<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:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
First Union Corporation
(Name of Registrant as Specified In Its Charter)
Kent S. Hathaway
(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:
1Set 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:
<PAGE>
(First Union Logo)
March , 1995
Dear Stockholder:
On behalf of the Board of Directors, I am pleased to extend to you an
invitation to attend the Annual Meeting of Stockholders of First Union
Corporation (the "Corporation") to be held in Charlotte, North Carolina, on
Tuesday, April 18, 1995, beginning at 9:30 a.m., Eastern time.
The notice of meeting and proxy statement which appear on the following pages
contain information about the matters which are to be considered at the meeting.
During the meeting we will also review operating results for the past year and
present other information concerning the Corporation and its subsidiaries. The
meeting should be interesting and informative and we hope you will be able to
attend.
In order to ensure that your shares are voted at the meeting, please complete,
date, sign and return the enclosed proxy in the enclosed postage-paid envelope
at your earliest convenience. Every stockholder's vote is important, whether you
own a few shares or many.
Sincerely yours,
(Signature of Edward E. Crutchfield)
Edward E. Crutchfield
Chairman and Chief Executive Officer
First Union Corporation, One First Union Center, Charlotte, North Carolina
28288-0013
<PAGE>
First Union Corporation
One First Union Center, Charlotte, North Carolina 28288-0013
NOTICE OF ANNUAL MEETING
TO BE HELD ON APRIL 18, 1995
March , 1995
To the Stockholders:
The Annual Meeting of Stockholders (the "Meeting") of First Union Corporation
(the "Corporation") will be held in the Auditorium, 12th floor, Two First Union
Center, Charlotte, North Carolina, on Tuesday, April 18, 1995, at 9:30 a.m.,
Eastern time, for the purpose of considering and acting on the following
matters:
1. A proposal to elect the 12 nominees named in the attached proxy
statement as directors of the Corporation, eight nominees to serve as
Class III directors with terms expiring at the 1998 Annual Meeting of
Stockholders, two nominees to serve as Class I directors with terms
expiring at the 1996 Annual Meeting of Stockholders, and two nominees to
serve as Class II directors to serve until the 1997 Annual Meeting of
Stockholders, in each case until their successors are duly elected and
qualified;
2. A proposal to approve certain amendments to the Corporation's 1992
Master Stock Compensation Plan, including amendments intended to
preserve the Corporation's federal income tax deduction with respect to
certain compensation payable under such Plan;
3. A proposal to approve certain amendments to the Corporation's Management
Incentive Plan intended to preserve the Corporation's federal income tax
deduction with respect to certain compensation payable under such Plan;
4. A proposal to approve certain amendments to the Corporation's Management
Long-Term Cash Incentive Plan intended to preserve the Corporation's
federal income tax deduction with respect to certain compensation
payable under such Plan;
5. A proposal to ratify the appointment of KPMG Peat Marwick as auditors of
the Corporation for the year 1995; and
6. Such other business as may properly come before the Meeting or any
adjournments thereof.
Only stockholders of record on the books of the Corporation at the close of
business on February 22, 1995, are entitled to notice of and to vote at the
Meeting.
(Signature of Edward E. Crutchfield)
Edward E. Crutchfield
Chairman and Chief Executive Officer
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
TO ENSURE THAT YOUR SHARES ARE VOTED AT THE MEETING. YOUR VOTE IS IMPORTANT,
WHETHER YOU OWN A FEW SHARES OR MANY.
<PAGE>
First Union Corporation
One First Union Center, Charlotte, North Carolina 28288-0013
PROXY STATEMENT
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
First Union Corporation (the "Corporation") in connection with the Annual
Meeting of Stockholders of the Corporation (the "Meeting") to be held in the
Auditorium, 12th Floor, Two First Union Center, Charlotte, North Carolina, on
Tuesday, April 18, 1995, at 9:30 a.m., Eastern time. The accompanying form of
proxy is for use at the Meeting if a stockholder does not attend the Meeting in
person or wishes to have his shares voted by proxy even if he attends the
Meeting. The proxy may be revoked by the person giving it at any time before it
is exercised, by such person (i) giving written notice to the Secretary of the
Corporation, (ii) submitting a proxy having a later date, or (iii) appearing at
the Meeting and electing to vote in person. All shares represented by valid
proxies received pursuant to this solicitation and not revoked before they are
exercised will be voted in the manner specified therein. If no specification is
made, proxies will be voted in favor of approval of Proposals 1 through 5
described below. This proxy statement and the enclosed form of proxy are being
first mailed to the Corporation's stockholders on or about March , 1995.
The only class of voting securities of the Corporation is its Common Stock,
$3.33 1/3 par value per share (the "Common Stock"). There were
shares of Common Stock issued and outstanding at the close of business on
February 22, 1995, the record date for stockholders entitled to receive notice
of and to vote at the Meeting. A majority of the shares entitled to vote at the
Meeting, represented at the Meeting in person or by proxy, will constitute a
quorum. Each share is entitled to one vote on all matters properly brought
before the Meeting.
The Corporation is not aware of any stockholder who may beneficially own
more than 5% of the outstanding shares of Common Stock, except for Wellington
Management Company ("WMC"), 75 State Street, Boston, Massachusetts 02109, who,
based on a Schedule 13G dated February 3, 1995, in its capacity as investment
adviser, may be deemed to be the beneficial owner of 10,756,244 shares, or 6.1%,
which are owned by numerous investment counselling clients of WMC as of December
31, 1994. According to such Schedule, WMC has shared voting power over 220,500
of such shares and shared dispositive power over all of such shares.
The Corporation will bear the cost of preparing this proxy statement and of
soliciting proxies in the enclosed form. Proxies may be solicited by employees
of the Corporation and its subsidiaries, either personally, by letter or by
telephone. Such employees will not be specifically compensated for soliciting
such proxies. In addition, the Corporation has retained Georgeson & Company,
Inc. as proxy solicitors, to provide certain services in connection with the
solicitation of proxies. The fee for these services is $7,500, plus expenses.
1
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
GENERAL INFORMATION AND NOMINEES
The Corporation's Articles of Incorporation (as amended, the "Articles")
provide that the Board of Directors shall be divided into three classes, each as
nearly equal in number to the other as possible, and that at each annual meeting
of stockholders, the stockholders shall elect the members of one of the three
classes to three-year terms of office. The Articles also provide that the number
of directors shall be determined from time to time by a majority of the
directors then in office, but shall not be less than nine nor more than 30. The
number of directors is currently fixed at 25.
The terms of office of the eight current directors serving in Class III
will expire at the Meeting, and, except as otherwise indicated below, the terms
of office of the current directors serving in Classes I and II will expire at
the 1996 and 1997 Annual Meetings of Stockholders, respectively, in each case
until their successors are duly elected and qualified.
Messrs. Bernhardt, Bradley, Haworth, Herring, Smith and Trogdon, who are
currently serving as directors in Class III, and Messrs. Dolan and Georgius, who
are currently serving as directors in Class I, are being nominated to serve as
directors in Class III with terms expiring at the 1998 Annual Meeting of
Stockholders and until their successors are duly elected and qualified. In
addition, Messrs. Hemby and Younger, who are currently serving as directors in
Class II, are being nominated to serve as directors in Class I with terms
expiring at the 1996 Annual Meeting of Stockholders, and Messrs. Halsey and
Perry, who are currently serving as directors in Class III, are being nominated
to serve as directors in Class II with terms expiring at the 1997 Annual Meeting
of Stockholders, in each case until their successors are duly elected and
qualified.
Unless a director reaches retirement age during his term in office (i.e.,
age 70), each director holds office until the annual meeting of stockholders at
which his term expires and until his successor has been duly elected and
qualified. Directors who reach retirement age during their term in office are to
retire from the Board effective with the annual meeting of stockholders next
following their 70th birthday, subject to the Board authorizing that such
retirement be deferred on a year-to-year basis.
Directors of the Corporation will be elected by a plurality of the votes
cast. Shares cannot be voted for a greater number of persons than the number of
nominees named herein. Should any nominee be unavailable for election by reason
of death or other unexpected occurrence, the enclosed proxy, to the extent
permitted by applicable law, may be voted with discretionary authority in
connection with the nomination by the Board of Directors and election of any
substitute nominee, or, alternatively, the Board may reduce the number of
directors to be elected at the Meeting.
PROXIES, UNLESS INDICATED TO THE CONTRARY, WILL BE VOTED "FOR" THE ELECTION
OF THE EIGHT NOMINEES NAMED BELOW AS CLASS III DIRECTORS TO SERVE FOR TERMS
EXPIRING AT THE 1998 ANNUAL MEETING OF STOCKHOLDERS, THE TWO NOMINEES NAMED
BELOW AS CLASS I DIRECTORS TO SERVE FOR TERMS EXPIRING AT THE 1996 ANNUAL
MEETING OF STOCKHOLDERS, AND THE TWO NOMINEES NAMED BELOW TO SERVE AS CLASS II
DIRECTORS TO SERVE FOR TERMS EXPIRING AT THE 1997 ANNUAL MEETING OF
STOCKHOLDERS, IN EACH CASE UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND
QUALIFIED.
2
<PAGE>
Listed below are the names of the eight nominees to serve as Class III
directors, the two nominees to serve as Class I directors, the two nominees to
serve as Class II directors, and the 13 incumbent directors who will be
continuing in office following the Meeting, together with: their ages; their
principal occupations during the past five years; any other directorships they
hold with companies having securities registered under the Securities Exchange
Act of 1934; the years during which their current consecutive terms as directors
of the Corporation first commenced; and the number of shares of Common Stock
they beneficially owned as of January 31, 1995. As of such date, no director
beneficially owned more than 1% of the outstanding shares of Common Stock. See
footnote (3) following the list of directors for information relating to
ownership of the Corporation's Series 1990 Cumulative Perpetual Adjustable Rate
Preferred Stock, no-par value (the "Series 1990 Preferred Stock").
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
CLASS III NOMINEES FOR ELECTION TO TERMS EXPIRING IN 1998
<S> <C> <C> <C>
(Photo) G. ALEX BERNHARDT (51). President and Chief Executive Officer, 1992 4,806
Bernhardt Furniture Company, Lenoir, North Carolina, furniture
manufacturing. Director, Duke Power Company. (1)
(Photo) W. WALDO BRADLEY (61). Chairman, Bradley Plywood Corporation, 1986 51,518
Savannah, Georgia, building materials. Director, Atlanta Gas
Light Company and Savannah Foods & Industries, Inc. (1)
(Photo) B. F. DOLAN (67). Retired. Formerly, Chairman, Textron, Inc., 1977 24,694
Providence, Rhode Island, a manufacturer of aerospace, consumer,
industrial and other products. Director, FPL Group, Inc., Polaris
Industries, Inc., Ruddick Corporation and Textron, Inc.
(Photo) JOHN R. GEORGIUS (50). President, the Corporation, since February 1988 132,171
1993. Formerly, Chairman and Chief Executive Officer, First Union
National Bank of North Carolina ("FUNB-NC"), a subsidiary of the
Corporation, Charlotte, North Carolina. (1)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
<S> <C> <C> <C>
(Photo) HOWARD H. HAWORTH (60). President, The Haworth Group and The 1986 12,000
Haworth Foundation, Inc., Morganton, North Carolina, investments.
Formerly, Group President, Masco Home Furnishings, Masco
Corporation, Morganton, North Carolina, a home furnishings
industry conglomerate, October 1990 to August 1991. (1)
(Photo) LEONARD G. HERRING (67). President and Chief Executive Officer, 1986 26,408
Lowe's Companies, Inc., North Wilkesboro, North Carolina, a
retailer of building materials and related products for home
improvement. Director, Lowe's Companies, Inc.
(Photo) LANTY L. SMITH (52). Chairman and Chief Executive Officer, 1987 2,000
Precision Fabrics Group, Inc., Greensboro, North Carolina, a
manufacturer of technical, high-performance textile products.
Director, Masland Corporation. (1)
(Photo) DEWEY L. TROGDON (63). Chairman, Cone Mills Corporation, 1986 616
Greensboro, North Carolina, a textile manufacturer. Director,
Cone Mills Corporation.
</TABLE>
CLASS I NOMINEES FOR ELECTION TO TERMS EXPIRING IN 1996
<TABLE>
<S> <C> <C> <C>
(Photo) TORRENCE E. HEMBY, JR. (69). President, Beverly Crest 1987 13,000
Corporation, Charlotte, North Carolina, real estate development.
(1)(2)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
<S> <C> <C> <C>
(Photo) KENNETH G. YOUNGER (69). Transportation consultant, Gastonia, 1986 13,080
North Carolina, since May 1994. Formerly, Chairman and Chief
Executive Officer, Carolina Freight Corporation, Cherryville,
North Carolina, an interstate motor carrier. Director, Carolina
Freight Corporation.
</TABLE>
CLASS II NOMINEES FOR ELECTION TO TERMS EXPIRING IN 1997
<TABLE>
<S> <C> <C> <C>
(Photo) BRENTON S. HALSEY (67). Chairman Emeritus, James River 1993 6,840
Corporation, Richmond, Virginia, a textile manufacturer, since
February 1992. Formerly, Chairman, James River Corporation.
Director, Westmoreland Coal Company.
(Photo) HENRY D. PERRY, JR., M.D. (68). Physician, Plantation, Florida. 1985 702,236
(1)
</TABLE>
INCUMBENT CLASS I DIRECTORS -- TERMS EXPIRING IN 1996
<TABLE>
<S> <C> <C> <C>
(Photo) ROBERT J. BROWN. (60). Chairman, President and Chief Executive 1993 450
Officer, B&C Associates, Inc., High Point, North Carolina, a
public relations and marketing research firm. Director, Duke
Power Company and Sonoco Products Company.
(Photo) EDWARD E. CRUTCHFIELD (53). Chairman and Chief Executive Officer, 1977 199,361
the Corporation. Director, BellSouth Telecommunications, Inc.,
Bernhardt Industries, Inc., Liberty Corporation and VF
Corporation. (1)
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
<S> <C> <C> <C>
(Photo) R. STUART DICKSON (65). Chairman of the Executive Committee, 1985 30,917
Ruddick Corporation, Charlotte, North Carolina, a diversified
holding company, since February 1994. Formerly, Chairman, Ruddick
Corporation. Director, PCA International, Inc., Ruddick
Corporation, Textron, Inc. and United Dominion Industries. (1)(3)
(Photo) MAX LENNON (54). President and Chief Executive Officer, Eastern 1988 100
Foods, Inc., Atlanta, Georgia, a food manufacturer and
distributor, since August, 1994. Formerly, President, Clemson
University, Clemson, South Carolina. Director, Delta Woodside
Industries, Inc. and Duke Power Company.
(Photo) RUTH G. SHAW (47). Senior VIce President, Corporate Resources 1990 500
(since April 1994), and Chief Administrative Officer (since
August 1994), Duke Power Company, Charlotte, North Carolina, an
investor-owned electric utility. Formerly, Vice President,
Corporate Communications, Duke Power Company, from September 1992
to April 1994, and President, Central Piedmont Community College,
prior to September 1992. (1)
(Photo) B. J. WALKER (64). Vice Chairman, the Corporation, since March 1987 111,711
1991. Formerly, Chairman and Chief Executive Officer, First Union
National Bank of Florida ("FUNB-FL"), a subsidiary of the
Corporation, Jacksonville, Florida. (1)(2)
</TABLE>
INCUMBENT CLASS II DIRECTORS -- TERMS EXPIRING IN 1997
<TABLE>
<S> <C> <C> <C>
(Photo) ROBERT D. DAVIS (63). Chairman, D.D.I., Inc., Jacksonville, 1985 1,073,500
Florida, investments. Director, American Heritage Life Investment
Corporation, Florida Rock Industries, Inc., Stein Mart, Inc. and
Winn-Dixie Stores, Inc. (1)(3)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
<S> <C> <C> <C>
(Photo) RODDEY DOWD, SR. (62). Chairman, Charlotte Pipe and Foundry 1988 8,539
Company, Charlotte, North Carolina, a manufacturer of pipe and
fittings. Director, Ruddick Corporation.
(Photo) WILLIAM H. GOODWIN, JR. (54). Chairman, AMF Companies, Richmond, 1993 23,000
Virginia, a manufacturer of sports and other equipment. Director,
Basset Furniture Industries, Incorporated.
(Photo) JACK A. LAUGHERY (60). Chairman, The Bagel Group, Inc., Rocky 1978 5,826
Mount, North Carolina, a restaurant developer, since January
1995. Formerly, Chairman, Hardee's Food Systems, Inc., Rocky
Mount, North Carolina, a fast food chain. Director, Imasco, Ltd.,
Papa John's International Inc. and Sprint Mid-Atlantic Telecom.
(Photo) RADFORD D. LOVETT (61). Chairman, Commodores Point Terminal 1985 181,546
Corp., Jacksonville, Florida, an operator of a marine terminal
and real estate. Director, American Heritage Life Investment
Corporation, Florida Rock Industries, Inc., FRP Properties, Inc.
and Winn-Dixie Stores, Inc. (3)
(Photo) RANDOLPH N. REYNOLDS (53). Vice Chairman, Reynolds Metals 1993 609
Company, Richmond, Virginia, an aluminum manufacturer, since
January 1994. Formerly, Executive Vice President, Reynolds Metals
Company. Director, Reynolds Metals Company.
(Photo) JOHN D. UIBLE (59). Investor, Jacksonville, Florida. Director, 1990 10,000
St. Joe Paper Company. (3)
</TABLE>
7
<PAGE>
(1) Each director or nominee named above has sole voting and investment power
over the issued and outstanding shares of Common Stock beneficially owned
by such director on January 31, 1995, except for the following shares over
which the directors indicated, and such directors and the five executive
officers of the Corporation (Messrs. Crutchfield, Georgius, Walker, Robert
T. Atwood, Executive Vice President and Chief Financial Officer, and
Marion A. Cowell, Jr., Executive Vice President, Secretary and General
Counsel) as a group, share voting and/or investment power: Mr.
Bernhardt -- 1,726 shares; Mr. Davis -- 1,061,000 shares; Mr.
Dickson -- 25,000 shares; Mr. Georgius -- 204 shares; Mr. Hemby -- 11,000
shares; Dr. Perry -- 668,306 shares; Dr. Shaw -- 500 shares; Mr.
Walker -- 30,000 shares; and members of the group (including the
foregoing) -- 1,799,836 shares.
The 25 current directors and the five executive officers of the
Corporation beneficially owned a total of 2,716,593 shares, or
approximately 1.5% of the outstanding shares of Common Stock, as of
January 31, 1995. Included in the calculation of the number of shares of
Common Stock so owned are the following shares held under certain of the
Corporation's employee benefit plans, including options which were
exercisable on January 31, 1995, or within 60 days thereafter, by the
directors indicated, and by the directors and such executive officers as a
group: Mr. Crutchfield -- 104,169 shares; Mr. Georgius -- 61,504 shares;
Mr. Walker -- 8,438 shares; and members of the group (including the
foregoing) -- 200,958 shares. Non-employee directors are not eligible to
participate in any of the Corporation's stock option or other employee
benefit plans.
The following directors or nominees disclaim beneficial ownership of
certain shares of Common Stock held by certain of their related or other
parties, as a result of which these shares are not included in the number
of shares indicated above: Mr. Bradley -- 32,725 shares; Mr.
Davis -- 185,000 shares; Mr. Georgius -- 1,463 shares; Mr.
Haworth -- 18,500 shares; Mr. Hemby -- 300 shares; Dr. Perry -- 284,378
shares; and Mr. Smith -- 3,300 shares.
(2) Mr. Hemby and Mr. Walker also served as directors of the Corporation from
April 1985 to April 1986 and from April 1986 to November 1986,
respectively.
(3) As of January 31, 1995, none of the directors or nominees were the
beneficial owners of any shares of Series 1990 Preferred Stock, except for
Mr. Davis -- 2,200 shares; Mr. Dickson -- 4,000 shares (as to which shares
Mr. Dickson has shared voting and investment power); Mr. Lovett -- 13,136
shares; and Mr. Uible -- 530,215 shares. The shares owned by each of such
directors represent less than 1% of the outstanding shares of Series 1990
Preferred Stock as of such date, except for Mr. Uible, whose shares
represent 8.4% of the outstanding shares of such series as of such date.
As of such date, the directors and the five executive officers of the
Corporation as a group were the beneficial owners of 549,551 shares, or
8.7%, of the outstanding shares of such series. Mr. Uible disclaims
beneficial ownership of 10,000 shares of Series 1990 Preferred Stock owned
by a related party, as a result of which these shares are not included in
the number of shares indicated. The Series 1990 Preferred 1990 Preferred
Stock has been called for redemption by the Corporation on March 31, 1995,
at the redemption price per share of $51.50.
(4) See "Other Matters Relating to Executive Officers and Directors" below.
COMMITTEES AND ATTENDANCE
Executive Committee. The Executive Committee of the Board of Directors held
six meetings in 1994. The Committee is authorized, between meetings of the Board
of Directors, to perform all duties and exercise all authority of the Board of
Directors, except for those duties and authorities delegated to other committees
of the Board of Directors or which are exclusively reserved to the Board of
Directors by the By-laws of the Corporation or by statute. The following
directors are the current members of the Executive Committee: Dolan (Chairman),
Crutchfield, Davis, Dickson, Herring, Lovett, Smith and Walker.
Audit Committee. The Audit Committee of the Board of Directors held six
meetings in 1994. The principal responsibilities of the Committee are to ensure
that the Board of Directors receives objective information regarding policies,
procedures and activities of the Corporation with respect to auditing,
accounting, internal accounting controls, financial reporting, regulatory
matters and such other activities of the Corporation as may be directed by the
Board of Directors. The following directors are the current members of the Audit
Committee: Bradley (Chairman), Bernhardt (Vice Chairman), Dowd, Haworth, Perry
and Reynolds.
Financial Management Committee. The Financial Management Committee of the
Board of Directors held six meetings in 1994. The Committee is authorized, among
other things, to review lending and deposit policies and to monitor
non-performing assets, owned real estate and investment policies and
8
<PAGE>
procedures. The Committee also reviews the Corporation's mortgage banking and
capital management activities. The following directors are the current members
of the Financial Management Committee: Davis (Chairman), Smith (Vice Chairman),
Brown, Georgius, Goodwin, Laughery, Lennon, Shaw, Uible and Younger.
Human Resources Committee. The Human Resources Committee of the Board of
Directors (the "HR Committee") held six meetings in 1994. The HR Committee is
authorized, among other things, to review and make recommendations to the Board
regarding employee compensation, to administer various employee benefit plans,
to act as the executive compensation committee of the Corporation and to monitor
conditions of employment and personnel policies. The following directors are the
current members of the HR Committee: Dickson (Chairman), Herring (Vice
Chairman), Dolan, Halsey, Hemby, Lovett and Trogdon.
Nominating Committee. The Nominating Committee of the Board of Directors held
one meeting in 1994. The Committee is authorized, among other things, to
recommend the number of directors to be elected to the Board of Directors of the
Corporation and its subsidiaries, to recommend any changes in Board membership,
to recommend director prospects and to study the compensation for directors and
recommend changes when appropriate. The following directors are the current
members of the Nominating Committee: Dolan (Chairman), Dickson (Vice Chairman),
Crutchfield, Herring and Lovett. The Corporation's By-laws include provisions
setting forth specific conditions under which persons may be nominated as
directors of the Corporation at an annual meeting of stockholders.
Attendance. The Board of Directors of the Corporation held eight meetings in
1994. In 1994, all of the directors attended at least 75% of the aggregate of
the meetings of the Board of Directors of the Corporation and the above
committees on which they served during the period they were directors and
members of such committees, except for Mr. Uible, who was not able to attend at
least 75% of such meetings because of illness, business or other conflicts.
9
<PAGE>
EXECUTIVE COMPENSATION
The following information relates to all plan and non-plan compensation
awarded to, earned by, or paid to (i) the Chief Executive Officer of the
Corporation (the "CEO"), and (ii) the four other most highly compensated
executive officers of the Corporation or a subsidiary of the Corporation, who
were serving as executive officers of the Corporation or a subsidiary of the
Corporation at December 31, 1994 (the CEO and such officers, the "Named
Officers").
SUMMARY COMPENSATION TABLE
The following table sets forth for the Named Officers for each of the last
three calendar years: (i) their name and principal position (column (a)); (ii)
year covered (column (b)); (iii) annual compensation (columns (c), (d) and (e)),
including (A) base salary (column (c)), (B) bonus (column (d)), and (C) other
annual compensation not properly categorized as salary or bonus (column (e));
(iv) long-term compensation (columns (f), (g) and (h)), including (A) the dollar
value of any award of restricted stock (calculated by multiplying the closing
sale price of the Common Stock on the date of grant by the number of shares
awarded) (column (f)), (B) the sum of the number of stock options granted
(column (g)) and (C) the dollar value of all payments pursuant to long-term
incentive plans ("LTIPs") (column (h)); and (v) all other compensation for the
covered year that the Corporation believes could not be properly reported in any
other column of the table (column (i)).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Awards
Annual Compensation Securities
Other Annual Restricted Underlying
Name and Principal Salary Bonus Compensation Stock Award(s) Options/SARs
Position Year ($) (1) ($) (1) ($) (2) ($) (3) (#)
<S> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f) (g)
Edward E. Crutchfield 1994 835,000 835,000 93,723 718,000 44,000
Chairman and Chief 1993 810,000 810,000 30,289 720,000 24,000
Executive Officer, 1992 750,000 750,000 24,717 1,090,600 30,400
the Corporation
John R. Georgius 1994 600,000 600,000 25,039 448,750 15,000
President, 1993 590,000 590,000 21,017 450,000 15,000
the Corporation 1992 525,000 525,000 13,371 658,306 18,350
Byron E. Hodnett 1994 395,000 395,000 11,765 269,250 9,000
Chief Executive Officer, 1993 395,000 395,000 4,771 270,000 9,000
FUNB-FL 1992 365,000 365,000 5,366 414,356 11,550
Robert T. Atwood 1994 335,000 335,000 17,104 215,400 7,200
Executive Vice 1993 325,000 325,000 19,879 216,000 7,200
President and 1992 270,000 255,000 7,172 283,412 7,900
Chief Financial Officer,
the Corporation
B. J. Walker 1994 375,000 275,000 15,514 233,350 7,800
Vice Chairman, 1993 375,000 250,000 9,462 180,000 6,000
the Corporation 1992 365,000 180,000 11,183 188,344 5,250
<CAPTION>
Payouts
LTIP All Other
Name and Principal Payouts Compensation
Position ($) ($) (4)
<S> <C> <C>
(a) (h) (i)
Edward E. Crutchfield 448,740 155,242
Chairman and Chief 375,000 54,049
Executive Officer, 0 49,680
the Corporation
John R. Georgius 323,384 48,896
President, 262,500 39,177
the Corporation 0 34,110
Byron E. Hodnett 212,905 36,823
Chief Executive Officer, 182,500 27,037
FUNB-FL 0 23,170
Robert T. Atwood 176,961 29,698
Executive Vice 127,500 23,821
President and 0 16,470
Chief Financial Officer,
the Corporation
B. J. Walker 150,000 39,716
Vice Chairman, 127,500 30,006
the Corporation 0 32,430
</TABLE>
(1) Amounts include dollars deferred by the Named Officers under the
Corporation's voluntary Deferred Compensation Plans. At the election of the
participants in such Plans, account balances are paid in a lump sum or in
ten annual installments upon termination of employment due to death,
disability or retirement, except in the event of a "change in control" of
the Corporation where the successor or acquiring corporation does not elect
to continue the Plans, in which case such balances are to be paid in a lump
sum. The Corporation has established a nonqualified retirement trust (the
"Trust") for the purpose of providing a source of funds to assist the
Corporation in meeting its liabilities under certain unfunded nonqualified
benefit plans, including the Deferred Compensation Plans and the
Supplemental Retirement Plan. In its discretion, the Corporation may
designate additional plans to be covered by the Trust. Prior to a "change in
control" of the Corporation, benefits are paid from the Trust only upon the
direction of the Corporation. Upon the occurrence of a change in control,
the Corporation is required to make an irrevocable asset contribution to the
Trust in an amount sufficient to pay each plan participant or beneficiary
the benefits to which such participant or beneficiary would be entitled
pursuant to the terms of the plans as of the date on which the change in
control occurs.
10
<PAGE>
(2) Information regarding any personal benefit that totals less than $50,000 is
not required and is not included in the amounts indicated. Dollar amounts
indicated for 1994 consist of amounts reimbursed for the payment of taxes on
certain personal benefits, and for Mr. Crutchfield, the value of personal
use of a company-owned automobile ($36,164).
(3) The aggregate number of shares of restricted stock held as of December 31,
1994, and the value thereof as of such date, were as follows: Crutchfield:
46,400 shares ($1,919,800); Georgius: 28,600 shares ($1,183,325); Hodnett:
17,640 shares ($729,855); Atwood: 12,640 shares ($522,980); and Walker:
12,280 shares ($508,085). Restricted stock awards granted in 1994 vest at a
rate of 20% per year over five years or upon termination due to death,
disability, retirement at age 65, or upon a "change in control" of the
Corporation. Dividends on shares of restricted stock are paid quarterly.
(4) Amounts shown for 1994 consist of the following:
<TABLE>
<CAPTION>
Crutchfield Georgius Hodnett Atwood Walker
<S> <C> <C> <C> <C> <C>
Savings Plan matching contributions.......................... $ 50,000 36,000 23,700 20,100 22,500
Value of life insurance premiums............................. 102,489 4,320 1,375 6,750 5,265
Value of disability insurance premiums....................... 0 2,335 0 2,817 0
Above market interest on deferred compensation............... 1,653 6,241 11,748 31 11,951
Bonus for use of real estate referral program................ 1,100 0 0 0 0
</TABLE>
The value of life insurance premiums for Mr. Crutchfield includes the value
of premiums advanced by the Corporation under a split-dollar life insurance
agreement with the Corporation. The Corporation may terminate such agreement
and receive its interest in the life insurance policy under certain
conditions, including termination of the employment of Mr. Crutchfield,
(other than due to death, disability or retirement, unless Mr. Crutchfield
becomes affiliated with a competitor following any such termination due to
disability or retirement), provided the Corporation may not terminate the
agreement if such termination of employment or affiliation occurs after a
"change in control" of the Corporation.
OPTION/SAR GRANTS TABLE
The following table sets forth, with respect to grants of stock options made
during 1994 to each of the Named Officers: (i) the name of such officer (column
(a)); (ii) the number of options granted (column (b)); (iii) the percent the
grant represents of the total options granted to all employees during 1994
(column (c)); (iv) the per share exercise price of the options granted (column
(d)); (v) the expiration date of the options (column e)); and (vi) the
Black-Scholes value of the options at grant date (column (f)).
OPTION/SAR GRANTS IN 1994
<TABLE>
<CAPTION>
Individual Grants
Number of Securities % of Total
Underlying Options/SAR Options/SARs Granted Exercise or Black-Scholes
Granted (1) to Employees Base Price Expiration Grant Date Value (2)
Name (#) in 1994 ($/Sh) Date ($)
<S> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f)
Crutchfield 44,000 6.35 44.875 6/20/04 608,520
Georgius 15,000 2.16 44.875 6/20/04 207,450
Hodnett 9,000 1.30 44.875 6/20/04 124,470
Atwood 7,200 1.04 44.875 6/20/04 99,576
Walker 7,800 1.13 44.875 6/20/04 107,874
</TABLE>
(1) Options granted are incentive stock options ("ISOs")under (section mark)422
of the Internal Revenue Code of 1986, as amended (the "Code"), except for
options granted to Mr. Crutchfield, Mr. Georgius and Mr. Hodnett to purchase
41,794, 12,117 and 1,390 shares of Common Stock, respectively. Options are
exercisable after one year from the date of grant, subject to the
limitations under (section mark)422, at an option exercise price equal to
the market price of the Common Stock at the date of grant. All outstanding
options terminate upon a "change in control" of the Corporation; provided,
however, optionholders have the right immediately prior to the change in
control to exercise any unexercised options, whether or not then
exercisable.
(2) The values shown reflect standard application of the Black-Scholes pricing
model using (i) 60-month volatility (30.962%) and daily stock prices for the
five years prior to grant date, (ii) an option term of ten years, (iii) an
interest rate that corresponds to the U.S. Treasury rate with a ten-year
maturity (7.10%), and (iv) dividends at the annualized rate in place on the
date of grant ($1.84). The values do not take into account risk factors such
as non-transferability and limits on exercisability. The Black-Scholes
option pricing model is a commonly utilized model for valuing options. The
model assumes that the possibilities of future stock returns (dividends plus
share price appreciation) resemble a normal "bell-shaped" curve. In
assessing the values indicated in the above table, it should be kept in mind
that no matter what theoretical value is placed on a stock option on the
date of grant, the ultimate value of the option is dependent on the market
value of the Common Stock at a future date, which will depend, to a large
degree, on the efforts of the Named Officers to bring future success to the
Corporation for the benefit of all stockholders.
11
<PAGE>
AGGREGATED OPTION/SAR EXERCISES AND YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth, with respect to each exercise of stock options
(or tandem stock appreciation rights ("SARs")) and freestanding SARs during 1994
by each of the Named Officers and the year-end value of unexercised options and
SARs on an aggregated basis: (i) the name of such officer (column (a)); (ii) the
number of shares received upon exercise, or, if no shares were received, the
number of securities with respect to which the options or SARs were exercised
(column (b)); (iii) the aggregate dollar value realized upon exercise (column
(c)); (iv) the total number of unexercised options and SARs held at December 31,
1994, separately identifying the exercisable and unexercisable options and SARs
(column (d)); and (v) the aggregate dollar value of in-the-money, unexercised
options and SARs held at December 31, 1994, separately identifying the
exercisable and unexercisable options and SARs (column (e)).
AGGREGATED OPTION/SAR EXERCISES IN 1994 AND
DECEMBER 31, 1994 OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs In-the-Money Options/SARs
at 12/31/94 (#) at 12/31/94 ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Crutchfield 0 0 107,682/68,272 1,507,450/122,172
Georgius 0 0 58,163/36,607 913,586/70,268
Hodnett 0 0 5,574/23,976 30,657/32,868
Atwood 0 0 5,574/16,726 30,657/12,793
Walker 8,100 157,950 5,508/13,542 28,875/0
</TABLE>
LONG-TERM INCENTIVE PLAN AWARDS TABLE
The following table sets forth, with respect to each award made to a Named
Officer in 1994 under any LTIP: (i) the name of such officer (column (a)); (ii)
the number of shares, units or other rights awarded under any LTIP (column (b));
(iii) the performance or other time period until payout or maturation of the
award (column (c)); and (iv) for LTIPs not based on stock price, the dollar
value of the estimated payout or range of estimated payouts under the award
(threshold, target and maximum amount), whether such award is denominated in
stock or cash (columns (d) through (f)).
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1994 (1)
<TABLE>
<CAPTION>
Estimated Future Payments under
Performance or Other Non-Stock Price-Based Plans
Number of Shares, Period Until Maturation Threshold Target Maximum
Name Units or Other Rights (#) or Payout ($ or #) ($ or #)(2) ($ or #)(3)
<S> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f)
Crutchfield 3 years 0 $ 448,740 $ 835,000
Georgius 3 years 0 323,384 600,000
Hodnett 3 years 0 212,905 395,000
Atwood 3 years 0 176,961 335,000
Walker 3 years 0 150,000 375,000
</TABLE>
(1) See the Summary Compensation Table above. Under the Corporation's Management
Long-Term Cash Incentive Plan, if the Corporation achieves not less than a
10% average return on equity ("ROE") for the three-year period ending each
December 31, based on the Corporation's "adjusted net income", a
contribution to a management incentive pool will be made, based on (i) the
rank of the Corporation's average ROE for the applicable period compared to
the average ROE of the 25 largest bank holding companies in the U.S. for
such period (ranging from a ranking of one to 13), and (ii) a percentage of
base salaries of the participants in the Plan for the last year of the
period (gradually decreasing from 50% of such salaries if the Corporation's
rank is one, to 27% if such rank is 13). Participants receive awards under
the Plan, subject to the discretion of the HR Committee, at the end of each
three-year period on the basis of individual performance as determined by
the HR Committee. The maximum potential award is 100% of base salary.
(2) Targets are not determinable. Awards indicated represent awards granted in
1994 for the 1991-1993 three-year period. Future awards may be higher or
lower than such awards.
(3) Represents 1994 annual salaries, the maximum awards that can be granted in
1995 for the 1992-1994 three-year period.
12
<PAGE>
PENSION PLAN TABLE
The following table sets forth the estimated annual benefits payable upon
retirement under the Corporation's Pension Plan (including amounts attributable
to the Corporation's Supplemental Retirement Plan) in the specified compensation
and years of service classifications indicated below.
The compensation covered by the Pension Plan includes basic compensation,
overtime and certain incentive compensation. The portions of compensation which
are considered covered compensation under the Pension Plan for the Named
Officers are the salary amounts indicated in the Summary Compensation Table less
deferred amounts. As of January 1, 1995, the credited full years of service
under the Pension Plan were as follows: Mr. Crutchfield -- 29 years; Mr.
Georgius -- 19 years; Mr. Hodnett -- 22 years; Mr. Atwood -- 4 years; and Mr.
Walker -- 38 years.
The portions of compensation which are considered covered compensation under
the Corporation's Supplemental Retirement Plan for the Named Officers are the
annual salary and bonus amounts indicated in the Summary Compensation Table. The
Pension Plan is referred to in the table as "PP" and the Supplemental Retirement
Plan as "SRP".
<TABLE>
<CAPTION>
Estimated annual retirement benefit, assuming a married
participant, a straight life annuity and the years
of service indicated (1)
Average annual 15 years 20 years 25 years 30 years 35 years
compensation PP SRP PP SRP PP SRP PP SRP PP SRP
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 750,000................ 27,339 197,503 36,452 268,571 45,565 339,639 54,678 410,707 57,755 407,388
1,000,000............... 27,339 278,400 36,452 376,434 45,656 474,468 54,678 572,502 57,755 569,183
1,250,000............... 27,339 359,298 36,452 484,297 45,565 609,297 54,678 734,296 57,755 730,978
1,500,000............... 27,339 440,195 36,452 592,161 45,565 744,126 54,678 896,091 57,755 892,772
1,750,000............... 27,339 521,093 36,452 700,024 45,565 878,955 54,678 1,057,886 57,755 1,054,567
2,000,000............... 27,339 601,990 36,452 807,887 45,565 1,013,784 54,678 1,219,681 57,755 1,216,362
</TABLE>
(1) For the year ending December 31, 1995, the annual retirement benefit payable
under the Corporation's Pension Plan is limited by federal law to $120,000
and the maximum covered compensation is limited to $150,000. For officers
covered under the Corporation's Supplemental Retirement Plan (a total of 22
in number), any excess annual retirement benefit (based on 30 or less years
of service) which could not be paid under the Pension Plan because of such
limitations would be payable under the Supplemental Retirement Plan. The
foregoing is reflected in the table. Following a "change in control" of the
Corporation, benefits earned under the Supplemental Retirement Plan would be
payable in a lump sum actuarial equivalent, upon a participant's retirement
or upon any modification to the Plan which would cause the actual or
projected benefits payable under the Plan to be reduced.
COMPENSATION OF DIRECTORS
Directors of the Corporation receive a quarterly retainer of $5,500, plus
$1,000 for each committee meeting attended and $2,000 for each meeting of the
Board of Directors attended. In addition to the foregoing, the Chairman of each
committee receives a quarterly fee of $250. Travel and accommodation expenses of
directors incurred in traveling to and from meetings are reimbursed by the
Corporation. Directors who are employees of the Corporation or its subsidiaries
do not receive any directors' fees. Directors' fees totaling $986,000 were
either paid by the Corporation to the directors of the Corporation in 1994 or
deferred under the terms of the Corporation's Deferred Compensation Plan for
Non-Employee Directors. Certain office space and secretarial services are
provided by the Corporation to Mr. Uible, who formerly was Chairman and Chief
Executive Officer of a corporation acquired by the Corporation in 1990, and
currently serves as a director of the Corporation. Prior to August 1994, Mr.
Uible also served as a director of FUNB-FL for which he received $1,000 per
meeting attended.
Under the Corporation's Deferred Compensation Plan for Non-Employee Directors,
directors of the Corporation who are not employees of the Corporation or any of
its subsidiaries may defer payment of all or any part of their directors' fees
(including fees payable as committee members). Amounts
13
<PAGE>
deferred under the Plan, plus interest, are payable after the end of the
calendar year in which the director ceases to be a director, in annual
installments over a ten-year period, unless otherwise determined by the HR
Committee in its discretion. A total of 14 directors of the Corporation elected
to defer $582,902 of their 1994 directors' fees under the Plan. Deferred fees
may either earn interest or be valued based on the fair market value of the
Common Stock, at the option of the director.
All non-employee directors of the Corporation who serve as such for five years
or more are eligible to participate in the Corporation's Retirement Plan for
Non-Employee Directors. Under the Plan, after the end of the calendar year in
which the director retires from the Board, the retired director is entitled to
receive annually for 10 years $1,000 for each year he or she served as a
director of the Corporation, up to a maximum of $10,000 per year.
EMPLOYMENT CONTRACTS
In August 1985, the Corporation and Mr. Crutchfield entered into an employment
agreement providing for the employment of Mr. Crutchfield as Chairman and Chief
Executive Officer of the Corporation until December 31, 1990, subject to (i) the
extension of such period of employment so that the unexpired portion thereof
would be not less than five years, (ii) the right of either party to terminate
the agreement at any time, and (iii) the right of Mr. Crutchfield to terminate
the agreement if the Board of Directors changes such offices held by Mr.
Crutchfield or the power and authority or duties or responsibilities attendant
thereto. The agreement provides that Mr. Crutchfield's annual salary will not be
less than $330,000 and that the Corporation, in its sole discretion, may award
Mr. Crutchfield an annual bonus based on his performance and other factors. If
the Corporation terminates the agreement other than for cause (as therein
defined) or if Mr. Crutchfield terminates the agreement as provided in (iii)
above, the agreement provides that the Corporation will pay to Mr. Crutchfield
an amount equal to the sum of (a) the result of multiplying (i) Mr.
Crutchfield's annual salary by (ii) the number of years (including any fraction
thereof) then remaining in the term of employment, and (b) the result of
multiplying (i) the annual average bonus payable to Mr. Crutchfield during the
three calendar years preceding the termination date by (ii) the number of years
(including any fraction thereof) then remaining in the term of employment. If
Mr. Crutchfield terminates his employment other than as provided in (iii) above,
he will be entitled to be paid 66 2/3% of his annual salary for a period of two
years following termination of his employment, subject to termination of such
payments if Mr. Crutchfield were to violate a two-year non-compete provision
provided for in the agreement. In December 1994, the agreement was amended to
provide for a gross-up payment to Mr. Crutchfield equal to the amount of excise
taxes (plus the applicable federal and state income, FICA and excise taxes due
on such gross-up payment) payable by Mr. Crutchfield if his employment is
terminated in conjunction with a "change in control" of the Corporation and such
taxes become payable as a result of payments to Mr. Crutchfield under the
agreement, or otherwise, being deemed to be "excess parachute payments" for
federal income tax purposes.
None of the other Named Officers has an employment contract with the
Corporation. In December 1994, the Corporation entered into an agreement with
Robert T. Atwood to provide a death benefit comparable to that provided under
the Corporation's Supplemental Retirement Plan if Mr. Atwood should die before
he becomes vested (i.e., completion of ten years of service) under such Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the HR Committee are Messrs. Dickson, Dolan, Halsey,
Hemby, Herring, Lovett and Trogdon, all of whom are independent, outside
directors of the Corporation.
Mr. Crutchfield serves on the Board of Directors of Bernhardt Furniture
Company, and as one of the outside directors on the Compensation Advisory
Committee of such Board. G. Alex Bernhardt, a
14
<PAGE>
director of the Corporation, serves as President and Chief Executive Officer of
Bernhardt Furniture Company.
HR COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The HR Committee had six regularly scheduled meetings during 1994, at which
time it reviewed, evaluated and approved executive compensation and benefit
recommendations without the presence of the CEO. The Corporation's executive
compensation programs consist of elements that vary based on corporate
performance (variable pay) and elements that do not (fixed pay). The variable
component is substantial. Variable pay elements include a short-term incentive
plan, a stock compensation plan and a long-term cash incentive plan, which are
further discussed below. All plans are developed based on competitive
information and administered to balance the interests of the executives with the
performance of the Corporation and the interests of its stockholders.
In its deliberations on executive pay, the HR Committee maintains the
following standards:
(Bullet) Programs are designed to attract, motivate, reward and retain high
performing and dedicated management employees.
(Bullet) In total, the compensation programs balance competitive need,
corporate, individual and business unit performance, and
affordability.
(Bullet) Programs provide competitive financial security for executives and
dependents in the event of death, disability or retirement.
The HR Committee believes that the most meaningful performance and pay equity
comparisons are made against companies of similar size and with similar business
interests. In keeping with this belief, the HR Committee consistently uses the
25 largest bank holding companies in the U.S. as the comparator group when
making compensation decisions. The Corporation ranked ninth in size among this
group on December 31, 1994, based on total assets.
The HR Committee believes that ROE is the most appropriate measure for
evaluating Corporate results. Accordingly, the Corporation's Management
Incentive Plan and the Corporation's Management Long-Term Cash Incentive Plan
both rely on ROE performance as a primary determinant of incentive payouts.
The companies chosen for compensation comparisons in the most recent
competitive study (i.e., the 25 largest bank holding companies) are not the same
companies that comprise the published industry index in the performance graph
set forth below (i.e., the KBW 50 (as defined below)), although the 25 largest
bank holding companies are included in the KBW 50. The HR Committee believes
that the most direct competitors for executive talent are not necessarily all of
the companies that would be included in a published industry index for comparing
total stockholder value.
The Corporation's and the HR Committee's intent is to provide executive
compensation consisting of base salaries, which when combined with awards made
under the short-term Management Incentive Plan, the Management Long-Term Cash
Incentive Plan and grants made under the 1992 Master Stock Compensation Plan,
result in total compensation levels which have the same relative rank as ROE
performance within the peer group. This result is achieved through the use of
proxy data on total compensation for the five most highly compensated executives
and financial performance data for the peer companies. For other executive
officers, the HR Committee uses judgment based on this data. Each compensation
decision is based on what is competitive for that compensation element relative
to the peer group, as well as the impact of that decision on total compensation.
15
<PAGE>
Because pay and performance levels at peer companies are not known at the time
compensation decisions are made, the HR Committee does not know if the target
compensation levels have been met until such peer information is made public.
Therefore, the HR Committee looks at the historical relationship between pay and
performance over time (typically a three-year period) as well as comparisons for
a single year. For 1993, the Corporation's ROE performance peer group rank was
ninth and the total of all compensation for the Named Officers ranked 15th. It
is the HR Committee's intent to address any variance between performance rank
and compensation rank with future compensation decisions.
The HR Committee's review of executive compensation relative to the $1 million
limit on tax deductible compensation was made in the context of insuring the
ability to balance sound compensation decisions with appropriate fiscal
responsibility. The HR Committee's intention has been to modify the
Corporation's executive compensation plans to minimize the possibility of lost
deductions. However, the HR Committee believes it is important to balance the
effectiveness of such plans against the materiality of any possible lost
deductions.
To continue to meet these objectives, the HR Committee may from time to time
change or adjust one or more of the Corporation's executive compensation plans,
or recommend the same to the Board of Directors, as it deems appropriate.
Additionally, the Corporation from time to time employs an independent firm of
employee benefit consultants to advise the Corporation and the HR Committee as
to various matters relating to executive compensation.
Base Salary
The Corporation's base salary program targets base salaries for executive
officers at market. As indicated above, the "market" for the Corporation is the
25 largest bank holding companies in the U.S., as measured by total assets. The
HR Committee believes that base salary should be reflective of the executive's
scope of responsibility, and, further, that asset size is the best indicator of
scope of responsibility. Accordingly, base salaries for executives are set such
that they have the same relative rank among the peer group as asset size. For
1993, the Corporation's asset size ranked ninth among the peer group and the
total base salaries for the Named Officers ranked 11th among the peer group. Any
variances are addressed in determining the total compensation for the Named
Officers. Base salary increases in 1994 were made solely as a result of
increases in base salary market data.
Short-Term Management Incentive Plan
The Corporation's short-term Management Incentive Plan covering executive
officers is funded based on the Corporation's ROE. The threshold ROE for
incentive payments is 12%. Individual awards may range from 0% to 100% of base
salary. Determination of individual awards is based primarily on the
Corporation's ROE, but includes a subjective assessment of individual
performance, where permitted. Measures of individual performance include meeting
business unit objectives, promoting corporate values and providing leadership to
employees.
The Corporation's ROE for 1994 (based on net income applicable to common
stockholders before the Series 1990 Preferred Stock redemption premium) was
17.04%, exceeding the threshold ROE by 42% and resulting in payments which, in
general, were equal to 100% of each Named Officer's base salary.
16
<PAGE>
Long-Term Incentive Program
The long-term incentive program is composed of the following:
(Bullet) The Corporation's 1992 Master Stock Compensation Plan, which is
made up of two elements: stock options and restricted stock
awards. The HR Committee believes that issuing stock options and
restricted stock to executives benefits the Corporation's
stockholders by encouraging and enabling executives to own the
stock of the Corporation, thus aligning executive pay with
stockholder interests.
(Bullet) The Corporation's Management Long-Term Cash Incentive Plan, which
pays cash awards based on ROE performance. The Corporation's rank
for the period in ROE against the peer group determines the
available pool from which awards may be made. The Corporation's
ROE for the period, and individual performance, are considered in
determining actual payouts from the plan.
Award sizes for the stock plan, and payouts from the long-term cash plan, are
set so that total compensation has the same relative rank as ROE performance
within the peer group. The Corporation's 1993 ROE of 17.42% resulted in a
three-year average ROE rank of 10th among the peer group, generating a pool of
37% of the aggregate base salaries of all participants in the long-term cash
plan. This amount was distributed proportionately by the HR Committee in its
discretion.
The 1994 mix of the long-term incentive program awards was set subjectively.
In determining the mix, the HR Committee balanced rewards for past performance
with incentives for future performance, and took into account such factors as
overall risk of the pay package, award sizes in prior years and cash/stock mix.
Current holdings of stock were not considered. No acceleration of vesting or of
payouts occurred under these plans in 1994.
1994 Compensation for the CEO
Mr. Crutchfield is eligible to participate in the same executive compensation
plans available to the other executive officers as described above. His 1994
base salary was set at the size-adjusted median of the peer group. The
size-adjusted median increased primarily because of increases in market
salaries. Mr. Crutchfield's short-term Management Incentive Plan payout and
Management Long-Term Cash Incentive Plan payout were based primarily on the
Corporation's ROE, and included a subjective assessment of individual
performance, where permitted. In this case, the HR Committee considered overall
financial performance, including ROE of 17.04%, return on assets of 1.27%, net
income applicable to common stockholders before the Series 1990 Preferred Stock
redemption premium of $900 million (a 13.6% increase over 1993 net income), and
success in meeting strategic objectives. These included ten acquisitions
completed in 1994, and the execution of three acquisition agreements in 1994,
which are currently pending, as well as major initiatives involving capital
markets, mutual funds and card products. The stock option grants and restricted
stock awards made to Mr. Crutchfield in 1994 were based on the analysis
discussed above. That is, the HR Committee set them so that Mr. Crutchfield's
total compensation would have the same expected relative rank as ROE performance
within the peer group. The mix of options and restricted stock awards was set
subjectively, balancing rewards for past performance with incentives for future
performance. The 1985 employment agreement with Mr. Crutchfield described above,
had no impact on compensation decisions made with respect to Mr. Crutchfield
during 1994.
17
<PAGE>
With respect to the HR Committee's use of the historical relationship between
pay and performance described above, the Corporation's ROE performance and total
asset rank for 1993 were both ninth among the peer group and Mr. Crutchfield's
base salary and total compensation ranked seventh and 18th, respectively.
<TABLE>
<S> <C>
R. STUART DICKSON, Chairman TORRENCE E. HEMBY, JR.
LEONARD G. HERRING, Vice Chairman RADFORD D. LOVETT
B. F. DOLAN DEWEY L. TROGDON
BRENTON S. HALSEY
</TABLE>
PERFORMANCE GRAPH
The following graph compares (i) the yearly change in the cumulative total
stockholder return on the Common Stock with (ii) the cumulative return of the
Standard & Poor's 500 Stock Index ("S&P 500") and the Keefe, Bruyette & Woods,
Inc. 50 Index ("KBW 50"). The graph assumes that the value of an investment in
the Common Stock and in each index was $100 on December 31, 1989, and that all
dividends were reinvested.
The S&P 500 and the KBW 50 are market-capitalization-weighted indices, meaning
that companies with a higher market value count for more in both indices. The
KBW 50 is comprised of 50 bank holding companies, including all money-center and
major regional bank holding companies.
TOTAL STOCKHOLDER RETURN
JANUARY 1, 1990 THROUGH DECEMBER 31, 1994
(Performance Graph appears here--see appendix)
<TABLE>
<CAPTION>
December 31,
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
The Corporation..................................................... $100 80 162 244 238 249
S&P 500............................................................. 100 97 126 136 150 152
KBW 50.............................................................. 100 72 114 145 153 145
</TABLE>
18
<PAGE>
The information set forth above under the subheadings "HR Committee Report on
Executive Compensation" and "Performance Graph" (i) shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission or subject to Regulation 14A or the liabilities of Section 18 of the
Securities Exchange Act of 1934, and (ii) notwithstanding anything to the
contrary that may be contained in any filing by the Corporation under such Act
or the Securities Act of 1933, shall not be deemed to be incorporated by
reference in any such filing.
OTHER MATTERS RELATING TO EXECUTIVE OFFICERS AND DIRECTORS
The directors and executive officers of the Corporation and its subsidiaries
who are members of the Corporation's Corporate Management Committee,
organizations with which they are affiliated and members of their immediate
families, are customers of the Corporation's banking subsidiaries. In the
opinion of management of the Corporation, the outstanding indebtedness and
commitments in connection with the lending relationships of such directors and
officers with the Corporation's banking subsidiaries were made in the ordinary
course of business and on substantially the same terms, including interest
rates, collateral and repayment terms, as those prevailing at the time for
comparable transactions with other customers and do not involve more than normal
risk of collectibility or present other unfavorable features. During 1994, the
aggregate monthly outstanding principal balances of loans made by the
Corporation's banking subsidiaries to such directors and officers and including
certain of their related interests, ranged from a high of approximately $671
million to a low of approximately $222 million.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and certain executive officers of the Corporation and
its subsidiaries covered by such Section, and any persons who own more than 10%
of any class of the Corporation's equity securities, to file certain reports
relating to their ownership of such securities and changes in such ownership
with the Securities and Exchange Commission and the New York Stock Exchange (the
"NYSE") and to furnish the Corporation with copies of such reports. To the
Corporation's knowledge, based solely on review of the copies of such reports
furnished to the Corporation or written representations relating thereto, during
or prior to the year ended December 31, 1994, all Section 16(a) filing
requirements applicable to such officers, directors and greater than 10% owners
were complied with, except as set forth in prior proxy statements and except for
late filings related to: two transactions by Mr. Bernhardt, a director of the
Corporation, relating to a transfer from one type of indirect ownership to
another type of indirect ownership and the transfer of shares to a trust for
which Mr. Bernhardt is trustee; the inadvertent omission by Donald M. MacLeod,
an executive officer of the Corporation, to include certain shares on his
initial report of beneficial ownership; and two transactions by Frank H. Dunn,
Jr., an executive officer of the Corporation, relating to the exercise of an
option and sale of the shares received upon such exercise.
19
<PAGE>
PROPOSAL 2. APPROVAL OF CERTAIN AMENDMENTS TO THE CORPORATION'S 1992 MASTER
STOCK COMPENSATION PLAN, INCLUDING AMENDMENTS INTENDED TO PRESERVE
THE CORPORATION'S FEDERAL INCOME TAX DEDUCTION WITH RESPECT TO
CERTAIN COMPENSATION PAYABLE UNDER SUCH PLAN
PROPOSAL 3. APPROVAL OF CERTAIN AMENDMENTS TO THE CORPORATION'S MANAGEMENT
INCENTIVE PLAN INTENDED TO PRESERVE THE CORPORATION'S FEDERAL INCOME
TAX DEDUCTION WITH RESPECT TO CERTAIN COMPENSATION PAYABLE UNDER
SUCH PLAN
PROPOSAL 4. APPROVAL OF CERTAIN AMENDMENTS TO THE CORPORATION'S MANAGEMENT
LONG-TERM CASH INCENTIVE PLAN INTENDED TO PRESERVE THE CORPORATION'S
FEDERAL INCOME TAX DEDUCTION WITH RESPECT TO CERTAIN COMPENSATION
PAYABLE UNDER SUCH PLAN
GENERAL
Proposals 2, 3 and 4 relate to certain amendments (the "Proposed Amendments")
to three existing benefit plans of the Corporation, (the 1992 Master Stock
Compensation Plan (the "1992 Plan"), the Management Incentive Plan (the
"Short-Term Plan") and the Management Long-Term Cash Incentive Plan (the
"Long-Term Plan" and together with the 1992 Plan and the Short-Term Plan, the
"Plans")). The Proposed Amendments are being presented to the stockholders
primarily as a result of the Omnibus Budget Reconciliation Act of 1993 and the
proposed regulations promulgated thereunder by the Internal Revenue Service
("OBRA"), in order to preserve the Corporation's federal income tax deduction
with respect to certain executive compensation payable under the Plans. Certain
amendments to the Plans were presented to the stockholders of the Corporation
for the same purpose at the 1994 Annual Meeting of Stockholders and were
approved by the stockholders at such meeting. Certain additional amendments to
the Plans were adopted by the Board of Directors of the Corporation in February
1995, subject to the approval of the stockholders of the Corporation. Pursuant
to OBRA, the Corporation is resubmitting certain of the amendments approved by
the stockholders last year, which are included in the Proposed Amendments.
Under OBRA, the allowable federal income tax deduction by a publicly held
corporation for compensation paid or accrued with respect to the chief executive
officer and the four other most highly compensated executive officers of such
corporation serving as such at the end of such corporation's fiscal year (the
"Actual OBRA Officers") is limited to no more than $1,000,000 per year (the
"OBRA Limitation"), subject to certain exemptions, including an exemption
relating to performance-based compensation that is payable (i) solely on account
of the achievement of one or more performance goals established by a
compensation committee consisting exclusively of two or more outside directors,
(ii) under a plan the material terms of which are approved by the stockholders,
and (iii) solely upon certification by the compensation committee that the
performance goals and other material conditions precedent to the payment have
been satisfied.
To the extent the final OBRA regulations differ from the proposed OBRA
regulations (i) the Plans may be further amended by the Board of Directors to
reflect the final OBRA regulations (without stockholder approval unless such
approval is required by the final OBRA regulations), and (ii) the following
discussions are qualified in their entirety and shall be subject to the terms
and conditions of the final OBRA regulations.
20
<PAGE>
1992 PLAN
General
The 1992 Plan was approved by the stockholders of the Corporation at the 1992
Annual Meeting of Stockholders. The 1992 Plan provides for the issuance of up to
5,000,000 shares of Common Stock to key employees of the Corporation and its
subsidiaries (of which up to 2,000,000 shares may be shares of restricted
stock), subject to adjustment in the event of any change in the outstanding
shares of Common Stock as a result of a stock dividend or split,
recapitalization, merger, consolidation, combination or exchange of shares or
other similar corporate change (a "Corporate Change"). The last reported sale
price of the Common Stock on the NYSE on March 1, 1995, was $ per share.
No option or shares of restricted stock may be granted under the 1992 Plan on
or after the tenth anniversary of the 1992 Plan's effective date, April 21,
1992.
Participants in the 1992 Plan are selected by the HR Committee from among
those officers and other key employees of the Corporation or its subsidiaries
who are in a position to contribute materially to the Corporation's continued
growth and development and to its long-term financial success. In 1994, a total
of 536 employees received stock options and shares of restricted stock under the
1992 Plan.
No option granted pursuant to the 1992 Plan may have an option price that is
less than the fair market value of the Common Stock on the date the option is
granted. Each option expires at such time as the HR Committee determines at the
time such option is granted; provided, however, that no option may be
exercisable later than the tenth anniversary date of its grant. Under the 1992
Plan, only ISOs to purchase up to $100,000 of Common Stock (measured as of the
date of grant of the option) may vest as to each optionee in each calendar year.
In addition, no participant in the 1992 Plan may be granted options to purchase
more than 200,000 shares of Common Stock during any fiscal year, subject to
adjustment as a result of a Corporate Change.
Except as provided in the 1992 Plan, shares of restricted stock granted under
the 1992 Plan may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated for such period of time as determined by the HR
Committee. During the period of restriction, participants holding shares of
restricted stock granted under the 1992 Plan may exercise full voting rights
with respect to those shares and, except as otherwise provided below, are
entitled to receive all dividends and other distributions paid with respect to
those shares.
Certain Federal Tax Consequences
An optionee will not be taxed at the time a nonqualified stock option
("Non-ISO") is granted. In general, an employee exercising a Non-ISO will
recognize ordinary income equal to the excess of the fair market value on the
exercise date of the stock purchased over the option price. Upon subsequent
disposition of the stock purchased, the difference between the amount realized
and the fair market value of the stock on the exercise date will constitute
capital gain or loss. The Corporation will not recognize income, gain or loss
upon the granting of a Non-ISO. Upon the exercise of such an option, the
Corporation is entitled to an income tax deduction equal to the amount of
ordinary income recognized by the employee.
An employee will not be taxed at the time an ISO is granted. In general, an
employee exercising an ISO will not be taxed at the time an ISO is exercised if
the stock purchased is held for at least one year after the exercise date and at
least two years after the date of grant; provided, however, the bargain element
of exercised ISOs is treated as a tax preference item under the alternative
minimum tax rules.
21
<PAGE>
If such holding periods are satisfied, the difference between the option price
and the amount realized upon disposition of the stock will constitute long-term
capital gain or loss. If such holding periods are not satisfied, the employee
will recognize ordinary income to the extent of the lesser of the gain realized
and the excess of the fair market value of the stock on the exercise date over
the option price. The Corporation will not recognize income, gain or loss upon
the granting or exercise of an ISO, nor will it be entitled to any deduction
upon the disposition of an ISO if the holding periods referred to above are
satisfied. If such holding periods are not satisfied, the Corporation will be
entitled to a deduction equal to the amount of the ordinary income recognized by
the employee.
In general, an employee who has received shares of restricted stock and who
has not made an election under Section 83(b) of the Code to be taxed upon
receipt, will include in his gross income as compensation income an amount equal
to the fair market value of the shares of restricted stock at the earlier of the
first time the rights of the employee are transferable or the restrictions
lapse. The Corporation is entitled to a deduction at the time that the employee
is required to recognize income. Shares of restricted stock granted to employees
who are Actual OBRA Officers are subject to the deduction
limitations under OBRA, as set forth below.
Proposed Amendments to the 1992 Plan
The Proposed Amendments to the 1992 Plan provide that: (i) the HR Committee
shall determine the executive officers of the Corporation and its subsidiaries
whose compensation the HR Committee determines may be subject to the OBRA
Limitation (the "Expected OBRA Officers") and an ROE performance goal (based on
Adjusted Net Income, as defined below) that will need to be attained by the
Corporation in order to permit any shares of restricted stock to be granted to
the Expected OBRA Officers; (ii) the value of any shares of restricted stock
granted to an Expected OBRA Officer (calculated by multiplying the closing price
of the Common Stock on the NYSE on the date of grant times the number of shares
of restricted stock granted) will be designated as 200% of the Expected OBRA
Officer's base salary as of December 31 of the preceding year (instead of the
current 100%), subject to reduction by the HR Committee, in its discretion, but
in no event may such value exceed $3,000,000; (iii) for purposes of determining
the Corporation's ROE performance goal, as described above, the Corporation's
common equity shall exclude any adjustment for unrealized gains or losses on
debt and equity securities (pursuant to the Statement of Financial Accounting
Standards Number 115); and (iv) the period during which future options granted
under the 1992 Plan may be exercised following the retirement, death or
disability of the holder of such options shall be three years (instead of the
current one year) following such retirement, death or disability, or the
expiration of the period during which such option may be exercised, whichever
first occurs.
The term "Adjusted Net Income" means the Corporation's net income applicable
to common stockholders reported in its income statement, adjusted to remove the
effect of the following:
(i) items to be disclosed under generally accepted accounting principles
("GAAP"), or that would be disclosed absent a materiality concept, in
the Corporation's income statement as extraordinary gains or losses or
as changes in accounting principles;
(ii) net income or loss attributable to companies acquired in acquisition
transactions which are being treated as poolings under GAAP to the
extent the income or loss is attributable to periods prior to the
consummation date of the transaction; and
(iii) restructuring charges to be recognized in the Corporation's income
statement as a result of current and/or pending acquisition
transactions.
22
<PAGE>
In situations where the Corporation's reported net income is adjusted as a
result of pooling transactions noted above, the average equity of the
Corporation for the applicable period, against which the Adjusted Net Income is
compared to determine ROE, shall be computed without taking into account the
equity of an acquired company for any time periods prior to consummation of the
transaction.
In December 1994, the HR Committee determined the Expected OBRA Officers
(including the Named Officers indicated above) and the ROE performance goal that
the Corporation will need to attain in 1995 (12%) in order to permit any shares
of restricted stock to be granted to the Expected OBRA Officers in 1996.
1992 Plan Benefits
The following table sets forth the number of stock options and shares of
restricted stock granted under the 1992 Plan in June 1994 to the individuals and
groups indicated.
<TABLE>
<CAPTION>
1994 Restricted
1994 Stock Options Stock Grants
<S> <C> <C>
Crutchfield.................................................................. 44,000 16,000
Georgius..................................................................... 15,000 10,000
Hodnett...................................................................... 9,000 6,000
Atwood....................................................................... 7,200 4,800
Walker....................................................................... 7,800 5,200
Executive Group.............................................................. 128,340 85,560
Non-Executive Director Group................................................. 0 0
Non-Executive Employee Group................................................. 490,335 326,390
</TABLE>
SHORT-TERM PLAN
General
The Short-Term Plan was approved by the Board of Directors of the Corporation
in 1978 and has been amended by the Board of Directors on several occasions
since 1978.
The Short-Term Plan is intended to provide significant and sustaining
motivation to key management personnel of the Corporation and its subsidiaries
who are responsible for meeting the growth and profit objectives of the
Corporation. Participants in the Short-Term Plan are limited to key members of
senior management of the Corporation and its subsidiaries who are selected by
the HR Committee. In 1994, there were 126 participants in the Short-Term Plan.
Pursuant to the Short-Term Plan, if the Corporation's ROE (based on net income
as adjusted for certain items) is not less than 12% for a given fiscal year, a
contribution to an incentive pool is made by the Corporation. The amount of the
contribution is equal to a percentage of such net income, based on such ROE,
ranging from 1% of such net income for an ROE of 12%, to a maximum of 2.5% of
such net income for an ROE of 17% or greater.
Under the Short-Term Plan as currently in effect, participants receive awards
from the incentive pool, including amounts in the pool carried over from prior
years because they were not awarded in such years, on the basis of individual
performance as determined by the HR Committee; provided, however, that the
maximum award for an individual may not exceed 200% of the individual's base
salary.
Awards are payable in the first quarter of the year following the year in
which the awards are earned, except for awards payable to Expected OBRA
Officers. Such awards are payable on or after January 31 of such following year;
provided, however, such awards may be paid prior to January 31 if they are
discounted at a rate intended to reflect the time value of money.
23
<PAGE>
Proposed Amendments to the Short-Term Plan
The Proposed Amendments to the Short-Term Plan provide that: (i) the HR
Committee shall determine the Expected OBRA Officers and an ROE performance goal
(based on Adjusted Net Income) that will need to be attained by the Corporation
for each year in order to permit any awards to be made to the Expected OBRA
Officers for such year; (ii) the amount of any award for an Expected OBRA
Officer will be designated as 200% of the Expected OBRA Officer's base salary as
of December 31 of the year for which the award is made (instead of the current
100%) subject to reduction by the Committee, in its discretion, but in no event
may such award exceed $3,000,000; and (iii) for purposes of determining the
Corporation's ROE performance goal, as described above, the Corporation's common
equity shall exclude any adjustment for unrealized gains or losses on debt and
equity securities (pursuant to the Statement of Financial Accounting Standards
Number 115).
The Expected OBRA Officers (including the Named Officers indicated above) and
an ROE performance goal of 12% for 1995 were determined by the HR Committee in
December 1994.
Short-Term Plan Benefits
The following table sets forth the awards granted under the Short-Term Plan to
the individuals and groups indicated for the year ended December 31, 1994.
<TABLE>
<CAPTION>
1994 Awards
<S> <C>
Crutchfield........................................................................... $ 835,000
Georgius.............................................................................. 600,000
Hodnett............................................................................... 395,000
Atwood................................................................................ 335,000
Walker................................................................................ 275,000
Executive Group....................................................................... 4,777,000
Non-Executive Director Group.......................................................... 0
Non-Executive Employee Group.......................................................... 7,174,600
</TABLE>
LONG-TERM PLAN
General
The Long-Term Plan was approved by the Board of Directors of the Corporation
in December 1991 and was amended by the Board of Directors in October and
December 1992 and in February 1994.
Through recognition of both long-term performance of the Corporation relative
to its peers and individual performance, the Long-Term Plan is intended to
provide significant and sustaining motivation to key management personnel of the
Corporation and its subsidiaries who are responsible for meeting the growth and
profit objectives of the Corporation. Participants in the Long-Term Plan are
limited to key members of senior management of the Corporation and its
subsidiaries who are selected by the HR Committee. For awards granted in June
1994 for the 1991-1993 three-year period, there were 119 participants in the
Long-Term Plan.
Pursuant to the Long-Term Plan, if the Corporation's average ROE (based on net
income as adjusted for certain items) is not less than 10% for the three-year
period ending each December 31, a contribution to an incentive pool is made by
the Corporation.
The contribution to the pool is based on the rank of the Corporation's average
ROE for the applicable period compared to the average ROE of a peer group of the
25 largest bank holding companies in the nation ranging from 50% of the base
salaries of all participants in the Long-Term Plan for the last year of the
applicable period if such rank is one, to 27% of such base salaries if such rank
is 13.
24
<PAGE>
Under the Long-Term Plan as currently in effect, participants receive awards
from the incentive pool, including amounts in the pool carried over from prior
years because they were not awarded in such years, on the basis of individual
performance as determined by the HR Committee; provided, however, that the
maximum award for an individual may not exceed 100% of the individual's base
salary.
Awards are payable at any time during the year following the end of the
applicable period for which the awards are earned, except for awards payable to
Expected OBRA Officers. Such awards are payable on or after the June 30th of
such following year; provided, however, such awards may be paid prior to such
June 30th if they are discounted at a rate intended to reflect the time value of
money.
Proposed Amendments to the Long-Term Plan
The Proposed Amendments to the Long-Term Plan provide that: (i) the HR
Committee shall determine the Expected OBRA Officers and an average ROE
performance goal (based on Adjusted Net Income) that will need to be attained by
the Corporation for each three-year period in order to permit any awards to be
made to the Expected OBRA Officers for such period; (ii) the maximum award for
an Expected OBRA officer may not exceed $1,500,000; and (iii) for purposes of
determining the Corporation's ROE performance goal, as described above, the
Corporation's common equity shall exclude any adjustment for unrealized gains or
losses on debt and equity securities (pursuant to the Statement of Financial
Accounting Standards Number 115).
The Expected OBRA Officers (including the Named Officers indicated above)
and an average ROE performance goal of 12% for the 1995-1997 three-year period
were determined by the HR Committee in December 1994.
Long-Term Plan Benefits
The following table sets forth the awards granted under the Long-Term Plan in
June 1994 to the individuals and groups indicated for the 1991-1993 three-year
period.
<TABLE>
<CAPTION>
1994 Awards for 1991-1993
<S> <C>
Crutchfield........................................................................ $ 448,740
Georgius........................................................................... 323,384
Hodnett............................................................................ 212,905
Atwood............................................................................. 176,961
Walker............................................................................. 150,000
Executive Group.................................................................... 2,700,289
Non-Executive Director Group....................................................... 0
Non-Executive Employee Group....................................................... 2,964,500
</TABLE>
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF SHARES OF COMMON STOCK
VOTED THEREON IS REQUIRED TO APPROVE THE PROPOSED AMENDMENTS TO THE 1992
PLAN, THE SHORT-TERM PLAN AND THE LONG-TERM PLAN. THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF THE PROPOSED
AMENDMENTS TO THE 1992 PLAN, THE SHORT-TERM PLAN AND THE LONG-TERM PLAN.
PROXIES, UNLESS INDICATED TO THE CONTRARY, WILL BE VOTED "FOR" APPROVAL OF THE
PROPOSED AMENDMENTS TO THE 1992 PLAN, THE SHORT-TERM PLAN AND THE LONG-TERM
PLAN.
25
<PAGE>
PROPOSAL 5. RATIFICATION OF APPOINTMENT OF AUDITORS
The accounting firm of KPMG Peat Marwick has been appointed the Corporation's
auditors for the year 1995 and, in accordance with established policy, such
appointment is being submitted to the stockholders for ratification. In the
event the appointment is not ratified by a majority of shares voted, in person
or by proxy, it is anticipated that no change in auditors would be made for the
current year because of the difficulty and expense of making any change so long
after the beginning of the current year, but such vote would be considered in
connection with the appointment of auditors for 1996.
KPMG Peat Marwick were auditors of the Corporation for the year ended December
31, 1994, and a representative of such firm is expected to attend the Meeting,
respond to appropriate questions from stockholders and proxyholders present at
the Meeting and if such representative desires, which is not now anticipated,
make a statement.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF SHARES OF COMMON STOCK
VOTED THEREON IS REQUIRED TO APPROVE THIS PROPOSAL. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS PROPOSAL. PROXIES, UNLESS INDICATED
TO THE CONTRARY, WILL BE VOTED "FOR" THIS PROPOSAL.
OTHER MATTERS; STOCKHOLDER PROPOSALS
Management of the Corporation is not aware of any other matters which are to
be presented at the Meeting but if any such matters are so presented which may
require a vote of the stockholders, the enclosed proxy shall be deemed to confer
discretionary authority to the individuals named as proxies therein to vote the
shares represented by such proxy as to any such matters. The Corporation's By-
laws include provisions setting forth specific conditions under which business
may be transacted at an annual meeting of stockholders.
Proposals of stockholders intended to be presented at the 1996 Annual Meeting
of Stockholders of the Corporation should be received by the Corporation at its
offices at One First Union Center, Charlotte, North Carolina 28288-0013,
Attention: Corporate Secretary, on or before November 13, 1995, in order to be
considered for inclusion in the Corporation's proxy statement and form of proxy
relating to that meeting. The submission of such proposals by stockholders and
the consideration of such proposals by the Corporation for inclusion in next
year's proxy statement and form of proxy are subject to applicable rules and
regulations of the Securities and Exchange Commission.
March , 1995
A COPY OF THE CORPORATION'S 1994 ANNUAL REPORT ON FORM 10-K IS AVAILABLE
WITHOUT CHARGE (EXCEPT FOR EXHIBITS) UPON WRITTEN REQUEST TO FIRST UNION
CORPORATION, INVESTOR RELATIONS, TWO FIRST UNION CENTER, CHARLOTTE, NC
28288-0206, ATTENTION: T. SEAN FOX.
26
<PAGE>
FIRST UNION CORPORATION
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of First Union Corporation (the "Corporation")
hereby constitutes and appoints W. Waldo Bradley, Robert D. Davis and Leonard G.
Herring and each of them, with full power of substitution, attorneys and proxies
to appear and vote, as indicated below, all of the shares of Common Stock of the
Corporation held of record by the undersigned on February 22, 1995, at the
Annual Meeting of Stockholders of the Corporation to be held on April 18, 1995,
and at any and all adjournments thereof.
1. PROPOSAL TO ELECT THE 12 NOMINEES LISTED BELOW AS DIRECTORS OF THE
CORPORATION, EIGHT NOMINEES TO SERVE AS CLASS III DIRECTORS WITH TERMS
EXPIRING AT THE 1998 ANNUAL MEETING OF STOCKHOLDERS, TWO NOMINEES TO SERVE
AS CLASS I DIRECTORS WITH TERMS EXPIRING AT THE 1996 ANNUAL MEETING OF
STOCKHOLDERS, AND TWO NOMINEES TO SERVE AS CLASS II DIRECTORS WITH TERMS
EXPIRING AT THE 1997 ANNUAL MEETING OF STOCKHOLDERS, IN EACH CLASS UNTIL
THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees listed below.
below)
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
CLASS III: G. Alex Bernhardt, W. Waldo Bradley, B. F. Dolan, John R. Georgius,
Howard H. Haworth, Leonard G. Herring, Lanty L. Smith and Dewey L. Trogdon.
CLASS I: Terrence E. Hemby, Jr. and Kenneth G. Younger.
CLASS II: Brenton S. Halsey and Henry D. Perry, Jr.
2. PROPOSAL TO APPROVE CERTAIN AMENDMENTS TO THE CORPORATION'S 1992 MASTER STOCK
COMPENSATION PLAN, INCLUDING AMENDMENTS INTENDED TO PRESERVE THE
CORPORATION'S FEDERAL INCOME TAX DEDUCTION WITH RESPECT TO CERTAIN
COMPENSATION PAYABLE UNDER SUCH PLAN;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE CERTAIN AMENDMENTS TO THE CORPORATION'S MANAGEMENT
INCENTIVE PLAN INTENDED TO PRESERVE THE CORPORATION'S FEDERAL INCOME TAX
DEDUCTION WITH RESPECT TO CERTAIN COMPENSATION PAYABLE UNDER SUCH PLAN;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO APPROVE CERTAIN AMENDMENTS TO THE CORPORATION'S MANAGEMENT
LONG-TERM CASH INCENTIVE PLAN INTENDED TO PRESERVE THE CORPORATION'S FEDERAL
INCOME TAX DEDUCTION WITH RESPECT TO CERTAIN COMPENSATION PAYABLE UNDER SUCH
PLAN;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on other side)
<PAGE>
5. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK AS AUDITORS OF THE
CORPORATION
FOR 1995.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" PROPOSALS 1 THROUGH 5. THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER
BUSINESS AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF, IN THEIR
SOLE DISCRETION.
SIGNATURE(S) OF STOCKHOLDER
Please sign exactly as name appears
on this proxy. When shares are held
by joint tenants, both should sign.
When signing on behalf of a
corporation or partnership, or as
attorney, agent or fiduciary, please
indicate the capacity in which you
are signing.
Dated: 1995
...............................................................................
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT TO US. PLEASE MARK, DATE AND
SIGN YOUR PROXY AND RETURN IT PROMPTLY IN THE PROVIDED
RETURN ENVELOPE. THANK YOU.
*******************************************************************************
APPENDIX
On the Dear Stockholder letter the First Union logo and the
signature of Edward E. Crutchfield appears where indicated.
On the Notice of Annual Meeting page the signature of
Edward E. Crutchfield appears where noted.
On Pages 3 through 7 photos of all Nominees and Incumbent Directors
appear to the left of each name and description where indicated.
On Page 18 the Performance Graph appears where indicated. The plot
points for the graph are listed in the table below that point.
