SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to [section sign]240.14a-11(c) or
[section sign]240.14a-12
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)(1), 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 ap-
plies:
_________________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________________
3) Per unit price or other underlying value of transaction com
puted 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:
_______________________________________________________
(LOGO) WASHINGTON TRUST BANCORP, INC.
23 Broad Street, Westerly, Rhode Island 02891
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 30, 1996
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 30th of April, 1996 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, 1996; 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, 1996 will
be entitled to notice of and to vote at such meeting. The transfer books
of the Corporation will not be closed.
It is important that your shares be represented and voted whether or not
you plan to be present. Therefore, 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 18, 1996
WASHINGTON TRUST BANCORP, INC.
23 Broad Street
Westerly, RI 02891
Telephone 401/348-1200
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 30, 1996
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 30, 1996, 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 Secretary, 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, 1996, 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 2,880,432 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 18, 1996.
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,
1996.
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. This year, four directors are to be elected at
the Annual Meeting to serve until the 1999 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 Gary P.
Bennett, Larry J. Hirsch, Mary E. Kennard and Joseph J. Kirby. 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, 1996 (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 1999
(if elected):
Gary P. Bennett 2 54 150 1,125 1,275 0.04%
President, Chief Executive
Officer and Director,
Analysis & Technology, Inc.
(interactive multimedia
training systems,
information systems and
engineering services)
Larry J. Hirsch 2 57 1,643 1,125 2,768 0.09%
President, Westerly
Jewelry Co., Inc.
(retailer)
Mary E. Kennard, Esq. 2 41 264 875 1,139 0.04%
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 24 64 6,159 60,434 66,593 2.15%
Chairman of the Board and
Chief Executive Officer
since 1996; President of the
Corporation 1984-1995;
President of the Bank 1982-
1995
Terms Expiring in 1997:
Steven J. Crandall 13 43 449 8,250 8,699 0.28%
Vice President, Ashaway
Line & Twine
Manufacturing Co.
(manufacturer of tennis
string, fishing line and
surgical sutures)
Richard A. Grills 13 63 78,363 8,250 86,613 2.80%
Consultant and retired
President, Bradford Dyeing
Association, Inc. (textiles)
James W. McCormick, Jr. 13 65 4,762 8,250 13,012 0.42%
Former President,
McCormick's, Inc. (retailer)
Victor J. Orsinger, II 13 49 5,498 8,250 13,748 0.44%
Partner, Orsinger &
Nardone, Attorneys at Law
James P. Sullivan, CPA 13 57 480 8,065 8,545 0.28%
Finance Officer, Roman
Catholic Diocese of
Providence
Neil H. Thorp 13 56 5,606 5,800 11,406 0.37%
President, H.E. Thorp &
Sons, Inc. (real estate) and
President, Thorp & Trainer,
Inc. (insurance)
Terms Expiring in 1998:
Katherine W. Hoxsie, CPA 5 47 14,864 8,250 23,114 0.75%
Executive Vice President,
Hoxsie Buick-Pontiac-GMC
Truck, Inc.; formerly with
the firm of Price Waterhouse
Brendan P. O'Donnell 14 66 3,375 8,250 11,625 0.38%
Retired manufacturing
executive; formerly
consultant Harris Graphics
Corp. (printing presses)
Joseph H. Potter (3) 14 62 9,359 29,737 39,096 1.26%
Executive Vice President of
the Corporation since 1984;
Executive Vice President of
the Bank since July 1982
Anthony J. Rose, Jr. 24 65 43,807 7,875 51,682 1.67%
President, Technical
Industries, Inc. (chemicals)
John C. Warren (4) 0 50 2,000 1,338 3,338 0.11%
President and Chief
Operating Officer of the
Corporation and the Bank
since 1996; President and
Chief Executive Officer of
Sterling Bancshares
Corporation 1990-1994,
Chairman 1993-1994
</TABLE>
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:
<TABLE>
<CAPTION>
Common Stock Shares Beneficially
Owned on March 8, 1996 (2)
--------------------------------
Common Percent
Stock Vested of
Owned Options Total Class
---------------------------------------------
<S> <C> <C> <C> <C>
David V. Devault, CPA 1,242 13,831 15,073 0.49%
Vice President and Chief
Financial Officer
Harvey C. Perry, II 2,699 10,973 13,672 0.44%
Vice President and Secretary
Robert G. Cocks, Jr. 147 6,675 6,822 0.22%
Senior Vice President -
Lending of the Bank
Directors and Executive 184,624 215,633 400,257 12.93%
Officers as a Group (22
persons)
<F1> 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.
<F2> "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.
<F3> Mr. Potter and Louis J. Luzzi, Vice President and Treasurer of
the Corporation and the Bank, are first cousins.
<F4> Mr. Warren was appointed to the Board of Directors on February
15, 1996.
</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 1995 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 3 times in
1995, 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),
Bennett, Grills, McCormick and Rose.
Audit Committee. The Audit Committee, which met 5 times in 1995, 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 twice in 1995 and
is responsible for the administration of the Corporation's Amended and
Restated 1988 Stock Option Plan ("Stock Option Plan"). Committee members
are Directors Bennett (Chairman), Kennard, O'Donnell and Sullivan.
Nominating Committee. The Nominating Committee met 15 times in 1995 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
Nominating Committee was also responsible for assessing candidates for the
position of President and Chief Operating Officer and recommending a
selection to the Board of Directors, with the advice and counsel of the
Chief Executive Officer. The Committee members are Directors O'Donnell
(Chairman), Bennett, Grills, McCormick 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 1995. The Board of
Directors of the Bank, the members of which are the same as the
Corporation, held 12 meetings in 1995. During 1995, each member of the
Corporation's Board attended at least 75% of the aggregate number of
meetings of the Corporation Board, Bank Board and the Corporation Board
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 Directors O'Donnell (Chairman), Bennett, Grills,
McCormick and Rose. The Stock Option Committee is responsible for the
administration of the Corporation's Stock Option Plan. The Stock Option
Committee members are Directors Bennett (Chairman), Kennard, O'Donnell and
Sullivan. No members of the Compensation Committee or the Stock Option
Committee are employees of the Corporation or the Bank.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
During 1995, 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
generally paid for only one of such meetings. In addition, non-employee
directors received a $6,000 annual retainer.
The Plan for Deferral of Directors' Fees adopted by the Corporation and
the Bank effective March 1, 1988 provides 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 and amended as of December 17, 1992 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.
The Corporation's Stock Option Plan provides that a non-qualified option
to purchase 1,500 shares of Common Stock shall automatically be granted to
each person who is initially elected or re-elected a director of the
Corporation as of the date of such election or re-election, at an option
price equal to the fair market value of the Common Stock on such date.
These options are exercisable in 25% installments commencing on the date
of grant and on each anniversary date thereafter. In the event of a
Change in Control of the Corporation (as defined in the Stock Option Plan)
these options will become immediately exercisable in full.
Executive Compensation
The following table shows, for the fiscal years ended December 31, 1995,
1994 and 1993, 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,
1995 (the "Named Executives").
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 1995 $220,000 $81,400 8,544 $7,320(4)
Chairman of the 1994 210,000 81,585 9,656 6,886
Board and Chief 1993 200,000 88,800 10,779 6,863
Executive Officer
Joseph H. Potter 1995 $131,000 $36,620 3,816 $4,359
Executive Vice 1994 125,000 39,454 4,311 4,099
President 1993 119,000 35,700 6,413 4,084
David V. Devault 1995 $105,000 $26,316 4,078 $3,494
Vice President 1994 100,000 26,417 2,300 3,279
and Chief 1993 90,000 21,600 3,234 3,088
Financial Officer
Harvey C. Perry, II 1995 $ 94,300 $23,455 1,831 $3,138
Vice President 1994 90,000 24,135 2,069 2,951
and Secretary 1993 80,000 19,008 2,874 2,745
Robert G. Cocks, Jr. 1995 $ 86,000 $20,729 1,670 $2,861
Senior Vice 1994 82,000 21,683 1,886 2,689
President - Lending 1993 78,000 18,650 2,802 1,434
of the Bank
<F1> Bonus amounts represent amounts accrued for the years indicated
under the Corporation's Short-Term Incentive Plan for its executive
officers and other key employees (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.
<F2> 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.
<F3> Under the Bank's tax-qualified 401(k) plan (the "401(k) Plan")
which covers all full-time salaried employees, 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%.
<F4> Includes $2,334 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.
</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, 1995.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------
Percent of
Number of Total Potential Realizable Value
Securities Options/SARs at Assumed Annual Rates of
Underlying Granted to Exercise Stock Price Appreciation
Options/ Employees or Base for Option Term
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 8,544 24.41% $25.75 5/12/2005 $138,362 $350,636
Joseph H. Potter 3,816 10.90% $25.75 5/12/2005 $ 61,796 $156,604
David V. Devault 4,078 11.65% $25.75 5/12/2005 $ 66,039 $167,357
Harvey C. Perry, II 1,831 5.23% $25.75 5/12/2005 $ 29,651 $ 75,142
Robert G. Cocks, Jr. 1,670 4.77% $25.75 5/12/2005 $ 27,044 $ 68,535
<F1> All options granted to the Named Executives were granted on
May 12, 1995 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.
<F2> $25.75 at 5% annually for 10 years = $41.95
<F3> $25.75 at 10% annually for 10 years = $66.80
</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, 1995 and unexercised options held as of the end of the 1995
fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options/SARs at
Number of Options/SARs at FY-End (1) FY-End (1)(2)
Shares Acquired Value -----------------------------------------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph J. Kirby 5,750 $47,202 60,434 13,932 $798,647 $106,936
Joseph H. Potter -0- -$0- 29,737 6,621 $398,814 $ 54,077
David V. Devault -0- -$0- 15,072 5,018 $199,773 $ 34,237
Harvey C. Perry, II 1,696 $14,134 11,973 3,128 $164,143 $ 25,152
Robert G. Cocks, Jr. -0- -$0- 6,675 2,898 $100,619 $ 23,655
<F1> There are no SARs attached to the stock options held by the
Named Executives.
<F2> Value based on the fair market value of the Corporation's
Common Stock on December 31, 1995 ($29.75) 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 1995, under the Pension Plan and the Supplemental
Plan as it relates to the Pension Plan. The benefits shown are straight-
life annuity amounts not reduced by a joint survivorship benefit which is
available.
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 $25,223 $ 33,630 $ 42,038 $ 50,446 $ 58,853
125,000 32,160 42,880 53,601 64,321 75,041
150,000 39,098 52,130 65,163 78,196 91,228
175,000 46,035 61,380 76,726 92,071 107,416
200,000 52,973 70,630 88,288 105,946 123,603
225,000 59,910 79,880 99,851 119,821 139,791
250,000 66,848 89,130 111,413 133,696 155,978
275,000 73,785 98,380 122,976 147,571 172,166
300,000 80,723 107,630 134,538 161,446 188,353
325,000 87,660 116,880 146,101 175,321 204,541
350,000 94,598 126,130 157,663 189,196 220,728
</TABLE>
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 1995
the covered Social Security compensation level was $25,920.
The years of service accrued for purposes of the Pension Plan in 1995 for
the Named Executives were: Mr. Kirby, 32 years; Mr. Potter, 37 years; Mr.
Devault, 9 years; Mr. Perry, 21 years, and Mr. Cocks, 3 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 Chief
Executive Officer, 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 Sub-index used in the
Performance Graph set forth herein. In addition, with respect to the
Chief Executive Officer's salary, the Compensation Committee received
input from the Consultant. The 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 Chief Executive Officer's base salary for 1995 was increased 4.8% over
the previous year based on the Compensation Committee's subjective
assessment of the Chief Executive Officer's performance as well as a
review of the Chief Executive Officers' 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 Chief Executive Officer 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 Chief
Executive Officer) to 20% of base salary. These targets are also adjusted
upward or downward by a multiplier which is tied to the performance
measurement levels.
In 1995, 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 1995
performance of 100% 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.
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 Chief Executive Officer's
base salary on an annual basis, with generally 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 1995, 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
Chief Executive Officer, the Stock Option Committee reviewed the Chief
Executive Officer'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.
In 1995 the Stock Option Committee awarded the Chief Executive Officer
options with an aggregate exercise price equal to 100% of his base salary,
based on their subjective assessment of the Chief Executive Officer's
performance in promoting and enhancing shareholder value. The Stock
Option Committee also took into account the aggregate number of options
awarded to the Chief Executive Officer to date and the aggregate value of
such shares. The Corporation does not have a target level of equity
holdings by executives.
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) Gary P. Bennett (Chairman)
Gary P. Bennett Mary E. Kennard, Esq.
Richard A. Grills Brendan P. O'Donnell
James W. McCormick, Jr. James P. Sullivan, CPA
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 Regional Bank Sub-index for the five years ended
December 31, 1995.
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>
1990 1991 1992 1993 1994 1995
------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Washington Trust Bancorp, Inc. $100.00 $114.71 $179.42 $263.97 $360.01 $497.62
Nasdaq Stock Market (U.S.) $100.00 $160.56 $186.87 $214.51 $209.69 $296.30
KBW Eastern Regional Banks $100.00 $175.86 $242.86 $253.27 $224.84 $381.66
<FN>
Assumes that the value of Washington Trust Bancorp, Inc. Common Stock and
each index was $100 on December 31, 1990. 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.
During 1995, the Bank paid approximately $65,656 in legal fees related to
collection matters to the law firm of Orsinger & Nardone, of which Mr.
Orsinger, a member of the Board of Directors, is a partner.
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, 1996, 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 1995 all Section
16(a) filing requirements applicable to its Insiders were complied with.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit a proposal for presentation to the
1997 Annual Meeting of Shareholders must submit the proposal to the
Corporation, 23 Broad Street, Westerly, Rhode Island 02891, Attention:
Secretary, not later than November 16, 1996 for inclusion, if appropriate,
in the Corporation's Proxy Statement and the form of proxy relating to the
1997 Annual Meeting.
FINANCIAL STATEMENTS
The financial statements of the Corporation are contained in the 1995
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.
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.
ANNUAL REPORT ON FORM 10-K
Copies of the Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 as filed with the Securities and Exchange
Commission are available to shareholders without charge upon written
request addressed to David V. Devault, Vice President and Chief Financial
Officer, Washington Trust Bancorp, Inc., 23 Broad Street, Westerly, Rhode
Island 02891.
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 18, 1996
WASHINGTON TRUST BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Brendan P. O'Donnell, Victor J. Orsinger
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 30, 1996 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: Gary P. Bennett, Larry J. Hirsch, Mary E. Kennard, Esq. and
Joseph J. Kirby
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY to
(except as indicated) 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
Corporation for the fiscal year ending December 31, 1996.
[ ] 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 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 Nos. 1 and 2.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated: , 1996
--------------------------------
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.
