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 ss.240.14a-11(c) or ss.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:
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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.
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<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 21, 1998
NOTICE is hereby given that the Annual Meeting of Shareholders of CCB
Financial Corporation (the "Corporation") will be held as follows:
Place: George Watts Hill Alumni Center,
Stadium Drive at Ridge Road
on the campus of the University of
North Carolina at Chapel Hill,
Chapel Hill, North Carolina
Date: Tuesday, April 21, 1998
Time: 11:00 A.M.
For your convenience, a map with directions to the George Watts Hill
Alumni Center appears on the back outside cover of the accompanying Proxy
Statement.
THE PURPOSES OF THE ANNUAL MEETING ARE:
1. To amend Paragraph 4 of the Amended and Restated Charter of the
Corporation to increase the number of shares of stock which the Corporation has
the authority to issue.
2. To elect seven members of the Board of Directors for terms of three
years, one member for a term of two years and one member for a term of one
year.
3. 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, 1998.
4. 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 27, 1998.
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,
/s/ Ernest C. Roessler
ERNEST C. ROESSLER,
Vice Chairman, President and Chief
Executive Officer
March 18, 1998
<PAGE>
CCB Financial Corporation
111 Corcoran Street
Post Office Box 931
Durham, North Carolina 27702-0931
--------------
Proxy Statement
--------------
Mailing Date: March 18, 1998
Annual Meeting of Shareholders
To Be Held April 21, 1998
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
1998 Annual Meeting of Shareholders of the Corporation and any adjournments
thereof (the "Annual Meeting"). The Annual Meeting will be held on Tuesday,
April 21, 1998, beginning at 11:00 A.M., at the George Watts Hill Alumni
Center, Stadium Drive at Ridge Road, on the campus of the University of North
Carolina at Chapel Hill, Chapel Hill, North Carolina. For your convenience, a
map with directions to the George Watts Hill Alumni Center 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, Durham, North Carolina, and the term "AFB"
refers to American Federal Bank, FSB, Greenville, South Carolina.
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 nine nominees for director named in Proposal 2 and
"FOR" the other proposals described herein. If, at or before the time of the
Annual Meeting, any nominee named in Proposal 2 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 27, 1998, 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 20,789,901 shares were outstanding as of the Record Date. On such date
there were approximately 9,200 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 2, the nine 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 such proposals 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, in this
case, Proposals 2 and 3. Proposal 1, however, is not considered to be a routine
matter 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 Proposal 1 ("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 Proposal 1. 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, 1997.
<TABLE>
<CAPTION>
Amount and Nature Percentage
Name and Address Beneficial Ownership of Class(1)
- -------------------------------- ---------------------- ------------
<S> <C> <C>
Central Carolina Bank and 1,144,798(2) 5.51%
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 20,776,412 shares of the Corporation's Common Stock issued and
outstanding on December 31, 1997.
(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 1,113,772 shares over which the Bank
exercises sole voting power, 31,026 shares over which the Bank has shared
voting power, 626,474 shares over which the Bank has sole investment
power, and 224,927 shares over which the Bank has shared investment power.
2
<PAGE>
Set forth below is information as of December 31, 1997 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, 1997. Current
directors and executive officers as a group owned 3.17% of the shares
outstanding on such date.
<TABLE>
<CAPTION>
Amount and Nature of
Name Beneficial Ownership(1)
- -------------------------------------------- ------------------------
<S> <C>
William L. Abercrombie, Jr. 69,066(2)
John M. Barnhardt 13,054(3)
J. Harper Beall, III 30,877(4)
James B. Brame, Jr. 5,868(5)
Timothy B. Burnett 3,663(6)
W. L. Burns, Jr. 148,566(7)
Blake P. Garrett, Jr. 43,520(8)
Edward S. Holmes 8,701(9)
Bonnie McElveen-Hunter 3,567(10)
David B. Jordan 21,557(11)
C. Dan Joyner 19,376(12)
Owen G. Kenan 6,318(13)
Eugene J. McDonald 7,055(14)
Hamilton W. McKay, Jr., M.D. 14,240(15)
George J. Morrow 1,985(16)
Eric B. Munson 3,788(17)
Ernest C. Roessler 42,538(18)
Dr. David E. Shi 6,825(19)
Miles J. Smith, Jr. 72,842(20)
Jimmy K. Stegall 34,964(21)
H. Allen Tate, Jr. 19,243(22)
James L. Williamson 6,653(23)
Dr. Phail Wynn, Jr. 4,053(24)
J. Scott Edwards 41,211(25)
Richard L. Furr 32,516(26)
All current directors and executive 662,046(27)
officers as a group (25 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 9,510 shares with respect to which Mr. Abercrombie exercises
shared voting and investment power, 40,092 shares which he could purchase
under a presently exercisable option and as to which he is considered to
have sole investment power only and 7,148 shares held under the 401(k)
Plan of AFB as to which he is considered to have sole investment power
only.
(3) Includes 2,500 shares which Mr. Barnhardt could purchase under a presently
exercisable option and as to which he is considered to have sole
investment power only and 1,303 shares held by participants of a
self-directed profit-sharing plan sponsored by a company he controls, and
2,006 shares with respect to which he exercises shared voting and
investment power.
(4) Includes 10,142 shares which Mr. Beall could purchase under a presently
exercisable option and as to which he is considered to have sole
investment power only, and 8,160 shares with respect to which he exercises
shared voting and investment power. Does not include 2,010 shares held by
Mr. Beall's spouse and children and with respect to which he disclaims any
beneficial ownership.
(5) Includes 2,000 shares which Mr. Brame could purchase under a presently
exercisable option and as to which he is considered to have sole
investment power only.
(6) Includes 1,500 shares which Mr. Burnett could purchase under a presently
exercisable option and as to which he is considered to have sole
investment power only.
3
<PAGE>
(7) Includes 39,884 shares with respect to which Mr. Burns exercises shared
voting and investment power, 2,000 shares with respect to which he
exercises sole voting power only, 3,804 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, and 2,500 shares which
he could purchase under a presently exercisable option and as to which he
is considered to have sole investment power only.
(8) Includes 23,807 shares with respect to which Mr. Garrett exercises shared
voting and investment power and 5,698 shares which he could purchase under
a presently exercisable option and as to which he is considered to have
sole investment power only.
(9) Includes 2,500 shares which Mr. Holmes could purchase under a presently
exercisable option and as to which he is considered to have sole
investment power only. Does not include 21,648 shares held by his spouse
and with respect to which he disclaims any beneficial ownership.
(10) Includes 1,000 shares which Ms. McElveen-Hunter could purchase under a
presently exercisable option and as to which she is considered to have
sole investment power only.
(11) Includes 1,340 shares with respect to which Mr. Jordan exercises shared
voting and investment power, 1,547 shares under the 401(k) Plan as to
which he is considered to have sole investment power only, and 920 shares
which he could purchase under a presently exercisable option and as to
which he is considered to have sole investment power only.
(12) Includes 1,144 shares with respect to which Mr. Joyner exercises shared
voting and investment power and 5,698 shares which he could purchase under
a presently exercisable option and as to which he is considered to have
sole investment power only.
(13) Includes 3,530 shares with respect to which Mr. Kenan exercises shared
voting and investment power and 2,500 shares which he could purchase under
a presently exercisable option and as to which he is considered to have
sole investment power only.
(14) Includes 1,902 shares with respect to which Mr. McDonald exercises shared
voting and investment power and 2,500 shares which he could purchase under
a presently exercisable option and as to which he is considered to have
sole investment power only.
(15) Does not include 779 shares held by Dr. McKay's spouse and son and with
respect to which he disclaims any beneficial ownership.
(16) Includes 1,000 shares which Mr. Morrow could purchase under a presently
exercisable option and as to which he is considered to have sole
investment power only.
(17) Includes 2,500 shares which Mr. Munson could purchase under a presently
exercisable option and as to which he is considered to have sole
investment power only.
(18) Includes 3,247 shares with respect to which Mr. Roessler exercises shared
voting and investment power, 11,338 shares which he could purchase under a
presently exercisable option and as to which he is considered to have sole
investment power only, and 7,707 shares held under the 401(k) Plan as to
which he is considered to have sole investment power only.
(19) Includes 4,698 shares which Dr. Shi could purchase under a presently
exercisable option and as to which he is considered to have sole
investment power only.
(20) Includes 7,982 shares with respect to which Mr. Smith exercises shared
voting and investment power and 2,500 shares which he could purchase under
a presently exercisable option and as to which he is considered to have
sole investment power only.
(21) Includes 5,452 shares with respect to which Mr. Stegall exercises shared
voting and investment power and 2,500 shares which he could purchase under
a presently exercisable option and as to which he is considered to have
sole investment power only.
(22) Includes 5,387 shares with respect to which Mr. Tate exercises shared
voting and investment power and 2,500 shares which he could purchase under
a presently exercisable option and as to which he is considered to have
sole investment power only. Does not include a total of 1,650 shares held
by or for Mr. Tate's spouse and children and with respect to which he
disclaims any beneficial ownership.
(23) Includes 2,500 shares which Mr. Williamson could purchase under a
presently exercisable option and as to which he is considered to have sole
investment power only.
4
<PAGE>
(24) Includes 2,500 shares which Dr. Wynn could purchase under a presently
exercisable option and as to which he is considered to have sole
investment power only.
(25) Includes 11,246 shares under the 401(k) Plan as to which Mr. Edwards is
considered to have sole investment power only and 4,553 shares which he
could purchase under a presently exercisable option and as to which he is
considered to have sole investment power only.
(26) Includes 4,180 shares with respect to which Mr. Furr exercises shared
voting and investment power, 5,818 shares which he could purchase under a
presently exercisable option and as to which he is considered to have sole
investment power only, and 5,184 shares under the 401(k) Plan as to which
he is considered to have sole investment power only.
(27) Includes an aggregate of 381,453 shares with respect to which current
directors and executive officers exercise sole voting and investment
power, 120,000 shares with respect to which they have shared voting and
investment power, 2,000 shares with respect to which they have sole voting
power only, 121,957 shares which such persons could purchase under
presently exercisable options and as to which they have sole investment
power only, and 36,636 shares under the 401(k) Plan as to which they have
sole investment power only.
PROPOSAL 1: AMENDMENT OF THE AMENDED AND RESTATED CHARTER PROVISIONS
REGARDING ISSUANCE OF STOCK
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 1.
The Board of Directors has voted to recommend to the shareholders an
amendment to Paragraph 4 of the Corporation's Amended and Restated Charter to
increase by 55,000,000 the number of authorized shares of the Corporation's
capital stock (the "Share Amendment"). The Corporation presently has 55,000,000
shares authorized, with 50,000,000 of such shares classified as Common stock
and the remaining 5,000,000 shares classified as serial preferred stock
("Preferred Stock"). On the Record Date, there were 20,789,901 shares of Common
Stock and no shares of Preferred Stock issued and outstanding. If the Share
Amendment is approved by the shareholders, the Corporation will then have
110,000,000 shares authorized, with 100,000,000 of such shares classified as
Common Stock and the remaining 10,000,000 shares classified as Preferred Stock.
The relative rights and limitations of the Common Stock and Preferred Stock
would remain unchanged under the Share Amendment. Holders of the capital stock
of the Corporation shall not be entitled to preemptive rights with respect to
any shares of the Corporation which may be issued.
The Share Amendment has been recommended by the Board of Directors to
assure that an adequate supply of authorized, unissued shares is available for
future acquisitions and general corporate needs, such as future stock
dividends, stock splits, or issuance under stock-based benefit plans. There are
currently no plans or arrangements relating to the issuance of any of the
additional shares of Common Stock or Preferred Stock proposed to be authorized.
If the Share Amendment is approved by the shareholders, such shares would be
available for issuance without further action by the shareholders, unless
required by the Corporation's Amended and Restated Charter or bylaws or by
applicable law.
The issuance of additional shares of Common Stock may, among other things,
have a dilutive effect on earnings per share and on the equity and voting power
of existing holders of Common Stock. The issuance of additional shares of
Common Stock or shares of Preferred Stock by the Corporation may potentially
have an anti-takeover effect by making it more difficult to obtain shareholder
approval of various actions, such as a merger or removal of management.
The text of the first sentence of Paragraph 4 of the Amended and Restated
Charter, as proposed to be amended, is as follows:
"The total number of shares of capital stock which the corporation has
authority to issue is 110,000,000, of which 100,000,000 shall be common stock,
$5.00 par value, and 10,000,000 shall be serial preferred stock."
In order for Proposal 1 to be approved, the number of votes cast for it
must exceed the number of votes cast against it.
5
<PAGE>
PROPOSAL 2. ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE
NINE NOMINEES NAMED BELOW FOR THE TERMS AS INDICATED.
<TABLE>
<CAPTION>
Principal Occupation
Name and Age and Other Directorships Director Since(1)
- ----------------------------- -------------------------------------------------------------- ------------------
<S> <C> <C>
Three-Year Term:
John M. Barnhardt Chairman and President, Barnhardt 1995
(61) & Walker, Inc. (advertising and public relations)
James B. Brame, Jr. (2) President, Brame Specialty Co., Inc. (paper products, office 1993
(52) supplies and equipment)
David B. Jordan Vice Chairman of the Board of the Corporation and the Bank; 1995
(61) Former Vice Chairman and Chief Executive Officer of
Security Capital Bancorp (acquired by the Corporation in
1995); Director of AFB
C. Dan Joyner President of Prudential/C. Dan Joyner Co., Inc. (real estate 1997 (3)
(60) broker)
Eric B. Munson Executive Director, University of North Carolina Hospitals 1985
(55)
Dr. David E. Shi President, Furman University 1997 (3)
(46)
Jimmy K. Stegall President, Service Oil of Monroe, Inc. (petroleum marketer 1995
(67) and real estate development)
Two-Year Term:
William L. Abercrombie, Jr. Vice Chairman of the Board of the Corporation and the Bank; 1997 (3)
(50) Chairman of the Board, President and Chief Executive
Officer of AFB
One-Year Term:
Blake P. Garrett, Jr. Partner, Garrett and Garrett Construction (commercial real 1997 (3)
(57) estate development); Trustee, Real Estate Fund Investment
Trust
Remaining Directors Not Subject To Election in 1998
Serving a Two-Year Term
Ending in 1999:
Timothy B. Burnett President, Bessemer Improvement Company (industrial and 1994
(57) commercial real estate development); Trustee, Alexander
Hamilton Insurance Trust
Owen G. Kenan President, Kenan Enterprises, Inc. (commercial real estate 1981
(54) holding company), 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, Pace Communications, Inc. (publishing) 1996
(47)
George J. Morrow Managing Director, Glaxo Wellcome U.K. Ltd. (pharmaceu- 1996
(46) ticals)
Ernest C. Roessler Vice Chairman of the Board, President and Chief Executive 1993
(56) Officer of the Corporation and the Bank; Director of AFB
H. Allen Tate, Jr. President, Allen Tate Company, Inc. (residential real estate 1989
(66) broker); Director, Reliance Relocation Services, Inc.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Name and Age and Other Directorships Director Since(1)
- ----------------------------- ------------------------------------------------------------- ------------------
<S> <C> <C>
Serving A Three-Year
Term Ending in 2000:
J. Harper Beall, III President, Fairfield Chair Company (furniture manufacturer) 1994
(56)
Edward S. Holmes Partner, Holmes & McLaurin (attorneys) 1973
(68)
Eugene J. McDonald President, Duke Management Company (asset management 1985
(65) company affiliated 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. President Emeritus and Consultant to Carolina Asthma & 1990
(68) Allergy Center, P.A.
James L. Williamson Retired since 1990, previously Partner, KPMG Peat Marwick 1995
(65) LLP (certified public accountants)
Dr. Phail Wynn, Jr. President, Durham Technical Community College 1992
(50)
Chairman Emeritus:(4)
W.L. Burns, Jr. Former Chairman of the Boards of Directors of the 1972
(70) Corporation and the Bank
</TABLE>
- ---------
(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 1997, the Bank purchased office supplies and other products from
Brame Specialty Co., Inc., in an aggregate amount of $447,257.
(3) Messrs. Abercrombie, Garrett, and Joyner, and Dr. Shi became members of the
Boards of Directors of the Corporation and the Bank on August 1, 1997, by
action of the then existing Boards of Directors of the Corporation and the
Bank, in connection with the Corporation's acquisition of AFB.
(4) Effective upon the election of directors at the 1998 Annual Meeting. As
Chairman Emeritus, Mr. Burns will act in an advisory role to the Boards of
Directors of the Corporation and Bank, but will not exercise any voting
rights. In 1997, in addition to his duties as Chairman of the Boards of
Directors of the Corporation and Bank, Mr. Burns served as a part-time
government relations, marketing and acquisitions consultant to the
Corporation and did not receive director's fees. For such services he was
paid $97,750 in 1997.
Retirement from the Board of Directors/Successor to Chairman of the Board of
Directors
W.L. Burns, Jr., and Miles J. Smith, Jr., will retire from the Boards of
Directors of the Corporation and the Bank after the election of directors at
the 1998 Annual Meeting. Mr. Smith has served as a director of the Corporation
and Bank since 1995. Mr. Burns was first elected as a director of the Bank in
1972, and as a director of the Corporation upon its organization in 1983. Mr.
Burns has served as Chairman of the Boards of Directors of the Corporation and
the Bank since 1993, and upon his retirement, will be named Chairman Emeritus
of the Boards of Directors of the Corporation and the Bank. Mr. Roessler will
succeed Mr. Burns as Chairman of the Boards of Directors of the Corporation and
the Bank.
Directors' Compensation
Directors who are officers do not receive any additional compensation for
their service as directors. During 1997 each director of the Corporation
received a retainer of $10,000 and an additional retainer of $7,500 if a member
of the Executive Committee. Additionally, directors received a fee of $875 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.
In order to increase stock ownership of directors in the Corporation, in
1997, 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 1997
were $449,800, of which $347,600 was paid to directors and $102,150 was
deferred.
7
<PAGE>
Additionally, during 1997, each director, depending on length of service
to the Board of Directors, was granted from 2,000 to 5,000 options to purchase
shares of the Corporation's Common Stock at fair market value on the date of
grant. A total of 69,000 options were granted on April 15, 1997, at an exercise
price of $63.125 with 50% of the options vesting on the date of grant and 50%
on the first anniversary of the date of grant. Additionally, in connection with
the acquisition of AFB, Messrs. Garrett and Joyner and Dr. Shi were granted, in
the aggregate, a total of 10,840 options on August 1, 1997, at an exercise
price of $81.875 with 50% of the options vesting on the date of grant and 50%
on the first anniversary of the date of grant.
Fees for 1998 will be unchanged from 1997 and no further option grants are
contemplated in 1998.
Board of Directors' Meetings and Committees
The Board of Directors held four regular meetings and one special meeting
during 1997. 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 1997 except for Messrs. Hunter, Kenan, and Morrow, 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, Garrett, Williamson, Dr. Wynn and Ms.
McElveen-Hunter. Officers currently serving as non-voting, advisory members are
Messrs. Rojas, Parker, J. Scott Edwards, Executive Vice President of the
Corporation and the Bank, Robert L. Savage, Senior Vice President and Chief
Financial Officer of the Corporation and the Bank, and B. W. Harris, Jr.,
retired Controller 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, including the nomination of the
Corporation's independent accountants. The committee met four times during
1997.
The current members of the Nominating Committee are Mr. Holmes, who serves
as Chairman, Messrs. Burns and Stegall and Dr. Shi 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 1997 Annual Meeting. Any shareholder wishing
to make a nomination for director to be considered at the 1999 Annual Meeting
anticipated to be held during April 1999 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 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) has 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 five times during 1997, is described below.
8
<PAGE>
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation Committee are Mr. Munson, who
serves as Chairman, and Messrs. Barnhardt, Burns, Joyner, 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 1997, 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 made in
March 1997 by the Performance and Compensation Management Consulting Group of
KPMG Peat Marwick LLP, the Corporation's independent accountants.
Recommendations included changes in the methodology used to grant stock
options. The 1997 grants used the Black-Sholes methodology which assigns a
present (intrinsic) value to an option at the date of grant.
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. 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 1997 with respect to the Corporation's executive officers, including Mr.
Roessler.
Annual Compensation Program. The 1997 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 Company ("Watson Wyatt"), an independent compensation
consulting firm, an analysis of the base salaries of the chief executive
officers of approximately 40 unnamed bank holding companies. A 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 1997 salary set by
the Executive Committee for Mr. Roessler was 100% of the midpoint.
The 1997 salaries of the other executive officers, except Mr. Jordan and
Mr. Abercrombie, were set during February 1997, 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 1997 salary of Mr. Jordan was separately negotiated in connection
with the Corporation's acquisition of Security Capital Bancorp ("Security
Capital") in 1995 and the 1997 salary of Mr. Abercrombie was separately
negotiated in connection with the Corporation's acquisition of AFB in 1997. See
"Change in Control and Employment Arrangements."
The cash incentive bonuses paid for 1997 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
1997 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 1997, individual target bonuses, as a percentage of annual base
salary, ranged from a low of 4% to a high of
9
<PAGE>
50%. 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 200% 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, 1997, the Corporation exceeded the designated performance measures
by a weighted average of 132.4% 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 1997 were equal to approximately
132.4% of their respective target bonuses.
Other forms of annual compensation paid to executive officers in 1997
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 1997, 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 1997, 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 1997 have an exercise price
of $63.875 per share, and a term of ten years with 50% of the options vesting
on the date of grant and 50% of the options vesting on the first anniversary of
the date of grant. The Units awarded in 1997 have a value in range from $0 to
$200 each with a target value of $100 each and will be paid only if the
Corporation meets or exceeds a specified average return on equity, return on
assets and total shareholder return as compared to a peer group of comparably
sized banks east of the Mississippi River over a three-year period ending on
December 31, 1999. The vesting of Units also is subject to the Corporation's
achievement of a minimum level of shareholder return over the three-year
performance period. If the targeted performance goals are met, payment in
settlement of earned Units will be made as soon as practical following the
conclusion of the performance period in cash. The number of Options and Units
awarded to Mr. Roessler and to each of the other executive officers was based
in each case upon a specified percentage of their current base salary.
Executive Compensation
The following table shows for 1997, 1996, and 1995, the cash and certain
other compensation paid to or received or deferred by the Chief Executive
Officer and the four other executive officers of the Corporation (the "Named
Executive Officers").
10
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
------------------------------------
Other
Name and Annual
Principal Salary Bonus Compensation
Position Year ($)(1) ($)(2) ($)
- --------------------------------------- ------ --------- --------- ----------------
<S> <C> <C> <C> <C>
Ernest C. Roessler
Vice Chairman, President and Chief 1997 486,160 312,464 --
Executive Officer of the Corporation 1996 417,150 220,523 --
and the Bank 1995 347,707 142,500 --
William L. Abercrombie, Jr. (4)
Vice Chairman of the Corporation 1997 285,666 158,880 121,500(5)
and the Bank and Chairman, 1996 262,167 92,605 --
President and Chief Executive 1995 245,333 84,686 --
Officer of AFB
David B. Jordan (7)
Vice Chairman of the Corporation 1997 251,320 129,222 --
and the Bank 1996 237,415 83,672 --
1995 208,995 65,292 --
J. Scott Edwards
Executive Vice President of the 1997 268,315 137,961 --
Corporation and the Bank 1996 253,380 89,298 --
1995 230,377 80,040 --
Richard L. Furr
Executive Vice President of the 1997 273,980 140,874 --
Corporation and the Bank 1996 257,500 90,750 --
1995 233,467 81,075 --
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Awards
Restricted Securities Payouts All
Name and Stock Underlying LTIP Other
Principal Awards Options/SARs Payouts Compensation
Position ($) (#) ($) ($)(3)
- --------------------------------------- ----------- -------------- --------- ----------------
<S> <C> <C> <C> <C>
Ernest C. Roessler
Vice Chairman, President and Chief -- 17,240 138,000 31,406
Executive Officer of the Corporation -- 6,070 63,559 26,046
and the Bank -- 6,140 -- 20,012
William L. Abercrombie, Jr. (4)
Vice Chairman of the Corporation -- 6,357 285,275(6)
and the Bank and Chairman, -- 668 -- 46,411
President and Chief Executive -- 668 -- 39,463
Officer of AFB
David B. Jordan (7)
Vice Chairman of the Corporation -- 6,680 -- 27,345
and the Bank -- 2,760 -- 26,557
-- -- -- 23,268
J. Scott Edwards
Executive Vice President of the -- 7,140 80,000 15,864
Corporation and the Bank -- 2,950 62,757 15,511
-- 3,470 -- 12,844
Richard L. Furr
Executive Vice President of the -- 7,290 80,000 16,179
Corporation and the Bank -- 3,000 62,757 15,750
-- 3,520 -- 13,001
</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."
(3) The amount listed for each Named Executive Officer for 1997 includes (i)
the Corporation'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 -- $20,776 and $10,630; Mr. Abercrombie -- $6,400 and $0; Mr.
Jordan -- $9,830 and $5,030; Mr. Edwards -- $10,494 and $5,370; Mr. Furr
-- $10,703 and $5,476. Also includes premiums in the amount of $3,875 paid
by the Corporation with respect to whole life insurance for the benefit of
Mr. Abercrombie and premiums in the amount of $12,485 paid by the
Corporation with respect to split-dollar life insurance for the benefit of
Mr. Jordan.
(4) On July, 31, 1997, the Corporation acquired AFB. Amounts paid to Mr.
Abercrombie prior to such date were paid to him by AFB in his capacity as
Chairman, President and Chief Executive Officer of AFB.
(5) Consists entirely of five (5) payments of $24,300 each from the Corporation
to Mr. Abercrombie in connection with the Corporation's acquisition of
AFB. See "Change in Control and Employment Arrangements."
(6) Includes a closing bonus in the amount of $275,000 paid to Mr. Abercrombie
by the Corporation in connection with the Corporation's acquisition of
AFB.
(7) On May 19, 1995, the Corporation acquired Security Capital and its
wholly-owned subsidiaries. Amounts paid to Mr. Jordan prior to such date
were paid to him by Security Capital in his capacity as Vice Chairman and
Chief Executive Officer of Security Capital.
11
<PAGE>
The following table sets forth information with regard to grants of
options during the fiscal year ended December 31, 1997. All such grants were
made under the LTIP.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
Individual Grants
- ------------------------------------------------------------------------------------------------
Potential Realizable
Value
Number at Assumed Annual Rates
of Securities Percent of Total of Stock Price
Underlying Options Granted Appreciation for Option
Options to Employees in Exercise or Term
Granted 1997 Base Price Expiration ----------------------
Name (#) (#) ($/Sh.) Date 5%($) 10%($)
- ----------------------------- --------------- ----------------- ------------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ernest C. Roessler 17,240 8.0% 63.875 3/31/2007 692,542 1,755,037
William L. Abercrombie, Jr. 667(1) -- 62.921 4/23/2007 26,394 66,887
5,690 2.6% 81.875 8/1/2007 292,982 742,475
David B. Jordan 6,680 3.1% 63.875 3/31/2007 268,340 680,026
J. Scott Edwards 7,140 3.3% 63.875 3/31/2007 286,818 726,854
Richard L. Furr 7,290 3.4% 63.875 3/31/2007 292,844 742,124
</TABLE>
- ---------
(1) Granted under plan of AFB acquired by the Corporation on July 31, 1997.
The following table sets forth information with regard to option exercises
during the fiscal year ended December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997
AND OPTION VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
December 31, 1997 (#) December 31, 1997 ($) (1)
Shares Acquired Value ----------------------------- ----------------------------
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------- ----------------- ------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Ernest C. Roessler 2,546 154,011 11,338 14,714 548,207 753,578
William L. Abercrombie, Jr. 2,000 168,778 40,092 2,845 3,311,860 72,903
David B. Jordan -- -- 920 8,520 52,843 397,100
J. Scott Edwards 1,157 68,263 4,553 6,694 212,202 268,721
Richard L. Furr 1,193 41,308 5,818 6,827 299,587 357,025
</TABLE>
- ---------
(1) Closing price of the Corporation's Common Stock at December 31, 1997 was
$107.50.
The following table sets forth information with regard to Units granted
during 1997. All Units were granted under the LTIP. Each Unit has a designated
value of $100 and will vest only if the Corporation meets or exceeds a targeted
average return on equity and return on assets over a three-year period
beginning January 1, 1997 and ending December 31, 1999.
LONG-TERM INCENTIVE PLAN -- AWARDS IN 1997
<TABLE>
<CAPTION>
Estimated Future
Performance Payouts Under
or Other Non-Stock Price-Based
Period Plans
Number of Shares Until --------------------
Units or Other Maturation or Target Maximum
Name Rights (#) Payout ($) ($)
- ------------------------------- ------------------ -------------- --------- ----------
<S> <C> <C> <C> <C>
Ernest C. Roessler 1,420 1997-99 142,000 284,000
William L. Abercrombie, Jr. 680 1997-99 68,000 136,000
David B. Jordan 550 1997-99 55,000 110,000
J. Scott Edwards 590 1997-99 59,000 118,000
Richard L. Furr 600 1997-99 60,000 120,000
</TABLE>
12
<PAGE>
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>
Years of Service
Final -----------------------------------------------------------------
Average Compensation 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
- ---------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$100,000........... $ 18,000 $ 24,000 $ 30,000 $ 36,000 $ 42,000 $ 48,000
150,000............ 27,000 36,000 45,000 54,000 63,000 72,000
200,000............ 36,000 48,000 60,000 72,000 84,000 96,000
250,000............ 45,000 60,000 75,000 90,000 105,000 120,000
300,000............ 54,000 72,000 90,000 108,000 125,000 125,000
350,000............ 63,000 84,000 105,000 125,000 125,000 125,000
400,000............ 72,000 96,000 120,000 125,000 125,000 125,000
450,000............ 81,000 108,000 125,000 125,000 125,000 125,000
500,000............ 90,000 120,000 125,000 125,000 125,000 125,000
550,000............ 99,000 125,000 125,000 125,000 125,000 125,000
600,000............ 108,000 125,000 125,000 125,000 125,000 125,000
</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 and short-term bonus. At his or
her retirement, a participant's annual benefit under the Pension Plan is based
on his or her average covered compensation 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, 1997, the
amount of a participant's annual compensation taken into account for benefit
calculation purposes under the Pension Plan may not exceed $160,000, and
maximum annual benefits payable under the Pension Plan are $125,000. As of
December 31, 1997, the Final Average Compensation and years of service of each
of the Named Executive Officers would have been: Mr. Roessler -- $454,035 and 9
years; Mr. Abercrombie -- $396,105 and 24 years; Mr. Jordan -- $240,779 and 38
years; Mr. Edwards -- $278,807 and 29 years; and Mr. Furr -- $281,804 and 26
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,
1997, Messrs. Roessler, Abercrombie, Jordan, Edwards, and Furr would have
qualified for annual benefits at normal retirement under the supplemental plan
in the amounts of $30,766, $76,260, $2,922, $40,538, and $37,280, respectively.
Change in Control and Employment Arrangements
In 1998 the Corporation and Bank entered into Employment and Amended and
Restated Change in Control Agreements (collectively referred to as "Executive
Employment Agreements"), with Messrs. Roessler ("Roessler Employment
Agreement"), Edwards ("Edwards Employment Agreement"), and Furr ("Furr
Employment Agreement") as senior executive officers of the Corporation and Bank
(individually, Messrs. Roessler, Edwards, and Furr, herein called the
"Executive"). The Roessler Agreement provides that Mr. Roessler will be
employed as the President and Chief Executive Officer of the Corporation and
the Bank. The Board of Directors of the Corporation shall nominate and use its
best efforts to secure the election of Mr. Roessler as a director of the
Corporation during the term of the Roessler Employment Agreement. The Boards of
Directors of the Corporation and Bank shall cause the outstanding shares of the
direct and indirect subsidiaries of the Corporation and Bank to elect Mr.
Roessler as a member of the Boards of Directors of such subsidiaries as will be
useful to Mr. Roessler in the performance of his duties. At all times as Mr.
Roessler serves as a director of the Corporation and Bank, he shall be
appointed to the Executive Committees of those Boards of Directors. The
Roessler Employment Agreement has a five-year term, beginning on its Effective
Date (as defined within the Roessler Employment Agreement), and
13
<PAGE>
will automatically, without further action by the Board of Directors of the
Corporation or Bank, be extended for an additional one year period on each
anniversary of its Effective Date, provided that either party may cause the
term of the Roessler Employment Agreement to cease to extend automatically. Mr.
Roessler will receive cash compensation consisting of a base salary of $521,000
per year and will be entitled to participate in all incentive, savings,
retirement and welfare plans, practices, policies and programs applicable
generally to senior executive employees of the Corporation or Bank.
The Edwards Employment Agreement provides that Mr. Edwards will be
employed as Executive Vice President in charge of the Administrative Group of
each of the Corporation and Bank. In his executive capacities, Mr. Edwards
shall report to the President and Chief Executive Officer of the Corporation
and Bank, as applicable. The Edwards Employment Agreement has a three-year
term, beginning on its Effective Date (as defined within the Edwards Employment
Agreement), and will automatically, without further action by the Board of
Directors of the Corporation or Bank, be extended for an additional one year
period on each anniversary of the Effective Date provided that either party may
cause the term of the Edwards Employment Agreement to cease to extend
automatically. Mr. Edwards will receive cash compensation consisting of a base
salary of $290,000 per year and will be entitled to participate in all
incentive, savings, retirement and welfare plans, practices, policies and
programs applicable generally to senior executive officers of the Corporation
or Bank.
The Furr Employment Agreement provides that Mr. Furr will be employed as
Executive Vice President in charge of the Banking Group of each of the
Corporation and Bank. In his executive capacities, Mr. Furr shall report to the
President and Chief Executive Officer of the Corporation and Bank, as
applicable. The Furr Employment Agreement has a three-year term, beginning on
its Effective Date (as defined within the Furr Employment Agreement), and will
automatically, without further action by the Board of Directors of the
Corporation or Bank, be extended for an additional one year period on each
anniversary of its Effective Date provided that either party may cause the term
of the Furr Employment Agreement to cease to extend automatically. Mr. Furr
will receive cash compensation consisting of a Base Salary of $301,650 per year
and will be entitled to participate in all incentive, savings, retirement and
welfare plans, practices, policies and programs applicable generally to senior
executive officers of the Corporation or Bank.
Each Executive Employment Agreement provides, among other benefits to the
Executive, that the Corporation and Bank shall maintain a split-dollar life
insurance agreement ("Split Dollar Agreement") with the Executive, and together
with the Executive, maintain a related life insurance policy to be owned by the
Executive and collaterally assigned to the Corporation and/or the Bank
("Insurance Policy"), providing coverage on the life of the Executive for the
benefit of the Executive's estate, beneficiaries designated by him, and/or
trusts created by him. Each Executive Employment Agreement also provides that
the Compensation Committee of the Board of Directors of the Corporation shall
annually review the Executive's total compensation and in its sole discretion
may adjust the Executive's Base Salary from year to year, but during the term
of the Executive Employment Agreement ("Employment Period") neither the
Compensation Committee nor the Board of Directors of the Corporation or the
Bank may decrease the Executive's Base Salary below the amount stated within
the Executive Employment Agreement, and periodic increases, once granted, shall
not be subject to revocation.
If during the Employment Period the Corporation or Bank terminates an
Executive Employment Agreement other than for Cause or Disability or the
Executive terminates it for Good Reason (each as defined therein), in any of
the foregoing cases within one year after a Change in Control ("Change in
Control Termination"), the Executive shall be entitled to receive, among other
things and in addition to compensatory amounts owed to him for the current
fiscal year, an amount equal to 2.99 times the total of the Executive's Base
Salary and aggregate cash bonus for the last completed fiscal year. Moreover,
under certain circumstances in connection with a Change in Control Termination,
as provided within the Executive Employment Agreements, the Corporation shall
immediately grant a vested and nonforfeitable award under the Long Term
Incentive Plan ("LTIP") of the same type and the same quantitative amount as
awarded to the Executive under the LTIP for the previous fiscal year, and/or an
award under the Executive Management Incentive Program of the same type and in
the same quantitative amount as awarded in the previous fiscal year. All
options previously granted to each Executive that are unvested as of the date
of the Change in Control Termination shall be deemed vested, fully exercisable
and nonforfeitable as of that date, subject to certain exceptions provided
within the Executive Employment Agreements, and Executive benefits under all
nonqualified benefit plans shall be 100% vested. Following a Change in Control
Termination, the Corporation and the Bank shall maintain and continue to pay,
during the term remaining in the Employment Period from and after the date of
the Change in Control Termination, all premiums due under the Split Dollar
Agreement and the Insurance Policy; provided, however, that upon or at any time
prior to the expiration of the Continuing Period, the Executive may exercise
his right under his Executive Employment Agreement to terminate the Split
Dollar Agreement and the Insurance Policy.
During the Executive's Employment Period and the remainder of his
Employment Period after termination of his Executive Employment Agreement, each
Executive has agreed to refrain, with certain exceptions provided, within the
States
14
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of South Carolina and North Carolina, directly or indirectly in any capacity
from rendering his services or engaging or having a financial interest in, any
business that shall be competitive with any of those business activities in
which the Corporation or its subsidiaries are engaged as of the date of
termination of his employment. Each Executive has also agreed to refrain from
soliciting the provision of services included in the business activities of the
Corporation or its subsidiaries to certain customers or potential customers of
the Corporation or its subsidiaries. The obligations of the Corporation and
Bank under the Executive Employment Agreements are subject to certain
regulatory intervention as outlined within the Executive Employment Agreements.
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 "Jordan 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 Jordan Agreement
terminates. The Jordan 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 Jordan Agreement. Upon making such election, his
participation in certain key employee incentive plans will terminate. The
Jordan 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.
The Corporation acquired AFB in 1997, and in connection with that
acquisition, entered into an employment agreement (the "CCB Abercrombie
Agreement") with Mr. Abercrombie, the Chief Executive Officer of AFB. The CCB
Abercrombie Agreement provides that Mr. Abercrombie will be employed as Vice
Chairman of the Board of Directors of the Corporation and President and Chief
Executive Officer of the Corporation's principal banking subsidiary located in
South Carolina. The Board of Directors shall nominate and use its best efforts
to secure the election of Mr. Abercrombie as a director of the Corporation
during the term of the CCB Abercrombie Agreement and if Mr. Abercrombie is
elected, he shall serve as a member of the Executive Committee of the Board of
Directors. The CCB Abercrombie Agreement has a five-year term, beginning on its
Effective Date (as defined therein), and will automatically, without further
action by the Board of Directors, be extended for an additional one-year period
on each anniversary of the Effective Date, provided that either party may cause
the term of the CCB Abercrombie Agreement to cease to extend automatically. Mr.
Abercrombie will receive cash compensation consisting of a base salary of
$300,000 per year and will be entitled to participate in all incentive,
savings, retirement and welfare plans, practices, policies and programs
applicable generally to senior executive officers of the Corporation on the
same basis as such other senior executive officers, with full credit given to
Mr. Abercrombie's total accumulated years of service at AFB for purposes of
determining vesting and eligibility. The Corporation shall also, if requested
by Mr. Abercrombie, assume and maintain on behalf of Mr. Abercrombie that
certain Supplemental Retirement Benefit Agreement, dated as of December 19,
1994, between Mr. Abercrombie and AFB. In addition to any bonus earned by Mr.
Abercrombie pursuant to the Corporation's regular incentive plans, the
Corporation shall pay to Mr. Abercrombie a monthly bonus for each of the 24
months immediately following the Effective Date in the amount of $24,300.
The CCB Abercrombie Agreement provides that either Mr. Abercrombie or the
Corporation may terminate his employment in consideration of various payments
by the Corporation based upon certain circumstances. In addition, during the
six-month period immediately following the second anniversary of the CCB
Abercrombie Agreement's effect, either Mr. Abercrombie or the Corporation may
terminate Mr. Abercrombie's employment. In such event, Mr. Abercrombie will
continue to receive payments from the Corporation calculated on the basis of
the remaining period of the CCB Abercrombie Agreement ("Employment Period"),
but not to exceed three years. During his Employment Period and the remainder
of his Employment Period after termination of Mr. Abercrombie's employment, Mr.
Abercrombie has agreed to refrain, with certain exceptions provided, within the
States of South Carolina and North Carolina, directly or indirectly, in any
capacity, from rendering his services or engaging or having a financial
interest in, any business that shall be competitive with any of those business
activities in which the Corporation or its subsidiaries are engaged as of the
date of termination of Mr. Abercrombie's employment. Mr. Abercrombie has also
agreed to refrain from soliciting the provision of services included in the
business activities of the Corporation or its subsidiaries to certain customers
or potential customers of the Corporation or its subsidiaries.
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Contemporaneously with the execution of the CCB Abercrombie Agreement,
AFB, as a subsidiary of the Corporation, also entered into an employment
agreement with Mr. Abercrombie ("AFB Abercrombie Agreement"). The AFB
Abercrombie Agreement provides that Mr. Abercrombie will continue to serve as
President and Chief Executive Officer of AFB during the term of the AFB
Abercrombie Agreement. The term of the AFB Abercrombie Agreement will run
concurrently with the term of the CCB Abercrombie Agreement, unless earlier
terminated as provided in the CCB Abercrombie Agreement, or by the Board of
Directors of AFB. Mr. Abercrombie's compensation under the AFB Abercrombie
Agreement is provided by the Corporation in accordance with the terms of the
CCB Abercrombie Agreement.
Finally, 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.
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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, 1997 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. The graph assumes $100 originally invested on
December 31, 1992 and that all subsequent dividends were reinvested in
additional shares.
CCB Financial Corporation
Comparison of Cumulative Total Shareholder Return
Years Ended December 31 (1)
[GRAPHIC OMITTED]
(1) Closing price of the Corporation's Common Stock:
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
December 31, 1997 - $107.50
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Transactions with Management
The Bank, AFB 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 1997
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. During 1997, the Corporation determined that year
end reports filed under Section 16(a) by Messrs. Holmes and McDonald, for
1995-1997, and by Mr. Morrow for 1996 and 1997, should have reflected purchases
of the Corporation's stock by such directors through the Corporation's deferred
directors' fees program. 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 1997 except that Mr. Barnhardt was delinquent in reporting
one purchase transaction.
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 3.
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 1998, 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.
PROPOSALS OF SHAREHOLDERS
It currently is expected that the 1999 Annual Meeting will be held during
April 1999. Any proposal of a shareholder which is intended to be presented at
the 1999 Annual Meeting must be received by the Corporation at its principal
executive office in Durham, North Carolina, not later than November 16, 1998 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 18, 1998
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[MAP -- CAMPUS -- UNC]
<PAGE>
CCB Appointment
FINANCIAL of
CORPORATION Proxy
111 Corcoran Street, Post Office Box 931
Durham, North Carolina 27702-0931
- -------------------------------------------------------------
This Appointment of Proxy is Solicited on Behalf of the Board of Directors The
under signed 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 under signed on February 27, 1998 at the
Annual Meeting of Shareholders of the Corporation to be held on April 21, 1998
and any adjournments thereof. The undersigned hereby directs that such shares be
voted as follows:
<TABLE>
<S> <C> <C> <C>
1. AMENDMENT OF AMENDED AND [ ] FOR [ ] AGAINST [ ] ABSTAIN
RESTATED CHARTER:
2. ELECTION OF DIRECTORS: [ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
</TABLE>
Nominees: Three-Year Term: John M. Barnhardt, James B. Brame, Jr., David B.
Jordan, C. Dan Joyner, Eric B. Munson, David E. Shi, Jimmy K. Stegall. Two-Year
Term: W.L Abercrombie, Jr. One-Year Term: Blake P. Garrett, 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>
3. RATIFICATION OF THE APPOINTMENT OF KPMG
PEAT MARWICK LLP AS THE CORPORATION'S
INDEPENDENT ACCOUNTANTS FOR 1998: [ ] FOR [ ] AGAINST[ ] ABSTAIN
4. 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 and 3 above, and "FOR" the election of each of the
nominees for director as listed in Proposal 2 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 2 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: , 1998
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Shareholder sign above
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Co-holder (if any) sign above
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
<PAGE>
