SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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 COMMISSION ONLY
(AS PERMITTED BY RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240-14a-12
Capital City Bank Group, Inc.
____________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
____________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(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 of 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 and 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:_______________________________________________________
NOTICE OF 2005 ANNUAL MEETING OF SHAREOWNERS
AND
PROXY STATEMENT
[CCBG STAR LOGO]
[CCBG NAME LOGO]
217 North Monroe Street * Tallahassee, Florida 32301
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CONTENTS
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LETTER TO SHAREOWNERS
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
PROXY STATEMENT
General Information........................................................1
Corporate Governance.......................................................3
Nominees for Election as Directors.........................................7
Continuing Directors and Executive Officers................................8
Share Ownership........................................................... 9
Executive Officers and Transactions with Management.......................11
Compensation Committee Report.............................................12
Executive Compensation....................................................15
Retirement Plans..........................................................18
Five-Year Performance Graph...............................................19
Audit Committee Report....................................................20
Ratification of Auditors..................................................22
Annual Report.............................................................23
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LETTER TO SHAREOWNERS
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CAPITAL CITY BANK GROUP, INC.
217 North Monroe Street
Tallahassee, Florida 32301
April 1, 2005
Dear Fellow Shareowners:
You are cordially invited to attend the 2005 Annual Meeting of Shareowners
at 11:00 a.m., local time, on Tuesday, April 26, 2005, at Wesleyan College,
4760 Forsyth Road, Candler Alumnae Building, Oval Hall, Macon, Georgia
31210.
At the meeting, I will give an update on Capital City's business and plans
for the future. Also, we will elect four Class II directors to the Board of
Directors and ratify our accountants for fiscal 2005.
Your Board of Directors encourages every shareowner to vote. Your vote is
very important. Whether or not you plan to attend the meeting, please
review the proxy materials and return your proxy instructions by Monday,
April 11, 2005.
The meeting will begin at 11:00 a.m. I hope you will come early and join
your friends for light refreshments at 10:30 a.m.
Sincerely,
/s/ William G. Smith, Jr.
William G. Smith, Jr.
Chairman, President,
and Chief Executive Officer
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NOTICE OF ANNUAL MEETING OF SHAREOWNERS
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------------------------------------- ------------------------------------
BUSINESS TIME
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(1) Elect four Class II directors 11:00 a.m., local time,
to the Board of Directors April 26, 2005
(2) Ratify the appointment of ------------------------------------
KPMG LLP as the auditors for PLACE
The fiscal year ending ------------------------------------
December 31, 2005
Associate Stock Purchase Plan Wesleyan College
4760 Forsyth Road 3
(3) Transact other business properly Candler Alumnae Building
coming before the meeting or any Oval Hall
adjournment of the meeting. Macon, Georgia
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DOCUMENTS VOTING
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The Proxy Statement, proxy card, Even if you plan to attend the
and Capital City Bank Group Annual meeting in Macon, Georgia, please
Report are included in this mailing. provide us your voting instructions
in one of the following ways as soon
as possible:
------------------------------------- (1) Internet - use the internet
RECORD DATE address on the proxy card
-------------------------------------
(2) Telephone - use the toll-free
Shareowners owning Capital City number on the proxy card; and
Bank Group shares at the close of
business on February 28, 2005, are (3) Mail - mark, sign, and date the
entitled to attend and vote at the proxy card and return in the
meeting. A list of these shareowners enclosed postage-paid envelope
will be available at the Annual
Meeting and for 10 days prior to the
Annual Meeting between the hours of
9:00 a.m. and 5:00 p.m., at our
principal executive offices at
217 North Monroe Street, Tallahassee,
Florida 32301.
By Order of the Board of Directors
J. KIMBROUGH DAVIS
Corporate Secretary,
Tallahassee, Florida
April 1, 2005
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PROXY STATEMENT - GENERAL INFORMATION
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Why am I receiving this Proxy Statement and proxy card?
The Board of Directors is soliciting your proxy for the 2005 Annual Meeting
of Shareowners and any adjournments of this meeting. The meeting will be
held at 11:00 a.m., local time, Tuesday, April 26, 2005, at the Wesleyan
College, 4760 Forsyth Road, Candler Alumnae Building, Oval Hall, Macon,
Georgia 31210. This Proxy Statement and the proxy card are being provided
to shareowners on or about April 1, 2005.
What is being voted upon?
The election of four Class II directors and the ratification of KPMG LLP as
the Company's auditors. The proposals to be considered will not create
appraisal or dissenter's rights. We are not aware of any other matters to
be presented at the meeting; however, the holders of the proxies will vote
in their discretion on any other matters properly presented.
Who can vote?
All shareowners of record on the record date of February 28, 2005. On that
date, there were 14,162,103 Capital City Bank Group common shares
outstanding and entitled to vote, and these shares were held of record by
approximately 1,598 shareowners.
How much does each share count?
Each share counts as one vote. For the proposals scheduled to be voted upon
at the meeting, withheld votes on directors, abstentions, and shares held by
a broker that the broker fails to vote are all counted to determine a
quorum, but are not counted for or against the matters being considered.
There is no cumulative voting.
How many votes are required to have a quorum?
In order for us to conduct the Annual Meeting, a majority of the shares
entitled to vote must be present in person or by proxy.
How many votes are required to elect directors and to ratify KPMG's
appointment?
Directors are elected by a plurality of the votes cast. "Plurality" means
that the nominees receiving the largest number of votes cast are elected as
directors up to the maximum number of directors who are nominated to be
elected at the meeting. At our meeting, the maximum number of directors to
be elected is four. The ratification of KPMG's appointment requires a
majority of the votes cast at the Annual Meeting.
How do I give voting instructions?
You may attend the meeting and give instructions in person or by the Internet,
by telephone, or by mail. Instructions are on the proxy card. The appropriate
individuals named on the enclosed proxy card will vote all properly executed
proxies that are delivered in response to this solicitation and not later
revoked in accordance with the instructions given by you. If you want to vote
in person at the Annual Meeting, and you hold your Capital City Bank Group
shares through a securities broker (that is, in street name), you must obtain
a proxy from your broker and bring that proxy to the meeting.
1
How will my voting instructions be treated?
If you provide specific voting instructions, your shares will be voted as
instructed. If you hold your shares in your name and sign and return a
proxy card or vote by telephone or Internet without giving specific voting
instructions, then your shares will be voted as recommended by our Board of
Directors.
If you hold your shares in the name of a bank, broker, or other nominee, and
you do not give instructions to that nominee on how you want your shares
voted, then generally your broker can vote your shares on certain "routine"
matters. At our meeting, both proposals 1 and 2 are considered routine,
which means that your nominee can vote your shares on these proposals if you
do not timely provide instructions to vote your shares.
If you hold your shares in the name of a bank, broker, or other nominee, and
that nominee does not have discretion to vote your shares on a particular
proposal and you don't give your broker instructions on how to vote your
shares, then the votes will be considered broker nonvotes. A "broker
nonvote" will be treated as unvoted for purposes of determining approval for
the proposal and will have the effect of neither a vote for nor a vote
against the proposal.
Can I change my vote?
Yes, you may revoke your proxy by submitting a later proxy or by written
request received by the Company's corporate secretary before the meeting.
You may also revoke your proxy at the meeting and vote in person.
What does it mean if I get more than one proxy card?
You will receive a proxy card for each account you have. Please vote
proxies for all accounts to ensure that all your shares are voted.
When are shareowner proposals due for the 2006 Annual Meeting?
Shareowner proposals that are to be included in the Proxy Statement for the
2006 meeting must be received by December 2, 2005. Shareowner proposals for
the 2006 meeting that are not intended to be included in the Proxy Statement
for that meeting must be received by February 18, 2006 or the Board of
Directors can vote the proxies in its discretion on the proposal. Proposals
must comply with the proxy rules and be submitted in writing to:
J. Kimbrough Davis
Corporate Secretary
Capital City Bank Group, Inc.
217 North Monroe Street
Tallahassee, Florida 32301
Who pays for soliciting proxies?
The Company pays the cost of soliciting proxies. The officers or other
employees of the Company or its subsidiaries may solicit proxies to have a
larger representation at the meeting.
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CORPORATE GOVERNANCE
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GOVERNING PRINCIPLES
Capital City Bank Group is a financial holding company managed by a core group
of officers and governed by a Board of Directors consisting of 12 members.
The Company is committed to maintaining a business atmosphere where only the
highest ethical standards and integrity prevail. An unwavering adherence to
high ethical standards provides a strong foundation on which the Company's
business and reputation can thrive, and is integral to creating and sustaining
a successful, high-caliber company.
INDEPENDENT DIRECTOR MEETINGS IN EXECUTIVE SESSIONS
The Company's independent directors, as defined under the Nasdaq rules, have
established a policy to meet separately from the other directors in regularly
scheduled executive sessions at least twice annually, and at such other times
as may be deemed appropriate by the Company's independent directors. Any
independent director may call an executive session of independent directors at
any time. In 2004, the independent directors met in an executive session four
times. Cader B. Cox, III serves as the lead independent director.
INDEPENDENT DIRECTORS
The Company's common stock is listed on the Nasdaq National Market. Nasdaq
requires that a majority of the Company's directors be "independent," as
defined by the Nasdaq's rules. Generally, a director does not qualify as an
independent director if the director (or, in some cases, a member of a
director's immediate family) has, or in the past three years had, certain
relationships or affiliations with the Company, its external or internal
auditors, or other companies that do business with the Company. The Board has
affirmatively determined that a majority of the Company's directors are
independent directors under the Nasdaq rules. Included among the Company's
independent directors are the following current directors and nominees for
director: DuBose Ausley, Frederick Carroll, III, Cader B. Cox, III, J. Everitt
Drew, John K. Humphress, Lina S. Knox, Ruth A. Knox, Henry Lewis III, and John
R. Lewis.
DIRECTOR NOMINATING PROCESS
The Nominating Committee annually reviews and makes recommendations to the
full Board regarding the composition and size of the Board so that the Board
consists of members with the proper expertise, skills, attributes and personal
and professional backgrounds needed by the Company, consistent with applicable
Nasdaq and regulatory requirements.
The Nominating Committee believes that all directors, including nominees,
should possess the highest personal and professional ethics, integrity, and
values, and be committed to representing the long-term interests of the
Company's shareowners. The Nominating Committee will consider criteria
including the nominee's current or recent experience as a senior executive
officer, whether the nominee is independent, as that term is defined in Rule
4200(a)(15) of the National Association of Securities Dealers listing
standards, the business experience currently desired on the Board, geography,
the nominee's banking industry experience, and the nominee's general ability
to enhance the overall composition of the Board.
3
The Company's Nominating Committee will identify nominees for directors
primarily based upon suggestions from shareowners, current directors, and
executives. The Chair of the Nominating Committee and at least one other
member of the Nominating Committee will interview director candidates. The
full Board will formally nominate candidates for director to be included in
the slate of directors presented for shareowner vote based upon the
recommendations of the Nominating Committee following this process.
Any Company shareowner entitled to vote generally in the election of directors
may recommend a candidate for nomination as a director. A shareowner may
recommend a director nominee by submitting the name and qualifications of the
candidate the shareowner wishes to recommend, pursuant to Article VII of the
Company's Articles of Incorporation, to the Company's Nominating Committee,
c/o Capital City Bank Group, 217 North Monroe Street, Tallahassee, Florida
32301. To be considered, recommendations with respect to an election of
directors to be held at an annual meeting must be received no earlier than 180
days and no later than 120 days prior to April 26, 2006, the first anniversary
of this year's annual meeting date. In other words, director nominations must
be received no earlier than October 29, 2005, and no later than December 27,
2005. Recommendations with respect to an election of directors to be held at
a special meeting called for that purpose must be received by the 10th day
following the date on which notice of the special meeting was first mailed to
shareowners. Recommendations meeting these requirements will be brought to the
attention of the Company's Nominating Committee. Candidates for director
recommended by shareowners are afforded the same consideration as candidates
for director identified by Company directors, executive officers or search
firms, if any, employed by the Company.
SHAREOWNER COMMUNICATIONS
The Company's Corporate Governance Guidelines provide for a process by which
shareowners may communicate with the Board, a Board committee, the non-
management directors as a group, or individual directors. Shareowners who
wish to communicate with the Board, a Board committee or any other directors
or individual directors may do so by sending written communications addressed
to the Board of Directors of Capital City Bank Group, a Board committee or
such group of directors or individual directors, Capital City Bank Group, c/o
Corporate Secretary, 217 North Monroe Street, Tallahassee, Florida 32301. All
communications will be compiled by the Company's Corporate Secretary and
submitted to the Board, a committee of the Board or the appropriate group of
directors or individual directors, as appropriate, at the next regular meeting
of the Board.
CORPORATE GOVERNANCE GUIDELINES
The Board has adopted Corporate Governance Guidelines that give effect to the
Nasdaq corporate governance listing standards and various other corporate
governance matters.
CODES OF CONDUCT AND ETHICS
The Board has adopted Codes of Conduct applicable to all directors, officers,
and associates and a Code of Ethics applicable to the Company's Chief
Executive Officer and its financial and accounting officers, all of which are
available, without charge, upon written request to Capital City Bank Group,
c/o Corporate Secretary, 217 North Monroe Street, Tallahassee, Florida 32301.
These codes are designed to comply with Nasdaq and SEC requirements.
4
BOARD MEETINGS
The Board met 12 times in 2004. All of the directors attended at least 75
percent of the total aggregate number of meetings of the Board and of the
Board committees on which they served.
ANNUAL MEETINGS
The Company expects all directors to attend the Company's Annual Meeting.
All directors, who were directors at the time of the Company's Annual Meeting
in 2004, attended the Annual Meeting.
COMMITTEES OF THE BOARD
Other than the Executive Committee, which has the delegated authority to
exercise the power and authority of the Board of Directors between meetings
(except for matters requiring the full Board or the shareowners), the Board
has adopted written charters for each of its four standing committees: Audit,
Compensation, Nominating, and Corporate Governance. The Nominating and Audit
Committee charters are published on the Corporate Governance section of the
Company's website at www.ccbg.com and were included as appendices to the
Company's proxy statement filed with the SEC on April 1, 2004. The Board has
determined that all members of the Audit, Compensation, Nominating, and
Corporate Governance Committees are independent as that term is defined in
Rule 4200(a)(15) of the National Association of Securities Dealers listing
standards.
Audit Committee:
* Members are Frederick Carroll, III (Chairman and financial expert),
Cader B. Cox, III, J. Everitt Drew and Ruth A. Knox
* Met 12 times in 2004
* Oversees the Company's auditing, accounting, financial reporting, and
internal control functions
* Monitors and reviews the Company's compliance with Section 112 of the
Federal Deposit Insurance Corporation Improvement Act of 1991 and reviews
regulatory reports
* Reviews independent auditors' report on the Company's financial
statements, significant changes in accounting principles and practices,
significant proposed adjustments, and any unresolved disagreements with
management concerning accounting or disclosure matters
* Recommends independent auditors and reviews their independence and
qualifications, services, fees, and the scope and timing of audits
Compensation Committee:
* Members are Cader B. Cox, III (Chairman), J. Everitt Drew, Henry Lewis
III, and John R. Lewis
* Met seven times in 2004
* Evaluates performance of the President and Chief Executive Officer and
reviews and approves compensation for the named executive officers listed
in the summary compensation table
* Evaluates and recommends appropriate level of director compensation,
including compensation for service as a member or chair of a Board
committee, and ensures that payments, if any, to directors other than in
their capacity as directors are proper, and are fully and properly
disclosed
5
Nominating Committee:
* Members are John R. Lewis (Chairman), Cader B. Cox, III, Ruth A. Knox, and
Henry Lewis III
* Met five times in 2004
* Develops and reviews background information for candidates for the Board
of Directors, including candidates recommended by shareowners, and makes
recommendations to the Board of Directors about these candidates
Corporate Governance Committee:
* Members are John K. Humphress (Chairman), Frederick Carroll, III, Lina S.
Knox, and Ruth A. Knox
* Met three times in 2004
* Develops, implements and monitors policies and practices relating to
corporate governance
* Oversees the annual self-assessment of the Board
DIRECTORS' FEES
Only non-employee directors are compensated for board service. The pay
components for 2004 were:
Annual Retainers:
$12,500 for each non-employee member of the Board of Directors
$1,250 additional annual retainer if serving as chairman of a Board
committee and $2,500 if serving as Audit Committee Chairman
Meeting Fees:
$1,000 per month for all Board and committee meetings
Directors were also permitted to purchase shares of common stock at a 10%
discount from fair market value under the 1996 Director Stock Purchase Plan.
This Plan had 187,500 shares reserved for issuance. Since the inception of
this Plan, 54,388 shares have been issued to directors. During 2004, 7,369
shares were purchased. Purchases under this Plan were not permitted to
exceed the annual retainer and meeting fees received. This Plan was
terminated as of December 31, 2004. A substantially similar plan, the 2005
Director Stock Purchase Plan, was adopted by the shareowners at the Company's
2004 Annual Meeting. As of January 1, 2005, all purchases of this type will
be made under the 2005 Director Stock Purchase Plan.
6
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NOMINEES FOR ELECTION AS DIRECTORS
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ITEM NO. 1
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ELECTION OF DIRECTORS
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The Board of Directors is divided into three classes, designated Class I,
Class II, and Class III. The directors in each class are elected for terms
of three years or until their successors are duly elected and qualified.
At the meeting, the shareowners will elect four Class II directors. The
individuals named on the enclosed proxy card will vote, unless instructed
otherwise, each properly delivered proxy for the election of the following
nominees as directors. If a nominee is unable to serve, the shares
represented by all valid proxies that have not been revoked will be voted
for the election of a substitute as the Board of Directors may recommend, or
the Board of Directors may by resolution reduce the size of the Board of
Directors to eliminate the resulting vacancy. At this time, the Board of
Directors knows of no reason why any nominee might be unable to serve.
CLASS II DIRECTOR NOMINEES:
--------------------------
THOMAS A. BARRON
Mr. Barron, 52, has been a director since 1982. He is Treasurer of the
Company and was appointed President of Capital City Bank in 1995.
J. EVERITT DREW
Mr. Drew, 49, has been a director since 2003. Since 2000, he has been the
President of St. Joe Land Company where his duties include overseeing the
sale and development efforts of several thousand acres of St. Joe property
in northwest Florida and southwest Georgia.
LINA S. KNOX
Ms. Knox, 60, has been a director since 1998. She is a dedicated
community volunteer. Ms. Knox is the first cousin of William G. Smith, Jr.
JOHN R. LEWIS
Mr. Lewis, 62, has been a director since 1999. He is President and Chief
Executive Officer of Super-Lube, Inc., Tallahassee, Florida, which he
founded in 1979.
Except as provided above, if elected, Messrs. Barron, Drew, and Lewis and
Ms. Knox will serve as Class II directors until the 2008 Annual Meeting.
Messrs. Barron and Lewis and Ms. Knox have served as directors for at least
the past five years. Mr. Drew became a director on July 1, 2003.
The affirmative vote of a plurality of shares present and entitled to vote
is required for the election of directors.
The Board of Directors unanimously recommends a vote "FOR" the nominees.
7
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CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
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CONTINUING CLASS I DIRECTORS:
------------------------------
(Term expiring in 2007)
CADER B. COX, III
Mr. Cox, 55, has been a director since 1994. Since 1976, he has served as
President of Riverview Plantation, Inc., a resort and agricultural
company.
L. MCGRATH KEEN, JR.
Mr. Keen, 51, has been a director since October 2004. He served as
President (since 2000) and director (1980-2004) of Farmers and Merchants
Bank, prior to its merger with CCBG. He was a principal shareowner of
Farmers and Merchants Bank at the time of the merger.
RUTH A. KNOX
Ms. Knox, 51, has been a director since 2003. Since 2003, she has served
as President of Wesleyan College, Macon, Georgia. Prior to this
appointment, she practiced law in Atlanta and Macon, Georgia for 25 years.
WILLIAM G. SMITH, JR.
Mr. Smith, 51, is the Chairman of the Board of the Company and has been a
director since 1982. In 1995, he was appointed President and Chief
Executive Officer of the Company and Chairman of Capital City Bank. In
2003, Mr. Smith was elected Chairman of the Board of Directors. Mr. Smith
is the first cousin of Lina S. Knox.
CONTINUING CLASS III DIRECTORS:
-------------------------------
(Term expiring in 2006)
DUBOSE AUSLEY
Mr. Ausley, 67, has been a director since 1982. He is employed by the law
firm of Ausley & McMullen and was Chairman of this firm and its predecessor
for more than 20 years. Since 1992, he has served as a director of TECO
Energy, Inc. Since 1993, Mr. Ausley has served as a director of Sprint
Corporation. In addition, Mr. Ausley has served as a director of Huron
Consulting Group, Inc. since 2004.
FREDERICK CARROLL, III
Mr. Carroll, 54, has been a director since 2003. Since 1990, he has been
the Managing Partner of Carroll and Company CPAs, an accounting firm
specializing in tax and audit based in Tallahassee, Florida.
JOHN K. HUMPHRESS
Mr. Humphress, 56, has been a director since 1994. Since 1973, he has been
a shareholder of Krause Humphress Pace & Wadsworth, Chartered CPAs.
HENRY LEWIS III
Dr. Lewis, 55, has been a director since 2003. He is a Professor and
Director of the College of Pharmacy and Pharmaceutical Studies at Florida
A&M University. Prior to Dr. Lewis's appointment to his position as
director in 2004, Dr. Lewis served as Dean of the College of Pharmacy and
Pharmaceutical Studies at Florida A&M University since 1994.
NON-DIRECTOR EXECUTIVE OFFICER:
-------------------------------
J. KIMBROUGH DAVIS
Mr. Davis, 51, was appointed Executive Vice President and Chief Financial
Officer of the Company in 1997. He served as Senior Vice President and
Chief Financial Officer from 1991 to 1997. In 1998, he was appointed
Executive Vice President and Chief Financial Officer of Capital City Bank.
8
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SHARE OWNERSHIP
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's directors and executive officers, and parties owning
beneficially more than 10% of the common stock, must file reports with the
Securities and Exchange Commission to reflect their interests in the
Company's common stock. Copies of these reports must be furnished to the
Company. Based solely upon on a review of these reports received by the
Company for fiscal 2004 and any written representations from its officers
and directors, the Company believes that each required Section 16(a) report
for 2004 was filed on time.
SHARE OWNERSHIP TABLE
Beneficial owners of more than 5% of the common stock are required to file
reports with the Securities and Exchange Commission. The following table
provides information, as of February 28, 2005, on the common stock
beneficially owned by beneficial owners who have filed the required reports,
beneficial owners who were known to the Company to beneficially own more
than 5% of the common stock, directors, executive officers named in the
Summary Compensation Table, and all executive officers and directors as a
group.
Percentage of
Shares Beneficially Outstanding
Owned Shares Owned
------------------- -------------
Robert H. Smith 2,503,614 17.68%
Post Office Box 11248
Tallahassee, Florida 32302
William G. Smith, Jr. 2,660,656 18.79%
Post Office Box 11248
Tallahassee, Florida 32302
DuBose Ausley 574,076 4.05%
Thomas A. Barron 252,429 1.78%
Frederick Carroll, III 2,942 *
Cader B. Cox, III 315,665 2.23%
J. Kimbrough Davis 48,854 *
J. Everitt Drew 2,000 -
John K. Humphress 425,250 3.00%
L. McGrath Keen, Jr. 462,796 3.27%
Lina S. Knox 86,531 *
Ruth A. Knox 1,409 *
Henry Lewis III 874 *
John R. Lewis 17,033 *
Bruce S. Sherman 711,467 5.02%
8889 Pelican Bay Blvd., Naples, Florida 34108
All Directors and Executive Officers as a Group 4,850,515 34.25%
(13 Persons)
*Represents less than one percent.
9
For purposes of this table, a person is deemed to be the beneficial
owner of any shares of common stock if he or she has or shares voting
or investment power with respect to the shares or has a right to
acquire beneficial ownership at any time within 60 days from the
record date. "Voting power" is the power to vote or direct the voting
of shares and "investment power" is the power to dispose or direct the
disposition of shares.
Robert H. Smith and William G. Smith, Jr. are brothers, and Lina S.
Knox is their first cousin.
Includes (i) 80,106 shares in accounts for his children for which Mr.
Smith is custodian; (ii) 453,171 shares held in certain trusts under
which Mr. Smith shares voting and investment power as a co-trustee;
and (iii) 460,578 shares held by a partnership under which Mr. Smith
shares voting and investment power. Of the shares beneficially owned
by Robert H. Smith, 913,749 shares are also beneficially owned by
William G. Smith, Jr.
Includes (i) 31,299 shares in an account for his son for which Mr.
Smith is custodian; (ii) 453,171 shares held in certain trusts under
which Mr. Smith shares voting and investment power as a co-trustee;
(iii) 460,578 shares held by a partnership under which Mr. Smith
shares voting and investment power; and (iv) 27,519 shares owned by
Mr. Smith's wife, of which he disclaims beneficial ownership. Of the
shares beneficially owned by William G. Smith, Jr., 913,749 shares are
also beneficially owned by Robert H. Smith.
Includes (i) 228,345 shares held in trust under which Mr. Ausley
serves as trustee and has sole voting and investment power; (ii)
10,000 shares owned by Mr. Ausley's wife, of which he disclaims
beneficial ownership; and (iii) 280 shares owned by Mr. Ausley and
his wife.
Includes (i) 46,427 shares held in trusts under which Mr. Barron
serves as trustee; (ii) 573 shares for which Mr. Barron has power of
attorney and may be deemed to be a beneficial owner; and (iii) 23,125
shares owned by Mr. Barron's wife, of which he disclaims beneficial
ownership.
Includes 300,812 shares held in a trust under which Mr. Cox shares
voting and investment power as a co-trustee, of which he disclaims
beneficial ownership.
Includes (i) 1,180 shares in accounts for his children for which Mr.
Davis is custodian; (ii) 15,633 shares owned jointly by Mr. Davis and
his wife; and (iii) 4,082 shares owned by Mr. Davis's wife, directly
and through an Individual Retirement Account, all of which he
disclaims beneficial ownership.
Includes 500 shares in accounts for his children for which Mr. Drew is
custodian.
Includes (i) 72,712 shares held by a limited partnership of which Mr.
Humphress is a general partner and shares voting and investment power;
(ii) 3,550 shares owned jointly by Mr. Humphress and his wife;
(iii) 2,626 shares in accounts for his children for which
Mr. Humphress is custodian; (iv) 300,812 shares held in a trust under
which Mr. Humphress shares voting and investment power as a co-trustee,
of which he disclaims beneficial ownership; and (v) 1,378 shares owned
by Mr. Humphress's wife, directly and through an Individual Retirement
Account, all of which he disclaims beneficial ownership.
Includes 95,338 shares held in a trust of which Mr. Keen serves as
trustee and 161,508 shares held in a trust under which Mr. Keen serves
as co-trustee.
Includes 3,000 shares owned jointly by Ms. Knox and her husband.
This information is based upon a Schedule 13G filed by the reporting
person. Mr. Sherman reports sole voting and investment power over
11,250 shares. Mr. Sherman is CEO of Private Capital Management, L.P.
("PCM"). Mr. Sherman reports shared voting and investment power with
respect to 700,217 shares held by PCM's clients and managed by PCM.
Mr. Sherman disclaims beneficial ownership for the shares held by PCM's
clients.
10
----------------------------------------------------------------------------
EXECUTIVE OFFICERS AND TRANSACTIONS WITH MANAGEMENT
----------------------------------------------------------------------------
EXECUTIVE OFFICERS
Executive officers are elected annually by the Board of Directors at its
meeting following the annual meeting of shareowners to serve for a one year
term and until their successors are elected and qualified. Messrs. Barron
and William G. Smith, Jr. serve as directors and executive officers of the
Company and Mr. Davis is an executive officer of the Company. For
information pertaining to the business experience and other positions held
by these individuals, see "NOMINEES FOR ELECTION AS DIRECTORS" and
"CONTINUING DIRECTORS AND EXECUTIVE OFFICERS."
TRANSACTIONS WITH MANAGEMENT AND RELATED PARTIES
During 2004, Capital City Bank, a wholly-owned subsidiary of the Company,
had outstanding loans to several of the Company's directors, executive
officers, their associates and members of the immediate families of these
directors and executive officers. These loans were made in the ordinary
course of business and were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with others. These loans do not involve more than
the normal risk of collectability or present other unfavorable features.
DuBose Ausley, a director of the Company, is employed by and is the former
Chairman of Ausley & McMullen, the Company's general counsel. During 2004,
the Company and the Company's subsidiaries paid legal fees to this law firm
of approximately $758,000.
Capital City Bank's Apalachee Parkway Office is located on land leased from
the Smith Interests General Partnership L.L.P. ("SIGP") in which William G.
Smith, Jr. (Chairman of the Board, President, and Chief Executive Officer of
the Company), Robert H. Smith (a Vice President of the Company), and Lina S.
Knox (a Director of the Company) are partners. In addition, a trust for the
benefit of Elaine W. Smith, a relative of William G. Smith, Jr., Robert H.
Smith, and Lina S. Knox, of which DuBose Ausley, a director of the Company,
is trustee, is also a partner of SIGP. As trustee of this trust, Mr. Ausley
has the power to vote the SIGP interests owned by the trust. Under a lease
agreement expiring in 2024, Capital City Bank makes annual lease payments to
SIGP. Lease payments are adjusted periodically for inflation. Actual lease
payments made by Capital City Bank to SIGP in 2004 amounted to $88,892.
Expected lease payments in 2005 are approximately $109,000.
11
----------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT
----------------------------------------------------------------------------
What is the Company's Executive Compensation Philosophy?
We, as a Committee, have established the Company's compensation philosophy.
This compensation philosophy provides broad guidance on executive
compensation and more specifically on the compensation of the named
executive officers including the Chairman, President, and Chief Executive
Officer of the Company, the President of Capital City Bank, and the
Executive Vice President and Chief Financial Officer of the Company.
Specifically, the compensation philosophy includes:
* Aligning shareowner value with compensation;
* Providing a direct and transparent link between the performance of the
Company and pay for the named executive officers;
* Making prudent use of the stock options and other stock-based
compensation plans to ensure compatibility between executive
compensation and creation of shareowner value;
* Aligning the interests of shareowners with that of the Company's
senior executive officers through performance-based incentive plans;
and
* Awarding total compensation that will be effective in attracting,
motivating, and retaining key associates.
We believe that accomplishing corporate goals is essential for the Company's
continued success and sustained financial performance. Therefore, we believe
that executive compensation should be largely performance-based. Specific
targets and weightings used for establishing short-term and long-term
performance goals are subject to change at the beginning of each measurement
period, and are influenced by the Board of Directors' desire to emphasize
performance in certain areas. Each year, we review and approve all
performance-based goals.
What Comprises Total Executive Compensation?
* Base salary
* Short-term incentives
* Long-term incentives
* Benefits and perquisites
Total Executive Compensation
During 2004, we employed an outside compensation consultant who conducted a
study comparing the total compensation of the Company's named executive
officers to a peer group of comparable commercial banks. The banks in the
peer group were chosen based on their similarities to the Company relative
to asset size, performance, and markets served. We used this study as a
guide to determine the level of compensation for the Company's named
executive officers.
Base Salary
Base salaries for the named executive officers are determined by assessing
the competitive market, the responsibilities required by the position, and
the experience and performance of the individual. Mr. Smith was elected as
President and Chief Executive Officer in 1995, and in 2003, he was
12
appointed Chairman of the Board of the Company. In 2004, Mr. Smith's base
salary was set at $195,000 per year. We have increased his salary to
$210,000 per year for 2005. We have determined that Mr. Smith's salary is
reasonable and meets the standards contained in the Company's compensation
philosophy.
Short-term Incentives
Cash Bonuses. Each named executive officer has the opportunity to earn
annual cash bonuses. These cash bonuses, paid through the profit
participation plan, are based solely on the Company achieving a target
earnings per share (EPS). EPS goals are set at the beginning of the year as
recommended by management and approved by the Compensation Committee and the
Board of Directors. In 2004, no bonuses would be paid if the Company's
actual EPS is 75% or less of the budgeted EPS. Bonuses ranging from 4% to
200% of a specified target award are paid to named executive officers if the
Company's actual EPS is between 75% and 125% of budgeted EPS. In 2004, Mr.
Smith's cash bonus was $196,454 based on achieving EPS of $2.18, which was
slightly below the 2004 target performance.
Stock Bonuses. The Company maintains an Associate Incentive Plan, which was
approved by the Company's shareowners. Under this plan, the named executive
officers are eligible to earn annual Performance Share Units, based on the
achievement of short-term performance goals. We set these goals with
reference to several performance factors. In 2004, the factors were based
on revenue growth, loan growth, deposit growth, achieving a target
efficiency ratio, and loan credit quality measures. For achieving short-
term performance goals in 2004, Mr. Smith received a payout of 456 shares
under the Associate Incentive Plan, with a fair market value of $44.84 per
share. The opportunity at maximum performance was 702 shares. In addition
to stock earned in 2004, the Company provided a cash bonus equal to 31% of
the value of stock as a partial offset to the tax liability incurred by
Mr. Smith.
Total Annual Bonus of Chief Executive Officer. Mr. Smith's annual bonus was
tied directly to the Company's actual profitability for 2004 compared to
targeted profitability. We believe his performance and influence are best
measured by the Company's profitability and performance goals. In 2004, Mr.
Smith earned short-term incentive compensation of $223,240. This annual
bonus includes a cash bonus of $196,454, a stock bonus award of $20,447, and
a 31% tax supplement bonus of $6,339.
Long-term Incentives
Performance Share Units. Under the Associate Incentive Plan, the Company
provides long-term incentive compensation through performance-based grants
of Performance Share Units to all named executive officers. In 2004, the
goal for the named executive officers to receive long-term Performance Share
Units was based on annual growth in EPS. In 2004, no Performance Share
Units were awarded through the long-term incentive component of the
Associate Incentive Plan to the named executive officers because the Company
did not achieve its targeted goal of 10% annual growth in EPS.
Stock Options. Mr. Smith is the only named executive officer who is
currently eligible to be granted stock options. On January 1, 2003, the
Company and Mr. Smith entered into an agreement to award stock options as
provided for in the Associate Incentive Plan. Under the agreement, the
Company agreed to award a fixed dollar Black-Scholes equivalent value of
stock options based on achieving a
13
specified three-year compound growth rate in EPS. No award is earned if
actual performance is below a 7.5% compound growth rate in EPS, the minimum
performance level. A maximum award of $500,000 is earned if the EPS
compound growth rate equals or exceeds 12.5%, the maximum performance level.
If the compound growth rate in EPS is greater than the minimum performance
level and less than or equal to the maximum performance level, then the
award will be made on a pro-rata basis. On March 12, 2004, Mr. Smith was
granted 18,510 stock options under the 2003 agreement.
For fiscal year 2004, Mr. Smith earned 29,797 stock options under an
agreement effective January 1, 2004 that contains the same EPS compound
growth rate performance goal as in the 2003 agreement. The Board of
Directors expects to grant 29,797 stock options in 2005 that were earned in
2004 based on the three-year EPS performance goal under the terms of this
agreement.
Benefits and Perquisites
In addition to the benefits that are available to all of our associates, we
provide retirement benefits under the Company's supplemental employee
retirement plan, as discussed on page 18. Moreover, we provide the named
executive officers with perquisites that we believe are reasonable,
competitive, and consistent with the Company's overall executive
compensation program. The value of the perquisites for each named executive
officer in the aggregate do not exceed the lesser of $50,000 or 10% of the
executive officer's compensation.
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on
the amount that a publicly traded company may deduct for compensation paid
to a named executive officer who is employed on the last day of the fiscal
year. "Performance-based compensation" is excluded from this $1 million
limitation. In general, our policy is to provide compensation that is fully
deductible by the Company for income tax purposes. However, in order to
maintain ongoing flexibility of the Company's compensation programs, we may
from time to time approve annual compensation that exceeds the $1 million
limitation. We recognize that the loss of the tax deduction may be
unavoidable under these circumstances.
Summary
The Compensation Committee continues to monitor and review all of the
compensation programs for the Company to ensure that each plan provides a
fair and equitable return for both the shareowners and the executive
officers of the Company. We frequently review the various pay plans and
policies and modify them, as we deem necessary to continue to meet the
Company's business objectives and philosophy. We believe that the policies
and programs described in this report provide a substantial link between
executive pay and Company performance and serve the best interests of
shareowners.
Members of the Committee:
Cader B. Cox, III, Chairman
J. Everitt Drew
Henry Lewis III
John R. Lewis
14
----------------------------------------------------------------------------
EXECUTIVE COMPENSATION
----------------------------------------------------------------------------
The following summary compensation table shows compensation information for
the Company's Chief Executive Officer and each of the two other executive
officers of the Company who earned over $100,000 in aggregate salary, bonus,
and other compensation in the fiscal year ended December 31, 2004.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
----------------------------------------------- --------------------------------
Securities Long-Term
Name and Other Annual underlying Incentive Plan
Principal Position Year Salary Bonus Compensation options Payouts
(a) (b) (c) (d) (e) (g) (h)
---------------------- ------ ------------ ------------ ----------------- -------------- ---------------
William G. Smith, Jr. 2004 $195,000 $216,901 $ 6,339 18,510 $ --
Chairman, President, and 2003 $185,000 $237,719 $38,066 -- 97,959
Chief Executive Officer 2002 $175,000 $437,648 $ 7,387 -- --
Thomas A. Barron 2004 $190,000 $202,862 $ 6,047 -- --
President, Capital City Bank 2003 $181,000 $222,331 $37,225 -- --
2002 $174,000 $406,609 $ 7,071 -- --
J. Kimbrough Davis 2004 $175,000 $ 86,906 $ 3,934 -- --
Executive Vice President 2003 $165,000 $ 95,637 $22,868 -- --
and Chief Financial Officer 2002 $155,000 $156,452 $ 4,325 -- --
Includes cash bonuses and the dollar value of short-term incentive
stock awards.
Consists of cash bonuses paid as a tax supplement to participants in
the 1996 Associate Incentive Plan.
Consists of the dollar value of all payouts made for long-term
performance awards earned under the 1996 Associate Incentive Plan.
15
STOCK OPTIONS
The following table contains information concerning stock options granted
during the fiscal year ended December 31, 2004, to the executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
------------------------------------------------------------------------------------------ --------------------------
Number of Percent of
Securities total options
Underlying granted to Exercise or
Options employees in base price Expiration
Name granted(#) fiscal year per share date 5%($) 10%(S)
(a) (b) (c) (d) (e) (f) (g)
------------------------------------------------------------------------------------------ --------------------------
William G. Smith, Jr. 18,510 100% $41.20 3/12/2014 $479,530 $1,215,375
Thomas A. Barron -- -- -- -- -- --
J. Kimbrough Davis -- -- -- -- -- --
The options granted will vest in three equal annual installments beginning on the first anniversary of the
date of grant. The options granted will be immediately exercisable if a change in control, as defined on page 17,
occurs.
OPTION EXERCISES AND HOLDINGS
The following table contains information with respect to options exercised
during 2004 and the value of unexercised options held as of December 31, 2004
for the executive officers.
Number of securities underlying Value of unexercised
unexercised options in-the-money options
at fiscal year-end (#) at fiscal year-end ($)
(d) (e)
-------------------------------- -----------------------------
Shares
acquired on Value
Name exercise (#) realized ($)
(a) (b) (c) Exercisable Unexercisable Exercisable Unexercisable
-------------------------------------------------------------------------------------- ------------------------------
William G. Smith, Jr. -- -- -- 18,510 -- $11,106
Thomas A. Barron -- -- -- -- -- --
J. Kimbrough Davis -- -- -- -- -- --
16
Equity Compensation Plan Information
The Company's 1996 Associate Incentive Plan was approved by the Company's
shareowners at the 1996 Annual Meeting. The Company's 1995 Associate Stock
Purchase Plan was approved by the Company's shareowners at the 1995 Annual
Meeting. The following table provides certain information regarding the
Company's equity compensation plans.
Number of securities
Number of securities remaining available for
to be issued upon Weighted-average future issuance under
exercise of exercise price of equity compensation plans
outstanding options, outstanding options, (excluding securities
Plan Category warrants and rights warrants and rights reflected in column (a))
---------------------- ------------------------ ----------------------- ----------------------------
(a) (b) (c)
Equity Compensation
Plans Approved by 18,510 $41.20 898,813
Securities Holders
Equity Compensation
Plans Not Approved - - 133,112
by Securities Holders
------------------------ ----------------------- ----------------------------
Total 18,510 $41.20 1,031,925
------------------------ ----------------------- ----------------------------
The Company's 1996 Director Stock Purchase Plan, which has not been approved
by the Company's shareowners, allows the directors to purchase the Company's
common stock at a price equal to 90% of the closing price on the date of
purchase. The Director Stock Purchase Plan has 187,500 shares reserved for
issuance. In 2004, 2003, and 2002, CCBG issued 7,369, 4,861, and 4,438
shares, respectively, under this plan. A total of 54,388 shares have been
issued to directors since the inception of this plan. This plan has been
terminated as of December 31, 2004. A substantially similar plan, the 2005
Director Stock Purchase Plan, was approved by the shareowners at last year's
Annual Meeting.
CHANGES IN CONTROL
In the event of a change in control, the named executive officers of the
Company will be credited with an additional two years of credited service for
purposes of computation of retirement benefits payable under the Supplemental
Employee Retirement Plan ("SERP"). Accrued benefits based upon normal
retirement are payable to the named executive officer upon a change in
control. A "change in control" under the SERP means the sale of
substantially all of the assets of the Company, a change in share ownership
of greater than 50% within a 24-month period. For more information regarding
the Company's SERP, please see page 18 under the heading "Retirement Plans."
In the event of a change in control, any stock options previously granted to
a named executive officer of the Company under the 1996 Associate Incentive
Plan will become immediately vested. A "change in control" for purposes of
the immediate vesting of options means a change in share ownership of a fixed
percent, or, during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election or the nomination
for election by the Company's shareholders of each new director was approved
by a vote of at least three-quarters of the directors then still in office
who were directors at the beginning of the period.
17
----------------------------------------------------------------------------
RETIREMENT PLANS
----------------------------------------------------------------------------
SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
The following table shows the estimated annual pension benefits payable to
an executive officer, assuming retirement on January 1, 2005, at age 65
after selected periods of service. Total pension benefits for executive
officers are determined under the Company's SERP, which is a non-qualified
defined benefit plan. This plan is designed to restore a portion of the
benefits Messrs. Smith, Barron, and Davis would otherwise receive under the
Company's Retirement Plan, a qualified, noncontributory, defined benefit
retirement plan, which covers all full-time associates and part-time
associates with 1,000 hours of service annually who are employed by the
Company and its subsidiaries, if these benefits were not limited by the tax
laws. A portion of the benefits will be paid under the Company's Retirement
Plan. The remainder of the benefit will be paid under the SERP. The SERP
provides additional benefits, which, when combined with benefits payable
under the Retirement Plan, approximate 60 percent of average monthly cash
compensation, which more closely aligns the benefits payable to
Messrs. Smith, Barron, and Davis with those of Retirement Plan participants.
The SERP is not a qualified plan under the tax laws. The Company has no
obligation to fund the SERP but accrues for its anticipated obligations
under the SERP on an annual basis.
Years of Accredited Service
Compensation 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
250,000........ $ 56,500 $ 84,800 $113,100 $141,400 $150,000 $150,000
300,000........ 68,000 102,100 136,100 170,100 $180,000 $180,000
350,000........ 79,500 119,300 159,100 198,900 $210,000 $210,000
400,000........ 91,000 136,600 182,100 227,600 $240,000 $240,000
450,000........ 102,500 153,800 205,100 256,400 $270,000 $270,000
500,000........ 114,000 171,100 228,100 285,100 $300,000 $300,000
550,000........ 125,500 188,300 251,100 313,900 $330,000 $330,000
Benefits for retirement plan purposes are calculated based upon the average
monthly compensation for the highest five consecutive years in the last 10
years of employment. The Company's retirement plan also provides pre-
retirement disability and death benefits. The benefits are not subject to
any deduction for Social Security or other offset amounts. As of December
31, 2004, the applicable compensation levels and accredited service for
determination of pension benefits for the named executive officers are:
Compensation Accredited Service
William G. Smith, Jr. $445,900 26
Thomas A. Barron $425,917 30
J. Kimbrough Davis $278,291 23
18
----------------------------------------------------------------------------
FIVE-YEAR PERFORMANCE GRAPH
----------------------------------------------------------------------------
This performance graph compares the cumulative total shareholder return on
the Company's common stock with the cumulative total shareholder return of
the NASDAQ Composite Index and the SNL Financial LC $1B-$5B Bank Index for
the past five years. The graph assumes that $100 was invested on December
31, 1999 in the Company's common stock and each of the above indices, and
that all dividends were reinvested. The shareholder return shown below
represents past performance and should not be considered indicative of
future performance.
[Omitted Stock Performance Graph is represented by the following table.]
Period Ending
Index 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
------------------------------------------------------------------------------------------------
Capital City Bank Group, Inc. 100.00 118.53 116.65 196.05 292.81 270.84
NASDAQ Composite Index 100.00 60.82 48.16 33.11 49.93 54.49
SNL Financial LC $1B-$5B Bank Index 100.00 113.48 137.88 159.16 216.44 267.12
19
----------------------------------------------------------------------------
AUDIT COMMITTEE REPORT
----------------------------------------------------------------------------
The Audit Committee, which operates under a written charter adopted by the
Board of Directors, monitors the Company's financial reporting process on
behalf of the Board of Directors. This report reviews the actions taken by
the Audit Committee with regard to the Company's financial reporting process
during 2004 and particularly with regard to the Company's audited
consolidated statements of financial condition as of December 31, 2004 and
2003, and the related statements of income, changes in shareowners' equity,
and cash flows for each of the years in the three-year period ended
December 31, 2004.
The Audit Committee currently is composed of four persons, all of whom are
"independent," as defined under Nasdaq rules. None of the committee members
is or has been an officer or employee of the Company or any of its
subsidiaries, has engaged in any nonexempt business transaction or has any
nonexempt business or family relationship with the Company or any of its
subsidiaries or affiliates. In addition, the Board of Directors has
determined that Frederick Carroll, III, Chairman of the Committee, is an
"audit committee financial expert" as defined by the Securities and Exchange
Commission.
The Company's management has the primary responsibility for the Company's
financial statements and reporting process, including the systems of
internal controls and reporting. The Company's independent auditors are
responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with U.S. generally accepted
auditing standards, issuing a report thereon, and annually auditing
management's assessment of the effectiveness of internal control over
financial reporting. The Audit Committee monitors the integrity of the
Company's financial reporting process, system of internal controls and the
independence and performance of the Company's independent and internal
auditors.
The Audit Committee believes that it has taken the actions necessary or
appropriate to fulfill its oversight responsibilities under the Audit
Committee's charter. To carry out its responsibilities, the Audit Committee
met 12 times during 2004.
In fulfilling its oversight responsibilities, the Audit Committee reviewed
and discussed with management the audited financial statements to be
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2004, including a discussion of the quality (rather than just
the acceptability) of the accounting principles, the reasonableness of
significant judgments and the clarity of disclosures in the financial
statements.
The Audit Committee also reviewed with KPMG LLP, their judgments as to the
quality (rather than just the acceptability) of the Company's accounting
principles and such other matters as are required to be discussed with the
Audit Committee under Statement on Auditing Standards No. 61, Communication
with Audit Committees. In addition, the Audit Committee discussed with KPMG
LLP, the auditor's independence from management and the Company, including
the written disclosures, letter and other matters required of KPMG LLP by
Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees. The Audit Committee also considered whether the provision
of services during 2004 by KPMG LLP that were unrelated to its audit of the
financial statements referred to above and to their reviews of the Company's
interim financial statements during 2004 is compatible with maintaining KPMG
20
LLP's independence, and determined that the provision of non-audit services
by KPMG LLP is compatible with being independent.
Additionally, the Audit Committee discussed with the Company's internal and
independent auditors the overall scope and plan for their respective audits.
The Audit Committee met with the internal and independent auditors, with and
without management present, to discuss the results of their examinations,
their evaluations of the Company's internal controls and the overall quality
of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2004 for filing with the Securities and Exchange
Commission. The Audit Committee also recommended to the Board that the
Company retain KPMG LLP as the Company's independent auditors for 2005. The
Board has approved and ratified such recommendation. In addition, the
Committee has approved the scope of non-audit services anticipated to be
performed by KPMG LLP in 2005 and the estimated budget for those services.
Members of the Committee:
Frederick Carroll, III, Chairman
Cader B. Cox, III
J. Everitt Drew
Ruth A. Knox
21
----------------------------------------------------------------------------
RATIFICATION OF AUDITORS
----------------------------------------------------------------------------
ITEM NO. 2
----------
RATIFICATION OF AUDITORS
------------------------
The Audit Committee appointed KPMG LLP, independent certified public
accountants, as the Company's independent auditors for the fiscal year
ending December 31, 2005. KPMG LLP has served as the Company's independent
auditors since the 2002 fiscal year.
With respect to fiscal year 2005, KPMG LLP will audit the Company's
consolidated financial statements, provide limited reviews of quarterly
reports, and perform services related to filings with the Securities and
Exchange Commission and other non-audit related services.
Fees Paid to Principal Accountants
----------------------------------
The following table presents fees for professional services rendered by KPMG
LLP for the audit of the Company's annual financial statements for 2004 and
2003, and fees billed for other services rendered by KPMG LLP.
2004 2003
------------ ------------
Audit Fees $ 849,949 $ 208,500
Audit-Related Fees 27,500 22,000
Tax Fees 243,675 341,366
All Other Fees - -
------------ ------------
Total $1,121,124 $ 571,866
============ ============
Audit Fees - Audit fees billed to the Company by KPMG LLP for auditing
the Company's annual consolidated financial statements (including
services incurred with rendering an opinion under Section 404 of the
Sarbanes-Oxley Act of 2002), reviewing the financial statements
included in the Company's Quarterly Reports on Form 10-Q, and for
services that are normally provided by the auditor in connection with
statutory and regulatory filings.
Audit-Related Fees - Audit-related fees billed to the Company by KPMG
LLP include fees related to the audit of the Company's employee
benefit plans.
Tax Fees - Tax fees billed to the Company by KPMG LLP include fees
related to the preparation of the Company's original and amended tax
returns, claims for refunds, and tax planning.
All Other Fees - All other fees billed to the Company by KPMG LLP.
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of
-------------------------------------------------------------------------
Independent Auditor
-------------------
The Audit Committee's policy is to pre-approve all audit and non-audit
services provided by the independent auditors. These services may include
audit services, audit-related services, tax services, and other services.
Pre-approval is generally provided for up to 12 months from the
22
date of pre-approval and any pre-approval is detailed as to the particular
service or category of services and is generally subject to a specific
budget. The Audit Committee may delegate pre-approval authority to one or
more of its members when expedition of services is necessary. The
independent auditors and management are required to periodically report to
the full Audit Committee regarding the extent of services provided by the
independent auditors in accordance with this pre-approval policy, and the
fees for the services performed to date.
The Audit Committee has determined that the non-audit services provided by
KPMG LLP during the fiscal year ended December 31, 2004 were compatible with
maintaining their independence.
Since May 6, 2003, the effective date of Securities and Exchange Commission
rules stating that an auditor is not independent of an audit client if the
services it provides to the client are not appropriately approved, each new
engagement of KPMG LLP was approved in advance by the Audit Committee, and
none of those engagements made use of the de minimis exception to pre-
approval contained in the Commission's rules.
Ratification of KPMG LLP
------------------------
Shareowner ratification of the selection of KPMG LLP as the Company's
independent public accountants is not required by the Company's bylaws or
other applicable legal requirement. However, the Board is submitting the
selection of KPMG LLP to the shareowners for ratification as a matter of
good corporate practice. If the shareowners fail to ratify the selection,
the Audit Committee will reconsider whether or not to retain that firm.
Even if the selection is ratified, the Audit Committee at its discretion may
direct the appointment of a different independent accounting firm at any
time during the year if it determines that such a change would be in the
best interests of the Company and its shareowners.
Representatives of KPMG LLP will be present at the meeting to respond to
appropriate questions and to make any statements as they may desire.
The proposal to ratify KPMG LLP as independent auditors will be approved if
the votes cast by the shareowners present, or represented, at the meeting
and entitled to vote on the matter favoring this proposal exceed the votes
cast in opposition to the proposal.
The Board of Directors unanimously recommends a vote "FOR" approval
ratification of the appointment of KPMG LLP.
----------------------------------------------------------------------------
ANNUAL REPORT
----------------------------------------------------------------------------
The Company has filed an annual report for the fiscal year ended December
31, 2004 on Form 10-K with the Securities and Exchange Commission.
Shareowners may obtain, free of charge, a copy of the Company's annual
report on Form 10-K by writing to the Corporate Secretary at the Company's
corporate address.
23
CAPITAL CITY BANK GROUP, INC.
217 North Monroe Street
Tallahassee, Florida 32301
PROXY FOR ANNUAL MEETING OF SHAREOWNERS
APRIL 26, 2005
KNOW ALL MEN BY THESE PRESENTS that I, the undersigned shareowner of Capital
City Bank Group, Inc. (the "Company"), Tallahassee, Florida, do hereby
nominate, constitute and appoint Randolph M. Pople and Dale A. Thompson, or
any one of them (with full power to act alone), my true and lawful attorneys
and proxies with full power of substitution, for me and in my name, place and
stead to vote all the shares of Common Stock of the Company, standing in my
name on its books as of the close of business on Monday, February 28, 2005,
at the annual meeting of its shareowners to be held at Wesleyan College
4760 Forsyth Road, Candler Alumnae Building, Oval Hall, Macon, Georgia on
Tuesday, April 26, 2005, at 11:00 a.m., or at any adjournments thereof with
all the power the undersigned would
possess if personally present.
(Continued and to be signed on the other side)
ANNUAL MEETING OF SHAREOWNERS OF
CAPITAL CITY BANK GROUP, INC.
Tuesday, April 26, 2005
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PROXY VOTING INSTRUCTIONS
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MAIL
----
Date, sign and mail your proxy
card in the envelope provided as
soon as possible.
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-OR-
COMPANY NUMBER
TELEPHONE
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Call toll-free 1-800-PROXIES
from any touch-tone telephone ACCOUNT NUMBER
and follow the instructions.
Have your proxy card available -----------------------------
when you call.
-OR-
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INTERNET
--------
Access "www.voteproxy.com" and
follow the on-screen instructions.
Have your Proxy card available
when you access the web page.
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You may enter your voting instructions at 1-800-PROXIES or www.voteproxy.com
up until 11:59 PM Eastern Time the day before the cut-off or meeting date.
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Please detach along the perforated line and mail in the Envelope Provided IF
you are not voting via telephone or the Internet.
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
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(1.) To elect the four persons listed at below as Class II directors of the
Company to serve a term of three years each, or until their successors
are duly elected and qualified.
[ ] FOR ALL NOMINEES NOMINEES:
( ) Thomas A. Barron
[ ] WITHHOLD AUTHORITY ( ) J. Everitt Drew
FOR ALL NOMINEES ( ) Lina S. Knox
( ) John R. Lewis
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
mark "FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: (*)
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method. [ ]
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(2.) To ratify the appointment of KPMG LLP as auditors for the Company for
the fiscal year ending December 31, 2005.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3.) In the discretion of the Board of Directors of the Company, to approve
such other business properly coming before the meeting or any
adjournment of the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE PROPOSALS.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTIONS ARE GIVEN ON THE
PROXY, THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED FOR PROPOSALS 1
AND 2 AND AS DETERMINED BY THE BOARD OF DIRECTORS ON ANY OTHER MATTER
WHICH MAY PROPERLY BE BROUGHT AT THE MEETING.
The undersigned Shareowner(s) hereby acknowledges receipt of the Notice of
Annual Meeting and Proxy Statement.
Signature of Shareowner______________________________ Date:_____________
Signature of Shareowner______________________________ Date:_____________
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are owned jointly, each shareowner should sign. When signed as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.