<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
F.N.B. CORPORATION
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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 or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------- ----------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[LOGO]
F.N.B. CORPORATION
Hermitage Square * Hermitage, Pennsylvania 16148-3389 412/981-6000
A Bank Holding Company formed under the Bank Holding Company Act of 1956,
as amended, operating under Regulations of the Board of Governors of the
Federal Reserve System
March 19, 1997
Dear Shareholder:
It is a pleasure to invite you to attend the Annual Meeting of
Shareholders of F.N.B. Corporation. The meeting will be held at our Data
Center, located at the corner of South Keel Ridge Road and East State Street,
Hermitage, Pennsylvania, on Wednesday, April 23, 1997, at 4:00 p.m.
At the meeting, you will be asked to consider and vote upon the
election of five directors.
Your vote is important regardless of how many shares of stock you own.
If you hold stock in more than one account or name, you will receive a proxy
card for each. Please sign and return each card since they represent a separate
number of votes. Postage paid envelopes are provided for your convenience.
You are cordially invited to attend the Annual Meeting. Regardless of
whether you plan to attend, please date and return the enclosed proxy card(s)
as soon as possible. This will not prevent you from voting at the meeting, but
will assure that your vote is counted if you are unable to attend.
As always, the directors, management and staff thank you for your
continued support and interest in F.N.B. Corporation.
Sincerely,
/s/ PETER MORTENSEN
-----------------------------
Peter Mortensen
Chairman and President
<TABLE>
<CAPTION>
Principal Subsidiaries
- -------------------------------------------------------------------------------
<S> <C>
First National Bank of Pennsylvania Founded 1864
Citizens Budget Co. - Youngstown Founded 1927
F.N.B. Consumer Discount Company Founded 1979
Bucktail Bank & Trust Company Founded 1928
Reeves Bank Founded 1868
The Metropolitan Savings Bank of Ohio Founded 1922
Mortgage Service Corporation Founded 1944
First County Bank Founded 1988
Dollar Savings Association Founded 1898
Regency Consumer Discount Co., Inc. Founded 1983
</TABLE>
<PAGE> 3
F.N.B. CORPORATION
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
Notice is hereby given that the Annual Meeting of the Shareholders of
F.N.B. Corporation (the "Corporation") will be held at the F.N.B. Data and
Accounting Center, located at the corner of South Keel Ridge Road and East
State Street, Hermitage, Pennsylvania, on Wednesday, April 23, 1997, at 4:00
p.m. Eastern Daylight Time, for the following purposes:
1. To elect five (5) directors of the Corporation;
2. To transact such other business as may properly come before
the Annual Meeting and any adjournments thereof.
As of the date of this Notice, the Board of Directors of the
Corporation does not know of any other business to be transacted at the Annual
Meeting.
Only the holders of Common Stock and Series A Preferred Stock of the
Corporation of record on the books of the Corporation at the close of business
on March 1, 1997 are entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof.
Enclosed with this Notice are a Proxy Statement and form of proxy. All
shareholders, whether or not they expect to be present at the meeting, are
requested to date and sign the proxy and to return it in the enclosed
self-addressed envelope. Prompt compliance with this request will be
appreciated. Shareholders who attend the meeting may, if they wish, vote in
person even if they have mailed their proxies.
BY ORDER OF THE BOARD OF DIRECTORS
David B. Mogle, Secretary
March 19, 1997
<PAGE> 4
March 19, 1997
F.N.B. CORPORATION
HERMITAGE SQUARE
HERMITAGE, PENNSYLVANIA 16148-3389
PROXY STATEMENT
The accompanying proxy is being solicited by F.N.B. Corporation (the
"Corporation") in connection with the Annual Meeting of Shareholders to be held
on April 23, 1997 pursuant to the preceding Notice of Annual Meeting. The
approximate date on which this proxy statement and the accompanying form of
proxy are first being sent to shareholders of the Corporation is March 19,
1997. If the proxy is executed and returned, it may nevertheless be revoked by
written notice to the Secretary of the Corporation at any time prior to the
voting thereof or in open meeting, or by voting in person at the Annual
Meeting. Unless the proxy is revoked or contains other instructions, the shares
represented thereby will be voted at the meeting in favor of the election of
the persons named below as directors.
The Board of Directors has fixed March 1, 1997 as the record date for
determination of shareholders entitled to notice of and to vote at the Annual
Meeting. As of that date, the Corporation had outstanding 12,082,131 shares of
Common Stock, 23,588 shares of Series A Cumulative Convertible Preferred Stock
("Series A Preferred Stock") and 321,818 shares of Series B Cumulative
Convertible Preferred Stock ("Series B Preferred Stock"). The holders of a
majority of the shares outstanding and entitled to vote, present in person or
represented by proxy, constitute a quorum for the meeting. Holders of Common
Stock are entitled to one vote for each share held and holders of Series A
Preferred Stock are entitled to 5.1 votes for each share held. Holders of
Series B Preferred Stock have no voting rights with respect to their shares of
Series B Preferred Stock.
ELECTION OF DIRECTORS
The Bylaws of the Corporation provide that the Board of Directors
shall consist of not fewer than 5 nor more than 25 persons, the exact number to
be determined from time to time by the Board. The number of directors has been
fixed at 23 by the Board of Directors. Proxies will not be voted for a greater
number of persons than the number of nominees set forth below. Directors are
elected by a plurality of the votes actually cast at the meeting. Abstentions
and shares held in "street" name that are not cast at the meeting are not
counted. Neither the holders of Common Stock nor the holders of Series A
Preferred Stock have cumulative voting rights in the election of directors.
The Bylaws of the Corporation also provide for classification of the
directors with respect to the time for which they shall severally hold office.
The Board is divided into four classes with the term of office of the directors
of each class to expire at the fourth annual meeting after their election. At
each succeeding annual meeting of shareholders, successors to the directors of
the class whose term expires are elected. Each director shall hold office for
the term for which he/she is elected and thereafter until his/her successor is
duly elected and qualified or until his/her earlier death, resignation or
removal.
As a result of the Southwest Banks, Inc. affiliation completed in
January 1997, four new directors were appointed to the Board of Directors, in
classes to equalize the terms. Joining the Corporation's Board are James S.
Lindsay, Edward J. Mace, Richard C. Myers and Gary L. Tice, all of whom are
Directors of Southwest Banks, Inc. Additionally, Mr. Sollenberger and Dr.
Lowe, whose terms expire this year, have decided not to stand for re-election
to the Board due to pending plans for retirement.
Charles T. Cricks, Henry M. Ekker, Thomas W. Hodge, James S. Lindsay
and Paul P. Lynch, all of whom have expressed their willingness to serve, have
been nominated for election as directors of the Corporation to hold
<PAGE> 5
office for the term described and until their successors are elected and have
qualified. All of the nominees are presently Directors of the Corporation. In
the event one or more of such persons is unable or unwilling to serve as a
director for any reason (and the Corporation knows of no such reason), the
persons named in the enclosed proxy will vote for the other nominees named and
such substituted nominees as may be nominated by the Board of Directors.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
Information concerning directors and executive officers is set forth
below. The principal occupation of each director and executive officer as of
the date hereof and for the past five years is included in the table. The
information concerning beneficial ownership of Common Stock and Series B
Preferred Stock is based upon information received as of March 1, 1997. No
director or executive officer of the Corporation is the beneficial owner of any
shares of Series A Preferred Stock.
<TABLE>
<CAPTION>
Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership
of Term of Ownership of Percent of Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director (a) (b)(c) Class (d) Stock (e) Class (d)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PETER MORTENSEN 61 1974 1998 102,660(f) 981
Chairman & President of the
Corporation; and Chairman of First
National Bank of Pennsylvania
("First National Bank"), a
subsidiary
STEPHEN J. GURGOVITS 53 1981 2000 45,193(f)(g) 0
Executive Vice President of the
Corporation since 1995, Senior
Vice President of the Corporation
1988-1995; and President & Chief
Executive Officer of First National
Bank
GARY L. TICE 49 1997 1998 69,094(h) 0
Executive Vice President of the
Corporation since 1997; and
Chairman, President & Chief
Executive Officer of Southwest
Banks, Inc., a subsidiary, since
1997
W. RICHARD BLACKWOOD 55 1985 2000 91,084 8,100 2.5
President, Harry Blackwood Inc.
(insurance and real estate)
WILLIAM B. CAMPBELL 58 1975 2000 73,527(i)(j) 0
Retired Business Executive
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership
of Term of Ownership of Percent of Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director (a) (b)(c) Class (d) Stock (e) Class (d)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CHARLES T. CRICKS 47 1994 1997 43,789(k) 0
Executive Vice President and Chief
Operating Officer, Health Care
Solutions, Inc.
HENRY M. EKKER, ESQ. 58 1994 1997 10,581 0
Attorney at Law, Partner of Ekker,
Kuster & McConnell
THOMAS C. ELLIOTT 73 1991 1998 17,680 0
President & Treasurer, Elliott Bros.
Steel Co. (steel processor)
THOMAS W. HODGE 71 1975 1997 33,413(i) 0
Retired Business Executive
JAMES S. LINDSAY 48 1997 1997 95,233(l) 0
Managing Partner, Dor-J's
Partnership; Licensed Real Estate
Broker, The Lindsay Company
GEORGE E. LOWE, D.D.S. 71 1975 1997 5,831 0
Dentist
PAUL P. LYNCH 45 1991 1997 90,631(m) 200
Attorney at Law; President & Chief
Executive Officer, Lynch Brothers
Investments, Inc. (real estate)
EDWARD J. MACE 40 1997 1998 71,900(n) 0
Edward J. Mace, Certified Public
Accountant; Chief Operating
Officer, Ribek Corporation
ROBERT S. MOSS 59 1994 1998 6,449 0
President, Associated Contractors
of Conneaut Lake, Inc. (general
contractors)
RICHARD C. MYERS 68 1997 2000 66,921 0
Director, Naples Dodge, Inc.;
Retired President, Naples Dodge,
Inc.
JOHN R. PERKINS 69 1985 2000 57,179(o) 0
Retired Vice President of the
Corporation; and Chairman
Emeritus of the Board of
Metropolitan
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership
of Term of Ownership of Percent of Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director (a) (b)(c) Class (d) Stock (e) Class (d)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
WILLIAM A. QUINN 68 1974 1998 3,120 0
Retired Vice President of the
Corporation; and Retired Executive
Vice President & Cashier of First
National Bank
GEORGE A. SEEDS 66 1992 2000 5,603 0
Retired President, Findley Welding
Supply, Inc.
WILLIAM J. STRIMBU 36 1995 1999 37,730(p) 0
President, Nick Strimbu, Inc.
(common carrier)
ARCHIE O. WALLACE, ESQ. 62 1992 1999 15,698 0
Attorney at Law, Partner of
Rowley, Wallace, Keck, Karson &
St. John
JOSEPH M. WALTON 70 1975 1999 19,724 650
Chairman of the Board, Chief
Executive Officer & Treasurer,
Jamestown Paint Co. (manufacturer
of paint and varnish)
JAMES T. WELLER 66 1975 1999 54,896 0
Chairman of the Board & Chief
Executive Officer, Liberty Steel
Products, Inc. (steel processor)
ERIC J. WERNER, ESQ. 34 1995 1999 108 0
Chief Administrative Officer,
General Counsel & Secretary,
Werner Co. (manufacturer of
climbing products and aluminum
extrusions)
DONNA C. WINNER 50 1994 2000 275,179 2.3 0
Co-Owner, The Radisson
Shenango, Tara - A Country Inn,
The Winner (clothing store)
JOHN W. ROSE 47 N/A N/A 52,455(f) 24,000 7.5
Executive Vice President of the
Corporation since 1995; President
of McAllen Capital Partners, Inc.
1992 - 1995; President of
Livingston Financial Group 1988-
1992 (q)
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership
of Term of Ownership of Percent of Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director (a) (b)(c) Class (d) Stock (e) Class (d)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
WILLIAM J. RUNDORFF 48 N/A N/A 18,076(f) 0
Executive Vice President of the
Corporation since 1995, Vice
President of the Corporation 1991-
1995; and Vice President of First
National Bank since 1991
SAMUEL K. SOLLENBERGER 59 1988 1997 23,333(f) 800
Vice President of the Corporation;
and Chairman & Chief Executive
Officer of The Metropolitan
Savings Bank of Ohio
("Metropolitan"), a subsidiary,
since 1996 & President of
Metropolitan 1989-1995 and 1997
JOHN D. WATERS 50 N/A N/A 7,614(f) 0
Vice President & Chief Financial
Officer of the Corporation; and
Senior Vice President & Chief
Financial Officer of First National
Bank since June 1994; Executive
Vice President & Chief Financial
Officer, WSFS Financial
Corporation 1988-1993
=================================================================================================================================
</TABLE>
All directors, director nominees and executive officers as a group (28 persons),
as the beneficial owners of 1,166,741 shares of the outstanding Common Stock,
owned 9.7% of the Common Stock of the Corporation as of March 1, 1997 and
controlled 9.6% of the outstanding voting power of the Corporation's issued and
outstanding stock.
(a) The term of office for directors expires at the annual meeting to be
held during the year shown.
(b) Includes (1) the following shares which the officer or director has
the right to acquire within sixty days upon exercise of stock options
and/or warrants: Mr. Mortensen, 26,066 shares; Mr. Gurgovits, 20,739
shares; Mr. Sollenberger, 15,677 shares; Mr. Rundorff, 14,687 shares;
Mr. Rose, 1,680 shares; Mr. Waters, 2,871 shares; Mr. Lindsay, 9,125
shares; Mr. Mace, 1,305 shares; Mr. Myers, 9,560 shares; and Mr. Tice,
45,921; and (2) shares which the officer or director has the right to
acquire by conversion of shares of Series B Preferred Stock. Shares of
Series B Preferred Stock are convertible into shares of Common Stock
at the ratio of 2.0453 shares of Common Stock per share of Series B
Preferred Stock.
(c) Except as otherwise indicated, each director possesses sole voting
power and sole investment power as to all shares listed opposite his
or her name or shares these powers with his or her spouse or a wholly
owned company. This does not include the following shares held of
record by the director's spouse or children, or held in trust, and as
to which each director disclaims beneficial ownership: Mr. Mortensen,
248 shares; Mr. Hodge, 2,189 shares; Mr. Lindsay, 7,404 shares; Mr.
Walton, 5,518 shares; and Mr. Weller, 10,312 shares.
(d) Unless otherwise indicated, represents less than 1% of the class.
(e) Except as otherwise indicated, each director possesses sole investment
power as to all shares listed opposite his or her name or shares these
powers with his or her spouse or a wholly owned company. This does not
include 650 shares held of record by Mr. Walton's wife and as to which
Mr. Walton disclaims beneficial ownership.
(f) Does not include shares awarded as an employer matching contribution
as a part of the Corporation's 401(k) Plan.
5
<PAGE> 9
(g) Includes 3,776 shares owned by Mr. Gurgovits' wife as a participant in
her employer's profit sharing program; and 44 shares held by Mr.
Gurgovits as trustee for his daughter.
(h) Includes 1,384 shares jointly owned by Mr. Tice and his two children;
3,649 shares jointly owned by Mr. Tice and his mother; 425 shares
owned by Mr. Tice's wife; and 3,493 shares held by the Southwest
Banks, Inc. and Affiliates Salary Savings KSOP for which Mr. Tice has
voting power.
(i) Includes 9,296 shares held in irrevocable trusts by the Trust
Department of First National Bank. A committee which includes Messrs.
Campbell and Hodge holds sole voting power over the shares, while the
Trust Department possesses sole investment power over such shares.
(j) Includes 621 shares owned by Mr. Campbell's wife and 696 shares held
in trust for his daughter, as to which Mr. Campbell shares voting and
investment power.
(k) Includes 3,551 shares held by Mr. Cricks as trustee for his children.
(l) Includes 9,435 shares held by Mr. Lindsay as custodian for his three
children; 55,945 shares owned by Dor-J's Partnership, of which Mr.
Lindsay is the managing partner; and 1,050 shares held by Mr. Lindsay
as trustee for his mother.
(m) Includes 30,956 shares owned by Mr. Lynch's wife; 848 shares owned by
Mr. Lynch as custodian for his daughters; 703 shares owned by Mr.
Lynch's wife as custodian for his daughters; and 564 shares owned by
Mr. Lynch's mother as custodian for his daughter.
(n) Includes 318 shares held by Mr. Mace as custodian for his three
children; 4,216 shares held by Mr. Mace as trustee for certain
unrelated beneficiaries; 19,171 shares held by the Ribek Corporation
Defined Contribution Pension Trust of which Mr. Mace is a Trustee; and
38,343 shares owned by Ribek Corporation of which Mr. Mace is Chief
Operating Officer.
(o) Includes 2,164 shares jointly owned by Mr. Perkins and his daughter;
and 11,819 shares held by Mr. Perkins as trustee for certain unrelated
beneficiaries. Mr. Perkins shares voting and investment power with
respect to all such shares.
(p) Excludes 57,997 shares held by Nick Strimbu, Inc. Salaried Employees
Profit Sharing Plan of which Mr. Strimbu is a participant.
(q) Mr. Rose also serves as a director of Monarch Bancorporation.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Upon review of Forms 3, 4 and 5 furnished to the Corporation during or
with respect to its most recent fiscal year, the Corporation has determined
that no officer, director or 10 percent shareholder of the Corporation failed
to timely file or failed to file a report during 1996 as required by Section
16(a) of the Securities Exchange Act of 1934, except that Mr. Werner did not
file, on a timely basis, a report for one transaction.
Directors' Fees
During 1996, each non-employee director was paid an annual retainer of
$4,000 and $1,000 for each quarterly Board meeting attended. Additionally,
certain non-employee directors were compensated for their attendance at various
committee meetings of the Corporation's subsidiaries at rates ranging from $150
to $300 per meeting attended.
Each director of the Corporation may elect to receive shares of common
stock in lieu of cash as their compensation for attendance at regular and
committee meetings of the Board of Directors of the Corporation pursuant to the
F.N.B. Corporation Directors' Compensation Plan (the "Plan"). The number of
shares of common stock to be issued shall equal the number of shares of common
stock that may be purchased (or having a market value equal to) the amount of
cash otherwise payable to such Director by the Corporation for attendance at
such meetings. During 1996, all Directors except Dr. Lowe elected to receive
some portion of their fees in stock.
A Director may elect to defer receipt of all of his annual fees
payable under the Plan in shares for the period beginning on January 1 of the
following year and continuing until the Corporation receives written notice
from the Director terminating such deferral. Additionally, Messrs. Mortensen,
Gurgovits and Tice have elected
6
<PAGE> 10
to participate in this plan by having an amount equal to the director fees paid
to non-employee directors deferred from their base salaries.
If a Director has previously deferred cash fees pursuant to agreements
in place prior to adoption of the Plan in 1996, the Director may elect to
convert all or a percentage of the cash fees previously deferred in shares
rather than cash. During 1996, Messrs. Blackwood, Campbell, Gurgovits, Lynch,
Mortensen, Perkins, Walton and Ms. Winner elected to transfer their deferred
cash fees into deferred stock. Prior to this transfer, their deferred cash fees
accumulated interest at an annual rate of 5.34% from January through June 30
and 5.39% from July 1 through August 1, the date of transfer.
Business Relationships and Related Transactions
Certain directors and executive officers of the Corporation and its
subsidiaries and their associates were customers of, and had loans outstanding
from, the Corporation's subsidiaries in the ordinary course of business during
1996. Such loans were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other customers of the Corporation's subsidiaries and did not
involve more than the normal risk of collectability or present other unfavorable
features.
Board and Committee Meetings
During 1996, the Board of Directors of the Corporation held four
meetings. All directors except for Mr. Werner and Ms. Winner attended at least
75% of the aggregate number of meetings of the Board of Directors and the
respective committees on which they serve.
The Board of Directors has an Audit Committee consisting of Messrs.
Hodge, Lynch, Moss, Quinn and Dr. Lowe. Duties of the Audit Committee include
engaging independent auditors, reviewing with the independent auditors the plan
and results of the auditing engagement, reviewing the activities and
recommendations of the Corporation's internal auditors and reviewing the
adequacy of internal accounting controls. The Audit Committee met four times
during 1996.
The Board of Directors has a Compensation Committee which includes
Messrs. Blackwood, Cricks, Seeds and Weller. During 1996, the Compensation
Committee met four times. Duties of the Compensation Committee include
reviewing the performance of and establishing compensation for the officers of
F.N.B. Corporation and affiliate chief executive officers; reviewing and
approving the compensation of affiliate senior officers as proposed by
affiliate boards of directors; and reviewing compensation and benefit matters
that have corporate-wide significance. The Compensation Committee also
administers the 1990 Stock Option Plan, the 1996 Stock Option Plan, the
Restricted Stock and Incentive Bonus Plan and the Directors' Compensation Plan
(more fully described below).
The Board of Directors has a Nominating Committee consisting of
Messrs. Campbell, Elliott, Perkins, Quinn, Seeds and Walton. During 1996, the
Nominating Committee met three times. The Nominating Committee is responsible
for selecting and recommending to the Board of Directors nominees for election
as director. The Nominating Committee will consider nominees recommended by
shareholders of the Corporation. Such recommendations must be made in writing,
include a statement of the nominee's qualifications, and be addressed to the
Nominating Committee at the address of the Corporation. Shareholders may also
nominate persons for election as directors in accordance with the procedures
set forth in the Corporation's Bylaws. Written notification of such nomination,
containing the required information, must be mailed or delivered to the
Secretary of the Corporation not less than 14 days nor more than 50 days prior
to the Annual Meeting.
7
<PAGE> 11
EXECUTIVE COMPENSATION, BENEFITS AND RELATED MATTERS
REPORT OF COMPENSATION COMMITTEE
To Our Shareholders:
Responsibilities and Composition of the Compensation Committee
The Compensation Committee ("Committee") establishes compensation
programs for executive officers of the Corporation and its affiliates that
attract, retain, motivate and appropriately reward individuals who are
responsible for the Corporation's short- and long-term profitability, growth
and return to shareholders; oversees and administers the Corporation's
executive compensation programs; and determines the compensation of the
Corporation's executive officers. The Committee is comprised entirely of
directors who are not officers of the Corporation or its affiliates. Although
Mr. Mortensen, Chairman and President of the Corporation, served as an ex
officio member of the Committee, he did not participate in any deliberations or
decision-making involving his own compensation.
Compensation Philosophy and Objectives
The central objective of the compensation philosophy of the
Corporation is to provide fair and reasonable compensation to all employees,
including its executive officers. The Committee maintains that the compensation
of the Corporation's executive officers should be determined in accordance with
a performance-based framework that enhances shareholder value by integrating
the overall financial condition and results, individual contribution, and
business unit performance. Within this overall philosophy, the Committee's
specific objectives are to: (i) provide annual compensation that takes into
account the Corporation's overall performance relative to its financial goals
and objectives and the performance of functions and business units under the
executive's management and performance against assigned individual goals; (ii)
offer a total compensation program that takes into account the compensation
practices and financial performance of financial institutions of comparable
asset size and complexity for comparable positions based upon an evaluation of
the responsibilities of the executive's position and attendant skills and
experience; (iii) align the financial interests of the executive officers with
those of shareholders by providing significant equity-based long-term
incentives; and (iv) target compensation levels for executive officers based on
the level of responsibility, scope and complexity of the executive's position
relative to other senior management positions and comparative compensation of
similarly positioned executives of peer financial institutions.
Compensation Components and Process
The major components of the Corporation's executive officer
compensation are: (i) base salary, (ii) annual incentive awards and (iii)
long-term incentive awards (typically in the form of stock options or
restricted stock).
The process utilized by the Committee in determining executive officer
compensation levels for all of these components is based upon the Committee's
subjective judgment and takes into account both qualitative and quantitative
factors. However, the Committee emphasizes that in determining executive
officer compensation levels, particular attention is placed on tying a
significant portion of executive compensation to the success of the executive
officer and the Corporation in meeting predetermined performance goals. In
making compensation decisions, the Committee relies upon the work performed by
its two independent compensation consultants, Towers Perrin and Strategic
Compensation Planning, Inc. The two independent compensation consultants
reviewed market data, financial performance, stock performance and other
related performance criteria to determine relevant compensation practices of
various peer groups. The peer groups developed by the two independent
compensation consultants consisted of national, regional and other specially
selected groupings of bank holding companies of similar asset size. The peer
information provides guidance to the Committee, but the
8
<PAGE> 12
Committee does not target total executive compensation or any component thereof
to any particular point within, or outside, the range of the peer group results.
In general, the Committee continues to adjust the mix of base salary,
annual incentive awards and long-term incentives. Specifically, the Committee's
focus was to increase the emphasis on the amount of executive compensation that
is at risk.
Base Salary
Base salaries for executive officers are established at levels
considered appropriate in light of the scope of the duties and responsibilities
of each officer's position and taking into account peer group compensation
practices.
Annual Incentive Awards
Executive officers received annual cash incentive awards under the
Executive Incentive Bonus Plan in accordance with the target payout percentages
established by the Committee for 1996.
Long-Term Incentive Awards
The stock-based awards (stock option awards and restricted stock
grants) are generally granted to executive officers on an annual basis. It has
been the practice of the Committee to grant stock options and restricted stock
to both executive officers and other members of senior management. The stock
option awards cannot be issued with an exercise price below the market price of
the Corporation's common stock at the time of the award and the exercise price
cannot be changed after the award is issued, except to accommodate any
dividends, stock splits or conversions which would affect all shareholders. In
determining the size of each executive officer's stock option award or
restricted stock grant, the Committee considers the results of the peer group
review performed by the independent compensation consultants.
The Committee has historically granted stock options as a means of
providing long-term incentives to employees, rather than as a reward for past
performance. All stock options granted by the Corporation under the 1990 Stock
Option Plan "vest" incrementally over a five-year period based on the
optionee's continued employment by the Corporation or one of its principal
subsidiaries. The Committee therefore based its 1996 decisions with regard to
the stock options granted to its executive officers (including Mr. Mortensen,
the CEO) primarily upon the total number of options available for grant and the
officer's position, with adjustments for individual performance where
appropriate.
The Committee also granted restricted stock in 1996 to certain
executive and other senior officers under the Corporation's Restricted Stock
Bonus Plan. The restricted stock grants are to award individuals who made a
particularly important contribution to the Corporation in 1996. These grants
are also a key component of the Committee's long-term incentive compensation
policy because restricted stock granted under the Plan only "vests"
incrementally over a five-year period based on the recipient's continued
employment by the Corporation or one of its principal subsidiaries.
Based on a comparison with relevant peer group practices, the
independent compensation consultant determined that the Corporation has been
substantially below the Corporation's peer group in prior years. As a result,
the accumulated value of stock options granted in recent years has been
significantly below industry practice. The independent compensation consultant
recommended that the Committee consider a special grant of either restricted
stock or stock options to those individuals who have contributed to the
Corporation's performance over the previous five years. The Committee adopted
the independent compensation consultant's recommendation.
9
<PAGE> 13
Chief Executive Officer Compensation
In evaluating the compensation of Mr. Peter Mortensen for services
rendered in 1996, as Chairman of the Board as well as Chief Executive Officer
of the Corporation, the Committee examined both quantitative and qualitative
factors.
In looking at quantitative factors, the Committee reviewed the
Corporation's 1996 financial results as compared with those of the peer group
and with the Corporation's financial results for 1995. The Committee reviewed
the Corporation's record net earnings of $21 million for 1996 (excluding
one-time charges concerning the recapitalization of the SAIF fund and costs
related to the acquisition of Southwest Banks, Inc.), an increase of 16% from
1995; a 14% increase from 1995 in the Corporation's common stock price; and an
80% increase from 1995 in cash dividends paid on common stock; and other
quantitative factors. The Committee did not apply any specific quantitative
formula which would assign weights to these performance measures or establish
numerical targets for any given factor.
In addition to the above quantitative accomplishments, the Committee
considered the following accomplishments that are qualitative in nature. The
Committee recognized Mr. Mortensen's continued leadership in positioning the
Corporation strategically as demonstrated by the Corporation's geographic
expansion into the Florida banking market. The Committee also recognized his
leadership in relation to the placement of greater emphasis on the appropriate
allocation of the Corporation's capital for the purpose of providing greater
return to shareholders, including, among other things, the pending sale of the
Corporation's subsidiary, Bucktail Bank and Trust Company, and the resulting
equity investment in Sun Bancorp, Inc. Further, the Committee acknowledged Mr.
Mortensen's continued leadership in community reinvestment and economic
development activities as evidenced by the fact that all of the Corporation's
bank subsidiaries received "satisfactory" or better Community Reinvestment Act
("CRA") ratings, with four subsidiaries having received "outstanding" CRA
ratings following their most recent examinations.
The Committee's decisions relating to Mr. Mortensen's compensation
were ratified by the Board. Also, consistent with the principles and procedures
outlined in this report, the Committee approved the compensation of the
Corporation's other executive officers for 1996 and said decisions were
ratified by the Board.
Respectfully submitted,
James T. Weller, Chairman
W. Richard Blackwood
Charles T. Cricks
George A. Seeds
Compensation Committee Interlocks and Insider Participation
Mr. Mortensen, Chairman and President of the Corporation, served as an
ex officio member of the Corporation's Compensation Committee, and did not
participate or vote in any deliberations or decision making involving his own
compensation.
Mr. Mortensen serves on the board of directors of Liberty Steel
Products, Inc., a closely held corporation which is wholly owned by Mr. Weller
and his family. Mr. Weller, a member of the Corporation's Compensation
Committee, is Chairman and Chief Executive Officer of Liberty Steel Products,
Inc.
10
<PAGE> 14
Executive Remuneration
The following table sets forth information regarding remuneration paid
by the Corporation and its subsidiaries for the years shown to the Chairman and
President of the Corporation and the four other most highly compensated
executive officers of the Corporation whose aggregate annual remuneration
exceeded $100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
=================================================================================================================================
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
---------------------------------
Annual Compensation Awards Payouts
- ----------------------------------------------------------------------------------------------------------------
Name and Other Restricted Securities LTIP All Other
Principal Year Salary Bonus(1) Annual Stock Underlying Payouts Compensation
Position ($) ($) Compensation(2) Awards ($) Options ($) ($)
($) (#)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter Mortensen 1996 355,008 101,381 38,016 None 16,800 None 36,446(3),(4)
Chairman and 1995 347,004 99,243 26,920 None 8,820 None 35,472
President of the 1994 347,005 12,826 13,981 None 6,945 None 45,196
Corporation
Stephen J. Gurgovits 1996 255,000 53,139 10,972 None 14,700 None 23,090(3),(4)
Executive Vice 1995 250,008 78,232 10,529 None 7,717 None 22,256
President of the 1994 250,008 9,101 6,710 None 5,787 None 25,232
Corporation
Samuel K. Sollenberger 1996 171,000 36,634 None 6,300 None 7,985(3)
Vice President of the 1995 161,000 23,211 None 6,615 None 7,207
Corporation 1994 161,000 9,467 None 4,630 None 7,325
William J. Rundorff 1996 161,004 39,410 None 12,600 None 11,203(3),(4)
Executive Vice 1995 147,012 35,038 None 6,615 None 9,885
President of the 1994 140,004 5,376 None 4,630 None 12,080
Corporation
John W. Rose 1996 151,008 36,964 None 8,400 None 3,367(3)
Executive Vice 1995 107,695 25,667 29,285 None 0 None
President of the
Corporation
=================================================================================================================================
</TABLE>
1 Amount earned by the officer under the Corporation's Incentive Bonus Plan
and/or Performance Compensation Plan.
2 The aggregate amount of payments made to each officer for perquisites or other
personal benefits did not exceed 10% of salary and bonus except that in 1995,
Mr. Rose received a relocation allowance of $24,818. Amounts shown for Messrs.
Mortensen and Gurgovits were reimbursements due to increases in the Federal
income tax rates.
3 Includes the following amounts paid or accrued by the Corporation under the
following programs to Messrs. Mortensen, Gurgovits, Sollenberger, Rundorff and
Rose, respectively: 401(k) Plan (employer matching contributions), $4,500,
$4,500, $4,222, $4,500 and $3,367; Basic Retirement Plan (employer matching
contributions relating to 401(k) Plan), $16,440, $8,809, $1,762, $2,523 and
$0; Supplemental Disability, $8,357, $4,842, $2,001, $0 and $0.
4 Includes the following amounts which represent the present value of imputed
interest on the Corporation's portion of split dollar life insurance premiums
paid during 1996: Mr. Mortensen, $7,149; Mr. Gurgovits, $4,939; and Mr.
Rundorff, $4,180. These premiums will be returned to the Corporation upon the
earlier of either the death of the covered employee or termination of the
policy.
11
<PAGE> 15
Deferred Compensation
In addition to the Basic Retirement Plan (more fully described below),
the Board of Directors of First National Bank has established a Deferred
Compensation Plan (the "Compensation Plan") for Messrs. Mortensen and Gurgovits
which commenced January 1, 1986. The Compensation Plan provides for payments of
annual benefits of $62,000 for Mr. Mortensen and $25,000 for Mr. Gurgovits for
a period of ten years commencing upon the occurrence of: (a) retirement from
First National Bank; (b) complete and total disability; or (c) the death of the
participant in the event such death occurs prior to retirement.
Performance Compensation Program
The Corporation's banking subsidiaries have established a Performance
Compensation Program ("Program") in which all employees are eligible to
participate. The amount of the award available for distribution is based upon
that subsidiary's performance with regard to Performance Factors. In 1996, the
Performance Factors focused on loan and deposit growth, profitability, asset
quality and productivity. The Program also establishes a range of payout
percentages which reflect that subsidiary's success in achieving these
Performance Factors. This payout percentage is uniformly applied to the gross
salaries of each eligible employee. In 1996, Messrs. Mortensen, Gurgovits,
Rundorff and Rose did not participate in the Program.
Stock Options
The Corporation's 1990 Stock Option Plan (the "1990 Plan") and 1996
Stock Option Plan (the "1996 Plan") authorize the grant of incentive stock
options, intended to qualify under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), non-statutory stock options (not intended to
qualify under Section 422 of the Code), stock appreciation rights ("SARs") and
limited stock appreciation rights ("LSARs") to key employees of the Corporation
and its subsidiaries. The purposes of these Plans are to promote growth and
profitability of the Corporation by enabling it to attract and retain the best
available personnel for positions of substantial responsibility, and to provide
key employees with an opportunity for investment in the Corporation's Common
Stock and to give them an additional incentive to increase their efforts on
behalf of the Corporation and its subsidiaries.
The 1990 Plan and the 1996 Plan are administered by the Committee,
which has the authority to determine and designate the key employees to whom
options are to be granted, the number of shares to be optioned, the option
exercise price, the type of option, the option period, the restrictions, if
any, on the shares issuable upon the exercise of the option, the terms for
payment of the option price and the terms and conditions of each option. The
Committee may include SARs and LSARs in connection with an incentive stock
option or a non-statutory stock option, either at the time of grant or, in the
case of a non-statutory stock option, at any time thereafter during the term of
the stock option.
Consideration for the options to be granted under these Plans are
provided by the optionee's past, present and expected future contributions to
the management of the Corporation. No monetary consideration is provided by the
optionees with respect to the grant of the options.
An aggregate of 450,271 and 1,000,000 shares of Common Stock has been
reserved for issuance upon exercise of stock options granted under the 1990
Plan and the 1996 Plan, respectively. Options which have been granted under
these Plans will expire no later than ten years from the date of grant. Shares
not purchased pursuant to options which expire or are terminated unexercised
shall again be available for purposes of these Plans. To the extent that SARs
or LSARs are exercised, the stock option in connection with which such SARs or
LSARs were granted shall be deemed to have been exercised and the shares of
Common Stock which otherwise would have been issued upon the exercise of such
stock option shall not be the subject of any further grant of options under
these Plans.
12
<PAGE> 16
Under these Plans, the exercise price for incentive stock options or
non-statutory stock options to purchase unrestricted shares is to be determined
by the Committee, but may not be less than the fair market value of the Common
Stock on the day before the option is granted. The exercise price for
non-statutory stock options to purchase restricted shares shall be fixed by the
Committee, but may not be less than the fair value of the Common Stock on the
date of grant, as determined by the Committee.
During 1996, stock options covering a total of 166,950 shares of
Common Stock were granted to 21 employees under the 1990 Plan. During 1996, no
options were granted under the 1996 Plan. As of December 31, 1996, no options
granted under the 1990 Plan had been exercised by the executive officers of the
Corporation. The following tables show certain information relating to stock
options granted during the last fiscal year and aggregated stock options for
the named executive officers and all unexercised options held by such officers
as of December 31, 1996.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
- ---------------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants1 for Option Term3
- ---------------------------------------------------------------------------------------------------------------------------
Securities % of Total
Underlying Options Exercise
Options Granted to or Base
Granted2 Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Mortensen 16,800 10.1 20.36 01/30/06 215,111 545,136
Mr. Gurgovits 14,700 8.8 20.36 01/30/06 188,222 476,994
Mr. Sollenberger 6,300 3.8 20.36 01/30/06 80,666 204,426
Mr. Rundorff 12,600 7.5 20.36 01/30/06 161,333 408,852
Mr. Rose 8,400 5.0 20.36 01/30/06 107,555 272,568
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Adjusted for 5% stock dividend declared on April 24, 1996.
2 Options were granted on January 30, 1996 and are 20% vested on each of the
first through fifth anniversaries of the grant date.
3 In order for the gains to be realized over the ten-year term of the option,
the stock price at the end of the period would be $33.16 and $52.81
respectively, reflecting increases in the overall market price of each share
of Common Stock of the Corporation by approximately 63% and 159%,
respectively.
13
<PAGE> 17
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at 12/31/96 at 12/31/96($) 1
---------------------------------------------------------------------
Shares
Acquired Value
on Realized
Name Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Mortensen 0 0 15,042 32,471 201,999 229,549
Mr. Gurgovits 0 0 12,607 28,052 169,046 196,326
Mr. Sollenberger 0 0 10,175 17,335 136,132 144,134
Mr. Rundorff 0 0 8,424 22,893 110,209 152,293
Mr. Rose 0 0 0 8,400 0 25,326
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Represents the difference between the aggregate market value at December 31,
1996 of the shares subject to the options and the aggregate option price of
those shares.
Retirement Benefits
The following table illustrates the maximum annual benefits payable in
1997 under the life annuity option of the First National pension plan, in which
Messrs. Mortensen, Gurgovits, Rundorff and Rose participate, and the Basic
Retirement Plan (more fully described below) upon normal retirement at age 62.
ESTIMATED ANNUAL PENSION PAYMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Earnings Years of Service
for 5 Years Preceding -----------------------------------------------------------------------
Retirement 10 15 20 25 or More
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$125,000 $43,090 $52,815 $62,540 $72,265
$150,000 $54,215 $66,065 $77,915 $89,765
$175,000 $71,205 $83,225 $95,245 $107,265
$200,000 $88,705 $100,725 $112,745 $124,765
$225,000 $106,205 $118,225 $130,245 $142,265
$250,000 $123,705 $135,725 $147,745 $159,765
$275,000 $141,205 $153,225 $165,245 $177,265
$300,000 $158,705 $170,725 $182,745 $194,765
$325,000 $176,205 $188,225 $200,245 $212,265
$350,000 $193,705 $205,725 $217,745 $229,765
$375,000 $211,205 $223,225 $235,245 $247,265
$400,000 $228,705 $240,725 $252,745 $264,765
$500,000 $298,705 $310,725 $322,745 $334,765
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 18
The retirement benefit for each employee covered by the pension plan
is a monthly benefit in the form of a Five Year Certain and Life annuity, equal
to 1.2% of Final Average Earnings plus .5% of Final Average Earnings in excess
of the employee's Covered Compensation (as defined by Section 401(l)(5)(E) of
the Internal Revenue Code) times Years of Service, not to exceed twenty-five
(25) years. The Final Average Earnings figure is calculated using the highest
sixty (60) consecutive months of earnings of the last 120 months of service as
an employee. The benefits listed above are not subject to deduction for Social
Security.
Compensation included for computation of benefits is base salary and
bonus as indicated in the Summary Compensation Table. As of December 31, 1996,
credited years of service under the plan were as follows: Mr. Mortensen, 38
years; Mr. Gurgovits, 35 years; Mr. Rundorff, six years and Mr. Rose, one year.
The following table illustrates the maximum annual benefits payable in
1997 under the life annuity option of the Metropolitan pension plan, in which
Mr. Sollenberger participates, and the Basic Retirement Plan (more fully
described below) upon normal retirement at age 65.
ESTIMATED ANNUAL PENSION PAYMENTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Highest Average Total
Compensation for Any 5 Years of Service
Consecutive Years of 10 -------------------------------------------------------------------------------
Years Preceding Retirement 10 15 20 25 30 or More
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $25,360 $32,711 $40,062 $47,414 $54,765
$125,000 $34,494 $43,936 $53,379 $62,822 $72,265
$150,000 $43,628 $55,162 $66,696 $78,231 $89,765
$175,000 $60,458 $72,160 $83,862 $95,563 $107,265
$200,000 $77,958 $89,660 $101,362 $113,063 $124,765
$225,000 $95,458 $107,160 $118,862 $130,563 $142,265
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The retirement benefit for each employee covered by the plan is a
monthly benefit for life equal to 28% of Average Monthly Compensation up to the
employee's Covered Compensation (as defined by Section 401(l)(5)(E) of the
Internal Revenue Code) and 47% of said compensation in excess of the employee's
Covered Compensation. The Average Monthly Compensation is calculated by
determining the highest Average Total Compensation of any five consecutive
years during the last ten years of employment. The monthly benefit of any
employee with less than 30 years of service with Metropolitan is reduced by
1/30th for each year of service less than 30. The amount of the contribution,
payment or accrual with respect to a specified person is not and cannot be
separately or individually calculated by the actuaries for the plan. The
benefits listed above are not subject to deduction for Social Security.
Compensation included for computation of benefits is total cash
compensation as indicated in the Summary Compensation Table, including bonuses.
As of December 31, 1996, Mr. Sollenberger was credited with eight years of
service under the plan.
Basic Retirement Plan
The Basic Retirement Plan (the "BRP") is an unfunded plan providing
supplemental retirement benefits to those officers of the Corporation and its
subsidiaries who are designated by the Board of Directors of the Corporation
(the "Board"). The basic benefits under the BRP, payable when a participant
retires at or after the normal retirement date under his employer's defined
benefit or defined contribution plan ("Primary Qualified Plan"), is a monthly
benefit equal to either 50%, 60% or 70% (as determined by the Board) of the
participant's
15
<PAGE> 19
highest average monthly cash compensation during any five consecutive calendar
years within the last ten calendar years of employment. This amount is reduced
by the monthly benefit to which the participant would be entitled under Social
Security at normal retirement under the Primary Qualified Plan in which he
participates and (to the extent the benefit relates to employer contributions
other than matching contributions) under other benefit plans designated by the
Board. The benefit also includes credits equal to matching stock contributions
which certain participants were prevented from receiving pursuant to the
Corporation's 401(k) Plan due to limits imposed by the Internal Revenue Code.
The BRP contains provisions for reducing the basic benefit described
above if the participant retires before his normal retirement age but on or
after the early retirement date permitted by the Primary Qualified Plan. The
participant's rights to benefits under the BRP vest pursuant to a schedule set
forth in the BRP which takes into account years of participation in the BRP and
years of credited service under the participant's Primary Qualified Plan. A
participant automatically becomes 100% vested if he is employed with the
Corporation or a subsidiary on his normal retirement date, if a "change in
control" (as defined in the BRP) occurs, or in the event of his death or total
and permanent disability. Benefits are forfeited in the event a participant's
employment is terminated for cause or if the participant retires before the
early retirement date provided in his Primary Qualified Plan.
Employment Agreements
The Corporation has entered into Employment Agreements (collectively,
the "Agreements") with Messrs. Mortensen, Gurgovits, Sollenberger, Rundorff and
Rose. Each of the Agreements with Messrs. Mortensen, Gurgovits, Sollenberger
and Rundorff provide that on December 31 of each year, the term of employment
of each executive officer will be automatically extended to December 31 of the
third calendar year thereafter (unless the Corporation or the respective
executive officer fixes the expiration date of the term of employment in
accordance with provisions contained in the Agreements) and that the officer
will continue to be employed throughout that term at not less than his current
base salary. The Agreement with Mr. Rose is for an initial three year period
ending March 21, 1998 and provides that on March 22 of each year thereafter,
the term of employment will be automatically extended to March 22 of the next
succeeding year (unless the Corporation or Mr. Rose fixes the expiration date
of the term of employment in accordance with provisions contained in the
Agreement) and that Mr. Rose will continue to be employed throughout that term
at not less than his current base salary.
The term shall not be extended to a date beyond December 31 of the
year during which the executive officer reaches age 62, except for Mr.
Mortensen, which is age 65, and Mr. Rose. The term of Mr. Rose's Employment
Agreement shall not be extended to a date beyond March 21 of the year during
which Mr. Rose reaches age 63. The term of employment of Mr. Sollenberger shall
be extended only if, prior to the renewal date, the Board of Directors of the
Corporation has made a determination to extend the term of his employment for
such period.
The Agreements may be terminated voluntarily by the executive officers
and upon such event, all obligations of the Corporation shall cease as of the
date of termination. The Corporation will be obligated, should it terminate any
of the Agreements other than for cause, to pay the executive officer affected
for the balance of the term of his Employment Agreement then in effect.
Provision is made in the Agreements for termination of their respective
obligations to serve the Corporation and for the payment to them of a bonus
equal to approximately three times their annual compensation for Mr. Gurgovits,
and two times for Messrs. Rundorff and Rose, in the event of a sale or other
change of control transaction affecting the Corporation.
During 1996, the Corporation and Mr. Mortensen entered into a
Post-Employment Services Agreement, which replaces the change in control
feature of his current Employment Agreement. Upon cessation of full-time
employment under his Employment Agreement, Mr. Mortensen, pursuant to the terms
of the Post-Employment Services Agreement, shall be required to make himself
available to serve the Corporation as Director and Chairman of the Board and to
serve the Corporation and its subsidiaries as an independent consultant with
respect to various aspects of their business. Mr. Mortensen shall be entitled
to receive compensation for such services.
16
<PAGE> 20
STOCK PERFORMANCE GRAPHS
The following five-year performance graph compares the cumulative
total shareholder return (assuming reinvestment of dividends) on the
Corporation's Common Stock (_) to the Nasdaq Composite Index (+) and the
Nasdaq Bank Index (o). This stock performance graph assumes $100 was invested
on December 31, 1991, and the cumulative return is measured as of each
subsequent fiscal year end.
F.N.B. Corporation Five-Year Stock Performance Graph
Total Return, Including Stock and Cash Dividends
<TABLE>
<CAPTION>
F.N.B. Nasdaq Nasdaq
Corporation Composite Banks
----------- --------- -------
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 120.36 116.38 145.55
1993 172.63 133.59 165.99
1994 184.57 130.59 165.38
1995 271.22 184.67 246.32
1996 311.47 227.16 325.60
</TABLE>
The following ten-year performance graph compares the price
appreciation of the Corporation's Common Stock (_) with the price
appreciation on stocks included in the Nasdaq Composite Index (X).
F.N.B. Corporation Ten-Year Stock Appreciation Graph
Including Stock Splits and Stock Dividends
<TABLE>
<CAPTION>
F.N.B. Nasdaq
Corporation Composite
----------- ---------
<S> <C> <C>
1986 100.00 100.00
1987 127.71 94.75
1988 115.72 109.36
1989 113.75 130.43
1990 89.14 107.17
1991 89.35 168.16
1992 91.62 194.11
1993 140.74 222.77
1994 155.12 215.61
1995 223.68 302.65
1996 253.87 371.37
</TABLE>
17
<PAGE> 21
SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS
Under the terms of the Merger Agreement between Reeves Bank ("Reeves")
and the Corporation, certain shareholders of Reeves received Series A Preferred
Stock and Common Stock in exchange for their shares of Reeves stock. The
following table sets forth certain information concerning persons known to the
Corporation to be the beneficial owner of 5% or more of the outstanding Series
A Preferred Stock as of March 1, 1997. The Corporation is not aware of any
other person who is the beneficial owner of 5% or more of any other class of
the Corporation's voting stock.
<TABLE>
<CAPTION>
Shares Percent of Outstanding
Name and Address Beneficially Series A
Owned Preferred Stock
Beneficially Owned
=================================================================================================
<S> <C> <C>
Cede & Co. 4,126 17.5
Box 20
Bowling Green Station
New York, NY 10004
Hilton G. Klein & Joan H. Klein 2,160 9.2
122 Hilton Drive
New Brighton, PA 15006
I.B.E.W. Local #712 Pension Trust Fund
217 Sassafras Lane 2,000 8.5
P. O. Box 248
Beaver, PA 15009
Hanna Jane Boggs
7531 Spring Lake Road, Apt. C2 1,809 7.7
Bethesda, MD 20817
Richard Charles Boggs
6211 33rd St. NW 1,809 7.7
Washington, DC 20015
=================================================================================================
</TABLE>
VOTING SHARES HELD IN FIDUCIARY CAPACITY
The Corporation's affiliate, First National Bank of Pennsylvania
(First National Bank), and said affiliate's nominee were as of March 1, 1997
the beneficial owner of 407,809 shares of the Corporation's Common Stock, or
3.4% of the outstanding shares of Common Stock. These shares are held by First
National Bank with full voting and/or dispositive power in various fiduciary
capacities. First National Bank has or shares voting power as to 323,026 of
these shares, or 2.7% of the total shares of Common Stock outstanding, and 2.6%
of the total voting power of the Corporation's outstanding Stock. First
National Bank will vote the shares over which it has authority as of the record
date for the election of the five candidates for director.
18
<PAGE> 22
INDEPENDENT AUDITORS
The Corporation re-appointed Ernst & Young LLP ("Ernst & Young")
Certified Public Accountants, as independent auditors for the year ended
December 31, 1997. Ernst & Young has served as the Corporation's independent
auditors since 1993. Representatives of Ernst & Young are expected to be
present at the Annual Meeting, and will have the opportunity to make a
statement, if they so desire, and respond to appropriate questions.
ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST TO THE UNDERSIGNED SECRETARY OF THE CORPORATION
(AT THE ADDRESS SPECIFIED ON PAGE 1) BY ANY SHAREHOLDER WHOSE PROXY IS
SOLICITED HEREBY, THE CORPORATION WILL FURNISH TO SUCH SHAREHOLDER WITHOUT
CHARGE A COPY OF ITS 1996 ANNUAL REPORT ON FORM 10-K TO THE SECURITIES AND
EXCHANGE COMMISSION, TOGETHER WITH FINANCIAL STATEMENTS AND SCHEDULES THERETO.
ADDITIONAL INFORMATION
The Corporation knows of no other matters which will be presented to
shareholders for action at the Annual Meeting. However, if other matters are
presented which are proper subjects for action by shareholders, it is the
intention of those named in the accompanying proxy to vote such proxy in
accordance with their judgment upon such matters.
Solicitation of proxies will be made by employees of the Corporation,
and the cost will be borne by the Corporation. Proxies will be solicited by
mail and, in limited instances, by telephone, telegraph and personal interview.
The Corporation will also request brokerage houses and other custodians,
nominees and fiduciaries to forward soliciting material to the beneficial
owners of the stock held of record by such persons and will reimburse such
persons for their costs incurred in forwarding such materials.
SHAREHOLDER PROPOSALS
Proposals of security holders intended to be presented at the next
Annual Meeting must be received by the Corporation no later than November 20,
1997 for inclusion in the Corporation's proxy statement and form of proxy
relating to such meeting.
BY ORDER OF THE BOARD OF DIRECTORS
David B. Mogle, Secretary
19
<PAGE> 23
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F.N.B. Corporation
o Hermitage Square o Hermitage, Pennsylvania 16148-3389 o (412) 981-6000
<PAGE> 24
F.N.B. CORPORATION
1997 ANNUAL MEETING OF SHAREHOLDERS
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas W. Hodge, William A. Quinn, and Archie
O. Wallace, Esq., each with full power to act without the others, as Proxies of
the undersigned, each with the full power to appoint his substitute, and hereby
authorizes them to represent and to vote, as indicated on the reverse, all the
shares of Common Stock and/or Series A Cumulative Convertible Preferred Stock
of F.N.B. Corporation held of record by the undersigned on March 1, 1997, at
the Annual Meeting of Shareholders to be held on April 23, 1997 or any
adjournment of it.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
FOLD AND DETACH HERE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS.
Please mark your votes as indicated in this example [ X ]
ELECTION OF DIRECTORS:
<TABLE>
<S> <C> <C>
FOR THE TERM OF FOUR FOR all WITHHOLD
YEARS: Charles T. Cricks, nominees listed authority to
Henry M. Ekker, Thomas W. below (except vote for all
Hodge, James S. Lindsay as marked to nominees
and Paul P. Lynch. the contrary) listed below
[ ] [ ]
</TABLE>
INSTRUCTION: To withhold authority to vote your shares for any individual
nominee, write that nominee's name here:
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Your shares will be voted for the election of each nominee whose name is not
written in the space above.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREBY
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXIES WILL VOTE
SHARES REPRESENTED BY THIS PROXY FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR
AND WILL VOTE IN THEIR DISCRETION ON SUCH OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE DATE, EXECUTE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
SIGNATURE(S) DATE
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SIGNATURE(S) DATE
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
FOLD AND DETACH HERE
[LOGO]
F.N.B. CORPORATION
Dear Shareholder:
F.N.B. Corporation offers a Voluntary Dividend Reinvestment and Stock Purchase
Plan for its shareholders.
This plan provides features such as safekeeping to eliminate the risk of loss,
theft or destruction of stock certificates; automatic dividend reinvestment and
purchase of additional common shares without a broker fee.
All of these convenient features are at no cost to you.
If you wish to participate in this Plan, a Prospectus and enrollment card may
be obtained by calling Shareholder Relations at 800-490-3951 or 800-262-7600
(ext. 7629).
Sincerely,
F.N.B. CORPORATION
