<PAGE>
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
CCB FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fees (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:*
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
*Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CCB FINANCIAL CORPORATION
111 CORCORAN STREET
POST OFFICE BOX 931
DURHAM, NORTH CAROLINA 27702-0931
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 15, 1997
NOTICE is hereby given that the Annual Meeting of Shareholders of CCB
Financial Corporation (the "Corporation") will be held as follows:
<TABLE>
<S> <C>
PLACE: Sheraton Imperial Hotel
Page Road at Exit 282, Interstate Highway 40
Research Triangle Park, North Carolina
DATE: Tuesday, April 15, 1997
TIME: 11:00 A.M.
</TABLE>
For your convenience, a map with directions to the Sheraton Imperial Hotel
appears on the back outside cover of the accompanying Proxy Statement.
THE PURPOSES OF THE ANNUAL MEETING ARE:
1. To amend Article III, Section 2 of the Bylaws of the Corporation
setting a minimum of 9 and a maximum of 23 persons to serve as directors
and to divide the directors into three classes, as nearly equal in number
as may be, to serve in the first instance for terms of one, two and three
years, respectively, and thereafter the successors in each class of
directors to be elected to serve for terms of three years.
2. To amend the Restated Charter of the Corporation to provide that
directors may be removed only "for cause."
3. To elect 19 members of the Board of Directors for terms of one, two
and three years, provided Proposal 1 is approved by the shareholders, or
all 19 members for a one year term should Proposal 1 not be approved.
4. To consider a proposal to ratify the appointment of KPMG Peat
Marwick LLP as the Corporation's independent accountants for the year
ending December 31, 1997.
5. To consider and act on any other matters that may properly come
before the Annual Meeting.
The record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting has been set as the close of business on
February 28, 1997.
EVEN IF YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO MARK, DATE, AND SIGN THE ENCLOSED APPOINTMENT OF PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE
YOUR APPOINTMENT OF PROXY AND VOTE YOUR SHARES IN PERSON.
Sincerely,
(Signature of Ernest C. Roessler)
ERNEST C. ROESSLER,
VICE CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
March 13, 1997
<PAGE>
CCB FINANCIAL CORPORATION
111 CORCORAN STREET
POST OFFICE BOX 931
DURHAM, NORTH CAROLINA 27702-0931
PROXY STATEMENT
MAILING DATE: MARCH 13, 1997
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 15, 1997
GENERAL
This Proxy Statement is being distributed in connection with the
solicitation by the Board of Directors of CCB Financial Corporation (the
"Corporation") of appointments of proxy in the form enclosed herewith for the
1997 Annual Meeting of Shareholders of the Corporation and any adjournments
thereof (the "Annual Meeting"). The Annual Meeting will be held on Tuesday,
April 15, 1997, beginning at 11:00 A.M., at the Sheraton Imperial Hotel, Page
Road at Exit 282, Interstate Highway 40, Research Triangle Park, North Carolina.
For your convenience, a map with directions to the Sheraton Imperial Hotel
appears on the back outside cover of this Proxy Statement.
As used in this Proxy Statement, the term "the Bank" refers to the
Corporation's North Carolina-chartered commercial bank subsidiary, Central
Carolina Bank and Trust Company.
VOTING OF APPOINTMENTS OF PROXIES; REVOCATION
Persons named in the enclosed appointment of proxy as proxies for
shareholders at the Annual Meeting are Leo P. Pylypec, Secretary of the
Corporation and the Bank, W. Harold Parker, Jr., Controller of the Corporation
and the Bank, and Manuel L. Rojas, General Auditor of the Bank. Shares
represented by each appointment of proxy which is properly executed, returned,
and not revoked, will be voted in accordance with the directions contained
therein. If no directions are given, those shares will be voted "FOR" the
election of each of the 19 nominees for director named in Proposal 3 and "FOR"
the other proposals described herein. If, at or before the time of the Annual
Meeting, any nominee named in Proposal 3 becomes unavailable for any reason, the
proxies will be authorized to vote for a substitute nominee. On such other
matters as may properly come before the Annual Meeting, the proxies will be
authorized to vote shares represented by appointments of proxy in accordance
with their best judgment.
A shareholder may revoke an appointment of proxy at any time before the
shares represented by it have been voted by filing with Mr. Pylypec at the
address above an instrument revoking it or a properly executed appointment of
proxy bearing a later date, or by attending the Annual Meeting and announcing
his or her intention to vote in person.
EXPENSES OF SOLICITATION
The Corporation will pay the cost of preparing, assembling, and mailing
this Proxy Statement and other proxy solicitation expenses. In addition to the
use of the mail, appointments of proxy may be solicited in person or by
telephone by officers, directors, or employees of the Corporation and its
subsidiaries without additional compensation. The Corporation has engaged
Corporate Investor Communications, Inc. to assist in the solicitation of
appointments of proxy. The fee for such services will be approximately $5,000,
plus reimbursement of reasonable out-of-pocket expenses. The Corporation also
will reimburse brokerage houses and other nominees for expenses incurred in
forwarding the Corporation's proxy materials to beneficial owners of its voting
securities.
RECORD DATE
The Board of Directors has set February 28, 1997, as the record date (the
"Record Date") for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting. Only shareholders of record on that date will be
entitled to vote at the Annual Meeting.
<PAGE>
VOTING SECURITIES
The voting securities of the Corporation are the shares of its $5.00 par
value common stock ("Common Stock"), of which 50,000,000 shares were authorized
and shares were outstanding as of the Record Date. On such date there
were approximately 6,500 shareholders of record.
VOTING PROCEDURES; VOTES REQUIRED FOR APPROVAL
The representation in person or by proxy of a majority of the votes
entitled to be cast is necessary to provide a quorum at the Annual Meeting. At
the Annual Meeting, each shareholder will be entitled to cast one vote for each
share of Common Stock held of record on the Record Date for each matter
submitted for voting and, in the election of directors, for each director to be
elected.
In voting for directors under Proposal 3, the 19 nominees receiving the
highest numbers of votes will be elected. Votes may be cast in favor of director
nominees or withheld. Withheld votes are not treated as votes cast and,
therefore, will have no effect on the election of directors. In the case of the
other proposals, for each such proposal to be approved the number of votes cast
for approval must exceed the number of votes cast against approval. Under the
rules of the New York Stock Exchange (the "NYSE"), broker-dealers who hold
shares in street name have the authority to vote on certain routine items when
they have not received voting instructions from beneficial owners. Proposals 1
and 2 are not considered routine matters under the rules of the NYSE.
Accordingly, broker-dealers who hold shares in street name and have not received
instructions from beneficial owners will not have authority to vote on these two
proposals ("broker non-votes"). Under North Carolina law, broker non-votes are
not treated as votes cast and, therefore, will have no effect on the vote for
Proposals 1 and 2. Similarly, abstentions are not treated as votes cast and,
therefore, will have no effect on the vote for any proposal.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP OF VOTING SECURITIES
Set forth below is information regarding the only entity known to
management of the Corporation to beneficially own more than five percent of the
issued and outstanding shares of Common Stock as of December 31, 1996.
<TABLE>
<CAPTION>
PERCENTAGE
AMOUNT AND NATURE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP CLASS(1)
<S> <C> <C>
Central Carolina Bank and 847,183(2) 5.62%
Trust Company
111 Corcoran Street
Post Office Box 931
Durham, North Carolina
27702-0931
</TABLE>
(1) The calculation of the percentage of class beneficially owned is based on
the 15,082,128 shares of the Corporation's Common Stock issued and
outstanding on December 31, 1996.
(2) Shares beneficially owned by the Bank are held through its trust department
in various fiduciary capacities. In addition to the shares reflected above,
the Bank holds certain other shares in various fiduciary capacities as to
which the Bank disclaims beneficial ownership. The aggregate number of
shares held by the Bank includes 797,202 shares over which the Bank
exercises sole voting power, 50,181 shares over which the Bank has shared
voting power, 508,809 shares over which the Bank has sole investment power,
and 259,799 shares over which the Bank has shared investment power.
2
<PAGE>
Set forth below is information as of December 31, 1996 regarding the
beneficial ownership of Common Stock by the Corporation's current directors and
executive officers individually, and by all current directors and executive
officers of the Corporation as a group. No current director or executive officer
owned more than one percent of the shares outstanding on December 31, 1996.
Current directors and executive officers as a group owned 3.07% of the shares
outstanding on such date.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME BENEFICIAL OWNERSHIP(1)
<S> <C>
John M. Barnhardt 8,894(2)
J. Harper Beall, III 34,606(3)
James B. Brame, Jr. 3,245
Timothy B. Burnett 1,806
W. L. Burns, Jr. 147,023(4)
Edward S. Holmes 4,320(5)
Bonnie McElveen-Hunter 2,279
David B. Jordan 40,143(6)
Owen G. Kenan 3,730(7)
Eugene J. McDonald 2,291(8)
Hamilton W. McKay, Jr., M.D. 10,974(9)
George J. Morrow 500
Eric B. Munson 707
Ernest C. Roessler 27,614(10)
Miles J. Smith, Jr. 70,072(11)
Jimmy K. Stegall 30,450(12)
H. Allen Tate, Jr. 11,023(13)
James L. Williamson 4,043
Dr. Phail Wynn, Jr. 1,220
J. Scott Edwards 32,990(14)
Richard L. Furr 25,825(15)
All current directors and 463,955(16)
executive officers as a
group (21 persons)
</TABLE>
(1) Except as otherwise noted, each individual exercises sole voting and
investment power with respect to all shares shown as beneficially owned.
(2) Includes 976 shares held by a company Mr. Barnhardt controls and 2,006
shares with respect to which he exercises shared voting and investment
power.
(3) Includes 1,440 shares with respect to which Mr. Beall exercises sole voting
power only, 8,642 shares which he could purchase under a presently
exercisable option and as to which he is considered to have sole investment
power only, and 14,525 shares with respect to which he exercises shared
voting and investment power. Does not include 1,005 shares held by Mr.
Beall's spouse and children and with respect to which he disclaims any
beneficial ownership.
(4) Includes 34,884 shares with respect to which Mr. Burns exercises shared
voting and investment power, 4,000 shares with respect to which he
exercises sole voting power only and 3,792 shares under the Corporation's
Section 401(k) Retirement Savings Plan (the "401(k) Plan") as to which he
is considered to have sole investment power only.
(5) Does not include 21,648 shares held by Mr. Holmes' spouse and with respect
to which he disclaims any beneficial ownership.
(6) Includes 1,340 shares with respect to which Mr. Jordan exercises shared
voting and investment power and 1,053 shares under the 401(k) Plan as to
which he is considered to have sole investment power only.
(7) Includes 3,530 shares with respect to which Mr. Kenan exercises shared
voting and investment power.
(8) Includes 1,902 shares with respect to which Mr. McDonald exercises shared
voting and investment power.
(9) Includes 5,625 shares with respect to which Dr. McKay exercises shared
voting and investment power. Does not include 1,256 shares held by Dr.
McKay's spouse and son and with respect to which he disclaims any
beneficial ownership.
3
<PAGE>
(10) Includes, 3,247 shares with respect to which Mr. Roessler exercises shared
voting and investment power, 1,194 shares which he could purchase under a
presently exercisable option and as to which he is considered to have sole
investment power only, and 5,845 shares held under the 401(k) Plan as to
which he is considered to have sole investment power only.
(11) Includes 7,982 shares with respect to which Mr. Smith exercises shared
voting and investment power.
(12) Includes 4,338 shares with respect to which Mr. Stegall exercises shared
voting and investment power.
(13) Includes 108 shares with respect to which Mr. Tate exercises shared voting
and investment power. Does not include a total of 8,068 shares held by or
for Mr. Tate's spouse, mother and children and with respect to which he
disclaims any beneficial ownership.
(14) Includes 9,316 shares under the 401(k) Plan as to which Mr. Edwards is
considered to have sole investment power only.
(15) Includes, 4,136 shares with respect to which Mr. Furr exercises shared
voting and investment power, 1,193 shares which he could purchase under a
presently exercisable option and as to which he is considered to have sole
investment power only, and 4,761 shares under the 401(k) Plan as to which
he is considered to have sole investment power only.
(16) Includes an aggregate of 335,120 shares with respect to which current
directors and executive officers exercise sole voting and investment power,
87,599 shares with respect to which they have shared voting and investment
power, and 5,440 shares with respect to which they have sole voting power
only, 11,029 shares which such persons could purchase under presently
exercisable options and as to which they have sole investment power only,
and 24,767 shares under the 401(k) Plan as to which they have sole
investment power only.
INTRODUCTION TO PROPOSALS 1 AND 2
Proposals 1 and 2 have been unanimously approved by the Board of Directors
and, under North Carolina law, must be approved by the shareholders to become
effective. Proposal 1 seeks an amendment to the Bylaws of the Corporation to
classify the Board of Directors into staggered terms of three years each (the
"Bylaw Amendment"). Proposal 2 seeks an amendment to the Restated Charter of the
Corporation (the "Restated Charter") to permit directors to be removed only "for
cause" as defined in the amendment (the "Charter Amendment"). Because both the
Bylaw Amendment and the Charter Amendment have an impact upon the rights of
shareholders and could be characterized as anti-takeover measures which, if
adopted, may tend to insulate management and make the accomplishment of certain
transactions involving a potential change of control of the Corporation more
difficult, each shareholder should carefully study the description of the
proposals contained herein and the text of the amendments as set forth in
Exhibits A and B to this Proxy Statement. The Board of Directors has no present
intention to put before the shareholders any additional proposals which would
operate as a significant impediment to an attempt by a third party to obtain
control of the Corporation.
EXISTING ANTI-TAKEOVER PROVISIONS
STATUTORY PROVISIONS. The Corporation, as a bank holding company
incorporated under the laws of the State of North Carolina, presently has
certain statutory anti-takeover provisions in effect. The Corporation and the
Bank are subject to the Change in Bank Control Act, administered by the Board of
Governors of the Federal Reserve System as to the Corporation and the Federal
Deposit Insurance Corporation as to the Bank, which requires federal regulatory
approval before any one person can acquire 10% or more of the outstanding Common
Stock. North Carolina banking law has similar prior approval requirements which
are administered by the North Carolina Commissioner of Banks. The Corporation
has elected to be subject to the North Carolina Shareholder Protection Act,
which generally requires the affirmative vote of at least 95% of the voting
shares of a corporation to adopt or authorize most business combinations unless
certain fair price and procedural requirements are satisfied. The Corporation
also has elected to be subject to the North Carolina Control Share Acquisition
Act, which generally provides that in the event a potential acquiror acquires a
certain percentage of the total voting power of a corporation, the power to vote
such shares is subject to approval by a majority of the shares held by persons
other than the potential acquiror. If the potential acquiror obtains voting
powers in this manner, under certain circumstances the other shareholders will
have the right to have their shares redeemed by the Corporation at fair market
value.
RESTATED CHARTER AND BYLAW PROVISIONS. The Corporation's Restated Charter
and Bylaws also contain certain provisions which may have an anti-takeover
effect. In 1990, the shareholders approved amendments to the Restated Charter to
4
<PAGE>
accommodate a Shareholder Rights Plan which provides for the distribution of one
stock purchase right for each share of Common Stock. Each right entitles
shareholders (other than a potential acquiror) to purchase shares of the
Corporation's preferred or Common Stock at a significant discount if a person
acquires or announces a tender offer for 15% or more of the Corporation's
outstanding Common Stock. If the acquisition is successful, the right also
entitles holders to purchase securities of the surviving corporation at a
substantial discount. The rights expire in February 2000 and may be redeemed by
the Corporation at any time. The Restated Charter of the Corporation includes a
supermajority voting provision which requires approval of certain business
combinations by (a) 85% of all outstanding shares of voting stock and (b) a
majority of shares held by persons who individually own less than 20% of the
Corporation's voting stock unless (i) the transaction has been approved by a
majority of disinterested directors or (ii) a fair price mechanism is satisfied.
The Restated Charter authorizes the Board of Directors to issue up to five
million shares of preferred stock. Subject to certain limitations, the Board of
Directors may determine the preferences, limitations and relative voting rights
of any class or series of preferred stock without further shareholder approval.
Accordingly, the Board of Directors can design a new series of preferred stock
with characteristics unfavorable to potential acquirors and issue such shares to
a "friendly party." The Restated Charter also provides that shareholders of the
Corporation shall not have preemptive rights to acquire additional shares. The
existence of preemptive rights would significantly restrict the Corporation's
flexibility to enter into friendly or "white knight" acquisitions involving the
issuance of large blocks of additional shares to repel a hostile, unsolicited
potential acquiror. The Restated Charter does not authorize cumulative voting
for directors, which makes it more difficult for minority shareholders to gain
representation on the Board of Directors. The Bylaws of the Corporation do not
permit special meetings of shareholders to be called other than by the Chairman,
any Vice Chairman, President or the Board of Directors. The Bylaws also grant
discretionary power to the Board of Directors, in determining what is in the
best interest of the Corporation and its shareholders, to consider the social
and economic effects of a matter on the Corporation, its subsidiaries, their
employees, depositors, customers, creditors and the communities in which the
Corporation operates.
OTHER AGREEMENTS. The Long Term Incentive Plan of the Corporation provides
for immediate vesting of nonvested benefits, such as restricted stock, stock
options, and cash or stock base performance units, in the event of a change in
control of the Corporation, subject to certain limitations, and the Corporation
has entered into agreements with four of its executive officers that generally
provide for severance payments equal to 299% of the officer's salary in the
event certain circumstances arise in connection with a change in control of the
Corporation. See "Proposal 3: Election of Directors -- Executive
Compensation -- Change in Control and Employment Agreements."
PROPOSAL 1: AMENDMENT OF THE BYLAWS TO CLASSIFY THE BOARD OF DIRECTORS
THE PROPOSED BYLAW AMENDMENT
The Board of Directors has unanimously approved and recommends that the
shareholders approve the Bylaw Amendment which would amend Article III, Section
2 of the Bylaws to provide for the classification of the Corporation's
directors. The text of the Bylaw Amendment is provided in Exhibit A to this
Proxy Statement. The Bylaws currently provide that the number of directors shall
be fixed by the directors or shareholders and shall be not less than 5 nor more
than 30 with each director serving a one year term. The Bylaw Amendment would
increase the minimum number of directors to nine, decrease the maximum number to
23 and divide the Board of Directors into three classes, each class to be as
nearly equal in number as possible. The Board of Directors has set the number of
directors for the forthcoming year at 19. If the Bylaw Amendment is adopted,
seven directors would be elected for a term expiring at the 1998 annual meeting,
six directors would be elected for a term expiring at the 1999 annual meeting,
and six directors would be elected for a term expiring at the 2000 annual
meeting, and, in each case, until their respective successors are duly elected
and qualified. Starting with the 1998 annual meeting of shareholders, one class
will be elected each year for a three-year term.
REASONS FOR THE PROPOSED BYLAW AMENDMENT
Over the last several years there has been a trend towards the accumulation
of substantial stock positions in public corporations by outside parties either
with a view toward utilizing a controlling block of stock to force a merger or
consolidation or as a prelude to proposing a restructuring or sale of all or
part of a corporation or other similar extraordinary corporate action requiring
the approval of its board of directors. These actions are often undertaken
without advance notice to or consultation with management of the corporation. In
many cases, such third parties seek representation on the corporation's board of
directors in order to increase the likelihood that their proposals will be
implemented by the corporation. If the corporation resists the efforts to obtain
representation on the corporation's board, the outside parties may commence
proxy contests to have themselves or their nominees elected to the board in
place of certain directors or the entire board.
5
<PAGE>
The Board of Directors of the Corporation believes that in many
circumstances such efforts may not be beneficial to the interests of the
Corporation and its shareholders, because they may deprive management of the
time and information necessary to evaluate the proposals, to study alternative
proposals and to help ensure that the best price is obtained in any transaction
which may ultimately be undertaken. Thus, the Bylaw Amendment is designed to
protect against rapid shifts in control of the Board of Directors and assist in
assuring continuity in the management, affairs and business strategies of the
Corporation. The Corporation is not aware of any specific effort by a party to
obtain control of the Corporation.
The overall effect of the Bylaw Amendment (and the Charter Amendment
discussed in Proposal 2) may be to render more difficult or to discourage a
merger or tender offer, the assumption of control by a holder of a large block
of the Common Stock and the removal of incumbent management, even if such
transactions or events are favorable to the interests of shareholders.
Specifically, it should be noted that the Bylaw Amendment would make a change in
directors and management for any reason more difficult at each election of
directors because the staggering of terms of directors would have the effect of
requiring at least two shareholder meetings, instead of one, as at present, to
effect a change in majority control of the Board of Directors. If the Bylaw
Amendment is adopted, shareholders will elect directors to longer terms and
existing directors, if re-elected, would be the initial beneficiaries of the
extended terms. Because the Bylaw Amendment and the Charter Amendment are both
components of a single strategy to protect against rapid shifts in control of
the Board of Directors, shareholders should review "Reasons for the Proposed
Charter Amendment" set forth below before making a decision regarding the Bylaw
Amendment.
RECOMMENDATION
The Board of Directors recommends a vote "FOR" approval of the Bylaw
Amendment and all proxies received will be voted in favor thereof unless
directed otherwise on the proxy by the shareholder.
PROPOSAL 2: AMENDMENT OF THE RESTATED CHARTER PROVISIONS
REGARDING REMOVAL OF DIRECTORS
THE PROPOSED CHARTER AMENDMENT
The Board of Directors has unanimously approved and recommends that the
shareholders approve the Charter Amendment which adds a new Section 16 to
provide for removal of directors only "for cause" as set forth therein. Under
North Carolina law, only a charter provision recommended by the board of
directors and approved by the shareholders is effective to permit directors to
be removed only for "cause". At the present time, directors may be removed with
or without "cause". The Charter Amendment would provide that directors may only
be removed for one or more of the following reasons defined as "cause": (i) the
criminal prosecution and conviction of the director of an act of fraud,
embezzlement, theft or personal dishonesty; (ii) prosecution and conviction of a
criminal offense involving dishonesty or breach of trust described by the
Federal Deposit Insurance Act; or (iii) the occurrence of an event causing such
director to be "unbondable" under any of the Corporation's fidelity bonds or
insurance policies covering its directors. Reference is made to Exhibit B for
the complete text of the Charter Amendment.
REASONS FOR THE PROPOSED CHARTER AMENDMENT
At the present time directors may be removed with or without "cause".
Assuming the Bylaw Amendment permitting a classified Board of Directors is
approved by the shareholders, its effect would be nullified without a provision
in the Restated Charter that directors may only be removed "for cause". The
primary intent of a classified board is to delay the takeover of a majority of
the positions on the Board of Directors beyond the elapse of one year's time. By
eliminating the shareholder's right to remove directors "without cause", a
potential acquiror of a controlling interest of the Common Stock of the
Corporation could not gain control of the Board of Directors unless, with
respect to a majority of incumbent directors, there exist circumstances which
constitute "cause" as defined in the Charter Amendment. Accordingly, the Charter
Amendment makes the classification of the Board of Directors as set forth in
Proposal 1 effective. Otherwise, an acquiring shareholder could remove the
entire board of directors without "cause" and thereby gain total control of the
Corporation by obtaining only a majority of the ownership of the Corporation.
Because the Bylaw Amendment and the Charter Amendment are both components of a
single strategy to protect against rapid shifts in control of the Board of
Directors, shareholders should review "Reasons for the Proposed Bylaw Amendment"
set forth above before making a decision regarding the Charter Amendment.
RECOMMENDATION
The Board of Directors recommends a vote "FOR" approval of the Charter
Amendment and all proxies received will be voted in favor thereof unless
directed otherwise on the proxy by the shareholder.
6
<PAGE>
PROPOSAL 3. ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE
19 NOMINEES NAMED BELOW FOR THE TERMS AS INDICATED OR, IF PROPOSAL 1 IS NOT
APPROVED, EACH FOR A TERM OF ONE YEAR:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND AGE AND OTHER DIRECTORSHIPS
<S> <C>
ONE-YEAR TERM:
John M. Barnhardt President, Treasurer and Chairman of the Board, Barnhardt
(60) & Walker, Inc. (advertising and public relations)
James B. Brame, Jr.(2) President, Brame Specialty Co., Inc. (paper products, office supplies
(51) and equipment)
W. L. Burns, Jr.(3) Chairman of the Board of the Corporation and the Bank
(69)
David B. Jordan Vice Chairman of the Board of the Corporation and the Bank
(60)
Eric B. Munson Executive Director, University of North Carolina Hospitals
(54)
Miles J. Smith, Jr. Chairman of the Board, Hand Held Products, Inc. (portable data analysis
(69) and storage systems manufacturer)
Jimmy K. Stegall President, Service Oil of Monroe, Inc. (petroleum marketer and real
(66) estate development)
<CAPTION>
TWO-YEAR TERM:
<S> <C>
Timothy B. Burnett President, Bessemer Improvement Company (industrial and commercial real
(56) estate development); Trustee, Alexander Hamilton Insurance Trust
Owen G. Kenan President, Kenan Enterprises, Inc. (commercial real estate holding
(53) company), Kenan Oil Co., Inc. (petroleum products), Kenan
Developments, Inc. (commercial real estate developer); also serves as `
Director, Kenan Transport Co., Inc. (bulk products hauler), Vice
Chairman, Flagler Systems, Inc. (hotel and property management), and
Chairman, Kenan Global Enterprises, LLC (international investments)
Bonnie McElveen-Hunter President and Chief Executive Officer, Pace Communications, Inc.
(46) (publishing company)
George J. Morrow Managing Director, Glaxo Wellcome U.K. Ltd. (pharmaceuticals)
(45)
Ernest C. Roessler Vice Chairman of the Board, President and Chief Executive Officer of the
(55) Corporation and the Bank
H. Allen Tate, Jr.(4) President, Allen Tate Company, Inc. (residential real estate broker)
(65)
<CAPTION>
THREE-YEAR TERM:
<S> <C>
J. Harper Beall, III President, Fairfield Chair Company (furniture manufacturer)
(55)
Edward S. Holmes Partner, Holmes & McLaurin (attorneys)
(67)
Eugene J. McDonald President, Duke Management Company (asset management company affiliated
(64) with Duke University); Executive Vice President, Duke University;
Director, Key Funds, Inc.; and Director, Flag Group of Mutual Funds
Hamilton W. McKay, Jr., M.D. Physician, Carolina Asthma & Allergy Center, P.A.
(67)
James L. Williamson Retired since 1990, previously Partner, KPMG Peat Marwick LLP (certified
(64) public accountants)
Dr. Phail Wynn, Jr. President, Durham Technical Community College
(49)
<CAPTION>
NAME AND AGE DIRECTOR SINCE(1)
<S> <C>
ONE-YEAR TERM:
John M. Barnhardt 1995
(60)
James B. Brame, Jr.(2) 1993
(51)
W. L. Burns, Jr.(3) 1972
(69)
David B. Jordan 1995
(60)
Eric B. Munson 1985
(54)
Miles J. Smith, Jr. 1995
(69)
Jimmy K. Stegall 1995
(66)
TWO-YEAR TERM:
<S> <C>
Timothy B. Burnett 1994
(56)
Owen G. Kenan 1981
(53)
Bonnie McElveen-Hunter 1996
(46)
George J. Morrow 1996
(45)
Ernest C. Roessler 1993
(55)
H. Allen Tate, Jr. 1989
(65)
THREE-YEAR TERM:
<S> <C>
J. Harper Beall, III 1994
(55)
Edward S. Holmes 1973
(67)
Eugene J. McDonald 1985
(64)
Hamilton W. McKay, Jr., M.D. 1990
(67)
James L. Williamson 1995
(64)
Dr. Phail Wynn, Jr. 1992
(49)
</TABLE>
7
<PAGE>
(1) Refers to the year in which a person first was elected a director of the
Corporation or, if prior to the Corporation's organization in 1983, the year
in which such person first was elected a director of the Bank.
(2) During 1996, the Bank purchased office supplies and other products from
Brame Specialty Co., Inc. in an aggregate amount of $599,833.
(3) Mr. Burns retired from his positions as President and Chief Executive
Officer of the Corporation and the Bank effective April 6, 1993. In addition
to his duties as Chairman, Mr. Burns serves as a part-time government
relations, marketing and acquisitions consultant to the Corporation and does
not receive director's fees. For such services he was paid $88,313 in 1996.
Additionally, Mr. Burns was granted a restricted stock award in 1996 of
4,000 shares of the Corporation's Common Stock with restrictions lapsing on
50% of such shares in 1997 and the remainder in 1998.
DIRECTORS' COMPENSATION
Directors who are officers do not receive any additional compensation for
their service as directors. During 1996 each director of the Corporation
received a retainer of $7,500 and an additional retainer of $7,500 if a member
of the Executive Committee. Additionally, directors received a fee of $750 for
each meeting of the Board of Directors attended and $750 for attendance at each
meeting of a committee of the Board of Directors. If the director also served as
chairman of the committee, he received an additional fee of $250 for attendance
at each committee meeting.
[1997 DIRECTORS COMPENSATION TO BE DETERMINED AT 3-4-97 COMPENSATION COMMITTEE
MEETING.]
In order to increase stock ownership of directors in the Corporation, in
1996 the directors were given the option of receiving fees in an amount equal to
120% of the fees to which they were entitled provided they utilized such amount
to purchase shares of the Corporation's Common Stock through the Corporation's
Dividend Reinvestment and Stock Purchase Plan. Alternatively, the fees may be
deferred under a Deferred Compensation Plan that invests solely in the Common
Stock of the Corporation. Total directors' fees payable for 1996 were $332,310,
of which $246,010 was paid to directors and $86,300 was deferred.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors held four regular meetings during 1996. All
incumbent directors attended more than 75% of the total number of meetings of
the Board of Directors and its committees on which they served during 1996
except for Mr. Morrow and Ms. McElveen-Hunter, whose absences were due to
business scheduling conflicts.
The Board of Directors has several standing committees, including an Audit
Committee, a Nominating Committee, and a Compensation Committee. The voting
members of these committees are appointed by the Board of Directors annually
from among its members. Additionally, certain officers of the Corporation and
the Bank are appointed to serve as non-voting, advisory members of each
committee.
The current members of the Audit Committee are Mr. Burnett, who serves as
Chairman, and Messrs. Beall, Brame, Williamson, and Dr. Wynn. Officers currently
serving as non-voting, advisory members are Messrs. Rojas, Parker, J. Scott
Edwards, Executive Vice President of the Corporation and the Bank, and B. W.
Harris, Jr., retired Comptroller of the Bank. The primary functions of the Audit
Committee are to provide additional assurance regarding the integrity of
financial information used by the Board of Directors and distributed to the
public by the Corporation and to oversee and monitor the activities of the
Corporation's internal and external audit processes. The committee met five
times during 1996.
The current members of the Nominating Committee are Mr. Holmes, who serves
as Chairman, Messrs. Burns, Rutledge, Stegall, and Dr. McKay. Messrs. Pylypec
and Roessler currently serve as non-voting, advisory members. The primary
function of the Nominating Committee is to recommend candidates to the Board
of Directors for selection as nominees for election as directors. The
committee has met once since the 1996 Annual Meeting. Any shareholder wishing
to make a nomination for director to be considered at the 1998 Annual Meeting
anticipated to be held during mid-April 1998 must make such nomination in
writing to Mr. Pylypec, Secretary of the Corporation, not less than 60 days
nor more than 90 days prior to such meeting. Such notification must include
the name and address of the shareholder making the
8
<PAGE>
nomination, a representation of the number of shares of the Corporation owned of
record by the shareholder and such shareholder's intention to appear in person
or by proxy at the meeting to nominate the person or persons specified in the
notice. As to each person nominated, the notification must include such person's
name and address, employment history for the past five years, affiliations (if
any) with the Corporation and other corporations, the number of shares of the
Corporation that are owned of record or beneficially by such proposed nominee(s)
and information concerning any transactions in shares of the Corporation or such
other corporation within the prior 60 days. Additionally, information must be
given as to whether such proposed nominee(s) have been convicted in a criminal
proceeding within the past five years and, if so, the details thereof; whether
such person(s) has been a party to any proceeding or subject to any judgment,
decree or final order with respect to violations of federal or state securities
laws within the past five years and the details thereof, if any, and the details
of any contract, arrangement, understanding or relationships with any person
with respect to any securities of the Corporation. Further, the proposed
nominee's written consent to be named as a nominee and to serve as a director if
elected must be provided together with a description of all arrangements or
understandings between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination(s) are
to be made by the shareholder. Any nomination(s) not made within the confines of
the foregoing procedure may be disregarded by the chairman of the meeting.
The Compensation Committee administers the Corporation's compensation
program and has responsibility for matters involving the compensation of
executive officers of the Corporation and the Bank. With respect to salaries,
however, the Compensation Committee only establishes salary ranges for executive
officers while the Executive Committee sets actual salaries within those ranges.
All actions of the Compensation Committee are subject to review by the full
Board of Directors. The membership of the Compensation Committee, which met four
times during 1996, is described below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Mr. Munson, who
serves as Chairman, and Messrs. Barnhardt, Burns, McDonald and Morrow, with
Messrs. Roessler and J. Kent Fawcett, Senior Vice President and Personnel
Director of the Corporation and the Bank, serving as non-voting, advisory
members.
The current members of the Executive Committee are Mr. Roessler, who serves
as Chairman, and Messrs. Burns, Holmes, Jordan, McDonald, Munson and Dr. Wynn,
with Mr. Edwards and Mr. Furr serving as non-voting, advisory members.
COMPENSATION COMMITTEE REPORT
GENERAL. It is the policy of the Compensation Committee to provide a fully
competitive, performance-based compensation program that will enable the
Corporation to attract, motivate, and retain qualified executive officers.
During 1996, the Corporation's executive compensation program provided for (a)
annual compensation consisting of base salaries combined with cash incentive
bonuses based on the Corporation's financial performance, and (b) long-term
compensation consisting of periodic stock option awards combined with incentive
compensation based on the Corporation's financial performance. The Corporation
also provided certain other compensation plans customary for companies of
comparable size. The annual and long-term compensation programs were intended to
be competitive with median levels of incentive compensation paid by the
Corporation's competitors and were developed based on recommendations of
Watson-Wyatt Company ("Watson-Wyatt"), an independent compensation consulting
firm.
The Omnibus Reconciliation Act of 1993 amended Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), to limit the
deductibility of annual compensation in excess of $1,000,000 paid by public
corporations to certain executive officers. As the Corporation presently does
not compensate any officer in an amount approaching $1,000,000 per year, the
Compensation Committee has not adopted a policy with respect to Section 162(m).
The following is a discussion of each element of the compensation program
for 1996 with respect to the Corporation's executive officers, including Mr.
Roessler.
ANNUAL COMPENSATION PROGRAM. The 1996 base salary for Mr. Roessler was set
on an objective basis by the Executive Committee using specific performance
criteria within a range determined by the Compensation Committee to be
competitive with the base salaries paid to chief executive officers of bank
holding companies of comparable asset size. The Compensation Committee obtained
from Watson-Wyatt a report listing the base salaries of the chief executive
officers of approximately 80 unnamed bank holding companies ranging in size from
$500 million to $10 billion in total assets. A
9
<PAGE>
graphic summary of this information was prepared to correlate reported base
salaries and asset sizes. The approved midpoint of the salary range was set
using a regression formula to calculate the base salary of a chief executive
officer whose bank has total assets equal in amount to the Corporation's. The
1996 salary set by the Executive Committee for Mr. Roessler was 92% of the
midpoint.
The 1996 salaries of the other executive officers except Mr. Jordan were
set during February 1996, within ranges approved by the Compensation Committee,
by the Executive Committee based on its evaluation of the performance and levels
of responsibility of each officer and their contribution to the Corporation's
financial performance, measured in terms of its return on assets and return on
equity, for the prior fiscal year. The salary ranges were set by the
Compensation Committee based on its evaluation of the level of demands and
responsibility required by each executive position and by the levels of
compensation paid by financial institutions of comparable size for similar
positions. This comparative analysis was based upon information obtained from
Watson-Wyatt regarding salaries paid to executive officers of bank holding
companies of comparable asset size, expressed in terms of the ratio of such
salaries to the salaries of their respective chief executive officers. The 1996
salary of Mr. Jordan was separately negotiated in connection with the
Corporation's acquisition of Security Capital Bancorp ("Security Capital") in
1995. See "Change in Control and Employment Arrangements."
The cash incentive bonuses paid for 1996 to Mr. Roessler and to each of the
other executive officers were determined under the terms of the Management
Performance Incentive Plan (the "Incentive Plan") based on the Corporation's
1996 financial performance, measured in terms of the Corporation's return on
assets, return on equity, earnings per share, and efficiency ratio. The
Incentive Plan uses a "target bonus" approach to determine the size of each
eligible employee's bonus. A participant's base salary and salary grade as of
the first day of the fiscal year is used to determine such participant's target
bonus. During 1996, individual target bonuses, as a percentage of annual base
salary, ranged from a low of four percent to a high of 45 percent. The overall
bonus fund is the sum of the target bonuses of all participants. Actual bonus
amounts for participants in the Incentive Plan may be higher or lower than their
target bonus amounts and are based upon a comparison of the Corporation's actual
performance to the designated performance measures. The maximum bonus for any
participant generally may not exceed 150% of his or her target bonus.
Additionally, the Corporation's total net income for the fiscal year must exceed
a minimum threshold amount in order for any bonuses to be paid under the
Incentive Plan. Payment of bonuses under the Incentive Plan are made annually
within 75 days of the end of the fiscal year, subject to approval by the
Executive Committee. For the year ended December 31, 1996, the Corporation
exceeded the designated performance measures by a weighted average of 121% and
surpassed the applicable minimum net income threshold. Consequently, the actual
bonuses received by Mr. Roessler and by each of the other executive officers for
1996 were equal to approximately 121% of their respective target bonuses.
Other forms of annual compensation paid to executive officers in 1996
include the Corporation's matching contributions (the "Matching Contributions")
to the account of each executive officer under the 401(k) Plan and the portion
of the Corporation's special discretionary contribution to the 401(k) Plan (the
"Discretionary Contribution") allocated to the account of each executive
officer. The Matching Contributions for Mr. Roessler and the other executive
officers were based on a formula contained in the terms of the 401(k) Plan and
were not related to the Corporation's or the individual officer's performance
for the year. The total amount of the Discretionary Contribution generally was
based upon the Corporation's financial performance for 1996, measured in terms
of earnings per share, net income, return on assets, and return on equity,
although there was no specific formula or other mechanism by which the amount
was determined. The portion of the Discretionary Contribution allocated to the
accounts of Mr. Roessler and the other executive officers was based upon a
formula contained in the terms of the 401(k) Plan.
LONG-TERM COMPENSATION PROGRAM. To enable the Corporation to attract,
retain, and motivate key employees and directors, the Board of Directors adopted
the Long-Term Incentive Plan (the "LTIP"). The LTIP was approved by the
shareholders of the Corporation at their 1994 Annual Meeting and has a ten-year
term. The objective of the LTIP is to provide the Board of Directors with the
means to reward achievement of long-term goals in a manner more flexible than
that provided by the Corporation's previous long-term incentive compensation
arrangements. Under the LTIP, restricted stock, stock options, and performance
units (payable in cash, restricted stock, or unrestricted stock) may
periodically be granted in various combinations to key officers and directors.
The LTIP is administered by the Compensation Committee. Each recipient of an
award under the LTIP must enter into a written agreement with the Corporation
setting forth the restrictions, terms, and conditions of that particular award.
During 1996, Mr. Roessler and each of the other executive officers received
awards under the LTIP in the form of stock options ("Options") and performance
units ("Units"). The Options awarded in 1996 have an exercise price of $50.0625
per share, vest over a three-year period, and have a term of ten years. The
Units awarded in 1996 have a value in
10
<PAGE>
range from $0 to $200 each with a target value of $100 each and will be paid
only if the Corporation meets or exceeds a specified average return on equity
and return on assets over a three-year period ending on December 31, 1998. The
vesting of Units also is subject to the Corporation's achievement of a minimum
level of shareholder return over the three-year performance period. If the
targeted performance goals are met, payment in settlement of earned Units will
be made as soon as practical following the conclusion of the performance period
in cash, shares of restricted Common Stock, or shares of unrestricted Common
Stock. The number of Options and Units awarded to Mr. Roessler and to each of
the other executive officers was based in each case upon a specified percentage
of their current base salary.
COMPENSATION COMMITTEE AT DECEMBER 31, 1996:
ERIC B. MUNSON, CHAIRMAN
JOHN M. BARNHARDT
W. L. BURNS, JR.
EUGENE J. MCDONALD, JR.
GEORGE J. MORROW
ERNEST C. ROESSLER*
J. KENT FAWCETT*
EXECUTIVE COMMITTEE AT
DECEMBER 31, 1996:
ERNEST C. ROESSLER, CHAIRMAN
W. L. BURNS, JR.
EDWARD S. HOLMES
DAVID B. JORDAN
EUGENE J. MCDONALD
ERIC B. MUNSON
DR. PHAIL WYNN, JR.
J. SCOTT EDWARDS*
RICHARD L. FURR*
* Denotes a non-voting, advisory member of the committee.
EXECUTIVE COMPENSATION
The following table shows for 1996, 1995, and 1994, the cash and certain
other compensation paid to or received or deferred by the Chief Executive
Officer and the three other executive officers of the Corporation (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS
ANNUAL SECURITIES PAYOUTS
NAME AND COMPENSATION UNDERLYING LTIP
PRINCIPAL SALARY BONUS OPTIONS/SARS PAYOUTS
POSITION YEAR ($)(1) ($)(2) (#) ($)
<S> <C> <C> <C> <C> <C>
Ernest C. Roessler 1996 417,150 220,523 6,070 63,559
Vice Chairman, President and Chief 1995 347,707 142,500 6,140 --
Executive Officer of the Corporation 1994 283,250 88,550 6,160 60,949
and the Bank
David B. Jordan (4) 1996 237,415 83,672 2,760 --
Vice Chairman of the Corporation 1995 208,995 65,292 -- --
and the Bank 1994 193,836 -- -- --
J. Scott Edwards 1996 253,380 89,298 2,950 62,757
Executive Vice President of the 1995 230,377 80,040 3,470 --
Corporation and the Bank 1994 206,000 54,096 3,580 60,949
Richard L. Furr 1996 257,500 90,750 3,000 62,757
Executive Vice President of the 1995 233,467 81,075 3,520 --
Corporation and the Bank 1994 206,000 54,096 3,580 60,949
<CAPTION>
ALL
NAME AND OTHER
PRINCIPAL COMPENSATION
POSITION ($)(3)
<S> <C>
Ernest C. Roessler 26,046
Vice Chairman, President and Chief 20,012
Executive Officer of the Corporation 16,017
and the Bank
David B. Jordan (4) 26,557
Vice Chairman of the Corporation 23,268
and the Bank 6,430
J. Scott Edwards 15,511
Executive Vice President of the 12,844
Corporation and the Bank 11,318
Richard L. Furr 15,750
Executive Vice President of the 13,001
Corporation and the Bank 11,318
</TABLE>
(1) Consists of salary payable to each Named Executive Officer, including
portions of salary deferred at the election of each officer.
(2) Consists entirely of cash bonuses paid to the Named Executive Officers under
the Incentive Plan. See "Compensation Committee Report -- Annual
Compensation Program."
11
<PAGE>
(3) The amount listed for each Named Executive Officer for 1996 includes (i) the
Bank's matching contributions on behalf of that officer to the 401(k) Plan
and (ii) the portion of the Discretionary Contribution to the 401(k) Plan
which was allocated to the account of the officer. Those separate amounts
for each Named Executive Officer are, respectively: Mr. Roessler -- $16,425
and $9,621; Mr. Jordan -- $8,874 and $5,198; Mr. Edwards -- $9,781 and
$5,730; Mr. Furr -- $9,932 and $5,818. Also includes premiums in the amount
of $12,485 paid by the Corporation with respect to term life insurance for
the benefit of Mr. Jordan.
(4) On May 19, 1995, the Corporation acquired Security Capital and its
wholly-owned subsidiaries. Amounts paid to Mr. Jordan prior to such date
were paid to him by Security Capital in his capacity as Vice Chairman and
Chief Executive Officer of Security Capital.
The following table sets forth information with regard to grants of options
during the fiscal year ended December 31, 1996. All such grants were made under
the LTIP.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
NUMBER POTENTIAL REALIZABLE
OF SECURITIES PERCENT OF TOTAL VALUE AT ASSUMED
UNDERLYING OPTIONS GRANTED ANNUAL RATES OF STOCK
OPTIONS TO EMPLOYEES IN EXERCISE OR PRICE APPRECIATION
GRANTED 1996 BASE PRICE EXPIRATION FOR OPTION TERM
NAME (#)(1) (#) ($/SH.) DATE 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Ernest C. Roessler 6,070 10.1 50.0625 3/11/2006 191,108 484,305
David B. Jordan 2,760 4.6 50.0625 3/11/2006 86,896 220,211
J. Scott Edwards 2,950 4.9 50.0625 3/11/2006 92,876 235,371
Richard L. Furr 3,000 5.0 50.0625 3/11/2006 94,452 239,360
</TABLE>
(1) Each option granted in 1996 will vest in equal annual installments over a
three-year period beginning in 1996.
The following table sets forth information with regard to option exercises
during the fiscal year ended December 31, 1996.
AGGREGATED OPTION EXERCISES IN 1996
AND OPTION VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY
NUMBER OF SECURITIES OPTIONS AT
UNDERLYING DECEMBER
UNEXERCISED OPTIONS AT 31, 1996
SHARES ACQUIRED VALUE DECEMBER 31, 1996 (#) ($) (1)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE
<S> <C> <C> <C> <C> <C>
Ernest C. Roessler 4,262 140,747 1,194 10,164 37,760
David B. Jordan 37,750 1,506,533 -- 2,260 --
J. Scott Edwards 3,542 97,197 -- 5,264 --
Richard L. Furr 2,367 72,076 1,193 5,346 41,457
<CAPTION>
VALUE OF
UNEXERCISABLE
IN-THE-MONEY
OPTIONS AT
DECEMBER
31, 1996
($) (1)
UNEXERCISABLE
NAME
<S> <C>
Ernest C. Roessler 239,871
David B. Jordan 50,198
J. Scott Edwards 126,833
Richard L. Furr 128,755
</TABLE>
(1) Closing price of the Corporation's Common Stock at December 31, 1996 was
$68.25.
12
<PAGE>
The following table sets forth information with regard to Units granted
during 1996. All Units were granted under the LTIP. Each Unit has a designated
value of $100 and will vest only if the Corporation meets or exceeds a targeted
average return on equity and return on assets over a three-year period beginning
January 1, 1996 and ending December 31, 1998.
LONG-TERM INCENTIVE PLAN -- AWARDS IN 1996
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE
OR OTHER PAYOUTS UNDER
PERIOD NON-STOCK PRICE-BASED
NUMBER OF SHARES UNTIL PLANS
UNITS OR OTHER MATURATION OR TARGET MAXIMUM
NAME RIGHTS (#) PAYOUT ($) ($)
<S> <C> <C> <C> <C>
Ernest C. Roessler 1,010 1996-98 101,000 202,000
David B. Jordan 460 1996-98 46,000 92,000
J. Scott Edwards 490 1996-98 49,000 98,000
Richard L. Furr 500 1996-98 50,000 100,000
</TABLE>
PENSION PLAN
The Corporation maintains a tax-qualified, defined benefit pension plan
(the "Pension Plan") in which substantially all full-time employees of the
Corporation and its subsidiaries who have been continuously employed for a
period of 12 months participate. The following table shows the estimated annual
benefit payable under the Pension Plan to participants following retirement at
age 65, which is the "normal retirement age" under the Pension Plan, based on
various specified numbers of years of service with the Corporation and its
subsidiaries and various levels of compensation covered under the Pension Plan.
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
<S> <C> <C> <C> <C> <C> <C>
$100,000....................................... $ 21,825 $ 29,100 $ 36,375 $ 43,650 $ 50,925 $ 58,200
150,000....................................... 33,075 44,100 55,125 66,150 77,175 88,200
200,000....................................... 44,325 59,100 73,875 88,650 103,425 118,200
250,000....................................... 55,575 74,100 92,625 111,150 120,000 120,000
300,000....................................... 66,825 89,100 111,375 120,000 120,000 120,000
350,000....................................... 78,075 104,100 120,000 120,000 120,000 120,000
400,000....................................... 89,325 119,100 120,000 120,000 120,000 120,000
450,000....................................... 100,575 120,000 120,000 120,000 120,000 120,000
500,000....................................... 111,825 120,000 120,000 120,000 120,000 120,000
</TABLE>
Benefits shown in the table are computed as straight life annuities
beginning at age 65 and are not subject to a deduction for Social Security
benefits or any other offset amount. Compensation covered by the Pension Plan
each year is a participant's annual base salary. At his or her retirement, a
participant's annual benefit under the Pension Plan is based on his or her
average base salary for any five consecutive plan years during the last ten
years preceding normal retirement age ("Final Average Compensation"). However,
under tax laws in effect at December 31, 1996, the amount of a participant's
annual compensation taken into account for benefit calculation purposes under
the Pension Plan may not exceed $150,000, and maximum annual benefits payable
under the Pension Plan are $120,000. As of December 31, 1996, the Final Average
Compensation and years of service of each of the Named Executive Officers would
have been: Mr. Roessler -- $283,489 and 8 years; Mr. Jordan -- $196,636 and 37
years; Mr. Edwards -- $200,166 and 28 years; Mr. Furr -- $201,660 and 25 years.
As described above, tax laws place limits on the amount of compensation
that may be taken into account for benefit calculation purposes under the
Pension Plan and in the maximum amount of benefits payable under the Pension
Plan. The Corporation has adopted a supplemental retirement plan which operates
in conjunction with the Pension Plan and under which a retiree will receive
annual benefits in an amount equal to the difference, if any, between his actual
annual benefit under the Pension Plan and the amount he would receive under the
Pension Plan in the absence of the above limitations. At December 31, 1996,
Messrs. Roessler, Jordan, Edwards, and Furr would have qualified for annual
benefits at normal retirement under the supplemental plan in the amounts of
$13,840, $1,208, $18,452, and $17,000, respectively.
13
<PAGE>
CHANGE IN CONTROL AND EMPLOYMENT ARRANGEMENTS
In 1995 the Corporation entered into Change of Control Agreements with
Messrs. Roessler, Edwards and Furr that provide that, if within two years
following a "change of control" of the Corporation the named officer's
employment is terminated for other than "cause" or another terminating event
occurs, then the named officer is entitled to receive an amount equal to 299% of
his compensation and acceleration of vesting of certain employee benefits. The
initial term of each agreement is two years with automatic one year extensions
on each anniversary unless action is taken by the Corporation's Board of
Directors to terminate such automatic extensions. "Change of Control" is defined
as ownership of 25% or more of any class of voting securities of the
Corporation; a merger whereby the Corporation is not the surviving corporation;
or a sale of all or substantially all of the assets of the Corporation. Other
terminating events include non-assumption of the obligations under the
agreements or, if within 24 months of a change of control, the officer's
executive position, duties, responsibilities or reporting responsibilities in
effect at the time are eliminated, diminished, lessened or diluted, the
officer's base salary is reduced, existing fringe benefits are diminished or the
officer is transferred to a job location more than 50 miles from his principal
work location.
In connection with its acquisition of Security Capital in May 1995, the
Corporation assumed all rights and obligations of Security Capital. These rights
and obligations include an Employment Agreement (the "Agreement") with David B.
Jordan providing for Mr. Jordan to serve as Vice Chairman of the Corporation and
the Bank, to be elected to the Board of Directors of both the Corporation and
the Bank and to be recommended for re-election to the Board on an annual basis
until March 15, 2001. On such date, the Agreement terminates. The Agreement
requires a base compensation equal to his total annualized base salary from
Security Capital and its subsidiaries in effect immediately prior to the
acquisition as well as participation in all fringe benefit plans for key
employees of the Corporation presently in effect or that may be made available
in the future. At any time after Mr. Jordan reaches his 60th birthday, he may
elect to reduce his duties and responsibilities with a reduction in his base
salary to $150,000 upon the next anniversary of the date of the Agreement. Upon
making such election, his participation in certain key employee incentive plans
will terminate. The Agreement also provides for the payment of an amount equal
to 299% of Mr. Jordan's then applicable base salary upon certain events
occurring after a change of control of the Corporation defined as: a merger
after which shareholders of the Corporation's voting securities outstanding
immediately prior to such event receive or retain less than 50% of the voting
securities of the survivor by merger; any person acquires more than 20% of the
Corporation; 50% of the Bank's securities is owned by a person or entity other
than the Corporation; or the sale of more than 50% of the assets of either the
Corporation or the Bank.
Under the provisions of the LTIP, if a change in control of the Corporation
occurs (a) all stock options granted thereunder then unexercised and outstanding
will become fully exercisable, (b) all restrictions applicable to all shares of
restricted stock granted thereunder then outstanding will be deemed lapsed and
satisfied, and (c) all performance units granted thereunder will be deemed to
have been fully earned as of the date thereof subject to the limitation that
such stock options, shares of restricted stock, and performance units have been
granted and outstanding for more than six months as of the date of such change
in control. If (a) a participant's employment is terminated by the Corporation
or any of its subsidiary corporations prior to a change in control without cause
at the request of a person who has entered into an agreement with the
Corporation the consummation of which will constitute a change in control or (b)
the participant terminates his or her employment with the Corporation or any of
its subsidiary corporations prior to a change in control of the Corporation and
the circumstance or event which causes such termination occurs at the request of
such person, then a change in control will be deemed to have occurred
immediately prior to such participant's termination of employment. If the making
of any payment or payments under the LTIP would (a) subject the participant to
an excise tax under Section 4999 of the Code, or any like or successor section
thereto or (b) result in the Corporation's loss of a deduction from federal
taxable income for such payments under Section 280G of the Code, or any like or
successor section thereto (either or both, an "Adverse Tax Consequence"), then,
unless otherwise expressly provided in the underlying award agreement, the
payments attributable to the LTIP that are "parachute payments" within the
meaning of Section 280G of the Code will be reduced, as determined by the
Compensation Committee in its sole discretion, but after consultation with the
participant affected, to the extent necessary to avoid any Adverse Tax
Consequence.
14
<PAGE>
PERFORMANCE GRAPH
The following line graph illustrates the cumulative total shareholder
return on the Corporation's Common Stock over the five-year period ended
December 31, 1996 and the cumulative total return over the same period of: (a)
two broad equity market indices, the Dow Jones Industrial Average and the
Standard and Poor's 500 Composite Index, and (b) a published industry index, the
SNL Banks (Southeast) Index. During 1996, the Common Stock was listed on the
NYSE and, consequently, is no longer included in the Nasdaq National Market
System. As a result of this change, management elected to replace the
published industry index used in prior years, the Nasdaq Stock Market Bank
Index, with the SNL Banks (Southeast) Index. The Nasdaq Stock Market Bank
Index is included in the graph below for comparison purposes only. The
graph assumes $100 originally invested on December 31, 1991 and that all
subsequent dividends were reinvested in additional shares.
CCB FINANCIAL CORPORATION
COMPARISON OF CUMULATIVE TOTAL SHAREHOLDER RETURN (1)
YEARS ENDED DECEMBER 31 (2)
(Graphic appears here with the following plot points)
1991 1992 1993 1994 1995 1996
CCB Financial Corporation 100.0 128.7 124.3 134.4 221.5 280.2
SNL Banks (Southeast) Index 100.0 137.7 144.6 144.9 217.4 298.4
Nasdaq Stock Market (Bank Stocks) 100.0 145.6 166.0 165.4 246.8 325.6
Dow Jones Industrial Average 100.0 107.4 125.6 131.9 180.3 232.1
S&P 500 Composite 100.0 107.6 118.4 119.9 164.9 202.6
(1) Assumes $100 invested on December 31, 1991 with all subsequent
dividends reinvested.
(2) Closing price of the Corporation's Common Stock, adjusted where
applicable for the 3/2 stock split effected in the form of a 50% stock
dividend paid October 1, 1992:
December 31, 1991 - $28.67
December 31, 1992 - $35.63
December 31, 1993 - $33.25
December 31, 1994 - $34.75
December 31, 1995 - $55.50
December 31, 1996 - $68.25
15
<PAGE>
TRANSACTIONS WITH MANAGEMENT
The Bank and the Corporation's other financial institution subsidiary have
had, and expect to have in the future, lending transactions in the ordinary
course of business with many of their officers and directors and with associates
of such persons. All loans included in such transactions during 1996 were made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons, and
did not involve more than the normal risk of collectibility or present other
unfavorable features.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors, executive officers, and certain principal shareholders of the
Corporation are required by federal law to file reports with the Securities and
Exchange Commission regarding the amount of and changes in their beneficial
ownership of Common Stock. The 401(k) Plan permits participants to direct the
trustee to invest all or a portion of their plan accounts in funds holding
shares of the Corporation's Common Stock. During 1996, the Corporation
determined that year-end reports filed under Section 16(a) by its executive
officers since 1991 should have reflected routine contributions to these funds
under the 401(k) Plan. Reports reflecting these acquisitions have since been
filed. To the Corporation's knowledge, all other Section 16(a) filing
requirements applicable to the Corporation's officers and directors were
complied with during 1996 except that Hamilton W. McKay, Jr., M.D., a director,
was delinquent in reporting one purchase transaction.
PROPOSAL 4. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The firm of KPMG Peat Marwick LLP, certified public accountants, has been
appointed by the Board of Directors to serve as the Corporation's independent
accountants for 1997, and a proposal to ratify that appointment will be
introduced at the Annual Meeting. KPMG Peat Marwick LLP has served as
independent accountants for the Corporation since its organization as the parent
holding company of the Bank during 1983, and previously had served as
independent accountants for the Bank since 1975. If shareholders do not approve
this proposal, the Board of Directors will reconsider the appointment.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting and available to respond to appropriate questions, and will have
an opportunity to make a statement if they so desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 4.
PROPOSALS OF SHAREHOLDERS
It currently is expected that the 1998 Annual Meeting will be held during
April 1998. Any proposal of a shareholder which is intended to be presented at
the 1998 Annual Meeting must be received by the Corporation at its principal
executive office in Durham, North Carolina, not later than November 17, 1997 in
order to be included in the Corporation's proxy statement and form of
appointment of proxy to be issued in connection with that meeting.
March 13, 1997
16
<PAGE>
EXHIBIT A; AMENDMENT TO BYLAWS
ARTICLE III
"Section 2. NUMBER, TERM AND QUALIFICATIONS. The number of directors
constituting the Board of Directors shall be not less than nine nor more than 23
as may be fixed or changed from time to time, within the minimum and maximum, by
the shareholders or by the Board of Directors. Directors need not be residents
of the State of North Carolina or shareholders of the Corporation. The directors
shall be divided into three classes, as nearly equal in number as may be, to
serve in the first instance for terms of one, two and three years, respectively,
and thereafter the successors in each class of directors shall be elected to
serve for terms of three years. In the event of any increase or decrease in the
number of directors, the additional or eliminated directorships shall be so
classified or chosen that all classes of directors shall remain or become as
nearly equal in number as may be."
EXHIBIT B; AMENDMENT TO RESTATED CHARTER
"16. Any person serving as a director of this Corporation may only be
removed for "cause" by the shareholders represented by a majority of all shares
entitled to vote at an annual or special meeting of this Corporation. The term
"cause" for the purposes of this Section shall mean (i) the criminal prosecution
and conviction during the course of the director's service as a director of this
Corporation of an act of fraud, embezzlement, theft or personal dishonesty
(excepting minor traffic and similar violations in the nature of a misdemeanor
under North Carolina law); (ii) the prosecution and conviction of any criminal
offense involving dishonesty or breach of trust described in the Federal Deposit
Insurance Act, as amended, or any successor federal statute that would
disqualify such director from serving as a director of the Corporation or any of
its wholly owned despository institution subsidiaries or, (iii) the occurrence
of any event resulting in a director being excluded from coverage, or having
coverage limited as to the director when compared to other covered directors,
under any of the corporation's fidelity bonds or insurance policies covering its
directors, officers or employees."
17
<PAGE>
(Map of Interstate 40 showing Raleigh-Durham airport and Sheraton Imperial Hotel
as well as Durham Expressway going away from Interstate 40. Exit 282 on
Page Road is center of map.)
<PAGE>
*********************************APPENDIX********************************
THIS APPOINTMENT OF PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS The undersigned hereby
appoints Leo P. Pylypec, W. Harold Parker, Jr., and
Manuel L. Rojas, and each of them, as attorneys and
proxies, each with full power to appoint his
substitute, and hereby authorizes them to represent
and to vote as directed below all the shares of
common stock of CCB Financial Corporation (the
"Corporation") held of record by the undersigned on
February 28, 1997 at the Annual Meeting of
Shareholders of the Corporation to be held on April
15, 1997 and any adjournments thereof. The
undersigned hereby directs that such shares be
voted as follows:
CCB APPOINTMENT
FINANCIAL OF
CORPORATION PROXY
111 Corcoran Street, Post Office Box 931
Durham, North Carolina 27702
<TABLE>
<S> <C> <C>
1. BYLAW AMENDMENT: [ ] FOR [ ] AGAINST
2. AMENDMENT OF RESTATED CHARTER: [ ] FOR [ ] AGAINST
3. ELECTION OF DIRECTORS: [ ] FOR [ ] WITHHOLD
<S> <C>
1. BYLAW AMENDMENT: [ ] ABSTAIN
2. AMENDMENT OF RESTATED CHARTER: [ ] ABSTAIN
3. ELECTION OF DIRECTORS: [ ] FOR ALL EXCEPT
</TABLE>
NOMINEES: ONE-YEAR TERM: John M. Barnhardt, James B. Brame, Jr., W. L. Burns,
Jr., David B. Jordan, Eric B. Munson, Miles J. Smith, Jr., Jimmy K. Stegall.
TWO-YEAR TERM: Timothy B. Burnett, Owen G. Kenan, Bonnie McElveen-Hunter, George
J. Morrow, Ernest C. Roessler, H. Allen Tate, Jr. THREE-YEAR TERM: J. Harper
Beall, III, Edward S. Holmes, Eugene J. McDonald, Hamilton W. McKay, Jr., M.D.,
James L. Williamson, and Dr. Phail Wynn, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee mark "For
All Except" and write that nominee's name in the space provided below.
<PAGE>
<TABLE>
<S> <C> <C>
4. RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK
LLP AS THE CORPORATION'S INDEPENDENT ACCOUNTANTS FOR
1997: [ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
5. OTHER BUSINESS: On such other matters as may
properly come before the Annual Meeting, the
proxies are authorized to vote the shares
represented by this appointment of proxy in
accordance with their best judgment.
The shares represented by this appointment of proxy will be voted as directed
above. In the absence of any direction, such shares will be voted by the proxies
"FOR" Proposals 1, 2 and 4 above, and "FOR" the election of each of the nominees
for director as listed in Proposal 3 by casting an equal number of votes for
each such nominee. If, at or before the time of the meeting, any nominee listed
in Proposal 3 becomes unavailable for any reason, the proxies are authorized to
vote for a substitute nominee.
Please sign exactly as your name(s) appears on this card. If shares are held by
joint tenants, both should sign. If signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Date: , 1997
Shareholder sign above
Co-holder (if any) sign above
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
