SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule 14
a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
CNB Bancshares, Inc.
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(Name of Registrant as Specified in its Charter)
CNB Bancshares, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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:
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2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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 date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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Page
[LOGO] CNB BANCSHARES, INC.
Notice of
Annual Meeting
and Proxy Statement
Annual Meeting of Shareholders
April 22, 1997
Page 1
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 24, 1997
To the Shareholders of
CNB Bancshares, Inc.
Notice is hereby given that the Annual Meeting of Shareholders of CNB
Bancshares, Inc. will be held at the Vanderburgh Auditorium, 715 Locust Street,
Evansville, Indiana on April 22, 1997, at 5:00 p.m., local time, for the purpose
of considering and voting upon the following matters:
1. The election of four Directors to Class III of the Company's Board
of Directors, each to serve a term of three years, until a
successor shall have been duly elected and qualified;
2. Any other business which may be brought before the meeting or any
adjournment thereof.
DAVID L. KNAPP
Secretary
PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, WHETHER
YOU PLAN TO ATTEND THE MEETING IN PERSON OR NOT. IF YOU DO ATTEND THE MEETING,
YOU MAY THEN WITHDRAW YOUR PROXY, IF YOU WISH.
Page 2
CNB BANCSHARES, INC.
20 N.W. THIRD STREET
EVANSVILLE, INDIANA 47739-0001
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of CNB Bancshares, Inc. (the "Company") of proxies to be
voted at the Annual Meeting of Shareholders of the Company (the "Meeting") to be
held on April 22, 1997, at 5:00 p.m., local time, at the Vanderburgh Auditorium,
715 Locust Street, Evansville, Indiana, and at any adjournment thereof. This
Proxy Statement and the form of proxy were first mailed to shareholders on March
24, 1997. Any shareholder executing a proxy which is solicited hereby has the
power to revoke it. Revocation may be made effective by giving written notice
to the Company at any time prior to exercise of the proxy.
Proxies will be solicited by mail. They may also be solicited by officers
and employees of the Company, personally or by telephone, or other electronic
means. Such persons will not be specially compensated for their services. All
expenses of solicitation will be paid by the Company.
As of March 6, 1997, there were 19,813,693 outstanding shares of the
Company's Common Stock, no par value (the "Common Stock"). The Common Stock is
the Company's only class of stock outstanding. Only holders of record of such
Common Stock at the close of business on March 6, 1997, are entitled to notice
of and to vote at the Meeting. Each holder of Common Stock of record on that
date is entitled to one vote for each share of Common Stock held.
With respect to each matter to be acted upon at the Meeting, abstentions on
properly executed proxy cards will be counted for purposes of determining a
quorum at the Meeting; however, such abstentions and shares not voted by brokers
and other entities holding shares on behalf of beneficial owners will not be
counted in calculating voting results on those matters for which the shareholder
has abstained or the broker has not voted.
CERTAIN BENEFICIAL OWNERSHIP
The following table sets forth, as of December 31, 1996, the name and
address of the only person or entity known to management of the Company to
beneficially own more than 5% of the Company's Common Stock:
<TABLE>
<CAPTION>
Total Shares
Name & Address of Voting Power Investment Power Beneficially Percent of
Beneficial Owner Sole Shared Sole Shared Owned Class
- ---------------- ---- ------ ---- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
CNB Bancshares, Inc. (a) 1,492,089 58,365 1,770,565 389,232 2,247,355 11.7
</TABLE>
(a) The Company (20 N. W. Third Street, Evansville, Indiana 47739-0001) itself
holds no shares as record owner. Subsidiaries of the Company, however,
hold shares in various fiduciary capacities and, by virtue of sole or
shared voting or investment power with respect to such shares, are deemed
to own them beneficially. As parent of its subsidiaries, the Company may
be deemed to share voting power or investment power, or both, as to all
shares beneficially owned by those subsidiaries and, therefore, may be
deemed a beneficial owner of all such shares. It is the practice of the
subsidiaries when holding shares as sole trustee or sole executor to vote
said shares but, where shares are held as co-executor or co-trustee,
approval is obtained from the co-fiduciary prior to voting.
Page 3
ELECTION OF DIRECTORS AND
INFORMATION WITH RESPECT TO DIRECTORS AND EXECUTIVE OFFICERS
In accordance with the provisions of the Company's Articles of
Incorporation, the Board of Directors is divided into three classes, as nearly
equal in number as possible, with all Directors to serve three-year terms, and
one class to be elected at each Annual Meeting of Shareholders.
The only item scheduled to be acted upon at the Meeting is the election of
four Directors to Class III of the Board of Directors, each to hold office for
three years (until the 2000 Annual Meeting of Shareholders) and until his
successor shall have been duly elected and qualified. The Indiana Business
Corporation Law requires that Directors be elected by a plurality of the votes
cast and, therefore, the four nominees receiving the greatest number of votes
cast will be elected as Class III Directors.
All proxies which are received by the Secretary in proper form prior to the
election of Directors at the Meeting, and which have not been revoked, will be
voted "FOR" the Board of Directors' four nominees for Class III, subject to any
specific voting instructions contained therein. All nominees have consented to
be named as candidates in this Proxy Statement and have agreed to serve if
elected. In the event any nominee declines or is unable to serve, it is
intended that the proxies will be voted for a successor nominee designated by
the Board of Directors. The Board of Directors knows of no reason to believe
that any nominee will decline or be unable to serve, if elected. Each of the
nominees listed herein currently serves as a Director of the Company.
The following information is provided with respect to each nominee for
Director and each present continuing Director whose term of office extends
beyond the Meeting:
<TABLE>
INFORMATION REGARDING NOMINEES FOR
CLASS III DIRECTORS
(Term To Expire 2000)
<CAPTION>
Shares of Company Stock
Principal Occupation(s) Beneficially Owned as of
for Past 5 Years and December 31, 1996
Name, Age Other Directorships Number % (b)
- --------- ------------------- ------ -----
<S> <C> <C> <C>
James J. President and Chief Executive 71,583 (a) .4
Giancola, 48 Officer of the Company since
Director of March, 1996; President and
Company since Chief Operating Officer of the
1994 Company from 1994 to March,
1996; prior to 1994 Executive
Vice President and Chief
Operating Officer of the
Company.
Robert L. Koch President and Chief Executive 41,670 .2
II, 58 Officer, George Koch Sons, Inc.
Director of (manufacturing). Mr. Koch also
Company since serves as a director of
1983 SIGCORP, Inc. (gas and
electric utility holding
company) and Bindley Western
Industries (national wholesale
distributor of pharmaceutical
and related products).
Lawrence J. Corporate Vice President, 210 --
Kremer, 55 Materials, Emerson Electric
Director of Company (manufacturer of
Company since electronic products and
1995 systems) since 1993; prior to
1993, Senior Vice President,
Whirlpool Corp.
Paul G. Wade, 57 President, Wade Oil Corporation 33,323 .2
Director of (regional crude oil producer).
Company since
1989
</TABLE>
Page 4
INFORMATION REGARDING DIRECTORS CONTINUING IN OFFICE
<TABLE>
CLASS I DIRECTORS
(Term Expiring 1998)
<CAPTION>
Shares of Company Stock
Principal Occupation(s) Beneficially Owned as of
for Past 5 Years and December 31, 1996
Name, Age Other Directorships Number % (b)
- --------- ------------------ ------ -----
<S> <C> <C> <C>
Jerry A. Lamb, 62 Chairman of the Board, 52,320 .3
Director of American Sheet Extrusion
Company since Corporation (manufacturer of
1983 custom and proprietary plastic
products). Mr. Lamb also
serves as a director of
SIGCORP, Inc. (gas and
electric utility holding
company).
Burkley F. President, Fendrich 15,006 .1
McCarthy, 66 Industries, Inc. (diversified
Director of manufacturer).
Company since
1983
Thomas W. President, Traylor Bros., Inc. 176,717 .9
Traylor, 57 (underground and marine
Director of construction).
Company since
1983
CLASS II DIRECTORS
(Term Expiring 1999)
H. Lee Cooper, 58 Chairman of the Board of the 118,769 (a) .6
Director of Company; prior to March, 1996,
Company since Chairman of the Board and Chief
1983 Executive Officer of the
Company.
John D. President, South Central 29,899 .1
Engelbrecht, 45 Communications Corporation
Director of (broadcasting and
Company since communications company). Mr.
1983 Engelbrecht also serves as a
director of SIGCORP, Inc. (gas
and electric utility holding
company).
Robert K. Ruxer, President, Ruxer Farms, Inc.; 261,550 1.3
47 and Rolling Fields, Inc.
Director of
Company since
1991
</TABLE>
_________________________________________________
(a) The number of shares listed for Messrs. Cooper and Giancola includes the
number of exercisable stock options disclosed in the table on page 9
under the caption Aggregated Option Exercises in Last Fiscal Year.
(b) The total number of outstanding shares of the Company's Common Stock
used to compute the percent of class assumes the exercise of options
and convertible debentures for the purchase of 910,795 shares.
(c) In addition to the shares shown above, Mr. Koch has contingent voting
power with respect to 133,888 shares held in a trust by his father's
estate, in the event that those shares are not voted by his mother.
The business experience of each of the above listed nominees and Directors
during the past five years was that typical to a person engaged in the principal
occupation listed. Unless otherwise indicated, each of the nominees and
Directors has had the same position or another executive position with the same
employer during the past five years. Beneficial ownership of shares, as
determined in accordance with applicable Securities and Exchange Commission
rules, includes shares as to which a person directly or indirectly has or shares
voting power and/or investment power.
Page 5
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held ten regular meetings and one
special meeting during the fiscal year ended December 31, 1996. During 1996,
each Director attended 75% or more of the aggregate number of meetings of the
Board of Directors and of any committee of which he was a member.
Company Directors, other than those who also serve as officers of the
Company or its subsidiaries, receive for their services a fee of $5,000 per year
and $500 per meeting attended, plus $500 per meeting of other committees
attended, with the exception of joint committee meetings held with the Directors
of The Citizens National Bank of Evansville, for which a fee of $375 per meeting
is paid. Under the terms of the Company's 1995 Stock Incentive Plan, the non-
employee Directors of the Company automatically receive 1,000 non-qualified
stock options each year on the first business day following each Annual Meeting
of Stockholders of the Company at which he or she is elected, reelected, or
continues as a Director. The exercise price per share of Common Stock subject
to such options equals the market value of a share of Common Stock as of the
date of grant and the options become exercisable on the second anniversary of
the date of grant. During 1996, each of the eight non-employee Directors of the
Company received 1,050 options with an exercise price of $27.38 per share of
Common Stock, as adjusted to reflect the 5% stock dividend issued on October 11,
1996.
The Board of Directors has an Audit Committee. During 1996, the Audit
Committee, consisting of Burkley F. McCarthy (Chairman), Robert K. Ruxer, Paul
G. Wade, and Robert L. Koch II (beginning September, 1996), met six times. The
Audit Committee is responsible for monitoring the accounting, auditing and
financial reporting practices of the Company and its subsidiaries. The Audit
Committee also recommends to the Board of Directors the appointment of the
Company's independent auditors.
The Board of Directors has a Nominating and Corporate Governance Committee
(the "Nominating Committee") consisting of Robert L. Koch II (Chairman), John D.
Engelbrecht, Jerry A. Lamb, Burkley F. McCarthy, Robert K. Ruxer, H. Lee Cooper
III, and James J. Giancola. The Nominating Committee, which met once in 1996,
is responsible for promoting effective recruiting, staffing, and organization of
the Company's Board of Directors as well as managing the Board's self-appraisal
process. The Nominating Committee will consider nominees for Director submitted
in writing to the Secretary of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of December 31, 1996, the number of
shares of Common Stock of the Company owned beneficially, including currently
exercisable options and options which become exercisable within 60 days, by
those executive officers named in the Summary Compensation Table and by
Directors and executive officers as a group.
<TABLE>
<CAPTION>
Beneficial Owners Number (a) Percent of Class (b)
----------------- ---------- --------------------
<S> <C> <C>
H. Lee Cooper 118,769 .6%
James J. Giancola 71,582 .4
David L. Knapp 59,731 .3
John R. Spruill 20,858 .1
M. Lynn Cooper 34,031 .2
All Directors, Nominees and
Executive Officers as a group...... 1,178,118 5.9
</TABLE>
(a) The number of shares listed for each named executive officer includes
the number of exercisable stock options disclosed in the table on page
9 under the caption Aggregated Option Exercises in Last Fiscal Year.
(b) The total number of outstanding shares of the Company's Common Stock
used to compute the percent of class assumes the exercise of options
and convertible debentures for the purchase of 910,795 shares.
Page 6
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Federal securities laws, the Company's Directors, its executive
officers, and any persons holding more than 10% of the Company's Common Stock,
if any, are required to report their initial ownership of the Company's Common
Stock and any subsequent changes in that ownership to the Company, the
Securities and Exchange Commission and the New York Stock Exchange. Specific
due dates for these reports have been established, and the Company is required
to disclose in this Proxy Statement any failure to file such reports by these
dates during 1996. To the Company's knowledge, based solely on written
representations of its Directors and executive officers and a review of copies
of the reports that they have filed with the Securities and Exchange Commission,
all of these filing requirements were satisfied during the fiscal year ended
December 31, 1996.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
awarded or paid during each of the Company's last three fiscal years to the
Company's Chief Executive Officer and each of the Company's four other most
highly compensated executive officers, based on salary and bonus earned during
1996.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Annual Compensation
Compensation Awards All Other
Name & Principal Position Year Salary Bonus Option Shares Compensation
(a) (b) (c)
<S> <C> <C> <C> <C> <C>
H. Lee Cooper 1996 $316,680 $236,877 15,750 $9,500
Chairman of the Board 1995 301,600 60,320 17,974 8,783
Chief Executive Officer 1994 290,000 97,875 16,858 8,700
until March, 1996
James J. Giancola 1996 283,985 212,421 15,750 8,520
President and 1995 222,425 44,485 9,699 6,408
Chief Executive Officer 1994 194,334 51,013 8,428 5,830
David L. Knapp 1996 198,900 101,439 8,400 5,967
Executive Vice President 1995 182,450 27,368 7,956 5,209
1994 159,584 41,891 7,034 4,788
John R. Spruill 1996 185,400 104,009 8,400 5,562
Executive Vice President 1995 60,000 9,000 6,615 1,575
and Chief Financial Officer 1994 - - - -
M. Lynn Cooper 1996 174,772 80,220 8,400 4,500
Executive Vice President 1995 157,410 23,612 5,863 4,245
1994 143,100 17,888 4,184 4,293
</TABLE>
(a) These amounts represent bonuses payable pursuant to the Company's
Short Term Incentive Plan described elsewhere in this Proxy Statement.
(b) The options listed have been adjusted to reflect stock dividends.
(c) These amounts represent the Company's 401(k) Plan and CNB Bancshares,
Inc. Savings Equalization Plan (the "SEP") contributions. The purpose
of the SEP is to provide a supplemental savings program for eligible
employees unable to make adequate contributions to the Company's 401(k)
Plan because of Internal Revenue Service regulations.
Page 7
STOCK OPTIONS
The following tables summarize option grants to and exercises by the named
executive officers during 1996 as well as the value of options held by such
persons at the end of the year.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
--------------------------------------------------------- Potential Realizable
Number of % of Total Value at Assumed Annual
Securities Options Rates of Stock Price
Underlying Granted to Exercise or Appreciation
Options Employees in Base Price Expiration For Option Term (b)
Name Granted (a) Fiscal Year ($ Per Share) Date 5% 10%
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H. Lee Cooper 15,750 9.38% $26.79 6/18/06 $265,316 $672,366
James J. Giancola 15,750 9.38 26.79 6/18/06 265,316 672,366
David L. Knapp 8,400 5.00 26.79 6/18/06 141,501 358,595
John R. Spruill 8,400 5.00 26.79 6/18/06 141,501 358,595
M. Lynn Cooper 8,400 5.00 26.79 6/18/06 141,501 358,595
</TABLE>
(a) All options were granted on June 18, 1996, and the exercise price was
established at the then current market value. Options became exercisable
on December 18, 1996 and January 1, 1997. The options reflect the 5% stock
dividend issued on October 11, 1996.
(b) The dollar amounts under these columns represent the potential realizable
value on a pre-tax basis at the end of the 10-year option term, assuming
annual appreciation in the Common Stock price of 5% and 10%, respectively,
less the exercise price. The appreciation rates are set by the Securities
and Exchange Commission and, therefore, are not intended to forecast
possible future appreciation in the Common Stock price.
Page 8
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-The-Money Options
Acquired Value Options at Fiscal Year-End at Fiscal Year-End (a)
on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
H. Lee Cooper --- --- 62,310 21,888 $1,094,714 $355,200
James J. Giancola --- --- 50,685 --- 853,295 ---
David L. Knapp --- --- 37,400 --- 638,738 ---
John R. Spruill --- --- 15,015 --- 232,377 ---
M. Lynn Cooper --- --- 26,153 --- 433,533 ---
</TABLE>
(a) These two columns represent pre-tax gain calculated as the fair market
value of Common Stock at year-end of $41.75 per share less the exercise
price.
CHANGE OF CONTROL
Messrs. H. Lee Cooper, Giancola, Knapp, Spruill, and M. Lynn Cooper, each
have entered into an employment agreement with the Company which becomes
effective upon any future change of control of the Company and provides for a
three-year term commencing as of that date. If during the term of the
agreement, or the one-year period prior thereto, the officer's employment is
terminated by the Company (other than for cause), or if the officer voluntarily
leaves the employ of the Company during the term under certain circumstances,
the agreement provides for a payment to the officer of an amount equal to a
maximum of three times the officer's annual authorized base salary. The amount
of any such payments would be limited to the amount deductible by the Company
for Federal income tax purposes at the time the agreements were entered into.
The agreement also provides for the continuation of medical and hospitalization
insurance coverage to the officer, after any such termination of employment.
The officer would be responsible for the cost of all such insurance premiums.
In addition, upon receiving any payment under the agreement, the officer is
prohibited, prior to age 65, or within three years of the date of a change of
control, whichever occurs first, from engaging in any competing banking or bank
holding company business within a 60 mile radius of Evansville, Indiana.
PENSION PLAN
On an ongoing basis, the Company combines the various pension plans of its
newly-acquired subsidiaries into one noncontributory pension plan, the CNB
Bancshares, Inc. Employee Pension Plan (the "Pension Plan"). The Pension Plan
is for the benefit of substantially all full-time and eligible part-time
employees. Additionally, certain executive officers (including four executive
officers named in the Summary Compensation Table) of the Company participate in
the CNB Bancshares, Inc. Pension Equalization Plan (the "PEP"). The purpose of
the PEP is to supplement the benefits payable under the Pension Plan to the
extent they are reduced as a result of the maximum compensation and maximum
benefit limitations imposed by the Internal Revenue Code.
Page 9
Full-time employees become eligible to participate in the Pension Plan when
they have reached the age of 21 and have one year of continuous service.
Participants are fully vested after five years of continuous service in the
Pension Plan. The Pension Plan provides for full monthly benefits upon reaching
age 65, the normal retirement age. Early retirement becomes available at age 55
with reduced monthly benefits. The cost of the Pension Plan is based on
actuarial valuations in accordance with the requirements of the Internal Revenue
Service and the Department of Labor.
Benefits under the Pension Plan and the PEP are based upon (a) the
participant's average base compensation (annual salary as reported in the
Summary Compensation Table excluding bonuses) during the five consecutive years
in which his compensation was the highest, (b) the number of years of service,
and (c) the years in which that service was credited. On January 1, 1994 the
benefits under the Pension Plan and the PEP were amended such that all years of
service credited after January 1, 1994 result in annual retirement benefits as
listed in Pension Table B. All years of service credited prior to January 1,
1994 result in annual retirement benefits as listed in Pension Table A.
Eligible compensation under the Pension Plan is limited to the amount on which a
pension expense deduction may be based under current Internal Revenue Service
regulations (which amount was $150,000 in 1996). Compensation in excess of the
Internal Revenue Service limitations is taken into account under the PEP. The
years of service factor under the Pension Plan reaches its peak after 25 years
of service. The annual retirement benefits are not subject to any deduction for
Social Security or other offset amounts.
The five executive officers named in the Summary Compensation Table of the
Company during 1996 have accumulated the following number of years of credited
service under Pension Plan A: H. Lee Cooper, 25; Giancola, 1; Knapp, 25; M.
Lynn Cooper, 7. Under Pension Plan B, Messrs. Giancola and M. Lynn Cooper have
each earned four years and Mr. Spruill has earned one year of credited service.
The following tables present annual retirement benefits upon reaching age
65 under the Pension Plan and the PEP combined based upon the highest five
years' average earnings and years of service indicated and when those years of
service were credited.
<TABLE>
PENSION PLAN TABLE A
<CAPTION>
Estimated Annual Pension
Average Annual Earnings for the Highest Based Upon Years of Service Indicated
Compensated Five Years of Service 5 Years 10 Years 15 Years 20 Years 25 Years
<S> <C> <C> <C> <C> <C>
$ 50,000 . . . . . . . . $5,375 $10,750 $16,125 $21,500 $26,875
100,000 . . . . . . . . 11,000 22,000 33,000 44,000 55,000
150,000 . . . . . . . . 16,625 33,250 49,875 66,500 83,125
200,000 . . . . . . . . 22,250 44,500 66,750 89,000 111,250
250,000 . . . . . . . . 27,875 55,750 83,625 111,500 139,375
300,000 . . . . . . . . 33,500 67,000 100,500 134,000 167,500
350,000 . . . . . . . . 39,125 78,250 117,375 156,500 195,625
400,000 . . . . . . . . 44,750 89,500 134,250 179,000 223,750
</TABLE>
Page 10
<TABLE>
PENSION PLAN TABLE B
<CAPTION>
Estimate Annual Pension
Average Annual Earnings for the Highest Based Upon Years of Service Indicated
Compensated Five Years of Service 5 Years 10 Years 15 Years 20 Years 25 Years
<S> <C> <C> <C> <C> <C>
$50,000 . . . . . . . . $3,602 $7,204 $10,806 $14,408 $18,010
100,000 . . . . . . . . 7,852 15,704 23,556 31,408 39,260
150,000 . . . . . . . . 12,102 24,204 36,306 48,408 60,510
200,000 . . . . . . . . 16,352 32,704 48,056 65,408 81,760
250,000 . . . . . . . . 20,602 41,204 61,806 82,408 103,010
300,000 . . . . . . . . 24,852 49,704 74,556 99,408 124,260
350,000 . . . . . . . . 29,102 58,204 87,306 116,408 145,510
400,000 . . . . . . . . 33,352 66,704 100,056 133,408 166,760
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Corporate Structure Committee (the "Compensation
Committee") of the Board of Directors, which consists solely of the non-employee
Directors named below, met five times in 1996. The Compensation Committee is
responsible for establishing and administering an equitable salary and benefits
program for all officers. The Compensation Committee also administers the
Company's Executive Compensation Program, which was originally adopted in 1988
to support long and short-term objectives critical to the success of the
Company. These objectives are to:
- attract and retain a pool of high caliber executive talent;
- motivate and reward outstanding executive and corporate performance; and
- link shareholder related performance measures of earnings per share and
return on average equity with Company and individual performance goals.
In order to achieve these objectives, the Executive Compensation Program
consists of three elements: 1) base salary, 2) a Short-Term Incentive Plan, and
3) a Long-Term Stock Incentive Plan. The overall program is reviewed at least
annually by the Compensation Committee, and any modifications are approved by
the entire Board of Directors of the Company.
The Compensation Committee believes the Executive Compensation Program
should be based on maintaining base salaries at sufficient levels to attract and
retain qualified executive talent. Further, the Compensation Committee believes
that a substantial portion of cash compensation should be related to specific
annual performance criteria such as earnings per share growth and return on
average equity, thereby emphasizing achievement of near-term results that
directly affect shareholder value. In order to appropriately align management's
objectives with the long-term financial interests of shareholders, and to
maintain a balance between short-term and long-term goals, the Compensation
Committee encourages management to have a proprietary interest in the Company
through increased stock ownership. The Compensation Committee has not
established target equity ownership levels for its executives, but it does
achieve increased stock ownership through the annual grant of stock options and
the payment of incentive awards through a combination of cash and Common Stock.
The Compensation Committee believes the annual award of stock options and the
payment of incentive awards to be an important part of the Executive
Compensation Program.
Page 11
Base Salary Plan
The Compensation Committee determines the annual base salaries and salary
ranges for the top executive officers. The Compensation Committee also approves
the salary ranges for other officers of the Company. The determination of base
salaries and ranges is based upon competitive norms for similar positions in a
comparison group of similar regional bank holding companies. The companies in
the comparison group are similar to the Company in either asset size, earnings
performance, or geographic location. In order to assist in this process, the
Company retains independent consultants to provide such information to the
Compensation Committee. Actual base salaries are tied to the performance of the
individual executives against standards established for each officer at the
beginning of each year, as well as the relationship of actual salary to the
midpoint of the applicable salary range. These standards were considered by the
Compensation Committee in establishing the base salaries of the Chairman of the
Board and the Chief Executive Officer. In setting the salary of the Chief
Executive Officer, the Committee evaluated his performance on the basis of the
Company's earnings and revenue growth, his major contribution to the Company's
operations and support systems, and the expanded products and services the
Company now offers. The base salaries of the Chief Executive Officer and the
other officers as provided in the Summary Compensation Table were set at or near
the midpoints of the respective salary ranges by the Compensation Committee.
Short-Term Incentive Plan
Since 1989, the Company has maintained an annual Short-Term Incentive Plan
(the "STIP") for certain key officers. Fifty-four officers, including those
named in the Summary Compensation Table, participated in the STIP during 1996.
The STIP provides for the payment of additional compensation contingent upon the
achievement of certain corporate and shareholder-related performance goals and
the participant's achievement of certain individual performance goals. The
awards are based upon a percentage of the participant's base salary. STIP
participants are required to receive at least one-third of their award in
Company Stock, which is valued at market price on the award date. The Company
retains an independent consultant to assist the Compensation Committee in its
annual review of the STIP and in the design of annual corporate and shareholder-
related performance goals. The corporate and shareholder-related goals are
intended to stretch the efforts of management to achieve higher performance
levels given the facts and circumstances known to the Compensation Committee at
the time the goals are established. At the beginning of each plan year,
participants establish individual goals which are linked to the Company's
business and strategic plans. The individual goals relate to the specific
business segments for which the participant has responsibility and are intended
to challenge the participants to perform beyond expected levels of performance.
The Compensation Committee established three payout matrices based on
specific corporate and shareholder-related performance goals relating to the
Company's growth of earnings per share. Participants have been assigned to one
of the three payout matrices based upon their level of responsibility and
expected level of contribution to the Company's achievement of its corporate and
shareholder-related performance goals. The payout matrices used to determine
the amount of awards based solely upon the Company's performance range from 5%
to 80% of a participant's base salary. The actual amount of a participant's
award under the STIP is calculated as follows. First, the corporate component
of the participant's award is determined by reference to the tier to which the
participant had been assigned under the payout matrix and the performance of the
Company in relation to the pre-established corporate and shareholder-related
performance goals. Second, the amount of the participant's award, determined
under the first step, may be increased or decreased (up to a maximum of 50% of
the award) based upon the participant's achievement of his or her individual
goals during the plan year. The STIP allows for the payment of awards of up to
a maximum of 5% of a participant's base salary in the event the participant
achieves his or her individual performance goals, but the Company fails to
achieve its corporate and shareholder-related performance goals.
Page 12
For 1996, the Company exceeded the earnings per share target based upon
operating earnings before payment of the one-time SAIF assessment. The
operating earnings per share for 1996 represented a 14% increase over 1995's
operating results. Based upon the pre-determined payout matrix, the President
and Chief Executive Officer, Mr. Giancola, was to be awarded an incentive bonus
equal to 68% of his base salary. The Compensation Committee then reviewed the
individual goals and accomplishments of Mr. Giancola. Based upon Mr. Giancola's
personal accomplishments and the achievement of corporate and shareholder-
related performance goals, the Compensation Committee unanimously agreed to
increase the amount of his STIP bonus by 10%, to a total incentive bonus equal
to 74.8% of his base compensation.
Long-Term Stock Incentive Plan
The Company maintains the Long-Term Incentive Stock Option Plan and the
1995 Stock Incentive Plan (the "Plan"). The Board and the Compensation
Committee believe that this flexible long-term, stock-based incentive plan
enhances the Company's ability to attract, retain and reward management with
exceptional talent and provides the Company with the ability to develop
incentive programs which are responsive to the demands of the marketplace. The
Compensation Committee also believes that the stock option grants afford a
desirable long-term compensation method because they closely align the interests
of management with those of shareholders. Forty-eight officers, including those
listed in the Summary Compensation Table, participate in the Plan. During 1996,
the Compensation Committee granted stock options to eligible Plan participants.
In determining the grants of stock options to the Chief Executive Officer, as
well as other named officers in the Summary Compensation Table, the Compensation
Committee took into account the respective scope of responsibility, performance
requirements, and recent and expected contributions of the Plan participants to
the Company's achievement of its long-term performance objectives.
1996 Compensation Committee Robert L. Koch II, Chairman
John D. Engelbrecht
Jerry A. Lamb
Burkley F. McCarthy
SHAREHOLDER RETURN PERFORMANCE COMPARISONS
Set forth below is a line graph comparing the cumulative total shareholder
return on the Company's Common Stock against the cumulative total return of the
S&P 500, the SNL NYSE Bank Index, and the SNL Midwest Bank Index over the past
five years based on an initial $100 investment on December 31, 1991. This
analysis assumes that all dividends are reinvested.
In prior years, the Company compared its cumulative total shareholder
return to the NASDAQ Bank Index rather than the SNL NYSE Bank and SNL Midwest
Bank Indices. The Company believes the SNL NYSE Bank and SNL Midwest Bank
Indices to be a better comparison of the performance of the Company than the
NASDAQ Bank Index considering the Company's listing on the NYSE in April, 1996
and its Midwest base of operation. The cumulative total return for the five
years ended December 31, 1996 of the Company's Common Stock was 286% as compared
to 318%, 262%, and 336% for the SNL NYSE Bank, the SNL Midwest Bank, and the
NASDAQ Bank Indices, respectively. The compound annual total return for CNB
Bancshares, Inc. from 1991 through 1996 was 23%.
Page 13
<TABLE>
<CAPTION>
Comparison of Five Year Cumulative
Total Return of CNB Bancshares, Inc. Versus
S&P 500, SNL NYSE Bank, and SNL Midwest Bank Indices
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CNB Bancshares, Inc. 100 134 165 175 180 286
S&P 500 100 108 118 120 165 203
SNL NYSE Banks Index 100 135 147 142 225 318
SNL Midwest Banks Index 100 129 135 130 193 262
</TABLE>
TRANSACTIONS WITH DIRECTORS, OFFICERS AND ASSOCIATES
Directors and officers of the Company, and some of the corporations and
firms with which certain Directors and officers are associated, have been
indebted to the Company's subsidiary banks for loans of $60,000 or more, and it
is anticipated that some of these persons, corporations and firms will continue
to be indebted to the subsidiary banks on a similar basis in the future. All
loans extended to such persons, corporations and firms, since the beginning of
the last full fiscal year, were made in the ordinary course of business and did
not involve more than normal risk of collectibility or present other unfavorable
features. All such loans were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the same time for
comparable bank transactions with unaffiliated persons.
Outside of normal customer relationships, none of the Directors or officers
of the Company, or the corporations and firms with which such persons are
associated, currently maintains or has maintained since the beginning of the
last full fiscal year, any significant business or personal relationship with
the Company or its subsidiaries.
INDEPENDENT AUDITORS
On September 11, 1996, the Company retained KPMG Peat Marwick LLP as its
independent auditors for the years ending December 31, 1996 and 1997, replacing
Geo. S. Olive & Co. LLC, the auditors of the Company since its formation in
1984. The decision was recommended by management of the Company and approved by
the Company's Audit Committee following receipt of proposals from various
auditing firms. Representatives of KPMG Peat Marwick LLP will be present at the
Meeting and will be available to answer questions and discuss matters pertaining
to the Independent Auditors' Report contained in the 1996 Annual Report to
Shareholders, and they will have the opportunity to make a statement, if they so
desire.
The reports of Geo. S. Olive & Co. LLC on the Company's consolidated
financial statements for the years ended December 31, 1994 and 1995, did not
contain an adverse opinion or a disclaimer opinion, and the reports were not
qualified or modified as to uncertainty, audit scope or accounting principles.
Page 14
In connection with the audits of the Company's financial statements for
each of the two years ended December 31, 1994 and 1995, and in the subsequent
interim period, there were no unresolved issues, scope restrictions, unanswered
questions or disagreements with Geo. S. Olive & Co. LLC on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to the satisfaction of Geo. S. Olive &
Co. LLC, would have caused Geo. S. Olive & Co. LLC to make reference to the
matter in their report.
In connection with the audits of the Company's financial statements for
each of the two years ended December 31, 1994 and 1995, and the subsequent
interim period, there were no reportable events (as defined in Item 304(a)(1)(v)
of Regulation S-K) with Geo. S. Olive & Co. LLC.
During the years ended December 31, 1994 and 1995 and the subsequent
interim period prior to engaging KPMG Peat Marwick LLP, the Company (or anyone
on the Company's behalf) did not consult KPMG Peat Marwick LLP regarding either:
(i) the application of accounting principles to a specified transaction,
either completed or proposed; or the type of audit opinion that might
be rendered on the Company's financial statements; and as such no
written report was provided to the Company and no oral advice was
provided that the new accountant concluded was an important factor
considered by the Company in reaching a decision as to any accounting,
auditing or financial reporting issue; or
(ii) any matter that was either the subject of a disagreement or a
reportable event.
SHAREHOLDER PROPOSALS
Shareholder proposals to be considered for inclusion in the proxy statement
and considered at the Meeting must be submitted on a timely basis. Proposals
for the 1998 Annual Meeting of Shareholders must be received by the Company no
later than November 25, 1997. Any such proposals, together with supporting
statements, should be directed to the Secretary of the Company.
OTHER MATTERS
The Company will provide without charge to each shareholder, upon written
request, a copy of the Company's 1996 Annual Report on Form 10-K, including the
financial statements and schedules thereto, required to be filed with the
Securities and Exchange Commission. All written requests should be directed to
Mr. Ralph L. Alley, Senior Vice President and Controller, CNB Bancshares, Inc.,
P.O. Box 778, Evansville, Indiana, 47705-0778.
The Board of Directors of the Company is not aware of any other matters
which will be presented for consideration at the Meeting. The proxies may,
however, be voted with discretionary authority with respect to any other matters
that may properly come before the Meeting.
By Order of the Board of Directors
DAVID L. KNAPP
Secretary
March 24, 1997
Page 15
