<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 / /
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 Section240.14a-11(c) or
Section240.14a-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/ 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:
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<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of F&M Bancorp ("Bancorp") will be held
at the Corporate Headquarters, 110 Thomas Johnson Drive, Frederick, Maryland, on
April 18, 2000, at 10:00 a.m., for the following purposes:
(1) To elect seven directors of Bancorp to their respective classes.
(2) To consider and act upon such other business as may properly come before
the meeting or any adjournments thereof.
Stockholders of Bancorp of record on February 1, 2000 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 17, 2000
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>
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 2000 annual meeting of stockholders (the "2000 Annual
Meeting") described in the accompanying notice and at any adjournments thereof.
The purpose of the meeting is to elect seven directors of Bancorp, whose terms
expire at the 2000 Annual Meeting, and to transact such other business as may
properly come before the meeting, or any adjournments thereof. The Proxy
Statement and the accompanying form of proxy are first being sent to
stockholders on or about March 17, 2000.
The record of stockholders entitled to notice of and to vote at the annual
meeting was taken as of the close of business on February 1, 2000. At that date
there were outstanding and entitled to vote 11,004,733 shares of common stock,
par value $5.00 per share, of Bancorp (the "Common Stock").
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.
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,
Farmers & Mechanics National Bank (the "Bank"), or Home Federal Savings Bank
(the "Savings Bank") without additional compensation to them.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth alphabetically, as of February 1, 2000, the
amount of Bancorp's Common Stock beneficially owned by each of its directors and
nominees, each executive officer named in
1
<PAGE>
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.................................... 11,941(1) *
Howard B. Bowen.................................. 9,972(2) *
John D. Brunk.................................... 18,490(3) *
Beverly B. Byron................................. 1,498(4) *
Faye E. Cannon................................... 28,610(5) *
Albert H. Cohen.................................. 93,787(6) *
Maurice A. Gladhill.............................. 59,000(7) *
Howard E. Harrison, III.......................... 12,178(8) *
Charles W. Hoff, III............................. 14,286(9) *
Donald R. Hull................................... 76,837(10) *
James K. Kluttz.................................. 1,635(11) *
Richard W. Phoebus, Sr. ......................... 21,261(12) *
David L. Spilman................................. 831 *
David R. Stauffer................................ 21,999(13) *
H. Deets Warfield, Jr. .......................... 13,205(14) *
Thomas R. Winkler................................ 1,749(15) *
All Executive Officers and Directors as a group
(16 persons)................................... 387,279(16) 3.5
</TABLE>
- ------------------------
* Indicates holdings of less than 1 percent.
(1) Includes 395 shares in the form of options exercisable by Mr. Benna within
60 days.
(2) Includes 1,327 shares in the form of options exercisable by Mr. Bowen within
60 days.
(3) Includes 112 shares owned jointly with family members and as to which Mr.
Brunk has joint voting and disposition powers, 12,493 shares owned by family
members and as to which Mr. Brunk has voting and disposition powers, and 380
shares in the form of options exercisable within 60 days.
(4) Includes 363 shares in the form of options exercisable by Ms. Byron within
60 days.
(5) Includes 5,410 shares owned jointly with family members and as to which Ms.
Cannon has joint voting and disposition powers, and 22,003 shares in the
form of options exercisable by Ms. Cannon within 60 days.
(6) Includes 22,638 shares owned by family members and as to which Mr. Cohen has
voting and disposition powers, and 374 shares in the form of options
exercisable by Mr. Cohen within 60 days.
(7) Includes 35,121 shares owned by family members and as to which Mr. Gladhill
has voting and disposition powers, 5,203 owned by a limited partnership and
as to which Mr. Gladhill has voting and disposition powers, and 438 shares
in the form of options exercisable by Mr. Gladhill within 60 days.
(8) Includes 4,720 shares in the form of options exercisable by Mr. Harrison
within 60 days.
(9) Includes 2,274 shares owned by family members and as to which Mr. Hoff has
voting and disposition powers, and 1,312 shares in the form of options
exercisable by Mr. Hoff within 60 days.
(10) Includes 3,756 shares owned by family members and as to which Mr. Hull has
voting and disposition powers, and 84 shares in the form of options
exercisable by Mr. Hull within 60 days.
2
<PAGE>
(11) Includes 336 shares owned jointly with family members and as to which Mr.
Kluttz has joint voting and disposition powers, and 438 shares in the form
of options exercisable by Mr. Kluttz within 60 days.
(12) Includes 571 shares owned by family members and as to which Mr. Phoebus has
voting and disposition powers, and 8,796 shares in the form of options
exercisable by Mr. Phoebus within 60 days.
(13) Includes 19,512 shares in the form of options exercisable by Mr. Stauffer
within 60 days.
(14) Includes 3,596 shares owned by family members and as to which Mr. Warfield
has voting and disposition powers, and 374 shares in the form of options
exercisable by Mr. Warfield within 60 days.
(15) Includes 420 shares in the form of options exercisable by Mr. Winkler
within 60 days.
(16) Includes 60,936 shares in the form of options exercisable within 60 days.
To the knowledge of Bancorp, no person beneficially owns more than 5.0% of
the outstanding Common Stock of Bancorp.
3
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors of Bancorp is divided into three classes (the 2000
class, the 2001 class and the 2002 class, each class designated by the year in
which the term of office of a director will expire), with each class elected at
successive annual meetings. The term of office for all 2000 class directors
expires at the 2000 Annual Meeting. Six persons, all of whom are currently
directors of Bancorp, are nominated as 2003 class directors and one person,
currently a director is nominated as a 2001 class director. The nominees have
each agreed to serve if elected.
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 or unwilling to 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 will be
treated as shares not voted and will have no effect in the election of
directors.
Dr. Martha E. Church, 2001 class director, retired from the Board effective
February 29, 2000. Bancorp gratefully acknowledges her service.
INFORMATION CONCERNING NOMINEES
The following table presents information concerning persons nominated by the
Board of Directors for election as directors of Bancorp and also concerning
continuing directors. Except as indicated the nominees and continuing directors
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 February 1, 2000.
A. NOMINEES FOR DIRECTOR--2003 CLASS (TERMS EXPIRE IN 2003):
<TABLE>
<CAPTION>
AGE, PRINCIPAL OCCUPATIONS, AND
NAME OF NOMINEE DIRECTORSHIPS WITH PUBLIC COMPANIES
- --------------- -----------------------------------------------------
<S> <C>
R. Carl Benna Mr. Benna is 52 years old and has served as a
director of Bancorp since 1989. He is President of
North American Housing Corp., a modular housing
manufacturer. (3) (4)
Beverly B. Byron Ms. Byron is 67 years old and has served as a
director of Bancorp 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
Board of Directors of CareFirst, LMI, and
Constellation Energy Group. (1)
Maurice A. Gladhill Mr. Gladhill is 49 years old and has served as a
director of Bancorp since 1985. He is President of
Gladhill Tractor Mart, Inc., a farm equipment
dealership in Frederick, Md. (2) (3) (4)
James K. Kluttz Mr. Kluttz is 58 years old and has served as a
director of Bancorp since 1996. He is President and
Chief Executive Officer of Frederick Memorial
Hospital. (1) (2) (4)
Richard W. Phoebus, Sr. Mr. Phoebus is 61 years old and has served as a
director of Bancorp since 1996. He is President and
Chief Executive Officer of the Savings Bank and Vice
President of Bancorp.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
AGE, PRINCIPAL OCCUPATIONS, AND
NAME OF NOMINEE DIRECTORSHIPS WITH PUBLIC COMPANIES
- --------------- -----------------------------------------------------
<S> <C>
Thomas R. Winkler Mr. Winkler is 57 years old and has served as a
director of Bancorp since 1992. He is currently a
biopharmaceutical consultant and was formerly
Executive Vice President and Chief Operating Officer
of Bio Whittaker, Inc.
</TABLE>
B. NOMINEE FOR DIRECTOR--2001 CLASS (TERM EXPIRES IN 2001)
<TABLE>
<S> <C>
Howard E. Harrison, III Mr. Harrison is 58 years old and has served as a
director of Bancorp since 1999. He is Chairman of
Marina Development, Inc. which owns and operates a
full-service marina in Baltimore County.
Mr. Harrison was elected to the Board in 1999 as part
of Bancorp's acquisition of Patapsco Valley
Bancshares, Inc. (1)
</TABLE>
C. CONTINUING DIRECTORS--2001 CLASS (TERMS EXPIRE IN 2001):
<TABLE>
<S> <C>
Howard B. Bowen Mr. Bowen is 48 years old and has served as a
director of Bancorp since 1996. He is President of
Ewing Oil Co., Inc., a petroleum distributor.
(1) (4)
Albert H. Cohen Mr. Cohen is 77 years old and has served as a
director of Bancorp since 1983. He is an investor and
building consultant. (2) (3)
Charles W. Hoff, III Mr. Hoff is 65 years old and has served as a director
of Bancorp since 1983. He is Chairman of the Board of
Bancorp and the Bank. (2) (3)
</TABLE>
D. CONTINUING DIRECTORS--2002 CLASS (TERMS EXPIRE IN 2002):
<TABLE>
<S> <C>
John D. Brunk Mr. Brunk is 62 years old and has served as a
director of Bancorp since 1983. He is President of
Frederick Produce Co., Inc., a wholesale food service
distributor. (4)
Faye E. Cannon Ms. Cannon is 50 years old and has served as a
director of Bancorp since 1993. She is President and
Chief Executive Officer of Bancorp and the Bank.
(2) (3)
Donald R. Hull Mr. Hull is 61 years old and has served as a director
of Bancorp since 1998. He is the president of Hull
Company Accountants, Inc. (1)
H. Deets Warfield, Jr. Mr. Warfield is 68 years old and has served as a
director of Bancorp since 1983. He is President of
the Damascus Motor Co., Inc., an automobile
dealership. (2)
</TABLE>
- ------------------------
(1) Member of the Audit Committee.
(2) Member of the Executive Committee.
(3) Member of the Nominating Committee.
(4) Member of the Compensation Committee.
5
<PAGE>
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
During 1999, there were 10 meetings of the Board of Directors of Bancorp.
Each of the directors attended at least 75% of the combined total number of
meetings of the Board of Directors and board committees of which he or she is a
member (held during the period for which he or she has been a director).
The Board of Directors of Bancorp has, among others, a Nominating Committee,
an Audit Committee, and a Compensation Committee.
The Nominating Committee of Bancorp is responsible for recommending persons
to serve as new directors. Members of the Nominating Committee are designated by
note (3) 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 Nominating Committee met
once in 1999.
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 subsidiaries 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 6 times in 1999, and members are
designated by note (1) above.
The Compensation Committee of Bancorp establishes the compensation for
executive officers of Bancorp, the Bank and the Savings Bank and administers
Bancorp's 1983, 1995 and 1999 Stock Option Plans, the 1999 Non-Employee Director
Stock Option Plan and the Executive Supplemental Income Plan. During 1999, the
directors designated by note (4) above were members of the Compensation
Committee of Bancorp. The Compensation Committee met on 2 occasions during 1999.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation 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, the Bank and the Savings Bank (collectively, "the Corporation") and
administers Bancorp's 1983, 1995 and 1999 Employee 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 Corporation's human resources' staff, and, as
appropriate, other qualified consultants to review the Corporation's
compensation practices as they compare to industry norms.
Compensation program components include:
1. BASE SALARY--Base pay levels are established within a range for each
position, determined through the assistance of a third party consultant
specializing in compensation practices for the industry. In addition, survey
data is routinely updated, comparing similar positions at other companies, both
financial and non-financial, of like-size and performance located in the
geographic area in which the Corporation does business and at other financial
institutions of similar size, business make up and performance characteristics
located outside the Corporation's market area. Actual salaries are based on the
individual performance and experience of each executive officer.
6
<PAGE>
2. SHORT TERM INCENTIVE COMPENSATION--The Corporation has adopted an annual
incentive compensation program for executive and other designated officers at
the Bank and the Savings Bank (the "Program"). The Program was designed in
conjunction with an independent consultant specializing in incentive
compensation practices for the banking industry and is similar to existing plans
of other banks and financial service companies. The Program, like these plans in
general, requires a considerable degree of specificity with regard to
performance measures and evaluations, which are benchmarked to industry
incentive practices. The Program allows the Compensation Committee to establish
annually the performance measures to be used in conjunction with the goals in
the Corporation's strategic plan and ensures that such performance measures
align with stockholder interests. Executives are eligible for incentive
compensation expressed as a percentage of their base salaries for meeting
established performance measures. Levels of incentive compensation increase as
executive officers' and the Bank's performance exceed established targets. In
1999, the named executive officers received no compensation under the incentive
compensation program. The executive officers determined to forego any bonus that
might have been payable under the Program, citing the corporation's depressed
stock price. The Committee also considered the prospect that any bonus payable
under the Program would have been marginal given the corporation's financial
performance against Plan and established performance measures.
3. LONG TERM INCENTIVE COMPENSATION--The Corporation maintains 1983, 1995
and 1999 Employee Stock Option Plans which provide long term incentive
compensation through 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. Incentive stock options are granted at the market
price of F&M Bancorp stock on the date of grant. Non-qualified options may be
granted at no less than 85% of market price on the date of grant. The Committee
considers it significant that officers who receive incentive stock option awards
will profit from those awards only if, and only to the extent that, the market
price of F&M Bancorp stock appreciates following the date of grant. In 1999 the
Committee granted greater numbers of shares in option form to the executive
officers and other participants than in prior years. The size of the grants was
consistent with industry practice based on advice of a third party consultant.
For 1999, the Compensation Committee established Ms. Cannon's base salary
with reference to the salary ranges determined with the assistance of a third
party consultant that provides bank executive compensation data and information
specific to the banking industry. The Committee considers the Chief Executive
Officer responsible for overall corporate performance, both operational and
financial. As such, all of the Chief Executive Officer's potential bonus under
the Bank's incentive compensation program is related to Bank-wide performance
and stockholder interests. The Committee finds that the total compensation
package for the Chief Executive Officer in 1999 was justified based on
competitive market data and overall corporate performance, both financial and
operational.
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 executive compensation data and information provided, individual
performance of each executive, and, for incentive compensation, are rationally
linked with the fulfillment of corporate objectives and corporate financial
performance.
Compensation Committee of the Board of
Directors:
Maurice A. Gladhill, Chairman
R. Carl Benna
Howard B. Bowen
John D. Brunk
James K. Kluttz
7
<PAGE>
The following table sets forth compensation information with respect to the
Chief Executive Officer and the other executive officers in 1999 (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
------------------------------ ------------
OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SHARES(2) COMPENSATION(3)
- --------------------------- -------- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Faye E. Cannon 1999 $258,940 $ -0- 12,964 --
President and CEO of Bancorp and of the 1998 242,000 58,080 3,996 $14,222
Bank 1997 220,000 88,000 4,947 16,765
David R. Stauffer 1999 195,000 -0- 5,486 --
Vice President of Bancorp and Senior 1998 170,685 27,312 2,176 14,222
Executive Vice President and COO of 1997 164,120 54,365 2,835 16,765
the Bank
Richard W. Phoebus, Sr. 1999 140,000 -0- 4,383 --
Vice President of Bancorp and President 1998 136,400 38,363 2,259 20,000
and CEO of the Savings Bank 1997 124,000 44,485 2,778 15,565
David L. Spilman 1999 106,670 -0- 3,856 41,767
Treasurer of Bancorp and Senior Vice 1998 120,000 19,200 1,543 10,793
President of the Bank 1997 75,856 25,396 -0- -0-
</TABLE>
- ------------------------
(1) No Named Executive Officer received any perquisites in 1997, 1998 or 1999
the aggregate amount of which exceeded 10% of the officer's salary and
bonus.
(2) Adjusted to reflect 5% stock dividends paid on August 8, 1997, July 29,
1998, and July 28, 1999.
(3) Includes Bancorp 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 with a salary cap of $160,000. Dollar
values of each contribution for 1999 will not be finally calculated until
after mailing date of the Proxy Statement but will be included in the 2001
Proxy Statement. For Mr. Spilman, the 1999 amount represents a severance
payment made. Mr. Spilman resigned October 20, 1999.
8
<PAGE>
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, 1999. Bancorp does not grant stock appreciation
rights.
OPTIONS GRANTED IN 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ------------------------------------------------------------------------------------------ VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
OPTIONS GRANTED TO OPTION TERM
GRANTED(1) EMPLOYEES IN EXERCISE PRICE EXPIRATION -----------------------
NAME (SHARES) FISCAL 1999 (PER SHARE) DATE 5% 10%
- ---- ---------- ------------ -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Faye E. Cannon................... 12,964 13.93% $30.12 04/20/2009 $245,568 $622,318
David R. Stauffer................ 5,486 5.89 30.12 04/20/2009 103,917 263,347
Richard W. Phoebus, Sr........... 4,383 4.71 30.12 04/20/2009 83,024 210,399
David L. Spilman................. 3,856 4.14 30.12 04/20/2009 73,042 185,102
</TABLE>
- ------------------------
(1) All options granted on April 20, 1999. Options exercisable to the extent of
25%, 50%, 75%, and 100% on April 20, 2000, 2001, 2002, and 2003
respectively.
The following table sets forth information with respect to the value of all
options exercised during the fiscal year ended December 31, 1999 and the value
of all options held on December 31, 1999 by the Chief Executive Officer and the
Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUES AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF NUMBERS OF SHARES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT 12/31/99(2) OPTIONS AT 12/31/99(3)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Faye E. Cannon.................... 3,827 $47,991 16,613 19,302 $55,398 -0-
David R. Stauffer................. -0- -0- 16,164 9,260 56,399 -0-
Richard W. Phoebus, Sr............ 1,144 8,277 6,441 7,467 36,061 -0-
David L. Spilman.................. -0- -0- -0- -0- -0- -0-
</TABLE>
- ------------------------
(1) Based on the differences 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, 1999.
(3) Based on the difference between aggregate fair market value at December 31,
1999 and aggregate exercise price.
9
<PAGE>
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
Bancorp provides an Executive Supplemental Income Plan (the "Supplemental
Plan") in which executive officers Cannon and Stauffer participate. The
Supplemental Plan provides certain benefits which are integrated with the
benefits provided executive officers Cannon 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% of their compensation
(salary and bonus) 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 by a single person of 25% or more of the
combined voting power of the Bank and Bancorp, a majority of the members of the
Board of Directors of the Bank or Bancorp is composed of persons not elected or
recommended by two-thirds of the then current directors, or a sale of assets to
or merger with another corporation whose voting securities are not at least 60%
controlled by Bancorp's then current stockholders in substantially the share
proportions as their ownership to the Bank and Bancorp immediately prior to the
sale or merger. 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 and Stauffer would
have estimated annual benefits under the Supplemental Plan of $199,227 and
$145,138 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.
Executive officer Phoebus has an employment agreement with Bancorp providing
for payments of three times Mr. Phoebus' annual compensation if he terminated
following a change in control of Bancorp or the Savings Bank. Mr. Phoebus is
also entitled to receive 1.5 times his annual compensation if he is terminated
without cause by Bancorp or the Savings Bank and at his retirement.
10
<PAGE>
DIRECTORS' FEES AND DEFERRED COMPENSATION PLAN
During 1999, each director of Bancorp (other than employee directors)
received a quarterly director's fee of $1,250 plus $200 for each board meeting
and board committee meeting attended. Each director of Bancorp who also served
as a director of the Bank received a quarterly fee of $500 plus $200 for each
Bank board meeting and board committee meeting attended. Bancorp and Bank board
committee chairs received $300 for each committee meeting attended. Each
director of Bancorp who also served as a director of the Savings Bank received a
fee of $200 for each Savings Bank board meeting attended. In addition to these
fees, Chairman Hoff received a fee of $24,300 for chairing the boards of
directors of Bancorp and the Bank. Each Bancorp director may elect to defer all
or part of these fees until he or she ceases to be a director. Interest is
earned on the deferred amount at a floating rate equal to the "prime rate" as
published in the Wall Street Journal's Money Rates Table on December 15(th) of
each year for the next calendar year, currently 8.5%. Payment of the deferred
amount may be made to the director or his or her beneficiary in a lump sum or in
equal monthly installments over 10 years, as the director elects. In 1999
directors also received options to purchase F&M Bancorp stock, pursuant to the
1999 Stock Option Plan for Non-Employee Directors. All options were granted on
April 21, 1999 with an exercise price of $32.375, which represented the closing
price as quoted by NASDAQ on the previous day. The number of shares received by
each director was equal to 25% of the director's total cash compensation divided
by $9.80 which represented the Black Scholes Model calculation of the per share
price of F&M Bancorp stock.
CERTAIN TRANSACTIONS WITH DIRECTORS AND OFFICERS
During the past year Bancorp and its subsidiaries have had, and expect to
have in the future, banking transactions in the ordinary course of their
businesses with directors and officers of Bancorp, the Bank, the Savings 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.
11
<PAGE>
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, 1999. The graph assumes
that the value of the investment in Bancorp's Common Stock and each index was
$100 on December 31, 1994 and that all dividends were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SHAREHOLDER RETURN PERFORMANCE GRAPH
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31,
1994 1995 1996 1997 1998 1999
F&M BANCORP 100 108 90 154 143 97
NASDAQ US COMPANIES 100 141 174 213 300 542
NASDAQ BANK STOCKS 100 149 197 329 327 314
</TABLE>
12
<PAGE>
AUDIT COMMITTEE AND INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Arthur Andersen LLP ("AA") has acted as Bancorp's
independent public accountants for the year ended December 31, 1999 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 AA 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon review of Forms 3, 4, and 5 and amendments thereto furnished to
the Corporation and inquiry to directors and executive officers, all required
reports of securities activities were timely filed, except executive officer
Richard W. Phoebus, Sr. who, as a result of Bancorp's omission, filed one late
Form 4 reporting the exercise of previously granted stock options.
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, or any adjournments thereof, 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
Stockholder proposals are eligible for consideration for inclusion in the
proxy materials for the 2001 Annual Meeting of Stockholders in accordance with
Rule 14a-8 under the Securities Exchange Act of 1934, as amended, if they are
received by Bancorp on or before November 17, 2000. Any proposal should be
directed to the attention of the Corporate Secretary, F&M Bancorp, 110 Thomas
Johnson Drive, Frederick, Maryland, 21702. In order for a stockholder proposal
submitted outside Rule 14a-8 to be considered "timely" within the meaning of
Rule 14a-4(c) and in order for a proposal to be timely under Bancorp's By-Laws,
it must be received on or prior to January 18, 2001, but no earlier than
December 19, 2000.
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 GORDON
M. COOLEY, SECRETARY, F&M BANCORP, 110 THOMAS JOHNSON DRIVE, P.O. BOX 518,
FREDERICK, MARYLAND 21702.
By Order of the Board of Directors,
Gordon M. Cooley
Secretary
Frederick, Maryland
March 17, 2000
13
<PAGE>
F&M BANCORP
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, April 18, 2000
10:00 a.m.
Corporate Headquarters
110 Thomas Johnson Drive
Frederick, MD 21702
F&M BANCORP
[LOGO] 110 THOMAS JOHNSON DRIVE
FREDERICK, MD 21702 PROXY
- ------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL
MEETING ON APRIL 18, 2000 AT 10:00 A.M.
The shares of stock you hold will be voted as you specify below.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEM 1.
By signing the proxy, you revoke all prior proxies and appoint Faye E.
Cannon, David R. Stauffer, and Alice E. Stonebreaker, or any two of them,
with full power of substitution, to vote your shares on the matters shown on
the reverse side and any other matters which may come before the Annual
Meeting and all adjournments.
See reverse for voting instructions.
<PAGE>
[LOGO]
Please detach here
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
1. Election of directors:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR TERM TO EXPIRE IN 2003: FOR TERM TO EXPIRE IN 2001: / / Vote FOR / / Vote WITHHELD
all nominees from all nominees
01 R. Carl Benna 04 James K. Kluttz 07 Howard E. Harrison, III
02 Beverly B. Byron 05 Richard W. Phoebus, Sr.
03 Maurice A. Gladhill 06 Thomas R. Winkler
</TABLE>
(INSTRUCTIONS: TO WITHHOLD AUTHORITY
TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NAME(S) OF THE NOMINEE(S)
IN THE BOX PROVIDED TO THE RIGHT.) __________________________________
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTORED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR PROPOSAL 1, AND IN THE BEST DISCRETION
OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS.
Address Change? Mark Box / / Date: __________________________
Indicate changes below.
________________________________
________________________________
SIGNATURE(S) IN BOX
PLEASE SIGN EXACTLY AS YOUR NAME(S)
APPEAR ON PROXY. IF HELD IN JOINT
TENANCY, ALL PERSONS MUST SIGN.
TRUSTEES, ADMINISTRATORS, ETC.,
SHOULD INCLUDE TITLE AND AUTHORITY.
CORPORATIONS SHOULD PROVIDE FULL
NAME OF CORPORATION AND TITLE OF
AUTHORIZED OFFICER SIGNING THE
PROXY.
