SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
[Amendment No. ___________]
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
NATIONAL PENN BANCSHARES, INC.
------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) or Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
NATIONAL PENN BANCSHARES, INC.
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
to be held April 23, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of National Penn Bancshares, Inc. (the "Company") will be held on
April 23, 1996, at 4:00 P.M. (Local Time) at the Gilbertsville Fire Company,
1456 East Philadelphia Avenue, Gilbertsville, Pennsylvania, for the following
purposes:
(1) to elect four Class III directors to hold office for three years from
the date of election and until their successors shall have been
elected and qualified; and
(2) to transact such other business as may properly be presented at the
Meeting.
Shareholders of record at the close of business on March 15, 1996, will be
entitled to notice of, and to vote at, the Meeting.
SHAREHOLDERS ARE URGED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sandra L. Spayd
SANDRA L. SPAYD
Secretary
March 22, 1996
<PAGE>
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of National Penn Bancshares, Inc. (the
"Company"), parent company of National Penn Bank ("NPB"), for use at the
Company's Annual Meeting of Shareholders to be held April 23, 1996 (the
"Meeting"). The Proxy Statement and the accompanying proxy are first being
mailed to shareholders of the Company on or about March 22, 1996. The expense of
soliciting proxies will be borne by the Company. It is expected that the
solicitation of proxies will be primarily by mail. The Company's directors,
officers, and employees may also solicit proxies personally, by telephone, and
by telegraph.
The execution and return of the enclosed proxy will not affect a
shareholder's right to attend the Meeting and vote in person. Any shareholder
giving a proxy may revoke it at any time before it is exercised by submitting
written notice of its revocation or a subsequently executed proxy to the
Secretary of the Company, or by attending the Meeting and electing to vote in
person. Only shareholders of record at the close of business on March 15, 1996,
are entitled to notice of, and to vote at, the Meeting. On that date, there were
7,613,865 of the Company's common shares outstanding, each of which will be
entitled to one vote at the Meeting.
The presence, in person or by proxy, of shareholders entitled to cast a
majority of all the votes entitled to be cast at the Meeting will constitute a
quorum. Abstentions, broker non-votes and withhold authority votes all count for
the purpose of determining a quorum.
If a shareholder is a participant in the Company's Dividend Reinvestment
Plan, the proxy card sent to such shareholder will represent both the number of
shares registered in the shareholder's name and the number of shares (including
fractional shares) credited to the shareholder's Dividend Reinvestment Plan
account.
If the enclosed proxy is appropriately marked, signed, and returned in time
to be voted at the Meeting, the shares represented by the proxy will be voted in
accordance with the instructions marked thereon. Signed proxies not marked to
the contrary will be voted "FOR" the election, as directors, of the Board of
Directors' nominees. Signed proxies will be voted "FOR" or "AGAINST" any other
matter which properly comes before the Meeting or any adjournment thereof, in
the discretion of the persons named as proxyholders.
The Company's Annual Report for the year ended December 31, 1995, is
enclosed herewith. The Annual Report of the Company has been furnished to
shareholders for their information. No part of the Annual Report is incorporated
by reference into this Proxy Statement.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
General
The Articles of Incorporation of the Company provide that the Company's
business shall be managed by a Board of Directors of not less than eight and not
more than twelve persons. The Board of Directors of the Company, as provided in
the Company's Articles of Incorporation, is divided into three classes: Class I,
Class II, and Class III, with each class being as nearly equal in number as
possible. The Board of Directors of the Company presently consists of eleven
members, with four directors in Class I, three directors in Class II, and four
directors in Class III.
Four Class III directors will be elected at the Meeting. The term of office
of the Class III directors elected at the Meeting will expire on the date of the
annual meeting of the Company's shareholders in 1999. The term of office of each
continuing director in Class I and Class II will expire on the date of the
annual meeting of the Company's shareholders in 1997 and 1998, respectively.
The Board of Directors has nominated Patricia L. Langiotti, Randall J.
Nester, Harold C. Wegman, D.D.S., and Wayne R. Weidner for election as Class III
directors. Each of these persons is presently a director of the Company. The
Company's Bylaws provide for the mandatory retirement of directors upon
attainment of age 72. Accordingly, although Mr. Nester has been nominated for
election as a Class III director to serve until 1999, he will serve, if elected,
only until 1997. The Board of Directors has the power, under the Company's
Articles of Incorporation, to fill Board vacancies. Any person designated to
fill this vacancy will serve the remainder of the Class III term until 1999.
The Bylaws of the Company permit nominations for election to the Board of
Directors to be made by the Board of Directors or by any shareholder entitled to
vote for the election of directors. Nominations for director made by
shareholders (other than the Board of Directors) must be made, in writing,
delivered or mailed to the Company not less than fourteen days prior to the date
of a shareholders' meeting. Such notice must contain the same information to the
extent known to the notifying shareholder as that required to be stated by the
Company in its Proxy Statement with respect to nominees of the Board of
Directors. Any nominations that are not made in this manner or any votes cast at
the Meeting for any candidate not duly nominated may be disregarded by the
chairman of the Meeting. No notice of nomination for election as a director has
been received from any shareholder as of the date of this Proxy Statement.
The four nominees who receive the highest number of votes cast at the
Meeting will be elected as Class III directors. Abstentions and broker non-votes
will not constitute or be counted as "votes" cast for the purpose of the
election of directors. Shares represented by properly executed proxies in the
accompanying form will be voted for the nominees named below unless otherwise
specified in the proxy by the shareholder. Any shareholder who wishes to
withhold authority from the proxyholders to vote for the election of directors
or to withhold authority to vote for any individual nominee may do so by marking
his or her proxy to that effect. No proxy may be voted for a greater number of
persons than the number of nominees named. If any nominee should become unable
to serve, the persons named in the proxy may vote for another nominee. The
Company's management, however, has no present reason to believe that any nominee
listed below will be unable to serve as a director, if elected.
3
<PAGE>
The Nominees and Continuing Directors
The following table sets forth the principal occupation, age, and certain
other information as to the nominees for election as Class III directors, and
the continuing Class I and Class II directors, as of January 1, 1996:
<TABLE>
<CAPTION>
Director of
Principal Occupation(s) the Company
Name During Last Five Years Age Since (1)
<S> <C> <C> <C>
NOMINEES AS CLASS III
DIRECTORS TO SERVE UNTIL 1999
PATRICIA L. LANGIOTTI(3) President, Creative Management 49 1992
Concepts (management consulting);
Chief Executive Officer, Brubacher
Excavating, Inc.
RANDALL J. NESTER(2) Private investor since 1992; Owner, 70 1967
Blue Chip Machine; prior thereto,
President of E.M. Industries,
Inc., t/a Reading Products
(manufacturer of machine parts).
HAROLD C. WEGMAN, D.D.S.(2) Dentist practicing in the Reading 68 1980
area.
WAYNE R. WEIDNER(4) Executive Vice President of the 53 1985
Company since April 1990;
Treasurer of the Company from
October 1983 to April 1990; also
Chief Executive Officer and
President of NPB.
CONTINUING CLASS I DIRECTORS
TO SERVE UNTIL 1997
JOHN H. BODY(2)(3)(4) Manager, General Services, Air 62 1981
Products and Chemicals, Inc.
J. RALPH BORNEMAN, JR.(3) President, Body-Borneman Asso- 57 1992
ciates, Inc. (insurance).
JOHN A. CENERAZZO(2)(3)(4)(5) Chairman, Infocore, Inc. (telecom- 71 1961
munications and data
communications).
KENNETH A. LONGACRE(2) Chief Executive Officer, Farm & 62 1993
Home Oil Company.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Director of
Principal Occupation(s) the Company
Name During Last Five Years Age Since (1)
<S> <C> <C> <C>
CONTINUING CLASS II DIRECTORS TO SERVE UNTIL 1998
JOHN J. DAU(2)(4) President and Chief Executive Of- 69 1975
ficer, Bally Block Company and
Michigan Maple Block Company
(manufacturers of wood products);
President, J.D. Brauner Company of
New York (retailers of wood
products).
LAWRENCE T. JILK, JR.(4) President and Chief Executive Of- 57 1978
ficer of the Company since January
1990; President of the Company
from April 1988 to January 1990;
also Chairman of NPB.
C. ROBERT ROTH(3) District Justice since August 48 1990
1992; former owner and operator of
C.R. Roth Furniture in Quakertown.
- ------------------------
<FN>
(1) Includes period served as director of NPB prior to formation
of the Company in 1982.
(2) Member of Compensation Committee of the Company.
(3) Member of Audit Committee of the Company.
(4) Member of Executive Committee of the Company.
(5) Retires April 1996 in accordance with Company's Bylaw
provision for mandatory retirement.
</FN>
</TABLE>
5
<PAGE>
Security Ownership of Management
The following table sets forth information concerning the number of common
shares of the Company held as of January 1, 1996, by each nominee for director,
each present director, each named executive officer set forth in the
compensation tables beginning on page 10, and all directors and executive
officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
Sole Shared
Total Voting and Voting and Percent
Name of Beneficial Investment Investment of
Beneficial Owner Ownership Power Power Class(1)
<S> <C> <C> <C> <C>
Directors and Nominees
John H. Body 52,697 50,854 1,843 -
J. Ralph Borneman, Jr. 8,596 2,653 5,943 -
John A. Cenerazzo 97,606 97,466 140 1.3%
John J. Dau 174,250 39,925 134,325 2.3%
Lawrence T. Jilk, Jr.(3) 44,901 37,076 7,825 -
Patricia L. Langiotti(2) 3,533 3,081 452
Kenneth A. Longacre 59,634 59,634 0 -
Randall J. Nester(2) 193,922 158,819 35,103 2.5%
C. Robert Roth 5,189 1,191 3,998 -
Harold C. Wegman, D.D.S.(2) 78,565 36,350 42,215 1.0%
Wayne R. Weidner(2)(3) 34,962 30,058 4,904 -
Other Named
Executive Officers
William H. Sayre(3) 2,766 1,587 1,179 -
All directors and
executive officers as
a group (14 persons)(3) 769,023 530,633 238,390 10.1%
- ------------------------
<FN>
(1) Unless otherwise indicated, amount owned does not exceed 1% of the
total number of common shares outstanding as of January 1, 1996.
(2) Indicates a nominee for election as a Class III director at the Annual
Meeting of Shareholders.
(3) Includes shares allocated under the Company's Capital Accumulation
Plan. Includes the following shares which may be acquired by exercise
of vested options granted to officers under the Company's Stock Option
Plan: Mr. Jilk - 33,205 shares, Mr. Weidner - 20,959, and Mr. Sayre -
1,474. Does not include shares which may be acquired in the future by
exercise of options granted under the Company's Stock Option Plan
which options are not presently exercisable.
</FN>
</TABLE>
6
<PAGE>
ADDITIONAL INFORMATION
Board and Committee Meetings
The Company's Board of Directors met eight times during 1995. The Company's
Board of Directors has an Executive Committee, a Compensation Committee and an
Audit Committee and is authorized, under the Company's Bylaws, to create other
committees. At present, no other committee has been established. The Company's
Executive Committee, which met three times during 1995, may exercise the
authority of the Board to the extent permitted by law during intervals between
meetings of the Board. The Company's Compensation Committee, which met four
times during 1995, is responsible for the approval and administration of the
base salary level and annual incentive compensation programs, as well as the
stock option program, for executive officers and other officers of the Company.
The Compensation Committee is comprised solely of directors who are not
employees of the Company. The Company's Audit Committee, which met four times
during 1995, is responsible for reporting to the Board on the general financial
condition of the Company and the results of the annual audit. During 1995, each
director of the Company attended at least 75% of the aggregate of all meetings
of the Company's Board of Directors and Board committees on which they served.
Directors' Compensation
Each member of the Company's Board of Directors who is not an employee of
the Company or NPB annually receives a $5,000 retainer for serving as a
director, if he attends at least 75% of the meetings of the Board of Directors.
Additionally, each such director receives $250 per meeting for each committee
meeting attended, and Messrs. Dau and Longacre, as non-employee directors of
Investors Trust Company ("ITC"), a subsidiary of the Company, each receive $250
per ITC Board meeting attended (or $125 per meeting if it is held on the same
day as an NPB Board meeting). Under a deferred compensation plan, non-employee
directors of the Company or of its subsidiaries may elect to defer, with
interest, all or part of their cash compensation for future distribution. Under
a stock option plan for non-employee directors of the Company, each non-employee
director receives annually on the first business day of the year a non-qualified
stock option for 500 common shares, at an exercise price equal to the stock's
fair market value on the date of grant. The options become exercisable two years
from the date of grant, subject to acceleration if an actual or potential change
of control of the Company occurs, and expire ten years from the date of grant.
Report of the Compensation Committee
Compensation Philosophy. The Compensation Committee of the Company's Board
of Directors (the "Committee") believes that the maximization of corporate
performance and, in turn, shareholder value, depends largely on establishing a
close alignment between the financial interests of shareholders and those of the
Company's employees, especially its senior management, and retaining
experienced, qualified management. Accordingly, the Committee follows a
pay-for-performance philosophy. In addition to base salary and benefits, the
Company maintains an incentive compensation program and a stock option plan for
managerial employees, closely tied to corporate results. These programs place at
risk a major portion of senior managers' compensation by emphasizing
compensation earned upon the Company's achievement of its financial goals and
through appreciation in the market value of the Company's stock. The Company
seeks to provide a high level of overall compensation to its senior managers if
a high level of profitability is achieved.
Base Salary. Base salaries of executive officers are determined by
evaluating the responsibilities of their positions and by comparing salaries
paid in the marketplace to executives with similar experience and
responsibilities at other bank holding companies. In making this comparison, the
Committee utilizes management compensation data available from commercial
sources. In keeping with the pay-for-performance concept, base salaries are
generally targeted somewhat below the average salary levels of the
7
<PAGE>
companies covered by the data reviewed by the Committee. Although the Company's
financial performance is considered, salary decisions are generally not tied to
any financial performance factor or other criteria for the Company and are made
independently of decisions on other components of the Company's compensation
package.
For 1995, the Committee reviewed an independent salary study of
mid-Atlantic bank holding companies, broken down by asset size, including data
on chief executive officer compensation. This group is more narrowly defined
than the financial institutions in the Nasdaq Bank Stock Index included in the
Performance Graph on page 13, which includes many larger banking companies
throughout the United States. The Committee believes salary comparisons should
be made primarily with mid-Atlantic companies of comparable size.
The Committee established Mr. Jilk's base salary, effective April 12, 1995,
at $253,575, a 3.5% increase over his 1994 salary level. This placed Mr. Jilk's
base compensation somewhat below the average base compensation of the chief
executive officers of the comparable bank holding companies, as reflected in the
compensation data reviewed by the Committee. While the Committee credited Mr.
Jilk with great success in managing the rapid growth of the Company's assets and
the development of new business delivery strategies in 1994, at the same time
leading the Company to a record financial performance, the Committee also
considered the Company-wide cost containment efforts contemplated for 1995.
Benefits. The Company provides various benefits to its employees, including
its executive officers, such as life and disability insurance and the Company's
qualified pension plan.
Short-Term Incentive Compensation. Executive officers and other
participants approved by the Committee are eligible to earn annual awards under
the Company's Executive Incentive Plan. Under the Incentive Plan, at the
beginning of a fiscal year, the Committee establishes both internal and external
financial performance goals for the Company for that year. For 1995, the
internal performance goal was for the Company's net operating income before
securities and mortgage transactions to exceed such income for 1994. For 1995,
the external performance goal was for the Company's net operating income before
securities and mortgage transactions, as a percent of average equity, to exceed
the average of such income, as a percent of average equity, for a group of bank
holding companies selected by the Committee. This comparison group is
established annually based on common traits with the Company, such as asset size
and geographic location. For 1995, there were nine Pennsylvania bank holding
companies in this group. This group is subject to change as the companies merge
with other institutions or are acquired. This group is more narrow than the
financial institutions in the Nasdaq Bank Stock Index included in the
Performance Graph on page 13. The Committee believes that short-term financial
performance should be measured against that of companies located in or near the
Company's market area.
At the end of each year, the extent to which the Company's internal and
external performance goals are attained is measured. If both goals are met, a
bonus fund is determined by a formula set forth in the Incentive Plan. Under
this formula, the size of the bonus fund is determined solely by the extent to
which the Company exceeds its external performance goal. The maximum bonus fund
is established if the Company's external performance goal is achieved by 30% or
more. If either goal is not met, no bonus fund is established. The Incentive
Plan provides the maximum cash bonus is 50% of base salary for the Company's
chief executive officer and chief operating officer, with an additional bonus
component subject to deferral as discussed below. For other officers, the
Incentive Plan provides, depending upon their positions, maximum cash bonuses of
35% or 25% of base salary.
Given the Company's goal to provide incentives for its managers to remain
with the Company, the Incentive Plan requires that 25% of a total incentive
award to a participant eligible for a maximum cash bonus of 50% or 35%,
including the Company's executive officers, be subject to a mandatory five-year
deferral; if,
8
<PAGE>
at the end of five years, the participant remains employed or has retired at age
60, the participant becomes entitled to the amount of the deferred bonus plus
interest, together with a matching contribution from the Company. A deferred
bonus is forfeited if the recipient does not satisfy the requirements for a
matching contribution, except in the case of death or a change in control of the
Company followed by discontinuance of the plan in its present form.
For 1995, Mr. Jilk was eligible to earn a cash bonus of up to 50% of his
base salary, together with a mandatory deferred bonus equal to 25% of his total
incentive award, based on the Company's success in meeting its financial
performance goals. For 1995, the Company's financial performance exceeded the
external performance target established under the Incentive Plan by 20%. As the
result, Mr. Jilk earned a cash bonus of $126,788, which represented 50% of his
base salary for fiscal year 1995, and a mandatory deferred bonus of $42,262.
Stock Option Grants. Stock options are granted annually to executive
officers and other employees under the Company's Stock Option Plan, based on the
recommendations of the Company's chief executive officer, and subject to
ratification by the disinterested members of the Board of Directors. Grants are
made at an exercise price equal to 100% of the stock's fair market value on the
date of the grant. The Company's goal in granting stock options is to provide a
vehicle for long-term incentive compensation through financial rewards dependent
on future increases in the market value of the Company's stock. Thus, executive
officers are encouraged to manage the Company with a view toward maximizing
long-term shareholder value.
In determining the number of options to be granted to Option Plan
participants, including Mr. Jilk and the Company's other executive officers, the
Committee considers publicly available management compensation data (including
data on options) concerning other bank holding companies, the number of options
already held by executive officers and others, potential dilution, the number of
the Company's shares outstanding, and the financial performance of the Company
to the date of grant. While the Committee considers this information, it does
not apply any specific quantitative or qualitative criteria or assign any
specific weights to these factors; the grants are made in the subjective
judgment of the Committee. In 1995, stock options granted to employees covered a
total of 147,945 shares, or 1.96% of the Company's shares outstanding at
December 31, 1994. Options for 32,340 shares were granted to Mr. Jilk, the same
number he received in 1994.
Given the Company's goal to provide incentives for its managers to remain
with the Company, the Option Plan provides an option may only be exercised to
the extent it is vested. An option vests as the option holder completes
continuous employment with the Company following the date of its grant, as
follows: second and third anniversaries of grant date - 12.5% vests each year;
fourth, fifth, and sixth anniversaries of grant date - 25% vests each year. If a
participant's employment with the Company terminates other than upon death or
retirement at age 60 or later, non-vested options terminate.
Tax Law Change. A 1993 change in the federal tax law has made
non-performance-based compensation to executives of public companies in excess
of $1 million per year non-deductible for income tax purposes. Given the
Company's current executive compensation levels, the Committee does not
anticipate this change in law will affect the Company, but the Committee will
continue to monitor the situation.
John A. Cenerazzo, Chairman Kenneth A. Longacre
John H. Body Randall J. Nester
John J. Dau Harold C. Wegman
9
<PAGE>
Executive Compensation Summary
The following table sets forth annual and long-term compensation for
services in all capacities to the Company of those persons who were, at December
31, 1995, (i) the Company's Chief Executive Officer, and (ii) the other two most
highly compensated executive officers of the Company or subsidiary (the "named
executives") for each of the three years ended December 31. No other executive
officer received salary and bonus for 1995 in excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
Securities
Restricted Underlying
Name and Other Annual Stock Options/ LTIP All Other
Principal Salary Bonus(1) Compensation Awards SARs Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence T. Jilk, Jr. 1995 $254,927 $169,050 0 0 32,340 0 $49,218(2)
President & Chief 1994 238,686 159,953 0 0 33,957 0 47,539
Executive Officer 1993 229,227 155,333 0 0 33,030 0 39,939
Wayne R. Weidner 1995 167,181 112,472 0 0 27,720 0 34,803(2)
Executive Vice 1994 157,146 106,407 0 0 29,106 0 31,435
President 1993 148,231 103,333 0 0 28,312 0 18,721
William H. Sayre 1995 117,661 55,786 0 0 11,550 0 2,942(2)
Vice Chairman 1994 121,367 52,860 0 0 12,127 0 2,784
of NPB 1993 114,136 51,333 0 0 11,796 0 1,474
- ----------
<FN>
(1) Includes 25% mandatory deferral of total award under the Company's
Executive Incentive Plan.
(2) Consists of 50% matching contributions by the Company under the Capital
Accumulation Plan (a 401(k) plan) ($4,620 for Mr. Jilk, $4,180 for Mr.
Weidner, and $2,942 for Mr. Sayre), Company's matching contribution with
respect to previously awarded, mandatorily deferred amounts under the
Company's Executive Incentive Plan paid in accordance with the Plan
($38,981 for Mr. Jilk and $25,396 for Mr. Weidner), life insurance annual
premiums of $2,005 and $3,960 for Messrs. Jilk and Weidner, and long-term
disability insurance premiums of $3,612 and $1,267 for Messrs. Jilk and
Weidner.
</FN>
</TABLE>
10
<PAGE>
Option Grants
The following table summarizes certain information regarding option grants
during fiscal 1995 to the named executives:
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
Number of Grant Date
Securities % of Total Present Value
Underlying Options Based on
Options Granted to Exercise or Black-Scholes
Granted(1) Employees in Base Price(2) Model(4)
Name (#) Fiscal Year ($/Share) Expiration Date(3) ($)
(a) (b) (c) (d) (e) (f)
<S> <C> <C> <C> <C> <C>
Lawrence T. Jilk, Jr. 32,340 21.6% $26.67 10/27/05 $397,585
Wayne R. Weidner 27,720 18.7% $26.67 10/27/05 $340,787
William H. Sayre 11,550 7.8% $26.67 10/27/05 $141,995
- ----------
<FN>
(1) An option may only be exercised after the holder has been an employee for
two full years from the grant date in accordance with the following
schedule: 12.5% per year on the second and third anniversary dates of
grant, and 25% per year on the fourth, fifth, and sixth anniversary dates
of grant. All amounts represent stock options; the Company's Stock Option
Plan does not provide for the issuance of stock appreciation rights. Option
information has been restated to reflect a 5% stock dividend paid on
October 31, 1995.
(2) Under the terms of the Company's Stock Option Plan, all options must be
granted with an exercise price equal to the fair market value on the date
of grant. The exercise price for an option must be paid in cash; an
optionee exercising a non-qualified stock option may elect to surrender a
percentage of the shares otherwise issuable to cover any required
withholding taxes upon compliance with detailed procedural rules set forth
in the Plan. Option exercise prices have been adjusted pursuant to the Plan
to reflect a 5% stock dividend paid on October 31, 1995.
(3) In the event of termination of employment other than for retirement at age
60 or later or death, or for "cause," the non-vested portion of any option
will lapse immediately and the unexercised vested portion of any option
will lapse no later than three months after termination of employment. In
the event of termination of employment upon retirement at age 60 or later
or death, the nonvested portion of any option will vest immediately and the
option, to the extent remaining unexercised, will lapse no later than three
years after termination of employment. In the event of termination of
employment for "cause," all unexercised options lapse immediately.
(4) Based upon the Black-Scholes option valuation model, which estimates the
present dollar value of the Company's common stock options to be $12.29 per
share under option. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the date
the option is exercised, so that there is no assurance the value realized
will be at or near the value estimated by the Black-Scholes model. The
assumptions underlying the Black-Scholes model include (a) an expected
volatility of .0820 based on the prior three years of month-end closing
stock prices of the Company's common shares, (b) a risk-free rate of return
of 6.17%, which approximates the 10-year Treasury bond rate, (c) the
Company's average common shares dividend yield of 2.54% over the prior
three-year period, and (d) a ten-year period from time of grant until
exercise.
</FN>
</TABLE>
11
<PAGE>
Option Exercises and Fiscal Year-End Option Values
The following table summarizes certain information regarding exercises of
stock options during fiscal 1995 and the value of outstanding options at the end
of fiscal 1995 for the named executives:
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Value of Unexercised
Number of Securities In-the-Money
Shares Underlying Unexercised Options/SARs
Acquired on Options/SARs at FY-End at FY-End(2)
Exercise Value Realized(1) Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g)
<S> <C> <C> <C> <C> <C> <C>
Lawrence T. Jilk, Jr. 17,818 $233,509 33,205 138,134 $257,315 $404,293
Wayne R. Weidner 17,545 154,867 20,959 116,672 179,311 330,831
William H. Sayre 0 0 1,474 33,999 0 0
- ----------
<FN>
(1) Represents the aggregate market value of the underlying common shares at
the date of exercise minus the aggregate exercise price for options
exercised.
(2) "In-the-Money Options" are stock options with respect to which the market
value of the underlying common shares exceeded the exercise price at
December 31, 1995. The value of such options is determined by subtracting
the aggregate exercise price for such options from the aggregate fair
market value of the underlying common shares on December 31, 1995.
</FN>
</TABLE>
Pension Plan
The Company has a noncontributory, defined-benefit Pension Plan covering
employees who have reached 20 1/2 years of age and completed 1,000 hours of
service with the Company. The following table shows the annual retirement
benefits payable under the plan in the form of a joint and survivor annuity for
a range of compensation and years of service classifications. The amounts shown
in the table are based on an employee who is presently age 65 and has had a
constant salary for the past five years and are not subject to offset for social
security or other amounts. As of December 31, 1995, Messrs. Jilk, Weidner, and
Sayre were credited with 18, 33, and 3 years of service under the plan,
respectively.
<TABLE>
<CAPTION>
Pension Plan Table
Years of Service
Salary 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$ 75,000 $ 16,650 $ 22,200 $ 27,750 $ 33,300 $ 38,850
100,000 23,213 30,950 38,688 46,425 54,163
125,000 29,775 39,700 49,625 59,550 69,475
150,000 36,338 48,450 60,563 72,675 84,788
175,000(1) 36,338 48,450 60,563 72,675 84,788
200,000(1) 36,338 48,450 60,563 72,675 84,788
225,000(1) 36,338 48,450 60,563 72,675 84,788
250,000(1) 36,338 48,450 60,563 72,675 84,788
275,000(1) 36,338 48,450 60,563 72,675 84,788
300,000(1) 36,338 48,450 60,563 72,675 84,788
325,000(1) 36,338 48,450 60,563 72,675 84,788
- ----------
<FN>
(1) Salary in excess of $150,000 is disregarded in determining a participant's
retirement benefit. The 1995 compensation covered by the plan (all salary)
for Messrs. Jilk, Weidner, and Sayre was $150,000, $150,000, and $117,661,
respectively.
</FN>
</TABLE>
The Company is also contractually obligated to provide Messrs. Jilk and
Weidner with additional retirement benefits for a specified time period. See
"Transactions with Management and Others" herein.
12
<PAGE>
Performance Graph
The following performance graph compares the performance of the Company's
Common Stock to the Nasdaq Stock Market Total Return Index and to the Nasdaq
Bank Stock Index for the Company's last five fiscal years. The graph assumes
that the value of the investment in the Company's Common Stock and each index
was $100 at December 31, 1990, and that all dividends were reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
Among National Penn Bancshares, Nasdaq Stock Market Total Return Index,
& Nasdaq Bank Stock Index
(The Performance Graph appears here. See the table below for plot points.)
<TABLE>
<CAPTION>
December 31,
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
National Penn Bancshares, Inc. 100 126 194 312 208 226
Nasdaq Stock Market Total Return 100 161 187 215 210 296
Nasdaq Bank Stocks 100 164 239 272 271 404
</TABLE>
13
<PAGE>
Transactions with Management and Others
The Company is a party to deferred compensation agreements with Lawrence T.
Jilk, Jr., President and Chief Executive Officer of the Company, and Wayne R.
Weidner, Executive Vice President of the Company. Each of these agreements will
provide the executive with a retirement annuity of approximately 65% of his
final average base salary for a specified 15-year period. If Messrs. Jilk and
Weidner had retired at December 31, 1995, they would have been entitled to
receive retirement annuities of $102,897 and $74,342, respectively, per year.
These amounts would have included the retirement benefits payable to these
executives under the Company's Pension Plan. The deferred compensation
agreements also provide that, following a "change in control" (as defined in the
agreements) of the Company or NPB, an executive whose employment is terminated
without cause or who resigns following an adverse change in the terms of his
employment, including reduction in title or responsibilities, reduction in
compensation or benefits (except in the case of a reduction for all employees
generally), failure to nominate the executive for election to the Board of
Directors of the Company or NPB, reassignment of the executive beyond a
thirty-minute commute from Boyertown, Pennsylvania, or increased travel
requirements, will receive a lump-sum cash severance payment equal, generally,
to 299% of the executive's average annual compensation for the five years
preceding the change in control.
Certain directors and officers of the Company, and the companies with which
they are associated, are customers of, and during 1995 had banking transactions
with, NPB in the ordinary course of business. Similar transactions may be
expected to occur in the future. All loans, and commitments to loan, involved in
such transactions were made under substantially the same terms, including
interest rates, collateral, and repayment terms, as those prevailing at the time
for comparable transactions with other persons and, in the opinion of NPB's
management, do not involve more than the normal risk of collection or present
other unfavorable features. As of December 31, 1995, loans to officers,
directors, and affiliates represented 3.7% of stockholders' equity in the
Company.
Auditors
Grant Thornton LLP, certified public accountants, conducted the Company's
audit for 1995. Representatives of Grant Thornton LLP are expected to be present
at the Meeting, will be given an opportunity to make a statement if they desire
to do so, and will be available to respond to appropriate questions from
shareholders.
Principal Shareholders
The following table sets forth the persons or groups known by the Company
to own more than 5% of its common shares as of January 1, 1996:
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership Common Shares
Investors Trust Company(2) 475,956(1) 6.3%
Wyomissing, PA
James K. Overstreet 1,045,720(3) 13.7%
315 Natlie Road
Phoenixville, PA
- ----------
(1) These shares are held by Investors Trust Company ("ITC"), a wholly-owned
subsidiary of the Company, as trustee or executor on behalf of various
trusts and estates. Pursuant to the provisions of the applicable governing
instruments and/or in accordance with the applicable principles of
fiduciary law, ITC has the right and power, exercisable alone, to vote and
to dispose of 172,635 of these shares, and exercisable with a co-fiduciary,
to vote and to dispose of 303,321 of these shares, so long as such action
is in the best interest of such trust or estate and the beneficiaries or
principals thereof.
14
<PAGE>
(2) 132,033 shares are also held by ITC as trustee under the Company's Capital
Accumulation Plan. ITC has the right and power to vote these shares in
accordance with the Plan. ITC has the right and power to dispose of these
shares only to the extent necessary to meet the liquidity needs of the
Plan.
(3) These shares are owned of record by persons or entities identified by Mr.
Overstreet in filings made by him with regulatory authorities and with the
Company, as being parties through which he holds common shares of the
Company. 42,592 of these shares are held by Mr. Overstreet's wife, Evelyn
M. Overstreet, and 5,333 owned by a limited partnership in which Mr.
Overstreet is a partner.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than ten percent of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors, and greater than ten-percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that, during the fiscal year ended December 31, 1995, all Section 16(a)
filing requirements applicable to its officers, directors, and greater than
ten-percent beneficial owners were complied with.
Other Matters
Management knows of no business other than as described above that is
planned to be brought before the Meeting. Should any other matters arise,
however, the persons named on the enclosed proxy will vote thereon according to
their best judgment.
Shareholder Proposals for Next Annual Meeting
Any shareholder proposal for consideration at the annual meeting of
shareholders to be held in 1997 must be received by the Company at its principal
offices not later than November 23, 1996, in order for it to be considered for
inclusion in the Company's proxy materials relating to the 1997 annual meeting
of shareholders.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sandra L. Spayd
SANDRA L. SPAYD
Secretary
15
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NATIONAL PENN BANCSHARES, INC.
The undersigned hereby appoints Clyde M. Brumbach, Paul R. Hafer and Thomas
E. Henry, III, proxies, each with power to act without the others and with power
of substitution, and hereby authorizes them to represent and vote, as designated
on the other side, all the shares of stock of National Penn Bancshares, Inc.
(the "Company") standing in the name of the undersigned with all powers which
the undersigned would possess if present at the Annual Meeting of Shareholders
of the Company to be held April 23, 1996, or any adjournment thereof.
(Continued, and to be marked,
dated and signed, on the other side)
<PAGE>
This proxy when properly executed will be voted in the manner directed by the
undersigned shareholder. If no direction is made, this proxy will be voted FOR
proposal 1.
1. Election of Class III Directors:
___ FOR all nominees listed to the right (except as marked to the
contrary).
___ WITHHOLD AUTHORITY to vote for all nominees listed to the right.
NOMINEES: Patricia L. Langiotti, Randall J. Nester, Harold C. Wegman, and
Wayne R. Weidner.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
__________________________________________________________________________
2. In their discretion, the proxy holders are authorized to vote upon such
other business as may come before the meeting.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: , 1996
______________________________________
(Signature)
______________________________________
(Signature if held jointly)
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
