DEF 14A 1 proxy2002.txt PEOPLES BANCORP, INC. 100 SPRING AVENUE P. O. BOX 210 CHESTERTOWN, MARYLAND 21620-0210 _____________________________________________________________ PROXY STATEMENT 2002 ANNUAL MEETING OF SHAREHOLDERS MAY 15, 2002 _____________________________________________________________ Peoples Bancorp, Inc. (hereinafter "Peoples") is sending this Proxy Statement to you for the solicitation of proxies by the Board of Directors to be voted at the Annual Meeting. This Proxy Statement and the enclosed form of proxy are being mailed to shareholders on or about April 15, 2002. ABOUT THE MEETING WHEN AND WHERE IS THE ANNUAL MEETING? The Annual Meeting will be held at 12:30 PM, local time on Wednesday, May 15, 2002 at Christ United Methodist Church Parish Hall, 401 High Street, Chestertown, Maryland. WHAT MATTERS WILL BE VOTED ON AT THE ANNUAL MEETING? At the Annual Meeting you are asked to: - Elect 14 persons to serve on the Board of Directors of Peoples until the next Annual Meeting of shareholders. - Ratify the selection of Rowles & Company as the independent auditor and accountant for Peoples, and - Consider whatever other business may be properly brought before the Annual Meeting. WHO IS ENTITLED TO VOTE? Only shareholders of record on the record date, March 1, 2002, are entitled to receive notice of the Annual Meeting and to vote at the Annual Meeting. On March 1, 2002, there were 814,312 shares of Peoples common stock outstanding. Each share of Peoples common stock is entitled to one vote on each matter considered at the meeting, including one vote for each director to be elected. Shareholders are not entitled to cumulate their votes in the election of directors. WHAT CONSTITUTES A QUORUM? Presence at the Annual Meeting, in person or by proxy, of a majority of the outstanding shares eligible to vote at the Annual Meeting is required for a quorum to exist. Under applicable Maryland corporate law and the Articles of Incorporation and By-Laws of Peoples, proxies received by Peoples specifying an abstention as to any proposal will cause the shares so represented to be counted toward a quorum, but are not counted as favorable votes, and therefore, have the same effect as a vote against the proposal. To the extent holders or brokers having the right to vote shares do not attend the meeting or return a proxy, such shares will not count toward a quorum, and if a quorum is otherwise achieved, will have no effect on the vote of the proposals considered at the meeting. WHAT VOTE IS REQUIRED TO ELECT THE DIRECTORS? The 14 nominees for election as directors who receive the greatest number of votes will be elected directors. Votes may be cast in favor of some or all of the nominees for election to the Board of Directors or withheld as to some or all of the nominees. Votes withheld from a nominee will have the same effect as a vote against the nominee. HOW DO I VOTE? If you complete and properly sign the accompanying proxy form and return it to Peoples, it will be voted as you direct. If you properly sign and return the proxy but give no directions as to how it is to be voted, the shares represented by your proxy will be voted FOR the nominees for directors listed in the Proxy Statement and FOR the ratification of the appointment of Rowles & Company as the independent auditor and accountant for Peoples. If any other matters are properly presented at the Annual Meeting for consideration, the persons named in the proxy, Robert A. Moore and Alexander P. Rasin, III, will have discretion to vote on those matters according to their best judgment. "Street name" shareholders who wish to vote at the annual meeting will need to obtain a proxy form from the institution that holds their shares. Shareholder votes are tabulated by Peoples' Registrar and Transfer Agent. CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY? Yes. Even after you have submitted your proxy, your proxy may be withdrawn at any time before it is voted by: - delivering written notice of such withdrawal to Marie Brennan, Peoples Executive Secretary, at 100 Spring Avenue, PO Box 210, Chestertown, Maryland 21620-0210 on or before the taking of the vote at the Annual Meeting, - completing a later dated proxy, - or attending the Annual Meeting and voting in person. WHO PAYS THE COST OF SOLICITING PROXIES? The enclosed proxy is solicited by the Board of Directors of Peoples. Peoples will bear the cost of soliciting proxies for the Annual Meeting. In addition to soliciting proxies by mail, the directors, officers and employees of Peoples may solicit proxies personally or by telephone or fax. None of those individuals who solicit proxies will receive any compensation for their solicitation other than their regular compensation for the positions they hold. Peoples does not intend to pay any compensation to any other persons for the solicitation of proxies. Peoples will, however, reimburse brokerage houses and their custodians, nominees and fiduciaries for reasonable expenses to mail proxy materials for beneficial owners. Such expenses are estimated not to exceed $5,000. STOCK OWNERSHIP WHO ARE THE LARGEST OWNERS OF PEOPLES STOCK? As of March 1, 2002, the only persons believed by management to be the beneficial owners of more than 5% of Peoples outstanding common stock are set forth in the table below. The information is based on the most recent Schedule 13G prepared by such person and filed with the Securities and Exchange Commission. Percentage of Amount and Nature Common of Beneficial Stock Name and Address of Beneficial Owner Ownership Outstanding ------------------------------------ --------- ----------- Nylon Capital Shopping Center, Inc 81,752(a) 10.04% P. O. Box 266 Chestertown, MD 21620-0266 Alexander P. Rasin, III 55,648(b) 6.83% P. O. Box 228 Chestertown, MD 21620-0228 ------------------------- (a) Elmer E. Horsey, director of Peoples, and President of Nylon Capital Shopping Center, Inc. has voting rights of 80,000 shares owned by Nylon Capital Shopping Center, Inc., as well as 1,552 shares owned by his wife. (b) Alexander P. Rasin, III, partner in the law firm of Rasin Wright & Wootton, and a director of Peoples, has shared voting rights of 46,920 shares registered in a family trust, as well as 1,422 shares owned by his wife. HOW MUCH STOCK DO THE DIRECTORS AND EXECUTIVE OFFICERS OF PEOPLES OWN? As of March 1, 2002, the Board of Directors and executive officers of Peoples beneficially owned 216,576 shares (26.60%), directly and indirectly, of the issued and outstanding common stock of Peoples. The following table sets forth, as of March 1, 2002, certain information concerning shares of the Common Stock of Peoples beneficially owned by - the chief executive officer of Peoples - all directors and nominees for directors of Peoples - all directors and executive officers of Peoples as a group. For purposes of this table, and according to Rule 13d-3 under the Securities Exchange Act of 1934, a person is the beneficial owner of any shares if he or she has voting and/or investment power over those shares. The table includes shares owned by spouses, immediate family members in trust, shares held in retirement accounts or funds for the benefit of the named individuals, and other forms of ownership, over which shares the persons named in the table possess voting and/or investment power. Amount and Nature of Beneficial Percent of Name and address of Beneficial Owner Ownership (1) Class (1) ---------------------------------- ------------- ---------- Directors: Robert W. Clark, Jr. 6,460(2) * LaMonte E. Cooke 20 * Gary B. Fellows 20 * Herman E. Hill, Jr 6,163(3) * Elmer E. Horsey 81,752(4) 10.04% Arthur E. Kendall 2,311 * P. Patrick McClary 3,445 * Robert A. Moore 6,315(5) * E. Roy Owens 4,211(6) * Alexander P. Rasin, III 55,648(7) 6.83% Stefan R. Skipp 31,800(8) 3.91% Thomas G. Stevenson 11,085(9) 1.36% Elizabeth A. Strong 309 * William G. Wheatley 7,037(10) * All Directors and Executive Officers of Peoples as a group (15 persons) (11) 217,001 26.65% ------------------------------- * Less than 1% of Peoples's outstanding stock. (1) Unless otherwise indicated, the named person has sole voting and investment power with respect to all shares. (2) Includes 2,817 shares owned by Mr. Clark's minor children and 742 shares owned by Mr. Clark's wife. (3) Includes 5,389 shares owned jointly by Mr. Hill and his wife and 228 shares owned by Mr. Hill's wife. (4) Includes 80,000 shares owned by Nylon Capital Shopping Center, Inc. for which Mr. Horsey serves as President, but does not own any beneficial interest, and 1,552 shares owned by Mr. Horsey's wife. (5) Includes 5,310 shares owned jointly by Mr. Moore and his wife. (6) Includes 1,365 shares owned jointly by Mr. Owens and his wife and 197 shares owned independently by Mr. Owens' wife. (7) Includes 46,920 shares owned by a family trust and 1,422 shares owned by Mr. Rasin's wife. (8) Includes 9,000 shares owned by family trust accounts and 1,800 shares owned by Mr. Skipp's minor children. (9) Includes 8,100 shares owned by three family trusts, and 1,500 shares owned by a family partnership. (10) Includes 6,843 shares owned jointly by Mr. Wheatley and his wife, 29 shares owned by Mr. Wheatley's wife, and 60 shares independently owned by his three children. (11) All directors and executive officers may be contacted at Peoples' corporate offices by addressing correspondence to the appropriate person, care of Peoples Bancorp Inc., 100 Spring Avenue, P. O. Box 210, Chestertown, Maryland 21620-0210. PROPOSAL ONE: ELECTION OF DIRECTORS The Bylaws of Peoples provide that the Board of Directors shall consist of not less than seven nor more than 14 individuals with the exact number of directors to be fixed from time to time, within that range, by the Board of Directors. The Board of Directors currently has fixed the number of directors at 14. All 14 of the current nominees presently serve as directors and were last elected at the Annual Meeting of Peoples held on May 16, 2001. Each nominee has indicated he or she is able and willing to serve on the Board of Directors. If any nominee becomes unable to serve, the shares represented by properly completed proxies will be voted for the election of substitute directors recommended by the Board of Directors. At this time, the Board of Directors has no reason to believe that any nominee named herein will be unable to serve. Your Company's Board of Directors unanimously recommends a vote FOR the election of each of the Nominees named below as directors of Peoples. The following material contains information concerning the nominees for election: ROBERT W. CLARK, JR. (1) Mr. Clark, age 52, has served as a director of Peoples and their wholly owned subsidiary, Peoples Bank of Kent County, Maryland (hereinafter "Bank") since December 1997. He is in the agricultural business, and is owner of Fair Promise Farm, and manager of Hopewell Farm. LAMONTE E. COOKE (2) Mr. Cooke, age 50, has served as a director of Peoples and the Bank since December 1997. He is presently serving as Administrative Director of Queen Anne's County Maryland Detention Center in Centreville, Maryland. GARY B. FELLOWS (1)(3)(4) Mr. Fellows, age 50, has served as a director of Peoples and the Bank since December 1997. He is a partner in the Fellows Helfenbein & Newnam Funeral Home PA, and a partner in the Eastern Shore Genesis Partnership. HERMAN E. HILL, JR. (4) Mr. Hill, age 56, has served as a director of Peoples since its inception in March 1997 and the Bank since January 1994. He is in the agricultural business, and is President of Herman E. Hill & Son, Inc. He is also a partner in Kent Hills LLC, Massey LLC, Bakers Lane LLC, Linden LLC and KWest LLC. ELMER E. HORSEY (1)(2)(3) Mr. Horsey, age 69, has served as a director of Peoples since March 1997 and the Bank since September 1983. Mr. Horsey is President of Nylon Capital Shopping Center, Inc. He also is a director, secretary and treasurer of Delmarva Publications, Inc. He is a director and secretary of Unity, Inc., and a partner in the H & S Investment Trust. He is a trustee under Deed of Trust of Ld'AC, dated May 19, 1960. He is Chairman of the Personnel Committee, Vice-Chairman of the Audit Committee and Vice-Chairman of the Investment Committee of the Bank, as well as a trustee of the Employees' Retirement Plan of the Bank. ARTHUR E. KENDALL (1)(2) Mr. Kendall, age 49, has served as a director of Peoples since March 1997 and the Bank since July 1994. He is a director and President of K-Foods, Inc., and a partner in Lady Luck Associates LLC. P. PATRICK MCCLARY (2)(3)(4) Mr. McClary, age 61, has served as a director of Peoples since March 1997 and the Bank since February 1991. He is a director & President of Gunther McClary Real Estate, Inc. and P. Patrick McClary Real Estate, Inc. He is Vice-Chairman of the Personnel Committee of the Bank. ROBERT A. MOORE (1) Mr. Moore, age 68, has served as a director of Peoples since March 1997 and the Bank since February 1975. He is Chairman of the Executive Committee of the Bank, as well as a trustee of the Employees' Retirement Plan of the Bank. He is also Chairman of the Audit Committee of Peoples and the Bank. E. ROY OWENS (1)(2)(3)(4) Mr. Owens, age 69, has served as a director of Peoples since March 1997 and the Bank since May 1972. He is presently serving as Chairman of the Board and Chief Executive Officer of Peoples and holds the same position in the Bank. He is a member of the Executive Committee and a nonvoting member of the Audit Committee of Peoples and the Bank. He also serves as a trustee of the Employees' Retirement Plan of the Bank. ALEXANDER P. RASIN, III (4) Mr. Rasin, age 58, has served as a director of Peoples since March 1997 and the Bank since September 1975. He is a partner in the law firm of Rasin, Wright and Wootton, and serves Peoples and the Bank as its legal counsel. He is Chairman of the Nominating Committee of the Bank. STEFAN R. SKIPP (3)(4) Mr. Skipp, age 59, has served as a director of Peoples since March 1997 and the Bank since May 1979. He is currently serving as District Public Defender in the State of Maryland. He is Chairman of the Investment Committee of the Bank. THOMAS G. STEVENSON (1)(2)(3)(4) Mr. Stevenson, age 54, has served as a director of Peoples since March 1997 and the Bank since August 1990. He is President and Chief Financial Officer of Peoples and the Bank. He is a member of the Executive Committee and a nonvoting member of the Audit Committee of Peoples and the Bank. ELIZABETH A. STRONG (2) Mrs. Strong, age 53, has served as a director of Peoples since March 1997 and the Bank since January 1995. She is owner and manager of the Rock Hall Insurance Agency in Rock Hall, Maryland. She is a trustee of the Employees' Retirement Plan of the Bank. WILLIAM G. WHEATLEY Mr. Wheatley, age 49, has served as a director of Peoples since March 1997 and the Bank since December 1995. He is an Executive Vice- President and Loan Administrator of the Bank. ---------------------- (1)---Member of the Audit Committee (2)---Member of the Personnel/Compensation Committee (3)---Member of the Investment Committee (4)---Member of the Nominating Committee OTHER EXECUTIVE OFFICERS Certain information regarding other employees participating in major matters of Peoples and the Bank other than those previously mentioned is set forth below. H. Lawrence Lyons Mr. Lyons, age 49, is an Executive Vice-President in charge of operationsof the Bank. He also supervises the activity in the Bank conducted through the Invest Financial Corporation. INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES HOW OFTEN DID THE BOARD MEET DURING 2001? The Board of Directors of Peoples and the Board of Directors of the Bank each met 24 times during the year ended December 31, 2001. Both Boards of Directors met twice each month. The following director is the only current director that attended fewer than 75% of the total number of meetings of both Boards and committees to which the director was assigned during 2001: Director Herman E. Hill attended 63% of all such meetings. HOW ARE DIRECTORS COMPENSATED? Directors who are not employees of the Bank receive a maximum monthly fee of $600 for Board meetings attended and a maximum fee of $200 for monthly Executive Committee meetings attended. Each director has an opportunity to serve on the Executive Committee quarterly on a rotating basis of two directors each quarter. Other committee fees are paid on the basis of $130 per meeting attended. Each Board Member is paid a $1,000 retainer fee for each year served in addition to the aforementioned fees. The Secretary of the Board and committee chairmen are paid slightly more than the other members. Directors do not receive additional fees for their service as directors of Peoples. Employee directors are not compensated for attendance at Board or committee meetings. WHAT COMMITTEES HAS THE BOARD ESTABLISHED? As of the date of this Proxy Statement, the Board of Directors has an Audit Committee, Personnel/Compensation Committee, Investment Committee and a Nominating Committee. AUDIT COMMITTEE. The Audit Committee held 4 meetings during Its current members are Messrs. Moore, Chairman, Clark, Fellows, Horsey and Kendall. Mr. Owens and Mr. Stevenson are also members of the committee, but they do not have any voting power. The duties of the Audit Committee include reviewing the Audit Program each quarter including any enhancements that have been adopted. They also review the scope of the independent annual audit and internal audits. They also review the independent accountants letter to management concerning the effectiveness of Peoples and the Bank's internal financial and accounting controls and management's response to that letter. In addition, the Committee usually reviews and recommends to the Board the firm to be engaged as Peoples and the Bank's independent accountants. The committee may also examine and consider other matters relating to the financial affairs of Peoples and the Bank as it determines appropriate. PERSONNEL/COMPENSATION COMMITTEE. The Personnel/Compensation Committee met 3 times during 2001. Its current members are Messrs. Horsey, Chairman, Cooke, Kendall, McClary, Owens, Stevenson and Ms. Strong. The purpose of the Personnel/ Compensation Committee is to review and recommend approval to the Board of Directors of all compensation and benefit policies of the Bank. In addition, the committee recommends to the Board the compensation to be paid to all employees of the Bank. INVESTMENT COMMITTEE. The Investment Committee met one time during 2001. Its current members are Messrs. Skipp, Chairman, Fellows, Horsey, McClary, Owens and Stevenson. The purpose of the Investment Committee is to supervise and guide management's decisions in the investing of excess funds in the securities portfolio along guidelines established by the Board of Directors. The Investment Committee reviews objectives set by the Board as often as necessary to allow timely adjustments in coordination with the mix of loans and interest bearing assets, deposits, capital requirements and other funds management policies. NOMINATING COMMITTEE. The Nominating Committee meets periodically and makes certain recommendations to the Board of Directors of Peoples and the Bank concerning officer and un-expired terms of directors, if applicable. EXECUTIVE COMPENSATION The following table sets forth the compensation paid or allocated for services rendered to the Bank in all capacities during the years ended December 31, 1999, 2000 and 2001 by the chief executive officer of the Bank. The Compensation of other members of executive management is not required to be provided because the base compensation of each of such individuals does not exceed $100,000. SUMMARY COMPENSATION TABLE Salary Bonus Name and Principal Position Year ($) ($) --------------------------- ---- ------- ------ E. Roy Owens, Chairman and CEO 2001 135,500 19,245 E. Roy Owens, Chairman and CEO 2000 130,000 21,805 E. Roy Owens, Chairman and CEO 1999 125,000 16,896 Peoples and the Bank have no employment agreements, terminations of employment, or change-in-control agreements or understandings with any of its directors, executive officers or any other parties. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During the past year the Bank had banking transactions in the ordinary course of its business with: - its directors and nominees for directors. - its executive officers. - its 5% or greater shareholders. - members of the immediately family of its directors, nominees for directors or executive officers and 5% shareholders. - the associates of such persons. Such transactions have been on substantially the same terms, including interest rates, collateral, and repayment terms on loans, as those prevailing at the same time for comparable transactions with others. The extensions of credit by the Bank to these persons have not and do not currently involve more than the normal risk of collectibility or present other unfavorable features. At December 31, 2001, the balance of the loans outstanding to directors, executive officers, owners of 5% or more of the outstanding Common Stock, and their associates, including loans guaranteed by such persons, aggregated $4,004,079.69 which represented approximately 22.03% of Peoples' and the Bank's equity capital accounts. Alexander P. Rasin, III, a director of both Peoples and the Bank, is a partner in the law firm of Rasin, Wright and Wootton, that performs legal services for the Company and its subsidiaries. Management believes that the terms of these transactions were at least as favorable to Peoples and the Bank as could have been obtained elsewhere. Robert A. Moore, a director of both Peoples and the Bank, is the former Chairman of Dukes-Moore Insurance Agency, Inc. which is now owned and managed by his son. The Dukes-Moore Insurance Agency is an insurance brokerage firm through which Peoples and the Bank place various insurance policies. During the year of 2001 Peoples and the Bank placed various insurance policies with the Dukes-Moore Insurance Agency, Inc. which represented 3.13% of the commissions of the agency. Management believes that the terms of these transactions were at least as favorable to Peoples and the Bank as could have been obtained elsewhere. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires directors, executive officers and greater than 10% shareholders to file reports of their ownership and any changes in ownership of Peoples securities with the Securities and Exchange Commission. The directors, executive officers and greater than 10% shareholders are required by regulation to provide Peoples with a copy of any Section 16(a) reports that are filed. Since the Bank is the transfer agent of all of the common stock transactions, the Bank prepares the required form for the reporting person to sign. The Bank then transfers the form electronically to the Securities and Exchange Commission. Based on a review of copies of the reports executed by such individuals of Peoples, Peoples believes that all Section 16(a) filing requirements applicable to directors, executive officers and greater than 10% shareholders were complied with during the year ended December 31, 2001 except the following: Robert A. Clark, Jr., a director, filed a Form 4 report late because of an oversight by the Bank. PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS The Board of Directors of both Peoples and the Bank proposes and recommends the election of Rowles & Company as independent certified public accountants to make an examination of the accounts for the year ending December 31, 2002. Rowles & Company served as People's and the Bank's independent public accountants and auditors for 2001. Representatives of Rowles & Company are expected to be present at the Annual Meeting and will have the opportunity to make a statement or statements if they desire. They will be available to respond to appropriate questions regarding Peoples' consolidated financial statements for 2001. Shareholders are not required to take action on this retention, but the Board of Directors deems it appropriate to ask shareholders to approve the Board's decision in this regard. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFYING THE SELECTION OF ROWLES & COMPANY AS THE COMPANY'S INDEPENDENT ACCOUNTS FOR 2002. SHAREHOLDERS PROPOSALS FOR THE 2002 ANNUAL MEETING Proposals of shareholders to be presented at the 2002 annual meeting of Peoples must be received prior to December 12, 2002 (120 days before the date of mailing based on the mailing date of this year's Proxy Statement) and meet all other requirements in order to be included in the proxy statement for such meeting. Additionally, Peoples will be authorized to exercise discretionary voting authority with respect to any stockholder proposal to be considered at the 2002 Annual Meeting that is not disclosed in Peoples' 2002 Proxy Statement if the Company has received written notice of such proposal by March 1, 2002 (45 days before the date of the mailing based on the mailing date of this year's Proxy Statement). In order to curtail controversy as to compliance with this requirement, shareholders are urged to submit proposals to the Executive Secretary of Peoples by Certified Mail-Return Receipt Requested. FINANCIAL STATEMENTS A copy of Peoples' and the Bank's Annual Report Containing audited financial statements for the year ended December 31, 2001, accompanies this Proxy Statement. A copy of Form 10-KSB, as filed with the Securities and Exchange Commission, may be obtained without charge, upon written request to Marie Brennan, Executive Secretary, Peoples Bancorp, Inc., 100 Spring Avenue, PO Box 210, Chestertown, MD 21620-0210. OTHER MATTERS The management of Peoples and the Bank knows of no other matters to be presented for action at the meeting other than those mentioned above; however, if any other matters properly come before the meeting, it is intended that the persons named in the accompanying proxy will vote on such other matters in accordance with their judgment of the best interest of Peoples and the Bank. Chestertown, Maryland By Order of the Board of Directors March 29, 2002 Robert A. Moore Secretary