<PAGE>
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
UNITED CAROLINA BANCSHARES CORPORATION
(Name of Registrant as Specified In Its Charter)
Howard V. Hudson, Jr.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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: (1)
4) Proposed maximum aggregate value of transaction:
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] 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:
1
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(United Carolina Bancshares logo appears here)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
United Carolina Bancshares Corporation
You are cordially invited to attend the Annual Meeting of
Shareholders of United Carolina Bancshares Corporation ("UCB") to
be held at the UCB Support Services Building, Highway 701 North,
Whiteville, North Carolina, on April 17, 1996, at 9:30 A.M., EDT,
for the following purposes:
1. To elect thirteen (13) Directors of UCB for the coming
year;
2. To consider approval of the 1995 Stock Option and
Incentive Award Plan under which grants of stock options,
stock appreciation rights, stock awards and/or performance
units may be made from time to time to selected key
employees of UCB and its subsidiaries as approved by the
Personnel Committee of the Board of Directors as Plan
Administrator. This Plan is being submitted for
shareholder approval in accordance with the corporate
governance requirements of NASDAQ, and the regulatory
requirements of 16b-3 of the Securities Exchange Act of
1934 and Section 162(m) of the Internal Revenue Code as
discussed in Proposal 2 of the proxy statement.
3. To transact such other business as may properly come
before the meeting.
Only shareholders of record at the close of business on
February 23, 1996, are entitled to notice of and to vote at the
meeting.
Very truly yours,
(Signature of E. Rhone Sasser)
E. RHONE SASSER
March 22, 1996 CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ENCLOSED IS A FORM OF PROXY WHICH WE URGE YOU TO SIGN, DATE
AND FORWARD AS SOON AS POSSIBLE TO THE SECRETARY OF UCB IN THE
ACCOMPANYING ENVELOPE. IF YOU ATTEND THE MEETING YOU MAY REVOKE
YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE>
UNITED CAROLINA BANCSHARES CORPORATION
EXECUTIVE OFFICES
127 WEST WEBSTER STREET
POST OFFICE BOX 632
WHITEVILLE, NORTH CAROLINA 28472
PROXY STATEMENT
This Proxy Statement and accompanying form of proxy are first being mailed
or provided to shareholders on or about March 22, 1996, in connection with the
solicitation of proxies by the Board of Directors of United Carolina Bancshares
Corporation ("UCB") for use at the 1996 Annual Meeting of Shareholders and at
any adjournments thereof. The Annual Meeting will be held at the UCB Support
Services Building, Highway 701 North, Whiteville, North Carolina, on Wednesday,
April 17, 1996, at 9:30 A.M. for the purposes set forth in the Notice of Annual
Meeting of Shareholders.
Shares represented by properly executed proxy, if received in time and not
revoked, will be voted by the proxies at the Annual Meeting or any adjournment
thereof as specified therein. If no voting instruction is specified in the proxy
as to a specific proposal, the shares represented thereby will be voted in favor
of the proposal. Unless otherwise irrevocable under North Carolina law, any
proxy may be revoked at any time before it is exercised by filing with the
Secretary of UCB a written instrument revoking such proxy, by timely filing with
the Secretary an executed proxy bearing a later date, or, by appearing in person
at the Annual Meeting and requesting that the proxy be returned.
RECORD DATE; INFORMATION CONCERNING OUTSTANDING SHARES AND VOTING RIGHTS:
The Board of Directors, pursuant to UCB's By-Laws, has set February 23,
1996, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting. The only voting securities of UCB
are shares of UCB's $4.00 par value common stock ("Common Stock"), of which
40,000,000 shares were authorized and 22,571,753 shares were outstanding as of
February 23, 1996. As of that date UCB's wholly owned subsidiary banks held
301,382 shares for the accounts of their customers as sole fiduciary with
discretionary voting authority. Each share of Common Stock is entitled to one
vote on each matter submitted for voting. In accordance with North Carolina law,
shareholders do not have the right to vote cumulatively in the election of
directors.
Except as otherwise required by UCB's Articles of Incorporation or by the
North Carolina Business Corporation Act, UCB's By-Laws provide that a majority
of the outstanding shares of Common Stock represented for any purpose at the
Annual Meeting constitutes a quorum for the purpose of taking action on any
matter or proposal which is properly presented for shareholder consideration.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS:
There is no person known to UCB who owns beneficially more than 5% of its
outstanding Common Stock.
United Carolina Bank, a subsidiary of UCB, is the trustee of UCB's Dollar
Plus Savings Plan and Trust (the "Savings Plan"), a tax-qualified employee
benefit plan that includes an Internal Revenue Code Section 401(k) feature and
an employee stock ownership plan. UCB serves as administrator of the Savings
Plan. As a result of certain fiduciary responsibilities reserved to the trustee
under the terms of the Savings Plan, United Carolina Bank may exercise
beneficial ownership over the voting of unallocated shares of Common Stock held
by the Plan. In addition, United Carolina Bank is deemed under United States
Department of Labor policy to have certain residual fiduciary responsibilities
with respect to the voting of any unvoted, allocated shares of Common Stock held
in the Plan. At February 23, 1996, there were 2,515,858 allocated shares of
Common Stock held in the Savings Plan for the individual accounts of the Plan
participants. Substantially all of the allocated Savings Plan shares of Common
Stock have been voted historically by Plan participants, and United Carolina
Bank, as fiduciary, disclaims any beneficial ownership of such shares. At
February 23, 1996, United Carolina Bank, as trustee, held 13,000 shares of
Common Stock in the Savings Plan which were unallocated.
1
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SECURITY OWNERSHIP OF MANAGEMENT:
The following table sets forth information concerning the beneficial
ownership of Common Stock which was held as of February 23, 1996, by each
current director, director nominee, and executive officer named in the Summary
Compensation Table which appears on page 6 herein, and by all current directors
and executive officers of UCB as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP
NAME OF BENEFICIAL OWNER OF COMMON STOCK (1)(6) PERCENT OF CLASS
<S> <C> <C>
Directors and nominees:
J. W. Adams 67,334(2) .30%
John V. Andrews 10,743 .05%
Russell M. Carter 6,000 .03%
W. E. Carter 82,156 .36%
Alfred E. Cleveland 23,467 .10%
James L. Cresimore 35,376 .16%
Thomas P. Dillon 9,565 .04%
C. Frank Griffin 30,913 .14%
James C. High 13,480(3) .06%
E. Rhone Sasser (CEO) 109,090(5) .48%
Jack E. Shaw 307,102(4) 1.36%
Harold B. Wells 93,808 .42%
Charles M. Winston 24,836 .11%
Non-director executive officers named in
Summary Compensation Table:
Kenneth L. Miller, Jr. 16,307(5) .07%
Ronald C. Monger 23,535(5) .10%
Jeff D. Etheridge, Jr. 69,775(5) .31%
David L. Thomas 31,459(5) .14%
Current directors and all executive officers of
UCB as a group (22 persons): 1,058,041 4.69%
</TABLE>
(1) Except as otherwise noted, each individual has sole voting and investment
power over all shares beneficially owned except as follows: (a) shared
voting and investment power: W. E. Carter -- 41,857 shares; A. E.
Cleveland -- 744 shares; J. L. Cresimore -- 69 shares; J. C. High -- 127
shares; E. R. Sasser -- 67,776 shares; J. E. Shaw -- 55,260 shares; H. B.
Wells -- 11,057; R. C. Monger -- 750 shares; all UCB directors and executive
officers as a group -- 209,493 shares. (b) shared voting power (Savings Plan
shares): E. R. Sasser -- 41,214 shares; K. L. Miller -- 12,320 shares; R. C.
Monger -- 15,285 shares; J. D. Etheridge -- 18,521 shares; D. L.
Thomas -- 16,411 shares; all UCB directors and executive officers as a
group -- 168,810.
(2) Includes 14,902 shares held in trust for Mr. Adams and his children as
beneficiaries. Mr. Adams has no voting or investment power over such shares.
(3) Includes 10,500 shares held in a family trust for which Mr. High serves as
trustee.
(4) Does not include 20,250 shares held of record by Mr. Shaw's spouse. Mr. Shaw
disclaims any beneficial ownership of such shares.
(5) Includes shares held in trust for the account of the named officer pursuant
to the terms of UCB's Savings Plan.
(6) The amount of Common Stock shown in the table has been adjusted to reflect
the 3 for 2 stock dividend declared by the Board of Directors on January 17,
1996.
2
<PAGE>
PROPOSAL 1. ELECTION OF BOARD OF DIRECTORS
GENERAL
Action will be taken at the meeting to elect a complete Board of Directors
to serve a one year term or until their respective successors are duly elected
and have qualified. Pursuant to the By-Laws, the Board of Directors has set the
number of directors for the ensuing year at thirteen (13).
The nominees for whom the persons named as proxies intend to vote, and
certain information regarding the nominees, including their principal
occupations during the past five years, positions and offices held at UCB, and
other reportable directorships, are set forth below. The thirteen nominees
presently constitute the Board of Directors of UCB. All of the nominees are
recommended by UCB's Personnel Committee and the Board and have consented to be
named and to serve as directors if elected. In the event any nominee is unable
or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any substitute nominee who shall be designated by the
Board of Directors to fill the vacancy.
<TABLE>
<CAPTION>
DIRECTOR
PRINCIPAL OCCUPATION (1), OF
NOMINEE'S AFFILIATIONS WITH UCB UCB
NAME AND AGE AND OTHER DIRECTORSHIPS SINCE:
<S> <C> <C>
J. W. Adams Retired bank executive; Vice Chairman of the Board of Directors and Executive Committee of 1978
67 UCB and member of the Finance Committee; Vice Chairman of the Board of Directors and the
Executive Committee of United Carolina Bank.
John V. Andrews President of Teledyne Allvac (metals manufacturer); Vice Chairman of the Audit Committee and 1988
62 member of the Personnel Committee of UCB; Director and Vice Chairman of the Audit Committee
of United Carolina Bank.
Russell M. Carter (2) President of Atlantic Corporation of Wilmington, Inc. (paper products manufacturer); Member 1992
46 of the Audit Committee of UCB; Director and member of the Executive and Audit Committees of
United Carolina Bank.
W. E. Carter Owner of W. E. Carter Realty; Member of the Finance and Personnel Committees of UCB; 1995 (3)
57 Director of United Carolina Bank.
Alfred E. Cleveland Partner in the law firm of McCoy, Weaver, Wiggins, Cleveland & Raper; Member of the 1990
60 Executive and Personnel Committees of UCB; Director and Member of the Executive Committee of
United Carolina Bank; Director of Mid-South Insurance Company.
James L. Cresimore Chairman of the Board of Associated Brokers, Inc. and Allegiance Brokers, Inc. (food 1985
68 brokers); Chairman of the Board of Smithfield Companies, Inc. (food processors); Member of
the Executive and Personnel Committees and Chairman of the Finance Committee of UCB;
Director of United Carolina Bank.
Thomas P. Dillon Business consultant; Member of the Audit Committee of UCB; Director and member of the 1988
67 Executive Committee of United Carolina Bank.
C. Frank Griffin President of the law firm of Griffin, Caldwell, Helder, Lee & Helms, P.A.; Chairman of the 1981
69 Personnel Committee and Member of the Finance Committee of UCB; Director of United Carolina
Bank.
James C. High President of The News Reporter Company, Inc. (newspaper publishing); Member of the Executive 1987
63 and Finance Committees of UCB; Director and Member of the Executive Committee of United
Carolina Bank.
E. Rhone Sasser Chairman of the Board, Chief Executive Officer, and Chairman of the Executive Committee of 1981
59 UCB; Chairman of the Board, Chief Executive Officer, and Chairman of the Executive Committee
of United Carolina Bank; Chairman of the Board and Member of the Executive Committee of
United Carolina Bank of South Carolina; Director of UCB Investor Services, Inc.
Jack E. Shaw Chief Executive Officer of Shaw Resources, Inc. (real estate investment and development); 1990
61 Director of Unitronix Corporation; Member of the Executive, Finance and Personnel Committees
of UCB; Vice Chairman of the Board and Member of the Executive Committee of United Carolina
Bank of South Carolina.
Harold B. Wells President of Wells Oldsmobile, Inc. (automobile dealership); Member of the Executive 1982
64 Committee and Vice Chairman of the Finance Committee of UCB; Director and Member of the
Executive Committee of United Carolina Bank.
Charles M. Winston Chairman of the Board of Winston Hotels Inc. (hotel development); Chairman of the Audit 1988
66 Committee and Member of the Personnel Committee of UCB; Director and Chairman of the Audit
Committee of United Carolina Bank.
</TABLE>
3
<PAGE>
(1) With the exception of Mr. Adams, each nominee has been employed in his
present occupation for the past five years. Mr. Adams retired as the Chief
Administrative Officer of UCB and its subsidiary, United Carolina Bank, in
1991.
(2) Mr. R. M. Carter has advised that an order for relief under Chapter 11 of
the Bankruptcy Code was entered on March 3, 1992, by the United States
Bankruptcy Court, Middle District of Florida, against Leisure Living for the
Active Retiree Joint Venture, a Florida general partnership ("LLAR"). Within
two years immediately preceding entry of the order, Mr. Carter owned
approximately a 2.5 percent partnership interest in LLAR. In October 1990,
Mr. Carter exchanged his interest in LLAR for a limited partnership interest
which became effective in June 1991. In November 1992, LLAR's plan of
reorganization was confirmed. Mr. Carter advises that he was a passive
investor and was never a managing partner, officer, or controlling person in
LLAR.
(3) Mr. W. E. Carter has served as a director of UCB's subsidiary bank, United
Carolina Bank, since 1982.
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS WITH RESPECT TO
PROPOSAL 1
The laws of the State of North Carolina provide that directors are elected
by a plurality of the votes cast by the shares entitled to vote in the election.
Proxies, unless indicated to the contrary, will be voted for the election of the
director nominees.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION
OF THE THIRTEEN DIRECTOR NOMINEES NAMED ABOVE IN PROPOSAL 1.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 1995 the Board of Directors of UCB held five (5) regularly scheduled
meetings. Each of the incumbent directors named above attended at least 75% of
the aggregate number of meetings of the Board of Directors and committees on
which such director served.
The Board of Directors annually appoints the following committees: Audit,
Executive, Finance and Personnel. Membership on the Audit, Finance and Personnel
Committees are comprised entirely of non-management directors. The Audit
Committee, which held five (5) meetings during 1995, is empowered to review the
internal controls of UCB and its subsidiaries and the scope and results of
audits conducted by the internal and independent auditors, and to review any
aspects of the operations of UCB and its subsidiaries to ensure that the Board
of Directors' policies are being adhered to and implemented. The Finance
Committee, which held four (4) meetings during 1995, reviews and approves the
financial statements and financial disclosures of UCB and its subsidiaries prior
to their submission to the Board of Directors and release to the public, and
reviews and makes recommendations to the Board of Directors concerning proposed
dividend payments and the adoption of general lending and investment policies of
UCB's bank subsidiaries. The Personnel Committee, which held six (6) meetings
during 1995, reviews and makes recommendations to the Board of Directors for
final action, as appropriate, on personnel matters related generally to (i) the
compensation of directors, officers and employees of UCB and its subsidiaries,
and (ii) the administration of certain employee benefit plans adopted by UCB and
its subsidiaries. Pursuant to delegated authority granted by the Board of
Directors, the Personnel Committee is solely responsible for the administration
of UCB's 1994 Long Term Incentive Plan, which is administered by the Committee
in compliance with the requirements of Section 162(m) of the Internal Revenue
Code. Although UCB does not have a standing nominating committee, the Personnel
Committee is authorized to recommend to the Board of Directors for their
consideration the number of directors to be elected to the Board, to recommend
any changes in Board membership and to nominate director candidates annually and
as vacancies occur. In identifying director candidates, the Committee will
consider individuals recommended by shareholders. Shareholders may make written
recommendations to the Committee by addressing such correspondence to the
Personnel Committee of UCB, c/o Corporate Secretary, Post Office Box 632,
Whiteville, N.C. 28472.
DIRECTORS COMPENSATION
For service as directors of UCB during 1996, each non-employee director
will receive a base fee of $7,500, plus a fee of $900 for each Board of
Directors meeting attended and $900 for each committee meeting or approved
training session attended, plus travel allowances. The chairman of the Executive
Committee will receive an additional base fee of $2,500, and the chairmen of the
Personnel, Audit and Finance Committees will each receive an additional base fee
of $1,500. Directors who are full-time employees of UCB or one of its
subsidiaries do not receive director or chairman fees. Each director may elect
to defer all or a portion of his fees each year. Deferred fees bear interest at
a variable rate equal to
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<PAGE>
United Carolina Bank's prime rate of interest and, at the director's option,
become payable in a lump sum or in up to ten annual installments after the
director ceases to be a member of the Board of Directors.
The following fees were paid for special participation in local advisory
board meetings of United Carolina Bank held during 1995: Mr. Russell M.
Carter -- $200 and Mr. Cleveland -- $600.
The Board of Directors of UCB adopted in 1994 an unfunded Director
Retirement Plan for non-management directors who retire after January 1, 1995,
with at least one year of Board service. Under the terms of the Plan, an
eligible director, who has retired from the Board and attained age 70, will be
paid annually his base director's fee in effect on the date of retirement for a
period not to exceed the lesser of the number of years the director served on
the Board of Directors of UCB (and, as applicable, its subsidiary bank prior to
his election as a director of UCB) or ten (10) years (collectively the
"retirement benefits"). Retirement benefits which remain unpaid at the time of a
retired director's death will be paid on an annual basis to the director's
surviving spouse until paid or until the spouse's death, whichever event first
occurs. If during active Board service or after retirement but before age 70, an
eligible UCB director or retired director, respectively, becomes disabled or
dies, the director or his or her spouse, in the case of death, will be entitled
to begin receiving retirement benefits at the end of the then current calendar
year. The Personnel Committee of the Board of Directors of UCB is responsible
for administering the Director Retirement Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors, nominees for director, and executive officers of UCB and
its subsidiary banks and certain of their respective associates (including
immediate family members) were customers and/or borrowers of either or both of
UCB's subsidiary banks during 1995. All loans made by the banks to a director,
nominee, executive officer, or associate of any such person (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) in the opinion of
management of the banks, did not involve more than normal risk of collectibility
or present other unfavorable features.
During 1995, UCB's subsidiary, United Carolina Bank, purchased in the
ordinary course of its business with various automobile dealers $2.73 million in
retail consumer installment contracts originated by Wells Oldsmobile, Inc., a
corporate affiliate of Mr. Wells, a director nominee. It is United Carolina
Bank's intention to continue purchasing such contracts in the future which meet
the Bank's credit quality standards. In addition, UCB and United Carolina Bank
purchased in the ordinary course of business from Wells Oldsmobile, Inc.
$105,927 in motor vehicles and automotive repair and maintenance services during
1995.
For information concerning other specific business relationships or related
transactions, please refer to the next section.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following named persons served on UCB's Personnel Committee during all
or a portion of 1995: C. Frank Griffin, Chairman; John V. Andrews; Russell M.
Carter; W. E. Carter; Alfred E. Cleveland; James L. Cresimore; Thomas P. Dillon;
Jack E. Shaw; and Charles M. Winston. Based on routine committee assignments
made annually by the Board of Directors, Messrs. Russell M. Carter and Dillon
completed their service on the Personnel Committee as of April 18, 1995, and
Messrs. W. E. Carter, Cleveland, Cresimore and Shaw were newly assigned by the
Board to serve on the Personnel Committee beginning April 19, 1995. At December
31, 1995, the members of the Personnel Committee were Messrs. Griffin, Andrews,
W. E. Carter, Cleveland, Cresimore, Shaw and Winston.
Messrs. Griffin, Andrews, Russell M. Carter, W. E. Carter, Cleveland,
Cresimore, Dillon, Shaw and Winston and certain of their associates were also
customers and/or borrowers during 1995 of UCB's subsidiary banks, United
Carolina Bank and/or United Carolina Bank of South Carolina. All loans made by
the bank subsidiaries to UCB's directors (including members of the Personnel
Committee) and their respective associates (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) in the opinion of Bank management,
did not involve more than normal risk of collectibility or present other
unfavorable features.
During 1995, United Carolina Bank retained in the ordinary course of
business the law firm of Griffin, Caldwell, Helder, Lee & Helms, P. A. and the
Bank intends to retain the firm in the future. Mr. Griffin, a director nominee,
is the senior member and President of the aforementioned firm. Also during 1995,
both UCB and United Carolina Bank
5
<PAGE>
retained in the ordinary course of business the law firm of McCoy, Weaver,
Wiggins, Cleveland & Raper, and both companies intend to do so in the future.
Mr. Cleveland, a director nominee of UCB, is a member of the latter firm.
During 1995, UCB and its subsidiaries purchased in the ordinary course of
business printing services and supplies in the amount of $355,407 from Atlantic
Corporation of Wilmington, Inc. (dba Atlantic Publishing) for which Mr. Russell
M. Carter, a director nominee, serves as President. Mr. Russell M. Carter served
on the Personnel Committee during 1995 through April 18, 1995.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the fiscal years ending December 31,
1993, 1994 and 1995, the cash compensation paid by UCB, as well as certain other
compensation paid or accrued for those years, to each of the five most highly
compensated executive officers of UCB (the "named executive officers") for
services rendered in all capacities to UCB and its subsidiaries:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
AWARDS PAYOUTS
SECURITIES
UNDERLYING LTIP
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) OPTIONS (#)(2) PAYOUTS ($)(3)
<S> <C> <C> <C> <C> <C>
1995 395,004 158,002 6,636 -0-
E. Rhone Sasser; CEO and Chairman of the 1994 375,000 260,800 -0- 58,841
Board of UCB and United Carolina Bank 1993 360,000 149,546 5,023 13,392
1995 252,498 75,750 4,452 -0-
Kenneth L. Miller, Jr.; President of UCB 1994 225,000 120,140 -0- 28,513
and United Carolina Bank 1993 181,250 63,907 2,790 5,580
Ronald C. Monger; Executive Vice 1995 210,000 63,000 3,528 -0-
President and Chief Financial Officer 1994 190,000 101,296 -0- 24,111
of UCB and United Carolina Bank 1993 170,000 58,182 2,371 5,022
Jeff D. Etheridge, Jr.; Executive Vice 1995 202,500 60,750 3,402 -0-
President of UCB and United Carolina 1994 190,000 113,096 -0- 31,228
Bank (Credit Administration) 1993 175,000 60,393 2,511 7,254
David L. Thomas; Executive Vice 1995 182,004 54,601 3,057 -0-
President of UCB and United Carolina 1994 172,500 96,441 -0- 24,306
Bank (Trust and Related Financial 1993 160,000 54,759 2,232 5,580
Services)
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION ($)(4)
<S> <C>
15,799
E. Rhone Sasser; CEO and Chairman of the 13,999
Board of UCB and United Carolina Bank 13,992
10,963
Kenneth L. Miller, Jr.; President of UCB 10,702
and United Carolina Bank 10,696
Ronald C. Monger; Executive Vice 12,181
President and Chief Financial Officer 11,833
of UCB and United Carolina Bank 10,957
Jeff D. Etheridge, Jr.; Executive Vice 11,520
President of UCB and United Carolina 11,920
Bank (Credit Administration) 10,726
David L. Thomas; Executive Vice 11,878
President of UCB and United Carolina 11,659
Bank (Trust and Related Financial 11,461
Services)
</TABLE>
(1) The "Bonus" paid to each named executive officer consisted of: For 1995, the
payment of an annual bonus pursuant to UCB's Management Incentive Plan
discussed on page 11; for 1994, the payment of an annual bonus pursuant to
UCB's Management Incentive Plan and the payout of vested Base Units
(non-performance in nature) previously awarded under the terms of UCB's 1986
Long Term Incentive Plan which has been terminated; and, for 1993, the
payment of an annual bonus pursuant to UCB's 1991 Senior Management
Incentive Plan and the payout of vested Base Units awarded under the terms
of the 1986 Long Term Incentive Plan.
(2) The stock options granted to the named executive officers in 1995 were
granted under the terms of the 1995 Stock Option and Incentive Award Plan
which is being submitted to UCB's shareholders for plan approval at the 1996
Annual Meeting of Shareholders. If the 1995 Stock Option and Incentive Award
Plan is not approved by shareholders, the stock options granted thereunder
in 1995 will be void. The number of shares respectively underlying each of
the stock options granted in 1995 and 1993 has been adjusted by the
Personnel Committee of the Board of Directors to account for the 3 for 2
stock dividend declared by the Board in January 1996.
(3) "LTIP payouts" for 1993 and 1994 consisted of the payout of vested
Performance Units which were previously awarded under the terms of UCB's
1986 Long Term Incentive Plan. Following shareholder approval in April 1994
of UCB's 1994 Long Term Incentive Plan, the Board of Directors ordered the
termination of the 1986 Long Term Incentive Plan, and the payout, on a
prorated basis through December 31, 1993, of all awards of Base and
Performance Units outstanding under the latter Plan.
6
<PAGE>
(4) For 1995, "All Other Compensation" consisted of: (a) employer contributions
of $9,000 to UCB's 401(k) Savings Plan to match the executive's 1995 pre-tax
deferred contribution to the Plan, and (b) insurance premiums paid by UCB
for group term life insurance with respect to each executive in the
following amounts: Mr. Sasser -- $6,799; Mr. Miller -- $1,963; Mr.
Monger -- $3,181; Mr. Etheridge -- $2,520; Mr. Thomas -- $2,878.
STOCK OPTIONS
No stock options were granted during 1995 to the named executive officers
or other eligible participants under UCB's 1986 Key Employee Stock Option Plan
(the "1986 Option Plan"). As more fully discussed in Proposal 2 on page 15, it
is the intention of the Board of Directors of UCB to discontinue the 1986 Option
Plan if shareholders approve at the Annual Meeting the UCB Stock Option and
Incentive Award Plan (the "1995 Option and Incentive Plan") which was adopted by
the Board on July 21, 1995.
The following table provides information concerning non-qualified stock
options which were granted on July 21, 1995, by the Personnel Committee of the
Board of Directors to each of the named executive officers under the terms of
the 1995 Option and Incentive Plan. If the 1995 Option and Incentive Plan is not
approved by UCB's shareholders, the Plan and all option grants made thereunder
during 1995, including the grants shown in the table below, will be void.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (4)
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE OR
UNDERLYING OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#)(1) FISCAL YEAR ($/SH)(2) DATE (3) 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
E. Rhone Sasser 6,636 9.3 20.834 7/20/2005 86,958 220,342
Kenneth L. Miller, Jr. 4,452 6.2 20.834 7/20/2005 58,339 147,824
Ronald C. Monger 3,528 4.9 20.834 7/20/2005 46,231 117,144
Jeff D. Etheridge, Jr. 3,402 4.8 20.834 7/20/2005 44,580 112,960
David L. Thomas 3,057 4.3 20.834 7/20/2005 40,059 101,505
</TABLE>
(1) The options are presently unexercisable and subject to the following vesting
schedule:
<TABLE>
<CAPTION>
COMPLETED YEARS OF VESTED INTEREST AS
EMPLOYMENT FROM DATE PERCENTAGE OF SHARES
OF OPTION GRANT UNDERLYING THE OPTION
<S> <C>
2 40%
3 60%
4 80%
5 100%
</TABLE>
The right to exercise as to any portion of the shares of Common Stock
underlying a vested, outstanding option is cumulative, and failure to so
exercise by the optionee in any year is not a forfeiture of such right
during the remaining term of the option. Subject to the terms of the 1995
Option and Incentive Plan, the right to exercise and the vesting of any
unvested, outstanding option are accelerated upon the occurrence of the
optionee's death, Disability, Retirement, Change in Control of UCB or its
subsidiary, United Carolina Bank, or upon termination of the optionee's
employment other than for Cause as a result of a Threatened Change in
Control.
(2) The exercise or base price shown in the table is the closing sale price per
share of UCB Common Stock as quoted by NASDAQ on the date of'grant ($31.25
per share) as adjusted by the Personnel Committee of the Board of Directors
for the 3 for 2 stock dividend declared in January 1996.
(3) Except as provided below, an outstanding option will terminate upon the
earliest to occur of: (i) the expiration date shown in the table, (ii) the
expiration of six (6) months after termination by UCB of the optionee's
employment without Cause or the optionee voluntarily terminates employment
other than for Cause after a Change in Control, or (iii) the date the
optionee's employment is terminated by UCB for Cause or the optionee
otherwise voluntarily terminates employment. In the event the optionee's
employment with UCB is terminated by reason of death or Disability, any
portion of the outstanding option which is then unvested shall become fully
vested, and the vested option shall
7
<PAGE>
remain exercisable for a period of one (1) year after such event; or, if the
optionee's employment is terminated due to Retirement from UCB, any portion
of the outstanding option which is then unvested shall become vested on a
prorated basis, and the vested option shall remain exercisable for a period
of six (6) months after such event.
(4) The dollar amounts shown under the tabular columns are the results of
calculations at rates set by the Securities and Exchange Commission. UCB's
per share stock price would be $33.938 and $54.038 if the exercise price per
share were increased 5% and 10% respectively, compounded annually over the
applicable option term of ten (10) years.
OPTION EXERCISES AND HOLDINGS
The following table provides information concerning the number and value of
outstanding options which were held at December 31, 1995, by the named executive
officers under the terms of both the 1986 Option Plan and the 1995 Option and
Incentive Plan, which is subject to shareholder approval at the Annual Meeting.
No outstanding options held during 1995 by the named executive officers were
exercisable.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED IN-THE-
OPTIONS AT MONEY OPTIONS AT
FY-END (#) FY-END ($)(1)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE (2) UNEXERCISABLE (2)
<S> <C> <C>
E. Rhone Sasser 0/45,438 0/478,437
Kenneth L. Miller, Jr. 0/21,125 0/205,291
Ronald C. Monger 0/19,395 0/195,484
Jeff D. Etheridge, Jr. 0/21,596 0/223,992
David L. Thomas 0/17,990 0/183,541
</TABLE>
(1) Value is the difference between the fair market value of the option shares
on the date of grant (the exercise price) and the fair market value of the
underlying shares at fiscal year-end. Under the terms of the 1986 Option
Plan, "fair market value" is defined as the mean between the closing bid and
ask prices for UCB Common Stock as quoted by NASDAQ on the applicable dates.
At 12/31/95, the fair market value of the option shares of UCB Common Stock
granted under the 1986 Option Plan, as adjusted for the 3 for 2 stock
dividend declared in January 1996, was $22.75 per share. Under the terms of
the 1995 Option and Incentive Plan, "fair market value" is defined as the
closing sale price for UCB Common Stock as quoted by NASDAQ on the
applicable dates. At 12/31/95, the fair market value of the option shares of
UCB Common Stock granted under the 1995 Option and Incentive Plan, as
adjusted for the aforementioned stock dividend, was $22.50 per share.
(2) Includes the number of shares of UCB Common Stock shown in the Option/SAR
Grants table on page 7 underlying the stock options granted in 1995 to the
named executive officers under the terms of the 1995 Option and Incentive
Plan, which is subject to shareholder approval at the Annual Meeting.
LONG TERM INCENTIVE PLAN
No awards under UCB's 1994 Long Term Incentive Plan (the "1994 LTIP") were
made during 1995 to the named executive officers or to any other officer.
Under the terms of the 1994 LTIP, each award, when made, consists of a
number of performance units, expressed in dollars, which is stated as a
percentage or multiple of the participant's Base Salary during the first year of
the Measurement Period established by the Personnel Committee of the Board of
Directors of UCB. The Personnel Committee also establishes for each award
certain Performance Objectives and the weight to be accorded each such
objective, Performance Targets (i.e., threshold, target and maximum) applicable
to each Performance Objective, and the amount of compensation that will be paid
based on UCB's corporate achievement of the Performance Objectives. The
Personnel Committee may use one or more of the following Performance Objectives
in making LTIP awards: total shareholder return, average return on assets,
average return on equity, average growth in assets, increase in operating
earnings per share, increase in book value per share, and ratio of operating
overhead to operating revenue.
If the participant remains in the employ of UCB until the end of the
Measurement Period, he will be eligible to receive a payout of his LTIP award
based on the level of achievement by UCB of the Performance Objectives selected
for
8
<PAGE>
the award. No payout of a LTIP award is made unless "threshold" performance for
one or more of the selected Performance Objectives is attained by UCB for the
Measurement Period. If the participant terminates employment before the end of
the Measurement Period for any award, he will forfeit his right to any payment
of the award, unless his termination results from death, Disability, Retirement
under the UCB Pension Plan, or involuntary termination by UCB without cause. In
these latter events, the participant (or in the event of death, his beneficiary)
will be entitled to receive a prorated payment at the end of the Measurement
Period based on the number of months the participant was employed during the
Measurement Period divided the number of months in the Measurement Period.
The payout of a LTIP award is first determined by the Personnel Committee
as a dollar figure, but payment of the award is made to the participant in
shares of UCB's Common Stock based on its then fair market value per share
(i.e., the closing price per share as quoted by NASDAQ on the date of payout).
Subject to the prior approval of the Personnel Committee, a participant may
request to receive a portion of his award in cash for the purpose of satisfying
tax obligations related to the award. The Committee may also discretionarily
withhold a portion of an award to pay tax withholding obligations related to
payout of the award.
A participant will also be entitled to receive payout of a LTIP award in
the event a Change In Control of UCB or United Carolina Bank occurs during a
measurement period (or a Threatened Change In Control occurs followed by the
participant's termination by UCB or United Carolina Bank without Cause or the
participant's resignation with Good Reason). The payout of a LTIP award in such
event is based upon the target award level of performance or the actual
performance of UCB to the date of the Change or Threatened Change in Control,
whichever provides greater payment, and, in the discretion of the Personnel
Committee, is payable in shares of Common Stock and/or cash. Except for awards
which are payable immediately upon a participant's termination of employment or
resignation in connection with a Threatened Change In Control, a participant is
entitled to payment of a LTIP award for any given Measurement Period during
which a Change In Control occurs only if (i) he remains employed by UCB (or its
successor) until the end of the Measurement Period, or (ii) prior to the end of
the Measurement Period, his employment is terminated by UCB (or its successor)
without Cause, or the participant retires (whether early, normal or late) under
UCB's (or its successor's) retirement plan, dies or becomes disabled, or (iii)
he resigns from employment with UCB (or its successor) with Good Reason prior to
the end of the Measurement Period.
PENSION PLAN
The following table provides information concerning estimated annual
benefits that are payable to covered employees at normal retirement age under
the terms of UCB's tax qualified, non-contributory pension plan (the "Pension
Plan"), including benefits attributable to UCB's non-qualified, unfunded
supplemental Benefit Equivalency Plan (the "BEP"), based on the compensation and
years of service classifications specified below. The combined plan benefits
shown in the Pension Plan Table are computed on the basis of a straight life
annuity beginning at age 65.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION
(FINAL AVERAGE
EARNINGS) 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$125,000 58,137 67,512 67,512 67,512 72,476
150,000 71,262 82,512 82,512 82,512 88,226
175,000 84,387 97,512 97,512 97,512 97,512
200,000 97,512 112,512 112,512 112,512 112,512
225,000 110,637 127,512 127,512 127,512 127,512
250,000 123,762 142,512 142,512 142,512 142,512
300,000 150,012 172,512 172,512 172,512 172,512
350,000 176,262 202,512 202,512 202,512 202,512
400,000 202,512 232,512 232,512 232,512 232,512
450,000 228,762 262,512 262,512 262,512 262,512
500,000 255,012 292,512 292,512 292,512 292,512
</TABLE>
The remuneration covered by the Pension Plan is an employee's "final
average earnings" which, under the terms of the Plan, is defined to be the
average of the highest five consecutive calendar years of base salary (reported
as "Salary" in the Summary Compensation Table above) earned by the employee
during the ten calendar years prior to his or her date of retirement,
termination, disability or death. For Plan Years 1989 through 1993, an
employee's annual base salary used in
9
<PAGE>
the determination of accrued Pension Plan benefits could not exceed an amount
(beginning in 1989 at $200,000 and ending in 1993 at $235,840) which was
annually indexed and approved by the Secretary of Treasury. As a result of the
enactment of the Revenue Reconciliation Act of 1993, the maximum base salary
which may be used in determining an employee's accrued Pension Plan benefits is
$150,000 beginning Plan Year 1994. No offset for primary social security
benefits received by a pensioner is allowed with respect to the benefits paid
under the Pension Plan.
UCB maintains the UCB Benefit Equivalency Plan (the "BEP ") for the benefit
of certain senior management employees of UCB and its affiliated subsidiaries,
including the executive officers named in the Summary Compensation Table.
Eligibility to participate in the BEP is determined annually on the basis of an
employee's base salary level, the recommendation of management, and approval by
the Board of Directors of UCB. The primary purpose of the BEP is to eliminate
the effect of certain Internal Revenue Code limitations applicable to qualified
retirement plans generally by providing eligible senior management employees
with supplemental benefits in an amount sufficient to create a level of total
retirement income that is similar to the levels provided to the average UCB
employee under the terms of the Pension Plan. Supplemental benefits payable
under the BEP are determined by the following formula: 30% of the eligible
employee's final average earnings, plus 1.5% of final average earnings
multiplied times the number of years of completed service (up to 20 years),
minus benefits paid under the Pension Plan, minus one-half of the employee's
primary social security benefit, minus any benefits paid from a pension plan of
any previous employer. The BEP was amended by the Board of Directors in November
1994 to provide Mr. Sasser an annual guaranteed minimum retirement benefit of
$184,350 in consideration of his continued employment with UCB. This minimum
retirement benefit is equal to the sum of the normal retirement benefit which is
vested and payable to Mr. Sasser under the provisions of the Pension Plan and a
supplemental benefit which is payable under the terms of the BEP in an amount
equal to Mr. Sasser's guaranteed minimum retirement benefit less his Pension
Plan benefit. Upon retirement, Mr. Sasser will receive the greater of (i) the
guaranteed minimum retirement benefit, or (ii) the combination of retirement
benefits which are otherwise payable under the terms of the Pension Plan and the
BEP on the date of his retirement.
The final average earnings and the respective years of service as of
January 31, 1996, for each of the executive officers named in the Summary
Compensation Table are as follows: Mr. Sasser -- $359,004 (28 years); Mr.
Miller -- $198,750 (14 years); Mr. Monger -- $173,000 (19 years); Mr.
Etheridge -- $182,500 (17 years); and Mr. Thomas -- $161,300 (14 years).
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THIS REPORT IS SUBMITTED BY THE PERSONNEL COMMITTEE OF THE BOARD OF
DIRECTORS ADDRESSING UCB'S COMPENSATION POLICIES DURING 1995 WITH RESPECT TO ALL
ITS EXECUTIVE OFFICERS, INCLUDING THOSE NAMED IN THE SUMMARY COMPENSATION TABLE
ABOVE (THE "NAMED EXECUTIVES").
COMPENSATION PHILOSOPHY REGARDING EXECUTIVE OFFICERS
The compensation program at UCB is structured to enable UCB to attract
needed executive talent, to encourage executives to perform in a manner
consistent with the attainment of both annual and long term strategic goals, and
to provide a reasonable level of security for executives that is requisite to
ensure their retention. Base salaries paid by UCB to its executives are
competitively set based on practices in peer banking companies and reflect
internal subjective values based on specific job responsibilities and
assessments of incumbents' performance. Annual and long term incentives offered
by UCB are based upon UCB's achieving certain performance goals established by
the Personnel Committee at the beginning of each incentive measurement period.
UCB's stock option plans provide key executives identified by the Personnel
Committee or the Board of Directors, as appropriate, with an opportunity for
equity participation in the company and forge a direct link with shareholder
value. In general, the UCB executive compensation program balances a mix of
fixed and variable components that work in concert to stimulate executive
management performance and corporate fiscal achievement designed to benefit
UCB's shareholders.
RELATIONSHIP OF COMPENSATION TO PERFORMANCE
BASE SALARY AND ANNUAL BONUS
Base salaries for UCB's executive officers are targeted at the competitive
median salaries which are paid by banking institutions throughout the nation
having total assets of $2 to $6 billion (hereinafter referred to as the
"national comparison group"). In 1995, there were 93 companies in the national
comparison group. Base salaries paid by UCB are generally adjusted on an annual
basis so as to remain within the competitive ranges established by companies in
the national comparison group for their executives and to reward each executive
for his or her individual performance as subjectively
10
<PAGE>
assessed by the CEO and the Personnel Committee and approved by the Board of
Directors. Base salary levels during 1995 for UCB's executive group (10 persons)
were increased by an overall 6.9 percent over 1994. The 1995 base salary levels
for UCB's executive group on average approximated the midpoint of the base
compensation range for the national comparison group. UCB is unaware of any
correlation between the companies which comprise the national comparison group
and those which comprise the indexed group of NASDAQ banks shown in the
Performance Graph on page 14, since the banks in the national comparison group
were selected based on their size and scope of operation, without consideration
of the exchange on which their respective stocks may be listed.
The Management Incentive Plan was adopted effective January 1, 1994, and is
designed to provide participants with compensation in addition to base salary
that is subject to the attainment of certain annual performance goals. The Plan
provides that the Board of Directors may reduce or cancel bonus payments if
UCB's Return on Average Equity is less than 12.5 percent, or if actual Net
Operating Income per share, as defined in the Plan and as adjusted by the
Committee to exclude items judged to be outside the control and influence of
management, is less than 90% of the amount budgeted. During 1995 there were 213
participants in the Management Incentive Plan, including UCB's executive group
(10 persons). Under the 1995 Plan rules, each executive participant was assigned
a target level incentive award, expressed as a percentage of his or her base
salary, 80% of which was payable if the target level of performance relative to
the selected goals was met; with the remaining 20% payable at the discretion of
the Personnel Committee, subject to the approval of the Board of Directors. The
payment of annual bonuses for 1995 pursuant to the Management Incentive Plan was
made in accordance with a Plan formula which compared consolidated Net Operating
Income per share for the year ended December 31, 1995, determined in the manner
referred to above, with the amount budgeted, and compared the 1995 operating
results of certain divisions of UCB to their respective budgets. UCB attained
its consolidated budgeted Net Operating Income per share as calculated pursuant
to the method described above for the year ended December 31, 1995, and based on
that level of performance and the performance levels of the divisions evaluated,
$1,915,945 was approved by the Personnel Committee and the Board of Directors
for payout in 1996 to participants, which represented 96.64% of the sum of
target bonuses for the individual participants.
LONG TERM INCENTIVE PLAN
The principal purpose of the Long Term Incentive Plan (the "LTIP") is to
encourage eligible executive management employees to make long term decisions
that increase UCB's shareholder value and enhance UCB's ability to retain such
key employees. Each LTIP target award consists of a number of units, expressed
in dollars, which is calculated as a percentage or multiple of the participant's
Base Salary during the first year of the Measurement Period established by the
Personnel Committee. The value assigned the aforementioned award is the amount
to be paid if the targeted levels of performance for each of the goals are
attained during the Measurement Period. For each award, the Personnel Committee
establishes certain corporate performance objectives, the weight to be accorded
each objective, and the amount of compensation that will be paid at various
levels of attainment of the performance objectives. For each performance
objective, if the target level of performance is attained, the payout is 100% of
the value of the award; if the minimum (i.e., threshold) level of performance is
attained, the payout is 25% of the value of the award; and if a maximum level of
performance is reached or exceeded, the payout is 150% of the value of the
award. If the threshold level of performance is not attained with respect to any
performance objective, no payout relating to that performance objective is made.
Based on the extent to which performance objectives are met or exceeded, the
Personnel Committee may authorize payouts at the end of the measurement period
to participating executives who remain employed by UCB or by one of its
subsidiaries. The payout of a LTIP award is first determined by the Personnel
Committee as a dollar figure, but payment of the award is made to the
participant in shares of UCB's Common Stock based on its then fair market value
per share (i.e., the closing price per share as quoted by NASDAQ on the date of
payout). Subject to the prior approval of the Personnel Committee, a participant
may request to receive a portion of his award in cash for the purpose of
satisfying tax obligations related to the award. The Committee may also
discretionarily withhold a portion of an award to pay tax withholding
obligations related to payout of the award.
Having adopted this new and relatively complex performance-based plan in
1994, the Personnel Committee elected not to grant additional awards under the
LTIP during 1995, in order to provide the Committee an opportunity over the
course of two plan years to evaluate the reasonableness of the performance
objectives which had been selected in 1994, and the weights assigned to those
objectives.
STOCK PLANS
Subject to approval by the Corporation's shareholders, the Board of
Directors adopted, as of July 21, 1995, the 1995 Stock Option and Incentive
Award Plan. This plan is intended to replace the 1986 Key Employee Stock Option
Plan,
11
<PAGE>
which will expire in October, 1996, and which is viewed by the Board of
Directors as having an inadequate number of options remaining for future
issuance to adequately serve the Corporation's needs. The objectives of this new
1995 Stock Option and Incentive Award Plan are to promote greater stock
ownership in UCB by those employees who are principally responsible for its
future growth and continued success; to more closely link the personal interests
of plan participants to those of UCB's shareholders; and to provide flexibility
to UCB in its ability to motivate, attract and retain the services of
individuals upon whose judgment, initiative and special effort the continued
success of UCB depends. The plan will be administered by the Personnel
Committee, and authorizes the Committee to grant non-qualified stock options and
incentive stock options, and to award stock appreciation rights, stock awards
(restricted or unrestricted), and performance shares. Details of the material
terms of this plan are contained in Proposal 2.
Stock option grants made during 1995 under the terms of the 1995 Stock
Option and Incentive Award Plan were made by the Personnel Committee in lieu of
issuing further grants under the 1986 Key Employee Stock Option Plan. Effective
July 21, 1995, grants of 71,456 option shares of the Corporation's Common Stock
were made to 53 participants including the executive group (10 persons), subject
to approval of the Plan by shareholders. Forty percent (40%) of these stock
options will become vested on July 21, 1997, and an additional 20% will vest on
July 21 of each of the three years thereafter. Once vested, these stock options
may be exercised at any time until July 20, 2005, at which time any unexercised
options will expire. Each eligible participant was assigned to a class of
participation, depending upon the scope of the individual's job
responsibilities, which determined the percentage of base salary (ranging from
20% to 35%) used to calculate the value of stock options granted to that
participant. The Personnel Committee did not take into consideration the number
or status of any outstanding stock options in granting the above stock options
under the new Plan. If the 1995 Stock Option and Incentive Award Plan is
approved by shareholders at the annual meeting, it is the intention of the
Personnel Committee and the Board of Directors that no further stock options
will be granted under the terms of 1986 Key Employee Stock Option Plan, although
options previously granted under that Plan will remain outstanding and subject
to the vesting and exercise schedules previously established for such options.
Prior to 1995, stock options were periodically granted pursuant to the
terms of the 1986 Key Employee Stock Option Plan to key employees (including
UCB's executive officer group) selected by the Board of Directors pursuant to
recommendations from the Personnel Committee which took into consideration: (1)
the nature of the services rendered by the employee; (2) the employee's
potential contribution to the long-term success of the company; and (3) such
other factors as the Committee in its discretion deemed relevant. The decision
to grant option awards to key employees was solely within the discretion of the
Personnel Commmittee and the Board of Directors, and the grant of options, when
made initially or subsequent to an initial award, was principally to encourage
the continued employment of UCB's key employees. The granting of option awards
under this Stock Option Plan was not related in any manner to UCB's corporate
performance. Each option entitled the participant to purchase a number of
underlying shares of UCB Common Stock at fair market value as of the date of
grant. Initial awards of stock options were historically granted as a percent of
each participant's base salary at the time of the grant, such that new
participants were awarded options to purchase underlying shares of Common Stock
having a market value that approximated 100 percent of the participant's then
current base salary. While subsequent awards were not made consistently on an
annual basis, incumbent participants were awarded options which on average
equaled 20 percent of the cumulative annual base salaries when such awards were
made. Except as limited by the aforementioned practices of the Personnel
Committee, the amount and terms of options previously awarded to participants
were not considered when making subsequent option awards under the Key Employee
Stock Option Plan. Options outstanding under this Plan do not vest generally
until five years after the date of grant and exercise must occur within a
subsequent five year period. While the grant of stock options to key employees
was not linked to UCB's performance, any gain realized through the exercise of
options will be the product of an increase in the market value of the underlying
stock.
OTHER COMPENSATION
UCB's executive officers are covered by a defined benefit pension plan and
by a supplemental retirement plan known as the Benefit Equivalency Plan which
are more fully described on pages 9 and 10. Executives also are eligible to
participate along with all other UCB employees in UCB's Dollar Plus Savings Plan
to which pre-tax contributions may be made. Individual deferral contributions in
1995 were limited to the lesser of 6 percent of the employee's base salary or
$9,000. UCB makes a matching contribution to the Plan equal to that voluntarily
contributed by each participant. The UCB contribution is invested in UCB Common
Stock.
GENERAL
Awards made to executives under the Long Term Incentive Plan and awards or
grants made to executives under the 1995 Stock Option and Incentive Award Plan
are approved and administered by the Personnel Committee. All other
12
<PAGE>
components of executive compensation are approved annually by the Board of
Directors upon recommendation by the Personnel Committee. In 1995, the total
cash compensation paid by UCB to its executives approximated on average the
levels paid for comparable executive positions in the national comparison group.
MR. SASSER'S COMPENSATION
Each component of Mr. Sasser's total compensation paid or awarded in 1995
was made in accordance with the general compensation policies discussed above.
In this regard, Mr. Sasser's base salary of $395,000 was set for 1995 by the
Board of Directors upon the recommendation of the Personnel Committee at a level
that approximated the median salary for Chief Executive Officers among the
national comparison group referenced above. A base pay adjustment of 5.3 percent
over his 1994 base salary was made to align Mr. Sasser's base salary with the
median level of the national comparison group and reflected the Personnel
Committee's subjective assessment of Mr. Sasser's individual performance during
1994. Mr. Sasser was paid a cash bonus of $158,002 for 1995 pursuant to the
terms of the Management Incentive Plan calculated in accordance with the
performance formula discussed above.
The Personnel Committee granted in 1995 to Mr. Sasser options to purchase
6,636 shares of UCB Common Stock at $20.834 per share, pursuant to the terms of
the 1995 Stock Option and Incentive Award Plan, subject to approval of the Plan
by shareholders. In making this grant, the Personnel Committee did not take into
account any previously granted stock options which are outstanding. Additional
compensation provided to Mr. Sasser, which is detailed in footnote 3 to the
Summary Compensation Table, was in the form of a $9,000 matching contribution to
the deferral made to the Dollar Plus Savings Plan and the premium of $6,799 paid
by UCB on a term life insurance policy. These forms of compensation are
available on similar terms to all employees of the Corporation.
TAXATION ISSUE
The Internal Revenue Service has issued final regulations implementing
Internal Revenue Code Section 162(m), which generally prohibits the tax
deduction by a public corporation of certain compensation paid each year to the
corporation's chief executive officer and the four highest compensated officers
of the corporation other than the chief executive officer, unless such
compensation is performance related. Based on an analysis of the various
components of UCB's compensation program, it appears that all compensation to be
paid by UCB to each of its covered executives in 1996 and for the foreseeable
future will be fully tax deductible by the Corporation under the regulations.
The Personnel Committee and the Board of Directors intend to closely monitor
UCB's compensation policies so as to insure that, to the extent practical, the
Corporation's compensation related expenses remain deductible in compliance with
tax law.
SUBMITTED BY THE PERSONNEL COMMITTEE OF UCB'S BOARD OF DIRECTORS:
C. Frank Griffin, Chairman John V. Andrews W. Eugene Carter
Alfred E. Cleveland James L. Cresimore Jack E. Shaw Charles M. Winston
13
<PAGE>
PERFORMANCE GRAPH:
The following graph compares during the measurement period shown the yearly
percentage change in UCB's cumulative total shareholder return on its Common
Stock with the cumulative total returns of the NASDAQ market (U.S. companies)
and NASDAQ bank stocks, assuming dividend reinvestment:
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
AMONG UCB, NASDAQ STOCK MARKET (U.S. COMPANIES)
AND NASDAQ BANK STOCKS
(The Performance Graph appears here. The plot points are listed below.)
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
<S> <C> <C> <C> <C> <C> <C>
United Carolina 100.00 120.4 155.6 175.3 211.2 294.2
Bancshares Corp.
CRSP Total Return 100.00 160.6 186.9 214.5 209.7 296.3
Index for the NASDAQ
Stock Market (US)
CRSP Total Return 100.00 164.1 238.9 272.4 271.4 404.4
Index for the NASDAQ
Bank Stocks
(Comprised of Standard Industry Classification (SIC) Codes 6020 through
6029 and 6710 through 6719)
</TABLE>
EMPLOYMENT AGREEMENTS
UCB and its bank subsidiary, United Carolina Bank (collectively, "UCB"),
have entered into identical employment agreements (the "Agreements") with each
of the executive officers named in the Summary Compensation Table above. The
purpose of the Agreement is to recognize the significant contributions and
valuable management services rendered by each of the named executive officers to
the overall financial performance and success of UCB, and to provide for the
executive's continued employment with UCB.
Under the provisions of the Agreement, each executive is employed with UCB
for a rolling three year term which is automatically extended each day after the
date of the Agreement (the "Term"); provided, however, the Term may not extend
beyond the executive's sixty-fifth (65th) birthday unless the parties otherwise
agree in writing. UCB and the executive may give notice to the other, at any
time, that the Term will cease to automatically extend, and, as and from the
14
<PAGE>
effective date of such notice, the Term is fixed at three years (or, as
applicable, for such shorter period). As compensation for employment services to
be rendered by the executive during each year or partial year of the Term of the
Agreement, the executive will receive his annual base salary in effect on the
date of the Agreement (or, as applicable, a pro rata portion thereof), payable
monthly in accordance with UCB's regular payroll practices, and the executive is
entitled to participate in any employee benefit plan or arrangement generally
made available by UCB to its executive officers. The executive's annual base
salary may be adjusted by UCB after the date of the Agreement in accordance with
annual salary review practices, and the base salary, as periodically adjusted,
becomes the executive's base compensation under the Agreement.
The executive has the right to terminate employment under the Agreement (a)
if UCB materially breaches the Agreement and the breach is not cured within
thirty (30) days after notice, or (b) for Good Reason. "Good Reason" means the
occurrence (without the executive's express written consent) within three (3)
years following the date of a Change In Control of UCB, or during the period
commencing on the date a Threatened Change In Control becomes manifest and until
it ends, of any one of the following general acts or events which, after notice,
is not promptly corrected by UCB or its successor: the assignment of duties
inconsistent with the executive's status with UCB immediately prior to the
Change or Threatened Change In Control; the reduction or nonpayment of the
executive's base salary and/or the reduction or elimination of any other
material source of the executive's total compensation, long-term or otherwise;
the failure to provide the executive with employee plan benefits (i.e., pension;
life insurance; health and accident insurance; and disability insurance)
substantially similar to those provided immediately prior to the Change or
Threatened Change In Control; or, the relocation of the executive or UCB's
principal office outside the States of North and South Carolina. If the
executive terminates employment for either of the reasons stated above, the
executive will be entitled to receive the following damages: (i) his monthly
base salary then in effect (less the monthly employee costs of insurance
coverages referenced below) for the Term of the Agreement; (ii) a monthly amount
for the Term of the Agreement equal to one-twelfth ( 1/12) of the highest annual
bonus paid to the executive in the three year period immediately preceding
termination of employment; (iii) his life, health, accident, and disability
insurance coverage benefits then in effect for the Term of the Agreement as
provided by UCB or its successor, at its expense; (iv) a pro rata annual bonus
payment for the year in which the executive's employment is terminated
calculated at his target level of participation; and (iv) additional credited
service in the BEP for benefit accrual purposes equal to the number of months
remaining in the Term of the Agreement. The executive's right to employment and
payment of damages under the provisions of the Agreement terminate and cease if
during the Term of the Agreement the executive resigns without cause, dies,
becomes Disabled, elects to retire under the company's pension plan, or is
terminated by UCB or its successor for cause.
PROPOSAL 2. APPROVAL OF UNITED CAROLINA BANCSHARES CORPORATION STOCK OPTION AND
INCENTIVE AWARD PLAN
GENERAL
Based on the recommendation of an independent compensation consultant
engaged by the Board of Directors of UCB, the Board, through its Personnel
Committee, undertook a comprehensive review in late 1994 of the various stock
option and stock based incentive plans which are offered to the executive and
senior management employees of UCB's peer banking institutions in North
Carolina, the Southeast and the Nation generally. Following completion of the
Committee's study in July 1995, the Personnel Committee unanimously recommended
to the Board of Directors that it adopt the UCB Stock Option and Incentive Award
Plan (the "1995 Option and Incentive Plan"), a flexible, omnibus stock based
compensation plan, to replace the outmoded UCB Key Employee Stock Option Plan,
which was adopted by the Board in 1986, approved by shareholders at the 1987
Annual Meeting, and will terminate as to the issuance of new options on October
14, 1996. Subject to the approval of UCB's shareholders at the 1996 Annual
Meeting, the Board of Directors adopted the 1995 Option and Incentive Plan
effective as of July 21, 1995.
The general purposes of the 1995 Option and Incentive Plan are to promote
greater stock ownership in UCB by those key management employees of UCB and its
subsidiaries who are principally responsible for the future growth and continued
success of the company; to more closely link the personal interests of such
employees with those of UCB's shareholders; and to provide UCB and its
subsidiaries with the needed ability to motivate, attract and retain the
services of key management employees upon whose judgment, initiative and special
effort the continued success of UCB depends. There are approximately seventy
(70) management employees of UCB who will be eligible to participate in the 1995
Option and Incentive Plan as compared to ten (10) such persons who are eligible
to participate in the 1986 Option Plan.
The 1995 Option and Incentive Plan is intended to operate for a period of
ten (10) years and will terminate as to the issuance of new grants and awards on
July 20, 2005. The Board of Directors has reserved 900,000 shares of Common
Stock (representing 3.98% of UCB's issued, outstanding Common Stock) for
issuance under the 1995 Plan. These shares
15
<PAGE>
may, in the discretion of UCB, be either authorized, unissued shares of Common
Stock or shares of Common Stock purchased by UCB on the open market.
If the 1995 Option and Incentive Plan is approved by UCB's shareholders,
which is unanimously recommended by the Board of Directors, the Board will
immediately discontinue the 1986 Option Plan and no further grants of options
will be made under the latter plan. If the 1995 Option and Incentive Plan is not
approved by UCB's shareholders, it will not be made effective by the Board of
Directors; all grants of non-qualified stock options made during 1995 under the
Plan to participants will be void; and the 1986 Option Plan will continue in
effect until its short lived expiration in October 1996.
Other material terms of the 1995 Option and Incentive Plan are summarized
below. Information concerning specific grants of non-qualified stock options
made by the Personnel Committee during 1995 under the terms of the 1995 Option
and Incentive Plan to the named executive officers and other selected management
employees is provided below and in the Option Grants table on page 7.
ADMINISTRATION
In order to comply with the "outside director" requirements of Section
162(m) of the Internal Revenue Code and the "disinterested administration"
requirements of Rule 16b-3 of the Securities Exchange Act of 1934, which are
more fully discussed below, the Board of Directors delegated to its Personnel
Committee the sole authority to administer the 1995 Option and Incentive Plan.
Under the terms of the 1995 Option and Incentive Plan, the Personnel Committee
(whose membership consists only of outside, disinterested directors appointed by
the Board) has full and exclusive power to select those employees who are
eligible to receive grants and/or awards from time to time; to determine the
size and types of grants or awards made; to determine the terms and conditions
of grants or awards in a manner consistent with the Plan (including vesting
provisions and the duration of the awards or grants); to construe and interpret
the Plan and any agreement or instrument entered into under the Plan; to
establish, amend or waive rules and regulations for the Plan's administration;
and subject to certain restrictions, to amend the terms and conditions of any
outstanding grant or award to the extent such terms and conditions are within
the discretion of the Committee as provided in the Plan. In determining the key
employees of UCB and its subsidiaries who may be eligible to participate in the
Plan, the Personnel Committee will take into account the duties and
responsibilities of such prospective participants, their present and potential
contributions to the success of UCB and its subsidiaries, and such other factors
as the Committee deems relevant.
The Personnel Committee also has the authority under the terms of the 1995
Option and Incentive Plan to effect, in its discretion, proportionate
adjustments in the number of shares of Common Stock which have been reserved for
grants or awards under the Plan, or which are subject to outstanding grants or
awards previously made, in the event of any change in UCB's corporate
capitalization (such as a stock split, stock dividend, or corporate transaction
to include any merger, consolidation, separation, reorganization, or
liquidation) and to prevent dilution or enlargement of any rights under the
Plan.
The Board of Directors of UCB may, at any time, alter, amend, suspend or
terminate the 1995 Option and Incentive Plan in whole or in part; provided that,
unless approved by UCB's shareholders, no amendment shall be made to the Plan
which would (i) materially modify the participant eligibility requirements; (ii)
increase the total number of shares of Common Stock which may be granted or
awarded under the Plan; or (iii) extend the term of the Plan.
DESCRIPTION OF THE 1995 OPTION AND INCENTIVE PLAN
Grants or awards made under the 1995 Option and Incentive Plan by the
Personnel Committee to any eligible key employee may consist, individually or in
combination, of non-qualified stock options ("NQSO"), incentive stock options
("ISO"), stock appreciation rights ("SAR"), stock awards (restricted or
unrestricted), and/or stock related performance units. The following
restrictions apply to each of the foregoing types of grants and awards:
STOCK OPTIONS: The maximum, aggregate number of shares of Common Stock
subject to stock options, whether NQSO or ISO in nature, which may be granted
under the 1995 Plan to any participant during any twelve (12) month period is
75,000 shares; provided, however, that the maximum number of such shares
available for grant to a participant during any twelve (12) month period shall
be correspondingly reduced by the number of shares underlying any SAR awards
made to the participant during the same period. The maximum number of ISO shares
which may be exercised by a participant during any calendar year under the Plan
shall in no event exceed $100,000 in fair market value.
The option price of each share of Common Stock underlying a NQSO is
established by the Personnel Committee, but in no event shall the option price
be less than eighty-five percent (85%) of the Fair Market Value of a share of
Common Stock on the date the option is granted. The option price of each share
of Common Stock underlying an ISO is the Fair Market Value of such Stock on the
date the ISO is granted.
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<PAGE>
The option price upon exercise of any option granted under the Plan shall
be payable by the optionee to UCB in full either in cash, or by tendering
previously acquired shares of Common Stock having an aggregate fair market value
at the time of exercise equal to the total option price, or by a combination
thereof.
No stock option shall be exercisable by an optionee later than the tenth
(10th) anniversary of its grant.
Unless otherwise provided by the Committee in the agreement evidencing the
grant of an option, all outstanding unvested options granted to a participant
shall immediately vest upon his or her death or Disability while in the
employment of UCB or its subsidiary, and thereafter the vested options shall
remain exercisable by the participant, or in the case of death, by his or her
designated beneficiary or personal representative, until the expiration date of
each such option grant, or for one (l) year after the date of death or the
Disability, as appropriate, whichever period is shorter. In the event a
participant retires from UCB or its subsidiary, the participant shall be
entitled to a pro rata vesting of all outstanding unvested options as determined
by the Committee, and the vested options shall remain exercisable at any time
prior to their expiration date, or for six (6) months after the date of
retirement, whichever period is shorter.
Subject to Plan provisions relating to a Change or Threatened Change in
Control of UCB and except as otherwise provided by the Committee, if a
participant shall terminate employment with UCB or its subsidiaries for any
reason other than death, Disability, or Retirement, all options held by the
participant which are not then vested shall be forfeited to UCB.
STOCK APPRECIATION RIGHTS: SARs may be awarded in conjunction with, or in
addition to, or independent of any options granted by the Personnel Committee
under the Plan. The maximum number of shares of Common Stock underlying SARs
which can be awarded during any twelve (12) month period to any participant is
75,000 shares; provided, however, that the maximum number of such shares shall
be correspondingly reduced by the number of shares of Common Stock that are
subject to any options granted to the participant during the same period.
Upon exercise of a vested SAR, the participant shall be entitled to receive
a number of shares of Common Stock having an aggregate fair market value on the
date of exercise equal to the amount by which the Fair Market Value per share of
Common Stock on the date of exercise shall exceed (i) in the case of SARs
granted in conjunction with or in addition to a stock option, the option price
per share of Common Stock of the related option, or (ii) in the case of stand
alone SARs, the SAR grant value multiplied by the number of Shares of Common
Stock in respect of which the SARs will have been exercised. In the discretion
of the Personnel Committee and subject to applicable securities law, SARs upon
exercise may be settled by the payment of cash equal to the aggregate fair
market value of the shares of Common Stock that would otherwise have been
delivered to the participant.
STOCK AWARDS -- RESTRICTED OR UNRESTRICTED: The maximum number of shares of
Common Stock (whether restricted or unrestricted) that may be awarded by the
Personnel Committee to any participant during any twelve (12) month period is
30,000 shares.
With regard to any award of restricted stock, the Personnel Committee will
establish a period of restriction applicable to such award, which shall not be
less than six (6) months. At the end of the restricted period, all restrictions
made applicable to the award of restricted stock shall lapse and the stock shall
vest in the participant. The Personnel Committee may also prescribe conditions
for the lapse or termination of restrictions which have been made applicable to
any award upon the occurrence of the participant's death, Disability or
Retirement from UCB or its subsidiary, or upon the occurrence of a Change in
Control or Threatened Change in Control of UCB as defined in the Plan.
An award of restricted Common Stock may require the participant to pay for
such shares, and, in such event, the Personnel Committee may, in its discretion,
establish a purchase price below Fair Market Value at which the participant can
purchase such stock.
During the period of restriction applicable to any restricted stock award,
the participant shall have all the rights and privileges of a UCB stockholder as
to such restricted shares of Common Stock, including the right to receive
dividends and to vote such shares. No shares of restricted Common Stock,
however, may be sold, transferred, assigned, pledged, or otherwise encumbered or
disposed of by the participant during the period of restriction and until any
and all other conditions which have been prescribed by the Personnel Committee
have been satisfied.
All awarded shares of restricted Common Stock which have not become vested
in accordance with the restrictions and conditions established by the Personnel
Committee shall be forfeited and all rights of the participant to such shares
shall terminate automatically if the participant ceases to be a full-time
employee of UCB or one of its subsidiaries.
17
<PAGE>
Upon the expiration or termination of all restrictions and the satisfaction
of all conditions prescribed by the Personnel Committee, if any, with respect to
any restricted stock award, a stock certificate for the number of vested shares
of Common Stock subject to the award shall be delivered to the participant.
PERFORMANCE SHARES: The Personnel Committee may, in its discretion, make an
award of performance shares to participants from time to time for no payment.
The maximum number of performance shares which may be awarded to any participant
with respect to any performance period established by the Committee, which shall
not be less than two years in length, is 30,000 performance shares.
Each performance share awarded shall have a value equal to the fair market
value of a share of Common Stock on the date the performance share is earned by
the participant.
When making an award of performance shares, the Personnel Committee shall
establish and relatively weight one or more performance goals which, depending
on the extent to which such goal or goals is/are met, will determine the number
of performance shares that may be earned by a participant. The measurements from
which performance goals must be selected by the Committee in making a
performance share award to a named executive officer pursuant to the terms of
the 1995 Option and Incentive Plan are as follows: total shareholder return,
average return on assets, average return on equity, average growth in assets,
increase in operating earnings per share, increase in book value per share of
Common Stock, and ratio of operating revenue to operating overhead. For
participants other than named executive officers, the Personnel Committee may
select and relatively weight such performance goals as it deems appropriate. The
Committee may, in its sole discretion, exclude the effect of extraordinary and
non-recurring items from calculations involving any performance goal and the
measure thereof.
The payout of earned performance shares as determined by the Personnel
Committee is payable in a single lump sum in cash or in shares of Common Stock
(or a combination thereof) which have, as of the last day of the performance
period, an aggregate value equal to the fair market value of the earned
performance shares.
Unless provided otherwise by the Personnel Committee, if the employment of
a participant, who has received an award of performance shares, is terminated by
reason of death, Disability or Retirement or by UCB without Cause at any time
during the performance period related to the award, the participant will be
entitled to a prorated payout, as determined by the Committee under the terms of
the Plan, with respect to the unearned performance shares which are then
outstanding. If a participant's employment is terminated during a performance
period for any reason other than death, Disability, Retirement or by UCB without
Cause, all unearned performance shares which are outstanding will be forfeited
automatically.
CHANGE IN CONTROL/THREATENED CHANGE IN CONTROL: In the event of a Change in
Control of UCB or the termination of a participant other than for Cause as a
result of a Threatened Change in Control, all as defined in the 1995 Option and
Incentive Plan, and except as otherwise provided in the Plan or under any
agreement evidencing an award or grant made under the Plan, (i) all outstanding,
unvested options and SARs will become fully vested and be immediately
exercisable; (ii) to the extent provided by the Personnel Committee in the award
agreement, the earning of unearned performance shares will be based upon the
target award levels or actual performance compared with pre-established goals
prorated to the date of the Change in Control or, as appropriate, the date of
the participant's termination as a result of a Threatened Change in Control,
whichever provides the greater amount. Outstanding, unearned performance shares
in any such event will become fully vested and will be payable in Common Stock
or cash, or a combination thereof, as determined by the Committee; and, (iii)
all restrictions on restricted stock granted under the Plan shall lapse and such
stock shall be delivered to the participant. The terms "Change in Control" and
"Threatened Change in Control" have the same meanings as prescribed in the
Employment Agreements discussed on pages 14 and 15.
NEW PLAN BENEFITS: As discussed above, the benefits and amounts, if any, to
be granted or awarded under the terms of the 1995 Option and Incentive Plan to
any participant, including the named executive officers of UCB, lies totally
within the authority and discretion of the Personnel Committee of the Board of
Directors and, therefore, cannot be predetermined. The table below reflects
information concerning the grant by the Personnel Committee on July 21, 1995, of
non-qualified stock options to key employees of UCB and its bank subsidiaries,
including the company's named executive officers, who were selected to
participate in the Plan by the Personnel Committee during 1995. All of the
option grants disclosed below are subject to shareholder approval of the 1995
Option and Incentive Plan. Additional information concerning such grants to
UCB's named executive officers appears in the Summary Compensation Table,
Option/SAR Grants table and Aggregated Option/SAR Exercises table above.
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<PAGE>
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
UNITED CAROLINA BANCSHARES STOCK OPTION AND INCENTIVE AWARD PLAN
NUMBER OF SECURITIES EXERCISE VALUE OF UNEXERCISABLE
UNDERLYING OPTIONS PRICE EXPIRATION OPTIONS AT 3/8/1996
NAME GRANTED DURING 1995 (#) ($/SH)(1) DATE (2) ($)(3)
<S> <C> <C> <C> <C>
E. Rhone Sasser 6,636 20.834 7/20/05 23,498
Kenneth L. Miller, Jr. 4,452 20.834 7/20/05 15,765
Ronald C. Monger 3,528 20.834 7/20/05 12,493
Jeff D. Etheridge, Jr. 3,402 20.834 7/20/05 12,046
David L. Thomas 3,057 20.834 7/20/05 10,825
All current executive officers as a group (ten
persons): 33,099 20.834 7/20/05 117,204
All other participants as a group
(43 persons), excluding executive officers: 38,357 20.834 7/20/05 135,822
</TABLE>
(1) Represents the exercise price per option share of Common Stock as adjusted
by the Personnel Committee to account for the 3 for 2 stock dividend
declared by the Board of Directors in January 1996. The original exercise
price per Common Share on July 21, 1995 (the date of grant) was $31.25, the
closing sale price as quoted by NASDAQ.
(2) The options are subject to the following vesting schedule:
<TABLE>
<CAPTION>
COMPLETED YEARS OF VESTED INTEREST AS
EMPLOYMENT FROM DATE PERCENTAGE OF SHARES
OF OPTION GRANT UNDERLYING THE OPTION
<S> <C>
2 40%
3 60%
4 80%
5 100%
</TABLE>
(3) Value is the difference between the fair market value of the option shares
on the date of grant (the exercise price) and the fair market value of the
underlying shares on the date shown in the table. Under the terms of the
1995 Option and Incentive Plan, "Fair Market Value" is defined as the
closing sale price for UCB Common Stock as quoted by NASDAQ on the
applicable dates. At March 8, 1996, the Fair Market Value of the option
shares of UCB Common Stock granted under the 1995 Option and Incentive Plan
was $24.375 per share.
INCOME TAX CONSEQUENCES: Under current federal tax regulations, UCB has
been advised that no income will be recognized by a participant at the time a
stock option is granted. If the option is an ISO, no income will be recognized
by the participant upon exercise of the option, but income will be recognized by
the participant upon disposition of the exercised ISO shares. The exercise of a
NQSO is generally a taxable event that requires the participant to recognize, as
ordinary income, the difference between the exercise price of the underlying
option shares and the fair market value of those shares at the time of exercise.
No income is recognized by a participant upon the grant of a SAR. The
exercise of a SAR generally is a taxable event for which the participant must
recognize ordinary income equal to any cash that is paid and the fair market
value of any Common Stock that is received in settlement of a SAR.
A participant will recognize ordinary income with respect to a stock award
on the first day that the shares are either transferable or are not subject to a
substantial risk of forfeiture. The amount of income recognized by the
participant is equal to the fair market value of the Common Stock at that time.
A participant will recognize ordinary income at the time of payout of a
performance share award equal to the amount of cash paid and the fair market
value of Common Stock that is received in settlement of the award.
Subject to the restrictions of Section 162(m) of the Internal Revenue Code,
UCB will be entitled to claim a federal income tax deduction upon a
participant's exercise of a NQSO or SAR, the vesting of a stock award, and the
settlement of a performance share award. The amount of such deduction is equal
to the ordinary income which is then recognized by a participant. UCB will also
be entitled to a federal income tax deduction with respect to an ISO upon the
occurrence of either of the following events: (i) the participant disposes of
the underlying ISO shares prior to satisfying certain holding
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<PAGE>
period requirements or (ii) having satisfied the holding period requirements, at
the time the participant otherwise disposes of the ISO shares.
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS WITH RESPECT TO
PROPOSAL 2:
Under North Carolina law, the creation and adoption of stock option and
incentive award plans for UCB's officers and employees is a matter of business
judgment of the Board of Directors and, in the absence of other regulatory
requirements, such plans are not generally submitted to shareholders for
approval. However, in order to comply with the corporate governance requirements
of NASDAQ with whom UCB's Common Stock is listed, and the regulatory
requirements of Rule 16b-3 of the Securities Exchange Act of 1934 and Section
162(m) of the Internal Revenue Code, the 1995 Option and Incentive Plan is being
submitted herewith to shareholders for approval. Shareholder approval of the
Plan is essential (i) to secure the benefit of the short swing profit liability
exemption which is provided under Rule 16b-3 of the Securities Exchange Act with
respect to certain stock transactions effected by UCB's corporate insiders
participating in the Plan, and (ii) to insure that any qualified
performance-based compensation which is payable under the 1995 Option and
Incentive Plan to UCB's executive officers named in the Summary Compensation
Table is fully deductible by UCB for income tax purposes under Section 162(m) of
the Internal Revenue Code. Section 162(m) of the Internal Revenue Code generally
prohibits a publicly traded corporation from taking a tax deduction for certain
levels of compensation paid to its chief executive officer and the four highest
compensated officers of the corporation (other than the CEO) unless such
compensation is performance-based, the plan under which such compensation is
payable is approved by the corporation's shareholders, and the compensation plan
is administered by the board of directors, or a committee thereof, comprised
solely of "outside" directors.
A majority of the shares of Common Stock which are represented in person or
by proxy and entitled to vote at the Annual Meeting of Shareholders must be
voted in favor of the 1995 Option and Incentive Plan to approve the Plan. Voting
abstentions will be treated as a vote against Proposal 2 and broker non-votes
will have no affect on the outcome of the vote on Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 2.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires certain
officers of UCB and its directors, and persons who beneficially own more than
ten percent of any registered class of UCB's equity securities to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission and UCB.
Based solely on a review of the beneficial ownership reports and written
representations provided to UCB by the above referenced persons, UCB believes
that all filing requirements applicable to its reporting officers, directors and
greater than ten percent beneficial owners were properly and timely complied
with during 1995.
SELECTION OF AUDITORS
The firm of KPMG Peat Marwick, LLP, independent Certified Public
Accountants, has been appointed by the Board of Directors, on recommendation of
the Audit Committee, to serve as UCB's independent auditors for 1996. During
1995 the firm performed an audit of UCB's financial statements and certain
non-audit services consisting of tax return preparation and tax consultation for
UCB and its subsidiaries. An invitation has been extended to representatives of
the firm to attend the Annual Meeting with the opportunity to make a statement
if they desire to do so. A representative of the firm has indicated that he will
attend the meeting and will be available to respond to appropriate questions.
ANNUAL REPORT ON FORM 10-K
ON OR AFTER MARCH 22, 1996, UPON WRITTEN REQUEST TO THE SECRETARY OF UCB,
127 WEST WEBSTER STREET, WHITEVILLE, NORTH CAROLINA 28472, A COPY OF UCB'S
ANNUAL REPORT ON FORM 10-K FOR 1995, INCLUDING FINANCIAL STATEMENTS AND
SCHEDULES THERETO, WILL BE FORWARDED WITHOUT CHARGE TO THE SHAREHOLDER MAKING
SUCH REQUEST.
PROPOSALS FOR 1997 ANNUAL MEETING
Any proposal of a shareholder which is intended to be presented at the 1997
Annual Meeting of Shareholders must be received by UCB at its executive offices
no later than November 25, 1996, in order that such proposal be timely
20
<PAGE>
received for inclusion in the proxy statement and form of proxy to be issued in
connection with that meeting. It is anticipated that the 1997 Annual Meeting
will be held during the month of April, 1997.
GENERAL
A copy of UCB's 1995 Annual Report on Form 10-K (without exhibits) filed
with the Securities and Exchange Commission and 1995 Annual Report to
Shareholders accompany this Proxy Statement.
The expense of solicitation of proxies will be borne by UCB. In addition to
the use of the mails, directors, officers and regular employees of UCB may
solicit proxies by personal interview, telephone or other telecommunication
means. No additional fees or compensation will be paid to directors, officers or
regular employees of UCB for such solicitation.
Banks, brokerage houses and other institutions, nominees and fiduciaries
have been requested to forward soliciting material and annual reports to their
beneficial owners and to obtain authorization for the execution of proxies. Upon
request, UCB will reimburse expenses so incurred.
The Board of Directors does not know of any business which will be
presented at the meeting other than the proposals specifically set forth in the
Notice of Meeting. If any other matters are properly presented to the meeting
for action, it is intended that the persons named in the accompanying form of
proxy and acting thereunder will vote in accordance with their best judgment on
such matters.
By order of the Board of Directors.
HOWARD V. HUDSON, JR.
SECRETARY
March 22, 1996
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<PAGE>
(UNITED CAROLINA BANCSHARES appears here)
NOTICE OF
ANNUAL MEETING
OF
SHAREHOLDERS
PROXY STATEMENT
April 17, 1996
UCB Support Services Building
Whiteville, North Carolina
<PAGE>
*******************************************************************************
APPENDIX
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
UNITED CAROLINA BANCSHARES CORPORATION
The undersigned hereby appoints E. Rhone Sasser, C. Frank Griffin, and
Harold B. Wells, and each of them, with full power of substitution, as Proxies
and hereby authorizes them to represent and to vote, as designated below, all
the shares of common stock of United Carolina Bancshares Corporation held of
record by the undersigned on February 23, 1996 at the Annual Meeting of
Shareholders to be held April 17, 1996 or any adjournment thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
J. W. Adams, J. V. Andrews, R. M. Carter, W. E. Carter, A. E. Cleveland, J. L.
Cresimore, T. P. Dillon, C. F. Griffin, J. C. High,
E. R. Sasser, J. E. Shaw, H. B. Wells, C. M. Winston
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
2. To consider approval, for the purposes stated in Proposal 2 of the proxy
statement, of the 1995 Stock Option and Incentive Award Plan under which
grants of stock options, stock appreciation rights, stock awards and
performance units may be made from time to time to selected key employees of
UCB and its subsidiaries as approved by the Personnel Committee of the Board
of Directors as Plan Administrator.
[ ] For [ ] Against [ ] Abstain
3. In their discretion, the Proxies are authorized to vote the shares
represented hereby upon such other business as may properly come before the
meeting and for substitute nominees, if any.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE PROPOSALS.
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(continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR EACH OF THE PROPOSALS SET FORTH ON THE REVERSE SIDE.
Please PROMPTLY Sign and Date Below and Return in the Enclosed Envelope.
Date: , 1996
Signature:
Signature:
NOTE: Please sign exactly as name
appears on stock records. Joint
owners should each sign personally.
Trustees and others signing in a
representative capacity should
indicate the capacity in which they
sign.
