SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the Registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12
FIRST CHARTER CORPORATION
- -----------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
FIRST CHARTER CORPORATION
- -----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
_________________________________________________________________
(2) Aggregate number of securities to which transactions
applies:
_________________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (1):
[FOOTNOTE (1): Set forth the amount on which the
filing fee is calculated and state how it was
determined.]
_________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_________________________________________________________________
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the form or schedule and the date of its
filing.
(1) Amount previously paid:
_________________________________________________________________
(2) Form, schedule or registration statement no.:
_________________________________________________________________
(3) Filing party:
_________________________________________________________________
(4) Date filed:
_________________________________________________________________
<PAGE>
FIRST CHARTER CORPORATION
22 Union Street, North
Concord, North Carolina 28025
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on May 7, 1996
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of First Charter
Corporation will be held at the Rolling Hills Country Club,
located on West Roosevelt Boulevard in Monroe, North Carolina, on
Tuesday, May 7, 1996, at 3:00 p.m., for the following purposes:
1. To elect five directors for terms expiring in 1999, one
director for a term expiring in 1998 and one director
for a term expiring in 1997;
2. To approve an Amendment to the First Charter
Corporation Comprehensive Stock Option Plan to increase
the number of shares available for issuance thereunder
from 240,000 to 400,000.
3. To ratify the action of the Board of Directors in
selecting KPMG Peat Marwick as independent public
accountants to audit the books of the Corporation for
the current year; and
4. To transact such other business as may properly come
before the meeting or any adjournment or adjournments
thereof.
Pursuant to the provisions of the North Carolina Business
Corporation Act, March 22, 1996 has been fixed as the record date
for the determination of shareholders entitled to notice of and
to vote at such Annual Meeting and, accordingly, only holders of
Common Stock of record at the close of business on that date will
be entitled to notice of and to vote at such meeting and at any
adjournment or adjournments thereof.
You are cordially invited to attend the meeting. Whether or
not you plan to attend, please sign, date and return the
accompanying proxy promptly, so that your shares may be
represented and voted at the meeting. A return envelope is
enclosed for your convenience.
By order of the Board of Directors.
James W. Townsend, Jr.
Secretary
March 25, 1996
<PAGE>
FIRST CHARTER CORPORATION
22 Union Street, North
Concord, North Carolina 28025
______________________________
PROXY STATEMENT
______________________________
1996 Annual Meeting of Shareholders
to be held on May 7, 1996
The following proxy statement, first mailed or delivered to
security holders on or about March 25, 1996, is furnished in
connection with the solicitation by the Board of Directors of
First Charter Corporation (the "Corporation") of proxies for the
Annual Meeting of Shareholders of the Corporation to be held on
May 7, 1996 at 3:00 p.m. at the Rolling Hills Country Club,
located on West Roosevelt Boulevard in Monroe, North Carolina,
and at any adjournment or adjournments thereof (the "Annual
Meeting"). The principal executive offices of the Corporation
are located at 22 Union Street, North, Concord, North Carolina
28025. The Corporation's telephone number is (704) 786-3300.
The Corporation owns all of the outstanding capital stock of
First Charter National Bank, a national banking association
("FCNB"), and Bank of Union, a North Carolina state-chartered
commercial bank ("Union").
The accompanying form of proxy is for use at the Annual
Meeting if a shareholder either will be unable to attend in
person or will attend but wishes to vote by proxy. The proxy may
be revoked in writing by the person giving it at any time before
it is exercised by notice to the Secretary of the Corporation or
by submitting a proxy having a later date, or it may be revoked
by such person appearing at the Annual Meeting and electing to
vote in person. All shares of the Corporation's common stock,
$5.00 par value (the "Common Stock"), represented by valid
proxies received pursuant to this solicitation, and not revoked
before they are exercised, will be voted in the manner specified
therein. Where specifications are not made, proxies will be
voted in favor of (i) electing as directors of the Corporation
the seven nominees named in this Proxy Statement, (ii) approving
the proposed Amendment to the Corporation's Comprehensive Stock
Option Plan to increase the number of shares available for
issuance thereunder from 240,000 to 400,000 and (iii) ratifying
the action of the Board of Directors in selecting KPMG Peat
Marwick to audit the books of the Corporation for the current
year, and will be voted in the discretion of the proxy holders on
any other matters presented at the Annual Meeting.
The entire cost of soliciting these proxies will be borne by
the Corporation. In following up the original solicitation of
the proxies by mail, the Corporation will request brokers and
others to send proxies and proxy material to the beneficial
owners of the Common Stock and will reimburse them for their
expenses in so doing. If necessary, the Corporation may also use
one or more of its regular employees, who will not be specially
compensated therefor, to solicit proxies from the shareholders,
either in person, by telephone or by mail.
Pursuant to the provisions of the North Carolina Business
Corporation Act, as amended (the "Business Corporation Act"),
March 22, 1996 has been fixed as the record date in connection
with the Annual Meeting and, accordingly, only holders of the
6,268,487 outstanding shares of Common Stock of record at the
close of business on that date will be entitled to notice of and
to vote at the Annual Meeting. Each share of Common Stock is
entitled to one vote on each of the matters to be voted upon at
the Annual Meeting, except that shares held by FCNB, whether or
not held in a fiduciary capacity, may not be voted by FCNB in the
election of directors. The holders of a majority of the
outstanding shares entitled to be cast on a matter must be
present in person or represented by proxy at the Annual Meeting
in order to constitute a quorum for the transaction of business
on that matter. In accordance with North Carolina law, votes
withheld from director nominees and abstentions from voting will
be counted for purposes of determining whether a quorum has been
reached at the Annual Meeting. Furthermore, pursuant to the
rules of the National Association of Securities Dealers, Inc.
(the "NASD"), a broker holding shares of Common Stock in nominee
or "street" name must obtain specific voting instructions from
beneficial owners of such shares in order to vote such shares.
Any such shares represented by a duly executed proxy returned by
a broker will be counted for purposes of determining whether a
quorum exists, even if such shares are not voted in certain
matters where voting instructions were not received ("broker non-
votes").
PRINCIPAL SHAREHOLDERS
The following table sets forth each shareholder known to the
Corporation to beneficially own more than 5% of the outstanding
shares of the Common Stock as of December 31, 1995. The Common
Stock is the only class of equity securities of the Corporation
outstanding.
SHARES
BENEFICIALLY OWNED (1)
----------------------
PERCENT OF
NAME AND ADDRESS NUMBER CLASS
------------------------------- ----------- ----------
First Union National Bank
of North Carolina
Capital Management Group
401 South Tryon Street
Charlotte, North Carolina 28202 371,110 (2) 6.0%
First Charter National Bank
Post Office Box 228
Concord, North Carolina 28025 698,767 (3) 11.2
__________________
(1) Unless otherwise noted, all shares of Common Stock set forth
in the table are directly owned, with sole voting and
investment power, by such shareholder. The Corporation has
obtained certain of the information from schedules filed
with the Securities and Exchange Commission pursuant to
Section 13(d) or 13(g) of the Securities Exchange Act of
1934, as amended.
(2) Includes 289,863 shares held in various fiduciary capacities
with respect to which First Union National Bank has shared
voting power and 80,486 shares held in various fiduciary
capacities with respect to which it has sole voting power.
First Union National Bank has shared investment power with
regard to 346,539 shares and sole investment power with
regard to 24,571 shares.
(3) Includes 76,165 shares held in various fiduciary capacities
with respect to which FCNB has sole voting power and 622,602
shares held in various fiduciary capacities with respect to
which it has shared voting power. FCNB has sole investment
power with respect to 81,694 shares and shared investment
power with respect to 45,200 shares.
ELECTION OF DIRECTORS
Under the Corporation's Articles of Incorporation and
Bylaws, the Board of Directors of the Corporation shall have not
fewer than five nor more than twenty-five members as determined
from time to time by not less than 75% of the members of the
Board of Directors or by the shareholders of the Corporation, and
the directors shall be divided into three classes having
staggered three-year terms. The Corporation's Bylaws provide
that the term of a director shall expire at the first
shareholders' meeting following the date on which such director
reaches age 70.
The terms of eight directors expire at the Annual Meeting,
four of whom are serving three-year terms which expire in 1996
and four of whom were elected to the Board of Directors in
December 1995 to fill vacancies created on the Board in
connection with the acquisition of Union (the "Merger"). Since
the 1995 Annual Meeting of Shareholders, Mr. D.C. Linn, Jr.,
whose three-year term will expire at the Annual Meeting, has
reached the mandatory retirement age and therefore will not stand
for re-election to the Board of Directors at the Annual Meeting.
Pursuant to the Bylaws, the Board of Directors has determined not
to fill the vacancy created by his retirement and accordingly has
decreased the number of directors from eighteen to seventeen.
The Board has nominated for election the seven remaining
members whose terms expire at the Annual Meeting and are eligible
for re-election. It is intended that the persons named in the
accompanying form of proxy will vote to elect the five nominees
listed below as directors for three-year terms to expire in 1999,
the one nominee listed below as director for a two-year term to
expire in 1998 and the one nominee listed below for a one-year
term to expire in 1997, unless authority to so vote is withheld.
Each nominee, if elected, will serve until the Annual Meeting of
Shareholders held in 1999, 1998 or 1997, as applicable, or until
such person's earlier resignation or retirement, or until his
successor shall be elected and shall qualify to serve. Although
management expects that each of the nominees will be available
for election, if a vacancy in the slate of nominees is caused by
death or other unexpected occurrence, it is intended that shares
represented by proxies in the accompanying form will be voted for
the election of a substitute nominee selected by the persons
named in the proxy. Directors will be elected by a plurality of
the votes cast. Accordingly, neither votes withheld from
director nominees nor broker non-votes, if any, will have the
effect of a "negative" vote with respect to the election of
directors. The Board of Directors recommends a vote FOR all of
the nominees for election as directors.
The names of the nominees for election to the Board of
Directors and of the continuing directors, their ages, their
principal occupations or employment for the past five years, and
certain other information with respect to such persons is set
forth below. The dates indicated as the dates from which such
persons have served as directors reflect the year in which the
respective directors became directors of the Corporation, which
was formed in 1983. Most of the directors also have been
directors of FCNB or Union (or other banks which have merged into
FCNB) both prior to and since the formation of the Corporation.
NOMINEES FOR THREE-YEAR TERMS EXPIRING IN 1999
[picture of WILLIAM R. BLACK, age 47, is a medical doctor
Dr. Black] specializing in oncology. He has been a director
since 1990.
[picture of GRADY S. CARPENTER, age 67, is the President of
Mr. Carpenter] Security Oil Company, Inc., a wholesale oil
distributor. He has been a director since 1986.
[picture of H. CLARK GOODWIN, age 61, is the President and
Mr. Goodwin] Chief Executive Officer of Bank of Union, a
wholly-owned subsidiary of the Corporation. Mr.
Goodwin has been a director since 1995.
[picture of FRANK H. HAWFIELD, JR., age 62, is the Chairman of
Mr. Hawfield] the Board of Bank of Union, a wholly-owned
subsidiary of the Corporation. Mr. Hawfield is
also the owner of Firestone Home and Auto Supply
Store. Mr. Hawfield has been a director since
1995.
[picture of T. DAVID PROPST, age 45, is the President of
Mr. Propst] Earl's Tire Store, Inc. He has been a director
since 1986.
NOMINEE FOR TWO-YEAR TERM EXPIRING IN 1998
[picture of DR. JERRY E. McGEE, age 53, is President of
Mr. McGee] Wingate University. Prior to being president of
Wingate University, Dr. McGee served as Vice
President for Development at Furman University.
Dr. McGee has been a director since 1995.
NOMINEE FOR ONE-YEAR TERM EXPIRING IN 1997
[picture of JAMES B. FINCHER, age 66, is the owner and
Mr. Fincher] President of Mineral Springs Milling and Farm
Supplies, Inc., a provider of wholesale and retail
agricultural supplies. Mr. Fincher is also the
owner and Vice President of Frontier Meat
Processing, Inc., and Vice President of FAFCO,
Inc., a real estate development and rental
company. Mr. Fincher has been a director since
1995.
DIRECTORS WITH TERMS EXPIRING IN 1997
[picture of JANE B. BROWN, age 64, is a private investor. She
Ms. Brown] has been a director since 1986.
[picture of MICHAEL R. COLTRANE, age 49, is the President and
Mr. Coltrane] Chief Executive Officer of CT Communications,
Inc., a North Carolina telecommunications company.
Mr. Coltrane served as director of the Corporation
from 1983 until 1985, and has currently served as
a director since 1988. Mr. Coltrane also serves
as a director of CT Communications, Inc. and a
director of US Intelco Holdings, Inc.
[picture of J. ROY DAVIS, JR., age 62, is the Chairman of the
Mr. Davis] Board of the Corporation and FCNB. He is also the
principal owner and Chief Executive Officer of S&D
Coffee, Inc., a coffee roasting and beverage
distribution firm. He has been a director since
1983.
[picture of BRANSON C. JONES, age 68, is Industry Consultant
Mr. Jones] and Advisor of Oiles America Corp., a manufacturer
of automobile bearings. Mr. Jones has been a
director since 1983.
[picture of HUGH H. MORRISON, age 48, is the President of E.
Mr. Morrison] L. Morrison Co., Inc., a retail building supply
company. He has been a director since 1985.
DIRECTORS WITH TERMS EXPIRING IN 1998
[picture of J. KNOX HILLMAN, JR., age 54, is the principal
Mr. Hillman] owner and Chief Executive Officer of Shuford
Insurance Agency, Inc., a general insurance
agency. He has been a director since 1984.
[picture of LAWRENCE M. KIMBROUGH, age 55, is the President
Mr. Kimbrough] and Chief Executive Officer of the Corporation and
FCNB. He has been a director since 1986.
[picture of ROBERT F. LOWRANCE, age 47, is the owner of A&A
Mr. Lowrance] Realty Company, a company involved in retail and
commercial real estate sales and development. He
has been a director since 1986.
[picture of ROBERT L. WALL, age 64, served as President of
Mr. Wall] Cabarrus Memorial Hospital until February 28,
1994, at which time he retired. He has been a
director since 1983.
[picture of JAMES B. WIDENHOUSE, age 68, is a private
Mr. Widenhouse]investor. He has been a director since 1983.
No family relationship as close as first cousin exists among
the directors, nominees for director or executive officers of the
Corporation.
COMPENSATION AND ATTENDANCE OF DIRECTORS
During 1995, each director of the Corporation who was not
employed by the Corporation or its subsidiaries was paid $400 for
each meeting of the Board of Directors of the Corporation which
he or she attended and $200 for each Corporation committee
meeting he or she attended. The Corporation also maintains the
Deferred Compensation Plan for Non-Employee Directors (the
"Deferred Compensation Plan"), pursuant to which directors, who
are not also employees of the Corporation, may elect to defer all
or a portion of such director fees. Such deferred fees may be
invested in a cash account, which is credited with interest at an
annual rate equal to the FCNB's Prime Rate, or in a stock-based
account, in which the participant will be credited with units
based on the value of shares of Common Stock of the Corporation.
Amounts invested in the stock account are credited with
additional amounts representing the value of dividends declared
from time to time by the Corporation. Under the Deferred
Compensation Plan, a participant may elect to receive amounts
(payable in cash only) in a lump sum or in equal installments
over five years, following the participant's death, disability,
retirement from the Board of Directors or any other date selected
by the participant which is at least six months following the
participant's election date.
During 1995, each member of the Board of Directors of the
Corporation attended at least 75% of the total number of meetings
of the Board of Directors and any committee or committees on
which he or she served. The Board of Directors met 17 times
during 1995.
COMMITTEES OF THE BOARD OF DIRECTORS
The Corporation has Executive, Audit and Compensation
Committees. The Executive Committee reviews the regularly
scheduled Board of Directors meeting agendas. This Committee
receives various reports from management and makes
recommendations based on management reports to the directors at
the regularly scheduled Board of Directors meetings. Pursuant to
the Corporation's Bylaws, the Executive Committee also serves as
the nominating committee. In such capacity, the Executive
Committee determines the nominees for director in a given year
and may consider written nominations of candidates for election
to the Board of Directors submitted by shareholders to the
Secretary of the Corporation that are accompanied by certain
information regarding such nominees. See "Election of Directors
- -- Nominations for Director." The Executive Committee also
serves the function previously served by the Asset/Liability
Committee. In such capacity, it monitors the financial condition
of the Corporation and makes adjustments in policies affecting
lending, pricing of services, investment securities and liability
positions with a view to current and anticipated interest rates
and other economic conditions.
The Audit Committee reviews the work and reports of the
Corporation's internal auditors and, on an annual basis, reviews
reports of the Corporation's independent auditors and any
examinations of regulatory agencies. The Audit Committee also
establishes the scope and detail of the audit program, which is
conducted by the internal auditors to protect against improper
and unsound practices and to furnish adequate protection of all
assets and records. It also reviews proposals from the
independent public accountants and makes recommendations to the
full Board of Directors.
The Compensation Committee annually reviews and recommends
to the Board of Directors salary grade ranges and merit increase
guidelines. In addition, it recommends to the Board of Directors
the annual budget request for all salaries and overtime and
specifically recommends to the Board of Directors all executive
officers' salaries. It reviews recommendations from management
regarding major benefits plans and recommends to the Board of
Directors annually the formula for matching contributions to the
First Charter Retirement Savings Plan as well as the formula for
funding and payments under the Corporation's Executive Incentive
Bonus Plan. The Compensation Committee also administers the
Corporation's Comprehensive Stock Option Plan and the 1996
Employee Stock Purchase Plan.
The members of each Committee and the number of meetings
held by each Committee during 1995 were as follows:
EXECUTIVE (11 meetings)
- -----------------------------------
Michael R. Coltrane
J. Roy Davis, Jr., Chairman
H. Clark Goodwin
J. Knox Hillman, Jr.
Branson C. Jones
Lawrence M. Kimbrough
Duard C. Linn, Jr.
Hugh H. Morrison
Robert L. Wall
AUDIT (4 meetings)
- -----------------------------------
Grady S. Carpenter
Michael R. Coltrane
Branson C. Jones, Chairman
Robert F. Lowrance
T. David Propst
James B. Widenhouse
COMPENSATION COMMITTEE (7 meetings)
- -----------------------------------
Jane B. Brown
Michael R. Coltrane
J. Roy Davis, Jr.
J. Knox Hillman, Jr., Chairman
Duard C. Linn, Jr.
T. David Propst
Robert L. Wall
NOMINATIONS FOR DIRECTOR
The Corporation's Bylaws set forth the procedures for a
shareholder to follow in order to nominate persons for election
to the Board of Directors. Pursuant to these provisions, a
shareholder generally may properly bring a nomination before the
annual meeting of shareholders in a given year if the shareholder
provides written notice to the Corporation's secretary at least
50 but not more than 75 days prior to the anniversary date of the
shareholders' meeting held in the prior year. This notice must
set forth certain biographical information relating to each
person so nominated by the shareholder. In addition, the notice
must set forth such shareholder's beneficial ownership of the
Common Stock. In its discretion, the nominating committee of the
Board of Directors may consider such nomination for the Board of
Directors' slate of nominees for that year. The Bylaws also set
forth the time by which nominations shall be submitted in the
event that the annual meeting is held more than 30 days before or
60 days after the anniversary date of the previous year's annual
meeting. Finally, the Bylaws set forth under what circumstances
a shareholder may bring a nomination for director before a
special meeting of shareholders and the time within which such
nomination must be submitted. Unless nominations are presented
in accordance with these provisions of the Bylaws, they will be
disregarded as invalid. Shareholders may obtain a copy of the
Corporation's Bylaws from the Corporation, upon written request
to First Charter Corporation, 22 Union Street North, Concord,
North Carolina, 28025, Attention: Robert O. Bratton, and upon
payment of $25.00 to cover the costs of reproduction and mailing.
MANAGEMENT OWNERSHIP OF COMMON STOCK
The following table presents information regarding the
beneficial ownership of the Common Stock as of January 31, 1996
of (i) all current directors and nominees for director, (ii) each
executive officer of the Corporation named in the Summary
Compensation Table contained elsewhere herein and (iii) all
directors, nominees for director and executive officers as a
group.
SHARES
BENEFICIALLY OWNED (1)
----------------------
PERCENT OF
NAME AND ADDRESS NUMBER CLASS
---------------------- ----------- ----------
William R. Black 2,333 *
Robert O. Bratton 60,965 (2) *
Jane B. Brown 50,729 *
Grady S. Carpenter 8,679 *
Michael R. Coltrane 68,016 (3) 1.08%
J. Roy Davis, Jr. 23,819 *
James B. Fincher 38,778 (4) *
Phillip M. Floyd 1,428 (5) *
Robert G. Fox 6,663 (6) *
H. Clark Goodwin 33,986 (7) *
Frank H. Hawfield, Jr. 12,824 *
J. Knox Hillman, Jr. 4,781 *
Branson C. Jones 29,600 (8) *
Lawrence M. Kimbrough 37,928 (9) *
Duard C. Linn, Jr. 221,983 (10) 3.53
Robert F. Lowrance 7,778 *
Jerry E. McGee 3,270 *
Hugh H. Morrison 30,106 (11) *
T. David Propst 12,574 (12) *
Robert L. Wall 4,956 (13) *
James B. Widenhouse 6,492 *
All directors, nominees and
executive officers of the
Corporation as a group (21 persons) 667,688 10.62%
_______________
*Less than 1%.
(1) Unless otherwise noted, all shares of Common Stock set forth
in the table are directly owned, with sole voting and
investment power, by such shareholders.
(2) Includes 5,920 shares represented by options that are
currently exercisable or exercisable within 60 days, 2,523
shares owned by spouse and 251 shares owned by minor
children.
(3) Includes 7,206 shares owned by spouse as to which Mr.
Coltrane disclaims beneficial ownership and 9,600 shares
held in three trusts of which Mr. Coltrane is a co-trustee,
with respect to which he has shared voting and investment
power.
(4) Includes 6,907 shares owned by spouse.
(5) Includes 1,328 shares represented by options that are
currently exercisable or exercisable within 60 days.
(6) Includes 2,347 shares represented by options that are
currently exercisable or exercisable within 60 days.
(7) Includes 165 shares owned by spouse and 1,863 shares owned
by a minor child.
(8) Includes 2,400 shares owned by spouse.
(9) Includes 12,747 shares represented by options that are
currently exercisable or become exercisable within 60 days,
415 shares owned by spouse and 1,224 shares owned by a minor
child.
(10) Includes 25,336 shares owned by spouse and 65,330 shares
held in a family limited partnership with respect to which
Mr. Linn has shared voting and investment power.
(11) Includes 5,878 shares held in trust, 1,061 shares owned by
spouse and 7,283 shares owned by minor children.
(12) Includes 2,538 shares owned by minor children.
(13) Includes 211 shares owned by spouse.
Pursuant to Section 16 ("Section 16") of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), directors
and officers of the Corporation are required to file reports with
the Securities and Exchange Commission indicating their holdings
of and transactions in the Common Stock. To the Corporation's
knowledge, based solely on its review of the copies of such
reports furnished to the Corporation and written representations
that no other reports were required, insiders of the Corporation
complied with all filing requirements.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table indicates for the
past three years the compensation of each person who served as an
executive officer of the Corporation in 1995, including the Chief
Executive Officer (the "named executive officers").
ANNUAL COMPENSATION
--------------------------------
OTHER
ANNUAL
NAME AND SALARY BONUS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)
- ------------------------ ---- -------- ---------- ------------
Lawrence M. Kimbrough 1995 $138,000 $91,080(1)
President and Chief 1994 132,500 92,750
Executive Officer 1993 125,000 62,500
Robert O. Bratton 1995 $102,000 $50,490(1)
Executive Vice 1994 97,500 48,750
President, Chief 1993 92,000 36,800
Operating Officer and
and Chief Financial
Officer
Robert G. Fox 1995 $100,000 $49,500(1)
Executive Vice 1994 95,000 47,500
President (4) 1993 62,577 27,000
H. Clark Goodwin 1995 $106,500 $42,700(7)
President of Union (6) 1994 100,000 12,600
1993 90,000 9,083
Phillip M. Floyd 1995 $ 79,167 $55,019(11) $5,387(12)
Executive Vice 1994 N/A N/A N/A
President (10) 1993 N/A N/A N/A
LONG TERM
COMPENSATION
------------
AWARDS
------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR (#) ($)
- ------------------------ ---- ------------ ------------
Lawrence M. Kimbrough 1995 4,100 $16,372(2)
President and Chief 1994 7,633 9,364
Executive Officer 1993 8,000 12,000
Robert O. Bratton 1995 2,500 $11,674(3)
Executive Vice 1994 4,900 9,745
President, Chief 1993 4,933 8,832
Operating Officer and
and Chief Financial
Officer
Robert G. Fox 1995 2,400 $11,442(5)
Executive Vice 1994 4,733 3,337
President (4) 1993 4,800 0
H. Clark Goodwin 1995 15,000(8) $19,989(9)
President of Union (6) 1994 0 11,783
1993 0 11,400
Phillip M. Floyd 1995 5,620 $ 286(13)
Executive Vice 1994 N/A N/A
President (10) 1993 N/A N/A
__________________
(1) Represents amounts paid pursuant to the Corporation's
Executive Incentive Bonus Plan. See "Report of Board of
Directors on Executive Compensation" for a brief description
of the Executive Incentive Bonus Plan.
(2) Consists of (i) $15,070 contributed by the Corporation under
the Retirement Savings Plan (the "Savings Plan"), a defined
contribution plan intended to qualify under Sections 401(a)
and 401(k) of the Internal Revenue Code of 1986, as amended
(the "Code"), and (ii) $1,302 representing the dollar value
of the premium paid by the Corporation for term life
insurance.
(3) Consists of (i) $11,138 contributed by the Corporation under
the Savings Plan, and (ii) $536 representing the dollar
value of the premium paid by the Corporation for term life
insurance.
(4) Mr. Fox was hired by the Corporation in April 1993.
(5) Consists of (i) $10,920 contributed by the Corporation under
the Savings Plan, and (ii) $522 representing the dollar
value of the premium paid by the Corporation for term life
insurance.
(6) Mr. Goodwin first became an executive officer of the
Corporation upon consummation of the Corporation's
acquisition of Union, effective December 21, 1995.
Compensation information with respect to periods prior to
that date reflect compensation of Mr. Goodwin from Bank of
Union.
(7) Represents amounts paid pursuant to Union's bonus plan.
(8) Options granted pursuant to the terms of the merger of the
Corporation and Union.
(9) Consists of (i) $12,189 contributed by Union under the Union
401(k) Plan, and (ii) $7,800 representing the dollar value
of the premium paid for term life insurance.
(10) Mr. Floyd is Executive Vice President of the Corporation's
Trust and Investment Division. Prior to joining the
Corporation in March 1995, Mr. Floyd was Trust Group
Executive from February 1982 to March 1995 for Southern
National Bank, Winston-Salem, North Carolina.
(11) Includes $39,186 paid pursuant to the Corporation's
Executive Incentive Bonus Plan and $15,833 paid upon the
executive's employment by the Corporation.
(12) Consists of gross-up payments for certain federal and state
income tax obligations.
(13) Represents the dollar value of the premium paid by the
Corporation for term life insurance.
STOCK OPTION PLANS
The Corporation has in effect the Comprehensive Stock Option
Plan pursuant to which the Compensation Committee may grant stock
options to officers and other key employees of the Corporation
and its subsidiaries. In addition, at fiscal year-end, the
Corporation also had in effect the 1993 Employee Stock Purchase
Plan (the "1993 ESPP") and the 1996 Employee Stock Purchase Plan
(the "1996 ESPP"). Pursuant to the 1993 ESPP, no additional
options may be granted, and options outstanding at year-end are
exercisable in 1996. As of fiscal year-end, no options had been
granted under the 1996 ESPP.
The following table indicates option grants pursuant to the
Comprehensive Stock Option Plan during fiscal year 1995 to the
named executive officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- ----------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS/
UNDERLYING SARS GRANTED EXERCISE
OPTIONS/SARS TO EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#) YEAR ($/SH) DATE
- ---------------- ------------ -------------- -------- ----------
L. M. Kimbrough 4,100 (1) 7.22% $21.50 12/14/05
R. O. Bratton 2,500 (1) 4.40% $21.50 12/14/05
R. G. Fox 2,400 (1) 4.22% $21.50 12/14/05
H. Clark Goodwin 15,000 (2) 26.40% $21.50 12/21/05
Phillip M. Floyd 3,320 (3) 5.84% $14.88 03/07/05
2,300 (1) 4.05% $21.50 12/14/05
GRANT DATE
PRESENT
NAME VALUE (4)
- ---------------- ----------
L. M. Kimbrough $ 31,205
R. O. Bratton $ 19,028
R. G. Fox $ 18,266
H. Clark Goodwin $114,165
Phillip M. Floyd $ 17,488
$ 17,505
__________________
(1) Represents shares covered by options granted pursuant to the
Corporation's Comprehensive Stock Option Plan. All such
options granted under the Comprehensive Stock Option Plan in
1995 vest at the rate of 20% per year over five years, based
on the date of grant. Such options have an exercise price
equal to 100% of fair market value of such shares on the
date of grant.
(2) Options granted pursuant to the terms of the merger of the
Corporation and Union.
(3) Options granted as part of an employment offer.
(4) Based on the Black-Scholes option pricing model adapted for
use in valuing executive stock options. The actual value,
if any, an executive may realize will depend on the excess
of the stock price over the exercise price on the date the
option is exercised, so that there is no assurance the value
realized by an executive will be at or near the value
estimated by the Black-Scholes model. The estimated values
under the Black-Scholes model for options granted under the
Comprehensive Stock Option Plan are based on the following
assumptions: exercise price is 100% of the fair market
value at date of grant; exercise term is ten years; no
discounts have been taken for vesting or restrictions; the
risk free rate is 5.9% (based on the 10-year Treasury note
yield as of the date the options were issued); the
volatility factor is .315 (based on the preceding 12
months); and the dividend yield is 2.9% (based on the
preceding 12 months).
The following table sets forth a summary of certain
information with respect to the exercise of stock options during
1995 by the named executive officers and the value of such
executive's unexercised stock options held at fiscal year end
(including options outstanding under the Comprehensive Stock
Option Plan and options outstanding under the 1993 ESPP).
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF
SECURITIES UNDERLYING
SHARES UNEXERCISED OPTIONS/SARS
ACQUIRED ON VALUE AT FISCAL YEAR-END (#)
EXERCISE REALIZED --------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE
- ---------------- ----------- -------- ----------- -------------
L. M. Kimbrough 1,766 $20,079 12,267 12,100
R. O. Bratton 4,340 $41,991 5,520 7,673
R. G. Fox 3,186 $29,767 2,347 6,400
H. Clark Goodwin 0 $ 0 0 15,000
Phillip M. Floyd 0 $ 0 664 4,956
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS/SARS
AT FISCAL YEAR-END ($) (1)
--------------------------
NAME EXERCISABLE UNEXERCISABLE
- ---------------- ----------- -------------
L. M. Kimbrough $149,908 $79,373
R. O. Bratton $ 59,321 $52,869
R. G. Fox $ 19,964 $35,227
H. Clark Goodwin $ 0 $ 0
Phillip M. Floyd $ 4,396 $17,583
___________________
(1) Determined based on the closing price of $21.50 of the
Common Stock as reported on the NASDAQ National Market
System as of December 29, 1995.
CHANGE IN CONTROL AGREEMENTS
During 1995, the Corporation entered into respective
agreements with certain of its officers, including certain of the
named executive officers, providing for certain payments to such
officers in the event their employment is terminated following a
"change in control" of the Corporation. For purposes of the
agreements, a "change in control" generally includes a merger or
similar transaction involving the Corporation in which the
Corporation's shareholders receive less than 50% of the voting
stock of the surviving corporation, the sale or transfer of
substantially all the Corporation's assets, certain acquisitions
of more than 20% of the Common Stock by any person or group other
than a person or group who owned more than 5% of the Common Stock
as of the date of the agreements unless prior approval of the
Board is received, certain instances in which the composition of
the Corporation's Board of Directors changes by more than 50%
during a two year period, or any other transaction that would
constitute a change in control required to be reported by the
Corporation in a proxy statement or the acquisition of control of
the Corporation under applicable federal banking laws. To be
entitled for payments upon such a change in control, (a) the
officer's employment must be terminated other than for cause, or
(b) the officer must terminate his employment for good reason, in
either case within one year following the change in control.
"Cause" is defined generally as willful misconduct, use of
narcotics or alcohol in a manner that affects the officer's
duties, conviction of a felony or serious misdemeanor involving
moral turpitude, embezzlement or theft or gross inattention or
dereliction of duty. "Good reason" generally means a material
reduction in the officer's duties or a change in title resulting
in reduction of the officer's duties, a material reduction in
salary or bonus, or the relocation of the officer to an area more
than 30 miles from their primary employment location immediately
preceding a change in control. The respective agreements of the
named executive officers provide for continued payment of base
salary and average bonus amounts, as well as certain continued
benefits provided to employees generally, for a period of 24
months (35 months in the case of Mr. Kimbrough) following an
event which would entitle such officer to payments under his
agreement.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Recommendations regarding the compensation of the
Corporation's executive officers generally are presented by the
Compensation Committee (the "Committee") to the Corporation's
entire Board of Directors for approval. Each member of the
Committee is a non-employee director. The Senior Management
Personnel Committee prepares recommendations on salary grade
ranges and merit increase guidelines for review by the
Compensation Committee as well as the annual budget request for
salaries and benefits. The Senior Management Personnel Committee
approves salaries for all personnel, with the exception of
executive officers, within the parameters of the annual salary
administration program. The Chief Executive Officer ("CEO")
presents recommendations to the Compensation Committee for the
annual salaries of the executive officers. The Committee, in
turn, reviews and analyzes all information submitted to it.
Thereafter the Committee determines its recommendations to the
Board of Directors regarding compensation of all executive
officers of the Corporation, including recommendations regarding
the compensation of the CEO. During 1995, the Board of Directors
approved all recommendations of the Committee.
Set forth below is a report of the Committee regarding
executive compensation for fiscal year 1995.
EXECUTIVE COMPENSATION POLICIES AND PROGRAM. The
Corporation's executive compensation program is designed to
* Attract and retain qualified management of the
Corporation;
* Enhance short-term financial gains of the Corporation;
and
* Enhance long-term shareholder value in the Corporation.
The total compensation package for executives of the
Corporation includes cash and equity-based compensation. Annual
compensation may consist of a base salary, a bonus and grants of
stock options. The Corporation's policy is generally to provide
base salary that might fall below the median base salary paid to
comparable executives, while focusing more on incentive
compensation that is linked to the performance of the
Corporation. The Corporation strives, however, to provide each
executive officer with total annual cash compensation (base
salary and bonus) in an amount that would be paid on the open
market for a fully qualified officer of that position.
During 1993, the Corporation hired an independent consultant
to review the Corporation's annual compensation package for its
executive officers. This consultant obtained a job description
for each of the executive officers of the Corporation at that
time. Based on these descriptions, the consultant generated a
report (the "Report") that provided compensation information
regarding comparable jobs in other financial institutions,
setting forth, among other things, the 50th and 75th percentiles
for each of base salary total annual cash compensation (base
salary and bonus). In general, the Committee used the 1993
information provided in the Report, adjusted for inflation, to
maintain levels of total annual cash compensation for 1995
(salary and potential bonus amounts, each as discussed below)
that fell between the 50th and 75th percentiles as set forth in
the Report.
The sources used by the consultant to generate this
information consisted of (i) its internal Compensation Data
Bank--Banking Survey Executive Report, which compiles information
regarding financial institutions located throughout the nation
with $200 to $500 million in assets; (ii) ECS/Wyatt Data
Services--Top Management Compensation-Regression Analysis Report,
which compiles information regarding financial institutions
located throughout the nation with $200 to $500 million in
assets; (iii) Cole Surveys Financial Institutions Position
Report: Commercial Banks, which compiles information regarding
financial institutions located throughout the nation with $200-
$499 million in assets; and (iv) Bank Administration Institute--
Bank Cash Compensation Survey, which compiles information
regarding financial institutions located throughout the Southeast
with $100-$499 million in assets. The institutions included in
these sources are not necessarily the same group of institutions
that comprise the Independent Bank Index used in the Performance
Graph contained elsewhere in this Proxy Statement. However, the
group of institutions comprising the Bank Administration
Institute's Bank Cash Compensation Survey is comparable to those
used in the Independent Bank Index.
BASE SALARIES. Generally, the Committee determines the
level of base salary for the CEO and three executive vice
presidents of the Corporation and salary ranges for all other
personnel, in each case based on competitive norms, derived from
annual surveys published by several independent banking
institutes or private companies specializing in financial
analysis of financial institutions. Actual salary changes are
based upon a written evaluation of each individual's performance
based on numerous criteria and the weighing of such criteria
using a previously agreed-upon formula. In addition, with
respect to each executive, including the CEO, the Committee
considers the individual's performance, including such
individual's total level of experience in the banking industry,
his record of performance and contribution to the success of the
Corporation relative to his job responsibilities and his overall
service to the Corporation. During 1995, the Committee used the
information set forth in the Report, adjusted for inflation, to
maintain 1995 base salaries for its executive officers that were
at or below the median salaries reported in the Report.
BONUSES. The Corporation also maintains the Executive
Incentive Bonus Plan (the "Bonus Plan") for executive officers,
from which performance-oriented bonuses may be paid to certain
key executive officers in any given year. The Committee annually
determines the executive officers eligible to participate in the
Bonus Plan. In general, those executives that are considered to
have major policy input with respect to the Corporation, or who
are in a position to generate a major impact on the Corporation's
earnings, are selected to participate in the Bonus Plan. Actual
bonuses paid pursuant to the Bonus Plan are based on various
return on assets ("ROA") levels of the Corporation at fiscal year
end. No bonuses may be paid unless the Corporation reaches a
minimum ROA, determined at the beginning of each year.
Pursuant to the Bonus Plan, the Corporation annually
establishes a bonus pool amount for each participating executive,
which is equal to a given percentage of the base salary of such
executive. Such percentages are determined based on the
executives' relative responsibilities and ability to impact the
financial and operating performance of the Corporation. The
amount of a participant's bonus pool that is eligible to be paid
at the end of the year differs depending on the level of the
Corporation's ROA. Of the amount eligible to be paid to a
participant, 50% is paid to the executive on a non-discretionary
basis. The remaining half of the eligible amount may be paid to
the participant, in the discretion of the Committee, based on the
participant's individual performance. When evaluating the
performance of a participant, the Committee considers the
Corporation's actual operating performance (such as reduced
levels of past due loans, reduced levels of non-performing and
restructured loans, improvements in asset quality and
corresponding reductions in provision amounts, increased non-
interest income and continued control of corporate expenses) in
relation to its targeted long range action plan and the
executive's ability to impact the various components thereof.
Other criteria considered include the executive's initiative,
contribution to overall corporate performance and managerial
ability.
The Corporation achieved a pre-Merger ROA of 1.83% with
respect to the 1995 fiscal year, which was in excess of the ROA
target set forth in the Bonus Plan. As a result, the entire
amount of each executive's bonus pool was available to be awarded
as bonus. Therefore, 50% of each bonus pool was awarded to the
respective executive on a non-discretionary basis. Furthermore,
the remainder of each executive's bonus pool was awarded to him
based upon the evaluation process described above.
OPTIONS. Stock options comprise the final component of
executives' core annual compensation. This equity-based
compensation is designed to be a long-term incentive for
executives to enhance shareholder value in the Corporation. The
Corporation maintains the Comprehensive Stock Option Plan (the
"Stock Option Plan") pursuant to which the Corporation grants
stock options (both qualified and non-qualified) to its key
employees. The Committee administers the Stock Option Plan in
its sole discretion, including the determination of the
individuals to whom options will be granted, the terms on which
such options are granted and the number of shares subject to such
options. In general, when determining the key employees to whom
options shall be granted, the Committee considers such employees'
relative job responsibilities and abilities to impact the
financial and operating performance of the Corporation.
Prior to 1993, the Committee had granted options to
executives on a fairly subjective basis, without guidance as to
practices among comparable institutions. In an effort to form a
more standardized method of granting options, the Corporation
requested the independent consultant hired in 1993 to review the
practices of comparable institutions in granting options.
Accordingly, using the information provided in its internal
Compensation Data Bank--Banking Survey Executive Report
(previously described), the consultant determined a scale whereby
the aggregate value of options granted is based on a multiple of
base salary. Based on the policy the Committee developed in
1993, when it granted options in 1995, the Committee considered
several factors, including the number of stock options currently
held by executives and their terms, the maximum aggregate number
of options to be granted under the Stock Option Plan in 1995, as
well as the cumulative amount outstanding, and the aggregate
number of options to be granted as a percentage of total shares
outstanding. Based on these factors, the Committee determined
that the aggregate value of options to be granted to each
executive generally should continue to be at the median of the
scale. Accordingly, using the scale the Committee determined the
applicable multiple of base salary for each executive and granted
options to such executive with an aggregate value (based on the
closing price of the Common Stock on the date of grant) equal to
such amount.
In addition to the Stock Option Plan, the Corporation
maintains an employee stock purchase program pursuant to which
options are granted periodically to all employees of the
Corporation, including executive officers, at an exercise price
equal to 90% of the fair market value of the stock at the date of
grant. The number of shares subject to options granted to each
employee, including executive officers, is determined
automatically based on base salary levels of all employees.
OTHER. In addition to the above forms of compensation, the
Corporation also provides group term life insurance for its
employees, including its executive officers. Executive officers
also participate in the Corporation's Retirement Savings Plan
(the "Savings Plan"), which is a defined contribution plan
intended to qualify under Section 401(a) of the Code and
containing a cash or deferred arrangement under Section 401(k) of
the Code. Pursuant to the Savings Plan, an eligible employee may
elect to defer between 1% and 10% of compensation. In addition,
the Corporation contributes annually to each participant's
account, out of net profits of the Corporation, 3% of the
participant's base compensation plus a portion of a discretionary
matching amount as determined by the Board of Directors from time
to time, allocated to participants' accounts in proportion to
their elective deferrals up to 6% for such year. Furthermore, an
additional discretionary amount as determined by the Board of
Directors from time to time may be contributed to the accounts of
participants, based on the level of employee contributions, and
is allocated to participants' accounts in proportion to their
base compensation for such year. Finally, certain of the
Corporation's executives including the CEO are parties to change
in control agreements that provide for continued salary, bonus
and benefits for a certain period of time upon termination of
employment following a change in control of the Corporation.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The Board of
Directors of the Corporation determines the compensation of the
CEO based upon recommendations of the Committee. The CEO's base
salary is determined by a review of salaries of top executives of
comparable financial institutions, using the process previously
described. In keeping with the Corporation's general policy with
respect to base salary and bonus, the CEO's base salary is set at
an amount which is approximately 20% lower than the base salaries
for comparable executives. The Compensation Committee instead
places more emphasis on available cash bonus, as a means of more
directly linking the CEO's total annual compensation to the
performance of the Corporation. Total annual compensation for
the CEO in 1995 was slightly below the median for comparable
executives. In 1994, the CEO was awarded the maximum amount of
his eligible bonus pool with respect to such year, which amount
was determined according to a specific bonus pool formula. Of
that amount, 50% was paid to the CEO on a non-discretionary
basis, according to the performance of the Corporation in 1994.
The remaining half of such amount was paid, in the discretion of
the Committee, based on the CEO's individual performance in that
year. The Corporation achieved a pre-Merger ROA of 1.83% with
respect to the 1995 fiscal year, which was in excess of the ROA
target set forth in the Bonus Plan for that year. As a result,
the entire amount of the CEO's bonus pool was available to be
awarded as bonus. In accordance with the terms of the Bonus
Plan, 50% of this amount was awarded to the CEO on a non-
discretionary basis. The remainder of the CEO's bonus pool was
awarded to him as the result of an evaluation of the
Corporation's overall improved financial and operating
performance in 1995, including increases in stock value,
increases in trust department income, decreases in past due and
classified loans and containment of costs in general. The Board
of Directors of the Corporation has approved the CEO's
participation in the Bonus Plan in 1996. Finally, the
Compensation Committee made a stock option grant to the CEO
pursuant to the Corporation's Stock Option Plan in December 1995.
In determining the number of shares subject to options so
granted, the Compensation Committee considered the CEO's
responsibilities and potential contribution to the performance of
the Corporation relative to that of the other executives, and the
actual number of shares subject to such options was determined
using the scale previously described.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS:
Jane B. Brown Duard C. Linn, Jr.
Michael R. Coltrane T. David Propst
J. Roy Davis, Jr. Robert L. Wall
J. Knox Hillman, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
Michael R. Coltrane, a member of the Compensation Committee,
served as Executive Vice President of the Corporation and First
Charter until 1988.
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative
total shareholder return on the Common Stock, based on the market
value of the Common Stock and assuming reinvestment of dividends,
with the Independent Bank Index, a published banking industry
index, and the Standard & Poor's 500 Stock Index, a broad equity
market index.
FIRST CHARTER CORPORATION
FIVE-YEAR PERFORMANCE INDEX
1990 1991 1992 1993 1994 1995
____ ____ ____ ____ ____ ____
FIRST CHARTER CORPORATION 100 105 188 291 389 609
INDEPENDENT BANK INDEX 100 111 152 188 225 299
S&P 500 INDEX 100 131 141 155 157 215
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FCNB and Union have had, and expect to have in the future,
banking transactions in the ordinary course of business with
directors, officers and principal shareholders of the Corporation
and its subsidiaries and their associates. All loans and
commitments included in such transactions were made and are
expected to be made on substantially the same terms, including
interest rate and collateral, as those prevailing at the time for
comparable transactions with other borrowers and did not and are
not expected to involve more than the normal risk of
collectibility or present other unfavorable features.
APPROVAL OF AMENDMENT TO THE FIRST CHARTER CORPORATION
COMPREHENSIVE STOCK OPTION PLAN
The Corporation currently maintains the First Charter
Corporation Comprehensive Stock Option Plan (the "Comprehensive
Plan"), which was approved by the Corporation's shareholders at
the 1992 Annual Meeting of the Corporation. The purpose of the
Comprehensive Plan is to attract and retain superior personnel
for positions of substantial responsibility with the Corporation
and to provide key employees with additional incentive to
contribute to the success of the Corporation.
The Comprehensive Plan currently authorizes the issuance of
up to 240,000 shares of Common Stock pursuant to options granted
under such Plan. As of January 31, 1996, an aggregate of 60,941
shares of Common Stock remained available for future grants under
the Comprehensive Plan. The Board of Directors has determined
that it would be desirable to have an additional 160,000 shares
of Common Stock available for future grants under the
Comprehensive Plan, in order to have available appropriate long-
term incentives and competitive compensation opportunities for
the key employees of the Corporation and its subsidiaries.
Accordingly, subject to shareholder approval, the Board of
Directors has adopted an amendment to the Comprehensive Plan (the
"Amendment") providing for an increase in the aggregate number of
shares available for issuance under the Comprehensive Plan from
240,000 to 400,000, resulting in an aggregate of 220,941 shares
remaining available for future grants of options under the
Comprehensive Plan. The text of the Amendment is set forth in
Exhibit A to this Proxy Statement.
Approval of the Amendment will require the affirmative vote
of a majority of the shares of Common Stock represented in person
or by proxy at the Annual Meeting and entitled to vote.
Accordingly, abstentions from voting with respect to this matter
will have the effect of a "negative" vote, but broker non-votes,
if any, will not. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THE ADOPTION OF THE AMENDMENT.
Options to be granted under the Comprehensive Plan may be
incentive stock options for purposes of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or
nonstatutory options. The Comprehensive Plan is designed to
satisfy the requirements of Rule 16b-3 under the Exchange Act
("Rule 16b-3"), and, therefore, the committee that administers
such Plan must consist of "disinterested persons" for purposes of
Rule 16b-3. The Comprehensive Plan currently is administered by
the Compensation Committee of the Board of Directors. Generally
the Compensation Committee has complete authority to determine
the key employees of the Corporation and its subsidiaries to whom
options may be granted, as well as the terms of such options, all
as hereinafter described. The Compensation Committee also has
discretion to interpret the Comprehensive Plan and to make other
determinations necessary or advisable for administration of such
Plan.
Key employees of the Corporation and its subsidiaries
(including officers and directors who are employees) who are
identified by the Compensation Committee shall be eligible to
receive options under the Comprehensive Plan. The Compensation
Committee shall identify such persons taking into account the
duties of the respective employees, their current and potential
contributions to the success of the Corporation or its
subsidiaries, the anticipated number of years of effective
service remaining, and such other factors as the Compensation
Committee shall deem relevant in connection with accomplishing
the purposes of the Comprehensive Plan. There is no maximum
number of key employees eligible to receive options under the
Comprehensive Plan. The Compensation Committee currently
anticipates, however, that the eligible group will comprise
approximately 25 persons.
The number of shares of Common Stock for which Options may
be granted under the Comprehensive Plan and option rights (both
as to number of shares and the option exercise price per share)
shall be appropriately adjusted for any increase or decrease in
the number of outstanding shares of Common Stock resulting from
payment of a stock dividend on the Common Stock, a subdivision or
combination of shares of the Common Stock or from a
reclassification of the Common Stock, and in the event of a
merger or consolidation.
Options may be granted for terms as determined by the
Compensation Committee. Options designated as incentive stock
options cannot be exercised after the expiration of ten years
from the date of grant. No option granted pursuant to the
Comprehensive Plan shall be exercisable within six months of the
date the option is granted.
The purchase price of the Common Stock under each option
("Option Price") shall be determined by the Compensation
Committee, but in no event shall the Option Price be less than
the par value of the Common Stock. Furthermore, the Option Price
for options designated as incentive stock options shall be not
less than 100% of the fair market value of the Common Stock as of
the date of grant of such option as required by the Code. In
addition, the Option Price of incentive stock options which are
granted to an employee who owns more than 10% of the outstanding
capital stock of the Corporation at the time an incentive stock
option is granted may not be less than 110% of the fair market
value of the Common Stock on the date of the grant and the option
shall not be exercisable after the expiration of five years from
the date it is granted. "Fair market value" is defined by the
Comprehensive Plan as (i) the average of the closing bid and
asked prices for the Common Stock in the over-the-counter market
as reported by the National Association of Securities Dealers
Automated Quotation ("NASDAQ") System if the Common Stock is not
listed on a national securities exchange or on the NASDAQ
National Market System, (ii) the closing price of the Common
Stock if the Common Stock is listed on a national securities
exchange or traded on the NASDAQ National Market System, or (iii)
the fair value thereof determined in good faith by the Board of
Directors if the Common Stock is not listed on a national
securities exchange or quoted on the NASDAQ National Market
System or the over-the-counter market.
Payment in full of the Option Price for options exercised by
an employee must be made at the time of exercise of the option.
The option price may be paid (i) in cash or by check payable to
the order of the Corporation, (ii) by delivery of shares of
Common Stock already owned by, and in the possession of, the
optionee, (iii) if authorized by the Compensation Committee or if
specified in the option agreement, by promissory note made by the
optionee in favor of the Corporation, upon the terms and
conditions determined by the Compensation Committee and secured
by the shares issuable upon exercise, or (iv) any combination
thereof. Payment of the Option Price by delivery of shares of
Common Stock in the Corporation would result in the transaction
being treated under the Code as a Section 1036 exchange with the
participant receiving a carry over basis in the new shares and
gain or loss being deferred until the disposition of the new
shares, provided that the applicable holding period requirements
are met with respect to the shares of Common Stock surrendered
upon exercise of the options.
The Comprehensive Plan provides that if the employment of
any person to whom an option has been granted is terminated for
any reason other than death, disability, retirement with the
consent of the Corporation, or termination without cause, his or
her option or options shall terminate immediately. If an
optionee retires with the consent of the Corporation, or any of
its subsidiaries, the optionee may exercise his or her option to
the extent that he or she was entitled to exercise it as of the
date of said retirement or termination, but in no event after the
expiration of ten years from the date such option was granted.
If an optionee dies within three months after retirement (where
such retirement is with the consent of the Corporation), his or
her option may be exercised at any time within one year after
retirement, but in no event after the expiration of ten years
from the date the option is granted. If an optionee dies or
becomes disabled while he or she is an employee of the
Corporation or any of its subsidiaries, the optionee's option may
be exercised at any time within one year after the date of his or
her death or disability, but in no event after the expiration of
ten years from the date of grant.
The Comprehensive Plan provides that options granted under
the Comprehensive Plan will become immediately exercisable in
full, regardless of their terms, upon the occurrence of certain
events relating to a change in control of the Corporation. Such
events include (i) the adoption of a plan of merger or
consolidation of the Corporation with any other corporation or
other entity as a result of which the holders of the voting
capital stock of the Corporation as a group would receive less
than fifty percent of the voting capital stock of the surviving
or resulting corporation, (ii) the approval by the Board of
Directors of an agreement providing for the sale or transfer
(other than as security for obligations of the Corporation) of
substantially all the assets of the Corporation, or (iii) in the
absence of prior expression of approval of the Board of
Directors, the acquisition of more than twenty percent of the
Corporation's voting capital stock by any person within the
meaning of Section 13(d)(3) of the Exchange Act, other than a
person, or group including a person, who beneficially owned, as
of the effective date of the Comprehensive Plan, more than five
percent of the Corporation's securities.
The provision accelerating the exercise date of options
granted under the Comprehensive Plan may render more difficult or
discourage a merger, tender offer or proxy contest, the
acquisition of control by a holder of a large block of the
Corporation's securities or the removal of incumbent management,
by allowing the holders of such options to increase the
percentage of the stock of the Corporation that they control. To
management's knowledge, there are no actions currently
contemplated by any party that would lead to a change in control
of the Corporation.
The Board of Directors may amend the Comprehensive Plan at
any time as deemed in the best interest of the Corporation.
However, the Comprehensive Plan is intended to meet the
requirements of Rule 16b-3 under the Exchange Act, which requires
shareholder approval for certain material amendments.
For federal income tax purposes, the grant of non-qualified
options under the Comprehensive Plan will not result in any
income being taxed to the optionee at the time of the grant or in
any tax deduction for the Corporation at such time. At the time
a non-qualified option is exercised under the Comprehensive Plan,
the optionee will be treated as having received ordinary income
equal to the excess of the fair market value of the shares of
Common Stock acquired as of the date of exercise over the Option
Price paid. The Corporation will be allowed a deduction for
federal income tax purposes equal to the amount of ordinary
income attributable to the optionee upon exercise. The
optionee's holding period for the shares of Common Stock acquired
will commence on the date of exercise, and the tax basis of the
shares will be the greater of their fair market value at the time
of exercise or the Option Price.
The grant or exercise of an incentive stock option pursuant
to the terms of the Comprehensive Plan will not result in the
recognition of income for the optionee, and the Corporation will
receive no deduction for federal income tax purposes. If certain
holding period requirements (at least two years from the date of
grant of the option and at least one year from transfer of the
shares pursuant to the exercise of the option) are satisfied
prior to the disposition of the shares that were acquired upon
the exercise of an option, the excess of the sales price over the
Option Price generally will be taxed to the employee as a capital
gain, with no tax consequences to the Corporation. If the
holding requirements are not met, the employee generally will
recognize at the time of disposition of the shares ordinary
income in the amount of the difference between the Option Price
and the lesser of (i) fair market value of the shares on the date
of exercise, or (ii) the amount received on the subsequent sale
of the shares. The spread between the exercise price of the
incentive stock option and the fair market value of the option
shares at the date of exercise constitutes a tax preference item
for purposes of computing the alternative minimum tax on the
participant's federal income tax return. Any gain recognized as
a result of such a disqualifying disposition in excess of the
amount treated as ordinary income will be taxed as a capital
gain. In the case of a disposition prior to satisfaction of the
holding period requirements that results in the recognition of
ordinary income by the employee, the Corporation will be entitled
to a deduction in the amount of such ordinary income in the year
of disposition.
The following table summarizes the prior grant of options to
the named executive officers, all executive officers as a group
and all employees as a group (including all officers who are not
executive officers). Non-employee directors of the Corporation
are not eligible to receive options under the Comprehensive Plan.
Because the grant of options under the Comprehensive Plan is in
the discretion of the Compensation Committee, no determination
can be made as to the number of options, if any, that will be
granted in the future to key employees of the Corporation and its
subsidiaries.
SHARES WEIGHTED AVERAGE
COVERED BY PRICE FOR
OPTIONS GRANTED OPTIONS GRANTED
--------------- ----------------
Lawrence M. Kimbrough
President and Chief Executive
Officer 24,367 $12.09
Robert O. Bratton
Executive Vice President, Chief
Operating Officer and Chief
Financial Officer 16,233 $11.57
Robert G. Fox
Executive Vice President 10,667 $14.35
H. Clark Goodwin
President of Union 15,000 $21.50
Phillip M. Floyd
Executive Vice President 5,620 $17.59
Current Executive Officers
as a group (5 persons) 71,887 $14.70
All other employees of the
Corporation and its subsidiaries 179,059 $12.77
On January 31, 1996, the approximate fair market value of
each share of Common Stock was $20.25.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed KPMG Peat Marwick,
independent public accountants, as its auditors for the fiscal
year 1996. KPMG Peat Marwick has acted in this capacity since
1983. The Corporation has been advised by KPMG Peat Marwick that
neither the firm nor any of its members or associates has any
direct financial interest or material indirect financial interest
in the Corporation or its subsidiaries other than as its
auditors. Although the selection and appointment of the
independent auditors are not required to be submitted to a vote
of the shareholders, the Board of Directors deems it advisable to
obtain the shareholders' ratification of this appointment. The
Board of Directors understands that a representative from KPMG
Peat Marwick will be present at the shareholders' meeting, will
have the opportunity to make a statement if he desires to do so
and will be available to respond to appropriate questions. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF THIS FIRM AS INDEPENDENT AUDITORS OF THE
CORPORATION FOR THE 1996 FISCAL YEAR. Should the shareholders
not ratify the appointment of KPMG Peat Marwick, the Board of
Directors will consider a change in auditors for the next fiscal
year.
ANNUAL REPORT
The 1995 Annual Report of the Corporation, including
financial statements, accompanies this Proxy Statement.
SHAREHOLDER PROPOSALS FOR CONSIDERATION
AT THE 1996 ANNUAL MEETING
Written shareholder proposals for consideration for the 1997
Annual Meeting of Shareholders should be addressed to the
Corporate Secretary, 22 Union Street, North, Concord, North
Carolina 28025, and received by the Corporation no later than
November 28, 1996.
FORM 10-K
COPIES OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1995, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, EXCLUDING EXHIBITS, ARE AVAILABLE WITHOUT
CHARGE UPON WRITTEN REQUEST TO FIRST CHARTER CORPORATION, 22
UNION STREET NORTH, CONCORD, NORTH CAROLINA 28025, ATTENTION:
ROBERT O. BRATTON, CHIEF FINANCIAL OFFICER. COPIES OF EXHIBITS
ARE AVAILABLE UPON PAYMENT OF $25.00 TO COVER THE COSTS OF
REPRODUCTION.
OTHER BUSINESS
The Board of Directors knows of no other matter to come
before the meeting. However, if any other matter requiring a
vote of the shareholders should arise, it is the intention of the
persons named in the enclosed proxy to vote such proxy in
accordance with their best judgment.
By Order of the Board of Directors
James W. Townsend, Jr.
Secretary
DATED: March 25, 1996
<PAGE>
EXHIBIT A
PROPOSED AMENDMENT TO THE
FIRST CHARTER CORPORATION
COMPREHENSIVE STOCK OPTION PLAN
Section 3.2 of the Corporation's Comprehensive Stock Option
Plan, as it is proposed to be amended, is set forth below in its
entirety:
"SECTION 3.2 STOCK SUBJECT TO OPTION. Subject to
adjustment as provided in Section 3.8 hereof, shares to be issued
upon the exercise of Options shall be authorized but unissued
shares of Common Stock or issued shares of Common Stock of the
Corporation, and the aggregate amount of Common Stock which may
be issued upon exercise of all Options under the Plan shall not
exceed 400,000 of such shares. If any Option granted under the
Plan shall expire or terminate for any reason, without having
been exercised in full, the shares covered by the Option but not
purchased shall again be available for Options to be granted
under the Plan."<PAGE>
PROXY
This Proxy is Solicited on Behalf
of the Board of Directors of
FIRST CHARTER CORPORATION
Annual Meeting of Shareholders, May 7, 1996
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
Shareholder of First Charter Corporation, a North Carolina
corporation (the "Corporation"), hereby constitutes and appoints
J. Knox Hillman, David Propst and Jane B. Brown, and each or any
of them, severally as attorneys and proxies for the undersigned,
with full power of substitution, for and on behalf of the
undersigned to act and vote as indicated below, according to the
number of shares of the Corporation's Common Stock held of record
by the undersigned on March 22, 1996, and as fully as the
undersigned would be entitled to act and vote if personally
present at the Annual Meeting of Shareholders to be held at the
Rolling Hills Country Club, 2722 West Roosevelt Boulevard,
Monroe, North Carolina at 3:00 p.m., May 7, 1996, and any
adjournment or adjournments thereof (the "Annual Meeting"), as
follows:
(1) ELECTION OF DIRECTORS
[ ] FOR electing the five nominees listed below
for a term expiring in 1999, the one director
nominee listed below for a term expiring 1998
and the one nominee listed below for term
expiring 1997.
[ ] WITHHOLD AUTHORITY to vote for election of
all nominees listed below.
(Instruction: To withhold authority to vote for any
individual nominee, strike a line through the nominee's
name in the list below.)
TERMS EXPIRING 1999 TERM EXPIRING 1998 TERM EXPIRING 1997
------------------- ------------------ ------------------
William R. Black James B. Fincher Dr. Jerry E. McGee
Grady S. Carpenter
H. Clark Goodwin
Frank H. Hawfield
T. David Propst
(2) APPROVAL OF THE AMENDMENT TO THE FIRST CHARTER
CORPORATION COMPREHENSIVE STOCK OPTION PLAN TO INCREASE
THE AGGREGATE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
THEREUNDER FROM 240,000 TO 400,000
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) RATIFICATION OF SELECTION OF KPMG PEAT MARWICK AS
ACCOUNTANTS FOR 1996
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion, the proxies are authorized to act
and vote upon any other business which may properly be
brought before said meeting or any adjournment or
adjournments thereof.
The undersigned hereby ratifies and confirms all that said
attorneys and proxies or any of them lawfully do or cause to be
done by virtue hereof. A majority of said attorneys and proxies
who shall be present and acting as such at the Annual Meeting or
any adjournment thereof, or if only one such attorney and proxy
be present and acting, then that one, shall have and may exercise
all powers hereby conferred.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR OF PROPOSALS
1, 2 AND 3.
The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders, dated March 25, 1996, the Proxy
Statement and the 1995 Annual Report to Shareholders furnished
therewith.
Dated this ____ day of ____________, 1996.
__________________________________(SEAL)
__________________________________(SEAL)
NOTE: Signature should agree with name
on stock certificate as printed thereon.
When shares are held by joint tenants,
both should sign. Executors,
administrators, trustees and other
fiduciaries, and persons signing on
behalf of corporations or partnerships,
should so indicate when signing.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. THANK
YOU.
