SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. [ ])
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the Appropriate Box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
ACNB CORPORATION
-------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No filing fee required.
<PAGE>
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-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 O-11 (Set forth the
amount on which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 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>
April 8, 1998
DEAR SHAREHOLDER:
On behalf of the Board of Directors and management of ACNB Corporation, I
call your attention to the Annual Meeting of Shareholders of the Corporation to
be held on Tuesday, May 5, 1998, at 1:00 p.m., prevailing time, at the Main
Office of Adams County National Bank, 675 Old Harrisburg Road, Gettysburg,
Pennsylvania 17325.
The Notice of the Annual Meeting and the Proxy Statement accompanying this
letter address the formal business of the meeting. The formal business schedule
includes: a proposal to fix the number of shareholders to be elected as Class 1
Directors at four (4) and the election of four (4) Class 1 Directors for a three
(3) year term. At the meeting, members of the Corporation's management will
review the Corporation's operations during the past year and be available to
respond to questions.
We strongly encourage you to vote your shares, whether or not you plan to
attend the meeting. It is very important that you sign, date and return the
accompanying Proxy as soon as possible, in the postage-paid envelope. If you do
attend the meeting and wish to vote in person, you must give written notice
thereof to the Secretary of the Corporation so that your Proxy will be
superseded by any ballot that you submit at the meeting.
Sincerely,
/s/ Ronald L. Hankey
----------------------
Ronald L. Hankey
President and
Chief Executive Officer
<PAGE>
ACNB CORPORATION
--------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 5, 1998
--------------------------------
TO THE SHAREHOLDERS OF ACNB CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of ACNB
CORPORATION (the "Corporation") will be held at 1:00 p.m., prevailing time, on
Tuesday, May 5, 1998, at the Main Office of Adams County National Bank, 675 Old
Harrisburg Road, Gettysburg, Pennsylvania 17325, for the following purposes:
1. To fix the number of shareholders to be elected as Class 1 Directors
at four (4);
2. To elect four (4) Class 1 Directors to serve for a three (3) year term
expiring in 2001 and until their successors are elected and qualified;
and
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
In accordance with the Bylaws of the Corporation and action of the Board of
Directors, only those shareholders of record at the close of business on March
2, 1998, will be entitled to notice of and to vote at the Annual Meeting and any
adjournment or postponement thereof.
A copy of the Corporation's Annual Report for the fiscal year ended
December 31, 1997, is enclosed with this Notice.
You are urged to mark, sign, date and promptly return your Proxy in the
enclosed envelope so that your shares may be voted in accordance with your
wishes and in order that the presence of a quorum may be assured. The prompt
return of your signed Proxy, regardless of the number of shares you hold, will
aid the Corporation in reducing the expense of additional proxy solicitation.
The giving of such Proxy does not affect your right to vote in person if you
attend the meeting and give written notice to the Secretary of the Corporation.
By Order of the Board of Directors,
/s/ Ronald L. Hankey
-----------------------------
Ronald L. Hankey
President and
Chief Executive Officer
April 8, 1998
<PAGE>
ACNB CORPORATION
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 5, 1998
GENERAL
Introduction, Date, Time and Place of Annual Meeting
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of ACNB CORPORATION (the "Corporation"), a Pennsylvania
business corporation, of proxies to be voted at the Annual Meeting of
Shareholders of the Corporation to be held on Tuesday, May 5, 1998, at 1:00
p.m., prevailing time, at the Main Office of Adams County National Bank, 675 Old
Harrisburg Road, Gettysburg, Pennsylvania 17325, and at any adjournment or
postponement of the Annual Meeting.
The principal executive office of the Corporation is located at Adams
County National Bank (the "Bank"), 675 Old Harrisburg Road, Gettysburg,
Pennsylvania 17325. The telephone number for the Corporation is (717) 334-3161.
All inquiries should be directed to Ronald L. Hankey, President and Chief
Executive Officer of the Corporation. The Bank is a wholly-owned subsidiary of
the Corporation.
Solicitation and Voting of Proxies
This Proxy Statement and the enclosed form of proxy (the "Proxy") are first
being sent to shareholders of the Corporation on or about April 8, 1998.
Shares represented by proxies on the accompanying Proxy, if properly signed
and returned, will be voted in accordance with the specifications made thereon
by the shareholders. Any Proxy not specifying to the contrary will be voted FOR
the proposal to fix the number of shareholders to be elected as Class 1
Directors at four (4) and FOR the election of the nominees for Class 1 Director
named below. Execution and return of the enclosed Proxy will not affect a
shareholder's right to attend the Annual Meeting and vote in person, after
giving written notice to the Secretary of the Corporation. The cost of
preparing, assembling, printing, mailing and soliciting proxies, and any
additional material which the Corporation may furnish shareholders in connection
with the Annual Meeting, will be borne by the Corporation. In addition to the
use of the mails, certain directors, officers and employees of the Corporation
and the Bank may solicit proxies personally, by telephone, telegraph and
telecopier. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to forward proxy solicitation material to
the beneficial owners of stock held of record by these persons and, upon request
therefor, the Corporation will reimburse them for their reasonable forwarding
expenses.
- 1 -
<PAGE>
Revocability of Proxy
A shareholder who returns a Proxy may revoke the Proxy at any time before
it is voted only: (1) by giving written notice of revocation to John W.
Krichten, Secretary of ACNB Corporation, at 675 Old Harrisburg Road, Gettysburg,
Pennsylvania 17325; (2) by executing a later-dated proxy and giving written
notice thereof to the Secretary of the Corporation; or (3) by voting in person
after giving written notice to the Secretary of the Corporation.
Voting Securities, Record Date and Quorum
At the close of business on March 2, 1998, the Corporation had issued and
outstanding 5,253,278 shares of common stock, par value $2.50 per share, the
only authorized class of stock (the "Common Stock").
Only holders of Common Stock of record at the close of business on March 2,
1998, will be entitled to notice of and to vote at the Annual Meeting.
Cumulative voting rights do not exist with respect to the election of directors.
On all matters to come before the Annual Meeting, each share of Common Stock is
entitled to one vote.
Under Pennsylvania law and the Bylaws of the Corporation, the presence of a
quorum is required for each matter to be acted upon at the Annual Meeting.
Pursuant to Section 1756 of the Pennsylvania Business Corporation Law of 1988,
as amended, the presence in person or by proxy of shareholders entitled to cast
at least a majority of the votes that all shareholders are entitled to cast
constitutes a quorum for the transaction of business at the Annual Meeting.
Votes withheld and abstentions will be counted in determining the presence of a
quorum for a particular matter. Broker non-votes will not be counted in
determining the presence of a quorum for the particular matter as to which the
broker withheld authority.
Assuming the presence of a quorum, the affirmative vote of a majority of
all votes cast by shareholders on the matter is required for the approval of the
proposal to fix the number of shareholders to be elected as Class 1 Directors at
four (4). Abstentions and broker non-votes are not votes cast and, therefore, do
not count either for or against the proposal. Abstentions and broker non-votes,
however, have the practical effect of reducing the number of affirmative votes
required to achieve a majority for such matter by reducing the total number of
shares voted for which the required majority is calculated.
Assuming the presence of a quorum, the four (4) nominees for director
receiving the highest number of votes cast by shareholders entitled to vote for
the election of directors shall be elected as Class 1 Directors. Votes withheld
from a nominee and broker non-votes will not be cast for such nominee.
- 2 -
<PAGE>
PRINCIPAL BENEFICIAL OWNERS OF THE CORPORATION'S STOCK
Principal Owners
As of March 2, 1998, there are no persons who own of record or who are
known by the Board of Directors and management of the Corporation to be the
beneficial owner of more than 5 percent of the Corporation's outstanding Common
Stock.
Beneficial Ownership by Officers, Directors and Nominees
The following table sets forth as of March 2, 1998, and from information
furnished by the respective individuals, the amount and percentage of the Common
Stock beneficially owned by each director, each nominee and all principal
officers, directors and nominees of the Corporation as a group. Unless otherwise
noted, shares are held individually and the "Percent of Class" is less than 1%
of the outstanding Common Stock.
<TABLE>
<CAPTION>
Shares Percent of Outstanding
Beneficially Common Stock
Name and Address Owned (1) Beneficially Owned
- ---------------- ----- ------------------
Class 1 Directors
(to serve until 1998) and
Nominees for Class 1 Director
(to serve until 2001)
- ---------------------
<S> <C> <C>
Philip P. Asper 5,234 (2) --
D. Richard Guise 5,336 (3) --
Ronald L. Hankey 19,150 (4) --
Marian B. Schultz 2,050 (5) --
Class 3 Directors
(to serve until 1999)
- ---------------------
Guy F. Donaldson 2,890 --
Frank Elsner, Jr. 11,318 (2) --
Philip M. Jones 89,974 (6) 1.71%
William B. Lower 43,528 (7) --
Thomas A. Ritter 3,000 (8) --
Ralph S. Sandoe 9,020 (9) --
L. Robert Snyder 5,958 (10) --
Class 2 Directors
(to serve until 2000)
- ---------------------
Richard L. Galusha 8,210 --
Wayne E. Lau 4,312 (2) --
Paul G. Pitzer 7,500 (2) --
Jennifer L. Weaver 600 --
- ------------------
<FN>
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in the
General Rules and Regulations of the Securities and Exchange Commission and
may include securities owned by or for the individual's spouse and minor
children and any other relative who has the same home, as well as
securities to which the individual has or shares voting or investment power
or has the right to acquire beneficial ownership within 60 days after March
2, 1998. Beneficial ownership may be disclaimed as to certain of the
securities.
(2) Shares held jointly with spouse.
(3) Includes 1,184 shares held jointly with Mr. Guise's spouse and 540 shares
held by his spouse.
(4) Includes 12,922 shares held jointly with Mr. Hankey's spouse.
(5) Includes 700 shares held jointly with Mrs. Schultz' spouse and 1,350 shares
held jointly by her spouse and his mother.
(6) Includes 5,218 shares held by Mr. Jones' spouse and 77,412 shares held by
Times and News Publishing Company of which Mr. Jones and his spouse own
56.74 percent.
(7) Includes 42,456 shares held by William B. Lower, Trustee of William B.
Lower, Sr. Revocable Trust.
(8) Includes 1,610 shares held by Mr. Ritter's spouse.
(9) Includes 8,220 shares held jointly with Mr. Sandoe's spouse.
(10) Includes 276 shares held jointly with Mr. Snyder's spouse.
</FN>
</TABLE>
ELECTION OF DIRECTORS
The Articles of Incorporation of the Corporation provide that the Board of
Directors shall consist of not less than five (5) nor more than twenty-five (25)
shareholders, the exact number to be fixed and determined from time to time by
resolution of a majority of the shareholders at any annual or special meeting
thereof. The Bylaws of the Corporation provide that each Director of the
Corporation must be a shareholder of the Corporation and, during the full term
of his or her directorship, shall own a minimum of One Thousand Dollars
($1,000.00) par value of stock of the Corporation.
The Articles of Incorporation of the Corporation also provide that the
directors shall be divided into three classes as nearly equal in number as
possible. As of the date of this Proxy Statement, Class 1 consists of four (4)
Directors elected for a three-year term expiring in 1998; Class 2 consists of
four (4) Directors elected for a three-year term expiring in 2000, and Class 3
consists of seven (7) Directors elected for a three-year term expiring in 1999.
A proposal will be offered at the Annual Meeting of Shareholders to fix the
number of shareholders to be elected as Class 1 Directors at four (4) and a
proposal for the election of nominees for Class 1 Directors of the Corporation
to serve for a three-year term expiring in 2001. The affirmative vote of a
majority of the shareholders represented in person or by proxy at the annual
meeting is required to approve each of these proposals.
- 3 -
<PAGE>
Unless otherwise instructed, the Proxyholders will vote the Proxies
received by them for the proposal to fix the number of shareholders to be
elected as Class 1 Directors at four (4) and for the election of the four (4)
nominees for Class 1 Director named below. If any nominee should be unavailable
to serve as a Director for any reason, Proxies will be voted in favor of a
substitute nominee as the Board of Directors of the Corporation shall determine.
The Board of Directors has no reason to believe that the nominees named will be
unable to serve, if elected. Any vacancy occurring on the Board of Directors of
the Corporation for any reason may be filled by a majority of the directors then
in office until the expiration of the term of the vacancy.
There is no cumulative voting for the election of directors. Each share of
Common Stock is entitled to cast only one vote for each nominee. For example, if
a shareholder owns ten shares of Common Stock, he or she may cast up to ten
votes for each of the directors in the class to be elected.
INFORMATION AS TO NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The following table contains certain information, as of March 2, 1998, with
respect to the executive officers, current directors and nominees for director.
<TABLE>
<CAPTION>
Principal Occupation for
Age as of Past Five Years and
March 2, Position Held with
Name 1998 Corporation
- ---- ---- -----------
Class 1 Directors
(to serve until 1998) and
Nominees For Class 1 Director
(to serve until 2001)
- ---------------------
<S> <C> <C>
Philip P. Asper (1)(2)(4) 49 Building Contractor
D. Richard Guise (1)(3)(4) 64 President, Adams County
Motors Corporation,
automobile dealer
Ronald L. Hankey (5) 57 President and Chief
Executive Officer of the
Corporation and Bank
Marian B. Schultz (1)(3)(4) 48 Assistant Dean -
Division of Undeclared
Majors - Shippensburg
University
- 4 -
<PAGE>
Current Class 3 Directors
(to serve until 1999)
Guy F. Donaldson(3)(4) 66 Fruit Grower
Frank Elsner, Jr. (1)(3)(4) 70 Chairman, Elsner
Engineering Works, Inc.,
designer and manufacturer of
special machinery
Philip M. Jones (3)(4) 80 CEO, Times and News
Publishing Company
William B. Lower (1)(2)(4) 68 President, Boyer
Nurseries & Orchards, Inc.
Thomas A. Ritter 46 Insurance Agent
Ralph S. Sandoe (3)(4) 70 Fruit Broker
L. Robert Snyder (3)(4) 73 Chairman of the Board
and President,
Littlestown Hardware &
Foundry Co., Inc.
Class 2 Directors
(to serve until 2000)
Richard L. Galusha(1)(2) 76 Realtor
Wayne E. Lau (3)(4) 62 Sales Representative,
Destinations, Travel Agency
Paul G. Pitzer (1)(3) 79 Fruit Grower
Jennifer L. Weaver (1)(2) 50 Director of Gettysburg
Center of Harrisburg
Area Community College
<CAPTION>
Director Since
Corporation/
Name Bank
- ---- ----
Class 1 Directors
(to serve until 1998) and
Nominees For Class 1 Director
(to serve until 2001)
- ---------------------
<S> <C>
Philip P. Asper (1)(2)(4) 1988/1988
D. Richard Guise (1)(3)(4) 1988/1988
Ronald L. Hankey (5) 1982/1975
Marian B. Schultz (1)(3)(4) 1992/1992
Current Class 3 Directors
(to serve until 1999)
Guy F. Donaldson(3)(4) 1982/1981
Frank Elsner, Jr. (1)(3)(4) 1982/1974
Philip M. Jones (3)(4) 1982/1979
William B. Lower (1)(2)(4) 1982/1974
Thomas A. Ritter 1997/1997
Ralph S. Sandoe (3)(4) 1987/1982
L. Robert Snyder (3)(4) 1982/1979
Class 2 Directors
(to serve until 2000)
Richard L. Galusha(1)(2) 1987/1962
Wayne E. Lau (3)(4) 1987/1987
Paul G. Pitzer (1)(3) 1992/1967
Jennifer L. Weaver (1)(2) 1992/1992
<FN>
(1) Member of the Executive Committee. This committee also performs the
functions of a compensation committee. The Committee held nine (9)
meetings in 1997.
- 5 -
<PAGE>
(2) Member of the Audit Committee. The functions of this committee include:
periodic meetings with the Bank's Internal Auditors; periodic reviews
of the procedures of the Bank's Internal Auditing Division and the
information obtained by that Division; reviewing the results of the
audit by the independent certified public accountants; and recommending
the engagement and continuation of the certified public accountants for
the Corporation and the Bank. The Committee held four (4) meetings in
1997.
(3) Member of the Trust Committee. This Committee reviews the policies and
procedures of the Trust Department and reviews the individual accounts
held within the Trust Department. The Committee held eleven (11)
meetings in 1997.
(4) Member of the Loan Committee. This Committee meets between regular
Board of Directors meeting dates to act on loan matters. This Committee
met eleven (11) times in 1997.
(5) Mr. Ronald L. Hankey is an ex-officio Member of all the committees,
except the Audit Committee which membership consists solely of outside
directors.
</FN>
</TABLE>
During 1997, the Corporation's and the Bank's Board of Directors each held
twelve (12) meetings. Each of the Directors attended at least 75 percent of the
combined total number of meetings of the Corporation's and of the Bank's Boards
of Directors and the committees of which he or she is a member, with the
exception of Messrs. Donaldson, Elsner, Lower and Snyder.
The Board of Directors of the Corporation has at present no standing
committees. The Corporation does not have a compensation or a nominating
committee; however, the Bank has an Executive Committee, which functions as a
Compensation Committee.
A shareholder who desires to propose an individual for consideration by the
Board of Directors as a nominee for director should submit a proposal in writing
to the Secretary of the Corporation in accordance with Article II, Section 202
of the Corporation's Bylaws. Any shareholder who intends to nominate any
candidate for election to the Board of Directors must notify the Secretary of
the Corporation in writing not less than sixty (60) days prior to the
anniversary date of the immediately preceding annual meeting of shareholders of
the Corporation.
EXECUTIVE COMPENSATION
Shown below is information concerning the annual compensation for services
in all capacities to the Corporation for the fiscal years ended December 31,
1997, 1996 and 1995 of those persons who were, at December 31, 1997, (i) Chief
Executive Officer, and (ii) the other four most highly compensated executive
officers of the Corporation to the extent such persons' total annual salary and
bonus exceeded $100,000.
- 6 -
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
(a) (b) (c) (d) (e)
Other
Annual
Compen-
Name and Principal Salary Bonus sation
Position Year ($) ($) $
-------- ---- --- --- -
<S> <C> <C> <C> <C>
Ronald L. Hankey 1997 180,000 1,800 0
President and Chief 1996 167,698 1,677 0
Executive Officer of 1995 160,840(1) 3,105 0
the Corporation and
the Bank
<CAPTION>
Long-Term Compensation
Awards Payouts
(f) (g) (h) (i)
Securities
Restricted Underlying All other
Stock Options/ LTIP Compen-
Name and Principal Award(s) SARs Payouts sation
Position ($) (#) ($) ($)(2)
-------- --- --- --- ------
<S> <C> <C> <C> <C>
Ronald L. Hankey 0 0 0 54,879
President and Chief 0 0 0 6,285
Executive Officer of 0 0 0 3,291
the Corporation and
the Bank
<FN>
(1) Includes directors fees of $5,590 paid in 1995. Mr. Hankey did not receive
directors fees in 1996 or 1997.
(2) Includes amount contributed by Bank to 401(k) Plan of $6,315, $6,285 and
$3,291 in 1997, 1996 and 1995, respectively. Includes $48,564 payment
pursuant to the terms of Mr. Hankey's Executive Retirement Employment
Agreement.
</FN>
</TABLE>
Employment Contract
Effective January 1, 1998, the Corporation, the Bank and Mr. Ronald L.
Hankey, President and Chief Executive Officer of each of the Corporation and the
Bank, and a member of the Board of Directors of each of the Corporation and the
Bank, entered into an employment agreement for a term of three (3) years, which
term renews automatically for an additional one year period unless one party
provides the other party with written notice of non-renewal. The agreement
specifies Mr. Hankey's position and duties, compensation and benefits, and
indemnification and termination provisions. The agreement also contains a
non-competition provision, a confidentiality provision and a change-in-control
provision.
Under the terms of his employment agreement, Mr. Hankey serves as the
President and Chief Executive Officer of the Corporation and of the Bank and as
a member of the Boards of Directors of the Corporation and of the Bank. The
employment agreement provides Mr. Hankey with an annual direct salary of
$189,000 in 1998. This salary may be increased in subsequent years as the Board
of Directors deems appropriate. In addition, the Boards of Directors of the
Corporation and the Bank have discretion to pay a periodic bonus to Mr. Hankey.
Mr. Hankey is not entitled to receive director's fees or other compensation for
serving on the Corporation's and the Bank's Boards of Directors or the
committees thereof. Mr. Hankey is also entitled to receive the employee benefits
made available by the Bank to its employees.
The agreement with Mr. Hankey also provides that if his employment is
terminated by the Corporation or the Bank, due to death, disability or for cause
(as defined therein), then he is entitled to the full annual direct salary
through the date of termination. If Mr. Hankey's employment is terminated by the
Corporation or the Bank other than pursuant to death, disability or for cause
(as
- 7 -
<PAGE>
defined therein), or if Mr. Hankey terminates his employment for good reason (as
defined therein), then he is entitled to his full annual direct salary from the
date of termination through the last day of the term of the agreement. If Mr.
Hankey's employment is terminated as a result of a change in control (as defined
therein), then he is entitled to his then current direct annual salary (as
defined therein) through the last date of the term of the agreement and will
continue to participate in all employee benefit plans and programs in which he
was previously entitled to participate.
Retirement Plan
The employees of the Bank are covered under the Group Pension Plan for
Employees of Adams County National Bank (the "Plan"). The Plan, as amended from
time to time, is a defined benefit pension plan under the Employee Retirement
Income Security Act of 1974. The most recent amendment is effective as of
November 1, 1989. The Plan is administered by Adams County National Bank as the
Plan Administrator.
Amounts are set aside each year to fund the Plan on the basis of actuarial
calculations. The amount of contribution to a defined pension plan on behalf of
a specific employee cannot be separately or individually calculated. The total
pension expense for the Plan for 1997 was $566,343. The contribution made by the
Bank to the Plan in 1997 was $379,011. This contribution was sufficient to meet
the legal minimum funding requirements.
Each employee of the Bank who attains the age of 20 years and 6 months and
who completes six months of eligible service, whichever is later, becomes
eligible to participate in the Plan on the following anniversary of the Plan.
The Plan generally provides for a prospective benefit at the age of 65 years for
the employee's remaining lifetime with payments certain for five years,
calculated as follows: 1 percent of final average compensation below the
applicable Social Security Covered Compensation, and 1.3 percent of such
earnings above the Covered Compensation, the total being multiplied by years of
credited service up to a maximum of 45 years of credited service. The employee
benefit accrued as of October 31, 1989, shall be maintained as a minimum
benefit. If an employee has earned 30 or more years of credited service, he is
eligible to retire at age 62 with no reduction applied to his benefit.
The following table shows for different final average compensation and for
different years of credited service, the annual benefits currently payable upon
retirement at age 65 by a participating employee:
<TABLE>
<CAPTION>
Annual Retirement Income (1)
------------------------
Final
Average Years of Service
Compensation 15 25 35 45 or more
- ------------ -- -- -- ----------
<S> <C> <C> <C> <C>
$ 50,000 $ 8,796 $ 14,661 $ 20,525 $ 26,389
75,000 13,671 22,786 32,900 41,014
100,000 18,546 30,911 43,275 55,639
125,000 23,421 39,036 54,650 70,264
150,000 28,296 47,161 66,025 84,889
175,000 33,171 55,286 77,400 99,514
200,000 38,046 63,411 88,775 112,221
- 8 -
<PAGE>
<FN>
(1) Assumes normal retirement date (age 65) occurs in 1997. Actual benefits may
be slightly higher on account of benefits earned under the Plan prior to
recent amendment. Later retirement dates produce smaller retirement
benefits as Social Security Covered Compensation increases.
</FN>
</TABLE>
For 1997, the covered compensation, as reported above in the Summary
Compensation Table, for Mr. Hankey, President and Chief Executive Officer, is
$150,000; the covered compensation includes salary only. As of December 31,
1997, Mr. Hankey had forty (40) years of service credited under the Plan.
401(K) Plan
The Bank maintains a defined contribution - profit sharing 401(K) Plan
effective on January 31, 1993 (the "Plan"). The Plan Sponsor and Plan
Administrator is Adams County National Bank. Ronald L. Hankey, President and
Chief Executive Officer of the Corporation and the Bank, and John W. Krichten,
Secretary and Treasurer of the Corporation and Senior Vice President, Cashier
and Chief Financial Officer of the Bank, are the Plan Trustees. The Plan is
subject to certain laws and regulations pursuant to the Internal Revenue Code
and participants are entitled to certain rights and protection under the
Employee Retirement Income Security Act of 1974.
To be eligible to become a participant in the Plan, an employee is required
to work six months and attain the age of 20 1/2. An eligible employee may elect
to contribute certain portions of salary and wages (other than bonuses), or
other direct remuneration to the Plan. Generally, eligible employees may not
contribute more than 10 percent of such compensation. The Bank matches a certain
percentage of the employee contribution. In 1997, the Bank's contribution
equaled 100 percent of the employee's contribution up to a maximum of 4 percent
of annual salary. The Bank's contributions to the Plan for each participant vest
in six (6) years. The employee's contributions to the Plan vest immediately.
Executive Retirement Income Agreements. The Bank entered into retirement
income agreements with Mr. Hankey and certain officers of the Bank to provide
supplemental retirement income benefits to such officers when they reach their
normal retirement date. The benefits are payable in one hundred eighty equal
monthly installments. Benefits are also payable upon disability, early
retirement, termination of service or death. Benefit amounts will be determined
by each officer's years of service and compensation at retirement age. Benefits
accrue annually, but no vesting occurs until the individual completes ten years
of service with the Bank. Estimated liability under the agreements is accrued as
earned by the employee. The Bank is owner and beneficiary of life insurance
policies on each officer, which have an aggregate cash value of approximately
$1,841,482 at December 31, 1997. The Bank purchased these policies to fund the
retirement income agreements entered into with these individuals. Further
information with respect to these agreements is set forth in the Notes to
Financial Statements contained in the Bank's Annual Report to Shareholders which
is enclosed with this Proxy Statement.
- 9 -
<PAGE>
Compensation of Directors
Each director of the Bank receives an annual retainer of $2,850, $265 per
monthly meeting attended, $80 per hour (with a minimum payment of $80) for each
committee meeting attended. In addition, directors receive seminar fees of $250
per half-day seminar and $400 for a full-day seminar, plus expenses, if
applicable.
In the aggregate, the Board of Directors of the Bank received $127,495 for
all Board of Directors' meetings and committee meetings attended in 1997. This
amount includes all Directors fees paid to all individuals who served as
Directors in 1997. During 1997, the Board of Directors of the Corporation held
twelve (12) meetings. Directors received no remuneration for attendance at these
meetings of the Board of Directors of the Corporation.
Compensation Committee Interlocks and Insider Participation
in Compensation Decisions
Ronald L. Hankey, President and Chief Executive Officer, is an ex-officio
member of the Executive Committee which also performs the functions of a
compensation committee. Mr. Hankey makes recommendations to the Executive
Committee regarding merit raise increases for all employees based on a merit
appraisal in connection with recommendations provided by an outside consultant.
A merit review of Mr. Hankey, President and Chief Executive Officer of the
Corporation and the Bank, is conducted by the Executive Committee. Mr. Hankey
does not participate in conducting his review. The merit review is submitted to
the entire Board of Directors to be voted upon.
Board Compensation Committee Report on Executive Compensation
The Board of Directors of the Corporation is responsible for the governance
of the Corporation and its wholly-owned subsidiary, Adams County National Bank
(the "Bank"). In fulfilling its fiduciary duties, the Board of Directors acts in
the best interests of the Corporation's shareholders, customers and the
communities served by the Corporation and the Bank. To accomplish the strategic
goals and objectives of the Corporation, the Board of Directors engages
competent persons who undertake to accomplish these objectives with integrity
and in a cost-effective manner. The compensation of these individuals is part of
the Board of Directors' fulfillment of its duties to accomplish the
Corporation's strategic mission. The Bank provides compensation to the employees
of the Bank. Corporation employees receive no compensation.
The fundamental philosophy of the Bank's compensation program is to offer
competitive compensation opportunities for all employees based on the
individual's contribution and personal performance. The compensation program is
administered by an Executive Committee comprised of nine (9) directors who are
listed below. The objectives of the Committee are to establish a fair
compensation policy to govern executive officers' base salaries and incentive
plans to attract and motivate competent and dedicated managers whose efforts
will enhance the products and services of the Bank, the results of which will be
improved profitability, increased dividends to the Corporation's shareholders
and subsequent appreciation in the market value of our shares.
- 10 -
<PAGE>
The compensation of the Bank's top executives is reviewed and approved
annually by the Board of Directors. The top executives whose compensation is
determined by the Committee include the chief executive officer and eight other
executive officers. The Committee utilizes a Regional Financial Industry Salary
Survey which covers financial institutions in the Pennsylvania, Maryland,
Washington, D.C., and Virginia marketplace. The referenced survey includes more
institutions than are listed on the peer group performance chart.
The Board of Directors does not deem Section 162(m) of the Internal Revenue
Code (the "IRC") to be applicable to the Corporation at this time. The Board of
Directors intends to monitor the future application of Section 162(m) of the IRC
to the compensation paid to its executive officers and in the event that this
section becomes applicable, it is the intent of the Board of Directors to amend
the Corporation's and the Bank's compensation plans to preserve the
deductibility of the compensation payable under such plans.
Chief Executive Officer Compensation
The Board of Directors determined that the Chief Executive Officer's 1997
base salary of $180,000, approximately a 4.25 percent increase in base salary,
combined with a $1,800 bonus, is appropriate in light of the 1997 Corporation
performance accomplishments. There is no direct correlation between the Chief
Executive Officer's compensation, the Chief Executive Officer's increase in
compensation and the Corporation's 1997 performance. The Chief Executive
Officer's compensation and the increase in the Chief Executive Officer's base
salary are based on the Committee's subjective determination after review of all
information.
Executive Officers
The Board of Directors established that the compensation of the Bank's
executive officers increased by 4.25 percent in 1997. Compensation increases
were determined by the Committee based on its subjective analysis after review
of all information that it deemed relevant.
In addition to base salary, executive officers of the Corporation and the
Bank may participate currently in the Bank's 401(K) Plan.
Total compensation opportunities available to the employees of the Bank are
influenced by general labor market conditions, the specific responsibilities of
the individual, and the individual's contributions to the Corporation's success.
Individuals are reviewed annually on a calendar year basis. The Bank strives to
offer compensation that is competitive with that offered by employers of
comparable size in our industry. Through these compensation policies, the
Corporation strives to meet its strategic goals and objectives to its
constituencies and provide compensation that is fair and meaningful to its
employees.
The foregoing report has been furnished by the Executive Committee which
performs the functions of a compensation committee: D. Richard Guise,
Chairperson, Philip P. Asper, Frank Elsner, Jr., Richard L. Galusha, , Ronald L.
Hankey (ex-officio member), William B. Lower, Paul G. Pitzer, Marian B. Schultz
and Jennifer L. Weaver.
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<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total shareholder return on the Corporation's Common Stock against
the cumulative total return of the S&P 500 Stock Index and the Peer Group Index
for the period of five fiscal years commencing January 1, 1993 and ended
December 31, 1997. The shareholder return shown on the graph below is not
necessarily indicative of future performance.
[Performance Graph Omitted]
[The following is a description of the Perfomance Graph in a tabular format:]
Peer Group Total 1000.00 1425.90 1706.76 1841.51 2085.54 2974.40
Peer Group Index 100.00 142.59 170.68 184.15 208.55 297.44
ACNB Corp. 100.00 146.12 114.12 142.45 136.48 207.38
S&P 500 Total Return 100.00 110.02 111.51 153.26 188.36 251.12
S&P 500 Total Return
Index 100.00 110.02 111.51 153.26 188.36 251.12
NOTE: The peer group for which information appears above includes the following
companies: ACNB Corporation; Century Financial Corporation; CNB Financial
Corporation; Citizens & Northern Corporation; Drovers Bancshares Corporation;
First West Chester Corporation; Franklin Financial Services Corp.; Hanover
Bancorp, Inc.; Penn Security Bank & Trust Co.; PennRock Financial Services
Corp.; Sterling Financial Corp. These companies were selected based on four
criteria: total assets between $200 million and $700 million; market
capitalization between $15 million and $170 million; headquarters located in
Pennsylvania; and not quoted on NASDAQ.
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<PAGE>
CERTAIN TRANSACTIONS
There have been no material transactions between the Corporation and the
Bank, nor any material transactions proposed, with any director or executive
officer of the Corporation and the Bank, or any associate of the foregoing
persons. The Corporation and the Bank have had and intend to continue to have
banking and financial transactions in the ordinary course of business with
directors and officers of the Corporation and the Bank and their associates on
comparable terms and with similar interest rates as those prevailing from time
to time for other customers of the Corporation and the Bank.
Total loans outstanding from the Corporation and the Bank at December 31,
1997, to the Corporation's and the Bank's officers and directors as a group and
to members of their immediate families and companies in which they had an
ownership interest of 10 percent or more was $3,570,156, or approximately 6.8
percent of the total equity capital of the Bank. Loans to such persons were made
in the ordinary course of business, were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and did not involve more than the
normal risk of collectibility or present other unfavorable features. The
aggregate amount of indebtedness outstanding as of the latest practicable date,
March 2, 1998, to the above described group was approximately $3,662,000.
PRINCIPAL OFFICERS OF THE CORPORATION
The following table sets forth selected information about the principal
officers of the Corporation, each of whom is elected by the Board of Directors
and each of whom holds office at the discretion of the Board of Directors.
Unless otherwise noted, shares are individually held.
<TABLE>
<CAPTION>
Bank Number of Shares Age as of
Held Employee Beneficially March 2,
Name and Position Since Since Owned 1998
----------------- ----- ----- ----- ----
<S> <C> <C> <C> <C>
Ronald L. Hankey - President 1982 1957 19,150 57
and Chief Executive Officer
John W. Krichten - 1982 1980 27,804 (1) 51
Secretary and Treasurer
Lynda L. Glass - Assistant 1993 1984 64 (2) 37
Secretary
<FN>
(1) Includes 24,002 shares held jointly with Mr. Krichten's spouse; and 682
shares held by Mr. Krichten, as custodian for their children.
(2) Shares held jointly with Ms. Glass' spouse.
</FN>
</TABLE>
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<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's officers and directors, and persons who own more than 10
percent of the registered class of the Corporation's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Officers, directors and greater than 10 percent shareholders
are required by SEC regulation to furnish the Corporation with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it or
written representations from certain reporting persons that no Forms 5 were
required to be filed to report late transactions for those persons, the
Corporation believes that during the period January 1, 1997 through December 31,
1997, its officers and directors were in compliance with all filing requirements
applicable to them.
INDEPENDENT AUDITORS
Stambaugh o Ness, P.C., successor to Harry Ness & Company, Certified Public
Accountants, of York, Pennsylvania, served as the Corporation's independent
auditors for its 1997 fiscal year. The Corporation has been advised by Stambaugh
o Ness, P.C. that none of its members has any financial interest in the
Corporation. In addition to performing customary audit services, Stambaugh o
Ness, P.C. assisted the Corporation and the Bank with preparation of their
federal and state tax returns, and provided assistance in connection with
regulatory matters, charging the Bank for such services at its customary hourly
billing rates. These non-audit services were approved by the Corporation's and
the Bank's Boards of Directors after due consideration of the effect of the
performance thereof on the independence of the auditors and after the conclusion
by the Corporation's and the Bank's Boards of Directors that there was no effect
on the independence of the auditors. The Board of Directors has engaged
Stambaugh o Ness, P.C. as the Corporation's independent auditors for the fiscal
year ending December 31, 1998.
ANNUAL REPORT
A copy of the Corporation's Annual Report for its fiscal year ended
December 31, 1997, is enclosed with this Proxy Statement. A representative of
the Corporation will be available to respond to any appropriate questions
concerning the Annual Report presented by shareholders at the Annual Meeting.
SHAREHOLDER PROPOSAL SUBMISSIONS
Any shareholder who, in accordance with and subject to the provisions of
the proxy rules of the Securities and Exchange Commission, wishes to submit a
proposal for inclusion in the Corporation's Proxy Statement for its 1999 Annual
Meeting of Shareholders must deliver such proposal in writing to the President
and Chief Executive Officer of ACNB Corporation at its principal executive
offices, 675 Old Harrisburg Road, Gettysburg, Pennsylvania 17325, not later than
Tuesday, December 8, 1998.
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<PAGE>
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the accompanying Notice of
Annual Meeting of Shareholders, but if any matters are properly presented, it is
the intention of the persons named in the accompanying Proxy to vote on such
matters in accordance with their best judgment.
ADDITIONAL INFORMATION
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, A COPY OF THE CORPORATION'S REPORT
ON FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1997, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 13a-1 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, MAY BE OBTAINED, WITHOUT CHARGE, FROM RONALD
L. HANKEY, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ACNB CORPORATION, 675 OLD
HARRISBURG ROAD, GETTYSBURG, PENNSYLVANIA 17325.
- 15 -
<PAGE>
ACNB CORPORATION
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 5, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Frank Elsner, Jr. and
Jennifer L. Weaver, and each or any of them, proxies of the undersigned, with
full power of substitution, to vote all of the shares of ACNB Corporation (the
"Corporation") that the undersigned may be entitled to vote at the Annual
Meeting of Shareholders of the Corporation to be held at the Main Office of
Adams County National Bank, 675 Old Harrisburg Road, Gettysburg, Pennsylvania
17325 on Tuesday, May 5, 1999, at 1:00 p.m., prevailing time, and at any
adjournment or postponement thereof as follows:
1. PROPOSAL TO FIX THE NUMBER OF SHAREHOLDERS TO BE ELECTED AS CLASS 1
DIRECTORS AT FOUR (4).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- --------------------------------------------------------------------------------
2. ELECTION OF CLASS 1 DIRECTORS TO SERVE FOR A THREE-YEAR TERM
Philip P. Asper, D. Richard Guise, Ronald L. Hankey, Marian B. Schultz
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all
as marked to the nominees listed
contrary below) above
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment or
postponement thereof.
<PAGE>
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE AND FOR
PROPOSAL 1.
Dated:___________________________, 1998
----------------------------------
Signature(s) (Seal)
Number of Shares Held of
Record on March 2, 1998
_________________________
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED PROMPTLY
TO THE CORPORATION IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE. IF MORE THAN ONE
TRUSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER SHOULD SIGN.
