SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant | |
Check the appropriate box:
| | Preliminary Proxy Statement
| | Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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| No fee required.
| | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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| | 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
[GRAPHIC OF REGISTRANT'S LOGO OMITTED]
WASHINGTON TRUST BANCORP, INC.
23 Broad Street, Westerly, Rhode Island 02891
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1998
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 28th of April, 1998 at 11:00 a.m. for the purpose of considering
and acting upon the following:
1. The election of five 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, 1998; 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 9, 1998 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, 1998
<PAGE>
WASHINGTON TRUST BANCORP, INC.
23 Broad Street, Westerly, RI 02891 Telephone 401-348-1200
------------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1998
------------------------------------------------
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 28, 1998, 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, Rhode Island 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 9, 1998, 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 6,659,086 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. Abstentions on the ratification of the
selection of independent auditors will have the same legal effect as a vote
against such matters. A broker "non-vote" occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner. Broker non-votes will
not be counted for purposes of approving the matters to be acted upon at the
Annual Meeting. 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, 1998.
<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 March 9, 1998.
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. Notwithstanding such three year terms, the Corporation's
By-Laws require any director who reaches his or her seventieth birthday to
resign from the Board of Directors as of the next Annual Meeting of Shareholders
following such director's seventieth birthday.
This year, five directors are to be elected at the Annual Meeting to serve until
the 2001 Annual Meeting and until their respective successors are elected and
have qualified. There are at present 14 directors; if all of the nominees for
director are elected, the Corporation will have 15 directors. 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 Alcino G.
Almeida, Katherine W. Hoxsie, Brendan P. O'Donnell, Anthony J. Rose, Jr. and
John C. Warren. Each of the nominees for director, other than Mr. Almeida, is
presently a director of the Corporation. Mr. Almeida was elected to the Board of
Directors of the Corporation's subsidiary, The Washington Trust Company (the
"Bank"), on January 15, 1998. Each of the nominees 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 9, 1998 (2)
-------------------------------------
Common
Name and Principal Occupation Years as Stock Vested Percent
During the Past Five Years Director (1) Age Owned Options Total of Class
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Terms Expiring in 2001
(if elected):
Alcino G. Almeida 0 65 100 0 100 -%
Executive Vice President
and General Manager, The Day
Publishing Company through 1997,
currently retired
Katherine W. Hoxsie, CPA 7 49 34,023 21,375 55,398 .83%
Vice President, Hoxsie
Buick-Pontiac-GMC Truck, Inc.
Brendan P. O'Donnell
Retired manufacturing executive 16 68 10,428 4,500 14,928 .22%
<PAGE>
<CAPTION>
Common Stock Shares Beneficially
Owned on March 9, 1998 (2)
-------------------------------------
Common
Name and Principal Occupation Years as Stock Vested Percent
During the Past Five Years Director (1) Age Owned Options Total of Class
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Anthony J. Rose, Jr. 26 67 120,910 3,657 124,567 1.87%
President, Technical Industries,
Inc. (chemicals)
John C. Warren 2 52 6,363 22,375 28,738 .43%
Chief Executive Officer of the
Corporation and the Bank since
1997; President of the Corporation
and the Bank since 1996; Chief
Operating Officer of the
Corporation and the Bank 1996-1997;
President and Chief Executive Officer
of Sterling Bancshares Corporation
1990-1994, Chairman 1993-1994
Terms Expiring in 1999:
Gary P. Bennett 4 56 662 7,031 7,693 .12%
Chairman, Chief Executive Officer
and Director, Analysis & Technology,
Inc. (interactive multimedia
training systems, information
systems and engineering services)
Larry J. Hirsch 4 59 5,978 3,656 9,634 .14%
President, Westerly Jewelry Co.,
Inc. (retailer)
Mary E. Kennard, Esq. 4 43 2,024 5,267 7,291 .11%
University Counsel and Vice
President, The American University;
Vice President and General Counsel
of the University of Rhode Island
1992-1994
Joseph J. Kirby 26 66 27,721 113,581 141,302 2.09%
Retired Chairman of the Board and
Chief Executive Officer of the
Corporation and the Bank 1996 -
1997; President of the Corporation
1984-1995
Terms Expiring in 2000:
Steven J. Crandall 15 45 1,695 4,500 6,195 .09%
Vice President, Ashaway
Line & Twine Manufacturing Co.
(manufacturer of tennis string,
fishing line and surgical sutures)
<PAGE>
<CAPTION>
Common Stock Shares Beneficially
Owned on March 9, 1998 (2)
-------------------------------------
Common
Name and Principal Occupation Years as Stock Vested Percent
During the Past Five Years Director (1) Age Owned Options Total of Class
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Grills 15 65 86,896 4,500 91,396 1.37%
Consultant and retired President,
Bradford Dyeing Association, Inc.
(textiles)
James W. McCormick, Jr. 15 67 21,552 4,500 26,052 .39%
Former President,
McCormick's, Inc. (retailer)
Victor J. Orsinger II 15 51 24,225 4,500 28,725 .43%
Partner, Orsinger & Nardone,
Attorneys at Law
James P. Sullivan, CPA 15 59 4,199 4,500 8,699 .13%
Finance Officer, Roman Catholic
Diocese of Providence
Neil H. Thorp 15 58 19,800 4,500 24,300 .36%
President, Thorp & Trainer, Inc.
(insurance)
<CAPTION>
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, CPA 11,481 32,723 44,204 .66%
Vice President, Treasurer
and Chief Financial Officer
Harvey C. Perry II 13,282 25,969 39,251 .59%
Vice President and Secretary
Robert G. Cocks, Jr. 481 23,220 23,701 .35%
Senior Vice President -
Commercial Lending, of the Bank
Louis W. Gingerella, Jr. 196 13,994 14,190 .21%
Senior Vice President - Credit
Administration, of the Bank
Directors and Executive 401,348 330,654 732,002 10.47%
Officers as a Group (22 persons)
<FN>
- ------------------
(1) The Corporation was organized in 1984. The years indicated include the
period the directors have been members of the Board of 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.
</FN>
</TABLE>
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 1997 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
(Chairperson), Grills, Hoxsie, Kirby, Orsinger, Rose and Warren.
Compensation Committee. The Compensation Committee, which met six times in 1997,
is responsible for reviewing compensation policies of the Bank and for making
recommendations concerning remuneration arrangements for executive officers.
Members of the Compensation Committee are Directors Orsinger (Chairperson),
Bennett, Grills, Hirsch, Kennard, Kirby and O'Donnell.
Audit Committee. The Audit Committee, which met four times in 1997, 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 Hoxsie (Chairperson),
Crandall, McCormick and Sullivan.
Stock Option Committee. The Stock Option Committee met three times in 1997 and
is responsible for the administration of the Corporation's Amended and Restated
1988 Stock Option Plan ("1988 Plan") and 1997 Equity Incentive Plan ("1997
Plan"). Committee members are Directors Bennett (Chairperson), Kennard,
O'Donnell and Sullivan.
Nominating Committee. The Nominating Committee met once in 1997 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 (Chairperson), Bennett, Hoxsie, Kirby, 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 seven meetings in 1997. In 1997, the
Board of Directors of the Bank, the members of which included all of the
Corporation's Board members, held 12 meetings in 1997. During 1997, each member
of the Corporation's Board attended at least 75% of the aggregate number of
meetings of the Corporation's Board, the Bank's Board and the Corporation's
Board committees of which such person was a member.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors' Compensation
During 1997, 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 chairpersons 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 only for one of such meetings. In addition, non-employee
directors received a $9,000 annual retainer which is paid quarterly.
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 1997 Plan provides that each director of the Corporation who is not an
employee of the Corporation shall automatically be granted a nonqualified option
to purchase 1,125 shares of Common Stock as of the date of each Annual Meeting
after which such director will continue to serve as a director of the
Corporation at an option price equal to the fair market value of the Common
Stock on such date and the expiration of which shall be the tenth anniversary
thereof. These options are exercisable on and after the date that is one year
after the date of grant. In addition, the Board may provide for such other terms
and conditions of these options, as shall be set forth in the applicable option
agreements, including acceleration of exercise upon a change of control of the
Corporation.
Executive Compensation
The following table shows, for the fiscal years ended December 31, 1997, 1996
and 1995, the compensation of each person who served as Chief Executive Officer
and the four most highly compensated executive officers of the Corporation
and/or the Bank, other than the Chief Executive Officer, whose total annual
salary and bonus exceeded $100,000 for the year ended December 31, 1997 (the
"Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
----------------------------------------------------
Number of
Securities
Name and Principal Underlying All Other
Position Year Salary Bonus (3) Options (4) Compensation (5)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Joseph J. Kirby 1997 $103,846 $33,917 1,125 $3,123
Retired Chairman of the 1996 232,000 77,256 18,000 7,698
Board and Chief Executive 1995 220,000 81,400 19,224 7,320
Officer (1)
John C. Warren 1997 $220,000 $89,540 31,538 $5,564
President and Chief 1996 153,846 39,600 22,958 -0-
Executive Officer (2)
David V. Devault 1997 $120,000 $32,700 8,758 $3,966
Vice President, Treasurer 1996 110,000 25,438 5,625 3,650
and Chief Financial Officer 1995 105,000 26,316 9,176 3,494
Harvey C. Perry II 1997 $104,000 $28,340 7,515 $3,437
Vice President and Secretary 1996 98,300 23,346 5,027 3,262
1995 94,300 23,455 4,121 3,138
Robert G. Cocks, Jr. Senior 1997 $91,000 $24,496 4,340 $3,008
Vice President - Commercial 1996 90,000 20,194 3,069 2,986
Lending, 1995 86,000 20,729 3,758 2,861
of the Bank
Louis W. Gingerella, Jr. 1997 $87,000 $23,535 4,175 $2,876
Senior Vice President - 1996 83,000 19,194 2,831 2,754
Credit Administration, 1995 75,500 18,684 3,299 2,512
of the Bank
<FN>
- ----------------
(1) Mr. Kirby retired in April 1997.
(2) Mr. Warren was President and Chief Operating Officer of the Corporation
and the Bank before becoming Chief Executive Officer upon Mr. Kirby's
retirement.
(3) 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.
(4) 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 three-for-two stock splits effected by the Corporation on October
15, 1996 and on November 19, 1997.
(5) Under the terms in effect during 1997 of the Bank's tax-qualified 401(k)
plan (the "401(k) Plan"), which covers all full-time salaried employees,
the Bank matched 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%.
</FN>
</TABLE>
-------------------------------------------
The following table contains information concerning the grant of stock options
pursuant to the 1988 Plan and 1997 Plan to the Named Executives during the
fiscal year ended December 31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
------------- --------------- ------------ --------------
Potential Realizable Value at
Percent of Assumed Annual Rates of
Number of Total Options Stock Price Appreciation
Securities Granted to Exercise for Option Term
Underlying Employees or Base --------------------------------
Options in Fiscal Price Per Expiration
Name Granted (1) Year Share Date 5% 10%
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph J. Kirby 1,125 .77% $17.333 5/12/2007 $12,263(2) $31,077(3)
John C. Warren 19,038 13.03% $17.333 5/12/2007 $207,528(2) $525,920(3)
12,500 8.56% $27.375 12/15/2007 $215,198(4) $545,357(5)
David V. Devault 5,193 3.55% $17.333 5/12/2007 $56,607(2) $143,455(3)
3,565 2.44% $27.375 12/15/2007 $61,374(4) $155,536(5)
Harvey C. Perry II 4,500 3.08% $17.333 5/12/2007 $49,053(2) $124,311(3)
3,015 2.06% $27.375 12/15/2007 $51,905(4) $131,540(5)
Robert G. Cocks, Jr. 2,625 1.80% $17.333 5/12/2007 $28,614(2) $72,515(3)
1,715 1.17% $27.375 12/15/2007 $29,525(4) $74,823(5)
Louis W. Gingerella, Jr. 2,510 1.72% $17.333 5/12/2007 $27,360(2) $69,338(3)
1,665 1.14% $27.375 12/15/2007 $28,664(4) $72,641(5)
<FN>
- ----------------
(1) All options granted to the Named Executives, other than the option granted
to Mr. Kirby, were granted in May and December 1997 under the 1988 Plan.
These 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. The option granted to Mr. Kirby
was granted in May 1997 under the 1997 Plan after Mr. Kirby's retirement,
in his capacity as a non-employee director. This option vests one year
after the date of the grant. If a change in control were to occur, the
options set forth above would become immediately exercisable in full.
(2) $17.333 at 5% annually for 10 years = $28.23
<PAGE>
(3) $17.333 at 10% annually for 10 years = $44.95
(4) $27.375 at 5% annually for 10 years = $44.59
(5) $27.375 at 10% annually for 10 years = $71.01
</FN>
</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,
1997 and unexercised options held as of the end of the 1997 fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End (1) at FY-End (1)(2)
----------------------------- -----------------------------
Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph J. Kirby 29,793 $354,353 132,631 1,125 $3,498,731 $19,875
John C. Warren 0 $0 19,363 35,133 $349,675 $565,518
David V. Devault 7,160 $85,392 37,960 11,676 $983,378 $200,433
Harvey C. Perry II 4,223 $48,155 30,193 9,182 $789,301 $152,274
Robert G. Cocks, Jr. 0 $0 23,220 5,731 $617,327 $97,951
Louis W. Gingerella, Jr. 3,069 $40,238 13,994 5,373 $349,448 $91,013
<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, 1997 ($35.00) minus the exercise price.
</FN>
</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 Supplemental Plan
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 1997, 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.
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
---------------------------------------------------------------------------------------
Average Annual
Pension Compensation 15 20 25 30 35
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $24,893 $33,190 $41,488 $49,786 $58,083
125,000 31,830 42,440 53,051 63,661 74,271
150,000 38,768 51,690 64,613 77,536 90,851
175,000 45,705 60,940 76,176 91,411 107,039
200,000 52,643 70,190 87,738 105,286 123,226
225,000 59,580 79,440 99,301 119,161 139,414
250,000 66,518 88,690 110,863 133,036 155,601
275,000 73,455 97,940 122,426 146,911 171,789
300,000 80,393 107,190 133,988 160,786 187,976
325,000 87,330 116,440 145,551 174,661 204,164
350,000 94,268 125,690 157,113 188,536 220,351
</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 1997, the covered Social Security compensation level was $29,304.
The years of service accrued for purposes of the Pension Plan in 1997 for the
following Named Executives were: Mr. Kirby, 34 years; Mr. Warren, 1 year; Mr.
Devault, 11 years; Mr. Perry, 23 years; Mr. Cocks, 5 years; and Mr. Gingerella,
7 years.
-------------------------------------------
The Corporation has entered into Change of Control Agreements (the "Agreements")
with each of the Named Executives pursuant to which such officers have agreed to
remain employed by the Corporation for a fixed term following a change in
control (as defined in the Agreements) and pursuant to which such officers would
receive a lump sum payment from the Corporation in the event of their
involuntary termination, other than for cause, or a reduction in their salary,
title, benefits, staff, perquisites or duties during such fixed term following a
change in control. The term of the Agreements and the multiple of the
executive's base amount (generally, the executive's annualized includable
compensation as defined in Section 280G of the Internal Revenue Code) which
constitutes the lump sum payment provided under the Agreements vary for each
executive. The term of the Agreement following a change in control and the
multiple of base amount for each Named Executive is as follows:
Term of the Agreement Multiple of
Named Executive After Change in Control Base Amount
- --------------------------------------------------------------------------------
John C. Warren 3 years 2.99
David V. Devault 2 years 2.00
Harvey C. Perry II 2 years 2.00
Robert G. Cocks, Jr. 1 year 1.00
Louis W. Gingerella, Jr. 1 year 1.00
<PAGE>
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. From April 1996 through April 1997, the
Compensation Committee consisted of Directors O'Donnell (Chairperson), Bennett,
Grills, McCormick and Rose. Since April 1997, the Compensation Committee members
have been Directors Orsinger (Chairperson), Bennett, Grills, Hirsch, Kennard,
Kirby and O'Donnell. Executive officer salary and short-term incentive plan
targets for 1997 were approved by the Compensation Committee prior to its change
in April 1997. The Stock Option Committee is responsible for the administration
of the Corporation's 1988 Plan and the 1997 Plan. The Stock Option Committee
members are Directors Bennett (Chairperson), Kennard, O'Donnell and Sullivan. No
members of the Compensation Committee or the Stock Option Committee are
currently employees of the Corporation or the Bank. Mr. Kirby was Chief
Executive Officer of the Corporation and the Bank before his retirement in April
1997. During 1997, the Bank paid approximately $54,866 in legal fees related to
collection matters to the law firm of Orsinger & Nardone, of which Mr. Orsinger,
the Chairperson of the Compensation Committee, is a partner.
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 executive compensation program
consists of three elements: base salary, short-term incentive compensation and
long-term incentives. Prior to the beginning of the fiscal year, the
Compensation Committee and the Stock Option Committee consulted with an
independent compensation consultant (the "Consultant") which provided certain
information regarding base salary, short-term and long-term incentive practices
of comparable companies in the banking industry (the "Compensation Peer Group").
This information was used by those Committees to evaluate, adjust and approve
recommendations made by the then Chief Executive Officer and the Chief Operating
Officer (collectively the "Chief Executive Officers") for the compensation
package for each other executive officer, and to develop and approve the
compensation packages of the Chief Executive Officers. The general policy of the
Compensation Committee is to attempt to position executive base salary levels in
the middle of the range of base level salaries for comparable executives in the
Compensation Peer Group, with adjustments to reflect such subjective factors as
technical, managerial and human relations skills, problem solving capabilities,
and level of accountability.
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 recommended for approval by the Compensation Committee for
each executive officer's position based on an analysis of compensation level
information provided by the Consultant, following the general guidelines
outlined above. Generally, the Compensation Committee relied on the
recommendations of its Chief Executive Officers in following these guidelines to
establish the base salary of the other executive officers for 1997. The base
annual salary established by the Compensation Committee for Mr. Kirby, who
served as Chairman of the Board and Chief Executive Officer through his
retirement in April 1997, and Mr. Warren, who served as President and Chief
Operating Officer through Mr. Kirby's retirement and as President and Chief
Executive Officer since that date, was $250,000 and $220,000, respectively. The
base salary established for Mr. Kirby, an increase of 8% over the prior year,
reflected the Compensation Committee's recognition of his long and successful
years of service and the important role Mr. Kirby was serving during the
transition to Mr. Warren as Chief Executive Officer. The total salary paid to
Mr. Kirby in 1997 reflects the proportion of his salary earned prior to his
retirement. The base salary established for Mr. Warren, an increase of 37.5%
over the prior year, reflected the anticipated elevation of Mr. Warren to Chief
Executive Officer during the year. Mr. Warren received no increase in base
salary upon becoming Chief Executive Officer.
Short-Term Incentive Plan. The Corporation's Short-Term Incentive Plan provides
for the payment of additional cash compensation to officers based upon the
achievement of target levels of return on equity and, with respect to officers
other than the Chief Executive Officers, the achievement of individual
objectives established by senior management. The return on equity target levels
were established by the Compensation Committee based upon their review of data
for the Compensation Peer Group provided by the Consultant and management's
expectations and recommendations. The Compensation Committee's policy is to
periodically review these performance measures and adjust them as appropriate.
The total target payout for each of the Chief Executive Officers in 1997 was 37%
of base salary.
In 1997, 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 1997 performance of
110% 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. As a general rule, the Stock Option Committee has granted
stock options to its executive officers on an annual basis. However, as a result
of the pending termination of the 1988 Plan, the Corporation made a second grant
of options to executive officers under the 1988 Plan in December 1997. This
grant is intended to replace the grants that would otherwise have been scheduled
for May 1998. The granting of stock options 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. In fixing the grant of stock options
to executive officers, the Stock Option Committee reviewed data for the
Compensation Peer Group provided by the Consultant and, for officers other than
the Chief Executive Officer, recommendations made by the Chief Executive
Officer, which were based on the individual officer's level of responsibility
and contribution towards achievement of the Corporation's business plan and
objectives. The number of shares subject to options granted in December 1997
were less than the number of options granted earlier in the year, reflecting the
increase in the value of the underlying Common Stock during the year. In May and
December 1997, the Stock Option Committee granted to Mr. Warren, the Chief
Executive Officer, options to purchase 19,038 and 12,500 shares, respectively,
with exercise prices of $17.333 and $27.375 per share, respectively. The grants
to the Chief Executive Officer were based upon his strong performance in
promoting shareholder value as measured both by the Corporation's financial and
stock price performance. In May 1997, after Mr. Kirby's retirement, the Stock
Option Committee also granted Mr. Kirby an option to purchase 1,125 shares at an
exercise price of $17.333 per share, consistent with options granted to other
non-employee directors during the year.
The foregoing report has been furnished by the Compensation Committee and the
Stock Option Committee.
Compensation Committee: Stock Option Committee:
Victor J. Orsinger II (Chairperson) Gary P. Bennett (Chairperson)
Gary P. Bennett Mary E. Kennard, Esq.
Richard A. Grills Brendan P. O'Donnell
Larry J. Hirsch James P. Sullivan, CPA
Mary E. Kennard, Esq.
Joseph J. Kirby
Brendan P. O'Donnell
<PAGE>
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, 1997.
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>
1992 1993 1994 1995 1996 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Washington Trust Bancorp, Inc. $100.00 $147.07 $200.65 $277.34 $457.09 $799.97
The Nasdaq Stock Market (U.S.) $100.00 $114.80 $112.21 $157.80 $195.19 $239.53
KBW Eastern Regional Banks $100.00 $101.43 $86.65 $141.98 $188.38 $294.24
<FN>
These results assume that the value of Washington Trust Bancorp, Inc. Common
Stock and each index was $100 on December 31, 1992. The total return assumes
reinvestment of dividends.
</FN>
</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 1997, the bank paid legal fees to a law firm of which a director
is a partner. See "Compensation Committee Interlocks and Insider Participation."
<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION OF AUDITORS
The ratification of KPMG Peat Marwick LLP to serve as independent auditors of
the Corporation for the current fiscal year ending December 31, 1998 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 LLP 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. Action by shareholders is not
required by law in the appointment of independent auditors, but their
appointment is submitted by the Board of Directors in order to give the
shareholders a voice in the designation of auditors. If the appointment is not
ratified by the shareholders, the Board of Directors will reconsider its choice
of KPMG Peat Marwick LLP as the Corporation's independent auditors.
The Board of Directors recommends that shareholders vote "FOR" this proposal.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING 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 upon a review of the
copies of such reports furnished to the Corporation, the Corporation believes
that during 1997 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 1999
Annual Meeting of Shareholders must submit the proposal to the Corporation, 23
Broad Street, Westerly, Rhode Island 02891, Attention: President, not later than
November 18, 1998 for inclusion, if appropriate, in the Corporation's Proxy
Statement and the form of proxy relating to the 1999 Annual Meeting.
FINANCIAL STATEMENTS
The financial statements of the Corporation are contained in the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997, 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
Management knows of no matters to be brought before the meeting other than those
referred to in this Proxy Statement, 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.
<PAGE>
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 Exchange Act, 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, 1997 as filed with the Securities and Exchange Commission are
available without charge upon written request addressed to David V. Devault,
Vice President, Treasurer and Chief Financial Officer, Washington Trust Bancorp,
Inc., P.O. Box 512, Westerly, Rhode Island 02891-0512.
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, 1998
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
John C. Warren, or any one 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 28, 1998 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 Proposals
Nos. 1 and 2.
PLEASE SIGN,DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on other side)
[X] Please mark your votes as indicated
The Board of Directors recommends that you instruct the proxies to vote FOR all
of the proposals.
1. ELECTION OF DIRECTORS:
NOMINEES: Alcino G. Almeida, Katherine W. Hoxsie,
Brendan P. O'Donnell, Anthony J. Rose, Jr.
and John C. Warren
[ ] 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 LLP as independent auditors
of the Corporation for the fiscal year ending December 31, 1998.
[ ] 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.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
Dated:_____________________________, 1998
_________________________________________
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.
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.
