PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 Section 240.14a-11(c)
or Section 240.14a-12
FRANKLIN FINANCIAL SERVICES 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $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 transaction
applies:
_________________________________________________________________
3) Per unit price or other underlying value of
transaction
computed pursuant to Exchange Act Rule 0-11 (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 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>
FRANKLIN FINANCIAL SERVICES CORPORATION
20 South Main Street
P. O. Box T
Chambersburg, PA 17201-0819
(717)264-6116
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 30, 1996
TO THE SHAREHOLDERS OF FRANKLIN FINANCIAL SERVICES CORPORATION:
Notice is hereby given that, pursuant to the call of its
directors, the regular Annual Meeting of shareholders of FRANKLIN
FINANCIAL SERVICES CORPORATION, Chambersburg, Pennsylvania, will
be held on Tuesday, April 30, 1996, at 10:30 A.M. at the
Lighthouse Restaurant, 4301 Philadelphia Avenue, Chambersburg,
Pennsylvania, for the purpose of considering and voting upon the
following matters:
1. ELECTION OF DIRECTORS. To elect the five nominees
listed in the accompanying Proxy Statement for the
term
specified.
2. OTHER BUSINESS. To consider such other business as
may
properly be brought before the meeting and any
adjournments thereof.
Only those shareholders of record at the close of business
on March 15, 1996, shall be entitled to notice of and to vote at
the Annual Meeting.
It is requested that you promptly execute the enclosed
Proxy
and return it in the enclosed postpaid envelope as soon as
possible, whether or not you plan to attend the meeting. You are
cordially invited to attend the meeting. If you attend, you may
withdraw your Proxy and vote your shares in person.
A copy of the Annual Report of Franklin Financial Services
Corporation is enclosed.
BY ORDER OF THE BOARD OF
DIRECTORS
APRIL E. ROSENBAUM
Secretary
Enclosures
April 4, 1996
<PAGE>
PROXY STATEMENT
Dated and to be Mailed April 4, 1996
FRANKLIN FINANCIAL SERVICES CORPORATION
20 South Main Street
P. O. Box T
Chambersburg, PA 17201-0819
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 1996
TABLE OF CONTENTS
GENERAL INFORMATION .......................................... 1
Date, Time, and Place of Meeting....................... 1
Shareholders Entitled to Vote.......................... 1
Purpose of Meeting..................................... 1
Solicitation of Proxies................................ 1
Revocability and Voting of Proxies..................... 1
Voting of Shares and Principal Holders Thereof......... 2
Shareholder Proposals.................................. 3
Recommendations of the Board of Directors.............. 3
INFORMATION CONCERNING THE ELECTION OF DIRECTORS.............. 3
General Information.................................... 3
Information about Nominees and Continuing Directors.... 4
Meetings and Committees of the Board of Directors...... 7
Compensation of Directors.............................. 7
Executive Officers..................................... 8
Executive Compensation and Related Matters............. 8
Transactions with Directors and Executive Officers.....15
Compliance with Section 16(a) of the Exchange Act......15
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS..............15
ADDITIONAL INFORMATION........................................16
OTHER MATTERS.................................................16
<PAGE>
GENERAL INFORMATION
Date, Time, and Place of Meeting
The regular Annual Meeting of the shareholders of Franklin
Financial Services Corporation (hereinafter, "Franklin
Financial") will be held on Tuesday, April 30, 1996, at
10:30 a.m. at the Lighthouse Restaurant, 4301 Philadelphia
Avenue, Chambersburg, Pennsylvania.
Shareholders Entitled to Vote
Shareholders of record at the close of business on March
15,
1996, are entitled to notice of and to vote at the meeting.
Purpose of Meeting
Shareholders will be asked to consider and vote upon the
following matters at the Annual Meeting: (1) the election of
five directors, and (2) such other business as may be properly
brought before the meeting and any adjournments thereof.
Solicitation of Proxies
This Proxy Statement is furnished in connection with the
solicitation of proxies, in the accompanying form, by the Board
of Directors of Franklin Financial for use at the Annual Meeting.
The expense of soliciting proxies will be borne by
Franklin
Financial. In addition to the use of the mails, directors,
officers, and employees of Franklin Financial and of any
subsidiary may, without additional compensation, solicit proxies
personally or by telephone.
Farmers and Merchants Trust Company of Chambersburg
(hereinafter, "F&M Trust") is a wholly-owned subsidiary of
Franklin Financial. This Proxy Statement, while prepared in
connection with the Annual Meeting of Shareholders of Franklin
Financial, contains certain information relating to F&M Trust
which will be identified where appropriate.
Revocability and Voting of Proxies
The execution and return of the enclosed proxy will not
affect a shareholder's right to attend the meeting and to vote in
person. Any proxy given pursuant to this solicitation may be
revoked by delivering written notice of revocation to April E.
Rosenbaum, Secretary of Franklin Financial, at any time before
the proxy is voted at the meeting. Unless revoked, any proxy
given pursuant to this solicitation will be voted at the meeting
in accordance with the instructions thereon of the shareholder
giving the proxy. In the absence of instructions, all proxies
will be voted FOR the election of the five nominees identified in
this Proxy Statement. Although the Board of Directors knows of
no other business to be presented, in the event that any other
matters are brought before the meeting, any proxy given pursuant
to this solicitation will be voted in accordance with the
recommendations of the management of Franklin Financial.
Shares held for the account of shareholders who
participate
in the Dividend Reinvestment Plan will be voted in accordance
with the instructions of each shareholder as set forth in his
proxy. If a shareholder who participates in the Dividend
Reinvestment Plan does not return a proxy, the shares held for
his account under the Dividend Reinvestment Plan will not be
voted.
Voting of Shares and Principal Holders Thereof
At the close of business on March 1, 1996, Franklin
Financial had outstanding 2,030,465 shares of common stock; there
is no other class of stock outstanding. As of such date,
117,265 shares of Franklin Financial common stock were held by
the Trust Department of F&M Trust as fiduciary (representing
approximately 5.78% of such shares outstanding) and will be voted
FOR the election of the five nominees identified in this Proxy
Statement.
A majority of the outstanding common stock present in
person
or by proxy will constitute a quorum for the conduct of business
at the Annual Meeting. Abstentions and broker non-votes will be
treated as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. Each share is
entitled to one vote on all matters submitted to a vote of the
shareholders. A majority of the votes that all shareholders
present in person or by proxy are entitled to cast at a meeting
at which a quorum is present is required to approve any matter
submitted to a vote of the shareholders, unless a greater vote is
required by law or by the Articles of Incorporation or Bylaws.
In the case of the election of directors, the five candidates
receiving the highest number of votes shall be elected directors
of Franklin Financial; accordingly, in the absence of a contested
election, votes withheld from a particular nominee or nominees
will not influence the outcome of the election.
To the knowledge of Franklin Financial, no person owned of
record or beneficially on March 1, 1996 more than five percent
(5%) of the outstanding common stock of Franklin Financial,
except as set forth in the table which follows.
<PAGE>
<TABLE>
<CAPTION>
Amount
and Nature
of
Beneficial
Name and Address of
Ownership as of
Title of Class Beneficial Owner
3/1/96 Percent of Class
<S> <C> <C>
<C>
Common Stock, Farmers and Merchants Trust
117,265 shares(1) 5.78%
$1.00 par value Company of Chambersburg
per share Trust Department
20 South Main Street
Chambersburg, PA 17201-0819
<FN>
Footnote
(1) Shares are held on behalf of various trusts, estates
and other accounts, with respect to
which F&M Trust acts as fiduciary.
</TABLE>
Shareholder Proposals
Shareholder proposals intended to be presented at the 1997
Annual Meeting of the shareholders of Franklin Financial must be
received at the executive offices of Franklin Financial at
20 South Main Street, P.O. Box T, Chambersburg, Pennsylvania
17201-0819, no later than December 5, 1996, in order to be
included in the proxy statement and proxy form to be prepared by
Franklin Financial in connection with the 1997 Annual Meeting.
Recommendations of the Board of Directors
The Board of Directors recommends that the shareholders
vote
FOR the election of the five nominees identified in this Proxy
Statement.
INFORMATION CONCERNING THE ELECTION OF
DIRECTORS
General Information
The Bylaws of Franklin Financial provide that the Board of
Directors shall consist of not less than five nor more than 25
persons and that the directors shall be classified with respect
to the time they shall severally hold office by dividing them
into three classes, each consisting as nearly as possible of one-
third of the number of the whole Board of Directors. The Bylaws
further provide that the directors of each class shall be elected
for a term of three years so that the term of office of one class
of directors shall expire in each year. Finally, the Bylaws
provide that the number of directors in each class of directors
shall be determined by the Board of Directors.
A majority of the Board of Directors may increase the
number
of directors between meetings of shareholders. Any vacancy
occurring in the Board of Directors, whether due to an increase
in the number of directors, resignation, retirement, death, or
any other reason, may be filled by appointment by the remaining
directors. Any director who is appointed to fill a vacancy shall
hold office until his successor is duly elected by the
shareholders at the next Annual Meeting or at a special meeting
called for that purpose.
The Board of Directors has fixed the number of directors
at
thirteen. There are five directors whose terms of office will
expire at the 1996 Annual Meeting and eight continuing directors
whose terms of office will expire at the 1997 or 1998 Annual
Meeting. The Board of Directors proposes to nominate the
following five persons for election to the Board of Directors for
the term specified below:
CLASS A
For a Term of
Three Years
Dennis W. Good, Jr.
G. Warren Elliott
William E. Snell, Jr.
Martha B. Walker
Robert G. Zullinger
In the event that any of the foregoing nominees is unable
to
accept nomination or election, any proxy given pursuant to this
solicitation will be voted in favor of such other persons as the
management of Franklin Financial may recommend. However, the
Board of Directors has no reason to believe that any of its
nominees will be unable to accept nomination or to serve as a
director if elected.
Section 3.5 of Article III of the Bylaws of Franklin
Financial requires that nominations, other than those made by or
on behalf of the existing management of Franklin Financial, must
be made in writing and must be delivered or mailed to the
Secretary of Franklin Financial no later than the thirtieth
business day prior to the date of the Annual Meeting. The
chairman of the meeting must determine whether nominations have
been made in accordance with the requirements of the Bylaws and,
if he determines that a nomination is defective, the nomination
and any votes cast for the nominee shall be disregarded.
Information about Nominees and Continuing Directors
Information concerning the five persons to be nominated
for
election to the Board of Directors of Franklin Financial at the
1996 Annual Meeting and concerning the eight continuing directors
and the executive officers of Franklin Financial named in the
Summary Compensation Table appearing elsewhere in this Proxy
Statement is set forth in the table which follows.
<PAGE>
<TABLE>
<CAPTION>
Shares of Stock of Franklin
Business Experience, Including Principal
Financial Beneficially
Occupation for the
Owned and Percentage of
Past 5 Years, and
Total Outstanding Stock
Name and Age Other Directorships(1)
Director Since(2) as of 2/15/96(3)
<S> <C> <C>
<C> <C>
CLASS A - Nominees
Dennis W. Good, Jr. (60) Partner, McGuire, Woods,
1988 24,908(4) 1.23%
Battle & Boothe (law firm)
G. Warren Elliott (41) Franklin County Commissioner;
1994 565 *
Regional Representative,
General Code Publishers (legal
publisher)
William E. Snell, Jr. (47) President and Chief Executive
1995 12,575(5) *
Officer, Franklin Financial
and F&M Trust; formerly
President and Chief Executive
Officer, Commonwealth Bank, and
President and Chief Operating
Officer, Commonwealth BancShares
Corporation (1990-1995)
Martha B. Walker (49) President, Walker, Van Horn &
MacBride, P.C. (law firm)
1979 7,807(6) *
Robert G. Zullinger (63) Vice Chairman, Franklin
1981 33,818(7) 1.67%
Financial and F&M Trust;
formerly President and Chief
Executive Officer, Franklin
Financial and F&M Trust
(1981-1996)
<CAPTION>
CLASS B - Continuing
Directors
(Term expires 1998)
Charles S. Bender, II (51) Executive Vice President,
1981 39,126(8) 1.93%
Franklin Financial and
F&M Trust
Charles R. Diller (68) Owner, Diller's Plumbing
1972 8,239(9) *
and Heating (contractor)
Omer L. Eshleman (62) Retired -- formerly President
1992 12,369(10) *
and Chief Executive Officer,
Mont Alto State Bank
Jeryl C. Miller (55) Vice President and Secretary,
1983 12,541(11) *
Charles W. Karper, Inc.
(trucking industry)
<CAPTION>
CLASS C - Continuing
Directors
(Term expires 1997)
Jay L. Benedict, Jr. (66) Attorney -- formerly partner,
1969 12,014(12) *
Benedict & Gabler (law firm);
Chairman of the Board of
Franklin Financial and F&M Trust
John M. Hull, III (68) Retired -- formerly President
1972 5,148(13) *
Noelker and Hull Associates,
Inc. (architects)
H. Huber McCleary (57) President, McCleary Oil Co.
1990 12,312(14) *
Charles M. Sioberg (55) Vice President, Martin &
1982 3.185(15) *
Martin, Inc. (engineers)
All directors and
executive officers as
a group (15 persons)
221,362(16) 10.90%
<FN>
FOOTNOTES
*The number of shares listed represents less than one percent of
the total number of shares of common stock
outstanding.
1. No nominee or continuing director is a director of
any other company which has one or more
classes of securities registered with the Securities and Exchange
Commission pursuant to Section 12 or which
is required to file periodic reports with the Securities and
Exchange Commission pursuant to Section 15(d)
of the Securities Exchange Act of 1934.
2. Reflects service as a director of Franklin Financial
and service as a director of F&M
Trust, predecessor of Franklin Financial.
3. Beneficial ownership of shares of the common stock
of Franklin Financial is determined in
accordance with Securities and Exchange Commission Rule 13d-3d(1)
which provides that a person shall be
deemed to own any stock with respect to which he, directly or
indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares: (i)
voting power, which includes the power to vote
or to direct the voting of the stock, or (ii) investment power,
which includes the power to dispose or to
direct the disposition of the stock. Unless otherwise indicated
in a footnote appearing below, all shares
reported in the table above are owned directly by the reporting
person.
4. Includes 16,131 shares held in the name of Mr.
Good's wife and 3,805 shares held in the
name of Mr. Good's adult daughter, beneficial ownership of which
is disclaimed.
5. Includes 7,325 shares of restricted stock issued
under the Long-Term Incentive Plan of
1990.
6. Includes 1,575 shares held by Martha B. Walker as
custodian for her children, 568 shares
held in the name of Farmers and Merchants Trust Co., Custodian
for the Individual Retirement Account of
Martha B. Walker, and 1,970 shares held in the name of Farmers
and Merchants Trust Co., Custodian for the
Individual Retirement Account of John R. Walker. Also includes
1,710 shares held in the name of The Baum
Publishing Co., Inc., beneficial ownership of which is
disclaimed.
7. Includes 462 shares held in the name of Mr.
Zullinger's wife, 668 shares issuable under the
Employee Stock Purchase Plan, and 2,514 shares held for Mr.
Zullinger's account under the Farmers and
Merchants Trust Company of Chambersburg Profit Sharing Plan.
8. Includes 40 shares held in the name of Mr. Bender's
children, 934 shares held by
Mr. Bender's father, beneficial ownership of which is disclaimed,
10,476 shares of restricted stock issued
under the Long-Term Incentive Plan of 1990, and 477 shares
issuable under the Employee Stock Purchase Plan.
9. Includes 210 shares held by Charles R. Diller as
custodian for his grandchildren, 4,015
shares held in a trust account for the benefit of Mr. Diller, and
4,014 shares held in a trust account for
the benefit of Mr. Diller's wife.
10. Includes 1,035 shares of restricted stock.
11. Includes 3,067 shares held in the name of Mr.
Miller's wife and 4,571 shares held in the
name of Mr. Miller's sons.
12. Includes 6,007 shares held in the name of Mr.
Benedict's wife.
13. Includes 2,573 shares held in a trust account for
the benefit of Mr. Hull and 2,575 shares
held in a trust account for the benefit of Mr. Hull's wife.
14. Includes 817 shares held in the name of Mr.
McCleary's wife.
15. Includes 478 shares held by Charles M. Sioberg, as
custodian for his children, 186 shares
held in a brokerage account with his daughter, and 719 shares
held as co-trustee for the benefit of
Mr. Sioberg's children.
16. Includes 30,029 shares of restricted stock issued
under the Long-Term Incentive Plan of
1990, 1,841 shares issuable under the Employee Stock Purchase
Plan, and 3,322 shares held under the Farmers
and Merchants Trust Company of Chambersburg Profit Sharing Plan.
</TABLE>
Meetings and Committees of the Board of Directors
The Board of Directors of Franklin Financial has a
standing
Audit Committee and a standing Incentive Compensation Committee,
but does not have a standing Nominating Committee.
Members of the Audit Committee during 1995 were Dennis W.
Good, Jr., Chairman, and Messrs. Hull, McCleary and Sioberg.
Mr. Benedict is an ex-officio member of the Audit Committee. The
Audit Committee met four times during the past year. The Audit
Committee is responsible for overseeing the internal accounting
and auditing methods and procedures of Franklin Financial and its
subsidiaries and for recommending annually to the Board of
Directors the engagement of an independent public accounting firm
to examine the consolidated financial statements of Franklin
Financial.
Members of the Incentive Compensation Committee during
1995
were Jay L. Benedict, Chairman, Ms. Walker and Messrs. Diller,
Hull, Miller and Sioberg. The Incentive Compensation Committee
met four times during the past year. The Incentive Compensation
Committee currently administers the Long-Term Incentive Plan of
1990 and the Employee Stock Purchase Plan and, in conjunction
with the Personnel Committees of the Board of Directors of F&M
Trust, oversees the administration of Franklin Financial's
compensation policies and employee benefits plans.
The Board of Directors of Franklin Financial met ten times
during 1995. All incumbent directors attended at least 75
percent of the meetings of the Board of Directors and the
committees on which they served.
Compensation of Directors
Directors of Franklin Financial who are not salaried
officers of Franklin Financial or one of its subsidiaries are
paid $250 for attendance at each meeting of the Board of
Directors and $150 for attendance at each committee meeting of
the Board of Directors.
Executive Officers
The following persons are the executive officers of
Franklin
Financial:
<TABLE>
<CAPTION>
Name Age Office Held
<S> <C> <C>
Jay L. Benedict, Jr. 66 Chairman of the Board of
Franklin
Financial since 1983 and of
F&M Trust
since 1981
Robert G. Zullinger 63 Vice Chairman of Franklin
Financial
and F&M Trust since 1996;
President
and Chief Executive Officer
of
Franklin Financial and F&M
Trust
(1981-1996)
William E. Snell, Jr. 47 President and Chief
Executive Officer
of Franklin Financial and
F&M Trust
since 1996; President of
Franklin
Financial and F&M Trust
(1995)
Charles S. Bender, II 51 Executive Vice President of
Franklin
Financial since 1983 and of
F&M Trust
since 1981
Frank S. Elliott 54 Sr. Vice President of
Franklin
Financial and F&M Trust
since 1988
Elaine G. Meyers 48 Treasurer and Chief
Financial Officer
of Franklin Financial and
Vice
President/Finance of F&M
Trust since
1988
</TABLE>
Robert G. Zullinger, who has served as Chief Executive
Officer of Franklin Financial and F&M Trust for the past 15
years, stepped down as Chief Executive Officer effective March 7,
1996 in anticipation of his retirement in July of this year, but
will retain his position as Vice Chairman of both organizations.
William E. Snell, Jr., President of Franklin Financial and F&M
Trust, has been named by the Board of Directors of both
organizations to succeed Mr. Zullinger as Chief Executive
Officer.
Executive Compensation and Related Matters
Summary of Cash and Certain Other Compensation
The following table provides certain summary information
concerning compensation paid or accrued by Franklin Financial and
the Banks to Robert G. Zullinger, the Chief Executive Officer of
Franklin Financial, and to each of the other most highly
compensated executive officers of Franklin Financial whose
combined 1995 salary and bonus compensation exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation
Awards Payouts
(a) (b) (c) (d) (e)
(f) (g) (h) (i)
Securities
Name Other
Underly- All
and Annual
Restricted ing Other
Principal Compen-
Stock Options/ LTIP Compen-
Position Salary Bonus sation
Award(s)(1) SARs Payouts sation(2)
Year ($) ($) ($)
($) (#) ($) ($)
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
Robert G. Zullinger, 1995 $152,880 None $12,971
None None $11,112 $5,250
Chief Executive Officer
1994 $145,600 None $10,237
None None $ 9,260 $4,500
1993 $130,000 None $ 5,594
None None $ 7,408 $2,865
William E. Snell, Jr., 1995 $ 96,923 $20,000 None
None None None None
President(3)
Charles S. Bender, II 1995 $109,200 None $ 8,992
None None $ 7,702 $4,202
Executive Vice
President 1994 $104,000 None $ 7,097
None None $ 6,418 $3,432
1993 $ 95,500 None $ 3,878
None None $ 5,135 $2,115
<FN>
Footnotes
1. Messrs. Zullinger and Bender held a total of 3,271 shares
and 5,305 shares, respectively, of restricted
stock with an aggregate value of $85,864 and $139,256,
respectively as of December 31, 1995. Dividends are
payable on these shares if and to the extent paid on
Franklin Financial common stock generally.
2. Consists of matching contribution to Section 401(k) Profit
Sharing Plan.
3. Mr. Snell was employed by Franklin Financial on April 17,
1995.
</TABLE>
Defined Benefit Pension Plan
The following table shows, for the salary levels and
years of service indicated, the annual pension benefit, before a
Social Security offset of 0.6 percent (0.6%) of covered
compensation for each year of service to a maximum of 35 years
(but without reflecting the maximum pension benefit limitations
established under Section 415 of the Internal Revenue Code),
payable under the defined benefit pension plan maintained by the
Bank commencing at age 65 under the present pension benefit
formula:
<PAGE>
<TABLE>
<CAPTION>
PENSION PLAN TABLE
YEARS OF SERVICE
Covered
Remuneration 15 20 25
30 35 40 45
<S> <C> <C> <C>
<C> <C> <C> <C>
$ 50,000 $13,125 $17,500 $21,875
$26,250 $ 30,625 $ 33,500 $ 36,375
75,000 19,688 26,250 32,813
39,376 45,938 50,250 54,563
100,000 26,250 35,000 43,750
52,500 61,250 67,000 72,750
125,000 32,813 43,750 54,688
65,625 76,563 83,750 90,938
150,000 and 39,375 52,500 65,625
78,750 91,876 100,500 109,125
Over
</TABLE>
A participant's remuneration covered by the Plan is the
average of the highest five consecutive year's compensation
(salary and bonus as reported in the Summary Compensation Table
appearing above) in the ten years preceding normal retirement.
Current compensation covered by the plan as of December 31, 1995
for Messrs. Zullinger and Bender was $137,025 and $101,794,
respectively. Mr. Snell will not be eligible to participate in
the Plan until May 1, 1996. As of December 31, 1995, Messrs.
Zullinger, Snell and Bender were credited with 45.5, 0 and 21
years of service, respectively, for benefit accrual purposes
under the Plan. The normal retirement benefit under the plan is
a single-life annuity equal to: (i) 1.15 percent (1.15%) of the
average of the highest five consecutive years' compensation in
the 10 years preceding normal retirement, multiplied by a
participant's number of years of service from the date of
employment to the retirement date, plus (ii) 0.6 percent (0.6%)
of such compensation in excess of Social Security covered
compensation (the taxable wage base averaged over the 35 year
period ending with the last day of the calendar year in which the
participant attains Social Security retirement age), multiplied
by a participant's number of years of service (up to a maximum of
35 years) from the date of employment to the retirement date.
This benefit is limited by the maximum benefit as specified under
Section 415 of the Internal Revenue Code of 1986, as amended.
Compensation Committee Report on Executive Compensation
The Incentive Compensation Committee of the Board of Directors of
Franklin Financial (the "Committee") administers the executive
compensation programs of Franklin Financial and its subsidiaries.
The Committee consists of six independent directors.
Executive Compensation Policies
The Committee administers two components of the executive
compensation programs ' base salaries and long-term incentives.
The Committee has established an executive compensation policy to
assist it in administering these two programs.
The policy is to provide Franklin Financial's executives with a
total compensation program that is fair in light of competitive
compensation practices, that attracts and retains qualified
executives, that places a portion of total pay at risk (to be
earned through the achievement of performance goals), and that
helps to align management's interests with those of shareholders.
Fair pay is defined as pay levels that are at or approach the
median of competitive compensation practices.
Competitive compensation practices are determined from time to
time, as follows. The Committee uses data from compensation
surveys of the banking industry to determine median pay practices
for similar positions at comparably sized organizations.
Compensation disclosures made by a peer group of comparably sized
Pennsylvania banks are also used to determine competitive pay
practices at the top management level. This group of
Pennsylvania banking organizations bears no direct relationship
to those companies represented in the Mid-Atlantic Banking Index
appearing in the stock performance graph set forth elsewhere in
this proxy statement because the companies represented in the
Index are too numerous, and because some are too small and others
too large for appropriate and meaningful compensation
comparisons. Additionally, the Committee's understanding of
competitive salary increases is used in estimating competitive
pay levels.
The Committee uses a long-term incentive program to link total
pay to the performance of Franklin Financial. This program
provides participants the opportunity to earn a combination of
cash and stock awards contingent upon the achievement of long-
term corporate earnings objectives. A goal of this program is to
help align the financial interests of the program's participants
with those of shareholders by linking total pay to the
achievement of long-term corporate earnings objectives. The
policy of using a long-term incentive is designed to instill a
performance focus that is longer-term in nature than is typical
of peer practices. The policy is to provide long-term incentive
opportunities that are fair in light of competitive practices
with respect to incentive opportunities.
The executive officers of Franklin Financial are also generally
provided with those benefits available to all employees. Certain
additional benefits may also be provided to the executive
officers on a limited basis when such practices appear to be
common in the banking industry and serve a legitimate business
function.
Relationship of Performance under Compensation
Plans
The Committee administers a long-term incentive plan for members
of senior management, which has historically included Messrs.
Zullinger and Bender and now includes Mr. Snell. (Other senior
officers also participate in the plan.) Under the plan,
participants receive awards of restricted stock and cash,
contingent upon the achievement of specified earnings objectives
over a period of years; earnings objectives are established for
five years into the future; and the allocation of the award
between cash and stock is also fixed at the outset.
Achievement of any one year's earnings objective results in the
vesting of a portion of the restricted stock award and/or a
distribution of a portion of the aggregate cash award. Failure
to meet the earnings objective in a given year results in the
permanent forfeiture of that year's portion of the cash award.
Furthermore, failure to meet the annual earnings objective means
that no restricted shares vest that year. After the expiration
of ten years from the date of the award, however, all unvested
shares of restricted stock will vest, provided that the
participant remains an employee of Franklin Financial or one of
its subsidiaries.
In 1995, Franklin Financial had net income of approximately
$4.179 million. This resulted in earnings per share of $2.17,
return on assets of 1.34%, and return on equity of 12.5%. This
level of earnings surpassed the long-term incentive plan goal for
1995, thereby triggering the distribution of cash awards under
the plan and accelerating the vesting of restricted stock awards
under the plan.
In recruiting Mr. Snell for the role of President of Franklin
Financial and F&M Trust, the Committee offered him the
possibility of earning a cash bonus at year-end 1995, based upon
his performance. In December 1995, the Committee, at its
discretion -- based on its assessment of Mr. Snell's performance,
including the effectiveness of his transition into the community
and Franklin Financial -- authorized the payment of a $20,000
bonus to Mr. Snell, which is reported in the summary compensation
table appearing above.
1995 Compensation for the Chief Executive
Officer
Based on its compensation policy as summarized above and its
understanding of competitive pay practices, in November 1994 the
Committee approved a 5.1% salary increase resulting in an annual
salary of $153,000 for Mr. Zullinger, effective January 1, 1995.
This salary remained in effect throughout the year.
Because Franklin Financial generated net income of approximately
$4.179 million in 1995 and exceeded the goal established under
the long-term incentive plan, the cash portion of Mr. Zullinger's
long-term incentive award ($11,112) was paid to him and 4,313
shares of previously awarded restricted stock vested on
December 31, 1995.
Impact of Omnibus Budget Reconciliation Act of
1993
(OBRA)-Section 162(m)
The passage of OBRA brought about a limitation on the
deductibility for federal income tax purposes of annual
compensation in excess of $1 million payable to certain officers
of Franklin Financial. The Committee does not foresee current
compensation arrangements exceeding this level. Accordingly, the
Committee has no plans to modify the compensation policies of
Franklin Financial in response to the provisions of
Section 162(m) of the Internal Revenue Code of 1986. The
Committee will evaluate this matter on an ongoing basis.
The foregoing report is furnished by Jay L. Benedict, Chairman of
the Compensation Committee, Ms. Walker, and Messrs. Diller, Hull,
Miller, and Sioberg, who served as members of the Incentive
Compensation Committee during 1995.
<PAGE>
Performance Graph
The Securities and Exchange Commission requires that a publicly
held company include in its proxy statement a stock performance
graph comparing its five-year cumulative total return to
shareholders with the returns generated by an industry-specific
index (or peer group index) and with the return generated by a
broad market index.
The following graph compares the cumulative total return to
shareholders of Franklin Financial with the NASDAQ Composite
Index (a broad market index prepared by Media General Financial
Services) and with the Mid-Atlantic Banking Index (also prepared
by Media General Financial Services) for the five year period
ended December 31, 1995, in each case assuming an initial
investment of $100 and the reinvestment of dividends.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Franklin $100 $105 $125 $184 $205 $249
Financial
NASDAQ $100 $128 $130 $156 $163 $212
Mid-Atlantic $100 $133 $167 $207 $197 $298
Banks
</TABLE>
<PAGE>
Transactions with Directors and Executive Officers
Some of the directors and executive officers of
Franklin Financial and F&M Trust and the companies with which
they are associated were customers of and had banking
transactions with F&M Trust in the ordinary course of business
during 1995. All loans and commitments to loan made to such
persons and the companies with which they are associated were
made on substantially the same terms, including interest rates,
collateral, and repayment terms, as those prevailing at the time
for comparable transactions with other persons and did not
involve more than a normal risk of collectibility or present
other unfavorable features. It is anticipated that F&M Trust
will enter into similar transactions in the future.
Martha B. Walker, a member of the Boards of
Directors
of Franklin Financial and F&M Trust, is president of Walker, Van
Horn & MacBride, P.C. Walker, Van Horn & MacBride has provided
legal services to F&M Trust for many years and is expected to
continue to do so in the future.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934
requires that the directors and certain officers of Franklin
Financial file with the Securities and Exchange Commission
reports of ownership and changes in ownership with respect to
shares of Franklin Financial common stock beneficially owned by
them. Based solely upon its review of copies of such reports
furnished to it and written representations made by its directors
and those officers who are subject to such reporting
requirements, Franklin Financial believes that during the
calendar year ended December 31, 1995, all filing requirements
applicable to its directors and officers were complied with,
except that a report on Form 4 was inadvertently filed late by
H. Huber McCleary, a director of Franklin Financial.
RELATIONSHIP WITH INDEPENDENT PUBLIC
ACCOUNTANTS
For the year ended December 31, 1995, Franklin
Financial engaged Arthur Andersen & Co.,LLP, independent
certified public accountants, to examine its consolidated
financial statements. It is anticipated that Arthur Andersen &
Co., LLP will be similarly engaged for the year 1996.
Representatives of Arthur Andersen & Co., LLP are expected to be
present at the 1996 Annual Meeting with the opportunity to make a
statement if they desire to do so and to be available to respond
to appropriate questions.
ADDITIONAL INFORMATION
A copy of the Annual Report of Franklin Financial on
Form 10-K as filed with the Securities and Exchange Commission,
including financial statements and financial statement schedules,
is available without charge to shareholders upon written request
addressed to Robert G. Zullinger, Vice Chairman and Chief
Executive Officer, Franklin Financial Services Corporation, 20
South Main Street, P.O. Box T, Chambersburg, Pennsylvania 17201-
0819.
OTHER MATTERS
The Board of Directors of Franklin Financial knows
of
no matters, other than those discussed in this Proxy Statement,
which will be presented at the 1996 Annual Meeting. However, if
any other matters are properly brought before the meeting, any
proxy given pursuant to this solicitation will be voted in
accordance with the recommendations of the management of Franklin
Financial.
BY ORDER OF THE BOARD OF
DIRECTORS
April E. Rosenbaum
Secretary
Chambersburg, Pennsylvania
April 4, 1996
<PAGE>
APPENDIX
FRANKLIN FINANCIAL SERVICES CORPORATION
PROXY ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD APRIL 30, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned hereby appoints April E. Rosenbaum and
Ruth
Ann Lesher, and each or either of them, as proxies, with full
power of substitution, to vote as directed below all of the
shares of Franklin Financial Services Corporation common stock
held of record on March 15, 1996, by the undersigned and by the
Plan Agent for the account of the undersigned under the Dividend
Reinvestment Plan at the Annual Meeting of Shareholders to be
held on Tuesday, April 30, 1996, at 10:30 a.m. at the Lighthouse
Restaurant, 4301 Philadelphia Avenue, Chambersburg, Pennsylvania,
and at any adjournment thereof, as follows:
1. ELECTION OF FIVE DIRECTORS FOR A TERM OF THREE YEARS
___ FOR all nominees listed ___ WITHHOLD AUTHORITY to
below (except marked to all vote for all nominees
the contrary below) listed below.
Dennis W. Good, Jr. G. Warren Elliott William E. Snell, Jr.
Martha B. Walker Robert G. Zullinger
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name).
(continued on reverse side)
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED.
This proxy also confers authority as to any other business which
may be brought before the meeting or any adjournment thereof. If
any other business is presented at the meeting, the shares
represented by this proxy will be voted in accordance with the
recommendations of the management of Franklin Financial Services
Corporation.
Dated:__________________,1996
_____________________________
Signature
______________________________
Signature
IMPORTANT: Please sign
exactly as
your name or names appear
hereon.
Joint owners should each
sign. If
you sign as agent or in
any other
representative capacity,
please
state the capacity in
which you
sign.
