<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
HUNTINGTON BANCSHARES INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
Huntington Bancshares Incorporated PRELIMINARY COPY
Huntington Center
41 South High Street
Columbus, Ohio 43287
[LOGO]
RALPH K. FRASIER
General Counsel and Secretary
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
The Thirty-Second Annual Meeting of Shareholders of Huntington
Bancshares Incorporated will be held in the Capitol Square Banking Lobby of The
Huntington National Bank, 17 South High Street, Columbus, Ohio, on Thursday,
April 23, 1998, at 5:00 p.m. local Columbus, Ohio time, for the following
purposes:
(1) To elect four directors to serve as Class II Directors until the
Annual Meeting of Shareholders to be held in the year 2001 and
until their successors are elected.
(2) To consider and act upon a proposal to amend the Corporation's
Charter to increase the authorized Common Stock of the Corporation
from 300,000,000 to 500,000,000 shares.
(3) To ratify the appointment of Ernst & Young LLP, independent
auditors, to serve as auditors for the Corporation for the year
1998.
(4) To transact any other business which may properly come before the
meeting.
You will be welcome at the meeting, and we hope you can attend.
Directors and officers of Huntington Bancshares Incorporated and representatives
of its independent auditors will be present to answer your questions and to
discuss its business.
We urge you to execute and return the enclosed proxy as soon as possible
so that your shares may be voted in accordance with your wishes. If you attend
the meeting, you may vote in person, and your proxy will not be used.
Sincerely yours,
[insert sig]
Ralph K. Frasier
February 18, 1998
----------------------------------------
PLEASE SIGN AND MAIL THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE
----------------------------------------
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
Huntington Bancshares Incorporated PRELIMINARY COPY
Huntington Center
41 South High Street
Columbus, Ohio 43287
----------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1998
---------------------
This Proxy Statement is furnished to the shareholders of Huntington
Bancshares Incorporated (the "Corporation") in connection with the solicitation
of proxies to be used in voting at the Annual Meeting of Shareholders to be held
on April 23, 1998, and at any adjournment thereof. The enclosed proxy is
solicited by the Board of Directors of the Corporation. This Proxy Statement and
the enclosed proxy will be first sent or given to the Corporation's shareholders
on approximately February 18, 1998.
The shares represented by the accompanying proxy will be voted as directed
if the proxy is properly signed and received by the Corporation prior to the
meeting. The proxy will be voted FOR the nominees for director named herein, FOR
the approval of the amendment to the Corporation's Charter, and FOR the
ratification of Ernst & Young LLP's appointment as independent auditors, if no
direction is made to the contrary.
A person giving the enclosed proxy has the power to revoke it at any time
before it is exercised by filing a written notice with the Secretary of the
Corporation prior to the meeting. Shareholders who attend the meeting may vote
in person and their proxies will not be used.
The Corporation will bear the cost of the solicitation of proxies, including
the reasonable charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of stock. Representatives of the
Corporation may solicit proxies by mail, telegram, telephone or other means of
electronic transmission, or personal interview. The Corporation has retained
Morrow & Co., Inc. to assist in the solicitation of proxies and will pay such
firm fees of approximately $5,000.00 plus expenses.
Holders of record of Common Stock at the close of business on February 9,
1998, will be entitled to vote at the Annual Meeting. At that date, the
Corporation had shares of Common Stock outstanding and entitled to vote.
Each share of Common Stock outstanding on the record date entitles the holder to
one vote on each matter submitted at the Annual Meeting.
<PAGE>
A majority of the outstanding shares of the Corporation will constitute a
quorum at the meeting. Under the law of Maryland, the Corporation's state of
incorporation, abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum, but are not counted as votes
cast at the meeting. Broker non-votes occur when brokers, who hold their
customers' shares in street name, sign and submit proxies for such shares on
some matters, but not others. Typically, this would occur when brokers have
not received any instructions from their customers, in which case the
brokers, as the holders of record, are permitted to vote on "routine"
matters, which typically include the election of directors and ratification
of independent auditors, but not on non-routine matters.
The election of each director nominee requires the favorable vote of a
plurality of all votes cast by the holders of Common Stock at a meeting at which
a quorum is present. Only shares that are voted in favor of a particular nominee
will be counted toward such nominee's achievement of a plurality and thus broker
non-votes and abstentions will have no effect. The proposed amendment of the
Charter requires the favorable vote of two-thirds of all the votes entitled to
be cast by the holders of Common Stock. Broker non-votes and abstentions will
have the same effect as votes cast against the proposed amendment to the
Corporation's Charter. The ratification of the appointment of Ernst & Young LLP
requires the affirmative vote of a majority of all the votes cast by the holders
of Common Stock. Broker non-votes and abstentions in this case will have no
effect since they are not counted as votes cast at the meeting.
ELECTION OF DIRECTORS
The Corporation's Charter provides for a classified Board of Directors. The
number of authorized directors has been set at eleven. The Board of Directors
proposes the election of four directors at the 1998 Annual Meeting of
Shareholders to serve as Class II Directors. The nominees for Class II
Directors, if elected, will each serve a three-year term expiring at the 2001
Annual Meeting of Shareholders and until their successors are elected.
Don Conrad, George A. Skestos, Lewis R. Smoot, Sr., and Frank Wobst are
currently Class II Directors of the Corporation and were elected at the 1995
Annual Meeting of Shareholders to serve three-year terms expiring in 1998.
Messrs. Conrad, Skestos, Smoot, and Wobst are being nominated by the Board of
Directors for reelection as Class II Directors.
It is intended that, unless otherwise directed, the shares represented by
the enclosed proxy will be voted FOR the election of Messrs. Conrad, Skestos,
Smoot, and Wobst as Class II Directors. In the event that any of the nominees
for director should become unavailable, the number of directors of the
Corporation may be decreased pursuant to the Bylaws, or the Board of Directors
may designate a substitute nominee, in which event such shares will be voted for
such substitute nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.
The following tables set forth certain information concerning each nominee
and each continuing director of the Corporation.
2
<PAGE>
CLASS II DIRECTORS
(NOMINEES FOR TERMS EXPIRING IN 2001)
<TABLE>
<CAPTION>
DIRECTORSHIPS HELD IN ANY COMPANY
WITH A CLASS OF SECURITIES REGISTERED
NAME AND PRINCIPAL DIRECTOR PURSUANT TO SECTIONS 12 OR 15(d) OF THE
OCCUPATION(1) AGE SINCE SECURITIES EXCHANGE ACT OF 1934
- ---------------------------------------------------- --- ----------- ---------------------------------------------
<S> <C> <C> <C>
DON CONRAD 69 1989
Chairman and Chief Executive Officer, WACO Oil
Co., Inc., retail gasoline/ convenience stores,
car washes, and self storage warehouses
GEORGE A. SKESTOS 70 1995
Retired Chairman, Homewood Corporation,
residential construction and development
LEWIS R. SMOOT, SR. 64 1995 M/I Schottenstein Homes, Inc.
President and Chief Executive Officer, The Smoot
Corporation, general construction and construction
management
FRANK WOBST 64 1974
Chairman and Chief Executive Officer of the
Corporation; Chairman and Chief Executive Officer
of The Huntington National Bank
</TABLE>
3
<PAGE>
CLASS III DIRECTORS
(TERMS EXPIRE IN 1999)
<TABLE>
<CAPTION>
DIRECTORSHIPS HELD IN ANY COMPANY
WITH A CLASS OF SECURITIES REGISTERED
WITH A CLASS OF SECURITIES REGISTERED
NAME AND PRINCIPAL DIRECTOR PURSUANT TO SECTIONS 12 OR 15(d) OF THE
OCCUPATION(1) AGE SINCE SECURITIES EXCHANGE ACT OF 1934
- ---------------------------------------------------- --- ----------- ---------------------------------------------
<S> <C> <C> <C>
DON M. CASTO III 53 1985
President, Don M. Casto Organization, real estate
developers
PATRICIA T. HAYOT 52 1996
Head of Columbus School for Girls
WM. J. LHOTA 58 1990 AEP Generating Company, AEP Resources,
Executive Vice President, American Electric Power, Inc., American Electric Power Service
an investor owned electric utility system serving Corp., Appalachian Power Company, Cedar
customers in parts of Indiana, Kentucky, Michigan, Coal Company, Central Ohio Coal Company,
Ohio, Tennessee, Virginia, and West Virginia Columbus Southern Power Company, Indiana
Michigan Power Company, Kentucky Power
Company, Kingsport Power Company, Ohio
Power Company, Ohio Valley Electric
Corporation, State Auto Financial
Corporation
TIMOTHY P. SMUCKER 53 1978 The J. M. Smucker Company, Dreyer's Grand
Chairman, The J. M. Smucker Company, manufacturer Ice Cream, Inc.
of jams, jellies, ice cream toppings, juices, and
peanut butter
</TABLE>
4
<PAGE>
CLASS I DIRECTORS
(TERMS EXPIRE IN 2000)
<TABLE>
<CAPTION>
WITH A CLASS OF SECURITIES REGISTERED
NAME AND PRINCIPAL DIRECTOR PURSUANT TO SECTIONS 12 OR 15(d) OF THE
OCCUPATION(1) AGE SINCE SECURITIES EXCHANGE ACT OF 1934
- ---------------------------------------------------- --- ----------- -------------------------------------------
<S> <C> <C> <C>
ROBERT H. SCHOTTENSTEIN
President, M/I Schottenstein 45 1997 M/I Schottenstein Homes, Inc.
Homes, Inc., homebuilding
ZUHEIR SOFIA
President, Chief Operating Officer, and 53 1984
Treasurer of the Corporation
WILLIAM J. WILLIAMS
Chairman, Freeburn Ventures, 69 1985
Ltd., venture capital and private equity
investments
</TABLE>
- ------------------------
(1) Each nominee and continuing director has held, or been retired from, the
various positions indicated or other executive positions with the same
organizations (or predecessor organizations) for at least the past five
years, except that Mr. Williams has served in his current position since
July 24, 1996. Mr. Williams retired from the position of Chairman of The
Huntington National Bank as of September 1, 1993. Messrs. Sofia and Wobst
are also directors of The Huntington National Bank and various other
entities affiliated with the Corporation. Mr. Williams is also a director of
The Huntington National Bank.
The Board of Directors of the Corporation held a total of ten regular and
special meetings during 1997. The Board of Directors has standing Audit,
Compensation and Stock Option, Executive, and Pension Review Committees. The
members of the Audit Committee are Ms. Hayot, and Messrs. Lhota, Schottenstein,
Smoot, and Casto, Chairman. The Audit Committee met three times during 1997 and
performs the function of overseeing the work of the internal and external
auditors. The members of the Compensation and Stock Option Committee are Messrs.
Conrad, Skestos, and Smucker, Chairman. This committee met five times during
1997 and reviews benefits and executive compensation, including incentive
compensation, and grants stock options. The Executive Committee is composed of
Messrs. Casto, Conrad, Smucker, and Wobst, Chairman, and makes recommendations
to the full Board of Directors with respect to significant policy issues and
nominations to the Board of Directors of the Corporation. The Executive
Committee did not meet in 1997. The members of the
5
<PAGE>
Pension Review Committee are Messrs. Skestos, Smucker, and Conrad, Chairman.
The Pension Review Committee met twice during 1997 and administers the
Corporation's Retirement Plan, oversees the investment of plan assets, and
makes recommendations to the Board of Directors regarding the Retirement Plan.
COMPENSATION OF DIRECTORS
Each non-employee director of the Corporation receives $1,500 for each Board
or committee meeting of the Corporation the director attends (excluding special
teleconference meetings). In addition, each non-employee director of the
Corporation receives retainer payments at an annual rate of $27,000. Non-
employee chairmen of standing committees of the Board of Directors of the
Corporation receive additional retainer payments at an annual rate of $5,000.
All or any portion of the compensation otherwise payable to a director may be
deferred if such director elects to participate in the Huntington Bancshares
Incorporated Deferred Compensation Plan and Trust for Huntington Bancshares
Incorporated Directors (the "Directors' Plan").
The Directors' Plan, adopted in 1991, allows the members of the Board of
Directors of the Corporation to elect to defer receipt of all or a portion of
the compensation payable to them in the future for services as directors. Such
deferred amounts are not included in the gross income of the directors until
such time as the deferred amounts are distributed from the Directors' Plan. The
Corporation transfers cash equal to the compensation deferred pursuant to the
Directors' Plan to a trust fund where it is allocated to the accounts of the
participating directors. The trustee of the Directors' Plan has broad investment
discretion over the trust fund and is authorized to invest in many forms of
securities and other instruments, including Common Stock of the Corporation.
During 1997, the trustee invested the trust fund primarily in Common Stock of
the Corporation. The trustee may hold some assets of the Directors' Plan in the
form of cash to the extent the trustee deems necessary. The trustee maintains a
separate account for each participating director. Amounts contributed to the
Directors' Plan are credited to the account of each director in the ratio that
the amount deferred by each director bears to the total amount deferred by all
directors. Distribution of a director's account will be made either in a lump
sum or in equal annual installments over a period of not more than ten years, as
elected by each director. Such distribution will commence upon the earlier of 30
days after the attainment of an age specified by the director at the time the
deferral election was made, or within 30 days of the director's termination as a
director. All of the assets of the Directors' Plan are subject to the claims of
the creditors of the Corporation and the rights of a director or his or her
beneficiaries to any of the assets of the Directors' Plan are no greater than
the rights of an unsecured general creditor of the Corporation. Directors who
are also employees of the Corporation do not receive compensation as directors
and, therefore, are ineligible to participate in the Directors' Plan.
Non-employee directors of the Corporation are also eligible to participate
in the Corporation's Amended and Restated 1994 Stock Option Plan (the "1994
Stock Option Plan"). An amendment was approved at the 1997 Annual Meeting of
Shareholders to, among other things, permit participation by directors. The
Corporation believed that making directors eligible for stock option grants was
more aligned with shareholder interests than the receipt of benefits under the
Huntington Bancshares Incorporated Retirement Plan for Outside Directors (the
"Directors' Retirement Plan"). Accordingly, the Directors' Retirement Plan was
terminated and only those retired directors or their beneficiaries whose
benefits commenced prior to the effective date of termination are being paid
under the Directors' Retirement Plan. After consultation with an independent
compensation consultant, the Corporation made a one-time grant of stock options
for replacement of the potential retirement
6
<PAGE>
benefit lost when the Directors' Retirement Plan was terminated. The present
value of the accrued vested benefit for each director was determined,
considering years of service and current age, and was divided by the
historical average stock price. This figure was rounded up to the nearest
1,000 shares. Accordingly, in recognition of loss of future participation in
the Director's Retirement Plan, options to purchase shares of the
Corporation's Common Stock were granted on May 21, 1997, to each of the
non-employee directors at an exercise price of $25.7955 per share, as follows
(adjusted to reflect the effect of a ten percent stock dividend paid July 31,
1997): 4,400 shares for Mr. Casto, 25,300 shares for Mr. Conrad, 1,100 shares
for Ms. Hayot, 5,500 shares for Mr. Lhota, 1,100 shares for Mr.
Schottenstein, 11,000 shares for Mr. Skestos, 5,500 shares for Mr. Smoot, and
5,500 shares for Mr. Smucker. Each option becomes exercisable in equal
increments on each of the first four anniversaries of the date of grant. It
is the intention of the Corporation that non-employee directors will be
eligible to receive additional grants of stock options on an annual basis in
amounts determined at the discretion of the Compensation and Stock Option
Committee.
OWNERSHIP OF VOTING STOCK
The following table sets forth the beneficial ownership of the Corporation's
Common Stock by each of the Corporation's directors, nominees, and five most
highly compensated executive officers, and the directors and executive officers
as a group as of December 31, 1997.
<TABLE>
<CAPTION>
SHARES OF COMMON
NAME OF BENEFICIAL OWNER STOCK OWNED(1) PERCENT OF CLASS
- --------------------------------------------- ---------------------- ----------------
<S> <C> <C>
Don M. Casto III............................. 155,044(2)(4) .08%
Don Conrad................................... 930,363(2)(4) .49
Peter E. Geier............................... 47,257(1)(3) .03
Patricia T. Hayot............................ 28,634(4) .02
Wm. J. Lhota................................. 33,481(2)(4) .02
Robert H. Schottenstein...................... 16,409(4) .01
Ronald J. Seiffert........................... 51,984(1)(2)(3) .03
George A. Skestos............................ 13,287(2)(4) .01
Lewis R. Smoot, Sr........................... 56,772(2)(4) .03
Timothy P. Smucker........................... 60,161(2)(4) .03
Zuheir Sofia................................. 671,795(1)(2)(3) .35
Gerald R. Williams........................... 168,438(1)(3) .09
William J. Williams.......................... 109,594(2)(3) .06
Frank Wobst.................................. 1,620,718(1)(2)(3) .84
Directors and Executive Officers as a Group
(16 in group).............................. 4,337,440(1)(2)(3)(4) 2.25
</TABLE>
- ------------------------
7
<PAGE>
(1) Except as otherwise noted, none of the named individuals shares with another
person either voting or investment power as to the shares reported. Figures
includes 38,473 shares for Mr. Geier, 33,280 shares for Mr. Seiffert, 70,061
shares for Mr. Sofia, 92,762 shares for Mr. G. Williams, 8,730 shares for
Mr. W. Williams, 737,861 shares for Mr. Wobst, and 1,086,575 shares of
Common Stock for all directors and executive officers as a group, which
could have been acquired under stock options exercisable within 60 days of
December 31, 1997.
(2) Figures include 6,315 shares, 100,700 shares, 1,164 shares, 2,541 shares,
2,569 shares, 3,137 shares, 22,227 shares, 1,162 shares, and 47,126 shares
of Common Stock owned by members of the immediate families of Messrs. Casto,
Conrad, Seiffert, Skestos, Smoot, Smucker, Sofia, W. Williams, and Wobst
respectively; 12,606 shares of Common Stock owned jointly by Mr. Lhota and
his spouse; 17,468 shares of Common Stock owned by The Smoot Corporation, of
which Mr. Smoot is President, and 50,668 shares of Common Stock reported as
owned by individuals included in the directors and executive officers as a
group, as to which the respective directors and executive officers have
disclaimed beneficial ownership.
(3) Also includes 285 shares for Mr. Geier, 285 shares for Mr. Seiffert, 26,237
shares for Mr. Sofia, 7,206 shares for Mr. G. Williams, 55,222 shares for
Mr. Wobst, and 92,891 shares of Common Stock for all executive officers as a
group, held in the Huntington Supplemental Stock Purchase and Tax Savings
Plan and Trust. Prior to the distribution of shares of Common Stock from
this plan to the participants, voting and dispositive power for the shares
allocated to the accounts of participants is held by The Huntington National
Bank, as trustee of the plan.
(4) Includes 48,286 shares for Mr. Casto, 30,464 shares for Mr. Conrad, 28,117
shares for Ms. Hayot, 20,519 shares for Mr. Lhota, 5,565 shares for Mr.
Schottenstein, 8,098 shares for Mr. Skestos, 35,088 shares for Mr. Smoot,
and 50,355 shares of Common Stock for Mr. Smucker held in the deferred
compensation plans for Directors. Prior to the distribution of shares of
Common Stock from the deferred compensation plans for Directors to the
participants, voting and dispositive power for the shares allocated to the
accounts of participants is held by The Huntington National Bank, as trustee
of the plans.
- ------------------------
As of December 31, 1997, no person was known by the Corporation to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock of
the Corporation, except as follows:
8
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES OF COMMON
OF BENEFICIAL OWNER STOCK OWNED(1) PERCENT OF CLASS
- ------------------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
The Huntington National Bank ...................................... 21,638,761 11.31%
Huntington Center
41 South High Street
Columbus, Ohio 43287
</TABLE>
- ------------------------
(1) These shares are held in various fiduciary capacities in the ordinary course
of business under numerous trust relationships by The Huntington National
Bank. As fiduciary, The Huntington National Bank has sole power to dispose
of 5,562,165 of these shares, shared power to dispose of 3,040,677 of these
shares, sole power to vote 9,691,168 of these shares, and shared power to
vote 10,693,198 of these shares.
- ------------------------
Entities affiliated with the Corporation, the directors and executive
officers of the Corporation and its affiliated entities, participants in the
Corporation's Stock Purchase and Tax Savings Plan, Supplemental Stock Purchase
and Tax Savings Plan, and Stock Option Plans beneficially owned, in the
aggregate, approximately _____ shares, or ___%, of the Common Stock of the
Corporation outstanding on December 31, 1997.
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
INDEBTEDNESS OF MANAGEMENT
Some of the directors, nominees for election as director, and executive
officers of the Corporation are customers of the Corporation's affiliated
financial and lending institutions and have transactions with such affiliates
in the ordinary course of business. Directors, nominees and executive
officers of the Corporation also may be affiliated with entities which are
customers of the Corporation's affiliated financial and lending institutions
and which enter into transactions with such affiliates in the ordinary course
of business. Transactions with directors, nominees, executive officers, and
their affiliates have been on substantially the same terms, including
interest rates and collateral on loans, as those prevailing at the time for
comparable transactions with others and did not involve more than the normal
risk of collectibility or present other unfavorable features.
CERTAIN OTHER TRANSACTIONS
In 1997, The Huntington National Bank began construction of a new Business
Service Center at the Easton Development in Columbus, Ohio, to replace the
existing Operations Center, also located in Columbus. The Business Service
Center will consist of five floors of approximately 460,000 total square feet,
which are to be occupied primarily by employees of The Huntington Service
Company, The Huntington National Bank and other affiliates of The Huntington
National Bank. Construction is expected to be completed and occupancy to begin
in the first quarter of 1999.
9
<PAGE>
Management considered possible alternatives and determined that it would be
appropriate to retain the services of an experienced consultant to undertake the
planning, design and oversight of the construction and provide budgeting and
cost control, management and contracting of required contractors and
specialists, and guidance to the architect, all consistent with prudent industry
standards. Management solicited bids from three qualified construction
management firms, each having national or regional prominence, local resources
and experience with similar projects, to act as Construction Manager for the
Business Service Center. After thorough evaluation of the bids and the
qualifications of the firms, management recommended that The Huntington National
Bank utilize Gilbane-Smoot, a joint venture comprised of Gilbane Building
Company and The Sherman R. Smoot Company of Ohio. Gilbane-Smoot was also
selected through a bidding and review process to provide comprehensive move
management services for the relocation of the existing Operations Center to the
Business Service Center. Gilbane-Smoot will be paid a fee of approximately
$1,700,000 for services as Construction Manager and approximately $398,000 for
the move management services.
In addition, after evaluating the bids and qualification of several general
contractors, The Huntington National Bank is negotiating a contract with The
Sherman R. Smoot Company of Ohio for the construction of a single deck parking
garage at the Business Service Center site for use by the occupants and
visitors. The parking garage will accommodate approximately 625 vehicles. The
Sherman R. Smoot Company of Ohio will be paid approximately $2,350,000 for the
design and construction of the parking garage.
Some of the factors leading to the selection of Gilbane-Smoot and The
Sherman R. Smoot Company of Ohio were the prominence, reputation and highly
qualified personnel of both entities, the competitive bids submitted by both
entities, and, with respect to Gilbane-Smoot, its experience with the
development of bank operations centers, its cooperative working relationship
with the developers of the Easton Development, and its experience in completing
large-scale technical moves. Lewis R. Smoot, Sr., a director of the Corporation,
is President and Chief Executive Officer of The Sherman R. Smoot Company of
Ohio, and President and Chief Executive Officer and 87.68% owner of The Smoot
Corporation, which is the parent company of The Sherman R. Smoot Company of
Ohio. The Sherman R. Smoot Company of Ohio is a 45% equity partner in the
Gilbane-Smoot joint venture. The foregoing transactions were presented to the
Boards of Directors of both the Corporation and The Huntington National Bank and
approved after thorough discussion and review.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Corporation and
its subsidiaries to the Corporation's Chief Executive Officer and each of the
next four most highly compensated executive officers, for each of the last three
fiscal years ended December 31, 1997.
10
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- ----------- -----------
OTHER
ANNUAL SECURITIES ALL OTHER
COMPEN- UNDERLYING LTIP COMPEN-
SALARY BONUS SATION OPTIONS PAYOUTS SATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($) ($)(2) (#)(3) ($)(4) ($)(5)
- -------------------------------------------- --------- --------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
FRANK WOBST ................................ 1997 910,738 75,487 220,000 0 39,058
Chairman and Chief Executive Officer 1996 867,950 559,828 74,239 181,498 433,975 39,058
1995 807,950 399,935 67,065 158,809 0 36,358
ZUHEIR SOFIA ............................... 1997 519,800 (2) 137,499 0 22,690
President, Chief Operating Officer, 1996 504,200 325,209 (2) 90,748 252,100 22,690
and Treasurer 1995 474,200 234,729 (2) 63,522 0 21,339
GERALD R. WILLIAMS ......................... 1997 280,000 (2) 24,200 0 12,263
Executive Vice President and 1996 272,500 176,400 (2) 24,198 140,000 12,263
Chief Financial Officer 1995 265,975 125,631 (2) 19,054 0 11,969
PETER E. GEIER ............................. 1997 255,000 (2) 43,999 0 11,381
President and Chief Operating Officer, 1996 156,667 112,320 (2) 18,148 90,000 6,750
The Huntington National Bank 1995 133,333 71,775 (2) 19,054 0 6,000
RONALD J. SEIFFERT ......................... 1997 255,000 (2) 43,999 0 11,381
Vice Chairman, The Huntington National Bank 1996 151,577 112,320 29,145 18,149 0 6,304
1995 112,698 43,954 (2) 12,705 0 5,071
</TABLE>
- ------------------------
11
<PAGE>
(1) Includes amounts deferred pursuant to the Corporation's Employee Stock
Purchase and Supplemental Stock Purchase Plans.
(2) During 1997, 1996, and 1995, Mr. Wobst received other annual compensation in
the amounts indicated, including executive life insurance premiums in the
amounts of $56,772, $50,064, and $46,883, respectively. During 1996, Mr.
Seiffert received other annual compensation in the amount indicated,
including reimbursement for moving expense of $27,972. Other annual
compensation for each of the other named executive officers for each year
indicated was less than $50,000 and less than 10% of the total of annual
salary and bonus reported for the named executive.
(3) Represents shares of the Corporation's Common Stock, adjusted for stock
dividends and stock splits paid after the date of grant.
(4) The Corporation's Long-Term Incentive Compensation Plan is set up in
overlapping three-year performance cycles commencing every other year.
Awards were paid for the cycle ended December 31, 1996. Figures indicated
represent total dollar value of the awards. Awards are normally made in
shares of the Corporation's Common Stock, however, a participant may elect
to receive up to fifty percent of an award in cash. Mr. Seiffert was not
eligible to participate in the cycle that ended December 31, 1996.
(5) Figures represent amounts contributed for each named executive officer by
the Corporation to the Employee Stock Purchase Plan and the Supplemental
Stock Purchase Plan. For 1997, $7,125 was contributed for each of the named
executive officers under the Employee Stock Purchase Plan and $33,858,
$16,266, $5,475, $4,256, and $4,256 were contributed for Messrs. Wobst,
Sofia, Williams, Geier and Seiffert, respectively, under the Supplemental
Stock Purchase Plan.
- ------------------------
EMPLOYMENT AND EXECUTIVE AGREEMENTS
Messrs. Wobst and Sofia each have an agreed upon term of employment. Under
Employment Agreements, Messrs. Wobst and Sofia will each be employed by the
Corporation through November 15, 2001, with automatic five-year renewals until
the executive's death, disability, or retirement, unless earlier terminated by
the executive or the Corporation upon written notice delivered to the other
party at least 60 days prior to the expiration of the initial or any renewal
period. Messrs. Wobst and Sofia will be employed at an annual rate of
compensation of not less than $925,000 and $525,000, respectively. The
Employment Agreements also provide for the officers' continued participation in
the Corporation's Incentive Compensation Plans, Stock Purchase and Tax Savings
Plan, Retirement Plans, Stock Option Plans, and certain other benefits afforded
to executive officers of the Corporation. In the event either of Messrs. Wobst
or Sofia is terminated for cause, he will be entitled to receive salary payments
for three calendar months following the date of termination plus any
compensation to which he is entitled under the Incentive Compensation Plans. In
the event either of Messrs. Wobst or Sofia is terminated without cause, he will
be entitled to his full compensation and benefits under his Employment
12
<PAGE>
Agreement until the later of six months after his termination or the
expiration of the then current term of the Employment Agreement. In the event
either of Messrs. Wobst or Sofia becomes disabled, which disability continues
for more than six months during a twelve-month period, the Corporation may
terminate such executive officer's Employment Agreement, and such executive
officer will be entitled to his full compensation (base salary and payments
under the Incentive Compensation Plans) to the date of termination.
Thereafter, the executive officer will be entitled to two-thirds of his base
salary, less disability benefits received from any of the Corporation's
disability insurance programs, until the first to occur of the termination of
the disability, or until the termination of his Employment Agreement in Mr.
Wobst's case or attainment of age sixty-five in Mr. Sofia's case, with base
salary to be reinstated upon return to employment. In the event of the death
of either of Messrs. Wobst or Sofia, their beneficiaries will receive their
base annual salary for six months plus Incentive Compensation Plan payments.
The Corporation also has entered into Executive Agreements with each of
the executive officers named in the Summary Compensation Table which are
designed to provide these executive officers with some assurance as to the
continuation of their employment status and responsibilities in the event of
a change in control of the Corporation. The Executive Agreements each provide
that, if a change in control of the Corporation occurs and the executive
officer makes a good faith determination within three years after such change
in control that such officer's employment status or responsibilities has been
materially and adversely affected thereby or if such officer's employment is
terminated within three years after a change in control, the executive
officer is entitled to receive an amount equal to, in the case of Messrs.
Wobst and Sofia, the greater of (i) the amount due such executive officer for
the remaining term of his Employment Agreement and (ii) three times his then
current annual base salary, and in the case of each of the other named
executives, three times his or her then current annual base salary plus, in
all cases, three times the average bonus or incentive compensation paid to
such officer in respect of the three fiscal years preceding termination. The
Executive Agreements with Messrs. Williams, Geier, and Seiffert provide that
adjustments to these payments will be made if the officer attains his normal
retirement date within three years of the termination of employment. The
Corporation will maintain for the executive officer's benefit, until the
earlier of three years from the officer's termination of employment or the
commencement of full-time employment with a new employer, all health and
welfare benefit plans and other specified benefits which the officer was
entitled to participate in or receive prior to his termination. The
Corporation will also pay the executive the aggregate of the increases in the
single sum actuarial equivalents of the executives' vested accrued benefits
under Huntington's retirement plan and each non-qualified defined benefit
pension plan that would result if the executive were credited with three
additional years of service and benefit service and three additional years of
age under such plans. In the event the payments to be received by Messrs.
Wobst or Sofia are subject to any federal or state excise tax, the
Corporation will pay an additional amount to the executive officer such that
the net amount retained by the officer after payment of any such tax will be
equal to the amount which such officer was entitled to receive before
application of such taxes. The Executive Agreements with each of the other
named executive officers provide that any payment which the officer would
otherwise be entitled to receive will be reduced or eliminated to the extent
the payment is determined to be nondeductible by the Corporation for federal
income tax purposes under applicable provisions of the Internal Revenue Code.
The Executive Agreements provide that, for a period of five years after any
termination of the executive's employment, the Corporation will provide the
executive with coverage under a standard directors'
13
<PAGE>
and officers' liability insurance policy at its expense, and shall indemnify,
hold harmless and defend the executive to the fullest extent permitted under
Maryland law against all expenses and liabilities reasonably incurred by the
executive in connection with or arising out of any action, suit, or
proceeding in which he may be involved by reason of having been a director or
officer of the Corporation or any subsidiary, whether or not the executive
continues to be a director or officer at the time of incurring such expense
or liabilities. If the Corporation fails to make any payment or provide any
benefit required to be made or provided under the Executive Agreement on a
timely basis, the Corporation will pay interest on the amount or value
thereof at an annualized rate of interest equal to the greater of 12% or the
prime commercial rate of The Huntington National Bank or its successor in
effect from time to time. The Executive Agreements also provide that the
Corporation will pay the cost of legal counsel for an executive officer in
the event such officer is required to enforce any of the rights granted under
his Executive Agreement through litigation or other legal action. An
Executive Agreement will terminate if the employment of the executive officer
terminates prior to a change in control of the Corporation. Under the
Comprehensive Thrift and Bank Fraud Prosecution and Taxpayer Recovery Act of
1990, the Federal Deposit Insurance Corporation has the authority to limit or
prohibit payments contingent upon the termination of an individual's
affiliation with the Corporation, but only if the Corporation is insolvent,
has been placed in conservatorship or receivership, or is determined by the
Board of Governors of the Federal Reserve System to be a troubled financial
institution.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING PERCENT OF TOTAL
OPTIONS OPTIONS GRANTED TO EXERCISE GRANT DATE
GRANTED EMPLOYEES IN FISCAL PRICE EXPIRATION PRESENT
NAME (#)(1) YEAR ($/SH)(2) DATE VALUE ($)(3)
- ------------------------------------------- ----------- --------------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Frank Wobst................................ 220,000 18.3 $ 25.7955 5/21/07 $ 1,749,000
Zuheir Sofia............................... 137,499 11.4 25.7955 5/21/07 1,093,117
Gerald R. Williams......................... 24,200 2.0 25.7955 5/21/07 192,390
Peter E. Geier............................. 43,999 3.7 25.7955 5/21/07 349,792
Ronald J. Seiffert......................... 43,999 3.7 25.7955 5/21/07 349,792
</TABLE>
- ------------------------
(1) Figures reflect the effect of a ten percent stock dividend paid July 31,
1997. The options granted to each named executive officer become exercisable
in equal increments on each of the first four anniversaries of the May 21,
1997, date of grant. Options not yet exercised are canceled upon a
termination of employment for any reason other than death, retirement under
one or more of the Corporation's retirement plans, termination following a
change in control of the Corporation, or a disposition (other than a change
in control) of substantially all of the stock or assets of the
14
<PAGE>
Corporation, in which case all options become exercisable immediately
as of such termination date and remain exercisable for a specified
period following the termination. Generally, the exercise price of
options may be paid for in cash or in shares of Common Stock of the
Corporation. In addition, any tax which the Corporation is required to
withhold in connection with the exercise of any stock option may be
satisfied by the optionholder by electing to have the number of shares
to be delivered on the exercise of the option reduced by, or otherwise
by delivering to the Corporation, such number of shares of Common Stock
having a fair market value equal to the amount of the withholding
requirement.
(2) In all cases, the exercise price was equal to the average of the high and
low market price of the underlying shares on the date of grant. The exercise
price has been adjusted to reflect the effect of the ten percent stock
dividend paid July 31, 1997.
(3) The dollar amounts in this column are the result of calculations made using
the Black-Scholes model, a theoretical method for estimating the present
value of stock options based on complex assumptions about the stock's price
volatility and dividend rate as well as interest rates. Because of the
unpredictability of the assumptions required, the Black-Scholes model, or
any other valuation model, is incapable of accurately predicting the
Corporation's stock price or of placing an accurate present value on options
to purchase its stock. In performing the calculations it was assumed that:
the options were exercised at the end of their ten-year terms; the
volatility of the stock price was equal to 22.5%, which was the volatility
calculated on a natural logarithmic basis of the Corporation's stock price
for the twelve-month period preceding the date of grant; the risk-free rate
of return was equal to the ten-year United States Treasury Note Rate
effective the week of the grant, to correspond to the term of the options;
and the dividend yield was equal to the Corporation's annualized dividend
yield at the end of the first calendar quarter of 1997, which was 3.05%. No
adjustments were made for vesting requirements, non-transferability, or risk
of forfeiture. In spite of any theoretical value which may be placed on a
stock option grant, no increase of the stock option's value is possible
without an increase in the market value of the underlying stock. Any
appreciation in the market value of the Corporation's stock would
benefit all shareholders and would be dependent in part upon the
efforts of the named executive officers. The total of the values
indicated in the table for all stock options granted in 1997 to the
named executive officers was $3,734,091, representing approximately
.076% of the value, on the date of grant, of all shares of the
Corporation outstanding at the date of grant.
- ------------------------
15
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT FISCAL IN-THE-MONEY(3)
YEAR-END OPTIONS AT FISCAL
(#)(2) YEAR-END ($)
SHARES ACQUIRED VALUE --------------------- ----------------------
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#)(1) ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------ --------------- ----------- --------------------- ----------------------
<S> <C> <C> <C> <C>
Frank Wobst......................... 7,332 143,388 737,861/475,229 17,783,499/6,941,921
Zuheir Sofia........................ 43,942 762,866 70,061/257,171 1,318,166/3,584,086
Gerald Williams..................... 17,823 302,645 92,762/57,831 2,518,440/863,441
Peter E. Geier...................... 0 0 38,473/69,519 854,184/922,251
Ronald J. Seiffert.................. 0 0 33,280/66,346 730,156/854,647
</TABLE>
- ------------------------
(1) The actual number of shares received may be less than indicated in the event
the optionholder elected to have shares withheld for the payment of the
exercise price or withholding tax liability.
(2) Adjusted for stock splits and stock dividends paid after the date of grant.
(3) An option is in-the-money if the fair market value of the underlying Common
Stock exceeds the exercise price of the option.
- ------------------------
16
<PAGE>
LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF SHARES, PERFORMANCE OR OTHER NON- STOCK PRICE-BASED PLAN(2)
UNITS, OR OTHER PERIOD UNTIL ----------------------------------
NAME RIGHTS MATURATION OR PAYOUT THRESHOLD TARGET MAXIMUM
- ----------------------------------------- ------------------- --------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Frank Wobst.............................. (1) (2) $ 166,500 $ 231,250 $ 925,000
Zuheir Sofia............................. (1) (2) 94,500 131,250 420,000
Gerald R. Williams....................... (1) (2) 50,400 70,000 168,000
Peter E. Geier........................... (1) (2) 54,000 75,000 180,000
Ronald J. Seiffert....................... (1) (2) 54,000 75,000 180,000
</TABLE>
- ------------------------
(1) Each named executive officer has been selected by the Compensation and Stock
Option Committee of the Board of Directors to participate in the cycle of
the Long-Term Incentive Compensation Plan which began on January 1, 1996,
and will end on December 31, 1998. Awards based on a percentage of base
salary will be paid at the end of the cycle if the Corporation's performance
achieves the established threshold or higher.
(2) The Long-Term Incentive Compensation Plan measures the Corporation's
performance over three-year cycles with a new cycle beginning every other
year. For cycles beginning on and after January 1, 1996, the Corporation's
performance goals are measured by return on average shareholders' equity of
the Corporation relative to the return on average shareholders' equity of
other selected United States banks and bank holding companies designated by
the Compensation and Stock Option Committee during the first 90 days of each
performance cycle. At the end of each performance cycle, the Compensation
and Stock Option Committee will review the performance of the Corporation
against the established performance goals. No award will be made for any
cycle if the Corporation's performance is below the threshold level. The
figures in the table are based on base salaries as of December 31, 1997.
- ------------------------
17
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ----------------------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 250,000............................................ $ 145,928 $ 145,928 $ 145,928 $ 145,928 $ 145,928
275,000............................................ $ 162,178 $ 162,178 $ 162,178 $ 162,178 $ 162,178
300,000............................................ $ 178,428 $ 178,428 $ 178,428 $ 178,428 $ 178,428
350,000............................................ $ 210,928 $ 210,928 $ 210,928 $ 210,928 $ 210,928
500,000............................................ $ 308,428 $ 308,428 $ 308,428 $ 308,428 $ 308,428
550,000............................................ $ 340,928 $ 340,928 $ 340,928 $ 340,928 $ 340,928
625,000............................................ $ 389,678 $ 389,678 $ 389,678 $ 389,678 $ 389,678
900,000............................................ $ 568,428 $ 568,428 $ 568,428 $ 568,428 $ 568,428
1,000,000........................................... $ 633,428 $ 633,428 $ 633,428 $ 633,428 $ 633,428
</TABLE>
The table above illustrates the operation of the Corporation's Retirement
Plan and Supplemental Executive Retirement Plan ("SERP") by showing various
annual benefits, after reduction for Social Security retirement income, assuming
various annual base salaries and years of credited service. Benefit figures
shown are computed on the assumption that participants retire at age 65. For
purposes of the table, it is assumed that each participant is receiving benefits
from the Retirement Plan in the form of a life annuity. Benefits under the SERP
are paid in the form of a life annuity (with 120 months certain).
Only those executive officers selected by the Compensation and Stock Option
Committee may participate in the SERP. The SERP ensures that each participating
executive officer (who retires at age 65) receives a level of retirement
benefits, without respect to years of service, equal to at least 65% of the
officer's highest consecutive twelve months' base salary within the previous
sixty months. At the time a participating officer retires, the benefit the
participant is entitled to through the SERP is calculated, and then funds from
the following sources are deducted to determine the amount (if any) of the
payment due from the Corporation under the SERP: (i) Social Security benefits
payable; (ii) the benefit under the Retirement Plan; and (iii) any benefits
under retirement plans of prior employers. For purposes of the table, it is
assumed that the participant is not receiving benefits from any prior employers'
retirement plans and that Social Security benefits payable are the maximum Old
Age, Survivors and Disability Insurance benefits payable. If the sum of the
payments due from Social Security, the Retirement Plan, and retirement plans of
prior employers exceeds 65% of the executive officer's highest consecutive
twelve months' base salary, then no payment will be due from the Corporation
under the SERP. As illustrated by the table, the SERP generally has the effect
of equalizing a participant's combined retirement benefits for a particular
level of covered compensation for all years of service. Thus, the total annual
benefits payable by the Corporation pursuant to the Retirement Plan and the SERP
would be the same for an executive officer with fifteen years of service as for
an executive officer with thirty-five years of service, assuming each had the
same level of covered compensation, the only difference being that the fifteen
18
<PAGE>
year executive officer, having a smaller benefit from the Retirement Plan, will
receive a greater portion of his benefit from the SERP. Monthly benefits
received by participants under the SERP may be increased annually, if indicated,
to reflect increases in the United States Bureau of Labor Statistics Consumer
Price Index for Urban Wage Earners and Clerical Workers.
An employee who has completed two years of continuous service with the
Corporation (or an affiliated company) and whose compensation is in excess of
the limitation imposed by Section 401(a)(17) of the Internal Revenue Code
(the "Code") is eligible to participate in the Corporation's Supplemental
Retirement Income Plan (the "SRIP"). The SRIP provides benefits according to
the same benefit formula as the Retirement Plan, except that benefits under
the SRIP are not limited by Sections 401(a)(17) and 415 of the Code. Code
Section 401(a)(17) limits the annual amount of compensation that may be taken
into account when calculating benefits under the Retirement Plan. For 1997,
this limit was $160,000. Code Section 415 limits the annual benefit amount
that a participant may receive under the Retirement Plan. For 1997 this
amount was $125,000. Because the SERP generally provides a larger benefit
than the SRIP, executives participating in the SERP generally will not
receive any payments under the SRIP.
For each of the executive officers named in the Summary Compensation Table,
the compensation covered by the Retirement Plan, the SRIP, and, if applicable,
the SERP is base salary earned in 1997 as indicated in the Summary Compensation
Table. The estimated credited years of service for each of the executive
officers named in the Summary Compensation Table are 23.5 for Mr. Wobst, 26.33
for Mr. Sofia, 8.75 for Mr. Williams, 13.83 for Mr. Geier, and 18.58 for Mr.
Seiffert. Messrs. Wobst and Sofia were the only named executive officers who
participated in the SERP in 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee is composed of Don Conrad,
George A. Skestos, and Timothy P. Smucker. None of the members other than Mr.
Conrad is or has ever been an officer of the Corporation or its subsidiaries.
Mr. Conrad served as Chairman of the Board of Directors of Huntington Bancshares
Kentucky, Inc., a subsidiary of the Corporation, from its inception in 1985
until its dissolution in 1996.
On December 31, 1997, the Corporation purchased $15 million of nonvoting
Preferred Securities of MFS Capital Trust I, a Delaware business trust (the
"Trust"). National Capital Financial Corporation ("National Capital"), owns all
of the voting Common Securities of the Trust. The Trust invested the proceeds
from the sale of its Common and Preferred Securities in a junior subordinated
deferrable interest note issued by National Capital bearing interest at 7.41%
per annum, payable quarterly, and maturing December 31, 2027 (the "Subordinated
Note"). The distribution rate and distribution payment dates of the Preferred
Securities and liquidation date of the Trust correspond to the interest rate,
interest payment dates, and maturity or earlier repayment date of the
Subordinated Note, which is the sole asset of the Trust.
National Capital has guaranteed payment of distributions on the Preferred
Securities out of funds held by the Trust to the extent the Trust has funds
available (the "Guarantee"). The Guarantee and the Subordinated
19
<PAGE>
Note rank subordinate and junior in right of payment to all indebtedness of
National Capital. The Guarantee, together with National Capital's obligations
under the Subordinated Note, constitute a full and unconditional guarantee of
all of the Trust's obligations under the Preferred Securities. The Preferred
Securities are redeemable at par by the Trust upon the redemption by National
Capital of the Subordinated Note, which may occur, in whole or in part, at
the option of National Capital, at any time on or after December 31, 2007.
The Preferred Securities may also be redeemed at par prior to this date upon
the occurrence of certain events specified in the trust documents. George A.
Skestos is a director of National Capital. The spouse and children of Mr.
Skestos collectively own approximately 18% of the common stock of National
Capital.
THE FOLLOWING BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION AND PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY
STATEMENT INTO ANY OF THE CORPORATION'S FILINGS UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT
TO THE EXTENT THAT THE CORPORATION SPECIFICALLY INCORPORATES THIS INFORMATION
BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of Directors (the
"Committee") oversees the Corporation's executive compensation programs. The
Committee, which consists entirely of non-employee directors, met five times in
1997 to review and approve executive compensation matters.
The Corporation's executive compensation philosophy is designed to meet four
primary goals:
(1) Ensure a strong linkage between corporate, unit, and individual
performance and total compensation.
(2) Integrate compensation programs with the Corporation's annual and
long-term strategic goals.
(3) Encourage long-term strategic management and enhancement of shareholder
value through equity awards.
(4) Attract and retain key executives critical to the long-term success of
the Corporation by providing a fully competitive reward package that is
appropriately sensitive to performance.
These principles are reflected in the key components of the Corporation's
executive compensation programs which consist of base salary, annual incentive
awards, and long-term incentive awards. Two of the Corporation's executive
officers, Messrs. Wobst and Sofia, each have employment agreements with the
Corporation (the "Existing Contracts") which remained in effect during 1997. The
Existing Contracts, among other things, establish minimum base salaries and
participation in the Corporation's incentive compensation plans (see "Employment
and Executive Agreements" above). Increases in the minimum base salaries and the
specific level of participation in the incentive compensation plans for these
executive officers is determined by the Committee based on the factors described
below. The Corporation's executive compensation programs are regularly evaluated
to ensure that they continue to reinforce shareholder interests and support the
goals of the Corporation's executive compensation philosophy.
20
<PAGE>
BASE SALARY
An executive's base salary and subsequent adjustments are determined
relative to the following factors: individual and business unit performance,
scope of responsibility and accountability, comparison with industry pay
practices, and cost of living considerations. The Committee feels that all of
these factors are significant and the relevance of each varies from executive to
executive. Therefore, no specific weight has been assigned to these factors in
the evaluation of an executive's base salary.
The specific measures of business unit performance vary depending upon
the executive's performance area and the goals periodically set for the
performance area by the Corporation. Industry comparisons, primarily of
banking organizations of comparable asset size, are drawn from survey data
relating to various executive levels published by independent sources. Where
relevant, cross-industry comparisons are utilized for certain executives
whose functions are not specific to banking. Although the Committee reviews
data representing pay practices of the 25th to 75th percentiles of the
competitive market, in terms of compensation, the Committee does not have a
policy to target compensation at a designated level of the pay practices of
such market. Many of the banking organizations represented by the data are
included in the index published by Keefe, Bruyette & Woods, Inc. and known as
the KBW 50 Total Return Index which was used for comparative purposes in the
shareholder return graph (see "Comparison of Five Year Cumulative Total
Return Between the Corporation, S & P 500 Index, and KBW 50 Total Return
Index", below).
Mr. Wobst received a salary increase of 6.6% effective April 1, 1997, which
was the first adjustment in base salary he had received since January 1, 1996.
The increase represented recognition of Mr. Wobst's continued leadership role in
the strong financial performance of the Corporation, including the growth in the
stock price during 1996 of 20.7%. Some of the Corporation's other key
accomplishments during this period included: the continued growth in its
geographic presence in the Florida market through the acquisitions of Peoples
Bank of Lakeland and Citi-Bancshares, Inc.; the purchase of assets of the Tice
Insurance Agency; launching of the Huntington Web Bank; and the piloting of a
smart card program.
ANNUAL CASH INCENTIVE AWARDS
Under the Corporation's Incentive Compensation Plan in effect for 1997,
executive officers earned annual cash incentive awards determined as a
percentage of base salary. The percentage of base salary for an executive was
determined by (i) the category to which the executive was assigned for 1997
based upon his level of responsibility and (ii) the Corporation's performance as
measured by return on average shareholders' equity ("ROAE") relative to a range
of ROAE targets established by the Committee in February of 1997. The higher the
ROAE target, the larger the percentage of base salary is applied for this
purpose.
For 1997, the range of incentive opportunity as a percentage of base salary
did not change from the previous year. ROAE targets that were set for 1997 had
no predetermined relationship to the ROAE targets set for the previous year. In
establishing the targets, consideration was given to internal corporate
performance goals and the Corporation's assessment of its economic environment
and industry trends.
21
<PAGE>
Awards for those executive officers whose compensation in 1997 was
anticipated to be effected by Section 162(m) of the Internal Revenue Code were
based solely on the Corporation's performance relative to ROAE goals (see "Tax
Deductibility of Executive Compensation" below). For 1997, the remaining
executive officers' awards were weighted as follows: 20% or 40% for corporate
performance, 40% or 60% for business unit performance, and 20% for individual
performance. The portions of an executive's award tied to these factors were
based upon the scope of the executive's responsibility, and could have been
adjusted as recommended by the managing executive's subjective evaluation.
No awards could have been paid under the plan unless the Corporation's
performance met the established minimum ROAE target level of 13%. The Committee
certified that ROAE goals had been met for 1997 and approved all awards. Based
on the Corporation's ROAE performance in 1997, Mr. Wobst's award was $_______.
In addition to the annual cash incentive awards under the Incentive
Compensation Plan, the Committee may, in certain circumstances, approve a
discretionary cash bonus award for an executive officer due to extraordinary
performance.
LONG-TERM INCENTIVE AWARDS
Long-term incentive awards are in the form of stock and cash awards
granted under the Long-Term Incentive Compensation Plan and stock options
granted under the Corporation's employee stock option plans. The value of
these awards is dependent upon the Corporation's performance over a period of
time, as described below.
The Long-Term Incentive Compensation Plan measures the Corporation's
performance over three-year cycles with a new cycle beginning every other year.
The Committee selects as participants for each cycle those officers who, in the
opinion of the Committee, will significantly contribute to the long-term
strategic performance and growth of the Corporation.
This Plan was amended and approved by the shareholders in 1996 for cycles
beginning on and after January 1, 1996. Each of the named executive officers was
selected by the Committee to participate in the cycle that began on January 1,
1996, and will end on December 31, 1998 (the "1996 Cycle"). A cycle did not
begin or end in 1997; therefore, no awards were made under this Plan for 1997.
Awards under the Long-Term Incentive Compensation Plan are based on a
comparison of the Corporation's three-year average ROAE to the three-year
average ROAE of a peer group. The Committee approved the peer group for the 1996
Cycle which is based on the fifty largest (based on assets) United States
banking organizations whose stock is publicly traded minus those banking
organizations deemed by the Committee to be money center banking organizations
and any other banking organizations that do not provide a meaningful standard
for comparison with the Corporation. The peer group will remain fixed for the
cycle, except to the extent the group is reduced due to attrition (as the result
of mergers and organizations ceasing to be reporting c ompanies). Currently the
peer group for the 1996 Cycle consists of 34 banking organizations (including
the Corporation) of which 29 are included in the KBW 50 Total Return Index.
22
<PAGE>
Awards under this program are determined as a percentage of the executive
officers' base salary at the end of the cycle. The percentage of base salary for
an executive is determined individually by (i) the category to which the
executive is assigned for a cycle based upon his level of responsibility and
(ii) the Corporation's ROAE performance relative to other banking organizations
in the peer group for the cycle. If the Corporation's ROAE performance is at the
25th percentile of all peer group banks in the cycle (the "Threshold Level"),
awards will be paid. The percentage of base salary awarded to an executive
officer increases incrementally as performance increases. Target level
performance is achieved if the Corporation's performance is at the 50th
percentile of all peer group banks in the cycle. The percentage of base salary
awarded increases incrementally at a higher rate once the Corporation's ROAE
results go over the plan target levels. No award will be made pursuant to the
Long-Term Incentive Compensation Plan if the Corporation's ROAE performance is
below the Threshold Level, and the maximum award would be paid if the
Corporation's ROAE performance is at or above the 90th percentile of the peer
group. The maximum award is 60% to 100% of a participant's base salary depending
upon the category to which a participant is assigned based on level of
responsibility. Awards are typically made in stock, however, participants may
elect to receive up to 50% of their awards in cash.
Stock option awards are considered annually by the Committee and the number
of shares granted to an executive officer is based on the individual's scope of
responsibility, a subjective evaluation of the performance of the individual and
his or her business unit since the last grant, and industry comparisons. No
specific weight is attached to these factors.
Data from three surveys published by nationally known compensation and
human resources consulting firms was reviewed by the Committee to determine
competitive benchmarks for awarding 1997 options. Two of the surveys included
financial institutions as well as cross-industry comparisons; one of these
surveys represented 123 companies of which 50 were financial institutions and
the other survey represented 608 companies of which 32 were financial
organizations. The third survey included financial institutions only and
provided data for 118 companies. Competitive grants were considered by using
sources presenting data as a percentage of base salary and as a dollar value.
The Committee does not have a policy to target its option awards at any
specific level of data as provided from these sources.
In addition, information as to the options awarded to each executive during
recent years was reviewed by the Committee. However, the Committee did not
consider the total amount of options held by an executive officer in determining
the size of an option awarded for 1997.
Each stock option has an exercise price equal to the fair market value of
the underlying Common Stock of the Corporation on the date of grant. Each stock
option granted in 1997 becomes exercisable in four equal annual increments
beginning on the first anniversary of the grant and remains exercisable for a
period of ten years from the date of grant (subject to plan forfeiture
restrictions). Since the stock options are granted at market price, the value of
the stock options is entirely dependent upon the growth in the Corporation's
stock price.
For 1997, the Committee awarded stock options to 239 employees in a total
amount equal to .52% of the Corporation's average shares of Common Stock
outstanding for the year. Mr. Wobst received 18.3%
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of all option shares granted, or 220,000 shares, as adjusted for a ten
percent stock dividend paid in July 1997. The option shares granted to the
named executive officers had a value at grant, adjusted for the stock
dividend paid in July 1997, of $25.7955 per share. Additional detail on
executive stock option grants is provided in the table above entitled "Option
Grants in Last Fiscal Year."
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Internal Revenue Code Section 162(m) no longer permits the Corporation to
deduct certain non-performance-based compensation in excess of $1,000,000 per
taxable year paid to each of the Chief Executive Officer and the four most
highly compensated executives required to be named in the Annual Proxy Statement
("Covered Employees"). The Corporation may continue to deduct compensation paid
to its Covered Employees in excess of $1,000,000 provided the payment of such
compensation qualifies for an exception under Section 162(m), including an
exception for certain performance-based compensation.
The Committee believes that Section 162(m) should not cause the Corporation
to be denied a deduction for 1997 compensation paid to the Covered Employees.
The Committee will continue to work to structure components of its executive
compensation package to achieve maximum deductibility under Section 162(m) while
at the same time considering the goals of its executive compensation philosophy.
COMPENSATION AND STOCK OPTION COMMITTEE
Timothy P. Smucker, Chairman
Don Conrad
George A. Skestos
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COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
BETWEEN THE CORPORATION, S&P 500 INDEX, AND KBW 50 TOTAL RETURN INDEX(1)
The line graph below compares the yearly percentage change in cumulative
total shareholder return on the Corporation's Common Stock and the cumulative
total return of both the S&P 500 Index and the KBW 50 Total Return Index for the
period December 31, 1992, through December 31, 1997. An investment of $100 on
December 31, 1992, and the reinvestment of all dividends are assumed.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HBI KBW S&P
<S> <C> <C> <C>
1992 $ 100 $ 100 $ 100
1993 $ 118 $ 106 $ 110
1994 $ 112 $ 100 $ 112
1995 $ 169 $ 160 $ 153
1996 $ 210 $ 227 $ 189
1997 $ 322 $ 332 $ 252
</TABLE>
- ------------------------
(1) The KBW 50 Total Return Index, published by Keefe, Bruyette & Woods, Inc.,
is a market-capitalization-weighted bank stock index that includes all
money-center and most major regional bank holding companies.
25
<PAGE>
EXECUTIVE OFFICERS OF THE CORPORATION
The executive officers of the Corporation are listed below. Each listing
includes a statement of the business experience of each executive officer during
at least the last five years. Executive officers are elected annually by the
Board of Directors and serve at the pleasure of the Board.
JUDITH D. FISHER, age 52, has served as Executive Vice President of the
Corporation since February 1994 and as Executive Vice President and Manager of
the Treasury Group of The Huntington National Bank since January 1991. Ms.
Fisher has also served as President of Huntington Bancshares Financial
Corporation since April 1991. Ms. Fisher served as Senior Vice President and
Manager, Investment and Funds Management, from September 1987 to January 1991.
RALPH K. FRASIER, age 59, Executive Vice President, General Counsel,
Secretary, and Cashier of The Huntington National Bank and General Counsel and
Secretary of the Corporation, joined The Huntington National Bank in November
1975 as Vice President and General Counsel. Mr. Frasier was named Senior Vice
President and General Counsel of The Huntington National Bank and General
Counsel of the Corporation in July 1976. Mr. Frasier became Secretary to the
Boards of Directors of both companies in June 1981 and was named Executive Vice
President and Cashier of The Huntington National Bank in March 1983. Mr. Frasier
served as Secretary and Cashier of The Huntington Trust Company, National
Association, from February 1988 until it was merged with The Huntington National
Bank in June 1997.
PETER E. GEIER, age 40, has served as Vice Chairman of the Corporation and
as a director and President and Chief Operating Officer of The Huntington
National Bank since December 1996. Mr. Geier served as Executive Vice President
of the Corporation from November 1994 until December 1996 and as Executive
Director of Consumer Services from March 1994 to December 1996. Mr. Geier served
as Senior Vice President of the Corporation from March 1994 to November 1994.
Prior thereto, Mr. Geier served as Senior Vice President and Manager of
Commercial Banking of The Huntington National Bank from November 1989 to March
1994. Mr. Geier joined The Huntington National Bank in March 1984 and served in
various other capacities prior to November 1989.
RONALD J. SEIFFERT, age 41, has served as Vice Chairman of the Corporation
and as a director and Vice Chairman of The Huntington National Bank since
December 1996. He served as Executive Vice President and Executive Director of
Commercial Services of the Corporation from January 1996 to December 1996. Prior
thereto, Mr. Seiffert served as Executive Vice President and Group Manager of
the Commercial Banking Group for the Northern Region of The Huntington National
Bank from February 1994. Mr. Seiffert joined the Bank in 1979 and served in
various other capacities prior to February 1994.
ZUHEIR SOFIA, age 53, has served as President and a director of the
Corporation from October 1984 to the present, as Chief Operating Officer from
September 1986 to the present, and as Treasurer from February 1989 to the
present. In addition, Mr. Sofia has served as a director of The Huntington
National Bank since February 1981. Mr. Sofia also served as a director of The
Huntington Trust Company, National Association from February 1988 until that
entity was merged into The Huntington National Bank in June 1997. Mr. Sofia
served as Vice Chairman of The Huntington National Bank from March 1983 to
September 1986, as
26
<PAGE>
Senior Vice President of the Corporation from March 1983 to October 1984, as
Executive Vice President of The Huntington National Bank from February 1981
to March 1983, as Treasurer of the Corporation from January 1984 to June
1984, and as Senior Vice President and Division Executive of the Corporate
Banking, Funds Management, and International Divisions of The Huntington
National Bank from December 1976 to February 1981. From the time he joined
the Corporation in September 1971 until December 1976, Mr. Sofia served the
Corporation in various other capacities.
GERALD R. WILLIAMS, age 61, has served as Executive Vice President and Chief
Financial Officer of the Corporation from April 1989 to the present. Mr.
Williams has also served as Principal Accounting Officer since January 1997.
From January 1987 to April 1989, Mr. Williams was the owner and President of
Mattara Services, Inc., a consulting company to financial institutions and
investors in financial institutions.
FRANK WOBST, age 64, has served as Chairman of the Board and Chief Executive
Officer of the Corporation from February 1981 to the present, and Chairman of
the Board and Chief Executive Officer of The Huntington National Bank from
December 1996 to the present. Mr. Wobst has also served as a director of The
Huntington National Bank and the Corporation from the time he joined the
Corporation in 1974 to the present. In addition, Mr. Wobst served as Chairman of
The Huntington Trust Company, National Association, from February 1988 until
June 1997 when that entity was merged into The Huntington National Bank. Mr.
Wobst served as President of the Corporation from February 1981 to October 1984,
as President of The Huntington National Bank from July 1974 until March 1983 and
from March 1984 to September 1986 and as Chairman of the Board and Chief
Executive Officer of The Huntington National Bank from February 1981 to
September 1986.
PROPOSAL TO AMEND THE CORPORATION'S CHARTER
The Corporation is presently authorized to issue 306,617,808 shares of
capital stock, of which 300,000,000 shares are Common Stock and 6,617,808 shares
are Serial Preferred Stock. In 1990, 1,000,000 shares of the Serial Preferred
Stock were designated "Series A Junior Participating Preferred Stock" and were
reserved for issuance pursuant to a Rights Agreement dated February 22, 1990 and
amended on August 16, 1995 (the "Rights Agreement") between the Corporation and
The Huntington National Bank, as successor Rights Agent. The Board of Directors
has adopted resolutions approving and recommending that the shareholders adopt
an amendment to Article FIFTH of the Corporation's Charter, the full text of
which is attached to this Proxy Statement as Exhibit A. The amendment, if
adopted by the shareholders, would amend the Corporation's Charter to increase
the authorized Common Stock from 300,000,000 shares to 500,000,000 shares.
As of January 31, 1997, _______ shares of Common Stock were issued and
outstanding. In addition, the Corporation has reserved a certain number of
shares of Common Stock for issuance in connection with the Corporation's
employee benefit plans and dividend reinvestment plan. As of December 31, 1997,
an aggregate of approximately ___ million shares of Common Stock have been
reserved by the Corporation for these purposes. The authorized Common Stock was
increased to 300,000,000 shares at the 1996 Annual Meeting and there remain
approximately ___ million shares of Common Stock authorized but unissued and
unreserved.
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<PAGE>
All shares of Common Stock, including those currently authorized and those
which would be authorized by the proposed amendment to Article FIFTH, are equal
in rank and have the same voting, dividend, and liquidation rights. There are no
preemptive rights associated with these shares and the shares are subject to all
of the terms of the Serial Preferred Stock.
The Board of Directors believes that the proposed increase in the number
of authorized shares of Common Stock is desirable so that sufficient shares
of Common Stock will be available for issuance from time to time, without
further action or authorization by the shareholders (except as may be
required in a specific case by law), for corporate needs such as equity
financing, retirement of outstanding indebtedness, stock splits and stock
dividends, employee benefit plans, dividend reinvestment plans, or other
corporate purposes deemed to be in the best interests of the Corporation and
its shareholders.
On December 9, 1997, the Corporation entered into an agreement with
NationsBank Corporation for the acquisition of 60 banking offices of Barnett
Banks, Inc. in Florida and the associated deposit and loan products from
NationsBank Corporation. This transaction was initiated by the acquisition of
Barnett Banks Inc. by NationsBank Corporation; NationsBank Corporation desired
to sell such assets in order to meet regulatory requirements of the acquisition.
The Corporation's transaction is also subject to regulatory approval. The
Corporation anticipates completing the acquisition of the Barnett banking
offices in the second quarter of 1998. Although NationsBank Corporation will
receive cash for these banking offices, the Corporation intends to issue a
combination of trust preferred securities and Common Stock prior to the
acquisition in order to maintain its strong capital ratios. Each offering will
be made only by means of a prospectus.
Neither the proposed acquisition of the Barnett banking offices nor the
proposed issuance of trust preferred securities and Common Stock requires the
approval of the Corporation's shareholders. The Corporation currently has
sufficient shares of Common Stock to complete its proposed issuance of
additional shares to the public for cash and it intends to proceed with this
public offering even if the Corporation's shareholders do not approve the
increase in the number of authorized shares of Common Stock; however, the
increase in the number of authorized shares of Common Stock will give the
Corporation greater flexibility in responding quickly to other advantageous
business opportunities. At the present time, there are no other written
agreements, understandings, or arrangements with respect to acquisitions;
however, the Corporation continues to explore opportunities to acquire banks and
nonbank companies as permitted by the Bank Holding Company Act of 1956, as
amended. Since acquisitions may be made by an exchange of stock, increases in
the total number of authorized shares of Common Stock will enable the
Corporation to better meet its future business needs. Due to the number of
remaining authorized but unissued or unreserved shares, the Corporation's
ability to use its securities for these purposes could be limited under the
present Article FIFTH.
The amendment may have the effect of deterring or rendering more difficult
attempts by third parties to obtain control of the Corporation if such attempts
are not approved by the Board of Directors. The Board of Directors is not aware
of any current efforts to obtain control of the Corporation. The availability of
authorized and unissued Common Stock, in addition to the Corporation's Serial
Preferred Stock, could enhance the Board of Directors' ability to negotiate for
better terms on behalf of the Corporation's shareholders. On the other hand, the
authorized and unissued shares could be used to discourage a tender offer or
prevent a change in control of the Corporation. Such shares could, for example,
be privately placed (subject to the requirements
28
<PAGE>
of the Bank Holding Company Act of 1956, as amended, and the Change in Bank
Control Act of 1978) with purchasers who are known to favor the election of
current directors or who are committed to oppose a transaction which could
result in a change in directors of the Corporation. The Corporation is
already afforded some protection against acquisition attempts which are not
supported by the Board of Directors by provisions currently contained in the
Corporation's Charter and Bylaws and the Rights Agreement.
The Corporation's Charter provides for the issuance of Serial Preferred
Stock and authorizes the Board of Directors, without prior shareholder
approval, to fix the number of shares constituting each series and to fix the
dividend, redemption, conversion, voting rights and other rights, preferences
and restrictions relating thereto. The issuance of Serial Preferred Stock may
be used to discourage certain acquisition attempts. In addition, the
Corporation's Charter provides for a board of directors divided into three
classes of directors serving staggered three-year terms and permitting
removal of directors for cause only by the affirmative vote of the holders of
two-thirds of all votes entitled to be cast for the election of directors.
Because of the additional time required to change the control of the Board of
Directors, this provision tends to perpetuate present directors and could
also make the Corporation less attractive to certain tender offerors since
normally two annual meetings would be required to obtain a two-thirds
majority of the Board of Directors and three annual meetings for complete
control. The Charter provides that any action taken by the shareholders to
adopt, alter, or repeal the Corporation's Bylaws will require a two-thirds
vote of the holders of shares entitled to vote. The Corporation's Charter
also requires the Board of Directors to respond to any acquisition proposal
on the basis of the Board's evaluation of what is in the best interest of the
Corporation, its shareholders, and other constituencies, and to consider all
factors the Board deems relevant. All of the above described Charter
provisions may tend to discourage acquisition attempts.
The Corporation's Bylaws provide that in order for a person to be eligible
for election as a director of the Corporation, such person must be nominated by
or at the direction of the Corporation's Board of Directors or by a shareholder
entitled to vote for the election of directors in accordance with certain
specified procedures. Shareholder nominations must be made pursuant to timely
written notice to the Secretary of the Corporation. In most cases, a
shareholder's notice, to be considered timely, must be received at the principal
executive offices of the Corporation not less than thirty nor more than sixty
days prior to the date of a shareholders' meeting. The notice must set forth
certain specified information about the shareholder giving the notice and the
shareholder's proposed nominee. In addition, the Bylaws require shareholders
wishing to call a special meeting of shareholders to represent at least a
majority of shares entitled to vote at such meeting. These Bylaw provisions may
discourage or deter a third party from soliciting proxies to elect its own slate
of directors or otherwise attempting to obtain control of the Corporation.
Under the Rights Agreement, as amended, each of the Corporation's
shareholders has one Right for each outstanding share of Common Stock held and
each newly-issued share of Common Stock will have issued with it one Right. The
Rights currently have no value, are represented by the certificates evidencing
Common Stock and trade only with such stock. The Rights separate from the Common
Stock and become exercisable only upon the occurrence of a person or group
("Acquiror") acquiring or obtaining beneficial ownership of 10% or more of the
then outstanding Common Stock (a "Triggering Event") or the tenth business day
after the commencement or announcement of a tender or exchange offer that would
result in ownership of 10% or more of the outstanding Common Stock. The Rights
Agreement provides that, upon the Rights becoming exercisable,
29
<PAGE>
shareholders would be entitled to purchase, at the Exercise Price, one
one-hundredth of a share of the Series A Junior Participating Preferred Stock
("Preferred Shares"). Such fractional share is intended to be the practical
equivalent of one share of Common Stock. In the event of a Triggering Event,
the Rights will entitle each holder (except the Acquiror or any affiliate or
associate thereof, whose Rights become null and void) to purchase shares of
the Corporation's Preferred Shares having a value equal to twice the Exercise
Price. In the event the Corporation is acquired in a merger or other business
combination or a significant portion of its assets are sold, leased,
exchanged, or otherwise transferred to an Acquiror, shares of the Acquiror
(or shares of the surviving corporation in such acquisition, which could be
the Corporation) may be purchased. The Exercise Price and the number of
Preferred Shares or other securities or property issuable upon exercise of a
Right are subject to adjustment upon the occurrence of certain events
including, for example, a stock dividend or split payable in the
Corporation's Common Stock or Preferred Shares. The number of Rights may also
be adjusted upon the occurrence of certain events including, for example, a
reverse stock split. The Rights expire on August 16, 2005, unless earlier
redeemed by the Corporation. The Rights may cause substantial dilution to a
person or group that attempts to acquire the Corporation and thus have an
anti-takeover effect.
The Board of Directors does not have any current plans to use shares of
Common Stock for anti-takeover purposes. Further, the Board of Directors does
not have any current plans to propose amendments in the Charter or Bylaws of the
Corporation that may be deemed to have anti-takeover implications except as
described in this Proxy Statement.
If the shareholders approve the amendment, it will become effective on the
date on which the required filing is made in the office of the State Department
of Assessments and Taxation of the State of Maryland. Such filing will be made
as promptly as possible after shareholder approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
PROPOSED AMENDMENT TO ARTICLE FIFTH OF THE CORPORATION'S CHARTER.
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent auditors,
as auditors for the Corporation for the year 1998. Although not required, the
Board of Directors is submitting its selection to the shareholders of the
Corporation for ratification. Ernst & Young LLP has served as the independent
auditor for the Corporation since its inception in 1966. The Board of Directors
believes that the reappointment of Ernst & Young LLP for the year 1998 is
appropriate because of the firm's reputation, qualifications, and experience.
Representatives of Ernst & Young LLP will be present at the meeting and will
have an opportunity to make a statement if they desire to do so. Such
representatives will be available to respond to appropriate questions. The Board
of Directors will reconsider the appointment of Ernst & Young LLP if its
selection is not ratified by the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP.
30
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers, directors and persons who are beneficial owners of more
than ten percent of the Corporation's Common Stock ("reporting persons") to file
reports of ownership and changes in ownership with the SEC. Reporting persons
are required by SEC regulations to furnish the Corporation with copies of all
Section 16(a) forms filed by them. Based on its review of the copies of Section
16(a) forms received by it, and on written representations from reporting
persons concerning the necessity of filing a Form 5--Annual Statement of Changes
in Beneficial Ownership, the Corporation believes that, during 1997, all filing
requirements applicable for reporting persons were met.
PROPOSALS BY SHAREHOLDERS FOR 1999 ANNUAL MEETING
If any shareholder of the Corporation wishes to submit a proposal for
consideration for inclusion in next year's Proxy Statement and acted upon at
the annual meeting of the Corporation to be held in 1999, the proposal must
be received by the Secretary of the Corporation at the principal executive
offices of the Corporation, Huntington Center, 41 South High Street,
Columbus, Ohio 43287, prior to the close of business on October 21, 1998. In
addition, the Corporation's Bylaws establish advance notice procedures as to
(1) business to be brought before an annual meeting of shareholders other
than by or at the direction of the Board of Directors, and (2) the
nomination, other than by or at the direction of the Board of Directors, of
candidates for election as directors. Any shareholder who wishes to submit a
proposal to be acted upon at next year's annual meeting or who wishes to
nominate a candidate for election as a director should obtain a copy of these
Bylaw provisions and may do so by written request addressed to the Secretary
of the Corporation at the principal executive offices of the Corporation.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no other
business that will come before the meeting. Should any other matter requiring a
vote of the shareholders arise, the proxy in the enclosed form confers upon the
person or persons designated to vote the shares discretionary authority to vote
the same with respect to any such other matter in accordance with their best
judgment.
The Corporation's 1997 Annual Report, including financial statements, was
furnished to shareholders prior to or concurrently with the mailing of this
proxy material. THE CORPORATION'S FORM 10-K FOR 1997 AND ADDITIONAL COPIES OF
THE 1997 ANNUAL REPORT WILL BE FURNISHED, WITHOUT CHARGE, TO SHAREHOLDERS OF THE
CORPORATION UPON WRITTEN REQUEST TO INVESTOR RELATIONS, HUNTINGTON BANCSHARES
INCORPORATED, HUNTINGTON CENTER, COLUMBUS, OHIO 43287.
If you are an employee of the Corporation or its affiliated corporations and
are receiving this Proxy Statement as a result of your participation in the
Corporation's Stock Purchase and Tax Savings Plan, a proxy card has not been
included. Instead, an instruction card, similar to a proxy card, has been
provided so that you may instruct the trustee how to vote your shares held under
this plan.
31
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(This Page Intentionally Left Blank.)
<PAGE>
EXHIBIT A
TEXT OF PROPOSED RESOLUTION AMENDING CHARTER TO
INCREASE AUTHORIZED COMMON STOCK
RESOLVED, that, as declared advisable by the Board of Directors, the Charter of
this Corporation is amended by deleting the first paragraph of Article FIFTH
thereof in its entirety and substituting in lieu thereof the following:
FIFTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 506,617,808 shares, of which
500,000,000 shall be Common Stock, without par value, and 6,617,808 shares shall
be Serial Preferred Stock, without par value.
<PAGE>
PRELIMINARY COPY
Below is your proxy card. Please read both sides, vote, sign and return
it in the enclosed postage paid envelope.
COMMON STOCK
PROXY - HUNTINGTON BANCSHARES INCORPORATED
The undersigned shareholder of Huntington Bancshares Incorporated hereby
appoints Jon M. Anderson, S. Ronald Cook, Jr., and Michael T. Radcliffe, or
any one or more of them, as attorneys and proxies with full power of
substitution to vote all of the Common Stock of Huntington Bancshares
Incorporated which the undersigned is entitled to vote at the Annual Meeting
of Shareholders of Huntington Bancshares Incorporated to be held in the
Capitol Square Banking Lobby of The Huntington National Bank, 17 South High
Street, Columbus, Ohio, on Thursday, April 23, 1998, and at any adjournment
or adjournments thereof as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, AND 3.
1. Election of Directors.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed below
contrary below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Don Conrad George A. Skestos Lewis R. Smoot, Sr. Frank Wobst
2. Approval of the proposal to amend the Corporation's Charter to
increase the authorized Common Stock of the Corporation from 300,000,000
shares to 500,000,000 shares.
[ ] FOR [ ] AGAINST [ ]ABSTAIN
<PAGE>
Fold and Detach Here
3. Ratification of the appointment of Ernst & Young LLP to serve as
independent auditors for the Corporation for the year 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion to vote upon such other matters as may properly come
before the meeting.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
DIRECTOR NOMINEES NAMED HEREIN, FOR THE APPROVAL OF THE AMENDMENT OF THE
CORPORATION'S CHARTER, AND FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST &
YOUNG LLP.
Please sign and date this Proxy below and return in the enclosed envelope.
Date: ,1998
-------------------
-----------------------------
(Signature)
-----------------------------
(Signature)
Please date and sign your name as
it appears hereon. When signing
as attorney, executor,
administrator or guardian, please
give full title.
All joint owners must sign.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
<PAGE>
PRELIMINARY COPY
Below is your instruction card. Please read both sides, vote, sign
and return in the enclosed postage paid envelope.
HUNTINGTON STOCK PURCHASE AND TAX SAVINGS PLAN
INSTRUCTIONS TO TRUSTEE FOR VOTING
The undersigned participant in the Huntington Stock Purchase and Tax
Savings Plan ("Plan") hereby instructs The Huntington National Bank, Trustee,
under the Plan, to appoint Jon M. Anderson, S. Ronald Cook, Jr., and Michael
T. Radcliffe, or any one or more of them, as attorneys and proxies with full
power of substitution to vote all of the Common Stock of Huntington
Bancshares Incorporated (the "Corporation") which the undersigned is
entitled to vote pursuant to paragraph 10.02 of the Plan at the Annual
Meeting of Shareholders of the Corporation to be held in the Capitol Square
Banking Lobby of The Huntington National Bank, 17 South High Street,
Columbus, Ohio, on Thursday, April 23, 1998, and at any adjournment or
adjournments thereof as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, AND 3.
1. Election of Directors.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as marked to the contrary below) all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Don Conrad George A. Skestos Lewis R. Smoot, Sr. Frank Wobst
2. Approval of the proposal to amend the Corporation's Charter to
increase the authorized Common Stock of the Corporation from 300,000,000
shares to 500,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
Fold and Detach Here
3. Ratification of the appointment of Ernst & Young LLP to serve as
independent auditors for the Corporation for the year 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion to vote upon such other matters as may properly come
before the meeting.
IF NO DIRECTION IS MADE, THE TRUSTEE'S PROXY WILL BE VOTED FOR THE ELECTION OF
THE DIRECTOR NOMINEES NAMED HEREIN, FOR THE APPROVAL OF THE AMENDMENT TO THE
CORPORATION'S CHARTER, AND FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST &
YOUNG LLP.
With respect to shares of Common Stock held for the account of the
undersigned under the Plan, the undersigned hereby instructs the Trustee to
sign and forward the proxy being solicited by the Board of Directors of the
Corporation to vote as herein directed.
Please sign and date below and return in
the enclosed envelope.
------------------------------------
(Signature)
Date: , 1998
-------------------------
