<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
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g)
[_] 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:
________________________________________________________________________
Notes:
<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 27, 1999, at 10:00 a.m., local time. Holders of record of the Company's
common stock and preferred stock as of March 18, 1999 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 matters proposed for consideration at the meeting are the election of 22
directors to the Board of Directors of the Corporation. The accompanying
Notice of Meeting and Information Statement discuss these matters 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,
Jeremiah E. Casey
Chairman of the Board
<PAGE>
FIRST MARYLAND BANCORP
25 South Charles Street
Baltimore, Maryland 21201
NOTICE OF ANNUAL MEETING OF STOCKHOLDERSTO BE HELD ON APRIL 27, 1999
To the Stockholders of First Maryland Bancorp:
NOTICE IS HEREBY GIVEN that the 1999 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 27, 1999, at 10:00 a.m., local
time, for the following purposes:
1. To elect 22 directors to serve until the 2000 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, 1999 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, 1998.
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/ Gregory K. Thoreson
Gregory K. Thoreson
Senior Vice President and Assistant
Secretary
Baltimore, Maryland
March 24, 1999
<PAGE>
INFORMATION STATEMENT
This Information Statement is provided in connection with the 1999 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 29, 1999.
The close of business on March 18, 1999 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 597,763,495 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 22 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. Except for Messrs. Brady, Buckley and Evans, Ms.
Bellamy and Ms. Keating, each of the nominees was elected a director at the
1998 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.
Sherry F. Bellamy, age 46, has served as a director of the Corporation and
of its wholly owned subsidiary, FMB Bank (formerly The First National Bank of
Maryland and herein, "First National"), since January 1999. Since March 1997,
she has been the President and Chief Executive of Bell Atlantic-Maryland,
Inc., a regional telecommunications company. Prior to March 1997, Ms. Bellamy
was a vice president and the general counsel of Bell Atlantic-Washington, D.C.
James T. Brady, age 58, has served as a director of the Corporation and of
First National since October 1998. Since May 1998, he has been engaged as an
education/economic development consultant. From May 1995 to May 1998, Mr.
Brady was the Secretary of the Maryland Department of Business and Economic
Development. Prior to May 1995, Mr. Brady was a partner with Arthur Andersen
LLP in Baltimore, Maryland. Mr. Brady is also a director of McCormick &
Company, Inc., a spices and seasonings company.
Frank P. Bramble, age 50, has served as a director of the Corporation and of
First National since April 1994. He is the Chief Executive Officer of the
Corporation and of First National, and in November 1998, Mr. Bramble became
the Chief Executive, USA, and a director of Allied Irish Banks, p.l.c.
("AIB"), the parent of the Corporation. From April 1994 to January 1999, Mr.
Bramble was the President and Chief Executive Officer of the Corporation and
of First National. Mr. Bramble is a permanent member of the Executive
Committee.
Benjamin L. Brown, age 69, 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 the chairperson of the Community Affairs
Committee.
Michael D. Buckley, age 54, has served as a director of the Corporation
since October 1998. He is the Managing Director, Capital Markets Division, of
AIB and has been a director of AIB since 1995.
Jeremiah E. Casey, age 59, 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. From 1989 through October 1998, Mr. Casey was Chief Executive,
USA, of AIB and was a director of AIB from 1992 through October 1998. 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 69, 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").
Mr. Cole serves on the Community Affairs Committee.
Edward A. Crooke, age 60, has served as a director of the Corporation and of
First National since 1985. He has been Vice Chairman of BGE since 1998, prior
to which he was President and Chief Operating Officer, and he has been a
director of BGE since 1988. Mr. Crooke is also a director of Corporate Office
Properties Trust, a real estate investment trust. Mr. Crooke serves on the
Management and Compensation Committee.
2
<PAGE>
John F. Dealy, age 59, 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 is also Chairman and Chief Executive Officer
of The Maryland Health Care Product Development Corporation, a venture capital
company. In 1998, Mr. Dealy retired as Distinguished Professor in the
Georgetown University School of Business. In 1996, Mr. Dealy retired as Senior
Counsel to the law firm of Shaw, Pittman, Potts and Trowbridge. Mr. Dealy
serves on the Audit Committee.
Mathias J. DeVito, age 68, 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 USAirways Group, Inc. and of Mars Supermarkets, Inc. Mr. DeVito
is the chairperson of the Management and Compensation Committee.
Jerome W. Evans, age 52, has served as a director and as Vice Chairman and
Chief Financial Officer of the Corporation and of First National since January
1999. From August 1994 to August 1996, Mr. Evans was an Executive Vice
President, and from August 1996 to January 1999, Mr. Evans was an Executive
Vice President and the Chief Financial Officer, of the Corporation and of
First National. Prior to joining the Corporation, Mr. Evans was an Executive
Vice President with MNC Financial, Inc. in Baltimore, Maryland.
Jerome W. Geckle, age 69, 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.
Frank A. Gunther, Jr., age 67, 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 Affairs Committee.
Margaret M. Heckler, age 67, has served as a director of the Corporation and
of First National since 1989. She serves as Special Counsel to Chambers
Associates, Incorporated, Washington, D.C. and was U.S. Ambassador to Ireland
from 1985 to 1989. Ms. Heckler serves on the Audit Committee.
Lee H. Javitch, age 68, has served as a director of the Corporation since
July 1997 and of First National since October 1998, and served as a director
of Dauphin Deposit Corporation for 15 years. He is a private investor and was
formerly the Chairman of the Board and Chief Executive Officer of Giant Food
Stores, Inc., Carlisle, Pennsylvania. Mr. Javitch is also a director of
Pennsylvania Real Estate Investment Trust, a real estate investment trust.
Susan C. Keating, age 48, has served as a director and as President and
Chief Operating Officer of the Corporation and of First National since January
1999. From January 1996 to January 1999, Ms. Keating was an Executive Vice
President of the Corporation and of First National. Prior to joining the
Corporation, Ms. Keating was President and Senior Bank Executive-Maryland with
NationsBank, N.A. in Baltimore, Maryland.
Gary Kennedy, age 41, has served as a director of the Corporation since June
1997. He has served as Group Financial Director and a director of AIB since
May 1997, prior to which he was Vice President, Enterprise Networks Europe and
Managing Director, Northern Telecom (Ireland) Ltd. He is a member of the Board
of the Industrial Development Authority (Ireland).
William T. Kirchhoff, age 57, has served as a director of the Corporation
since July 1997 and of First National since October 1998, and served as a
director of Dauphin Deposit Corporation for 18 years. He is the President of
Cleveland Brothers Equipment Company, Inc., a construction equipment dealer.
Henry J. Knott, Jr., age 60, 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 serves on Audit Committee.
Andrew Maier II, age 49, has served as a director of the Corporation since
July 1997 and of First National since October 1998, and served as a director
of Dauphin Deposit Corporation for two years. He is a private investor and was
formerly the President and Chief Executive Officer of Maier's Bakery, Reading,
Pennsylvania.
3
<PAGE>
Thomas P. Mulcahy, age 57, 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. He is President of the Ireland Chapter of the
Ireland-United States Council for Commerce & Industry, Inc.
R. Champlin Sheridan, age 69, has served as a director of the Corporation
since July 1997 and of First National since October 1998, and served as a
director of Dauphin Deposit Corporation for five years. He is the Chairman of
The Sheridan Group, Inc., publication and book printing companies.
Meetings, Committees and Fees
The Board of Directors met six times during 1998 for regularly scheduled
meetings.
The Board of Directors has standing executive, audit, compensation and
community 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 six times for regularly scheduled meetings during 1998.
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 evaluates and approves, on behalf of the Board, the adequacy of
the Corporation's allowance for loan and lease losses, and reviews the status
of pending or threatened litigation involving the Corporation and its
subsidiaries. The Audit Committee met six times for regularly scheduled
meetings and once for a special meeting during 1998.
The Management and Compensation Committee reviews and recommends
compensation arrangements for the Corporation's executive officers and also
reviews and recommends action with respect to the Corporation's retirement
plans. The Management and Compensation Committee met five times during 1998.
The Community Affairs Committee oversees the Corporation's community
reinvestment 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 Affairs Committee met five times during 1998 for regularly
scheduled meetings.
Each director who is not also an officer of the Corporation or of AIB
receives an annual retainer of $20,000, 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.
During 1998, each of Mr. Javitch and Mr. Mulcahy was unable to attend at
least 75% of the aggregate of the meetings of the Board of Directors and of
the Board committees on which he serves.
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 1998. 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
4
<PAGE>
more than normal risk of collectibility or present other unfavorable features.
Of the loans outstanding at December 31, 1998, 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.
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.
Bramble, Buckley, Mulcahy and Kennedy are directors and/or executive officers
of AIB, and as such, each may be deemed to be the beneficial owner of 100% of
the Corporation's Common Stock.
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) 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, 1998.
<TABLE>
<CAPTION>
Ordinary
Shares (1)(2)
-------------
<S> <C>
Executive Officers(3)
Frank P. Bramble............................................... 469,548 (4)
Jeremiah E. Casey.............................................. 464,750
David M. Cronin................................................ 142,202 (4)
Walter R. Fatzinger, Jr. ...................................... 162,480 (4)
Susan C. Keating............................................... 250,314 (4)
Directors
Sherry F. Bellamy.............................................. --
James T. Brady................................................. --
Benjamin L. Brown.............................................. --
Michael D. Buckley............................................. 357,385 (4)
J. Owen Cole................................................... 14,244
Edward A. Crooke............................................... 100
John F. Dealy.................................................. --
Mathias J. DeVito.............................................. --
Jerome W. Evans(5)............................................. 98,022 (4)
Jerome W. Geckle............................................... 100
Frank A. Gunther, Jr........................................... --
Margaret M. Heckler............................................ --
Lee H. Javitch................................................. 87,600
Gary Kennedy................................................... 225,805 (4)
William T. Kirchhoff........................................... 264,798 (6)
Henry J. Knott, Jr. ........................................... 100
Andrew Maier II................................................ 42,900 (7)
Thomas P. Mulcahy.............................................. 786,534 (4)
R. Champlin Sheridan........................................... 169,368
All executive officers and directors as a group (24 persons)... 3,536,250
</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, Evans and Fatzinger and Ms. Keating,
includes holdings of restricted stock.
(4) Includes shares subject to currently exercisable stock options.
(5) Mr. Evans beneficially owns 1,163 shares of the Outstanding Preferred.
(6) Includes 65,232 shares held with sole voting/dispositive powers, 180,000
shares held by the profit sharing plan of which the director is a
controlling person, 12,000 shares subject to a presently exercisable
option and 7,566 shares held solely by the director's spouse.
(7) Includes 2,350 shares held with sole voting/dispositive powers, 4,000
shares held in trust for the benefit of the director and his spouse, and
800 held as custodian for the benefit of the director's children.
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, 1998.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------------- ---------------------
Restricted All Other
Name and Principal Other Annual Stock LTIP Compensa-
Position at 12/31/98 Year Salary Bonus(1) Compensation(2) Award(s)(3) Payout(4) tion(5)
- -------------------- ---- ------- -------- --------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeremiah E. Casey....... 1998 600,000 -0- 5,496 -0- -0- 22,781
Chairman 1997 600,000 450,000 5,496 -0- 1,591,924 24,647
1996 600,000 300,000 5,404 -0- 27,707
Frank P. Bramble........ 1998 600,000 -0- 1,587 -0- -0- 36,963
President and CEO 1997 600,000 450,000 -0- -0- 1,606,200 38,517
1996 525,000 300,000 -0- -0- 38,484
David M. Cronin......... 1998 290,000 -0- 1,265 -0- -0- 13,830
Executive Vice Pres. 1997 290,000 174,000 1,200 -0- 582,713 13,027
and Treasurer 1996 290,000 116,000 1,169 -0- 20,818
Walter R. Fatzinger,
Jr. ................... 1998 300,000 -0- -0- -0- -0- 27,947
Executive Vice Pres.(6) 1997 300,000 180,000 -0- -0- 562,925 29,335
1996 275,000 110,100 -0- -0- 31,495
Susan C. Keating........ 1998 375,000 -0- 1,708 -0- -0- 101,418
Executive Vice Pres. 1997 375,000 225,000 -0- 198,062 445,223 321,937
1996 300,000 120,000 -0- 300,000 26,912
</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, 1998 is set forth in next table.
(4) The 1995 Long Term Incentive Plan established three performance measures
on which the amount of a participant's award would be determined: (i) the
Corporation's aggregate after-tax profit over the three-year performance
period from 1/1/95 to 12/31/97; (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. The
threshold, target and maximum multipliers for Messrs. Casey and Bramble
were 85%, 170% and 340%, respectively, and for the other named executive
officers were 65%, 130% and 260%, respectively. The Corporation's actual
performance was measured against the performance measures, and the
Management and Compensation Committee determined that the Corporation
performed at a level between the target and maximum levels. The
multipliers were as follows: Mr. Casey, 268%; Mr. Bramble, 306%; other
named executive officers, 205%. The amount of an award equaled the
multiplier times average base salary over the performance period. Awards
were paid in cash (55%) and/or AIB Ordinary ADRs (45%). The plan
terminated as of December 31, 1997.
(5) Consists of: (a) the value of split-dollar life insurance premiums paid
pursuant to the Corporation's Executive Life Insurance Program of $12,563,
$29,763, $6,630, $20,747 and $20,826 during 1998 for Messrs. Casey,
Bramble, Cronin and Fatzinger and Ms. Keating respectively; (b) matching
contributions under the Corporation's qualified, defined contribution plan
of $7,200 for each named executive officer; (c) $73,392 in relocation
expenses paid by the Corporation in connection with Ms. Keating's
relocation to Harrisburg, PA; and (d) $3,018 in respect of certain
earnings on deferred compensation amounts for Mr. Casey.
(6) Mr. Fatzinger left the Corporation effective January 26, 1999.
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, 1998.
<TABLE>
<CAPTION>
Name Ordinary ADRs
- ---- -------------
<S> <C>
Jeremiah E. Casey................................................. -0-
Frank P. Bramble.................................................. 6,340
$ 699,778
David M. Cronin................................................... -0-
Walter R. Fatzinger, Jr. ......................................... 9,080
$1,002,205
Susan C. Keating.................................................. 11,719
$1,293,485
</TABLE>
1997 Stock Option Plan
In October 1997, the Corporation's Board of Directors approved the 1997
Stock Option Plan (the "1997 Option Plan"). The purposes of the 1997 Option
Plan are to provide incentives to key employees to contribute to the growth
and success of the Corporation and of AIB, and to enhance the Corporation's
ability to attract, retain and reward the highest quality employees in
positions of substantial responsibility.
The 1997 Option Plan provides for the grant to key employees of options to
acquire AIB American Depository Shares ("AIB ADSs"). The Corporation and an
independent trustee have created a trust which has been funded with AIB ADSs
acquired by the trust with the proceeds of a loan from the Corporation.
Proceeds of option exercises and any dividends and other earnings on the trust
assets will be used to repay the loan to the trust. Optionees have no
preferential rights with respect to the trust assets, and the trust assets are
subject to the claims of the Corporation's general creditors in the event of
insolvency. The AIB ADSs are held in the available-for-sale account on the
Corporation's balance sheet, and any decline in value of the AIB ADSs in the
trust below their original cost will be recorded as an adjustment to the
Corporation's stockholders' equity. The 1997 Option Plan is administered by
the Management and Compensation Committee of the Board of Directors. AIB will
not issue any securities in connection with the 1997 Option Plan, will not
receive any proceeds from the exercise of options, and otherwise has no rights
or obligations with respect to the 1997 Option Plan. As of December 31, 1998,
there were 993,100 AIB ADSs in the trust.
The following table sets forth information concerning options ("1998
Options") granted under the 1997 Option Plan to the named executive officers
during the year ended December 31, 1998.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------ Potential
% of Realizable Value
Total at Assumed Annual
No. of Options Rates of Stock Price
Securities Granted to Exercise Appreciation for
Underlying Employees or Base Option Term(1)
Options in Fiscal Price Expiration ---------------------
Name Granted(2) Year ($/Sh)(3) Date(4) 5%($) 10%($)
---- ---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
J.E. Casey.............. -- -- -- -- -- --
F.P. Bramble............ 25,000 5.5% $87.87 10/22/08 $1,381,500 $3,501,000
30,000 6.5% $79.25 10/09/08 1,495,200 3,789,000
D.M. Cronin............. 8,000 1.7% $79.25 10/09/08 398,720 1,010,400
W.R. Fatzinger, Jr...... 10,000 2.2% $79.25 10/09/08 498,400 1,263,000
S.C. Keating............ 12,000 2.6% $79.25 10/09/08 598,080 1,515,600
</TABLE>
- --------
(1) Illustrates value that would be realized upon exercise of options
immediately prior to expiration of term, assuming the specified annual
compound rates of appreciation on AIB ADSs over the option term.
(2) All options under the 1997 Option Plan are nonqualified options. A 1998
Option is exercisable for up to 50% of the underlying securities two years
after the grant date (October 9 and October 22, 1998) and for the
remaining 50% of the securities, three years after the grant date, except
in the event of a change in control of the Corporation or of AIB.
7
<PAGE>
(3) The exercise price of each option granted under the 1997 Option Plan is
equal to the greater of the cost or the market price of AIB ADSs on the
date of grant. The number of AIB ADSs subject to an option and the
exercise price may be adjusted in the event of a stock dividend or split,
recapitalization or similar transaction affecting the outstanding Ordinary
Shares of AIB. The exercise price of an option may be paid in cash or
through the contemporaneous sale of the underlying AIB ADSs.
(4) 1998 Options granted under the 1997 Option Plan expire ten years from the
date of grant, subject to certain exceptions relating to the manner of
termination of an optionee's employment. An option may not be transferred
except by will, by the laws of descent and distribution, or in connection
with a limited number of family estate planning transfers.
The following table sets forth information concerning exercised and
unexercised options under the 1997 Option Plan as of the end of 1998.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised in-the-money
Options Options at
Shares at 12/31/98 12/31/98($)
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized($) Unexercisable Unexercisable(1)
---- ----------- ----------- ------------- --------------------
<S> <C> <C> <C> <C>
J.E. Casey.............. -- -- -- --
F.P. Bramble............ -- -- 60,000/55,000 $3,262,500/1,496,375
D.M. Cronin............. -- -- 14,000/8,000 761,250/249,000
W.R. Fatzinger, Jr...... -- -- 18,000/10,000 978,750/311,250
S.C. Keating............ -- -- 30,000/12,000 1,631,250/373,500
</TABLE>
- --------
(1) Based on market value of AIB ADSs at December 31, 1998.
Pension Plans
The Corporation maintains a non-qualified, supplemental defined benefit
pension plan under which maximum retirement benefits for Mr. Casey are
determined. The maximum benefit is 70% of covered remuneration, 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 total annual pension benefits payable
to Mr. Casey at age 65 under the non-qualified supplemental pension plan and
qualified 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 and long term incentive
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 41 years. Mr. Bramble is entitled to supplemental
retirement benefits under an agreement which provides for a retirement benefit
at age 60 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 excess benefit plan, by social security
benefits and by benefit payments under defined benefit plans of former
employers. Ms. Keating is entitled to supplemental retirement benefits under
an agreement that provides for a retirement benefit equal to a minimum of 30%
and a maximum of 60% of the average of the highest three years of compensation
during the last 10 years of employment, offset by benefit payments under the
Corporation's qualified defined benefit plan and excess benefit plan, by
social security benefits, and by benefit payments under defined benefit plans
of former employers. Mr. Fatzinger was entitled to supplemental retirement
benefits under an agreement that required the Corporation to make a deferred
compensation contribution of 15% of annual cash compensation at the end of
each year of employment.
8
<PAGE>
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.
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 generally 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 executive 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 ADRs ("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, 1999, there was a total of 141,807 ordinary 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.
Change in Control Agreements
The Corporation has entered into 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 and
stock options; (iv) payment of any target amounts under long-term incentive
plans; (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
in beneficial ownership by a person (other than AIB, the Corporation, any
wholly-owned subsidiary of either AIB
9
<PAGE>
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 1998. No member of the Compensation Committee was an officer
or employee of the Corporation during 1998.
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 benefit 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 1998, 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.
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 1998 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 did not
meet the minimum net income level established by the committee for 1998, and
Mr. Bramble did not receive a 1998 Annual Bonus Plan award.
10
<PAGE>
Long Term Incentives. The Compensation Committee administers the 1989 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 1998.
The Chief Executive Officer's level of participation in the 1997 Stock
Option Plan during 1998 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 1998 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.
----------------
11
