UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 under ss. 240.14a-12
NATIONAL PENN BANCSHARES, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(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:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(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):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
NATIONAL PENN BANCSHARES, INC.
-----------------------------
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
to be held April 25, 2000
-----------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of National Penn Bancshares, Inc. (the "Company") will be held on
April 25, 2000, at 4:00 P.M. (Local Time) at the Sunnybrook Ballroom, East High
Street, Pottstown, Pennsylvania, for the following purposes:
(1) to elect four Class I 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 10, 2000, 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 27, 2000
<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 25, 2000 (the
"Meeting"). The Proxy Statement and the accompanying proxy are first being
mailed to shareholders of the Company on or about March 27, 2000. The expense of
soliciting proxies will be borne by the Company. The Company expects that the
solicitation of proxies primarily will be 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 10, 2000,
are entitled to notice of, and to vote at, the Meeting. On that date, there were
17,701,942 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 and/or Employee Stock Purchase Plan, the proxy card sent to such
shareholder will represent the number of shares registered in such shareholder's
name and the number of shares credited to such shareholder's Dividend
Reinvestment Plan account and/or Employee Stock Purchase 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, 1999, 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.
1
<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 fifteen persons. The Board of Directors of the Company, as provided in
the Company's Articles of Incorporation, as amended, 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, four directors in Class II
and three directors in Class III. John W. Jacobs and Robert E. Rigg, two of the
eleven directors, were elected to the Board of Directors on January 4, 1999 when
the Company acquired Elverson National Bank, pursuant to the terms of the
acquisition agreement.
Four Class I directors will be elected at the Meeting. The term of office
of the Class I directors elected at the Meeting will expire on the date of the
annual meeting of the Company's shareholders in 2003. The term of office of the
continuing directors in Class II and Class III will expire on the date of the
annual meeting of the Company's shareholders in 2001 and 2002, respectively.
The Board of Directors has nominated John H. Body, J. Ralph Borneman, Jr.,
Kenneth A. Longacre, and Robert E. Rigg for election as Class I directors. Each
of these persons is presently a Class I director of the Company.
The Company's Bylaws provide that a director must retire from the Board of
Directors on the date of the first annual meeting of shareholders following the
director's reaching age 70, except that a person who served as a director on
April 27, 1983 is not required to retire until the first annual meeting of
shareholders following that person's reaching age 72. In accordance with this
Bylaw provision, Dr. Harold C. Wegman, a Class III director who has served as a
director since 1980, will serve only until the Meeting, whereupon he will retire
and his Board seat will become vacant. 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 2002.
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 I 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.
2
<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 I directors, and the
continuing Class II and Class III directors, as of March 1, 2000:
<TABLE>
<CAPTION>
Director of
Principal Occupation(s) the Company
Name During Last Five Years Age Since (1)
---- ---------------------- --- ---------
<S> <C> <C> <C>
NOMINEES AS CLASS I DIRECTORS TO SERVE UNTIL 2003
JOHN H. BODY(2)(3)(4) Retired; 1988-May 1998, Manager,
General Services, Air Products 66 1981
and Chemicals, Inc.
J. RALPH BORNEMAN, JR.(2)(3) President, Body-Borneman Asso- 61 1988
ciates, Inc. (insurance).
KENNETH A. LONGACRE(2)(4) Chairman, Farm & Home Oil
Company; April 1990-July 1998,
Chief Executive Officer, Farm & 66 1990
Home Oil Company.
ROBERT E. RIGG(3)(5) President, Joseph A. Rigg 47 1999
Insurance Agency, Inc.
CONTINUING CLASS II DIRECTORS TO SERVE UNTIL 2001
FREDERICK H. GAIGE(2)(3) Dean & Campus Executive Officer, 62 1997
Penn State, Berks - Lehigh Valley College.
JOHN W. JACOBS(5) Private Investor. 50 1999
LAWRENCE T. JILK, JR.(4) Chairman and Chief Executive 61 1978
Officer of the Company;
Chairman of NPB.
C. ROBERT ROTH(3) District Justice. 52 1990
3
<PAGE>
Director of
Principal Occupation(s) the Company
Name During Last Five Years Age Since (1)
---- ---------------------- --- ---------
CONTINUING CLASS III DIRECTORS TO SERVE UNTIL 2002
PATRICIA L. LANGIOTTI(3)(4) President, Creative Management 53 1986
Concepts (management consulting);
1989-April 1998, Chief Executive
Officer, Brubacher Excavating, Inc.
HAROLD C. WEGMAN, D.D.S.(2) Dentist practicing in the Reading 72 1980
area.
WAYNE R. WEIDNER(4) President of the Company; 57 1985
Chief Executive Officer
and President of NPB.
<FN>
- ------------------------
(1) Includes period served as director of NPB prior to formation of the
Company.
(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) Messrs. Rigg and Jacobs are cousins.
</FN>
</TABLE>
4
<PAGE>
Security Ownership of Management
The following table sets forth information concerning the number of common
shares of the Company held as of March 1, 2000, by each nominee for director,
each present director, each named executive officer set forth in the
compensation tables beginning on page 9, 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(2)(4) 125,354 121,482 3,872 -
J. Ralph Borneman, Jr.(2)(4) 19,481 7,503 11,978 -
Frederick H. Gaige(4) 1,669 1,669 0 -
John W. Jacobs 376,259 104,024 272,235 2.1%
Lawrence T. Jilk, Jr.(3) 218,574 204,201 14,373 1.2%
Patricia L. Langiotti(4) 10,241 9,346 895 -
Kenneth A. Longacre(2)(4) 145,694 145,694 0 -
Robert E. Rigg(2) 289,768 275,275 14,493 1.6%
C. Robert Roth(4) 19,887 10,568 9,319 -
Harold C. Wegman, D.D.S.(4) 170,912 90,608 80,304 1.0%
Wayne R. Weidner(3) 189,190 180,612 8,578 1.1%
Other Named Executive Officers
Garry D. Koch(3) 25,696 25,654 42 -
Glenn E. Moyer(3)(5) 30,870 29,104 1,766 -
Sharon L. Weaver(3) 13,117 13,117 0 -
All Directors and Executive Officers
as a Group (16 Persons)(3)(4) 1,687,553 1,263,705 423,848 9.5%
<FN>
- ------------------------
(1) Unless otherwise indicated, amount owned does not exceed 1% of the total
number of common shares outstanding as of March 1, 2000.
(2) Indicates a nominee for election as a Class I 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 named officers under the Company's stock compensation
plans: Mr. Jilk - 196,133 shares, Mr. Weidner -168,304 shares, Mr. Koch -
24,472 shares, Mr. Moyer - 26,233 shares, and Ms. Weaver - 9,667. Does not
include shares which may be acquired in the future by exercise of options
granted under the Company's stock compensation plans, which options are not
presently exercisable.
(4) Includes the following shares which may be acquired by exercise of vested
options granted to non-employee directors under the Company's stock option
plan for non-employee directors: Mr. Body - 15,433 shares, Mr. Borneman -
1,928 shares, Mr. Gaige - 964, Ms. Langiotti -2,892 shares, Mr. Longacre -
6,751 shares, Mr. Roth - 6,751 shares, and Dr. Wegman - 16,399 shares. Does
not include shares which may be acquired in the future by exercise of
options granted under the Company's stock option plan for non-employee
directors which options are not presently exercisable.
(5) Includes 1,766 shares held by Mr. Moyer's spouse as to which Mr. Moyer
disclaims beneficial ownership.
</FN>
</TABLE>
5
<PAGE>
ADDITIONAL INFORMATION
Board and Committee Meetings
The Company's Board of Directors met 15 times during 1999. 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 one time during 1999, 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 twice during 1999, is
responsible for the approval and administration of the base salary level and
annual incentive compensation programs, as well as the long-term incentive
compensation 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 1999, is responsible for reporting to the Board on the general financial
condition of the Company and the results of the annual audit. During 1999, each
director of the Company attended at least 75% of the total of all meetings of
the Company's Board of Directors and Board committees on which they served.
Directors' Compensation
Each director of the Company who is not an employee of the Company or NPB
(each of whom also presently serves as a director of NPB) annually receives a
$5,000 retainer for serving as a director if the director attends at least 75%
of total Board meetings and meetings of Board committees on which the director
serves, plus $250 for each Board committee meeting attended (or $125 if the
meeting is held on the same day as a Board or another Board committee meeting).
Each non-employee director of NPB currently receives $500 for each NPB Board
meeting attended, and $250 for each Board committee attended (or $125 if the
meeting is held on the same day as a Board or another Board committee meeting).
Non-employee directors of the Company or NPB also receive $125 per Board or
Board committee meeting if such meeting is held by telephone conference call.
Mr. Longacre, as a non-employee director of Investors Trust Company ("ITC"), a
Company subsidiary, receives $250 for each ITC Board meeting attended. Messrs.
Longacre and Jacobs, as non-employee directors of Penn Securities, Inc. ("PSI"),
an NPB Bank subsidiary, receive $250 for each PSI Board meeting attended.
Messrs. Jacobs and Rigg, as non-employee members of NPB's Elverson National Bank
divisional board, receive $650 for each divisional board meeting attended.
Under a directors' fee plan, non-employee directors of the Company or of
its subsidiaries may elect to receive payment of their compensation as directors
either in cash or in the Company's common shares or to defer such compensation
for subsequent payment in cash or the Company's common shares. During 1999, the
Company accrued a total of $124,000 in director compensation. Of this amount,
$65,750 was paid currently in cash or stock. The balance of $58,250 was deferred
compensation, all of which will be paid in stock.
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 964 common shares (subject to adjustment on
account of stock dividends or splits) 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 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 closely tied to corporate results and a stock compensation
plan for managerial employees.
6
<PAGE>
The Committee intends to place at risk a major portion of senior managers'
compensation by emphasizing compensation earned through achievement of the
Company's financial goals and through appreciation in the market value of the
Company's stock. The Committee seeks to provide a high level of overall
compensation to senior managers if a high level of profitability is achieved.
Base Salary. The Committee determines base salaries of executive officers
by evaluating the responsibilities of their positions and by comparing salaries
paid to those of 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, the Committee generally targets base salaries
somewhat below the average salary levels of the compared bank holding company
executives. Although the Committee considers the Company's financial
performance, its salary decisions are generally not tied to any financial
performance factor or other criteria and are made independently of its decisions
on other components of the Company's compensation package.
For 1999, the Committee reviewed an independent salary study of
Pennsylvania bank holding companies, broken down by asset size, including data
on chief executive officer compensation. This group is less diverse than the
financial institutions in the Nasdaq Bank Stock Index included in the graph on
page 13, which Index includes many larger banking companies throughout the
United States. The Committee believes salary comparisons should be made
primarily with Pennsylvania companies of roughly comparable size.
The Committee established Mr. Jilk's base salary, effective April 1, 1999,
at $317,086, a 5% increase over his 1998 salary level. This placed Mr. Jilk's
base compensation somewhat below the average base compensation of the chief
executive officers of the bank holding companies covered by the compensation
data reviewed by the Committee. The Committee credited Mr. Jilk with success in
managing the growth of the Company's assets, new product development and
technological change, at the same time leading the Company to another record
financial performance.
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 bonuses under the
Executive Incentive Plan (the "Plan"). Such bonuses are a function of (1) the
size of the bonus fund, which the Committee determines each year, without
discretion, pursuant to the Plan; (2) the number of participants in the Plan,
which the Committee determines each year; and (3) the Committee's subjective
evaluation of each participant's contribution to the Company's results for the
year.
Under the Plan, at the beginning of a fiscal year, the Committee
establishes internal and external financial performance goals for the Company
for that year. For 1999, the internal goal was for the Company's net operating
income before securities transactions to exceed such income for 1998; the
external goal was for the Company's net operating income before securities
transactions (profits or losses on securities sales of banks or bank holding
companies or their successors in which the Company has or had a 20% ownership
interest are included as operating income), as a percent of average realized
common equity, to exceed the average of such income, as a percent of average
realized common 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 1999, there
were ten Pennsylvania bank holding companies in this group. This group is
subject to change as companies are acquired and is less diverse than the
financial institutions in the Nasdaq Bank Stock Index included in the 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 Committee determines the extent to which the
Company met the internal and external goals. If it met both goals, a bonus fund
is determined by a formula set forth in the Plan. Under this formula, the size
of the bonus fund is determined solely by the extent to which the Company
exceeds its external goal. The maximum bonus fund is established if the Company
met the external goal by 30% or more. If the Company does not meet either goal,
there is no bonus fund.
7
<PAGE>
The Plan provides for a maximum cash bonus of 50% of base salary for the
Company's Chairman and Chief Executive Officer and for its President. For other
officers, the Plan provides, depending on their positions, maximum cash bonuses
of 35% or 25% of base salary.
Given the goal to provide incentives for retention of the Company's
managers, the Plan also provides that each participant eligible for a maximum
cash bonus of 50% or 35% also is awarded a bonus equal to one-third of his or
her cash bonus, but this award is subject to a five-year mandatory deferral and
risk of forfeiture. If, at the end of five years, the participant is still
employed or has retired at age 60 or later, the participant becomes entitled to
the amount of the deferred bonus plus interest, together with a matching
contribution from the Company. The participant will forfeit the deferred bonus
if he or she does not satisfy the requirements for a matching contribution,
except in the case of death or a change in control of the Company.
In 1999, the Company met both its internal and external financial
performance goals, the latter by 38.6%. Based on the resulting size of the bonus
fund, the number of Plan participants, and the Committee's subjective
performance evaluations of Plan participants for 1999, including Mr. Jilk, the
Committee awarded Mr. Jilk a cash bonus of $158,543 and a mandatory deferred
bonus of $52,848. In evaluating Mr. Jilk's performance, the Committee noted the
Company's record earnings in 1999 and Mr. Jilk's leadership in continuing to
position the Company for long-term profitable growth.
Stock Option Grants. The Committee grants stock options annually to
executive officers and other key employees under the Officers' and Key
Employees' Stock Compensation Plan (the "Option Plan"). All options have an
exercise price equal to 100% of the stock's fair market value on the date of
grant. The goal has been, and is, to provide long-term incentive compensation
through financial rewards dependent on future increases in the market value of
the Company's stock, thus, encouraging management of the Company with a
long-term perspective.
In determining the number of options to be granted in 1999 to officers and
employees, including the Company's executive officers, the Committee considered
publicly available management compensation data (including data on options)
about other bank holding companies, the number of options already held by
executive officers and others, potential dilution, vesting requirements, the
number of the Company's shares outstanding, and the financial performance of the
Company to the date of grant. While the Committee considered this information,
it did not apply any specific quantitative or qualitative criteria or assign any
specific weights to these factors; the Committee made the grants subjectively in
its best judgment. In 1999, the Committee granted stock options for a total of
255,904 shares or 1.44% of the Company's shares outstanding at December 31,
1998, including stock options for 44,314 shares granted to Mr. Jilk.
Under the Option Plan, an option holder may exercise a stock option only to
the extent it is vested. Options vest in 20% increments over a five-year period.
If an option holder's employment with the Company terminates other than upon
death or retirement at age 60 or later, non-vested options terminate.
Tax Law. Under a federal income tax law adopted in 1993, compensation to
executives of public companies in excess of $1 million per year that is not
"performance-based" is not deductible for income tax purposes. Given the
Company's current executive compensation levels, the Committee does not
anticipate this tax law will affect the Company, but the Committee will continue
to monitor the situation. To the extent the Committee develops new executive
compensation plans or programs, it intends to structure them so that
compensation will be deemed "performance-based" under this income tax law.
John H. Body, Chairman Kenneth A. Longacre
J. Ralph Borneman, Jr. Harold C. Wegman
Frederick H. Gaige
8
<PAGE>
Executive Compensation Summary
The following table sets forth annual and long-term compensation for
services in all capacities to the Company during the years 1997 through 1999 of
those persons who were (i) the Company's Chief Executive Officer, and (ii) the
other four most highly compensated executive officers of the Company who were
serving as executive officers as of December 31, 1999 (collectively the "named
executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------
Annual Compensation Awards Payouts
--------------------------------- --------------------- -------
Securities
Restricted Underlying
Name and Other Annual Stock Options/ LTIP All Other
Principal Salary Bonus(1) Compensation Awards SARs Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
--------- ---- ------ -------- ------------ ------ ---- ------- ------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence T. Jilk, Jr. 1999 320,220 211,391 0 0 44,314 0 72,882(2)
Chief Executive 1998 305,314 201,325 0 0 49,278 0 66,639
Officer 1997 289,740 191,737 0 0 51,331 0 59,419
Wayne R. Weidner 1999 239,646 153,333 0 0 38,025 0 50,496(2)
President 1998 206,923 143,333 0 0 42,240 0 45,518
1997 191,327 133,333 0 0 44,000 0 40,649
Garry D. Koch 1999 132,199 58,333 0 0 7,875 0 20,480(2)
Executive Vice 1998 124,738 58,333 0 0 7,500 0 18,711
President of NPB 1997 98,997 46,667 0 0 8,750 0 11,819
Glenn E. Moyer (3) 1999 196,828 88,947 0 0 13,650(4) 0 5,000(2)
Executive Vice
President of NPB
Sharon L. Weaver 1999 120,470 53,667 0 0 7,350 0 17,245(2)
Executive Vice 1998 108,108 51,333 0 0 7,000 0 12,864
President of NPB 1997 96,371 44,800 0 0 8,125 0 11,616
<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) ($5,000 for Mr. Jilk, $5,000 for Mr.
Weidner, $4,375 for Mr. Koch, $5,000 for Mr. Moyer and $5,000 for Ms.
Weaver); 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 ($52,848 for Mr. Jilk,
$38,333 for Mr. Weidner, $14,583 for Mr. Koch and $13,417 for Ms. Weaver);
life insurance annual premiums of $4,260 and $4,400 for Messrs. Jilk and
Weidner; and long-term disability insurance premiums of $4,118 and $1,512
for Messrs. Jilk and Weidner.
(3) Mr. Moyer was not an employee of the Company in 1997 or 1998.
(4) Options for 6,300 of these shares were approved for Mr. Moyer in December
1998, contingent on closing of the Elverson National Bank acquisition. The
acquisition closed on January 4, 1999.
</FN>
</TABLE>
9
<PAGE>
Option Grants
The following table summarizes certain information regarding option grants
during fiscal 1999 to the named executives:
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
------------------------------------------------------------------ -----------------
Number of Grant Date
Securities % of Total Present Value
Underlying Options Based on
Options Granted to Exercise or Black-Scholes
Granted(1) Employees in Base Price(2) Model(4)
Name (#) Fiscal Year ($/Share) Expiration Date(3) ($)
---- --- ----------- --------- ------------------ ---
(a) (b) (c) (d) (e) (f)
<S> <C> <C> <C> <C> <C> <C>
Lawrence T. Jilk, Jr. 44,314 15.90% $25.33 1/1/10 $284,496
Wayne R. Weidner 38,025 13.65% 25.33 1/1/10 244,121
Garry D. Koch 7,875 2.83% 25.33 1/1/10 50,558
Glenn E. Moyer 7,350 2.64% 25.33 1/1/10 47,187
6,300(5) 2.26% 25.69 2/4/09 28,791
Sharon L. Weaver 7,350 2.64% 25.33 1/1/10 47,187
<FN>
- ----------
(1) Each option only becomes exercisable if the holder remains an employee
after the grant date in accordance with the following vesting schedule: 20%
per year on the first through fifth anniversary dates of grant. All amounts
represent stock options; the Company's stock compensation plans do not
provide for the issuance of stock appreciation rights.
(2) Under the terms of the Company's stock compensation plans, all options must
be granted with an exercise price equal to the fair market value of the
stock 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 plans.
(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 $6.42 per
share under option. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the date
the option is exercised, so that there is no assurance the value realized
will be at or near the value estimated by the Black-Scholes model. The
assumptions underlying the Black-Scholes model include (a) an expected
volatility of 17.0%, (b) a risk-free rate of return of 6.50%, which
approximates the 9-year, zero- coupon Treasury bond rate, (c) the Company's
average common shares dividend yield of 3.23% on the grant date, (d) an
expected term of 8.98 years, and (e) an expected turnover of 5%.
(5) These options were approved for Mr. Moyer in December 1998, contingent on
closing of the Elverson National Bank acquisition. The acquisition closed
on January 4, 1999.
</FN>
</TABLE>
10
<PAGE>
Option Exercises and Fiscal Year-End Option Values
The following table summarizes certain information regarding exercises of
stock options during fiscal 1999 and the value of outstanding options at the end
of fiscal 1999 for the named executives:
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options/SARs
Shares Options/SARs at FY-End at FY-End(2)
Acquired on ------------------------------ ------------------------------
Exercise Value Realized(1) Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
---- -------- ----------------- ----------- ------------- ----------- -------------
(a) (b) (c) (d) (e) (f) (g)
<S> <C> <C> <C> <C> <C> <C>
Lawrence T. Jilk, Jr. 0 0 196,133 203,785 $1,543,117 $905,581
Wayne R. Weidner 9,925 $375,754 168,304 174,716 1,421,538 776,206
Garry D. Koch 0 0 24,472 29,840 200,978 108,267
Glenn E. Moyer 0 0 26,233 13,650 303,476 0
Sharon L. Weaver 7,357 85,939 9,667 27,799 36,851 100,712
<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, 1999. 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, 1999.
</FN>
</TABLE>
11
<PAGE>
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, 1999, Messrs. Jilk, Weidner, Koch,
Moyer and Ms. Weaver were credited with 22, 37, 16, 0 and 21 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 $15,975 $21,300 $26,625 $31,950 $37,275
$100,000 $22,538 $30,050 $37,563 $45,075 $52,588
$125,000 $29,100 $38,800 $48,500 $58,200 $67,900
$150,000 $35,663 $47,550 $59,438 $71,325 $83,213
$175,000 (1) $38,288 $51,050 $63,813 $76,575 $89,338
$200,000 (1) $38,288 $51,050 $63,813 $76,575 $89,338
$225,000 (1) $38,288 $51,050 $63,813 $76,575 $89,338
$250,000 (1) $38,288 $51,050 $63,813 $76,575 $89,338
$275,000 (1) $38,288 $51,050 $63,813 $76,575 $89,338
$300,000 (1) $38,288 $51,050 $63,813 $76,575 $89,338
$325,000 (1) $38,288 $51,050 $63,813 $76,575 $89,338
$350,000 (1) $38,288 $51,050 $63,813 $76,575 $89,338
$375,000 (1) $38,288 $51,050 $63,813 $76,575 $89,338
<FN>
- ----------
(1) Salary in excess of $160,000 is disregarded in determining a participant's
retirement benefit. The 1999 compensation covered by the plan (all salary)
for Messrs. Jilk, Weidner, Koch, Moyer and Ms. Weaver was $160,000,
$160,000, $132,199, $160,000, and $120,470, 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 Graphs
The following two performance graphs compare the performance of the
Company's common shares to the Nasdaq Stock Market Total Return Index and to the
Nasdaq Bank Stock Index for the Company's last three and five fiscal years,
respectively. The graphs assume that the value of the investment in the
Company's common shares and each index was $100 at each of December 31, 1996 and
December 31, 1994, respectively, and that all dividends were reinvested.
COMPARISON OF THREE-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,
1996 1997 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
National Penn Bancshares, Inc. 100 174 184 184
Nasdaq Stock Market Total Return 100 123 172 312
Nasdaq Bank Stocks 100 169 166 160
</TABLE>
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,
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
National Penn Bancshares, Inc. 100 109 123 214 227 227
Nasdaq Stock Market Total Return 100 141 174 214 300 543
Nasdaq Bank Stocks 100 149 197 332 326 314
</TABLE>
13
<PAGE>
Transactions with Management and Others
The Company is a party to deferred compensation agreements with Lawrence T.
Jilk, Jr. and Wayne R. Weidner. 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, 1999, they would have been entitled to receive
retirement annuities of $158,325 and $107,209 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.
The Company is also a party to "change-in-control" agreements with Garry D.
Koch, Glenn E. Moyer, and Sharon L. Weaver. These agreements provide lump-sum
cash severance benefits under the same circumstances as the deferred
compensation agreements with Messrs. Jilk and Weidner. The benefits for Messrs.
Koch and Moyer and for Ms. Weaver would be 200%, 299% and 200%, respectively, 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 1999 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, 1999, loans to officers,
directors, and affiliates represented 2.6% of shareholders' equity in the
Company.
In February 2000, NPB applied to the Office of the Comptroller of the
Currency for approval of a $100,000 investment in CountyCorner.com Inc.
("CC.com"). If approved and made, this investment will increase the Company's
ownership from 4.58% to 8.75% of CC.com's common stock. CC.com is an electronic
gateway (portal) company through which persons may gain access to various
websites of third party vendors and the Internet in general. Patricia L.
Langiotti, a Company and NPB director, owns 11.21% of CC.com's common stock and
serves as a director, corporate secretary and consultant to CC.com. Edward A.
Langiotti, her husband, owns 11.67% of CC.com's common stock and serves as a
director of CC.com. In addition, Company and NPB directors John H. Body, J.
Ralph Borneman, Jr. and Kenneth A. Longacre own .92%, .92% and 5.11%,
respectively, of CC.com's common stock. The Company believes the amount to be
paid by NPB is competitive with the amounts paid by others in similar sales.
Auditors
Grant Thornton LLP, certified public accountants, conducted the Company's
audit for 1999. 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.
14
<PAGE>
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 March 1, 2000.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership Common Shares
------------------- ----------------------- -------------
<S> <C> <C>
Investors Trust Company 986,296(1)(2) 5.6%
2201 Ridgewood Road, #180
Wyomissing, PA 19610
James K. Overstreet 1,866,643(3) 10.5%
315 Natlie Road
Phoenixville, PA 19460
<FN>
- ----------
(1) 508,901 of 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 171,854 of these shares, and exercisable with a
co-fiduciary, to vote and to dispose of 337,047 of these shares, so long as
such action is in the best interest of such trust or estate and the
beneficiaries or principals thereof.
(2) 367,299 of these shares are 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 Plan provisions and applicable law. ITC has the right
and power to dispose of these shares only to the extent necessary to meet
the liquidity needs of the Plan. In addition, ITC holds 110,096 of these
shares without any power to vote or dispose of them.
(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. 88,690 of these shares are held by Mr. Overstreet's wife, Evelyn
M. Overstreet, and 11,207 owned by a limited partnership in which Mr.
Overstreet is a partner.
</FN>
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
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, and/or written representations that no Forms 5 were required, the
Company believes that, during the fiscal year ended December 31, 1999, 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.
15
<PAGE>
Shareholder Proposals for Next Annual Meeting
Any shareholder proposal for consideration at the annual meeting of
shareholders to be held in 2001 must be received by the Company at its principal
offices not later than November 27, 2000, in order for it to be considered for
inclusion in the Company's proxy materials relating to the 2000 annual meeting
of shareholders. If the Company receives notice of any shareholder proposal
after February 9, 2001, the persons named as proxies for the 2001 annual meeting
of shareholders will have discretionary voting authority to vote on such
proposal at that meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sandra L. Spayd
SANDRA L. SPAYD
Secretary
16
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NATIONAL PENN BANCSHARES, INC.
The undersigned hereby appoints Earl Mutter, Harry D. Yoder and William M.
Moeller 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 on April 25, 2000 and at any adjournments or
postponements 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 I 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: John H. Body, J. Ralph Borneman, Jr., Kenneth A. Longacre, Robert
E. Rigg
(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 Annual Meeting and any adjournments
or postponements thereof.
If you wish to supply the Company with your e-mail address, write it in the
following space. _______________________________________________________________
Please sign exactly as name appears below. 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: ____________________, 2000
___________________________
(Signature)
___________________________
(Signature if held jointly)
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
VOTING INSTRUCTION CARD
THIS VOTING INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF NATIONAL PENN BANCSHARES, INC.
This Voting Instruction Card serves to instruct Investors Trust
Company, as trustee (the "Trustee") under the National Penn Bancshares, Inc.
Capital Accumulation Plan (the "Plan"), to vote, as designated on the other
side, all the shares of stock of National Penn Bancshares, Inc. ("NPB") entitled
to be voted by the undersigned participant under the terms of such Plan with
respect to the Annual Meeting of Shareholders of NPB to be held on April 25,
2000 and at any adjournments or postponements thereof.
The undersigned, in giving such instructions, will act as named
fiduciary for (i) such shares that have been allocated to the account of the
undersigned, (ii) a proportionate share of such shares that have been allocated
to the accounts of other participants in the Plan as to which the Trustee
receives no instructions, and (iii) a proportionate share of such shares held in
the Plan that have not been allocated to any participants in the Plan.
(Continued, and to be marked,
dated and signed, on the other side)
<PAGE>
This voting instruction card when properly executed will be voted as instructed
by the undersigned participant subject to applicable law. If no instructions are
given, the shares allocated to the undersigned participant will be voted by the
Trustee in accordance with the terms of the Plan and applicable law.
1. Election of Class I Directors:
___ FOR all nominees listed to the right (except as marked to the
contrary).
___ WITHHOLD AUTHORITY to vote for all nominees listed below.
NOMINEES: John H. Body, J. Ralph Borneman, Jr., Kenneth A. Longacre,
Robert E. Rigg
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
___________________________________________________________________________
2. In its discretion, the Trustee is authorized to vote upon such other
business as may come before the Annual Meeting and any adjournments or
postponements thereof.
Please sign exactly as your name appears herein.
Dated: ____________________, 2000
___________________________
(Signature of Participant)
PLEASE SIGN, DATE AND RETURN THE VOTING INSTRUCTION CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
