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.
[ ] 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 7, 1999
Dear Fellow Shareholders of ACNB Corporation:
On behalf of the Board of Directors, I am pleased to invite you to attend
our Annual Meeting of Shareholders to be held on Tuesday, May 4, 1999, at 1:00
p.m., Eastern Daylight Time, at Adams County National Bank, 675 Old Harrisburg
Road, Gettysburg, Pennsylvania 17325. At the annual meeting, you will have the
opportunity to ask questions and to make comments. Enclosed with this proxy
statement are your proxy and ACNB Corporation's 1998 Annual Report.
The principal business of the meeting is to fix the number of directors of
the Corporation at sixteen (16); to fix the number of Class 3 Directors at four
(4); to elect four (4) Class 3 directors to serve a term of three (3) years; to
fix the number of Class 2 Directors at seven (7); to elect three (3) additional
Class 2 Directors; to fix the number of Class 1 Directors at five (5); to elect
one (1) additional Class 1 Director; and, to transact any other business that is
properly presented at the annual meeting. The notice of meeting and proxy
statement accompanying this letter describe the specific business to be acted
upon in more detail.
You will notice that this year's proxy statement is written in "plain
English". We hope that you like the new format and find the proxy statement
easier to read.
I am delighted you have chosen to invest in ACNB Corporation, and I hope
that, whether or not you plan to attend the annual meeting, you will vote as
soon as possible by completing, signing and returning the enclosed proxy in the
envelope provided. The prompt return of your proxy will save ACNB Corporation
expenses involved in further communications. Your vote is important. Voting by
written proxy will ensure your representation at the annual meeting if you do
not attend in person.
I look forward to seeing you on May 4, 1999, at ACNB Corporation's Annual
Meeting of Shareholders.
Sincerely,
/s/ Ronald L. Hankey
Ronald L. Hankey
President
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF ACNB CORPORATION
TO BE HELD ON MAY 4, 1999
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that ACNB Corporation will hold its Annual Meeting
of Shareholders on Tuesday, May 4, 1999, at 1:00 p.m. at Adams County National
Bank, 675 Old Harrisburg Road, Gettysburg, Pennsylvania 17325, to consider and
vote upon the following proposals:
1. To fix the number of directors of the Corporation at sixteen (16).
2. To fix the number of directors to be elected as Class 3 Directors at
four (4).
3. To elect the following individuals as Class 3 Directors:
o Guy F. Donaldson
o William B. Lower
o Thomas A. Ritter
o Ralph S. Sandoe
4. To fix the number of Class 2 Directors at seven (7).
5. To elect the following individuals as additional Class 2 Directors:
o Philip M. Jones
o L. Robert Snyder
o Harry L. Wheeler
6. To fix the number of Class 1 Directors at five (5).
7. To elect the following individual as an additional Class 1 Director:
o Edgar S. Heberlig
8. Other matters as may properly come before the annual meeting or any
adjournment of the meeting.
Shareholders as of March 1, 1999 are entitled to notice of the meeting and
may vote at the annual meeting, either in person or by proxy.
<PAGE>
Management welcomes your attendance at the annual meeting. Whether or not
you expect to attend the annual meeting in person, you are requested to
complete, sign, date and promptly return the enclosed proxy in the accompanying
postage-paid envelope. The prompt return of your proxy will save expenses
involved in further communications. Even if you return a proxy, you may vote in
person if you give written notice to the Secretary of ACNB Corporation and
attend the annual meeting. Returning your proxy will ensure that your shares
will be voted in accordance with your wishes and that the presence of a quorum
will be assured.
ACNB Corporation's Board of Directors is distributing this proxy statement,
form of proxy, and ACNB Corporation's 1998 Annual Report on or about April 7,
1999.
By Order of the Board of Directors,
/s/ Ronald L. Hankey
Ronald L. Hankey
President
Gettysburg, Pennsylvania
April 7, 1999
YOUR VOTE IS IMPORTANT.
TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
Table of Contents
Page
Proxy Statement
General Information........................................................1
Date, Time and Place of the Annual Meeting........................1
Description of ACNB...............................................1
Voting Procedures..........................................................2
Solicitation and Voting of Proxies................................2
Quorum and Vote Required for Approval.............................3
Revocability of Proxy.............................................3
Methods of Voting.................................................4
Board of Directors and Executive Officers..................................5
Governance........................................................5
o Directors of ACNB Table .................................5
o Executive Officers of ACNB Table.........................6
Committees and Meetings of ACNB's Board of Directors..............6
Committees and Meetings of the Bank's Board of Directors..........7
o Committees of the Bank's Board of Directors Table .8
Compensation of the Board of Directors............................8
Board of Directors' Report on Executive Compensation.......................9
Compensation Committee Report ....................................9
Chief Executive Officer Compensation .............................9
Executive Officers ..............................................10
Compensation Committee Interlocks and Insider Participation .............10
Executive Compensation ...................................................11
o Summary Compensation Table .............................11
Employment Contract with Ronald L. Hankey .......................11
Retirement Plan .................................................12
401(k) Plan .....................................................13
Executive Retirement Income Agreements ..........................13
Certain Relationships and Related Transactions............................14
Election Of Directors ....................................................14
Qualification and Nomination of Directors .......................14
Information as to Nominees and Directors ........................15
Performance Graph .......................................................19
<PAGE>
Beneficial Ownership of ACNB's Stock Owned by
Principal Owners and Management...........................................20
Principal Shareholders...........................................20
Share Ownership by the Directors, Officers and Nominees..........20
Section 16(a) Beneficial Ownership Reporting Compliance ..................22
Proposals.................................................................23
To Fix the Number of Directors of ACNB at Sixteen (16) ..........23
To Fix the Number of Class 3 Directors at Four (4) ..............23
To Elect Four (4) Class 3 Directors..............................23
To Fix the Number of Class 2 Directors at Seven (7) .............23
To Elect Three (3) Additional Class 2 Directors .................24
To Fix the Number of Class 1 Directors at Five (5) ..............24
To Elect One (1) Additional Class 1 Director ....................24
Independent Auditors .....................................................25
Shareholder Proposals for 2000 Annual Meeting.............................25
Other Matters That May Come Before the Annual Meeting.....................25
Additional Information ...................................................25
<PAGE>
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
ACNB CORPORATION
TO BE HELD ON MAY 4, 1999
GENERAL INFORMATION
Date, Time and Place of the Annual Meeting
ACNB Corporation (ACNB), a Pennsylvania business corporation and registered
bank holding company, is furnishing this proxy statement in connection with the
solicitation by the Board of Directors of proxies to be voted at the Annual
Meeting of Shareholders of ACNB Corporation. The annual meeting will be held at
675 Old Harrisburg Road, Gettysburg, Pennsylvania 17325, on Tuesday, May 4,
1999, at 1:00 p.m., Eastern Daylight Time.
The principal executive office of ACNB is located at Adams County National
Bank, 675 Old Harrisburg Road, Gettysburg, PA 17325. The telephone number is
(717) 334-3161. All inquiries should be directed to John W. Krichten,
Secretary/Treasurer of ACNB.
Description of ACNB
ACNB was established in 1983 as a one-bank holding company under the laws
of Pennsylvania. On March 1, 1999, the merger transaction between Farmers
National Bancorp, Inc. (FNB) and ACNB was completed. Thus, ACNB's activities as
the parent two-bank holding company consists of owning and supervising Adams
County National Bank (the Bank) and Farmers National Bank of Newville, its
wholly-owned depository subsidiaries.
ACNB is mailing a copy of the annual report for the fiscal year ended
December 31, 1998, with this proxy statement. You may obtain a copy of ACNB's
annual report for the 1997 fiscal year at no cost by contacting John W.
Krichten, Secretary/Treasurer of ACNB, via mail at 675 Old Harrisburg Road,
Gettysburg, Pennsylvania 17325, or via telephone at (717) 334-3161.
Since we have not authorized anyone to provide you with different
information, you should rely only on the information contained in this document
or on documents to which we refer you. Although we believe we have provided you
with all the information helpful to you in your decision to vote, events may
occur at ACNB subsequent to printing this proxy statement that might affect your
decision or the value of your stock.
1
<PAGE>
VOTING PROCEDURES
Solicitation and Voting of Proxies
The Board of Directors of ACNB is soliciting this proxy for use at the 1999
Annual Meeting of Shareholders of ACNB. The directors, officers and other
employees of ACNB or the Bank may solicit proxies in person or by telephone,
telecopy, telegraph or mail, but only for use at the annual meeting. The Bank
will pay the cost of preparing, assembling, printing, mailing and soliciting
proxies and any additional material that ACNB sends to shareholders. ACNB will
make arrangements with brokerage houses and other custodians, nominees, and
fiduciaries to forward proxy solicitation materials to the owners of stock held
by these persons. ACNB will reimburse these persons for their reasonable
forwarding expenses.
Only shareholders of record as of the close of business on March 1, 1999,
(the Voting Record Date), may vote at the annual meeting. ACNB's records show
that, as of the Voting Record Date, 5,783,453 shares of ACNB's common stock were
outstanding. On all matters to come before the annual meeting, shareholders may
cast one vote for each share held. Cumulative voting rights do not exist with
respect to the election of directors. See "Principal Shareholders" on page 20
for a list of the persons known by ACNB to be the beneficial owner of five
percent (5%) or more of ACNB's common stock as of the Voting Record Date.
By properly completing a proxy, the shareholder appoints D. Richard Guise
and Frank Elsner, Jr. as proxy holders to vote his or her shares as specified on
the proxy. The proxy holders will vote any proxy not specifying to the contrary
as follows:
FOR fixing the number of directors of ACNB at sixteen (16);
FOR fixing the number of directors to be elected as Class 3 Directors at
four (4);
FOR the election of the following individuals as Class 3 Directors:
o Guy F. Donaldson
o William B. Lower
o Thomas A. Ritter
o Ralph S. Sandoe
FOR fixing the number of Class 2 Directors at seven (7);
FOR the election of the following individuals as additional Class 2
Directors:
o Philip M. Jones
o L. Robert Snyder
o Harry L. Wheeler
FOR fixing the number of Class 1 Directors at five (5); and
2
<PAGE>
FOR the election of the following individual as an additional Class 1
Director:
o Edgar S. Heberlig
The Board of Directors of ACNB will mail this proxy statement to the
shareholders of ACNB on or about April 7, 1999.
Quorum and Vote Required For Approval
As of the close of business on March 1, 1999, ACNB had 5,783,453 shares of
common stock, par value $2.50 per share, issued and outstanding.
In order to hold the annual meeting, a "quorum" of shareholders must be
present. Under Pennsylvania law and the Bylaws of ACNB, the presence, in person
or by proxy, of the holders of a majority of the shares entitled to vote is
necessary to constitute a quorum for the transaction of business at the meeting.
The proxy holders will count votes withheld and abstentions when determining the
presence of a quorum for the particular matter. The proxy holders will not count
broker non-votes when determining the presence of a quorum for the particular
matter as to which the broker withheld authority.
Assuming the presence of a quorum, the nominees for director receiving the
highest number of votes cast by shareholders entitled to vote for the election
of directors will be elected. The proxy holders will not cast votes withheld or
broker non-votes for the nominees.
Assuming the presence of a quorum, approval to fix the number of directors
of the Board of Directors and to fix the number of directors in each class
requires the affirmative vote of a majority of all votes cast by shareholders.
Abstentions and broker non-votes are not deemed to constitute "votes cast" and,
therefore, do not count either for or against ratification. Abstentions and
broker non-votes, however, have the practical effect of reducing the number of
affirmative votes required to achieve a majority for the matter by reducing the
total number of shares voted from which the required majority is calculated.
Revocability of Proxy
Shareholders who sign proxies may revoke them at any time before they are
voted by:
o delivering written notice of the revocation to John W. Krichten,
Secretary/Treasurer of ACNB, at 675 Old Harrisburg Road, Gettysburg,
Pennsylvania 17325;
o delivering a properly executed proxy bearing a later date to John W.
Krichten, Secretary/Treasurer of ACNB, at 675 Old Harrisburg Road,
Gettysburg, Pennsylvania 17325; or,
o attending the meeting and voting in person after giving written notice
to the Secretary/Treasurer of ACNB.
3
<PAGE>
You have the right to vote and, if desired, to revoke your proxy any time before
the annual meeting. Should you have any questions, please contact John W.
Krichten at (717) 334-3161.
Methods of Voting
Voting by Proxy
1. Mark your selections.
2. Date your proxy and sign your name exactly as it appears on your proxy.
3. Mail to ACNB Corporation in the enclosed postage-paid envelope.
Voting in Person
1. Attend the annual meeting and show proof of eligibility to vote.
2. Obtain a proxy.
3. Mark your selections.
4. Date your proxy and sign your name exactly as it appears in the transfer
books of ACNB Corporation.
[Intentionally Left Blank]
4
<PAGE>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Governance
The Board of Directors of ACNB oversees all business, property, and affairs
of ACNB. The Chairman and officers keep the members of the Board informed of
ACNB's business through discussions at Board meetings and by providing materials
to them.
During fiscal year 1998, the Board of Directors of ACNB held twelve (12)
meetings. The Board of Directors of the Bank held twelve (12) meetings during
fiscal year 1998.
Directors of ACNB
The following table sets forth selected information about the directors of
ACNB.
Director Class of Age as of
Name Since Director March 1, 1999
- ---- ----- -------- -------------
Guy F. Donaldson 1981 3 67
Frank Elsner, Jr. 1974 3 71
Philip M. Jones 1979 3 81
William B. Lower 1974 3 69
Thomas A. Ritter 1997 3 47
Ralph S. Sandoe 1982 3 71
L. Robert Snyder 1979 3 74
Richard L. Galusha 1962 2 77
Wayne E. Lau 1987 2 63
Paul G. Pitzer 1967 2 80
Jennifer L. Weaver 1992 2 51
Philip P. Asper 1988 1 50
D. Richard Guise 1988 1 65
Ronald L. Hankey 1975 1 58
Marian B. Schultz 1992 1 49
5
<PAGE>
Executive Officers of ACNB
The following table sets forth selected information about the principal
officers of ACNB, each of whom is elected by the Board of Directors and each of
whom holds office at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
Position Number of Shares Age as of
Name and Position Held Since Beneficially Owned March 1, 1999
- ----------------- ---------- ------------------ -------------
<S> <C> <C> <C>
Ronald L. Hankey
President 1982 19,150(1) 58
Chief Executive Officer 1982
Chairman of the Board 1982
John W. Krichten
Secretary 1982 24,206(2) 52
Treasurer 1982
Lynda L. Glass
Assistant Secretary 1993 64(3) 38
<FN>
(1) See Table entitled "Share Ownership by the Directors, Officers and
Nominees" on page 20 for share ownership information for Mr. Hankey.
(2) Figure includes 3,120 shares held solely by Mr. Krichten; 20,772 shares
held jointly with Mr. Krichten's spouse; and, 314 shares held as custodian
for Mr. Krichten's daughter.
(3) These shares are held jointly with Ms. Glass' spouse.
</FN>
</TABLE>
Committees and Meetings of ACNB's Board of Directors
The Board of Directors of ACNB has, at present, no standing committees.
ACNB does not have a compensation or 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 ACNB in accordance with Article II, Section 202, of the
ACNB's Bylaws. Any shareholder who intends to nominate any candidate for
election to the Board of Directors must notify the Secretary of ACNB in writing
not less than sixty (60) days prior to the anniversary date of the immediately
preceding annual meeting of shareholders of the corporation.
6
<PAGE>
Committees and Meetings of the Bank's Board of Directors
During 1998, the Bank's Board of Directors maintained four (4) standing
committees: Executive, Audit, Loan and Trust. The function of each of these
committees is described below.
EXECUTIVE: This committee acts with limited powers on behalf of the Board
whenever the Board is not in session. It meets only as needed and acts by
unanimous vote. If any non-employee director wants a matter to be addressed by
the Board rather than the Executive Committee, then such matter is submitted to
the Board. This committee also performs the functions of a compensation
committee.
AUDIT: The functions of this committee include: periodic meetings with the
Bank's internal auditors; periodic reviews of the procedures of the Bank's
internal audit function and the information obtained by that function; reviewing
the results of the audit by the independent certified public accountants; and,
recommending the engagement and continuation of the certified public accountants
for ACNB and the Bank. All members are non-employee directors.
LOAN: This committee meets between regular Board meeting dates to oversee the
lending activities of the Bank to ensure compliance with regulatory
requirements. It reviews loan applications and makes recommendations to
management and the Board.
TRUST COMMITTEE: This committee reviews the policies and procedures of the Trust
Department and reviews the individual accounts held within the Trust Department.
During 1998, ACNB's and the Bank's Boards of Directors each held twelve
(12) meetings. Each of the directors attended at least 75% of the combined total
number of meetings of ACNB'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. Asper,
Donaldson, Jones and Snyder and Ms. Schultz.
[Intentionally Left Blank]
7
<PAGE>
<TABLE>
<CAPTION>
Committees of the Bank's Board of Directors
Meetings Held
Committees Members(1) in 1998
- ---------- ---------- ----------
<S> <C> <C>
Executive D. Richard Guise, Chairperson; Frank Elsner, Jr.; 10
William B. Lower; Richard L. Galusha; Paul G.
Pitzer; Jennifer L. Weaver; Philip P. Asper;
Thomas A. Ritter; Marian B. Schultz; and, C.F.
Ditzler, Director Emeritus.
Audit Philip P. Asper, Chairperson; William B. Lower; 4
Richard L. Galusha; Wayne E. Lau; and, L. Robert
Snyder.
Loan Frank Elsner, Jr., Chairperson; Guy F. Donaldson; 8
Philip M. Jones; William B. Lower; Ralph S. Sandoe;
L. Robert Snyder; Wayne E. Lau; Philip P. Asper; and,
D. Richard Guise.
Trust Jennifer L. Weaver, Chairperson; Guy F. Donaldson; 12
Frank Elsner, Jr.; Philip M. Jones; Ralph S. Sandoe;
Paul G. Pitzer; D. Richard Guise; Marian B. Schultz;
and, Thomas A. Ritter.
- -------------------
<FN>
(1) 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>
Compensation of the Board of Directors
During 1998, the Bank paid a monthly retainer of $2,850 to non-employee
Bank directors for services rendered regarding Board of Directors' meetings and
committee meetings. The Bank paid directors $265 per month for each Board
meeting attended; committee meeting fees were paid at the rate of $80 per hour
with a minimum payment of $80; and, seminar fees were paid in the amount of $250
per half-day seminar and $400 for a full-day seminar, plus expenses. The Bank
does not compensate employee directors for attendance at Board of Directors
meetings or committee meetings. In the aggregate, the Bank paid to the Board of
Directors $111,665 for all services rendered in 1998.
8
<PAGE>
BOARD OF DIRECTORS' REPORT ON
EXECUTIVE COMPENSATION
Compensation Committee Report
The Board of Directors of ACNB governs ACNB and the Bank. In fulfilling its
fiduciary duties, the Board of Directors acts in the best interests of ACNB's
shareholders, customers, and the communities served by ACNB and the Bank. To
accomplish the strategic goals and objectives of ACNB, the Board of Directors
engages competent persons, who undertake to accomplish these objectives with
integrity and with cost-effectiveness. The Board of Directors fulfills part of
its strategic mission through the compensation of these individuals. The Bank
provides compensation to the employees of the Bank. Employees of ACNB are not
compensated.
ACNB seeks to offer competitive compensation opportunities for all
employees based on the individual's contribution and personal performance. The
Executive Committee comprised of eleven (11) directors (listed below)
administers the compensation program. The committee seeks to establish a fair
compensation policy to govern executive officers' base salaries and incentive
plans to attract and motivate competent, dedicated and ambitious managers, whose
efforts will enhance the products and services of ACNB the results of which will
be improved profitability, increased dividends to ACNB shareholders, and
subsequent appreciation in the market value of ACNB shares.
The committee reviews and annually approves the compensation of the Bank's
top executives, including the chief executive officer and 8 other executive
officers. As a guideline in determining base salaries, the committee uses a
regional financial industry salary survey which covers financial institutions in
the Pennsylvania, Maryland, Washington, D.C., and Virginia market place. 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 ACNB 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 ACNB's
and the Bank's compensation plans to preserve the deductibility of the
compensation payable under the plans.
Chief Executive Officer Compensation
The Board of Directors has determined that the Chief Executive Officer's
1998 base salary of $189,000, an approximately five percent (5%) increase in
base salary, combined with an $1,890 bonus, is appropriate in light of the 1998
ACNB performance accomplishments. No direct correlation exists between the Chief
Executive Officer's compensation, the Chief Executive Officer's increase in
compensation, and ACNB's 1998 performance. The committee subjectively determines
such increase in the Chief Executive Officer's compensation based on a review of
all relevant information.
9
<PAGE>
Executive Officers
The committee has established that the compensation of the Bank's executive
officers increased by approximately four percent (4%) in 1998. The committee
determined the increases based on its subjective analysis of the individual's
contribution to ACNB's strategic goals and objectives. In determining whether
strategic goals have been achieved, the Committee considers numerous factors,
including the following: ACNB's performance as measured by earnings, revenues,
return on assets, return on equity, market share, total assets, and
non-performing loans. Although the committee measured the performance and
increases in compensation in light of these factors, no direct correlation
exists between any specific criterion and the employees' compensation; nor does
the committee, in its analysis, attribute specific weight to any such criteria.
The Committee makes a subjective determination after review of all relevant
information, including the above.
In addition to base salary, executive officers of the Bank may participate
in the Bank's 401(k) plan and the retirement plan. (See pages 12-13 for more
information.)
General labor market conditions, the specific responsibilities of the
individual, and the individual's contributions to ACNB's success influence total
compensation opportunities available to the executive officers of the Bank. The
committee reviews individuals on a calender year basis and strives to offer
compensation that is competitive with that offered by employers of comparable
size in our industry. Through these compensation policies, ACNB strives to meet
its strategic goals and objectives to its constituencies and provide
compensation that is fair and meaningful to its executive officers.
This report is furnished by the Executive Committee which performs the
functions of a compensation committee.
D. Richard Guise, Chairperson
Philip P. Asper William B. Lower Marian B. Schultz
Frank Elsner, Jr. Paul G. Pitzer Jennifer L. Weaver
Richard L. Galusha Thomas A. Ritter
C.F. Ditzler, Director Emeritus
Ronald L. Hankey (ex-officio member)
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
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 ACNB 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.
10
<PAGE>
EXECUTIVE COMPENSATION
Shown below is information concerning the annual compensation for services
in all capacities to ACNB and the Bank for the fiscal years ended December 31,
1998, 1997 and 1996 of those persons who were, at December 31, 1998, (i) Chief
Executive Officer and (ii) the other four most highly compensated executive
officers of ACNB and the Bank to the extent such persons' total annual salary
and bonus exceeded $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
(a) (b) (c) (d) (e)
Other
Annual
Compen-
Name and Principal Salary Bonus sation
Position Year ($) ($) $
-------- ---- --- --- -
<S> <C> <C> <C> <C>
Ronald L. Hankey 1998 189,000 1,890 0
President and Chief 1997 180,000 1,800 0
Executive Officer of 1996 167,698 1,677 0
ACNB and of the
Bank
<CAPTION>
Long-Term Compensation
Awards Payouts
(a) (f) (g) (h) (i)
Securities
Restricted Underlying All other
Stock Options/ LTIP Compen-
Name and Principal Award(s) SARs Payouts sation
Position ($) (#) ($) ($)(1)
-------- --- --- --- ----
<S> <C> <C> <C> <C>
Ronald L. Hankey 0 0 0 55,226
President and Chief 0 0 0 54,879
Executive Officer of 0 0 0 6,285
ACNB and of the
Bank
<FN>
(1) Includes amount contributed by Bank to 401(k) Plan of $6,400, $6,315 and
$6,285 in 1998, 1997 and 1996, respectively, on behalf of Mr. Hankey.
Includes deferred compensation of $48,826 and $48,564 in 1998 and 1997,
respectively, on behalf of Mr. Hankey. No deferred compensation was paid on
behalf of Mr. Hankey in 1996.
</FN>
</TABLE>
Employment Contract with Ronald L. Hankey
Effective January 1, 1998, ACNB, the Bank and Mr. Ronald L. Hankey,
President and Chief Executive Officer of ACNB and the Bank and a member of the
Boards of Directors of ACNB and the Bank, entered into an employment agreement
for a term of three (3) years, which term renews automatically for an additional
one (1) 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 ACNB and of the Bank and as a member of
the Boards of Directors of ACNB and of the Bank. The employment agreement
provided 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 ACNB and the Bank have
discretion to pay a periodic bonus to Mr. Hankey. Mr. Hankey is not entitled to
receive director fees or other compensation for serving on ACNB'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.
11
<PAGE>
The agreement with Mr. Hankey also provides that if his employment is
terminated by ACNB or the Bank, due to death, disability or "for cause", then he
is entitled to the full annual direct salary through the date of termination. If
Mr. Hankey's employment is terminated by ACNB or the Bank other than pursuant to
death, disability or "for cause", or if Mr. Hankey terminates his employment for
"good reason", 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, then he is
entitled to his then current direct annual salary 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 is a defined
benefit pension plan under the Employee Retirement Income Security Act of 1974.
The most recent amendment became effective November 1, 1989. The Bank is 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 1998 was $611,328. The contribution made by the
Bank to the plan in 1998 was $409,760. This contribution was sufficient to meet
the legal minimum funding requirements.
Each employee of the Bank who attains the age of twenty (20) years and six
(6) months and who completes six (6) 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
sixty-five (65) years for the employee's remaining lifetime with payments
certain for five (5) years, calculated as follows: 1% of final average
compensation below the applicable Social Security Covered Compensation, and 1.3%
of such earnings above the Covered Compensation, the total being multiplied by
years of credited service up to a maximum of forty-five (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 thirty (30) or more
years of credited service, he is eligible to retire at age sixty-two (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 sixty-five (65) by a participating employee:
12
<PAGE>
<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
- -----------------
<FN>
(1) Assumes normal retirement date (age 65) occurs in 1998. 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 1998, the covered compensation, as reported above in the Summary
Compensation Table, for Mr. Hankey, President and Chief Executive Officer, is
$189,000. The covered compensation includes salary only. As of December 31,
1998, Mr. Hankey had forty-one (41) years of service credited under the plan.
401(k) Plan
The Bank maintains a defined contribution - profit sharing 401(k) plan. The
plan sponsor and plan administrator is the Bank. Ronald L. Hankey, President and
Chief Executive Officer of ACNB and the Bank, and John W. Krichten,
Secretary/Treasurer of ACNB 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 twenty (20 years and six (6) months. An
eligible employee may elect to contribute certain portions of salary and wages
(other than bonuses) or other direct remuneration to the plan. Generally, an
eligible employee may not contribute more than 15% of such compensation. The
Bank matches a certain percentage of the employee contribution. In 1998, the
Bank's contribution equaled 100% of the employee's contribution up to a maximum
of 4% 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 (180) equal monthly installments. Benefits are
also payable upon disability, early retirement,
13
<PAGE>
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 (10) 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
$1,932,287 at December 31, 1998. 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
Consolidated Financial Statements contained in ACNB's 1998 Annual Report which
is enclosed with this proxy statement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ACNB and the Bank have not entered into any material transactions, proposed
or consummated, with any director or executive officer of ACNB and the Bank, or
any associate of the foregoing persons. ACNB and the Bank have engaged in and
intend to continue to engage in banking and financial transactions in the
ordinary course of business with directors and officers of ACNB and the Bank and
their associates on comparable terms with similar interest rates as those
prevailing from time to time for other customers of ACNB and the Bank.
Total loans outstanding from the Bank at December 31, 1998, to ACNB's and
the Bank's officers and directors as a group, members of their immediate
families and companies in which they had an ownership interest of ten percent
(10%) or more, amounted to $4,408,631, or approximately 7.8% of the total equity
capital of the Bank. The Bank made these loans in the ordinary course of
business, 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 collection or
present other unfavorable features. The aggregate amount of indebtedness as of
the latest practicable date, March 1, 1999, to the above described group was
approximately $4,106,846.
ELECTION OF DIRECTORS
Qualification and Nomination of Directors
The Bylaws of ACNB authorize the number of directors to be not less than
five (5) nor more than twenty-five (25). The Bylaws provide for three (3)
classes of directors with staggered three-year terms of office. The Board of
Directors nominated the four (4) persons named below to serve as Class 3
Directors until the 2002 annual meeting of shareholders or until their earlier
death, resignation, or removal from office. All of these nominees are presently
Class 3 members of the Board of Directors, and, all have consented to serve
another term as a director if re-elected. The Board of Directors nominated the
three (3) persons named below to serve as additional Class 2 Directors until the
2000 annual meeting of shareholders or until their earlier death, resignation,
or removal from office. These nominees are presently Class 3 members of the
Board of Directors and all have consented to serve until the 2000 annual meeting
as a director if re-elected. The Board of Directors nominated the one (1) person
named below to serve as a Class 1 Director until the 2001 annual meeting of
shareholders or until his earlier death, resignation, or removal from office.
The nominee is presently a Class 1 Director and has consented to serve until the
14
<PAGE>
2001 annual meeting if re-elected. If the nominees should be unavailable to
serve for any reason, a majority of the Board of Directors then in office may
select someone to fill the vacancy until the expiration of the term of the class
of directors to which he or she was appointed.
The Board of Directors is divided into three (3) classes, whose terms
expire at successive annual meetings. Currently, Class 1 consists of four (4)
directors, Class 2 consists of four (4) directors, and Class 3 consists of seven
(7) directors. Shareholders will elect four (4) Class 3 Directors at the annual
meeting to serve for a three-year (3) term that expires at ACNB's annual meeting
in the year 2002; three (3) additional Class 2 Directors to serve until the
annual meeting in the year 2000; and one (1) additional Class 1 Director to
serve until the annual meeting in the year 2001.
The proxy holders intend to vote all proxies for the election of each of
the eight (8) nominees named below, unless you indicate that your vote should be
withheld from any or all of them. Each nominee elected as a director will
continue in office until his successor has been duly elected and qualified, or
until his or her death, resignation or retirement.
The Board of Directors is proposing the following nominees for election as
Class 3 Directors at the annual meeting:
o Guy F. Donaldson
o William B. Lower
o Thomas A. Ritter
o Ralph S. Sandoe
The Board of Directors is proposing the following nominees for election as
additional Class 2 Directors at the annual meeting:
o Philip M. Jones
o L. Robert Snyder
o Harry L. Wheeler
The Board of Directors is proposing the following nominee for election as
an additional Class 1 Director at the annual meeting:
o Edgar S. Heberlig
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF THE
ABOVE-NAMED NOMINEES FOR ELECTION AS DIRECTORS.
Information as to Nominees and Directors
Set forth below is the principal occupation and certain other information
regarding the nominees and other directors whose terms of office will continue
after the annual meeting. You can find information about the share ownership of
the nominees and other directors on pages 20- 22.
15
<PAGE>
Current Class 3 Directors (to serve until 1999)
and
Nominees for Class 3 Directors (to serve until 2002)
Guy F. Donaldson
Mr. Donaldson, age 67, has been a member of ACNB's Board of Directors since
1982 and of the Bank's Board of Directors since 1981. He is a fruit grower in
Ortanna, Pennsylvania.
William B. Lower
Mr. Lower, age 69, has been a member of ACNB's Board of Directors since
1982 and the Bank's Board of Directors since 1974. Mr. Lower is President of
Boyer Nurseries & Orchards, Inc., located in Biglerville, Pennsylvania.
Thomas A. Ritter
Mr. Ritter, age 47, has been a member of both ACNB's and the Bank's Boards
of Directors since 1997. Mr. Ritter is an insurance agent in Gettysburg,
Pennsylvania.
Ralph S. Sandoe
Mr. Sandoe, age 71, has been a member of ACNB's Board of Directors since
1987 and the Bank's Board of Directors since 1982. Mr. Sandoe is a fruit broker
in Biglerville, Pennsylvania.
Current Class 3 Directors (to serve until 1999)
and
Nominees for Class 2 Directors (to serve until 2000)
Philip M. Jones
Mr. Jones, age 81, has been a member of ACNB's Board of Directors since
1982 and the Bank's Board of Directors since 1979. He is the Chief Executive
Officer of Times and News Publishing Company, located in Gettysburg,
Pennsylvania.
L. Robert Snyder
Mr. Snyder, age 74, has been a member of ACNB's Board of Directors since
1982 and the Bank's Board of Directors since 1979. He is Chairman of the Board
of Littlestown Hardware & Foundry Co., Inc., located in Littlestown,
Pennsylvania.
16
<PAGE>
Current Class 2 Director (to serve until 1999)
and
Nominee for Class 2 Director (to serve until 2000)
Harry L. Wheeler
Mr. Wheeler, age 58, has been a member of ACNB's Board of Directors since
the merger of Farmers National Bancorp, Inc. (FNB) and ACNB Corporation was
completed on March 1, 1999. He served on the Board of Directors of FNB from 1991
until the date of the completion of the merger. He has also been a member of the
Board of Directors of Farmers National Bank of Newville since 1987. Mr. Wheeler
is the proprietor of Wheeler Drywall, located in Carlisle, Pennsylvania.
Current Class 1 Director (to serve until 1999)
and
Nominee for Class 1 Director (to serve until 2001)
Edgar S. Heberlig
Mr. Heberlig, age 64, has been a member of ACNB's Board of Directors since
the merger of Farmers National Bancorp, Inc. (FNB) and ACNB Corporation was
completed on March 1, 1999. He has been a member of the Board of Directors of
FNB since 1991 and served as Vice Chairman of FNB from 1995 until the date of
the completion of the merger. He has also been a member of the Board of
Directors of Farmers National Bank of Newville since 1970. Mr. Heberlig is a
retired farm structure salesman and a retired Navy pilot.
Board of Directors - Continuing as Directors
Class 2 Directors (to serve until 2000)
Richard L. Galusha
Mr. Galusha, age 77, has been a member of ACNB's Board of Directors since
1987 and the Bank's Board of Directors since 1962. Mr. Galusha is a realtor in
Arendtsville, Pennsylvania.
Wayne E. Lau
Mr. Lau, age 63, has been a member of both ACNB's and the Bank's Boards of
Directors since 1987. Mr. Lau is a sales representative for Destinations, a
travel agency located in East Berlin, Pennsylvania.
17
<PAGE>
Paul G. Pitzer
Mr. Pitzer, age 80, has been a member of ACNB's Board of Directors since
1992 and the Bank's Board of Directors since 1967. He is a fruit grower in
Biglerville, Pennsylvania.
Jennifer L. Weaver
Ms. Weaver, age 51, has been a member of both ACNB's and the Bank's Boards
of Directors since 1992. She is the Director of the Gettysburg Center of
Harrisburg Area Community College.
Class 1 Directors (to serve until 2001)
Philip P. Asper
Mr. Asper, age 50, has been a member of both ACNB's and the Bank's Boards
of Directors since 1988. He is a building contractor in Biglerville,
Pennsylvania.
D. Richard Guise
Mr. Guise, age 65, has been a member of both ACNB's and the Bank's Boards
of Directors since 1988. He is the President of Adams County Motors Corp., an
automobile dealer located in Gettysburg, Pennsylvania.
Ronald L. Hankey
Mr. Hankey, age 58, is the President and Chief Executive Officer of ACNB
and the Bank. He has been a member of ACNB's Board of Directors since 1982 and
the Bank's Board of Directors since 1975. Mr. Hankey has served as Chairman of
the Board of ACNB since 1982 and of the Bank since 1975.
Marian B. Schultz
Ms. Schultz, age 49, has been a member of both ACNB's and the Bank's Boards
of Directors since 1992. She is Assistant Dean, Division of Undeclared Majors,
at Shippensburg University, located in Shippensburg, Pennsylvania.
[Intentionally Left Blank]
18
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total shareholder return on ACNB's common stock against the
cumulative total return of the S&P 500 Stock Index and the NASDAQ Bank Index for
the period of five (5) fiscal years commencing January 1, 1994 and ending
December 31, 1998. The graph shows that the cumulative investment return to
shareholders, based on the assumption that a $100 investment was made on
December 31, 1993, in each of the Bank's Capital Stock, the S& P 500 Stock Index
and the Peer Group Index, and that all dividends were invested in such
securities over the past five (5) years, the cumulative total return on such
investment would be $161.47, $293.36 and $271.52, respectively. The shareholder
return shown on the graph below is not necessarily indicative of future
performance.
[Graphic]
In the printed version of the document, a line graph
appears which depicts the following plot points:
Comparison of Five Year Cumulative Total Return
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Peer Group Index 100.00 119.75 128.75 145.83 206.83 271.52
ACNB Corp. 100.00 78.13 97.68 93.76 142.38 161.47
S&P 500 Total
Return Index 100.00 99.26 139.31 171.21 228.26 293.36
NOTE: The peer group for which information appears above includes the following
companies: CNB Financial Corporation; Citizens & Northern Corporation; Drovers
Bancshares Corporation; First West Chester Corporation; Franklin Financial
Services Corp.; Hanover Bancorp, Inc.; Penseco Financial Services Corporation;
Penns Woods Bancorp, Inc.; PennRock Financial Services Corp.; and, Sterling
Financial Corp. These companies were selected based on four criteria: total
assets between $300 million and $900 million; market capitalization between $65
million and $265 million; headquarters located in Pennsylvania; and, not quoted
on NASDAQ.
19
<PAGE>
BENEFICIAL OWNERSHIP OF
ACNB'S STOCK OWNED BY
PRINCIPAL OWNERS AND MANAGEMENT
Principal Shareholders
As of March 1, 1999, the Board of Directors knows of no person who owns of
record or who is known by the Board of Directors to be the beneficial owner of
more than five percent (5%) of ACNB's outstanding common stock.
Share Ownership by the Directors, Officers and Nominees
The following table sets forth, as of March 1, 1999, and from information
received from the respective individuals, the amount and percentage of the
common stock beneficially owned by each director, each nominee, and all
officers, directors and nominees of ACNB as a group. Unless otherwise noted,
shares are held individually and the percentage of class is less than one
percent (1%) of the outstanding common stock.
<TABLE>
<CAPTION>
Percentage
Name of Individual or Amount and Nature of of
Identity of Group Beneficial Ownership (1)(2) Class
- ----------------- -------------------- -----
Class 1 Directors
- -----------------
<S> <C> <C>
Philip P. Asper 5,234(3) --
D. Richard Guise 8,788(4) --
Ronald L. Hankey 19,150(5) --
Marian B. Schultz 2,050(6) --
Edgar S. Heberlig 28,651(7)
Class 2 Directors
- -----------------
Richard L. Galusha 8,210 --
Wayne E. Lau 4,312(8) --
Paul G. Pitzer 7,500(9) --
Jennifer L. Weaver 600 --
Harry L. Wheeler 8,361(10)
Class 3 Directors
- -----------------
Guy F. Donaldson 2,890 --
Frank Elsner, Jr. 16,000(11) --
Philip M. Jones 90,274(12) 1.56%
William B. Lower 43,678(13) --
Thomas A. Ritter 3,000(14) --
Ralph S. Sandoe 9,020(15) --
L. Robert Snyder 5,958(16) --
20
<PAGE>
John W. Krichten
Secretary/Treasurer 24,206 (17) --
Lynda L. Glass 64 (18)
Assistant Secretary
All Officers and Directors 287,946 4.98%
as a Group (16 Directors, 3
Officers, 18 persons in total)
<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 1, 1999. Beneficial ownership may be disclaimed as to certain
of the securities.
(2) Information furnished by the Directors and ACNB.
(3) Figure includes 5,234 shares held jointly with Mr. Asper's spouse.
(4) Figure includes 6,960 shares held solely by Mr. Guise; 1,288 shares held
jointly with Mr. Guise's spouse; and 540 shares held solely by Mr. Guise's
spouse.
(5) Figure includes 6,228 shares held solely by Mr. Hankey; and 12,922 shares
held jointly with Mr. Hankey's spouse.
(6) Figure includes 700 shares held jointly with Mrs. Schultz's spouse; and
1,350 shares held jointly by Mrs. Schultz's spouse and his mother.
(7) Figure includes 26,385 shares held solely by Mr. Heberlig; and 2,266 shares
held jointly with Mr. Heberlig's spouse.
(8) These shares are held jointly with Mr. Lau's spouse.
(9) These shares are held jointly with Mr. Pitzer's spouse.
(10) Figure includes 6,707 shares held solely by Mr. Wheeler; and 1,654 shares
held jointly with Mr. Wheeler's spouse.
(11) Figure includes 3,456 shares held solely by Mr. Elsner; and 12,544 shares
held jointly with Mr. Elsner's spouse.
(12) Figure includes 7,644 shares held solely by Mr. Jones; 5,218 shares held
jointly with Mr. Jones' spouse; and 77,412 shares held by Times and News
Publishing Co. of which Mr. Jones and his spouse own 56.74 percent.
(13) Figure includes 1,072 shares held solely by Mr. Lower; 41,906 shares held
by Mr. Lower as Trustee of the William B. Lower, Sr., Revocable Trust; 200
shares held by Mr. Lower as Trustee of the William B. Lower Revocable
Trust; 350 shares held by Mr. Lower as Trustee of the William B. Lower, Sr.
Revocable Trust; and 150 shares held by Mr. Lower as Trustee of the William
B. Lower, Sr. Revocable Trust.
21
<PAGE>
(14) Figure includes 1,390 shares held jointly with Mr. Ritter's spouse; and
1,610 shares held solely by Mr. Ritter's spouse.
(15) Figure includes 800 shares held solely by Mr. Sandoe; and 8,220 shares held
jointly with Mr. Sandoe's spouse.
(16) Figure includes 5,682 shares held solely by Mr. Snyder; and 276 shares held
jointly with Mr. Snyder's spouse.
(17) Figure includes 3,120 shares held solely by Mr. Krichten; 20,772 shares
held jointly with Mr. Krichten's spouse; and 314 shares held as custodian
for Mr. Krichten's daughter.
(18) These shares are held jointly with Ms. Glass' spouse.
</FN>
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that ACNB's
officers and directors, and persons who own more than ten percent (10%) of the
registered class of ACNB's equity securities, file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors, and greater than ten percent (10%) shareholders are required by SEC
regulation to furnish ACNB with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of Forms 3, 4 and 5 and amendments
thereto received by it, or written representations from certain reporting
persons that no Forms 5 were required for those persons, ACNB believes that
during the period from January 1, 1998, through December 31, 1998, its officers
and directors complied with all applicable filing requirements.
[Intentionally Left Blank]
22
<PAGE>
PROPOSALS
1. TO FIX THE NUMBER OF DIRECTORS OF ACNB AT SIXTEEN (16).
The Board of Directors recommends a vote FOR this proposal.
2. TO FIX THE NUMBER OF CLASS 3 DIRECTORS AT FOUR (4).
The Board of Directors recommends a vote FOR this proposal.
3. TO ELECT FOUR (4) CLASS 3 DIRECTORS.
Nominees for Class 3 Director are:
o Guy F. Donaldson (director since 1981)
o William B. Lower (director since 1974)
o Thomas A. Ritter (director since 1997)
o Ralph S. Sandoe (director since 1982)
Each has consented to serve a three-year term. (See page 16 for more
information.)
If any director is unable to stand for re-election, the Board may designate
a substitute. The proxy holders will vote in favor of a substitute nominee. The
Board of Directors has no reason to believe the four (4) nominees for Class 3
Director will be unable to serve if elected.
The Board of Directors recommends a vote FOR the election of the four (4)
nominees as Class 3 Directors.
4. TO FIX THE NUMBER OF CLASS 2 DIRECTORS AT SEVEN (7).
The Board of Directors recommends a vote FOR this proposal.
23
<PAGE>
5. TO ELECT THREE (3) ADDITIONAL CLASS 2 DIRECTORS.
Nominees for Class 2 Director are:
o Philip M. Jones (director since 1979)
o L. Robert Snyder (director since 1979)
o Harry L. Wheeler (director since 1999)
Each has consented to serve until the 2000 annual meeting. (See pages 16
and 17 for more information.)
If any director is unable to stand for re-election, the Board may designate
a substitute. The proxy holders will vote in favor of a substitute nominee. The
Board of Directors has no reason to believe the three (3) nominees for Class 2
Director will be unable to serve if elected.
The Board of Directors recommends a vote FOR the election of the three (3)
nominees as Class 2 Directors.
6. TO FIX THE NUMBER OF CLASS 1 DIRECTORS AT FIVE (5).
The Board of Directors recommends a vote FOR this proposal.
7. TO ELECT ONE (1) ADDITIONAL CLASS 1 DIRECTOR.
Nominee for Class 1 Director:
o Edgar S. Heberlig (director since 1999)
The nominee has consented to serve until the 2001 annual meeting. (See page
17 for more information.)
If any director is unable to stand for re-election, the Board may designate
a substitute. The proxy holders will vote in favor of a substitute nominee. The
Board of Directors has no reason to believe the nominee for Class 1 Director
will be unable to serve if elected.
The Board of Directors recommends a vote FOR the election of the nominee as
a Class 1 Director.
24
<PAGE>
INDEPENDENT AUDITORS
Stambaugh o Ness, P.C., successor to Harry Ness & Company, Certified Public
Accountants, of York, Pennsylvania, served as ACNB's independent auditors for
its 1998 fiscal year. ACNB has been advised by Stambaugh o Ness, P.C. that none
of its members has any financial interest in ACNB. In addition to performing
customary audit services, Stambaugh o Ness, P.C. assisted ACNB 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 ACNB'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 ACNB'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 ACNB's independent auditors for the fiscal year ending December
31, 1999.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any shareholder who, in accordance with and subject to the provisions of
the proxy rules of the Securities and Exchange Commission and the Bylaws of
ACNB, wishes to submit a proposal for inclusion in ACNB's proxy statement for
its 2000 Annual Meeting of Shareholders must deliver such proposal in writing to
the Secretary of ACNB at its principal executive office, 675 Old Harrisburg
Road, Gettysburg, Pennsylvania 17325, not later than Friday, December 10, 1999.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no matters other than those referred to in
the accompanying Notice of Annual Meeting of Shareholders that properly may come
before the annual meeting. However, if any other matter should be properly
presented for consideration and voting at the annual meeting or any adjournments
of the meeting, the persons named as proxy holders will vote the proxies in what
they determine to be the best interest of ACNB.
ADDITIONAL INFORMATION
Upon written request of any shareholder, a copy of ACNB's report on Form
10-K for its fiscal year ended December 31, 1998, 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, may be obtained, without charge, from John W. Krichten,
Secretary/Treasurer of ACNB, 675 Old Harrisburg Road, Gettysburg, Pennsylvania
17325.
25
<PAGE>
ACNB CORPORATION
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 4, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints D. Richard Guise and Frank
Elsner, Jr. and each or any of them, proxies of the undersigned, with full power
of substitution to vote all of the shares of ACNB Corporation that the
undersigned shareholder may be entitled to vote at the Annual Meeting of
Shareholders to be held at 675 Old Harrisburg Road, Gettysburg, Pennsylvania
17325, on Tuesday, May 4, 1999, 1:00 p.m., Eastern Daylight Time, and at any
adjournment or postponement of the meeting as follows:
1. TO FIX THE NUMBER OF DIRECTORS OF ACNB AT SIXTEEN (16).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- -------------------------------------------------------------------------------
2. TO FIX THE NUMBER OF CLASS 3 DIRECTORS AT FOUR (4).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- -------------------------------------------------------------------------------
3. ELECTION OF FOUR (4) CLASS 3 DIRECTORS TO SERVE FOR A THREE-YEAR TERM.
Guy F. Donaldson William B. Lower Thomas A. Ritter Ralph S. Sandoe
[ ]FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all nominees
as marked to the contrary below) listed above
The Board of Directors recommends a vote FOR these nominees.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- -------------------------------------------------------------------------------
4. TO FIX THE NUMBER OF CLASS 2 DIRECTORS AT SEVEN (7).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- -------------------------------------------------------------------------------
<PAGE>
5. ELECTION OF THREE (3) ADDITIONAL CLASS 2 DIRECTORS TO SERVE UNTIL THE 2000
ANNUAL MEETING.
Philip M. Jones L. Robert Snyder Harry L. Wheeler
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all nominees
as marked to the contrary below) listed above
The Board of Directors recommends a vote FOR these nominees.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- -------------------------------------------------------------------------------
6. TO FIX THE NUMBER OF CLASS 1 DIRECTORS AT FIVE (5).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- -------------------------------------------------------------------------------
7. ELECTION OF ONE (1) ADDITIONAL CLASS 1 DIRECTOR TO SERVE UNTIL THE 2001
ANNUAL MEETING.
Edgar S. Heberlig
[ ] FOR the nominee [ ] WITHHOLD AUTHORITY
listed above (except to vote for the nominee
as marked to the contrary below) listed above
The Board of Directors recommends a vote FOR this nominee.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- -------------------------------------------------------------------------------
8. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the meeting and any adjournment
or postponement of the meeting.
THIS PROXY, WHEN PROPERLY SIGNED AND DATED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED SHAREHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE AND FOR PROPOSALS 1, 2, 4, AND 6.
Dated: _____________, 1999 ___________________________________
Signature
___________________________________
Number of Shares Held of Record Signature
on March 1, 1999
- ----------------
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED PROMPTLY TO
ACNB 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.
