SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Washington Trust Bancorp, Inc.
_______________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
Washington Trust Bancorp, Inc. (David V. Devault, Chief Financial Officer)
_______________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l), or 14a-6(j)(2).
/ / $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:(1)
____________________________________________________________________
4) Proposed maximum aggregate value of transaction:
____________________________________________________________________
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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) Dated Filed:
March 4, 1994
____________________________________________
<PAGE>
WASHINGTON TRUST BANCORP, INC.
23 Broad Street
Westerly, RI 02891
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 17, 1994
To the Shareholders of
WASHINGTON TRUST BANCORP, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of WASHINGTON
TRUST BANCORP, INC. (the "Corporation"), a Rhode Island corporation, will be
held at the Westerly Library, 38 Broad Street, Westerly, Rhode Island on
Tuesday, the 17th of May, 1994 at 11:00 a.m. for the purpose of considering and
acting upon the following:
1. The election of six directors to serve for terms of three years;
2. The amendment to Article FOURTH of the Corporation's Restated Articles of
Incorporation to increase the number of shares of the Corporation's Common
Stock, $.0625 par value, that may be issued thereunder from 3,000,000 to
10,000,000;
3. The ratification of the selection of independent auditors to audit the
Corporation's consolidated financial statements for the year ending
December 31, 1994; and
4. Such other business as may properly come before the meeting, or any
adjournment thereof.
Only shareholders of record at the close of business on April 1, 1994 will be
entitled to notice of and to vote at such meeting. The transfer books of the
Corporation will not be closed.
If you do not expect to be present at the meeting, please sign, date, and fill
in the enclosed proxy and return it by mail in the enclosed addressed envelope.
By order of the Board of Directors
Harvey C. Perry, II
Secretary
April 10, 1994
<PAGE>
WASHINGTON TRUST BANCORP, INC.
23 Broad Street
Westerly, RI 02891
Telephone 401/348-1200
ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 17, 1994
PROXY STATEMENT
The accompanying proxy is solicited by and on behalf of the Board of Directors
of Washington Trust Bancorp, Inc. (the "Corporation") for use at the Annual
Meeting of Shareholders to be held on May 17, 1994, and any adjournment thereof
and may be revoked at any time before it is exercised by submission of another
proxy bearing a later date, by attending the meeting and voting in person, or by
notifying the Corporation of the revocation in writing to the President, 23
Broad Street, Westerly, RI 02891. If not revoked, the proxy will be voted at
the Annual Meeting in accordance with the instructions indicated on the proxy by
the shareholder or, if no instructions are indicated, all shares represented by
valid proxies received pursuant to this solicitation (and not revoked before
they are voted) will be voted FOR Proposal Nos. 1, 2 and 3 referred to herein.
As of April 1, 1994, the record date for determining shareholders entitled to
notice of and to vote at the Annual Meeting (the "Record Date"), there were
issued and outstanding 1,873,970 shares of common stock, $.0625 par value
(herein called "Common Stock"), of the Corporation. Each share of Common Stock
is entitled to one vote per share on all matters to be voted upon at the
meeting, with all holders of Common Stock voting as one class. A majority of
the outstanding shares of Common Stock entitled to vote, represented in person
or by proxy, will constitute a quorum for the transaction of business at the
Annual Meeting. Abstentions and broker non-votes will be counted for purposes
of determining if a quorum is present.
With regard to the election of directors, votes may be cast in favor or
withheld. Votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on all proposals other than
the election of directors and will be counted as present for purposes of the
item on which the abstention is noted. Abstentions on the amendment to Article
FOURTH of the Restated Articles of Incorporation and the ratification of
accountants will have the same legal effect as a vote against such matters. In
addition, under the rules of the New York Stock Exchange, brokers who hold
shares in street name for customers who are the beneficial owners of such shares
have the authority to vote on certain "discretionary" items when they have not
received instructions from such beneficial owners. Brokers that do not receive
instructions are entitled to vote on the election of directors, the amendment to
Article FOURTH of the Restated Articles of Incorporation and the ratification of
the selection of independent public accountants. However, if a broker does not
exercise such discretion, broker non-votes will have the same legal effect as a
vote against the amendment to Article FOURTH of the Restated Articles of
Incorporation and the ratification of the selection of independent public
accountants. Broker non-votes will have no effect on the outcome of the
election of directors.
Management knows of no matters to be brought before the meeting other than those
referred to. If any other business should properly come before the meeting, the
persons named in the proxy will vote in accordance with their best judgment.
The approximate date on which this Proxy Statement and accompanying proxy cards
will first be mailed to shareholders is April 10, 1994.
<PAGE>
PRINCIPAL SHAREHOLDERS
The Corporation knows of no person who beneficially owned more than five percent
(5%) of the Corporation's outstanding Common Stock as of April 1, 1994.
ELECTION OF DIRECTORS
The Corporation's Board of Directors is divided into three classes, with each
class serving staggered terms of three years, so that only one class is elected
in any one year. There are at present 16 directors and, upon retirement of
Jacques deLaporte, the number will be reduced to 15 (subject to further changes
as provided in the Corporation's Restated Articles of Incorporation). This year
six directors are to be elected at the Annual Meeting to serve until the 1997
Annual Meeting and until their respective successors are elected and have
qualified. Directors are elected by the affirmative vote of the majority of the
shares of Common Stock entitled to vote thereon, represented in person or by
proxy, at the Annual Meeting when a quorum is present.
The nominees for election of directors at the Annual Meeting are Steven J.
Crandall, Richard A. Grills, James W. McCormick, Jr., Victor J. Orsinger, II,
James P. Sullivan and Neil H. Thorp. Each of the nominees for director is
presently a director of the Corporation. Each has consented to being named a
nominee in this Proxy Statement and has agreed to serve as a director if elected
at the Annual Meeting. In the event that any nominee is unable to serve, the
persons named in the proxy have discretion to vote for other persons if such
other persons are designated by the Board of Directors. The Board of Directors
has no reason to believe that any of the nominees will be unavailable for
election.
<TABLE>
NOMINEES FOR DIRECTOR
<CAPTION>
Common Stock Shares Beneficially
Owned on April 1, 1994(2)
------------------------------------------
Years as Common Stock Vested Percent
Name and Principal Occupation Director(1) Age Owned Options Total of Class
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Terms Expiring in 1997:
Steven J. Crandall 11 41 279 5,000 5,279 0.25%
Vice President, Ashaway Line
& Twine Manufacturing Co.
(manufacturer of tennis string,
fishing line and surgical sutures)
Richard A. Grills 11 61 47,156 5,000 52,156 2.51%
Consultant and retired President,
Bradford Dyeing Association, Inc.
(textiles)
James W. McCormick, Jr. 11 63 3,347 5,000 8,347 0.42%
Former President, McCormick's,
Inc. (retailer)
Victor J. Orsinger, II 11 47 4,626 5,000 9,626 0.46%
Partner, Orsinger & Nardone,
Attorneys at Law
-2-
<PAGE>
<CAPTION>
Common Stock Shares Beneficially
Owned on April 1, 1994(2)
------------------------------------------
Years as Common Stock Vested Percent
Name and Principal Occupation Director(1) Age Owned Options Total of Class
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James P. Sullivan, C.P.A. 11 55 320 5,000 5,320 0.26%
Finance Officer, Roman Catholic
Diocese of Providence
Neil H. Thorp 11 54 2,808 5,000 7,808 0.38%
President, H.E. Thorp & Son, Inc.
(real estate) and President, Thorp &
Trainer, Inc. (insurance)
Terms Expiring in 1995:
Jacques deLaporte (3) 23 70 1,600 5,000 6,600 0.32%
Retired; formerly
Vice President-Marketing
& Secretary, Greene Plastics Corp.
Katherine W. Hoxsie, C.P.A. 3 45 904 5,000 5,904 0.28%
Executive Vice President,
Hoxsie Buick-Pontiac, Inc.;
formerly with the firm of
Price Waterhouse
Brendan P. O'Donnell 12 64 1,650 5,000 6,650 0.32%
Retired manufacturing
executive; formerly consultant,
Harris Graphics Corp.
(printing presses)
Joseph H. Potter (4) 12 60 5,821 13,342 19,163 0.92%
Executive Vice President of the
Corporation since 1984; Executive
Vice President of the Bank since
July 1982
Anthony J. Rose, Jr. 22 63 25,717 5,000 30,717 1.48%
President, Technical Industries, Inc.
(chemicals)
Terms Expiring in 1996:
Gary P. Bennett 0(5) 52 100 250 350 0.02%
President and Chief Executive Officer
of Analysis & Technology, Inc.
(interactive multimedia train-
ing systems, information systems
and engineering services)
Larry J. Hirsch 0(5) 55 1,022 250 1,272 0.06%
President
Westerly Jewelry Co., Inc. (retailer)
-3-
<PAGE>
<CAPTION>
Common Stock Shares Beneficially
Owned on April 1, 1994(2)
------------------------------------------
Years as Common Stock Vested Percent
Name and Principal Occupation Director(1) Age Owned Options Total of Class
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mary E. Kennard, Esq. 0(5) 39 0 250 250 0.01%
Vice President and General Counsel
of the University of Rhode Island
("URI") since 1992; various other
positions with URI since 1987
Joseph J. Kirby 22 62 3,464 31,343 34,807 1.67%
President of the Corporation since
1984; President of the Bank since
July 1982
Thomas F. Moore 33 69 26,912 5,000 32,412 1.56%
Chairman, The Moore
Company (textiles)
<FN>
(1) The Corporation was organized in 1984. The years indicated include the
period the directors have been members of the Board of the Corporation's
subsidiary, The Washington Trust Company of Westerly (the "Bank") prior to
1984.
(2) "Beneficial ownership" means, pursuant to Securities and Exchange Commission
("SEC") regulations, the sole or shared power to vote, or to direct the
voting of, a security and/or investment power with respect to a security
(i.e., the power to dispose, or to direct the disposition, of a security)
and/or the right to acquire such ownership within 60 days.
(3) Mr. deLaporte is retiring as of the 1994 Annual Meeting.
(4) Mr. Potter and Louis J. Luzzi, Vice President and Treasurer of the
Corporation and the Bank, are first cousins.
(5) Messrs. Bennett and Hirsch and Ms. Kennard were each elected directors on
March 17, 1994.
</TABLE>
Directors and executive officers as a group (19 persons), beneficially owned
245,395 shares of Common Stock, or 12.32%, as of April 1, 1994 (including vested
options to purchase 118,531 shares of Common Stock).
Committees of the Board of Directors
The Corporation's Board of Directors has the following committees:
Executive Committee. The Executive Committee met 12 times in 1993 and, when the
Board of Directors is not in session, is entitled to exercise all the powers and
duties of the Board. In addition, in 1993 the Executive Committee made
recommendations concerning remuneration arrangements for senior management of
the Corporation and the Bank; effective January 20, 1994, this function is now
performed by a newly-formed Compensation Committee, the members of which are
Directors O'Donnell (Chairman), deLaporte, McCormick, Orsinger and Rose.
Members of the Executive Committee are Directors O'Donnell (Chairman),
deLaporte, Kirby, McCormick, Orsinger, Potter and Rose.
-4-
<PAGE>
Audit Committee. The Audit Committee, which met 7 times in 1993, is responsible
for reviewing the adequacy of the Corporation's system of internal controls, its
audit program, the performance and findings of its internal audit staff and
action to be taken thereon by management, and reports of the independent
auditors. Committee members are Directors McCormick (Chairman), Crandall,
deLaporte and Hoxsie.
Stock Option Committee. The Stock Option Committee met once in 1993 and is
responsible for the administration of the Corporation's Amended and Restated
1988 Stock Option Plan ("Stock Option Plan"). Committee members are Directors
Orsinger (Chairman), Moore, O'Donnell and Sullivan.
Nominating Committee. On January 20, 1994, the Board established this committee
to study the qualifications of potential nominees, and recommend to the
shareholders the election of directors of the Corporation. The Committee
members are Directors O'Donnell (Chairman), deLaporte, McCormick, Orsinger and
Rose. Shareholders may make nominations for election as directors at any
meeting called for such purpose provided that written notice has been given to
the President of the Corporation not less than 14 nor more than 60 days prior to
such meeting. Such notice shall set forth the name, age, business address and
principal occupation of, and the number of shares of Common Stock beneficially
owned by, each nominee.
The Corporation's Board of Directors held 4 meetings in 1993. During 1993, each
member of the Corporation's Board attended at least 75% of the aggregate number
of meetings of the Board and the committees of which such person was a member,
except for Mr. Moore.
Compensation Committee Interlocks and Insider Participation
The Executive Committee makes recommendations concerning remuneration
arrangements for senior management of the Corporation and the Bank, subject to
the approval of the Board of Directors. The Executive Committee members are
Directors O'Donnell (Chairman), deLaporte, Kirby, McCormick, Orsinger, Potter
and Rose. Mr. Kirby, President of the Corporation and the Bank, and Mr. Potter,
Executive Vice President of the Corporation and the Bank, serve on the Executive
Committee, but do not participate in Committee discussions regarding executive
compensation.
During 1993, the Bank paid approximately $108,035 in legal fees related to
collection matters to the law firm of Orsinger & Nardone, of which Mr. Orsinger,
a member of the Executive Committee, is a partner.
Section 16 Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Corporation's officers and directors, and persons who own
more than 10% of a registered class of the Corporation's equity securities
("Insiders"), to file reports of ownership and changes in ownership with the
SEC. Insiders are required by SEC regulations to furnish the Corporation with
copies of all Section 16(a) reports they file. Based solely on a review of the
copies of such reports furnished to the Corporation, the Corporation believes
that during 1993 all Section 16(a) filing requirements applicable to its
Insiders were complied with, except that Messrs. McCormick, deLaporte and Rose
each inadvertently failed to report on a timely basis one transaction in 1993.
COMPENSATION OF DIRECTORS AND OFFICERS
Directors' Compensation
During 1993, for each meeting of the Board of the Corporation and the Bank
attended, non-employee directors received $250 and $500, respectively. In
addition, non-employee directors received $300 for each Corporation and Bank
committee meeting attended (committee chairmen received $500 per meeting).
-5-
<PAGE>
However, directors attending more than one meeting in any one day (excluding
meetings of the Board of Directors of the Corporation) were paid only for one of
such meetings. In addition, non-employee directors received a $5,000 annual
retainer.
The Corporation and the Bank have standard arrangements pursuant to which
directors may elect to defer all or part of their fees. Deferred fees earn
interest and are payable in a lump sum or installments following termination of
service as a director or attainment of a certain age. Deferred fees are
unfunded obligations of the Bank.
The Outside Director Retainer Continuation Plan adopted as of January 1, 1990
provides retirement benefits to non-employee directors after leaving the Board
of Directors. The benefit pays the regular quarterly retainer in effect at the
time of retirement for as many quarters as the director served as such with the
Corporation or a subsidiary. The benefit commences upon retirement and is
reduced for retirement occurring before age 65. In the case of a director who
dies before commencement of benefit payments, a surviving spouse will receive
50% of the benefit that would have been payable to the director. In the event
of a retired director's death before completion of all payments due, a surviving
spouse will receive the remaining payments reduced by 50%. Accrued and unpaid
benefits under this plan are an unfunded obligation of the Bank.
Executive Compensation
The following table shows, for the fiscal years ended December 31, 1993, 1992
and 1991, the compensation of the Chief Executive Officer and the other
executive officers whose total annual salary and bonus exceeded $100,000 for the
year ended December 31, 1993 (the "Named Executives").
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------- ------------
Securities
Name and Underlying
Principal Options/ All Other
Position Year Salary Bonus(1) SARs(2) Compensation(3)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Joseph J. Kirby 1993 $200,000 $88,800 7,186 $6,863
President 1992 207,692(4) 22,500 9,091 3,740
1991 200,000 -0- -0- 518
Joseph H. Potter 1993 119,000 35,700 4,275 4,084
Executive Vice 1992 103,846(4) 9,375 4,545 1,870
President 1991 100,000 -0- -0- 259
David V. Devault 1993 90,000 21,600 2,156 3,088
Vice President and 1992 85,154(4) 6,150 2,485 1,534
Chief Financial Officer 1991 82,000 -0- -0- 212
<FN>
(1) Effective July 1, 1992, the Board of Directors adopted a new Short-Term
Incentive Plan (the "Incentive Plan") for its executive officers and other
key employees. Bonus amounts represent amounts accrued for the period from
-6-
<PAGE>
July 1, 1992 to December 31, 1992 and for the full year 1993 under the
Incentive Plan. The Incentive Plan provides for annual payments up to a
maximum percentage of base salary, which percentages vary among
participants.
(2) None of the stock options granted to the Named Executives have tandem stock
appreciation rights ("SARs").
(3) On July 1, 1992, the Bank resumed employer matching contributions under its
tax-qualified 401(k) and profit sharing plan (the "Profit Sharing Plan"),
which covers all full-time salaried employees. Under the 401(k) component
of the Profit Sharing Plan, the Bank matches 50% of each participant's first
2% of salary contributions and 100% of each participant's next 2% of salary
contributions up to a maximum match of 3%. The profit sharing component of
the Profit Sharing Plan provides for an employer contribution based on the
Bank's earnings; however, participants in the Incentive Plan have not been
eligible for profit sharing benefits since the establishment of the
Incentive Plan.
(4) The increase in the 1992 base salary over the 1991 amount for each of the
Named Executives represents the effect of one extra bi-weekly pay period in
1992.
</TABLE>
The following table contains information concerning the grant of stock options
pursuant to the Corporation's Stock Option Plan to the Named Executives during
the fiscal year ended December 31, 1993.
<TABLE>
Option/SAR Grants in Last Fiscal Year
<CAPTION>
Individual Grants Potential Realizable Value
------------------------------------------------- at Assumed Annual Rates of
Number of Percent of Stock Price Appreciation
Securities Total for Option Term
Underlying Options/SARs ---------------------------
Options/ Granted to Exercise
SARs Employees or Base
Granted(1) in Fiscal Price Expiration 5% 10%
Name (#) Year ($/Sh) Date ($)(2) ($)(3)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph J. Kirby 7,186 22.78% $20.875 6/4/2003 $94,355 $239,112
Joseph H. Potter 4,275 13.55% $20.875 6/4/2003 $56,132 $142,250
David V. Devault 2,156 6.84% $20.875 6/4/2003 $28,309 $71,740
<FN>
(1) All options granted to the Named Executives were granted on June 4, 1993
under the Stock Option Plan. There are no SARs attached thereto. The
options become exercisable in 25% installments commencing as of the date of
grant and on each anniversary thereafter, so long as employment with the
Corporation continues. If a Change in Control (as defined in the Stock
Option Plan) were to occur, the options would become immediately exercisable
in full.
(2) $20.875 at 5% annually for 10 years = $34.01
(3) $20.875 at 10% annually for 10 years = $54.15
</TABLE>
-7-
<PAGE>
The following table sets forth information with respect to the Named Executives
concerning the exercise of options during the fiscal year ended December 31,
1993 and unexercised options held as of the end of the 1993 fiscal year.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Value Options/SARs at Options/SARs at
Acquired Realized FY-End (#)(1) FY-End($)(1)(2)(3)
Name on Exercise(#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Joseph J. -0- -0- 31,343/9,934 $44,468/$58,379
Kirby
Joseph H. -0- -0- 13,342/5,479 $22,891/$31,171
Potter
David V. -0- -0- 6,282/2,859 $12,343/16,512
Devault
<FN>
(1) There are no SARs attached to the stock options held by the Named
Executives.
(2) Value based on the fair market value of the Corporation's Common Stock on
December 31, 1993 ($24.75) minus the exercise price.
(3) 25,000, 10,000 and 4,500 of the exercisable stock options held by Messrs.
Kirby, Potter and Devault, respectively, have an exercise price which is
greater than the fair market value of the Corporation's Common Stock as of
December 31, 1993.
</TABLE>
Pension Plans
The Bank maintains a qualified defined benefit pension plan (the "Pension Plan")
for salaried employees of the Corporation and the Bank. The following table
shows the annual benefits payable upon retirement, assuming retirement at age 65
in 1993, under the Pension Plan:
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Average Annual ---------------- Years of Service------------------
Pension Income 15 20 25 30 35
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 ................... $25,535 $34,047 $ 42,559 $ 51,070 $ 59,582
120,000 ................... 31,085 41,447 51,809 62,170 72,532
140,000 ................... 36,635 48,847 61,059 73,270 85,482
160,000 ................... 42,185 56,247 70,309 84,370 98,432
180,000 ................... 47,735 63,647 79,559 95,470 111,382
200,000 ................... 53,285 71,047 88,809 106,570 124,332
220,000 ................... 58,835 78,447 98,059 117,670 137,282
240,000 ................... 63,231 84,308 105,385 126,462 147,539
260,000 ................... 63,231 84,308 105,385 126,462 147,539
280,000 ................... 63,231 84,308 105,385 126,462 147,539
300,000 ................... 63,231 84,308 105,385 126,462 147,539
</TABLE>
-8-
<PAGE>
The annual benefits shown in the above table are straight-life annuity amounts
not reduced by a joint survivorship provision which is available. The benefits
shown are reduced to reflect the limitations currently imposed by the Internal
Revenue Code which limit the compensation amount used in determining the annual
benefits payable from qualified plans to an individual. The table does not
reflect the Internal Revenue Code limitation on annual pension benefits payable
to an individual, which for 1993 was $115,641.
Annual payments to an employee retiring at age 65 are based on the average
highest 36 consecutive months of pension compensation. Pension compensation
consists of base salary, plus, in the case of the Named Executives and certain
other key employees, payments pursuant to the Incentive Plan and, in the case of
all other full time employees, nondeferred payments from the Profit Sharing
Plan. Such amounts are shown in the Salary and Bonus columns of the Summary
Compensation Table. The benefit is the sum of (i) 1.2% of pension
compensation multiplied by the number of years of service, plus (ii) .65% of
pension compensation in excess of the Social Security covered compensation
level multiplied by the number of years of service. In 1993 the covered
Social Security compensation level was $22,716.
The years of service accrued for purposes of the Pension Plan in 1993 for the
following Named Executives were: Mr. Kirby, 30 years; Mr. Potter, 35 years; and
Mr. Devault, 7 years.
EXECUTIVE COMMITTEE AND STOCK OPTION COMMITTEE
JOINT REPORT ON EXECUTIVE COMPENSATION
The non-employee directors of the Executive Committee (the "Compensation
Committee") administer the executive compensation program of the Corporation
under the supervision of the Board of Directors. The success of the Corporation
is highly dependent on hiring, developing and training qualified people who feel
encouraged to perform for the good of the shareholders, the community, the
Corporation and customers. The compensation program is designed to support the
following underlying principles:
- Compensation is a mechanism for ensuring that the Corporation
attracts and retains the best people.
- Total compensation dollars will be managed as an investment by
allocating these dollars where the Corporation receives its best
return.
- Employees will be rewarded commensurate with their contribution to
the success of the Corporation.
- Base salary is a mechanism which allows the Corporation to attract
employees who provide the skills and capabilities necessary to
manage its business.
- Total compensation is a mechanism for motivating, rewarding and
retaining those people.
In order to achieve the aforementioned objectives, the Corporation engaged an
independent compensation consultant (the "Consultant") during 1992 to provide
information to the Compensation Committee regarding salaries of officer
positions in comparable companies. The executive compensation program consists
of three elements: base salary, short-term incentive compensation and long-term
incentives.
Base Salary. Base salary for all officers is determined by the Compensation
Committee, subject to approval of the full Board of Directors. Salary levels
were developed by the Compensation Committee for each officer's position based
-9-
<PAGE>
on competitive compensation levels at thirty domestic financial institutions
ranging in size (based on total assets) from $250 million to $1 billion (the
"Salary Peer Group"). The institutions in the Salary Peer Group are not
included in the Performance Graph set forth on page 12 hereof. Minimum,
midpoint and maximum salary levels were established based on the results of the
Consultant's study of the pay practices of the Salary Peer Group. The general
policy of the Compensation Committee is an attempt to position executive base
salaries at approximately the midpoint level of the Salary Peer Group. Base
salary levels for the individual officers were developed based on technical,
managerial and human relations skills, problem solving capabilities, and level
of accountability.
The Compensation Committee reviews officers' salaries in the last quarter of
each fiscal year, based on recommendations from the President which reflect his
subjective assessment of the nature of the position and the contribution,
experience and tenure of each officer. The Compensation Committee then
recommends salary adjustments to the full Board, based on their assessment of
individual performance and achievement of the financial objectives established
by the Board for the Bank.
The President's salary in 1993 was unchanged from 1992. The President's salary
for 1994 was increased 5% based on the Corporation meeting its financial
objectives and the Compensation Committee's subjective assessment of the
President's performance as well as the relationship of his salary to the
midpoint salary level of the Salary Peer Group.
Short-Term Incentive Plan. The Short-Term Incentive Plan (the "Incentive Plan")
provides for the payment of additional cash compensation to officers based on
the achievement of target levels of return on equity and/or the achievement of
individual objectives. Under the Incentive Plan, return on equity is measured
against both shareholder expectations, as established by the Board, and the
performance of a peer group (the "Incentive Plan Peer Group") in order to
provide objective links between performance and pay. The Incentive Plan Peer
Group was comprised of 28 financial institutions in 1993, of which approximately
60% are located in the Northeast and 40% are located throughout the rest of the
country. These institutions are not included in the Performance Graph set forth
on page 12 hereof. The selection of these institutions was based on certain
criteria including asset size ($250 million to $1 billion), similar operating
lines of business and listing on NASDAQ. The performance measures for the
Incentive Plan are set at three levels: threshold - the minimum acceptable
return on equity for which incentives will be paid; target range - the return on
equity established by the Board of Directors; and maximum - performance
surpassing planned objectives.
The target payout for the President is based solely on the return on equity
component. The target payout for other participants includes a portion based on
the return on equity measurement and a portion based on the achievement of
individual performance goals. The total target payout for each officer varies
by level of responsibility and ranged from 37% (for the President) to 5% of base
salary. These targets are also adjusted upward or downward by a multiplier
which is tied to the performance measure levels (threshold, target range and
maximum).
In 1993 the Corporation's return on equity was within the target range and in
excess of the Incentive Plan Peer Group's average return on equity. As a
result, the 43 officers participating in the Incentive Plan were entitled to a
payout for 1993 performance of 120% of the return on equity portion of the
target payout for each officer. Payouts based on the achievement of individual
performance goals were subjectively determined by each participant's supervisor
and approved by the Board.
In 1994 the Board of Directors, on the advice of the Consultant, adopted a wider
spread between performance levels which will result in a lower payout in 1994
for substantially exceeding the target range and a somewhat higher payout for
meeting the target range, below which nothing is paid.
-10-
<PAGE>
Long-Term Incentives. In the 1992 industry study and review of long-term
incentive practices in the banking industry, the Consultant recommended that
stock option awards be based on a percentage of base salary ranging from a grant
value of up to one times the President's base salary on an annual basis, with
lesser amounts for other officers. This element of compensation is viewed as a
desirable long-term compensation method because it closely links the interest of
management with shareholder value and aids in the retention and motivation of
executives to improve long-term stock market performance. Stock options are
granted for Common Stock at prevailing market prices and will only have value if
the Corporation's Common Stock price increases.
During 1993, the Stock Option Committee, based on the recommendation of the
Consultant, granted non-qualified stock options to certain key officers of the
Corporation and the Bank. In fixing the grant of stock options to officers
other than the President, the Stock Option Committee reviewed the President's
recommendations for individual awards, which were based on individual
performance during the prior fiscal year and the individual officer's
contribution to the Corporation's strategic plan. Grant values range from 25%
to 75% of base salary, based on the levels of responsibility for each officer.
In 1993 the Stock Option Committee awarded the President options with a grant
value equal to 75% of his base salary, based on the Corporation's actual
performance as compared to its corporate financial goals and their subjective
assessment of the President's goals in promoting and enhancing shareholder
value. The Stock Option Committee also took into account the aggregate number
of options awarded to the President to date and the aggregate value of such
shares. The Corporation does not have a target level of equity holdings by
executives.
In December 1993, the Internal Revenue Service released its proposed regulations
(the Regulations") relating to the disallowance by publicly-held companies of
deductions for employee remuneration in excess of $1 million unless such
remuneration qualifies as performance-based compensation within the meaning of
the Regulations. Given that these Regulations have not been finally adopted and
the fact that current levels of compensation paid by the Corporation are
significantly below $1 million, the Committee has determined that it is
unnecessary at this time to seek to qualify the components of its compensation
program as performance-based compensation within the meaning of the regulations.
The foregoing report has been furnished by the Executive Committee and the Stock
Option Committee.
Executive Committee: Stock Option Committee:
Brendan P. O'Donnell (Chairman) Victor J. Orsinger, II (Chairman)
Jacques deLaporte Thomas F. Moore
Joseph J. Kirby Brendan P O'Donnell
James W. McCormick, Jr. James P. Sullivan, C.P.A.
Victor J. Orsinger, II
Joseph H. Potter
Anthony J. Rose, Jr.
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the cumulative total shareholder
return on the Corporation's Common Stock against the cumulative total return of
the NASDAQ Stock Market (U.S.) and the Keefe, Bruyette & Woods, Inc. ("KBW")
Eastern Region Bank Index for the five years ended December 31, 1993.
-11-
<PAGE>
(The line graph referred to in the preceeding paragraph appears in this
space in the proxy filed in paper format that will be provided to
shareholders. The following table provides the data points necessary to
describe this graphic via EDGAR.)
<TABLE>
Comparison of Five Year Cumulative Total Return
<CAPTION>
1988 1989 1990 1991 1992 1993
---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Washington Trust Bancorp, Inc. $100.00 $ 92.07 $ 50.25 $ 56.76 $ 78.71 $115.78
NASDAQ Stock Market (U.S.) $100.00 $121.25 $102.96 $165.21 $192.11 $219.22
KBW Eastern Region Banks $100.00 $102.02 $ 62.88 $110.57 $152.70 $159.24
<FN>
Assumes that the value of Washington Trust Bancorp, Inc. Common Stock and each
index was $100 on December 31, 1988. Total return assumes reinvestment of
dividends.
</TABLE>
INDEBTEDNESS AND OTHER TRANSACTIONS
The Bank has had transactions in the ordinary course of business, including
borrowings, with certain directors and executive officers of the Corporation and
their associates, all of which were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and did not involve more than the
normal risk of collectibility or present other unfavorable features when
granted.
See also "Compensation Committee Interlocks and Insider Participation" above.
During 1993 the Bank sold real estate acquired through foreclosure to a family
member of Katherine W. Hoxsie, a director of the Corporation, at a sales price
of $410,000.
-12-
<PAGE>
PROPOSED AMENDMENT TO ARTICLE FOURTH OF THE CORPORATION'S
RESTATED ARTICLES OF INCORPORATION
Article FOURTH of the Corporation's Restated Articles of Incorporation (the
"Articles") currently authorizes the Corporation to issue 3,000,000 shares of
Common Stock, $.0625 par value. The Board believes that it would be advisable
to amend Article FOURTH to authorize the issuance of an additional 7,000,000
shares of Common Stock. A copy of the proposed Amended Article FOURTH is
attached as Exhibit A hereto.
Proposed Increase in Common Stock
As of December 31, 1993, of the 3,000,000 authorized shares of Common Stock,
there were 1,870,330 shares issued and outstanding (net of 49,670 shares held in
treasury) and 464,922 shares were reserved for future issuance in connection
with the Stock Option Plan and the Corporation's Dividend Reinvestment and Stock
Purchase Plan. As a result, the Corporation has only 664,748 shares of
authorized and unreserved shares of Common Stock available for future issuance.
In order to provide for a sufficient number of authorized shares of Common Stock
for possible stock dividends, acquisitions, equity financings and other proper
corporate purposes, the Board of Directors approved a proposed amendment to
Article Fourth of the Articles to increase the number of shares of Common Stock
from 3,000,000 to 10,000,000. The additional shares of Common Stock proposed to
be authorized will be identical in all respects to the shares of Common Stock
presently authorized and outstanding.
If the amendment is approved by the shareholders, the increased number of
authorized shares of Common Stock will be available for issuance for such
purposes and consideration as the Board of Directors may approve, and no further
vote of the shareholders of the Corporation will be necessary with respect
thereto except as may otherwise be required by law. Although there are at
present no arrangements, commitments or understandings for issuing any
additional shares of Common Stock, increasing the authorized capital stock would
give the Corporation the flexibility to issue additional shares for proper
corporate purposes without the delay and expense of securing shareholder
approval for such issuance at a special meeting.
Although the Corporation has no intention at the present time of doing so, the
Corporation could issue previously authorized but unissued shares of Common
Stock which could, depending on the terms of such issue, preclude or make
difficult merger or takeover attempts. The amendment increasing the number of
authorized shares of Common Stock would thus enhance the ability of the
Corporation to deter potential acquirors and lessen their ability to obtain
control of the Corporation. For example, the Board might be able to place
shares of Common Stock with persons supportive of management, thereby diluting
the voting stock ownership of current shareholders and concentrating in the
hands of management sufficient voting power to effectively block attempts to
take control of the Corporation. The authorization of additional shares of
Common Stock might also facilitate the adoption by the Corporation of a
shareholder's rights plan under which shareholders would receive the right to
acquire shares of the Corporation's stock or an acquiring person's stock upon
the occurrence of certain change of control events, including a tender offer or
the acquisition of a certain percentage of the Corporation's voting stock. The
recommendation to increase the number of authorized shares of Common Stock is
not in response to any takeover or merger attempts as the Corporation is not
aware that any have been made or are planned in the future. The Articles and
Bylaws contain certain provisions which are intended to deter mergers or
takeovers. The Articles and Bylaws provide for a staggered Board of Directors.
See "Election of Directors". The Articles further provide that certain business
combinations with holders of 10% or more of the Corporation's capital stock must
-13-
<PAGE>
be approved by the holders of 80% or more of the Corporation's capital stock.
Amendments to the foregoing provisions of the Articles and Bylaws must be
approved by the holders of 80% of the outstanding shares entitled to vote. In
considering the Amendment, shareholders should also take into account that the
Corporation's Amended and Restated 1988 Stock Option Plan provides for the
immediate vesting of all outstanding options in the event of a change of
control.
Approval of this amendment will require the affirmative vote of the holders of a
majority of the issued and outstanding shares of Common Stock entitled to vote
on the matter at the Annual Meeting.
The Board recommends a vote "FOR" this proposal.
RATIFICATION OF SELECTION OF AUDITORS
The ratification of KPMG Peat Marwick to serve as independent auditors of the
Corporation for the current fiscal year ending December 31, 1994, will be
submitted to the Annual Meeting. Such ratification requires the affirmative
vote of a majority of the shares of Common Stock entitled to vote thereon,
represented in person or by proxy, at the Annual Meeting when a quorum is
present. Representatives of KPMG Peat Marwick will be present at the Annual
Meeting, will have the opportunity to make a statement if they so desire and
will be available to answer appropriate questions.
The firm of KPMG Peat Marwick has advised the Corporation that neither it nor
any of its members has any direct financial interest in the Corporation as a
promoter, underwriter, voting trustee, director, officer or employee.
All professional services rendered by KPMG Peat Marwick during the year ended
December 31, 1993 were furnished at customary rates.
The Board of Directors recommends a vote "FOR" this proposal.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit a proposal for presentation to the 1995
Annual Meeting of Shareholders must submit the proposal to the Corporation, 23
Broad Street, Westerly, Rhode Island 02891, Attention: President, not later
than December 12, 1994 for inclusion, if appropriate, in the Corporation's Proxy
Statement and the form of proxy relating to the 1995 Annual Meeting.
FINANCIAL STATEMENTS
The financial statements of the Corporation are contained in the 1993 Annual
Report to Shareholders, which has been provided to the Shareholders concurrently
herewith. Such report and the financial statements contained therein are not to
be considered as a part of this soliciting material.
OTHER BUSINESS
The management knows of no matters to be brought before the meeting other than
those referred to, but if any other business should properly come before the
meeting, the persons named in the proxy intend to vote in accordance with their
best judgment.
-14-
<PAGE>
EXPENSE OF SOLICITATION OF PROXIES
The cost of solicitation of proxies, including the cost of reimbursing brokerage
houses and other custodians, nominees or fiduciaries for forwarding proxies and
Proxy Statements to their principals, will be borne by the Corporation.
Solicitation may be made in person or by telephone or telegraph by officers or
regular employees of the Corporation, who will not receive additional
compensation therefor.
Submitted by order of the Board of Directors,
Harvey C. Perry, II
Secretary
Westerly, Rhode Island
April 10, 1994
-15-
<PAGE>
EXHIBIT A
FOURTH. Capital Stock. The aggregate number of shares which the Corporation
shall have authority to issue is 10,000,000, par value $.0625 per share, all of
which shares are to be a class designated as "Common Stock".
Subject to the provisions of these Restated Articles of Incorporation and
except as otherwise provided by law, the shares of stock of the Corporation may
be issued for such consideration and for such corporate purposes as the Board of
Directors may from time to time determine.
<PAGE>
WASHINGTON TRUST BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph J. Kirby, Brendan P. O'Donnell and Joseph
H. Potter, or any one or more of them, attorneys with full power of substitution
to each for and in the name of the undersigned, with all powers the undersigned
would possess if personally present to vote the Common Stock of the undersigned
in Washington Trust Bancorp, Inc. at the Annual Meeting of its shareholders to
be held May 17, 1994 or any adjournment thereof.
The Board of Directors recommends that you instruct the proxies to vote FOR all
of the proposals.
1.ELECTION OF DIRECTORS:
/ / FOR all nominees listed below (except marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Steven J. Crandall, Richard A. Grills, James W. McCormick, Jr.,
Victor J. Orsinger, II, James P. Sullivan and Neil H. Thorp
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2.To amend Article FOURTH of the Corporation's Restated Articles of
Incorporation to authorize an additional 7 million shares of Common Stock
For / / Against / / Abstain / /
3.To approve the appointment of KPMG Peat Marwick as auditors of the Corporation
for the fiscal year ending December 31, 1994.
For / / Against / / Abstain / /
4.In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed herein by
the shareholder. If no direction is made, this proxy will be voted FOR Proposal
1, 2, and 3.
Date____________________ , 1994 ___________________________________
Signature
___________________________________
Signature if held jointly
Please sign exactly as name appears.
When shares are held in more than one
name, including joint tenants, each party
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as such.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
