<PAGE> 1
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table discloses compensation
received by the Company's Chief Executive Officer, its Senior Vice
President-Loan Administrator and the President of USB Insurance Agencies, Inc.,
the President of USB and the President of HSB, for the years ended December 31,
1995, 1994 and 1993. No other executive officer of the Company or any of its
subsidiaries received annual compensation in excess of $100,000 for such years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
- -------------------------------------------------------------------- ----------------------------------------------------
OTHER DOLLAR VALUE SECURITIES ALL OTHER
EXECUTIVE ANNUAL OF RESTRICTED UNDERLYING LTIP COMPEN-
OFFICER YEAR SALARY BONUS COMPENSATION(1) STOCK AWARDS OPTIONS/SARS(2) PAYOUTS SATION(3)
------------------ ---- ------ ----- --------------- --------------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William C. Dashiell 1995 $109,920 $54,329 $9,350 - $5,627 - $51,157
President and Chief 1994 102,216 52,522 4,268 - - - 25,579
Executive Officer 1993 97,357 40,437 5,149 - - - -
Daniel P. Murray 1995 $ 73,500 $42,418 $4,600 - $3,584 - -
Senior Vice President- 1994 70,008 40,259 4,268 - - - -
Loan Administration 1993 61,949 24,235 4,019 - - - -
of the Company and
USB, and a Director
of USB
James L. Moe 1995 $ 86,587 $30,699 - - $4,545 - 2,400
President & 1994 86,796 27,414 - - - - 1,800
Director USB 1993 79,769 15,040 - - - - -
Insurance,
Director of the
Company
Robert I. McKean 1995 $ 64,086 $29,762 $3,800 - $4,095 - -
President & 1994 - - - - - - -
Director of USB 1993 - - - - - - -
Douglas C. Lukens 1995 $ 75,000 $21,237 $3,775 - $3,694 - -
President of HSB 1994 70,397 - 2,625 - - - -
1993 68,700 9,727 2,725 - - - -
</TABLE>
Stock Options. Options were granted to directors and executive officers during
the year ended December 31, 1995, totaling 83,840 shares.
Directors' Compensation. Directors of the Company receive $300 for each meeting
of the board of directors attended, and members of the executive committee of
the board receive $200 per meeting attended. During the year ended December 31,
1995, the Company paid total directors' fees of $19,600 pursuant to such
arrangements.
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(1) Represents Director Fees paid during the year
(2) Represents the value attributed to the named executive officers during
the year pursuant to the stock options granted. The value of the options
represent the difference between the option price and the fair market value at
year end 1995.
(3) Represents the value attributed to the named executive officer during the
year pursuant to agreements entered into between USB and such officers as part
of USB's salary continuation plan.
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<PAGE> 2
Description of Incentive Stock Option Plan. The Company presently maintains
one stock option plan, known as the 1995 Incentive Stock Option Plan. The Plan
was adopted by the board of directors on March 14, 1995 and by the shareholders
on May 24, 1995, and provides for the issuance of incentive stock options
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), and options that are not qualified under the Code. Key
individuals of the Company and its subsidiaries (including directors, executive
officers who are also employees, and advisors or consultants to the Company) are
eligible to receive grants of options. The plan is administered by a
Compensation Committee of the Board of Directors, whose members are entitled to
receive awards of options if and when granted by an independent executive
remuneration committee. Up to 200,000 shares of the Common Stock of the Company
or shares representing eight percent (8%) of the Common Stock of the Company
from time-to-time outstanding, whichever is less, are available for issuance in
the form of options under the plan.
As is described in Item 2 of this Proxy Statement, the board of directors has
approved and is recommending to the shareholders and amendment to the Plan
increasing the number of shares that may be issued pursuant to the exercise of
options granted thereunder to the lesser of eight percent (8%) of the common
stock of the Company from time-to-time outstanding or deemed outstanding, or
300,000 shares.
The Compensation Committee has authority with respect to the grant of options
to all eligible participants in the plan. The plan provides that the
Compensation Committee may consider but shall not be bound by the
recommendations of management or the board of directors of the Company in
exercising its duties under the plan.
The exercise price of an incentive stock option granted under the plan may not
be less than one hundred percent of the fair market value of the Company's
Common Stock on the date the option is granted, as determined by reference to
the average of the bid and asked prices of the Common Stock of the Company as of
the date of grant. The aggregate fair market value, on the date of grant, of the
stock for which incentive stock options are exercisable for the first time by an
employee during any calendar year may not exceed $100,000.
The Compensation Committee may, in its discretion, place limits on the number
of shares of Common Stock subject to any option award that can be exercised in
any given calendar year. Payment of the exercise price of an option must be made
in cash, unless the Compensation Committee determines otherwise. Options may be
subject to such additional or different terms and conditions not inconsistent
with the plan as are prescribed by the compensation committee.
In the event of a change in control of the Company (as defined in the plan),
or if the Company enters into, or the board of directors proposes that the
Company enter into, a reorganization event (as defined in the plan), the
Compensation Committee may take such action and make such adjustments with
respect to the options as it deems appropriate including: in the case of a
change of control, providing that all options shall become immediately
exercisable, or providing for cash payment to the optionee upon surrender of his
or her options; and in the case of a reorganization event or proposed
reorganization event, providing that options will be terminated or canceled if
not exercised within a certain period, advancing the date on which outstanding
options will be exercisable or providing for cash payment to an optionee upon
the surrender of his or her options.
The plan may be amended at any time and from time to time by the Board of
Directors, but no amendment which materially increases the benefits accruing to
an optionee, materially increases the maximum aggregate number of shares of
Common Stock of the Company which may be issued pursuant to the plan or
materially modifies the eligibility requirements of the plan will be effective
unless approved by the shareholders of the Company. No amendment may alter or
impair any of the rights or obligations of any person under any option granted
under the plan without the optionee's consent.
Options have been granted under the plan as of the date of this Proxy
Statement to directors and executive officers. The total number of shares issued
in the form of options was 83,840. The following table discloses the number
of shares granted to executive officers of the Company.
<TABLE>
<CAPTION>
Name of Owner No. of Shares % of Total Price Expiration Date
- ------------- ------------- ---------- ----- ---------------
<S> <C> <C> <C> <C>
William C. Dashiell 14,808 17.66% $12.12 5-23-05
Daniel P. Murray 9,432 11.25% $12.12 5-23-05
James L. Moe 11,960 14.26% $12.12 5-23-05
Robert L. McKean 10,776 12.85% $12.12 5-23-05
Douglas C. Lakens 9,720 11.59% $12.12 5-23-05
</TABLE>
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