<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CNB BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO] CNB BANCSHARES, INC.
NOTICE OF
ANNUAL MEETING
AND PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 21, 1999
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 22, 1999
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 Victory Theatre, 600 Main Street,
Evansville, Indiana on April 21, 1999, at 5:00 p.m., Central Daylight Savings
Time, for the purpose of considering and voting upon the following matters:
1. The election of four Directors to Class II 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. The approval of the CNB Bancshares, Inc. 1999 Stock Incentive Plan; and
3. Any other business which may be brought before the meeting or any
continuation, postponement or 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.
1
<PAGE>
CNB BANCSHARES, INC.
20 N.W. THIRD STREET
EVANSVILLE, INDIANA 47739-0001
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
APRIL 21, 1999
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 Wednesday, April 21, 1999, at 5:00 p.m., Central Daylight Savings Time,
at the Victory Theatre, 600 Main Street, Evansville, Indiana, and at any
continuation, postponement or adjournment thereof. This Proxy Statement and the
form of proxy were first mailed to shareholders on March 22, 1999. 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 also may be solicited by officers
and employees of the Company, personally or by telephone, or by other electronic
means, but such persons will not be specially compensated for their services.
All expenses of solicitation will be paid by the Company.
As of March 5, 1999, there were 35,206,103 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 5, 1999, 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, 1998, the name and
address of the only person or entity known to management of the Company to
beneficially own more than 5 percent of the Company's Common Stock:
<TABLE>
<CAPTION>
VOTING POWER INVESTMENT POWER TOTAL SHARES PERCENT
NAME & ADDRESS OF ------------ ---------------- BENEFICIALLY OF
BENEFICIAL OWNER SOLE SHARED SOLE SHARED OWNED CLASS
- ---------------- ---- ------ ---- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
CNB Bancshares, Inc. (a) 2,184,403 56,543 2,650,547 127,044 3,095,472 8.72%
</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.
2
<PAGE>
ITEM 1. ELECTION OF DIRECTORS AND
INFORMATION WITH RESPECT TO DIRECTORS AND EXECUTIVE OFFICERS
In accordance with the provisions of the Company's Restated 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 first item scheduled to be acted upon at the Meeting is the election of
four Directors to Class II of the Board of Directors, each to hold office for
three years (until the 2002 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 II 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 II, subject to any
specific voting instructions contained therein. All nominees have consented to
being 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 information is provided with respect to each nominee for Director and
each present continuing Director whose term of office extends beyond the
Meeting. 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.
INFORMATION REGARDING NOMINEES FOR
CLASS II DIRECTORS
------------------
(Term Expiring 2002)
<TABLE>
<CAPTION>
SHARES OF COMPANY STOCK
BENEFICIALLY OWNED AS OF
PRINCIPAL OCCUPATION(s) DECEMBER 31, 1998
FOR PAST 5 YEARS AND -----------------
NAME, AGE OTHER DIRECTORSHIPS NUMBER (a) % (b)
- --------- ------------------- ---------- -----
<S> <C> <C> <C>
H. LEE COOPER III, 60 Chairman of the Board of the Company; prior to March, 1996, 85,017 *
Director of Company since 1983 Chairman of the Board and Chief Executive Officer of the
Company.
JOHN D. ENGELBRECHT, 47 President, South Central Communications Corporation (a 49,754 *
Director of Company since 1983 broadcasting and communications company). Mr. Engelbrecht
also serves as a director of SIGCORP, Inc. (gas and electric
utility holding company).
JAMES E. HUTTON, 60 Vice President of Operations, Burrell Professional Labs, 66,142 *
Director of Company since 1998 Inc. (professional photo processing company)
ROBERT K. RUXER, 49 President, Ruxer Farms, Inc. and Rolling Fields, Inc. 293,188 *
Director of Company since 1991 (agricultural farming and apartment rental)
</TABLE>
3
<PAGE>
INFORMATION REGARDING DIRECTORS CONTINUING IN OFFICE
CLASS III DIRECTORS
-------------------
(Term Expiring 2000)
<TABLE>
<CAPTION>
SHARES OF COMPANY STOCK
BENEFICIALLY OWNED AS OF
PRINCIPAL OCCUPATION(s) DECEMBER 31, 1998
FOR PAST 5 YEARS AND -----------------
NAME, AGE OTHER DIRECTORSHIPS NUMBER (a) % (b)
- --------- ------------------- ---------- -----
<S> <C> <C> <C>
JAMES J. GIANCOLA, 50 President and Chief Executive Officer of the Company since 107,788 *
Director of Company since 1994 March, 1996; President and Chief Operating Officer prior to
March, 1996.
ROBERT L. KOCH II, 60 President and Chief Executive Officer, Koch Enterprises, 197,405 *
Director of Company since 1983 Inc. (manufacturing). Mr. Koch also serves as a director of
SIGCORP, Inc. (gas and electric utility holding company)
and Bindley Western Industries (national wholesale
distributor of pharmaceutical and related products).
LAWRENCE J. KREMER, 57 Vice President Materials, Emerson Electric Company 7,681 *
Director of Company since 1995 (manufacturer of electronic products and systems).
ALTON C. WENDZEL, 68 President Greg Farms, Inc; Greg Orchards and Produce, Inc.; 91,309 *
Director of Company since 1998 and Coloma Frozen Foods, Inc. (growers and producers of
fresh and frozen produce).
</TABLE>
CLASS I DIRECTORS
-----------------
(Term Expiring 2001)
<TABLE>
<CAPTION>
<S> <C> <C>
TERRENCE A. FRIEDMAN, 61 Chairman of the Board, Trelleborg/YSH,Inc. (manufacturer of 38,947 *
Director of Company since 1998 rubber components for auto industry); President and Chief
Executive Officer, Victoria National Golf Club (private golf
course and club) and Roslin Road Development Corporation
(residential and commercial land development).
EDMUND L. HAFER, JR., 56 President, Edmund L. Hafer & Associates, P.C. 5,791 *
Director of Company since 1997 (architectural and engineering services firm).
BURKLEY F. MCCARTHY, 68 Chairman, Fendrich Industries, Inc.(diversified 52,238 *
Director of Company since 1983 manufacturer).
THOMAS W. TRAYLOR, 59 Chairman and Chief Executive Officer, Traylor Bros., Inc. 235,568 *
Director of Company since 1983 (underground and marine construction).
</TABLE>
- --------------------------------------------------
* Represents holdings of less than 1 percent.
(a) The number of shares includes shares of Common Stock which could be
acquired within 60 days after December 31, 1998, pursuant to stock options
and convertible trust preferred securities in the following amounts:
Messrs. Cooper, 1,450; Engelbrecht, 15,913; Hutton, 12,589; Ruxer, 3,341;
Giancola, 77,184; Koch, 3,244; Kremer, 3,092; Hafer, 1,934; McCarthy,
2,857; and Traylor, 2,374.
(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 trust preferred securities for the purchase of 4,581,462
shares.
4
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held ten regular meetings and two
special meetings during the fiscal year ended December 31, 1998. During 1998,
each Director attended 75 percent or more of the aggregate number of meetings of
the Board of Directors and of any committee of which he was a member.
Directors, other than those who also serve as officers of the Company or
its subsidiaries, receive for their services a fee of $8,000 per year and $1,000
per board meeting attended, plus $500 per meeting of other committees attended.
Until March 31, 1998, Directors received $350 per meeting if joint committee
meetings were held with the directors of the subsidiary banks. Effective April
1, 1998, the board determined no joint committee fees would be paid.
Non-employee Directors serving as committee chair receive $1,500 per year for
services, provided their committee met at least once during the year. Mr.
Cooper, Chairman of the Board, entered into a consulting agreement with the
Company upon his retirement on January 5, 1998. During 1998, Mr. Cooper received
$5,000 monthly per his one year contractual agreement which ended December 31,
1998. In addition, the Company provided an automobile and membership fees in a
country club. In return, Mr. Cooper provided consulting services and advice to
the Company and agreed not to compete with the Company by providing services to
any banking or savings institution in Indiana. Mr. Cooper entered into a new
consulting agreement effective January 1, 1999. He will receive $10,000 per
month, an automobile, and membership fees in a country club until the agreement
expires December 31, 2001.
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 1998, each of the non-employee Directors of the
Company received 1,050 options each with an exercise price of $49.10 per share
of Common Stock, as adjusted to reflect the 5 percent stock dividend paid on
September 18, 1998.
The Board of Directors has an Audit Committee. During 1998, the Audit
Committee, consisting of Burkley F. McCarthy (Chairman), Robert K. Ruxer, James
E. Hutton and Alton C. Wendzel, met four 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, Burkley F. McCarthy, Robert K. Ruxer, H. Lee Cooper III, and James
J. Giancola. The Nominating Committee, which 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 met once in
1998. The Nominating Committee will consider nominees for Director submitted in
writing to the Secretary of the Company.
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of December 31, 1998, 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
certain executive officers including those 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>
James J. Giancola 107,788 *
David L. Knapp 80,802 *
John R. Spruill 39,642 *
M. Lynn Cooper 49,605 *
David M. Viar 24,737 *
All Directors, Nominees and Executive Officers as a group 1,575,467 3.9%
</TABLE>
- --------------------------------------------------
* Represents holdings of less than 1 percent.
(a) The number of shares includes shares of Common Stock which could be
acquired within 60 days after December 31, 1998, pursuant to stock options
and convertible trust preferred securities in the following amounts:
Messrs. Giancola, 77,184; Knapp, 51,796; Cooper, 38,122; Spruill, 25,817;
Viar, 19,926; and all directors, nominees and executive officers, 364,259.
(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 trust preferred securities for the purchase of 4,581,462
shares.
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 percent 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 1998. 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, 1998.
6
<PAGE>
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
1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation
Compensation Awards
-------------------- ---------------
Option All Other
Name & Principal Position Year Salary Bonus Shares Compensation
- -----------------------------------------------------------------------------------------------------------
(a) (b) (c)
<S> <C> <C> <C> <C> <C>
James J. Giancola 1998 $ 425,000 $ 157,803 21,000 $ 63,690
President and 1997 345,000 234,600 20,837 10,350
Chief Executive Officer 1996 283,985 212,421 17,364 8,520
David L. Knapp 1998 227,209 66,782 10,500 30,900
Executive Vice President and 1997 208,845 117,162 9,922 6,265
President of the Banking Group 1996 198,900 101,439 9,261 5,967
John R. Spruill 1998 212,183 63,688 10,500 31,214
Executive Vice President and 1997 194,670 109,210 9,922 5,840
Chief Administrative Officer 1996 185,400 104,009 9,261 5,562
M. Lynn Cooper 1998 191,286 35,809 8,925 32,031
Executive Vice President 1997 183,929 93,804 9,371 4,730
Retail Banking 1996 174,772 80,220 9,261 4,500
David M. Viar 1998 149,150 45,710 7,350 9,340
Executive Vice President and 1997 126,180 70,787 7,166 3,596
Treasurer 1996 104,167 58,437 6,946 3,125
</TABLE>
(a) These amounts represent bonuses payable pursuant to the Company's Short
Term Incentive Plan (STIP) described elsewhere in this Proxy Statement.
(b) The options listed have been adjusted to reflect stock dividends.
(c) These amounts represent the Company's contribution to the Company's 401(k)
Plan and Savings Equalization Plan ("SEP"). The purpose of the SEP is to
provide a supplemental savings program for eligible employees who are
limited in the amount of contributions to the Company's 401(k) Plan because
of Internal Revenue Service regulations. Beginning in 1998, the
compensation includable in the Company's 401(k) Plan and SEP was expanded
to also include performance-based incentives including bonuses awarded
under STIP.
7
<PAGE>
STOCK OPTIONS
The following tables summarize option grants to and exercises by the named
executive officers during 1998 as well as the value of options held by such
persons at the end of the year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
- -------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed Annual
Number of % of Total Rates of Stock Price
Securities Options Exercise or Appreciation
Underlying Granted to Base Price For Option Term (b)
Options Employees in ($ Per Expiration -----------------------
Name Granted (a) Fiscal Year Share) Date 5% 10%
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James J. Giancola 21,000 7.83% $ 43.81 6/16/08 $ 578,600 $ 1,466,200
David L. Knapp 10,500 3.92 43.81 6/16/08 289,300 733,100
John R. Spruill 10,500 3.92 43.81 6/16/08 289,300 733,100
M. Lynn Cooper 8,925 3.33 43.81 6/16/08 245,905 623,135
David M. Viar 7,350 2.74 43.81 6/16/08 202,510 513,170
</TABLE>
(a) Options were granted on June 16, 1998, and the exercise price was
established at the then current market value of the Common Stock.
One-third of each option grant becomes exercisable on December 16, 1998,
June 16, 1999 and June 16, 2000. The number of options and exercise price
reflect the 5 percent stock dividend issued on September 18, 1998.
(b) The dollar amounts under these columns represent 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 percent and 10 percent,
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.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options In-The-Money Options
Shares at Fiscal Year-End at Fiscal Year-End (a)
Acquired Value ------------------------------------------------------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James J. Giancola --- --- 76,701 21,015 $ 1,499,515 $ 108,300
David L. Knapp --- --- 51,314 10,343 1,075,010 52,523
John R. Spruill 1,300 $ 29,587 25,335 10,343 422,131 52,523
M. Lynn Cooper --- --- 38,027 9,103 756,118 47,730
David M. Viar --- --- 19,926 7,314 340,866 37,493
</TABLE>
(a) These two columns represent the pre-tax gain calculated at the fair market
value of Common Stock at year-end 1998 of $46.63 per share less the
exercise price.
CHANGE OF CONTROL
Each of the executive officers named in the Summary Compensation Table have
entered into a change of control agreement with the Company that provides
certain benefits as described below upon a "change of control" of the Company
(as defined in the agreements). If, during the six months prior to or eighteen
months subsequent to a change in control of the Company, the executive officer
terminates his employment for "good reason" (as defined in the agreements) or
the Company terminates the executive officer's employment for a reason other
than "cause" (as defined in the agreements), then the executive officer will
receive (i) a lump-sum payment equal to his Termination Compensation (as defined
below) multiplied by the Payment Period (as defined below) and (ii) certain
family medical, life insurance and other welfare benefits (subject to certain
limitations and at the same cost as charged to active executive employees
receiving similar coverage). The "Termination Compensation" for the executive
officer is defined in the agreements as the sum of (a) his highest rate of base
salary during the previous twelve months, plus (b) one twelfth of his average
annual incentive compensation. The "Payment Period" ranges from 18 to 36
months, which is subject to reduction by one for each full calendar month in
which the executive officer remains in the employ of CNB after the change of
control date. The merger with Pinnacle Financial Services, Inc. on April 17,
1998 constituted a change of control. The agreements further provide that
during the executive officer's employment or Payment Period the executive
officer may not compete with CNB or its successors within 100 miles from
Evansville, Indiana or 50 miles from its nearest banking office.
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 all full-time and eligible part-time employees.
Additionally, certain executive officers (including four of the 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 by the maximum compensation and maximum benefit
limitations imposed by the Internal Revenue Code.
9
<PAGE>
Employees with a minimum of 1,000 hours annually 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.
Participants become eligible to participate in the Pension Plan when they have
reached the age of 21 and have one year of continuous service. 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 total compensation (annual salary plus, beginning in 1999,
performance based incentives including 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 $160,000 in 1998). Compensation in excess
of the Internal Revenue Service limitations is included in 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 executive officers named in the Summary Compensation Table have
accumulated the following number of years of credited service at December 31,
1998 under Pension Plan A: Giancola, one; Knapp, 25; and Cooper, seven. Under
Pension Plan B, Messrs. Giancola and Cooper have each earned six years, Mr.
Spruill three years, and Mr. Viar five years of credited service.
The following tables present combined annual retirement benefits upon
reaching age 65 under the Pension Plan and the PEP based upon the highest five
years' average earnings and years of service indicated and when those years of
service were credited.
PENSION PLAN TABLE A
<TABLE>
<CAPTION>
Estimated Annual Pension
Based upon Years of Service Indicated
Average Annual Earnings for the Highest -------------------------------------------------------
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
300,000 . . . . . . . . . . 33,500 67,000 100,500 134,000 167,500
400,000 . . . . . . . . . . 44,750 89,500 134,250 179,000 223,750
500,000 . . . . . . . . . . 56,000 112,000 168,000 224,000 280,000
600,000 . . . . . . . . . . 67,250 134,500 201,750 269,000 336,250
700,000 . . . . . . . . . . 78,500 157,000 235,500 314,000 392,500
800,000 . . . . . . . . . . 89,750 179,500 269,250 359,000 448,750
</TABLE>
10
<PAGE>
PENSION PLAN TABLE B
<TABLE>
<CAPTION>
Estimated Annual Pension
Based upon Years of Service Indicated
Average Annual Earnings for the Highest -------------------------------------------------------
Compensated Five Years of Service 5 Years 10 Years 15 Years 20 Years 25 Years
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 50,000 . . . . . . . . . . $3,472 $6,944 $10,415 $13,887 $17,359
100,000 . . . . . . . . . . 7,722 15,444 23,165 30,887 38,609
150,000 . . . . . . . . . . 11,972 23,944 35,915 47,887 59,859
200,000 . . . . . . . . . . 16,222 32,444 48,665 64,887 81,109
300,000 . . . . . . . . . . 24,722 49,444 74,165 98,887 123,609
400,000 . . . . . . . . . . 33,222 66,444 99,665 132,887 166,109
500,000 . . . . . . . . . . 41,722 83,444 125,165 166,887 208,609
600,000 . . . . . . . . . . 50,222 100,444 150,665 200,887 251,109
700,000 . . . . . . . . . . 58,722 117,444 176,165 234,887 293,609
800,000 . . . . . . . . . . 67,222 134,444 201,665 268,887 336,109
</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 1998. 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-term 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) a Base Salary Plan, 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 the annual grant of stock options and the payment of
incentive awards through a combination of cash and Common Stock increase the
executives stock ownership of the Company. 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.
11
<PAGE>
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 salary of 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, the
expanded products and services the Company now offers, and the additional
responsibilities he assumed upon the retirement from full-time service of the
Chairman of the Board. 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
The Company maintains an annual Short-Term Incentive Plan (the "STIP")
for certain key officers. There were 136 officers, including those named in
the Summary Compensation Table, participating in the STIP during 1998. 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 30 percent of their award
in Common Stock, which is valued at its market price on the award date. The
annual 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 four payout matrices based on
specific corporate and shareholder-related performance goals relating to the
Company's growth of earnings per share and reaching a targeted level of
return on average equity. Participants have been assigned to one of the four
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
percent to 80 percent 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 percent 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 5 percent 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.
12
<PAGE>
For 1998, the lowest earnings level at which STIP bonuses would be paid
was $2.48 per share provided that return on average equity ("ROE") exceeded
14 percent. The maximum STIP bonuses would have been paid once the Company's
earnings per share exceeded $2.70. The Company's ROE was 17.88 percent which
exceeded the minimum target. Based upon the 12 percent increase in operating
earnings per share to $2.53 and the pre-determined payout matrix, the
President and Chief Executive Officer, Mr. Giancola, was to be awarded an
incentive bonus equal to 24.7 percent of his base salary. The Compensation
Committee reviewed Mr. Giancola's accomplishments toward his 1998 goals
including the completion of three acquisitions and significant improvement in
operating ratios such as ROA, ROE and efficiency, and increased his award by
50 percent to 37 percent of his base salary.
LONG-TERM STOCK INCENTIVE PLANS
The Company maintains stock option plans including the 1995 Stock
Incentive Plan (the "1995 Plan"). The Board and the Compensation Committee
believe that flexible long-term, stock-based incentive plans enhance the
Company's ability to attract, retain and reward management with exceptional
talent and provide 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. Eighty-two officers, including those
listed in the Summary Compensation Table, received grants under the 1995 Plan
during 1998. 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 1995 Plan participants to the Company's
achievement of its long-term performance objectives.
1998 Compensation Committee: Robert L. Koch II, Chairman
John D. Engelbrecht
Terrence A. Friedman
Burkley F. McCarthy
Thomas W. Traylor
13
<PAGE>
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 Banks Index, and the SNL Midwest Banks
Index over the past five years based on an initial $100 investment on
December 31, 1993. This analysis assumes that all dividends are reinvested.
The total return of the comparative indices includes the returns of companies
that have been acquired which may overstate the total return of the index
compared to companies that were not acquired during the periods presented.
The compound annual total return of the Company's common stock was 17 percent
from 1993 through 1998.
Comparison of Five Year Cumulative
Total Return of CNB Bancshares, Inc. Versus
S&P 500, SNL NYSE Bank, and SNL Midwest Bank Indices
[GRAPH]
<TABLE>
SNL Midwest SNL NYSE
CNB S&P 500 Banks Index Banks Index
1993 100 100 100 100
<S> <C> <C> <C> <C>
1994 106.18 101.32 96.65 96.66
1995 109.57 139.39 142.82 152.76
1996 173.55 171.26 194.3 216.59
1997 214.93 228.42 315.04 318.08
1998 222.8 293.69 335.09 348.04
</TABLE>
Source: SNL Securities, LC
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 transactions with unaffiliated persons.
14
<PAGE>
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, except for the following instances. During
1998, the Company and its subsidiaries paid $255,000 to Edmund L. Hafer &
Associates, P.C. for architectural and engineering services. These services
represent more than five percent of the gross revenues of Edmund L. Hafer &
Associates. Director Hafer is the President and majority shareholder of the
firm. The Company and its subsidiaries paid $81,000 to Total Office Products
for office equipment and supplies. The spouse of Director Ruxer is President of
Total Office Products. The Company and its subsidiaries expect to have now, and
in the future, similar transactions in the ordinary course of business with
these firms.
ITEM 2. PROPOSAL TO APPROVE CNB BANCSHARES, INC.
1999 STOCK INCENTIVE PLAN
The second item scheduled to be acted upon at the Meeting is the proposal
to approve the CNB Bancshares, Inc. 1999 Stock Incentive Plan (the "Plan")
described below.
GENERAL
PURPOSE. The Board of Directors has adopted the Plan, subject to approval
by the shareholders of the Company, which provides for several different types
of stock and stock-based awards. The Board believes that a flexible long-term,
stock-based incentive plan, such as the Plan, will enhance the Company's ability
to attract, retain and reward management with exceptional talent and will
provide the Company with the ability to develop incentive programs which are
responsive to the demands of the marketplace. The Board also believes that the
Plan will support the execution of the Company's business strategies, promote
the achievement of its goals, and associate the interests of participants in the
Plan with those of the shareholders of the Company. The Plan will essentially
replace the CNB Bancshares, Inc. 1995 Stock Incentive Plan (the "1995 Plan")
and, although grants outstanding under the 1995 Plan will remain in place until
they are exercised and/or forfeited or until such plan expires, no further
grants are contemplated under the 1995 Plan. The summary of the Plan set forth
below does not purport to be complete and is qualified in its entirety by
reference to the full text of the Plan, a copy of which is attached hereto as
Exhibit A.
ADMINISTRATION. The Plan will be administered by the Compensation and
Corporate Structure Committee of the Board of Directors or such other committee
of the Board meeting the requirements of the Plan as may be designated by the
Board from time to time (the "Committee"). The Committee will determine, among
other things (i) the key employees and, subject to the approval of the Board of
Directors, Directors and advisory directors of the Company's subsidiaries to
whom grants of awards will be made; (ii) the types of awards; and (iii) the
grant terms including, but not limited to, vesting schedule, grant price, length
of relevant option or restriction period, performance standards, dividend
rights, post-retirement and termination rights, and payment alternatives.
Awards may be granted as replacements of awards outstanding under the Plan or
under previous stock incentive plans maintained by the Company. The Committee
may designate other persons to carry out its responsibilities under such
conditions and limitations as it may set, other than its authority to determine
the key employees to whom grants of awards will be made and its authority with
regard to awards granted to employees who are executive officers or Directors of
the Company for purposes of Section 16 of the Securities Exchange Act of 1934,
as amended.
In the event of a Change of Control (as defined in the Plan) of the
Company, (i) all performance standards will be deemed to have been attained, all
restrictions will lapse, and the time period for exercising, realizing or
vesting of awards will be accelerated so that such awards may be immediately
exercised, realized or vested in full, (ii) performance shares or performance
units will be paid in cash, and (iii) with respect to stock options, during the
60-day period following a Change of Control, a grantee may, subject to certain
exceptions, elect to receive, in lieu of shares of Common Stock, cash equal to
the excess of the value (determined under the Plan) of the shares of Common
Stock over the price at which the option was exercisable. Notwithstanding the
above, no Award will be settled in cash if such payment would make a transaction
involving the Corporation ineligible for pooling interests accounting under APB
No. 16.
15
<PAGE>
SHARES AUTHORIZED. The total number of shares of Common Stock issuable
under the Plan in any plan year is limited to one and one-half percent (1.5%) of
the outstanding Common Stock of the Company as reported in its Annual Report on
Form 10-K for the fiscal year ending immediately prior to such plan year, plus
(i) any unused portion of the limit for a prior plan year, (ii) shares
represented by awards which are forfeited, surrendered, terminated, paid in cash
or expire unexercised, and (iii) the excess amount of variable awards which
become fixed at less than their maximum limitations. Notwithstanding the
foregoing, no more than 2,000,000 shares in the aggregate for all plan years may
be subject to incentive stock option awards under the Plan. The shares issuable
under the Plan, as aforesaid, are subject to adjustments to reflect stock splits
and dividends and certain other changes in the number or kind of outstanding
shares. As of March 5, 1999, the closing sale price of a share of Common Stock
of the Company, as reported in the WALL STREET JOURNAL (Midwest Edition), was
$41.25.
AMENDMENTS. The Board of Directors may alter, amend, suspend or
discontinue the Plan to the extent permitted by law, except that no such
alteration, amendment, suspension or discontinuance of the Plan may adversely
affect any right acquired under an award granted before the date of such
alteration, amendment, suspension or discontinuance. Any such action of the
Board may be taken without the approval of the shareholders of the Company,
but only to the extent that such shareholder approval is not required by
applicable law or regulation, including specifically Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code') and the rules and
policies of the New York Stock Exchange or, if the Common Stock is not then
traded on the New York Stock Exchange, the primary exchange or trading system
on which shares of Common Stock are then listed for trading. Unless earlier
terminated by the Board of Directors, the Plan will terminate on March 15,
2009.
PAYMENT FOR AWARDS. The Committee may determine that awards for which a
payment is due from an award recipient may be payable: (i) in U.S. dollars by
personal check, bank draft or money order payable to the order of the
Company, by money transfers or direct account debits; (ii) through the
delivery or deemed delivery based on attestation to the ownership of shares
of Common Stock held by the payor for at least six months, with a Fair Market
Value (as defined in the Plan) equal to the total payment due; (iii) by a
combination of the methods described in (i) and (ii) above; (iv) in the case
of a non-qualified stock option, by authorizing a third party to sell shares
of Common Stock (or a sufficient portion of the shares) acquired upon
exercise of the option and remit to the Company a sufficient portion of the
sale proceeds to pay the entire exercise price and any tax withholding
resulting from such exercise, or (v) by such other methods as the Committee
may deem appropriate.
PARTICIPATION OF KEY EMPLOYEES
All key employees of the Company, including key employees of any
subsidiary of the Company, will be eligible for selection for participation
under the Plan. The selection of participants from among key employees will
be solely within the discretion of the Committee. While the concept of a
"key employee" eligible to participate in the Plan is necessarily flexible,
approximately 100 employees are currently considered to fall within this
category. A key employee participant in the Plan may, at the discretion of
the Committee, receive multiple grants of stock-based awards or replacement
awards. The Plan provides that the number of shares of Common Stock
underlying stock options and stock appreciation rights which may be granted
to any one individual during any plan year may not exceed 150,000. The Plan
also provides that the terms and provisions of a type of award with respect
to any recipient need not be the same with respect to any other recipient of
such award.
TYPES OF AWARDS
The Plan authorizes the grant of any of the following awards to key
employees on a stand alone, combination or tandem basis:
16
<PAGE>
STOCK OPTIONS. Both tax-qualified incentive stock options and
non-qualified stock options may be granted under the Plan. The exercise
price per share of Common Stock subject to any stock option and the term of
such stock option will be determined by the Committee; however, the purchase
price may not be less than the fair market value of a share of Common Stock
on the date of grant. Options granted as incentive stock options must also
meet requirements of the Code; one current requirement is that the fair
market value of shares with respect to which incentive stock options are
first exercisable in any one year by any participant may not exceed $100,000.
Each stock option grant may be exercised in whole, at any time, or in part,
from time to time, after the grant becomes exercisable. If an incentive
stock option is exercised at a time when it no longer qualifies as an
incentive stock option, it will be treated as a non-qualified stock option.
STOCK APPRECIATION RIGHTS. Stock appreciation rights may be granted
independently of any stock option or in tandem with all or any part of a stock
option. Upon such terms and conditions as the Committee may determine in its
discretion, the grant of a stock appreciation right entitles a grantee to
receive in cash the excess of the fair market value of a share of Common Stock
on the date the stock appreciation right is exercised over the fair market value
of a share of Common Stock on the date the stock appreciation right was granted.
OTHER STOCK-BASED AWARDS. Other types of awards of Common Stock or awards
of cash based, in whole or in part, by reference to Common Stock may be granted.
Other stock-based awards include, without limitation, restricted shares and
share units, performance shares and share units and unrestricted stock grants.
The Committee will determine the time at which grants of such other stock-based
awards are to be made, the size of such awards, and all other conditions of such
awards, including any restrictions on transfer or other incidents of ownership,
performance standards and the period in which to meet such standards, time of
payment and vesting. The recipient may have the right to receive currently or
on a deferred basis, as determined by the Committee, dividends or their
equivalent value in cash (or in a combination of both) with respect to any new
or previously existing award.
PARTICIPATION OF NON-EMPLOYEE DIRECTORS; NON-QUALIFIED STOCK OPTIONS
On the first business day following each Annual Meeting of Shareholders of
the Company (commencing with the 1999 Annual Meeting) each person elected,
reelected or continuing as a non-employee Director of the Company will
automatically receive non-qualified stock options to purchase 1,000 shares of
Common Stock. These non-qualified stock options will become exercisable on the
second anniversary of the date of grant. Except as otherwise specifically
provided in the Plan or in the award summary, each non-qualified stock option
expires on the date which is ten years after it is granted.
In addition, prior to the beginning of any plan year, the Committee,
subject to the approval of the Board of Directors of the Company, may permit
each non-employee director of the Company, any non-employee director of any
subsidiary of the Company and any advisory director of the Company or any
subsidiary of the Company to elect to receive non-qualified stock options in
lieu of all or a portion of the director fees which would otherwise be payable
to such designated persons during such plan year. Any such options would be
granted at the time a cash payment of director fees would otherwise become
payable during such plan year and the exercise price would be the fair market
value (as defined in the Plan) of a share of Common Stock on the date of grant.
The Committee, subject to the approval of the Board of Directors of the Company,
also may issue additional non-qualified stock options to non-employee directors
of the Company, any non-employee directors of any subsidiary of the Company and
any advisory directors of the Company or any subsidiary of the Company. Options
granted in lieu of director fees and discretionary options will be subject to
terms determined by the Committee, subject to the approval of the Board of
Directors of the Company.
17
<PAGE>
TRANSFERABILITY OF AWARDS
Except as otherwise provided below, no award granted under the Plan shall
be assignable or transferable except by will or by the laws of descent and
distribution. During the lifetime of a recipient of an award under the Plan,
the award shall be exercisable only by such recipient or such recipient's
guardian or legal representative. The Committee, in its discretion, may permit
a recipient of a non-qualified stock option under the Plan, during his or her
lifetime, to transfer the option, for no consideration, to or for the benefit of
the recipient's immediate family (including a trust for the benefit of the
participant's immediate family or to a partnership or limited liability company
for one or more members of the participant's immediate family), subject to such
limits as the Committee may establish, provided the transferee would remain
subject to all the terms and conditions applicable to the option prior to such
transfer. Any vesting period applicable to such option would continue to be
measured in terms of the recipient's employment by the Company or its
subsidiaries.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. No income is recognized by the grantee on the
grant or exercise of an incentive stock option. Upon exercise of an incentive
stock option, the grantee generally will have no taxable income, although the
difference between the fair market value of the Common Stock on the date of
exercise and the exercise price of the Common Stock may be subject to
alternative minimum tax. After the exercise of the incentive stock option and
the transfer of such shares to the grantee, then (a) upon sale of such shares
after the two years from grant/one year from transfer holding period, any amount
realized in excess of the exercise price will be taxed to the grantee as a
long-term capital gain and any loss sustained will be a long-term capital loss,
and (b) no deduction will be allowed to the Company for Federal income tax
purposes. If, however, shares of Common Stock acquired upon the exercise of an
incentive stock option are disposed of prior to the expiration of the two years
from grant/one year from transfer holding period, generally (a) the grantee will
realize ordinary income in the year of disposition in an amount equal to the
excess (if any) of the fair market value of the shares at exercise (or, if less,
the amount realized on the disposition of the shares) over the exercise price
thereof, and (b) the Company will be entitled to a deduction for Federal income
tax purposes equal to such amount. Any further gain or loss realized by the
grantee will be taxed as short-term or long-term capital gain or loss, as the
case may be, and will not result in any deduction by the Company.
NON-QUALIFIED STOCK OPTIONS. No income is recognized by the grantee on the
grant of a non-qualified stock option. Upon the exercise of a non-qualified
stock option, ordinary income will be recognized by the grantee in an amount
equal to the difference between the fair market value of the Common Stock on the
date of exercise and the exercise price of the Common Stock. A subsequent sale
of such shares will result in capital gain or loss, which will be long-term or
short-term depending on how long the shares were held before the disposition.
The Company will be entitled to a deduction for Federal income tax purposes
equal to the compensation reported upon the exercise of the option.
STOCK APPRECIATION RIGHTS. No income is recognized by the grantee on the
grant of a stock appreciation right. Upon the exercise of a stock appreciation
right, ordinary income will be recognized by the grantee in an amount equal to
the amount of cash received. The Company will be entitled to a deduction for
Federal income tax purposes equal to the compensation reported upon the exercise
of the stock appreciation right.
18
<PAGE>
RESTRICTED STOCK AWARDS. Generally, restricted stock awards will not be
taxed until restrictions lapse on all, or any portion, of the award. When any
portion of a restricted stock award is released from restrictions, the fair
market value of those shares on the date the restrictions lapse, less any amount
paid for the stock by the recipient, will be included in the recipient's income
for that year and will be taxed at ordinary income tax rates. The recipient's
basis in the stock received will be equal to the fair market value of such stock
at the time that restrictions lapse, and the holding period will begin on that
date. A recipient may elect to have the restricted stock treated as taxable
income in the year granted. The recipient will be taxed at ordinary income tax
rates on the fair market value of the restricted stock on the date of grant,
less any amount paid for the stock by the recipient. Any future appreciation in
value of those shares at the time they are sold will be taxed as capital gain,
and any decline will be treated as a capital loss. If a recipient elects to be
taxed in the year the restricted stock is granted, and the restricted stock is
later forfeited before restrictions lapse, the income taxes paid are not
recoverable. The Company will be entitled to a deduction for Federal income tax
purposes equal to the fair market value of the restricted shares, less any
amount paid for the stock by the recipient, in the year the recipient recognizes
ordinary income as a result of the restricted stock award.
OTHER STOCK-BASED AWARDS. The Federal income tax consequences of other
stock based awards granted under the Plan will vary based on the nature of the
award.
NEW PLAN BENEFITS
With the exception of non-qualified stock options to purchase 1,000 shares
of Common Stock which will be granted to each person elected, reelected or
continuing as a Non-Employee Director of the Company, awards which may be
granted under the Plan during 1999 have not been determined. The benefits
granted or credited to participants under the 1995 Plan during 1998 are shown in
the table below. The Plan, as described above, will essentially replace the
1995 Plan. At this time, it is anticipated that only incentive stock options
and non-qualified stock options will be awarded in 1999. The inclusion,
however, of the other types of stock-based awards under the Plan provides the
Committee with a flexible, long-term, stock-based incentive plan that should
meet its needs well into the future.
<TABLE>
<CAPTION>
Number of Shares
----------------
Name Dollar Value (a) Underlying Options
- ---- ------------ ------------------
<S> <C> <C>
James J. Giancola $ 0 21,000
David L. Knapp 0 10,500
John R. Spruill 0 10,500
M. Lynn Cooper 0 8,925
David M. Viar 0 7,350
All current Executive Officers as a Group 0 86,258
All current Non-Employee Directors as a Group 0 11,550
All Non-Executive Officer Employees as a Group 43,732 (b) 161,388
</TABLE>
(a) As of March 5, 1999, the last reported sale price of the Company's Common
stock was $41.25 per share. There is no current dollar value to the 1998
option awards except as noted below since the current market price is less
than the option exercise prices of $43.81 for the exercise officers and
$49.10 for the non-employee directors.
(b) Dollar value is calculated by determining the difference between the per
share option exercise price and the last reported sale price of the Common
Stock, which was reported in the WALL STREET JOURNAL, (Midwest Edition) on
March 5, 1999 as $41.25. This difference is then multiplied by the number
of shares of common stock underlying the options to determine the dollar
value. Based on this calculation, only two grants totalling 36,750 options
are currently in-the-money. The remaining 124,638 options have no value
because the exercise price for such options is $43.81, which is greater
than the current market price of the Common Stock.
19
<PAGE>
VOTE REQUIRED
The affirmative vote of a majority of the Company's issued and outstanding
shares of Common Stock present or represented at the Meeting is required to
approve the Plan. Dissenting votes give rise to no rights on the part of
dissenters.
BOARD RECOMMENDATION
The Board of Directors believes that the Plan is in the best interests of
the shareholders and, accordingly, recommends a vote "FOR" approval of the Plan,
which is Item 2 on the Proxy Card. Unless otherwise specified, a properly
executed Proxy Card in the form enclosed that does not designate the manner in
which the proxy should be voted will be voted "FOR" approval of the Plan.
INDEPENDENT AUDITORS
During the year ended December 31, 1998, KPMG LLP was employed to perform
the annual audit and to render other services. KPMG LLP has served as
independent auditors of the Company for the last three years. Representatives
of KPMG 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 1998 Annual Report to Shareholders, and they will have the
opportunity to make a statement, if they so desire.
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 inclusion in the proxy statement for the Annual Meeting of Shareholders in
2000 must be received by the Company no later than November 23, 1999. Any such
proposals, together with supporting statements, should be directed to the
Secretary of the Company. Management proxies will be authorized to exercise
discretionary voting authority with respect to any shareholder proposal not
included in the Company's proxy statement for the Annual Meeting of Shareholders
in 2000 if (a) the Company did not receive the requisite notice of such proposal
on or before February 6, 2000, or (b) if the Company receives the requisite
notice of such proposal on or before February 6, 2000 and after November 23,
1999, and the conditions set forth in Rule 14a-4(c)(2)(i)-(iii) under the
Exchange Act are not satisfied.
OTHER MATTERS
The Company will provide without charge to each shareholder, upon written
request, a copy of the Company's 1998 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 22, 1999
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Exhibit A
CNB BANCSHARES, INC.
1999 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of the CNB Bancshares, Inc. 1999 Stock Incentive Plan is to
provide incentives and rewards for key Employees and non-Employee Directors of
the Corporation and its Subsidiaries (i) to support the execution of the
Corporation's business strategies and the achievement of its goals, (ii) to
associate the interests of key Employees and non-Employee Directors with those
of the Corporation's stockholders and (iii) to help provide a competitive
compensation program that will enable the Corporation to attract and retain the
highest quality Employees and non-Employee Directors.
2. DEFINITIONS
(a) "Award" includes, without limitation, stock options (including
incentive stock options under Section 422 of the Code), stock appreciation
rights, performance share or unit awards, dividend or equivalent rights, stock
awards, restricted share or unit awards, or other awards that are valued in
whole or in part by reference to, or are otherwise based on, the Corporation's
Common Stock ("other Common Stock-based Awards"), all on a stand alone,
combination or tandem basis, as described in or granted under this Plan.
(b) "Award Summary" means a written summary setting forth the terms and
conditions of each Award made under this Plan.
(c) "Board" means the Board of Directors of the Corporation.
(d) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(e) "Committee" means the Compensation and Corporate Structure Committee
of the Board or such other committee of the Board as may be designated by the
Board from time to time to administer this Plan; provided, however, that no
person may serve on the Committee who would not be considered (i) a
"non-employee director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act, and (ii) an "outside director" within the meaning of Section
162(m) of the Code.
(f) "Common Stock" means the $1.00 stated value Common Stock of the
Corporation.
(g) "Corporation" means CNB Bancshares, Inc., an Indiana corporation.
(h) "Director" means a non-Employee director of the Corporation. For
purposes of Awards granted pursuant to Section 7(b) only, the term "Director"
may, at the discretion of the Committee, include directors and advisory
directors of Subsidiaries.
(i) "Employee" means an employee of the Corporation or a Subsidiary.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k) "Fair Market Value" means the fair market value of the Common Stock as
of the date on which a determination is to be made, as determined by the
Committee.
(l) "Participant" means a key Employee who has been granted an Award under
this Plan.
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(m) "Plan" means this CNB Bancshares, Inc. 1999 Stock Incentive Plan.
(n) "Plan Year" means a twelve-month period beginning with January 1 of
each year.
(o) "Subsidiary" means any corporation or other entity, whether domestic
or foreign, in which the Corporation has or obtains, directly or indirectly, a
proprietary interest of more than 50% by reason of stock ownership or otherwise.
3. ELIGIBILITY
Awards may be granted from time to time to key Employees as determined by
the Committee in its discretion. Awards consisting of non-qualified stock
options shall be granted to Directors in accordance with Section 7 hereof.
4. PLAN ADMINISTRATION
(a) This Plan shall be administered by the Committee. The Committee shall
periodically make determinations with respect to the participation of Employees
and directors and advisory directors of Subsidiaries in this Plan and, except as
otherwise required by law or this Plan, the grant terms of Awards including
vesting schedules, price, length of relevant performance, restriction or option
period, dividend rights, post-retirement and termination rights, payment
alternatives such as cash, stock, contingent awards or other means of payment
consistent with the purposes of this Plan, and such other terms and conditions
as the Committee deems appropriate. Awards may be granted as replacements of
Awards outstanding under the Plan or under previous stock incentive plans
maintained by the Corporation.
(b) The Committee shall have authority to interpret and construe the
provisions of this Plan and the Award Summaries and make determinations pursuant
to any Plan provision or Award Summary which shall be final and binding on all
persons. No member of the Committee shall be liable for any action or
determination made in good faith, and the members shall be entitled to
indemnification and reimbursement in the manner provided in the Corporation's
Articles of Incorporation, as it may be amended from time to time.
(c) The Committee may designate persons other than its members to carry
out its responsibilities under such conditions or limitations as it may set,
other than its determinations with respect to the participation of Employees in
this Plan and its authority with regard to the Awards granted to Employees who
are officers and directors of the Corporation for purposes of Section 16 of the
Exchange Act.
5. STOCK SUBJECT TO PROVISIONS OF PLAN
(a) The stock subject to the provisions of this Plan shall be shares of
authorized but unissued Common Stock. Subject to adjustment in accordance with
the provisions of Section 11 hereof, and subject to Section 5(c) and
Section 6(b) hereof, the total number of shares of Common Stock available for
grants of Awards in any Plan Year shall not exceed 1.5% of the outstanding
Common Stock as reported in the Corporation's Annual Report on Form 10-K for the
fiscal year ending immediately prior to such Plan Year.
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(b) The exercise of an option or stock appreciation right granted in
tandem therewith will reduce proportionately the amount of shares subject to the
tandem stock appreciation right or option and any shares ceasing to be subject
to the related option or stock appreciation right because of such reduction
shall not increase the number of shares of Common Stock available for future
Awards granted under this Plan. The grant of a performance or restricted share
unit Award shall be deemed to be equal to the maximum number of shares which may
be issued under the Award and where the value of an Award is variable on the
date it is granted, the value shall be deemed to be the maximum limitation of
the Award. Awards payable solely in cash will not reduce the number of shares
available for Awards granted under this Plan.
(c) There shall be carried forward and be available for Awards under this
Plan in succeeding Plan Years, in addition to shares available for grant under
Section 5(a), all of the following: (i) any unused portion of the limit set
forth in Section 5(a) for a prior Plan Year; (ii) shares represented by Awards
which are forfeited, surrendered, terminated, paid in cash or expire
unexercised; and (iii) the excess amount of variable Awards which become fixed
at less than their maximum limitations.
(d) The maximum number of shares of Common Stock underlying stock options
and stock appreciation rights which are granted to any one Participant during
one calendar year shall be 150,000 shares.
6. AWARDS TO EMPLOYEES UNDER PLAN
As the Committee may determine, the following types of Awards and other
Common Stock-based Awards may be granted under this Plan on a stand alone,
combination or tandem basis:
(a) NON-QUALIFIED STOCK OPTION. A right to buy a specified number of
shares of Common Stock at a fixed exercise price during a specified time, all as
the Committee may determine; provided that the exercise price of any option
shall not be less than 100% of the Fair Market Value of the Common Stock on the
date of grant of the Award.
(b) INCENTIVE STOCK OPTION. A right, in the form of a stock option which
shall comply with the requirements of Section 422 of the Code or any successor
Section as it may be amended from time to time, to buy a specified number of
shares of Common Stock at a fixed exercise price during a specified time, all as
the Committee may determine; provided that the exercise price of any option
shall not be less than 100% of the Fair Market Value of the Common Stock on the
date of grant of the Award. Subject to adjustment in accordance with the
provisions of Section 11 hereof, the aggregate number of shares which may be
subject to incentive stock option Awards under this Plan shall not exceed
2,000,000 shares, subject in any Plan Year to the limitations of Section 5
hereof.
(c) STOCK APPRECIATION RIGHT. A right to receive in cash the excess of
the Fair Market Value of a share of Common Stock on the date the stock
appreciation right is exercised over the Fair Market Value of a share of Common
Stock on the date the stock appreciation right was granted.
(d) RESTRICTED AND PERFORMANCE SHARES. A transfer of Common Stock to a
Participant, subject to such restrictions on transfer or other incidents of
ownership, or subject to specified performance standards, for such periods of
time as the Committee may determine.
(e) RESTRICTED AND PERFORMANCE SHARE UNIT. A fixed or variable share or
dollar denominated unit subject to such conditions of vesting, performance and
time of payment as the Committee may determine, which unit may be paid in Common
Stock, cash or a combination of both.
(f) DIVIDEND OR EQUIVALENT RIGHT. A right to receive dividends or their
equivalent in value in Common Stock, cash or in a combination of both with
respect to any new or previously existing Award.
(g) STOCK AWARD. An unrestricted transfer of ownership of Common Stock.
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(h) OTHER STOCK-BASED AWARDS. Other Common Stock-based Awards which are
related to or serve a similar function to those Awards set forth in this
Section 6.
7. AWARDS TO DIRECTORS UNDER PLAN
(a) On the first business day following the Corporation's Annual Meeting
of Shareholders (commencing with the 1999 Annual Meeting), each person elected,
reelected or continuing as a Director shall automatically receive non-qualified
stock options to purchase 1,000 shares of Common Stock (as adjusted pursuant to
Section 11 hereof).
(b) Prior to the beginning of any fiscal year, the Committee, subject to
Board approval, may permit each Director to elect to receive non-qualified stock
options in lieu of all or a portion of the Director fees which would otherwise
be payable to the Director during such fiscal year. Options will be granted
pursuant to this paragraph (b) at the time a cash payment of fees would
otherwise become payable to the Director during the fiscal year.
(c) The Board, at its discretion, may issue additional non-qualified stock
options to Directors.
(d) If legal counsel to the Corporation determines that, on the date
options would otherwise be granted to Directors, the Corporation is in
possession of material non-public information concerning its affairs, such grant
shall be delayed until the third day on which trading occurs following the
public dissemination of such information or the date of an event which renders
such information immaterial.
(e) The terms of the non-qualified stock options granted to Directors
under Section 7(a) shall be as follows:
(i) Unless otherwise specifically provided below or in the Award
Summary, each non-qualified stock option shall expire on the date which is ten
years after the date of grant.
(ii) The non-qualified stock options shall be exercisable beginning
on the second anniversary of the date of grant.
(iii) If an optionee's status as a Director ceases for reasons other
than termination on or after attaining age fifty-five, death or disability (as
defined in Section 22(e)(3) of the Code) the non-qualified stock options shall
terminate three months after the date of the termination of the optionee's
status as a Director.
(iv) If an optionee's status as a Director ceases due to termination
on or after attaining age fifty-five or disability (as defined in Section
22(e)(3) of the Code) the non-qualified stock options shall terminate two years
after the date of the termination of the optionee's status as a Director.
(v) If an optionee dies while serving as a Director, the
non-qualified stock options shall terminate two years after the date of death.
(vi) The per share purchase price of each share of Common Stock which
is subject to a non-qualified stock option under this Section 7(a) shall be the
fair market value of a share of Common Stock on the date of grant. For purposes
of this paragraph (vi), "fair market value" shall mean the per share closing
price as reported in the WALL STREET JOURNAL (Midwest Edition). If there were
no sales of Common Stock on the date of grant, "fair market value" shall mean
the per share closing price on the next preceding date on which such selling
prices were recorded.
(f) The terms of the non-qualified stock options granted to Directors
under Sections 7(b) and 7(c) will be determined by the Committee, subject to
Board approval.
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8. AWARD SUMMARIES
Each Award under this Plan shall be evidenced by an Award Summary.
Delivery of an Award Summary to each Participant or Director, as the case may
be, shall constitute an agreement, subject to Section 9 hereof, between the
Corporation and the Participant or Director, as the case may be, as to the terms
and conditions of the Award.
9. OTHER TERMS AND CONDITIONS
(a) ASSIGNABILITY. Except as otherwise provided below, no Award shall be
assignable or transferable except by will or the laws of descent and
distribution and, during the lifetime of a Participant or Director, the Award
shall be exercisable only by such Participant or Director or such Participant's
or Director's guardian, legal representative. The Committee, in its discretion,
may permit a Participant or Director, during their lifetime, to transfer a
non-qualified stock option, for no consideration, to or for the benefit of the
Participant's or Director's immediate family (including a trust for the benefit
of the Participant's or Director's immediate family) or to a partnership or
limited liability company for one or more members of the Participant's or
Director's immediate family), subject to such limits as the Committee may
establish, and the transferee shall remain subject to all the terms and
conditions applicable to the Option prior to such transfer. Any vesting period
applicable to such option shall, however, continue to be measured in terms of
the Participant's employment by or the Director's service to the Corporation or
its Subsidiaries. The term "immediate family" shall mean the Participant's or
Director's spouse, parents, children, stepchildren, adoptive children, sisters,
brothers and grandchildren (and, for these purposes, shall also include the
Participant or Director).
(b) TERMINATION OF EMPLOYMENT. The Committee shall determine the
disposition of the grant of each Award in the event of disability, death or
other termination of a Participant's employment.
(c) RIGHTS AS A STOCKHOLDER. A Participant or Director shall have no
rights as a stockholder with respect to shares covered by an Award until the
date the Participant or Director or their respective nominee, guardian or legal
representative is the holder of record of such shares. No adjustment shall be
made for cash dividends or other rights for which the record date is prior to
such date.
(d) NO OBLIGATION TO EXERCISE. The grant of an Award shall impose no
obligation upon the Participant or Director to exercise the Award.
(e) EXERCISE OF OPTIONS. Options granted under this Plan that have vested
under the terms of the Award may be exercised, in whole or in part, at any time
during the option term by giving written notice of exercise to the Corporation
specifying the number of shares of Common Stock subject to the option to be
exercised and by making payment of the exercise price in accordance with the
terms of the Award.
(f) PAYMENTS BY PARTICIPANTS OR DIRECTORS. The Committee may determine
that Awards for which a payment is due from a Participant or a Director may be
payable: (i) in U.S. dollars by personal check, bank draft or money order
payable to the order of the Corporation, by money transfers or direct account
debits; (ii) through the delivery or deemed delivery based on attestation to the
ownership of shares of Common Stock held by the payor for at least six months,
with a Fair Market Value equal to the total payment due; (iii) by a combination
of the methods described in (i) and (ii) above; (iv) in the case of a
non-qualified stock option, by authorizing a third party to sell shares of
Common Stock (or a sufficient portion of the shares) acquired upon exercise of
the option and remit to the Corporation a sufficient portion of the sale
proceeds to pay the entire exercise price and any tax withholding resulting from
such exercise, or (v) by such other methods as the Committee may deem
appropriate.
(g) WITHHOLDING. Except as otherwise provided by the Committee, (i) the
deduction of withholding and any other taxes required by law shall be made from
all amounts paid in cash, and (ii) in the case of payments of Awards in shares
of Common Stock, a number of shares the Fair Market Value of which equals the
amount required to be withheld shall be deducted from the payment. The
Committee may provide for shares of Common Stock to be withheld for tax
withholding purposes in excess of the required minimum amount but not in excess
of a Participant's or Director's maximum marginal tax rate.
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(h) PAYMENTS BY CORPORATION. Awards may be settled through cash payments,
the delivery of shares of Common Stock, the granting of replacement Awards, or
combination thereof as the Committee shall determine. Any Award settlement,
including payment deferrals, may be subject to such conditions, restrictions and
contingencies as the Committee may provide in the terms of the Awards. The
Committee may permit or require the deferral of any Award payment, subject to
such rules and procedures as it may establish, which may include provisions for
the payment or crediting of interest, or dividend equivalents, including
converting such credits into deferred Common Stock equivalents. Notwithstanding
the above, no Award will be settled in cash if such payment would make a
transaction involving the Corporation ineligible for pooling of interests
accounting under APB No. 16.
10. AMENDMENTS
The Board may alter, amend, suspend or discontinue this Plan to the extent
permitted by law; provided, however, that no alteration, amendment, suspension
or discontinuance of this Plan shall adversely affect any right acquired by any
Participant or Director under an Award granted before the date of such
alteration, amendment, suspension or discontinuance of this Plan. Any such
action of the Board may be taken without the approval of the Corporation's
stockholders, but only to the extent that such stockholder approval is not
required by applicable law or regulation, including specifically Section 422 of
the Code and the rules or policies of the New York Stock Exchange or, if the
Common Stock is not then traded on the New York Stock Exchange, then of the
primary exchange or trading system on which the Common Stock is then traded.
11. RECAPITALIZATION
The aggregate number of shares of Common Stock as to which Awards may be
granted hereunder, the number of shares thereof covered by each outstanding
Award, and the price per share thereof in each such Award, shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a subdivision or consolidation of shares
or other capital adjustment, or the payment of a stock dividend or other
increase or decrease in such shares, effected without receipt of consideration
by the Corporation, or other change in corporate or capital structure; provided,
however, that any fractional shares resulting from any such adjustment shall be
eliminated. The Committee shall make the foregoing changes and any other
changes, including changes in the classes of securities available, to the extent
necessary or desirable to preserve the intended benefits of this Plan for the
Corporation and the Participants and Directors in the event of any other
reorganization, recapitalization, merger, consolidation, spin-off, extraordinary
dividend or other distribution or similar transaction.
12. NO RIGHT TO EMPLOYMENT
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant or Director the
right to be retained in the employ of the Corporation or a Subsidiary. The
Corporation and each Subsidiary further expressly reserve the right at any time
to dismiss a Participant free from any liability, or any claim under this Plan,
except as provided herein or in any Award Summary issued hereunder.
13. CHANGE OF CONTROL
(a) Notwithstanding anything contained in this Plan or any Award Summary
to the contrary, in the event of a Change of Control, as defined below, the
following shall occur with respect to any and all Awards outstanding as of such
Change of Control:
(i) automatic maximization of performance standards, lapse of all
restrictions and acceleration of any time periods relating to the exercise,
realization or vesting of such Awards so that such Awards may be
immediately exercised, realized or vested in full on or before the relevant
date fixed in the Award Summary;
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(ii) performance shares or performance units shall be paid entirely
in cash; and
(iii) upon exercise of a non-qualified stock option or an incentive
stock option (collectively an "Option") during the 60-day period from and
after the date of a Change of Control, the Director or Participant
exercising the Option may in lieu of the receipt of Common Stock upon the
exercise of the Option, elect by written notice to the Corporation to
receive an amount in cash equal to the excess of the aggregate Value (as
defined below) of the shares of Common Stock covered by the Option or
portion thereof surrendered determined on the date the Option is exercised,
over the aggregate exercise price of the Option (such excess is referred to
herein as the "Aggregate Spread"); As used in this Section 13(a)(iii) the
term "Value" means the higher of (i) the highest Fair Market Value during
the 60-day period from and after the date of a Change of Control, and
(ii) if the Change of Control is the result of a transaction or series of
transactions described in paragraphs (i) or (iii) of the definition of
Change of Control set forth in Section 13(b), the highest price per share
of the Common Stock paid or to be paid in such transaction or series of
transactions (which in the case of paragraph (i) shall be the highest price
per share of the Common Stock as reflected in a Schedule 13D by the person
having made the acquisition). Notwithstanding the foregoing, if any right
granted pursuant to this clause (iii) would make a Change of Control
transaction ineligible for pooling of interests accounting under APB No. 16
that but for this clause (iii) would otherwise be eligible for such
accounting treatment, Common Stock (having a Fair Market Value equal to the
cash otherwise payable hereunder) shall be substituted for the cash payable
hereunder.
(b) A "Change of Control" of the Corporation shall be deemed to have
occurred upon the happening of any of the following events:
(i) the acquisition, other than from the Corporation, by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either
the then outstanding shares of Common Stock of the Corporation or the
combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors, but
excluding, for this purpose, any such acquisition by the Corporation or any
of its Subsidiaries, or any employee benefit plan (or related trust) of the
Corporation or its Subsidiaries, or any corporation with respect to which,
following such acquisition, more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Common Stock and voting securities of the Corporation immediately
prior to such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the then outstanding
shares of Common Stock of the Corporation or the combined voting power of
the then outstanding voting securities of the Corporation entitled to vote
generally in the election of directors, as the case may be;
(ii) individuals who, as of the date hereof, constitute the Board (as
of the date hereof the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Corporation's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
directors of the Corporation (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
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(iii) approval by the stockholders of the Corporation of a
reorganization, merger or consolidation of the Corporation, in each case,
with respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the Common Stock and
voting securities of the Corporation immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
Common Stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization, merger
or consolidation, or a complete liquidation or dissolution of the
Corporation or of the sale or other disposition of all or substantially all
of the assets of the Corporation.
14. Governing Law
To the extent that federal laws do not otherwise control, this Plan and the
Awards issued hereunder shall be construed in accordance with and governed by
the law of the State of Indiana to the extent not inconsistent with Section 422
of the Code and regulations issued thereunder.
15. SAVINGS CLAUSE
This Plan is intended to comply in all aspects with applicable law and
regulation, including, with respect to the Directors and those Employees who are
officers or directors for purposes of Section 16 of the Exchange Act, Rule 16b-3
promulgated by the Exchange Act. In case any one or more of the provisions of
this Plan shall be held invalid, illegal or unenforceable in any respect under
applicable law and regulation (including Rule 16b-3), the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and the invalid, illegal or unenforceable provision shall be
deemed null and void; however, to the extent permissible by law, any provision
which could be deemed null and void shall first be construed, interpreted or
revised retroactively to permit this Plan to be construed in compliance with all
applicable laws (including Rule 16b-3) so as to foster the intent of this Plan.
16. SUCCESSORS
Awards issued under the Plan should be binding upon, and inure to the
benefit of, the Corporation and its successors and assigns, and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Corporation's assets and business.
17. EFFECTIVE DATE AND TERM
The effective date of this Plan is March 16, 1999, subject to its approval
by the stockholders of the Corporation at the annual meeting to be held on April
21, 1999, or any adjournment thereof. This Plan shall remain in effect until
March 15, 2009 unless terminated earlier by the Board.
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PROXY CNB BANCSHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 21, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned shareholder of CNB Bancshares, Inc., an Indiana corporation
(the "Company"), hereby appoints James J. Giancola, David L. Knapp, Robert L.
Koch II, John R. Spruill, and each of them with full power to act alone, the
true and lawful attorneys-in-fact and proxies of the undersigned, with full
power of substitution and revocation, and hereby authorizes them and each of any
of them, to represent and to vote all shares of Common Stock of the Company held
of record on March 5, 1999, which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Company to be held at the Victory Theatre,
600 Main Street, Evansville, Indiana on April 21, 1999, at 5:00 p.m., Central
Daylight Savings Time, and at any adjournment thereof, with all powers the
undersigned would possess if personally present, as follows:
PLEASE SPECIFY CHOICES BY CLEARLY MARKING THE APPROPRIATE LINE:
ITEM 1. Election of Directors:
Nominees: H. Lee Cooper III, John D. Engelbrecht, James E. Hutton,
Robert K. Ruxer
FOR all nominees listed above (except vote withheld from
the following nominees, if any).
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WITHHOLD AUTHORITY to vote for all nominees above.
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ITEM 2. Approval of the CNB Bancshares, Inc. 1999 Stock Incentive Plan:
FOR approval of the 1999 Stock Incentive Plan
--------
AGAINST approval of the 1999 Stock Incentive Plan
--------
ABSTAIN
--------
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEES OF THE BOARD OF DIRECTORS AND "FOR" APPROVAL OF THE 1999 STOCK
INCENTIVE PLAN. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY
WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF MANAGEMENT.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears at left. If
signing as a representative, please include
capacity.
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Signature of Shareholder
Dated: , 1999
-----------------------------------------------
Signature of Shareholder
Dated: , 1999
