-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DoVzMg5coWzQOWsB9/beII2fVCZ9wCcIyyWPPh/Ze594M6GAGLcI28G4y6wSCJDM w9mnygpNwwSLAitCIzVbbw== 0000730708-99-000003.txt : 19990315 0000730708-99-000003.hdr.sgml : 19990315 ACCESSION NUMBER: 0000730708-99-000003 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990422 FILED AS OF DATE: 19990312 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEACOAST BANKING CORP OF FLORIDA CENTRAL INDEX KEY: 0000730708 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 592260678 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-13660 FILM NUMBER: 99563965 BUSINESS ADDRESS: STREET 1: 815 COLORADO AVE STREET 2: P O BOX 9012 CITY: STUART STATE: FL ZIP: 34994 BUSINESS PHONE: 5612874000 MAIL ADDRESS: STREET 1: 815 COLORADO AVE STREET 2: P O BOX 9012 CITY: STUART STATE: FL ZIP: 34995 DEF 14A 1 PROXY STATEMENT [GRAPHIC OMITTED] Seacoast Banking Corporation of Florida March 17, 1999 TO THE SHAREHOLDERS OF SEACOAST BANKING CORPORATION OF FLORIDA: You are cordially invited to attend the Annual Meeting of Shareholders of Seacoast Banking Corporation of Florida ("Seacoast" or the "Company"), which will be held at the Ballantrae Golf and Yacht Club, 3325 S.E. Ballantrae Boulevard, Port St. Lucie, Florida, on Thursday, April 22, 1999, at 3:00 P.M., Local Time (the "Meeting"). At the Meeting, you will be asked to consider and vote upon (i) the reelection of ten directors to serve until the Annual Meeting of Shareholders in 2000 and until their successors have been elected and qualified, and (ii) the ratification of the appointment of Arthur Andersen LLP as independent auditors for Seacoast for the fiscal year ending December 31, 1999. Enclosed are the Notice of Meeting, Proxy Statement, Proxy and 1998 Annual Report. We hope you can attend the Meeting and vote your shares in person. In any case, we would appreciate your completing the enclosed Proxy and returning it to us. This action will ensure that your preferences will be expressed on the matters that are being considered. If you are able to attend the Meeting, you may vote your shares in person even if you have previously returned your Proxy. We want to thank you for your support this past year. We are proud of our progress as reflected in the results for 1998, and we encourage you to review carefully our Annual Report. If you have any questions about the Proxy Statement or our Annual Report, please call or write us. Sincerely, Dennis S. Hudson III President & Chief Executive Officer SEACOAST BANKING CORPORATION OF FLORIDA 815 Colorado Avenue Stuart, Florida 34994 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD April 22, 1999 Notice is hereby given that the Annual Meeting of Shareholders of Seacoast Banking Corporation of Florida ("Seacoast" or the "Company") will be held at the Ballantrae Golf and Yacht Club, 3325 S.E. Ballantrae Boulevard, Port St. Lucie, Florida, on Thursday, April 22, 1999, at 3:00 P.M., Local Time (the "Meeting"), for the following purposes: 1. Elect Directors. To consider and vote upon the reelection of ten directors to serve until the Annual Meeting of Shareholders in 2000 and until their successors have been elected and qualified. 2. Ratify Auditors. To ratify the appointment of Arthur Andersen LLP as independent auditors for Seacoast for the fiscal year ending December 31, 1999. 4. Other Business. To transact such other business as may properly come before the Meeting or any adjournments or postponements thereof. Only shareholders of record at the close of business on February 12, 1999, are entitled to notice of, and to vote at, the Meeting or any adjournments thereof. All shareholders, whether or not they expect to attend the Meeting in person, are requested to complete, date, sign and return the enclosed Proxy in the accompanying envelope. By Order of the Board of Directors [GRAPHIC OMITTED] Dennis S. Hudson III President & Chief Executive Officer March 17, 1999 PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY TO SEACOAST IN THE ENVELOPE PROVIDED WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY. PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS OF SEACOAST BANKING CORPORATION OF FLORIDA April 22, 1999 INTRODUCTION General This Proxy Statement is being furnished to the shareholders of Seacoast Banking Corporation of Florida ("Seacoast" or the "Company"), a Florida corporation registered as a bank holding company under the Bank Holding Company Act of 1956, as amended (the "BHC Act"), in connection with the solicitation of proxies by Seacoast's Board of Directors from holders of Seacoast's Class A common stock ("Class A Common Stock") and its Class B common stock ("Class B Common Stock") (herein, Class A Common Stock and Class B Common Stock are collectively referred to as "Common Stock"), for use at the Annual Meeting of Shareholders of Seacoast to be held on April 22, 1999, and at any adjournments or postponements thereof (the "Meeting"). Unless otherwise clearly specified, the terms "Company" and "Seacoast" include the Company's subsidiaries. The Meeting is being held to consider and vote upon (i) the reelection of ten directors to serve until the Annual Meeting of Shareholders in 2000 and until their successors have been elected and qualified; (ii) the ratification of the appointment of Arthur Andersen LLP as independent auditors for Seacoast for the fiscal year ending December 31, 1999. The Board of Directors of Seacoast knows of no other business that will be presented for consideration at the Meeting other than the matters described in this Proxy Statement. The 1998 Annual Report to Shareholders ("Annual Report"), including financial statements for the fiscal year ended December 31, 1998, accompanies this Proxy Statement. These materials are first being mailed to the shareholders of Seacoast on or about March 17, 1999. The principal executive offices of Seacoast are located at 815 Colorado Avenue, Stuart, Florida 34994, and its telephone number is (561) 287-4000. Record Date, Solicitation and Revocability of Proxies The Board of Directors of Seacoast has fixed the close of business on February 12, 1999 as the record date ("Record Date") for determining the Seacoast shareholders entitled to notice of, and to vote at, the Meeting. Accordingly, only holders of record of shares of Common Stock on the Record Date will be entitled to notice of, and to vote at, the Meeting. At the close of business on such date, there were 4,570,786 shares of Class A Common Stock issued and outstanding, which were held by approximately 1,025 holders of record and 375,413 shares of Class B Common Stock issued and outstanding, which were held by approximately 86 holders of record. See "PRINCIPAL SHAREHOLDERS." Holders of record of Class A Common Stock are entitled to one vote per share on each matter to be considered and voted upon at the Meeting. Holders of Class B Common Stock are entitled to ten votes per share on each matter to be considered and voted upon at the Meeting. The Company's Articles of Incorporation also provide that, except as otherwise required by law or by the Articles of Incorporation, holders of Class A Common Stock and Class B Common Stock vote together as a single class on all matters. As a result of the ten-to-one voting preference accorded by the Articles of Incorporation to shares of Class B Common Stock, as of the Record Date there were 8,324,916 votes entitled to be cast by the holders of the outstanding Common Stock, with the holders of the Class B Common Stock entitled to cast 3,754,130 votes or 45.10% of the votes entitled to be cast on matters for which the holders of both classes of Common Stock vote together as a single class. Thus, the holders of the Class A Common Stock possess a majority of the votes eligible to be cast. See "PROPOSAL ONE - ELECTION OF DIRECTORS Management Stock Ownership" and "PRINCIPAL SHAREHOLDERS." In determining whether a quorum exists at the Meeting for purposes of all matters to be voted on, all votes "for" or "against," as well as all abstentions (including votes to withhold authority to vote in certain cases), with respect to the proposal receiving the most such votes, will be counted. The vote required for the reelection of the ten directors is a plurality of the votes cast by the shares entitled to vote in the election, provided a quorum is present. Consequently, with respect to the proposal for the reelection of directors, abstentions and broker non-votes will not be counted as part of the base number of votes to be used in determining if the proposal has received the requisite number of base votes for approval. The proposal to ratify Arthur Andersen LLP as independent auditors will be approved if the votes cast by the holders of the shares of Common Stock 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. Consequently, with respect to this proposal, as in the proposal for the election of directors, abstentions and broker non-votes will not be counted as part of the base number of votes to be used in determining if the proposal has received the requisite number of base votes for approval. Shares of Common Stock represented by properly executed Proxies, if such Proxies are received in time and not revoked, will be voted at the Meeting in accordance with the instructions indicated in such Proxy. IF NO INSTRUCTIONS ARE INDICATED, SUCH SHARES OF COMMON STOCK WILL BE VOTED FOR THE REELECTION AS DIRECTORS OF SEACOAST OF THE TEN NOMINEES NAMED IN THE PROXY AND FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS. A shareholder who has given a Proxy may revoke it at any time prior to its exercise at the Meeting by either (i) giving written notice of revocation to the Secretary of Seacoast, (ii) properly submitting to Seacoast a duly executed Proxy bearing a later date, or (iii) appearing in person at the Meeting and voting in person. All written notices of revocation or other communications with respect to revocation of Proxies should be addressed as follows: Seacoast Banking Corporation of Florida, 815 Colorado Avenue, Stuart, Florida 34994, Attention: Dennis S. Hudson III, President & Chief Executive Officer. PROPOSAL ONE ELECTION OF DIRECTORS General The Meeting is being held to reelect ten directors of Seacoast to serve a one-year term of office expiring at the 2000 Annual Meeting of Shareholders and until their successors have been elected and qualified. All of the nominees are presently directors of Seacoast. Seven have served as directors of Seacoast since its inception in 1983. Dennis S. Hudson, III was first elected a director in 1984, and Christopher E. Fogal and Jeffrey S. Furst were elected to the Board in 1997 following the acquisition of Port St. Lucie National Bank Holding Corporation. All of the nominees also serve as directors of Seacoast's banking subsidiary, First National Bank and Trust Company of the Treasure Coast (the "Bank"). The members of the Boards of Directors of the Bank and the Company are the same except for Stephen E. Bohner, T. Michael Crook, Marian B. Monroe and A. Douglas Gilbert, who are members of the Bank's Board only. All shares 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 the election of the ten nominees listed below. In the event that any nominee is unable to serve (which is not anticipated), the persons designated as Proxies will cast votes for the remaining nominees and for such replacements, if any, as may be nominated by Seacoast's Board of Directors acting as the Nominating Committee. Proxies cannot be voted for a greater number of persons than the number of nominees specified herein (ten persons). The affirmative vote of the holders of shares of Common Stock representing a plurality of the votes cast at the Meeting at which a quorum is present, is required for the reelection of the directors listed below. THE NOMINEES HAVE BEEN NOMINATED BY SEACOAST'S BOARD OF DIRECTORS AND THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE REELECTION OF ALL TEN NOMINEES LISTED BELOW. The following table sets forth the name and age of each nominee and each senior executive officer of the Company who is not a director or nominee, the year in which he was first elected a director or executive officer, as the case may be, a description of his position and offices with Seacoast or the Bank, if any, a brief description of his principal occupation and business experience during at least the last five years, directorships presently held by him in companies other than Seacoast with registered securities, and certain other information including his age and the number of shares of Class A Common Stock and Class B Common Stock beneficially owned by him as of February 12, 1999. See "Information About the Board of Directors and Its Committees." Name, Age and Shares of Common Stock Year Beneficially First Elected or Owned and Percentage Appointed a Information About of Common Stock Director Nominee Outstanding (l) or Executive Officer Class A Class B Nominees: Jeffrey C. Bruner Mr. Bruner has been a 7,140 (2) 90 (3) (48) self-employed real (4) (4) 1983 estate investor in Stuart, Florida since 1972. John H. Crane Mr. Crane has been 9,409 (4) -- (69) Vice President of C&W 1983 Fish Company, Inc., a fish processing plant located in the Stuart, Florida area, since 1982. He also served as President of Krauss & Crane, Inc, an electrical contracting firm located in Stuart, Florida, from 1957 through 1997. Evans Crary, Jr. Mr. Crary is 4,597 (4) 1,665 (4) (69) retired, but has (5) 1983 served as a member of Crary, Buchanan, Bowdish, Bovie, Lord, Roby & Evans, Chartered, a law firm located in Stuart, Florida, since 1993, and prior thereto he served as President and a shareholder of the law firm since 1974. Mr. Crary has practiced law in Stuart, Florida, since 1952. Christopher E. Mr. Fogal, a 20,328 (4) -- Fogal (47) certified public (6) 1997 accountant, has been a managing partner of Fogal, Lynch, Johnson & Long since 1979. Jeffrey S. Furst Mr. Furst has been 45,208 (4) -- (54) a real estate (7) 1997 broker since 1973 and is owner of Sun Realty, Inc. in Port St. Lucie, Florida. Dale M. Hudson Mr. Hudson was 440,804 (9) 154,151 (10) (64) named Chairman of 9.64% 41.06% 1983(8) Seacoast in June 1998. Prior thereto, he served as Chief Executive Officer of Seacoast from 1992 and as President of Seacoast from 1990. He was named Chairman of the Board of the Bank in September 1992 after serving as Vice Chairman and President of the Bank since 1978. Dennis S. Mr. Hudson served 318,581 (11) 125,753 (12) Hudson, Jr. (71) as Chairman of the 6.97% 33.50% 1983 (8) Board of Seacoast from 1990 to June 1998. He served as Chief Executive Officer of Seacoast from 1983 until 1992 and Chairman of the Bank from 1969 until 1992. Dennis S. Mr. Hudson was 253,350 (13) 23,502 (14) Hudson, III (43) named President and 5.54% 6.26% 1984 (8) Chief Executive Officer of Seacoast in June 1998 and has served as Chief Executive Officer of the Bank since 1992. Prior thereto, he served as Chief Operating Officer of Seacoast since 1990 and President of the Bank since 1992. John R. Mr. Santarsiero is 5,387 (4) 1,395 (4) Santarsiero, Jr. a private investor (54) and former owner of 1983 an automobile dealership located in Stuart, Florida. Thomas H. Mr. Thurlow has 4,725 (4) -- Thurlow, Jr. been an officer and (15) (62) a director of 1983 (8) Thurlow & Smith, P. A., a law firm located in Stuart, Florida, since 1981 and has practiced law in Stuart, Florida since 1961. Executive Officers Who Are Not Also Nominees or Directors: A. Douglas Mr. Gilbert, Senior 17,319 (4) -- Gilbert (58) Executive Vice (16) 1990 President, was named Chief Operating Officer of Seacoast and President of the Bank in June 1998. Mr. Gilbert has served as Chief Credit Officer of Seacoast since July 1990, also serving as Chief Banking Officer from September 1992 to October 1995. He was named Chief Operating and Credit Officer of the Bank in October 1994. Prior thereto, he served as Executive Vice President and Chief Banking and Credit Officer of the Bank from 1992 to 1994, and Executive Vice President and Chief Credit Officer of the Bank from 1990 to 1992. C. William Mr. Curtis, Senior 9,602 (4) -- Curtis, Jr. Executive Vice (17) (60) President, has 1995 served as Chief Banking Officer of Seacoast and the Bank since October 1995. Prior thereto, Mr. Curtis was Area President of First Union Bank in Sarasota and Manatee Counties, a $970 million banking unit with 21 offices. He served as Senior Marketing Officer for Florida National Banks of Florida, Inc.for 10 years prior to coming to the Treasure Coast as President of Florida National Bank in Indian River County from 1985 to 1989. William R. Mr. Hahl, Executive 20,733 (4) -- Hahl (50) Vice President/ (18) 1990 Finance Group, has served as the Chief Financial Officer of Seacoast and the Bank since July 1990. Nominees and 944,911 291,556 executive 20.67% 77.66% officers as a group 13 persons) (1) Information relating to beneficial ownership of Common Stock by directors is based upon information furnished by each person using "beneficial ownership" concepts set forth in the rules of the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as amended (the "1934 Act"). Under such rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares "voting power," which includes the power to vote or direct the voting of such security, or "investment power," which includes the power to dispose of or to direct the disposition of such security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under such rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may disclaim any beneficial ownership. Accordingly, nominees are named as beneficial owners of shares as to which they may disclaim any beneficial interest. Except as indicated in other notes to this table describing special relationships with other persons and specifying shared voting or investment power, directors possess sole voting and investment power with respect to all shares of Common Stock set forth opposite their names. (2) Includes 180 shares held jointly with Mr. Bruner's wife, 2,150 shares held by Mr. Bruner as custodian for his son, and 4,000 shares held by Mr. Bruner as custodian for his two nephews as to which shares Mr. Bruner may be deemed to share both voting and investment power. (3) Includes 90 shares held jointly with Mr. Bruner's wife as to which shares Mr. Bruner may be deemed to share both voting and investment power. (4) Less than 1%. (5) Includes 1,268 shares held by the trustee for the IRA of Mr. Crary. (6) All 20,328 shares are held jointly with Mr. Fogal's wife, as to which shares Mr. Fogal may be deemed to share both voting and investment power. (7) Includes 6,069 shares held by the trustee for the IRA of Mr. Furst, and 29,385 shares held jointly with Mr. Furst's wife, as to which shares Mr. Furst may be deemed to share both voting and investment power. Also includes 6,449 shares held by Mr. Furst's wife, 1,564 shares held by Mr. Furst's two children, and 1,214 shares held jointly by Mr. Furst's wife and mother-in-law, as to which shares Mr. Furst may be deemed to share both voting and investment power and as to which shares Mr. Furst disclaims beneficial ownership. (8) Dennis S. Hudson, Jr. and Dale M. Hudson are brothers. Dale M. Hudson is married to the sister of Thomas H. Thurlow, Jr. Dennis S. Hudson, III is the son of Dennis S. Hudson, Jr. and the nephew of Dale M. Hudson. (9) Includes 41,297 shares held jointly with Mr. Hudson's wife, as to which shares Mr. Hudson may be deemed to share both voting and investment power. Also includes 26,025 shares held by Mr. Hudson's wife and 75,787 shares held by Mr. Hudson's three children, as to which shares Mr. Hudson may be deemed to share both voting and investment power and as to which Mr. Hudson disclaims beneficial ownership. Mr. Hudson and his wife, subject to required regulatory approvals, plan to transfer certain of their shares into Monroe Partners, Ltd., a family partnership (the "Monroe Partnership"), of which he and his wife will be the general partners. (10) Includes 20,649 shares held jointly with Mr. Hudson's wife, as to which shares Mr. Hudson may be deemed to share both voting and investment power. Also includes 3,960 shares held by Mr. Hudson's wife and 9,543 shares held by Mr. Hudson's three children, as to which shares Mr. Hudson may be deemed to share both voting and investment power and to which Mr. Hudson disclaims beneficial ownership. (11) Includes 212,272 shares held by Sherwood Partners, Ltd., a family partnership (the "Sherwood Partnership") of which Mr. Hudson, his wife, Anne P. Hudson, and his son, Dennis S. Hudson, III, are general partners. Mr. Hudson may be deemed to share both voting and investment power with respect to such shares with the other general partners, and as to which Mr. Hudson disclaims beneficial ownership except to the extent of his partnership interests. Also includes 47,417 shares held by Mr. Hudson's wife and 25,050 shares held by Mr. Hudson's three children, as to which shares Mr. Hudson may be deemed to share both voting and investment power and as to which Mr. Hudson disclaims beneficial ownership. (12) Includes 15,000 shares held by the Sherwood Partnership, as to which shares Mr. Hudson may be deemed to share both voting and investment power with the other general partners, and as to which Mr. Hudson disclaims beneficial ownership, except to the extent of his partnership interests. Also includes 23,709 shares held by Mr. Hudson's wife, 6,270 shares held by Mr. Hudson's three children, as to which shares Mr. Hudson may be deemed to share both voting and investment power and as to which Mr. Hudson disclaims beneficial ownership. (13) Includes 212,272 shares held by the Sherwood Partnership of which Mr. Hudson and his mother and father, Anne P. Hudson and Dennis S. Hudson, Jr., are general partners. Mr. Hudson may be deemed to share both voting and investment power with respect to such shares with the other general partners, and as to which Mr. Hudson disclaims beneficial ownership, except to the extent of his partnership interests. Also includes 44 shares held by Mr. Hudson's two sons, as to which shares Mr. Hudson may be deemed to share both voting and investment power. Also includes 41,000 shares that Mr. Hudson has the right to acquire by exercising options that are exercisable within 60 days after the Record Date. (14) Includes 15,000 shares held by the Sherwood Partnership, as to which Mr. Hudson may be deemed to share both voting and investment power with the other general partners, and as to which Mr. Hudson disclaims beneficial ownership, except to the extent of his partnership interests. (15) Includes 1,575 shares owned by Mr. Thurlow's wife and 1,575 shares held by Mr. Thurlow's three children, as to which shares Mr. Thurlow may be deemed to share both voting and investment power. (16) Includes 200 shares held in Mr. Gilbert's IRA and 14,000 shares that Mr. Gilbert has the right to acquire by exercising options that are exercisable within 60 days after the Record Date. (17) Includes 3,967 shares held by Mr. Curtis' wife as to which shares Mr. Curtis may be deemed to share both voting and investment power. Also includes 1,250 shares of a stock grant which becomes vested within 6 months after the Record Date and 3,666 shares that Mr. Curtis has the right to acquire by exercising options that are exercisable within 60 days after the Record Date. (18) Includes 16,733 shares that Mr. Hahl has the right to acquire by exercising options that are exercisable within 60 days after the Record Date. Information About the Board of Directors and Its Committees The Board of Directors of Seacoast held eight meetings during 1998. All of the directors attended at least 75% of the total number of meetings of the Board of Directors and attended at least 75% of the meetings of the Board committees on which they served. Seacoast's Board of Directors has two standing committees: the Salary and Benefits Committee and the Audit Committee, both of which serve the same functions for the Bank. In addition, the Bank's Board of Directors has the following standing committees separate from the Company: Executive Committee, Investment Committee, Trust Committee and the Directors Loan Committee. Such committees perform those duties customarily performed by similar committees at other financial institutions. The Company's Salary and Benefits Committee is comprised of Messrs. Crary (Chairman), Bruner, Dennis S. Hudson, Jr. and Santarsiero and Ms. Marian Monroe. This Committee has the authority to determine the compensation of the Company's and the Bank's executive officers and employees, and administers various of the Company's benefit and incentive plans. This Committee has the power to interpret the provisions of the Company's Profit Sharing Plan, Employee Stock Purchase Plan, the Seacoast Banking Corporation of Florida 1991 Stock Option and Stock Appreciation Right Plan (the "1991 Incentive Plan"), the Seacoast Banking Corporation of Florida 1996 Long-Term Incentive Plan (the "1996 Incentive Plan") and the Non- Employee Directors Stock Compensation Plan (the "Directors Stock Plan"). Five meetings were held by this Committee in 1998. See "Salary and Benefits Committee Report." The Audit Committee recommends on an annual basis to the Board of Directors a public accounting firm to be engaged as independent auditors for Seacoast for the next fiscal year, reviews the plan for the audit engagement, and reviews financial statements, the internal audit plans and reports financial reporting procedures and reports of regulatory authorities. This Committee periodically reports to the Board of Directors. This Committee is comprised of Messrs. Bruner (Chairman), Crane, Fogal, and Santarsiero and it held four meetings in 1998. The entire Board of Directors serves as the Nominating Committee for the purpose of nominating persons to serve on the Board of Directors. While nominees recommended by shareholders may be considered, this Committee has not actively solicited recommendations nor established any procedures for this purpose. The Board held two meetings in its capacity as the Nominating Committee during 1998. Board members who are not executive officers of the Company are paid an annual retainer of $20,000 for their service as directors of the Company and its subsidiaries. In addition to the annual retainers, outside Board members receive $600 for each Board meeting attended, $600 for each committee meeting attended and $700 for each committee meeting chaired. Non-Employee Director Stock Compensation Plan During 1998, the Board of Directors reserved 25,000 shares of Seacoast Class A Common stock for issuance under an approved Non- Employee Director Stock Compensation Plan ("Director Stock Plan"). Under the Director Stock Plan, non-employee directors of the company or its subsidiary may elect to receive shares of stock in lieu of some or all of their retainer fee paid for their services as a director, and/or cash fees paid for attendance at any meeting of the Board or its committees. Executive Officers Executive officers are appointed annually at the organizational meeting of the respective Boards of Directors of Seacoast and the Bank following the annual meetings of shareholders, to serve until the next annual meeting and until successors are chosen and qualified. The table set forth under "PROPOSAL ONE - Election of Directors" lists the nominees for election to the Board of Directors as well as the Named Executive Officers of Seacoast and the Bank who are not nominees to or members of the Board of Directors, their ages and respective offices held by them, the period each such position has been held, a brief account of their business experience for at least the past five years, and the number of shares of Common Stock beneficially owned by each of them on February 12, 1999. Management Stock Ownership As of February 12, 1999, based on available information, all directors and executive officers of Seacoast as a group (13 persons) beneficially owned approximately 872,012 shares of Class A Common Stock, constituting 19.1% of the total number of shares of Class A Common Stock outstanding at that date, and approximately 291,556 shares of Class B Common Stock, constituting 77.7% of the total number of shares of Class B Common Stock outstanding at that date. Seacoast's directors and executive officers beneficially owned, as of that date, shares of Common Stock having 3,787,572 votes, or 45.5% of the total votes represented by Common Stock outstanding on the Record Date and entitled to vote at the Annual Meeting. In addition, as of the Record Date, various subsidiaries of Seacoast, as fiduciaries, custodians, and agents, had sole or shared voting power over 92,965 shares, or 2.0% of the issued and outstanding shares, of Seacoast Class A Common Stock, and 300 shares of Class B Common Stock, including shares held as trustee or agent of various Seacoast employee benefit and stock purchase plans. See "Record Date, Solicitation and Revocability of Proxies" and "PRINCIPAL SHAREHOLDERS." EXECUTIVE COMPENSATION Under rules established by the SEC, the Company is required to provide certain data and information in regard to the compensation and benefits provided to its chief executive officer and other executive officers, including the four other highly compensated executive officers (collectively, these officers are referred to as the "Named Executive Officers"). The disclosure requirements for the Named Executive Officers include the use of tables and a report explaining the rationale and considerations that led to fundamental executive compensation decisions affecting these individuals. The following report reflects Seacoast's compensation philosophy as endorsed by the Board of Directors and the Salary and Benefits Committee and resulting actions taken by Seacoast for the reporting periods shown in the various compensation tables supporting the report. The Salary and Benefits Committee either approves or recommends to the Board of Directors payment amounts and award levels for executive officers of Seacoast and its subsidiaries. Salary and Benefits Committee Report General During 1998, the Salary and Benefits Committee of the Board of Directors was composed entirely of five members, four of whom were not officers or employees of Seacoast or the Bank at any time during the year. The Board of Directors designates the members and Chairman of such committee. Compensation Policy The policies that govern the Salary and Benefits Committee's executive compensation decisions are designed to align changes in total compensation with changes in the value created for the Company's shareholders. The Salary and Benefits Committee believes that compensation of executive officers and others should be directly linked to Seacoast's operating performance and that achievement of performance objectives over time is the primary determinant of share price. The underlying objectives of the Salary and Benefits Committee's compensation strategy are to establish incentives for certain executives and others to achieve and maintain short-term and long-term operating performance goals for Seacoast, to link executive and shareholder interests through equity-based plans, and to provide a compensation package that recognizes individual contributions as well as overall business results. At Seacoast, performance-based executive officer compensation includes: base salary, short-term annual cash incentives, and long-term stock and cash incentives. Base Salary and Increases In establishing executive officer salaries and increases, the Committee considers individual annual performance and the relationship of total compensation to the defined salary market. The decision to increase base pay is recommended by the chief executive officer and approved by the Salary and Benefits Committee using performance results documented and measured annually through a formal management- by-objectives ("MBO") program. Information regarding salaries paid in the market is obtained through formal salary surveys and other means, and is used to evaluate competitiveness with Seacoast's peers and competitors. Seacoast's general philosophy is to provide base pay competitive with the market, and to reward individual performance while positioning salaries consistent with Company performance. Short-Term Incentives Seacoast's Key Manager Incentive Plan seeks to align short-term cash compensation with individual performance and performance for the shareholders. Funding for this annual incentive plan is dependent on Seacoast first attaining defined performance thresholds for return on assets and earnings per share. Once this threshold is attained, the Salary and Benefits Committee, using recommendations from the Company's chief executive officer, approves awards to those officers who have made superior contributions to Company profitability as measured and reported through individual performance goals established at the beginning of the year. As specified in the plan, the payout schedule is designed to pay a smaller number of officers the highest level of funded cash incentives to ensure that a meaningful reward is provided to the organization's top performers. This philosophy better controls overall compensation expenses by reducing the need for significant annual base salary increases as a reward for past performance, and places more emphasis on annual profitability and the potential rewards associated with future performance. Salary market information is used to establish competitive rewards that are adequate in size to motivate strong individual performance during the year. The Key Manager Incentive Plan paid an aggregate of $344,700 in 1998, which was distributed among 17 persons. Long-Term Incentives Long-term incentive awards have been made under the 1991 Incentive Plan and the 1996 Incentive Plan. Stock options granted under the plan are designed to motivate sustained high levels of individual performance and align the interests of key employees with those of the Company's shareholders by rewarding capital appreciation and earnings growth. Upon the recommendation of the chief executive officer, and subject to approval by the Salary and Benefits Committee, stock options are awarded annually to those key officers whose performance during the year has made a significant contribution to Seacoast's long-term growth. During 1998, options on 156,000 shares of Class A Common Stock were awarded to 25 key employees under the 1996 Incentive Plan, including four of the Named Executive Officers. A restricted stock award for 4,000 shares of Class A Common Stock was also granted to one key middle manager of the Bank under the 1996 Incentive Plan to provide additional incentive for that employee to remain in the service of the company and to reward outstanding performance. Deduction Limit At this time, because of its compensation levels, Seacoast does not appear to be at risk of losing deductions under Section 162(m) of the Code, which generally establishes, with certain exceptions, a $1 million deduction limit on executive compensation for all publicly held companies. As a result, Seacoast has not established a formal policy regarding such limit, but will evaluate the necessity for developing such a policy in the future. Chief Executive Pay The Salary and Benefits Committee formally reviews the compensation paid to the chief executive officers of the Company and the Bank during the first quarter of each year. Final approval of chief executive compensation is made by the Board of Directors. Changes in base salary and the awarding of cash and stock incentives are based on overall financial performance and profitability related to objectives stated in the Company's strategic performance plan and the initiatives taken to direct the Company. In addition, utilizing published surveys, databases, and proxy statement data, including, for example, public information compiled from the SNL Executive Compensation Report (collectively, the "Survey Data"), the Salary and Benefits Committee surveyed the total compensation of chief executive officers of comparable-sized financial institutions located in comparable markets nationally, as well as of locally-based banks and thrifts. While there is likely to be a substantial overlap between the financial institutions included in the survey data and the banks and thrifts represented in the Nasdaq Bank Index line on the shareholder return performance graph, below, the groups are not exactly the same. The Salary and Benefits Committee believes that the most direct competitors for executive talent are not necessarily the same as the companies that would be included in the published industry index established for comparing shareholder returns. After reviewing the Survey Data, the salary for Mr. Dennis S. Hudson, III was increased by $13,700 to $306,600 annually effective January 1, 1999. This increase followed a $20,000 adjustment following his appointment as President and Chief Executive Officer of Seacoast in June 1998. The annual salary for Mr. A. Douglas Gilbert was increased by $14,300 to $300,300 effective January 1, 1999. This increase followed a $40,000 adjustment upon his appointment as President of the Bank in June 1998. The annual salary for Mr. Dale M. Hudson, Chairman of the Board of Seacoast, was increased by $25,900 to $200,000. These adjustments maintained their respective total compensation at the median of the comparative groups. Seacoast's earnings growth in 1998 continued to be limited by the geographic expansion initiatives begun during 1997. Accordingly, Mr. Hudson, III's cash incentive award under the Key Manager Incentive Plan was reduced from $94,000 in 1996 and $40,000 in 1997 to $38,400 in 1998, and Mr. Gilbert's cash incentive award was reduced from $94,000 in 1996 and $63,000 in 1997 to $60,500 in 1998. Summary In summary, the Salary and Benefits Committee believes that Seacoast's compensation program is reasonable and competitive with compensation paid by other financial institutions of similar size. The program is designed to reward managers for strong personal, Company and share value performance. The Salary and Benefits Committee monitors the various guidelines that make up the program and reserves the right to adjust them as necessary to continue to meet Company and shareholder objectives. Evans Crary, Jr., Chairman Marian B. Monroe Jeffrey C. Bruner John R. Santarsiero, Jr. Dennis S. Hudson, Jr. The table below sets forth certain elements of compensation for the Named Executive Officers of Seacoast or the Bank for the periods indicated. Summary Compensation Table Annual Compensation ----------------------------- Year Salary Bonus Name and Principal (b) ($)(c) ($)(1)(d) Position(a) Dennis S. Hudson, III 1998 $294,903 $38,400 President & Chief 1997 253,967 40,000 Executive Officer of 1996 236,388 94,500 Seacoast, Chairman and Chief Executive Officer of the Bank Dale M. Hudson 1998 $196,062 -- Chairman of Seacoast 1997 167,659 -- 1996 161,027 -- A. Douglas Gilbert 1998 $284,927 $60,500 Senior Executive Vice 1997 233,735 63,000 President & Chief 1996 215,839 94,500 Operating & Credit Officer of Seacoast, President & Chief Operating & Credit Officer of the Bank C. William Curtis, Jr. 1998 $199,015 $48,000 Senior Executive Vice 1997 171,184 50,000 President & Chief 1996 169,756 64,000 Banking Officer of Seacoast and the Bank William R. Hahl 1998 $180,568 $15,000 Executive Vice 1997 160,455 10,000 President & Chief 1996 149,131 30,000 Financial Officer of Seacoast and the Bank Long-Term Compensation --------------------------- Securities Under- Restricted lying All Stock Options/ Other Name and Principal Year Awards SARs Compensation Position(a) (b) ($)(f) (#)(g ($)(i) Dennis S. Hudson, III 1998 -- -- 22,000 $21,415 (2) President & Chief 1997 -- 6,000 $20,144 Executive Officer of 1996 -- -- 6,000 27,546 Seacoast, Chairman and Chief Executive -- Officer of the Bank Dale M. Hudson 1998 -- -- -- $17,077 (3) Chairman of Seacoast 1997 -- -- -- 16,223 1996 -- -- -- 16,932 A. Douglas Gilbert 1998 -- -- 22,000 $20,734 (4) Senior Executive Vice 1997 -- -- 6,000 19,086 President & Chief 1996 -- -- 6,000 22,247 Operating & Credit Officer of Seacoast, President & Chief Operating & Credit Officer of the Bank C. William Curtis, 1998 -- 22,000 $17,084 (5) Jr. 1997 -- 6,000 19,109 Senior Executive Vice 1996 111,250 (6) 11,000 11,572 President & Chief Banking Officer of Seacoast and the Bank William R. Hahl 1998 -- 7,000 $16,539 (7) Executive Vice 1997 -- 4,000 16,149 President & Chief 1996 -- 4,000 16,400 Financial Officer of Seacoast and the Bank (1) Incentive cash compensation paid for results achieved during the applicable fiscal year in accordance with the Key Manager Incentive Plan as well as certain other bonuses related to performance or deemed necessary to attract new management. See "Salary and Benefits Committee Report." (2) This includes $2,406 in excess life insurance benefits, $8,528 in employer matching contributions to the Profit Sharing Plan, $4,256 in profit sharing, $5,675 in employer discretionary retirement contributions, and $550 paid by the employer into the Cafeteria Plan. (3) This includes $2,406 in excess life insurance benefits, $7,763 in employer matching contributions to the Profit Sharing Plan, $2,725 in profit sharing, $3,633 in employer discretionary retirement contributions, and $550 paid by the employer into the Cafeteria Plan. (4) This includes $2,406 in excess life insurance benefits, $8,408 in employer matching contributions to the Profit Sharing Plan, $4,016 in profit sharing, $5,354 in employer discretionary retirement contributions, and $550 paid by the employer into the Cafeteria Plan. (5) This includes $2,406 in excess life insurance benefits, $7,764 in employer matching contributions to the Profit Sharing Plan, $2,728 in profit sharing, $3,637 in employer discretionary retirement contributions, and $550 paid by the employer into the Cafeteria Plan. (6) This amount represents a restricted stock award of 5,000 shares of the Company's Class A Common Stock which was awarded to Mr. Curtis on March 29, 1996, based on the closing sale price of the Company's Class A Common Stock on the Nasdaq Stock Market on March 29, 1996. One quarter of the shares covered by this award vested on March 29, 1997 and one quarter of the shares vested on March 29, 1998. The remaining shares will, as long as Mr. Curtis remains employed by the Company, vest in increments of 1,250 shares on March 29, 1999 and 2000. Mr. Curtis has full voting and dividend rights with respect to the restricted stock during the vesting period. (7) This includes $2,406 in excess life insurance benefits, $7,668 in employer matching contributions to the Profit Sharing Plan, $2,535 in profit sharing, $3,380 in employer discretionary retirement contributions, and $550 paid by the employer into the Cafeteria Plan. Grants of Options/SARs in 1998 The following table sets forth certain information concerning options granted during 1998 to the Named Executive Officers. No stock appreciation rights ("SARs") were granted in 1998. Individual Grants ---------------------------------------------- Percent Number of of Total Securities Options/ Under- SARs Exercise lying Granted or Base Options/ to Price SARs Employees ($/Share Expiration Granted in Fiscal ) Date Name (#) Year Dennis S. 22,000 14.10% $29.00 June 30, Hudson, III 2008 Dale M. Hudson -- -- -- N/A A. Douglas 22,000 14.10% $29.00 June 30, Gilbert 2008 C. William 22,000 14.10% $29.00 June 30, Curtis, Jr. 2008 William R. Hahl 7,000 4.49% $29.00 June 30, 2008 Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term Name 5%($) 10%($) Dennis S. Hudson, III $401,280 $1,016,840 Dale M. Hudson N/A N/A A. Douglas Gilbert $401,280 $1,016,840 C. William Curtis, Jr. $401,280 $1,016,840 William R. Hahl $127,680 $323,540 Aggregated Option/SAR Exercises in 1998 and 1998 Year-End Option/SAR Values The following table shows stock options exercised by the Named Executive Officers during 1998, including the aggregate value of gains on the date of exercise. In addition, this table includes the number of shares covered by both exercisable and non-exercisable options as of December 31, 1998. Also reported are the values for "in-the-money" options, which represent the positive spread between the exercise price of any such existing options and the year-end price of the Company's Class A Common Stock. No SARs were outstanding in 1998. Value of Number of Unexercised Unexercised In-the- Options/SARs Money at FY-End Options/ Shares Value (#) SARs at FY- Acquired Realized Exercisable End($) on (E)/ Exercisable Exercise Unexercis- (E)/ Name able (U) Unexercis- able (U) Dennis S. -- -- 39,000 (E) $489,875(E) Hudson, III 34,000 (U) $65,500(U) Dale M. Hudson -- -- -- (E) --(E) -- (U) --(U) A. Douglas 6,000 $96,212 12,000 (E) $120,500(E) Gilbert 34,000 (U) $65,500(U) C. William -- -- 3,666 (E) $24,287(E) Curtis, Jr. 35,334 (U) $65,838(U) William R. 4,000 $64,500 15,066 (E) $148,828(E) Hahl 15,334 (U) $47,293(U) Report on Repricing of Options / SARs In June 1998, options to purchase a total of 156,000 shares of Class A Common Stock were granted to 25 key employees under the 1996 Incentive Plan, including four of the Named Executive Officers. On November 10, 1998, the Salary and Benefits Committee of the Board of Directors approved a reduction in the exercise price of these stock options from $38.00 per share to $29.00 per share, the fair market value of the Company's Class A Common Stock on that date. The repricing was approved by the Salary and Benefits Committee to restore the value of the stock options which, as a result of a significant decline in the securities markets, especially financial institutions, and the price of the Class A Common Stock, had ceased to provide an incentive for valued employees, officers, and directors to remain in the service of the Company and the Bank. The affected options were amended to reduce the exercise prices to the fair market value of the underlying stock on the date of the repricing. All other terms of the options remained the same. As set forth in the 1996 Incentive Plan, stock options are intended to provide incentives to the Company's officers and employees. The Salary and Benefits Committee believes that such equity incentives are a significant factor in the Company's ability to attract, retain and motivate key employees who are critical to the Company's long-term success. The Salary and Benefits Committee believed that, at their original exercise prices, the disparity between the exercise price of these options and recent market prices for the Company's Class A Common Stock did not provide meaningful incentives to the employees holding these options. The Committee also believes that the decline in the values of financial institution stocks generally, and the Company's stock, following market disruptions in the Summer and Fall of 1998, are unrelated to the Company's or its key employees' performance, and that maintaining such exercise prices was inappropriate. The Salary and Benefits Committee approved the repricing of these options as a means of ensuring that optionees will continue to have meaningful equity incentives to work toward the success of the Company. Submitted by the members of the Salary and Benefits Committee: Evans Crary, Jr., Chairman Marian B. Monroe Jeffrey C. Bruner John R. Santarsiero, Jr. Dennis S. Hudson, Jr. Ten-Year Option/SAR Repricings Market Number of Price of Securities Stock at Underlying Time of Options/SARs Repricing Repriced or or Name Date Amended (#) Amendment ($) Dennis S. Hudson, III 11/10/98 22,000 $29.00 President & Chief Executive Officer A. Douglas Gilbert 11/10/98 22,000 $29.00 Senior Executive Vice President & Chief Operating & Credit Officer C. William Curtis, Jr. 11/10/98 22,000 $29.00 Senior Executive Vice President & Chief Banking Officer William R. Hahl 11/10/98 7,000 $29.00 Executive Vice President & Chief Financial Officer Exercise Length of Price at Original Time of Option Term Repricing New Remaining or Exercise at Date of Amendment Price Repricing or Name ($) ($) Amendment Dennis S. Hudson, III $38.00 $29.00 9.5 years President & Chief Executive Officer A. Douglas Gilbert $38.00 $29.00 9.5 years Senior Executive Vice President & Chief Operating & Credit Officer C. William Curtis, Jr. $38.00 $29.00 9.5 years Senior Executive Vice President & Chief Banking Officer William R. Hahl $38.00 $29.00 9.5 years Executive Vice President & Chief Financial Officer Profit Sharing Plan Seacoast sponsors an Amended and Restated Retirement Savings Plan for Employees of the First National Bank & Trust Company of the Treasure Coast (the "Profit Sharing Plan"). The Profit Sharing Plan has various features, including employer matching contribution for salary deferrals of up to 4% of the employee's compensation for each calendar quarter. The Company matches 100% of any Elective Profit Sharing Contribution that is deferred into the Profit Sharing Plan. In addition, the Profit Sharing Plan has a Code Section 401(k) feature that allows employees to make voluntary "salary savings contributions" ranging from 1% to 18% of compensation (as defined by the Plan), subject to federal income tax limitations. After-tax contributions may also be made by employees with "voluntary contributions" of up to 10% of compensation (as defined in the Profit Sharing Plan for each plan year), subject to certain statutory limitations. A retirement contribution is made on an annual discretionary basis by the Company of up to 2% of "retirement eligible compensation," as defined in the Profit Sharing Plan. At the end of each plan year, the Company's Board of Directors decides whether to make a profit sharing contribution for the plan year. If it decides to make such a contribution, the contribution is allocated among eligible employees based on each employee's "eligible compensation" as defined in the Profit Sharing Plan. At least 50% of this contribution (the "Non-Elective Profit Sharing Contribution") is contributed to the employee's Profit Sharing account. The balance (the "Elective Profit Sharing Contribution") may be deferred into the Profit Sharing Plan or taken in cash by the employee, at the employee's election. Performance Graph The following line-graph compares the cumulative, total return on Seacoast's Class A Common Stock from December 31, 1993 to December 31, 1998, with that of the Nasdaq Composite Index (an average of all stocks traded on the Nasdaq Stock Market) and the Nasdaq Bank Stock index (an average of all bank and thrift institutions whose stock is traded on the Nasdaq Stock Market). Cumulative total return represents the change in stock price and the amount of dividends received over the indicated period, assuming the reinvestment of dividends. 1993 1994 1995 1996 1997 1998 Seacoast 100 101.41 134.95 165.36 250.07 190.15 Nasdaq Stock Market 100 96.80 135.44 166.19 202.15 282.26 Nasdaq Bank Stocks 100 101.11 146.42 184.71 302.17 266.60 Employment and Severance Agreements The Bank entered into an executive employment agreement with A. Douglas Gilbert on March 22, 1991. Similar agreements were entered into with Dennis S. Hudson, III on January 18, 1994, and with C. William Curtis, Jr. on July 31, 1995. Each such agreement has a three-year term and provides for automatic renewal on an annual basis at the end of that term; provided, however, that neither the employee nor the Bank gives written notice electing not to renew such agreement not less than 90 days prior to the end of the agreement's then current term. Each such agreement contains certain non-competition, non- disclosure and non-solicitation covenants. These employment agreements also provide for a base salary, hospitalization, insurance, long term disability and life insurance in accordance with the Bank's insurance plans for senior management, and reasonable club dues. Each executive subject to these contracts may also receive other compensation including bonuses, and the executives will be entitled to participate in all current and future employee benefit plans and arrangements in which senior management of the Bank may participate. The agreements provide for termination of the employee for cause, including willful and continued failure to perform the assigned duties, crimes, breach of the Bank's Code of Ethics, and also upon death or permanent disability of the executive. Each agreement contains a Change in Control provision which provides that certain events, including the acquisition of the Bank or the Company in a merger, consolidation or similar transaction, the acquisition of 51% or more of the voting power of any one or all classes of Common Stock, the sale of all or substantially all of the assets, and certain other changes in share ownership, will constitute a "change in control" which would allow the executive to terminate the contract within one year following the date of such change in control. Termination may also be permitted by the executive in the event of a change in duties and powers, customarily associated with the office designated in such contract. Upon any such termination following a change in control, the executive's base salary, hospitalization and other health benefits will continue for two years. SALARY AND BENEFITS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Messrs. Crary (Chairman), Bruner, Dennis S. Hudson, Jr. and Santarsiero and Ms. Monroe are the members of the Salary and Benefits Committee. Mr. Hudson was the only member of the Salary and Benefits Committee that was also an officer or employee of Seacoast or its subsidiaries during 1998. Mr. Hudson served as Chairman of the Board of Seacoast from 1990 until June 1998; he served as Chief Executive Officer of Seacoast from 1983 until 1992 and President of Seacoast from 1983 until 1990. See "PROPOSAL ONE - Election of Directors". James H. Bruner, a Seacoast Director Emeritus and the father of Jeffrey C. Bruner, a director of Seacoast and the Bank, is a controlling shareholder of Mayfair Investments. Jeffrey C. Bruner is a minority shareholder in the same company, which leases to the Bank 20,000 square feet of space adjacent to the First National Center in Stuart, Florida pursuant to two lease agreements which expire in May 2000 and May 2002. At the end of the lease terms, the Bank has options to extend the leases for periods of three and five years, respectively. The Bank paid rent of $226,839 on this property in 1998. Seacoast believes the terms of these leases are commercially reasonable and comparable to rental terms for similar property in Stuart. Evans Crary, Jr., a director of Seacoast and the Bank, and Chairman of the Bank's Executive Committee and the Company's Salary and Benefits Committee, is a retired member of Crary, Buchanan, Bowdish, Bovie, Lord & Roby, Chartered ("Crary, Buchanan"), a law firm in Stuart, Florida. Crary, Buchanan performed various legal services for Seacoast and the Bank during the fiscal year ended December 31, 1998. CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS Several of Seacoast's directors, executive officers and their affiliates, including corporations and firms of which they are directors or officers or in which they and/or their families have an ownership interest, are customers of Seacoast and its subsidiaries. These persons, corporations and firms have had transactions in the ordinary course of business with Seacoast and its subsidiaries, including borrowings, all of which, in the opinion of Seacoast management, were on substantially the same terms including interest rates and collateral as those prevailing at the time for comparable transactions with unaffiliated persons and did not involve more than the normal risk of collectibility or present other unfavorable features. Seacoast and its subsidiaries expect to have such transactions on similar terms with its directors, executive officers, and their affiliates in the future. The aggregate amount of loans outstanding by the Bank to directors, executive officers, and related parties of Seacoast or the Bank as of December 31, 1998, was approximately $5,921,859, which represented approximately 7.55% of Seacoast's consolidated shareholders' equity on that date. For information concerning specific transactions and business relationships between Seacoast or the Bank and certain of its directors or executive officers, see "Salary and Benefits Committee Interlocks and Insider Participation." PRINCIPAL SHAREHOLDERS As of February 12, 1999, the only shareholders known to Seacoast to be the beneficial owners, as defined by Securities and Exchange Commission rules, of more than 5% of the outstanding shares of Class A Common Stock or Class B Common Stock, were the following, for whom beneficial ownership information is set forth in the following table. Number and Number and Percent of Percent of Class A Common Class B Common Stock Stock Beneficially Beneficially Owned Owned ------------------------------------- Name and Address of Beneficial Owner Number % Number % Dale M. Hudson (1) (2) 440,804 9.64 154,151 41.06 192 S.E. Harbor Point Drive Stuart, FL 34996 Dennis S. Hudson, Jr. 318,581 6.97 125,753 33.50 (1) (3) 157 S. River Road Stuart, FL 34996 Dennis S. Hudson, III 253,350 5.54 23,502 6.26 (1) (3) 2341 NW Bay Colony Court Stuart, FL 34994 Anne P. Hudson, (1) (3) 318,581 6.97 125,753 33.50 157 S. River Road (4) (5) Stuart, FL 34996 First Union Corporation 284,824 6.24 -- -- (6) One First Union Center Charlotte, North Carolina 28288 (1) Dennis S. Hudson, Jr. and Dale M. Hudson are brothers. Anne P. Hudson is the wife of Dennis S. Hudson, Jr. Dennis S. Hudson, III is the son of Dennis S. Hudson, Jr. and the nephew of Dale M. Hudson. See the table under "Proposal One - Election of Directors" for further information on their beneficial ownership. (2) Dale M. Hudson, and his wife, Mary T. Hudson, subject to notice to and approval by the appropriate regulatory authorities, plan to transfer certain of their shares of Company Class A and Class B Common Stock to the Monroe Partnership, of which they will be the general partners. See "Proposal One - Election of Directors" for further information regarding their beneficial ownership. (3) Dennis S. Hudson, Jr. and his wife, Anne P. Hudson, together with their son, Dennis S. Hudson, III, are the general partners of the Sherwood Partnership, their family partnership, which as of February 12, 1999 owned 212,272 share of Company Class A Common Stock and 15, 000 shares of Company Class B Common Stock. Mr. and Mrs. Dennis Hudson, Jr., subject to notice to and approval by the appropriate regulatory authorities, plan to transfer certain of their remaining shares of Company Class A and Class B Common Stock to the Sherwood Partnership. Each of Dennis S. Hudson, Jr., Anne P. Hudson and Dennis S. Hudson, III, as general partners, may be deemed to share voting and investment power with the other general partners and each of them disclaims beneficial ownership with respect to such shares except to the extent of their respective partnership interests. See the table under "Proposal One - Election of Directors" for further information regarding their beneficial ownership. (4) Includes 33,842 shares held by Mrs. Hudson's husband and 25,050 shares held by Mrs. Hudson's three children, as to which shares Mrs. Hudson may be deemed to share both voting and investment power and as to which Mrs. Hudson disclaims beneficial ownership. (5) Includes 80,774 shares held by Mrs. Hudson's husband, 6,270 shares held by Mrs. Hudson's three children, as to which shares Mrs. Hudson may be deemed to share both voting and investment power and as to which Mrs. Hudson disclaims beneficial ownership. (6) First Union Corporation ("First Union") is the parent holding company of Lieber & Company ("Lieber"), Evergreen Asset Management Corporation ("Evergreen") and First Union National Bank, Charlotte, NC. Lieber and Evergreen are corporations which are investment advisors for mutual funds and other clients; the securities reported by these subsidiaries are beneficially owned by such mutual funds or other clients. The other First Union entity listed above holds the securities reported in a fiduciary capacity for its customers. Of the shares beneficially owned, First Union reports it has sole voting power as to 219,624 shares and sole dispositive power as to 212,800 shares. The information regarding First Union, including the number and percent of Class A Common Stock beneficially owned, is based solely upon a Schedule 13G dated February 11, 1999 and filed by First Union with respect to Class A Common Stock beneficially owned as of December 31, 1998. PROPOSAL TWO RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS The Board of Directors, upon the recommendation of the Audit Committee, has appointed Arthur Andersen LLP, independent certified public accountants, as independent auditors for Seacoast and its subsidiaries for the current fiscal year ending December 31, 1999, subject to ratification by the shareholders. Arthur Andersen LLP has served as independent auditors for Seacoast and its subsidiaries since August 20, 1991. Arthur Andersen LLP has advised Seacoast that neither the firm nor any of its partners has any direct or material interest in Seacoast and its subsidiaries except as auditors and independent certified public accountants of Seacoast and its subsidiaries. A representative of Arthur Andersen LLP will be present at the Meeting and will be given the opportunity to make a statement on behalf of the firm if he so desires. A representative of Arthur Andersen LLP is also expected to respond to appropriate questions from shareholders. All shares 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 the ratification of the appointment of Arthur Andersen LLP for the fiscal year ending December 31, 1999. The affirmative vote of the holders of shares of Common Stock representing a majority of the votes represented at the Meeting, at which a quorum is present, is required to ratify the appointment of Arthur Andersen LLP as independent auditors. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999. SECTION 16(a) REPORTING The Company is required to identify each director or officer who failed to file timely with the Securities and Exchange Commission a required report relating to ownership and changes in ownership of the Company's securities. Based on material provided to the Company, the Company believes that all such filing requirements with respect to the Company's fiscal year ended December 31, 1998 were complied with. SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING Proposals of shareholders of Seacoast intended to be presented at the 2000 Annual Meeting of Shareholders must be received by Seacoast at its principal executive offices on or before November 19, 1999, in order to be included in Seacoast's Proxy Statement and Proxy relating to the 2000 Annual Meeting of Shareholders. Only proper proposals which are timely received will be included in the Proxy Statement and Proxy. OTHER MATTERS Management of Seacoast does not know of any matters to be brought before the Meeting other than those described above. If any other matters properly come before the Meeting, the persons designated as Proxies will vote on such matters in accordance with their best judgment. OTHER INFORMATION Proxy Solicitation Costs The cost of soliciting Proxies for the Meeting will be paid by Seacoast. In addition to the solicitation of shareholders of record by mail, telephone, facsimile or personal contact, Seacoast will be contacting brokers, dealers, banks, or voting trustees or their nominees who can be identified as record holders of Common Stock; such holders, after inquiry by Seacoast, will provide information concerning quantities of proxy materials and 1998 Annual Reports needed to supply such information to beneficial owners, and Seacoast will reimburse them for the reasonable expense of mailing proxy materials and 1998 Annual Reports to such persons. Annual Report on Form 10-K Upon the written request of any person whose Proxy is solicited by this Proxy Statement, Seacoast will furnish to such person without charge (other than for exhibits) a copy of Seacoast's Annual Report on Form 10-K for the fiscal year ended December 31, 1998, including financial statements and schedules thereto, as filed with the Securities and Exchange Commission. Requests may be made to Seacoast Banking Corporation of Florida, P.O. Box 9012, Stuart, Florida 34995, Attention: Dennis S. Hudson III, President & Chief Executive Officer. By Order of the Board of Directors, DENNIS S. HUDSON III President & Chief Executive Officer March 17, 1999 -----END PRIVACY-ENHANCED MESSAGE-----