<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
FILED BY THE REGISTRANT (X)
FILED BY A PARTY OTHER THAN THE REGISTRANT ( )
CHECK THE APPROPRIATE BOX:
( ) PRELIMINARY PROXY STATEMENT
(X) DEFINITIVE PROXY STATEMENT
( ) DEFINITIVE ADDITIONAL MATERIALS
( ) SOLICITING MATERIAL PURSUANT TO (SECTION MARK)240.14A-11(C) OR
(SECTION MARK)240.14A-12
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):
( ) $125 PER EXCHANGE ACT RULES 0-11(C)(1)(II), 14A-6(I)(1), OR 14A-6(J)(2).
( ) $500 PER EACH PARTY TO THE CONTROVERSY PURSUANT TO EXCHANGE ACT RULE
14A-6(I)(3).
( ) FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(4) AND 0-11.
1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED PURSUANT
TO EXCHANGE
ACT RULE 0-11:1
4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
(1) SET FORTH THE AMOUNT ON WHICH THE FILING FEE IS CALCULATED AND STATE HOW IT
WAS DETERMINED.
( ) CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT RULE
0-11(A)(2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS PAID
PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR
THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
1) AMOUNT PREVIOUSLY PAID:
2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
3) FILING PARTY:
4) DATE FILED:
<PAGE>
(First Union Logo appears on left side of page)
March 12, 1997
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 15, 1997, beginning
at 9:30 a.m., Eastern time.
The notice of meeting and proxy statement which appear on the
following pages contain information about 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 appears here)
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 15, 1997
March 12, 1997
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 15, 1997, at 9:30 a.m., Eastern time, for the purpose of
considering and acting on the following matters:
1. a proposal to elect the ten nominees named in the attached
proxy statement as directors of the Corporation, nine
nominees to serve as Class II directors with terms expiring
at the 2000 Annual Meeting of Stockholders and one nominee
to serve as a Class I director with a term expiring at the
1999 Annual Meeting of Stockholders, in each case until
their successors are duly elected and qualified;
2. a proposal to ratify the appointment of KPMG Peat Marwick
LLP as auditors of the Corporation for the year 1997; and
3. such other business as may properly come before the Meeting
or any adjournments thereof.
Only holders of record of the Corporation's Common Stock on the
books of the Corporation at the close of business on February 18,
1997, are entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors,
(Signature of Marion A. Cowell, Jr. appears here)
Marion A. Cowell, Jr.
Secretary
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 15, 1997, 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 of such revocation 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 thereon.
If no specification is made, proxies will be voted in favor of approval of
Proposals 1 and 2 described below. This proxy statement and the enclosed form of
proxy, Summary Annual Report and Annual Report are being first mailed to the
Corporation's stockholders entitled to notice of and to vote at the Meeting, on
or about March 12, 1997. The Summary Annual Report and Annual Report do not
constitute "soliciting material" and are not to be deemed "filed" with the
Securities and Exchange Commission (the "Commission").
If a stockholder is a participant in the Corporation's Dividend
Reinvestment and Stock Purchase Plan (the "DRIP") the enclosed proxy represents
the number of shares held in the DRIP by such holder as of the Record Date (as
hereinafter defined), as well as the number of shares directly registered in
such holder's name as of the Record Date.
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 $8,000, plus expenses.
VOTING SECURITIES AND PRINCIPAL HOLDERS
As of February 18, 1997 (the "Record Date"), the Corporation had
outstanding 279,281,846 shares of common stock, par value $3.33 1/3 per share
("Common Stock"). Each holder of Common Stock will have the right to one vote
for each share of such stock standing in such holder's name on the books of the
Corporation as of the close of business on the Record Date, with respect to each
matter voted on at the Meeting.
The presence in person or by proxy of a majority of the shares of Common
Stock outstanding on the Record Date will constitute a quorum for purposes of
conducting business at the Meeting. For purposes of determining the votes cast
with respect to any matter presented for consideration at the Meeting only those
votes cast "FOR" or "AGAINST" are included. Abstentions and broker non-votes
1
<PAGE>
(i.e., shares held by brokers on behalf of their customers, which may not be
voted on certain matters because the brokers have not received specific voting
instructions from their customers with respect to such matters) will be counted
solely for the purpose of determining whether a quorum is present.
Based upon information available to the Corporation, the following
stockholder beneficially owned more than 5% of the Common Stock as of the date
indicated:
<TABLE>
<CAPTION>
Name and Address Number of
of Beneficial Owner (1) Shares Owned Percent
<S> <C> <C>
Banco Santander, S.A. ("Santander") 26,079,422 9.3%
Paseo de la Castellana 24
28046 Madrid, Spain
</TABLE>
(1) The information presented, including the number of shares owned, is based on
Amendment No. 2, dated November 14, 1996, to a Schedule 13D filed by
Santander with the Commission. Santander is a bank holding company
incorporated in Spain. The shares are owned by a wholly-owned subsidiary of
Santander, FFB Participacoes e Servicos, S.A., a holding company
incorporated in Portugal. The shares were acquired in exchange for shares of
common stock of First Fidelity Bancorporation ("FFB"), which was acquired by
the Corporation on January 1, 1996. The percentage indicated is based on the
number of shares of Common Stock outstanding on the Record Date. See "Other
Matters Relating to Executive Officers, Directors and Principal
Stockholders" for additional information relating to Santander.
2
<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. For
purposes of the election of directors at the Meeting the number of directors has
been fixed at 29, ten directors in Class I, nine directors in Class II and ten
directors in Class III.
The terms of office of the current directors serving in Class II will expire
at the Meeting and, except as otherwise indicated below, the terms of office of
the current directors serving in Classes III and I will expire at the 1998 and
1999 Annual Meetings of Stockholders, respectively, in each case until their
successors are duly elected and qualified.
Messrs. Dowd, Goldberg, Goodwin, Laughery, Lovett, Reynolds and Uible, who are
currently serving as directors in Class II, together with Messrs. Davis and
McDonald, are being nominated to serve as directors in Class II with terms
expiring at the 2000 Annual Meeting of Stockholders and until their successors
are duly elected and qualified. In addition, Mr. Shelton, who is currently
serving as a director in Class I, is being nominated to serve as a director in
Class I with a term expiring at the 1999 Annual Meeting of Stockholders and
until his successor is 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. In addition, 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 NINE NOMINEES NAMED BELOW AS CLASS II DIRECTORS TO SERVE FOR TERMS EXPIRING
AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS AND "FOR" THE ELECTION OF THE NOMINEE
NAMED BELOW AS A CLASS I DIRECTOR TO SERVE FOR A TERM EXPIRING AT THE 1999
ANNUAL MEETING OF STOCKHOLDERS, IN EACH CASE UNTIL THEIR SUCCESSORS ARE DULY
ELECTED AND QUALIFIED.
3
<PAGE>
Listed below are the names of the nine nominees to serve as Class II
directors, the nominee to serve as a Class I director, and the 19 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 "1934 Act"); 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,
1997. As of such date, no director beneficially owned more than 1% of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
CLASS II NOMINEES FOR ELECTION TO TERMS EXPIRING IN 2000
<S> <C> <C> <C>
(photo appears A. DANO DAVIS (51). Chairman and Principal Executive Officer, 1,461,857
here) Winn-Dixie Stores, Inc., Jacksonville, Florida, a food retailer.
Mr. Davis is currently serving as a director of First Union
National Bank of Florida ("FUNB-FL"), a subsidiary of the
Corporation, and has served as such since 1986. Mr. Davis is a
first cousin of Robert D. Davis, a current director of the
Corporation, who is retiring as such, effective as of the date of
the Meeting. Director, American Heritage Life Investment
Corporation and Winn-Dixie Stores, Inc. (1)
(photo appears
here) RODDEY DOWD, SR. (64). Chairman, Charlotte Pipe and Foundry 1988 9,041
Company, Charlotte, North Carolina, a manufacturer of pipe and
fittings. Director, Ruddick Corporation. (1)
(photo appears ARTHUR M. GOLDBERG (55). Executive Vice President (and President 1996 216,714
here) of Gaming Operations), Hilton Hotels Corporation, Beverly Hills,
California, lodging and casinos, since December 1996. Formerly,
Chairman, President and Chief Executive Officer, Bally
Entertainment Corporation, Chicago, Illinois, casinos and
entertainment. Director, DiGiorgio Corporation and Hilton Hotels
Corporation. (1)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
<S> <C> <C> <C>
(photo appears WILLIAM H. GOODWIN, JR. (56). Chairman, CCA Industries, Inc., 1993 23,000
here) Richmond, Virginia, a diversified holding company. Director,
Basset Furniture Industries, Incorporated. (1)
(photo appears
here) JACK A. LAUGHERY (62). Investor. Formerly, Chairman, The Bagel 1978 6,175
Group, Inc., Rocky Mount, North Carolina, a restaurant developer,
from January 1995 to January 1997, and Chairman, Hardee's Food
Systems, Inc., Rocky Mount, North Carolina, a fast food chain,
prior to January 1995. Director, MassMutual Corporate Investors,
MassMutual Participation Investors and Papa John's International,
Inc.
(photo appears RADFORD D. LOVETT (63). Chairman, Commodores Point Terminal 1985 181,546
here) Corp., Jacksonville, Florida, an operator of a marine terminal
and a real estate management company. Director, American Heritage
Life Investment Corporation, Florida Rock Industries, Inc., FRP
Properties, Inc. and Winn-Dixie Stores, Inc.
(photo appears MACKEY J. MCDONALD. (50). President and Chief Executive Officer,
here) VF Corporation, Wyomissing, Pennsylvania, an apparel
manufacturer. Mr. McDonald is currently serving as a director of
First Union National Bank of North Carolina ("FUNB-NC"), a
subsidiary of the Corporation, and has served as such since 1994.
Director, VF Corporation.
(photo appears RANDOLPH N. REYNOLDS (55). Vice Chairman, Reynolds Metals 1993 609
here) Company, Richmond, Virginia, an aluminum manufacturer, since
January 1994. Formerly, Executive Vice President, Reynolds Metals
Company. Director, Reynolds Metals Company.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
(photo appears JOHN D. UIBLE (61). Investor, Jacksonville, Florida. Director, 1990 10,000
here) St. Joe Corporation.
CLASS I NOMINEE FOR ELECTION TO A TERM EXPIRING IN 1999
<S> <C> <C> <C>
(photo appears CHARLES M. SHELTON, SR. (61). General partner, The Shelton 1996 3,791
here) Companies, Charlotte, North Carolina, investments. Mr. Shelton
was elected a director of the Corporation by the Board of
Directors in August 1996. Prior to such date, Mr. Shelton had
served as a director of FUNB-NC since 1986. (2)
</TABLE>
INCUMBENT CLASS I DIRECTORS -- TERMS EXPIRING IN 1999
<TABLE>
<S> <C> <C> <C>
(photo appears ROBERT J. BROWN (62). Chairman, President and Chief Executive 1993 700
here) Officer, B&C Associates, Inc., High Point, North Carolina, a
public relations and marketing research firm. Director, Duke
Power Company and Sonoco Products Company. (1)
(photo appears EDWARD E. CRUTCHFIELD (55). Chairman and Chief Executive Officer, 1977 242,189
here) the Corporation. Director, Bernhardt Industries, Inc., Liberty
Corporation and VF Corporation. (1)
(photo appears R. STUART DICKSON (67). Chairman of the Executive Committee, 1985 30,975
here) Ruddick Corporation, Charlotte, North Carolina, a diversified
holding company, since February 1994. Formerly, Chairman, Ruddick
Corporation. Director, Dimon Incorporated, PCA International,
Inc., Ruddick Corporation, Textron, Inc. and United Dominion
Industries. (1)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
<S> <C> <C> <C>
(photo appears JUAN RODRIGUEZ INCIARTE (44). Executive Vice President and 1996 270
here) Director, Santander. Formerly, a director of FFB. (1) (2)
(photo appears MAX LENNON (56). President, Mars Hill College, Mars Hill, North 1988 100
here) Carolina, since March 1996. Formerly, President and Chief
Executive Officer, Eastern Foods, Inc., Atlanta, Georgia, a food
manufacturer and distributor, from August 1994 to March 1996, and
President, Clemson University, Clemson, South Carolina, prior to
August 1994. Director, Delta Woodside Industries, Inc. and Duke
Power Company.
(photo appears JOSEPH NEUBAUER (55). Chairman, President and Chief Executive 1996 5,832
here) Officer, ARAMARK Corporation, Philadelphia, Pennsylvania,
providing or managing food, leisure, uniform, health, education
and distribution services. Director, Bell Atlantic Corporation
and Federated Department Stores, Inc.
(photo appears RUTH G. SHAW (49). Senior Vice President, Corporate Resources 1990 1,000
here) (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. Director, AppleSouth, Inc. (1)
(photo appears ANTHONY P. TERRACCIANO (58). President, the Corporation, since 1996 104,449
here) January 1996. Formerly, Chairman of the Board, President and
Chief Executive Officer, FFB. (1) (2)
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
(photo appears B. J. WALKER (66). Vice Chairman, the Corporation. (1) 1987 101,155
here)
INCUMBENT CLASS III DIRECTORS -- TERMS EXPIRING IN 1998
<S> <C> <C> <C>
(photo appears EDWARD E. BARR (60). Chairman, President and Chief Executive 1996 68,592
here) Officer, Sun Chemical Corporation, Fort Lee, New Jersey, a
graphic arts materials manufacturer. Director, United Water
Resources Inc.
(photo appears G. ALEX BERNHARDT, SR. (53). Chairman and Chief Executive 1992 2,108
here) Officer, Bernhardt Furniture Company, Lenoir, North Carolina, a
residential and executive office furnishings manufacturer, since
August 1996. Formerly, President and Chief Executive Officer,
Bernhardt Furniture Company. Director, Duke Power Company. (1)
(photo appears W. WALDO BRADLEY (63). Chairman, Bradley Plywood Corporation, 1986 52,277
here) Savannah, Georgia, a wholesale distributor of building materials.
Director, AGL Resources, Inc. and Savannah Foods & Industries,
Inc. (1)
(photo appears B. F. DOLAN (69). Investor. Formerly, Chairman, Textron, Inc., 1977 26,589
here) Providence, Rhode Island, a manufacturer of aerospace, consumer,
industrial and other products. Director, FPL Group, Inc., Polaris
Industries, Inc., Ruddick Corporation and Santander. (1) (2)
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
<S> <C> <C> <C>
(photo appears JOHN R. GEORGIUS (52). Vice Chairman, the Corporation, since 1988 190,111
here) January 1996. Formerly, President, the Corporation, from February
1993 to January 1996, and Chairman and Chief Executive Officer,
FUNB-NC, prior to February 1993. (1)
(photo appears HOWARD H. HAWORTH (62). President, The Haworth Group and The 1986 12,000
here) Haworth Foundation, Inc., Charlotte, North Carolina, investments.
(1)
(photo appears FRANK M. HENRY (62). Chairman, Frank Martz Coach Company, 1996 309,079
here) Wilkes-Barre, Pennsylvania, bus transportation. Director, C-TEC
Corporation. (1)
(photo appears LEONARD G. HERRING (69). Investor. Formerly, President and Chief 1986 26,408
here) Executive Officer, 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 appears LANTY L. SMITH (54). Chairman and Chief Executive Officer, 1987 2,000
here) Precision Fabrics Group, Inc., Greensboro, North Carolina, a
manufacturer of technical, high-performance textile products. (1)
(photo appears DEWEY L. TROGDON (65). Chairman, Cone Mills Corporation, 1986 616
here) Greensboro, North Carolina, a manufacturer of apparel and
decorative fabrics. Director, Cone Mills Corporation.
</TABLE>
9
<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, 1997, except for the following shares over
which the directors indicated, and such directors and the six senior
executive officers of the Corporation (Messrs. Crutchfield, Georgius,
Terracciano, 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. Bradley -- 2,161 shares; Mr.
Brown -- 100 shares; Mr. Crutchfield -- 137 shares; Mr. Davis -- 1,269,757
shares; Mr. Dickson -- 25,000 shares; Mr. Dowd -- 2,000 shares; Mr.
Georgius -- 220 shares; Mr. Goldberg -- 1,133 shares; Mr.
Goodwin -- 20,000 shares; Mr. Henry -- 7,284 shares; Dr. Shaw -- 500
shares; Mr. Terracciano -- 1,100 shares; Mr. Walker -- 30,000 shares; and
members of the group (including the foregoing) -- 1,363,518 shares.
The current directors and six senior executive officers of the Corporation
beneficially owned a total of 2,635,769 shares, or approximately 1% of the
outstanding shares of Common Stock as of January 31, 1997. 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, 1997, or
within 60 days thereafter, by the directors indicated, and by the
directors and such executive officers as a group: Mr.
Crutchfield -- 134,580 shares; Mr. Georgius -- 95,925 shares; Mr.
Terracciano -- 778 shares; Mr. Walker -- 20,365 shares; and members of the
group (including the foregoing) -- 300,141 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 -- 30,564 shares; Mr.
Crutchfield -- 16,709 shares; Mr. Georgius -- 2,121 shares; Mr.
Haworth -- 15,600 shares; Mr. Smith -- 100 shares; and Mr.
Terracciano -- 2,700 shares. The shares of Common Stock beneficially owned
by Mr. Inciarte and Mr. Dolan exclude the shares of Common Stock
beneficially owned by Santander.
(2) See "Other Matters Relating to Executive Officers, Directors and Principal
Stockholders".
COMMITTEES AND ATTENDANCE
Executive Committee. The Executive Committee of the Board of Directors held
three meetings in 1996. 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 Bylaws of the Corporation or by statute. The following
directors are the current members of the Executive Committee: Dolan (Chairman),
Crutchfield, Robert D. Davis (a retiring director), Dickson, Goldberg, Goodwin,
Herring, Lovett, Neubauer, Smith, Terracciano and Walker.
Audit Committee. The Audit Committee of the Board of Directors held six
meetings in 1996. 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
10
<PAGE>
current members of the Audit Committee: Bernhardt (Chairman), Haworth (Vice
Chairman), Brown, Henry, Henry D. Perry, Jr. (a retiring director) and Reynolds.
Credit/Market Risk Committee. The Credit/Market Risk Committee held five
meetings in 1996. The Committee is authorized, among other things, to review the
deposit base, allowance for loan losses, and funds management, market risk and
lending policies of the Corporation, and to monitor the liquidity, investment
portfolio, trading activities, non-performing assets and owned real estate of
the Corporation. The following directors are the current members of the
Credit/Market Rate Committee: Smith (Chairman), Shaw (Vice Chairman), Robert D.
Davis (a retiring director), Dowd, Georgius, Goldberg, Inciarte and Terracciano.
Financial Services Committee. The Financial Services Committee of the Board of
Directors held six meetings in 1996. The Committee is authorized, among other
things, to review the commercial, consumer and mortgage banking, capital
management and capital markets activities of the Corporation. The following
directors are the current members of the Financial Services Committee: Goodwin
(Chairman), Brent S. Halsey (a retiring director) (Vice Chairman), Georgius,
Laughery, Lennon, Neubauer, Terracciano and Uible.
Human Resources Committee. The Human Resources Committee of the Board of
Directors (the "HR Committee") held six meetings in 1996. The HR Committee is
authorized, among other things, to review and make recommendations to the Board
of Directors 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), Barr, Bradley, Dolan, Lovett and Trogdon.
Nominating Committee. The Nominating Committee of the Board of Directors held
two meetings in 1996. 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, Goodwin, Herring, Lovett and Terracciano. The Corporation's Bylaws
include provisions setting forth specific conditions under which persons may be
nominated as directors of the Corporation at an annual meeting of stockholders.
A copy of such provisions is available upon request to: First Union Corporation,
One First Union Center, Charlotte, North Carolina 28288-0013, Attention:
Corporate Secretary.
Attendance. The Board of Directors of the Corporation held nine meetings in
1996. In 1996, 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.
11
<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, 1996, and who the Corporation considers executive
officers for purposes of such determination (the CEO and such executive
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 current 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 Payouts
Annual Compensation Securities
Other Annual Restricted Underlying LTIP
Name and Current Salary Bonus Compensation Stock Awards Options/SARs Payouts
Principal Position Year ($) (1) ($) (1) ($) (2) ($) (3) (#) ($)(1)
<S> <C> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f) (g) (h)
Edward E. Crutchfield 1996 1,025,000 2,050,000 38,763 1,170,000 100,000 850,000
Chairman and Chief 1995 850,000 1,700,000 36,319 834,811 61,345 835,000
Executive Officer, 1994 835,000 835,000 93,723 718,000 44,000 448,740
the Corporation
John R. Georgius 1996 710,000 1,420,000 24,758 789,750 50,000 665,000
Vice Chairman, 1995 665,000 1,000,000 20,353 599,874 31,595 600,000
the Corporation 1994 600,000 600,000 25,039 448,750 15,000 323,384
Anthony P. Terracciano (5) 1996 1,000,000 1,050,000 -- 789,750 50,000 --
President,
the Corporation
Byron E. Hodnett 1996 420,000 1,255,000(6) 22,677 468,000 24,000 340,000
Chief Executive Officer, 1995 395,000 475,000 14,000 295,350 15,400 325,000
FUNB-FL 1994 395,000 395,000 11,765 269,250 9,000 212,905
Robert T. Atwood 1996 420,000 700,000 20,448 468,000 24,000 250,000
Executive Vice 1995 355,000 355,000 13,841 241,650 12,600 201,000
President and 1994 335,000 335,000 17,104 215,400 7,200 176,961
Chief Financial Officer,
the Corporation
<CAPTION>
All Other
Name and Current Compensation
Principal Position ($) (4)
<S> <C>
(a) (i)
Edward E. Crutchfield 192,119
Chairman and Chief 190,387
Executive Officer, 179,018
the Corporation
John R. Georgius 128,778
Vice Chairman, 102,752
the Corporation 48,896
Anthony P. Terracciano (5) 71,441
President,
the Corporation
Byron E. Hodnett 143,756
Chief Executive Officer, 116,148
FUNB-FL 36,823
Robert T. Atwood 54,353
Executive Vice 49,535
President and 29,698
Chief Financial Officer,
the Corporation
</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 such 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 such plan as of the date on which the "change in
control" occurs.
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<PAGE>
(2) Information regarding any personal benefit that totals less than $50,000 is
not included in the amounts indicated. Dollar amounts indicated for 1996
consist of amounts reimbursed for the payment of taxes on certain personal
benefits.
(3) The aggregate number of shares of restricted stock held as of December 31,
1996, and the value thereof as of such date, were as follows: Crutchfield:
50,924 shares ($3,768,376); Georgius: 34,224 shares ($2,532,576);
Terracciano: 13,500 shares ($999,000); Hodnett: 19,280 shares ($1,426,720);
and Atwood: 17,120 shares ($1,266,880). Restricted stock awards granted in
1996 vest at a rate of 20% per year over five years or upon termination due
to death, retirement at age 65, or a "change in control" of the Corporation.
Dividends on shares of restricted stock are paid quarterly.
(4) Amounts shown for 1996 consist of the following:
<TABLE>
<CAPTION>
Crutchfield Georgius Terracciano Hodnett Atwood
<S> <C> <C> <C> <C> <C>
Savings Plan matching contributions...................... $ 61,500 42,600 60,000 25,200 25,200
Value of life insurance premiums......................... 121,624 28,071 11,350 13,193 22,582
Value of disability insurance premiums................... -- 1,552 -- -- 3,719
Above market interest on deferred compensation........... 3,695 56,555 91 105,363 2,853
Bonus for use of real estate referral program............ 5,300 -- -- -- --
</TABLE>
The value of life insurance premiums for Messrs. Crutchfield, Georgius,
Hodnett and Atwood includes the value of premiums advanced by the Corporation
under split-dollar life insurance agreements with the Corporation. The
Corporation may terminate such agreements and receive its interest in the
related life insurance policies under certain conditions, provided the
Corporation may not terminate such agreements if certain of such conditions
occur after a "change in control" of the Corporation.
(5) Mr. Terracciano was not employed by the Corporation prior to January 1,
1996.
(6) Includes a $500,000 special incentive bonus.
Option/SAR Grants Table
The following table sets forth with respect to grants of stock options made
during 1996 to each of the Named Officers: (i) the name of such officer (column
(a)); (ii) the number of options granted (column (b)); (iii) the percent the
grant represents of the total options granted to all employees during 1996
(column (c)); (iv) the per share exercise price of the options granted (column
(d)); (v) the expiration date of the options (column e)); and (vi) the
Black-Scholes value of the options at grant date (column (f)).
OPTION/SAR GRANTS IN 1996
<TABLE>
<CAPTION>
Individual Grants
Number of Securities % of Total
Underlying Options/SARs Options/SARs Granted Exercise or Black-Scholes
Granted (1) to Employees Base Price Expiration Grant Date Value (2)
Name (#) in 1996 ($/Sh) Date ($)
<S> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f)
Crutchfield 100,000 5.96 58.50 4/15/06 1,645,000
Georgius 50,000 2.98 58.50 4/15/06 822,500
Terracciano 50,000 2.98 58.50 4/15/06 822,500
Hodnett 24,000 1.43 58.50 4/15/06 394,800
Atwood 24,000 1.43 58.50 4/15/06 394,800
</TABLE>
(1) Options granted are nonqualified stock options, except for options granted
to Mr. Terracciano to purchase 1,709 shares of Common Stock, which are
incentive stock options ("ISOs") under (section mark)422 of the Internal
Revenue Code of 1986, as amended (the "Code"). 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. Upon a "change in control" of the
Corporation, all outstanding options granted under the 1992 Master Stock
Compensation Plan will terminate; provided, however, optionholders will have
the right immediately prior to such "change in control" to exercise such
options, whether or not then exercisable. Upon such a "change in control",
(i) all outstanding options under the 1996 Master Stock Compensation Plan
will become exercisable and will remain exercisable for the term of such
options, and (ii) the holders of such options may elect, in settlement
thereof, a cash payment equal to the fair market value of the Common Stock
at the date of the "change in control", less the applicable exercise price.
(2) The values shown reflect standard application of the Black-Scholes pricing
model using (i) 60-month volatility (23.948%) 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 (6.48%), and (iv) dividends at the annualized rate in place on the
date of grant ($2.08). 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.
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<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 1996
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,
1996, 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, 1996, separately identifying the
exercisable and unexercisable options and SARs (column (e)).
AGGREGATED OPTION/SAR EXERCISES IN 1996 AND
DECEMBER 31, 1996 OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs In-the-Money Options/SARs
at 12/31/96 (#) at 12/31/96 ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Crutchfield 78,137 2,898,745 131,404/120,904 3,888,983/2,308,322
Georgius 7,500 273,750 92,749/68,916 3,553,634/1,389,642
Terracciano -- -- --/50,000 --/775,000
Hodnett -- -- 19,577/41,012 490,933/976,221
Atwood -- -- 23,089/35,811 680,380/779,857
</TABLE>
Long-Term Incentive Plan Awards Table
The following table sets forth, with respect to each award made to a Named
Officer in 1996 under any LTIP: (i) the name of such officer (column (a)); (ii)
the number of shares, units or other rights awarded under any LTIP (column (b));
(iii) the performance or other time period until payout or maturation of the
award (column (c)); and (iv) for LTIPs not based on stock price, the dollar
value of the estimated payout or range of estimated payouts under the award
(threshold, target and maximum amount), whether such award is denominated in
stock or cash (columns (d) through (f)).
14
<PAGE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1996 (1)
<TABLE>
<CAPTION>
Estimated Future Payments under
Performance or Other Non-Stock Price-Based Plans
Number of Shares, Period Until Maturation Threshold Target Maximum
Name Units or Other Rights (#) or Payout ($ or #) ($ or #)(2) ($ or #)(3)
<S> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f)
Crutchfield 3 years 0 850,000 1,025,000
Georgius 3 years 0 665,000 710,000
Terracciano -- -- -- 1,000,000
Hodnett 3 years 0 340,000 420,000
Atwood 3 years 0 250,000 420,000
</TABLE>
(1) See the Summary Compensation Table. Under the Corporation's Management
Long-Term Cash Incentive Plan, if the Corporation achieves not less than a
10% average return on equity ("ROE") (calculated as indicated below under
"HR Committee Report on Executive Compensation") for the three-year period
ending each December 31, based on the Corporation's "adjusted net income"
(as defined in such Plan), 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 such 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 such 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
1996 for the 1993-1995 three-year period. Future awards may be higher or
lower than such awards.
(3) Represents 1996 annual salaries, the maximum awards that can be granted in
1997 for the 1994-1996 three-year period.
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, 1997, the credited full years of service
under the Pension Plan were as follows: Mr. Crutchfield -- 31 years; Mr.
Georgius -- 21 years; Mr. Terracciano -- seven years; Mr. Hodnett -- 24 years;
and Mr. Atwood -- five years.
The portions of compensation which are considered covered compensation under
the Corporation's Supplemental Retirement Plan for the Named Officers (excluding
Mr. Terracciano) 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)(2)
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>
$1,250,000...... $33,581 357,410 44,774 482,332 55,968 607,255 67,161 732,177 70,961 728,814
1,750,000...... 33,581 519,204 44,774 698,059 55,968 876,913 67,161 1,055,767 70,961 1,052,404
2,250,000...... 33,581 680,999 44,774 913,785 55,968 1,146,571 67,161 1,379,357 70,961 1,375,994
2,750,000...... 33,581 842,794 44,774 1,129,512 55,968 1,416,229 67,161 1,702,946 70,961 1,699,583
3,250,000 33,581 1,004,589 44,774 1,345,238 55,968 1,685,887 67,161 2,026,536 70,961 2,023,173
</TABLE>
(1) For the year ending December 31, 1997, the annual retirement benefit payable
under the Corporation's Pension Plan is limited by federal law to $125,000
and the maximum covered compensation is limited to $160,000. 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.
15
<PAGE>
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 such
Plan which would cause the actual or projected benefits payable under such
Plan to be reduced.
(2) 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 of Directors
Directors of the Corporation receive a quarterly retainer of $7,500, plus
$1,500 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 $2,000. 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 $1,520,928 were
either paid by the Corporation to the directors of the Corporation in 1996 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, a director of the Corporation who
formerly was Chairman and Chief Executive Officer of a corporation acquired by
the Corporation in 1990. Messrs. Goldberg (a current director and a nominee),
Henry (a current director) and Inciarte (a current director) also serve as
advisory directors on the First Union-North advisory board and receive $1,200
per meeting attended of such board. Messrs. McDonald (a nominee), Shelton (a
current director and a nominee) and A. Dano Davis (a nominee) received fees
during 1996 for serving as directors of certain of the Corporation's subsidiary
banks.
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 deferred under such 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 19
directors of the Corporation elected to defer $1,040,759 of their 1996
directors' fees under such 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 such Plan, after the end of the calendar year in
which the director retires from the Board, the retired director is entitled to
receive an annual retirement benefit equal to 80% of the amount of the annual
director retainer in effect at the time the director retires.
Employment Contracts
In August 1985, the Corporation and Edward E. 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
16
<PAGE>
annual bonus based on his performance and other factors. If the Corporation
terminates the agreement other than for "cause" (as defined in the agreement) 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 then
current 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 short-term Management Incentive Plan 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 then current 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. The agreement also provides 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.
In September 1995, the Corporation and John R. Georgius entered into an
employment agreement providing for the employment of Mr. Georgius as Vice
Chairman of the Corporation until December 31, 1998, subject to (i) automatic
extension of such period of employment for additional one-year periods, (ii) the
right of either party to terminate the agreement at any time, and (iii) the
right of Mr. Georgius to terminate the agreement if such offices held by Mr.
Georgius are changed or he shall fail to be vested with the power and authority
or duties or responsibilities attendant thereto. The agreement provides that Mr.
Georgius' annual salary will not be less than $665,000 and that the Corporation,
in its sole discretion, may award Mr. Georgius annual incentive compensation
based on his performance and other factors. If the Corporation terminates the
agreement other than for cause (as defined in the agreement) or if Mr. Georgius
terminates the agreement as provided in (iii) above, the agreement provides that
the Corporation will pay to Mr. Georgius an amount equal to the sum of (a) the
result of multiplying (i) Mr. Georgius' then current 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 average of the cash
incentive compensation payable to Mr. Georgius 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. Georgius
terminates his employment other than as provided in (iii) above, he will be
entitled to be paid 66 2/3% of his then current annual salary for a period of
one year following termination of his employment, subject to termination of such
payments if Mr. Georgius were to violate a one-year non-compete provision
provided for in the agreement. The agreement provides for a gross-up payment to
Mr. Georgius 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. Georgius 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. Georgius under the agreement or otherwise, being deemed to be
"excess parachute payments" for federal income tax purposes.
In connection with the execution of the agreement to acquire FFB entered into
in June 1995, the Corporation and Anthony P. Terracciano entered into an
employment agreement providing for the employment of Mr. Terracciano for the
five-year period following consummation of the acquisition of FFB by the
Corporation, which occurred on January 1, 1996. The agreement provides that Mr.
Terracciano's salary shall not be less than $1,000,000 per year and that his
salary plus any bonus
17
<PAGE>
shall not be less than $2,000,000 per year. Mr. Terracciano's current salary is
$1,000,000 per year. If Mr. Terracciano's employment is terminated for any
reason during the term of employment, Mr. Terracciano shall be entitled to be
paid at a rate of $2,000,000 per year during the remainder of the term of
employment. Upon expiration of the term of employment, the Corporation shall
thereafter for the life of the second to die of Mr. Terracciano and his current
spouse, guarantee to Mr. Terracciano or such spouse, retirement income of
$1,200,000 per year, offset by certain other retirement benefits. Upon the death
of Mr. Terracciano, the Corporation agrees to pay his designated beneficiary or
his estate a death benefit of $3,000,000, offset by certain other death
benefits. The agreement contains certain non-compete provisions with respect to
Mr. Terracciano's employment with another financial institution during the term
of employment within a specified geographical area. The agreement also provides
for reimbursement of certain excise taxes, if any, payable as a result of any
payments made to Mr. Terracciano by the Corporation or FFB.
Compensation Committee Interlocks and Insider Participation
The current members of the HR Committee who served during the period from
April 1996 through December 1996 are Messrs. Barr, Bradley, Dickson, Dolan,
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 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 1996, 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, stock compensation plans and a long-term cash incentive plan, which are
further discussed below. These variable performance based elements represent
from 55% to 85% of total compensation for executives covered under such plans.
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,
18
<PAGE>
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 sixth in size among the group on December 31, 1996, based on total
assets.
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 HR Committee believes that ROE is the most appropriate measure for
evaluating the Corporation's results. In order to provide a consistent basis for
comparison, the computation of ROE is based on the average of quarter-end
stockholders' equity, excluding unrealized gains or losses on investment
securities, as determined in accordance with the Statement of Financial
Accounting Standards 115 ("SFAS 115"), "Accounting for Certain Investments in
Debt and Equity Securities". The Corporation's Management Incentive Plan and the
Corporation's Management Long-Term Cash Incentive Plan both rely on such ROE
performance as a primary determinant of incentive payouts. The ROE calculations
exclude a one-time legislative special assessment on financial institutions that
have deposits insured by the Savings Association Insurance Fund ("SAIF").
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 Corporation's stock compensation plans,
result in total compensation levels which approximate the relative rankings of
asset size and 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 such decision on
total compensation.
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 1995, the Corporation's ROE performance peer group rank was
ninth and the total for all compensation for the Named Officers ranked ninth. 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 $1,000,000
limit on tax deductible compensation under the Omnibus Budget Reconciliation Act
of 1993 and the regulations promulgated thereunder ("OBRA") 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, it is also the HR Committee's intent 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
19
<PAGE>
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 targeted
to have the same relative rank among the peer group as asset size. For 1995, the
Corporation's asset size ranked sixth among the peer group and the total base
salaries for the Named Officers ranked fourth among the peer group. Any
variances are addressed in determining the total compensation for the Named
Officers. Base salary increases in 1996 were made as a result of the review of
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. For 1996, the threshold ROE
for incentive payments was 12%. Individual awards may range from 0% to 200% 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 1996 (calculated as indicated above) was 19.58%,
exceeding the threshold ROE by 63% and resulting in payments which ranged from
65% to 200% of base salaries.
Long-Term Incentive Program
The long-term incentive program is composed of the following:
(Bullet) The Corporation's stock compensation plans, which are 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 ROE
rank for the period 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 plans, and payouts from the long-term cash plan, are
set so that total compensation approximates the relative rankings of asset size
and ROE performance within the peer group. The Corporation's 1995 ROE of 17.93%
(calculated as indicated above) resulted in a three-year average ROE rank of
eighth among the peer group, generating a pool of 41% 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 1996 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
20
<PAGE>
years and cash/stock mix. Current holdings of stock were not considered. No
acceleration of vesting or of payouts occurred under these plans in 1996.
1996 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 1996
base salary was adjusted to reflect the increase in the Corporation's asset
size, primarily as a result of the FFB acquisition. 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 19.58%
(calculated as indicated above), return on assets of 1.31%, net income
applicable to common stockholders of $1.8 billion, excluding the after-tax
effect of restructuring and merger-related charges and a one time special
assessment SAIF charge (a 19% increase over 1995 net income applicable to common
stockholders, as restated to reflect the FFB acquisition) and success in meeting
strategic objectives. These included six acquisitions completed in 1996, as well
as the continued expansion initiatives involving capital markets and capital
management. In addition, the Corporation has implemented new service delivery
channels through projects such as Customer Service Centers, Direct Bank, Remote
Banking and the Internet. The Corporation continued to leverage its strategic
advantage of having in place a single system technology foundation that
facilitated the record pace conversion of FFB. The Corporation continues to
strengthen overall performance through execution of consumer and staff area
reengineering efforts. The stock option grants and restricted stock awards made
to Mr. Crutchfield in 1996 were based on the analysis discussed above. That is,
the HR Committee set them so that Mr. Crutchfield's total compensation would
approximate the expected relative rankings of asset size and 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. In the aggregate, the variable performance based portion was 85% of
Mr. Crutchfield's compensation. The 1985 employment agreement with Mr.
Crutchfield described above had no impact on compensation decisions made with
respect to Mr. Crutchfield during 1996.
With respect to the HR Committee's use of the historical relationship between
pay and performance described above, the Corporation's total assets and ROE
performance for 1995 ranked sixth and ninth, respectively, among the peer group,
and Mr. Crutchfield's base salary and total compensation ranked eighth and
tenth, respectively.
<TABLE>
<S> <C>
R. STUART DICKSON, Chairman B. F. DOLAN
LEONARD G. HERRING, Vice Chairman RADFORD D. LOVETT
EDWARD E. BARR DEWEY L. TROGDON
W. WALDO BRADLEY
</TABLE>
21
<PAGE>
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, 1991, 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
DECEMBER 31, 1991 THROUGH DECEMBER 31, 1996
(Performance Graph Appears Here)
The Corporation S&P 500 KBW 50
<TABLE>
<CAPTION>
December 31,
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
The Corporation..................................................... $100 150 147 153 215 295
S&P 500............................................................. 100 108 118 120 165 203
KBW 50.............................................................. 100 127 134 128 204 289
</TABLE>
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"
22
<PAGE>
with the Commission or subject to Regulation 14A or the liabilities of Section
18 of the 1934 Act, 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, DIRECTORS AND PRINCIPAL
STOCKHOLDERS
General
The directors and executive officers of the Corporation and its subsidiaries
who file reports with the Commission under Section 16(a) of the 1934 Act
(including 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 1996, the
aggregate monthly outstanding principal balances of loans made by the
Corporation's banking subsidiaries to such directors and officers, including
certain of their related interests, ranged from a high of approximately $1.5
billion to a low of approximately $929 million.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the 1934 Act 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 any changes in such ownership with the Commission and the New
York Stock Exchange and to furnish the Corporation with copies of such reports.
To the Corporation's knowledge, based solely on a 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, 1996, 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 a late filing by Mr. Barr (a current director) relating to the
purchase of 2,600 shares of Common Stock by an investment manager with
discretionary authority to make such purchase.
Santander
Pursuant to the agreement to acquire FFB, Santander is entitled to certain
registration rights with respect to the shares of Common Stock received by
Santander in the FFB acquisition, including the right to request one
registration in any 12-month period for no less than 2,000,000 shares of Common
Stock.
The Corporation's Amended and Restated Shareholder Protection Rights Agreement
(the "Rights Agreement") includes in the definition of an "Acquiring Person" any
person that is determined by the Federal Reserve Board to control the
Corporation for purposes of the Bank Holding Company Act of 1956, as amended
(the "BHCA"). The Rights Agreement provides that a person will not become an
Acquiring Person under the BHCA control test described above if either (i) the
Federal Reserve Board's control determination would not have been made but for
such person's failure to make certain customary passivity commitments, or such
person's violation of such commitments, made to the Federal Reserve Board, so
long as the Federal Reserve Board determines within 30 days (or 60 days in
certain circumstances), that such person no longer controls the Corporation, or
(ii) the Federal
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<PAGE>
Reserve Board's control determination was not based on such a failure or
violation and such person (x) obtains a noncontrol determination from the
Federal Reserve Board within three years, and (y) is using its best efforts to
allow the Corporation to make any acquisition or engage in any legally
permissible activity notwithstanding such person's being deemed to control the
Corporation for purposes of the BHCA.
In October 1995, the Federal Reserve Board determined that the structure of
the proposed relationship between Santander and the Corporation did not support
a finding that Santander would control the Corporation for purposes of the BHCA.
In connection with such determination, Santander committed to the Federal
Reserve Board that it will not:
exercise or attempt to exercise a controlling influence over the
management or policies of the Corporation or any of its subsidiaries;
seek or accept representation on the Board of Directors of the
Corporation or any of its subsidiaries, except that it may have two
representatives on the Board of Directors of the Corporation, one of whom
initially shall be a senior executive officer of the Corporation;
have or seek to have any employee or representative serve as an officer,
agent or employee with management responsibility at the Corporation or
any of its subsidiaries;
take any action causing the Corporation or any of its subsidiaries to
become a subsidiary of Santander or any of its subsidiaries;
acquire or retain voting securities of the Corporation or any of its
subsidiaries that would cause the combined interests of Santander or any
of its subsidiaries and its officers, directors and affiliates to exceed
the percentage of the outstanding voting securities of the Corporation or
any of its subsidiaries that they owned upon consummation of the FFB
acquisition;
exercise voting rights with respect to that portion of the voting
securities of the Corporation at any time owned by Santander or any of
its subsidiaries which exceeds 9.9% of the outstanding voting securities
of the Corporation at such time, other than to vote such shares for and
against any proposition in the same proportions as the voting securities
of the Corporation held by security holders not affiliated with the
Corporation have been voted;
propose a director or slate of directors in opposition to a nominee or
slate of nominees proposed by the management or Board of Directors of the
Corporation or any of its subsidiaries;
attempt to influence the dividend policies or practices of the
Corporation or any of its subsidiaries;
solicit or participate in soliciting proxies with respect to any matter
presented to the shareholders of the Corporation or any of its
subsidiaries;
attempt to influence the loan and credit decisions or policies, the
pricing of services, any personnel decision, the location of any offices,
branching, the hours of operation or similar activities of the
Corporation or any of its subsidiaries;
dispose or threaten to dispose of shares of the Corporation or any of its
subsidiaries in any manner as a condition of specific action or nonaction
by the Corporation or any of its subsidiaries; or
24
<PAGE>
enter into any banking or nonbanking transactions with the Corporation or
any of its subsidiaries other than normal banking transactions and
cooperative activities that are in the ordinary course of business and on
an arm's-length basis.
In connection with the execution of the agreement to acquire FFB, the
Corporation and Santander entered into an agreement, as subsequently amended,
pursuant to which the Corporation agreed, subject to certain conditions relating
to the percentage ownership of Common Stock by Santander at that time and
certain other conditions, to nominate at the Annual Meeting of Stockholders of
the Corporation in 1999, up to two individuals selected by Santander to serve as
directors of the Corporation for three-year terms.
In October 1996, Mr. Terracciano (a current director and an executive officer
of the Corporation) resigned as a director of Santander and Mr. Dolan (a current
director of the Corporation) was elected a director of Santander.
From time to time, Santander and its affiliates enter into transactions with
the Corporation and its subsidiaries in the ordinary course of business. Since
January 1, 1996, such transactions have included: (i) foreign exchange
facilities for the use of Santander's London, New York and Tokyo branches; (ii)
dollar accounts maintained by Santander with certain banking subsidiaries of the
Corporation; (iii) peseta accounts maintained by certain banking subsidiaries of
the Corporation with Santander; and (iv) a correspondent banking relationship,
principally for trade finance purposes.
Certain Other Relationships
Mr. Henry (a current director) is a partner in Frank M. Henry Associates, from
which a subsidiary of the Corporation leases a branch office in Wilkes-Barre,
Pennsylvania. The initial term expires on April 30, 2003, and the subsidiary has
four five-year renewal options. The rent paid in 1996 totaled $71,806.
Mr. Shelton (a current director and a nominee) is the general partner and part
owner of First Stratford Partnership ("Stratford"), a limited partnership, and,
together with other family members, he and such other family members are the
controlling stockholders of Shelco, Inc. ("Shelco"), a general contractor.
FUNB-NC has a 40% ownership interest in Stratford and, together with an
affiliate, leases space in an office building in Winston-Salem, North Carolina,
owned by Stratford. Mr. Shelton has a 10 1/2% ownership interest in Stratford
and his brother also has a 10 1/2% ownership interest. The rent paid to
Stratford by FUNB-NC and its affiliate in 1996 totaled $402,784. FUNB-NC
received $145,266 in partnership distributions from Stratford in 1996. FUNB-NC
also has an outstanding loan to Stratford on the office building.
During 1996, the Corporation and its subsidiaries paid Shelco approximately
$76 million for branch, office and tenant upfitting construction, including
Phase III of a 1,000,000 square foot, six-story Customer Information Center in
Charlotte, North Carolina. The Corporation currently estimates that payments to
Shelco for such construction in 1997 will total approximately $26 million.
25
<PAGE>
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF AUDITORS
The accounting firm of KPMG Peat Marwick LLP has been appointed the
Corporation's auditors for the year 1997 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
votes cast, 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 1998.
KPMG Peat Marwick LLP were auditors of the Corporation for the year ended
December 31, 1996, 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 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
Bylaws 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 1998 Annual Meeting
of Stockholders of the Corporation (the "1998 Meeting") 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 8,
1997, 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 Commission. In addition,
stockholders wishing to propose matters for consideration at the 1998 Meeting
must follow certain specified advance notice procedures set forth in the
Corporation's Bylaws, a copy of which is available upon request to: First Union
Corporation, One First Union Center, Charlotte, North Carolina 28288-0013,
Attention: Corporate Secretary.
March 12, 1997
A COPY OF THE CORPORATION'S 1996 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.
26
<PAGE>
(First Union logo appears here)
<PAGE>
******************************************************************************
APPENDIX
******************************************************************************
P R O X Y F O R M P R O X Y F O R M
THE BOARD OF DIRECTORS SOLICITS THIS PROXY
The undersigned hereby appoint(s) the individuals listed on the reverse side,
and each of them, attorney, agent and proxy of the undersigned, with full power
of substitution, to vote all shares of stock of the Company that the undersigned
would be entitled to cast if personally present at the Annual Meeting of
Shareholders of the Company, and at any postponement or adjournment thereof.
This proxy will be voted as specified by the undersigned. If no choice is
specified, the proxy will be voted according to the director recommendations
indicated on the reverse side and according to the discretion of the proxy
holders on any other matters that properly come before the meeting or any
postponement or adjournment thereof.
Please date, sign exactly as your name appears on the form and mail the proxy
promptly. When signing as an attorney, executor, administrator, trustee or
guardian, please give your full title as such. If shares are held jointly, both
owners must sign.
CONTINUED AND TO BE VOTED AND SIGNED ON REVERSE.
P R O X Y F O R M P R O X Y F O R M
<PAGE>
FIRST UNION CORPORATION ANNUAL MEETING TO BE HELD ON 04/15/97 FOR HOLDERS AS OF
02/18/97
<TABLE>
<S> <C> <C>
DIRECTORS 2 ITEM(S)
SHARE(S)
DIRECTORS RECOMMEND: A VOTE FOR THE ELECTION OF THE FOLLOWING NOMINEES
1 -- CLASS II NOMINEE(S): 01-A. DANO DAVIS, 02-RODDEY DOWD, SR., 03-ARTHUR M.
GOLDBERG, 04-WILLIAM H. GOODWIN, JR., 05-JACK A. LAUGHERY, 06-RADFORD D. LOVETT,
07-MACKEY J. MCDONALD, 08-RANDOLPH N. REYNOLDS, 09-JOHN D. UIBLE.
CLASS I NOMINEE(S): 10-CHARLES M. SHELTON, SR.
<CAPTION>
DIRECTORS
1 (MARK "X" FOR ONLY ONE BOX)
( ) FOR ALL NOMINEES
( ) WITHHOLD ALL NOMINEES
( ) WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE.
WRITE NUMBER(S) OF NOMINEE(S) BELOW.
USE NUMBER ONLY ____________________
</TABLE>
<TABLE>
<CAPTION>
DIRECTORS
PROPOSAL(S) RECOMMEND
<S> <C> <C> <C> <C> <C>
2 -- PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT FOR (arrow) (arrow) (arrow) (arrow) 2 FOR AGAINST ABSTAIN
MARWICK LLP AS AUDITORS OF THE CORPORATION FOR 1997. ( ) ( ) ( )
<CAPTION>
PROPOSAL(S) PLEASE INDICATE YOUR PROPOSAL
SELECTION BY FIRMLY PLACING AN "X" IN
THE APPROPRIATE NUMBERED BOX WITH
BLUE OR BLACK INK ONLY
<S> <C>
</TABLE>
<TABLE>
<S> <C> <C>
PROXIES -- W. WALDO BRADLEY, RADFORD D. LOVETT AND
CHARLES M. SHELTON, SR. SIGNATURE SIGNATURE
/ /
DATE
</TABLE>
