<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule14a-11(c) or Rule14a-12
SUSQUEHANNA 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] 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:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
- - --------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
- - --------------------------------------------------------------------------------
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- - --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- - --------------------------------------------------------------------------------
(3) Filing Party:
- - --------------------------------------------------------------------------------
(4) Date Filed:
- - --------------------------------------------------------------------------------
<PAGE>
SUSQUEHANNA BANCSHARES, INC.
April 24, 2000
TO OUR SHAREHOLDERS:
On behalf of our entire Board of Directors, I cordially invite you to
attend our Annual Meeting of Shareholders on Friday, May 26, 2000. At the
meeting, you will be asked to elect five members to the Board of Directors'
Class of 2003 for the coming three years. We will also report on Susquehanna's
1999 business results and other matters of interest to shareholders.
Information about the matters to be acted on at the meeting is contained in
the accompanying Notice of Annual Meeting and Proxy Statement. Also enclosed
with this Proxy Statement are your proxy voting card and the 1999 Annual Report.
I would like to take this opportunity to remind you that your vote is very
important. Please take a moment now to complete, sign and date the enclosed
proxy voting card and return it in the postage-paid envelope we have provided.
I look forward to seeing you at the meeting.
Sincerely,
/s/ Robert S. Bolinger
Robert S. Bolinger
Chairman of the Board and
Chief Executive Officer
<PAGE>
SUSQUEHANNA BANCSHARES, INC.
26 NORTH CEDAR STREET, P.O. BOX 1000
LITITZ, PA 17543-7000
April 24, 2000
NOTICE OF ANNUAL MEETING
On Friday, May 26, 2000, Susquehanna Bancshares, Inc. will hold its 2000
Annual Meeting of Shareholders at the Quality Inn & Suites, 2363 Oregon Pike,
Lancaster, Pennsylvania. The meeting will begin at 10:00 a.m. Only shareholders
of Susquehanna, their proxies and invited guests of Susquehanna may attend the
Annual Meeting.
Only shareholders of record at the close of business on April 11, 2000 can
vote at this meeting or any adjournments that may take place. At the meeting we
will:
1. Elect five members to the Board of Directors' Class of 2003 for
the coming three years; and
2. Attend to other business properly presented at the meeting.
Your Board of Directors recommends that you vote in favor of the director
nominees presented in this Proxy Statement.
At the meeting we will also report on Susquehanna's 1999 business results
and other matters of interest to shareholders.
A copy of Susquehanna's 1999 Annual Report is also enclosed. The
approximate date of mailing of this Proxy Statement and proxy voting card is
April 24, 2000.
By Order of the Board of Directors,
/s/ Lisa M. Cavage
Lisa M. Cavage
Secretary
Lititz, Pennsylvania
April 24, 2000
<PAGE>
SUSQUEHANNA BANCSHARES, INC.
26 NORTH CEDAR STREET, P.O. BOX 1000
LITITZ, PA 17543-7000
PROXY STATEMENT
April 24, 2000
INTRODUCTION
General
On Friday, May 26, 2000, Susquehanna Bancshares, Inc. will hold its 2000
Annual Meeting of Shareholders at the Quality Inn & Suites, 2363 Oregon Pike,
Lancaster, Pennsylvania. The meeting will begin at 10:00 a.m. At the meeting,
you will be asked to elect five members to the Board of Directors' Class of 2003
for the coming three years and to attend to any other business properly
presented at the meeting. Only shareholders of Susquehanna, their proxies and
invited guests of Susquehanna may attend the Annual Meeting.
This Proxy Statement was prepared under the direction of Susquehanna's
Board of Directors to solicit your proxy for use at the Annual Meeting. The
approximate date of mailing for this Proxy Statement and proxy voting card is
April 24, 2000.
Record Date for, and Voting at, the Annual Meeting
Only shareholders of record of Susquehanna common stock at the close of
business on Tuesday, April 11, 2000, may vote at the Annual Meeting. As of April
11, 2000, 39,268,003 shares of Susquehanna common stock, par value $2.00 per
share, were issued and outstanding and entitled to vote at the Annual Meeting.
A majority of the issued and outstanding shares of common stock is required
to constitute a quorum at the Annual Meeting. They may be present at the meeting
or represented by proxy. The Bank of New York, our Transfer Agent, will tabulate
the votes cast by proxy or in person at the Annual Meeting.
At the Annual Meeting, each share of Susquehanna common stock is entitled
to one vote in the election of the five directors to the Class of 2003. You will
be entitled to cast one vote for each share held by you for each candidate
nominated, but will not be entitled to cumulate your votes. The five nominees
receiving the highest number of votes will be elected to the Board of Directors'
Class of 2003.
Brokers that are member firms of the New York Stock Exchange and who hold
shares in street name for customers have the discretion to vote those shares
with respect to certain matters if they have not received instructions from the
beneficial owners. Brokers will have this discretionary authority with respect
to the election of directors. The brokers' failure to vote shares will have no
effect in the outcome of the election of directors if a quorum is present
because the five nominees receiving the highest number of votes will be elected.
As to all other matters properly brought before the meeting, the vote of
the holders of a majority of the Susquehanna common stock present in person or
represented by proxy will decide any question brought before the Annual Meeting,
unless the question is one for which, by express provision of statute or of
Susquehanna's Articles or Bylaws, a different vote is required. Generally,
abstentions on these matters will have the same effect as a negative vote
because under Susquehanna's Bylaws, these matters require the affirmative vote
of the holders of a majority of Susquehanna common stock present in person or
represented by proxy at the Annual Meeting. Broker non-votes will have no effect
because such shares will not be considered present and entitled to vote on such
matters.
3
<PAGE>
Your Board of Directors unanimously recommends that you vote "FOR" the
election of the five director nominees to the Class of 2003.
Proxies for the Annual Meeting
All shares represented by valid proxies will be voted in the manner
specified in the proxies.
Your proxy, unless you otherwise specify in the proxy, will be voted FOR
the election of the persons nominated for directors by Susquehanna's Board of
Directors. Where you have appropriately specified how your proxy is to be voted,
it will be voted in accordance with your direction.
Your Board of Directors knows of no business that will be presented for
consideration at the Annual Meeting other than the matters described in this
Proxy Statement and those incidental to the conduct of the meeting. It is not
anticipated that other matters will be brought before the Annual Meeting. If,
however, other matters are duly brought before the Annual Meeting or any
adjournments of the meeting, the persons named in the proxy will have the
discretion to vote or act on such matters according to their best judgment.
If you are a participant in the BuyDIRECTsm Open Availability and Dividend
Reinvestment Plan for Susquehanna common stock, shares held in your account in
the plan will be voted in accordance with your instructions on your proxy voting
card. The plan's administrator, as the shareholder of record, will vote only
plan shares for which it has received directions to vote from plan participants.
If you are an employee participant in Susquehanna's Employee Stock Purchase
Plan, shares held in your account in the plan will be voted in accordance with
your instructions on your proxy voting card. The plan's custodian, as the
shareholder of record, will vote only plan shares for which it has received
directions to vote from plan participants.
You may revoke your proxy for the Annual Meeting at any time after its
submission and before it is exercised by:
. submitting written notice of revocation of your proxy to the Secretary
of Susquehanna prior to voting at the Annual Meeting;
. submitting a later dated proxy received by the Secretary of
Susquehanna; or
. appearing at the Annual Meeting and requesting a revocation of the
proxy. Your appearance alone at the Annual Meeting will not of itself
constitute a revocation of your proxy.
Directors, officers and employees of Susquehanna may solicit proxies from
Susquehanna shareholders, either personally or by telephone, telegraph or other
form of communication. These persons will not receive any additional
compensation for these services. Susquehanna will request that the Notice of
Annual Meeting, this Proxy Statement, the proxy voting card and related
materials, if any, be forwarded to beneficial owners and expects to reimburse
banks, brokers and other persons for their reasonable out-of-pocket expenses in
handling these materials. Susquehanna will bear the costs of all such
solicitations.
4
<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
AND HOLDINGS OF MANAGEMENT
To the knowledge of Susquehanna's management, no person owns beneficially
more than 5% of Susquehanna's common stock.
The shares of Susquehanna common stock deemed to be owned beneficially by
each director, each nominee for election to the office of director, each
executive officer named in the Summary Compensation Table in this Proxy
Statement, and by all directors, nominees and executive officers as a group as
of February 29, 2000, is set forth in the following table. On February 29, 2000,
none of the individuals named in the following table beneficially owned more
than 1% of Susquehanna's outstanding shares of common stock, except Mr. Wimmer,
who beneficially owned 4.636%. On that date, all of the directors, nominees and
executive officers as a group owned beneficially 7.261% of Susquehanna's
outstanding common stock.
- - --------------------------------------------------------------------------------
Nature and Amount of Beneficial Ownership
Name of Beneficial Owner of Susquehanna Common Stock(1)
- - --------------------------------------------------------------------------------
James G. Apple(5)(8) 40,697
Robert S. Bolinger(2)(8) 82,840
Richard M. Cloney(8) 31,534
Trudy B. Cunningham 1,206
John M. Denlinger 50,113
Gregory A. Duncan(8) 20,450
Owen O. Freeman, Jr.(6) 90,297
Henry H. Gibbel(2)(3)(8) 190,312
Marley R. Gross 3,961
T. Max Hall(4)(8) 13,556
Edward W. Helfrick(8)(9) 253,066
C. William Hetzer, Jr.(8) 10,750
Drew K. Hostetter 1,328
Guy W. Miller, Jr. 5,470
George J. Morgan(2) 11,879
Clyde R. Morris 38,681
William J. Reuter(8) 24,196
Roger V. Wiest(2)(8) 35,800
Michael J. Wimmer(2)(7) 1,829,071
- - --------------------------------------------------------------------------------
All Directors, Nominees and
Executive Officers as a Group(10) 2,864,904
- - --------------------------------------------------------------------------------
(1) Unless otherwise indicated, shares shown as beneficially owned are held
individually by the person indicated or jointly with spouse or children
living in the same household, individually by the spouse or children living
in the same household, or as trustee, custodian or guardian for minor
children living in the same household.
(2) Nominee for three year term expiring in 2003.
(3) Mr. Gibbel has sole beneficial ownership with respect to 151,351 shares and
shares beneficial ownership with his wife with respect to 24,327 shares.
Mr. Gibbel's wife has sole beneficial ownership of 13,884 shares. Mr.
Gibbel is also an officer and director of Gibbel Foundation, Inc., Penn
Charter Mutual Insurance Co. and Lititz Mutual Insurance Co. These three
organizations hold 7,030 shares, 28,125 shares and 244,687 shares,
respectively, to which Mr. Gibbel disclaims beneficial ownership.
(4) Mr. Hall has sole beneficial ownership of 8,857 shares. In addition, 3,949
shares are held in a Keogh Plan for the benefit of Mr. Hall.
5
<PAGE>
(5) Mr. Apple has sole beneficial ownership with respect to 14,045 shares. In
addition, 25,902 shares are held in trust under the John A. Apple,
Deceased, Marital Trust, with respect to which Mr. Apple shares beneficial
ownership.
(6) Mr. Freeman has sole beneficial ownership with respect to 84,815 shares. In
addition, he shares beneficial ownership of 5,482 shares with children and
grandchildren.
(7) Mr. Wimmer has sole beneficial ownership with respect to 826,000 shares,
and shares beneficial ownership with his wife with respect to 8,116 shares.
He also holds 118,000 shares as custodian for a child. Mr. Wimmer's wife
has sole beneficial ownership of 826,000 shares. In addition, 50,955 shares
are held by Hann & Co., of which Mr. Wimmer is a principal.
(8) Includes shares issuable upon the exercise of stock options granted under
Susquehanna's Equity Compensation Plan to purchase shares of stock which
are exercisable or will become exercisable on or before April 30, 2000.
(9) Mr. Helfrick's term expires in 2000. He will be retiring from the Board of
Directors as of the Annual Meeting. Mr. Helfrick has sole beneficial
ownership of 252,316 shares, and a currently exercisable option to purchase
an additional 750 shares. Options granted but not yet vested to purchase
8,250 shares not included in the table will become fully exercisable at his
retirement.
(10) Includes 158,294 shares issuable upon the exercise of stock options which
are presently exercisable or will become exercisable on or before April 30,
2000.
ELECTION OF DIRECTORS
General
Susquehanna's Board of Directors currently consists of 16 directors. The
Board is classified into three classes, one of which is elected each year to
serve a term of three years. Directors of each class hold office until the
expiration of the term for which they were elected and their successors have
qualified or until the annual meeting following their attaining the age of 72
years.
At the Annual Meeting, five persons will be elected to the Class of 2003.
The candidates nominated who receive the highest number of votes will be
elected. In the election, you will be entitled to cast one vote for each share
held by you for each of the five candidates, but will not be entitled to
cumulate your votes.
The Board of Directors has nominated five members to the Class of 2003. Any
holder of Susquehanna common stock may make additional nominations for election
to the Board of Directors. Each nomination must be made in writing and delivered
or mailed to Susquehanna's President not less than 14 days prior to the Annual
Meeting. The notification must contain the following information to the extent
known by the notifying shareholder without unreasonable effort or expense:
. the name and address of each proposed nominee;
. the principal occupation of each proposed nominee;
. the total number of shares of Susquehanna capital stock that will be
voted by the notifying shareholder for the proposed nominee;
. the name and residence address of the notifying shareholder; and
. the number of shares of Susquehanna capital stock owned by the
notifying shareholder.
6
<PAGE>
The Class of 2003
The Board of Director's nominees for the Class of 2003 are Robert S.
Bolinger, Henry H. Gibbel, George J. Morgan, Roger V. Wiest and Michael J.
Wimmer. Messrs. Bolinger, Gibbel, Morgan and Wiest are currently directors of
Susquehanna.
Mr. Wimmer is currently the President and Chief Executive Officer of Boston
Service Company, Inc. (t/a Hann Financial Service Corporation), a wholly-owned
subsidiary of Susquehanna acquired on February 1, 2000. He joined Hann in 1976
and assumed his current position in 1990.
Mr. Wimmer has also been a member of the Board of Directors of Susquehanna
Bancshares East, Inc. since 1997 and Equity Bank, National Association, since
1985, both of which are also wholly-owned subsidiaries of Susquehanna. He is
currently the Chairman of the Executive Loan Committee and the past Chairman of
the Personnel Committee at Equity Bank, National Association.
Mr. Wimmer has been an active member of the National Vehicle Leasing
Association and currently serves as a member of its New York Legislative
Committee. He is also an active associate member of the New Jersey Bankers'
Association and the New Jersey Automobile Dealers' Association.
In the absence of instructions to the contrary, proxies will be voted in
favor of the election of the Board of Directors' nominees. In the event any of
the nominees should become unavailable, it is intended that the proxies will be
voted for substitute nominee(s) chosen by the Board. The Board of Directors has
no present knowledge that any of the nominees will be unavailable to serve.
Biographical Summaries of Directors and Nominees
The name and age of each nominee and continuing director of Susquehanna, as
well as their business experience (including their principal occupation and the
period during which he or she has served as a Susquehanna director), is set
forth in the following table:
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------
Business Experience
Including Principal Occupation for Past Five Director Present Term
Name Age Years Since Expires
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert S. Bolinger* 63 Chairman of the Board and CEO, 1982 2000
Susquehanna; Chairman, Farmers First Bank;
Chairman, Susquehanna Bancshares South, Inc.;
President and CEO, Susquehanna Bancshares East,
Inc.; Chairman, Susque-Bancshares Life
Insurance Company, Inc.
Henry H. Gibbel* 65 President and CEO, Lititz Mutual Insurance Co. 1982 2000
& Penn Charter Mutual Insurance Co. (Insurance
Companies)
George J. Morgan* 69 President, Morgan, Hallgren, Crosswell & Kane, 1982 2000
P.C. (Law Firm)
Roger V. Wiest* 59 Managing and Senior Partner, Wiest, Saylor, 1992 2000
Muolo, Noon & Swinehart (Law Firm)
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------
Business Experience
Including Principal Occupation for Past Five Director Present Term
Name Age Years Since Expires
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael J. Wimmer* 47 President and Chief Executive Officer, Boston -- --
Service Company, Inc. (Automobile Financing
Company)
James G. Apple 64 President, Butter Krust Baking Co., Inc. 1992 2001
(Baking Company)
Richard M. Cloney 58 Vice President, Susquehanna; Executive Vice 1985 2001
President, Farmers First Bank; President,
Susque-Bancshares Leasing Co., Inc.; President
and CEO, Susquebanc Lease Co.
Trudy B. Cunningham 57 Associate Dean of Engineering, Bucknell 1998 2001
University
John M. Denlinger 60 Retired; Division Manager, Denlinger Building 1985 2001
Materials, a Division of Carolina Holdings,
Inc. (Building Material Manufacturer));
President, Denlinger, Inc. (Building Material
Manufacturer)
Marley R. Gross 67 President, Marley R. Gross Ford, Inc. 1995 2001
(Automobile Dealership)
T. Max Hall 65 Attorney and Managing Partner, McNerney, Page, 1986 2001
Vanderlin and Hall (Law Firm); Chairman of the
Board, Data Papers, Inc. (Printing Company);
Chairman of the Board, Data Papers, Inc. of
North Carolina, Inc. (Printing Company)
Clyde R. Morris 71 Chairman of the Board, First American National 1999 2001
Bank of Pennsylvania; President, Morris
International, Inc. (Farm Equipment Dealership)
C. William Hetzer, Jr. 68 President, C. William Hetzer, Inc. 1989 2002
(General Contractor)
Owen O. Freeman, Jr. 65 Chairman of the Board, First Capitol Bank 1999 2002
Guy W. Miller, Jr. 54 President, Homes by Keystone, Inc. (Modular 1999 2002
Homes Manufacturer)
William J. Reuter 50 President, Susquehanna; President, Susquehanna 1999 2002
Bancshares South, Inc.; President and Chief
Executive Officer, Susquehanna Bank; Chairman,
President and CEO of Farmers & Merchants Bank
and Trust
- - ---------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
* The Board of Director's nominees for election at the Annual Meeting for terms
expiring 2003.
Messrs. Gibbel, Morgan, Denlinger and Bolinger are directors of Farmers
First Bank, a Susquehanna subsidiary, and have been directors of that bank for
more than five years. Messrs. Apple and Wiest are directors of First National
Trust Bank, a Susquehanna subsidiary, and have been directors of that bank for
more than five years. Ms. Cunningham has been a director of First National Trust
Bank since 1996. Mr. Miller has been a director of Citizens National Bank of
Southern Pennsylvania, a Susquehanna subsidiary, since 1996. Mr. Hall is a
director of Williamsport National Bank, a Susquehanna subsidiary, and has been a
director of that bank for more than five years. Mr. Reuter has been a director
of Farmers & Merchants Bank and Trust, a Susquehanna subsidiary, for more than
the past five years. He has also been a director of Susquehanna Bank, a
Susquehanna subsidiary, since 1997. Mr. Gross was formerly a director for more
than five years of Spring Grove National Bank, a Susquehanna subsidiary which
was merged into Farmers First Bank in 1996. Mr. Hetzer is a director of Farmers
& Merchants Bank and Trust and has been a director of that bank for more than
five years. Mr. Morris is a director of the First American National Bank of
Pennsylvania, a Susquehanna subsidiary, and has been a director of that bank for
more than five years. Mr. Freeman is a director of First Capitol Bank, a
Susquehanna subsidiary, and has been a director of that bank for more than five
years. Mr. Wimmer is a director of Boston Service Company, Inc. (t/a Hann
Financial Service Corporation), a Susquehanna subsidiary acquired on February 1,
2000, and has been a director of that corporation for more than five years.
Messrs. Bolinger and Reuter were also appointed directors of Hann in 2000.
Messrs. Bolinger, Cloney, Denlinger, Morgan and Reuter also serve as directors
of Susquehanna Bancshares South, Inc., a Susquehanna subsidiary. Messrs.
Bolinger, Denlinger, Morgan and Wiest also serve as directors of Susquehanna
Bancshares East, Inc., a Susquehanna subsidiary. Messrs. Bolinger and Cloney are
also directors of Susque-Bancshares Leasing Co., Inc., Susquehanna Lease Co. and
Susque-Bancshares Life Insurance Company, Inc., all Susquehanna subsidiaries.
Messrs. Bolinger, Hall, Denlinger, Gibbel and Reuter are also directors of
Valley Forge Asset Management Corp., a Susquehanna subsidiary acquired in March
of 2000. Mr. Bolinger has also served as a director of First Capitol Bank since
1999.
All of the directors of Susquehanna are outside directors except Messrs.
Bolinger, Cloney, Reuter and Freeman, and if elected, Mr. Wimmer.
Board Committees and Meetings
Susquehanna's Board has two standing committees, an Audit Committee and a
Compensation Committee, both of which were established in 1987. The members of
both committees are all outside directors. The Board of Directors has no other
standing committees. It operates as a committee of the whole for all other
matters including nominations.
Audit Committee
The principal purposes of the Audit Committee are to meet with
Susquehanna's independent accountants and:
. review the scope and results of Susquehanna's annual audit; and
. review information pertaining to internal auditing and Susquehanna's
systems of internal controls.
The directors presently serving on the Audit Committee are Messrs. Apple,
Hall, Miller and Wiest. The Audit Committee met four times during 1999.
Compensation Committee
The principal purposes of the Compensation Committee are:
9
<PAGE>
. to review and approve key executive salary and salary policy;
. with respect to Susquehanna's Chief Executive Officer, to determine
the salary and criteria for that office;
. to administer Susquehanna's Equity Compensation Plan;
. to approve participants in Susquehanna's Executive Deferred Income
Plan; and
. to review and approve the design of any new supplemental compensation
programs applicable to executive compensation.
The directors presently serving on the Compensation Committee are Messrs.
Denlinger, Gibbel, Hall, Hetzer, Jr. and Morgan. The Compensation Committee met
five times during 1999.
Meetings
Susquehanna's Board met nine times during 1999. Each of the directors
attended at least 75% of the meetings of the Board of Directors and the
committees of the Board on which they served that were held in 1999 during the
period when they served as a director, except that Mr. Helfrick attended 64% of
the total meetings of the Board of Directors and committees of the Board on
which he served.
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
Report of the Compensation Committee
The Compensation Committee of Susquehanna's Board is composed entirely of
independent outside directors. The Committee is charged with responsibility for:
. assuring that key management personnel of Susquehanna and its
affiliates are effectively compensated in terms of salaries,
supplemental compensation and benefits which are internally equitable
and externally competitive in order to allow Susquehanna to attract
and retain qualified personnel; and
. developing and initiating incentive programs and plans that will serve
to attract and retain qualified personnel in key management positions
of Susquehanna and its affiliates.
Overall Policy
Susquehanna's executive compensation program is designed to be closely
linked to corporate performance and returns to shareholders. To this end,
Susquehanna has developed an overall compensation strategy and specific
compensation plans that tie a significant portion of executive compensation to
Susquehanna's success in meeting specified performance goals and to appreciation
in its stock price. The overall objectives of this strategy are:
. to attract and retain the best possible executive talent;
. to motivate executives to achieve the goals inherent in Susquehanna's
business strategy;
. to link executive and shareholder interests through equity based
plans; and
10
<PAGE>
. to provide a compensation package that recognizes individual
contributions as well as overall business results.
Each year the Committee conducts a review of Susquehanna's executive
compensation program. The Committee believes that Susquehanna's most direct
competitors for executive talent are not necessarily all of the companies that
would be included in a peer group established for comparing shareholder returns.
Successful executives in the banking industry have a broad range of
opportunities in the financial industry generally, either with larger or smaller
institutions, or with related industry groups or unrelated industry groups in
some instances (a chief financial officer, for example). Many of these companies
are not publicly traded. The annual compensation reviews permit an ongoing
evaluation of the link between Susquehanna's performance and its executive
compensation in the context of the compensation programs of other companies.
The Committee determines the compensation for the Susquehanna officers
designated as participants in Susquehanna's long term incentive plan, set forth
in more detail below. This includes all individuals whose compensation is set
forth in the "Summary Compensation Table" which follows. The Committee believes
that utilization of this approach ensures consistency throughout the executive
compensation program. In reviewing the individual performance of the executives
whose compensation is detailed in this Proxy Statement (other than that of
Susquehanna's Chief Executive Officer), the Committee solicits and considers the
views of Mr. Bolinger.
The key elements of executive compensation consist of:
. base salary;
. annual incentive bonus; and
. long term compensation through ownership interests in Susquehanna
granted or awarded under the Equity Compensation Plan.
The Committee's policies with respect to each of these elements, including
the basis for the compensation awarded to Mr. Bolinger, Susquehanna's Chief
Executive Officer, are discussed below. In addition, while the elements of
compensation described below are considered separately, the Committee takes into
account the full compensation package afforded by Susquehanna to the individual,
including pension benefits, severance plans, insurance and other benefits, as
well as the programs described below.
Section 162(m) of the Internal Revenue Code generally provides that a
publicly held reporting company such as Susquehanna may not deduct, as an
expense, amounts paid to any executive officer in excess of $1 million per year.
Because the compensation paid to Susquehanna's most highly compensated officer
amounted to $431,226, which is substantially below the $1 million threshold
called for in Section 162, the Committee has not adopted a formal policy on
awarding compensation in excess of this threshold.
Base Salaries
Base salaries for new executive officers are initially determined by:
. evaluating the responsibilities of the position held and the
experience of the individual; and
. reference to the competitive marketplace for executive talent,
including a comparison to base salaries for comparable positions at
other companies.
Annual salary adjustments are determined by:
. evaluating the performance of Susquehanna and of each executive
officer; and
11
<PAGE>
. taking into account new responsibilities (in the case of executive
officers with responsibility for a particular business unit, the
unit's financial results are also considered).
In conducting its deliberations, the Committee makes use of an executive
compensation survey prepared by nationally recognized consultants on executive
compensation matters. The 1999 survey analyzed compensation paid to executives
at participating financial institutions with assets between $100 million and $5
billion.
The survey describes the compensation paid to executives at various
management levels. The base salary of all similar positions within the survey
group was used as the basis for calculating a midpoint for each job description
within Susquehanna's management program. The Committee then established a range
around the midpoint, with 80% of the midpoint as the minimum and 120% of the
midpoint as the maximum.
The salaries of Susquehanna's principal officers were compared to the
midpoint, and increases were awarded in the context of individual performance
and contribution, as explained below, with each salary targeted to fall within
the midpoint range. Accordingly, salaries which are established by the Committee
may slightly exceed or fall below the median range. Mr. Bolinger's salary falls
within the range established for the position he occupies.
In evaluating an executive officer's performance, the Committee looks to
his/her accomplishments (which are based on qualitative and quantitative
measures) and the results produced by the executive officer (which are based on
quantitative measures). In determining accomplishments and results, the
Committee considers the following corporate and business unit performance
factors:
Corporate Performance Factors:
. the earnings growth of Susquehanna and the subsidiary with which the
executive officer serves
. the asset growth of Susquehanna and the subsidiary with which the executive
officer serves
. the ability of the executive officer to demonstrate management skills
Business Unit Performance Factors:
. the revenues of the business unit for which the executive officer has
responsibility
. the business unit's growth in earnings and development of new products or
lines of business
. the business unit's results expressed in terms of savings realized or
efficiencies achieved
In determining the quantitative measures, the Committee looks, in part, to
the Uniform Bank Performance Results which is published quarterly by the Federal
Financial Institution Examination Council. This material measures and compares
each Susquehanna bank subsidiary against other banks in its peer group in over
40 different financial areas. The peer groups used include banks between $100
million and $300 million in size and between $500 million and $1 billion in
size. The basis for the bank's performance in these areas in relation to the
business unit and the bank in which the executive serves allows the Committee to
assess that individual's and his or her business unit's quantitative success.
A majority of the financial institutions participating in the salary survey
are included in the line of business group which is indexed in Susquehanna's
Stock Price Performance Graph set forth in this Proxy Statement. All of the
financial institutions which are indexed in the Stock Price Performance Group
are reported in the Uniform Bank Performance Results.
In considering the various factors that are weighed in this process, no
differentiation as to weighting or relative importance has been established;
rather the members of the Committee are permitted to assign a weight and
importance to each factor as they, in their discretion, deem appropriate.
12
<PAGE>
In determining the compensation package to be awarded to Messrs. Bolinger,
Cloney, Reuter and Duncan, the Committee did not attach particular weight to
their employment agreements with Susquehanna, other than to recognize that the
employment agreements provide that base salary will be set at a rate agreed
between the parties, or in the absence of agreement, increased on the basis of
the Consumer Price Index. Base salary adjustments for all executive officers
other than Mr. Bolinger were determined by the Committee in consideration of the
salary survey and the performance factors for Susquehanna and each executive
officer as discussed above, and upon the recommendations and performance
evaluation provided by Mr. Bolinger.
With respect to the base salary granted to Mr. Bolinger in 1999, the
Committee took into account a comparison of base salaries of chief executive
officers of peer companies based on the salary survey, Susquehanna's success in
meeting its return on equity and other financial goals in 1998, the performance
of Susquehanna common stock and the assessment by the Committee of Mr.
Bolinger's individual performance. The Committee also took into account the
longevity of Mr. Bolinger's service to Susquehanna and Farmers First Bank and
its belief that Mr. Bolinger is a representative of Susquehanna and Farmers
First Bank to the public by virtue of his stature in the community and the
industry. Mr. Bolinger was granted a base salary of $400,000 for 1999, an
increase of 5.26% over his $380,000 base salary for 1998.
Annual Bonus
Each Susquehanna subsidiary maintains an annual cash bonus program in which
all persons employed by that subsidiary on a certain date are eligible to
participate. The amount of the bonus is generally determined based upon
utilization of a "performance bonus calculation" which is a formula relationship
based on return on average assets and net income growth for the subsidiary and
return on average capital and earnings per share growth for Susquehanna that
produces a "performance bonus percentage." In general, the subsidiary employees'
performance bonus percentage is based 50% on the performance of their respective
subsidiary and 50% on the performance of Susquehanna, while Susquehanna
employees' performance bonus is based 100% on the performance of Susquehanna. A
"performance bonus percentage" is adopted by the Board of Directors of each
subsidiary and Susquehanna and uniformly applied to the salaries of each
eligible employee. This performance bonus program resulted in no bonuses for
1999.
A special 7% bonus was declared for all of Susquehanna's and its
subsidiaries' employees (excluding executive and senior management) employed on
certain dates for extraordinary efforts during 1999. Both executive and senior
management will be excluded from this bonus. Consequently, Mr. Bolinger will not
be paid a bonus under this program.
Equity Compensation Plan
The Equity Compensation Plan is administered and interpreted by the
Committee. After receiving recommendations from management, the Committee has
the sole authority to determine:
. the persons to whom options and/or awards will be granted under the
plan;
. the type, size and terms of the options granted under the plan;
. the time when the options and/or awards will be granted and the
duration of the exercise period; and
. any other matters arising under the plan.
Awards under the plan may consist of incentive stock options, non-qualified
stock options, restricted stock grants, phantom stock rights and stock
appreciation rights. All grants are subject to the terms and conditions set
forth in the plan and to other terms and conditions consistent with the plan as
the Committee deems appropriate and as are specified by the Committee to the
designated individual in his or her respective Grant Letter. The Committee must
approve the form and provisions of each Grant Letter to an individual.
13
<PAGE>
Officers, employee directors and other employees of Susquehanna or an
affiliate designated by Susquehanna are eligible to participate in the plan.
Non-employee directors do not participate in the plan beyond an initial grant of
an option to acquire 11,250 shares to each present and newly added director.
Non-employee directors receive a grant of an option to purchase 2,250 shares in
their first year of participation in the plan, and 2,250 shares in each of the
next following years (up to a total, aggregate grant of 11,250 shares). The
options may be exercised to the extent of one-third on the third anniversary of
the date of the grant, one-third on the fourth anniversary of the date of the
grant, and one-third on the fifth anniversary of the date of grant. As of April
24, 2000, approximately 20 senior officers were eligible to participate in the
plan. After receiving recommendations from Susquehanna management, the Committee
selects the persons to receive grants and determines the number of shares of
Susquehanna common stock subject to a particular grant. No grantee may receive
options, stock appreciation rights, phantom stock rights or restricted stock
awards for more than 450,000 shares of Susquehanna common stock for any calendar
year.
On May 29, 1999, additional non-qualified stock options to acquire 294,117
shares were granted to directors and officers of Susquehanna under this plan. Of
this total, 53,248, 13,087, 26,189, 22,280 and 22,472 stock options were granted
to Messrs. Bolinger, Cloney, Reuter, Hostetter and Duncan, respectively.
Conclusion
Through the programs described above, a significant portion of
Susquehanna's executive compensation is linked directly to individual and
corporate performance and stock price appreciation. In 1999, as in previous
years, performance-based variable elements played a major role in the
Committee's executive compensation determinations, including those relating to
Mr. Bolinger. The Committee intends to continue the policy of linking executive
compensation to Susquehanna's performance and return to shareholders,
recognizing that rises and falls in the business cycle from time to time must be
recognized, and may result in an apparent imbalance for a particular period.
The Susquehanna Bancshares, Inc. Compensation Committee:
John M. Denlinger C. William Hetzer, Jr.
Henry H. Gibbel George J. Morgan
T. Max Hall
Compensation of Directors
Directors currently receive an annual fee of $5,000 and a payment of $800
for attendance at each Board of Directors' meeting except telephonic meetings,
where the compensation is $250. Directors are paid $800 for each committee
meeting that they attend, unless the committee meets on the day of a meeting of
the entire Board, in which case the fee is $250. Directors are also entitled to
receive stock option grants pursuant to Susquehanna's Equity Compensation Plan
as discussed above.
Summary Compensation Table
The following table is a summary of the compensation for the years 1999,
1998 and 1997 awarded or paid to, or earned by, Susquehanna's Chief Executive
Officer and its four other most highly compensated executive officers in 1999.
14
<PAGE>
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
Other
Annual Stock
Compen- Options LTIP All Other
Name Principal Position Year Salary(1) Bonus(2) sation(3) Granted(4) Payouts(5) Compensation(6)
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert S. Chairman and Chief 1999 $393,846 $ - $10,250 53,248 $ - $4,800
Bolinger Executive Officer 1998 376,610 33,895 9,800 59,420 - 4,800
of Susquehanna 1997 366,227 71,750 13,200 13,872 32,288 4,800
Richard M. Vice President of 1999 $262,908 $ - $10,000 13,087 $17,101 $4,800
Cloney Susquehanna 1998 258,848 23,296 9,000 5,625 34,201 4,800
1997 254,330 28,994 12,700 6,903 13,389 4,800
William J. President of 1999 $242,981 $ - $ 5,650 26,189 $ - $4,800
Reuter Susquehanna; 1998 231,923 20,873 - 14,516 - 4,800
President of 1997 213,846 35,529 - 4,653 3,539 4,800
F & M; President
of Susquehanna
South; President
of Susquehanna Bank
Drew K. Hostetter Senior Vice 1999 $160,392 - 22,280 $4,800
President, 1998 134,850 $ - - 13,398 $ - 4,426
Treasurer and 1997 111,234 12,137 - 11,250 3,237
Chief Financial 22,681 -
Officer of
Susquehanna -
Gregory A. Executive Vice 1999 $160,389 $ - $21,263 22,472 $ 6,423 $4,800
Duncan President of 1998 139,603 12,564 - 8,250 12,846 4,800
Susquehanna 1997 128,462 12,075 - 4,653 3,649 3,854
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes salary deferred by the named executive under Susquehanna's
Executive Deferred Income Plan. Payment of such salary is deferred until
retirement, or in some instances, until a specified date prior to
retirement. The sums in participants' accounts are fully vested and may be
withdrawn in accordance with such plan.
(2) Includes bonus deferred by the named executive under Susquehanna's
Executive Deferred Income Plan. Payment of such bonus is deferred until
retirement, or in some instances, until a specified date prior to
retirement. The sums in participants' accounts are fully vested and may be
withdrawn in accordance with such plan.
(3) Includes fees paid to the named executive for services as a director of
Susquehanna or its subsidiaries including fees the named executive has
elected to defer under Susquehanna's Executive Deferred Income Plan or its
predecessor plan, the Directors' Deferred Compensation Plan. Payment of
such fees is deferred until retirement, or in some instances, until a
specified date prior to retirement. The sums in participants' accounts are
fully vested and may be withdrawn in accordance with such plan. Also
included under this heading are the moving expenses of $21,263 paid to Mr.
Duncan.
(4) Represents number of shares of Susquehanna common stock pertaining to
options granted under the Equity Compensation Plan discussed below under
the heading "Stock Option Grants."
(5) Represents payments under Susquehanna's Performance Award Plan for the
"earnout periods" as defined in the plan running from January 1, 1992
through December 31, 1994 and January 1, 1995 through December
15
<PAGE>
31, 1997. Payments under this plan are made in three installments with
one-half of the amount earned payable on or before June 1 of the calendar
year commencing immediately following the conclusion of the earnout period
and the remaining one-half paid in two equal installments over the next two
years. No awards under this plan have been approved since the adoption of
Susquehanna's Equity Compensation Plan.
(6) Represents payments made by Susquehanna into the Susquehanna 401(k) Plan on
behalf of each participant, as more fully discussed below under the heading
"Description of Certain Employment Contracts and Plans."
Stock Option Grants
The following table sets forth information concerning the individual grants
of options to purchase Susquehanna's commons stock made to the named executive
officers in 1999:
<TABLE>
<CAPTION>
Potential Realizable
--------------------
Number of % of Total Value at Assumed Annual
--------- ---------- -----------------------
Securities Options Rates of Stock
---------- ------- --------------
Underlying Granted to Price Appreciation for
---------- ---------- ----------------------
Options Employees in Exercise Expiration Option Term
------- ------------ -------- ---------- -----------
Name Granted Fiscal Year Price Date 5% 10%
---- ------- ----------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Robert S. Bolinger 53,248 18.1% $18.19 5-30-2009 $609,135 $1,543,669
Richard M. Cloney 13,087 4.4% 18.19 5-30-2009 149,710 379,394
William J. Reuter 26,189 8.9% 18.19 5-30-2009 299,592 759,224
Gregory A. Duncan 22,472 7.6% 18.19 5-30-2009 257,071 651,467
Drew K. Hostetter 22,280 7.6% 18.19 5-30-2009 254,874 645,901
</TABLE>
These awards were made pursuant to Susquehanna's Equity Compensation Plan.
Under this plan, the exercise price of Susquehanna common stock subject to a
non-qualified stock option is the fair market value of Susquehanna's common
stock on the date the option is granted. The fair market value of a share of
Susquehanna's common stock is the last reported sale price on the date of the
grant, or if there were no trades on that date, the latest preceding date upon
which a sale was reported. The options may be exercised to the extent of
one-third on the third anniversary of the date of the grant, one-third on the
fourth anniversary of the date of grant and one-third on the fifth anniversary
of the date of the grant.
The dollar gains in the above table result from calculations assuming 5%
and 10% growth rates as set by the Securities and Exchange Commission and are
not intended to forecast future price appreciation of Susquehanna's common
stock. The gains reflect a future value based upon growth at these prescribed
rates.
It is important to note that options have value to recipients, including
the listed executive officers, only if the stock price advances beyond the grant
date price shown in the table during the effective option period.
The following table sets forth information concerning unexercised stock
options held by the named executive officers as of December 31, 1999. None of
the named executive officers exercised any options in 1999.
Number of Securities Underlying Value of Unexercised
------------------------------- --------------------
Unexercised Options In-the-Money Options
------------------- --------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
Robert S. Bolinger 35,728 / 156,382 $62,945 / $125,896
Richard M. Cloney 22,524 / 49,954 44,988 / 89,977
William J. Reuter 14,553 / 60,505 28,512 / 57,024
Gregory A. Duncan 12,624 / 46,664 22,956 / 45,913
Drew K. Hostetter 0 / 46,928 0 / 0
16
<PAGE>
Description of Certain Employment Contracts and Plans
Executive Employment Contracts
Susquehanna has employment contracts with Messrs. Bolinger and Cloney which
will expire on February 28, 2001. The contracts provide for base salaries in
2000 of $400,000 for Mr. Bolinger and $264,200 for Mr. Cloney. The contracts
also provide fringe benefits comparable to those generally supplied to other
salaried employees of Farmers First Bank. If the officer becomes permanently
disabled, he is entitled to all benefits under the contract, other than bonuses,
for a period of not less than six months.
The employment contracts may be terminated by Susquehanna if the officer is
responsible for a loss to Susquehanna or Farmers First Bank in excess of Farmers
First Bank's loan loss reserve or for actions bringing discredit to the business
reputation or goodwill of Farmers First Bank. Upon any termination described
above, the officer will be entitled to receive the base salary and all other
benefits provided by the contract for a period of one year reduced, however, by
any compensation received, during the period, from any other employment entered
into. Following any such termination, Susquehanna may require the officer to
perform his duties under the contract for up to three months and hold himself
reasonably available for advice and consultation for an additional period of
nine months.
In addition, the officer may terminate the contract on two months' notice
to Susquehanna. Susquehanna may terminate the contract immediately for breach of
the contract by the officer, upon a felony conviction of the officer or on
commission by the officer of a material fraudulent act against Susquehanna or
Farmers First Bank. If Susquehanna terminates the contract for any reason other
than those set forth above, or if the officer resigns upon being reduced to a
position of materially lesser authority, stature or responsibility, the officer
will be entitled to a lump sum payment of the amounts he would have received
under the contract for the balance of its term plus the value of other benefits
to which he was entitled under the agreement.
Susquehanna's Board has approved three-year employment contracts with
Messrs. Reuter and Duncan which will terminate, unless renewed, in 2003. The
contracts provide for base salaries in 2000 of $260,000 for Mr. Reuter and
$215,000 for Mr. Duncan. The contracts also provide fringe benefits comparable
to those generally supplied to other salaried employees of Susquehanna. If the
officer becomes permanently disabled, he is entitled to all benefits under the
contract, other than bonuses, for a period of not less than six months. The
employment contracts may be terminated by the officer on two months' notice to
Susquehanna. Susquehanna may terminate the contracts immediately for cause.
The employment contracts for Messrs. Reuter and Duncan also provide certain
relief in the event of a change of control. Each may terminate his employment
within twelve months following a change of control of Susquehanna if there
occurs an adverse change in his respective circumstances (as set forth in his
respective employment contracts). If the officer's employment is terminated due
to a change of control, the officer will be entitled to receive a lump sum
payment in an amount equal to the greater of his then current monthly salary
rate or the rate in effect prior to any reduction which led to his termination,
times the number of months otherwise remaining under the contract, plus the
value of any benefits which would have accrued if his employment was not
terminated.
Change of Control Plans
Susquehanna adopted a Key Employee Severance Pay Plan in 1999. The purpose
of the plan is to alleviate financial hardships which may be experienced by
senior executives and other key employees of Susquehanna whose employment is
terminated under specified circumstances within one year of a change of control
of Susquehanna and to reinforce and encourage the continued attention and
dedication of those senior executives and other key employees to their assigned
duties without distraction from a potential change of control. Of the executive
officers named in the Summary Compensation Table, only Mr. Hostetter is included
under the plan.
17
<PAGE>
The plan provides that if a participant in the plan is terminated under
certain circumstances within one year following a change of control as defined
in the plan, he or she will receive a lump sum payment in an amount equal to one
and one-half times his or her compensation within 15 days after such
termination, and for a one year period after such termination, be entitled to
receive certain benefits and perquisites which comparable employees of the
company are eligible to receive under plans or programs in effect as of the date
of his or her termination.
Additionally, each of Susquehanna's Performance Award Plan, Equity
Compensation Plan and Executive Deferred Income Plan contains change of control
provisions. Under the Performance Award Plan, 100% of the "target award"
applicable to a then-current "earnout period" (both as defined in the plan)
becomes due and payable to each participant upon a change of control as defined
in the plan. The target award is deemed earned and immediately payable in full
with the same force and effect as if all performance criteria had been achieved
for the entire earnout period, whether or not such is the case. In the event of
a change of control of Susquehanna as defined under the Equity Compensation
Plan, all options outstanding under the plan will become immediately
exercisable, and all restrictions on the transfer of shares with respect to a
restricted stock grant which have not, prior to such date, been forfeited will
immediately lapse. In the event of a change of control as defined under the
Executive Deferred Income Plan, each participant in the plan who voluntarily
terminates his or her employment in connection with such change of control will
receive the amount of any remaining unpaid vested benefits credited to his or
her account.
Pension Plans
Effective January 1, 1989, Susquehanna and each of its subsidiaries adopted
a defined benefit pension plan (the "Retirement Income Plan") under which
benefits are determined by "Final Average Compensation" as defined below. This
plan covers employees of Susquehanna and its subsidiaries upon their attaining
age 21 and the completion of one year's service in which 1,000 hours are worked.
All participants in predecessor plans maintained by Susquehanna's subsidiaries
as of January 1, 1989 became members of the Retirement Income Plan effective
that date.
Participants under the Retirement Income Plan are entitled to an annual
retirement pension at normal retirement age of 65 equal to 1.5% of Final Average
Compensation up to the Social Security Covered Compensation level plus 2% of
Final Average Compensation in excess of Social Security Covered Compensation,
multiplied by years of credited service up to a maximum of 25 years. Final
Average Compensation means the average earnings during the five highest-paid
consecutive calendar years of employment with Susquehanna affiliates. Social
Security Covered Compensation means the compensation upon which a Social
Security benefit at Social Security Normal Retirement Age will be calculated as
defined in regulations.
Participants with 15 years of service are eligible for early retirement at
age 55, in which event retirement benefits are actuarially reduced.
Effective January 1, 1994, the Board adopted a Supplemental Executive
Retirement Plan ("Supplemental Plan") which will provide for benefits lost under
the Retirement Income Plan on account of Internal Revenue Code provisions which
limit the compensation and benefits under a qualified retirement plan. Selected
participants of the Retirement Income Plan, including Messrs. Bolinger, Cloney,
Reuter, Hostetter and Duncan, are eligible for benefits under the Supplemental
Plan.
Effective January 1, 1998, Susquehanna converted the Retirement Income Plan
into a Defined Benefit Cash Balance Pension Plan. All employees who were
participants in the Retirement Income Plan had the value of their benefit under
that plan converted into an opening Cash Balance Account under the Cash Balance
Pension Plan.
Employees age 55 and older with 10 or more years of service as of
January 1, 1998, were "grandfathered" and will receive a benefit no less than
the amount determined under the plan provisions in effect December 31,
18
<PAGE>
1997. Messrs. Bolinger and Cloney are included in this group and currently their
benefits are more favorable under the Retirement Income and Supplemental Plans.
Messrs. Reuter, Hostetter and Duncan were not grandfathered.
Normal retirement under the Cash Balance Pension Plan is age 65. Reaching
age 55 with 15 years of service attains early retirement. The benefit equals the
annuitized value of the participant's Cash Balance Account as of the retirement
commencement date.
The annual benefits under both the Retirement Income and the Supplemental
Plans upon normal retirement in 1999 at age 65 to persons in specified salary
classifications, assuming election by the employee of payment only in the form
of a life annuity, is set forth below. Amounts shown in the table are not
subject to offset for social security or other benefits received by the
participants.
Years of Service at Retirement
---------------------------------------------------------------
Final Average 15 20 25 30 35
Compensation -- -- -- -- --
- - ------------
$125,000 $35,021 $ 46,694 $ 58,368 $ 58,368 $ 58,368
150,000 42,521 56,694 70,868 70,868 70,868
175,000 50,021 66,694 83,368 83,368 83,368
200,000 57,521 76,694 95,868 95,868 95,868
225,000 65,021 86,694 108,368 108,368 108,368
250,000 72,521 96,694 120,868 120,868 120,868
300,000 87,521 116,694 145,868 145,868 145,868
350,000 102,521 136,694 170,868 170,868 170,868
400,000 117,521 156,694 195,868 195,868 195,868
450,000 132,521 176,694 220,868 220,868 220,868
500,000 147,521 196,694 245,868 245,868 245,868
For purposes of the Retirement Income Plan, as of December 31, 1999,
Messrs. Bolinger and Cloney had 23 and 22 credited years of service
respectively. Only the base salary of Messrs. Bolinger and Cloney is
compensation covered under the Retirement Income Plan and Supplemental Plan.
Other components of such officers' total compensation do not affect benefits
payable under the plans. In 1999, Mr. Bolinger's base salary was $393,846 and
Mr. Cloney's base salary was $262,908.
The annual benefits under both the Cash Balance Pension and the
Supplemental Plans upon normal retirement in 1999 at age 65 to persons in
specified salary classifications is set forth below. Amounts shown in the table
are not subject to offset for social security or other benefits received by the
participants.
Years of Service at Retirement*
---------------------------------------------------------------
Final Average 15 20 25 30 35
Compensation -- -- -- -- --
- - ------------
$125,000 $ 19,032 $ 27,745 $ 36,971 $ 48,336 $ 59,827
150,000 22,839 33,294 44,366 58,006 71,795
175,000 26,645 38,842 51,760 67,674 83,761
200,000 30,451 44,391 59,154 77,340 95,727
225,000 34,257 49,940 66,549 87,008 107,694
250,000 38,064 55,490 73,942 96,675 119,656
300,000 45,677 66,587 88,731 116,009 143,588
350,000 53,290 77,686 103,520 135,345 167,521
400,000 60,902 88,784 118,310 154,680 191,453
450,000 68,515 99,881 133,095 174,014 215,383
500,000 76,128 110,980 147,886 193,350 239,319
19
<PAGE>
*Assumptions: Cash Balance Plan in effect all years; Salary scale (3%); Interest
credit rate (6.5%); Interest rate for annuity conversion (8%); Mortality (GAM83
unisex).
For purposes of the Cash Balance Pension Plan, as of December 31, 1999,
Messrs. Reuter, Hostetter and Duncan had 26, 5 and 12 credited years of service
respectively. Only the base salary and bonus of Messrs. Reuter, Hostetter and
Duncan is compensation covered under the Cash Balance Pension Plan. Other
components of such officers' total compensation do not affect benefits payable
under the Cash Balance Pension Plan. In 1999, Mr. Reuter's base salary and bonus
were $263,854, Mr. Hostetter's base salary and bonus were $172,529 and Mr.
Duncan's base salary and bonus were $179,376.
401(k) Plan
Effective January 1, 1989, Susquehanna and each of its subsidiaries adopted
a 401(k) plan under which employees may defer portions of their income on a
pre-tax basis. The 401(k) plan covers employees of Susquehanna and its
subsidiaries upon their attaining age 21 and the completion of one year of
service in which 1,000 hours are worked. All members of predecessor thrift or
401(k) plans as of January 1, 1989, became participants in the Susquehanna
401(k) plan effective that date.
Subject to certain limitations imposed by the Internal Revenue Service,
participants under the Susquehanna 401(k) plan are allowed to defer between 1%
and 15% of their compensation during the year. Subject to Board discretion,
Susquehanna will match 100% of the first 3% of employee deferrals. These funds
will be accumulated under the 401(k) Plan until paid out at termination,
disability, death or retirement. The 401(k) plan allows for loans and hardship
withdrawals within legal limitations.
The vested portion of matching contributions made to the 401(k) plan during
1999 was $4,800 for each of Messrs. Bolinger, Cloney, Reuter, Hostetter and
Duncan and $73,316 for all executive officers as a group.
Stock Price Performance Graph
The following graph compares for fiscal years 1994 through 1999 the yearly
change in the cumulative total return to holders of Susquehanna common stock
with the cumulative total return of the Nasdaq Total Return Index (the "Nasdaq
Index"), a broad market in which Susquehanna participates, and of an index
comprised of all publicly traded banks in asset size $1-5 billion, compiled by
an independent research firm (the "Bank Index"). The graph depicts the total
return on an investment of $100 based on both stock price appreciation and
reinvestment of dividends for Susquehanna, and the companies represented by the
Nasdaq Index and the Bank Index.
The Bank Index consists of Susquehanna's bank peers relative to size as
measured by total assets. It is believed that these Bank Index companies are
comparable to Susquehanna in terms of size and all businesses engaged in.
20
<PAGE>
Susquehanna Bancshares, Inc.
[GRAPH]
December 31
-----------
Index 1994 1995 1996 1997 1998 1999
----- ---- ---- ---- ---- ---- ----
Susquehanna Bancshares, Inc. 100.0 124.54 169.57 290.16 238.55 191.42
NASDAQ - Total US* 100.0 141.33 173.89 213.07 300.25 542.43
SNL $1B-$5B Bank Asset-Size Index 100.0 134.48 174.33 290.73 290.06 266.58
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires Susquehanna's
officers and directors, and persons who own more than ten percent of a
registered class of Susquehanna'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 Susquehanna with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of forms received by it, and
written representations from certain reporting persons that no Forms 5 were
required for those persons, Susquehanna believes that, during 1999, all filing
requirements applicable to its officers, directors and greater than ten-percent
beneficial owners were satisfied, with the exception of Messrs. Helfrick, Hetzer
and Miller, who each inadvertently did not timely file a Form 4.
21
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors and executive officers of Susquehanna and its
subsidiaries, including their immediate families and companies in which they are
principal owners (more than 10%), were indebted to banking subsidiaries. All
these transactions were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not involve more than the normal risk of collectibility or present other
unfavorable features. At December 31, 1999, these loans totaled approximately
$36 million.
During 1999, the law firms in which directors Hall, Morgan, and Wiest are
principals, received fees for legal services from Susquehanna affiliates in
amounts which were less than 5% of their respective firm's gross revenues for
that year.
On February 1, 2000, in exchange for 2,360,000 shares of Susquehanna common
stock, Susquehanna acquired 100% of the capital stock of Boston Service Company,
Inc. (t/a Hann Financial Service Corporation), owned by Mr. Wimmer, one of
Susquehanna management's nominees to the Board of Directors' Class of 2003, and
certain members of his immediate family. Auto Lenders Liquidation Center, Inc.,
which is wholly-owned by Mr. Wimmer and his immediate family, provides
automobile marketing services to Hann. Fees associated with these services for
2000 are estimated to be approximately $500,000. The agreement pursuant to which
these fees will be paid was entered into on February 1, 2000 and has an initial
term of two years, and may be renewed by Hann thereafter for an additional two
year term, and thereafter for three additional two year terms. Upon the tenth
year of the agreement, either party may terminate the agreement upon 60 days
prior written notice to the other party. MTW Realty, L.L.C., a company also
wholly-owned by Mr. Wimmer and his immediate family, also receive rental fees of
$15,000 and $10,000 per month from Hann for leased office space located in
Jamesburg and Williamstown, New Jersey, respectively. The Jamesburg and
Williamstown leases both were executed on February 1, 2000 and have 15 years
terms (cancelable at Hann's option at the end of tenth year upon one years prior
notice). The leases both also provide for rental adjustments based on the
Consumer Price Index every five years.
INDEPENDENT PUBLIC ACCOUNTANTS
Susquehanna has engaged PricewaterhouseCoopers L.L.P., independent public
accountants, to audit its financial statements for the year ended December 31,
1999. Susquehanna expects to engage PricewaterhouseCoopers as its independent
public accountants for the year 2000. Representatives of PricewaterhouseCoopers
are expected to be present at the Annual Meeting and will have an opportunity to
make a statement if they desire to do so. They are expected to be available to
respond to appropriate questions from Susquehanna's shareholders.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 2001 Annual Meeting of Susquehanna
shareholders must be received by the Secretary of Susquehanna no later than
December 27, 2000, in order to be considered for inclusion in the proxy
statement and form of proxy relating to such 2001 Susquehanna Annual Meeting.
22
<PAGE>
ANNUAL REPORT ON FORM 10-K
Upon written request to the Secretary of Susquehanna at the address set
forth the top of page 3, Susquehanna will furnish without charge to any
shareholder whose proxy is solicited hereby a copy of Susquehanna's Annual
Report on Form 10-K to the Securities and Exchange Commission, including the
financial statements and schedules thereto.
By Order of the Board of Directors,
/s/ Lisa M. Cavage
Lisa M. Cavage
Secretary
23
<PAGE>
SUSQUEHANNA BANCSHARES, INC.
Annual Meeting of Shareholders
May 26, 2000 at 10:00 AM
Quality Inn and Suites
2363 Oregon Pike, Lancaster, PA
Only Shareholders of Susquehanna, their proxies, and invited guests of
Susquehanna may attend the Annual Meeting.
Directions:
From Philadelphia, New Jersey and New York:
From the NJ turnpike, take Route 76/276 (PA turnpike). Follow PA turnpike
west to Exit #21. Follow Route 222 South for about 12 miles. Exit onto
Route 272/Oregon Pike. Go to the stop sign, turn left onto 272 South.
Follow for about 1 1/2 miles to the first traffic light. The hotel is 100
feet ahead on the left.
From Harrisburg, Pittsburgh and Ohio:
Follow PA turnpike (Route 76) East to Exit #19. Take Route 283 East for
about 30 miles where it will join Route 30 East. Exit at Route 501/Lititz
Pike. Continue straight, through the traffic light. At the next traffic
light, turn left onto Route 272/Oregon Pike North. Go through 3 traffic
lights. Continue for an additional 100 yards. The hotel is on the right,
before the 4th traffic light.
From Baltimore, Washington, D.C. and Virginia:
Follow Route 695 North to Route 83 North. Follow Route 83 North to York,
PA. Follow Route 30 East for about 35 miles. Upon arrival of Lancaster,
stay in the right lane for local exits. Follow signs to Route 272 Oregon
Pike. Continue straight, through two traffic lights (Fruitville Pike and
Lititz Pike). At the next traffic light, turn left onto Route 272/Oregon
Pike North. Go through 3 traffic lights. Continue for an additional 100
yards. The hotel is on the right, before the 4th traffic light.
From Northern New Jersey, Bethlehem and Allentown:
Follow Route 78/22 West through Allentown to Route 222 South. Follow Route
222 South beyond Reading toward Lancaster. Continue on Route 222 to the
Route 272/Oregon Pike exit. Exit onto Route 272/Oregon Pike. Go to the stop
sign, turn left onto 272 South. Follow for about 1 1/2 miles to the first
traffic light. The hotel is 100 feet ahead on the left.
From Wilkes-Barre, Scranton and Binghamton, NY:
Follow I-81 South to Lebanon, PA. Take Route 72 South toward Manheim and
Lancaster. Turn left onto Route 722 East. Continue on Route 722 to Route
272. Turn right onto Route 272 South. Follow for about 4 miles to the first
traffic light. The hotel is 100 feet ahead on the left.
From Chambersburg, Hagerstown, MD and Virginia,
Follow I-81 North to Chambersburg, PA. Take Route 30 East through
Gettysburg and York toward Lancaster. Upon arrival in Lancaster, stay in
the right lane for local exits. Follow signs to Route 272 Oregon Pike.
Continue straight, through two traffic lights (Fruitville Pike and Lititz
Pike). At the next traffic light, turn left onto Route 272/Oregon Pike
North. Go through 3 traffic lights. The hotel is on the right before the
4th traffic light.
SUSQUEHANNA BANCSHARES, INC.
PROXY/VOTING INSTRUCTION CARD
This proxy is solicited on behalf of the Board of Directors of Susquehanna
Bancshares, Inc. for the Annual Meeting on May 26, 2000.
I (We) hereby constitute and appoint James H. Shreiner and Kenneth E.
Miller, and each of them, proxies with full power of substitution, to vote all
of the shares of common stock of Susquehanna Bancshares, Inc. ("Susquehanna")
which I (we) may be entitled to vote at the Annual Meeting of Shareholders of
Susquehanna to be held at The Quality Inn and Suites, 2363 Oregon Pike,
Lancaster, Pennsylvania on Friday, May 26, 2000, at 10:00 a.m., prevailing time,
and at any adjournment thereof, as set forth in this Proxy.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF A CHOICE IS NOT SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE NOMINEES FOR DIRECTORS.
---
For Participants in the Susquehanna Employee Stock Purchase Plan: I
instruct the Custodian to sign a proxy for me in substantially the form set
forth above and on the reverse side. The Custodian shall mark the proxy as I
specify. If a choice is not specified, my shares will be voted FOR the nominees
---
for directors.
(Continued and to be dated and signed on the reverse side.)
SUSQUEHANNA BANCSHARES, INC.
P.O. BOX 11310
NEW YORK, N.Y. 10203-0310
<PAGE>
SUSQUEHANNA BANCSHARES, INC.
26 North Cedar Street, Lititz, PA 17543
April 24, 2000
TO OUR SHAREHOLDERS:
On behalf of our entire Board of Directors, I cordially invite you to
attend our Annual Meeting of Shareholders on Friday, May 26, 2000. At the
meeting, you will be asked to elect five members to the Board of Directors'
Class of 2003 for the coming three years. We will also report on Susquehanna's
1999 business results and other matters of interest to shareholders.
Information about the matters to be acted on at the meeting is contained in
the accompanying Notice of Annual Meeting and Proxy Statement. Also enclosed
with this Proxy Statement are your proxy voting card and the 1999 Annual Report.
I would like to take this opportunity to remind you that your vote is very
important. Please take a moment now to complete, sign and date the attached
proxy voting card and return it in the postage-paid envelope we have provided.
I look forward to seeing you at the meeting.
Sincerely,
/s/ Robert S. Bolinger
Robert S. Bolinger
Chairman of the Board and
Chief Executive Officer
Detach Proxy Card Here
*(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided. Such a
mark will be deemed a vote "FOR" all nominees to the Class other than those
listed as exceptions.)
*Exceptions
---------------------------------------------------------------------
FOR all nominees [_] WITHHOLD AUTHORITY to vote [_] *EXCEPTIONS [_]
listed below for all nominees listed below
1. Election of Directors to the Class of 2003
Nominees: Robert S. Bolinger, Henry H. Gibbel, George J. Morgan, Roger V.
Wiest, Michael J. Wimmer
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
Check here if you: Plan to attend the [_]
Annual Meeting
Have written comments [_]
or change of address
on this card
Want to discontinue [_]
duplicate Annual
Reports
Please sign exactly as your shares are issued.Joint owners should each sign.
Attorneys, trustees, executors, administrators, guardians or corporate officers
should state full title.
Dated: _____________________________________________________, 2000
- - ------------------------------------------------------------------
Signature
- - ------------------------------------------------------------------
Signature
Votes must be indicated
(x) in Black or Blue ink. [X]
(Please sign, date and return this proxy promptly in the enclosed postage
prepaid envelope.)
Please Detach Here
You Must Detach This Portion of the Proxy
Card Before Returning it in the Enclosed Envelope
