<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 ss.240.14a-11(c) or ss.240.14a-12
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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] No fee required.
[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
(First Union Logo appears here)
March 12, 1999
Dear Stockholder:
On behalf of the Board of Directors, I am pleased to invite you to
the Annual Meeting of Stockholders in Charlotte, North Carolina, on
Tuesday, April 20, 1999, at 9:30 a.m.
The notice of meeting and proxy statement on the following pages
contain information about the meeting. We will also review operating
results for the past year and present other information concerning
First Union. The meeting should be interesting and informative and we
hope you will be able to attend.
In order to ensure your shares are voted at the meeting, please
return the enclosed proxy at your earliest convenience. Every
stockholder's vote is important, whether you own a few shares or many.
Sincerely yours,
/s/ Edward E. Crutchfield
---------------------------------
Edward E. Crutchfield
Chairman and Chief Executive Officer
First Union Corporation, One First Union Center, Charlotte, North Carolina
28288-0013
<PAGE>
<PAGE>
First Union Corporation
One First Union Center, Charlotte, North Carolina 28288-0013
NOTICE OF ANNUAL MEETING
TO BE HELD ON APRIL 20, 1999
March 12, 1999
The Annual Meeting of Stockholders will be held in the Auditorium, 12th
floor, Two First Union Center, Charlotte, North Carolina, on Tuesday,
April 20, 1999, at 9:30 a.m., to consider the following:
1. A PROPOSAL TO ELECT THE TEN NOMINEES NAMED IN THE ATTACHED PROXY
STATEMENT AS DIRECTORS, NINE NOMINEES TO SERVE AS CLASS I
DIRECTORS WITH TERMS EXPIRING AT THE 2002 ANNUAL MEETING OF
STOCKHOLDERS, AND ONE NOMINEE TO SERVE AS A CLASS II DIRECTOR
WITH A TERM EXPIRING AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS,
IN EACH CASE UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND
QUALIFY;
2. A PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS AUDITORS FOR
THE YEAR 1999; AND
3. SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENTS THEREOF.
Only holders of record of First Union common stock on February 22,
1999, are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
/s/ Marion A Cowell, Jr.
-------------------------
Marion A. Cowell, Jr.
Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE RETURN THE
ENCLOSED PROXY TO ENSURE YOUR SHARES ARE VOTED AT THE MEETING. YOUR VOTE
IS IMPORTANT, WHETHER YOU OWN A FEW SHARES OR MANY.
<PAGE>
<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 in
connection with the Annual Meeting of Stockholders to be held in the
Auditorium, 12th Floor, Two First Union Center, Charlotte, North Carolina, on
Tuesday, April 20, 1999, at 9:30 a.m. The enclosed proxy is for use at the
meeting if you do not attend the meeting or if you wish to vote your shares by
proxy even if you attend the meeting. You may revoke your proxy at any time
before it is exercised, by (i) giving written notice of such revocation to the
Secretary of First Union, (ii) submitting a proxy having a later date, or (iii)
appearing at the meeting and requesting to vote in person. All shares
represented by valid proxies and not revoked before they are exercised will be
voted as specified. If no specification is made, proxies will be voted in favor
of Proposals 1 and 2 described below. This proxy statement and the enclosed
proxy and 1998 Annual Report to Stockholders are being first mailed to our
stockholders on or about March 12, 1999. The Annual Report does not constitute
"soliciting material" and is not to be deemed "filed" with the SEC.
If you have any shares in our Dividend Reinvestment and Stock Purchase
Plan, the enclosed proxy represents the number of shares you have in the Plan
on the record date for the meeting, as well as the number of shares directly
registered in your name on the record date.
First Union will bear the cost of preparing this proxy statement and of
soliciting proxies in the enclosed form. Proxies may be solicited by our
employees, either personally, by letter or by telephone. Such employees will
not be specifically compensated for soliciting such proxies. In addition, we
have retained Georgeson & Company, Inc. as proxy solicitors to provide certain
services in connection with the solicitation and tabulation of proxies. The fee
for these services is $18,000, plus expenses.
VOTING SECURITIES AND PRINCIPAL HOLDERS
As of February 22, 1999, the record date for the meeting, there were
988,664,405 shares of First Union common stock outstanding. You have one vote
for each share registered in your name on the record date, with respect to each
matter voted on at the meeting. We are not aware of any stockholder who was the
beneficial owner of more than 5% of the outstanding shares of common stock on
the record date, except for Capital Research and Management Company, 333 South
Hope Street, Los Angeles, CA 90071, an investment adviser, which based on a
Schedule 13G filed with the SEC, was the holder of 53,749,030 shares of common
stock as of December 31, 1998, or 5.4% of the outstanding shares of common
stock on the record date. Capital Research indicated that it holds such shares
for accounts under the discretionary management of Capital Research and not for
its own account. Capital Research also indicated that it does not have sole or
shared voting power with respect to the shares and has sole dispositive power
over them.
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
on any matter at the meeting only "FOR" and "AGAINST" votes are included.
Abstentions and broker non-votes (I.E., shares held by brokers that they can't
vote because they haven't received voting instructions from their customers
with respect to the matters voted on) are only counted for the purpose of
determining whether a quorum is present.
1
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
GENERAL INFORMATION AND NOMINEES
The Board of Directors is divided into three classes. At each annual
meeting of stockholders, the stockholders elect the members of one of the three
classes to three-year terms. The number of directors is determined by the
directors, but cannot be less than nine or more than 30. For purposes of the
election of directors at the meeting the number of directors has been fixed at
27, nine directors in Class I, nine directors in Class II, and nine directors
in Class III.
The terms of the directors serving in Class I will expire at the meeting
and, except as otherwise indicated below, the terms of the directors serving in
Classes II and III will expire at the 2000 and 2001 Annual Meetings of
Stockholders, respectively, in each case until their successors are duly
elected and qualify.
Erskine B. Bowles, Robert J. Brown, Edward E. Crutchfield, James E.S.
Hynes, Herbert Lotman, Patricia A. McFate, Joseph Neubauer, Ruth G. Shaw and
Charles M. Shelton, Sr., each of whom, other than Bowles and Hynes, is
currently serving as a director in Class I, are being nominated to serve as
directors in Class I with terms expiring at the 2002 Annual Meeting of
Stockholders and until their successors are duly elected and qualify. In
addition, R. Stuart Dickson, who is currently serving as a Class I director, is
being nominated to serve as a Class II director with a term expiring at the
2000 Annual Meeting of Stockholders and until his successor is duly elected and
qualifies.
Directors who reach retirement age (I.E., age 70) during their term in
office are to retire from the Board at the annual meeting of stockholders next
following their 70th birthday, subject to the Board authorizing that retirement
be deferred when deemed appropriate.
Directors are elected by a plurality of 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 and the 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 (I) THE NINE NOMINEES NAMED BELOW AS CLASS I DIRECTORS TO SERVE FOR
TERMS EXPIRING AT THE 2002 ANNUAL MEETING OF STOCKHOLDERS, AND (II) THE NOMINEE
NAMED BELOW AS A CLASS II DIRECTOR TO SERVE FOR A TERM EXPIRING AT THE 2000
ANNUAL MEETING OF STOCKHOLDERS, IN EACH CASE UNTIL THEIR SUCCESSORS ARE DULY
ELECTED AND QUALIFY.
Listed below are the names of the nine nominees to serve as Class I
directors, the nominee to serve as a Class II director, and the 17 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 publicly-held companies; the year during
which they were first elected a director; and the number of shares of First
Union common stock they beneficially owned as of January 31, 1999. As of such
date, no director beneficially owned more than 1% of the outstanding shares of
common stock.
2
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
--------------------------------------------------------------- ---------- ----------
<S> <C> <C> <C>
CLASS I NOMINEES FOR ELECTION TO TERMS EXPIRING IN 2002
(Photo of Erskine B. Bowles appears here)
ERSKINE B. BOWLES (53). General Partner, Forstmann 5,000*
Little & Co., New York, New York, and Managing Director,
Carousel Capital Company, LLC, Charlotte, North
Carolina, merchant banking-private equity companies,
since January 1999. Formerly, Chief of Staff, The White
House, November 1996 to November 1998, Managing
Director, Carousel Capital Company, LLC, December
1995 to November 1996, Deputy Chief of Staff, The White
House, October 1994 to December 1995, and
Administrator, Small Business Administration, March
1993 to October 1994. (2)
(Photo of Robert J. Brown appears here)
ROBERT J. BROWN (64). Chairman, President and Chief 1993 1,400
Executive Officer, B&C Associates, Inc., High Point,
North Carolina, a public relations and marketing research
firm. Director, Duke Energy Corporation, Republic
Industries, Inc. and Sonoco Products Company. (1)(2)
(Photo of Edward E. Crutchfield appears here)
EDWARD E. CRUTCHFIELD (57). Chairman and Chief 1977 836,579
Executive Officer, First Union Corporation. Director,
Bernhardt Industries, Inc., Liberty Corporation and VF
Corporation. (1)(2)
(Photo of James E. S. Hynes appears here)
JAMES E. S. HYNES (58). Chairman, Hynes, Inc., 20,408
Charlotte, North Carolina, a sales and marketing services
firm. Director, North Carolina Natural Gas Corporation
and Ruddick Corporation.
(Photo of Herbert Lotman appears here)
HERBERT LOTMAN (65). Chairman and Chief Executive 1998 121,086
Officer, Keystone Foods Corporation, Bala Cynwyd,
Pennsylvania, a food processing and logistics company.
(1)(3)
----------
* Purchased subsequent to January 31, 1999.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
---------------------------------------------------------- ---------- ----------
<S> <C> <C> <C>
(Photo of Patricia A. McFate appears here)
PATRICIA A. MCFATE (66). Senior Scientist, Science 1998 8,626
Applications International Corporation, McLean, Virginia,
a systems engineering company. (3)
(Photo of Joseph Neubauer appears here)
JOSEPH NEUBAUER (57). Chairman and Chief Executive 1996 11,664
Officer, ARAMARK Corporation, Philadelphia,
Pennsylvania, a service management company. Director,
Bell Atlantic Corporation, CIGNA Corporation and
Federated Department Stores, Inc.
(Photo of Ruth G. Shaw appears here)
RUTH G. SHAW (51). Executive Vice President and Chief 1990 2,200
Administrative Officer, Duke Energy Corporation,
Charlotte, North Carolina, an energy company, since
June 1997. Formerly, Senior Vice President, Corporate
Resources, and Chief Administrative Officer, Duke
Energy Corporation, from April 1994 to June 1997, and
Vice President, Corporate Communications, prior to April
1994. Director, Avado Brands, Inc. and Texas Eastern
Products Pipeline Company. (1)
(Photo of Charles M. Shelton, Sr. appears here)
CHARLES M. SHELTON, SR. (63). General partner, The 1996 7,829
Shelton Companies, Charlotte, North Carolina,
investments. (2)
CLASS II NOMINEE FOR ELECTION TO TERM EXPIRING IN 2000
(Photo of R. Stuart Dickson appears here)
R. STUART DICKSON (69). Chairman of the Executive 1985 63,094
Committee, Ruddick Corporation, Charlotte, North
Carolina, a diversified holding company, since February
1994. Formerly, Chairman, Ruddick Corporation.
Director, Dimon Incorporated, Ruddick Corporation,
Textron, Inc. and United Dominion Industries. (1)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
------------------------------------------------------------ ---------- ----------
<S> <C> <C> <C>
INCUMBENT CLASS II DIRECTORS -- TERMS EXPIRING IN 2000
(Photo of A. Dano Davis appears here)
A. DANO DAVIS (53). Chairman and Principal Executive 1997 2,919,714
Officer, Winn-Dixie Stores, Inc., Jacksonville, Florida, a
food retailer. Director, American Heritage Life Investment
Corporation and Winn-Dixie Stores, Inc. (1)
(Photo of B. F. Dolan appears here)
B. F. DOLAN (71). Investor. Director, FPL Group, Inc. and 1977 56,172
Polaris Industries, Inc.
(Photo of Roddey Dowd, Sr. appears here)
RODDEY DOWD, SR. (66). Chairman of the Executive 1988 20,973
Committee, Charlotte Pipe and Foundry Company,
Charlotte, North Carolina, a manufacturer of pipe and
fittings, since September 1998. Formerly, Chairman,
Charlotte Pipe and Foundry Company. Director, Ruddick
Corporation. (1)
(Photo of Arthur M. Goldberg appears here)
ARTHUR M. GOLDBERG (57). President and Chief 1996 432,862
Executive Officer, Park Place Entertainment Corporation,
casinos, Chatham, New Jersey, since December 1998.
Formerly, Executive Vice President (and President of
Gaming Operations), Hilton Hotels Corporation, from
December 1996 to December 1998, and Chairman,
President and Chief Executive Officer, Bally
Entertainment Corporation, prior to December 1996.
Director, DiGiorgio Corporation, Hilton Hotels
Corporation and Park Place Entertainment
Corporation. (1)
(Photo of William H. Goodwin, Jr. appears here)
WILLIAM H. GOODWIN, JR. (58). Chairman, CCA 1993 746,000
Industries, Inc., Richmond, Virginia, a diversified holding
company. Director, Basset Furniture Industries,
Incorporated. (1)(2)
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
------------------------------------------------------------ ---------- ----------
<S> <C> <C> <C>
(Photo of Radford D. Lovett appears here)
RADFORD D. LOVETT (65). Chairman, Commodores 1985 363,092
Point Terminal 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 of Mackey J. McDonald appears here)
MACKEY J. MCDONALD (52). Chairman (since October 1997 1,000
1998), President and Chief Executive Officer, VF
Corporation, Greensboro, North Carolina, an apparel
manufacturer. Director, Hershey Foods Corporation and
VF Corporation.
(Photo of Randolph N. Reynolds appears here)
RANDOLPH N. REYNOLDS (57). Vice Chairman, Reynolds 1993 2,918
Metals Company, Richmond, Virginia, an aluminum
manufacturer. Formerly, Executive Vice President,
Reynolds Metals Company. Director, Reynolds Metals
Company. (2)
INCUMBENT CLASS III DIRECTORS -- TERMS EXPIRING IN 2001
(Photo of Edward E. Barr appears here)
EDWARD E. BARR (62). Chairman, Sun Chemical 1996 133,085
Corporation, Fort Lee, New Jersey, a graphic arts
materials manufacturer, since January 1998. Formerly,
Chairman, President and Chief Executive Officer, Sun
Chemical Corporation. Director, United Water
Resources Inc.
(Photo of G. Alex Bernhardt, Sr. appears here)
G. ALEX BERNHARDT, SR. (55). Chairman and Chief 1992 2,604
Executive 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 Energy
Corporation. (1)
(Photo of W. Waldo Bradley appears here)
W. WALDO BRADLEY (65). Chairman, Bradley Plywood 1986 89,554
Corporation, Savannah, Georgia, a wholesale distributor
of building materials. (1)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director Shares
and Certain Other Directorships Since Owned (1)
----------------------------------------------------------- ---------- ----------
<S> <C> <C> <C>
(Photo of Norwood H. Davis, Jr. appears here)
NORWOOD H. DAVIS, JR. (59). Chairman of the Board and 1998 110,236
Chief Executive Officer, Trigon Healthcare, Inc., a
managed healthcare company, Richmond, Virginia.
Director, Hilb, Rogal and Hamilton Company and Trigon
Healthcare, Inc. (1)
(Photo of John R. Georgius appears here)
JOHN R. GEORGIUS (54). President (since January 1998) 1988 502,608
and Chief Operating Officer (since October 1998), First
Union Corporation. Formerly, Vice Chairman, First Union
Corporation, from January 1996 to January 1998, and
President, prior to January 1996. (1)(2)
(Photo of Frank M. Henry appears here)
FRANK M. HENRY (65). Chairman, Frank Martz 1996 622,208
Coach Company, Wilkes-Barre, Pennsylvania, bus
transportation. Director, Commonwealth Telephone
Enterprises, Inc. (1)(2)
(Photo of Ernest E. Jones appears here)
ERNEST E. JONES (54). President and Chief Executive 1998 2,582
Officer, Private Industry Council of Philadelphia, Inc.,
Philadelphia, Pennsylvania, a workforce development
company, since October 1998. Formerly, President and
Executive Director of Greater Philadelphia Urban Affairs
Coalition. (3)
(Photo of James M. Seabrook appears here)
JAMES M. SEABROOK (65). Chairman and Chief 1998 9,710
Executive Officer, Seabrook Brothers & Sons, Inc., frozen
foods processor and marketer. (1)(3)
(Photo of Lanty L. Smith appears here)
LANTY L. SMITH (56). Chairman, The Greenwood Group, 1987 8,000
Inc., Raleigh, North Carolina, a provider of technical and
other temporary personnel in eastern North Carolina.
Also, Chairman, Precision Fabrics Group, Inc.,
Greensboro, North Carolina, a manufacturer of technical,
high-performance textile products, since November,
1997. Formerly, Chairman and Chief Executive Officer,
Precision Fabrics Group, Inc. Director, Oakwood Homes
Corporation.
</TABLE>
7
<PAGE>
- ----------
(1) The foregoing directors and nominees have sole voting and investment power
over the shares of common stock beneficially owned by them on January 31,
1999, except for the following shares over which the directors indicated,
and such directors and the seven senior executive officers of First Union
(in addition to Crutchfield and Georgius, B.J. Walker, Vice Chairman, G.
Kennedy Thompson, Vice Chairman, Charles L. Coltman, Vice Chairman, 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: Bernhardt --
802 shares; Bradley -- 4,322 shares; Brown -- 200 shares; Crutchfield --
23,662 shares; A. Dano Davis -- 2,539,514 shares; Norwood H. Davis, Jr.
-- 108,068 shares; Dickson -- 50,000 shares; Dowd -- 4,000 shares;
Goldberg -- 31,700 shares; Goodwin -- 740,000 shares; Henry -- 14,568
shares; Lotman -- 45,360 shares; Shaw -- 1,200 shares; and members of the
group (including the foregoing) -- 3,666,179 shares.
The foregoing directors, nominees and senior executive officers
beneficially owned a total of 8,175,434 shares, or less than one percent of
the outstanding shares of common stock as of January 31, 1999. Included in
such shares are the following shares held under certain of our employee
benefit plans, including options exercisable on January 31, 1999, or within
60 days thereafter, by the directors indicated, and by the directors and
senior executive officers as a group: Crutchfield -- 328,264 shares;
Georgius -- 205,104 shares; and members of the group (including the
foregoing) -- 957,139 shares. Non-employee directors are not eligible to
participate in any of our stock option or other employee benefit plans.
The following directors and nominees disclaim beneficial ownership of
certain shares of common stock held by certain of their related interests,
as a result of which these shares are not included in the number of shares
indicated above: Bradley -- 61,128 shares; Crutchfield -- 33,685 shares;
Georgius -- 3,564 shares; Lotman -- 73,436 shares; and Seabrook -- 3,240
shares.
(2) See (i) "Crutchfield Employment Contract" and "Georgius Employment
Contract" under "Executive Compensation", and (ii) "Other Matters Relating
to Executive Officers and Directors".
(3) Jones, Lotman, McFate and Seabrook were former directors of CoreStates
Financial Corp and were elected directors of First Union by the Board
following completion of our acquisition of CoreStates in April 1998.
COMMITTEES OF THE BOARD AND ATTENDANCE
EXECUTIVE COMMITTEE. The Executive Committee held five meetings in 1998.
The Committee is authorized, between meetings of the Board, to perform all
duties and exercise all authority of the Board, except for those duties and
authorities delegated to other committees of the Board or which are exclusively
reserved to the Board by our Bylaws or by statute. The following directors are
the current members of the Committee: Dolan (Chairman), Crutchfield, Dickson,
Goldberg, Goodwin, Lovett, Neubauer, Shelton and Smith.
AUDIT COMMITTEE. The Audit Committee held six meetings in 1998. The
principal responsibilities of the Committee are to ensure that the Board
receives objective information regarding policies, procedures and activities
with respect to auditing, accounting, internal accounting controls, financial
reporting, regulatory matters and such other activities as may be directed by
the Board. The following directors are the current members of the Committee:
Neubauer (Chairman), Mackey J. McDonald (Vice Chairman), Barr, Norwood H.
Davis, Jr., Jones and McFate.
8
<PAGE>
CREDIT/MARKET RISK COMMITTEE. The Credit/Market Risk Committee held six
meetings in 1998. The Committee is authorized, among other things, to review
the deposit base, allowance for loan losses, and funds management, market risk
and lending policies, and to monitor the liquidity, investment portfolio,
trading activities, non-performing assets and owned real estate. The following
directors are the current members of the Committee: Smith (Chairman), Shaw
(Vice Chairman), A. Dano Davis, Dowd and Goldberg.
FINANCIAL SERVICES COMMITTEE. The Financial Services Committee held six
meetings in 1998. The Committee is authorized, among other things, to review
the commercial, consumer and mortgage banking, capital management and capital
markets activities. The following directors are the current members of the
Committee: Goodwin (Chairman), Shelton (Vice Chairman), Bernhardt, Malcolm S.
McDonald (a retiring director), Reynolds and Seabrook.
HUMAN RESOURCES COMMITTEE. The Human Resources Committee (the "HR
Committee") held six meetings in 1998. 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 and to monitor conditions of employment
and personnel policies. The following directors are the current members of the
HR Committee: Dickson (Chairman), Bradley, Brown, Dolan, Henry, Lotman and
Lovett.
NOMINATING COMMITTEE. The Nominating Committee held no meetings in 1998.
The Committee is authorized, among other things, to recommend the number of
directors to be elected to the Board, 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 Committee: Dolan (Chairman), Dickson (Vice
Chairman), Bernhardt, Crutchfield, Goodwin, Lovett, Mackey J. McDonald and
Shelton. Our Bylaws include provisions setting forth specific conditions under
which persons may be nominated as directors 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 held seven meetings in 1998. In 1998, all of the
directors attended at least 75% of the meetings of the Board and the relevant
committees, except for Arthur M. Goldberg, who was not able to do so due to
illness, business or other conflicts.
EXECUTIVE COMPENSATION
The following information relates to compensation paid or payable to (i)
the Chief Executive Officer (the "CEO"), (ii) the four other most highly
compensated executive officers who were serving as such at December 31, 1998,
and (iii) two executive officers who retired during 1998 who would have been
among the four other most highly compensated executive officers had they been
serving as such at December 31, 1998 (the CEO and such six other executive
officers, the "Named Officers").
9
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth for the Named Officers: (i) their name and
principal position on December 31, 1998 (column (a)); (ii) years 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 we believe could not be properly reported in any other column
of the table (column (i)).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------------------------------------
Other Annual
Salary Bonus Compensation
Name and Position Year ($) (1) ($) (1) ($) (2)
- -------------------------- ---------- --------------- ------------------ --------------
<S> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Edward E. Crutchfield 1998 1,140,000 2,280,000 107,186
Chairman and Chief 1997 1,025,000 2,050,000 104,120
Executive Officer 1996 1,025,000 2,050,000 38,763
John R. Georgius 1998 750,000 1,500,000 129,036
President and Chief 1997 725,000 1,450,000 23,854
Operating Officer 1996 710,000 1,420,000 24,758
G. Kennedy Thompson 1998 400,000 1,908,563(5) 143,285
Vice Chairman 1997 345,000 2,443,163(5) 244,792
1996 325,000 520,000 12,776
Robert T. Atwood 1998 470,000 840,000 17,697
Executive Vice 1997 420,000 750,000 11,522
President and 1996 420,000 700,000 20,448
Chief Financial Officer
Donald A. McMullen, Jr. 1998 445,000 880,000 33,964
Executive Vice 1997 405,000 700,000 11,886
President 1996 405,000 650,000 42,473
Terrence A. Larsen (6) 1998 1,000,000 1,500,000 3,961
Retired. Formerly,
Vice Chairman
Malcolm S. McDonald (7) 1998 700,000 700,000 420
Retired. Formerly, 1997 58,333 58,333 --
Chairman, First Union-
Mid-Atlantic
<PAGE>
<CAPTION>
Long-Term Compensation
-----------------------------------------------
Awards Payouts
------------------------------- ---------------
Securities
Restricted Underlying LTIP All Other
Stock Awards Options/SARs Payouts Compensation
Name and Position ($) (3) (#) ($) (1) ($) (4)
- -------------------------- ---------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
(a) (f) (g) (h) (i)
Edward E. Crutchfield 2,049,939 400,844 1,015,812 320,378
Chairman and Chief 15,059,070 -- 1,012,818 229,955
Executive Officer 1,170,000 200,778 850,000 192,119
John R. Georgius 8,507,398 844 718,501 433,112
President and Chief 1,083,510 100,000 701,562 151,178
Operating Officer 789,750 100,778 665,000 128,778
G. Kennedy Thompson 809,986 34,138 -- 101,611
Vice Chairman 593,924 37,200 269,866 45,106
386,100 31,903 219,000 32,692
Robert T. Atwood 809,986 39,206 360,024 140,104
Executive Vice 609,976 48,000 358,964 76,719
President and 468,000 101,004 250,000 54,353
Chief Financial Officer
Donald A. McMullen, Jr. 809,986 39,206 320,217 29,197
Executive Vice 561,820 42,000 320,217 11,507
President 409,500 43,167 150,000 10,415
Terrence A. Larsen (6) 6,212,500 200,000 -- 1,891,564
Retired. Formerly,
Vice Chairman
Malcolm S. McDonald (7) -- 67,647 -- 9,021
Retired. Formerly, 1,950,000 100,000 -- --
Chairman, First Union-
Mid-Atlantic
</TABLE>
10
<PAGE>
- ----------
(1) Amounts include dollars deferred by the Named Officers under our 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 First Union 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. A nonqualified retirement
trust has been established to fund certain nonqualified benefit plans,
including the Deferred Compensation Plans and Supplemental Retirement
Plan. Prior to a "change in control" of First Union, benefits are paid
from the trust only upon our direction. Upon the occurrence of a "change
in control", we are required to contribute an amount to the trust
sufficient to pay the benefits required to be paid under such plans as of
the date on which the "change in control" occurs. (2) Represents
reimbursement for (i) payment of taxes, and (ii) personal benefits, if such
benefits total $50,000 or more for a Named Officer. Personal benefits for a
Named Officer which exceeded 25% of such personal benefits that totaled
$50,000 or more in 1998 were as follows:
<TABLE>
<CAPTION>
Crutchfield Georgius Thompson
------------- ---------- ---------
<S> <C> <C> <C>
Membership fees and dues ............ $43,054 29,547 69,836
Personal use of automobile .......... -- 15,066 --
</TABLE>
(3) The aggregate number of shares of restricted stock held as of December 31,
1998, and the value thereof as of such date, were as follows: Crutchfield:
370,181 shares ($22,511,632); Georgius: 189,464 shares ($11,521,780);
Thompson; 52,262 shares ($3,178,183); Atwood: 41,038 shares ($2,495,623);
and McMullen: 40,638 shares ($2,471,298). Larsen and McDonald retired in
1998, as a result of which all of their shares of restricted stock became
fully vested. Restricted stock awards granted in 1998 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 First Union, except for a special
restricted stock award consisting of 113,600 shares of common stock
granted to Georgius, which vests in approximately equal amounts over a
seven-year period. See " -- HR Committee Report on Executive
Compensation". See also footnote (5) below. Dividends on shares of
restricted stock are paid at the same time dividends on the other
outstanding shares of common stock are paid.
(4) Amounts shown for 1998 consist of the following:
<TABLE>
<CAPTION>
Crutchfield Georgius Thompson Atwood McMullen Larsen McDonald
------------- ---------- ---------- -------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Savings Plan matching
contributions ................. $ 68,400 43,000 24,000 28,200 26,700 28,717 --
Value of life insurance
premiums ...................... 241,201 173,801 22,661 58,808 1,375 1,862,847 6,464
Value of disability insurance
premiums ...................... -- 1,775 1,120 4,080 -- -- --
Above market interest on
deferred compensation ......... 10,777 169,536 53,830 49,016 1,122 -- 2,557
Special restricted stock award
FTC filing fee ............... -- 45,000 -- -- -- -- --
</TABLE>
The value of life insurance premiums includes the value of premiums advanced
by us under split-dollar life insurance agreements. We may terminate certain
of such agreements and receive our interest in the related life insurance
policies under certain conditions, provided we may not terminate such
agreements if certain of such conditions occur after a "change in control"
of First Union.
(5) Thompson participates in an annual incentive bonus plan for the Capital
Markets Group that requires 25% of his annual incentive bonus be paid in
shares of restricted stock (the "Bonus Shares"). We match 50% of the Bonus
Shares with additional shares of restricted stock. The shares of
restricted stock awarded under the plan vest at the end of a three-year
period. The bonus amounts set forth in the Summary Compensation Table
represent the total bonus, including the portions attributable to such
shares of restricted stock. These shares of restricted stock are not
included in footnote (3) above.
(6) The payments to Larsen are being made pursuant to an Employment Agreement
entered into in connection with the acquisition of CoreStates. Pursuant to
such agreement, he is to be paid $2,500,000 per year until April 2003, and
$1,000,000 per year thereafter, subject to offset by certain retirement
benefits. The agreement also provides for him to receive 100,000 shares of
restricted First Union common stock in 1998 and 1999, an option to
purchase 200,000 shares of First Union common stock in 1998 (which was
granted at an exercise price of $60.4375 per share), an option to purchase
200,000 shares of First Union common stock to be granted in 1999 at an
exercise price equal to the market value of such stock on the date of
grant, and a split dollar life insurance policy which will pay $15,000,000
to his beneficiary upon his death, in addition to any outstanding loans
under the policy. The restrictions on the shares of restricted stock
granted in 1998 have lapsed and the restrictions on the shares of
restricted stock to be granted in 1999 will lapse following their grant.
Pursuant to such agreement, Larsen is also entitled to certain welfare
benefits. He retired as an employee of First Union on June 30, 1998. He
was elected a director of First Union by the Board of Directors of First
Union following the acquisition of CoreStates and is retiring as a
director at the meeting.
(7) The payments to McDonald are being made pursuant to an Employment Agreement
entered into in connection with the acquisition of Signet Banking
Corporation in November 1997. Pursuant to such agreement, he is to be paid
$1,400,000 per year until November 2002, and $840,000 per year thereafter,
subject to offset by certain retirement benefits. Under the agreement, in
1997 he also received 40,000 shares of restricted First Union common stock
and an option to purchase 100,000 shares of common stock (which was
granted at an exercise price of $48.75 per share). The restrictions on the
shares of restricted stock have lapsed. Pursuant to such agreement,
McDonald is entitled to certain welfare benefits and use of office space.
He retired as an employee of First Union on July 31, 1998, and is retiring
as a director at the meeting.
11
<PAGE>
OPTION/SAR GRANTS TABLE
The following table sets forth with respect to grants of stock options
made during 1998 to each of the Named Officers: (i) the name of such officer
(column (a)); (ii) the number of options granted (column (b)); (iii) the
percent the grant represents of the total options granted to all employees
during 1998 (column (c)); (iv) the per share exercise price of the options
granted (column (d)); (v) the expiration date of the options (column e)); and
(vi) the Black-Scholes value of the options at grant date (column (f)).
OPTION/SAR GRANTS IN 1998
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------------------------
Number of Securities % of Total
Underlying Options/SARs Options/SARs Granted Exercise or Black - Scholes
Granted (1) to Employees Base Price Expiration Grant Date Value (3)
Name (#) in 1998 ($/Sh) Date ($)
- ---------------------- ------------------------- ---------------------- ------------- -------------- ---------------------
<S> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f)
Crutchfield .......... 400,000(1) 62.1250 4/21/08 7,656,285
844(2) 50.3100 7/31/00 11,259
Total: 400,844 2.79
Georgius ............. 844(2) 0.01 50.3100 07/31/00 11,259
Thompson ............. 33,294(1) 62.1250 4/21/08 637,271
844(2) 50.3100 7/31/00 11,259
Total: 34,138 0.24
Atwood ............... 38,362(1) 62.1250 4/21/08 734,276
844(2) 50.3100 7/31/00 11,259
Total: 39,206 0.27
McMullen ............. 38,362(1) 62.1250 4/21/08 734,276
844(2) 50.3100 4/21/08 11,259
Total: 39,206 0.27
Larsen ............... 200,000(1) 1.39 60.4375 4/28/08 3,724,159
McDonald (4) ......... 67,647(1) 0.47 61.9375 Various 1,290,905
</TABLE>
- ----------
(1) These options are nonqualified stock options, except for options granted to
McMullen to purchase 1,609 shares, which are incentive stock options
("ISOs") under section 422 of the Internal Revenue Code of 1986. The
options are exercisable after one year from the date of grant, subject to
the limitations under section 422, at an option exercise price equal to
the market price of the common stock at the date of grant.
(2) These options were granted under the 1998 Employee Stock Purchase Plan and
are covered by section 423 of the Code. The options are exercisable at the
lesser of 85% of the market value of the common stock at the date of grant
or at the end of the plan.
(3) The values shown for the options disclosed in footnote (1) reflect standard
application of the Black-Scholes pricing model using (i) 60-month
volatility (21.285%) 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 (5.64%),
and (iv) dividends at the annualized rate in place on the date of grant
($1.48). The values shown for the options disclosed in footnote (2)
reflect standard application of the Black-Scholes pricing model using (i)
12-month volatility (22.9748%) and daily stock prices for the five years
prior to grant date, (ii) an option term of two years, (iii) an interest
rate that corresponds to the U.S. Treasury rate with a two-year maturity
(5.27%), (iv) dividends at the annualized rate in place on the date of
grant ($1.68) and (v) an exercise price that is equal to 85% of the fair
market value of the common stock on the date of grant. The values do not
take into account risk factors such as non-transferability and limits on
exercisability. The Black-Scholes options 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 First
Union for the benefit of all stockholders.
(4) Represents reload stock options granted pursuant to stock option plans
assumed by First Union as a result of the Signet acquisition. Pursuant to
such plans, optionees may tender acquired shares of First Union common
stock in payment of the exercise price of previously granted stock options
and receive reload stock options to purchase the number of shares
tendered. The reload options have an exercise price equal to the closing
price of the common stock on the date the previously granted options are
exercised, are first exercisable six months from such date, and will
expire on the scheduled expiration dates of the previously granted
options. The expiration dates for the reload options are as follows:
1/26/03 (9,341 options), 01/25/04 (10,982 options), 1/23/05 (1,614
options), 1/25/05 (7,143 options), 1/22/06 (9,633 options), 1/27/07
(11,309 options), and 6/10/07 (17,625 options).
12
<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 1998 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, 1998, 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, 1998,
separately identifying the exercisable and unexercisable options and SARs
(column (e)).
AGGREGATED OPTION/SAR EXERCISES IN 1998 AND
DECEMBER 31, 1998 OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs In-the-Money Options/SARs
at 12/13/98 (#)(1) at 12/31/98 ($)
------------------------ --------------------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
- ------------- ----------------- ---------------- ------------------------ --------------------------
<S> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Crutchfield 75,633 2,895,115 323,112/415,752 11,032,215/642,351
Georgius 113,206 4,303,379 200,422/27,106 5,228,932/1,041,956
Thompson 7,500 339,356 105,170/45,168 3,184,103/443,874
Atwood -- -- 152,288/53,184 4,713,526/556,996
McMullen 10,378 199,467 94,044/38,784 2,636,234/4,432
Larsen 603,081 20,657,551 324,199/-- 3,679,565/--
McDonald 315,258 14,416,927 262,687/-- 5,425,313/--
</TABLE>
- ----------
(1) Upon a "change in control" of First Union, all outstanding options granted
under the 1998 Stock Incentive Plan will become exercisable and will
remain exercisable for the term of such options.
LONG-TERM INCENTIVE PLAN AWARDS TABLE
The following table sets forth, with respect to each award made to a Named
Officer in 1998 under any LTIP: (i) the name of such officer (column (a)); (ii)
the number of shares, units or other rights awarded under any LTIP (column
(b)); (iii) the performance or other time period until payout or maturation of
the award (column (c)); and (iv) for LTIPs not based on stock price, the dollar
value of the estimated payout or range of estimated payouts under the award
(threshold, target and maximum amount), whether such award is denominated in
stock or cash (columns (d) through (f)).
13
<PAGE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1998 (1)
<TABLE>
<CAPTION>
Estimated Future Payments under
Non-Stock Price-Based Plans
-------------------------------------------------
Performance or Other
Number of Shares, Period Until Maturation Threshold Target Maximum
Name Units or Other Rights (#) or Payout ($ or #) ($ or #)(2) ($ or #)(3)
- ------------- --------------------------- ------------------------ ----------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f)
Crutchfield 3 years 0 $1,015,812 $1,140,000
Georgius 3 years 0 718,501 750,000
Thompson 3 years 0 -- --
Atwood 3 years 0 360,024 470,000
McMullen 3 years 0 320,217 445,000
Larsen 3 years 0 -- --
McDonald 3 years 0 -- --
</TABLE>
- ----------
(1) See the Summary Compensation Table. Under the Management Long-Term Cash
Incentive Plan, if we achieve 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 our "adjusted net income" (as defined in such Plan), a
contribution to a management incentive pool will be made, based on (i) our
average ROE ranking 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 our ranking is one, to
27% if our ranking 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
1998 for the 1995-1997 three-year period. Future awards may be higher or
lower than such awards.
(3) Represents 1998 annual salaries, the maximum awards that can be granted in
1999 for the 1996-1998 three-year period.
PENSION PLAN TABLE
The following table sets forth the estimated annual benefits payable upon
retirement under our Pension Plan (including amounts attributable to our
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, 1999, the credited full years of
service under the Pension Plan were as follows: Crutchfield -- 33 years;
Georgius -- 23 years; Thompson -- 23 years; Atwood -- seven years; and McMullen
- -- four years. Larsen and McDonald retired during 1998.
The portions of compensation which are considered covered compensation
under the Supplemental Retirement Plan for the Named Officers (excluding
McMullen, Larsen and McDonald) are the annual salary, bonus and LTIP 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".
14
<PAGE>
<TABLE>
<CAPTION>
Estimated annual retirement benefit, assuming a married
participant, a straight life annuity and the years
of service indicated (1)(2)
-------------------------------------------------------------------
15 years 20 years 25 years
----------------------- --------------------- ---------------------
Average annual
compensation PP SRP PP SRP PP SRP
- -------------------- ---------- ------------ -------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
$1,250,000.......... $27,750 356,577 36,999 481,429 46,249 606,281
1,750,000 ......... 27,750 518,372 36,999 697,155 46,249 875,939
2,250,000 ......... 27,750 680,167 36,999 912,882 46,249 1,145,597
2,750,000 ......... 27,750 841,961 36,999 1,128,608 46,249 1,415,255
3,250,000 ......... 27,750 1,003,756 36,999 1,344,335 46,249 1,684,913
3,750,000 ......... 27,750 1,165,551 36,999 1,560,061 46,249 1,954,571
4,250,000 ......... 27,750 1,327,346 36,999 1,775,788 46,249 2,224,229
<CAPTION>
Estimated annual retirement benefit,
assuming a married
participant, a straight life annuity and the
years
of service indicated (1)(2)
-------------------------------------------
30 years 35 years
--------------------- ---------------------
Average annual
compensation PP SRP PP SRP
- -------------------- -------- ------------ -------- ------------
<S> <C> <C> <C> <C>
$1,250,000.......... 55,499 731,133 58,658 727,725
1,750,000 ......... 55,499 1,054,722 58,658 1,051,315
2,250,000 ......... 55,499 1,378,312 58,658 1,374,904
2,750,000 ......... 55,499 1,701,902 58,658 1,698,494
3,250,000 ......... 55,499 2,025,491 58,658 2,022,084
3,750,000 ......... 55,499 2,349,081 58,658 2,345,674
4,250,000 ......... 55,499 2,672,671 58,658 2,669,263
</TABLE>
- ----------
(1) For the year ending December 31, 1999, the annual retirement benefit
payable under the Pension Plan is limited by federal law to $130,000 and
the maximum covered compensation is limited to $160,000. For officers
covered under the Supplemental Retirement Plan (currently, a total of 19
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 First Union, 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, we entered into an agreement with Robert T. Atwood to
provide a death benefit comparable to that provided under the 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 receive a quarterly retainer of $11,250, plus $1,500 for each
committee meeting attended and $2,000 for each meeting of the Board attended.
In addition, the Chairman of each committee receives a quarterly fee of $2,500.
Travel and accommodation expenses are reimbursed by First Union. Directors who
are employees of First Union do not receive any directors' fees. Directors'
fees totaling $1,572,495 were either paid to the directors in 1998 or deferred
under the terms of our Deferred Compensation Plan for Non-Employee Directors.
Arthur M. Goldberg and Frank M. Henry also serve as advisory directors on the
First Union-Atlantic advisory board and receive $1,200 per meeting attended of
such board.
Under the Deferred Compensation Plan for Non-Employee Directors, directors
who are not employees of First Union may defer payment of all or any part of
their directors' fees. Deferred amounts 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 1998, 17 directors deferred $1,008,623 of their 1998 directors'
fees. Deferred fees may either earn interest or be valued based on the fair
market value of First Union common stock, at the option of the director.
All non-employee directors who serve five years or more are eligible to
participate in our Retirement Plan for Non-Employee Directors. Under such Plan,
after the end of the calendar year in which the director retires, the director
is entitled to receive an annual retirement benefit equal to 80% of the amount
of the annual director retainer in effect at that time.
The foregoing does not include payments being made to five former
directors for serving as special advisory consultants to the Board. Such former
directors (i) retired as of the Annual Meeting of Stockholders in April 1998,
(ii) are to be paid an annual retainer fee of $60,000 for the three-year period
from April 1998 to April 2001, and (iii) are eligible to participate in the
same benefit programs the current directors are eligible to participate in. The
foregoing also does not include payments being made to (i) Anthony P.
Terracciano, who retired as a director as of the Annual Meeting
15
<PAGE>
of Stockholders in 1998 and who retired as an employee in December 1997, (ii)
Terrence A. Larsen, who is retiring as a director as of the meeting and who
retired as an employee on June 30, 1998, or (iii) Malcolm S. McDonald, who also
is retiring as a director as of the meeting and who retired as an employee on
July 31, 1998. The payments to Terracciano are being made pursuant to an
Employment Agreement entered into in June 1995 in connection with the
acquisition of First Fidelity Bancorporation. Pursuant to such agreement, he is
to be paid $3,000,000 per year until December 31, 2000, and $1,200,000 per year
thereafter, subject to offset by certain other retirement benefits. We also
have agreed to pay $3,000,000 to his beneficiary or estate upon his death,
subject to offset by certain other death benefits. Pursuant to such agreement,
he also is entitled to certain fringe benefits, including certain welfare
benefits, use of an automobile, financial planning services, business use of a
company airplane, office space and secretarial services. See footnotes (6) and
(7) to the "Summary Compensation Table" for information with respect to the
payments to Larsen and McDonald.
CRUTCHFIELD EMPLOYMENT CONTRACT.
In August 1985, we entered into an employment agreement with Edward E.
Crutchfield as Chairman and Chief Executive Officer until December 31, 1990,
subject to (i) extension so that the unexpired portion 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 Crutchfield to terminate the agreement if the
Board changes the offices held by him or his power and authority or duties or
responsibilities. The agreement provides for an annual salary of not less than
$330,000 and an annual bonus based on his performance and other factors. If we
terminate the agreement other than for "cause" or if he terminates the
agreement as provided in (iii) above, he will be paid an amount equal to the
sum of (a) the result of multiplying (i) his 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) his annual average
short-term Management Incentive Plan bonus 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 he terminates
his employment other than as provided in (iii) above, he will be paid 66 2/3%
of his then current annual salary for a period of two years, subject to
termination of such payments if he were to violate a two-year non-compete
provision. The agreement also provides for a gross-up payment 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 him if his employment is
terminated in conjunction with a "change in control" of First Union and such
taxes become payable as a result of payments to him under the agreement or
otherwise, being deemed to be "excess parachute payments" for federal income
tax purposes.
GEORGIUS EMPLOYMENT CONTRACT.
In September 1995, we entered into an employment agreement with John R.
Georgius until December 31, 1998, subject to (i) extension for additional
one-year periods, (ii) the right of either party to terminate the agreement at
any time, and (iii) the right of Georgius to terminate the agreement if he
should lose certain duties or responsibilities. The agreement provides for an
annual salary of not less than $665,000 and annual incentive compensation based
on his performance and other factors. If we terminate the agreement other than
for "cause" or if he terminates the agreement as provided in (iii) above, he
will be paid an amount equal to the sum of (a) the result of multiplying (i)
his 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) his average cash incentive compensation 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
he terminates his employment other than as provided in (iii) above, he will be
paid 66 2/3% of his then current annual
16
<PAGE>
salary for a period of one year, subject to termination of such payments if he
were to violate a one-year non-compete provision. The agreement provides for a
gross-up payment 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 him if his employment is terminated in conjunction with a "change in
control" of First Union and such taxes become payable as a result of payments
to him under the agreement or otherwise, being deemed to be "excess parachute
payments" for federal income tax purposes.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the HR Committee are Messrs. Bradley, Brown,
Dickson, Dolan, Henry, Lotman and Lovett, all of whom are independent, outside
directors.
Edward E. Crutchfield serves on the Board of Bernhardt Furniture Company,
and as one of the outside directors on its Compensation Advisory Committee. G.
Alex Bernhardt, Sr., a director of First Union, serves as Chairman and Chief
Executive Officer of Bernhardt Furniture Company.
HR COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The HR Committee had six regularly scheduled meetings during 1998, at
which time it reviewed, evaluated and approved executive compensation and
benefit recommendations without the presence of the CEO. Our 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. For 1998, these variable performance based elements
represented from 75% to 92% 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 our performance
and the interests of our stockholders.
In its deliberations on executive pay, the HR Committee maintains the
following standards:
o Programs are designed to attract, motivate, reward and retain high
performing and dedicated management employees.
o In total, the compensation programs balance competitive need, corporate,
individual and business unit performance, and affordability.
o 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. We ranked sixth in size among the group on
December 31, 1998, 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
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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 our 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". Our Management Incentive Plan and Management Long-Term Cash
Incentive Plan both rely on such ROE performance as a primary determinant of
incentive payouts. The ROE calculations in 1997 and 1998 exclude one-time
merger-related charges.
First Union's and the HR Committee's general 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 our 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 1997, our ROE peer group rank was 17th,
our asset size ranked sixth, and the total for all compensation for the Named
Officers ranked tenth. 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 our 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 our executive compensation plans or
recommend the same to the Board, as it deems appropriate. Additionally, from
time to time we employ an independent firm of employee benefit consultants to
advise us and the HR Committee as to various matters relating to executive
compensation.
18
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BASE SALARY
Our base salary program targets base salaries for executive officers at
market. As indicated above, our "market" 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 1997, our asset
size ranked sixth among the peer group and the total base salaries for the
Named Officers (excluding Larsen and McDonald who were paid pursuant to
employment agreements) ranked fourth among the peer group. Any variances are
addressed in determining the total compensation for such Named Officers. Base
salary increases in 1998 were made as a result of the review of base salary
market data.
SHORT-TERM MANAGEMENT INCENTIVE PLAN
Our short-term Management Incentive Plan covering executive officers is
funded based on ROE. For 1998, the threshold ROE was 15%. Individual awards may
range from 0% to 200% of base salary. Determination of individual awards is
based primarily on our 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.
Our ROE for 1998 was 22.85%, exceeding the threshold ROE by 52% and
resulting in payments which ranged from 28% to 200% of base salaries.
LONG-TERM INCENTIVE PROGRAM
The long-term incentive program is composed of the following:
o Our 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 our stockholders
by encouraging and enabling executives to own First Union stock, thus
aligning executive pay with stockholder interests.
o Our Management Long-Term Cash Incentive Plan, which pays cash awards based
on ROE performance. Our ROE rank for the period against the peer group
determines the available pool from which awards may be made. Our 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. Our 1997 ROE of 18.86% resulted
in a three-year average ROE rank of tenth 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 by the HR Committee in its discretion.
The 1998 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.
In addition to the restricted stock award made to John R. Georgius under
our stock compensation plan, in 1998 he was granted a special restricted stock
award in recognition of his exceptional leadership during the past ten years
and in order to better assure us of such continued leadership.
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During this period we experienced outstanding financial performance, including
(i) an increase in total stockholder return at an annual compound rate of 23%,
(ii) growth in dividends per share at an annual compound rate of 11%, (iii)
book value per share growth at an annual compound rate of 8.8%, (iv) growth in
total assets from $16.6 billion to $157.3 billion (for the twelve-year period
ending December 31, 1997), (v) successfully integrating over 70 acquired
financial institutions, and (vi) an increase in market capitalization of
1,415%.
1998 COMPENSATION FOR THE CEO
Edward E. Crutchfield is eligible to participate in the same executive
compensation plans available to the other executive officers as described
above. His short-term Management Incentive Plan payout and Management Long-Term
Cash Incentive Plan payout were based primarily on our ROE, and included a
subjective assessment of individual performance, where permitted. The
Management Long-Term Cash Incentive Plan payout was based primarily on our
three-year average ROE, as discussed above. In the case of the short-term
Management Incentive Plan payout, the HR Committee considered our overall
financial performance in 1998 and success in meeting strategic objectives. Our
1998 ROE was 22.85%, return on assets was 1.66%, and net income applicable to
common stockholders was $3.7 billion (a 28% increase over 1997 net income
applicable to common stockholders, excluding one-time merger-related charges).
The strategic objectives included five acquisitions completed (I.E.,
CoreStates, Covenant Bancorp, Inc., Wheat First Butcher Singer, Inc., Bowles
Hollowell Conner & Co. and The Money Store, Inc.), as well as the continued
expansion of initiatives involving capital markets, capital management and the
Future Bank. The stock option grant and restricted stock awards made to him in
1998 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. In the aggregate, the variable performance based portion was 92% of his
compensation. The 1985 employment agreement with him described above had no
impact on compensation decisions made with respect to him during 1998.
With respect to the HR Committee's use of the historical relationship
between pay and performance described above, our total assets and ROE
performance for 1997 ranked sixth and 17th, respectively, among the peer group,
and Mr. Crutchfield's base salary and total compensation ranked second and
13th, respectively.
R. STUART DICKSON, CHAIRMAN
W. WALDO BRADLEY
ROBERT J. BROWN
B. F. DOLAN
FRANK M. HENRY
HERBERT LOTMAN
RADFORD D. LOVETT
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PERFORMANCE GRAPH
The following graph compares (i) the yearly change in the cumulative total
stockholder return on First Union 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, 1993,
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.
(Plot points for omitted graphic appear below)
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------
1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
First Union ......... $100 104 146 201 286 349
S&P 500 ............. 100 101 139 171 228 293
KBW 50 .............. 100 95 152 215 314 340
</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" with the SEC or subject to Regulation
14A or the liabilities of Section 18 of the 1934 Act,
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and (ii) notwithstanding anything to the contrary that may be contained in any
filing by First Union under such Act or the 1933 Act, shall not be deemed to be
incorporated by reference in any such filing.
OTHER MATTERS RELATING TO EXECUTIVE OFFICERS AND DIRECTORS
GENERAL
The directors and executive officers who file reports with the SEC under
Section 16(a) of the 1934 Act (including organizations with which they are
affiliated and members of their immediate families) are customers of our bank.
In the opinion of management, the outstanding indebtedness and commitments in
connection with the lending relationships of such directors and officers 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 1998, the aggregate monthly outstanding principal balances of loans made
by our bank to such directors and officers, including certain of their related
interests, ranged from a high of approximately $2.4 billion to a low of
approximately $3.2 billion. In addition to such lending relationships, the
directors and organizations they are affiliated with provide certain services
or otherwise do business with First Union and its affiliated entities and we in
turn provide certain services or otherwise do business with the directors and
such organizations, in each case in the ordinary course of business. Certain of
such relationships are discussed below.
CERTAIN RELATIONSHIPS
Erskine B. Bowles is a general partner of Forstmann Little & Co. and a
Managing Director of Carousel Capital Company, LLC. Carousel Company is the
general partner of Carousel Capital Partners, LP. First Union has a 15% limited
partnership interest in Carousel Partners, which is represented by a $25
million commitment. As of December 31, 1998, we had invested $12.5 million in
Carousel Partners, leaving a remaining commitment of $12.5 million. As part of
our investment in Carousel Partners we pay Carousel Company a semi-annual
management fee, which totaled $437,500 in 1998. First Union is a lender to
several of the companies that Carousel Partners and Forstmann Little have
investments in and may engage in other transactions with such companies. In
1993, Bowles sold his interest in Bowles Hollowell Conner & Co. back to the
company. In April 1998, we acquired Bowles Hollowell. Subsequent to the
acquisition Bowles Hollowell paid Bowles the $1.65 million remaining on the
note that Bowles Hollowell issued to Bowles when he sold his interest to the
company. In 1990, we entered into sale/leaseback transaction with a real estate
finance company that involved various First Union bank branches in North
Carolina, Florida and Georgia. The lease agreement expires in 2010. Bowles is a
passive investor (7.15% limited partnership interest) in Investment Partners
Leasing Corporation, which has an option to lease all or part of such branches,
at a fixed rate upon expiration of the lease. First Union entered into an
agreement with Investment Partners whereby we have the option to sublease such
branches from Investment Partners, at market rates, at the expiration of the
current lease, if they exercise their option.
Robert Brown is Chairman, President and Chief Executive Officer of B&C
Associates, Inc. During 1998, B&C Associates supervised certain consulting
services provided to First Union by a consulting firm, for which we paid B&C
Associates $89,300, including expenses.
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William H. Goodwin, Jr. owns 100% of a company from which we rent aircraft
owned by such company to transport directors to and from meetings of the Board
of Directors. The rent we pay for use of such aircraft is $4,000 per meeting.
Frank M. Henry is a partner in Frank M. Henry Associates, from which we
lease a branch office in Wilkes-Barre, Pennsylvania. The initial term expires
on April 30, 2003, and has four five-year renewal options. The rent paid in
1998 totaled $73,140.
Charles M. Shelton, Sr., together with other family members, are the
controlling stockholders of Shelco, Inc. , a general contractor. During 1998,
we paid Shelco approximately $5.2 million for construction work in Charlotte,
North Carolina. In addition, in 1998 we received a final partnership
distribution of approximately $79,000 from a partnership that included, among
others, First Union, Shelton and his brother. The partnership owned a building
in Winston-Salem, North Carolina, a portion of which we leased from the
partnership. The partnership was dissolved in 1997. Also, Shelco has a 40%
interest in a joint venture that is the contractor for Three First Union
Center, which is being built in Charlotte, North Carolina. We currently expect
to pay the joint venture $15.6 million for tenant improvements in this building
in 1999 and through the first quarter of 2000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the directors and executive
officers covered by such Section to file certain reports relating to their
ownership of such securities and any changes in such ownership with SEC and the
New York Stock Exchange. To our knowledge, based solely on a review of the
copies of such reports or written representations relating thereto, during or
prior to the year ended December 31, 1998, all Section 16(a) filing
requirements applicable to such directors and executive officers were complied
with, except as set forth in prior proxy statements and except for late filings
by: Reggie Davis, a Section 16(a) reporting officer, relating to the sale of
832 shares; Malcolm S. McDonald, a retiring director, relating to 78,265 shares
withheld to satisfy a tax withholding obligation in connection with the
exercise of stock options; Donald A. McMullen, a Section 16(a) reporting
officer, relating to the exercise of three stock options totaling 10,378 shares
and the surrender of shares in payment of the option price; and Randolph N.
Reynolds, a director, relating to the purchase of 1,000 shares by a trust for
which he serves as trustee.
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PROPOSAL 2. RATIFICATION OF APPOINTMENT OF AUDITORS
The accounting firm of KPMG LLP has been appointed as our auditors for the
year 1999 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 2000.
KPMG LLP were our auditors for the year ended December 31, 1998, and a
representative of such firm is expected to attend the meeting, respond to
appropriate questions and if such representative desires, which is not now
anticipated, make a statement.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS PROPOSAL. PROXIES,
UNLESS INDICATED TO THE CONTRARY, WILL BE VOTED "FOR" THIS PROPOSAL.
STOCKHOLDER PROPOSALS
Management is not aware of any other matters which are to be voted on at
the meeting. If any other matters are presented and voted upon, the enclosed
proxy will be deemed to confer discretionary authority to the individuals named
as proxies to vote the shares represented by such proxy, as to any such
matters.
Proposals of stockholders intended to be included in our proxy statement
and voted on at the 2000 Annual Meeting of Stockholders must be received at our
offices at One First Union Center, Charlotte, North Carolina 28288-0013,
Attention: Corporate Secretary, on or before November 12, 1999. The submission
of such proposals by stockholders and the consideration of such proposals by us
for inclusion in next year's proxy statement and form of proxy are subject to
applicable rules and regulations of the SEC.
Pursuant to our Bylaws, in order for any business not included in the
proxy statement for the 2000 Annual Meeting of Stockholders to be brought
before the meeting by a stockholder of record entitled to vote at the meeting,
the stockholder must have given timely notice of such business in writing to
the Secretary of First Union. According to our Bylaws, the meeting is scheduled
to be held on April 18, 2000, and to be timely, the notice must not be received
any earlier than January 31, 1999, nor any later than February 20, 2000. If the
meeting is not held on such date, the notice must be received no later than the
tenth day after public disclosure of the date of the meeting. The notice must
set forth (i) a brief description of the business desired to be brought before
the meeting and the reasons for so doing, (ii) the name and address of the
stockholder and the number of shares of First Union common stock owned by the
stockholder, and (iii) any material interest of the stockholder in such
business, other than having an interest as a stockholder. A copy of our Bylaws
is available upon request to: First Union Corporation, One First Union Center,
Charlotte, North Carolina 28288-0013, Attention: Corporate Secretary.
March 12, 1999
A COPY OF OUR 1998 ANNUAL REPORT ON FORM 10-K WILL BE PROVIDED WITHOUT
CHARGE (EXCEPT FOR EXHIBITS) UPON WRITTEN REQUEST TO FIRST UNION CORPORATION,
CORPORATE RELATIONS, ONE FIRST UNION CENTER, CHARLOTTE, NC 28288-0206.
24
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<PAGE>
(First Union Logo appears here)
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***********************************APPENDIX**********************************
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
------------------------------------------------------------------------------
FIRST UNION CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned holder of shares of common stock of First Union Corporation
R (the "Corporation") hereby constitutes and appoints W. Waldo Bradley, Radford
O D. Lovett and Charles M. Shelton, Sr., or any of them, the lawful attorneys
X and proxies of the undersigned, each with full power of substitution, for and
Y on behalf of the undersigned, to vote as specified on the reverse side, all
of the shares of the Corporation's common stock held of record by the
undersigned on February 22, 1999, at the Annual Meeting of Stockholders of
the Corporation to be held on April 20, 1999, at 9:30 a.m., in the
Auditorium, 12th Floor, Two First Union Center, Charlotte, North Carolina,
and at any adjournments or postponements thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED ON THE
REVERSE SIDE. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR"
PROPOSALS 1 AND 2, AS APPLICABLE. IF ANY OTHER MATTERS ARE VOTED ON AT THE
ANNUAL MEETING, THIS PROXY WILL BE VOTED BY THE PROXYHOLDERS ON SUCH
MATTERS IN THEIR SOLE DISCRETION.
(PLEASE COMPLETE, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE AND MAIL WITHOUT
DELAY IN THE ENCLOSED ENVELOPE.)
SEE REVERSE SIDE
<PAGE>
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- -------------------------------------------------------------------------------
PLEASE MARK VOTES
[X]
AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
<TABLE>
<S> <C> <C> <C>
(1) Election of Directors: Class I - Erskine B. Bowles,
Robert J. Brown, Edward E. Crutchfield, James E. S. FOR all nominees listed WITHHOLD
Hynes, Herbert Lotman, Patricia A. McFate, Joseph (except as indicated to authority to vote
Neubauer, Ruth G. Shaw and Charles M. Shelton, Sr.; the contrary) for all nominees
Class II-R. Stuart Dickson [ ] [ ]
INSTRUCTIONS: To withhold authority to vote for any
individual nominee(s), write the name(s) of such
nominee(s) in the space provided below.
- --------------------------------
(2) A proposal to ratify the appointment of KPMG LLP as For Against Abstain
auditors of the Corporation for the year 1999. [ ] [ ] [ ]
DATE: ---------------------------- , 1999
-----------------------------------------
-----------------------------------------
SIGNATURES(S)
NOTE: Signature(s) should agree
with name(s) on proxy form.
Executors, administrators, trustees
and other fiduciaries, and persons
signing on behalf of corporations
or partnerships, should so indicate
when signing.
</TABLE>