<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
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PNC BANK CORP
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
PNC BANK CORP. THOMAS H. O'BRIEN
One PNC Plaza Chairman and Chief Executive Officer
249 Fifth Avenue
Pittsburgh, PA 15222-2707
[LOGO OF PNC BANK]
March 14, 1997
Dear Shareholder:
You will find enclosed the notice of meeting, proxy statement, and proxy card
for the annual meeting of shareholders of PNC Bank Corp., which will be held on
Tuesday, April 22, 1997, on the 15th floor of One PNC Plaza, in Pittsburgh,
Pennsylvania, beginning at 11:00 a.m.
Please review the enclosed material and complete, sign, date and return the
proxy card regardless of whether you plan to attend the annual meeting, so that
the matters coming before the meeting can be acted upon.
We look forward to meeting our shareholders, and welcome the opportunity to
discuss the business of your company with you.
Cordially,
/s/Thomas H. O'Brien
Thomas H. O'Brien
<PAGE>
[LOGO OF PNC BANK]
PNC BANK CORP.
ONE PNC PLAZA
249 Fifth Avenue
PITTSBURGH, PENNSYLVANIA 15222-2707
March 14, 1997
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997
To The Shareholders:
The annual meeting of the shareholders of PNC Bank Corp. will be held on the
15th floor of One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania, on
Tuesday, April 22, 1997, beginning at 11:00 a.m., local time, for the purpose
of considering and acting upon the following matters:
(1) The election of 19 directors to serve until the next annual meeting and
until their successors are elected and qualified;
(2) A proposal to approve the PNC Bank Corp. 1997 Long-Term Incentive Award
Plan;
(3) A proposal to approve an amendment to the PNC Bank Corp. Employee Stock
Purchase Plan; and
(4) Such other business as may properly come before the meeting or any
adjournment thereof.
Shareholders of record at the close of business on February 24, 1997 are
entitled to receive notice of, and to vote at, the meeting and any adjournment
thereof.
A proxy statement, form of proxy and self-addressed envelope are enclosed.
Please complete, date and sign the proxy card. Return it promptly in the
envelope provided, which requires no postage if mailed in the United States. If
you attend the meeting, you may then withdraw your proxy and vote in person.
By Order of the Board of Directors,
/s/William F. Strome
William F. Strome
Corporate Secretary
<PAGE>
[LOGO OF PNC BANK]
PNC BANK CORP.
ONE PNC PLAZA
249 Fifth Avenue
PITTSBURGH, PENNSYLVANIA 15222-2707
March 14, 1997
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 22, 1997
The enclosed proxy is being solicited by the Board of Directors ("Board of
Directors" or "Board") of PNC Bank Corp. ("Corporation" or "PNC") for use at
the Corporation's annual meeting of shareholders to be held April 22, 1997, or
at any adjournment thereof ("meeting" or "annual meeting"). Solicitation of
proxies may be made by mail, personal interviews, telephone and facsimile by
officers and employees of the Corporation and its subsidiaries. The Corporation
has retained D. F. King & Co., Inc. to assist in the solicitation of proxies
for a fee of $10,000 plus out-of-pocket expenses. Brokerage houses and other
custodians, nominees and fiduciaries will be requested to forward soliciting
material to the beneficial owners of the stock held of record by such persons.
Expenses for such solicitation will be borne by the Corporation. The proxy
statement and form of proxy are first being mailed to shareholders on or about
March 14, 1997.
The enclosed proxy is revocable at any time prior to the actual voting of
such proxy by the filing of an instrument revoking it, or a duly executed proxy
bearing a later date, with the Corporate Secretary of the Corporation. In the
event your proxy is mailed and you attend the meeting, you may revoke your
proxy and cast your vote personally. All properly executed proxies delivered
pursuant to this solicitation will be voted at the meeting in accordance with
instructions, if any. Unless otherwise directed, proxies will be voted FOR the
election as director of each of the persons named on page 3, FOR the proposal
to approve the PNC Bank Corp. 1997 Long-Term Incentive Award Plan as described
beginning on page 21, and FOR the proposal to approve an amendment to the PNC
Bank Corp. Employee Stock Purchase Plan as described beginning on page 27.
The Board of Directors has fixed the close of business on February 24, 1997
as the record date for determining shareholders entitled to receive notice of
and to vote at the meeting and any adjournment thereof ("Record Date"). On the
Record Date, there were issued and outstanding 322,038,350 shares of the
Corporation's common stock, par value $5.00 per share ("Common Stock") and the
following shares of the Corporation's preferred stock entitled to vote at the
meeting: 16,258 shares of $1.80 Cumulative Convertible Preferred Stock-Series A
("Preferred Stock-A"); 4,452 shares of $1.80 Cumulative Convertible Preferred
Stock-Series B ("Preferred Stock-B"); 325,610 shares of $1.60 Cumulative
Convertible Preferred Stock-Series C ("Preferred Stock-C") and 439,896 shares
of $1.80 Cumulative Convertible Preferred Stock-Series D ("Preferred Stock-D")
(collectively, "Voting Preferred Stock"). As of the Record Date, there were
6,000,000 shares of Fixed/Adjustable Rate Noncumulative Preferred Stock, Series
F ("Preferred Stock-F") issued and outstanding. Holders of Preferred Stock-F
have no voting rights except in limited circumstances not applicable to the
matters which are anticipated to come before the annual meeting for a vote.
The holders of Common Stock are entitled to one vote per share. Holders of
each share of Voting Preferred Stock are entitled to a number of votes equal to
the number of full shares of Common Stock which
1
<PAGE>
can be acquired upon conversion of such preferred stock, with holders of
Preferred Stock-A and Preferred Stock-B being entitled to 8 votes per share and
the holders of Preferred Stock-C and Preferred Stock-D being entitled to 4
votes per 2.4 shares. Holders of record of the Common Stock and Voting
Preferred Stock will vote together as a single class at the meeting, as
described in the section captioned "Voting Procedures" beginning on page 31.
The presence in person or by proxy of the holders of a majority in voting power
of the Common Stock and the Voting Preferred Stock will constitute a quorum for
the transaction of business at the meeting.
THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH SHAREHOLDER UPON WRITTEN
REQUEST A COPY (WITHOUT EXHIBITS, UNLESS OTHERWISE REQUESTED) OF THE
CORPORATION'S ANNUAL REPORT ON FORM 10-K REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ("SEC") FOR THE YEAR ENDED DECEMBER 31,
1996. REQUESTS FOR COPIES SHOULD BE ADDRESSED TO GLENN DAVIES, VICE PRESIDENT--
FINANCIAL REPORTING, PNC BANK CORP., ONE PNC PLAZA, 249 FIFTH AVENUE,
PITTSBURGH, PENNSYLVANIA 15222-2707. REQUESTS MAY ALSO BE DIRECTED TO MR.
DAVIES AT (412) 762-1553 OR TO [email protected] ON THE INTERNET. COPIES MAY
ALSO BE ACCESSED ELECTRONICALLY BY MEANS OF THE SEC'S HOME PAGE ON THE INTERNET
AT HTTP://WWW.SEC.GOV. THE ANNUAL REPORT ON FORM 10-K IS NOT PART OF THE PROXY
SOLICITATION MATERIALS.
ITEM 1
ELECTION OF DIRECTORS
INFORMATION CONCERNING NOMINEES
The By-Laws of the Corporation provide that the number of directors shall be
not fewer than five nor more than 36 as from time to time determined by the
Board of Directors. Pursuant to the recommendation of the Committee on
Corporate Governance, the Board has acted to fix at 19 the number of directors
to be elected at the annual meeting. The persons named below are nominees for
election as directors to hold office until the next annual meeting of
shareholders and the election and qualification of their successors.
The proxies solicited hereby, unless directed to the contrary therein, will
be voted FOR all nominees named below. All such nominees are now directors of
the Corporation and all have consented to being named in this proxy statement
and to serve if elected. Two directors currently serving on the Board, Messrs.
Arthur J. Kania and Donald I. Moritz, are not standing for re-election. The
Board of Directors has no reason to believe that any nominee will be
unavailable or unable to serve as a director, but if for any reason any nominee
should not be available or able to serve, the accompanying proxy will be voted
by the persons acting under said proxy in accordance with the recommendations
of the Board of Directors.
The table below sets forth the names of the nominees for election as
directors of the Corporation; their principal occupations as of January 15,
1997; the year they first became directors of the Corporation; and their
directorships of certain other companies. All nominees have held the position
indicated or another senior executive position with the same entity or one of
its affiliates or a predecessor corporation for at least the past five years,
except as otherwise indicated.
2
<PAGE>
<TABLE>
<CAPTION>
Director
Name Age Principal Occupation Since
- ---- --- -------------------- --------
<S> <C> <C> <C>
Paul W. Chellgren 54 Chairman and Chief Executive Officer of Ashland Inc. 1995
(energy company)
Robert N. Clay 50 President and Chief Executive Officer of Clay Holding 1987
Company (investments)
George A. Davidson, Jr. 58 Chairman and Chief Executive Officer of Consolidated 1988
Natural Gas Company (public utility holding company)
David F. Girard-diCarlo 54 Managing Partner of Blank Rome Comisky & McCauley 1995
(law firm)
Dianna L. Green 51 Senior Vice President of Customer Operations of Duquesne 1995
Light Company (public utility)
C. G. Grefenstette 69 Chairman and Chief Executive Officer of The Hillman 1989
Company (diversified operations and investments)
Bruce C. Lindsay 55 Chairman and Managing Director of Brind-Lindsay & 1995
Company Inc. (investment company)
Thomas Marshall 68 Retired Chairman and Chief Executive Officer of 1989
Aristech Chemical Corporation (chemicals)
W. Craig McClelland 62 Chairman and Chief Executive Officer of Union Camp 1985
Corporation (paper manufacturing and land resources)
Thomas H. O'Brien 60 Chairman and Chief Executive Officer of the Corporation 1983
Jackson H. Randolph 66 Chairman of Cinergy Corp. (public utility holding company) 1988
James E. Rohr 48 President of the Corporation 1989
Roderic H. Ross 66 Chairman and Chief Executive Officer of Keystone State 1979
Life Insurance Company (insurance company)
Vincent A. Sarni 68 Retired Chairman and Chief Executive Officer of PPG 1989
Industries, Inc. (glass, chemicals, coatings and resins)
Garry J. Scheuring 57 Vice Chairman of the Corporation;+ and former 1995
Chairman, President and Chief Executive Officer of
Midlantic Corporation (financial services)
Richard P. Simmons 65 Chairman, President, and Chief Executive Officer of 1976
Allegheny Teledyne Incorporated (specialty metals
and diversified businesses)
Thomas J. Usher 54 Chairman and Chief Executive Officer of USX 1992
Corporation (energy, steel and diversified business)
Milton A. Washington 61 President and Chief Executive Officer of Allegheny 1994
Housing Rehabilitation Corporation (housing rehabilitation
and construction)
Helge H. Wehmeier 54 President and Chief Executive Officer of Bayer 1992
Corporation (specialty chemicals, pharmaceuticals, and
imaging and graphic systems)
<CAPTION>
Directorships in Companies
Other than the Corporation
Filing Reports with the
Name SEC
- ---- --------------------------
<S> <C>
Paul W. Chellgren Ashland Inc.; and
Ashland Coal, Inc.
Robert N. Clay None
George A. Davidson, Jr. Consolidated Natural Gas Company;
and B.F. Goodrich Company
David F. Girard-diCarlo None
Dianna L. Green None
C. G. Grefenstette Owens & Minor, Inc.
Bruce C. Lindsay None
Thomas Marshall Allegheny Teledyne Incorporated; and
Ashland Coal, Inc.
W. Craig McClelland Union Camp Corporation; and
Allegheny Teledyne Incorporated
Thomas H. O'Brien Bell Atlantic Corporation; and
Hilb, Rogal and Hamilton Company
Jackson H. Randolph Cinergy Corp.; and
Cincinnati Financial Corporation
James E. Rohr Allegheny Teledyne Incorporated;
Student Loan Marketing Association;
and Equitable Resources, Inc.
Roderic H. Ross Hunt Manufacturing Company
Vincent A. Sarni PPG Industries, Inc.;
Hershey Foods Corporation; and
The LTV Corporation
Garry J. Scheuring None
Richard P. Simmons Allegheny Teledyne Incorporated; and
Consolidated Natural Gas Company
Thomas J. Usher USX Corporation
PPG Industries, Inc.
Milton A. Washington None
Helge H. Wehmeier None
</TABLE>
- --------
+Mr. Scheuring resigned as a Vice Chairman of the Corporation, effective as of
the close of business on February 28, 1997.
3
<PAGE>
BOARD AND COMMITTEES
The Board of Directors has six standing committees: an Audit Committee, an
Asset and Liability Management Committee, a Credit Committee, a Committee on
Corporate Governance, a Personnel and Compensation Committee and an Executive
Committee.
The Audit Committee is responsible for assisting the Board of Directors in
fulfilling its statutory and fiduciary responsibilities for the audit function
of the Corporation and its subsidiaries and in monitoring its accounting and
financial reporting practices; determining that the Corporation has adequate
administrative, operational and internal accounting controls and that the
Corporation is operating in accordance with its prescribed procedures and
codes of conduct; determining that the Corporation has in place policies and
procedures to enable it to comply with applicable laws and regulations and
that such compliance is occurring; and providing general oversight for the
internal and external audit function. Its functions include recommending to
the Board of Directors the appointment of the independent auditors and
reviewing with the internal auditors and the independent auditors their annual
audit plans and monitoring their progress during the year. The Committee is
presently comprised of Messrs. Davidson (Chairman), Chellgren, Girard-diCarlo,
Grefenstette, Kania, Moritz, Usher and Wehmeier.
The Asset and Liability Management Committee is primarily responsible for
monitoring the Corporation's interest rate and liquidity risks. In performing
this function, the Committee reviews and approves (when appropriate) key asset
and liability policies regarding interest rate sensitivity, financial
derivatives and funding needs and reviews management reports regarding these
policies and activities related thereto. The Committee is presently comprised
of Ms. Green and Messrs. Grefenstette (Chairman), Clay, Kania, O'Brien, Sarni,
Simmons and Wehmeier.
The Credit Committee is responsible for reviewing and approving (when
appropriate) loan policies and reports of compliance therewith; reviewing
credit policy officer committee activities; and reviewing reports regarding
lending and credit activities, as well as the Corporation's credit quality.
The Committee is presently comprised of Messrs. McClelland (Chairman), Girard-
diCarlo, Lindsay, Marshall, Randolph, Rohr, Ross, Scheuring and Washington.
The Committee on Corporate Governance is responsible for recommending to the
Board of Directors persons to be nominated for election or appointment as
directors of the Corporation and monitoring and recommending enhancements to
the Corporation's corporate governance framework, particularly with respect to
the structure, processes, and proceedings of the Board of Directors. In
performing the nominating function, the Committee considers director nominees
recommended by shareholders. Such recommendations must be submitted in writing
no later than November 14, 1997 to the Corporate Secretary, PNC Bank Corp.,
One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2707, and
include the name, age, citizenship, residence, qualifications and
directorships and other positions held by the proposed nominee in business,
charitable, and community organizations. The Committee is presently comprised
of Ms. Green and Messrs. Sarni (Chairman), Davidson, Lindsay, Randolph, Ross,
Simmons and Wehmeier.
The Personnel and Compensation Committee is responsible for recommending to
the Board of Directors the persons to be elected as Chairman, President, and
Vice Chairmen of the Corporation and establishing the compensation of the
executive officers of the Corporation. The Committee also makes
recommendations to the Board of Directors regarding the adoption of employee
benefit, bonus, incentive compensation or similar plans and is responsible for
their oversight. The Committee is presently comprised of Messrs. Usher
(Chairman), Chellgren, Clay, Marshall, McClelland, Moritz and Washington.
The Executive Committee has all the powers of the Board of Directors to the
extent permitted by law and can exercise such powers between meetings of the
Board of Directors. The Committee is presently comprised of Messrs. Simmons
(Chairman), Davidson, Grefenstette, McClelland, O'Brien, Rohr, Sarni,
Scheuring and Usher.
4
<PAGE>
The Board of Directors met ten times in 1996. During 1996, the Board's
committees held the following number of meetings: Audit Committee--four
meetings; Asset and Liability Management Committee--five meetings; Credit
Committee--four meetings; Committee on Corporate Governance--two meetings;
Personnel and Compensation Committee--seven meetings; and Executive
Committee--two meetings.
In 1996, each director then serving attended at least 75% of the combined
total of meetings of the Board of Directors held during his or her period of
service and meetings of each committee of the Board on which such director
served.
COMPENSATION OF DIRECTORS
Executive officers of the Corporation who are directors or members of
committees of the Board of Directors of the Corporation or its subsidiaries
receive no compensation for serving in such positions. All non-officer
directors of the Corporation are compensated for their services by a per diem
fee of $1,200 for any day's participation in a Board or committee meeting, or
any combination thereof, an annual retainer fee of $32,000 for Board
membership and, in accordance with the terms of the Corporation's 1992
Director Share Incentive Plan ("Director Share Plan"), a number of shares of
Common Stock having a fair market value on the date of the award equal to
$5,000. In addition, the chairman of each standing committee receives a $3,000
annual retainer fee. For 1996, the Corporation did not pay more than $62,800
in aggregate fees, including the value of Common Stock awarded pursuant to the
Director Share Plan, to any one director.
Pursuant to the Directors Retirement Plan, each current or future non-
officer director of the Corporation who served as a director of the
Corporation or a predecessor or acquired corporation or other business entity
for at least five years will be paid an annual cash retirement benefit. The
amount of the annual benefit will be equal to the annual retainer fee in
effect for non-officer directors of the Corporation on the date of the
director's retirement. The annual benefit will be paid for the lesser of ten
years or the life of the retired director, with payment to commence on the
later of age 65 or retirement from the Board of Directors.
Under the terms of the Directors Deferred Compensation Plan ("Deferred
Plan") approved in 1996 by the Board upon the recommendation of the Committee
on Corporate Governance, non-officer directors may elect to defer the receipt
of all or a portion of the compensation otherwise payable to them as a result
of their service as a director. The minimum deferral amount is $10,000 per
year. A director may elect one of two investment options with respect to
amounts deferred: an interest rate alternative or an investment in phantom
shares of Common Stock. Investment elections may be changed quarterly. A
director may also elect the event or date when amounts credited to his or her
account are paid out and whether the payout shall be in a lump sum or a
designated number of annual installments (not to exceed ten annual
installments). The director may designate a beneficiary to receive unpaid
amounts in the account upon the director's death.
COMMON STOCK PURCHASE GUIDELINE
In 1995, upon the recommendation of the Committee on Corporate Governance,
the Board of Directors adopted a Common Stock purchase guideline which
requires that each non-officer director annually purchase Common Stock in an
amount equal to twenty-five percent of the annual retainer fee then in effect.
5
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL
OWNERS
The following table sets forth information concerning beneficial ownership
of the Corporation's Common Stock as of January 15, 1997, by each director and
nominee for election as a director, each of the five executive officers named
in the Summary Compensation Table on page 16 and all directors and executive
officers of the Corporation as a group. The number of shares shown as
beneficially owned by each director and executive officer is determined under
the rules of the SEC and the information is not necessarily indicative of
beneficial ownership for any other purpose. For purposes of the table set
forth below, beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire within 60 days of January
15, 1997 through the exercise of any option, warrant or right.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial Ownership
- ---- -----------------------
<S> <C>
Richard C. Caldwell 177,143(/1/)(/2/)
Paul W. Chellgren 6,155
Robert N. Clay 4,789
George A. Davidson, Jr. 8,832
David F. Girard-diCarlo 1,318
Dianna L. Green 4,436
C. G. Grefenstette 471,552(/3/)(/4/)
Walter E. Gregg, Jr. 197,076(/1/)(/2/)
Arthur J. Kania* 436,136
Bruce C. Lindsay 2,080
Thomas Marshall 44,211
W. Craig McClelland 4,022(/4/)
Donald I. Moritz* 5,007(/4/)
Thomas H. O'Brien 978,608(/1/)(/2/)(/4/)
Jackson H. Randolph 11,458
James E. Rohr 462,849(/1/)(/2/)
Roderic H. Ross 5,767
Vincent A. Sarni 15,480(/4/)
Garry J. Scheuring 200,912(/1/)(/2/)
Richard P. Simmons 81,230(/4/)
Thomas J. Usher 4,761
Milton A. Washington 18,610
Helge H. Wehmeier 3,399
Directors and executive officers as a group (32 persons) 4,038,443(/1/)(/2/)(/3/)(/4/)**
</TABLE>
- --------
* Not standing for re-election.
** As of January 15, 1997, there were 324,172,568 shares of the Corporation's
Common Stock issued and outstanding. The number of shares of Common Stock
held by each individual is less than 1% of the outstanding Common Stock;
the total number held by the group equals 1.25% of the class. These
percentages were calculated by adding shares subject to exercisable stock
options to the foregoing number. The number shown also includes 247,600
restricted shares of Common Stock held by 11 executive officers. The number
of restricted shares held by each executive officer named in the Summary
Compensation Table on page 16 is shown in footnote (e) to that table.
6
<PAGE>
(1) Includes shares held in the Corporation's Incentive Savings Plan, a
qualified employee benefit defined contribution plan.
(2) Includes shares subject to exercisable stock options held by the executive
officers. The shares subject to such options are as follows, for Messrs.
O'Brien (679,000 shares), Rohr (357,500 shares), Gregg (147,400 shares),
Scheuring (71,500 shares), Caldwell (155,200 shares). The aggregate number
of shares subject to such options for the remaining nine executive officers
is 664,200.
(3) The amount listed for Mr. Grefenstette includes 142,000 shares held in a
trust of which Mr. Grefenstette is one of three co-Trustees; in that
fiduciary capacity he shares voting and dispositive power over the trust's
assets with the other co-Trustees. The amount listed for Mr. Grefenstette
also includes 316,000 shares owned by Wilmington Securities, Inc., an
indirect wholly-owned subsidiary of The Hillman Company, which is
controlled by the trust. The amount listed for Mr. Grefenstette, however,
does not include 448,000 shares owned by The Hillman Foundation, Inc.; Mr.
Grefenstette, who is a Vice President and Director of the Foundation,
disclaims beneficial ownership of that holding.
(4) Includes shares held jointly and/or indirectly.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 5, 1997, based solely on Schedules 13G filed with the SEC under
the Securities Exchange Act of 1934 ("Exchange Act"), the following persons are
known by the Corporation to be the beneficial owners of more than five percent
of the Corporation's Common Stock. The numbers shown on the table represent
holdings as of December 31, 1996 and should be interpreted in light of the
related footnotes.
<TABLE>
<S> <C> <C>
Name and Address of Beneficial Owner Amount and Nature Percent of
- ------------------------------------ of Beneficial Ownership Class
----------------------- ----------
The Capital Group Companies, Inc.(/1/) 20,259,000(/2/) 5.9%(/2/)
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071
PNC Bank Corp. 18,106,945(/3/) 5.6%(/3/)
PNC Bancorp, Inc.
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
</TABLE>
- --------
(1) The shares reported by The Capital Group Companies, Inc. relate to those
attributable to the following two wholly-owned operating subsidiaries,
including the shares reported by the Capital Research and Management
Company ("Capital Research") on a Schedule 13G filed with the SEC: (i)
Capital Research, an Investment Adviser registered under Section 203 of the
Investment Advisers Act of 1940; and (ii) Capital Guardian Trust Company, a
Bank as defined in Section 3(a)(6) of the Exchange Act. The Corporation has
been advised that each of these subsidiaries acts separately from the other
and from The Capital Group Companies, Inc. in exercising investment
discretion over its managed accounts.
7
<PAGE>
(2) The Capital Group Companies, Inc. reports sole voting power as to 925,400
shares and sole dispositive power as to 21,379,400 shares. These shares do
not include any shares as to which Capital Research reports sole voting
power, but do include 20,259,000 shares as to which Capital Research
reports sole dispositive power. Neither The Capital Group Companies, Inc.
nor any of its affiliates own any shares of the Corporation's Common Stock
directly. The shares reported are owned by various institutional accounts
under the discretionary investment management of the subsidiaries
identified in footnote (1); no one such managed account owns five percent
or more of the Corporation's Common Stock. Beneficial ownership as to all
shares reported is disclaimed by the reporting persons pursuant to Rule
13d-4 under the Act.
(3) As of December 31, 1996, the Corporation's subsidiary banks, acting in
various fiduciary and representative capacities, were deemed to be the
beneficial owners of an aggregate of 18,106,945 shares of Common Stock,
representing 5.6% of outstanding Common Stock; no one subsidiary bank was
the beneficial owner of 5% or more of outstanding Common Stock. The
foregoing aggregate number of shares of Common Stock and percentage of
outstanding Common Stock include 4,429 shares of Preferred Stock-C and
6,375 shares of Preferred Stock-D. The cited figures for Common Stock
reflect conversion of such beneficially owned Preferred Stock into Common
Stock. The bank subsidiaries had the power to vote or direct the voting of
a portion of said shares as follows: 12,226,438 sole; and 4,270,344 shared.
The bank subsidiaries had the power to dispose or direct the disposition of
a portion of said shares as follows: 5,580,532 sole; and 2,028,312 shared.
PNC Bancorp, Inc., a wholly-owned subsidiary of the Corporation, is the
direct parent holding company of the Corporation's subsidiary banks.
COMPENSATION OF EXECUTIVE OFFICERS
PERSONNEL AND COMPENSATION COMMITTEE REPORT
The following is the Personnel and Compensation Committee's report to
shareholders on the Corporation's executive compensation policies with respect
to compensation reported for fiscal year 1996. In accordance with the rules of
the SEC, this report shall not be incorporated by reference into any of the
Corporation's filings made under the Exchange Act or under the Securities Act
of 1933.
PERSONNEL AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION FOR
FISCAL YEAR 1996
. Key compensation-related responsibilities of the Personnel and Compensation
Committee ("Committee") of the Board of Directors ("Board"):
. Oversee PNC Bank Corp.'s ("Corporation") compensation policies and
practices;
. Establish the annual compensation of the Corporation's executive
officers;
. Recommend to the Board the adoption or amendment of employee benefit,
bonus, incentive compensation, and similar plans;
. Oversee those plans; and
. Conduct an annual, comprehensive review of the Corporation's executive
compensation program.
.How the Committee functions:
. No Committee member can be a Corporation officer.
. The Committee reviews comparative compensation data for:
. The domestic banking industry as a whole; and
8
<PAGE>
. A peer group of selected money center bank holding companies and
certain regional bank holding companies which compete in markets
served by the Corporation ("Peer Group"). The banking institutions
included in the Peer Group do not necessarily include the same banking
institutions included in the peer group index used for the Common
Stock performance graph on page 20.
. Management provides the Committee with comparative compensation data
obtained from nationally-recognized compensation consulting firms.
. The Committee is assisted by:
. An independent compensation consultant retained by the Committee; and
. The Corporation's human resources, corporate compensation, legal, and
accounting staffs.
.The Corporation's executive compensation program is designed to:
. Attract, motivate, and retain executive officers who can make significant
contributions to the Corporation's long-term success;
. Align the interests of executive officers with those of shareholders; and
. Place a significant proportion of an executive officer's total
compensation at risk by tying it to the Corporation's financial and
Common Stock price performance.
. Description of the three primary components of the Corporation's executive
compensation program: base salary; annual incentive awards; and annual long-
term incentive awards:
.Base salary
. The base salary structure is targeted at the middle of the competitive
marketplace.
. The base salary range for an executive position is determined through
an annual formal assessment by the Corporation's human resources
personnel. This assessment considers the position's complexity and
level of responsibility, its importance to the Corporation in relation
to other executive positions, and the competitiveness of an
executive's total compensation.
. Each executive position is assigned a corporate job grade with a
salary range which approximates the salary practices of:
. The general domestic banking industry for all officers except the
Corporation's Chief Executive Officer and the President; or
. The Peer Group for the Chief Executive Officer and the President
because the Peer Group's chief executive officers and presidents
have duties and responsibilities which more closely approximate
those of Mr. O'Brien and Mr. Rohr, respectively.
. Subject to the Committee's approval, the level of an executive
officer's base pay within a salary range is determined on the basis
of:
. Relevant comparative compensation data; and
. The Chief Executive Officer's assessment of the executive's
performance, experience, demonstrated leadership, job knowledge,
and management skills.
9
<PAGE>
.Annual incentive awards
. For 1996, annual incentive awards were made under two plans. For the
Chief Executive Officer and the other four executive officers included
in the compensation tables beginning on page 16 ("named executive
officers"), awards were paid under the 1996 Executive Incentive Award
Plan ("1996 Plan"), which was approved by shareholders at the
Corporation's 1996 annual meeting. With respect to other eligible
executive officers, awards were paid under the shareholder-approved
1994 Annual Incentive Share Award Plan ("1994 Plan"). Participants in
the 1996 Plan do not also receive an award under the 1994 Plan.
. These cash awards are intended to provide a linkage among executive
performance, annual objective performance measures, and long-term
shareholder value.
.How annual incentive awards are calculated under the 1996 Plan:
. The 1996 Plan is designed to give the Committee the flexibility to
make annual incentive awards that are comparable to those found in the
marketplace in which the Corporation competes for executive talent.
The 1996 Plan permits the payment of annual incentive awards that
qualify as deductible performance-based compensation under Section
162(m) of the Internal Revenue Code of 1986, as amended ("Code").
. Before the end of the first quarter of 1996, the Committee assigned
each participant an incentive award amount, expressed as the maximum
percentage of the compensation pool available to that participant for
the 1996 award period. For 1996, the compensation pool was equal to
one-half of one percent of the Corporation's 1996 net income.
. No participant can be assigned a percentage of the compensation pool
greater than 35% and the sum of all percentages assigned cannot exceed
100% of the compensation pool.
. During the first quarter of 1997, the Committee:
. Confirmed the identity of the executive officers eligible to
participate in the 1996 Plan;
. Computed and certified the size of the compensation pool for the
1996 award period, based upon financial statements supplied by the
Corporation's officers; and
. Determined the amount of the incentive award to be paid to each
participant, based on:
. the maximum percentage of the compensation pool assigned to a
participant during the first quarter of 1996; and
. such qualitative or quantitative performance factors the
Committee deemed relevant in adjusting the incentive award
payable to the level shown in the Summary Compensation Table
on page 16, in the column captioned "Bonus($)," for the year
1996.
.How annual incentive awards are calculated under the 1994 Plan:
. The target amount payable to an executive officer as an annual
incentive award under the 1994 Plan is a function of the officer's
salary grade, expressed as a percentage of base salary. The percentage
amount generally increases as the officer's salary grade increases.
. When setting the 1996 target annual incentive awards, the Committee
assumed that the 1996 target performance goal would be achieved.
Achievement of that goal would result in the payment of median annual
incentive amounts, in terms of the domestic banking industry.
10
<PAGE>
. There are four factors which affect the size of actual award payments:
. "EPS Goal"--This goal is based on the Corporation's earnings per
share in relation to the Corporation's budget or profit plan. The
EPS Goal is used as the primary performance measure when making
annual incentive awards. Management established, subject to
Committee approval, the target EPS Goal for 1996.
. "Relative Goals"--These goals are based on the Corporation's
return on average assets and return on average equity relative to
the Peer Group.
. The Chief Executive Officer's assessment of an executive officer's
performance is also considered.
. The Committee may, in its sole discretion, increase, reduce, or
eliminate an executive officer's award, based on its assessment of
the officer's performance.
.Annual long-term incentive awards
. The 1996 stock option grants were made under the 1992 Long-Term
Incentive Award Plan ("Long-Term Plan").
. The Long-Term Plan is intended to focus the efforts of executive
officers on performance which will increase the equity value of the
Corporation for its shareholders.
. The Committee may grant incentive stock options and nonstatutory stock
options to purchase shares of Common Stock. The options are granted at
an exercise price per share not less than the fair market value of a
share of Common Stock on the date of grant. The Committee may also
grant stock appreciation rights, performance units, and incentive or
restricted stock. For 1996, only nonstatutory stock options were
granted.
.How the number of stock options granted under the Long-Term Plan is
determined:
. A number of stock options is established which would position the
executive officer competitively relative to the domestic banking
industry (approximately at the median) with respect to long-term
compensation. This number is called the "base-line amount" and is used
as a reference point for upward and downward adjustments to the stock
option grant level. The base-line amount is adjusted periodically in
order to achieve the market competitive objective.
. Each year, the stock option grant level may be adjusted upward or
downward from the base-line amount. This adjustment is based on the
Corporation's total shareholder return as compared to the Peer Group.
. If the Corporation's total shareholder return is significantly higher
or lower than the Peer Group's median return, the number of options to
be granted will be adjusted above or below, respectively, the base-
line amount.
. For the 1996 stock option grants, Common Stock appreciation and
dividend payments during 1995 were used to calculate total shareholder
return.
. By 1998, and in each following year, total shareholder return will be
based on Common Stock appreciation and dividend payments for the three
most recent years. For example, the 1998 grants will be based on
Common Stock appreciation and dividend payments for the period 1995
through 1997.
11
<PAGE>
. The 1996 option grant levels shown on the Option Grant Table on page
18 reflect an approximately 10% increase over the previous grant in
1994. (No options were granted in 1995 due to a timing change related
to the implementation of a revised method of calculating stock option
levels.) This adjustment was made to maintain the overall
competitiveness of the grant level.
.Chief Executive Officer compensation
. With input from the Committee's independent compensation consultant, the
Committee discusses matters affecting Mr. O'Brien's compensation
privately, without Mr. O'Brien or other officers present.
. In arriving at a decision affecting Mr. O'Brien's compensation, the
Committee considered:
. The Corporation's financial performance, Common Stock price
performance, and industry-wide and Peer Group compensation data; and
. Mr. O'Brien's leadership, decision-making skills, experience,
knowledge, communication with the Board, and strategic
recommendations, as well as the Corporation's positioning for future
performance.
. The Committee did not place any particular relative weight on one of
these factors over another, but the Corporation's financial
performance is generally given the most weight.
. The Committee's decisions regarding Mr. O'Brien's compensation are
reported to and discussed by the full Board at its next regularly
scheduled meeting. These discussions are conducted privately, without Mr.
O'Brien or other officers present.
. For 1996, the Committee made the following decisions regarding Mr.
O'Brien's compensation:
. In December 1995, Mr. O'Brien's 1996 base salary was increased above
the level established for him for 1995.
. In February 1996, the Committee granted Mr. O'Brien 132,000
nonstatutory stock options, using the total shareholder return
methodology described in this report. These options have an exercise
price per share of $31.125, the average of the high and low prices of
a share of Common Stock on the date of grant.
. In February 1997, in accordance with the methodology used for
calculating annual incentive awards under the 1996 Plan, the Committee
authorized the payment to Mr. O'Brien of $1,150,000 as an incentive
award for 1996.
. In deciding upon the size of Mr. O'Brien's 1996 incentive award payment,
the Committee considered these significant accomplishments:
. Net interest income grew 13% and noninterest revenues increased 11%,
reflecting the impact of initiatives to reduce reliance on wholesale
investment activities and substantial growth in fee-based businesses.
. Net interest margin widened 68 basis points to 3.83% as the proportion
of average loans to earning assets increased to 76% from 66% a year
ago.
. The Midlantic Corporation integration was successfully completed with
cost savings above expectations.
. The progress made in the implementation of the AAA affinity program
positioned the Corporation to market a full range of products and
services to AAA members nationwide.
12
<PAGE>
. Asset quality remained strong. Nonperforming assets continued to
decline, representing 0.88% of loans and foreclosed assets at December
31, 1996, and net charge-offs were 0.33% of average loans.
. The Corporation aggressively pursued capital management initiatives,
including the repurchase of approximately 23 million shares of Common
Stock during 1996.
.Tax policy
. Section 162(m) of the Code disallows a federal income tax deduction for
compensation over $1 million paid to the Chief Executive Officer and any
of the executive officers included in the compensation tables following
this report, subject to certain exceptions.
. One exception applies to compensation paid pursuant to shareholder-
approved plans that are performance-based.
. The Committee intends that awards made under the 1996 Plan be eligible
for the performance-based exception, and therefore eligible as a federal
income tax deduction for the Corporation.
. The Committee unanimously recommended to the Board that the Long-Term
Plan be amended and restated and resubmitted to the shareholders for
approval as the 1997 Long-Term Incentive Award Plan. A transitional rule
under Section 162(m) requires that this plan be approved by shareholders
at the Corporation's 1997 annual meeting. More detailed information is
provided in the discussion of Item 2, beginning on page 21.
. The Committee has taken and will continue to take whatever actions are
necessary to minimize, if not eliminate, the Corporation's nondeductible
compensation expense under Section 162(m). While keeping this goal in
mind, the Committee will also try to maintain the flexibility which the
Committee believes to be an important element of the Corporation's
executive compensation program.
.Other highlights of compensation-related developments since the Committee's
previous report:
. As disclosed in last year's Committee report and the accompanying award
table, during 1995 a small number of key executive officers, including
each of the named executive officers except Mr. Scheuring, received
special performance incentive share awards. A specified number of
restricted shares of Common Stock were to be issued to each award
recipient upon the achievement of performance conditions based on the per
share price of Common Stock. During 1996 the Committee certified that
both performance conditions had been satisfied as of September 16, 1996
and November 1, 1996, respectively. As a result, restricted shares of
Common Stock were issued in the name of Messrs. O'Brien (66,900 shares),
Rohr (42,400 shares), Gregg (31,900 shares), and Caldwell (17,600 shares)
and the other executive officers who had been granted awards. Although
the recipients are entitled to receive dividends on and vote the shares
issued, the shares will be forfeited if the officer leaves the
Corporation's employ within two years after the applicable performance
condition was satisfied. This two-year restricted period may be
eliminated upon certain employment terminations in the event of a change
in control.
. The Committee deleted from the Corporation's 1994 Plan the provision
which established 150% of a Participant's target award as the maximum
amount that can be paid based on performance goal achievement in excess
of target levels. The Committee also eliminated the Plan's limitation on
the Committee's discretion to make upward adjustments to awards. In view
of the adoption of the 1996 Executive Incentive Award Plan, these
limitations are no longer necessary for purposes of Section 162(m) of the
Code. Also, the Committee believes that it should have greater
flexibility to recognize superior performance through increased incentive
award payments made under this plan.
13
<PAGE>
. The Committee unanimously recommended to the Board that the authorized
shares of Common Stock issuable under the Corporation's Employee Stock
Purchase Plan be increased by 4,000,000 shares and that the Plan's term
be extended to May 31, 2003, subject to shareholder approval of the
increase in issuable shares. The reasons for this recommendation are
detailed in Item 3 of this proxy statement, beginning on page 27.
. The Committee unanimously recommended to the Board that certain changes
be made to the Corporation's benefits and compensation programs to
protect certain key executives' benefits and compensation in the event
their employment is terminated after a change in control of the
Corporation. The Board approved those recommendations and the resulting
change in control arrangements are discussed following this report, on
page 15.
.Conclusion:
. Based upon its annual, comprehensive review of the Corporation's
executive compensation program, the Committee has concluded that the
program's basic structure is appropriate, competitive, and effective to
serve the purposes for which it was established.
MEMBERS OF THE COMMITTEE:
Thomas J. Usher (Chairman)
Paul W. Chellgren
Robert N. Clay
Thomas Marshall
W. Craig McClelland
Donald I. Moritz
Milton A. Washington
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Personnel and Compensation Committee is an officer or former
officer of the Corporation or any of its subsidiaries.
Certain directors, nominees and executive officers and/or their associates,
including certain members of the Personnel and Compensation Committee and their
respective associates, were customers of and had transactions with the
Corporation or its subsidiaries during 1996. Transactions which involved loans
or commitments by subsidiary banks were made in the ordinary course of business
and 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 normal risk of collectibility or present other
unfavorable features. Blank Rome Comisky & McCauley, the law firm for which Mr.
Girard-diCarlo serves as Managing Partner, and Kania, Lindner, Lasak and
Feeney, the law firm of which Mr. Kania is a partner, were retained to provide
legal services to one or more of the Corporation's subsidiaries during 1996 and
may provide similar services during 1997.
14
<PAGE>
CHANGE IN CONTROL AND OTHER ARRANGEMENTS
The Corporation has entered into change in control severance agreements with
each of the executive officers named in the Summary Compensation Table, other
than Mr. Scheuring, and certain other executive officers. If the executive
officer's employment is terminated by the Corporation without cause or by the
executive officer for good reason, during a period of up to three years (two
years for certain executive officers) following a change in control of the
Corporation, the executive officer will receive severance benefits, including
(i) a lump sum payment of up to three times (two times for certain executive
officers) the executive officer's annual base salary and bonus; (ii) the
payment of at least the target bonus for the executive officer for the fiscal
year during which the executive officer's employment is terminated; (iii) up to
three years (two years for certain executive officers) of additional benefits
under the Corporation's retirement and benefit plans; and (iv) a payment to
reimburse the executive officer for any excise taxes on severance benefits that
are considered excess parachute payments under the Internal Revenue Code of
1986, as amended ("Code"). Each agreement requires the executive officer not to
use or disclose any of the Corporation's confidential business information and,
if the executive officer receives the above severance benefits, not to employ
or solicit any officer of the Corporation during the year following the
executive officer's termination. Each agreement terminates when the executive
officer reaches age 65, and the Corporation may, upon one year's advance
notice, simultaneously terminate all of the change in control severance
agreements.
The Corporation has also amended its displaced employee assistance plans for
employees generally to increase severance benefits following a change in
control under certain circumstances. If an employee's employment is terminated
by the Corporation within two years following consummation of a change in
control, the employee will receive a lump sum payment equal to twice the
benefits to which such employee otherwise would be entitled under the
applicable plan.
In connection with the Midlantic Corporation merger, which became effective
as of December 31, 1995, the Corporation entered into an employment agreement
with Mr. Scheuring which includes the following terms and conditions: (i) a
term commencing on December 31, 1995 and ending on the third anniversary
thereof; (ii) annual base salary in an amount not less than $650,000; (iii) a
bonus for 1996 in an amount equal to the greater of 1996 salary and the amount
that would otherwise by payable under PNC's incentive award plan and,
thereafter, as described in the following clause; (iv) participation in all of
PNC's compensation and benefit (including perquisite and, after 1996, annual
bonus) plans or arrangements at a level, in each case, that is not less
favorable than the level at which provided to any other member of PNC's Office
of the Chairman (other than the Chairman); and (v) non-competition and
confidentiality covenants by Mr. Scheuring. Under the terms of the employment
agreement, if the agreement is terminated by Mr. Scheuring for any reason other
than by reason of death or disability, he is entitled to receive, among other
things, his full base salary through the date of termination at the highest
annual rate in effect during the 12 months immediately preceding the time
notice of termination is given. Mr. Scheuring is also entitled to a cash
severance payment equal to 2.99 times his "base amount" as defined in Section
280G of the Code, but excluding from the computation of Mr. Scheuring's base
amount any income from the exercise or settlement of stock options during 1995
and 1996. Mr. Scheuring has terminated his employment with the Corporation,
effective as of the close of business on February 28, 1997. As required by the
terms of Mr. Scheuring's employment agreement, the Corporation has paid to him
the following amounts, in addition to base salary through the date of
termination: $2,588,046 as a severance payment; $95,625 as a pro rata incentive
award for 1997; and $367,868 as the present value of certain additional
retirement benefit payments.
15
<PAGE>
SUMMARY COMPENSATION TABLE*
The Summary Compensation Table shows, for the years 1994 through 1996, the
compensation paid or awarded to Mr. O'Brien, the Corporation's Chairman and
Chief Executive Officer, and the Corporation's next four most highly
compensated, policy-making executive officers; the inclusion of the four
executive officers other than Mr. O'Brien in this group was based on salary
and bonus earned during 1996. Mr. O'Brien and the other four executive
officers are referred to collectively as the Corporation's "named executive
officers." For a detailed discussion of the Corporation's executive
compensation program, please refer to the Personnel and Compensation Committee
Report on Executive Compensation, beginning on page 8.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- ----------------------------------
AWARDS PAYOUTS
---------- --------------
OTHER SECURITIES
ANNUAL UNDERLYING LONG-TERM ALL
NAME AND PRINCIPAL COMP OPTIONS/ INCENTIVE PLAN OTHER
POSITION YEAR SALARY ($) BONUS ($) ($) SARS (#) PAYOUTS ($) COMP ($)
- ------------------ ---- ---------- --------- ------ ---------- -------------- --------
(a) (b) (c) (d)(e)
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas H. O'Brien 1996 950,000 1,150,000 2,476 132,000 0 204,230
Chairman and Chief 1995 900,000 657,000 10,306 0 0 192,397
Executive Officer 1994 850,000 249,900 2,410 120,000 0 149,934
PNC Bank Corp.
James E. Rohr 1996 650,000 700,000 3,387 71,500 0 161,174
President 1995 570,000 400,000 13,926 0 0 111,035
PNC Bank Corp. 1994 515,000 113,558 3,365 65,000 0 93,306
Garry J. Scheuring 1996+ 650,000 650,000 0 71,500 0 50,965
Vice Chairman**
PNC Bank Corp.
Walter E. Gregg, Jr. 1996 460,000 345,000 1,181 53,400 0 119,526
Senior Executive Vice 1995 430,000 300,000 4,914 0 0 77,979
President 1994 375,000 71,663 980 44,000 0 60,561
PNC Bank Corp.
Richard C. Caldwell 1996 330,000 330,000 1,163 29,200 0 31,810
Executive Vice President 1995 315,000 157,500 4,667 0 0 30,637
PNC Bank Corp. 1994 305,000 73,810 0 26,500 0 25,450
</TABLE>
- ----
* Footnotes to the Summary Compensation Table are set forth on page 17.
** Mr. Scheuring has resigned as a Vice Chairman of the Corporation, effective
as of the close of business on February 28, 1997.
+ Mr. Scheuring, the former Chairman of the Board, President, and Chief
Executive Officer of Midlantic Corporation, first became a PNC executive
officer as of December 31, 1995.
16
<PAGE>
FOOTNOTES TO SUMMARY COMPENSATION TABLE
(a) Incentive Awards for 1996 were made to each named executive officer
pursuant to the Corporation's 1996 Executive Incentive Award Plan.
(b) The amounts shown represent reimbursement for certain tax liabilities. None
of the named executive officers received perquisites or other personal
benefits, securities, or property during 1996 which, in the aggregate, cost
the Corporation the lesser of $50,000 or 10% of the named executive
officer's salary and bonus earned during that year. Perquisites and other
personal benefits which were received by the named executive officers were
valued on the basis of their incremental cost to the Corporation and its
subsidiaries, as prescribed by the rules of the SEC.
(c) No options were granted in 1995 due to a timing change related to the
implementation of a revised method of calculating stock option levels. The
options granted in February 1996 would have been granted in December 1995
under the practice previously followed by the Personnel and Compensation
Committee.
(d) The amount shown for each named executive officer for 1996 includes the
dollar value ($9,000 for each of Messrs. O'Brien, Rohr, Gregg, and
Caldwell; and $7,500 for Mr. Scheuring) of matching contributions of the
Corporation's Common Stock made pursuant to the Corporation's Incentive
Savings Plan, a qualified employee benefit defined contribution plan. The
amount also includes 1996 contributions made to the Corporation's
Supplemental Incentive Savings Plan, a non-qualified employee benefit
defined contribution plan, for Messrs. O'Brien ($47,500), Rohr ($29,500),
Gregg ($18,100), and Caldwell ($10,300). Finally, the amount shown includes
the 1996 net premiums paid by the Corporation in connection with its Key
Executive Equity Plan, a split-dollar insurance arrangement, on behalf of
Messrs. O'Brien ($147,730), Rohr ($122,674), Scheuring ($43,465), Gregg
($92,426), and Caldwell ($12,510). The net premiums disclosed in the
preceding sentence, and included in "All Other Compensation" for 1994 and
1995, represent the full dollar amounts paid by the Corporation for both
the term and non-term portions of the Key Executive Equity Plan.
(e) As of December 31, 1996, the named executive officers, other than Mr.
Scheuring, held restricted shares of Common Stock as follows, with the
aggregate dollar value shown as of that date: Messrs. O'Brien (66,900
shares; $2,517,113); Rohr (42,400 shares; $1,595,300); Gregg (31,900
shares; $1,200,237); and Caldwell (17,600 shares; $662,200).
17
<PAGE>
OPTION GRANTS IN 1996
This table provides information on stock options granted to the named
executive officers in 1996. Only nonstatutory stock options were granted in
1996 under the Corporation's 1992 Long-Term Incentive Award Plan. No stock
appreciation rights were granted in 1996.
INDIVIDUAL GRANTS--1996
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES EXERCISE OR BASE EXPIRATION PRESENT
NAME GRANTED (#) IN 1996 PRICE ($/SH) DATE VALUE ($)
- ---- ----------- ---------- ---------------- ---------- ----------
(a) (b) (c)
<S> <C> <C> <C> <C> <C>
Thomas H. O'Brien 132,000 4.89% $31.125 02/13/06 964,920
James E. Rohr 71,500 2.65% $31.125 02/13/06 522,665
Garry J. Scheuring 71,500 2.65% $31.125 02/13/06 522,665
Walter E. Gregg, Jr. 53,400 1.98% $31.125 02/13/06 390,354
Richard C. Caldwell 29,200 1.08% $31.125 02/13/06 213,452
</TABLE>
- --------
(a) Options were granted on February 13, 1996 and became exercisable on
February 13, 1997.
(b) Exercise price shown equals the average of the high and low sale prices of
the Corporation's Common Stock on the New York Stock Exchange on February
13, 1996.
(c) The values listed in this column are based upon the Black-Scholes option
pricing model. The assumptions used to determine the grant date present
value of $7.31 per option are as follows: market price ($31.125), exercise
price ($31.125), volatility (.3219), risk free rate of return (5.28%),
estimated useful life (6 years), and dividend yield (4.70%). The
Corporation in no way intends to provide any predictions or assurances
with respect to option values, as some of the underlying assumptions are
highly subjective. For an explanation of the method used to determine the
number of options granted, please refer to the section of the Personnel
and Compensation Committee Report on Executive Compensation captioned "How
the number of stock options granted under the Long-Term Plan is
determined," at page 11.
AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR-END OPTION VALUES
This table provides information concerning exercises of nonstatutory stock
options during 1996 by the named executive officers. The table also shows the
number and value of unexercised options at the end of 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT 1996 IN-THE-MONEY OPTIONS
YEAR-END (#) AT 1996 YEAR-END
------------------------- -------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ---------- ----------- ------------- ----------- -------------
(a)(b) (b)
<S> <C> <C> <C> <C> <C> <C>
Thomas H. O'Brien 169,000 $2,136,523 547,000 132,000 $7,750,432 $915,750
James E. Rohr 101,000 $1,435,902 286,000 71,500 $3,758,000 $496,031
Garry J. Scheuring 0 $ 0 0 71,500 $ 0 $496,031
Walter E. Gregg, Jr. 54,000 $ 720,125 94,000 53,400 $ 912,750 $370,462
Richard C. Caldwell 24,400 $ 607,862 126,000 29,200 $1,892,625 $202,575
</TABLE>
- --------
(a) An option is in-the-money if the fair market value of the underlying
security exceeds the exercise price of the option.
(b) The dollar values shown were calculated by determining the difference
between: (1) the average of the high and low sale prices of the
Corporation's Common Stock on the New York Stock Exchange on December 31,
1996 (i.e., $38.0625) and (ii) the exercise prices of the various options
held by the named executive officer as of December 31, 1996.
18
<PAGE>
PENSION BENEFITS
The Corporation maintains a non-contributory pension plan ("Pension Plan")
for employees which is a defined benefit plan under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and is qualified under
Section 401(a) of the Code. The Corporation and certain of its subsidiaries
contribute an actuarially determined amount necessary to fund total benefits
payable to participants employed by them. The amount of the Corporation's
annual contribution to this Plan with respect to a specified participant cannot
readily be calculated by the actuaries for the Pension Plan. Benefits under the
Pension Plan are based on the average of the highest base salary for five
consecutive years during the last ten years of credited service ("final average
compensation"), and are subject to limitations imposed by the Code.
Retirement benefits under the Pension Plan are calculated as follows: (i)
1.3% of the final average compensation for each year of credited service up to
25 years, plus (ii) 1% of the final average compensation for each year of
credited service over 25, plus (iii) 0.45% of the final average compensation in
excess of the participant's social security covered compensation (determined as
of the year of retirement) for each year of credited service up to 35 years.
A supplemental benefit plan applicable to certain officers of the Corporation
and its subsidiaries provides retirement benefits equal to the difference, if
any, between the maximum benefit allowed under the Code and the amount provided
by the Pension Plan. Under the provisions of a different supplemental benefit
plan, certain officers who received cash payments in connection with annual
incentive awards (or bonuses under prior cash compensation plans) are eligible
for additional retirement benefits based on either the additional payment under
the Pension Plan that eligible officers would receive if cash payments made in
connection with annual incentive awards were included in determining final
average compensation for purposes of calculating such eligible officers'
pension benefits, or on an alternative minimum formula.
The following table sets forth the estimated annual benefits payable upon
normal retirement (age 65) pursuant to the provisions of the Pension Plan as
supplemented by the various plans described above to persons in the indicated
final average compensation and credited years of service classifications.
<TABLE>
<CAPTION>
Annual Benefits for Credited Years of Service Indicated
Final Avg. ----------------------------------------------------------------
Compensation 15 20 25 30 35
- ------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$ 300,000 76,772 102,363 127,953 149,044 170,135
500,000 129,272 172,363 215,453 251,044 286,635
700,000 181,772 242,363 302,953 353,044 403,135
900,000 234,272 312,363 390,453 455,044 519,635
1,100,000 286,772 382,363 477,953 557,044 636,135
1,300,000 339,272 452,363 565,453 659,044 752,635
1,500,000 391,772 522,363 652,953 761,044 869,135
1,700,000 444,272 592,363 740,453 863,044 985,635
1,900,000 496,772 662,363 827,953 965,044 1,102,135
2,100,000 549,272 732,363 915,453 l,067,044 1,218,635
2,300,000 601,772 802,363 1,002,953 1,169,044 1,335,135
2,500,000 654,272 872,363 1,090,453 l,271,044 1,451,635
2,700,000 706,772 942,363 1,177,953 1,373,044 1,568,135
</TABLE>
Amounts reported in the Summary Compensation Table on page 16 under the
columns captioned "Annual Compensation--Salary" and "Annual Compensation--
Bonus" would be included in the calculation of final average compensation for
the purpose of determining the benefits shown in the table above. The named
executive officers have accumulated the following credited years of service:
Messrs. O'Brien (35), Rohr (25),
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<PAGE>
Scheuring (6)*, Gregg (23), and Caldwell (7). The foregoing credited years of
service were calculated by rounding each half year or more to the next highest
number. The estimated annual pension benefits shown above are based on a single
life annuity payment method and assume that the benefits are payable beginning
at age 65, with a termination date and payment start date of February 1, 1997.
The normal form of payment for a married person is the joint and survivor
annuity, which provides a lower annual pension during the combined lives of the
person and his or her spouse. The estimated annual benefits listed in the
Pension Plan Table are not subject to any deduction for Social Security
benefits or other offset amounts.
*Because a different past service formula would have been used for Mr.
Scheuring's Midlantic Corporation service, his benefits may differ from the
entries shown in the table; any such differences would not be material. Mr.
Scheuring has resigned as a Vice Chairman of the Corporation, effective as of
the close of business on February 28, 1997.
COMMON STOCK PERFORMANCE GRAPH
The graph set forth below shows the cumulative shareholder return (i.e.,
price change plus reinvestment of dividends) on the Corporation's Common Stock
during the five-year period ended December 31, 1996, as compared with: (i) an
overall stock market index, the S&P 500 Index; and (ii) a peer group index, the
S&P Major Regional Banks Index ("S&P Major Regional Banks"). The stock
performance graph assumes that $100 was invested on January 1, 1992 for the
five-year period and also shows the resultant compound growth rate ("CGR") for
the performance period. The yearly points marked on the horizontal axis of the
graph correspond to December 31 of that year.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG PNC, S&P 500 INDEX AND S&P MAJOR REGIONAL BANKS INDEX
<TABLE>
<CAPTION>
S&P
MAJOR
REGIONAL
Measurement period S&P 500 BANKS
(Fiscal year Covered) PNC INDEX INDEX
- --------------------- -------- ------- -------
<S> <C> <C> <C>
Measurement PT -
12/31/91 $100 $100 $100
FYE 12/31/92 126.16 107.62 127.34
FYE 12/31/93 133.49 118.46 135.00
FYE 12/31/94 102.03 120.03 127.78
FYE 12/31/95 164.71 165.13 201.20
FYE 12/31/96 201.05 203.05 274.92
5 year
Cumulative
Total Return 15.0% 15.2% 22.4%
</TABLE>
ASSUMES $100 INVESTMENT ON JANUARY 1, 1992
TOTAL RETURN=PRICE CHANGE PLUS REINVESTMENT OF DIVIDENDS
In accordance with the rules of the SEC, this section shall not be
incorporated by reference into any of the Corporation's filings under the
Exchange Act or the Securities Act of 1933.
20
<PAGE>
ITEM 2
PROPOSAL TO APPROVE THE
PNC BANK CORP.
1997 LONG-TERM INCENTIVE AWARD PLAN
INTRODUCTION
In order to preserve the federal income tax deductibility of certain
compensation paid to its executive officers, the Corporation is asking
shareholders to approve the PNC Bank Corp. 1997 Long-Term Incentive Award Plan
("Incentive Plan" or "Plan"). The Incentive Plan is an amendment and
restatement of the existing PNC Bank Corp. 1992 Long-Term Incentive Plan ("1992
Plan") approved by shareholders at the 1992 annual meeting. The Incentive Plan,
like the 1992 Plan, is intended to focus the efforts of Plan participants on
performance which will increase the equity value of the Corporation for its
shareholders. The Incentive Plan is substantially the same as the 1992 Plan.
REASON FOR THE PROPOSAL
The 1992 Plan is still in effect and would not have expired until February
20, 2002, unless sooner terminated by the Board of Directors. The reason for
this proposal is the shareholder approval requirement imposed under the
performance-based compensation exception of Section 162(m)(4)(C) of the Code.
Enacted in 1993, Section 162(m) disallows federal income tax deductions for
certain executive compensation paid by the Corporation in excess of $1 million
per year ("$1 million limit"). Under Section 162(m), compensation that
qualifies as "performance-based compensation" is not subject to the $1 million
limit. One of the conditions required to qualify compensation paid pursuant to
grants and awards under the Incentive Plan as "performance-based compensation"
is shareholder approval of the material terms of the Plan.
Because the 1992 Plan had been approved by the Corporation's shareholders
before December 20, 1993, the regulations issued under Section 162(m) provided
a special transitional rule for obtaining shareholder approval. Under the
transitional rule, the 1992 Plan did not have to be resubmitted for shareholder
approval until the Corporation's 1997 annual meeting.
Since the enactment of Section 162(m), the Board's Personnel and Compensation
Committee ("Committee") has reviewed the Corporation's executive compensation
program regularly in light of the $1 million limit. The Committee's guiding
principle has been to minimize non-deductible compensation expense under
Section 162(m) of the Code. The Committee has also tried to maintain, to the
extent possible, the flexibility which the Committee believes to be an
important element of the Corporation's executive compensation program.
For reasons related to Section 162(m), the Corporation has previously
submitted for shareholder approval its Annual Incentive Award Plan and its
Executive Incentive Award Plan, at its 1994 and 1996 annual meetings,
respectively. Both of those plans were approved by shareholders. Similarly, the
Board of Directors, upon the unanimous recommendation of the Committee,
approved the Incentive Plan, subject to shareholder approval.
The Incentive Plan makes it possible for the Committee to make grants and
awards intended to qualify as deductible performance-based compensation under
Section 162(m). Nevertheless, grants and awards which do not so qualify may
also be granted under the Plan. The Committee does not currently intend to make
grants or awards which may be non-deductible, but the Incentive Plan permits it
to do so in order to maintain the flexibility of the Corporation's executive
compensation program.
21
<PAGE>
DESCRIPTION OF THE INCENTIVE PLAN
The following summary of the material terms of the Incentive Plan is
qualified in its entirety by reference to the full text of the Incentive Plan,
a copy of which is set forth as Exhibit A to this proxy statement. Unless
otherwise specified, capitalized terms have the meaning assigned to them in the
Incentive Plan. As noted above, the Incentive Plan is substantially the same as
the 1992 Plan; the next section will summarize the amendments made to the 1992
Plan.
Pursuant to the Incentive Plan, the Committee may grant Incentive Stock
Options within the meaning of the Code and Nonstatutory Stock Options to Senior
Executives to purchase shares of Common Stock at an exercise price per share
not less than the Fair Market Value of such shares on the Date of Grant. The
Committee may provide for the payment of the exercise price in cash, by
delivery of Common Stock valued at its Fair Market Value on the Date of
Exercise, or by a combination of both cash and the delivery of Common Stock.
In addition, the Committee may grant stock appreciation rights independently
or in tandem with Option grants. Stock appreciation rights entitle the holder
upon exercise to elect to receive in cash, Common Stock or a combination
thereof, the excess of the Fair Market Value of a specified number of Shares of
Common Stock over the Fair Market Value of such Shares of Common Stock on the
Date of Grant. In the case of a Related Option (which must be surrendered upon
exercise of the Related Right), the exercise price is provided in the Related
Option.
The Committee may also grant Performance Units independently or in connection
with the grant of Nonstatutory Stock Options. On the Date of Grant, the
Committee will establish performance goals for a specified period; these goals
may be particular to a Grantee, or the department, branch, subsidiary or other
unit in which the Grantee works, or may be based on the performance of the
Corporation generally. The value of a Performance Unit may not exceed the Fair
Market Value of a share of Common Stock. The performance standards may be based
on earnings or earnings growth; return on assets, equity or investment;
regulatory compliance; satisfactory internal or external audits; improvement of
financial ratings; reduction of nonperforming loans; achievement of balance
sheet or income statement objectives; or any other objective goals established
by the Committee. The amount realized upon exercise of Performance Units by the
Grantee will depend upon the extent to which the performance goals for the
specified period have been achieved. Except in limited circumstances, Options,
stock appreciation rights, and Performance Units may not be exercised less than
six months nor more than ten years after the Date of Grant. Currently, the
Committee imposes a one-year holding period before an Option may be exercised.
The terms and provisions of Options, Rights, and Performance Units are
specified in an Agreement signed by the Senior Executive. The terms and
provisions of Agreements need not be identical.
Finally, the Committee may grant Incentive Share awards to Senior Executives.
Incentive Share awards consist of Shares of Common Stock issued or to be issued
at such times, subject to the achievement of such performance standards or
other goals, and on such other terms and conditions as the Committee shall deem
appropriate and specify in an Agreement. The performance standards for
Incentive Share awards include the same standards identified for Performance
Units in the preceeding paragraph.
Neither the Corporation nor any of its Subsidiaries receive any cash
consideration for the grant or extension of an Option, Right, Performance Unit,
or Incentive Share.
If an Option, Right or Performance Unit expires or terminates without having
been fully exercised, or if Incentive Shares are not issued or are forfeited,
the shares subject to the unexercised portion of the Option, Right or
Performance Unit, or the shares unissued or forfeited shall become available
for other grants under the Incentive Plan.
Currently, there are approximately 1,000 Senior Executives of the Corporation
and its Subsidiaries eligible to participate in the Incentive Plan. The
Committee designates officers and key employees of the
22
<PAGE>
Corporation or a Subsidiary as "Senior Executives" eligible to participate in
the Plan. This designation is based upon the recommendations of the
Corporation's management and the Committee's assessment of an individual's
ability to make a significant contribution to the success of the Corporation.
As of February 20, 1997, 10,141,853 shares of Common Stock were reserved for
issuance under the Plan. As of the close of trading on March 3, 1997, the
market value of one share of Common Stock was $42.50.
The Board or Committee will have the power to terminate the Plan in whole or
in part and to amend it in any respect, subject to certain limitations.
Shareholder approval of Plan amendments or Plan termination is required to the
extent specified by applicable law or regulations or stock exchange
requirements. No termination or amendment of the Plan can adversely affect
grants or awards previously made, without the consent of the participant.
Capital adjustments resulting from stock dividends, stock splits, mergers, or
other forms of corporate reorganizations may be made by the Committee.
For additional information about the long-term incentive component of the
Corporation's executive compensation program, please see the Committee's Report
on Executive Compensation, at page 11.
PLAN BENEFITS
The number of Nonstatutory Stock Options which would be granted for 1997
under the Incentive Plan is not determinable because additional grants may be
made during the course of the year as individuals become members of the
executive officer group or the non-executive officer group. In limited cases,
the Committee may make additional grants to those already in either group.
If the Incentive Plan had been in effect for the Corporation's 1996 fiscal
year, the number of Nonstatutory Stock Options granted would have been
identical to those granted under the existing 1992 Plan. During 1996,
Nonstatutory Stock Options covering 538,900 shares of Common Stock were granted
to all executive officers as a group (14 persons, including the named executive
officers). The five named executive officers received Nonstatutory Stock
Options covering 357,600 shares of Common Stock. The terms of these options are
described in the Option Grant table on page 18.
In addition, a non-executive officer group of 682 persons received
Nonstatutory Stock Options covering 2,157,800 shares of Common Stock.
Each Option granted on February 13, 1996, which includes all Options granted
to the named executive officers, had an exercise price of $31.125. Option
grants made on October 23 and November 6, 1996 had an exercise price of
$35.3125 and $37.3125, respectively.
Directors who are not executive officers of the Corporation did not receive
any Options under the 1992 Plan and would not be eligible to receive any
Options or other awards under the Incentive Plan.
DESCRIPTION OF AMENDMENTS
This section will summarize the amendments to the 1992 Plan included in the
Incentive Plan. The description of the amendments is only a summary and is
qualified in its entirety by reference to the Incentive Plan, a copy of which
is attached as Exhibit A.
The term of the Plan is extended for five years, from February 20, 2002 to
February 20, 2007. The Board or the Committee has the authority to terminate
the Plan before the new expiration date. Termination of the Plan will not
affect the validity of any grant or award which is outstanding on the
termination date.
The definition of "Committee" has been revised to require all Committee
members to satisfy the definition of an "outside director" for Section 162(m)
purposes. In general, a director is an "outside director"
23
<PAGE>
if he or she is not a current employee of the Corporation; is not a former
employee who receives compensation for prior services (other than certain
retirement benefits); has not been an officer of the Corporation; and does not
receive remuneration from the Corporation, either directly or indirectly, in
any capacity other than as a director. The Committee has been composed solely
of outside directors, beginning prior to the enactment of Section 162(m). The
current members of the Committee are listed on page 4 under the caption "Board
and Committees".
Also for Section 162(m) purposes, an annual limitation is imposed on the
maximum number of Shares as to which grants or awards may be made to one
participant. This limitation is 250,000 Shares. The Committee adopted this
limitation by resolution in 1994, to satisfy the then newly-issued Section
162(m) regulations. The Plan has also been amended to provide for adjustments
to this limitation in the case of stock dividends, stock splits, or other
corporate reorganizations.
A new Article 19 has been added, relating to compliance with Section 162(m) of
the Code. The purpose of this provision is to avoid the inadvertent loss of
federal income tax deductibility for compensation paid pursuant to the Plan.
Any Plan or Agreement provision or Committee action which would cause that loss
is deemed to be null and void, to the extent permitted by law and deemed
advisable by the Committee. In order to maintain flexibility, however, the
Committee is given the authority to override the application of this provision.
During 1996, the SEC adopted new rules under Section 16 of the Exchange Act.
Section 16 limits the ability of a corporation's directors, executive officers,
and ten percent shareholders to benefit from short-swing trading in the
corporation's stock. Rule 16b-3, which provides exemptions for certain employee
benefit plan transactions, was completely revised, effective as of November 1,
1996. New Rule 16b-3 eliminates certain requirements which formerly applied to
the 1992 Plan. The Incentive Plan was drafted in light of new Rule 16b-3 and
contains limited technical amendments in response to the new rule. In
particular, former Rule 16b-3 required that Options, Rights, and Performance
Units be nontransferable other than by will or intestacy. New Rule 16b-3
eliminates this requirement and Article 10 of the Incentive Plan gives the
Committee the discretion to provide for transferability in an Agreement. This
change is intended to eliminate an unnecessary Plan restriction and increase
the Committee's flexibility in making or amending grants and awards. The
Committee will limit any right to transfer a grant or award in a manner
consistent with the Plan's objectives and the efficient administration of the
Plan. Article 10 also gives an Optionee the right to designate a beneficiary to
exercise his or her Options after the Optionee's death, provided that the
Committee has first expressly approved the procedures and forms necessary to
effect such a designation.
Article 3 affirms the right of the Committee Chairman to exercise such
authority as may be delegated to him or her by the Committee with respect to
the administration of the Plan. Such a delegation would be appropriately
limited, but would promote the efficient administration of the Plan. Sections
3.3(vi) and (vii) have been added, affirming the authority of the Committee to
include provisions in an Agreement relating to the forfeiture of grants and
awards and the effect of a change in control of the Corporation, respectively.
The Plan also has been amended to authorize the use of an "attestation
procedure" in the satisfaction of the Option Price or tax liabilities incurred
by a participant in connection with the Plan. An attestation procedure is used
in stock-for-stock cashless option exercises to eliminate the need for an
Optionee to deliver a Common Stock certificate physically to the Corporation.
Instead of the stock certificate, the Optionee delivers a signed form
"attesting" to his or her ownership of a specified number of shares of Common
Stock (which may be in certificated or non-certificated form) and the intention
to have that stock used in effecting a stock-for-stock option exercise.
A new Section 3.7 has been added, affirming the Committee's authority to
grant Reload Options, subject to such terms and conditions as the Committee may
specify. A Reload Option may be granted only when a Senior Officer has
exercised an Option through the surrender of already-owned shares of Common
Stock. The Reload Option will be to purchase, at Fair Market Value as of the
date the original Option was exercised,
24
<PAGE>
a number of shares of Common Stock equal to the number of whole shares
surrendered by the Optionee to exercise the original Option or satisfy any
related tax withholding obligation. The Reload Option will be exercisable only
between its Date of Grant and the date of expiration of the original Option. A
Reload Option will be subject to such terms and conditions as the Committee
shall impose, including the possible cancellation of the Optionee's right to
receive a Reload Option.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the federal income tax consequences to
participants who may receive grants or awards under the Incentive Plan. The
discussion is based upon interpretations of the Code in effect as of January 1,
1997, and the related regulations as of that date. The consequences under
applicable state and local income tax laws may not be the same as under federal
income tax laws.
Nonstatutory Stock Options. For federal income tax purposes, no income is
recognized by a participant upon the grant of a Nonstatutory Stock Option under
the Incentive Plan. Upon the exercise of a Nonstatutory Stock Option, however,
compensation taxable as ordinary income will be realized by the participant in
an amount equal to the excess of the Fair Market Value on the date of such
exercise of the shares of Common Stock received over the exercise price. A
subsequent sale or exchange of such shares will result in gain or loss measured
by the difference between (i) the exercise price, increased by any compensation
reported upon the participants exercise of the Option, and (ii) the amount
realized on such sale or exchange. Such gain or loss will be capital in nature
if the shares were held as a capital asset and will be long-term if such shares
were held for more than one year.
The Corporation is entitled to a deduction for compensation paid at the same
time and in the same amount as the participant is considered to have realized
compensation by reason of the exercise of an Option.
Incentive Stock Options. No taxable income is realized by the participant
upon the grant or exercise of an Incentive Stock Option (although income may be
realized upon exercise for alternative minimum tax purposes). If shares of
Common Stock are issued to a participant pursuant to the exercise of an
Incentive Stock Option, and if no disqualifying disposition of such shares is
made by such participant within two years after the date of grant or within one
year after the transfer of such shares to the participant, then (a) upon sale
of such shares, any amount realized in excess of the Option Price will be taxed
to such participant as a long-term capital gain and any loss sustained will be
a long-term capital loss, and (b) no deduction will be allowed to the
Corporation for federal income tax purposes.
If shares of Common Stock acquired upon the exercise of an Incentive Stock
Option are disposed of within two years after the Option was granted or within
one year after the shares were transferred pursuant to the exercise of the
Option, generally (a) the participant will realize ordinary income in the year
of disposition in an amount equal to the excess (if any) of the Fair Market
Value of the shares at exercise (or, if less, the amount realized on the
disposition of the shares) over the Option Price thereof, and (b) the
Corporation will be entitled to deduct such amount. Any further gain or loss
realized will be taxed as short-term or long-term capital gain or loss, as the
case may be, and will not result in any deduction by the Corporation.
Stock Appreciation Rights and Performance Units. No taxable income is
recognized by a participant
upon the grant of a stock appreciation right or Performance Unit under the
Incentive Plan. Upon the exercise of a stock appreciation right or Performance
Unit, however, compensation taxable as ordinary income will be realized by the
participant in an amount equal to the cash received upon exercise, plus the
fair market value on the date of exercise of any shares of Common Stock
received upon exercise increased by the amount of cash or the fair market value
of stock withheld with respect to the award to satisfy withholding taxes.
Shares of Common Stock received on the exercise of a stock appreciation right
or Performance Unit will be eligible for capital gain treatment, with the
capital gain holding period commencing on the date of exercise of the stock
appreciation right or Performance Unit.
25
<PAGE>
The Corporation is entitled to a deduction for compensation paid to a
participant at the same time and in the same amount as the participant is
considered to have realized compensation by reason of the exercise of a stock
appreciation right or Performance Unit.
Incentive Shares. A recipient of Incentive Shares generally will be subject
to tax at ordinary income rates on the Fair Market Value of the Common Stock at
the time the Incentive Shares are either received, or if subject to a future
obligation or restriction, at the time the Incentive Shares are transferable or
are no longer subject to forfeiture. However, a recipient who receives
Incentive Shares which are subject to a future obligation or restriction and so
elects under Section 83(b) of the Code within 30 days of the Date of Grant will
have ordinary taxable income on the Date of Grant equal to the Fair Market
Value of the Incentive Shares as if the Incentive Shares were unrestricted and
could be sold immediately. If the Incentive Shares subject to such election are
forfeited, the recipient will not be entitled to any deduction, refund or loss
for tax purposes with respect to the forfeited Incentive Shares. Upon sale of
the Incentive Shares after the forfeiture period has expired, the holding
period to determine whether the recipient has long-term or short-term capital
gain or loss begins when the restriction period expires. However, if the
recipient timely elects to be taxed as of the Date of Grant, the holding period
commences on the Date of Grant and the tax basis will be equal to the Fair
Market Value of the Incentive Shares on the Date of Grant as if the Incentive
Shares were then unrestricted and could be sold immediately.
ACCOUNTING TREATMENT
In October 1995, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 123 "Accounting for Stock-Based Compensation" ("FAS No. 123").
This statement defines a fair value based method of measuring and recording
compensation cost associated with employee stock compensation plans. Under the
fair value based method, compensation cost is measured at the grant date based
on the value of the award and is recognized in income over the service period.
FAS No. 123 also allows an entity to continue to measure compensation cost
using the method of accounting prescribed by APB Opinion No. 25 "Accounting for
Stock Issued to Employees" ("APB No. 25"). Entities electing to continue using
the accounting method in APB No. 25 must make pro forma disclosures of net
income and earnings per share as if the fair value based method prescribed
under FAS No. 123 had been applied. The Corporation has elected to use this
approach. Under APB No. 25, the grant or exercise of stock options does not
result in a charge against the Corporation's earnings as long as the exercise
price is not less than 100% of the fair market value of the Common Stock as of
the date of grant. Therefore, under the Corporation's existing accounting
policies neither the grant nor the exercise of an Incentive Stock Option or a
Nonstatutory Stock Option with an exercise price not less than the Fair Market
Value of the Common Stock on the Date of Grant will require a charge against
the Corporation's earnings.
Stock appreciation rights will require a charge to the Corporation's earnings
in each period there is appreciation in the value of those rights anticipated
to be exercised. The amount of such charge in the period of grant is based upon
the difference between the Fair Market Value of the Common Stock at the end of
the period and the exercise price of the Right (non-tandem stock appreciation
right) or the exercise price of the Related Option (tandem stock appreciation
right). In subsequent periods, the charge to earnings is based upon the
difference between the Fair Market Value of the Common Stock at the end of each
period and the Fair Market Value of the Common Stock in the previous period. In
the event of a decline in the market value of the Common Stock, prior charges
may be reversed in the current period in the amount of such decline, but such
reversals on a cumulative basis cannot exceed the aggregate charges to
earnings.
Performance Units will require a charge to the Corporation's earnings in each
period there is an increase in the estimated value of the Performance Units
anticipated to be exercised. Such charge is based on the satisfaction of
specified performance goals for a particular period. In the event of a decline
in the estimated value, reversal of prior charges may be made in the amount of
such decline, but such reversals on a cumulative basis cannot exceed the
aggregate charges to earnings.
26
<PAGE>
Incentive Share awards will require charges to earnings, measured by the Fair
Market Value of the Common Stock on either the Date of Grant or a subsequent
date, to be allocated to the period or periods in which the employee performs
related services.
SHAREHOLDER APPROVAL REQUIRED
Approval of the Incentive Plan requires the affirmative vote of a majority of
the votes cast by the holders of the Common Stock and the Voting Preferred
Stock, voting together as a single class, in person or by proxy, at a meeting
at which a quorum is present. The rules of the New York Stock Exchange also
require that the total vote cast on this proposal represent over 50% in
interest of the Common Stock and Voting Preferred Stock, voting together as a
single class. Please see "Voting Procedures," beginning on page 31 for more
information. If the Incentive Plan is not approved by the Corporation's
shareholders, the Board may nevertheless continue to grant long-term incentive
awards under the existing 1992 Plan. In such event, however, payments made to
certain of the Corporation's executive officers may not be deductible for
federal income tax purposes under Section 162(m) of the Code.
ITEM 3
PROPOSAL TO APPROVE AN AMENDMENT
TO THE PNC BANK CORP.
EMPLOYEE STOCK PURCHASE PLAN
INTRODUCTION
The Corporation is asking shareholders to approve an amendment to the PNC
Bank Corp. Employee Stock Purchase Plan ("Purchase Plan" or "Plan") which would
increase the number of shares of Common Stock available for issuance under the
Purchase Plan by 4,000,000 shares. At December 31, 1996, there were 614,154
shares of Common Stock available for issuance under the Purchase Plan.
The purpose of the Purchase Plan is to allow eligible employees of the
Corporation and its subsidiaries to purchase shares of Common Stock by means of
regular payroll deductions, thereby providing an incentive for them to promote
the continued success of the Corporation. Participation in the Purchase Plan is
entirely voluntary.
The Purchase Plan is intended to be an "employee stock purchase plan" within
the meaning of Section 423 of the Code. The Plan is not subject to the
provisions of ERISA, nor is it qualified as a pension, profit-sharing, or stock
bonus plan under Section 401(a) of the Code.
The Purchase Plan was first approved by shareholders in 1982. The
Corporation's Board of Directors formally adopted the Plan on February 17, 1983
and it became effective on June 1, 1983. A Plan amendment was most recently
submitted to shareholders for approval at the Corporation's 1988 annual
meeting. At that meeting, shareholders approved an increase in the number of
shares of Common Stock available for issuance under the Plan from 1,000,000 to
2,000,000 shares (not including the 574,537 shares previously issued on a pre-
stock split basis). The number of shares of Common Stock available for issuance
under the Plan was subsequently adjusted as the result of a November 1992 two-
for-one Common Stock split.
REASONS FOR THE PROPOSAL
At the Board's regular meeting held on January 2, 1997, the Board adopted a
resolution increasing the number of shares of Common Stock available for
issuance under the Plan by an additional 4,000,000 shares, effective upon
shareholder approval at the annual meeting. The Board's resolution also
provided that if the shareholders approve the requested increase in shares
available for issuance, the Plan, which would otherwise expire on May 31, 1998,
will be renewed for a term ending on, and including, May 31, 2003.
27
<PAGE>
The Board of Directors, or the Board's Personnel and Compensation Committee,
without shareholder approval, may amend the Plan at any time, with certain
exceptions. The Chairman of the Personnel and Compensation Committee may
exercise limited authority pursuant to a delegation from the Board to adopt
certain amendments to the Plan. Under the Code, shareholder approval is
required to increase the number of shares reserved for issuance under the
Purchase Plan, increase the benefits accruing to participants, or modify the
requirements as to eligibility to participate in the Plan.
The only amendment to the Plan for which shareholder approval is sought, or
required, at the annual meeting is a 4,000,000 share increase in the shares of
Common Stock available for issuance under the Plan. The amended Plan, a copy of
which is attached as Exhibit B, also contains other minor revisions, most of
which are designed to improve the efficiency of the Plan's administration. None
of these other changes is material to the operation of the Plan, and none
requires shareholder approval.
As of December 31, 1996, 614,154 shares of Common Stock were available for
issuance under the Purchase Plan. Currently, there are 6,216 active Plan
participants; the estimated number of eligible employees currently employed by
the Corporation and its subsidiaries is 17,224. During 1996, 389,531 shares of
Common Stock were purchased by Plan participants. For the most recent option
period, ended November 30, 1996, 183,757 shares of Common Stock were purchased
by employees.
Based on the current and anticipated level of employee participation in the
Plan and the current price of a share of Common Stock, the Corporation
estimates that the 614,154 shares currently reserved for issuance under the
Plan could be exhausted upon the end of the option period which will conclude
on May 31, 1998.
DESCRIPTION OF THE PURCHASE PLAN AS PROPOSED TO BE AMENDED
The following description of the Purchase Plan is a summary of its terms and
is qualified in its entirety by reference to the Purchase Plan as proposed to
be amended, a copy of which is attached hereto as Exhibit B. Unless otherwise
specified, capitalized terms have the meaning assigned to them in the amended
Plan.
Shares Subject to Sale. As proposed, an additional 4,000,000 authorized but
unissued shares of Common Stock may be issued or sold under the Purchase Plan,
subject to adjustment pursuant to antidilution provisions. This is in addition
to the 614,154 shares currently available for issuance and the 4,534,726 shares
previously purchased under the Plan.
Administration. The Purchase Plan is administered by a committee of officers
of the Corporation ("Officer Committee"). The Officer Committee is authorized
to interpret the Purchase Plan, particularly in light of the applicable Code
provisions and regulations. Officer Committee members may participate in the
Purchase Plan. The Officer Committee has the power to appoint an Employee as
Plan Manager and to delegate to the Plan Manager such authority with respect to
the administration of the Plan as the Officer Committee, in its sole
discretion, deems advisable from time to time. The Officer Committee currently
consists of Walter E. Gregg, Jr., Senior Executive Vice President, Robert L.
Haunschild, Senior Vice President and Chief Financial Officer and William E.
Rosner, Senior Vice President and Director of Human Resources. The current Plan
Manager is James S. Gehlke, Vice President, Corporate Benefits Administration.
Eligibility. An Employee is eligible to participate in an offering under the
Purchase Plan if he or she has at least one year of continuous service with the
Corporation or a Subsidiary for at least one year immediately preceding the
commencement of that offering. Rights under the Purchase Plan are
nontransferable.
Offerings under the Purchase Plan. An offering under the Purchase Plan is
made on June 1 and December 1 each year. An offering affords each eligible
Employee an opportunity to purchase shares of Common Stock at a 15% discount
from Fair Market Value as determined in accordance with the terms of
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the Purchase Plan. Purchases under the Purchase Plan are made by means of
payroll deductions over a six-month Option Period. The amount deducted must be
a whole number percentage of a participating Employee's base salary from 1% to
10% inclusive, and is credited to a Purchase Plan Account established in the
Employee's name. For a participating Employee, the amount in his or her account
on the last day of the Option Period is applied, without interest, to the
purchase of that number of whole shares of Common Stock that such amount will
purchase, at the lower price of:
(i) 85% of the Fair Market Value of a share of Common Stock on the first
day of the Option Period (i.e., June 1 or December 1); or
(ii) 85% of the Fair Market Value of a share of Common Stock on the last
day of the Option Period, (i.e., the November 30 or May 31) next
following the beginning of the Option Period.
If an offering is oversubscribed, any balance in an Employee's Account not
applied to the purchase of Common Stock is carried over to the next offering
period. An Employee may not purchase more than 400 shares of Common Stock under
the Plan each year.
An Employee may withdraw from an offering at any time prior to the last day
of the Option Period and may request that all accumulated payroll deductions be
refunded. No interest will be paid on the amount withdrawn from the Plan. An
Employee may discontinue payroll deductions without the withdrawal of all
payroll deductions previously made during that particular Option Period before
the termination of his or her participation in that offering. The amount
remaining in the Employee's Account will be used to purchase Common Stock on
the Exercise Date, provided that he or she is an Employee as of the Exercise
Date. Amounts not used to purchase Common Stock will be refunded without
interest upon the written request of the Participant. A Participant who elects
to discontinue payroll deductions during an Option Period may again become a
Participant in a subsequent Option Period by filing a new Stock Purchase
Agreement.
PLAN BENEFITS
The Plan as proposed to be amended would not change the benefits available
under the Plan as now in effect. The number of shares of Common Stock which
would be purchased during the Corporation's 1997 fiscal year is not
determinable because purchase prices will not be set until the end of each
Option Period and the level of participation may fluctuate during the course of
the year.
During 1996, two named executive officers, Messrs. O'Brien and Rohr,
participated in the Purchase Plan. Each officer purchased 400 shares of Common
Stock, with an aggregate dollar difference between the purchase price and the
Fair Market Value of the shares ("Aggregate Dollar Difference") of $2,035 for
each 400 share purchase. A group of nine executive officers, including Messrs.
O'Brien and Rohr, purchased 2,904 shares of Common Stock, with an Aggregate
Dollar Difference of $21,735. A non-executive officer group of approximately
4,500 persons purchased 386,627 shares of Common Stock having an Aggregate
Dollar Difference of $3,539,166. Non-executive officer directors are not
eligible to participate in the Purchase Plan.
ACCOUNTING TREATMENT
As explained on page 26, FAS No. 123 allows an entity to continue to measure
compensation cost using the method of accounting prescribed by APB Opinion No.
25 "Accounting for Stock Issued to Employees" ("APB No. 25"). Entities electing
to continue using the accounting method in APB No. 25 must make pro forma
disclosures of net income and earnings per share as if the fair value based
method prescribed under
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FAS No. 123 had been applied. The Corporation has elected to use this approach.
Therefore, under the Corporation's existing accounting policies shares of
Common Stock issued under the Purchase Plan will not require a charge against
the Corporation's earnings.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
A Participant will not recognize income at the time of the grant of an option
under the Purchase Plan (that is, on the Offering Date). Nor will a Participant
recognize income on the exercise of such an option (that is, on the Exercise
Date), provided that at no time during the period beginning with the Offering
Date and ending on the date three months before the Exercise Date, the
Participant ceased to be an Employee of the Corporation or one of its
Subsidiaries ("employment requirement"). Under these circumstances, no
deduction will be allowable to the Corporation in connection with either the
grant of an option or the issuance of shares upon exercise of an option.
If a Participant disposes of shares acquired under the Purchase Plan more
than two years after the Offering Date (the "required holding period") or in
the event of the Participant's death, the Participant will recognize
compensation income equal to the lesser of (a) the excess, if any, of the fair
market value of the shares on the date of disposition or the Participant's
death over the amount the Participant paid for the shares, or (b) 15% of the
fair market value of the shares as of the Offering Date. In addition, a
Participant will recognize capital gain equal to the excess, if any, of the
proceeds from the disposition over the sum of the purchase price paid by the
Participant for the shares and the amount of ordinary income the Participant
recognizes. If the proceeds from disposition of the shares are less than the
purchase price paid by the Participant, the Participant will be entitled to a
long-term capital loss. No deduction for federal income taxes will be allowed
to the Corporation upon a Participant's death or upon the disposition of shares
after the required holding period.
If shares acquired under the Purchase Plan are held less than the required
holding period, the excess of the fair market value of the shares as of the
Exercise Date over the price the Participant paid for the shares will be
treated as ordinary income to the Participant at the time of disposition of the
shares. In addition, the Participant will recognize capital gain equal to the
excess, if any, of the proceeds from sale over the fair market value of the
shares as of the Exercise Date. If the proceeds from disposition of the shares
are less than the fair market value of the shares as of the Exercise Date, the
Participant will recognize a capital loss equal to the amount of such
difference. The Corporation will be entitled to a deduction for federal income
tax purposes equal to the amount of ordinary income a Participant recognizes
upon disposition of the shares prior to expiration of the required holding
period.
If a Participant fails for any reason other than the Participant's death or
certain temporary leaves to meet the employment requirement, then, upon the
receipt of shares upon exercise, the Participant generally will recognize
ordinary income equal to the difference between the fair market value of the
shares purchased as of the Date of Exercise and the purchase price paid. Under
such circumstances, the Corporation will be entitled to a deduction equal to
the amount of ordinary income recognized by the Participant.
The rules governing employee stock purchase plans are very technical, so that
the above description of tax consequences is general in nature and does not
purport to be complete. Moreover, statutory provisions are subject to change,
as are their interpretations, and their application may vary in individual
circumstances. Finally, the consequences under applicable state and local
income tax laws may not be the same as under the federal income tax laws.
SHAREHOLDER APPROVAL REQUIRED
Approval of the proposed amendment of the Purchase Plan requires the
affirmative vote of a majority of the votes cast by the holders of the Common
Stock and the Voting Preferred Stock, voting together as a single class, in
person or by proxy, at a meeting at which a quorum is present. The rules of the
New York
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Stock Exchange also require that the total vote cast on this proposal represent
over 50% in interest of the Common Stock and Voting Preferred Stock, voting
together as a single class. Please see "Voting Procedures" below for more
information. The Purchase Plan will continue even if the proposed amendment is
not approved, but its term will not be extended beyond its current May 31, 1998
termination date. If an insufficient number of shares of Common Stock is
available for issuance as of any Exercise Date occurring before that date, the
Plan will automatically terminate by its terms, immediately after that Exercise
Date.
VOTING PROCEDURES
Pennsylvania law and the Corporation's By-Laws require the presence of a
quorum for the annual meeting. A quorum is constituted by the presence, in
person or by proxy, of shareholders entitled to cast at least a majority of the
votes which all shareholders are entitled to cast on the particular matters to
be voted on. At a duly organized annual meeting, the Corporation's By-Laws
provide that, except as otherwise specified in the Corporation's Articles of
Incorporation or provided by law, each matter shall be decided by a majority of
the votes cast on such matters by the shareholders present at the meeting in
person or by proxy. Votes withheld from director nominees and abstentions will
be counted in determining whether a quorum has been reached, but the failure to
execute and return a proxy will result in a shareholder not being considered
present at the meeting.
Assuming a quorum has been reached, a determination must be made as to the
results of the vote on Item 1, the election of directors; Item 2, the proposal
to approve the PNC Bank Corp. 1997 Long-Term Incentive Award Plan; and Item 3,
the proposal to approve an amendment to the PNC Bank Corp. Employee Stock
Purchase Plan.
Under Pennsylvania law, the act of "voting" does not include either recording
the fact of abstention or failing to vote for a candidate or for approval or
disapproval of a proposal, whether or not the person entitled to vote
characterizes the conduct as voting. In other words, only those who indicate an
affirmative or negative decision on a matter are treated as voting, so that
ordinarily abstention or a mere absence or failure to vote is not equivalent to
a negative decision.
With respect to Item 1, the 19 nominees for election as directors who receive
the greatest number of votes cast at the annual meeting, assuming that a quorum
is present, shall be elected as directors at the conclusion of the vote
tabulation. A withheld vote on any nominee will not affect the voting results.
With respect to Items 2 and 3, each will be decided by a majority of the
votes cast by the shareholders present at the meeting in person or by proxy.
Holders of Common Stock and Voting Preferred Stock will vote as a single class.
Shares which are present at the annual meeting but not voted and abstentions
will not be counted as votes cast and therefore will have no effect on the vote
on Items 2 or 3, except as otherwise explained in the next paragraph.
With respect to Item 2 and Item 3, the rules of the New York Stock Exchange
require that the total vote cast on each Item represent over 50% in interest of
the Common Stock and Voting Preferred Stock, voting together as a single class.
As a result, shares not voted, abstentions, and broker non-votes will have a
negative effect on the satisfaction of that requirement.
Under the rules of the New York Stock Exchange, "routine" items are those
upon which broker-dealers holding shares in street name for their customers may
vote, in their discretion, on behalf of any customers who do not furnish voting
instructions within ten days of the annual meeting. With respect to non-routine
items that come before the annual meeting for a vote, such broker-dealers would
not be able to vote without first receiving voting instructions from their
customers. These broker "non-votes" would not be considered in the calculation
of the majority of the votes cast and therefore would have no effect on the
vote with respect to a non-routine item, except as otherwise explained in the
preceding paragraph.
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The Corporation has adopted a policy that all proxies, ballots, voting
instructions from employee benefit plan participants and voting tabulations
that identify the particular vote of a shareholder or benefit plan participant
be kept permanently confidential and not be disclosed to the Corporation, its
directors, officers or employees except: (i) as necessary to meet legal
requirements or to pursue or defend legal actions; (ii) to allow the Judge of
Election to certify the results of the vote; (iii) when expressly requested by
a shareholder or benefit plan participant; or (iv) in the event of a contested
proxy solicitation. The Corporation has confirmed with its independent vote
tabulator and Judge of Election that its procedures will be consistent with the
foregoing policy.
INDEPENDENT AUDITORS
At its meeting on February 20, 1997, the Board of Directors approved the
recommendation of the Audit Committee for the appointment of Ernst & Young LLP
to audit the consolidated financial statements of the Corporation for 1997.
Ernst & Young LLP performed audit services for the Corporation during 1996.
Such services included an audit of annual consolidated financial statements,
interim reviews of quarterly financial statements, review and consultation
connected with filings with the SEC, internal control reviews required by
regulatory authorities and certain contractual agreements, consultation on tax,
financial accounting and reporting matters, and meetings with the Audit
Committee of the Board of Directors.
Representatives of Ernst & Young LLP are expected to be present at the annual
meeting with the opportunity to make a statement if they desire to do so and to
be available to respond to appropriate questions.
LEGAL PROCEEDINGS
A consolidated class action complaint was filed in March 1995 in the United
States District Court for the Western District of Pennsylvania against the
Corporation, its Chairman and Chief Executive Officer, and its Senior Vice
President and Chief Financial Officer. The lawsuit was consolidated from four
lawsuits filed in November and December 1994. The consolidated complaint
alleges violations of federal securities laws and common law relating to
disclosures regarding the Corporation's net interest income, interest rate
risk, future prospects, and related matters and seeks, among other things,
unquantified damages. On August 7, 1996, the district court denied defendants'
motion to dismiss as to all claims except the negligent misrepresentation
claim, which was dismissed. On the same date, the district court certified the
case as a class action consisting of all persons who purchased the
Corporation's common stock from April 18, 1994 through November 15, 1994.
Management believes there are meritorious defenses to this consolidated lawsuit
and intends to defend it vigorously. Management believes that the final
disposition will not be material to the Corporation's financial position.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's directors,
certain of its executive officers, and persons who own more than ten percent of
a registered class of the Corporation's equity securities (currently there are
no such persons), to file with the Corporation, the SEC and the New York Stock
Exchange initial reports of ownership and reports of changes in ownership of
any equity securities of the Corporation. During 1996, to the best of the
Corporation's knowledge, all required report forms were filed on a timely
basis. Information regarding two cashless employee stock option exercise
transactions by Mr. Rohr was provided by means of an amendment, filed on his
behalf by his attorney-in-fact, to a timely SEC Form 4. The amendment was filed
shortly after the due date for the Form 4. In making these statements, the
Corporation has relied on the written representations of its directors and
copies of the reports provided to the Corporation.
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SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders may submit proposals to be considered for shareholder action at
the 1998 annual meeting of shareholders if they do so in accordance with the
applicable SEC rules. Any such proposals must be in writing and received by the
Corporate Secretary of the Corporation no later than November 14, 1997 in order
to be considered for inclusion in the Corporation's 1998 proxy materials.
OTHER MATTERS
The Board of Directors knows of no other business to be presented at the
meeting. If, however, any other business should properly come before the
meeting, or any adjournment thereof, it is intended that the proxy will be
voted with respect thereto in accordance with the best judgment of the persons
named in the proxy.
By Order of the Board of
Directors,
/s/William F. Strome
William F. Strome
Corporate Secretary
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EXHIBIT A
PNC BANK CORP.
1997 LONG-TERM INCENTIVE AWARD PLAN
(AMENDING, RESTATING, AND RENAMING THE PNC BANK CORP. 1992 LONG-TERM INCENTIVE
PLAN)
1.DEFINITIONS
In this Plan, except where the context otherwise indicates, the following
definitions apply:
1.1. "Agreement" means a written agreement implementing a grant of an Option,
Right or Performance Unit or an award of Incentive Shares.
1.2. "Board" means the Board of Directors of the Corporation.
1.3. "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
1.4. "Committee" means the committee appointed by the Board to administer the
Plan, all of the members of which shall be " non-employee directors" as defined
in Rule 16b-3 (b)(3)(i) under the Exchange Act or any similar successor rule
and "outside directors" as defined in Treas. Reg. (S)1.162-27(e)(3) or any
similar successor regulation. Unless otherwise determined by the Board, the
Personnel and Compensation Committee of the Board shall be the Committee.
1.5. "Common Stock" means the common stock, par value $5.00 per share, of the
Corporation.
1.6. "Corporation" means PNC Bank Corp.
1.7. "Date of Exercise" means the date on which the Corporation receives
notice of the exercise of an Option, Right or Performance Unit in accordance
with the terms of Article 9.
1.8. "Date of Grant" means the date on which an Option, Right or Performance
Unit is granted or Incentive Shares are awarded by the Committee or such later
date as may be specified by the Committee in authorizing the grant or award.
1.9. "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
1.10. "Fair Market Value" of a Share means the amount equal to the fair
market value of a Share as determined pursuant to a reasonable method adopted
by the Committee in good faith for such purpose.
1.11. "Grantee" means a Senior Executive to whom Incentive Shares have been
awarded pursuant to Article 12.
1.12. "Incentive Shares" means Shares awarded pursuant to the provisions of
Article 12.
1.13. "Incentive Stock Option" means an Option granted under the Plan that
qualifies as an incentive stock option under Section 422 of the Code and that
the Corporation designates as such in the Agreement granting the Option.
1.14. "Nonstatutory Stock Option" means an Option granted under the Plan that
is not an Incentive Stock Option.
1.15. "Option" means an option to purchase Shares granted under the Plan in
accordance with the terms of Article 6.
1.16. "Option Period" means the period during which an Option may be
exercised.
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1.17. "Option Price" means the price per Share at which an Option may be
exercised. The Option Price shall be determined by the Committee, but unless
otherwise determined by the Committee pursuant to Section 3.7, in no event
shall the Option Price be less than the Fair Market Value per Share determined
as of the Date of Grant.
1.18. "Optionee" means a Senior Executive to whom an Option, Right or
Performance Unit has been granted.
1.19. "Performance Period" means the period or periods during which each
performance criterion of a Performance Unit will be measured against the
performance standards established by the Committee and specified in the
Agreement relating thereto.
1.20. "Performance Unit" means a performance unit granted under the Plan in
accordance with the terms of Article 8.
1.21. "Performance Unit Exercise Period" means the period during which a
Performance Unit may be exercised.
1.22. "Plan" means the PNC Bank Corp. 1992 Long-Term Incentive Award Plan, as
amended, restated, and renamed the PNC Bank Corp. 1997 Long-Term Incentive
Award Plan.
1.23. "Related Option" means an Option granted in connection with a specified
Right or Performance Unit.
1.24. "Related Performance Unit" means a Performance Unit granted in
connection with a specified Option.
1.25. "Related Right" means a Right granted in connection with a specified
Option.
1.26. "Right" means a stock appreciation right granted under the Plan in
accordance with the terms of Article 7.
1.27. "Right Period" means the period during which a Right may be exercised.
1.28. "Senior Executive" means any officer or key employee of the Corporation
or a Subsidiary who is designated as a "Senior Executive" by the Committee.
1.29. "Share" means a share of authorized but unissued Common Stock or a
reacquired share of Common Stock.
1.30. "Subsidiary" means a corporation at least 80% of the total combined
voting power of all classes of stock of which is owned by the Corporation,
either directly or through one or more other Subsidiaries.
2.PURPOSE
The Plan is intended to assist in attracting, retaining, and motivating
Senior Executives of outstanding ability and to promote the identification of
their interests with those of the shareholders of the Corporation.
3.ADMINISTRATION
The Plan shall be administered by the Committee or by the Chairman of the
Committee in the exercise of such authority as the Committee may delegate to
him or her from time to time, provided that Section 162(m)(4)(C) of the Code
does not require action by the Committee as a whole. In addition to any other
powers granted to the Committee, it shall have the following powers, subject to
the express provisions of the Plan:
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3.1. to determine in its discretion the Senior Executives to whom Options,
Performance Units or Rights shall be granted and to whom Incentive Shares shall
be awarded, the number of Shares to be subject to each Option, Right,
Performance Unit grant or Incentive Share award, and the terms upon which
Options, Rights or Performance Units may be acquired, exercised, or forfeited
and the terms and conditions of Incentive Share awards;
3.2. to determine all other terms and provisions of each Agreement, which
need not be identical;
3.3. without limiting the generality of the foregoing, to provide in its
discretion in an Agreement:
(i) for an agreement by the Optionee or Grantee to render services to the
Corporation or a Subsidiary upon such terms and conditions as may be
specified in the Agreement, provided that the Committee shall not have the
power under the Plan to commit the Corporation or any Subsidiary to employ
or otherwise retain any Optionee or Grantee;
(ii) for restrictions on the transfer, sale or other disposition of
Shares issued to the Optionee upon the exercise of an Option, Right or
Performance Unit, or for conditions with respect to the issuance of
Incentive Shares;
(iii) for an agreement by the Optionee or Grantee to resell to the
Corporation, under specified conditions, Shares issued upon the exercise of
an Option, Right or Performance Unit or awarded as Incentive Shares;
(iv) for the payment of the Option Price upon the exercise of an Option
otherwise than in cash, including without limitation by delivery of Shares
valued at Fair Market Value on the Date of Exercise of the Option or a
combination of cash and Shares; by means of any attestation procedure
approved or ratified by the Committee; or by delivery of a properly
executed exercise notice together with irrevocable instructions to a broker
to promptly deliver to the Corporation the amount of sale or loan proceeds
to pay the exercise price;
(v) for the deferral of receipt of amounts that otherwise would be
distributed upon exercise of a Performance Unit, the terms and conditions
of any such deferral and any interest or dividend equivalent or other
payment that shall accrue with respect to deferred distributions, subject
to the provisions of Article 11;
(vi) for the forfeiture by any Optionee or Grantee of any Option, Right,
Performance Unit, or Incentive Shares upon such terms and conditions as the
Committee may deem advisable from time to time; and
(vii) for the effect of a "change in control," as defined in the
Agreement, of the Corporation on the rights of an Optionee or Grantee with
respect to any Options, Rights, Performance Units or Incentive Shares.
3.4. to construe and interpret the Agreements and the Plan;
3.5. to require, whether or not provided for in the pertinent Agreement, of
any person exercising an Option, Right or Performance Unit or acquiring
Incentive Shares, at the time of such exercise or acquisition, the making of
any representations or agreements which the Committee may deem necessary or
advisable in order to comply with applicable securities, tax, or other laws;
3.6. to provide for satisfaction of an Optionee's or Grantee's tax
liabilities arising in connection with the Plan through, without limitation,
retention by the Corporation of shares of Common Stock otherwise issuable on
the exercise of a Nonstatutory Stock Option, Right or Performance Unit or
pursuant to an award of Incentive Shares or through delivery of Common Stock to
the Corporation by the Optionee or Grantee under such terms and conditions as
the Committee deems appropriate, including but not limited to any attestation
procedure approved or ratified by the Committee;
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3.7. to provide with respect to any Option, including those outstanding on
February 20, 1997, that, if the Optionee, while a Senior Executive, exercises
the Option or satisfies any related tax withholding obligation in whole or in
part by surrendering already-owned shares of Common Stock, the Optionee will,
subject to this Section 3.7 and such other terms and conditions as may be
imposed by the Committee, receive an additional option ("Reload Option"). The
Reload Option will be to purchase, at Fair Market Value as of the date the
original Option was exercised, a number of shares of Common Stock equal to the
number of whole shares surrendered by the Optionee to exercise the original
Option or to satisfy any related tax withholding obligation. The Reload Option
will be exercisable only between its Date of Grant and the date of the
expiration of the original Option. A Reload Option shall be subject to such
additional terms and conditions as the Committee shall approve, which terms may
provide that the Committee may cancel the Optionee's right to receive the
Reload Option and that the Reload Option will be granted only if the Committee
has not cancelled such right prior to the exercise of the original Option.
3.8. to make all other determinations and take all other actions necessary or
advisable for the administration of the Plan; and
3.9. to delegate to officers or managers of the Corporation or any Subsidiary
the authority to perform administrative functions under the Plan, provided that
Section 162(m)(4)(C) of the Code does not require action by the Committee as a
whole with respect to such function.
Any determinations or actions made or taken by the Committee pursuant to this
Article shall be binding and final.
4.ELIGIBILITY
Options, Rights, Performance Units and Incentive Shares may be granted or
awarded only to Senior Executives; provided, that the members of the Committee
are not eligible to receive Options, Rights, Performance Units or Incentive
Share awards.
5.STOCK SUBJECT TO THE PLAN
5.1. The maximum number of Shares that may be issued or as to which grants or
awards may be made under the Plan (excluding Shares issued pursuant to grants
or awards made prior to February 20, 1997 ) shall not exceed the sum of (i)
10,141,853 Shares plus (ii) as of January 1 of each calendar year commencing
with 1998 an additional number of Shares (which shall be cumulative from year
to year) equal to one and one-half percent (1.5%) of the total issued shares of
Common Stock (including reacquired Shares) at the end of the immediately
preceding calendar year. Notwithstanding the foregoing, in no event shall more
than three percent (3%) of the total issued shares of Common Stock (including
reacquired Shares) at the end of the immediately preceding calendar year be
cumulatively available for grants and awards made in any calendar year. The
maximum number of Shares as to which grants or awards may be made under the
Plan to one Optionee or Grantee with respect to one calendar year shall be
250,000 Shares. The limitation provided in the first sentence of this Section
5.1 is hereinafter called the "Cumulative Limitation"; the limitation provided
in the second sentence is hereinafter called the "Annual Limitation"; and the
limitation provided in the third sentence is hereinafter called the "Individual
Limitation."
5.2. If an Option, Right or Performance Unit expires or terminates for any
reason (other than termination by virtue of the exercise of a Related Option,
Related Right or Related Performance Unit, as the case may be) without having
been fully exercised, or if Shares covered by an Incentive Share award are not
issued or are forfeited, the unissued or forfeited Shares which had been
subject to the Agreement relating thereto shall for purposes of the Cumulative
Limitation (and if granted or awarded in the same calendar year, then also for
purposes of the Annual Limitation) again become available for the grant of
other Options, Rights and Performance Units or for the award of additional
Incentive Shares.
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5.3. The Shares issued upon the exercise of a Right or Performance Unit (or
if cash is payable in connection with such exercise, that number of Shares
having a Fair Market Value equal to the cash payable upon such exercise), shall
be charged against the number of Shares issuable under the Plan and shall not
become available for the grant of other Options, Rights and Performance Units
or for the award of Incentive Shares. If the Right referred to in the preceding
sentence is a Related Right, or if the Performance Unit referred to in the
preceding sentence is a Related Performance Unit, the Shares subject to the
Related Option, to the extent not charged against the number of Shares subject
to the Plan in accordance with this Section 5.3, shall for purposes of the
Cumulative Limitation (and if granted in the same calendar year, then also for
purposes of the Annual Limitation) again become available for the grant of
other Options, Rights or Performance Units or for the award of additional
Incentive Shares.
6.OPTIONS
6. 1. The Committee is hereby authorized to grant Nonstatutory Stock Options
and Incentive Stock Options to Senior Executives, provided that the number of
Options granted to a Senior Executive during a calendar year shall not exceed
the Individual Limitation when aggregated with other grants or awards made to
that Senior Executive during that calendar year.
6.2. All Agreements granting Options shall contain a statement that the
Option is intended to be either (i) a Nonstatutory Stock Option or (ii) an
Incentive Stock Option.
6.3. The Option Period shall be determined by the Committee and specifically
set forth in the Agreement, provided that an Option shall not be exercisable
until the expiration of at least six months from the Date of Grant (except that
this limitation need not apply in the event of the death or disability of the
Optionee or as otherwise permitted by the Agreement upon a change in control of
the Corporation) or after ten years from the Date of Grant.
6.4. All Incentive Stock Options granted under the Plan shall comply with the
provisions of the Code governing incentive stock options and with all other
applicable rules and regulations.
6.5. All other terms of Options granted under the Plan shall be determined by
the Committee in its sole discretion.
7.RIGHTS
7.1. The Committee is hereby authorized to grant Rights to Senior Executives,
provided that the number of Rights granted to a Senior Executive during a
calendar year shall not exceed the Individual Limitation when aggregated with
other grants or awards made to that Senior Executive during that calendar year.
7.2. Rights may be granted under the Plan:
(i) in connection with, and at the same time as, the grant of an Option
to a Senior Executive;
(ii) by amendment of an outstanding Nonstatutory Stock Option granted
under the Plan to a Senior Executive; or
(iii) independently of any Option granted under the Plan.
A Right granted under clause (i) or (ii) of the preceding sentence is a
Related Right. A Related Right may, in the Committee's discretion, apply to all
or a portion of the Shares subject to the Related Option.
7.3. A Right may be exercised in whole or in part as provided in the
Agreement, and, subject to the provisions of the Agreement, entitles its
Optionee to receive, without any payment to the Corporation (other than
required tax withholding amounts), either cash or that number of Shares (equal
to the highest whole number of Shares), or a combination thereof, in an amount
or having a Fair Market Value determined as of the Date of Exercise not to
exceed the number of Shares subject to the portion of the Right exercised
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multiplied by an amount equal to the excess of the Fair Market Value per Share
on the Date of Exercise of the Right over either (i) the Fair Market Value per
Share on the Date of Grant of the Right or the base price determined by the
Committee pursuant to Section 3.7 if the Right is not a Related Right, or (ii)
the Option Price as provided in the Related Option if the Right is a Related
Right.
7.4. The Right Period shall be determined by the Committee and specifically
set forth in the Agreement, provided, however:
(i) a Right may not be exercised until the expiration of at least six
months from the Date of Grant (except that this limitation need not apply
in the event of the death or disability of the Optionee or as otherwise
permitted by the Agreement upon a change in control of the Corporation);
(ii) a Right will expire no later than the earlier of (A) ten years from
the Date of Grant, or (B) in the case of a Related Right, the expiration of
the Related Option; and
(iii) a Right that is a Related Right may be exercised only when and to
the extent the Related Option is exercisable.
7.5. The exercise, in whole or in part, of a Related Right shall cause a
reduction in the number of Shares subject to the Related Option equal to the
number of Shares with respect to which the Related Right is exercised.
Similarly, the exercise, in whole or in part, of a Related Option shall cause a
reduction in the number of Shares subject to the Related Right equal to the
number of Shares with respect to which the Related Option is exercised.
8.PERFORMANCE UNITS
8.1. The Committee is hereby authorized to grant Performance Units to Senior
Executives, provided that the number of Performance Units granted to a Senior
Executive during a calendar year shall not exceed the Individual Limitation
when aggregated with other grants or awards made to that Senior Executive
during that calendar year.
8.2. Performance Units may be granted under the Plan:
(i) in connection with, and at the same time as, the grant of a
Nonstatutory Stock Option to a Senior Executive;
(ii) by amendment of an outstanding Nonstatutory Stock Option granted
under the Plan to a Senior Executive; or
(iii) independently of any Option granted under the Plan.
A Performance Unit granted under Subparagraph (i) or (ii) of the preceding
sentence is a Related Performance Unit. A Related Performance Unit may, in the
Committee's discretion, apply to all or a portion of the Shares subject to the
Related Option. A Performance Unit may not be granted in connection with, or by
amendment to, an Incentive Stock Option.
8.3. A Performance Unit may be exercised in whole or in part as provided in
the Agreement, and, subject to the provisions of the Agreement, entitles its
Optionee to receive, without any payment to the Corporation (other than
required tax withholding amounts), cash, Shares or a combination of cash and
Shares, based upon the degree to which performance standards established by the
Committee and specified in the Agreement have been achieved. During the
Performance Period, such performance standards may be particular to a Senior
Executive or the department, branch, Subsidiary or other unit in which he
works, or may be based on the performance of the Corporation generally. The
performance standards may be based on earnings or earnings growth; return on
assets, equity or investment; regulatory compliance; satisfactory internal or
external audits; improvement of financial ratings; reduction of nonperforming
loans; achievement of balance sheet or income statement objectives; or any
other objective goals established by the Committee, and may be absolute in
their terms or measured against or in relationship to other companies
comparably, similarly or otherwise situated.
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8.4. The Performance Unit Exercise Period shall be determined by the
Committee and specifically set forth in the Agreement, provided, however--
(i) A Performance Unit may not be exercised until the expiration of at
least six months from the Date of Grant (except that this limitation need
not apply in the event of the death or disability of the Optionee or as
otherwise permitted by an Agreement upon a change in control of the
Corporation); and
(ii) a Performance Unit will expire no later than the earlier of (A) ten
years from the Date of Grant, or (B) in the case of a Related Performance
Unit, the expiration of the Related Option.
8.5. Each Agreement granting Performance Units shall specify the number of
Performance Units granted; provided, that the maximum number of Related
Performance Units may not exceed the maximum number of Shares subject to the
Related Option and the maximum value of a Related Performance Unit may not
exceed the Fair Market Value of a Share subject to the Related Option.
8.6. The exercise, in whole or in part, of Related Performance Units shall
cause a reduction in the number of Shares subject to the Related Option and the
number of Performance Units in accordance with the terms of the Agreement.
Similarly, the exercise, in whole or in part, of a Related Option shall cause a
reduction in the number of Related Performance Units equal to the number of
Shares with respect to which the Related Option is exercised.
9.EXERCISE; PAYMENT OF WITHHOLDING TAXES
An Option, Right or Performance Unit may, subject to the provisions of the
Agreement under which it was granted, be exercised in whole or in part by the
delivery to the Corporation of written notice of the exercise, in such form as
the Committee may prescribe, accompanied, in the case of an Option, by full
payment for the Shares with respect to which the Option is exercised, and in
the case of an Option, Right or Performance Unit, full payment for related
withholding taxes, if any. The receipt of Incentive Shares shall be subject to
full payment by the Grantee of any withholding taxes then required to be paid.
10.NONTRANSFERABILITY
Except as the Committee may expressly provide otherwise in or with respect to
an Agreement, including any Agreement in effect as of February 20, 1997,
Options, Rights and Performance Units granted under the Plan shall not be
transferable otherwise than by will or the laws of descent and distribution,
and an Option, Right or Performance Unit may be exercised during his or her
lifetime only by the Optionee or, in the event of his or her legal disability,
by his or her legal representative. A Related Right or Related Performance Unit
is transferable only when the Related Option is transferable and only with the
Related Option and under the same conditions. An Optionee may also designate a
beneficiary to exercise his or her Options after the Optionee's death, provided
that the Committee has first expressly approved the procedures and forms
necessary to effect such a designation.
11.DEFERRAL OF AWARDS
If an Optionee so elects in accordance with the terms of an Agreement, the
Optionee may defer any or all of the amount otherwise payable on the exercise
of Performance Units in accordance with the provisions of a deferred
compensation plan maintained by the Corporation or a Subsidiary, provided:
(i) that the Optionee makes such election by delivering to the
Corporation written notice of such election, in such form as the Committee
may from time to time prescribe, prior to the beginning of the Performance
Period;
(ii) that such election shall be irrevocable until at least six months
after termination of the Optionee's employment; and
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(iii) that such deferred payment shall be made in accordance with the
provisions of such deferred compensation plan.
12.INCENTIVE SHARE AWARDS
The Committee may, in its sole discretion, grant Incentive Share awards to
Senior Executives, provided that the number of Incentive Share awards granted
to a Senior Executive during a calendar year shall not exceed the Individual
Limitation when aggregated with other grants or awards made to that Senior
Executive during that calendar year. Incentive Share awards shall entitle a
Senior Executive to receive Shares, to be issued at such times, subject to the
achievement of such performance standards or other goals, in recognition of
such performance or other achievements or for such other purposes, and on such
other terms and conditions, if any, as the Committee shall deem appropriate.
Performance standards may be based on earnings or earnings growth; return on
assets, equity or investment; regulatory compliance; satisfactory internal or
external audits; improvement of financial ratings; reduction of nonperforming
loans; achievement of balance sheet or income statement objectives; or any
other objective goals established by the Committee, and may be absolute in
their terms or measured against or in relationship to other companies
comparably, similarly or otherwise situated. The number of Incentive Share
awards made to a Senior Executive during a calendar year shall not exceed the
Individual Limitation when aggregated with other grants or awards made to that
Senior Executive during that calendar year.
13.CAPITAL ADJUSTMENTS
The number and class of Shares (or the Performance Unit equivalent) subject
to each outstanding Option, Right or Performance Unit or Incentive Share award,
the Option Price and the aggregate number and class of Shares for which grants
or awards thereafter may be made, and the Individual Limitation provided for in
Section 5.1, shall be subject to such adjustment, if any, as the Committee in
its sole discretion deems appropriate to reflect such events as stock
dividends, stock splits, recapitalizations, mergers, consolidations or
reorganizations of or by the Corporation.
14.TERMINATION OR AMENDMENT
The Board or the Committee may amend, alter or terminate this Plan in any
respect at any time; provided, however, that, after this Plan has been approved
by the shareholders of the Corporation, no amendment, alteration or termination
of this Plan shall be made by the Board or the Committee without approval of
(i) the Corporation's shareholders to the extent shareholder approval of the
amendment is required by applicable law or regulations or the requirements of
the principal exchange or interdealer quotation system on which the Common
Stock is listed or quoted, and (ii) each affected Optionee if such amendment,
alteration or termination would adversely affect his or her rights or
obligations under any grant or award made prior to the date of such amendment,
alteration or termination.
15.MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS, RIGHTS AND PERFORMANCE UNITS
Subject to the terms and conditions and within the limitations of the Plan,
the Committee may modify, extend or renew outstanding Options, Rights and
Performance Units, or accept the surrender of outstanding options, rights and
performance units (to the extent not theretofore exercised) granted under the
Plan or under any other plan of the Corporation, a Subsidiary or a company or
similar entity acquired by the Corporation or a Subsidiary, and authorize the
granting of new Options, Rights and Performance Units pursuant to the Plan in
substitution therefor (to the extent not theretofore exercised), and the
substituted Options, Rights and Performance Units may specify a longer term
than the surrendered Options, Rights and Performance Units or have any other
provisions that are authorized by the Plan; provided, however, that the
substituted Options, Rights and Performance Units may not specify a lower
exercise price than the surrendered options, rights and performance units.
Subject to the terms and conditions and within the limitations of the Plan, the
Committee may modify the terms of any outstanding Agreement providing for
awards of Incentive Shares. Notwithstanding the foregoing, however, no
modification of an Option, Right or Performance Unit granted under the Plan, or
an award of Incentive Shares, shall, without the consent of the Optionee or
Grantee, adversely affect the rights or obligations of the Optionee or Grantee.
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16.EFFECTIVENESS OF THE PLAN AND AMENDMENTS
The effective date of the Plan was December 17, 1987. The effective date of
the Plan amendments contained herein is February 20, 1997. Any amendments to
the Plan requiring shareholder approval pursuant to Article 14 are subject to
approval by vote of the shareholders of the Corporation within 12 months after
their adoption by the Board or the Committee. Subject to that approval, any
amendments are effective on the date on which they are adopted by the Board.
Options, Rights, Performance Units or Incentive Shares may be granted or
awarded prior to shareholder approval of amendments, but each Option, Right,
Performance Unit or Incentive Share grant or award requiring such amendments
shall be subject to the approval of the amendments by the shareholders. The
date on which any Option, Right, Performance Unit or Incentive Shares granted
or awarded prior to shareholder approval of the amendment shall be the Date of
Grant for all purposes of the Plan as if the Option, Right, Performance Unit or
Incentive Shares had not been subject to approval. No Option, Right or
Performance Unit granted subject to shareholder approval of an amendment may be
exercised prior to such shareholder approval, and any Incentive Share award
subject to shareholder approval of an amendment and any dividends payable
thereon are subject to forfeiture if such shareholder approval is not obtained.
17.TERM OF THE PLAN
Unless sooner terminated by the Board or the Committee pursuant to Article
14, the Plan shall terminate on February 20, 2007, and no Options, Rights,
Performance Units or Incentive Share awards may be granted or awarded after
termination. The termination shall not affect the validity of any Option,
Right, Performance Unit or Incentive Share awards outstanding on the date of
termination.
18.INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees, actually and reasonably incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Option,
Right, Performance Unit or Incentive Shares granted or awarded hereunder, and
against all amounts reasonably paid by them in settlement thereof or paid by
them in satisfaction of a judgment in any such action,
suit or proceeding, if such members acted in good faith and in a manner which
they believed to be in, and not opposed to, the best interests of the
Corporation.
19.COMPLIANCE WITH SECTION 162(M) OF THE CODE
To the extent that any provision of the Plan or an Agreement, or any action
of the Committee, may result in the application of Section 162(m)(1) of the
Code to compensation payable to a Grantee or Optionee, such provision or action
shall be deemed to be null and void, to the extent permitted by law and deemed
advisable by the Committee. The Committee shall have the authority to override
the application of this Article by an action duly approved or ratified by the
Committee and reflected in the Committee's records.
20.GENERAL PROVISIONS
20.1. The establishment of the Plan shall not confer upon any Senior
Executive any legal or equitable right against the Corporation, any Subsidiary
or the Committee, except as expressly provided in the Plan.
20.2. Neither the Plan nor any Agreement constitutes inducement or
consideration for the employment of any Senior Executive, nor are they a
contract between the Corporation or any Subsidiary and any Senior Executive.
Participation in the Plan shall not give a Senior Executive any right to be
retained in the service of the Corporation or any Subsidiary.
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20.3. The Corporation and its Subsidiaries may assume options, warrants, or
rights to purchase stock issued or granted by other corporations whose stock or
assets shall be acquired by the Corporation or its Subsidiaries, or which shall
be merged into or consolidated with the Corporation or its Subsidiaries.
Neither the adoption of this Plan, nor its submission to the shareholders,
shall be taken to impose any limitations on the powers of the Corporation or
its affiliates to issue, grant, or assume options, warrants, or rights,
otherwise than under this Plan, or to adopt other stock option or restricted
stock plans or to impose any requirement of shareholder approval upon the same.
20.4. Except as the Committee may otherwise provide pursuant to Article 10 or
as otherwise required by a deferral election pursuant to Article 11, the
interests of any Senior Executive under the Plan are not subject to the claims
of creditors and may not, in any way, be assigned, alienated or encumbered.
20.5. The Plan shall be governed, construed and administered in accordance
with the laws of the Commonwealth of Pennsylvania, and it is the intention of
the Corporation that Incentive Stock Options granted under the Plan qualify as
such under Section 422 of the Code.
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EXHIBIT B
PNC BANK CORP.
EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF FEBRUARY 20, 1997)
ARTICLE I
PURPOSE AND SCOPE OF THE PLAN
1.1 PURPOSE
The PNC Bank Corp. Employee Stock Purchase Plan is intended to encourage
employee participation in the ownership and economic progress of the
Corporation.
1.2 DEFINITIONS
Unless the context clearly indicates otherwise, the following terms have the
meaning set forth below:
Board of Directors or Board shall mean the Board of Directors of the
Corporation.
Code shall mean the Internal Revenue Code of 1986, as amended.
Committee shall mean a Committee of officers of the Corporation and/or
Designated Subsidiaries appointed by the Board of Directors or the Personnel
and Compensation Committee of the Board, which Committee of officers shall
administer the Plan as provided in Section 1.3 hereof.
Common Stock shall mean shares of the common stock, par value $5.00 per
share, of the Corporation.
Corporate Benefits Administration shall mean the department of the
Corporation responsible for the day-to-day administration of and recordkeeping
for the Plan.
Corporation shall mean PNC Bank Corp.
Compensation shall mean the base salary paid to an Employee by the
Corporation or Designated Subsidiary in accordance with established payroll
procedures.
Continuous Service shall mean the period of time, uninterrupted by a
termination of employment, that an Employee has been employed by the
Corporation and/or a Designated Subsidiary immediately preceding an Offering
Date. Such period of time shall include any approved leave of absence.
Designated Subsidiary shall mean any Subsidiary which has been designated by
the Committee to participate in the Plan.
Employee shall mean any employee of the Corporation or a Designated
Subsidiary.
Exercise Date shall mean May 31 and November 30 of each Plan Year.
Fair Market Value of a share of Common Stock shall be the last price of the
Common Stock on the applicable date as reported by the Wall Street Journal, or,
if no such price is reported for that day, on the last preceding day for which
such price is reported, or such other reasonable method of determining fair
market value as the Committee shall adopt.
Offering Date shall mean June 1 and December 1 of each Plan Year.
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Option Period or Period shall mean the period beginning on an Offering Date
and ending on the next succeeding Exercise Date.
Option Price shall mean the purchase price of a share of Common Stock
hereunder as provided in Section 3.1 hereof.
Participant shall mean any Employee who (i) is eligible to participate in the
Plan under Section 2.1 hereof and (ii) elects to participate.
Plan shall mean the Corporation's Employee Stock Purchase Plan, as the same
may be amended from time to time.
Plan Account or Account shall mean an account established and maintained in
the name of each Participant.
Plan Year shall mean the twelve (12) month period beginning June 1 and ending
on the following May 31.
Stock Purchase Agreement shall mean the form prescribed by the Committee
which must be completed and executed by an Employee who elects to participate
in the Plan.
Subsidiary shall mean any company in which the Corporation owns, directly or
indirectly, shares possessing 50% or more of the total combined voting power of
all classes of stock.
1.3 ADMINISTRATION OF PLAN
Subject to oversight by the Board of Directors or the Board's Personnel and
Compensation Committee, the Committee shall have the authority to administer
the Plan and to make and adopt rules and regulations not inconsistent with the
provisions of the Plan or the Code. The Committee shall adopt the form of Stock
Purchase Agreement and all notices required hereunder. Its interpretations and
decisions in respect to the Plan shall, subject as aforesaid, be final and
conclusive. The Committee shall have the authority to appoint an Employee as
Plan Manager and to delegate to the Plan Manager such authority with respect to
the administration of the Plan as the Committee, in its sole discretion, deems
advisable from time to time.
1.4 EFFECTIVE DATE OF PLAN
The Plan, as amended and restated herein, shall become effective on the date
established for that purpose by the Committee, if prior to that date, the Plan
(i) has been adopted by the Board of Directors of the Corporation and (ii) has
been approved by an affirmative vote of a majority of votes cast by the holders
of the Common Stock and the voting preferred stock, voting together as a single
class, in person or by proxy, at a meeting at which a quorum is present. The
date established by the Committee as the effective date shall be an Offering
Date.
1.5 EXTENSION OR TERMINATION OF PLAN
The Plan shall continue in effect through, and including, May 31, 2003 unless
terminated prior thereto pursuant to Section 4.3 hereof, or by the Board of
Directors or the Personnel and Compensation Committee of the Board, each of
which shall have the right to extend the term of or terminate the Plan at any
time. Upon any such termination, the balance, if any, in each Participant's
Account shall be refunded to him, or otherwise disposed of in accordance with
policies and procedures prescribed by the Committee in cases where such a
refund may not be possible.
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ARTICLE II
PARTICIPATION
2.1 ELIGIBILITY
Each Employee, including those serving on the Committee or serving as Plan
Manager, who on an Offering Date will have at least one year of Continuous
Service, may become a Participant by executing and filing a Stock Purchase
Agreement with Corporate Benefits Administration prior to said Offering Date.
No Employee may participate in the Plan if said Employee, immediately after an
Offering Date, would be deemed for purposes of Section 423(b)(3) of the Code to
possess 5% or more of the total combined voting power or value of all classes
of stock of the Corporation or any Subsidiary.
2.2 PAYROLL DEDUCTIONS
Payment for shares of Common Stock purchased hereunder shall be made by
authorized payroll deductions from each payment of Compensation in accordance
with instructions received from a Participant. Said deduction shall be
expressed as a whole number percentage which shall be at least 1% but not more
than 10%. A Participant may not increase or decrease the deduction during an
Option Period. However, a Participant may change the percentage deduction for
any subsequent Option Period by filing notice thereof with Corporate Benefits
Administration prior to the Offering Date on which such Period commences.
During an Option Period, a Participant may discontinue payroll deductions but
have the payroll deductions previously made during that Option Period remain in
the Participant's Account to purchase Common Stock on the next Exercise Date,
provided that he or she is an Employee as of that Exercise Date. Any amount
remaining in the Participant's Account after the purchase of Common Stock shall
be refunded without interest upon the written request of the Participant. Any
Participant who discontinues payroll deductions during an Option Period may
again become a Participant for a subsequent Option Period by executing and
filing another Stock Purchase Agreement in accordance with Section 2.1. Amounts
deducted from a Participant's Compensation pursuant to this Section shall be
credited to said Participant's Account.
ARTICLE III
PURCHASE OF SHARES
3.1 OPTION PRICE
The Option Price per share of the Common Stock sold to Participants hereunder
shall be 85% of the Fair Market Value of such share on either the Offering Date
or the Exercise Date of an Option Period, whichever is lower, but in no event
shall the Option Price per share be less than the par value of the Common
Stock.
3.2 PURCHASE OF SHARES
On each Exercise Date, the amount in a Participant's Account shall be charged
with the aggregate Option Price of the largest number of whole shares of Common
Stock which can be purchased with said amount. The balance, if any, in such
account shall be carried forward to the next succeeding Offering Period.
3.3 LIMITATIONS ON PURCHASE
Except as the Committee may otherwise provide by an adjustment made pursuant
to Section 4.2, no Participant shall purchase more than 400 shares of Common
Stock in each calendar year, provided that any such purchase shall not exceed
the limitations imposed by Section 423(b)(8) of the Code.
3.4 TRANSFERABILITY OF RIGHTS
Rights to purchase shares hereunder shall be exercisable only by the
Participant. Such rights shall not be transferable.
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ARTICLE IV
PROVISIONS RELATING TO COMMON STOCK
4.1 COMMON STOCK RESERVED
At February 20, 1997, there shall be 4,614,154 authorized and unissued shares
of Common Stock reserved for the Plan, subject to adjustment in accordance with
Section 4.2 hereof. The aggregate number of shares which may be purchased
thereafter under the Plan shall not exceed the number of shares reserved for
the Plan. Such amount shall be in addition to the 4,534,726 shares previously
authorized and issued under the Plan.
4.2 ADJUSTMENT FOR CHANGES IN COMMON STOCK
In the event that adjustments are made in the number of outstanding shares of
Common Stock or said shares are exchanged for a different class of stock of the
Corporation or for shares of stock of any other corporation by reason of
merger, consolidation, stock dividend, stock split or otherwise, the Committee
may make appropriate adjustments in (i) the number and class of shares or other
securities that may be reserved for purchase, or purchased, hereunder, and (ii)
the Option Price. All such adjustments shall be made in the sole discretion of
the Committee, and its decision shall be binding and conclusive.
4.3 INSUFFICIENT SHARES
If the aggregate funds available for the purchase of Common Stock on any
Exercise Date would cause an issuance of shares in excess of the number
provided for in Section 4.1 hereof, (i) the Committee shall proportionately
reduce the number of shares which would otherwise be purchased by each
Participant in order to eliminate such excess, and (ii) the Plan shall
automatically terminate immediately after such Exercise Date.
4.4 CONFIRMATION
Each purchase of Common Stock hereunder shall be confirmed in writing to the
Participant. A record of purchases shall be maintained by appropriate entries
on the books of the Corporation. Participants may obtain a certificate or
certificates for all or part of the shares of Common Stock purchased hereunder
by requesting same in writing.
4.5 RIGHTS AS SHAREHOLDERS
The shares of Common Stock purchased by a Participant on an Exercise Date
shall, for all purposes, be deemed to have been issued and sold at the close of
business on such Exercise Date. Prior to that time, none of the rights or
privileges of a shareholder of the Corporation shall exist with respect to such
shares.
ARTICLE V
TERMINATION OF PARTICIPATION
5.1 VOLUNTARY WITHDRAWAL
A Participant may withdraw from the Plan at any time by filing notice of
withdrawal prior to the close of business on an Exercise Date. Upon withdrawal,
the entire amount, if any, in a Participant's Account shall be refunded to him
without interest. Any Participant who withdraws from the Plan may again become
a Participant in accordance with Section 2.1 hereof.
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5.2 TERMINATION OF ELIGIBILITY
If a Participant retires, he may elect to (i) withdraw the entire amount, if
any, in his Plan Account, or (ii) have said amount used to purchase whole
shares of Common Stock pursuant to Section 3.2 hereof on the next succeeding
Exercise Date, and have any remaining balance refunded without interest.
If a Participant ceases to be eligible under Section 2.1 hereof for any
reason other than retirement, the dollar amount and the number of unissued
shares in such Participant's Account will be refunded or distributed to
Participant's designated beneficiary or estate, or otherwise disposed of in
accordance with policies and procedures prescribed by the Committee in cases
where such a refund or distribution may not be possible.
ARTICLE VI
GENERAL PROVISIONS
6.1 NOTICES
Any notice which a Participant files pursuant to the Plan shall be made on
forms prescribed by the Committee and shall be effective when received by
Corporate Benefits Administration.
6.2 CONDITION OF EMPLOYMENT
Neither the creation of the Plan nor participation therein shall be deemed to
create any right of continued employment or in any way affect the right of the
Corporation to terminate an Employee.
6.3 AMENDMENT OF THE PLAN
The Board of Directors or the Board's Personnel and Compensation Committee
may at any time, or from time to time, amend the Plan in any respect, except
that, without approval of the shareholders, no amendment may increase the
aggregate number of shares reserved under the Plan other than as provided in
Section 4.2 hereof, materially increase the benefits accruing to Participants
or materially modify the requirements as to eligibility for participation in
the Plan. Any amendment of the Plan must be made in accordance with applicable
provisions of the Code and/or any regulations issued thereunder, any other
applicable law or regulations, and the requirements of the principal exchange
upon which the Common Stock is listed.
6.4 APPLICATION OF FUNDS
All funds received by the Corporation by reason of purchases of Common Stock
hereunder may be used for any corporate purpose.
6.5 LEGAL RESTRICTIONS
The Corporation shall not be obligated to sell shares of Common Stock
hereunder if counsel to the Corporation determines that such sale would violate
any applicable law or regulation.
6.6 GENDER
Whenever used herein, use of any gender shall be applicable to both genders.
6.7 GOVERNING LAW
The Plan and all rights and obligations thereunder shall be construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania and
any applicable provisions of the Code and the related regulations.
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<PAGE>
PNC BANK CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
OF SHAREHOLDERS
APRIL 22, 1997--11:00 AM
PLACE: ONE PNC PLAZA, PITTSBURGH, PA
Thomas H. O'Brien, Walter E. Gregg, Jr. and William F. Strome, and each of them
with full power to act alone and with full power of substitution, are hereby
authorized to represent the shareholder named on the reverse side hereof
("shareholder") at the annual meeting of shareholders of PNC Bank Corp. to be
held on April 22, 1997, or at any adjournment thereof, and to vote, as
indicated on the reverse side hereof, the number of shares of Common Stock
and/or Preferred Stock which the shareholder would be entitled to vote if
personally present at said meeting. The above named individuals, and each of
them with full power to act alone, are further authorized to vote such stock
upon any other business as may properly come before the meeting, or any
adjournment thereof, in accordance with their best judgment.
THIS PROXY MAY BE REVOKED BY GIVING THE SECRETARY OF THE MEETING WRITTEN NOTICE
OF REVOCATION OR A SUBSEQUENTLY DATED PROXY AT ANY TIME BEFORE THE VOTING OF
THE SHARES REPRESENTED BY THIS PROXY, OR BY CASTING A BALLOT AT THE MEETING.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
- --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
<PAGE>
WILL ATTEND MEETING [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES LISTED IN ITEM 1, FOR ITEM 2, AND FOR ITEM 3.
ALL SHARES WILL BE VOTED AS INSTRUCTED BELOW. IN THE
ABSENCE OF AN INSTRUCTION TO THE CONTRARY, ALL SHARES
WILL BE VOTED FOR ALL NOMINEES LISTED IN ITEM 1, FOR
ITEM 2, AND FOR ITEM 3.
ITEM 1--Election of FOR ALL WITHHELD
Directors: Ms. Green and NOMINEES FOR ALL
Messrs. Chellgren, Clay, [_] [_]
Davidson, Girard-
diCarlo, Grefenstette,
Lindsay, McClelland,
Marshall, O'Brien,
Randolph, Rohr, Ross,
Sarni, Scheuring,
Simmons, Usher,
Washington and Wehmeier
(or any substitute
nominee in case of
unavailability).
[_] FOR ALL NOMINEES, EXCEPT AS INDICATED BELOW:
-------------------------
(Write nominee name(s)
in the space provided
above to withhold
authority.)
ITEM 2--Proposal FOR AGAINST ABSTAIN
to approve the PNC [_] [_] [_]
Bank Corp. 1997
Long-Term
Incentive Award
Plan
ITEM 3--Proposal FOR AGAINST ABSTAIN
to approve an [_] [_] [_]
amendment to the
PNC Bank Corp.
Employee Stock
Purchase Plan
COMMENTS/ADDRESS CHANGE
PLEASE MARK THIS BOX IF YOU HAVE [_]
WRITTEN COMMENTS/ADDRESS CHANGE
ON THE REVERSE SIDE.
SIGNATURE(S) DATE:
------------------------------------------------ -------------
PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING ON BEHALF OF A CORPORATION OR PARTNERSHIP OR AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH PROXY CARD HERE
RETURN PROXY CARD IN ENCLOSED ENVELOPE AFTER COMPLETING, SIGNING AND DATING
ADMISSION TICKET
PNC BANK CORP.
1997 ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 22, 1997
11:00 AM
ONE PNC PLAZA--15TH FLOOR
FIFTH AVENUE AND WOOD STREET
PITTSBURGH, PENNSYLVANIA
PLEASE ADMIT NON-TRANSFERABLE
<PAGE>
PNC BANK CORP.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997--11:00 AM
PLACE: ONE PNC PLAZA, PITTSBURGH, PA
ISP INSTRUCTION CARD
To: PNC Bank, National Association, Trustee of the non-ESOP portion of the PNC
Bank Corp. Incentive Savings Plan and PNC Bank, Ohio, National Association,
Trustee of the ESOP portion of the PNC Bank Corp. Incentive Savings Plan.
The signatory on the reverse side hereof, a Participant having Common Stock
and/or Preferred Stock of PNC Bank Corp. credited to my account, does hereby
direct each Trustee to vote the number of shares indicated hereon at the annual
meeting of shareholders to be held on April 22, 1997, or any adjournment
thereof, as indicated.
THIS CARD IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
- --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
<PAGE>
WILL ATTEND MEETING [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES LISTED IN ITEM 1, FOR ITEM 2, AND FOR ITEM 3.
ALL FULL AND PARTIAL SHARES OF STOCK CREDITED TO YOUR
PLAN ACCOUNT WILL BE VOTED AS DIRECTED BELOW. IN THE
ABSENCE OF A DIRECTION TO THE CONTRARY, ALL SHARES
(INCLUDING UNALLOCATED SHARES) WILL BE VOTED IN THE
MANNER REQUIRED OR PERMITTED BY THE GOVERNING PLAN
DOCUMENTS.
ITEM 1--Election of FOR ALL WITHHELD
Directors: Ms. Green and NOMINEES FOR ALL
Messrs. Chellgren, Clay, [_] [_]
Davidson, Girard-
diCarlo, Grefenstette,
Lindsay, McClelland,
Marshall, O'Brien,
Randolph, Rohr, Ross,
Sarni, Scheuring,
Simmons, Usher,
Washington and Wehmeier
(or any substitute
nominee in case of
unavailability).
[_] FOR ALL NOMINEES, EXCEPT AS INDICATED BELOW:
-------------------------
(Write nominee name(s)
in the space provided
above to withhold
authority.)
ITEM 2--Proposal FOR AGAINST ABSTAIN
to approve the PNC [_] [_] [_]
Bank Corp. 1997
Long-Term
Incentive Award
Plan
ITEM 3--Proposal FOR AGAINST ABSTAIN
to approve an [_] [_] [_]
amendment to the
PNC Bank Corp.
Employee Stock
Purchase Plan
COMMENTS/ADDRESS CHANGE [_]
PLEASE MARK THIS BOX IF YOU HAVE
WRITTEN COMMENTS/ADDRESS CHANGE
ON THE REVERSE SIDE.
SIGNATURE DATE:
------------------------------------------------ ----------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH INSTRUCTION CARD HERE
RETURN INSTRUCTION CARD IN ENCLOSED ENVELOPE AFTER COMPLETING,
SIGNING AND DATING
ADMISSION TICKET
PNC BANK CORP.
1997 ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 22, 1997
11:00 AM
ONE PNC PLAZA--15TH FLOOR
FIFTH AVENUE AND WOOD STREET
PITTSBURGH, PENNSYLVANIA
PLEASE ADMIT NON-TRANSFERABLE
<PAGE>
PNC BANK CORP.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997--11:00 AM
PLACE: ONE PNC PLAZA, PITTSBURGH, PA
RSP INSTRUCTION CARD
To: PNC Bank, National Association, Trustee of the PNC Bank Corp. Retirement
Savings Plan.
The signatory on the reverse side hereof, a Participant having Common Stock of
PNC Bank Corp. credited to my account, does hereby direct the Trustee to vote
the number of shares indicated hereon at the annual meeting of shareholders to
be held on April 22, 1997, or any adjournment thereof, as indicated.
THIS CARD IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
- --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
<PAGE>
WILL ATTEND MEETING [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES LISTED IN ITEM 1, FOR ITEM 2, AND FOR ITEM 3.
ALL FULL AND PARTIAL SHARES OF STOCK CREDITED TO YOUR
PLAN ACCOUNT WILL BE VOTED AS DIRECTED BELOW. IN THE
ABSENCE OF A DIRECTION TO THE CONTRARY, ALL SHARES
(INCLUDING UNALLOCATED SHARES) WILL BE VOTED IN THE
MANNER REQUIRED OR PERMITTED BY THE GOVERNING PLAN
DOCUMENTS.
ITEM 1--Election of FOR ALL WITHHELD
Directors: Ms. Green and NOMINEES FOR ALL
Messrs. Chellgren, Clay, [_] [_]
Davidson, Girard-
diCarlo, Grefenstette,
Lindsay, McClelland,
Marshall, O'Brien,
Randolph, Rohr, Ross,
Sarni, Scheuring,
Simmons, Usher,
Washington and Wehmeier
(or any substitute
nominee in case of
unavailability).
[_] FOR ALL NOMINEES, EXCEPT AS INDICATED BELOW:
-------------------------
(Write nominee name(s)
in the space provided
above to withhold
authority.)
ITEM 2--Proposal FOR AGAINST ABSTAIN
to approve the PNC [_] [_] [_]
Bank Corp. 1997
Long-Term
Incentive Award
Plan
ITEM 3--Proposal FOR AGAINST ABSTAIN
to approve an [_] [_] [_]
amendment to the
PNC Bank Corp.
Employee Stock
Purchase Plan
COMMENTS/ADDRESS CHANGE [_]
PLEASE MARK THIS BOX IF YOU HAVE
WRITTEN COMMENTS/ADDRESS CHANGE
ON THE REVERSE SIDE.
SIGNATURE DATE:
------------------------------------------------ ----------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH INSTRUCTION CARD HERE
RETURN INSTRUCTION CARD IN ENCLOSED ENVELOPE AFTER COMPLETING,
SIGNING AND DATING
ADMISSION TICKET
PNC BANK CORP.
1997 ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 22, 1997
11:00 AM
ONE PNC PLAZA--15TH FLOOR
FIFTH AVENUE AND WOOD STREET
PITTSBURGH, PENNSYLVANIA
PLEASE ADMIT NON-TRANSFERABLE
<PAGE>
PNC BANK CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT
THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997--11:00 AM
PLACE: ONE PNC PLAZA, PITTSBURGH, PA
Thomas H. O'Brien, Walter E. Gregg, Jr. and William F. Strome, and each of them
with full power to act alone and with full power of substitution, are hereby
authorized to represent the shareholder named on the reverse side hereof
("shareholder") at the annual meeting of shareholders of PNC Bank Corp. to be
held on April 22, 1997, or at any adjournment thereof, and to vote, as
indicated on the reverse side hereof, the number of shares of Common Stock
and/or Preferred Stock which the shareholder would be entitled to vote if
personally present at said meeting. The above named individuals, and each of
them with full power to act alone, are further authorized to vote such stock
upon any other business as may properly come before the meeting, or any
adjournment thereof, in accordance with their best judgment.
THIS PROXY MAY BE REVOKED BY GIVING THE SECRETARY OF THE MEETING WRITTEN NOTICE
OF REVOCATION OR A SUBSEQUENTLY DATED PROXY AT ANY TIME BEFORE THE VOTING OF
THE SHARES REPRESENTED BY THIS PROXY, OR BY CASTING A BALLOT AT THE MEETING.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
- --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
<PAGE>
WILL ATTEND MEETING [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES LISTED IN ITEM 1, FOR ITEM 2, AND FOR ITEM 3.
ALL SHARES WILL BE VOTED AS INSTRUCTED BELOW. IN THE
ABSENCE OF AN INSTRUCTION TO THE CONTRARY, ALL SHARES
WILL BE VOTED FOR ALL NOMINEES LISTED IN ITEM 1, FOR
ITEM 2, AND FOR ITEM 3.
ITEM 1--Election of FOR ALL WITHHELD
Directors: Ms. Green and NOMINEES FOR ALL
Messrs. Chellgren, Clay, [_] [_]
Davidson, Girard-
diCarlo, Grefenstette,
Lindsay, McClelland,
Marshall, O'Brien,
Randolph, Rohr, Ross,
Sarni, Scheuring,
Simmons, Usher,
Washington and Wehmeier
(or any substitute
nominee in case of
unavailability).
[_] FOR ALL NOMINEES, EXCEPT AS INDICATED BELOW:
-------------------------
(Write nominee name(s)
in the space provided
above to withhold
authority.)
ITEM 2--Proposal FOR AGAINST ABSTAIN
to approve the PNC [_] [_] [_]
Bank Corp. 1997
Long-Term
Incentive Award
Plan
ITEM 3--Proposal FOR AGAINST ABSTAIN
to approve an [_] [_] [_]
amendment to the
PNC Bank Corp.
Employee Stock
Purchase Plan
COMMENTS/ADDRESS CHANGE [_]
PLEASE MARK THIS BOX IF YOU HAVE
WRITTEN COMMENTS/ADDRESS CHANGE
ON THE REVERSE SIDE.
SIGNATURE(S) DATE:
------------------------------------------------ -------------
PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING ON BEHALF OF A CORPORATION OR PARTNERSHIP OR AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH PROXY CARD HERE
RETURN PROXY CARD IN ENCLOSED ENVELOPE AFTER COMPLETING, SIGNING AND DATING
ADMISSION TICKET
PNC BANK CORP.
1997 ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 22, 1997
11:00 AM
ONE PNC PLAZA--15TH FLOOR
FIFTH AVENUE AND WOOD STREET
PITTSBURGH, PENNSYLVANIA
PLEASE ADMIT NON-TRANSFERABLE
