt business or family relationship with the Company or any of its
subsidiaries or affiliates. In addition, the Board of Directors has
determined that Frederick Carroll, III, Chairman of the Committee, is an
"audit committee financial expert" as defined by the Securities and
Exchange Commission.
The Company's management has the primary responsibility for the
Company's financial statements and reporting process, including the systems
of internal controls and reporting. The Company's independent auditors
KPMG LLP is responsible for performing an independent audit of the
Company's consolidated financial statements in accordance with U.S.
generally accepted auditing standards, issuing a report thereon, and
annually auditing management's assessment of the effectiveness of internal
control over financial reporting. The Audit Committee monitors the
integrity of the Company's financial reporting process, system of internal
controls and the independence and performance of the Company's independent
and internal auditors.
The Audit Committee believes that it has taken the actions necessary or
appropriate to fulfill its oversight responsibilities under the Audit
Committee's charter. To carry out its responsibilities, the Audit
Committee met 13 times during 2005.
In fulfilling its oversight responsibilities, the Audit Committee
reviewed and discussed with management the audited financial statements to
be included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2005, including a discussion of the quality (rather than just
the acceptability) of the accounting principles, the reasonableness of
significant judgments and the clarity of disclosures in the financial
statements.
The Audit Committee also reviewed with KPMG LLP, their judgments as to
the quality (rather than just the acceptability) of the Company's
accounting principles and such other matters as are required to be
discussed with the Audit Committee under Statement on Auditing Standards
No. 61, Communication with Audit Committees. In addition, the Audit
Committee discussed with KPMG LLP, the auditor's independence from
management and the Company, including the written disclosures, letter and
other matters required of KPMG LLP by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees. The Audit Committee
also considered whether the provision of services during 2005 by KPMG LLP
that were unrelated to its audit of the financial statements referred to
above and to their reviews of the Company's interim financial statements
during 2005 was compatible
24
with maintaining KPMG LLP's independence. The Audit Committee determined
that the provision of non-audit services by KPMG LLP is compatible with
being independent.
Additionally, the Audit Committee discussed with the Company's internal
and independent auditors the overall scope and plan for their respective
audits. The Audit Committee met with the internal and independent
auditors, with and without management present, to discuss the results of
their examinations, their evaluations of the Company's internal controls
and the overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2005 for filing with the Securities and Exchange
Commission. The Audit Committee also recommended to the Board that the
Company retain KPMG LLP as the Company's independent auditors for 2006.
The Board has approved and ratified such recommendation. In addition, the
Committee has approved the scope of non-audit services anticipated to be
performed by KPMG LLP in 2006 and the estimated budget for those services.
THE AUDIT COMMITTEE:
FREDERICK CARROLL, III, CHAIRMAN J. EVERITT DREW
CADER B. COX, III RUTH A. KNOX
25
- ---------------------------------------------------------------------------
RATIFICATION OF AUDITORS
- ---------------------------------------------------------------------------
RATIFICATION OF AUDITORS (PROXY ITEM NO. 2)
-------------------------------------------
The Audit Committee appointed KPMG LLP, independent certified public
accountants, as our independent auditors for the fiscal year ending
December 31, 2006. KPMG LLP has served as our independent auditors since
the 2002 fiscal year.
With respect to fiscal year 2006, KPMG LLP will audit our consolidated
financial statements, provide limited reviews of quarterly reports, and
perform services related to filings with the Securities and Exchange
Commission and other non-audit related services.
FEES PAID TO PRINCIPAL ACCOUNTANTS
The following table represents aggregate fees, including out-of-pocket
expenses, paid to our auditors, KPMG LLP for the audit of our annual
financial statements for 2005 and 2004 and fees billed for other services:
2005 2004
-------- ----------
Audit Fees $661,500 $ 849,949
Audit-Related Fees 54,500 27,500
Tax Fees 74,370 243,675
All Other Fees - -
-------- ----------
Total $789,870 $1,121,124
======== ==========
Audit Fees - Audit fees billed to us by KPMG LLP for auditing our
annual consolidated financial statements (including services incurred
with rendering an opinion under Section 404 of the Sarbanes-Oxley Act
of 2002), reviewing the financial statements included in our
Quarterly Reports on Form 10-Q, and for services that are normally
provided by the auditor in connection with statutory and regulatory
filings. Also included is $75,000 and $55,000 in out of pocket
expenses in the 2005 and 2004 fees, respectively.
Audit-Related Fees - Audit-related fees billed to us by KPMG LLP
include fees related to the audit of our employee benefit plans.
Tax Fees - Tax fees billed to us by KPMG LLP include fees related to
the preparation of our original and amended tax returns, claims for
refunds, and tax planning.
All Other Fees - All other fees billed to us by KPMG LLP.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES OF
INDEPENDENT AUDITOR
The Audit Committee's policy is to pre-approve all audit and non-audit
services provided by the independent auditors. These services may include
audit services, audit-related services, tax services, and other services.
Pre-approval is generally provided for up to 12 months from the date of
pre-approval and any pre-approval is detailed as to the particular service
or category of services and is generally subject to a specific budget. The
Audit Committee may delegate pre-approval authority to one or more of its
members when expedition of services is necessary. The independent auditors
and management are required to periodically report to the full Audit
26
Committee regarding the extent of services provided by the independent
auditors in accordance with this pre-approval policy, and the fees for the
services performed to date.
The Audit Committee has determined that the non-audit services provided
by KPMG LLP during the fiscal year ended December 31, 2005 were compatible
with maintaining their independence.
RATIFICATION OF KPMG LLP
Shareowner ratification of the selection of KPMG LLP as our independent
public accountants is not required by our bylaws or other applicable legal
requirement. However, the Board is submitting the selection of KPMG LLP to
the shareowners for ratification as a matter of good corporate practice.
If the shareowners fail to ratify the selection, the Audit Committee will
reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee at its discretion may direct the appointment
of a different independent accounting firm at any time during the year if
it determines that such a change would be in our and our shareowners' best
interests.
Representatives of KPMG LLP will be present at the meeting to respond to
appropriate questions and to make any statements as they may desire.
The proposal to ratify KPMG LLP as independent auditors will be approved
if the votes cast by the shareowners present, or represented, at the
meeting and entitled to vote on the matter favoring this proposal exceed
the votes cast in opposition to the proposal.
The Board of Directors unanimously recommends a vote "FOR"
ratification of the appointment of KPMG LLP.
27
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OTHER MATTERS
- ---------------------------------------------------------------------------
ANNUAL REPORT
We filed an annual report for the fiscal year ended December 31, 2005 on
Form 10-K with the Securities and Exchange Commission. Shareowners may
obtain, free of charge, a copy of our annual report on Form 10-K by writing
to our Corporate Secretary at our principal offices.
SHAREOWNER PROPOSALS
Shareowner proposals that are to be included in the Proxy Statement for
the 2007 meeting must be received by December 1, 2006. Shareowner
proposals for the 2007 meeting that are not intended to be included in the
Proxy Statement for that meeting must be received by February 23, 2007 or
the Board of Directors can vote the proxies in its discretion on the
proposal. Proposals must comply with the proxy rules and be submitted in
writing to:
J. Kimbrough Davis
Corporate Secretary
Capital City Bank Group, Inc.
217 North Monroe Street
Tallahassee, Florida 32301
DIRECTOR NOMINATIONS
Any shareowner entitled to vote generally in the election of directors may
recommend a candidate for nomination as a director. A shareowner may
recommend a director nominee by submitting the name and qualifications of the
candidate the shareowner wishes to recommend, pursuant to Article VII of our
Articles of Incorporation, to:
Nominating Committee of the Board of Directors
c/o Capital City Bank Group, Inc.
217 North Monroe Street
Tallahassee, Florida 32301
To be considered, recommendations with respect to an election of directors
to be held at an annual meeting must be received no earlier than 180 days and
no later than 120 days prior to March 31, 2007, the first anniversary of this
year's Notice of Annual Meeting date. In other words, director nominations
must be received no earlier than October 4, 2006, and no later than December
2, 2006. Recommendations with respect to an election of directors to be held
at a special meeting called for that purpose must be received by the 10th day
following the date on which notice of the special meeting was first mailed to
shareowners. Recommendations meeting these requirements will be brought to the
attention of the Nominating Committee. Candidates for director recommended by
shareowners are afforded the same consideration as candidates for director
identified by our directors, executive officers or search firms, if any,
employed by us.
27
CAPITAL CITY BANK GROUP, INC.
217 North Monroe Street
Tallahassee, Florida 32301
PROXY FOR ANNUAL MEETING OF SHAREOWNERS
APRIL 25, 2006
KNOW ALL MEN BY THESE PRESENTS that I, the undersigned shareowner of
Capital City Bank Group, Inc. (the "Company"), Tallahassee, Florida, do
hereby nominate, constitute and appoint Randolph M. Pople and Dale A.
Thompson, or any one of them (with full power to act alone), my true and
lawful attorneys and proxies with full power of substitution, for me and in
my name, place and stead to vote all the shares of Common Stock of the
Company, standing in my name on its books as of the close of business on
Tuesday, February 28, 2006, at the annual meeting of its shareowners to be
held at University Center Club, Building B, Floor 3, University Center,
Florida State University, Tallahassee, Florida on Tuesday, April 25, 2006,
at 10:00 a.m., or at any adjournments thereof with all the power the
undersigned would possess if personally present.
(Continued and to be signed on the other side)
ANNUAL MEETING OF SHAREOWNERS OF
CAPITAL CITY BANK GROUP, INC.
Tuesday, April 25, 2006
---------------------------
PROXY VOTING INSTRUCTIONS
---------------------------
MAIL
- ----
Date, sign and mail your proxy
card in the envelope provided as
soon as possible.
----------------------------
-OR-
COMPANY NUMBER
TELEPHONE
- --------- ----------------------------
Call toll-free 1-800-PROXIES
from any touch-tone telephone ACCOUNT NUMBER
and follow the instructions.
Have your proxy card available ----------------------------
when you call.
-OR-
----------------------------
INTERNET
- --------
Access "www.voteproxy.com" and
follow the on-screen instructions.
Have your Proxy card available
when you access the web page.
- ---------------------------------------------------------------------------
You may enter your voting instructions at 1-800-PROXIES or www.voteproxy.com
up until 11:59 PM Eastern Time the day before the meeting date.
- ---------------------------------------------------------------------------
Please detach along the perforated line and mail in the envelope provided
IF you are not voting via telephone or the Internet.
- ---------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
- ---------------------------------------------------------------------------
(1) To elect the four persons listed at below as Class III directors of
the Company to serve a term of three years each, or until their
successors are duly elected and qualified.
[ ] FOR ALL NOMINEES NOMINEES:
( ) DuBose Ausley
[ ] WITHHOLD AUTHORITY ( ) Frederick Carroll, III
FOR ALL NOMINEES ( ) John K. Humphress
( ) Henry Lewis III
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
mark "FOR ALL EXCEPT" and fill in the circle next to each
nominee you wish to withhold, as shown here: (*)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method. [ ]
- ---------------------------------------------------------------------------
(2) To ratify the appointment of KPMG LLP as auditors for the Company for
the fiscal year ending December 31, 2006.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) In the discretion of the Board of Directors of the Company, to approve
such other business properly coming before the meeting or any
adjournment of the meeting.
- ---------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE PROPOSALS.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTIONS ARE GIVEN ON THE
PROXY, THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED FOR PROPOSALS 1
AND 2 AND AS DETERMINED BY THE BOARD OF DIRECTORS ON ANY OTHER MATTER
WHICH MAY PROPERLY BE BROUGHT AT THE MEETING.
The undersigned Shareowner(s) hereby acknowledges receipt of the Notice of
Annual Meeting and Proxy Statement.
Signature of Shareowner______________________________ Date:_____________
Signature of Shareowner______________________________ Date:_____________
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are owned jointly, each shareowner should sign. When signed as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.