SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
Washington Trust Bancorp, Inc.
_____________________________________________________________________________
(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)(l), 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:
____________________________________________________________________
4) Dated Filed:
____________________________________________________________________
WASHINGTON TRUST BANCORP, INC.
23 Broad Street
Westerly, Rhode Island 02891
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 25, 1995
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 25th of April, 1995 at 11:00 a.m. for the purpose of considering
and acting upon the following:
1. The election of four directors to serve for terms of three years;
2. The ratification of the selection of independent auditors to audit
the Corporation's consolidated financial statements for the year
ending December 31, 1995; and
3. Such other business as may properly come before the meeting, or any
adjournment thereof.
Only shareholders of record at the close of business on March 8, 1995 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
Harvey C. Perry, II
Secretary
March 20, 1995
WASHINGTON TRUST BANCORP, INC.
23 Broad Street
Westerly, RI 02891
Telephone 401/348-1200
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 25, 1995
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 April 25, 1995, 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 and
2 referred to herein.
As of March 8, 1995, 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 2,825,061 shares of common stock, $.0625 par value (the
"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. 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 and the
ratification of the selection of independent auditors. As a result, broker
non-votes will have no effect on the outcome of the election of directors and
the ratification of the selection of independent auditors.
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 March 20, 1995.
-1-
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 March 8, 1995.
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 15 directors, one director, Jacques
deLaporte, having retired as of the Corporation's 1994 Annual Meeting on
May 17, 1994. Following the Annual Meeting, the number of directors will be
reduced to 14 as Thomas Moore will retire as of this year's Annual Meeting date
(subject to further changes as provided in the Corporation's Restated Articles
of Incorporation). This year, four directors are to be elected at the Annual
Meeting to serve until the 1998 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 Katherine W.
Hoxsie, Brendan P. O'Donnell, Joseph H. Potter and Anthony J. Rose, Jr. 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.
NOMINEE AND DIRECTOR INFORMATION
<TABLE>
<CAPTION>
Common Stock Shares Beneficially
Owned on March 8, 1995(2)
------------------------------------
Common
Years as 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 1998
(if elected):
Katherine W. Hoxsie, C.P.A. 4 46 14,810 7,500 22,310 0.74%
Executive Vice President,
Hoxsie Buick-Pontiac, Inc.;
formerly with the firm of
Price Waterhouse
Brendan P. O'Donnell 13 65 3,375 7,500 10,875 0.36%
Retired manufacturing execu-
tive; formerly consultant
Harris Graphics Corp.
(printing presses)
Joseph H. Potter (3) 13 61 9,045 24,395 33,440 1.10%
Executive Vice President of
the Corporation since 1984;
Executive Vice President of
the Bank since July 1982
-2-
<CAPTION>
Common Stock Shares Beneficially
Owned on March 8, 1995(2)
------------------------------------
Common
Years as Stock Vested Percent
Name and Principal Occupation Director(1) Age Owned Options Total of Class
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Anthony J. Rose, Jr. 23 64 41,695 7,500 49,195 1.62%
President, Technical
Industries, Inc. (chemicals)
Terms Expiring in 1996:
Gary P. Bennett 1 53 150 750 900 0.03%
President, Chief Executive
Officer and Director, Analysis
& Technology, Inc.
(interactive multimedia train-
ing systems, information sys-
tems and engineering services)
Larry J. Hirsch 1 56 1,588 750 2,338 0.08%
President, Westerly Jewelry
Co., Inc. (retailer)
Mary E. Kennard, Esq. 1 40 0 750 750 0.02%
Office of the University
Counsel, The American
University; Vice President
and General Counsel of the
University of Rhode Island
("URI") 1992-1994; various
other positions with URI since
1987
Joseph J. Kirby 23 63 5,580 55,531 61,111 2.02%
President of the Corporation
since 1984; President of the
Bank since July 1982
Thomas F. Moore 34 70 51,921 8,625 60,546 2.00%
Chairman, The Moore
Company (textiles)
Terms Expiring in 1997:
Steven J. Crandall 12 42 434 7,875 8,309 0.27%
Vice President, Ashaway Line
& Twine Manufacturing Co.
(manufacturer of tennis string,
fishing line and surgical
sutures)
-3-
<CAPTION>
Common Stock Shares Beneficially
Owned on March 8, 1995(2)
------------------------------------
Common
Years as Stock Vested Percent
Name and Principal Occupation Director(1) Age Owned Options Total of Class
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Grills 12 62 73,264 7,875 81,139 2.68%
Consultant and retired
President, Bradford Dyeing
Association, Inc. (textiles)
James W. McCormick, Jr. 12 64 4,613 7,875 12,488 0.41%
Former President,
McCormick's, Inc. (retailer)
Victor J. Orsinger, II 12 48 7,048 7,875 14,923 0.49%
Partner, Orsinger & Nardone,
Attorneys at Law
James P. Sullivan, C.P.A. 12 56 480 7,875 8,355 0.28%
Finance Officer,
Roman Catholic Diocese
of Providence
Neil H. Thorp 12 55 4,364 7,875 12,239 0.40%
President, H.E. Thorp &
Sons, Inc. (real estate) and
President, Thorp & Trainer,
Inc. (insurance)
<FN>
In addition to the nominee and director information provided above, the
following summarizes the security ownership of certain executive officers of
the Corporation and the Bank who are not also directors of the Corporation:
<S> <C> <C> <C> <C>
David V. Devault 247 11,737 11,984 0.40%
Vice President and
Chief Financial Officer
Harvey C. Perry, II 160 11,157 11,317 0.37%
Vice President and Secretary
Robert G. Cocks, Jr. 95 4,283 4,378 0.14%
Senior Vice President -
Lending of the Bank
Directors and Executive Offi- 221,563 207,197 428,760 14.14%
cers as a Group (22 persons)
-4-
<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. Potter and Louis J. Luzzi, Vice President and Treasurer of the
Corporation and the Bank, are first cousins.
</TABLE>
Committees of the Board of Directors
The Corporation's Board of Directors has the following committees:
Executive Committee. The Executive Committee met 11 times in 1994 and, when
the Board of Directors is not in session, is entitled to exercise all the
powers and duties of the Board. Members of the Executive Committee are
Directors O'Donnell (Chairman), Grills, Kirby, McCormick, Orsinger, Potter
and Rose.
Compensation Committee. The Compensation Committee, which met 2 times in 1994,
is responsible for making recommendations concerning remuneration arrangements
for senior management of the Corporation and the Bank. Members of the
Compensation Committee are Directors O'Donnell (Chairman), Grills, McCormick,
Orsinger and Rose.
Audit Committee. The Audit Committee, which met 5 times in 1994, 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, Hirsch and Hoxsie.
Stock Option Committee. The Stock Option Committee met once in 1994 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), Bennett, Moore, O'Donnell and Sullivan.
Nominating Committee. The Nominating Committee met once in 1994 and is
responsible for reviewing the qualifications of potential nominees for election
to the Board of Directors of the Corporation and recommending to the
shareholders the election of directors of the Corporation. The Committee
members are Directors O'Donnell (Chairman), Grills, 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 12 meetings in 1994. During 1994,
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.
Compensation Committee Interlocks and Insider Participation
The Compensation 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 Compensation Committee members are
-5-
Directors O'Donnell (Chairman), Grills, McCormick, Orsinger and Rose. In
addition, former director Jacques deLaporte served as a member of the
Compensation Committee until his retirement as of the Corporation's 1994 Annual
Meeting. The Stock Option Committee is responsible for the administration of
the Corporation's Stock Option Plan. The Stock Option Committee members are
Directors Orsinger (Chairman), Bennett, Moore, O'Donnell and Sullivan. No
members of the Compensation Committee or the Stock Option Committee are
employees of the Corporation or the Bank.
During 1994, the Bank paid approximately $103,944 in legal fees related to
collection matters to the law firm of Orsinger & Nardone, of which Mr.
Orsinger, a member of the Compensation Committee, is a partner.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
During 1994, for each meeting of the Board of Directors of the Corporation and
of 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).
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. For 1995, the annual retainer for non-employee directors has been
increased to $6,000.
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, 1994, 1993
and 1992, the compensation of the Chief Executive Officer and the other
executive officers of the Corporation and/or the Bank whose total annual
salary and bonus exceeded $100,000 for the year ended December 31, 1994 (the
"Named Executives").
-6-
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
---------------------- -------------
Number of
Securities
Name Underlying
and Principal Options/ All Other
Position Year Salary Bonus(1) SARs(2) Compensation(3)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Joseph J. Kirby 1994 $210,000 $81,585 9,656 $6,886(4)
President 1993 200,000 88,800 10,779 6,863
1992 207,692(5) 22,500 13,637 3,740
Joseph H. Potter 1994 $125,000 $39,454 4,311 $4,099
Executive Vice 1993 119,000 35,700 6,413 4,084
President 1992 103,846(5) 9,375 6,818 1,870
-7-
David V. Devault 1994 $100,000 $26,417 2,300 $3,279
Vice President 1993 90,000 21,600 3,234 3,088
and Chief 1992 85,154(5) 6,150 3,728 1,534
Financial Officer
Harvey C. Perry, II 1994 $90,000 $24,135 2,069 $2,951
Vice President 1993 80,000 19,008 2,874 2,745
and Secretary 1992 74,769(5) 5,400 3,273 1,347
Robert G. Cocks, Jr. 1994 $82,000 $21,683 1,886 $2,689
Senior Vice 1993 78,000 18,650 2,802 1,434
President-Lending 1992 41,827(5)(6) 2,813 3,215 0
- ----------------------------------------------------------------------------------
<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
July 1, 1992 to December 31, 1992 and for the full years 1993 and 1994
under the Incentive Plan. The Incentive Plan provides for annual payments
to participants 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"). The numbers of securities underlying stock
options granted to the Named Executives have been adjusted to reflect a
three-for-two stock split effected by the Corporation on August 31, 1994.
(3) On July 1, 1992, the Bank resumed employer matching contributions under its
tax-qualified 401(k) plan (the "401(k) Plan"), which covers all full-time
salaried employees. Under the 401(k) Plan, the Bank matches 50% of each
participant's first 2% of voluntary salary contributions and 100% of each
participant's next 2% of salary contributions up to a maximum match of 3%.
(4) Includes $2,386 accrued under the Supplemental Pension Benefit and Profit
Sharing Plan adopted by the Bank effective November 1, 1994 (the
"Supplemental Plan") which provides for payments by the Bank of certain
amounts which would have been contributed by the Bank under the 401(k)
Plan, but for limitations on employer contributions contained in the
Internal Revenue Code.
(5) The 1992 base salary for each of the Named Executives includes one extra
bi-week pay period in 1992.
(6) Mr. Cocks became an employee of the Bank on June 15, 1992.
</TABLE>
-7-
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, 1994.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
--------------------------------------------------
Potential Realizable Value
Percent of at Assumed Annual Rates of
Number of Total Stock Price Appreciation for
Securities Options/SARs Option Term
Underlying Granted to Exercise ---------------------------
Options/ Employees or Base
SARs in Fiscal Price Per Expiration
Name Granted(1) Year Share Date 5%(2) 10%(3)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph J. Kirby 9,656 25.89% $21.750 6/2/2004 $132,079 $334,715
Joseph H. Potter 4,311 11.56% $21.750 6/2/2004 $58,968 $149,436
David V. Devault 2,300 6.17% $21.750 6/2/2004 $31,460 $79,727
Harvey C. Perry, II 2,069 5.55% $21.750 6/2/2004 $28,301 $71,720
Robert G. Cocks, Jr. 1,886 5.06% $21.750 6/2/2004 $25,798 $65,376
<FN>
(1) All options granted to the Named Executives were granted on June 2, 1994
under the Stock Option Plan. There are no SARs attached thereto. The
options become exercisable in 25% installments commencing on the date of
grant and on each anniversary date 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) $21.750 at 5% annually for 10 years = $35.43
(3) $21.750 at 10% annually for 10 years = $56.42
</TABLE>
The following table sets forth information with respect to the Named Executives
concerning the exercise of options during the fiscal year ended December 31,
1994 and unexercised options held as of the end of the 1994 fiscal year.
-8-
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Securities Value of Unexercised
Number of Underlying Unexercised In-the-Money Options/
Shares Acquired Value Options/SARs at FY-End(1) SARs at FY-End(1)(2)
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph J. Kirby -0- -$0- 55,531 16,041 $240,088 $71,176
Joseph H. Potter -0- -$0- 24,395 8,147 $113,427 $39,164
David V. Devault -0- -$0- 11,737 4,275 $57,139 $20,466
Harvey C. Perry, II -0- -$0- 11,157 3,809 $52,519 $18,088
Robert G. Cocks, Jr. -0- -$0- 4,283 3,620 $31,952 $17,154
- ----------------------------------------------------------------------------------------------
<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, 1994 ($20.875) minus the exercise price.
</TABLE>
The Bank maintains a qualified defined benefit pension plan (the "Pension
Plan") for salaried employees of the Corporation and the Bank. The Internal
Revenue Code limits the compensation amount used in determining the annual
benefits payable from qualified plans to an individual. However, the Bank has
adopted a Supplemental Pension Benefit and Profit Sharing Plan, effective
November 1, 1994 (the "Supplemental Plan"), which provides for payments by the
Bank of certain amounts which employees of the Bank would have received under
the Pension Plan in the absence of such limitations in the Internal Revenue
Code. Benefits payable under the Supplemental Plan are an unfunded obligation
of the Bank. The following table shows the annual benefits payable upon
retirement, assuming retirement at age 65 in 1994, under the Pension Plan and
the Supplemental Plan as it relates to the Pension Plan.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
Average Annual -------------------------------------------------
Pension Compensation 15 20 25 30 35
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $25,380 $33,839 $42,299 $50,759 $59,219
120,000 30,930 41,239 51,549 61,859 72,169
140,000 36,480 48,639 60,799 72,959 85,119
160,000 42,030 56,039 70,049 84,059 98,069
180,000 47,580 63,439 79,299 95,159 111,019
200,000 53,130 70,839 88,549 106,259 123,969
220,000 58,680 78,239 97,799 117,359 136,919
240,000 64,230 85,639 107,049 128,459 149,869
260,000 69,780 93,039 116,299 139,559 162,819
280,000 75,330 100,439 125,549 150,659 175,769
300,000 80,880 107,839 134,799 161,759 188,719
</TABLE>
The annual benefits shown in the above table are straight-life annuity amounts
not reduced by a joint survivorship provision which is available.
-9-
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. 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 1994 the covered Social Security compensation level was
$24,312.
The years of service accrued for purposes of the Pension Plan in 1994 for the
following Named Executives were: Mr. Kirby, 31 years; Mr. Potter, 36 years;
Mr. Devault, 8 years; Mr. Perry, 20 years, and Mr. Cocks, 2 years.
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE
JOINT REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee administers 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,
motivates, rewards and retains the best people.
- Total compensation dollars are managed as an investment by allocating
these dollars where the Corporation receives its best return.
- Employees are 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.
In order to achieve the aforementioned objectives, prior to the beginning of
the fiscal year, the Corporation engaged an independent compensation consultant
(the "Consultant") to update certain information provided by the Consultant as
part of a comprehensive industry compensation study performed by the Consultant
in 1992 (the "1992 Study"). The 1992 Study included a review of short and long
term incentive practices in the banking industry as well as a review of
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 executive 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 executive
officer's position based on an analysis of compensation level information from
various industry sources. In the case of the President, Executive Vice
President and Chief Financial Officer, the Compensation Committee also reviewed
competitive compensation levels at approximately thirty domestic financial
institutions ranging in size (based on total assets) from $250 million to $1.2
billion (the "Compensation Peer Group"). Approximately 60% of the Compensation
Peer Group Members are located in the Northeast and 40% are located throughout
the rest of the country. The selection of these institutions was based on
certain criteria including asset size, similar operating lines of business and
listing on NASDAQ. The institutions in the Compensation Peer Group are not
included in the KBW Eastern Regional Bank Index used in the Performance Graph
set forth on page 12 hereof. In addition, with respect to the President's
salary, the Compensation Committee received input from the Consultant. The
-10-
general policy of the Compensation Committee is to attempt to position
executive base salary levels in the middle of the range of base salary levels
for comparable executives in the Compensation Peer Group. Base salary levels
for the individual executive officers were developed based on technical,
managerial and human relations skills, problem solving capabilities, and level
of accountability.
The President's salary for 1994 was increased 5% over the previous year based
on the Corporation meeting its financial objectives and the Compensation
Committee's subjective assessment of the President's performance as well as a
review of the Presidents' salaries in the Compensation 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 the Compensation Peer Group in order to
provide objective links between performance and pay. The Compensation
Committee establishes performance measures for the Incentive Plan which take
into account both the return on equity achieved by the Corporation and that
achieved by the Compensation Peer Group in determining the level of payout to
be made under the Incentive Plan. The Compensation Committee's policy is to
periodically review these performance measures and adjust them as appropriate.
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 executive
officer ranged from 37% (for the President) to 20% of base salary. These
targets are also adjusted upward or downward by a multiplier which is tied to
the performance measure levels.
In 1994, the Corporation's return on equity, as measured against the
Compensation Peer Group and the targets established by the Compensation
Committee, entitled the Executive Officers to a payout for 1994 performance
of 105% 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 upon the recommendation of the Compensation Committee.
Long-Term Incentives. After the 1992 Study, the Consultant recommended that
stock option awards be granted on an annual basis and be based on a percentage
of base salary so that the aggregate exercise price with respect to the grant
equals 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 1994, the Stock Option Committee granted non-qualified stock options to
certain key officers of the Corporation and the Bank. In fixing the grant of
stock options to executive officers other than the President, the Stock Option
Committee reviewed the President's recommendations for individual awards, which
were based on the individual executive officer's level of responsibility and
contribution towards achievement of the Corporation's business plan and
objectives. Stock option awards were granted to the executive officers other
than the President with aggregate exercise prices ranging from 50% to 75% of
base salary, based on the levels of responsibility for each officer.
In 1994 the Stock Option Committee awarded the President options with an
aggregate exercise price equal to 100% 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.
-11-
The foregoing report has been furnished by the Compensation Committee and the
Stock Option Committee.
Compensation Committee: Stock Option Committee:
Brendan P. O'Donnell (Chairman) Victor J. Orsinger, II (Chairman)
Richard A. Grills Gary P. Bennett
James W. McCormick, Jr. Thomas F. Moore
Victor J. Orsinger, II Brendan P. O'Donnell
Anthony J. Rose, Jr. James P. Sullivan, C.P.A.
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 Regional Bank Index for the five years ended December 31, 1994.
Comparison of Five Year Cumulative Total Return
(The line graph referred to in the preceding 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>
<CAPTION>
1989 1990 1991 1992 1993 1994
----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Washington Trust Bancorp, Inc. $100.00 $54.58 $61.65 $85.49 $125.74 $164.72
NASDAQ Stock Market (U.S.) $100.00 $84.92 $136.28 $158.58 $180.93 $176.91
KBW Eastern Regional Bank Index $100.00 $61.63 $108.38 $149.67 $156.08 $138.56
<FN>
Assumes that the value of Washington Trust Bancorp, Inc. Common Stock and each
index was $100 on December 31, 1989. Total return assumes reinvestment of
dividends.
</TABLE>
-12-
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.
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, 1995, 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 Board of Directors recommends a vote "FOR" this proposal.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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 upon a review of
the copies of such reports furnished to the Corporation, the Corporation
believes that during 1994 all Section 16(a) filing requirements applicable to
its Insiders were complied with, except that James W. McCormick, Jr., Director,
inadvertantly failed to report on a timely basis his wife's purchase of 150
shares of Common Stock in 1994. In addition, Directors Gary P. Bennett, Larry
J. Hirsch and Mary E. Kennard each filed their Form 3 late upon becoming
Directors and Vernon F. Bliven, Robert G. Cocks, Jr., Louis W. Gingerella and
B. Michael Rauh each filed their Form 3 late upon being named Executive
Officers.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit a proposal for presentation to the 1996
Annual Meeting of Shareholders must submit the proposal to the Corporation, 23
Broad Street, Westerly, Rhode Island 02891, Attention: President, not later
than November 21, 1995 for inclusion, if appropriate, in the Corporation's
Proxy Statement and the form of proxy relating to the 1996 Annual Meeting.
FINANCIAL STATEMENTS
The financial statements of the Corporation are contained in the 1994 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.
-13-
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.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any filing by the Corporation under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, the sections of the Proxy Statement entitled "Compensation
Committee and Stock Option Committee Joint Report on Executive Compensation"
and "Shareholder Return Performance Presentation" shall not be deemed to be
so incorporated, unless specifically otherwise provided in any such filing.
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. In addition, the Corporation has retained
Morrow & Co., Inc. to assist in the solicitation of proxies for a fee of
$3,500 plus customary expenses.
Submitted by order of the Board of Directors,
Harvey C. Perry, II
Harvey C. Perry, II
Secretary
Westerly, Rhode Island
March 20, 1995
-14-
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 April 25, 1995 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:
NOMINEES: Katherine W. Hoxsie, Brendan P. O'Donnell, Joseph H. Potter,
and Anthony J. Rose, Jr
/ / FOR all nominees (except as indicated)
/ / WITHHOLD AUTHORITY to vote for all nominees
(INSTRUCTION: To withhold authority to vote for any individual nominee or
nominees, write such nominee's or nominees' name(s) in the space provided
below.)
---------------------------------------------------------------------------
2. To ratify the selection of KPMG Peat Marwick as auditors of the Corpor-
ation for the fiscal year ending December 31, 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments
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 Nos. 1 and 2.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated:_____________________, 1995
_________________________________
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.
