<PAGE> 1
[Meridian Logo]
MERIDIAN BANCORP, INC.
35 North Sixth Street
P.O. Box 1102
Reading, Pennsylvania 19603
Notice of Annual Meeting of Shareholders
to be held April 26, 1994
To the Shareholders of Meridian Bancorp, Inc.:
Notice is hereby given that the Annual Meeting (the
"Meeting") of the holders of Common Stock (the "Common Stock") of
Meridian Bancorp, Inc. ("Meridian") will be held at the Sheraton
Berkshire, Regency Ballroom, Route 422 West and Paper Mill Road,
Wyomissing, Pennsylvania on Tuesday, April 26, 1994, at
4:00 P.M., local time:
1. To elect eight Class II directors to hold office
for three years from the date of election and until their
successors shall have been elected and qualified (Matter
No. 1).
2. To consider and act upon a proposal to amend
Meridian's Articles of Incorporation to increase the number
of authorized shares of Common Stock from 100,000,000 shares
to 200,000,000 shares (Matter No. 2).
3. To ratify the appointment by Meridian's Board of
Directors of KPMG Peat Marwick as Meridian's independent
auditors for the fiscal year ending December 31, 1994
(Matter No. 3).
4. To consider and act upon a shareholder proposal to
provide for cumulative voting in the election of Meridian's
directors (Matter No. 4).
5. To transact such other business as may properly
come before the Meeting or any adjournment or adjournments
thereof.
Holders of record of issued and outstanding shares of Common
Stock at the close of business on February 15, 1994 are entitled
to notice of, and to vote at, the Meeting. Such shareholders may
vote in person or by proxy. The stock transfer books of Meridian
will not be closed.
The Board of Directors of Meridian cordially invites you to
attend the Meeting. Whether or not you are personally present,
<PAGE> 2it is important that your shares be represented at the
Meeting. Accordingly, please sign and return your proxy in the
enclosed envelope.
By Order of the Board of Directors,
William L. Gaunt,
Secretary
Dated: Reading, Pennsylvania
March 15, 1994
Shareholders are urged to sign, date and mail the enclosed
proxy promptly in the accompanying envelope. The proxy is
revocable at any time by a written instrument, including a later
dated proxy, signed in the same manner as the proxy and received
by the Secretary of Meridian at or before the Meeting. If you
attend the Meeting, you may, if you wish, revoke your proxy by
voting in person.<PAGE>
<PAGE> 3 [Meridian Logo]
MERIDIAN BANCORP, INC.
35 North Sixth Street
P.O. Box 1102
Reading, Pennsylvania 19603
_______________________
Proxy Statement
for Annual Meeting
April 26, 1994
GENERAL
Introduction
Meridian Bancorp, Inc. ("Meridian") is a Pennsylvania
business corporation and multibank holding company headquartered
at 35 North Sixth Street, Reading, Pennsylvania 19601. Meridian
owns all of the outstanding common stock of Meridian Bank,
Meridian Bank, New Jersey and Delaware Trust Company. Meridian
also owns a number of nonbanking subsidiaries engaged in various
aspects of the financial services industry.
Solicitation of Proxies
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Meridian to
be used at the Annual Meeting (the "Meeting") of holders of
Common Stock (the "Common Stock") of Meridian to be held at the
Sheraton Berkshire, Regency Ballroom, Route 422 West and Paper
Mill Road, Wyomissing, Pennsylvania, at 4:00 P.M., local time, on
Tuesday, April 26, 1994, and at any adjournment or adjournments
thereof. The approximate date upon which this Proxy Statement
and the accompanying proxy were first sent, given or otherwise
made available to shareholders was March 15, 1994. In addition
to the use of the mails, proxies may be solicited by personal
interview and telephone by directors, officers and employees of
Meridian and its subsidiaries. Meridian will pay all costs of
soliciting proxies. In addition, Meridian has retained
Georgeson & Co., Inc. to assist with the solicitation of proxies
at an estimated cost of $8,000 plus reasonable out-of-pocket
expenses.
Voting Securities
Holders of record of Meridian's Common Stock at the close of
business on February 15, 1994 are entitled to notice of, and to
vote at, the Meeting.
At the Meeting, each shareholder is entitled to one vote for
each share of Common Stock registered in the shareholder's name
at the close of business on February 15, 1994. On February 15,
1994, there were 58,162,266 shares of Common Stock outstanding
and, accordingly, holders of Common Stock are entitled to cast a
total of 58,162,266 votes at the Meeting. Holders of Common
<PAGE> 4Stock are not entitled to cumulate votes in elections of
directors.
If a shareholder participates in Meridian's Shareholder
Automatic Dividend Reinvestment and Stock Purchase Plan, the
proxy card sent to such shareholder will represent the number of
shares registered in the shareholder's name and the number of
shares, including fractional shares, credited to the
shareholder's Dividend Reinvestment Plan account.
If the enclosed form of proxy is appropriately marked,
signed and returned in time to be voted at the Meeting, the
shares represented by the proxy will be voted in accordance with
the instructions marked thereon. Signed proxies not marked to
the contrary will be voted "FOR" the election of the nominees of
Meridian's Board of Directors, "FOR" the amendment to Meridian's
Articles of Incorporation to increase the number of authorized
shares of Common Stock from 100,000,000 to 200,000,000, "FOR" the
ratification of KPMG Peat Marwick as Meridian's independent
auditors for 1994, and "AGAINST" the shareholder proposal to
provide for cumulative voting in the election of Meridian's
directors. Signed proxies will be voted "FOR" or "AGAINST" each
other matter which properly comes before the Meeting or any
adjournment or adjournments thereof, at the discretion of the
persons named as proxyholders.
Right of Revocation
Any shareholder giving a proxy has the power to revoke it by
a written instrument, including a later dated proxy, signed in
the same manner as the proxy and received by the Secretary of
Meridian prior to its exercise. Any shareholder attending the
Meeting may also revoke his proxy by voting in person at the
Meeting.
Quorum
Under Meridian's Articles of Incorporation, the presence, in
person or by proxy, of shareholders entitled to cast at least
66-2/3% of the votes which all shareholders are entitled to cast
will constitute a quorum for the transaction of business at the
Meeting.
Principal Shareholders
The following table sets forth information, as of
February 15, 1994, as to beneficial owners, either directly or
indirectly, of 5% or more of the outstanding shares of Common
Stock and as to the right and power of Meridian, directly or
indirectly, to vote shares of Common Stock.
<PAGE>
<PAGE> 5
<TABLE>
<CAPTION> Amount and Nature
Name and Address of of Beneficial
of Beneficial Owner Ownership Percent of Class
<S> <C> <C>
George Strawbridge, Jr., 4,200,310(1) 7.22%
Nina S. Strawbridge
and Barton J. Winokur,
as co-trustees under a
Deed of Trust of
Mr. Strawbridge,
dated January 21, 1991
Building B, Suite 100
3801 Kennett Pike
Wilmington, DE 19807
Meridian Asset Management, 2,533,785(4) 4.36%
Inc., Meridian Trust
Company and Delaware
Trust Capital
Management, Inc.(2)(3)
c/o Meridian Bancorp, Inc.
35 North Sixth Street
Reading, PA 19601
__________________
<FN>
(1) As reported in a Schedule 13D, dated March 28, 1991 (as
amended May 15, 1991), filed by such persons with the Securities
and Exchange Commission. As reported, Mr. Strawbridge may be
deemed to have sole voting and dispositive power over all of such
shares by virtue of his power to revoke the trust, and
Mrs. Strawbridge and Mr. Winokur may be deemed to share voting
and dispositive power over such shares by virtue of their
positions as trustees of such trust. Mrs. Strawbridge and
Mr. Winokur each disclaims beneficial ownership of all of the
shares owned by the trust. Mrs. Strawbridge may also be deemed
to have sole voting and dispositive power over an additional
5,000 shares held by a revocable trust and to share voting and
dispositive power over 5,076 shares held in a fiduciary account
for the benefit of her minor son; Mrs. Strawbridge disclaims
beneficial ownership of such 5,076 shares. In addition,
Mr. Strawbridge may be deemed to share voting and dispositive
power over an additional 228,120 shares held by various trusts or
fiduciary accounts for the benefit of members of his family;
Mr. Strawbridge disclaims beneficial ownership of such 228,120
shares. (See "Matter No. 1 -- Election of Directors," herein.)
(2) These shares were held of record by nominees for
certain trust, estate and agency accounts administered by
Meridian Asset Management, Inc., Meridian Trust Company and
Delaware Trust Capital Management, Inc.
<PAGE> 6
(3) As of February 15, 1994, 1,793,328 shares of Common
Stock (approximately 3.08% of outstanding shares of Common Stock)
were held of record by a nominee for Meridian Trust Company,
trustee for the Meridian Bancorp, Inc. Savings Plan. Under the
terms of the Savings Plan and its related trust, these shares are
voted in the manner directed by Savings Plan participants. The
trustee is required to vote shares held under the Savings Plan
for which no direction is given for or against all matters in the
same proportion as shares held under the Savings Plan are
directed and voted for and against such matters.
(4) Pursuant to the provisions of the applicable governing
instruments and/or in accordance with the applicable principles
of fiduciary law, Meridian Asset Management, Inc., Meridian Trust
Company or Delaware Trust Capital Management, Inc. has the right
and power, exercisable either alone (2,199,026 shares or
approximately 3.78% of outstanding shares of Common Stock) or in
conjunction with a co-fiduciary (334,759 shares or approximately
.58% of outstanding shares of Common Stock) to vote these shares,
either in person or by proxy, "FOR" the election, as directors,
of nominees proposed by the Board of Directors (Matter No. 1),
"FOR" the amendment to Meridian's Articles of Incorporation to
increase the number of authorized shares of Common Stock from
100,000,000 to 200,000,000 (Matter No. 2), "FOR" the ratification
of KPMG Peat Marwick as Meridian's independent auditors for 1994
(Matter No. 3), and "AGAINST" the shareholder proposal to provide
for cumulative voting in the election of Meridian's directors
(Matter No. 4), provided such vote is in the best interests of
any such trust, estate or agency account and the beneficiaries or
principals thereof. Meridian Asset Management, Inc., Meridian
Trust Company and Delaware Trust Capital Management, Inc. each
intend to vote shares, over which it alone has voting power,
"FOR" the nominees listed below (Matter No. 1), "FOR" Matter
No. 2, "FOR" Matter No. 3 and "AGAINST" Matter No. 4, and each
expects that substantially all shares over which it has shared
voting power will be voted in the same manner.
/TABLE
<PAGE>
<PAGE> 7 MATTER NO. 1
ELECTION OF DIRECTORS
General
The Articles of Incorporation of Meridian provide that
Meridian's business shall be managed by a Board of Directors of
not less than 12 and not more than 24 persons. Meridian's Board,
as provided in its Articles of Incorporation, is divided into
three classes: Class I, Class II and Class III, each class being
as nearly equal in number as possible. Under Meridian's Bylaws,
a person elected to fill a vacancy on the Board of Directors
serves as a director for the remaining term of office of the
Class to which he or she was elected. The directors in each
class serve terms of three years each and until their successors
are elected and qualified.
The Board of Directors fixed the number of directors in
Class II at eight and has nominated the eight nominees listed
below for election as Class II directors. Each of the Board
nominees for election as director is presently a director of
Meridian. Directors Burke, Davis, Leighow, and Wootton were
elected to the Board of Directors on August 31, 1993 to fill
vacancies created in accordance with the merger agreement dated
March 30, 1993 between Meridian and Commonwealth Bancshares
Corporation. Director Joseph H. Jones, a nominee for election as
a Class II director at the Meeting will retire at Meridian's 1995
Annual Meeting of Shareholders in accordance with Meridian's
mandatory director retirement policy.
The Bylaws of Meridian permit nominations for election to
the Board of Directors to be made by the Board of Directors or by
any shareholder entitled to vote for the election of directors.
All nominations are referred to the Nominating Committee of the
Board of Directors for consideration. Nominations for director
to be made at the Meeting by shareholders entitled to vote for
the election of directors must be preceded by notice in writing,
delivered or mailed by first class United States mail, postage
prepaid, to the Secretary of Meridian not less than 30 days nor
more than 50 days prior to the Meeting, which notice must contain
certain information specified in the Bylaws. [_____ notice[s]
of nomination[s] for election as a director has (have) been
received from [a] shareholder[s] as of the date of this Proxy
Statement.] If a nomination is attempted at the Meeting which
does not comply with the procedures required by the Bylaws or if
any votes are cast at the Meeting for any candidate not duly
nominated, then such nomination and/or such votes may be
disregarded.
The eight nominees who receive the highest number of votes
cast at the Meeting will be elected as Class II directors.
Abstentions and broker non-votes will not constitute or be
counted as "votes" cast for purposes of the Meeting. Shares
represented by properly executed proxies will be voted for the
eight Class II nominees listed below unless otherwise specified
<PAGE> 8on a shareholder's proxy card. Any shareholder who
wishes to withhold authority from the proxyholders to vote for
the election of directors, or to withhold authority to vote for
any individual nominee, may do so by marking the proxy to that
effect. No proxy may be voted for a greater number of persons
than the number of nominees named.
If any of the nominees listed below become unable to accept
nomination or election, the proxyholders may exercise their
voting power in favor of such other person or persons as the
Board of Directors may recommend. Meridian, however, at present
has no reason to believe that any nominee listed below will be
unable to serve as a director, if elected.
The principal occupation for the last five years for each
nominee for director and each continuing director, together with
certain other relevant information, is set forth below.
NOMINEES AS CLASS II DIRECTORS TO SERVE UNTIL 1997
[Thomas F. Burke, Jr. THOMAS F. BURKE, JR., 47. Director
Photograph] since August 31, 1993. Attorney.
Director of Commonwealth Bancshares
Corporation until August 31, 1993.
President, The First Bank of
Greater Pittson until December 31,
1991.
[Julius W. Erving Photograph] JULIUS W. ERVING, 44. Director
since September 24, 1987.
President, The Erving Group and
Dr. J. Enterprises; part-owner,
Philadelphia Coca-Cola Bottling
Company and Television Station
WKBW, Buffalo, New York. Member,
Philadelphia 76'ers basketball team
until April 1987.
[Fred D. Hafer Photograph] FRED D. HAFER, 53. Director since
October 27, 1988. President, Chief
Operating Officer and Director,
Metropolitan Edison Company
(electric utility). Also a
director of GPU Service Corporation
and GPU Nuclear Corporation.
[Joseph H. Jones Photograph] JOSEPH H. JONES, 69. Director
since June 30, 1983. Partner,
Williamson, Friedberg & Jones (law
firm). See footnote 1.
<PAGE> 9
[Ezekiel S. Ketchum EZEKIEL S. KETCHUM, 58. Director
Photograph] since September 11, 1984.
President and Chief Operating
Officer, Meridian since February
1988; prior thereto, Vice Chairman,
Meridian from September 1984;
President and Chief Executive
Officer, Meridian Bank since April
1991; prior thereto, President,
Meridian Bank (and its predecessor)
since April 1982.
[Daniel H. Polett Photograph] DANIEL H. POLETT, 58. Director
since November 13, 1984. Chairman,
Wilkie Chevrolet Buick Subaru
(automobile dealership) and owner
operator of various other
automobile dealerships and related
businesses.
[Wilmer R. Schultz WILMER R. SCHULTZ, 67. Director
Photograph] since November 13, 1984.
President, Wilmer R. Schultz, Inc.
(general contractors).
[Robert B. Seidel Photograph] ROBERT B. SEIDEL, 67. Director
since June 30, 1983. Retired
Chairman, American Manufacturing
Corporation (private holding
company) since April 1991; prior
thereto, Chairman, American
Manufacturing Corporation from
March 1983. Also a director of
United National Insurance Company.
CONTINUING CLASS III DIRECTORS SERVING UNTIL 1995
[DeLight E. Breidegam, Jr. DELIGHT E. BREIDEGAM, JR., 67.
Photograph] Director since November 13, 1984.
President, East Penn Mfg. Co., Inc.
(battery manufacturer).
[Harry Corless Photograph] HARRY CORLESS, 65. Director since
April 25, 1989. Retired Chairman,
ICI Americas Inc. (chemical
manufacturer) since August 1989;
prior thereto, Chairman and Chief
Executive, ICI Americas Inc. from
April 1986. Also a director of
Nalco Chemical Company, Uniroyal
Chemical Corporation and Delaware
Trust Company.
<PAGE> 10
[Lawrence C. Karlson LAWRENCE C. KARLSON, 51. Director
Photograph] since September 23, 1991.
Chairman, President and Chief
Executive Officer, Karlson
Corporation (private holding
company) since 1986. Also,
Chairman, Spectra Physics AB
(Stockholm) (group of high
technology companies) from 1990 to
1993. Also a director of ABB Kent
Holdings PLC, Berwind Industries,
Inc. and CDI Corp.
[George W. Leighow GEORGE W. LEIGHOW, 58. Director
Photograph] since August 31, 1993.
Veterinarian and owner of Leighow
Veterinary Hospital. Director of
Commonwealth Bancshares Corporation
until August 31, 1993.
[Samuel A. McCullough SAMUEL A. McCULLOUGH, 55. Director
Photograph] since June 30, 1983. Chairman and
Chief Executive Officer, Meridian
since February 1988; prior thereto,
President and Chief Executive
Officer, Meridian from June 1983;
Chairman of Meridian Bank (and its
predecessor American Bank and Trust
Co. of Pa.) since April 1982. Also
a director of Fidelity National
Financial, Inc.
[Lawrence R. Pugh Photograph] LAWRENCE R. PUGH, 61. Director
since January 23, 1986. Chairman,
Chief Executive Officer and
Director, VF Corp. (apparel
manufacturer). Also a director of
Black & Decker, Inc. and Unum
Corporation.
[George Strawbridge, Jr. GEORGE STRAWBRIDGE, JR., 56.
Photograph] Director since January 1, 1988.
Private investor; owner and
President, Augustin Stables (sole
proprietorship); adjunct professor
of Latin American History and
Political Science, Widener
University. Also a director of
Delaware Trust Company and Campbell
Soup Company.
<PAGE> 11
[Anita A. Summers Photograph] ANITA A. SUMMERS, 68. Director
since February 27, 1987. Professor
Emerita, Senior Research Fellow,
Wharton Real Estate Center,
University of Pennsylvania, since
June 1991. Prior thereto,
Professor, Department of Public
Policy and Management, Wharton
School, University of Pennsylvania.
Also, Chairman of the Board of
Directors of Mathematica Policy
Research, Inc.
CONTINUING CLASS I DIRECTORS TO SERVE UNTIL 1996
[Robert W. Cardy Photograph] ROBERT W. CARDY, 57. Director
since April 20, 1993. Chairman,
President, Chief Executive Officer
and Director, Carpenter Technology
Corp. (specialty steel and alloys
manufacturer) since July 1, 1992;
prior thereto, President, Chief
Operating Officer and Director,
Carpenter Technology Corp. from
November 1, 1990; prior thereto,
Executive Vice President, Carpenter
Technology Corp. from October 12,
1989; prior thereto, Vice President
Sales & Marketing, Carpenter
Technology Corp. from January 11,
1979.
[William D. Davis Photograph] WILLIAM D. DAVIS, 62. Director
since August 31, 1993. Vice
Chairman and Director of
Pennsylvania Enterprises, Inc.
(utility holding company) since
June 1991. Chairman, Chief
Executive Officer and Director,
Commonwealth Bancshares Corporation
until August 31, 1993. Chairman,
Commonwealth Bank until August 31,
1993.
[Sidney D. Kline, Jr. SIDNEY D. KLINE, JR., 62. Director
Photograph] since June 30, 1983. Principal,
Stevens & Lee (law firm). Also, a
director of Horrigan American, Inc.
(financial services company). See
footnote 1.
[Joseph F. Paquette, Jr. JOSEPH F. PAQUETTE, JR., 59.
Photograph] Director since April 24, 1990.
Chairman, Chief Executive Officer
<PAGE> 12and Director, PECO Energy
(electric and gas utility) since
April 1988.
[Paul R. Roedel Photograph] PAUL R. ROEDEL, 66. Director since
June 30, 1983. Retired Chairman
and Chief Executive Officer,
Carpenter Technology Corp.
(specialty steel and alloys
manufacturer) since June 30, 1992;
prior thereto, Chairman and Chief
Executive Officer, Carpenter
Technology Corp. from July 1987;
Director, Carpenter Technology
Corp. since 1973. Also a director
of General Public Utilities
Corporation and P. H. Glatfelter
Co.
[Judith M. von Seldeneck JUDITH M. VON SELDENECK, 53.
Photograph] Director since June 30, 1983.
Chief Executive Officer, The
Diversified Search Companies
(executive search firm). Also a
director of Keystone Corporation,
Tasty Baking Company and Phillips
and Jacobs, Inc.
[David E. Sparks Photograph] DAVID E. SPARKS, 49. Director
since April 20, 1993. Vice
Chairman and Chief Financial
Officer of Meridian and Meridian
Bank since February, 1991. Prior
thereto, Vice Chairman, Treasurer
and Chief Financial Officer of
Meridian and Meridian Bank from
February 1990; prior thereto,
Executive Vice President, Midlantic
Corporation from March 1985. Also
a director of Fidelity National
Title Insurance Company of
Pennsylvania.
[Earle A. Wootton Photograph] EARLE A. WOOTTON, 49. Director
since August 31, 1993. President,
Montrose Publishing Company, Inc.
since 1974. Director, County
National Bank from 1979 to 1991.
Director, Commonwealth Bancshares
Corporation until August 31, 1993.
_____________________
(1) Meridian has engaged and expects that it will continue to
engage as counsel, from time to time, the law firm of
Stevens & Lee, Reading, Pennsylvania, and the law firm of
Williamson, Friedberg & Jones, Pottsville, Pennsylvania.
<PAGE> 13
Security Ownership of Management
The following table sets forth information concerning the
number of shares of Common Stock held as of February 15, 1994 by
each nominee for director, each present director and each named
executive officer set forth in the compensation tables beginning
on page 21.
<PAGE>
<PAGE> 14
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
Sole Shared
Total Voting or Voting or
Beneficial Dispositive Dispositive Percent of
Name of Beneficial Owner Ownership Power Power Class(1)
Directors
<S> <C> <C> <C> <C>
DeLight E. Breidegam, Jr. 8,128 300 7,828 --
Thomas F. Burke, Jr.(2) 13,431 6,356 7,075
Robert W. Cardy 400 400 --
Harry Corless 1,040 40 1,000 --
William D. Davis 57,865 55,333 2,532
Julius W. Erving(2) 1,100 1,100 -- --
Fred D. Hafer(2) 2,852 -- 2,852 --
Joseph H. Jones(2) 8,303 -- 8,303 --
Lawrence C. Karlson 1,000 -- 1,000 --
Ezekiel S. Ketchum(2) 174,706(3) 172,729 1,977 --
Sidney D. Kline, Jr. 11,699 10,683 1,016 --
George W. Leighow 50,276 50,276 --
Samuel A. McCullough 265,004(3) 264,794 210 --
Joseph F. Paquette 2,000 -- 2,000 --
Daniel H. Polett(2) 5,975 5,975 -- --
Lawrence R. Pugh 1,000 1,000 -- --
Paul R. Roedel 998 998 -- --
Wilmer R. Schultz(2) 117,774 95,587 22,187 --
Robert B. Seidel(2) 9,382 8,666 716 --
David E. Sparks 71,801(3) 71,489 312 --
George Strawbridge, Jr.(4) 4,200,310 4,200,310 -- 7.2%
Anita A. Summers 742 742 -- --
Judith A. von Seldeneck 1,574 264 1,310 --
Earle A. Wootton 101,171 100,614 557 --
<CAPTION>
Other Named
Executive Officers
<S> <C> <C> <C> <C>
Russell J. Kunkel 91,363(3) 91,363 -- --
John F. Porter, III 125,500(3) 125,500 -- --
All directors and named
executive officers as a
group (26 persons) 5,325,394 5,264,519 60,875 9.08
_______________________
<FN>
<PAGE>
<PAGE> 15
(1) Amount owned does not exceed 1% of the total number of
shares of Common Stock outstanding as of February 15, 1994.
(2) Indicates a nominee for election as a Class II director at
the Meeting.
(3) Includes shares allocated to the accounts of
Messrs. McCullough, Ketchum, Sparks and Kunkel,
respectively, under the Meridian Savings Plan. Includes the
following number of shares which may be acquired in
connection with the exercise of vested options to purchase
Common Stock granted under the Meridian Stock Option Plan:
Mr. McCullough -- 178,653; Mr. Ketchum -- 134,653;
Mr. Sparks -- 61,000; Mr. Kunkel -- 60,405; and Mr. Porter -
- 25,500. Does not include shares which may be acquired in
the future in connection with options granted under the
Meridian Stock Option Plan which are not presently
exercisable.
(4) See "General-Principal Shareholders," herein.
</TABLE>
Committees of the Board of Directors
Pursuant to Meridian's Bylaws, the Board of Directors is
authorized to create an Executive Committee, a Nominating
Committee, an Audit Committee, a Compensation Committee and such
other permanent or temporary committees as it deems necessary.
As of December 31, 1993, the Board of Directors had established a
Nominating Committee, an Audit Committee and a Compensation
Committee.
The Nominating Committee makes recommendations to the Board
of Directors with respect to qualifications and nominations of
directors. The present members of the Nominating Committee are
Messrs. Ketchum, Kline, McCullough, Paquette, Polett (Chairman),
Schultz and Strawbridge. The Nominating Committee met three
times during 1993. In determining its recommendations to
Meridian's Board, the Nominating Committee will consider nominees
recommended by shareholders. Such shareholder recommendations
should be made in writing no later than January 1, 1995,
addressed to the Nominating Committee, Meridian Bancorp, Inc.,
35 North Sixth Street, Reading, Pennsylvania 19601, Attention:
Nominating Committee.
The Audit Committee serves as the principal liaison among
the Board of Directors, Meridian's independent certified public
accountants and Meridian's internal audit staff in connection
with the audit function. In addition, the Audit Committee makes
recommendations to the Board of Directors concerning the
designation of Meridian's independent certified public
accountants to audit the books and accounts of Meridian and the
performance of nonaudit services. The present members of the
Audit Committee are Messrs. Hafer (Chairman), Jones, Karlson,
<PAGE> 16Kline, Roedel and Ms. Summers. The Audit Committee met
five times during 1993.
The Compensation Committee makes recommendations to the
Board of Directors with respect to compensation of members of
Meridian's executive staff, makes awards under the Meridian Stock
Option Plan and administers the Meridian Executive Annual
Incentive Plan. The members of the Compensation Committee are
Messrs. Breidegam, Corless, McCullough (ex officio), Pugh, Seidel
and Ms. von Seldeneck (Chairperson). The Compensation Committee
met two times during 1993. Mr. McCullough, as an ex officio
member of the Compensation Committee, does not participate in or
vote on matters concerning his own compensation or awards.
Board Meetings
During 1993, the Meridian Board of Directors held fourteen
regular meetings. Each member of the Board attended at least 75%
of the aggregate number of meetings of the Board and of
committees of which he or she is a member, except Directors
Cardy, Corless, Karlson, Paquette and Roedel each of whom
attended fewer than 75% of such meetings due to scheduling
conflicts.
Compensation Paid to Directors
All directors of Meridian are also directors of Meridian
Bank. Directors of Meridian who are not Meridian executive
officers are paid an annual retainer of $18,000 (including
retainers paid by Meridian Bank). The Boards of Directors of
Meridian and Meridian Bank meet concurrently and directors
receive an additional $1,000 for each such concurrent meeting and
for each Meridian or Meridian Bank committee meeting which they
attend. Also, the Chairman of each of the Audit, Compensation
and Directors' Nominating Committees of Meridian receives an
additional annual retainer of $5,000, $3,000 and $2,000,
respectively. Under a deferred compensation plan, directors of
Meridian who are not employees of Meridian may elect to defer,
with interest, all or part of their compensation for future
distribution. In addition to fees paid by Meridian,
Messrs. Corless and Strawbridge received during 1993 fees for
services as directors of Delaware Trust Company, a subsidiary of
Meridian, in the amounts of $5,100 and $7,152, respectively.
Meridian maintains a directors and officers liability
insurance policy with CNA Insurance Companies and Great American
Insurance Co. The policy covers all directors, officers and
employees of Meridian and its subsidiaries for certain liability,
loss, damage and expense which they may incur in their capacities
as such, at a premium cost to Meridian, as of the date of the
Meeting, of approximately $538,565 per year.
<PAGE> 17 REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Role of the Compensation Committee
The role of the Compensation Committee of the Board of
Directors of Meridian is to establish the compensation philosophy
of Meridian and monitor compensation plans and amounts for
conformity with the philosophy.
The Committee's role includes establishing company-wide
compensation and benefits plans, reviewing and adopting the Chief
Executive Officer's (the "CEO") recommendations for compensation
for executive and other senior officers, and reviewing and
determining the compensation for the CEO. An essential component
of this role is the establishment of performance standards for
Meridian's incentive plans and monitoring performance against
these standards. From time to time the Committee also reviews
other human resource areas including staffing, training,
succession planning, and other employment programs and practices.
The Committee generally meets two or three times per year in
conducting its business. All actions of the Committee are
reported to the full Board of Directors for ratification. The
CEO is an ex officio member of the Committee and does not vote on
any matters impacting the CEO's compensation or employment
status.
Executive Compensation Philosophy
Meridian's executive officer compensation program is
predicated on a pay for performance philosophy. Meridian's basic
tenet is that executive officer rewards should vary with business
results. Within this framework, the total compensation program
must enable Meridian to attract, retain, motivate and reward
executive officers who are critical to the success of Meridian.
Total compensation for executive officers at Meridian is a
mixture of non-variable elements such as salary and benefits and
variable elements such as short- and long-term incentives. Total
compensation can vary from year to year given Meridian's
considerable emphasis on the incentive compensation programs.
Actual payments under these incentive plans can range from zero
to amounts in excess of salary. Therefore, total compensation
for executive officers at Meridian is highly leveraged based on
incentive plans which are themselves tied to Meridian's financial
performance and the accomplishment of specific business
strategies and initiatives.
Meridian has historically set its salary range midpoints for
executive officer positions at the average or the median of
salaries for comparable positions at peer companies. However,
the salaries actually paid executive officers can range from 25%
below to 25% above the midpoint and reflect the Committee's
assessment of individual performance. Target awards under
Meridian incentive plans have similarly approximated competitive
<PAGE> 18norms. Payment of these target incentive awards has
historically required performance by Meridian that equals or
exceeds the financial performance experienced in comparator
organizations.
The Revenue Reconciliation Act of 1993 imposes a limit of
$1,000,000 on annual compensation to certain executives or the
corporation loses the ability to deduct compensation in excess of
such amount, subject to certain exceptions. The Committee did
not specifically design Meridian's compensation program for 1994
to meet the requirements of the Act because the Committee does
not believe that compensation payable to any executive officer
during 1994 will result in any significant loss of deduction to
Meridian.
Specific Executive Compensation Programs
In connection with setting executive compensation, the
Compensation Committee reviews compensation and financial
performance information from certain peer companies which the
Committee believes exhibit characteristics comparable to
Meridian. The Committee does not rely on one static set of peer
group companies, but considers a mix of information derived from
a number of commercially available and internally prepared
studies. These comparable companies include a national peer
group of bank holding companies that is similar in size to
Meridian, as well as a sample of Mid-Atlantic-based bank holding
companies to reflect local practice. This group of comparators
changes from time to time as the industry continues to change.
For 1993, these groups of comparator organizations ranged
generally in asset size from $6 billion to $25 billion and the
number of companies in the applicable peer group ranged from 16
to 100, depending on the particular study being reviewed. The
peer group examined by the Committee is different from and
broader than the list of financial institutions included in the
KBW 50 index illustrated in the Performance Graph on page __
because Meridian, at approximately $14 billion in asset size, is
not as large as most of the institutions included in the KBW 50
index.
As was the case in 1992, in 1993 the Committee engaged an
independent compensation consultant to review Meridian's
executive compensation policies and to make recommendations
relating thereto, which recommendations were considered by the
Committee in establishing compensation for 1994.
Total compensation for executive officers at Meridian is
targeted at the middle of the competitive practice for comparable
positions in similar companies in the financial services
industry. The components of total compensation at Meridian
include salary, short-term annual incentives, long-term
incentives, benefits, and perquisites. The following commentary
identifies the practices for each of these components.
<PAGE> 19Salary
Salary serves as the foundation for the Meridian total
compensation program. Salary ranges, which are related to
competitive practice, have been established for all positions
(including executive officers). The midpoint of each salary
range is set at the average of competitive salary practice. The
range minimums and maximums are 25% below and above the midpoint.
This salary range is then broken down into five equal increments
of 20% ("quintiles").
Positions are assigned to ranges based primarily on
competitive pay practices and secondarily on Meridian's
assessment of the importance of the position. The midpoints are
annually reviewed to assure continued competitiveness and, when
necessary, they are adjusted on January 1.
Once an individual position is assigned to a salary range,
the incumbent's performance determines where in the range that
person is paid. The Committee does not consider any objective
financial performance criteria for this purpose, but considers
generally such items as the Committee's assessment of the
individual's management of the organization, strategic planning
capabilities and overall company performance. No specific
weights are assigned to any criteria considered by the Committee.
New incumbents who are gaining experience in the position tend to
be paid in the lower portion of the range (1st and 2nd
quintiles). Individuals meeting job performance criteria tend to
be paid in the middle of the range (3rd quintile). Individuals
with a history of superior performance tend to be paid in the
upper portion of the range (4th and 5th quintile).
Salary adjustments are considered at the beginning of each
calendar year and are based on an assessment of the individual's
performance and their position in the range. The intent of this
process is to manage the incumbent's pay to the appropriate
position in the range over time.
For 1993, the CEO's salary was increased from $546,000 to
$600,000, which placed him in the third quintile of his assigned
salary range for that year. The Committee viewed the CEO's
performance in the areas described above relating to all
executive officers, including overall company performance. In
1994, the Committee determined that the salary of the CEO should
remain at $600,000. The Committee views his performance as
meeting the job requirements in certain performance areas and
exceeding requirements in other areas. This salary continues his
position in the third quintile portion of his assigned salary
range for 1994.
<PAGE> 20Short-Term Annual Incentive Plan
The Meridian annual incentive plan for executive officers is
designed to reward the accomplishment of specific annual
financial objectives. Plan participants are assigned target
incentive awards which, if paid, would produce incentive payments
approximating those in comparator organizations. The Meridian
performance required for payment of these target awards has
historically been set generally equal to or up to 15% above the
levels of historical financial performance, analyzed in terms of
return on assets and return on equity, achieved by the comparator
organizations.
Performance that is below a minimum acceptable level results
in no incentive payment. Exceptional performance results in
payments that are one and a half the target award (for the CEO).
The specific measures of performance used in the annual
incentive plan may vary from year to year depending on Meridian's
strategic plan. For 1993, the measure of corporate performance
was Earnings Per Share (EPS). The EPS goal for the incentive
plan was approved by the Compensation Committee at the start of
1993. The Committee has the authority to recognize exceptional
circumstances and adjust targets and awards as necessary for
business purposes, which historically has not been done and was
not done for 1993. Additional measures of performance are
established for executives with business unit responsibility as
well as corporate responsibility.
The 1993 annual incentive award for the CEO (and two of the
other named executive officers) was based entirely on corporate
EPS. The awards for the other named executive officers were
based on a combination of EPS and goals specific to business unit
and individual performance. In reviewing 1993 performance, the
Committee determined that the incentive award for the CEO should
be $305,580. This award is reflective of adjusted corporate EPS
of $2.84 which was above the EPS target of $2.82. The adjusted
EPS of $2.84 reflects the inclusion of the financial performance
of Commonwealth Bancshares Corporation, which Meridian acquired
on August 31, 1993 in a transaction accounted for as a pooling of
interests, from the date of acquisition through the end of the
year, rather than from January 1, 1993 as reflected in Meridian's
audited financial statements, because the Committee believed it
inappropriate to include Commonwealth's operating results for
plan purposes prior to the time Meridian had the right to exert
any substantial influence on such operating results. Calculation
of the actual amount of the award is made strictly on the basis
of mathematical interpolation; no discretion is vested in the
Committee.
<PAGE> 21Long-Term Incentive Plans
Meridian uses two long-term incentive plans--a stock option
plan under which grants may run for up to ten years, and a return
on equity performance plan that uses overlapping three-year
performance cycles. The purpose of these plans is to motivate
and reward long-term performance defined as the creation of
shareholder value and the achievement of consistent, long-term
return on equity goals.
The stock option plan relates a significant portion of
executive compensation to increases in shareholder value. The
plan promotes increased ownership of Meridian stock by
executives, as well as providing a meaningful compensation
opportunity when shares are sold at a price in excess of the
exercise price.
Option grants are made on an annual basis, usually in
December or January. All grants are made at fair market value as
of the date of grant, and vest one year after the date of grant.
The number of options granted to each executive officer is based
on comparator organization practice, with the objective being
that the awards should be at the average of comparator
organization practice. Comparator organization practice is
assessed by reviewing prior three-year grant information for such
organizations. The Committee does not consider any specific
company performance factors or criteria in determining the size
of option grants to plan participants, but does consider various
analyses of the potential long-term value of options granted.
The Committee also does not specifically consider the amounts of
options outstanding or the aggregate size of current awards in
making award determinations, although it does analyze the total
number of options to be granted in any year as a percentage of
total shares outstanding.
Meridian has never canceled options and reissued options at
a lower exercise price.
The return on equity plan provides an incentive opportunity
for plan participants based on Meridian performance over a
three-year performance cycle. A new cycle begins each year, and
therefore, the plan is composed of a series of overlapping
three-year performance periods. Payment of awards under this
plan is based on Meridian's attainment of a specified return on
equity performance during the three-year period. The applicable
target return on equity (ROE) is determined after review of
historical return on equity data of the comparator organizations.
The target ROE since the inception of the plan has been a 16%
return on equity for Meridian with a threshold of 15%, which the
Committee believes is a realistic yet aggressive financial goal.
Actual awards under the plan are stated in terms of predetermined
percentages of base salary and are based strictly on mathematical
interpolation based on the actual amount of ROE. The performance
period ending in 1993 (1991-1993) will result in no payment since
the ROE performance threshold of 15% was not attained.
<PAGE> 22
The CEO (and other named executive officers) all received
awards under the stock option program in 1993. The CEO's awards
were 40,000 shares as shown in Option Grants Table. The 1993
grant to the CEO was made substantially on the basis of the
Committee's review of comparator organization practice, with the
goal being that the grant be consistent with market practice.
The Committee believes that this award was made at the average of
competitive practice. Additionally, this grant is the same
number of shares as granted in the December 1992 grant.
Benefits and Perquisites
Meridian's executives participate in the same benefit
program as applies to all employees of Meridian. There are no
additional insurance programs or welfare benefits for executives.
Any perquisites for executives are business related and are
intended to allow the executive to operate in as efficient manner
as possible. These programs could include company provided
memberships in luncheon clubs and country clubs. Other programs
could include company provided automobiles.
Summary
The Compensation Committee believes that Meridian's overall
executive compensation program has performed well in attracting,
retaining and rewarding executives. Rewards have increased when
Meridian's financial performance and shareholder value have
increased, and have decreased when financial performance and
shareholder value decreased.
COMPENSATION COMMITTEE,
Judith M. Von Seldeneck, Chairperson
DeLight E. Breidegam, Jr.
Harry Corless
Samuel A. McCullough
Lawrence R. Pugh
Robert B. Seidel
Compensation Paid to Executive Officers
The following table sets forth information for each of the
three years ended December 31, 1993 concerning the annual and
long-term compensation for services in all capacities to Meridian
of those persons who were (i) the chief executive officer of
Meridian during the fiscal year ended December 31, 1993, or (ii)
the other four most highly compensated executive officers of
Meridian serving at December 31, 1993. There were no other
executive officers for whom disclosure would have been provided
but for the fact that such individuals were not serving at the
end of the 1993 fiscal year.<PAGE>
<PAGE> 23<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long Term Compensation
Awards Payouts
Securities
Restricted Underlying LTIP All Other
Other Annual Stock Options/ Payouts Compensa-
Name and Principal Salary(1) Bonus Compensation Award(s) SARs(3) (4) tion(5)
Position Year ($) ($) ($) (2)($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Samuel A. McCullough, 1993 $600,000 $308,500 $0 $0 40,000 $0 $36,000
Chairman and Chief 1992 567,000 376,375 0 0 75,000 0 34,020
Executive Officer 1991 520,000 314,704 0 0 0 0
Ezekiel S. Ketchum, 1993 400,000 164,560 0 0 25,000 0 24,000
President and Chief 1992 370,731 196,858 0 0 42,000 0 22,244
Operating Officer 1991 340,017 176,905 0 0 0 0
David E. Sparks, 1993 300,000 115,500 0 0 20,000 0 18,000
Vice Chairman and 1992 275,192 134,762 0 0 32,000 0 15,334
Chief Financial 1991 222,012 116,652 0 0 0 0
Officer
Russell J. Kunkel, 1993 254,000 113,640 0 0 9,000 0 15,240
Vice Chairman 1992 254,423 132,478 0 0 18,000 0 15,265
1991 220,012 117,931 0 0 0 0
John F. Porter, III, 1993 233,022 76,128 0 0 6,500 0 8,728
Chairman, Delaware 1992 246,985 85,136 0 0 13,000 0 8,475
Trust Company 1991 233,015 78,759 0 0 0 0
________________
<FN>
(1) Base salaries for Meridian employees are earned and paid
biweekly. Salary information for 1992 includes 27 pay
periods (as opposed to the normal 26); this occurs
approximately once in seven years.
(2) Meridian does not have a restricted stock award program.
(3) Indicates number of shares for which options were granted
during the applicable period. Meridian's Stock Option Plan
is designed to grant options on an annual basis. Grants of
options are normally made at the end of each year, and
therefore occur in December or January. Grant information
for 1993 represents 1993 grants made in December 1993.
Grant information for 1992 includes 1991 grants made in
January 1992 and 1992 grants made in December 1992. No SARs
or SARs granted in tandem with stock options were awarded
during any of the periods indicated.
(4) Meridian's only long-term incentive plan, other than the
Stock Option Plan, is the three-year Executive Intermediate
Performance Plan. There were no Plan cycles concluding in
1991. The first completed three-year cycle was the 1990 to
1992 cycle, which did not meet threshold financial
performance for 1992, and therefore there was no award under
the Plan in 1992. The second completed three-year cycle was
the 1991 to 1993 cycle, which also did not meet threshold
performance.
<PAGE> 24
(5) Amounts include (i) contributions to Meridian's "thrift
type" 401(k) Savings Plan on behalf of each of the named
executive officers to match pre-tax elective deferral
contributions (which are included under Salary) made by each
such officer to the Savings Plan (Mr. McCullough -
$8,727.94; Mr. Ketchum - $8,727.94; Mr. Sparks - $8,727.94;
Mr. Kunkel - $8,727.94; and Mr. Porter - $8,727.94) and
(ii) matching contributions credited under Meridian's
Supplemental Salary Reduction Plan (Mr. McCullough -
$27,271.92; Mr. Ketchum - $15,271.88; Mr. Sparks -
$9,271.86; and Mr. Kunkel - $6,511.96), which is an unfunded
plan which allows participants who are adversely affected by
salary reduction limitations imposed for 401(k) plans to
reduce their salaries by the additional pre-tax amounts that
would be permitted in the absence of such limitations.
Mr. Porter does not participate in the Supplemental Salary
Reduction Plan.
</TABLE>
<PAGE>
<PAGE> 25
The following table sets forth information concerning grants
of stock options during the fiscal year ended December 31, 1993
to the named executive officers.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants
Number of % of Total Potential Realizable
Securities Options/ Value at Assumed
Underlying SARs Annual Rates of
Options/ Granted to Exercise Price Appreciation
SARs Employees or Base for Option Term
Granted(1) in Fiscal Price(2) Expiration
Name (#) Year ($/Sh) Date 5%(%)(3) 10%($)(3)
<S> <C> <C> <C> <C> <C> <C>
Samuel A. McCullough 40,000 7.30% $28.50 1/21/04 $ 716,940 $ 1,816,868
Ezekiel S. Ketchum 25,000 4.56 28.50 1/21/04 448,088 1,135,543
David E. Sparks 20,000 3.65 28.50 1/21/04 358,470 908,434
Russell J. Kunkel 9,000 1.64 28.50 1/21/04 161,312 408,795
John F. Porter, III 6,500 1.19 28.50 1/21/04 116,503 295,241
All optionees 548,400 100.00 28.50 1/21/04 9,829,247 24,909,260
All shareholders(4) N/A N/A N/A N/A 1,042,471,192 2,641,826,678
_________________________
<FN>
(1) All amounts represent nonqualified stock options; no SARs or
SARs granted in tandem with options were granted during
1993. Terms of outstanding options are for a period of ten
years and one month from the date the option is granted. An
option may only be exercised after the holder has been an
employee of Meridian or one of its subsidiaries for one full
year from the date the option is granted or one full year
from the date the employee's employment is terminated "at
the convenience of the employer." Options are not
exercisable following an optionee's voluntary termination of
employment other than by reason of retirement or disability.
(2) Under the terms of the Plan, the exercise price per share
must equal the fair market value on the date the option is
granted. The exercise price may be paid in cash, in shares
of Common Stock valued at fair market value on the date of
exercise or pursuant to a cashless exercise procedure under
which the optionee provides irrevocable instructions to a
brokerage firm to sell the purchased shares and to remit to
Meridian, out of the sale proceeds, an amount equal to the
exercise price plus all applicable withholding taxes.
(3) The dollar amounts set forth under these columns are the
result of calculations made at the 5% and 10% appreciation
rates set forth in Securities and Exchange Commission
regulations and are not intended to indicate future price
appreciation, if any, of Meridian's Common Stock.
<PAGE> 26
(4) The potential realizable gain to all shareholders
(58,162,266 shares at $28.50) at the 5% and 10% assumed
annual rates of appreciation over the option terms is
provided as a comparison to the potential gain realizable by
the named executive officers and by all optionees as a
group. All optionee gain as a percentage of all shareholder
gain based on these 5% and 10% stock price appreciation
assumptions would be .9% and .9%, respectively.
/TABLE
<PAGE>
<PAGE> 27
The following table sets forth information concerning the
exercise of options to purchase Meridian's Common Stock by the
named executive officers during the fiscal year ended
December 31, 1993 as well as the number of securities underlying
unexercised options and potential value of unexercised options
(both options which are presently exercisable and options granted
in 1993 which are not presently exercisable) as of December 31,
1993.
<TABLE>
<CAPTION> Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Value(1)
Number of Value of
Securities Unexercised
Underlying In-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End Fiscal Year-End
(#) ($)(3)
Shares Acquired on Value Realized Exercisable/ Exercisable/
Name Exercise (#) ($)(2) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Samuel A. McCullough 108,028 $1,374,226 178,653/40,000 $747,467/50
Ezekiel S. Ketchum 3,230 36,299 134,653/25,000 750,271/0
David E. Sparks 8,000 149,375 61,000/20,000 454,750/0
Russell J. Kunkel 0 0 60,405/9,000 370,103/0
John F. Porter, III 0 0 25,500/6,500 136,063/0
____________________
<FN>
(1) All amounts represent stock options. No SARs or SARs
granted in tandem with stock options were either exercised
during 1993 or outstanding at fiscal year-end 1993.
(2) Represents the aggregate market value of the underlying
shares of Common Stock at the date of exercise minus the
aggregate exercise prices for options exercised.
(3) "In-the-money options" are stock options with respect to
which the market value of the underlying shares of Common
Stock exceeded the exercise price at December 31, 1993. The
value of such options is determined by subtracting the
aggregate exercise price for such options from the aggregate
fair market value of the underlying shares of Common Stock
on December 31, 1993.
</TABLE>
The following table sets forth information concerning awards
to the named executed officers pursuant to the Meridian Executive
Intermediate Performance Plan:
<PAGE>
<PAGE> 28
<TABLE>
<CAPTION> Long-Term Incentive Plan Awards in Last Fiscal Year(1)
Performance Estimated Future Payouts
Number of or Other Under Non-Stock Price Based Plans
Shares, Units Period Until
or Other Maturation or Threshold Target Maximum
Name Rights (#) Payout ($ or #) ($ or #) ($ or #)
<S> <C> <C> <C> <C> <C>
Samuel A. McCullough (1) 12/31/96 $60,000 $120,000 $240,000
Ezekiel S. Ketchum (1) 12/31/96 30,000 60,000 120,000
David E. Sparks (1) 12/31/96 15,000 30,000 60,000
Russell J. Kunkel(2) --- --- --- --- ---
John F. Porter, III(2) --- --- --- --- ---
_____________________
<FN>
(1) Meridian maintains a non-stock based Executive Intermediate
Performance Plan for its executives. The Plan provides for
cash payouts stated in terms of a percentage of base salary
(Mr. McCullough: 10%-40%; Mr. Ketchum: 7-1/2%-30%;
Mr. Sparks: 5%-20%) based upon Meridian achieving a
pre-determined rate of return on equity over a three-year
period. The threshold, target, and maximum for return on
equity and corresponding award payments are shown in the
chart above. If return on equity is below the required
"threshold," Plan participants receive no award. Meridian
did not meet a 15% ROE threshold performance target for the
three-year cycle ending in 1993, and therefore, no amounts
were paid under this Plan for the three-year cycle ending in
1993.
(2) Does not participate in the Plan.
/TABLE
<PAGE>
<PAGE> 29 Pension Plan
The following table indicates, for purposes of illustration,
the approximate amounts of annual retirement income which would
be payable under the terms of the Meridian Retirement Plan, in
the form of a straight life annuity, to a participant who retired
as of December 31, 1993, at age 65, under various assumptions as
to compensation and years of credited service. The benefit
amounts set forth below are not subject to further reduction for
Social Security or other offset amounts.
<TABLE>
<CAPTION>
Average Years of Credited Service
Compensation 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$150,000 $ 40,939 $ 54,586 $ 68,232 $ 75,732 $83,232
200,000 55,940 74,587 93,234 103,234 113,234
250,000 70,938 94,584 118,230 130,730 143,230
300,000 85,939 114,586 143,232 158,232 173,232
350,000 100,940 134,587 168,234 185,734 203,234
400,000 115,938 154,584 193,230 213,230 233,230
450,000 130,939 174,586 218,234 240,723 263,232
500,000 145,940 194,587 243,234 268,234 293,234
550,000 160,938 214,584 268,230 295,730 323,230
600,000 175,939 234,586 293,232 323,232 353,232
650,000 190,940 254,587 318,234 350,734 383,234
</TABLE>
The 1993 compensation covered by the Meridian Retirement
Plan for Messrs. McCullough, Ketchum, Sparks, Kunkel and Porter
was $650,000, $450,000, $350,000, $304,000 and $283,022,
respectively. Such covered compensation consists of base salary
and variable compensation, which includes bonuses and any other
incentive compensation, not to exceed $50,000 (the Salary and
Bonus columns included in the Summary Compensation Table). As of
December 31, 1993, Messrs. McCullough, Ketchum, Sparks, Kunkel
and Porter had accrued 18.25, 16, 9, 26.75 and 35.92 years of
credited service, respectively, under the Retirement Plan for
benefit accrual purposes.
Sections 401(a)(17) and 415 of the Internal Revenue Code of
1986, as amended (the "Code"), limit the annual benefits which
may be paid from a tax-qualified retirement plan. As permitted
by the Employee Retirement Income Security Act of 1974, Meridian
has supplemental plans which authorize the payment out of general
funds of Meridian of any benefits calculated under provisions of
the applicable retirement plan which may be above the limits or
<PAGE> 30otherwise prohibited under these sections. Amounts
payable pursuant to these plans in excess of such Code
limitations are included in the table set forth above.
Executive Employment and Other Agreements
In July 1986, Meridian entered into agreements with
Samuel A. McCullough, Ezekiel S. Ketchum, and Russell J. Kunkel.
In January 1990, Meridian entered into a similar agreement with
David E. Sparks. The agreements provide that, in the event of a
"change in control" of Meridian, an individual whose employment
is terminated or who resigns as a result of diminution in
position, compensation or benefits, reassignment to a location
beyond 100 miles from Meridian's headquarters or significantly
increased travel requirements will be entitled generally to
continuation of base salary, incentive compensation, continued
participation in employee benefit plans (or, if ineligible, a
dollar amount equal to the benefit forfeited as a result of such
ineligibility) and continued insurance benefits. Each of these
agreements for executives other than Mr. McCullough is a
three-year agreement which provides for an automatic annual
renewal for a period of three years unless either party gives
notice of nonrenewal in which case the agreement continues for
two years. Each agreement provides for a maximum two-year
payout. Mr. McCullough's agreement is a four-year agreement
which provides for an automatic annual renewal for a period of
four years, unless notice of nonrenewal is given in which case
the agreement continues for three years. Mr. McCullough's
agreement provides for a maximum three-year payout. Compensation
and benefits payable in the event of a "change in control" under
these agreements will not be reduced by compensation and benefits
payable by a subsequent employer, but will be reduced by any
amount actually received by the executive under a Meridian
severance policy then in effect.
In December 1993, the Board of Directors, upon
recommendation of the Compensation Committee, approved forms of
grantor trusts to be utilized, upon execution, as a funding
alternative for certain of the Company's non-qualified unfunded
plans of deferred compensation, including the Meridian Bancorp,
Inc. Supplemental Salary Reduction Plan, the Meridian Bancorp,
Inc. Supplemental Executive Retirement Plan and the Meridian
Bancorp, Inc. Retirement Restoration Plan. These grantor trusts,
commonly known as "rabbi trusts" provide protection to plan
participants against non-payment of plan benefits due to the
Company's refusal to pay following, among other things, a change
in corporate control. The trusts will not provide protection
against non-payment due to an inability to pay (e.g., insolvency
or bankruptcy). The trust assets will be subject to the claims
of Meridian's creditors. The trusts may be funded by Meridian
concurrently with their establishment or over a period of time,
but also contain a provision which requires Meridian to fund the
trusts immediately upon certain events, including principally a
change in control. The trust assets will be held by a trustee
independent of Meridian and are invested in accordance with an
<PAGE> 31investment policy established by the Compensation
Committee. As of the date of this Proxy Statement, no
contributions have been made to any of these trusts.
Compensation Committee Interlocks and Insider Participation
Samuel A. McCullough, Chairman and Chief Executive Officer
of Meridian, serves as a member of Meridian's Compensation
Committee, although he does not participate in or vote on matters
concerning his own benefits or awards. The Board of Directors
believes that Mr. McCullough's position with Meridian provides
him with perspective valuable to the Committee in connection with
performance of its duties.
Performance Graph
Set forth below is a graph comparing the yearly percentage
change in the cumulative total shareholder return on Meridian's
Common Stock against the cumulative total return on the S&P
Composite-500 Stock Index and the Keefe, Bruyette & Woods, Inc.
50 Index (a market capitalization-weighted bank stock index
comprised of all money-center and most regional banking
institutions) for the periods indicated. The graph assumes an
initial investment of $100.00 with dividends reinvested over the
periods indicated.
[PERFORMANCE GRAPH FILED SEPARATELY ON FORM SE]
Certain Transactions
Certain directors and executive officers of Meridian, and
their associates (including corporations of which such persons
are officers or 10% beneficial owners), were customers of and had
transactions with Meridian Bank or its predecessors in the
ordinary course of business during Meridian's fiscal year ended
December 31, 1993. Similar transactions may be expected to take
place in the future. Such transactions included the purchase of
certificates of deposit and extensions of credit in the ordinary
course of business on substantially the same terms, including
interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and did not
involve more than the normal risks of collectability or present
other unfavorable features. It is expected that any other
transactions with directors and officers and their associates in
the future will be conducted on the same basis.
During 1993, the law firm in which Meridian director Kline
is a partner received fees from Meridian and its subsidiaries of
approximately $3.01 million. Such sum does not include fees
received from borrowers who engage bank counsel principally in
commercial and real estate lending transactions with Meridian
Bank or its predecessors or any other subsidiaries of Meridian.
During 1993, the construction firms of which Meridian
director Schultz is President and Chief Executive Officer <PAGE>
32received payments of approximately $192,000 in connection with
various construction projects performed on behalf of Meridian and
its subsidiaries. Such payments were in amounts and on
substantially the same other terms and conditions as would have
been available to Meridian from an unaffiliated party.
MATTER NO. 2
AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE
AUTHORIZED SHARES OF COMMON STOCK FROM 100,000,000 SHARES
TO 200,000,000 SHARES
The Board of Directors of Meridian has approved an amendment
to Article Fifth of the Articles of Incorporation which, if
adopted, would increase the number of authorized shares of
Meridian's Common Stock from 100,000,000 to 200,000,000 shares.
The Board of Directors recommends that shareholders approve this
amendment.
At February 15, 1994, there were 58,162,266 shares of
Meridian's Common Stock issued and outstanding. Of the remaining
41,837,734 shares of authorized Common Stock on such date,
654,173 shares were reserved for issuance under Meridian's
Dividend Reinvestment and Stock Purchase Plan and 3,145,579
shares were reserved for issuance under Meridian's Stock Option
Plan, leaving 38,037,982 shares of Common Stock available for
issuance.
Matter No. 2 is being proposed because the Board of
Directors believes that it is advisable to have a greater number
of authorized but unissued shares of Common Stock available for
various corporate programs and purposes. Meridian may from time
to time consider acquisitions, stock dividends or stock splits,
and public or private financings to provide Meridian with
capital, which may involve the issuance of additional shares of
Common Stock or securities convertible into Common Stock. Also,
additional shares of Common Stock may be necessary to meet
anticipated future obligations under Meridian's Dividend
Reinvestment and Stock Purchase Plan and under Meridian's
employee benefit plans. The Board of Directors believes that
having authority to issue additional shares of Common Stock will
avoid the possible delay and significant expense of calling and
holding a special meeting of shareholders to increase authorized
capital. Meridian's shareholders last approved an increase in
the number of shares of Common Stock on April 22, 1988, at the
1988 Annual Meeting of Shareholders, from 50,000,000 to
100,000,000 shares.
Meridian has no present plan, agreement or understanding
involving the issuance of its Common Stock except for shares
required or permitted to be issued under employee benefit plans,
upon exercise of outstanding stock options, under Meridian's
shareholder rights plan, in connection with outstanding warrants
to purchase 500,000 shares, and in connection with Meridian's
pending acquisition of The Grange National Bank of Susquehanna
County. It is possible, however, that additional merger and
<PAGE> 33acquisition opportunities involving the issuance of
shares of Meridian's Common Stock will develop. It is also
possible that an increase in the market price for Meridian's
Common Stock, and conditions in the capital markets generally,
may make a stock dividend, a stock split or a public offering of
Meridian's stock desirable. Meridian believes that an increase
in the number of authorized shares of Meridian's Common Stock
will enhance its ability to respond promptly to any such
opportunities.
If Matter No. 2 is approved, the Board of Directors will not
solicit shareholder approval to issue additional authorized
shares of Common Stock, except to the extent that such approval
may be required by law, and such shares may be issued for such
consideration, cash or otherwise, at such times and in such
amounts as the Board of Directors may determine. Under the rules
of the National Association of Securities Dealers, Inc.
applicable to Meridian, shareholder approval must be obtained
prior to the issuance of shares for certain purposes, including
the issuance of greater than 25% of Meridian's then outstanding
shares in connection with an acquisition by Meridian.
Although the Board of Directors presently intends to employ
the additional shares of Common Stock solely for the purposes set
forth above, such shares could be used by the Board of Directors
to dilute the stock ownership of persons seeking to obtain
control of Meridian, thereby possibly discouraging or deterring a
nonnegotiated attempt to obtain control of Meridian and making
removal of incumbent management more difficult. The proposal,
however, is not a result of, nor does the Board of Directors have
knowledge of, any effort to accumulate Meridian capital stock or
to obtain control of Meridian by means of a merger, tender offer,
solicitation in opposition to the Board of Directors or
otherwise.
Article Fifth of Meridian's Articles of Incorporation also
authorizes the issuance of 25,000,000 shares of preferred stock,
$25 par value per share, which the Board of Directors has the
power to issue as a class or in series and to determine the
voting power, if any, dividend rates, conversion or redemption
prices, designations, rights, preferences and limitations of the
shares in the class or in each series. The proposed amendment to
Article Fifth of Meridian's Articles of Incorporation will not
increase or otherwise affect Meridian's authorized preferred
stock. As of March 1, 1994, there were no shares of Meridian's
Series A Preferred Stock outstanding.
The amendment of the Articles of Incorporation to increase
the number of authorized shares of Common Stock from 100,000,000
to 200,000,000 will consist of a revision of Article Fifth of the
Articles of Incorporation to provide as follows:
"FIFTH. The aggregate number of shares of capital
stock which the Corporation shall have authority to
issue is 225,000,000 shares, divided into two classes
<PAGE> 34consisting of 25,000,000 shares of preferred
stock of the par value of $25.00 each ("Preferred
Stock") and 200,000,000 shares of common stock of the
par value of $5.00 each ("Common Stock")."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS AMENDMENT.
The affirmative vote of a majority of all votes cast at the
Meeting is required to approve this amendment. Abstentions and
broker non-votes will not constitute or be counted as "votes"
cast for purposes of the Meeting. All proxies will be voted
"FOR" approval of the amendment unless a shareholder specifies to
the contrary on such shareholder's proxy card.
MATTER NO. 3
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors of Meridian, in accordance with the
recommendation made by Meridian's Audit Committee, has appointed
the firm of KPMG Peat Marwick, independent auditors, to provide
certain accounting services for Meridian and its subsidiaries
during fiscal year 1994. Such appointment is being submitted to
shareholders for ratification.
KPMG Peat Marwick has audited the books of account and
financial statements of Meridian or certain of its predecessors
continuously since 1973. Meridian has been advised that neither
the firm nor any of its partners possesses any other material
direct or indirect relationship with Meridian, its subsidiaries
or its officers or directors, in their capacities as such.
Representatives of KPMG Peat Marwick are expected to attend the
Meeting, will be afforded an opportunity to make a statement if
they desire to do so and will be available to respond to
questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK AS
MERIDIAN'S INDEPENDENT AUDITORS FOR THE 1994 FISCAL YEAR. The
affirmative vote of a majority of all votes cast at the Meeting
is required to ratify the appointment. Abstentions and broker
non-votes will not constitute or be counted as "votes" cast for
purposes of the Meeting. All proxies will be voted "FOR"
ratification of the appointment unless a shareholder specifies to
the contrary on such shareholder's proxy card.
MATTER NO. 4
SHAREHOLDER PROPOSAL TO PROVIDE FOR
CUMULATIVE VOTING
George R. Yake and Samuel J. Yake, 45 Chestnut Road, Paoli,
Pennsylvania 19301, who, at February 15, 1994, were,
collectively, the holders of record or beneficially of 77 shares
of Meridian's Common Stock, have given notice to Meridian that
they will cause a resolution to be introduced from the floor at
the Meeting. In accordance with the rules and regulations of the
Securities and Exchange Commission, the proposed resolution and
<PAGE> 35the supporting statement with respect thereto submitted
by Messrs. Yake are set forth below:
"RESOLVED, that the stockholders of Meridian Bancorp,
Inc., assembled in annual meeting in person and by proxy,
hereby request that the Board of Directors take the steps
necessary to provide for cumulative voting in the election
of directors, which means each stockholder shall be entitled
to as many votes as shall equal the number of shares he or
she owns multiplied by the number of directors to be
elected, and he or she may cast all of such votes for a
single candidate, or any two or more of them as he or she
may see fit.
Reasons
"In 1993, 4,633,956 shares were cast in favor of our
similar resolution.
"Until 1986 Meridian stockholders enjoyed this
important right.
"It should also be remembered that cumulative voting is
mandatory in all national banks and in many states.
"Lewis D. Gilbert, dean of corporate shareholder
activists, says: 'We believe cumulative voting crucial
because its institution in a corporation gives the minority
a voice in proportion to its actual strength . . . because
it changes a corporation from a monolith in which no
opposition is brooked to a democracy in which criticism acts
as a dynamic motive power.'
"If you agree, please mark your proxy FOR this
resolution; otherwise it is automatically cast against it,
unless you have marked to abstain."
Position of Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
AGAINST THIS PROPOSAL. Proxies solicited by the Board of
Directors will be so voted unless a shareholder specifies to the
contrary on such shareholder's proxy card.
The same resolution, accompanied by a similar statement, was
presented by Messrs. Yake to Meridian's shareholders at the prior
four annual meetings of Shareholders and was disapproved at each
of those meetings. The Board of Directors of Meridian continues
to oppose this proposal for the following reasons.
As indicated above, Meridian's shareholders voted at the
1986 Annual Meeting to amend Meridian's Articles of Incorporation
to eliminate cumulative voting in elections of directors. The
Board of Directors of Meridian continues to believe, as it
believed in 1986 when it proposed the elimination of cumulative
<PAGE> 36voting, that the function of the Board is to administer
the affairs of Meridian for the benefit of all shareholders. The
Board believes a director elected by a minority through
cumulative voting may feel bound to act in a manner which he
determines to be in the interests of the shareholders who elected
him even though such action may not be in the best interests of
Meridian and its shareholders as a whole.
The Board of Directors also believes that cumulative voting
could encourage factionalism and partisanship and introduce an
element of discord on the Board, thus impairing the ability of
directors to effectively work together for the best interests of
Meridian and its shareholders. The present method, by which the
holders of the majority of the shares of the Meridian's Common
Stock can elect the Board, is guided by the principle of majority
rule and, in the judgment of the Board, should be retained.
For the foregoing reasons, the Board recommends a vote
AGAINST the proposal.
The affirmative vote of a majority of all votes cast at the
Meeting is required for approval of this proposal. Abstentions
and broker non-votes will not constitute or be counted as "votes"
cast for purposes of the Meeting.
SHAREHOLDER PROPOSALS FOR 1995
In accordance with the Bylaws of Meridian, shareholders may
propose matters for consideration at annual meetings of
shareholders by notice in writing, delivered or mailed by first
class United States mail, postage prepaid, to the Secretary of
Meridian not less than 30 days nor more than 50 days prior to
such annual meeting (i.e., February 27, 1995 through March 19,
1995 if the 1995 Annual Meeting of Shareholders is held on
April 25, 1995 as presently expected).
Meridian's Annual Meeting of Shareholders for 1994 will be
held on or about April 25, 1995. Any shareholder desiring to
submit a proposal to be considered for inclusion in Meridian's
1995 proxy materials must submit such proposal or proposals in
writing, addressed to Meridian at 35 North Sixth Street, Reading,
Pennsylvania 19601, Attention - Secretary, on or before
November 15, 1994.
OTHER MATTERS
The Board of Directors does not intend to bring any other
matter before the Meeting and is not presently informed of any
other business which others may bring before the Meeting. If any
other matters should properly come before the Meeting, or any
adjournment or adjournments thereof, however, it is the intention
of the persons named in the accompanying proxy to vote on such
matters as they, in their discretion, may determine.
<PAGE> 37 Upon written request of any shareholder, a copy of
Meridian's Annual Report on Form 10-K for its fiscal year ended
December 31, 1993, including the financial statements and the
schedules thereto, required to be filed with the Securities and
Exchange Commission pursuant to Rule 13a-1 under the Securities
Exchange Act of 1934 may be obtained, without charge, from W.
Sturgis Corbett, Senior Vice President -- Investor Relations,
Meridian Bancorp, Inc.
BY ORDER OF THE BOARD OF DIRECTORS
William L. Gaunt,
Secretary
March 15, 1994
PLEASE SIGN, DATE AND MAIL YOUR PROXY NOW.<PAGE>
<PAGE> 38
Meridian
MERIDIAN BANCORP, INC.
I/we hereby appoint Russell J. Kunkel, Paul W. McGloin and
Robert C. Williams, or any one of them acting in the absence of
others, as proxyholders, each with the power to appoint his
substitute, and hereby authorize them to represent and to vote,
as designated on the reverse side, all the shares of common stock
of Meridian Bancorp, Inc. held of record by me/us on February 15,
1994, at the Annual Meeting of Shareholders to be held on
April 26, 1994, or any adjournment thereof.
This proxy when properly executed will be voted in the
manner directed on the reverse side. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR
MATTER NO. 2, FOR MATTER NO. 3 AND AGAINST MATTER NO. 4. This
proxy will be voted, in the discretion of the proxyholders, upon
such other business as may properly come before the Annual
Meeting of Shareholders or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
P
R
O
X
Y
<PAGE>
<PAGE> 39
[X] Please mark your
votes as in this
example.
________________________________________________________________
THE BOARD RECOMMENDS A VOTE THE BOARD RECOMMENDS A VOTE
"FOR" MATTERS 1, 2 AND 3 "AGAINST" MATTER 4
1. Election of Class II 4. Cumulative Voting
Directors
FOR AGAINST ABSTAIN
FOR WITHHELD
T.F. Burke, Jr., J.W. Erving,
F.D. Hafer, J.H. Jones,
E.S. Ketchum, D.H. Polett,
W.R. Schultz and R.B. Seidel
(INSTRUCTION: TO WITHHOLD
AUTHORITY FOR ANY INDIVIDUAL
STRIKE OUT NAME.)
2. Amendment to Articles of
Incorporation to Increase
Authorized Common Stock Dated: ___________________, 1994
FOR AGAINST ABSTAIN
________________________________
Signature
3. Ratification of Auditors
________________________________
FOR AGAINST ABSTAIN Signature if held jointly.
Please sign exactly as name
appears hereon.
