<PAGE>
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. )
Check the appropriate box:
[_] Preliminary Information Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14c-5(d)(2))
[X] Definitive Information Statement
FIRST MARYLAND BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing 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:
________________________________________________________________________
<PAGE>
[LOGO OF FIRST MARYLAND BANCORP APPEARS HERE]
Dear Stockholder:
You are hereby notified that the annual meeting of stockholders of FIRST
MARYLAND BANCORP (the "Corporation") will be held at the Corporation's
headquarters, 25 South Charles Street, 22nd Floor, Baltimore, Maryland, on
April 22, 1997, at 10:00 a.m., local time. Holders of record of the Company's
common stock and preferred stock as of March 18, 1997 are entitled to vote at
the meeting.
Allied Irish Banks, p.l.c. owns 100% of the outstanding common stock of the
Corporation and controls 99% of the voting power of the Corporation's
outstanding capital stock.
The only matter proposed for consideration at the meeting is the election of
15 directors to the Board of Directors of the Corporation. The accompanying
Notice of Meeting and Information Statement discuss this matter in further
detail.
On behalf of the Board of Directors and all of the employees of First
Maryland, I wish to thank you for your continued support.
Sincerely yours,
/s/ Jeremiah E. Casey
Jeremiah E. Casey
Chairman of the Board
LOGO
<PAGE>
FIRST MARYLAND BANCORP
25 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
NOTICE OF ANNUAL MEETING OF STOCKHOLDERSTO BE HELD ON APRIL 22, 1997
To the Stockholders of First Maryland Bancorp:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of FIRST MARYLAND BANCORP, a Maryland corporation (the
"Corporation"), will be held at the Corporation's headquarters, 25 South
Charles Street, Baltimore, Maryland, on April 22, 1997, at 10:00 a.m., local
time, for the following purposes:
1. To elect 15 directors to serve until the 1998 Annual Meeting of
Stockholders and until their successors are elected and qualified; and
2. To act upon any other matter which may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors of the Corporation has fixed the close of business on
March 18, 1997 as the record date for determining stockholders of the
Corporation entitled to notice of and to vote at the Annual Meeting.
Your attention is directed to the attached Information Statement and to the
enclosed Annual Report on Form 10-K of the Corporation for the year ended
December 31, 1996.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
---
By Order of the Board of Directors.
/s/Ronald C. McGuirk
Ronald C. McGuirk
Senior Vice President and Secretary
Baltimore, Maryland
March 26, 1997
<PAGE>
INFORMATION STATEMENT
This Information Statement is provided in connection with the 1997 Annual
Meeting of Stockholders (the "Annual Meeting") of First Maryland Bancorp (the
"Corporation"). This Information Statement is first being sent to stockholders
on or about March 26, 1997.
The close of business on March 18, 1997 has been fixed by the Board of
Directors of the Corporation as the record date (the "Record Date") for
determining the stockholders of the Corporation entitled to notice of and to
vote at the Annual Meeting. On the Record Date, the Corporation had
outstanding 594,480,215 shares of common stock, $ 1/7 par value per share (the
"Common Stock"), 6,000,000 shares of 7.875% Noncumulative Preferred Stock,
Series A, $5.00 par value per share (the "Series A Preferred"), and 90,000
shares of 4.50% Cumulative Redeemable Preferred Stock, $5.00 par value per
share (the "4.50% Preferred" and, together with the Series A Preferred, the
"Outstanding Preferred"). All of the outstanding Common Stock is owned by
Allied Irish Banks, p.l.c. ("AIB"), and AIB controls 99% of the voting power
of the Corporation's outstanding capital stock.
Each share of Common Stock and each share of Outstanding Preferred entitles
the holder thereof to one vote on each matter to be voted upon at the Annual
Meeting. Shares of Common Stock and Outstanding Preferred cannot be voted
unless the holder of record is present in person or represented by proxy at
the Annual Meeting.
The matters to be voted upon at the Annual Meeting require the affirmative
vote of the holders of a majority of the Common Stock and the Outstanding
Preferred present in person or by proxy at the meeting, at which a quorum is
present. The presence, in person or by proxy, of at least a majority of the
aggregate total number of shares of Common Stock and Outstanding Preferred is
necessary to constitute a quorum at the Annual Meeting. For purposes of
determining the existence of a quorum, voting and all other matters at the
Annual Meeting, the Common Stock and the Outstanding Preferred will be treated
as a single class.
The Board of Directors is aware of one item of business to be considered at
the Annual Meeting: the election of 15 directors to the Board of Directors of
the Corporation.
NEITHER THE CORPORATION NOR ANY PERSON AFFILIATED WITH THE
CORPORATION IS ASKING YOU FOR A PROXY AND YOU ARE
-------
REQUESTED NOT TO SEND A PROXY TO THE CORPORATION.
------------------------------------------------
1
<PAGE>
ELECTION OF DIRECTORS
The entire Board of Directors of the Corporation is elected at the Annual
Meeting. Each director is elected for a term of one year and until a successor
is elected and qualified. Each of the nominees was elected a director at the
1996 Annual Meeting of Stockholders.
INFORMATION CONCERNING NOMINEES
Information concerning the nominees for election as directors is presented
below. Each of the nominees has consented to serve as a director if elected.
There is no arrangement or understanding between any director and any other
person pursuant to which such director was selected as a director. If any
nominee becomes unable to accept nomination or election, then the Board of
Directors will designate another nominee for election or will reduce the
number of directors.
Frank P. Bramble, age 48, has served as a director of the Corporation and of
its wholly owned subsidiary, The First National Bank of Maryland ("First
National") since April 1994. He is President and Chief Executive Officer of
the Corporation and of First National. Mr. Bramble is a permanent member of
the Executive Committee. He was previously President and Chief Executive
Officer of MNC Financial, Inc. and Chairman of NationsBank Maryland.
Benjamin L. Brown, age 67, has served as a director of the Corporation and
of First National since 1990. Mr. Brown is an attorney and retired in January
1995 as General Counsel and Executive Director of the National Institute of
Municipal Law Officers. Mr. Brown is a member of the Loan Portfolio Review
Committee.
Jeremiah E. Casey, age 57, has served as a director of the Corporation since
1983 and of First National since 1985, and is Chairman of the Corporation and
First National. Since 1989, Mr. Casey has been Chief Executive, USA, of Allied
Irish Banks, p.l.c. ("AIB"), the parent of the Corporation, and has been a
director of AIB since 1992. Mr. Casey is a director of The Rouse Company, a
real estate development, management and ownership company ("The Rouse
Company"), and is also a director of the Federal Reserve Bank of Richmond,
Baltimore Branch. Mr. Casey is a permanent member of the Executive Committee.
J. Owen Cole, age 67, has served as a director of the Corporation since 1974
and of First National since 1968. He was Chairman of the Board of the
Corporation and of First National until 1987. Mr. Cole is also a member of the
Board of Baltimore Gas & Electric Company, a public utility company ("BGE").
Edward A. Crooke, age 58, has served as a director of the Corporation and of
First National since 1985. He has been the President and Chief Operating
Officer of BGE since 1992, prior to which he was President--Utility
Operations, and he has been a director of BGE since 1988. Mr. Crooke serves on
the Management and Compensation Committee and the Community, Consumer and
Public Affairs Committee.
John F. Dealy, age 57, has served as a director of the Corporation and of
First National since 1981. He is President of The Dealy Strategy Group, a
management consulting firm, and a Distinguished Professor in the Georgetown
University School of Business. Mr. Dealy is also Chairman and Chief Executive
Officer of The Maryland Health Care Product Development Corporation, a venture
capital company. In 1996, Mr. Dealy retired as Senior Counsel to the law firm
of Shaw, Pittman, Potts and Trowbridge. Mr. Dealy serves on the Community,
Consumer and Public Affairs Committee.
Mathias J. DeVito, age 66, has served as a director of the Corporation and
of First National since 1974. He retired as Chief Executive Officer of The
Rouse Company in 1995 and as Chairman of the Board in 1997, but continues to
serve as Chairman Emeritus and Chairman of its Executive Committee. He is also
a director of Allied Irish Banks, p.l.c. and of USAir Group, Inc. Mr. DeVito
is the chairperson of the Management and Compensation Committee and serves on
the Audit Committee.
Rhoda M. Dorsey, age 69, has served as a director of the Corporation and of
First National since 1975. She is President Emeritus of Goucher College. Ms.
Dorsey is the chairperson of the Audit Committee.
2
<PAGE>
Jerome W. Geckle, age 67, has served as a director of the Corporation and of
First National since 1975. He retired as Chairman of the Board of PHH
Corporation in 1989, prior to which he was Chairman and Chief Executive
Officer. He is also a director of BGE. Mr. Geckle serves on the Management and
Compensation Committee and is the chairperson of the Loan Portfolio Review
Committee.
Frank A. Gunther, Jr., age 65, has served as a director of the Corporation
and of First National since 1976. He is the retired Chairman of the Board and
President of Albert Gunther Inc., a contract hardware and industrial mill
supply firm. Mr. Gunther serves on the Community, Consumer and Public Affairs
Committee.
Curran W. Harvey, Jr., age 68, has served as a director of the Corporation
and of First National since 1985. He is a general partner of Spectra
Enterprise Associates and a special partner of New Enterprise Associates, both
venture capital limited partnerships. Mr. Harvey serves on the Loan Portfolio
Review Committee.
Margaret M. Heckler, age 65, has served as a director of the Corporation and
of First National since 1989. She is a practicing attorney in Washington, D.C.
and was U.S. Ambassador to Ireland from 1985 to 1989. Ms. Heckler serves on
the Loan Portfolio Review Committee.
Henry J. Knott, Jr., age 58, has served as a director of the Corporation and
of First National since 1981. He is the President of the Marion I. and Henry
J. Knott Foundation, and is the former Chairman and Chief Executive Officer of
Real Estate Resource Management, Inc., a real estate management company. Mr.
Knott is the chairperson of the Community, Consumer and Public Affairs
Committee.
Thomas P. Mulcahy, age 55, has served as a director of the Corporation since
1993. He has served as Group Chief Executive of AIB since January 1, 1994,
prior to which he was Group General Manager of AIB's Capital Markets Division.
He has been a director of AIB since 1990. Mr. Mulcahy serves on the Management
and Compensation Committee.
William M. Passano, Jr., age 68, has served as a director of the Corporation
and of First National since 1974. Since April 1991, he has been Chairman of
the Board of Waverly Inc., a publisher of medical books and periodicals. Mr.
Passano serves on the Audit Committee.
MEETINGS, COMMITTEES AND FEES
The Board of Directors met six times during 1996 for regularly scheduled
meetings.
The Board of Directors has standing executive, audit, compensation, loan
review and public affairs committees. The Executive Committee has two
permanent members and six rotating members who are outside directors. The
Executive Committee may exercise most of the powers of the Board of Directors
in the intervals between meetings of the full Board; it may not, however,
declare dividends, issue stock, recommend to stockholders any action requiring
stockholder approval, amend the bylaws, or approve mergers. The Executive
Committee met nine times for regularly scheduled meetings and once for a
special meeting during 1996.
The Audit Committee, composed of outside directors, is primarily responsible
for ascertaining that the Corporation's financial statements are presented
fairly in conformance with generally accepted accounting principles. The
committee oversees the Corporation's internal audit function, evaluates the
Corporation's system of internal controls, and reviews the external auditors'
proposed audit scope and approach and the results of the external audit. The
committee also reviews the status of pending or threatened litigation
involving the Corporation and its subsidiaries. The Audit Committee met five
times during 1996 for regularly scheduled meetings.
The Management and Compensation Committee reviews and recommends
compensation arrangements for the Corporation's executive and senior officers
and also reviews and recommends action with respect to the Corporation's
retirement plans. The Management and Compensation Committee met twice during
1996.
3
<PAGE>
The Loan Portfolio Review Committee reviews the Corporation's lending
activities, and oversees, reviews and approves the corporate loan review
program and credit approval policies. The committee also evaluates and
approves, on behalf of the Board, the adequacy of the Corporation's allowance
for loan and lease losses. The Loan Portfolio Review Committee met four times
during 1996 for regularly scheduled meetings.
The Community, Consumer and Public Affairs Committee oversees the
Corporation's Community Reinvestment Act activities. The Committee reviews the
Corporation's community outreach efforts, and its efforts to ascertain the
credit needs of low and moderate income areas and to develop and market
products to meet those needs. The Community, Consumer and Public Affairs
Committee met six times during 1996 for regularly scheduled meetings.
Each director who is not also an officer of the Corporation or of AIB
receives an annual retainer of either $17,000 in cash or AIB common stock ADRs
having a value of $18,500, at the director's option, plus $1,100 for
attendance at each meeting of the Board and $900 ($1,100 for the Executive
Committee) for attendance at meetings of committees of the Board of which he
or she is a member. In addition, each committee chairperson receives an
additional $300 per committee meeting, other than the chairperson of the
Management and Compensation Committee, who receives an annual retainer of
$6,500 in lieu of an additional fee per meeting.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Directors and officers of the Corporation, members of their immediate
families and AIB and certain affiliates were customers of, and had
transactions with, the Corporation, First National and other subsidiaries of
the Corporation in the ordinary course of business during 1996. Similar
transactions in the ordinary course of business may be expected to take place
in the future.
All loans to executive officers and directors and members of their immediate
families and to AIB and certain affiliates were made in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than normal risk of collectibility or
present other unfavorable features. Of the loans outstanding at December 31,
1996, none were contractually past due 90 days or more as to principal or
interest and none were classified as nonaccrual, restructured or potential
problem loans.
The Rouse Company maintains various banking relationships with First
National. In addition, First National has loans outstanding to, and leases
certain facilities from, various affiliates of The Rouse Company. The
aggregate amount payable under such leases during 1996 was $309,074. All such
loans were made in the ordinary course of business, on substantially the same
terms as those prevailing at the time for comparable transactions with other
persons and do not involve more than the normal risk of collectibility or
present other unfavorable features, and the terms of such leases are at least
as favorable to First National as could be obtained elsewhere.
In 1996, the law firm of Shaw, Pittman, Potts and Trowbridge, of which Mr.
Dealy, a director of the Corporation and First National, was Senior Counsel,
provided legal services to the Corporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Allied Irish Banks p.l.c., Bankcentre, Ballsbridge, Dublin 4, Ireland has
owned 100% of the Corporation's Common Stock since March 21, 1989. Messrs.
Casey and Mulcahy are directors and executive officers, and Mr. DeVito is a
director, of AIB, and as such, each may be deemed to be the beneficial owner
of 100% of the Corporation's Common Stock.
No director or named executive officer of the Corporation owns any of the
Outstanding Preferred.
4
<PAGE>
The following table sets forth the number of AIB Ordinary Shares (including
such shares held in the form of AIB Ordinary ADRs but excluding directors'
qualifying shares) and AIB Preferred Stock ADRs beneficially owned by each
executive officer named in the Summary Compensation Table, each nominee for
director, and by all executive officers and directors as a group as of
December 31, 1996.
<TABLE>
<CAPTION>
ORDINARY PREFERRED
SHARES (1)(2) STOCK ADRS (1)
------------- --------------
<S> <C> <C>
EXECUTIVE OFFICERS(3)
Frank P. Bramble............................... 107,262 3,636
Jeremiah E. Casey.............................. 463,750 16,801
David M. Cronin................................ 119,750 6,505
Walter R. Fatzinger, Jr. ...................... 51,456 1,794
Susan C. Keating............................... 42,198 2,162
DIRECTORS
Benjamin L. Brown.............................. -- --
J. Owen Cole................................... 14,244 4,000
Edward A. Crooke............................... 100 --
John F. Dealy.................................. -- --
Mathias J. DeVito.............................. 51 --
Rhoda M. Dorsey................................ -- --
Jerome W. Geckle............................... 100 --
Frank A. Gunther, Jr........................... -- --
Curran W. Harvey, Jr........................... -- --
Margaret M. Heckler............................ -- --
Henry J. Knott, Jr. ........................... 100 --
Thomas P. Mulcahy.............................. 511,149 (4) --
William M. Passano, Jr......................... -- --
All executive officers and directors as a group
(18 persons).................................. 1,310,160 34,898
</TABLE>
- --------
(1) No individual listed in the table beneficially owns, and all executive
officers and directors as a group do not beneficially own, more than one
percent of the shares of the indicated class outstanding.
(2) Each AIB Ordinary ADR represents six AIB Ordinary Shares.
(3) With respect to Messrs. Bramble, Casey, Cronin and Fatzinger and Ms.
Keating, includes holdings of restricted stock.
(4) Includes shares subject to currently exercisable stock options.
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth information about salary
and other compensation for the Corporation's chief executive officer and each
of the four other most highly compensated executive officers (the "named
executive officers") for services to the Corporation in all capacities during
each of the three years ended December 31, 1996.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- ------------
RESTRICTED ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL STOCK COMPENSA-
POSITION AT 12/31/96 YEAR SALARY BONUS(1) COMPENSATION(2) AWARD(S)(3) TION(4)
- -------------------- ---- ------- -------- --------------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Jeremiah E. Casey....... 1996 600,000 300,000 5,404 -0- 27,707
Chairman 1995 584,000 438,000 5,170 -0- 27,963
1994 584,000 -0- 4,941 -0- 33,158
Frank P. Bramble........ 1996 525,000 300,000 -0- -0- 38,484
President and CEO(5) 1995 450,000 375,000 -0- -0- 29,998
1994 337,500 -0- -0- 500,000 36,977
David M. Cronin......... 1996 290,000 116,000 1,169 -0- 20,818
Executive Vice Pres. 1995 274,000 164,400 1,110 -0- 21,075
and Treasurer 1994 274,000 -0- 1,054 -0- 15,400
Walter R. Fatzinger,
Jr. ................... 1996 275,000 110,100 -0- -0- 31,495
Executive Vice Pres.(6) 1995 250,000 150,000 -0- -0- 31,208
1994 104,167 -0- -0- 250,000 30,371
Susan C. Keating........ 1996 300,000 120,000 -0- 300,000 26,912
Executive Vice Pres.(7)
</TABLE>
- --------
(1) Bonuses are earned in the year specified and generally paid in the
following year.
(2) Consists of additional compensation in respect of income taxes due on
imputed income from executive long term disability insurance premiums paid
by the Corporation.
(3) This column shows the market value of awards of AIB restricted stock on
the date of grant. Restrictions on the stock lapse in equal amounts on the
third, fourth and fifth anniversaries of each respective grant. Dividends
on restricted stock are paid to the named executive officers in the same
manner and amount as paid on the same unrestricted securities. Information
concerning number of shares and values of restricted stock holdings at
December 31, 1996 is set forth in next table.
(4) Consists of: (a) the value of split-dollar life insurance premiums paid
pursuant to the Corporation's Executive Life Insurance Program of $21,571,
$33,984, $9,220, $26,995 and $22,412 during 1996 for Messrs. Casey,
Bramble, Cronin and Fatzinger and Ms. Keating respectively; (b) matching
contributions under the Corporation's qualified, defined contribution plan
of $4,500 for each named executive officer; (c) $7,098 in respect of life
insurance premiums paid by the Corporation for the benefit of Mr. Cronin;
and (d) $1,636 in respect of certain earnings on deferred compensation
amounts for Mr. Casey.
(5) Mr. Bramble was elected President and CEO on April 1, 1994. Prior to that
time, Mr. Bramble was not employed by the Corporation.
(6) Mr. Fatzinger joined the Corporation in August 1994.
(7) Ms. Keating joined the Corporation in January 1996.
6
<PAGE>
The following table sets forth additional information concerning the number
of shares and the value of restricted stock holdings of the named executive
officers at December 31, 1996.
<TABLE>
<CAPTION>
NAME ORDINARY ADRS PREFERRED ADRS
- ---- ------------- --------------
<S> <C> <C>
Jeremiah E. Casey.................................. 15,663 2,643
$614,773 $ 73,026
Frank P. Bramble................................... 17,877 3,636
$701,672 $100,463
David M. Cronin.................................... 6,564 1,107
$257,637 $ 30,586
Walter R. Fatzinger, Jr. .......................... 8,511 1,794
$334,057 $ 49,568
Susan C. Keating................................... 7,033 2,162
$276,045 $ 59,736
</TABLE>
The Corporation has not issued any stock options or stock appreciation
rights to any of the named executive officers during the three years ended
December 31, 1996, and there are no stock options or stock appreciation rights
currently outstanding.
PENSION PLANS
The Corporation maintains a non-qualified, supplemental defined benefit
pension plan under which maximum retirement benefits for Mr. Casey are
determined. A benefit payable under the supplemental plan will be reduced by
the benefit payable to Mr. Casey under the Corporation's qualified, defined
benefit pension plan in which all eligible employees (including the named
executive officer) participate, and by the amount of Social Security benefits.
The following table shows the estimated annual pension benefits payable to Mr.
Casey at age 65 under the non-qualified supplemental pension plan.
<TABLE>
<CAPTION>
ANNUAL RETIREMENT BENEFIT
AT AGE 65
WITH YEARS OF SERVICE
INDICATED
--------------------------
25 YEARS
REMUNERATION 15 YEARS 20 YEARS OR MORE
- ------------ -------- -------- --------
<S> <C> <C> <C>
400,000.............................................. 200,000 220,000 280,000
600,000.............................................. 300,000 330,000 420,000
800,000.............................................. 400,000 440,000 560,000
1,000,000............................................ 500,000 550,000 700,000
1,200,000............................................ 600,000 660,000 840,000
</TABLE>
A participant's remuneration covered by the pension plan is average total
compensation (salary, bonus and all other cash compensation other than
compensation attributable to restricted stock awards) for the three calendar
years during the last ten years of the participant's career for which the
average is the highest. The estimated years of service for Mr. Casey is 39
years. Mr. Bramble is entitled to supplemental retirement benefits under an
agreement which provides for a supplemental retirement benefit of 60% of the
average of the highest three years of compensation during his career, offset
by benefit payments under the Corporation's qualified defined benefit plan and
social security benefits and by benefit payments under defined benefit plans
of a former employer.
SHORT TERM INCENTIVE AWARDS
The Corporation's annual Short Term Incentive Plan for Senior Officers (the
"Annual Bonus Plan") is intended to focus the efforts of executive and senior
officers on the attainment of specific annual performance goals that will
promote the overall success of the Corporation. Payments under the Annual
Bonus Plan are funded out of the Corporation's net income.
7
<PAGE>
Under the Annual Bonus Plan, the Management and Compensation Committee (the
"Compensation Committee") approves minimum, target and maximum net income
levels at the beginning of the year. The Compensation Committee determines the
percentage of base salary applicable to each net income level. If the minimum
net income level is not achieved, then no award is made under the plan. If a
higher level of net income is achieved, then the Compensation Committee
determines the percentage applicable to the Chief Executive Officer and the
percentages applicable to the other senior officers, based on the scope of
each officer's duties and responsibilities. Individual performance measures
also are considered in setting individual percentages, in the discretion of
the Compensation Committee. Such measures include achievement of strategic and
tactical objectives, growth, meeting business unit objectives, promoting
corporate values, providing leadership to employees and encouraging teamwork.
1989 LONG TERM INCENTIVE PLAN
The Corporation's 1989 Long Term Incentive Plan and Trust (the "1989 LTIP")
was developed to attract and retain key employees who contribute to the
continued growth, development and profitable performance of the Corporation
and, thereby, to the continued financial success of AIB. The 1989 LTIP has
been approved by the Board of Directors of the Corporation.
The 1989 LTIP provides for awards of AIB ordinary and preferred ADRs
(collectively, "incentive shares") to officers eligible to participate in the
plan. Incentive shares are restricted and may not be disposed of by an officer
for a period of time after the date of an award. The restriction for a
specific award lapses in equal installments on the third, fourth and fifth
anniversary dates of the award. During the restricted period, the officer is
entitled to receive, without restriction, any dividends on the incentive
shares. Awards of incentive shares are intended to serve as compensation over
a period of several years and generally are made on a biennial basis. The size
of an award of incentive shares is based on a percentage of base salary for
each participant.
As of January 1, 1997, there was a total of 191,118 ordinary ADRs and 18,757
preferred ADRs available for awards under the 1989 LTIP. All incentive shares
available for awards in any year that are not used and incentive shares that
are later forfeited are also available for use in subsequent years.
1995 LONG TERM INCENTIVE PLAN
The Corporation's 1995 Long Term Incentive Plan (the "1995 LTIP") was also
developed to attract and retain key employees who contribute to the continued
growth, development and profitable performance of the Corporation and,
thereby, to the continued financial success of AIB. The 1995 LTIP has been
approved by the Board of Directors of the Corporation.
8
<PAGE>
The following table sets forth information concerning performance awards
made to the named executive officers under the 1995 LTIP:
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
OR OTHER NON-STOCK PRICE-BASED PLANS(3)
NUMBER OF PERIOD UNTIL -------------------------------
SHARES, UNITS MATURATION THRESHOLD TARGET MAXIMUM
NAME OR OTHER RIGHTS OR PAYOUT (2) ($ OR #) ($ OR #) ($ OR #)
---- --------------- --------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Mr. Casey (1) 1/1/95-12/31/97 $505,467 $1,010,933 $2,021,867
Mr. Bramble (1) 1/1/95-12/31/97 446,250 892,500 1,785,000
Mr. Cronin (1) 1/1/95-12/31/97 185,033 370,067 740,133
Mr. Fatzinger (1) 1/1/95-12/31/97 178,750 357,500 715,000
Ms. Keating (1) 1/1/96-12/31/97 136,568 273,137 546,273
</TABLE>
(1) The 1995 LTIP establishes three performance measures on which the amount
of a participant's award is determined: (i) the Corporation's aggregate
after-tax profit over the three-year performance period; (ii) the
Corporation's return-on-assets ratio ("ROA") for 1997 relative to the ROAs
for a peer group of approximately 20 U.S. bank holding companies; and
(iii) the Corporation's cost-to-income ratio for 1997. Threshold, target
and maximum levels were established for each performance measure, and
threshold, target and maximum percentage multipliers were specified for
each participant. At the end of the performance period, the Corporation's
actual performance will be measured against the performance measures, to
determine whether the Corporation performed at the threshold, target or
maximum level. If, for example, the Corporation performs at the target
level overall, then the participant's award will equal the applicable
target multiplier times his or her average base salary over the
performance period. The threshold, target and maximum multipliers for
Messrs. Casey and Bramble are 85%, 170% and 340%, respectively. The
threshold, target and maximum multipliers for the other named executive
officers are 65%, 130% and 260%, respectively.
(2) If a participant's employment status changes during the performance
period, then the award may be paid on a pro rata basis or forfeited,
depending on the nature of the change. The 1995 LTIP also provides that if
a participant's employment is terminated following a change in control of
the Corporation or AIB but prior to the end of a performance period, then
the award will be paid in its entirety, without proration, based on the
Corporation's performance as of the end of the most recent quarter.
(3) An award may be paid in the form of cash, AIB securities or a combination
thereof, as determined by the Compensation Committee.
CHANGE IN CONTROL AGREEMENTS
The Corporation has entered in to a change-in-control agreement ("Change
Agreement") with each named executive officer other than Mr. Casey. Each
Change Agreement provides that if an executive is discharged, or if the
executive experiences a material reduction in compensation or duties or
relocation to an office more than 50 miles from the executive's then current
office, in each case within two years following a "change of control," then
the executive will be entitled to a severance package comprised of the
following elements (subject to any limitations imposed by regulatory
authorities): (i) a payment equal to two times annual salary (three times
annual salary in the case of the Chief Executive Officer); (ii) payment of the
greater of the executive's target or actual bonus for the year in which the
change in control occurs; (iii) vesting of all restricted stock awards; (iv)
payment of any target amounts under long-term incentive awards; (v)
continuation of all fringe benefit coverage for up to two years; and (vi)
outplacement services.
For purposes of the Change Agreements, a "change of control" will be deemed
to have taken place on the date of the earliest to occur of any of the
following events: (i) an unaffiliated third party becomes the beneficial owner
of 50% or more of the outstanding ordinary shares of AIB, or 25% or more of
the outstanding common stock of the Corporation or of First National; (ii) the
commencement of, or first public announcement of the intention of any person
to commence, a tender or exchange offer the consummation of which would result
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in beneficial ownership by a person (other than AIB, the Corporation, any
wholly-owned subsidiary of either AIB or the Corporation, or any employee
benefit plan of AIB or the Corporation or of any subsidiary of either or any
entity holding common stock for or pursuant to the terms of any such plan) of
50% or more of the outstanding common stock of AIB, or 25% or more of the
outstanding common stock of the Corporation or of First National; or (iii) as
the result of, or in connection with, any cash tender or exchange offer,
merger, consolidation or other business combination, sale or disposition of
all or substantially all of the Corporation's assets, or contested election,
or any combination of the foregoing transactions (a "Transaction"), (a) the
persons who were directors of either AIB, the Corporation, or First National
immediately before the Transaction shall cease to constitute a majority of the
Board of Directors of such entity or any successor to such entity, or (b) the
persons who were stockholders of AIB or the Corporation, as applicable,
immediately before the Transaction shall cease to own at least 50% of the
outstanding voting stock of the applicable entity or any successor to such
entity.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Crooke, DeVito, Geckle and Mulcahy served on the Compensation
Committee during 1996. No member of the Compensation Committee was an officer
or employee of the Corporation during 1996. Mr. Casey was Chairman of the
Corporation and served as a director of The Rouse Company during 1996. Mr.
DeVito served as Chairman of The Rouse Company during 1996. Mr. Casey served
on the Personnel Committee of The Rouse Company, which Committee has certain
responsibilities relating to the compensation of executive officers of The
Rouse Company.
REPORT OF MANAGEMENT AND COMPENSATION COMMITTEE
General. The Compensation Committee, made up of three outside directors and
the Group Chief Executive of AIB, is responsible for executive compensation
policies. In addition to establishing policies, the Compensation Committee
approves all executive compensation arrangements and makes recommendations to
the Board of Directors for specific salary amounts and other compensation
awards for individual executives.
The Corporation's compensation program is designed to attract, motivate and
retain executive personnel capable of making significant contributions to the
long term success of the Corporation. The primary components of the executive
compensation program are competitive base salaries and both short term and
long term incentives. Executive officers also participate in other broad based
employee compensation and benefits programs.
The Corporation retains an independent compensation consulting firm
("Compensation Consultant") to assist the Compensation Committee in performing
its duties. The Compensation Consultant provides analytical and general
interpretive guidance regarding compensation practices for the banking
industry as a whole and for a group of the Corporation's peers, and advises
the Compensation Committee on structuring compensation arrangements to achieve
the desired quantitative and qualitative goals.
In connection with the annual review of the executive compensation program,
the Compensation Committee has confirmed with the Compensation Consultant that
the executive compensation plans remain competitive and effectively serve the
purposes for which they were established. For 1996, the Board approved all
recommendations by the Compensation Committee related to the compensation of
Frank P. Bramble, the Chief Executive Officer of the Corporation.
Base Salary. Base salaries for the Corporation's executive officers are
established based upon an analysis of executive salary practices at a group of
the Corporation's peer bank holding companies (the "Peer Group"). The Peer
Group is selected based on total assets, geographic location, and comparable
lines of business. The Compensation Committee believes that base salary should
reflect the scope of an executive officer's duties and responsibilities, his
or her importance to the Corporation relative to other executive officer
positions, and the competitiveness of the executive officer's total
compensation relative to similarly situated executives within the Peer Group.
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Executive officer salary increases are reviewed annually and are based on
the executive officer's performance, base salary position relative to the
median or average rates paid in the Peer Group and in the broader financial
institutions market, and the Corporation's net income during the prior year.
In determining Mr. Bramble's base salary, the Committee focused on
compensation data for those chief executive officers in the Peer Group whose
duties and responsibilities most closely resembled Mr. Bramble's.
Annual Bonus Plan. For 1996 awards under the Annual Bonus Plan, the
Compensation Committee approved minimum, target and maximum net income levels;
the percentages of base salary corresponding to these levels were 25%, 50% and
75%, respectively, for the Chief Executive Officer. The Corporation had net
income of $132.3 million for the year ended December 31, 1996, and 1996 awards
under the Annual Bonus Plan were determined using the target percentage.
Mr. Bramble received a 1996 Annual Bonus Plan award of $300,000. The
Compensation Committee, exercising its discretion as permitted by the terms of
the Annual Bonus Plan, chose to calculate Mr. Bramble's award using a nominal
base salary of $600,000 to reflect his continued contributions to the
Corporation's earnings momentum and his outstanding leadership.
Long Term Incentives. The Compensation Committee administers both the 1989
LTIP and the 1995 LTIP, and determines whether, to whom and in what amounts
awards are made under those plans. The Board of Directors acts on the
recommendations of the Committee regarding proposed awards under the 1989 LTIP
to the Chief Executive Officer. No award was made to the Chief Executive
Officer under the 1989 LTIP in 1996.
The Chief Executive Officer's level of participation in the 1995 LTIP was
based primarily on the broad scope of his responsibilities and the significant
role he plays in the Corporation achieving the performance goals established
under the plan.
INTERNAL REVENUE CODE SECTION 162(M) COMPLIANCE
The deductibility of executive compensation in excess of the limit set in
Section 162(m) of the Internal Revenue Code 1986, as amended, was not a factor
in the Committee's determination of 1996 compensation levels. The Committee
will continue to review the Corporation's executive compensation plans to
determine what changes, if any, may be advisable in connection with Section
162(m).
Mathias J. DeVito, Chairman Jerome W. Geckle
Edward A. Crooke Thomas P. Mulcahy
OTHER MATTERS
As of the date of this Information Statement, the Board of Directors of the
Corporation knows of no other business which will be presented for
consideration at the Annual Meeting.
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