(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
only (as permitted by Rule 14
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
BOK FINANCIAL CORPORATION
-----------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A (Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6 (i) (4) and 0-12.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value or transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined);
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a) (2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
March 17, 2004
To Each Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of BOK Financial Corporation to be held this year in the Tulsa Room on the ninth
floor of the Bank of Oklahoma Tower, One Williams Center, Tulsa, Oklahoma on
Tuesday, April 27, 2004, at 11:00 a.m. local time. Details of the business to be
conducted at the annual meeting are given in the attached Notice of Annual
Meeting and Proxy Statement. Also enclosed is our Annual Report to Shareholders,
covering the fiscal year ended December 31, 2003.
We hope that you will be able to attend this meeting, but all
shareholders, whether or not they expect to attend the meeting, are requested to
complete, date and sign the enclosed proxy and return it in the enclosed
envelope as promptly as possible.
We look forward to seeing you at the meeting.
Sincerely,
/s/ George B. Kaiser
George B. Kaiser, Chairman of the
Board of Directors
/s/ Stanley A. Lybarger
Stanley A. Lybarger, President and
Chief Executive Officer
IF YOU PLAN TO ATTEND THE 2004 ANNUAL MEETING OF SHAREHOLDERS OF BOK
FINANCIAL CORPORATION, PLEASE TAKE NOTE OF THE FOLLOWING: Due to security
measures in place at the Bank of Oklahoma Tower, it will be necessary for you to
check in at the Williams security desk on the plaza level of the Tower. You will
be required to surrender your driver's license in exchange for a visitor pass.
Your driver's license will be returned to you when you depart the building and
return the visitor pass.
BOK FINANCIAL CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on April 27, 2004
Each Shareholder:
Notice is hereby given that the Annual Meeting of Shareholders of BOK
Financial Corporation (the "Company" or "BOK Financial"), an Oklahoma
corporation, will be held in the Tulsa Room on the ninth floor of the Bank of
Oklahoma Tower, One Williams Center, Tulsa, Oklahoma on April 27, 2004, at 11:00
a.m. local time, for the following purposes:
1. To fix the number of directors to be elected at nineteen (19)
and to elect nineteen (19) persons as directors for a term of
one year or until their successors have been elected and
qualified; and,
2. To transact such other business as may properly be brought
before the Annual Meeting or any adjournment or adjournments
thereof.
The meeting may be adjourned from time to time and, at any reconvened
meeting, action with respect to the matters specified in this notice may be
taken without further notice to shareholders unless required by the Bylaws.
The Board recommends that shareholders vote FOR the director nominees
named in the accompanying proxy statement.
Only shareholders of record at the close of business on March 1, 2004,
shall be entitled to receive notice of, and to vote at, the annual meeting. A
complete list of shareholders entitled to vote will be available for inspection
at our offices, Bank of Oklahoma Tower, One Williams Center, Tulsa 74172.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Frederic Dorwart
Frederic Dorwart, Secretary
March 17, 2004
Tulsa, Oklahoma
BOK FINANCIAL CORPORATION
Bank of Oklahoma Tower
Tulsa, Oklahoma 74172
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
To be held April 27, 2004
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
BOK Financial Corporation for use at our annual meeting of shareholders. The
annual meeting will be held on Tuesday, April 27, 2004, at 11:00 a.m. local time
in the Tulsa Room on the ninth floor of the Bank of Oklahoma Tower, One Williams
Center, Tulsa, Oklahoma.
These proxy materials will be mailed on or about March 17, 2004 to
holders of record of common stock as of the close of business on March 1, 2004.
VOTING BY PROXY
You may vote at the annual meeting by completing, signing and returning
the enclosed proxy card. If not revoked, your proxy will be voted at the annual
meeting in accordance with your instructions marked on the proxy card. If you
fail to mark your proxy with instructions, your proxy will be voted as follows:
o FOR the election of the nineteen (19) nominees for director
listed in this Proxy Statement.
As to any other matter that may be properly brought before the annual
meeting, your proxy will be voted as the Board of Directors may recommend. If
the Board of Directors makes no recommendation, your proxy will be voted as the
proxy holder named in your proxy card deem advisable. The Board of Directors
does not know of any other matter that is expected to be presented for
consideration at the annual meeting.
Any shareholder executing a proxy retains the right to revoke it any
time prior to exercise at the annual meeting. A proxy may be revoked by delivery
of written notice of revocation to the Secretary of BOK Financial, by execution
and delivery of a later proxy or by voting the shares in person at the annual
meeting. If not revoked, all shares represented by properly executed proxies
will be voted as specified therein.
VOTING AND QUORUM REQUIREMENTS AT THE MEETING
Only holders of shares of common stock at the close of business on
March 1, 2004, (the "record date") are entitled to notice of and to vote at the
annual meeting. On the record date, there were 57,366,616 shares of common stock
entitled to vote.
You will have one vote for each share of common stock held by you on
the record date.
In order to have a meeting it is necessary that a quorum be present.
The presence in person or by proxy of the holders of one-third of the
outstanding shares of common stock is necessary to constitute a quorum at the
annual meeting. Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum. Abstentions and broker
non-votes will not be counted as having voted either for or against a proposal.
The affirmative vote of the holders of a majority of the shares present
or represented at the meeting in which a quorum is present that actually vote
for or against the matter is required. Directors are elected by a plurality
vote, meaning that the nineteen (19) nominees receiving the highest number of
votes FOR will be elected as directors.
George B. Kaiser currently owns approximately 67.7% of the outstanding
common stock and plans to vote in person at the meeting.
SOLICITATION OF PROXIES
We are paying for all our costs incurred in soliciting proxies for
the annual meeting. In addition to solicitation by mail, we may use our
directors, officers and regular employees to solicit proxies by telephone or
otherwise. These personnel will not be specifically compensated for these
services. We will pay persons holding shares of common stock for the benefit of
others, such as nominees, brokerage houses, banks, and other fiduciaries, for
the expense of forwarding solicitation materials to the beneficial owner.
ANNUAL REPORT
Our Annual Report to Shareholders, covering the fiscal year ended
December 31, 2003, including audited financial statements, is enclosed. No parts
of the Annual Report are incorporated in this Proxy Statement or are deemed to
be a part of the material for the solicitation of proxies.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 1, 2004, there were 57,366,616 shares of common stock
issued and outstanding. Mr. Kaiser is the only shareholder known by BOK
Financial to be the beneficial owner of more than five percent (5%) of its
outstanding common stock. The following table sets forth, as of March 1, 2004,
the beneficial ownership of common stock of BOK Financial, by each director and
nominee, the chief executive officer (Mr. Lybarger) and the four other executive
officers named in the Summary Compensation Table appearing at page 14 below,
and, as a group, all of such persons and other executive officers not named in
the table.
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership(1) Percent of Class(2)
------------------------ -------------------- ----------------
C. Fred Ball, Jr. 46,772(3) *
Sharon J. Bell 82,421(4) *
Steven G. Bradshaw 39,973(5) *
Joseph E. Cappy 2,587(6) *
Paula Marshall-Chapman 204 *
Luke R. Corbett 1,730(7) *
William E. Durrett 117,231(8) *
Robert G. Greer 26,731(9) *
David F. Griffin 37,811(10) *
V. Burns Hargis 44,550(11) *
E. Carey Joullian, IV 5,846(12) *
George B. Kaiser 43,346,510(13) 67.7%
Judith Z. Kishner 0 *
David L. Kyle 1,739 *
Robert J. LaFortune 137,747 *
Stanley A. Lybarger 228,384(14) *
Steven J. Malcolm 441 *
Steven E. Moore 1,912 *
W. Jeffrey Pickryl 33,469(15) *
James A. Robinson 32,662 *
L. Francis Rooney, III 736,392(16) 1.3
All directors, nominees and 44,925,112 70.0
executive officers as a group
(21 persons including the above)
* Less than one percent (1%)
(1) Except as otherwise indicated, all shares are beneficially owned and the
sole investment and voting power is held by the person named.
(2) All percentages are rounded to the nearest tenth, and are based upon the
number of shares outstanding as of the date set forth above. For purposes
of computing the percentages of the outstanding shares owned by the persons
described in the table, any shares such persons are deemed to own by having
a right to acquire such shares by exercise of an option are included, but
shares acquirable by other persons by the exercise of stock options are not
included.
(3) Includes options to purchase 26,744 shares of BOKF common stock immediately
exercisable. Also includes 4,000 shares owned by Mr. Ball and Charlotte
Ball, 5,114 shares owned by C. Fred Ball, Jr. IRA, and 4,028 shares held in
the BOk Thrift Plan.
(4) Includes 2,710 shares owned by spouse. Also includes (i) 17,903 shares
owned by the J. A. Chapman and Leta M. Chapman Trust (1949), of which Ms.
Bell is individual trustee, and 20,708 shares owned by the Leta McFarlin
Chapman Trust (1974), of which Ms. Bell is co-trustee.
(5) Includes options to purchase 32,986 shares of BOKF common stock immediately
exercisable. Also includes 506 shares held in the BOk Thrift Plan.
(6) All shares are indirectly owned by Joseph E. Cappy Trust.
(7) All shares are indirectly owned by Lucius R. Corbett Trust.
(8) Includes 555 shares indirectly owned by Mr. Durrett and Barbara J. Durrett,
4,895 shares indirectly owned by Durrett Family L.P., 108,969 shares
indirectly owned by American Fidelity Assurance Company, 1,089 shares
indirectly owned by CPROP, INC., 194 shares indirectly owned by CELP, and
1,529 shares indirectly owned by CAMCO.
(9) Includes options to purchase 441 shares of BOKF common stock immediately
exercisable. Also includes 7,829 shares indirectly owned by Robert G.
Greer, IRA, and 6,039 shares owned by Mr. Greer's spouse, Joan Philen
Greer.
(10) Includes 37,665 shares indirectly owned by Doppler Investments, L.P.
(11) Includes options to purchase 38,824 shares of BOKF common stock immediately
exercisable. Also includes 1,184 shares held in the BOk Thrift Plan.
(12) Includes 2,600 shares owned by Joullian & Co., Inc. Also includes 578
shares indirectly owned as trustee for E. C. Joullian V, 578 shares
indirectly owned as trustee for Laura L. Joullian and 578 shares indirectly
owned as trustee for Ann P. Joullian.
(13) Mr. Kaiser's address is P. O. Box 21468, Tulsa, OK 74121-1468. Includes
6,706,744 shares which Mr. Kaiser may acquire through conversion of
249,490,880 shares of BOK Financial Series A Preferred Stock. Shares of
Series A Preferred Stock may be converted to Common Stock at any time at
the option of the holder, at a ratio of 1 share of Common Stock for each
37.20 shares of Series A Preferred Stock which has been adjusted to account
for the two for one stock split which was issued February 22, 1999 and also
gives effect to the 1 for 100 reverse stock split of Common Stock effected
December 17, 1991 and the November 18, 1993, November 17, 1994, November
27, 1995, November 27, 1996, November 26, 1997, November 25, 1998, October
18, 1999, May 18, 2001, May 13, 2002 and May 15, 2003 BOKF 3% Common Stock
Dividends payable by the issuance of BOKF Common Stock.
(14) Includes options to purchase 105,865 shares of BOKF Common Stock
immediately exercisable. Also includes 22,389 shares indirectly owned by
Marcia Lybarger Living Trust, 7,519 shares indirectly owned by Stanley A.
Lybarger, IRA, and 23 shares held in the BOk Thrift Plan.
(15) Includes options to purchase 18,771 shares of BOKF common stock immediately
exercisable and 3,556 shares held in the BOk Thrift Plan.
(16) Includes 171,768 shares indirectly owned by Manhattan Construction Company,
506 shares held in L.F. Rooney IRA, 557,080 shares indirectly owned by L.F.
Rooney Trust, 144 shares indirectly owned by Kathleen Rooney IRA, and 2,600
shares indirectly owned by Kathleen Rooney Trust, L.F. Rooney Trust 2 of
which Kathleen Rooney is individual trustee.
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES AND VOTE REQUIRED TO ELECT NOMINEES
A board of nineteen (19) directors is to be elected at the annual
meeting. The nineteen (19) nominees for director who receive the highest number
of affirmative votes of the shares voting shall be elected as directors. You may
vote the number of shares of common stock you own for up to nineteen (19)
persons. Unless you otherwise instruct by marking your proxy card, the proxy
holders will vote the proxies received by them FOR the election of each of the
nineteen (19) nominees named below.
If at the time of the annual meeting any of the nominees is unwilling
or unable to serve, all proxies received will be voted in favor of the remainder
of those nominated and for such substitute nominees, if any, as shall be
designated by the board and nominated by any of the proxies named in the
enclosed proxy form. We have no reason to believe that any of the nominees will
be unable or unwilling to serve if elected.
TERM OF OFFICE
The term of office of each person elected as a director will continue
until the next annual meeting of shareholders or until his successor has been
elected and qualified.
FAMILY RELATIONSHIPS
There are no family relationships by blood, marriage or adoption
between any director or executive officer of the company and any other director
or executive officer of the company.
INFORMATION ABOUT NOMINEES
Certain information concerning the nominees to the Board of Directors
of the company is set forth below based on information supplied by the nominees.
All information is as of March 1, 2004. All references in this Proxy Statement
to "BOk" shall mean Bank of Oklahoma, National Association and all references to
"BOT" shall mean Bank of Texas, National Association, both of which are banking
subsidiaries of BOK Financial Corporation.
Principal Occupation, Business First Year
Experience During Last 5 Years, and Became a
Name Age Directorships of Other Public Companies Director
C. Fred Ball, Jr. 59 Chairman of BOT; previously, Mr. Ball served as Executive Vice 1999
President of Comerica Bank-Texas and later President of Comerica
Securities, Inc., where he was employed from 1991 until joining
Bank of Texas in 1997.
Sharon J. Bell 52 Attorney and Managing Partner, Rogers and Bell (Tulsa, Oklahoma); 1993
Trustee and General Counsel, Chapman-McFarlin Interests; formerly a
Director and President of Red River Oil Company (oil and gas
exploration and development).
Joseph E. Cappy 69 Retired Chairman and Chief Executive Officer of Dollar Thrifty 2001
Automotive Group (holding company that rents automobiles to leisure
travelers through its subsidiaries, Dollar Rent A Car Systems, Inc.
and Thrifty Rent-A-Car System, Inc.); former Vice President of
DaimlerChrysler Corporation beginning in August 1987 with
responsibility for rental car operations from June, 1993 until
December, 1997. Formerly, President, Chief Executive Officer and
Director of American Motors Corporation and General Marketing
Manager of Ford Motor Company's Lincoln-Mercury Division.
Paula Marshall-Chapman 50 Chief Executive Officer, The Bama Companies, Inc. (manufacturer and 2003
marketer of food products); Ms. Marshall-Chapman is also a director
of Helmerich and Payne, Inc. (oil and gas drilling contractor) and
American Fidelity Corporation (insurance holding company). She is
also a former director of the Federal Reserve Bank of Kansas City.
Luke R. Corbett 57 Chairman and Chief Executive Officer of Kerr-McGee Corporation 1999
(energy and inorganic chemical company). Mr. Corbett was formerly
President and Chief Operating Officer of Kerr-McGee Corporation.
William E. Durrett 73 Senior Chairman of the Board and Director of American Fidelity 1991
Corporation (insurance holding company), and American Fidelity
Assurance Company (a registered investment advisor). Mr. Durrett is
also a director of Oklahoma Gas & Electric Company and past Chairman of
the Board of Integris Health.
Robert G. Greer 69 Vice Chairman, BOT; formerly Chairman of the Board, Bank of
Tanglewood, N.A., since 1996; Chairman of the Board of Tanglewood 2003
Bank, N.A. and Vice Chairman of the Board of Northern Trust Bank of
Texas; Mr. Greer is also a director for Jefferson-Pilot Corporation
and its subsidiary (Jefferson-Pilot Financial) since 1975.
David F. Griffin 38 President, Griffin Communications, L.L.C. (owns and operates CBS 2003
affiliated television stations in Oklahoma); formerly President and
General Manager, KWTV-9 (Oklahoma City).
V. Burns Hargis 58 Vice Chairman, BOK Financial and BOk and Director of BOSC, Inc.; 1993
formerly, Attorney and Shareholder of the law firm of McAfee & Taft
(Oklahoma City, Oklahoma).
E. Carey Joullian, IV 43 President and Chief Executive Officer of Mustang Fuel Corporation 1995
and subsidiaries; President and Manager, Joullian & Co., L.C.
George B. Kaiser 61 Chairman of the Board of BOK Financial and BOk; President and 1990
principal owner of Kaiser-Francis Oil Company (independent oil and
gas exploration and production company), and Fountains Continuum of
Care, Inc., (senior housing communities).
Judith Z. Kishner 56 Manager, Zarrow Family Office, L.L.C.; Secretary and Treasurer, Nominee
Anne & Henry Zarrow Foundation; Trustee, Zarrow Families Foundation.
David L. Kyle 51 Chairman, President, Chief Executive Officer and Director of ONEOK, 2001
Inc. (energy company engaged in production, gathering, storage,
transportation, distribution and marketing of fuels); formerly,
president and Chief Operating Officer of ONG Transmission Company
and Oklahoma Natural Gas Company; Director, American Gas
Association and Southern Gas Association.
Robert J. LaFortune 77 Self-employed in the investment and management of personal 1993
financial holdings. Mr. LaFortune is also a director of Apco
Argentina, Inc.
Stanley A. Lybarger 54 President and Chief Executive Officer of BOK Financial and BOk; 1991
previously President of BOk Oklahoma City Regional Office and
Executive Vice President of BOk with responsibility for corporate
banking.
Steven J. Malcolm 55 Chairman, President and Chief Executive Officer of The Williams 2002
Companies, Inc. (energy holding company); formerly, President and
Chief Executive Officer of Williams Energy Services after serving as
senior vice president and general manager of Midstream Gas and Liquids
for Williams Energy Services.
Steven E. Moore 57 Chairman, President and Chief Executive Officer of OGE Energy Corp. 1998
(holding company for OG&E Electric Services, Enogex Inc. and
Origen, Inc.); Director, Oklahoma City Chamber of Commerce,
Oklahoma State Chamber of Commerce, and Edison Electric Institute.
James A. Robinson 75 Self-employed in the investment and management of personal 1993
financial holdings; formerly engaged in the practice of law,
general counsel for BOk, and banking.
L. Francis Rooney, III 50 Chairman of the Board and Chief Executive Officer, Rooney Holdings, 1995
Inc.
COMPENSATION OF DIRECTORS
All non-officer directors of BOK Financial and BOk receive a single
retainer of $7,500 per year, payable quarterly in arrears in BOK Financial
common stock in accordance with the BOKF Directors Stock Compensation Plan,
whether serving on one or more of the boards of directors. Director compensation
shares are issued to each director on or before the 15th day following the end
of each calendar quarter during which such director served as a member of the
Board of Directors of BOK Financial or BOk. The BOKF Directors Stock
Compensation Plan further provides that the issuance price for the director
compensation shares is the average of the mid-points between the highest price
and the lowest price at which trades occurred on NASDAQ on the five trading days
immediately preceding the end of the calendar quarter. All non-officer directors
also are paid $500 in cash for each board of directors or committee meeting
attended (provided only one fee is paid when two or more committees meet
contemporaneously) and $1,000 in cash for each committee meeting chaired. No
such fees are paid for meetings not attended.
CONTROLLED COMPANY EXEMPTION
The Board of Directors has determined that BOK Financial is a
"controlled company," as defined in Rule 4350(c)(5) of the listing standards of
the National Association of Securities Dealers, Inc. ("NASD"), based on Mr.
Kaiser's beneficial ownership of approximately 67.7% of the outstanding common
stock. Accordingly, BOK Financial is exempt from certain requirements of the
NASD listing standards, including the requirement to maintain a majority of
independent directors on the Company's Board of Directors and the requirements
regarding the determination of compensation of executive officers and the
nomination of directors by independent directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The Risk Oversight and Audit Committee, Independent Compensation
Committee and Credit Committee are described below.
Risk Oversight and Audit Committee
During 2003, the Board of Directors of BOK Financial Corporation had a
standing Risk Oversight and Audit Committee (the "Audit Committee") comprised
solely of independent directors. The Board of Directors adopted a revised Audit
Committee charter that complies with Rule 4350(d)(1) of the NASD listing
standards which is attached hereto as Appendix A. The Audit Committee will have
the responsibility and authority set forth in Rule 4350(d)(3) of the NASD
listing standards under the revised charter. Among other things, the Audit
Committee will be responsible for overseeing the accounting and financial
reporting processes of the Company and the audits of the financial statements of
the Company. The Audit Committee will also be directly responsible for the
appointment, compensation, retention and oversight of the work of the Company's
independent auditors, including the resolution of disagreements between
management and the auditors regarding financial reporting. Additionally, the
Audit Committee will approve all related party transactions that are required to
be disclosed pursuant to Item 404 of Regulation S-K.
The current members of the Audit Committee are Messrs. Joullian
(Chairman), Goodwin, Kyle, LaFortune and Lauinger. The Board of Directors has
designated Mr. Joullian as its "audit committee financial expert," as defined in
Item 401(h)(2) of Regulation S-K. Mr. Joullian is an "independent director" as
defined in Rule 4200(a)(15) of the NASD listing standards. The Audit Committee
held five meetings in fiscal 2003 and intends to meet at least five times in
fiscal 2004. The Report of the Audit Committee is on page 10 of this proxy
statement.
Independent Compensation Committee
In December 2002, the Board of Directors established an Independent
Compensation Committee, consisting of five independent directors, to administer
a performance based compensation plan for senior executives in accordance with
the provisions of Section 162(m) of the Internal Revenue Code. The Independent
Compensation Committee consists of Messrs. Cappy (Chairman), Corbett, Kyle,
Robinson and Rooney. The
Independent Compensation Committee met four times in fiscal 2003 and plans to
meet at least four times in fiscal 2004. Except for performance based
compensation which is intended to comply with the requirements of Section
162(m), incentive compensation is administered by the Chief Executive Officer
and senior management as described in the Report on Executive Compensation found
on page 19 of this proxy statement.
Credit Committee
The purpose of the Credit Committee is to review and report to the
Board of Directors regarding the quality of the Company's credit portfolio and
trends affecting the credit portfolio. It also oversees the effectiveness and
administration of credit-related policies and reviews the adequacy of the
allowance for loan losses. The members of the Credit Committee are Messrs.
Rooney (Chairman), Cappy, Griffin, Hargis, Harris, Kaiser, Lybarger, Malcolm and
Zarrow. The Credit Committee met eleven times during fiscal 2003 and plans to
meet at least eleven times in fiscal 2004.
DIRECTOR NOMINATIONS
While the Board of Directors does not have a standing nomination
committee, director candidates identified by management and members of the Board
of Directors are discussed at virtually every Board of Directors meeting. The
Board has no written policy on qualifications of directors; however, the
understood expectation is that directors will have all of the following
characteristics: (i) Impeccable integrity; (ii) Strong sense of professionalism;
and, (iii) Capability of serving the interests of stockholders, and several of
the following characteristics: (i) Prominence in the community; (ii) Significant
relations with one of the Company's subsidiary banks; (iii) Ability to represent
the views of under-represented constituencies in the Company's market areas;
(iv) Financial analytical skill and expertise; and, (v) Vision for social
trends.
The Board of Directors will consider director candidates recommended
by stockholders if provided with the following: (i) evidence in accordance with
Rule 14a-8 of compliance with stockholder eligibility requirements; (ii) the
written consent of the candidate(s) for nomination as a director and
verification as to the accuracy of the biographical and other information
submitted in support of the candidate; (iii) a resume or other written statement
of the qualifications of the candidate(s) for nomination as a director; and,
(iv) all information regarding the candidate(s) and the submitting stockholder
that would be required to be disclosed in a proxy statement filed with the SEC
if the candidate(s) were nominated for election to the Board of Directors. Any
recommendations received from stockholders will be evaluated in the same manner
that potential nominees suggested by board members, management or other parties
are evaluated. The Board of Directors encourages shareholder director candidate
recommendations.
Any stockholder that wishes to present a director candidate for
consideration should submit the information identified above pursuant to the
procedures set forth below under "Communication with the Board of Directors."
ATTENDANCE OF MEETINGS
The entire Board of Directors of BOK Financial met four times during
2003. All directors of BOK Financial attended 75% of all meetings of the Board
of Directors and committees on which they served, except Messrs. Kyle, Lopez,
McPherson and Moore who were unable to attend 75% of the meetings due to
business conflicts. Although BOK Financial does not have a policy with respect
to attendance by the Directors at the Annual Meeting of Stockholders, Directors
are encouraged to attend. Twenty-two of the twenty-four members of the Board of
Directors attended the 2003 Annual Meeting of Stockholders. The Board of
Directors intends to meet at least four times in 2004.
INDEPENDENT DIRECTOR MEETINGS
The Board of Directors has adopted a policy of regularly scheduled
executive sessions where independent directors will meet separate from
management. The independent directors plan to meet in executive session after
all regularly scheduled Board of Director meetings. The independent Directors
held no executive sessions during 2003. The presiding Director at the executive
sessions is Mr. Kaiser. Shareholders of the Company may communicate their
concerns to the non-management Directors in accordance with the procedures
described below under "Communications with the Board of Directors."
COMMUNICATION WITH THE BOARD OF DIRECTORS
The Board of Directors of BOK Financial believes that it is important
for stockholders to have a process to send communications to the Board.
Accordingly, stockholders who wish to communicate with the Board of Directors,
or a particular Director, may do so by sending a letter to the Investor
Relations Manager of BOK Financial at P.O. Box 2300, Tulsa, Oklahoma 74192. The
mailing envelope should contain a clear notation indicating that the enclosed
letter is a "Stockholder-Board Communication" or "Stockholder-Director
Communication." Such letters should identify the author as a stockholder and
state whether the intended recipients are all members of the Board of Directors
or certain specified individual Directors. The Investor Relations Manager and
the General Counsel will independently review the content of the letters.
Communications which are constructive suggestions for the conduct of the
business or policies of the Company will be promptly delivered to the identified
Director or Directors. Communications which are complaints about specific
incidents involving banking or brokerage service will be directed to the
appropriate business unit for review. Director nominations will be reviewed for
compliance with the requirements identified in the section of this proxy
entitled "Director Nominations", and if meeting such requirements, promptly
forwarded to the Director or Directors identified in the communication.
REPORT OF THE RISK OVERSIGHT AND AUDIT COMMITTEE
The Risk Oversight and Audit Committee (the "Audit Committee") oversees
BOK Financial Corporation's (the Company's) financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
discussed and reviewed the audited financial statements in the Annual Report
with management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial statements.
The Committee discussed and reviewed with the independent auditors, who
are responsible for expressing an opinion on the conformity of those audited
financial statements with accounting principles generally accepted in the United
States, their judgments as to the quality, not just the acceptability, of the
Company's accounting principles and such other matters as are required to be
discussed with the Committee under auditing standards generally accepted in the
United States, including Statement of Auditing Standards No. 61, Communications
with Audit Committees. In addition, the Committee has discussed with the
independent auditors the auditors' independence from management and the Company
including the matters in the written disclosures required by the Independence
Standards Board as required by Independence Standards Board Standard No. 1. The
Committee has also considered whether any non-audit services performed by the
independent auditors is compatible with maintaining the auditor's independence.
The Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Committee
meets with the internal and independent auditors with and without management
present, to discuss the results of their examinations, their evaluations of the
Company's internal controls, and the results of the Company's financial
reporting.
Each of the members of the Audit Committee qualifies as an
"independent" Director under the current listing standards of the National
Association of Securities Dealers (NASD). The Board of Directors appointed E.
Carey Joullian IV as the "audit committee financial expert."
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2003, for filing with the Securities and
Exchange Commission. The Committee and the Board have also recommended the
selection of the Company's independent auditors.
AUDIT COMMITTEE:
E. Carey Joullian IV, Chairman
James O. Goodwin
David L. Kyle
Robert J. LaFortune
Philip C. Lauinger, Jr.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
Fees paid to Ernst & Young, LLP ("EY") for the audit of the annual
consolidated financial statements included in BOK Financial's Annual Report on
Form 10-K, for the review of the consolidated financial statements included in
BOK Financial's Forms 10-Q for the quarters included in the years ended December
31, 2003 and 2002 and for the audit function, were $573,400 and $480,000
respectively.
Audit-related Fees
Fees paid to EY for the audit of BOK Financial's employee benefit
plans, system conversion and other audit related functions were $165,495 and
$63,000 respectively, for the years ended December 31, 2003 and 2002.
Tax Fees
Fees paid to EY associated with tax return preparation and tax planning
were $60,950 and $74,277 respectively, for the years ended December 31, 2003 and
2002.
All Other Fees
Fees paid to EY were $4,500 for each of the years ended December 31,
2003 and December 31, 2002.
The Audit Committee has also met and discussed with management and with
its legal and accounting advisors the new rules and regulations under the
Sarbanes-Oxley Act of 2002 and related SEC and Nasdaq rules. Such rules require
that the Audit Committee pre-approve all audit and non-audit services provided
by the Company's independent auditor. The Audit Committee has adopted a formal
policy on auditor independence requiring the approval by the Audit Committee of
all professional services rendered by BOK Financial's independent auditor prior
to the commencement of the specified services. Since these rules became
effective, 100% of the services described in "Audit Fees", "Audit-Related Fees,"
"Tax Fees" and "All Other Fees" were approved by the Audit Committee in
accordance with BOK Financial's formal policy on auditor independence and
approval of fees.
EXECUTIVE OFFICERS
Certain information concerning the executive officers of BOK Financial,
BOk, BOT, Bank of Albuquerque, N.A., Bank of Arkansas, N.A., Colorado State Bank
and Trust, N.A. and BOSC, Inc. is set forth below:
C. Fred Ball, Jr., age 59, is Chairman and Chief Executive Officer of
the Bank of Texas and is responsible for all banking activities in the State of
Texas for BOKF. Before joining Bank of Texas in 1997, he was Executive Vice
President of Comerica Bank-Texas and later President of Comerica Securities,
Inc.
Steven G. Bradshaw, age 44, is Senior Executive Vice President of BOk,
Manager of Consumer Banking & Wealth Management and Chairman of BOSC, Inc.
Before joining BOk Financial, Mr. Bradshaw spent six years managing the
brokerage operation at Sooner Federal. Mr. Bradshaw has been with BOK for 11
years.
Jeffery R. Dunn, age 41, is Chairman, President and Chief Executive
Officer of Bank of Arkansas. Prior to becoming President of Bank of Arkansas, he
served as Senior Vice President of Commercial Lending. He has been with BOK
Financial for 14 years.
Paul M. Elvir, age 63, is Executive Vice President and Manager of the
BOk Operations and Technology Division. Mr. Elvir began working for BOk in July,
1997. Previously, Mr. Elvir was President of Liberty Payments Services, Inc.
("LPSI"), a subsidiary of Banc One Services Corporation. Prior to serving as
President of LPSI, Mr. Elvir served as an Executive Vice President of Banc One
Services Corporation.
Daniel H. Ellinor, age 42, is Senior Executive Vice President for BOk.
Mr. Ellinor joined BOk in 2003. Previously, he served as regional president for
Compass Bank in Dallas, where he oversaw Compass' North Texas operations. Prior
to that time, Mr. Ellinor was Bank of America's market executive for the North
Texas Commercial Banking Division.
Mark W. Funke, age 48, is President, BOk Oklahoma City and Commercial
Banking Manager, Oklahoma City. Mr. Funke is also responsible for BOk's Business
Banking Group, which manages BOk's statewide small business banking efforts, and
all of its Community Banking Offices. He is also responsible for Bank of
Arkansas, N.A. and serves as a director. He joined BOk in 1984 as Vice President
in the financial institutions department and was named to his current position
in 1997. Before joining BOk, he was a commercial lender with Republic Bank in
Houston for seven years.
Robert G. Greer, age 69, is Vice Chairman of BOT. Mr. Greer joined BOT
as a result of the acquisition of Bank of Tanglewood, N.A. He is also a director
for Jefferson-Pilot Corporation and its subsidiary (Jefferson-Pilot Financial)
since 1975. Prior to the merger, Mr. Greer was Chairman of the Board, Bank of
Tanglewood, N.A., a position he held beginning in 1996. Prior to 1996, Mr. Greer
served as Chairman of the Board of Bank of Tanglewood, N.A. and Vice Chairman of
the Board of Northern Trust Bank of Texas.
V. Burns Hargis, age 58, is Vice Chairman, BOK Financial and BOk and
Director of BOSC, Inc. Mr. Hargis joined BOk in November, 1997. Previously, Mr.
Hargis was an attorney with the law firm of McAfee & Taft (Oklahoma City,
Oklahoma).
Eugene A. Harris, age 61, is a director and Executive Vice President of
BOk, Chief Credit Officer and Manager of the Credit Administration Division. Mr.
Harris has been with BOk for 23 years.
H. James Holloman, age 52, is Executive Vice President of BOk and
Manager of the Trust Division. Before joining BOk, he spent 12 years at First
Union National Bank in Charlotte, North Carolina. Mr. Holloman has been with BOk
since 1985.
James L. Huntzinger, age 53, is Chief Investment Officer of BOk. Mr.
Huntzinger was previously Financial Manager, Capital Markets and Chief
Investment Officer of the Trust Division. He has been with BOk since 1982.
Stacy C. Kymes, age 33, is Senior Vice President and Corporate
Controller for BOK Financial. Previously Mr. Kymes served as Chief Auditor of
BOK Financial. Mr. Kymes joined BOK Financial in 1996. Prior to joining BOK
Financial he was with the public accounting firm of KPMG LLP.
Stanley A. Lybarger, age 54, is President and Chief Executive Officer
of BOK Financial and BOk. Mr. Lybarger has been with BOk for 30 years.
Previously, he was President of Bank of Oklahoma's Oklahoma City Regional Office
and Executive Vice President of Bank of Oklahoma with responsibility for
corporate banking.
John C. Morrow, age 48, is Senior Vice President and serves as Director
of Financial Accounting and Reporting. He joined BOK Financial in 1993. He was
previously with Ernst & Young LLP for 10 years.
Steven E. Nell, age 42, is Executive Vice President and Chief Financial
Officer for BOK Financial and BOk. Mr. Nell previously served as Senior Vice
President and Corporate Controller for BOK Financial. He joined BOK Financial in
1992. He was previously with Ernst & Young LLP for 8 years.
W. Jeffrey Pickryl, age 52, is Senior Executive Vice President/Regional
Banks for BOK Financial. Mr. Pickryl was previously an Executive Vice President
for BOk, responsible for Commercial Banking in Tulsa, as well as statewide
energy and real estate lending. Before joining BOk in 1997, he was president and
Chief Credit Officer for Liberty Bancorp, Inc., where he worked for 14 years and
Trust Company of Tulsa, N.A. He had previously worked at Arizona Bank in
Phoenix.
Paul A. Sowards, age 51, is President of Bank of Albuquerque. Before
joining Bank of Albuquerque in March 2000, Mr. Sowards was President of Bank of
America in New Mexico. Prior to his election as President in New Mexico, Mr.
Sowards was Executive Vice President and Commercial Banking Market Manager,
responsible for commercial lending, treasury management and capital markets.
Thomas S. Swiley, age 54, is President and Director of Bank of Texas.
Prior to joining Bank of Texas in March 2001, Mr. Swiley was Managing Director
and Credit Products Executive, with responsibility for the Southwest region, for
Bank of America.
Gregory K. Symons, age 51, is Chairman and Chief Executive Officer,
Colorado State Bank and Trust and is responsible for commercial banking. He
previously served as Chairman and Chief Executive Officer of Bank of Albuquerque
and was responsible for commercial banking in New Mexico. He previously served
as a Senior Vice President for BOk. Mr. Symons has been with BOK Financial for
27 years.
James F. Ulrich, age 52, is Chairman and Chief Executive Officer for
Bank of Albuquerque. Before assuming his current position, Mr. Ulrich served as
Senior Vice President, Investor Relations and Mergers and Acquisitions. Prior to
that time, Mr. Ulrich served as director of Human Resources and Manager, Tulsa
Metropolitan Commercial Lending Department. Mr. Ulrich has been with BOK
Financial since 1987.
All executive officers serve at the pleasure of the Board of Directors.
Messrs. Ball, Hargis, and Lybarger have employment agreements which are
discussed below on page 18.
EXECUTIVE COMPENSATION
The following table sets forth summary information concerning the
compensation of those persons who were, at December 31, 2003, (i) the Chief
Executive Officer and (ii) the four other most highly compensated executive
officers of the Company. These five officers are hereafter referred to
collectively as the "Named Executive Officers."
Summary Compensation Table (1)
Annual Compensation Long Term Awards (2)
----------------------------------------------- --------------------------------------
Name and Restricted
Principal Position Other Annual Stock Awards Options/ All
------------------ -------- Other
Year Salary ($) Bonus ($) Compensation ($) ($)(3) SARs (#) Compensation (4)
---- ----------- --------- ---------------- --- -------- ---------
Stanley A. Lybarger 2003 $625,000 $375,000 $1,619,417(5) $1,022,490 111,676 $22,000
President & Chief Executive
Officer, BOK Financial and
BOk
2002 625,000 175,000 1,311,889 0 16,568 22,000
2001 475,000 150,000 870,648 0 61,574 18,700
C. Fred Ball, Jr. 2003 270,000 120,000 605,841 0 29,007 22,000
Chairman and Chief Executive
Officer, Bank of Texas, N.A.
2002 270,000 145,000 190,451 0 40,199 22,000
2001 255,000 130,000 0 0 36,018 18,700
Steven G. Bradshaw 2003 280,000 100,000 197,772 140,009 18,151 14,870
Senior Executive Vice
President, Consumer Banking
and Wealth Management, Bank
of Oklahoma
2002 195,000 90,000 145,405 0 19,660 14,000
2001 180,000 60,000 79,916 0 16,938 13,600
V. Burns Hargis 2003 285,000 70,000 209,553 0 25,232 22,000
Vice Chairman, BOK Financial
and BOk
2002 273,500 65,000 84,271 0 19,596 19,800
2001 265,225 65,000 39,943 0 18,167 15,470
W. Jeffrey Pickryl 2003 325,000 125,000 235,035 0 40,984 20,000
Senior Executive Vice 2002 218,000 130,000 113,257 0 28,612 20,000
President, Regional Banks 2001 210,000 125,000 161,139 0 24,629 17,000
for BOK Financial
1 No Long Term Incentive Plan payouts were made in 2001, 2002 or 2003 and
therefore no columns are included for such items in the Summary
Compensation Table.
2 After giving effect to November 18, 1993, November 17, 1994, November 27,
1995, November 27, 1996, November 26, 1997, November 25, 1998, October 18,
1999, May 1, 2001, May 13, 2002 and May 15, 2003 3% BOK Financial common
stock dividends payable in kind in BOK Financial common stock.
3 Represents performance shares in the form of restricted stock issued
pursuant to the BOK Financial 2003 Executive Incentive Plan ("Incentive
Plan"). Performance shares vest only on the fifth anniversary of the last
day of the year for which the shares were issued. Shares may not be sold
until three years after the shares vest unless, following such sale, the
executive would own that number of shares of BOK Financial common stock
provided for in any Executive Management BOKF Common Stock Ownership
Guidelines which may be established by the Independent Compensation
Committee. The number of performance shares issued in any one year may be
increased or decreased based upon two performance measures: 1) Company
earnings per share measured against peer group earnings per share and 2)
business unit actual controllable value added measured against business
unit planned controllable value added and attainment of individually
established goals; provided however, that the performance measure for the
Chief Executive Officer is based solely on the earnings per share measure.
Pre-established performance targets and goals are determined by the
Independent Compensation Committee and target achievement measure is based
upon a trailing three year average. Individual executive performance shares
may be increased in an amount not to exceed 50% of target compensation and
decreased to 0% of target compensation based upon a Long Term Incentive
matrix established by the Independent Compensation Committee. The
determination of whether the number of shares will be increased or
decreased for any fiscal year will be
determined on the second anniversary of the end of the year in respect of
which the performance shares were issued. The value of the performance
shares is based upon the market price of BOK Financial common stock on the
date of grant.
4 Amounts shown in this column are derived from the following: (i) Mr.
Lybarger, $10,200, 2001; $12,000, 2002; $12,000, 2003 - Company payment to
the defined benefit plan which is further described on page 17 of this
proxy ("DBP"); $8,500, 2001; $10,000, 2002, $10,000, 2003 - Company
matching contributions to 401(K) Thrift Plan which is further described on
page 18 of this proxy ("DCP"); (ii) Mr. Ball, $13,600, 2001; $16,000, 2002;
$16,000, 2003 - DBP $5,100, 2001; $6,000, 2002; $6,000, 2003 - DCP; (iii)
Mr. Bradshaw, $6,800, 2001; $7,650, 2002; $8,000, 2003 - DBP; $6,800, 2001;
$7,650, 2002; $8,000, 2003 - DCP; (iv) Mr. Hargis, $12,750, 2001; $15,000,
2002; $16,000, 2003 - DBP; $2,720, 2001; $4,800, 2002; $6,000, 2003 - DCP;
and (v) Mr. Pickryl, $11,900, 2001; $14,000, 2002; $14,000, 2003 - DBP;
$5,100, 2001; $6,000, 2002; $6,000, 2003 - DCP.
5 Represents stock option exercise income which has been deferred at the
election of Mr. Lybarger.
The following table sets forth certain information concerning stock options
granted to the Named Executive Officers for services rendered during the 2003
fiscal year. (1)
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Exercise or % of Total Options/SARs Total Grant
Grant Options/SARs Base Price Granted to Employees Expiration Date Present
Name No. Granted (#)(1) ($/Sh)(2) in Fiscal Year Date Value $(3)
---- --- ----------- ------ -------------- ---- -------
Stanley A. Lybarger 1 8,530 $38.33 0.96 % (2) $ 40,176
2 8,039 38.78 0.90 (2) 38,828
3 7,805 38.55 0.88 (2) 37,464
4 48,780 (4) 38.87 5.49 (2) 438,532
5 38,522 (5) 31.41 4.33 264,646
C. Fred Ball, Jr. 1 5,118 38.33 0.58 (2) 24,106
2 4,181 38.78 0.47 (2) 20,194
3 3,903 38.55 0.44 (2) 18,734
4 15,805 (4) 38.87 1.78 (2) 142,087
Steven G. Bradshaw 1 1,024 38.33 0.12 (2) 4,823
2 1,126 38.78 0.13 (2) 5,439
3 2,342 38.55 0.26 (2) 11,242
4 13,659 (4) 38.87 1.54 (2) 122,794
V. Burns Hargis 1 3,313 38.33 0.37 (2) 15,604
2 2,894 38.78 0.33 (2) 13,978
3 2,342 38.55 0.26 (2) 11,242
4 16,683 (4) 38.87 1.88 (2) 149,980
W. Jeffrey Pickryl 1 3,412 38.33 0.38 (2) 16,071
2 3,055 38.78 0.34 (2) 14,756
3 2,810 38.55 0.32 (2) 13,488
4 31,707 (4) 38.87 3.57 (2) 285,046
(1) Grant #5, which relates to compensation for 2002, was awarded on March
25, 2003 as a result of the timing of the formation of the Independent
Compensation Committee. Options related to compensation for services
rendered in 2003 were awarded on four occasions: November 3, 2003
("Grant #1"); December 2, 2003 ("Grant #2"); December 23, 2003 ("Grant
#3"); and, January 7, 2004 ("Grant #4"). All grants were awarded
pursuant to the BOKF 2003 Stock Option Plan.
(2) o All Grant #1 options vest and become exercisable on November 3, 2005
and expire 45 days after vesting.
o All Grant #2 options vest and become exercisable on December 2, 2005
and expire 45 days after vesting.
o All Grant #3 options vest and become exercisable on December 23, 2005
and expire 45 days after vesting.
o One-seventh of the Grant #4 options vest and become exercisable on
January 7 of each year, commencing on January 7, 2005; provided,
however, that no options may be exercised until the performance period
ends and the Independent Compensation Committee certifies that the
pre-established goals were met. Grant #4 vested options expire three
years after vesting.
o One-seventh of the Grant #5 options vest and become exercisable on
March 25 of each year, commencing March 25, 2004; provided, however,
that no options may be exercised until the performance period ends and
the Independent Compensation Committee certifies that the
pre-established goals were met. Grant #5 vested options expire three
years after vesting.
(3) Present value at date of grant is based on the Black-Scholes Option Pricing
Model adopted for use in valuing exercise stock options based on the
following assumptions:
o Grant #1: 17.8 volatility factor, 1.98% risk free rate of return,
$38.33 underlying price, no dividends;
o Grant #2: 17.8 volatility factor, 2.13% risk free rate of return,
$38.78 underlying price, no dividends;
o Grant #3: 17.8 volatility factor, 2.13% risk free rate of return,
$38.55 underlying price, no dividends;
o Grant #4: 17.8 volatility factor, weighted average 3.33% risk free
rate of return, $38.87 underlying price, no dividends.
o Grant #5: 17.8 volatility factor, weighted average 2.78% risk free
rate of return, $31.41 underlying price, no dividends.
The actual value, if any, an executive may realize will depend on the
excess of the stock price over the exercise price on the date the option is
exercised, so there is no assurance the value realized by the named
executive will be at or near the value estimated by the Black-Scholes
Model.
(4) Grant # 4 Options may be increased or decreased based upon two performance
measures: 1) Company earnings per share measured against peer group
earnings per share and 2) business unit actual controllable value added
measured against business unit planned controllable value added and
attainment of individually established goals; provided, however, that the
only performance measure for the Chief Executive Officer is the earnings
per share measure. Pre-established performance targets and goals are
determined by the Independent Compensation Committee and target achievement
measure is based upon a trailing three year average. Grant #4 options may
be increased in an amount not to exceed 50% of target long term
compensation and decreased in amounts to 0% of target long term
compensation based upon a Long Term Incentive matrix established by the
Independent Compensation Committee. The determination of whether the number
of options will be increased or decreased for any fiscal year will be
determined on the second anniversary of the end of the year in respect of
which the options were issued.
(5) Grant #5 vested options expire three years after vesting. Grant # 5 Options
may be increased or decreased based upon Company earnings per share
measured against peer group earnings per share. Pre-established performance
targets and goals are established by the Independent Compensation Committee
and target achievement measure is based upon a trailing three year average.
Grant #5 options may be increased in an amount not to exceed 50% of target
compensation and decreased in amounts to 0% of target long term
compensation based upon a Long Term Incentive matrix established by the
Independent Compensation Committee. The determination of whether the number
of options will be increased or decreased for any fiscal year will be
determined on the second anniversary of the end of the year in respect of
which the options were issued.
The following table sets forth certain information concerning the
exercise of stock options by the Named Executive Officers during fiscal year
2003 and the 2003 fiscal year-end value of unexercised options.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Shares Value Number of Unexercised Value of Unexercised In the Money
Acquired on Realized Options/SARs Options/SARs
Name Exercise(#) ($) at FY-End (#) at FY-End ($)(1)
------------------- ------------- ------------ --------------------------------- ------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
Stanley A. Lybarger 67,201 $1,619,417(2) 164,662 245,375 $3,691,120 $2,370,561
C. Fred Ball, Jr. 40,850 605,841 35,095 135,858 634,735 1,391,441
Steven G. Bradshaw 9,348 197,772 30,484 68,844 622,758 645,928
V. Burns Hargis 11,862 209,553 36,911 80,930 712,506 755,447
W. Jeffrey Pickryl 13,045 235,035 30,905 116,440 557,775 988,895
----------------------------------
(1) Values are calculated by subtracting the exercise or base price from the
fair market value of the stock as of the exercise date or fiscal year-end,
as appropriate.
(2) Represents stock option exercise income which has been deferred at the
election of Mr. Lybarger.
Defined Benefits Plan
Certain executives of the Company participate in the BOk Financial
Pension Plan (the "Pension Plan"). This plan was established in 1987 as a cash
balance defined benefit pension plan and has remained substantially unchanged
since its inception. Pension Plan benefits are determined based on a
hypothetical account balance that accumulates over time. The account balance
grows each year based on a 5.25% interest credit on prior balances plus an
annual account addition based on the executive's covered pay, age at plan entry
and years of service. The percentage of pay that is added to the executive's
account each year, in addition to the 5.25% interest credit on the prior
balance, is based on the schedule shown below:
ANNUAL ADDITION SCHEDULE
Years of Service
--------------------------------------------------------------------------------------------
Entry Age Less than 4 4 but less than 10 10 but less than 15 15 or more
-------------------- -------------------- --------------------- ------------------
Under 30 2.5% 3.0% 3.5% 4.5%
30 to 34 3.0% 3.5% 4.0% 5.0%
35 to 39 4.0% 4.5% 5.0% 6.0%
40 to 44 5.5% 6.0% 6.5% 7.5%
45 to 49 6.5% 7.0% 7.5% 8.5%
50 to 54 7.5% 8.0% 8.5% 9.5%
55 to 59 8.0% 8.5% 9.0% 10.0%
60 and over 8.5% 9.0% 9.5% 10.5%
Covered pay generally includes base salary, shift differential and
commissions, but does not include incentive pay and management bonuses. In
addition, covered pay is limited by government regulations to no more than
$200,000. This $200,000 limit is indexed and will be $205,000 in 2004. All five
named executives had their covered pay restricted by this government limit.
There is no supplemental plan to make-up benefits lost due to this government
restriction.
The normal retirement age under the plan is age 65. At that time, a
participant may receive a lump sum equal to their hypothetical account or an
annuity. Various annuity forms are available, but the basic monthly annuity is
equal to the hypothetical account divided by 200. This annuity amount increases
5.25% each year and continues for the participant's life. Other actuarially
equivalent annuity payment forms are also available.
The table below indicates the estimated annual basic annuity that will
be payable to each executive if they retire at age 65. These amounts are the age
65 value and will increase 5.25% per year for as long as the executive remains
alive. The estimates assume that government limits and each executive's pay will
increase by 3.5% per year until age 65 and that each executive will remain
employed by the Company and covered by the plan until their retirement.
Estimated Annual Basic
Executive Benefit at Age 65
------------------------------ ----------------------------
Stanley A. Lybarger $45,236
C. Fred Ball, Jr. $13,947
Steven G. Bradshaw $43,734
V. Burns Hargis $15,875
W. Jeffrey Pickryl $30,900
BOk Thrift Plan
Employee contributions to the BOk Thrift Plan are matched by the
Company up to 5% of base compensation, based on years of service. Participants
may direct the investments of their accounts to a variety of options, including
BOK Financial common stock.
Employment Agreements
A perpetual employment agreement is in effect between BOk and Mr.
Lybarger. Generally, the agreement provides that Mr. Lybarger will continue to
be employed in his present position and at his current rate of compensation. BOk
may terminate the employment agreement and be liable for termination benefits
not to exceed regular compensation and benefit coverage for twelve months (with
termination benefits to be reduced by the amount of compensation received by Mr.
Lybarger from other sources during the seventh through twelfth months after
termination). In the event of a change of control of BOk, as defined in the
employment agreement, Mr. Lybarger has the option, for a period of six months
after the change of control, to resign and receive the same termination benefits
as described in the preceding sentence in the event of termination by BOk.
An employment agreement is in effect between BOK Financial and Mr.
Hargis. Generally, the agreement provides that Mr. Hargis will be employed by
BOK Financial in the position of Vice Chairman for five years from December 1,
2003. BOK Financial may terminate the agreement without cause subject to payment
of the agreed annual compensation and benefits for the remaining contract term.
If such termination results within one year of a change of control, as defined
in the agreement, Mr. Hargis shall receive his current monthly salary times the
remaining months in the term of his contract divided by two. If such termination
is not within one year of a change of control, Mr. Hargis shall receive salary
and benefits for three months from the date of termination.
An employment agreement between BOT and Mr. Ball provides that Mr. Ball
will be employed by BOT as its Chairman and Chief Executive Officer until the
agreement is terminated by either BOT or Mr. Ball. BOK Financial may terminate
without cause subject to payment of agreed annual compensation and benefits for
a period not exceeding twelve months. Mr. Ball may terminate the agreement upon
twenty-six days prior written notice.
REPORT ON EXECUTIVE COMPENSATION
Independent Compensation Committee
In December 2002, the Board of Directors established an Independent
Compensation Committee consisting of five independent directors, to administer a
performance based compensation plan for senior executives in accordance with the
provisions of Section 162(m) of the Internal Revenue Code. The current members
of the committee are Messrs. Cappy (Chairman), Kyle, Rooney, Robinson and
Corbett.
The purpose of the Independent Compensation Committee is to establish
performance goals at the beginning of each fiscal year and award incentive
compensation under the BOK Financial Corporation 2003 Executive Incentive Plan,
approved by shareholders at the 2003 Annual Meeting of Shareholders. The goals
of the Independent Compensation Committee are to help the Company compete with
peer institutions in attracting and retaining highly qualified individuals as
executive officers, to pay executive officers based upon their contributions to
the Company's performance, and to comply with Section 162(m) of the Internal
Revenue Code.
Section 162(m) of the Internal Revenue Code limits deductibility for
federal income tax purposes of compensation in excess of $1,000,0000 annually
paid to individual executive officers unless certain exceptions, including
compensation based on performance goals, are satisfied. The BOK Financial
Corporation 2003 Executive Incentive Plan was established and is maintained to
comply with the performance-based exception to limits on deductibility of
executive officer compensation. The Chief Executive Officer, executives who
report directly to the Chief Executive Officer and other selected officers
approved by the Independent Compensation Committee may participate.
During 2003, the Independent Compensation Committee engaged an
executive compensation consulting firm to review senior executive management
compensation as compared to peer group. This report, along with recommendations
from Mr. Lybarger, the Chief Executive Officer, was used by the Independent
Compensation Committee to set target compensation, annual performance goals for
bonus and long term incentive compensation and manner of payment of long term
incentive compensation for each participant on an individual basis. The
performance goals for 2003 were based on a combination of (i) Company earnings
per share measured against peer group earnings per share and (ii) business unit
performance and attainment of individual goals. The Independent Compensation
Committee believes that basing executive compensation on earnings per share
performance strengthens the alignment of the interests of the executive officers
with those of all stockholders, while business unit performance measures promote
individual productivity and leadership.
The Independent Compensation Committee feels that the Company performed
exceptionally well as it recorded record earnings in 2003. The Committee
believes that the compensation paid during 2003 was fair and reasonable and
served the long term interests of the Company.
INDEPENDENT COMPENSATION COMMITTEE
Joseph E. Cappy, Chairman
David L. Kyle
L. Francis Rooney, III
James A. Robinson
Luke R. Corbett
Informal Compensation Committee
In addition to the performance-based compensation which is intended to
comply with the requirements of Section 162(m), the Company employs a wide range
of other incentive compensation for its employees including a combination of
annual salary, bonuses, pension plans and stock options. Such compensation is
designed to attract and retain quality management and reward long term
performance of the company. Compensation of the executive officers, other than
Mr. Lybarger, has in practice been determined by Mr. Lybarger, the President and
Chief Executive Officer, and Mr. Kaiser, the Chairman of the Board. Messrs.
Kaiser and Lybarger are directors of the Company and are herein sometimes
referred to collectively as the "Informal Compensation Committee." All
compensation for fiscal 2003 for Mr. Lybarger was determined by the Independent
Compensation Committee.
With respect to the 2003 fiscal year, the compensation paid to
executive officers (other than performance based long term incentive
compensation and Mr. Lybarger's compensation) was based on the evaluation by the
Informal Compensation Committee of the performance of the Company and the
performance of the individual officer. The cash and noncash compensation awarded
the executive officers was based on the performance of the Company in meeting
the corporate goals established for business development, expansion of market
coverage, financial achievement and other areas. The responsibility of each
executive officer for the various established corporate goals and the
performance in meeting those goals were considered in establishing executive
compensation. For fiscal year 2004, the salary, bonus and long term incentive
compensation for Mr. Lybarger, and executives that report directly to Mr.
Lybarger, will be determined by the Independent Compensation Committee.
The foregoing report of the Independent Compensation Committee is made by
Messrs. Kaiser and Lybarger.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Independent Compensation Committee were at
any time officers or employees of the Company or any of its subsidiaries or had
any relationship with the Company requiring disclosure under the Securities and
Exchange Commission regulations. Messrs. Kaiser and Lybarger, who make up the
Informal Compensation Committee which administers all compensation not intended
to comply with Section 162(m), determine the majority of the compensation of the
executive officers. See "Report of Executive Compensation" and "Certain
Transactions."
SHAREHOLDER RETURN PERFORMANCE GRAPH
The BOKF Common Stock (with non-detachable rights to purchase fifteen
additional BOKF Common shares at $0.054625 per share) was registered pursuant to
the Securities Exchange Act of 1934 and listed for trading on NASDAQ on
September 5, 1991. The BOKF shares traded with the rights attached through
October 28, 1991. The BOKF shares traded ex-rights from and after the opening or
trading on October 29, 1991. Set forth below is a line graph comparing the
change in cumulative shareholder return on the Common Stock of BOK Financial
against the cumulative total shareholders return of the NASDAQ Index, the NASDAQ
Bank Index, and the KBW 50 Bank Index for the period commencing December 31,
1998 and ending December 31, 2003.*
Comparison of Cumulative Total Return Graph shown here. Data points reflected in
indexes below.
============================================================================================================================
12/31/1998 12/31/1999 12/31/2000 12/31/2001 12/31/2002 12/31/2003
============================================================================================================================
BOKF 100.00 $ 88.39 $ 92.97 $ 142.13 $ 150.62 $ 185.62
----------------------------------------------------------------------------------------------------------------------------
NASDQ Bank Stocks 100.00 $ 96.15 $109.84 $ 118.92 $ 121.74 $ 156.62
----------------------------------------------------------------------------------------------------------------------------
KBW 50 Bank 100.00 $ 96.53 $115.89 $ 111.12 $ 103.29 $ 138.38
----------------------------------------------------------------------------------------------------------------------------
NASDQ (CRSP U.S. Company) 100.00 $185.43 $111.83 $ 88.76 $ 61.37 $ 91.75
============================================================================================================================
* Graph assumes value of an investment in the Company's Common Stock for each
index was $100 on December 31, 1998. The KBW 50 Bank index is the Keefe,
Bruyette & Woods, Inc. index, which is available only for calendar quarter
end periods. No dividends were paid on BOK Financial Common Stock except
(i) on November 17, 1993, the Company paid a 3% dividend on BOK Financial
Common Stock outstanding as of November 9, 1993, payable in kind by the
issuance of BOK Financial Stock, (ii) on November 17, 1994, the Company
paid a 3% dividend on BOK Financial Common Stock outstanding as of November
8, 1994, payable in kind by the issuance of BOK Financial Common Stock,
(iii) on November 27, 1995, the Company paid a 3% dividend on BOK Financial
Common Stock outstanding as of November 17, 1995, payable in kind by the
issuance of BOK Financial Common Stock, (iv) on November 27, 1996, the
Company paid a 3% dividend on BOK Financial Common Stock outstanding as of
November 18, 1996, payable in kind by the issuance of BOK Financial Common
Stock; (v) on November 26, 1997, the Company paid a 3% dividend on BOK
Financial Common Stock outstanding as of November 17, 1997, payable in kind
by the issuance of BOK Financial Common Stock, (vi) on November 25, 1998,
the Company paid a 3% dividend on BOK Financial Common Stock outstanding as
of November 13, 1998, (vii) on October 18, 1999, the Company paid a 3%
dividend on BOK Financial Common Stock outstanding as of October 5, 1999,
(viii) on May 18, 2001, the Company paid a 3% dividend on BOK Financial
Common Stock outstanding as of May 7, 2001, and on May 29, 2002, the
Company paid a 3% dividend on BOK Financial Common Stock outstanding as of
May 13, 2002, (ix) on April 29, 2003, the Company paid a 3% dividend on BOK
Financial Common Stock outstanding as of May 12, 2003. The graph has been
adjusted to reflect a two-for-one Common Stock split in the form of a 100%
stock dividend paid on February 22, 1999.
INSIDER REPORTING
Based upon a review of the filings with the Securities and Exchange
Commission and written representations that no other reports were required, we
believe that all of our directors and executive officers complied during fiscal
year 2003 with the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, with the exception of Jeffrey Dunn, who filed a late
report in February 2004 relating to 796 shares sold in May 2003; William
Durrett, who filed a late report in February 2004 relating to 10,550 shares
gifted by Mr. Durrett in October 2003; Mark Funke who filed a late report in
September 2003 relating to 1,000 shares sold in July 2003, filed a late report
in November 2003 relating to 1,000 shares sold in November 2003, and filed a
late report in December 2003 relating to 275 shares gifted by Mr. Funke in
December 2003 and 70 shares gifted by Mr. Funke in December 2003; Burns Hargis
filed a late report in February 2004 relating to 11,062 shares sold in December
2003 and 390 shares gifted in December 2003; George Kaiser filed a late report
in February 2004 relating to 11,421 shares acquired in April 2003; Gregory
Symons filed a late report in February 2004 relating to 140 shares gifted by Mr.
Symons on May 14, 2003, 140 shares gifted by Mr. Symons on May 15, 2003, 360
shares gifted by Mr. Symons on May 16, 2003, and 2,631 shares sold in November
2003.
CERTAIN TRANSACTIONS
Certain principal shareholders, directors of the Company and their
associates were customers of and had loan transactions with BOK Financial or its
subsidiaries during 2003. None of them currently outstanding are classified as
nonaccrual, past due, restructured or potential problem loans. All such loans
(i) were made in the ordinary course of business, (ii) were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and (iii)
did not involve more than normal risk of collectibility or present other
unfavorable features at the time the loans were made.
BOk leases office space in office buildings owned by Mr. Kaiser and
affiliates. In 2003, an affiliate of BOK Financial sold Oklahoma State Income
Tax Credits to (a) GBK Corporation, an affiliate of George Kaiser, receiving
$900,000, (b) Mr. Kaiser, receiving $3,780,000, (c) Emily Kaiser, Mr. Kaiser's
daughter, receiving $112,500, (d) Leah Kaiser, Mr. Kaiser's daughter, receiving
$112,500, (e) Philip Kaiser, Mr. Kaiser's son, receiving $112,500, (f) Ruth
Nelson, Mr. Kaiser's sister, receiving $270,000, (g) Stan Lybarger, receiving
$49,500, (h) Burns Hargis, receiving $33,300, and (i) Mark Funke receiving
$13,500.
All transactions described above between BOKF or a subsidiary and Mr.
Kaiser or a related entity were approved in advance by a majority of the entire
board of BOk or BOKF, as appropriate, (Mr. Kaiser not voting) after review by
the Chief Financial Officer.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP, independent public accountants, has been reappointed
by the Board of Directors of the Company as independent auditors for the Company
to examine and report on its financial statements for 2004. Ernst & Young LLP
have been auditors of the accounts of the Company since its inception on October
24, 1990. Representatives of Ernst & Young LLP are expected to be present at the
annual meeting, with the opportunity to make a statement if they desire to do
so, and will be available to respond to appropriate questions.
PROPOSALS OF SHAREHOLDERS
The Board of Directors will consider proposals of shareholders intended
to be presented for action at the Annual Meeting of Shareholders. According to
the rules of the Securities and Exchange Commission, such proposals shall be
included in the Company's Proxy Statement if they are received in a timely
manner and if certain other requirements are met. For a shareholder proposal to
be included in the Company's Proxy Statement relating to the 2005 Annual
Shareholders' Meeting, a written proposal complying with the requirements
established by the Securities and Exchange Commission must be received at the
Company's principal executive offices, located at Bank of Oklahoma Tower, Tulsa,
Oklahoma 74172, no later than December 1, 2004.
OTHER MATTERS
Management does not know of any matters to be presented for action at
the meeting other than those listed in the Notice of Meeting and referred to
herein. If any other matters properly come before the meeting, it is intended
that the Proxy solicited hereby will be voted in accordance with the
recommendations of the Board of Directors.
COPIES OF THE ANNUAL REPORT ON FORM 10-K AND OTHER DISCLOSURE
STATEMENTS FOR BOK FINANCIAL CORPORATION MAY BE OBTAINED WITHOUT CHARGE TO THE
SHAREHOLDERS BY WRITING TO THE CHIEF FINANCIAL OFFICER, BOK FINANCIAL
CORPORATION, P. O. BOX 2300, TULSA, OKLAHOMA 74192, OR VIA E-MAIL OR THROUGH THE
BOKF WEBSITE LOCATED AT HTTP://WWW.BOKF.COM.
THE COMPANY MAKES AVAILABLE ITS PERIODIC AND CURRENT REPORTS, FREE OF
CHARGE, ON ITS WEB SITE AS SOON AS REASONABLY PRACTICABLE AFTER SUCH MATERIAL IS
ELECTRONICALLY FILED WITH, OR FURNISHED TO, THE SEC AT HTTP://WWW.BOKF.COM.
Exhibit "A"
CHARTER
BOK Financial Corporation
Risk Oversight and Audit Committee
Charter
This charter governs the operations of the Risk Oversight and Audit Committee
(the Committee) of BOK Financial Corporation (the Company). The Committee shall
discuss and review and reassess the charter at least annually and shall submit
proposed changes to the board of directors for approval.
COMMITTEE STRUCTURE
The Committee shall be appointed by the board of directors and shall be
comprised of at least three directors, each of whom are independent of
management and the Company . Members shall serve annual terms and shall elect
the Chairman of the Committee. The board of directors may at any time, and in
its sole discretion, replace a Committee member. Each member of the Committee
shall meet the independence and experience requirements of the NASDAQ Stock
Market (NASDAQ), the Securities Exchange Act of 1934 (the Exchange Act) and the
rules and regulations of the Securities and Exchange Commission (SEC). At least
one member shall have the accounting or related financial management expertise
necessary to be designated the "audit committee financial expert" as defined by
the SEC and shall be so designated by the board of directors.
COMMITTEE MEETINGS
The Committee shall meet as often as it determines, but not less frequently than
quarterly. The Committee shall meet periodically with management, the internal
auditors and the independent auditor in separate executive sessions. The
Committee shall maintain minutes and other relevant documentation of all its
meetings. A simple majority of the members of the Committee shall form a quorum
and govern.
STATEMENT OF POLICY
The Committee shall provide assistance to the board of directors in fulfilling
their oversight responsibility to the shareholders, potential shareholders, the
investment community and others relating to the Company's financial statements
and the financial reporting process, the systems of internal accounting and
financial controls, the risk management function, the loan review function, the
appraisal review function, the internal audit function, the annual independent
audit of the Company's financial statements, and the legal compliance and ethics
programs as established by management and the board. In so doing, it is the
responsibility of the Committee to maintain free and open communication between
the Committee, independent auditors, the internal auditors, risk management,
loan review, appraisal review, compliance and management of the Company. In
discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities, and personnel of the Company. The Committee shall have the authority
to engage, without approval from the board of directors, independent legal,
accounting, and other advisors as it deems necessary to carry out its duties.
The Company shall provide appropriate funding, as determined by the Committee,
to compensate the independent auditor, outside legal counsel, or any other
advisors employed by the Committee, and to pay ordinary Committee administrative
expenses that are necessary and appropriate in carrying out its duties.
RESPONSIBILITIES AND PROCESSES
Management is responsible for preparing the Company's financial
statements, and the independent auditors are responsible for auditing those
financial statements and for reviewing the Company's unaudited interim financial
statements. One of the responsibilities of the Committee is to oversee the
Company's financial reporting process on behalf of the board and report the
results of their activities to the board. The Committee in carrying out its
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances. It is also the
responsibility of the Committee to oversee the Company's risk management, loan
review, appraisal review, and compliance processes. In fulfilling their
responsibilities hereunder, it is recognized that members of the Committee are
not full-time employees of the Company and are not, and do not represent
themselves to be, accountants or auditors by profession or experts in the fields
of accounting or auditing. As such, it is not the duty or responsibility of the
Committee or its members to conduct "field work" or other types of auditing or
accounting reviews or procedures. In performing the duties of a director, a
director shall be entitled
to rely on information, opinions, reports, or statements, including financial
statements and other financial data in each case, prepared or presented by:
1. one or more officers or employees of this Company whom the
director believes to be reliable and competent as to the
matters presented; and,
2. counsel, independent accountants, or other persons, within or
without the Company, as to matters which the director believes
to be within such person's professional or expert competence.
The following shall be the principal recurring processes of the
Committee in carrying out its oversight responsibilities. The processes are set
forth as a guide with the understanding that the Committee may supplement them
as appropriate.
o The Committee shall be directly responsible for the appointment and
termination, compensation, and oversight of the work of the independent
auditors, including resolution of disagreements between management and the
auditor regarding financial reporting. The Committee shall pre-approve all
audit and non-audit services provided by the independent auditors and shall
not engage the independent auditors to perform the specific non-audit
services proscribed by law or regulation. The Committee may delegate
pre-approval authority to the Chairman of the Committee. The decisions of
the Chairman must be presented to the full Committee at its next scheduled
meeting. At least annually, the Committee shall obtain and review a report
by the independent auditors describing:
o The Company's internal quality control procedures.
o Any material issue raised by the most recent internal quality
control review, or peer review, of the Company, or by any
inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one
or more independent audits carried out by the firm, and any
steps taken to deal with any such issues.
o All relationships between the independent auditors and the
Company (to assess the auditor's independence).
o In addition, the Committee shall require that the hiring of employees or
former employees of the independent auditors meet the SEC regulations and
the NASD listing standards and shall assure the regular rotation of the
lead audit partner as required by Section 10(A)(j) of the Exchange Act.
o The Committee shall receive regular reports from the independent auditor on
the critical policies and practices of the Company, and all alternative
treatments of financial information within generally accepted accounting
principles that have been discussed with management. The Committee shall
review management's assertion of the effectiveness of internal controls as
of the end of the most recent fiscal year and the independent auditors'
reports on management's assertion.
o The Committee shall discuss with the independent auditors and then disclose
the matters required to be discussed and disclosed by SAS 61, including any
difficulties the independent auditors encountered in the course of the
audit work, any restrictions on the scope of the independent auditors'
activities or on access to requested information, and any significant
disagreements with management. The Committee shall ascertain annually from
the independent auditors whether the Company has issues under Section
10A(b) of the Exchange Act.
o The Committee shall discuss with the internal auditors, risk management,
loan review, appraisal review, compliance and the independent auditors the
overall scope and plans for their respective work. Also, the Committee
shall discuss with management, risk management, loan review, appraisal
review, compliance, the internal auditors, and the independent auditors the
adequacy and effectiveness of the accounting and financial controls,
including the Company's system to monitor and manage business risk, and
legal and ethical compliance programs.
o The Committee or its designate shall discuss and review the interim
financial statements with management and the independent auditors prior to
the filing of the Company's Quarterly Report on Form 10-Q. Also, the
Committee shall discuss the results of the quarterly review and any other
matters required to be communicated to the Committee by the independent
auditors under auditing standards generally accepted in the United States.
The chair of the Committee may represent the entire Committee for the
purposes of this review. Additionally, the chair of the Committee will
represent the entire Committee for the purpose of discussing and reviewing
the Company's "earnings release" information with the independent auditors,
internal auditor, and management prior to the actual release of earnings to
the public. The Chair shall report such matters to the full Committee at
the next meeting.
o The Committee shall discuss and review with management and the independent
auditors the financial statements to be included in the Company's Annual
Report on Form 10-K (or the annual report to shareholders if distributed
prior to the filing of Form 10-K), including their judgment about the
quality, not just acceptability, of accounting principles, the
reasonableness of significant judgments, and the clarity of the disclosures
in the financial statements. Also, the Committee shall discuss the results
of the annual audit and any other matters communicated to the Committee by
the independent auditors under auditing standards generally accepted in the
United States.
o The Committee shall establish procedures for the receipt, retention, and
treatment of complaints received by the issuer regarding accounting,
internal accounting controls, or auditing matters, and the confidential,
anonymous submission by employees of the issuer of concerns regarding
questionable accounting or auditing matters.
o The Committee shall review and approve all related party transactions. The
Committee shall receive corporate attorney's reports of evidence of a
material violation of securities laws or breaches of fiduciary duty.
o The Committee also prepares its report to be included in the Company's
annual proxy statement, as required by SEC regulations.
o The Committee shall oversee the Company's risk management and compliance
processes. This shall include the review and approval of significant risk
policy limits and related exceptions. The Committee shall discuss and
review the reports of examination by regulators and the related management
responses. In addition, the Committee shall discuss and review and approve
significant Capital Markets policies, including Municipal Securities
Rulemaking Board (MSRB) and Government Securities Act (GSA) policies.
o The Committee shall oversee the internal loan review function and discuss
and review all internal loan review reports. In addition, the Committee
shall oversee the internal real estate appraisal review function and
discuss and review summary reports and reports of any "internally adjusted
values."