<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
F&M BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[F&M BANCORP LOGO]
110 Thomas Johnson Drive
Frederick, Maryland 21702
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of F&M Bancorp ("Bancorp") will be
held at the Holiday Inn FSK, Room FSK B, 5400 Holiday Drive, Frederick,
Maryland, on Tuesday, April 16, 1996, at 10:00 a.m., for the following
purposes:
(1) To elect 14 directors of Bancorp; and
(2) To consider and act upon such other business as may properly come
before the meeting.
Stockholders of Bancorp of record on January 26, 1996 will be entitled
to notice of and to vote at the meeting or any adjournments thereof.
By Order of the Board of Directors,
Gordon M. Cooley
Secretary
Frederick, Maryland
March 13, 1996
IMPORTANT -- YOUR PROXY IS ENCLOSED
EVEN THOUGH YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND PROMPTLY MAIL IT IN THE RETURN ENVELOPE
PROVIDED. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE ANNUAL MEETING AND DECIDE THAT YOU WISH TO VOTE IN PERSON, OR FOR
ANY OTHER REASON DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME PRIOR
TO ITS USE.
<PAGE> 3
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished to stockholders of F&M Bancorp
("Bancorp") in connection with the solicitation of proxies by Bancorp's Board
of Directors to be used at the annual meeting of stockholders described in the
accompanying notice and at any adjournments thereof. The purpose of the
meeting is to elect 14 directors of Bancorp and to transact such other business
as may properly come before the meeting. The Proxy Statement and the
accompanying form of proxy are first being sent to stockholders on or about
March 13, 1996.
The accompanying proxy is solicited by the Board of Directors of
Bancorp. The Board of Directors has selected Faye E. Cannon, David R.
Stauffer, and Alice E. Stonebreaker, or any two of them, to act as proxies with
full power of substitution. Any stockholder executing a proxy has the power to
revoke the proxy at any time before it is voted. This right of revocation is
not limited or subject to compliance with any formal procedure. Any
stockholder may attend the meeting and vote in person whether or not he has
previously given a proxy.
The record of stockholders entitled to notice of and to vote at the
annual meeting was taken as of the close of business on January 26, 1996. At
that date there were outstanding and entitled to vote 4,419,424 shares of
Common Stock, par value $5.00 per share.
In the election of directors, each share is entitled to one vote for
each director to be elected; cumulative voting is not permitted. For all other
matters each share is entitled to one vote.
The cost of solicitation of proxies and preparation of proxy materials
will be borne by Bancorp. Bancorp does not expect to compensate anyone for the
solicitation of proxies but may reimburse brokers and other persons holding
stock in their names, or in the names of nominees, for expenses they incur in
sending proxy materials to principals and in obtaining proxies. In addition to
solicitation of proxies by mail, proxies may be solicited personally or by
telephone or telegram by directors, officers, and employees of Bancorp or
Farmers and Mechanics National Bank (the "Bank") without additional
compensation to them.
1
<PAGE> 4
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth alphabetically, as of January 26, 1996,
the amount of the Company's Common Stock beneficially owned by each of its
directors and nominees, each executive officer named in the Summary
Compensation Table, and all directors and executive officers as a group, based
upon information obtained from such persons:
<TABLE>
<CAPTION>
TOTAL SHARES PERCENT
NAME OF INDIVIDUAL BENEFICIALLY OWNED OF CLASS
- ------------------ ------------------ --------
<S> <C> <C>
R. Carl Benna 9,976 *
John D. Brunk 13,564 (1) *
Beverly B. Byron 220 *
Faye E. Cannon 11,047 (2) *
Martha E. Church 1,369 *
Albert H. Cohen 74,280 (3) 1.7
Gordon M. Cooley 18,642 (4) *
George B. Delaplaine, Jr. 63,897 (5) 1.4
Maurice A. Gladhill 37,585 (6) *
Charles W. Hoff, III 16,537 (7) *
Robert K. Moler 22,539 (8) *
Charles A. Nicodemus 38,818 (9) *
David R. Stauffer 8,098 (10) *
Alice E. Stonebreaker 15,969 (11) *
H. Deets Warfield, Jr. 9,799 (12) *
John C. Warfield 16,907 (13) *
Thomas R. Winkler 1,084 *
All Executive Officers and
Directors as a group (24 persons) 393,801 (14) 8.9
</TABLE>
- -------------------------
*Indicates holdings of less than one percent
(1) Includes 9,498 shares owned by family members and as to which Mr. Brunk
has voting and disposition powers.
(2) Includes 2,303 shares owned jointly with family members and as to which
Ms. Cannon has joint voting and disposition powers and 8,512 shares in the
form of options exercisable within 60 days.
(3) Includes 44,088 shares owned jointly with a family member and as to which
Mr. Cohen has joint voting and disposition powers, and 21,795 shares owned
by family members and as to which Mr. Cohen has voting and disposition
powers.
(4) Includes 7,384 shares owned by family members and 8,622 shares in the form
of options exercisable within 60 days.
(5) Includes l,758 shares owned by a family member, 35,441 shares owned by a
corporation controlled by Mr. Delaplaine and as to which he has voting and
disposition powers, 11,167 shares owned by a family trust and as to which
Mr. Delaplaine has voting and disposition powers, and 4,364 shares held in
the marital trust of a family member of which Mr. Delaplaine is trustee
and as to which Mr. Delaplaine has voting and disposition powers.
(6) Includes 11,821 shares held jointly with family members and as to which
Mr. Gladhill has voting and disposition powers, 3,934 shares held by Mr.
Gladhill as custodian for his son, and 8,085 shares owned by family
members as to which Mr. Gladhill has voting and disposition powers.
(7) Includes 2,204 shares owned by family members and as to which Mr. Hoff has
voting and disposition powers and 3,333 shares in the form of options
exercisable within 60 days.
(8) Includes 2,781 shares owned jointly with a family member and as to which
Mr. Moler has joint voting and disposition powers, 10,596 shares owned by
a corporation controlled by Mr. Moler and as to which he has voting and
disposition powers, and 2,523 shares owned by family members and as to
which Mr. Moler has voting and disposition powers.
(9) Includes 3,954 shares owned by a family member and as to which Mr.
Nicodemus has voting and disposition powers. Also includes 19,296 shares
owned by a mutual corporation of which Mr. Nicodemus is Chairman of the
Board of Directors and as to which Mr. Nicodemus has shared voting and
disposition powers but disclaims beneficial ownership.
(10) Includes 6,710 shares in the form of options exercisable within 60 days.
(11) Includes 3,685 shares owned directly and 12,284 shares in the form of
options exercisable within 60 days.
(12) Includes 2,893 shares owned by family members and as to which Mr. H.
Warfield has voting and disposition powers.
(13) Includes 1,102 shares owned jointly with a family member and as to which
Mr. J. Warfield has joint voting and disposition powers and 13,828 shares
owned by family members as to which Mr. J. Warfield has voting and
disposition powers.
(14) Includes 68,681 shares in the form of options exercisable within 60 days.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of Bancorp, no person beneficially owns more than 5%
of the outstanding Common Stock of Bancorp, except the Trust Department of the
Bank which, according to a report filed with the Securities and Exchange
Commission on Schedule 13G, beneficially held as of December 31, 1995, 291,584
shares of Bancorp Common Stock representing 6.6% of the outstanding shares.
These shares are held in multiple accounts, no one of which represents more
than 5% of the outstanding Common Stock of Bancorp, where the Bank acts as
agent, trustee, or personal representative for others, and were acquired in the
normal course of its trust business and not for the purpose of acquiring
control of Bancorp.
ELECTION OF DIRECTORS
The entire Board of Directors of Bancorp will be elected to hold
office until the next annual meeting of stockholders and until their respective
successors are elected and have qualified. Fourteen persons, all of whom are
currently directors of Bancorp, are nominated as directors.
It is the Board of Directors' intention that proxies not limited to
the contrary will be voted for the following nominees, or, in the event that
any of the nominees should be unable to serve or for good cause will not serve,
for the election of such other persons as may be nominated by the Board of
Directors. A plurality of votes is required to elect directors. Abstentions
and broker non-votes generally will be treated as shares not voted and will
have no effect.
INFORMATION CONCERNING NOMINEES
The following table presents information concerning persons nominated
by the Board of Directors for election as directors of Bancorp. Except as
indicated, the nominees have been officers of the organizations named below as
their principal occupations or of affiliated organizations for more than five
years. Information is reported as of January 26, 1996.
<TABLE>
<S> <C>
Name of nominee Age, principal occupations, and
directorships with public companies
- -------------------------------------------------------------------------------
R. Carl Benna Mr. Benna is 48 years old and has
served as a director of Bancorp and of the
Bank since January 1989. He is President of
the North American Housing Corp., a modular
housing manufacturer. (1) (2) (3)
</TABLE>
3
<PAGE> 6
<TABLE>
<S> <C>
John D. Brunk Mr. Brunk is 58 years old and has served as a
director of Bancorp since 1983 and of the
Bank since 1975. He is President of
Frederick Produce Co., Inc., a wholesale food
service distributor. (2) (4) (5)
- -------------------------------------------------------------------------------
Beverly B. Byron Ms. Byron is 63 years old and has served as a
director of Bancorp and of the Bank since
1993. She is a former member of the U.S.
House of Representatives for the 6th District
of Maryland. She is a member of the Boards
of Directors of the Baltimore Gas and
Electric Company, UNC, Inc., McDonnell
Douglas Corp., and BlueCross BlueShield of
Maryland. (1) (5)
- -------------------------------------------------------------------------------
Faye E. Cannon Ms. Cannon is 46 years old and has
served as a director of Bancorp and of the
Bank since 1993. She is President and Chief
Operating Officer of Bancorp and the Bank.
(3) (5) (6) (7) (8)
- -------------------------------------------------------------------------------
Martha E. Church Dr. Church is 65 years old and has
served as a director of Bancorp since 1983
and of the Bank since 1982. She is President
Emerita of Hood College, an undergraduate
liberal arts college for women, with a
graduate school which meets area education
needs, located in Frederick, Maryland. (1) (5)
- -------------------------------------------------------------------------------
Albert H. Cohen Mr. Cohen is 73 years old and has
served as a director of Bancorp since 1983
and of the Bank since 1968. He is an
investor and building consultant. (3) (5)
(6) (7)
- -------------------------------------------------------------------------------
George B. Delaplaine, Jr. Mr. Delaplaine is 69 years old and has
served as a director of Bancorp since 1983
and of the Bank since 1979. He is President
of Great Southern Printing and Manufacturing
Company, publisher of the Frederick
News-Post. (1) (3) (6) (7)
</TABLE>
4
<PAGE> 7
<TABLE>
<S> <C>
Maurice A. Gladhill Mr. Gladhill is 45 years old and has
served as a director of Bancorp and the Bank
since 1985. He is President of Gladhill
Tractor Mart, Inc., a farm equipment
dealership in Frederick, Maryland. (3) (4)
(5) (6)
- -------------------------------------------------------------------------------
Charles W. Hoff, III Mr. Hoff is 61 years old and has served
as a director of Bancorp since 1983 and of
the Bank since 1980. He is Chairman of the
Board and Chief Executive Officer of Bancorp
and the Bank. (3) (5) (6) (7)
- -------------------------------------------------------------------------------
Robert K. Moler Mr. Moler is 68 years old and has
served as a director of Bancorp and of the
Bank since 1995. He is Chief Executive
Officer of The Moler Company, an investment
and farming entity.
- -------------------------------------------------------------------------------
Charles A. Nicodemus Mr. Nicodemus is 66 years old and has
served as a director of Bancorp since 1983
and of the Bank since 1973. He is Chairman
of the Board of Frederick Mutual Insurance
Company, a property insurance company. (3)
(4) (5) (6) (7)
- -------------------------------------------------------------------------------
H. Deets Warfield, Jr. Mr. Warfield is 64 years old and has
served as a director of Bancorp since 1983
and of the Bank since 1974. He is President
of the Damascus Motor Co., Inc., an
automobile dealership. He is a member of the
Board of Directors of First Citizens
Financial Corporation. (2) (4) (6) (7) (9)
- -------------------------------------------------------------------------------
John C. Warfield Mr. Warfield is 66 years old and has
served as a director of Bancorp since 1983
and of the Bank since 1969. He is President
of The Frederick Motor Co., an automobile
dealership. (1) (2) (3) (5) (6) (9)
</TABLE>
5
<PAGE> 8
<TABLE>
<S> <C>
Thomas R. Winkler Mr. Winkler is 53 years old and has
served as a director of Bancorp and of the
Bank since 1992. He is Executive Vice
President and Chief Operating Officer of Bio
Whittaker, Inc. (2) (4)
- -------------------------------------------------------------------------------
</TABLE>
(1) Member of the Audit Committees of Bancorp and the Bank.
(2) Member of the Personnel, Compensation and Stock Option Committees of
Bancorp and the Bank.
(3) Member of the Planning Committees of Bancorp and the Bank.
(4) Member of the Trust Investment Committee of the Bank.
(5) Member of the Investment Committee of the Bank.
(6) Member of the Executive Committees of Bancorp and the Bank.
(7) Member of the Nominating Committees of Bancorp and the Bank.
(8) Ms. Cannon and Alice E. Stonebreaker, Bancorp's Assistant Secretary and
Assistant Treasurer, are sisters.
(9) The Messrs. Warfield are not related. Mr. H. Warfield is the
father-in-law of Gordon M. Cooley, Bancorp's Secretary and Legal Officer.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
During 1995, there were 6 meetings of the Board of Directors of
Bancorp and the average attendance was 90% and there were 12 meetings of the
Board of Directors of the Bank and the average attendance was 93%. Each of the
directors attended at least 75% of the combined total number of meetings of the
Boards of Directors and board committees of which he or she is a member. The
Board of Directors of Bancorp has, among others, a Nominating Committee, an
Audit Committee and a Personnel, Compensation and Stock Option Committee.
The Nominating Committee of Bancorp is responsible for recommending
persons to serve as new directors and met once during 1995. Members of the
Nominating Committee are designated by note (7) above. Nominations for
director which are presented to the Nominating Committee by stockholders are
considered, along with those developed by the Nominating Committee, in light of
the needs of Bancorp, as well as the nominee's individual knowledge, experience
and background.
The Audit Committee of Bancorp meets with Bancorp's internal and
independent auditors to review whether satisfactory accounting procedures are
being followed by Bancorp and whether internal accounting controls are
adequate, to inform itself with regard to non-audit services performed by the
independent auditors and to review fees charged by the independent auditors.
The Audit Committee also recommends to the Board of Directors the selection of
independent auditors. The Audit Committee met 5 times in 1995, and members are
designated by note (1) above.
6
<PAGE> 9
The Personnel, Compensation and Stock Option Committee of Bancorp
establishes the compensation for executive officers of Bancorp and the Bank,
reviews generally all personnel issues, and administers Bancorp's 1983 and 1995
Stock Option Plans. During 1995, the directors designated by note (2) above
were members of the Personnel, Compensation and Stock Option Committee of
Bancorp. The Personnel, Compensation and Stock Option Committee met on 9
occasions during 1995.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Personnel, Compensation and Stock Option Committee of the Board of
Directors (the "Committee") has furnished the following report on executive
compensation.
The Committee establishes the compensation for executive officers of
Bancorp and the Bank (collectively, "the Corporation"), reviews, generally, all
personnel issues and administers Bancorp's 1983 and 1995 Stock Option Plans and
the Executive Supplemental Income Plan. Committee objectives include
administration of a total compensation package that allows the Corporation to
attract and retain qualified persons to fill key executive positions and to
effectively utilize incentive compensation programs which are directly related
to executive officers accomplishing corporate goals and objectives, both
operational and financial, aimed at achieving lasting improvement in the
Corporation's long-term financial performance.
The Committee utilizes the human resources' staff, and, as
appropriate, other qualified consultants to review actual performance of the
Chief Executive Officer and all executive officers and the Corporation's
compensation practices as they compare to industry norms. In 1992 the
Corporation undertook a survey of salary ranges for each position in the
Corporation compared with similar positions both at other employers in each of
the communities where the Corporation does business and at other banking
institutions of similar size, business make-up and performance characteristics
outside the Corporation's market area. In 1994 the survey results were updated
and they will be updated prospectively when appropriate to reflect market-place
changes and inflation. The survey was considered in 1995 as part of the
Committee's deliberations.
Compensation program components include:
1. Base salary - Base pay levels are established based on a range for
each position determined through comparison with other companies of like-size
and performance and also based on the geographic area in which the Corporation
does business. Actual salaries are based on the individual performance and
experience of each executive officer.
2. Annual incentive compensation - Includes payments made under an
annual bonus plan instituted by the Corporation in 1979 which is discretionary
and which provides
7
<PAGE> 10
payments to substantially all officers and employees based on the Corporation's
performance each year. Bonuses under the plan are paid from a pool
representing 5% of corporate earnings for a 12 month period and are distributed
ratably based on individual compensation levels among those persons eligible
under the Plan.
Annual incentive compensation also includes consideration to the award
of an additional merit bonus to executive officers of the Corporation when such
a bonus is warranted. The merit bonus plan was first established in 1982.
Merit bonus awards, if any, are at the discretion of the Committee based on
corporate performance.
3. Stock Option Program - The Corporation maintains 1983 and 1995
Stock Option Plans which provide for the grant of options to executive and
other key officers, in the Committee's discretion, who have substantial
responsibility for the management and growth of the Corporation. The Committee
believes that grants of stock options, which allow employees to purchase shares
of the Common Stock of the Corporation at specified prices in the future,
aligns employees' interests in corporate performance with the interests of all
stockholders. Each year the Committee determines the number of options, if
any, to be granted in order to achieve these objectives.
The Committee established the Chief Executive Officer's base salary in
1995 with reference to the salary ranges determined in the survey for chief
executive officers. The Committee considers the Chief Executive Officer
responsible for overall corporate performance, both operational and financial,
and finds that the Chief Executive Officer's total compensation package in 1995
was justified based on both his personal performance and corporate performance
in 1995, both financial and in the Corporation's focus on acquisition
activities and the development of technological capabilities which should
enhance long-term financial performance and shareholder value.
After the review of its existing programs, the Committee believes that
the total compensation awarded to the Chief Executive Officer and executives of
the Corporation is consistent with the Committee's objectives. The amounts
paid to individual executives are consistent with competition within the market
and with banks of similar size (as reflected by the salary survey), individual
performance of each executive, and, for incentive compensation, are rationally
linked with the fulfillment of corporate objectives and corporate financial
performance.
Personnel, Compensation and Stock
Option Committee of the Board of Directors:
Thomas R. Winkler, Chairman
R. Carl Benna
John D. Brunk
H. Deets Warfield, Jr.
John C. Warfield
8
<PAGE> 11
The following table sets forth compensation information with respect
to the Chief Executive Officer and the four next highest paid executive
officers in 1995 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION(1) AWARDS
---------------------- ------------
OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) (SHARES)(3) COMPENSATION(4)
- --------------------------- ---- -------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Charles W. Hoff, III 1995 $186,650 $51,526 3,412 --
Chairman and CEO of 1994 176,700 60,169 3,307 $12,465
Bancorp and of the Bank 1993 176,800 60,673 3,307 20,352
Faye E. Cannon 1995 161,700 41,719 3,412 --
President and Chief Operating 1994 152,050 47,839 3,307 12,465
Officer of Bancorp and of the Bank 1993 113,517 35,985 2,756 12,569
David R. Stauffer 1995 148,000 32,977 2,835 --
Vice President of Bancorp 1994 144,000 38,093 2,756 12,465
and Executive Vice President 1993 138,700 38,739 2,756 15,831
of the Bank
Gordon M. Cooley 1995 97,933 19,613 1,155 --
Secretary of Bancorp and 1994 93,500 22,517 1,102 8,648
Senior Vice President of the Bank 1993 90,000 20,015 1,102 8,511
Alice E. Stonebreaker 1995 85,000 18,626 2,520 --
Assistant Secretary and 1994 71,764 18,921 1,102 6,588
Assistant Treasurer of Bancorp 1993 67,300 19,355 2,205 6,514
and Senior Vice President of the Bank
</TABLE>
(1) No Named Executive Officer received any perquisites in 1993, 1994, or
1995, the aggregate amount of which exceeded 10% of the officer's salary
and bonus.
(2) Includes both annual bonus paid to substantially all employees and merit
bonuses.
(3) Adjusted to reflect 5% stock dividends paid on May 23, 1994 and May 22,
1995.
(4) Includes Bancorp's contribution to the account of each Named Executive
Officer in Bancorp's defined contribution Employee Benefit Plan (the
"Plan") qualified under Section 401(k) of the Internal Revenue Code for
both profit-sharing portion and corporate match of Named Executive
Officer's individual contributions to the Plan up to 2% of salary, with a
salary cap of $150,000. Dollar values of each contribution for 1995 will
not be finally calculated until after mailing date of the Proxy Statement
but will be included in the 1997 Proxy Statement.
9
<PAGE> 12
The following table sets forth information with respect to stock
option grants to the Chief Executive Officer and the Named Executive Officers
for the fiscal year ended December 31, 1995. Bancorp does not grant stock
appreciation rights.
OPTIONS GRANTED IN 1995
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
- -------------------------------------------------------------------------------------------------- --------------------------
% of Total Market
Options Price
Options Granted to Exercise on Date
Granted(1)(2) Employees in Price(2) of Grant(2) Expiration
Name (shares) Fiscal 1995 (per share) (per share) Date 0% 5% 10%
- -------------------- ------------- ------------ ----------- ------------ ----------- ---- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles W. Hoff, III 3,412 9.45% $28.21 $28.21 2/14/05 0 $60,542 $153,425
Faye E. Cannon 3,412 9.45 28.21 28.21 2/14/05 0 60,542 153,425
David R. Stauffer 2,835 7.85 28.21 28.21 2/14/05 0 50,304 127,479
Alice E. Stonebreaker 2,520 6.98 28.21 28.21 2/14/05 0 44,714 113,315
Gordon M. Cooley 1,155 3.20 28.21 28.21 2/14/05 0 20,494 51,936
</TABLE>
(1) All options granted on February 14, 1995. Options exercisable to the
extent of 25%, 50%, 75% and 100% on February 14, 1996, 1997, 1998 and
1999 respectively.
(2) Adjusted to reflect a five percent stock dividend paid May 22, 1995.
The following table sets forth information with respect to the value
of all options exercised during the fiscal year ended December 31, 1995 and the
value of all options held on December 31, 1995 by the Chief Executive Officer
and the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUES AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of Number of Shares Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Options at 12/31/95(2) Options at 12/31/95(3)
on Value ----------------------------- -----------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Hoff, III -0- -0- 7,010 8,371 $104,093 $59,097
Faye E. Cannon 525 $8,455 5,455 7,958 76,889 53,118
David R. Stauffer 200 3,500 3,935 6,968 55,168 49,243
Alice E. Stonebreaker -0- -0- 11,525 4,999 144,140 33,093
Gordon M. Cooley -0- -0- 7,562 2,751 87,464 18,731
</TABLE>
(1) Based on the difference between aggregate fair market value on date of
exercise and aggregate exercise price.
(2) Adjusted to reflect stock dividends paid between dates of grant and
December 31, 1995.
(3) Based on the difference between aggregate fair market value at December
31, 1995 and aggregate exercise price.
10
<PAGE> 13
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
Bancorp provides an Executive Supplemental Income Plan (the
"Supplemental Plan") in which Executive Officers Cannon, Hoff and Stauffer
participate. The Supplemental Plan provides certain benefits which are
integrated with the benefits provided Executive Officers Cannon, Hoff and
Stauffer under Bancorp's defined contribution employee benefit plan qualifying
under Section 401(k) of the Internal Revenue Code. The Supplemental Plan
provides for retirement benefits to Executive Officers Cannon and Stauffer
based on 65% (and 75% for Executive Officer Hoff) of their cash compensation
including salary and bonuses as measured by the greater of (a) compensation
paid during the 12 months immediately preceding retirement or (b) the average
compensation paid during the three consecutive years of employment that yield
the highest average.
The Supplemental Plan also provides for benefits upon termination of
employment following a change in control of the Bank or Bancorp. A change in
control is defined as the acquisition of 25% or more of the combined voting
power of the Bank or Bancorp, or a change in the majority of the members of the
Board of Directors of the Bank or Bancorp during any two-year period. In the
event of a termination of employment after a change in control, full
compensation benefits will be paid to a participant in the Supplemental Plan
until the third anniversary of the change in control. Thereafter, benefits
will be based on a fraction of final compensation as detailed above. Assuming
current compensation practices continue to retirement, in conjunction with
current assumptions relating to contributions to and performance of Bancorp's
401(k) Plan and current assumptions relating to future levels of Social
Security benefits, Executive Officers Cannon, Hoff and Stauffer would have
estimated annual benefits under the Supplemental Plan of $126,888, $136,050,
and $120,070, respectively.
The Supplemental Plan also provides for a death benefit equal to 50%
of a participant's cash compensation if the participant dies while still
employed.
DIRECTORS' FEES AND DEFERRED COMPENSATION PLAN
During 1995, each director of Bancorp received a quarterly director's
fee of $250 plus $50 for each board meeting attended. Each director of the
Bank received a quarterly fee of $1,500 plus $400 for each board meeting
attended. Fees for attendance at each committee meeting are $100 for each
director except full-time officers. Each director who is not also an officer
of Bancorp or the Bank may elect to defer all or part of these fees until he or
she either retires from his or her principal occupation or becomes 65 years of
age, whichever occurs first. Interest is earned on the deferred amount at a
rate established from time to time by the Board, currently 3.00% per annum.
Payment of the deferred amount may be made to the director or his or her
beneficiary in up to ten annual installments.
11
<PAGE> 14
CERTAIN TRANSACTIONS WITH DIRECTORS AND OFFICERS
During the past year Bancorp and the Bank have had, and expect to have
in the future, banking transactions in the ordinary course of their businesses
with directors and officers of Bancorp and the Bank and with their affiliates
on substantially the same terms, including interest rates, collateral, and
repayment terms on loans, as those prevailing at the same time for comparable
transactions with others. The extensions of credit did not involve and do not
currently involve more than the normal risk of collectibility or present other
unfavorable features.
The Bank purchased advertising and related services totalling $77,336
in 1995 from the Great Southern Printing and Manufacturing Co. of which
Director George B. Delaplaine, Jr. is President. The Bank purchased
automobiles and related services totalling $62,327 in 1995 from the Frederick
Motor Company of which Director John C. Warfield is President.
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the cumulative total return of Bancorp's
Common Stock with that of a broad market index (NASDAQ Stock Market, U.S.
Companies only) and an industry peer group index (NASDAQ Bank Stocks).
Information is provided for the five year period ending December 31, 1995. The
graph assumes that the value of the investment in Bancorp's Common Stock and
each index was $100 on December 31, 1990 and that all dividends were
reinvested.
[GRAPH]
<TABLE>
<CAPTION>
DECEMBER 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
F&M BANCORP 100 90 123 155 209 230
- ----------------------------------------------------------------------------------------------------------------------------------
NASDAQ US COMPANIES 100 161 187 215 210 296
- ----------------------------------------------------------------------------------------------------------------------------------
NASDAQ BANK STOCKS 100 164 239 272 271 404
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
AUDIT COMMITTEE AND INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Keller Bruner & Company, L.L.C., has acted as
Bancorp's independent public accountants for the year ended December 31, 1995
and has been recommended by the Audit Committee and selected by the Board of
Directors to act as such for the current fiscal year. A partner of Keller
Bruner & Company, L.L.C., is expected to be present at the annual meeting and
will have an opportunity to make a statement if he desires and to respond to
appropriate questions.
OTHER MATTERS
The management of Bancorp knows of no matters to be presented for
action at the annual meeting other than those mentioned above; however, if any
other matters properly come before the annual meeting, it is intended that the
persons named in the accompanying proxy will vote on such other matters in
accordance with their judgment of the best interests of Bancorp. Each such
matter generally requires the affirmative vote of a majority of the shares
voted on the matter. Abstentions and broker non-votes generally will be
treated as shares not voted and will have no effect.
STOCKHOLDER PROPOSALS
Stockholders' proposals intended to be presented at the 1997 Annual
Meeting must be received by Bancorp for inclusion in Bancorp's Proxy Statement
and form of proxy relating to that meeting by November 13, 1996.
13
<PAGE> 16
ANNUAL REPORT ON FORM 10-K
A COPY OF THE ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO
KENNETH M. SABANOSH, VICE PRESIDENT AND TREASURER, AT CORPORATE HEADQUARTERS.
By Order of the Board of Directors,
Gordon M. Cooley
Secretary
Frederick, Maryland
March 13, 1996
14
<PAGE> 17
F&M BANCORP
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED STOCKHOLDER of F&M Bancorp hereby appoints Faye E. Cannon,
Alice E. Stonebreaker, and David R. Stauffer, or any two of them, the lawful
attorneys and proxies of the undersigned with full power of substitution to
vote, as designated below, all shares of Common Stock of the Corporation which
the undersigned is entitled to vote at the Annual Meeting of Stockholders
called to convene at 10:00 a.m. on April 16, 1996, and at any and all
adjournments thereof with respect to the matters set forth below and described
in the Notice of Annual Meeting and Proxy Statement dated March 13, 1996,
receipt of which is hereby acknowledged.
1. ELECTION OF 14 DIRECTORS
<TABLE>
<S> <C>
/ / FOR all nominees listed below as / / WITHHOLD AUTHORITY
recommended by the Board of Directors to vote for all nominees listed below
(except as marked to the contrary)
</TABLE>
R. BENNA, J. BRUNK, B. BYRON, F. CANNON, M. CHURCH, A. COHEN, G. DELAPLAINE,
M. GLADHILL, C. HOFF, R. MOLER, C. NICODEMUS, H. WARFIELD,
J. WARFIELD AND T. WINKLER
(INSTRUCTION: To withhold authority for any individual nominee, strike a
line through the nominee's name in the list above)
2. IN THEIR DISCRETION, on such other matters as may properly come before the
meeting.
(Please mark, date and sign the reverse side)
<PAGE> 18
CONTINUED FROM OTHER SIDE
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED (OR THE VOTE
ON SUCH MATTERS WILL BE WITHHELD ON SPECIFIC MATTERS) IN ACCORDANCE WITH
INSTRUCTIONS APPEARING ON THE PROXY. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS,
PROXIES WILL BE VOTED FOR PROPOSAL 1 AND IN THE BEST DISCRETION OF THE PROXY
HOLDERS AS TO ANY OTHER MATTERS.
Dated , 1996
---------------------------------------
---------------------------------------------------
(Signature)
---------------------------------------------------
(Signature)
Please date and sign exactly as name(s) appears
at left. If joint account, both owners should sign.
(PROXY INFORMATION APPEARS ON THE REVERSE SIDE. PLEASE MARK, DATE, SIGN,
AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.)
--------------------------------
F&M BANCORP
ANNUAL MEETING
Holiday Inn FSK
Room FSK B
5400 Holiday Drive
Frederick, Maryland 21703
APRIL 16, 1996
10:00 A.M.
