<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 Rule 14a-11(c) or Rule 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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
* No fee required
<PAGE> 2
[F.N.B. Corporation LOGO]
F.N.B. Corporation
One F.N.B. Boulevard * Hermitage, Pennsylvania 16148-3363 724-981-6000
March 22, 1999
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 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 28, 1999, at 4:00
p.m.
At the meeting, you will be asked to consider and vote upon the
election of five directors and a proposal for a directors' stock compensation
plan.
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
ensure 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 Chief Executive Officer
<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 28, 1999, at 4:00 p.m.
Eastern Daylight Time, for the following purposes:
1. To elect five (5) directors of the Corporation, the names of whom
are set forth in the accompanying Proxy Statement;
2. To consider and vote upon the following proposal, which has been
unanimously recommended by the Board of Directors:
To approve the F.N.B. Corporation 1998 Directors' Stock Option
Plan in the form attached as EXHIBIT A to the Proxy Statement; and
3. 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, 1999 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 22, 1999
<PAGE> 4
March 22, 1999
F.N.B. CORPORATION
ONE F.N.B. BOULEVARD
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 28, 1999 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 22, 1999.
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, 1999 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 19,204,667 shares of
Common Stock, 20,718 shares of Series A Cumulative Convertible Preferred Stock
("Series A Preferred Stock") and 211,237 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 5.7 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 21 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.
William J. Strimbu, Archie O. Wallace, James T. Weller, Eric J. Werner,
and R. Benjamin Wiley, all of whom have expressed their willingness to serve,
have been nominated for election as directors of the Corporation to hold 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.
Additionally, Messrs. Joseph M. Walton, whose term expires this year, and Thomas
W. Hodge are retiring from the Board of Directors after 38 years and 24 years of
service, respectively.
<PAGE> 5
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, 1999. 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 63 1974 2002 142,587(f) 0
Chairman & Chief Executive Officer
of the Corporation since 1988; and
Chairman of First National Bank of
Pennsylvania ("FNBPA"), a
subsidiary
STEPHEN J. GURGOVITS 55 1981 2000 74,574(f)(g) 0
Vice Chairman of the Corporation
since 1998; Executive Vice President
of the Corporation 1995-1998;
Senior Vice President of the
Corporation 1988-1995; and
President & Chief Executive Officer
of FNBPA
GARY L. TICE 51 1997 2002 87,269(h) 0
President & Chief Operating Officer
of the Corporation since 1998;
Executive Vice President & Chief
Operating Officer of the Corporation
1997-1998; and Chairman & Chief
Executive Officer of Southwest
Banks, Inc., a former subsidiary
W. RICHARD BLACKWOOD 57 1985 2000 106,991 8,100 3.8
President, Harry Blackwood Inc.
(insurance and real estate)
ALAN C. BOMSTEIN 53 1999 2001 41,672(i) 0
President and Chief Executive
Officer, Creative Contractors, Inc.
WILLIAM B. CAMPBELL 60 1975 2000 70,623(j)(k) 0
Retired Business Executive
CHARLES T. CRICKS 49 1994 2001 42,497(l) 0
Executive Vice President and Chief
Operating Officer, Health Care
Solutions, Inc.
</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>
HENRY M. EKKER, ESQ. 60 1994 2001 14,401 0
Attorney at Law, Partner of Ekker,
Kuster & McConnell
THOMAS W. HODGE 73 1975 2001 20,957(j) 0
Retired Business Executive
JAMES S. LINDSAY 50 1997 2001 110,219(m) 0
Managing Partner, Dor-J's
Partnership; Licensed Real Estate
Broker, The Lindsay Company
PAUL P. LYNCH 47 1991 2001 101,681(n) 200
Attorney at Law; President & Chief
Executive Officer, Lynch Brothers
Investments, Inc. (real estate)
EDWARD J. MACE 42 1997 2002 90,166(o) 0
Edward J. Mace, Certified Public
Accountant; Chief Operating
Officer, Ribek Corporation
ROBERT S. MOSS 61 1994 2002 12,778 0
Chairman, Associated Contractors of
Conneaut Lake, Inc. (a general
contractor)
RICHARD C. MYERS 70 1997 2000 74,255 0
Retired Business Executive
WILLIAM A. QUINN 70 1974 2002 4,258 0
Retired Vice President of the
Corporation; and Retired Executive
Vice President & Cashier of FNBPA
GEORGE A. SEEDS 68 1992 2000 8,485 0
Retired Business Executive
WILLIAM J. STRIMBU 38 1995 1999 42,577 0
President, Nick Strimbu, Inc.
(common carrier)
ARCHIE O. WALLACE, ESQ. 64 1992 1999 21,196 0
Attorney at Law, Partner of Rowley,
Wallace, Keck, Karson & St. John
JOSEPH M. WALTON 72 1975 1999 24,392 650
Chairman & Chief Executive
Officer, Jamestown Paint Co.
(manufacturer of paint and varnish)
</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>
JAMES T. WELLER 68 1975 1999 32,081 0
Chairman, Liberty Steel Products,
Inc. (steel processor)
ERIC J. WERNER, ESQ. 36 1995 1999 1,745 0
Chief Administrative Officer,
General Counsel & Secretary,
Werner Co. (manufacturer of
climbing products and aluminum
extrusions)
R. BENJAMIN WILEY 54 1997 1999 2,390 0
Chief Executive Officer, Greater
Erie Community Action Committee
DONNA C. WINNER 52 1994 2000 304,156 1.6 0
Co-Owner, The Radisson Shenango,
Tara - A Country Inn,
The Winner (clothing store),
Tiffany's (banquet center)
WILLIAM J. RUNDORFF 50 N/A N/A 36,173(f) 0
Executive Vice President of the
Corporation since 1995, Vice
President of the Corporation 1991-
1995; and Vice President of FNBPA
since 1991
JOHN D. WATERS 52 N/A N/A 21,393(f) 0
Vice President & Chief Financial
Officer of the Corporation; and
Chief Financial Officer of FNBPA
since 1994
============================================================================================================================
</TABLE>
All directors, director nominees and executive officers as a group (25 persons),
as the beneficial owners of 1,245,707 shares of the outstanding Common Stock,
owned 6.5% of the Common Stock of the Corporation as of March 1, 1999 and
controlled 6.4% 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, 59,340 shares; Mr. Gurgovits, 44,942
shares; Mr. Tice, 37,844 shares; Mr. Rundorff, 32,267 shares; Mr.
Waters, 15,192 shares; Mr. Bomstein, 6,972; Mr. Lindsay, 10,061 shares;
Mr. Mace, 1,437 shares; and Mr. Myers, 10,450 shares; 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 2.2550
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,
287 shares; Mr. Hodge, 2,304 shares; Mr. Lindsay, 8,160 shares; Mr.
Walton, 7,829 shares; and Mr. Weller, 40,777 shares.
4
<PAGE> 8
(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.
(g) Includes 5,128 shares owned by Mr. Gurgovits' wife as a participant in
her employer's profit sharing program; and 50 shares held by Mr.
Gurgovits as trustee for his daughter.
(h) Includes 1,588 shares jointly owned by Mr. Tice and his two children;
4,021 shares jointly owned by Mr. Tice and his mother; 488 shares owned
by Mr. Tice's wife; 196 shares owned by Mr. Tice's son; 107 shares
owned by Mr. Tice's daughter; and 5,027 shares held by the F.N.B.
Corporation Salary Savings Plan for Mr. Tice who has voting power over
these shares.
(i) Includes 2,876 shares owned by Creative Contractors, Inc. 401K Profit
Sharing Plan and Trust, of which Mr. Bomstein is a trustee; and 3,532
shares owned by his sons.
(j) Includes 5,124 shares held in irrevocable trusts by the Trust
Department of FNBPA. 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.
(k) Includes 1,622 shares owned by Mr. Campbell's wife.
(l) Includes 3,913 shares held by Mr. Cricks as co-trustee for his children
and 7,702 shares held by Mr. Cricks as co-trustee for his mother.
(m) Includes 10,724 shares held by Mr. Lindsay as custodian for his three
children; 64,304 shares owned by Dor-J's Partnership, of which Mr.
Lindsay is the managing partner; and 1,157 shares held by Mr. Lindsay
as trustee for his mother.
(n) Includes 30,611 shares owned by Mr. Lynch's wife and 32,436 shares held
by the Paul and Marcia Lynch Family Trust.
(o) Includes 366 shares held by Mr. Mace as custodian for his three
children; 4,862 shares held by Mr. Mace as trustee for certain
unrelated beneficiaries; 21,135 shares held by the Ribek Corporation
Defined Contribution Pension Trust of which Mr. Mace is a Trustee; and
52,273 shares owned by Ribek Corporation of which Mr. Mace is Chief
Operating Officer.
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 1998 as required by Section 16(a)
of the Securities Exchange Act of 1934, except that Messrs. Seeds and Wallace
inadvertently failed to file, on a timely basis, a report for two transactions
each.
Directors' Fees
During 1998, each non-employee director was paid an annual retainer of
$10,000, $1,200 for the quarterly Board meeting attended in January, and $2,000
for each quarterly Board meeting attended in April, July and October.
Non-employee directors who serve on committees were compensated for their
attendance at various committee meetings of the Corporation and its subsidiaries
at rates ranging from $100 to $750 per meeting attended. In addition, Messrs.
Mortensen and Tice are compensated for attendance at certain board and committee
meetings of the Florida affiliates.
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 with (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 1998, all Directors elected to receive all or some portion
of their fees in stock.
5
<PAGE> 9
A director may elect to defer receipt of all of his annual fees payable
under the Plan in cash or 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 to participate in this plan by having an amount
equal to the director fees paid to non-employee directors deferred from their
base salaries.
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
1998. 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.
During 1998, a subsidiary of the Corporation leased, at fair market
value, a branch office facility from a partnership of which Mr. Edward J. Mace,
a director, is a 25.4% general partner. The aggregate value of the lease was
$268,131.
During 1998, Mr. James S. Lindsay, a director, was paid a special
one-time director fee of $50,000 in lieu of a real estate brokerage fee for his
role in assisting the Corporation to acquire the F.N.B. Financial Center located
in Naples. Additionally, Mr. Lindsay was paid $25,175 in real estate commissions
related to the purchase of three additional pieces of property by subsidiaries
of the Corporation.
Board and Committee Meetings
During 1998, the Board of Directors of the Corporation held four
meetings. All directors 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, Mace, Moss, Quinn and Werner. Duties of the Audit Committee
include engaging independent auditors, reviewing with the independent auditors
the planning 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 1998.
The Board of Directors has a Compensation Committee which includes
Messrs. Blackwood, Cricks, Lindsay, Seeds and Weller. Mr. Mortensen, Chairman
and Chief Executive Officer of the Corporation, serves as an ex officio member
of the Corporation's Compensation Committee, but does not participate or vote in
any deliberations or decision making involving his own compensation. During
1998, the Compensation Committee met six 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 various Stock Option Plans, the Restricted Stock
and Incentive Bonus Plan and the Directors' Compensation Plan.
The Board of Directors has a Nominating Committee consisting of Messrs.
Campbell, Mace, Quinn, Seeds and Walton. During 1998, the Nominating Committee
met six times. The Nominating Committee is responsible for selecting and
recommending to the Board of Directors nominees for election as director or
executive officer of the Corporation and its affiliates. The Nominating
Committee will consider director 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.
6
<PAGE> 10
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.
PROPOSAL TO BE VOTED ON AT ANNUAL MEETING
In addition to the election of directors of the Corporation described
above, the Board of Directors of the Corporation is submitting to the
shareholders for approval at the Annual Meeting a proposal for the Corporation's
1998 Directors' Stock Option Plan, which will further the purposes, as listed
below, of attracting and retaining directors while aligning director
compensation more closely with the economic interests of the Corporation's
shareholders.
The Board of Directors is recommending that shareholders approve this
plan because it will promote the growth and profitability of the Corporation by:
o Enabling the Corporation to continue to attract and retain
highly qualified individuals to serve as directors of the
Corporation.
o More closely aligning the directors' economic interests with
those of the Corporation's shareholders through opportunities
to obtain an equity stake in the Corporation.
o Giving the Corporation additional flexibility in designing
appropriate economic incentives to such directors in
furtherance of these goals.
o Enabling the Corporation, where appropriate, to provide
incentive and other compensation to directors in shares of
Common Stock rather than by making payments in cash.
Set forth below is a summary of the proposal being submitted to the
shareholders at the Annual Meeting.
PROPOSAL 1
ADOPTION OF F.N.B. CORPORATION
1998 DIRECTORS' STOCK OPTION PLAN
At the 1999 Annual Meeting, the Board is submitting the F.N.B.
Corporation 1998 Directors' Stock Option Plan (the "Plan") to the shareholders
for approval. A copy of the 1998 F.N.B. Directors' Stock Option Plan is attached
as EXHIBIT A to this proxy statement. Set forth below is a description of the
material features of and other information relating to the Plan.
General Information. The Board adopted the Plan on May 21, 1998, and
the Executive Committee of the Board amended the Plan to increase the number of
shares issuable under the Plan from 25,000 shares to 400,000 shares on March 1,
1999 (subject to shareholder approval of the Plan). The purposes of the Plan
generally are to promote the interests of F.N.B. Corporation (the "Company") and
its shareholders by enabling it to attract and retain experienced and
knowledgeable directors and by aligning the directors' economic interests more
closely with those of the Company's shareholders. The Plan is consistent with
the directors' compensation practices recommended by the National Association of
Corporate Directors' Blue Ribbon Commission (the "Commission"). The Commission
urged companies to establish or increase the equity component of director pay
practices as a meaningful manner of aligning directors' economic interests with
the shareholders (Source: Report of NACD Blue Ribbon Commission on Director
Compensation, June 19, 1995).
7
<PAGE> 11
The Plan permits the Company to grant to participants non-statutory
stock options (that is to say, stock options not meeting the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")),
stock appreciation rights ("SARs") and limited stock appreciation rights
("LSARs"). The term "option" as used in this Proxy Statement without further
qualification means any of the foregoing.
The Plan is administered by the Board and the Executive Committee of
the Board (collectively referred to in this section of the Proxy Statement as
the "Board"). The Board is authorized, subject to the provisions of the Plan, to
interpret the Plan and prescribe such rules, regulations and procedures as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan.
Shares Available for Issuance. Options to purchase up to 400,000 shares
of Common Stock may be granted under the Plan (assuming that the Plan as amended
is approved by the shareholders). The shares of Common Stock issuable upon
exercise of options granted under the Plan will be registered with the
Securities and Exchange Commission ("SEC") pursuant to a registration statement
on Form S-8. On January 24, 1999, options to purchase a total of 24,984 shares
of Common Stock had been issued pursuant to the Plan. As of March 1, 1999, the
market value of the F.N.B. Common Stock (based on the average of the closing bid
and ask prices reported on the Nasdaq National Market) was $22.91 per share.
Persons Who May Participate in the Plan. All directors of the Company
are eligible to participate in the Plan. Currently, 23 persons are eligible to
participate in the Plan.
Purchase of Securities Pursuant to the Plan; Payment for Securities
Offered. Under the Plan the Board has full and final authority, in its
discretion, to grant options and to determine the directors to whom options
shall be granted and the number of shares to be covered by each option. Each
nonemployee director may receive annual grants of options equivalent to the
total cash compensation received by such non-employee director or which such
non-employee director would have been entitled to receive during the prior year
as a member of the Board or any committee(s) thereof. Each employee director may
receive annual grants of options equivalent to the average total cash
compensation received by all non-employee directors during the prior year.
The purchase price at which an option may be exercised ("exercise
price") will be determined by the Board at the time the option is granted. In no
event, however, will the exercise price be less than the "fair market value" of
the Common Stock on the date of the grant. "Fair market value" is defined as the
average of the closing bid and ask prices quoted on the Nasdaq National Market
on the trade date immediately preceding the date as of which fair market value
is to be determined.
A participant may exercise an option by giving written notice to the
Company and by paying the exercise price in cash, or by surrendering other
shares of Common Stock with a market value equal to the exercise price, or by
withholding such number of shares of Common Stock then issuable upon exercise of
the option as shall then have a market value equal to the exercise price.
All securities to be issued upon exercise of options granted under the
Plan will be issued by the Company out of its authorized, unissued stock or out
of repurchased shares held by the Company, or partly each. Such repurchased
shares held by the Company may have been purchased by the Company on the open
market or in private transactions from time to time.
SARs. The Plan provides that SARs may be granted in connection with
stock options at the time such stock option is granted or at any time thereafter
during the option term. SARs are exercisable only to the extent the related
stock option is exercisable and only by the same person or persons entitled to
exercise the related stock option.
Each SAR entitles the holder to surrender the related stock option, or
any portion thereof, in exchange for that number of shares of Common Stock
having an aggregate fair market value equal to the excess of the fair
8
<PAGE> 12
market value per share of Common Stock on the date of exercise over the option
exercise price per share, multiplied by the number of shares covered by the
stock option or portion thereof being surrendered. However, the Committee, in
its discretion, may determine that the obligation of the Corporation with
respect to a SAR be paid in cash or part in cash and part in shares (subject to
certain limitations in the case of persons subject to Section 16 of the Exchange
Act at the time of exercise).
LSARs. The Plan provides for the grant of LSARs in connection with all
or part of non-statutory stock option at the time such option is granted or at
any time thereafter during the term of such stock option.
Each LSAR entitles the holder of the related stock option, upon
exercise of the LSAR, to surrender the stock option and any related SAR, to the
extent unexercised, and receive an amount of cash, in respect of each share of
Common Stock subject to such stock option (or the portion thereof surrendered),
equal to the excess of the fair market value (determined pursuant to the Plan)
per share of the Common Stock over the exercise price of such stock option.
LSARs shall be exercisable for a period of 60 days following the occurrence of
certain events specified in the Plan relating to a change in control or possible
change in control of the Company. No LSAR may be exercised until the holder has
completed at least six months of continuous service with the Company or a
subsidiary immediately following the date of grant of the LSAR.
Reload Options. Concurrently with the award of any stock option under
the Plan (such option is hereinafter referred to as the "Underlying Option") to
any participant in the Plan, the Board may grant a reload option (the "Reload
Option") to such participant pursuant to which the participant, upon exercising
a stock option and paying the exercise price by surrendering already owned
shares or withholding a portion of the shares issuable pursuant to such option,
shall be entitled to purchase a number of shares of Common Stock equal to (a)
the number of shares delivered by the participant to the Company to exercise the
Underlying Option and (b) to the extent authorized by the Board, the number of
shares used to satisfy any tax withholding requirement incident to the exercise
of the Underlying Option, subject to the availability of shares of Common Stock
under the Plan at the time of such exercise. The grant of a Reload Option shall
become effective upon the exercise of the Underlying Option by delivering to the
Company shares held by the participant.
The option price per share for a Reload Option shall be the fair market
value per share of the Common Stock on the date the grant of the Reload Option
becomes effective. Each Reload Option shall be fully exercisable subject to such
limitations on exercisability, if any, as may be imposed by the Board in its
discretion at the time of the grant of the Underlying Option. The term of each
Reload Option shall be equal to the remaining option term of the Underlying
Option. No Reload Option granted to a participant shall become effective when
options are exercised by such participant (or by such participant's estate or
personal representative) pursuant to the terms of the Plan following termination
of the participant's tenure as a director of the Company.
Except as otherwise provided above the other provisions of the Plan
applicable to stock options shall apply equally to Reload Options.
Resale Restrictions. A participant who is granted an option under the
Plan may not transfer the option other than by will or by the laws of descent
and distribution. No person other than the participant to whom an option is
granted may exercise such option during such participant's lifetime.
Termination; Amendment. The Board has the authority to amend or
terminate the Plan at any time, provided that such amendment or termination does
not adversely affect any outstanding option or SAR unless the holder of such
option has consented in writing thereto.
Benefits Granted. Participation in the Plan is limited to the Company's
employee and non-employee directors. The Company's employees who are not Company
directors are not eligible to participate in the Plan. There were no options
granted under the Plan during 1998. On January 24, 1999, the non-employee
directors were granted collectively, as a group, 24,984 options under the Plan.
The aggregate value of the options granted
9
<PAGE> 13
to the non-employee directors on January 24, 1999 was $0 since the market price
of the stock as of March 1, 1999 was below the exercise price. It is anticipated
that the employee and non-employee directors will receive stock option grants in
the future under the Plan; however, the amounts of such stock option grants
cannot be determined at this time.
Exercise of Options Upon Certain Events. The Plan provides that no
option may be exercisable during the first 12 months after the date of grant
unless the optionee dies during such 12 month period. In the case of the
participant's death while a director, the participant's estate or beneficiary
may exercise any options outstanding (whether or not exercisable on the date of
death) until the date twelve months after the date of death). If the participant
dies after his resignation or retirement from the Board, the participant's
estate or beneficiary may exercise any outstanding options at any time prior to
the expiration date of such option.
In addition, notwithstanding the foregoing limitations, each option
granted under the Plan shall become exercisable in full upon certain events
relating to a change in control or possible change in control of the
Corporation, whether or not such option is then exercisable under the stock
option agreement relating to such option.
Forfeitures and Penalties; Liens. Options issued under the Plan will
cease to become exercisable if the participant resigns or is terminated from the
Board as a result of certain conduct described in the Plan, including conduct
that is intentional, knowing, reckless or grossly negligent and involves a
substantial violation of material provisions of federal or state laws or
regulations, Company policy or agreements with the Company, and engaging in
competition with the Company or any of its subsidiaries. In addition, all
options granted under the Plan expire on the tenth anniversary of the date of
the grant.
Income Tax Consequences of Plan Participation. Certain aspects of the
Federal income tax consequences of the grant and exercise of options under the
Plan and any subsequent disposition of stock acquired thereby (based upon
present provisions of the Code and the Treasury regulations promulgated
thereunder) are described below.
NON-STATUTORY STOCK OPTIONS. A participant who is granted a
non-statutory stock option will not realize taxable income at the time
such option is granted or when it vests.
(a) In general, a participant will be subject to tax at
ordinary income rates (see "Rate Structure" below) for the year of
exercise on the excess of the fair market value of the shares
underlying the option on the date of exercise over the option exercise
price (the "spread"). Because the spread is compensation income for
federal income tax purposes, income tax withholding requirements apply
upon exercise, and the Company will receive a corresponding deduction.
The participant's basis in the shares so acquired will be equal to fair
market value thereof on the exercise date (i.e., the option exercise
price plus the spread upon which the participant is taxed). Upon
subsequent disposition of such shares, the participant will realize
long-term capital gain or loss if he has held the shares for more than
one year since the option was exercised; otherwise, such capital gain
or loss will be short-term.
(b) The general rules described in paragraph (a) will not
apply upon exercise of the option if (i) the shares received are not
"transferable" and are subject to a "substantial risk of forfeiture" or
(ii) sale of the shares at a profit could subject the participant to
suit under Section 16(b) of the Exchange Act. Even if a participant is
not required to recognize income under these rules, he or she may
nevertheless elect to recognize the spread at the time of the option
exercise by filing an election with the IRS within 30 days following
the exercise of the option. The purpose of such election is to cause
any post-exercise appreciation realized on the shares received to be
taxed as capital gain. If no such election is made, the timing of the
taxable event and the application of the withholding requirements will
be postponed until earliest to occur of (x) the lapse or release of the
transfer restrictions or the causes of the risk of forfeiture (or the
passage of six months in cases where Section 16(b) is applicable) or
(y) the disposition of such shares, and the participant's compensation
income at that time, and the Company's corresponding
10
<PAGE> 14
deduction, will be equal to the excess of the value of the shares at
that time (or sale price) over the option exercise price.
(c) If a participant exercises a non-statutory stock option by
delivering shares of Common Stock as payment of the option price, no
gain or loss will be recognized with respect to the shares delivered
and the participant will be subject to tax at ordinary income rates on
the excess of the fair market value of the shares he or she is entitled
to receive on the date of exercise over the option exercise price. The
participant's basis in the number of shares received which is equal to
the number to the shares surrendered will be the same as the his or her
basis in the surrendered shares, and the basis in the additional shares
obtained upon the exercise of the option will be equal to the amount of
compensation income realized by the participant. The participant's
holding period for the shares having the transferred basis will include
the holding period for the shares surrendered. The holding period for
the additional shares obtained by the exercise of the option will
commence on the date of exercise.
SARS AND LSARS. A participant is not taxed upon the grant of
SARs or LSARs. Upon exercise of such rights, he or she will be taxed at
ordinary income tax rates (subject to withholding) on the amount of
cash received and/or the current fair market value of stock received,
and the Company will be entitled to a corresponding deduction. The
participant's basis in any shares acquired through the exercise of SARs
and LSARs will be equal to the amount of ordinary income on which he or
she was taxed, and upon subsequent disposition, any gain or loss will
be a capital gain or loss.
RATE STRUCTURE. A capital gain or loss is long-term or
short-term depending upon whether the stock has been held for more than
one year. For individuals under the present rate structure provided by
the Code, both ordinary income and short-term capital gain are taxed at
a maximum rate of 39.6%, and long-term capital gain is taxed at a
maximum rate of 28%.
Interest of Nominees in Plan. Each person nominated for election to the
Board of Directors at the 1999 Annual Meeting is presently eligible to receive
grants of options under the Plan.
To effect this proposal, the following resolution will be presented at
the Annual Meeting for adoption by the shareholders:
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 1.
EXECUTIVE COMPENSATION, BENEFITS AND RELATED MATTERS
REPORT OF COMPENSATION COMMITTEE
To Our Shareholders:
Responsibilities and Composition of the Compensation Committee
The Compensation Committee ("Committee") meets periodically during the
course of the year and establishes compensation programs for executive officers
and senior managers 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; reviews, oversees and administers the Corporation's executive
compensation programs; determines the compensation of the Corporation's
executive officers; and approves changes to the Corporation's compensation
program and practices. The Committee is comprised entirely of directors who are
not officers of the Corporation or its affiliates. Although Mr. Mortensen,
Chairman and Chief Executive Officer 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.
11
<PAGE> 15
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 and senior managers. The Committee maintains that the
compensation of the Corporation's executive officers and senior managers 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 philosophy,
the Committee's specific objectives are to: (i) provide annual compensation that
takes into account the Corporation's performance relative to its financial goals
and objectives and the performance of functions and business units under the
executive's and senior manager'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 and senior managers
of peer financial institutions.
Specifically, a critical aspect of the committee's compensation
philosophy is that some portion of the executive officer's and senior manager's
total compensation be "at risk." The "at risk" portion is a function of the
executive officer's and senior manager's performance against corporation,
business unit and individual goals and objectives.
The following two components of executive officer and senior manager
compensation are "at risk": an annual cash bonus based on short-term performance
and stock options as an award for long-term performance. The total cash
compensation opportunities for executive officers and senior managers is
targeted at the median of industry practices among the Corporation's peer group.
In addition, the Corporation's incentive cash and bonus award program provide an
opportunity for stronger rewards when the Corporation's performance exceeds its
financial goals and objectives and/or peer results.
Compensation Components and Process
The major components of the Corporation's executive officer and senior
manager 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
and senior manager compensation levels for all of these components is based upon
the Committee's subjective judgment and takes into account objective 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 senior manager and the Corporation in meeting predetermined
financial and other performance goals.
In making compensation decisions, the Committee relies upon the work
performed by its independent compensation consultant, Strategic Compensation
Planning, Inc. The independent compensation consultant reviewed market data,
financial performance, stock performance and other important performance
criteria to determine relevant compensation practices of the Corporation's peer
group. The Corporation's peer group developed by the independent compensation
consultant consisted of national and regional financial institutions and bank
holding companies having between $3 to $5 Billion of banking assets. The
Committee determined that the Corporation's peer group identified by the
independent consultant is reasonable to measure the Corporation's compensation
practices given the Corporation's continued and expected growth. The peer
information provides
12
<PAGE> 16
guidance to the Committee, but the Committee does not target total 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 is to increase the emphasis on the amount of executive compensation that
is at risk. Base salaries for executive officers and senior managers 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. Executive officers received annual cash incentive
awards under the Corporation's Restricted Stock and Incentive Bonus Plan in
accordance with the target payout percentages established by the Committee for
1998.
Long-Term Incentive Awards
The stock-based awards (stock option awards and restricted stock
grants) are generally granted to executive officers and senior managers 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.
The Committee has historically granted stock options as a means of
providing long-term incentives to employees. All stock options granted by the
Corporation under its 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 1998 decisions
with regard to the stock options granted to its executive officers primarily
upon the total number of options available for grant, the officer's position and
a multiple of the officer's base salary.
The Committee also granted restricted stock in 1998 to certain
executive and other senior officers under the Corporation's Restricted Stock and
Incentive Bonus Plan. The restricted stock grants are to reward individuals who
made a particularly important contribution to the Corporation in 1998. These
grants are also a key component of the Committee's long-term incentive
compensation policy because restricted stock granted under this 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.
Chief Executive Officer Compensation
In evaluating the compensation of Mr. Peter Mortensen for services
rendered in 1998 as Chairman of the Board as well as Chief Executive Officer of
the Corporation, the Committee examined both quantitative and qualitative
factors.
In examining the relevant quantitative factors, the Committee reviewed
the Corporation's 1998 financial results as compared with those of its peer
group and with the Corporation's financial results for 1997. In determining Mr.
Mortensen's 1998 compensation, the Committee reviewed the following important
criteria concerning the Corporation's 1998 core operating results: (i) net
earnings of $35.5 Million for 1998, an increase of 11% from 1997; (ii) a 9%
growth in total assets in 1998 (exclusive of merger activity); (iii) the
continuation of the Corporation's exceptional asset quality in 1998; and (iv)
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 considerations, the Committee
reviewed the following 1998 accomplishments of the Corporation that are
qualitative in nature. The Committee recognized Mr. Mortensen's ongoing
leadership in positioning the Corporation strategically as demonstrated by the
Corporation's continued expansion into the Florida banking market. The Committee
considered the Corporation's efforts to diversify
13
<PAGE> 17
product offerings and enhance income opportunities by offering various
alternative investment products through certain of the Corporation's subsidiary
banks. 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 three 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 1998 and said decisions were ratified
by the Board.
Respectfully submitted,
James T. Weller, Chairman
W. Richard Blackwood
Charles T. Cricks
James S. Lindsay
George A. Seeds
Compensation Committee Interlocks and Insider Participation
Mr. Mortensen, Chairman and Chief Executive Officer of the Corporation,
served as an ex officio member of the Corporation's Compensation Committee, but
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 of Liberty Steel Products, Inc.
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
Chief Executive Officer of the Corporation and the four other most highly
compensated executive officers of the Corporation whose aggregate annual
remuneration exceeded $100,000 (the "Named Executive Officers").
14
<PAGE> 18
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
---------------------------------------
Annual Compensation Awards Payouts
- --------------------------------------------------------------------- ---------------------------- ----------
Securities
Name and Other Annual Restricted Underlying LTIP All Other
Principal Year Salary Bonus(1) Compensation(2) Stock Award Options(3,4) Payouts Compensation
Position ($) ($) ($) ($) (#) ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Peter Mortensen 1998 450,000 250,000 None 23,752 None 49,053(5,6)
Chairman and Chief 1997 378,000 347,800 57,799 266,256 23,542 None 105,083
Executive Officer 1996 355,008 101,381 38,016 None 17,640 None 36,446
Stephen J. Gurgovits 1998 290,004 126,842 None 13,120 None 14,435(5,6)
Vice Chairman 1997 265,008 201,901 127,500 13,528 None 38,798
1996 255,000 53,139 10,972 None 15,435 None 23,090
Gary L. Tice(7) 1998 305,297 137,000 45,567 191,260 34,120 None 139,792(5,6)
President and Chief 1997 243,457 183,600 56,330 None None None 154,087
Operating Officer
William J. Rundorff 1998 200,004 90,000 None 9,048 None 10,927(5,6)
Executive Vice President 1997 179,004 134,300 80,502 7,117 None 15,707
1996 161,004 39,410 None 13,230 None 11,203
John D. Waters 1998 190,008 81,000 None 8,596 None 13,610(5,6)
Vice President and Chief 1997 155,004 124,300 10,000 11,493 None 5,670
Financial Officer 1996 130,008 31,823 10,000 11,025 None 3,575
=============================================================================================================================
</TABLE>
(1) Amount earned by the officer as a cash incentive bonus under the
Restricted Stock and Incentive Bonus 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 1998, Mr. Tice received a car allowance of $15,420,
country club memberships of $12,647 and directors' fees of $17,500. In
1997, Mr. Mortensen received country club memberships of $37,554 and
Mr. Tice received a car allowance of $14,892, country club memberships
of $20,688 and directors' fees of $20,750. Amounts shown for Messrs.
Mortensen and Gurgovits for 1996 were reimbursements due to increases
in the Federal income tax rates.
(3) Aggregate restricted stock holdings in terms of number of shares and
dollar value as of December 31, 1998 for each named executive officer
were as follows: Mr. Mortensen: 10,341, $290,839; Mr. Gurgovits: 4,952,
$139,289; Mr. Tice: 5,904, $166,076; Mr. Rundorff: 3,127, $87,951; and
Mr. Waters: 738, $20,765.
(4) Total number of shares of restricted stock granted to Messrs.
Mortensen, Gurgovits, Tice, Rundorff and Waters, respectively: 1998 -
0, 0, 5,494, 0, and 0; 1997 - 11,210, 5,368, 0, 3,389, and 421; 1996 -
0, 0, 0, 0, and 467. All such restricted stock grants vest 20% each
year on the first through fifth anniversaries of the grant date.
Dividends are paid on all restricted stock granted to the named
executive officers.
(5) Includes the following amounts paid or accrued by the Corporation for
1998 under the following programs to Messrs. Mortensen, Gurgovits,
Tice, Rundorff and Waters, respectively: 401(k) Plan (employer matching
contributions), $4,800, $4,800, $14,600, $4,800 and $4,800; Basic
Retirement Plan (employer matching contributions relating to 401(k)
Plan), $0, $0, $8,460, $1,858 and $4,058; Supplemental Disability,
$8,357, $5,275, $9,156, $0 and $0.
(6) 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 1998: Mr. Mortensen, $35,896; Mr.
Gurgovits, $4,361; Mr. Tice, $107,576; Mr. Rundorff, $4,269; and Mr.
Waters, $4,752. These premiums will be returned to the Corporation upon
the earlier of either the death of the covered employee or termination
of the policy.
(7) Mr. Tice became an executive officer in January 1997 as a result of the
affiliation with Southwest Banks, Inc.
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<PAGE> 19
Deferred Compensation
In addition to the Basic Retirement Plan (more fully described below),
the Board of Directors of FNBPA 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 $102,000 for Mr. Mortensen and $25,000 for Mr. Gurgovits for a period of ten
years commencing upon the occurrence of: (a) retirement from FNBPA; (b) complete
and total disability; or (c) the death of the participant in the event such
death occurs prior to retirement. Of these amounts, $62,000 and $25,000,
respectively, will be paid pursuant to Deferred Compensation Agreements. The
remaining amount for Mr. Mortensen is to be provided by an annuity generated by
the excess cash surrender value of a split dollar life insurance policy. During
1997, it was determined that the cash surrender value of the split dollar life
insurance policy may fall short of the expected level at Mr. Mortensen's
retirement. Accordingly, during 1997 and 1998 an additional $38,448 and $48,815
were accrued, respectively, to cover the estimated shortfall.
Stock Options
The following tables show certain information relating to stock options
granted during the last fiscal year and aggregated stock options for the named
executive officers and all unexercised options held by such officers as of
December 31, 1998.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants(1) for Option Term(3)
- ----------------------------------------------------------------------------------------- ------------------------------
Securities % of Total Exercise
Underlying Options Granted to or Base
Options Granted(2) Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mr. Mortensen 23,752 10.2 33.15 01/18/08 495,175 1,254,877
Mr. Gurgovits 13,120 5.6 33.15 01/18/08 273,522 693,162
Mr. Tice 34,120 14.6 33.15 01/18/08 711,324 1,802,644
Mr. Rundorff 9,048 3.9 33.15 01/18/08 188,630 478,028
Mr. Waters 8,596 3.7 33.15 01/18/08 179,207 454,148
========================================================================================================================
</TABLE>
(1) Adjusted for a 5% stock dividend declared on April 9, 1998.
(2) Options were granted on January 18, 1998 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 $54.00 and
$85.98, respectively, reflecting increases in the overall market price
of each share of Common Stock of the Corporation by approximately 63%
and 159%, respectively.
16
<PAGE> 20
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised In-The-Money Options at
Options at 12/31/98 12/31/98($)(1)
------------------------------- -----------------------------
Value
Shares Acquired Realized
Name on Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Mortensen 0 0 40,789 60,061 632,245 324,916
Mr. Gurgovits 0 0 33,259 38,885 525,232 244,124
Mr. Tice 7,385 155,164 31,020 51,882 872,424 495,983
Mr. Rundorff 0 0 23,745 27,298 367,570 183,286
Mr. Waters 0 0 8,319 26,045 81,039 144,294
==========================================================================================================================
</TABLE>
(1) Represents the difference between the aggregate market value at
December 31, 1998 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
1999 under the life annuity option of the Corporation's pension plan, in which
Messrs. Mortensen, Gurgovits, Rundorff and Waters participate, and the Basic
Retirement Plan (more fully described below) upon normal retirement at age 62.
Please note that Mr. Tice does not participate in the same Corporation pension
plans as Messrs. Mortensen, Gurgovits, Rundorff and Waters, but does participate
in the Basic Retirement Plan. Mr. Tice participates in the F.N.B. Corporation
Salary Savings Plan and the Executive Management Supplemental Retirement Plan.
The estimated annual pension payments shown in the chart below are reasonable
representations of the total benefits under the Basic Retirement Plan, the
F.N.B. Corporation Salary Savings Plan, the portion of the Executive Management
Supplemental Retirement Plan related to pension benefits, and Social Security.
17
<PAGE> 21
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION PAYMENTS
- ----------------------------------------------------------------------------------------------------------------------
Average Annual Earnings Years of Service
for 5 Years Preceding --------------------------------------------------------------------------
Retirement 10 15 20 25 or More
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$125,000 $42,011 $51,786 $61,562 $71,337
$150,000 $53,053 $64,981 $76,909 $88,837
$175,000 $69,003 $81,448 $93,893 $106,337
$200,000 $86,503 $98,948 $111,393 $123,837
$225,000 $104,003 $116,448 $128,893 $141,337
$250,000 $121,503 $133,948 $146,393 $158,837
$275,000 $139,003 $151,448 $163,893 $176,337
$300,000 $156,503 $168,948 $181,393 $193,837
$325,000 $174,003 $186,448 $198,893 $211,337
$350,000 $191,503 $203,948 $216,393 $228,837
$375,000 $209,003 $221,448 $233,893 $246,337
$400,000 $226,503 $238,948 $251,393 $263,837
$500,000 $296,503 $308,948 $321,393 $333,837
======================================================================================================================
</TABLE>
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 as
indicated in the Summary Compensation Table. As of December 31, 1998, credited
years of service under the plan were as follows: Mr. Mortensen, 40 years; Mr.
Gurgovits, 37 years; Mr. Rundorff, eight years and Mr. Waters, four years.
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 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
18
<PAGE> 22
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, Tice, Rundorff and Waters.
Each of the Agreements 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 (except for Mr. Gurgovits whose Agreement extends to December 31 of
the fifth calendar year). 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 Messrs. Mortensen and Tice, which is age 65.
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,
two and a half times for Mr. Tice, and two times for Messrs. Rundorff and
Waters, in the event of a sale or other change of control transaction affecting
the Corporation.
In 1998 the Corporation and Mr. Mortensen entered into a Continuation
of Employment Agreement ("Continuation Agreement") which terminated the
Post-Employment Services Agreement entered into during 1996. The Continuation
Agreement provides for Mr. Mortensen to commit upon the completion of his term
as Chairman and Chief Executive Officer to serve the Corporation as Chairman and
Senior Executive for three years and, after that, as an internal consultant for
one year. The Corporation will have the option for his services as an internal
consultant for three additional years. The Corporation has entered into the
Continuation Agreement to ensure that Mr. Mortensen's experience and expertise
will continue to be available to the Corporation exclusively during a period of
management transition.
19
<PAGE> 23
STOCK PERFORMANCE GRAPH
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,
1993, and the cumulative return is measured as of each subsequent fiscal year
end.
[GRAPH]
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
INDEX 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
F.N.B Corporation 100.00 106.92 157.11 180.43 316.91 255.56
NASDAQ - Total US 100.00 97.75 138.26 170.01 208.58 293.21
NASDAQ Bank Index 100.00 99.64 148.38 195.91 328.02 324.90
</TABLE>
SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS
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, 1999. 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 Series A
Name and Address Beneficially Owned Preferred Stock Beneficially Owned
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cede & Co. 6,054 29.2
Box 20, Bowling Green Station
New York, NY 10274
Hilton G. Klein & Joan H. Klein 2,160 10.4
122 Hilton Drive
New Brighton, PA 15066-3510
I.B.E.W. Local #712 Pension Trust Fund 2,000 9.7
217 Sassafras Lane
P. O. Box 248
Beaver, PA 15009-0248
=====================================================================================================================
</TABLE>
20
<PAGE> 24
VOTING SHARES HELD IN FIDUCIARY CAPACITY
First National Trust Company, a subsidiary of FNBPA, an affiliate of
F.N.B. Corporation, and said affiliate's nominee were as of March 1, 1999 the
beneficial owner of 360,169 shares of the Corporation's Common Stock, or 1.9% of
the outstanding shares of Common Stock. These shares are held by First National
Trust Company with full voting and/or dispositive power in various fiduciary
capacities. First National Trust Company has or shares voting power as to
315,205 of these shares, or 1.6% of the total shares of Common Stock
outstanding, and 1.6% of the total voting power of the Corporation's outstanding
Stock. First National Trust Company will vote the shares over which it has
authority as of the record date for the election of the five candidates for
director and in favor of the other proposal to be presented at the Annual
Meeting described herein.
INDEPENDENT AUDITORS
The Corporation re-appointed Ernst & Young LLP ("Ernst & Young") as
independent auditors for the year ended December 31, 1999. Ernst & Young has
served as the Corporation's independent auditors since 1993.
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 1998 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 23,
1999 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
21
<PAGE> 25
EXHIBIT A
F.N.B. CORPORATION
1998 DIRECTORS' STOCK OPTION PLAN
PURPOSE
The purpose of the F.N.B. Corporation Directors' Stock Option
Plan (the "Plan") is to promote the interests of F.N.B. Corporation (the
"Corporation") and its shareholders by attracting and retaining experienced and
knowledgeable directors and by aligning their economic interest more closely
with those of the Corporation's shareholders.
SECTION 1
Effective Date and Duration of Plan
The effective date of the Plan shall be May 21,1998 (the
"Effective Date"), which is the date of adoption of the Plan by the Executive
Committee of the Board of Directors of the Corporation.
SECTION 2
Administration
The Plan shall be administered by the Corporation's Board of
Directors and the Executive Committee of the Corporation's Board of Directors
(collectively hereinafter referred to as "Board"). The Board shall interpret the
Plan and prescribe such rules, regulations and procedures in connection with the
operation of the Plan as it shall deem to be necessary and advisable for the
administration of the Plan consistent with the purposes of the Plan.
Subject to applicable state and federal laws and regulations
or rules issued by Nasdaq or other national stock exchange on which the
Corporation's stock is listed, the Board may at any time terminate or modify the
Plan. The Board's authority to amend the Plan includes the following: (i) a
material increase in the total number of common shares available for issuance
under the Plan; (ii) a material modification of the eligibility requirements for
participation in the Plan; or (iii) a material increase in the benefits accorded
to participants under the Plan.
SECTION 3
Eligibility
All current directors of the Corporation are eligible to
participate in the Plan. Future directors of the Corporation will also be
eligible to participate in the Plan.
Subject to the provisions of the Plan, the Board shall have
full and final authority, in its discretion, to grant stock options (with or
without stock appreciation rights) as described herein and to determine the
directors to whom stock options (with or without stock appreciation rights)
shall be granted and the number of shares to be covered by each stock option.
During the term of the Plan, the Board may issue annual grants of stock options
to non-employee Directors of the Corporation equivalent to the total cash
compensation received by such non-employee Director or which such non-employee
Director would have been entitled to receive from the Corporation during the
prior year as a member of the Corporation's Board of Directors or any
Committee(s) thereof. The Board may issue annual grants of stock options to
employee Directors of the Corporation equivalent to the average total cash
compensation received by non-employee Directors from the Corporation during the
prior year.
1
<PAGE> 26
SECTION 4
Shares Available Under the Plan
Initially, the aggregate number of shares of the Corporation's
common stock which may be issued or delivered and as to which stock options may
be granted under the Plan is 400,000 shares. To the extent permitted under the
terms of Section 2 of the Plan, the Board may from time to time increase or
decrease the aggregate number of shares reserved for issuance with the grant of
options under the Plan.
If any stock option granted under the Plan is canceled by
mutual consent or terminates or expires for any reason without having been
exercised in full, the number of shares subject to such stock option shall again
be available for purposes of the Plan, except that to the extent that stock
appreciation rights granted in conjunction with a stock option under the Plan
are exercised and the related stock option surrendered, the number of shares
available for purposes of the Plan shall be reduced by the number of shares, if
any, of Common Stock issued or delivered upon exercise of such stock
appreciation rights.
The shares which may be issued or delivered under the Plan may
be either authorized but unissued shares or repurchased shares or partly each.
SECTION 5
Grant of Stock Options, Stock Appreciation Rights, and
Limited Stock Appreciation Rights
The Board shall have authority, in its discretion, to grant
"non-statutory stock options" (stock options which do not qualify under Section
422 of the Internal Revenue Code of 1986, as amended). The Board also shall have
the authority, in its discretion, to grant stock appreciation rights in
conjunction with non-statutory stock options with the effect provided in Section
6(D) hereof. Stock appreciation rights granted in conjunction with a
non-statutory stock option may be granted either at the time such stock option
is granted or at any time thereafter during the term of such stock option. The
Board shall also have the authority, in its discretion, to grant limited stock
appreciation rights in accordance with the provisions of, and subject to the
terms and conditions set forth in Section 10.
SECTION 6
Terms and Conditions of Stock Options and
Stock Appreciation Rights
Stock options and stock appreciation rights granted under the
Plan shall be subject to the following terms and conditions:
(A) The purchase price at which each stock option may be
exercised (the "option price") shall be such price as the Board, in its
discretion, shall determine but shall not be less than one hundred
percent (100%) of the fair market value per share of Common Stock
covered by the stock option on the date of grant.
(B) The option price shall be payable in full in any one or
more of the following ways:
(i) in cash; and/or
(ii) in shares of Common Stock (which are owned by
the optionee free and clear of all liens and other
encumbrances and which are not subject to the restrictions set
forth in Section 9) having a fair market value on the date of
exercise of the stock option, determined as provided in
Section 6(H), equal to the option price for the shares being
purchased.
If the option price is paid in whole or in
part in shares of Common Stock, any portion of the option
price representing a fraction of a share shall be paid in
cash. The date of exercise of a stock option shall be
determined under procedures established by the Board, and the
option price shall be payable at such time or times as the
Board, in its discretion, shall determine. No shares shall be
issued or delivered upon exercise of a stock option until full
payment of the
2
<PAGE> 27
option price has been made. When full payment of the option
price has been made and subject to the restrictions set forth
in Section 9, the optionee shall be considered for all
purposes to be the owner of the shares with respect to which
payment has been made. Payment of the option price with shares
shall not increase the number of shares of Common Stock which
may be issued or delivered under the Plan as provided in
Section 4; or
(iii) by withholding such number of shares of Common
Stock then issuable upon exercise of the option as shall have
an aggregate fair market value equal to the option price for
the shares being acquired upon exercise of the option.
(C) Subject to Section 11 hereof, no stock option shall be
exercisable during the first twelve (12) months of its term, except
that this limitation on exercise shall not apply if the optionee dies
during such twelve (12) month period. No non-statutory stock option
shall be exercisable after the expiration of ten (10) years from the
date of grant. Subject to this Section 6(C) and Sections 6(F), 6(G) and
6(H), stock options may be exercised at such times, in such amounts and
subject to such restrictions as shall be determined, in its discretion,
by the Board.
(D) Stock appreciation rights shall be exercisable to the
extent that the related stock option is exercisable and only by the
same person or persons who are entitled to exercise the related stock
option. Stock appreciation rights shall entitle the optionee to
surrender the related stock option, or any portion thereof, and to
receive from the Corporation in exchange therefor that number of shares
of Common Stock having an aggregate fair market value equal to the
excess of the fair market value of one share of Common Stock on such
date of exercise over the option price per share, multiplied by the
number of shares covered by the stock option, or portion thereof, which
is surrendered. Cash shall be paid in lieu of any fractional shares.
The Board shall have the authority, in its discretion, to determine
that the obligation of the Corporation shall be paid in cash or part in
cash and part in shares, except that the Corporation shall not pay to
any person who is subject to the provisions of Section 16 of the
Exchange Act at the time of exercise of stock appreciation rights any
portion of the obligation of the Corporation in cash (except cash in
lieu of a fractional share) unless such stock appreciation rights are
exercised in a period during which such person is not prohibited from
trading Corporation stock by the rules and regulations promulgated
under Section 16 of the Exchange Act by the Securities and Exchange
Commission. The date of exercise of stock appreciation rights shall be
determined under procedures established by the Board, and payment under
this Section 6(D) shall be made by the Corporation as soon as
practicable after the date of exercise. To the extent that a stock
option as to which stock appreciation rights have been granted in
conjunction therewith is exercised, the stock appreciation rights shall
be canceled. For the purposes of this Section 6(D), the fair market
value of Common Stock shall be determined as provided in Section 6(H).
(E) No stock option or stock appreciation rights shall be
transferable by an optionee other than by will, or if an optionee dies
intestate, by the laws of descent and distribution of the state of
domicile of the optionee at the time of death, and all stock options
and stock appreciation rights shall be exercisable during the lifetime
of an optionee only by the optionee.
(F) Unless otherwise determined by the Board and set forth in
the stock option agreement referred to in Section 6(G) or an amendment
thereto:
(i) Following the death of an optionee during his or
her tenure as a director of the Corporation, any outstanding
stock option held by the optionee at the time of death shall
be exercisable in full (whether or not so exercisable on the
date of the death of the optionee) by such optionee's estate
or by the person or persons entitled to do so under the will
of the optionee, or, if the optionee shall fail to make
testamentary disposition of the stock option or shall die
intestate, by the legal representative of the optionee, at any
time prior to the expiration date of such stock option or
within one (1) year after the date of death, whichever is the
shorter period. Following the death of an optionee after his
or her resignation or retirement from the Corporation's Board
of Directors, but during a period when a stock option is
exercisable in full (whether or not so exercisable on the date
of the death of the optionee) as provided in clause (i) above,
any outstanding stock option held by the optionee at the time
of death shall be exercisable by such optionee's estate or by
such person or persons entitled to do so under the Will of the
optionee or by such legal representative to the
3
<PAGE> 28
extent the stock option was exercisable by the optionee at the
time of death at any time prior to the expiration date of such
stock option.
(ii) In the event a director resigns from the Board
or is terminated from the Board as a result of intentional,
willful, reckless or grossly negligent conduct of the director
entailing a substantial violation of any material provisions
of federal or state laws, rules, regulations, or orders or
directives of any governmental agency applicable to the
Corporation or its affiliates, or Corporation policy or
agreement with the Corporation, the rights of such optionee
under any then outstanding stock option shall terminate at the
time of the director's resignation or termination. In
addition, if an optionee engages in the operation or
management of a business, whether as owner, partner, officer,
director, consultant, advisor or agent (whether paid or
unpaid) or otherwise and whether during or after the
director's resignation from the Corporation's Board, which is
in competition with the Corporation or any of its
Subsidiaries, the Board may in its discretion immediately
terminate all stock options held by the optionee. Whether an
optionee has engaged in the operation or management of a
business which is in competition with the Corporation or any
of its Subsidiaries shall be determined in each case by a
majority vote of the Board and any such determination by the
Board shall be final and binding.
(G) All stock options and stock appreciation rights shall be
confirmed by a stock option agreement, or an amendment thereto, which
shall be executed by the Chief Executive Officer or the President (if
other than the Chief Executive Officer) or any Executive Vice President
or Vice President on behalf of the Corporation and by the director to
whom such stock options and stock appreciation rights are granted.
(H) Fair market value of the Common Stock,
(i) so long as the Common Stock trades on the Nasdaq
National Market, the "fair market value" of such stock shall
be the average of the closing bid and ask price quoted on the
Nasdaq National Market on the trade date immediately preceding
the date as of which "fair market value" is to be determined
or other reasonable method or formula as may be determined by
the Board in its discretion; or
(ii) in the event the Common Stock ceases to be
traded on the Nasdaq National Market and is traded on another
exchange, the "fair market value" of such stock shall be as
set forth in such reliable publication as the Board, in its
discretion, may choose to rely upon, by taking the average of
the highest and lowest price per share transaction of the
Common Stock as quoted on such exchange on the nearest date
before the date as of which fair market value is to be
determined or by such other reasonable method or formula as
may be determined by the Board in its discretion.
(I) The obligation of the Corporation to issue or deliver
shares of Common Stock under the Plan shall be subject to (i) the
effectiveness of a registration statement under the Securities Act of
1933, as amended, with respect to such shares, if deemed necessary or
appropriate by counsel for the Corporation, and (ii) all other
applicable laws, regulations, rules and orders which may then be in
effect.
Subject to the foregoing provisions of this Section 6
and the other provisions of the Plan, any stock option or stock
appreciation rights granted under the Plan shall be subject to such
other terms and conditions as the Board shall deem advisable.
SECTION 7
Reload Options
(A) Authorization of Reload Options. Concurrently with the
award of any stock option under this Plan (such option is hereinafter
referred to as the "Underlying Option"), to any participant in the
Plan, the Board may grant a reload option (the "Reload Option") to such
participant pursuant to which the participant shall be entitled to
purchase, as provided in Section 6(B), a number of shares of Common
Stock as specified below. A Reload Option shall be exercisable for a
number of shares of Common Stock equal to (a) the number of shares
delivered by the participant to the Corporation to exercise the
Underlying Option pursuant to Section 5(b)(ii) or (iii) and (b) to the
extent authorized by the Board, the number of shares used
4
<PAGE> 29
to satisfy any tax withholding requirement incident to the exercise of
the Underlying Option, subject to the availability of shares of Common
Stock under the Plan at the time of such exercise. The grant of a
Reload Option shall become effective upon the exercise of the
Underlying Option by delivering to the Corporation shares held by the
participant pursuant to Section 5(b)(ii) or (iii). Reload Options are
not intended to qualify as "incentive stock options" under Section 422
of the Code.
(B) Reload Option Amendment. Each stock option agreement in
connection with an option granted under the Plan shall state whether
the Board has authorized Reload Options with respect to the Underlying
Option covered by such agreement. Upon the exercise of an Underlying
Option, the Reload Option will be evidenced by an amendment to the
stock option agreement governing the Underlying Option.
(C) Terms of Reload Option.
(i) The option price per share for a Reload Option
shall be the fair market value per share of the Common Stock
on the date the grant of the Reload Option becomes effective.
(ii) Each Reload Option shall be fully exercisable
subject to such limitations on exercisability, if any, as may
be imposed by the Board in its discretion at the time of the
grant of the Underlying Option. The term of each Reload Option
shall be equal to the remaining option term of the Underlying
Option.
(iii) No Reload Option granted to a participant shall
become effective when options are exercised by such
participant (or by such participant's estate or personal
representative) pursuant to the terms of the Plan following
termination of the participant's tenure as a director of the
Corporation.
(iv) Except as otherwise provided in this Section 7,
the provisions of Section 6 of the Plan applicable to stock
options shall apply equally to Reload Options.
SECTION 8
Adjustment and Substitution of Shares
If a dividend or other distribution shall be declared upon the
Common Stock payable in shares of Common Stock, the number of shares of Common
Stock then subject to any outstanding stock option and the number of shares
which may be issued or delivered under the Plan but are not then subject to an
outstanding stock option shall be adjusted by adding thereto the number of
shares which would have been distributable thereon if such shares had been
outstanding on the date fixed for determining the stockholders entitled to
receive such stock dividend or distribution.
If the outstanding shares of Common Stock shall be changed
into or exchangeable for a different number or kind of shares of stock or other
securities of the Corporation or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of Common Stock subject to any then outstanding stock option and for each
share of Common Stock which may be issued or delivered under the Plan but is not
then subject to an outstanding stock option, the number and kind of shares of
stock or other securities into which each outstanding share of Common Stock
shall be so changed or for which each such share shall be exchangeable.
In the case of any adjustment or substitution as provided for
in this Section 8, the aggregate option price for all shares subject to each
then outstanding stock option prior to such adjustment or substitution shall be
the aggregate option price for all shares of stock or other securities
(including any fraction) to which such shares shall have been adjusted or which
shall have been substituted for such shares. Any new option price per share
shall be carried to at least three decimal places with the last decimal place,
rounded.
All fractional shares or other securities which result from
any such adjustment or substitution shall be carried to at least three decimal
places with the last decimal place, rounded. However, upon exercise of stock
options, no adjustment or substitution provided for in this Section 8 shall
require the Corporation to issue or sell a fraction of a share or other
security.
5
<PAGE> 30
SECTION 9
Restrictions on Transfer of Certain Shares
Shares of Common Stock acquired by a director of the
Corporation under exercise of an option pursuant to Section 6(B) shall not be
sold or otherwise transferred (including any sale or transfer pursuant to
Section 6(B)(iii)) prior to (i) the expiration of six months after the date of
the grant of the option to the optionee; or (ii) any lesser period of time
permitted by the Securities and Exchange Commission pursuant to Section 16b of
the Securities Exchange Act of 1934, whichever may first occur. The Corporation
is authorized to (i) retain the certificate(s) representing such shares or place
such certificates in the custody of its transfer agent, (ii) place a restrictive
legend on such shares, and/or (iii) issue a stop transfer order to the transfer
agent with respect to such shares in order to enforce the transfer restrictions
of this Section 9.
SECTION 10
Limited Stock Appreciation Rights
Limited stock appreciation rights may be granted in connection
with all or part of a non-statutory option, at the time such option is granted
or at any time thereafter during the term of the such option.
Limited stock appreciation rights shall entitle the holder of
an option in connection with which such limited stock appreciation rights are
granted, upon exercise of the limited stock appreciation rights, to surrender
the stock option, or any applicable portion thereof, and any related stock
appreciation rights, to the extent unexercised, and to receive an amount of cash
determined pursuant to this Section 10. Such option, and any related stock
appreciation rights, shall, to the extent so surrendered, thereupon cease to be
exercisable.
Limited stock appreciation rights shall be subject to the
following terms and conditions and to such other terms and conditions not
inconsistent with the Plan as shall from time to time be approved by the Board.
(A) Limited stock appreciation rights shall be exercisable,
subject to Section 10(B), during any one or more of the following
periods:
(i) for a period of 60 days beginning on the date on
which shares of Common Stock are first purchased pursuant to a
tender offer or exchange offer (other than such an offer by
the Corporation), whether or not such offer is approved or
opposed by the Corporation and regardless of the number of
shares of Common Stock purchased pursuant to such offer;
(ii) for a period of 60 days beginning on the date
the Corporation acquires knowledge that any person or group
deemed a person under Section 13(d)(3) of the Exchange Act
(other than any director of the Corporation on November 1,
1989, any Affiliate or Associate of any such director (with
such terms having the respective meanings set forth in Rule
12b-2 under the Exchange Act as in effect on November 1,
1989), any member of the family of any such director, any
trust (including the trustees thereof) established by or for
the benefit of any such persons, or any charitable foundation,
whether a trust or a corporation (including the trustees and
directors thereof) established by or for the benefit of any
such persons), in a transaction or series of transactions
shall become the beneficial owner, directly or indirectly
(with beneficial ownership determined as provided in Rule
13d-3, or any successor rule, under the Exchange Act), of
securities of the Corporation entitling the person or group to
10% or more of all votes (without consideration of the rights
of any class of stock to elect directors by a separate class
vote) to which all shareholders of the Corporation would be
entitled if the election of Directors were an election held on
such date;
(iii) for a period of 60 days beginning on the date
of filing under the Exchange Act of a Statement on Schedule
13D, or any amendment thereto, by any person or group deemed a
person under Section 13(d)(3) of the Exchange Act, disclosing
an intention or possible intention to acquire or change
control of the Corporation;
6
<PAGE> 31
(iv) for a period of 60 days beginning on the date of
the Corporation's Annual Meeting of Shareholders, during any
period of two consecutive years, when individuals who at the
beginning of such period constitute the Board of Directors of
the Corporation cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for
election by the shareholders of the Corporation, of each new
Director was approved by a vote of at least two-thirds of the
Directors then still in office who were Directors at the
beginning of such period; and
(v) for a period of 60 days beginning on the date of
approval by the shareholders of the Corporation of an
agreement (a "reorganization agreement") providing for (a) the
merger or consolidation of the Corporation with another
corporation where the shareholders of the Corporation,
immediately prior to the merger or consolidation, do not or
will not beneficially own, immediately after the merger or
consolidation, shares of the corporation issuing cash or
securities in the merger or consolidation entitling such
shareholders to 50% or more of all votes (without
consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all shareholders
of such corporation would be entitled in the election of
Directors or where the members of the Board of Directors of
the Corporation, immediately prior to the merger or
consolidation, do not or will not, immediately after the
merger or consolidation, constitute a majority of the Board of
Directors of the corporation issuing cash or securities in the
merger or consolidation or (b) the sale or other disposition
of all or substantially all the assets of the Corporation.
(B) Subject to Section 11 hereof, limited stock appreciation
rights shall in no event be exercisable unless and until the holder of
the limited stock appreciation rights shall have completed at least six
months of continuous service with the Corporation or a Subsidiary, or
both, immediately following the date upon which the limited stock
appreciation rights shall have been granted.
(C) Upon exercise of limited stock appreciation rights, the
holder thereof shall be entitled to receive an amount of cash in
respect of each share of Common Stock subject to the related option
equal to the excess of the fair market value of such share over the
option price of such related option, and for this purpose fair market
value shall mean the highest sale price of the Common Stock as reported
on the Nasdaq National Market System or other national stock exchange
on which the Corporation's Common Stock is listed or the highest stock
price for Corporation Common Stock as set forth in such reliable
publication as the Board, in its discretion, may choose to rely upon
during the period beginning on the 90th day prior to the date on which
the limited stock appreciation rights are exercised and ending on such
date, except that (a) in the event of a tender offer or exchange offer
for Common Stock, fair market value shall mean the greater of the
highest sale price or highest price paid for Common Stock pursuant to
any tender offer or exchange offer in effect at any time beginning on
the 90th day prior to the date on which the limited stock appreciation
rights are exercised and ending on such date, (b) in the event of the
acquisition by any person or group of beneficial ownership of
securities of the Corporation entitling the person or group to 10% or
more of all votes to which all shareholders of the Corporation would be
entitled in the election of Directors or in the event of the filing of
a Statement on Schedule 13D, or any amendment thereto, disclosing an
intention or possible intention by any person or group to acquire
control of the Corporation, fair market value shall mean the greater of
such highest sale price or the highest price paid per share paid for
Common Stock shown on the Statement on Schedule 13D, or any amendment
thereto, filed by the person or group becoming a 10% beneficial owner
or disclosing an intention or possible intention to acquire control of
the Corporation and (c) in the event of approval by shareholders of the
Corporation of a reorganization agreement, fair market value shall mean
the greater of the highest sale price, highest price paid or the fixed
or formula price specified in the reorganization agreement if such
price is determinable as of the date of exercise of the limited stock
appreciation rights. Any securities or property which are part or all
of the consideration paid for Common Stock in a tender offer or
exchange offer or under an approved reorganization agreement shall be
valued at the higher of (a) the valuation placed on such securities or
property by the person making the tender offer or exchange offer or by
the corporation other than the Corporation issuing securities or
property in the merger or consolidation or to whom the Corporation is
selling or otherwise disposing of all or substantially all the assets
of the Corporation and (b) the valuation placed on such securities or
property by the Board.
(D) To the extent that limited stock appreciation rights shall
be exercised, the option in connection with which such limited stock
appreciation rights shall have been granted shall be deemed to have
been exercised and any related stock appreciation rights shall be
canceled. To the extent that the option
7
<PAGE> 32
in connection with which limited stock appreciation rights shall have
been granted or any related stock appreciation rights shall be
exercised, the limited stock appreciation rights granted in connection
with such option shall be canceled.
SECTION 11
Acceleration of the Exercise Date of Stock Options
and Related Stock Appreciation Rights
Notwithstanding any other provision of this Plan, all stock
options and stock appreciation rights shall become exercisable upon the
occurrence of any of the events specified in Section 10(A) whether or not such
options are then exercisable under the provisions of the applicable agreements
relating thereto, except that if stock appreciation rights have been granted
along with limited stock appreciation rights to the same option holder with
respect to the same option, in no event may the stock appreciation rights be
exercised for cash during any of the 60- day periods provided for in Section 10.
SECTION 12
Effect of the Plan on Pooling Accounting Requirements
It is intended that the Plan be administered and that shares of Common
Stock acquired upon exercise of stock options under the Plan comply with the
requirements of generally accepted accounting principles (including
pronouncements by the Financial Accounting Standards Board) relating to
accounting for certain mergers and business combinations to which the
Corporation or one or more of its subsidiaries may be parties on a pooling of
interests basis. Each stock option agreement relating to the grant of stock
options under the Plan may contain terms and provisions designed to ensure such
compliance.
SECTION 13
Effect of the Plan on the Rights of Directors and Corporation
Neither the adoption of the Plan nor any action of the Board
pursuant to the Plan shall be deemed to give any director any right to be
granted a stock option (with or without stock appreciation rights) under the
Plan and nothing in the Plan, in any stock option or stock appreciation rights
granted under the Plan or in any stock option agreement shall confer any right
to any director to continue as a director of the Corporation or interfere in any
way with the rights of the Corporation to remove the director from the Company's
Board of Directors in accordance with the Corporation's Articles of
Incorporation and Bylaws at any time.
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F.N.B. Corporation o One F.N.B. Boulevard o
Hermitage, Pennsylvania 16148-3363 o (724) 981-6000
<PAGE> 33
F.N.B. CORPORATION
1999 ANNUAL MEETING OF SHAREHOLDERS
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James S. Lindsay, Edward J. Mace and William A.
Quinn, 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, 1999, at the
Annual Meeting of Shareholders to be held on April 28, 1999 or any adjournment
of it.
(Continued, and to be marked, dated and signed, on the other side.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 34
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR THE PROPOSAL.
<S> <C> <C> <C> <C> <C>
ELECTION OF DIRECTORS: PROPOSAL:
FOR THE TERM OF FOUR YEARS: FOR WITHHOLD To approve the F.N.B. Corporation 1998 Directors'
William J. Strimbu, all nominees listed authority to vote Stock Option Plan.
Archie O. Wallace, Esq., (except as marked to for all nominees
James T. Weller, the contrary below listed
Eric J. Werner, Esq., FOR AGAINST ABSTAIN
R. Benjamin Wiley [ ] [ ] [ ] [ ] [ ]
INSTRUCTION: To withhold authority to vote your shares for any individual nominee,
write that nominee's name here:
- ----------------------------------------------------------------------------------
Your shares will be voted for the election of each nominee
whose name is not written in the space above.
In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN
THE MANNER DIRECTED HEREBY BY THE UNDERSIGNED
SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR
DIRECTOR AND FOR THE PROPOSAL LISTED ABOVE.
PLEASE DATE, EXECUTE AND RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE.
Signature(s): Signature(s): Date
-------------------------------------------- ------------------------------------ -------------------
Please sign exactly as your name appears hereon. When signing as attorney, executor, administrator, trustee, etc., or as officer of
a corporation, please give your full title(s) as such. For joint accounts, each joint owner must sign.
</TABLE>
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
- -------------------------
[LOGO] F.N.B. CORPORATION
- -------------------------
Dear Shareholder:
F.N.B. Corporation offers a Dividend Reinvestment and Direct 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 F.N.B. Shareholder Services at 888-441-4FNB (4362).
Sincerely,
F.N.B. Corporation
