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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<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 27, 1999
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 27th of April, 1999 at 11:00 a.m. for the purpose of considering
and acting upon the following:
1. The election of four directors, each to serve for a term of three
years and until their successors are duly elected and qualified;
2. The ratification of the selection of independent auditors to audit
the Corporation's consolidated financial statements for the year
ending December 31, 1999; 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, 1999 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 19, 1999
<PAGE>
WASHINGTON TRUST BANCORP, INC.
23 Broad Street, Westerly, RI 02891 Telephone 401-348-1200
--------------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 27, 1999
--------------------------------------------------
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 27, 1999, 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 8, 1999, 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 10,061,952 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 19, 1999.
<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 8, 1999.
ELECTION OF DIRECTORS
The Corporation's Board of Directors is divided into three approximately equal
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. There are at present
15 directors.
This year, four directors are to be elected at the Annual Meeting to serve until
the 2002 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 and 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 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 the Board of Directors designates such
other persons. The Board of Directors has no reason to believe that any of the
nominees will be unavailable for election.
The Board of Directors recommends that shareholders vote "FOR" this proposal.
NOMINEE AND DIRECTOR INFORMATION
<TABLE>
<CAPTION>
Common Stock Shares Beneficially
Owned on March 8, 1999 (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 2002
(if elected):
Gary P. Bennett 5 57 2,682 2,954 5,636 .06%
Chairman, Chief Executive Officer and
Director, Analysis & Technology, Inc.
(interactive multimedia training
systems, information systems and
engineering services)
Larry J. Hirsch 5 60 9,127 8,439 17,566 .17%
President, Westerly Jewelry Co., Inc.
(retailer)
Mary E. Kennard, Esq. 5 44 3,107 10,856 13,963 .14%
University Counsel and Vice
President, The American University;
Vice President and General Counsel of
the University of Rhode Island
1992-1994
Joseph J. Kirby 27 67 33,580 161,248 194,828 1.91%
Retired Chairman of the Board and
Chief Executive Officer of the
Corporation and the Bank 1996 - 1997;
President of the Corporation and the
Bank 1984-1995
Terms Expiring in 2000:
Steven J. Crandall 16 46 2,588 8,439 11,027 .11%
Vice President, Ashaway
Line & Twine Manufacturing Co.
(manufacturer of tennis string,
fishing line and surgical sutures)
Richard A. Grills 16 66 130,344 8,439 138,783 1.38%
Consultant and retired President,
Bradford Dyeing Association, Inc.
(textiles)
James W. McCormick, Jr. 16 68 29,427 8,439 37,866 .38%
Former President,
McCormick's, Inc. (retailer)
Victor J. Orsinger II 16 52 30,448 8,439 38,887 .39%
Partner, Orsinger & Nardone,
Attorneys at Law
James P. Sullivan, CPA 16 60 6,298 8,439 14,737 .15%
Finance Officer, Roman Catholic
Diocese of Providence
Neil H. Thorp 16 59 28,691 8,439 37,130 .37%
President, Thorp & Trainer, Inc.
(insurance)
Terms Expiring in 2001:
Alcino G. Almeida 1 66 455 1,688 2,143 .02%
Executive Vice President
And General Manager, The Day
Publishing Company through 1997,
currently retired
Katherine W. Hoxsie, CPA 8 50 51,146 33,752 84,898 .84%
Vice President, Hoxsie
Buick-Pontiac-GMC Truck, Inc.
Brendan P. O'Donnell 17 69 15,641 8,439 24,080 .24%
Retired manufacturing executive
Anthony J. Rose, Jr. 27 68 188,768 3,376 192,144 1.91%
President, Technical Industries, Inc.
(chemicals)
John C. Warren 3 53 9,718 53,999 63,717 .63%
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
<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 17,530 57,922 75,452 .75%
Executive Vice President, Treasurer
and Chief Financial Officer
Harvey C. Perry II 19,586 41,156 60,742 .60%
Senior Vice President and Secretary
B. Michael Rauh, Jr. 2,642 24,317 26,959 .27%
Senior Vice President -
Retail Banking of the Bank
Stephen M. Bessette 600 3,089 3,689 .04%
Senior Vice President -
Consumer Lending of the Bank
Directors and Executive 606,969 521,008 1,127,977 10.66%
Officers as a Group (23 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 10 times in 1998 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 seven times in
1998, 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), Almeida, Bennett, Hirsch, Kennard and O'Donnell.
Audit Committee. The Audit Committee, which met six times in 1998, 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, which did not meet in
1998, 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 twice in 1998 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 six meetings in 1998. In 1998, the
Board of Directors of the Bank, the members of which included all of the
Corporation's Board members, held 13 meetings. During 1998, 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 1998, 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 (non-employee 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, amended, restated and renamed the Nonqualified Deferred
Compensation Plan (the "1999 Plan"), effective January 1, 1999, provides
standard arrangements pursuant to which directors may elect to defer all or part
of their fees. Deferred fees are invested in any of several benchmark options,
including the Corporation's common stock. Deferred fees are payable in a lump
sum or installments following termination of service as a director or attainment
of a certain age; if the investment benchmark selected is the Corporation's
common stock, the fees may also be payable in the form of such stock. 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 1,688 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, 1998, 1997
and 1996, 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, 1998 (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 (1) Options (2) Compensation (3)
- ------------------------------ ------------- ----------------- ----------------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
John C. Warren 1998 $250,000 $92,500 -0- $7,500 (4)
President and Chief 1997 220,000 89,540 47,307 5,564
Executive Officer 1996 153,846 39,600 34,437 -0-
David V. Devault 1998 $135,269 $37,125 -0- $4,058
Executive Vice President, 1997 120,000 32,700 13,138 3,966
Treasurer and Chief 1996 110,000 25,438 8,438 3,650
Financial Officer
Harvey C. Perry II 1998 $110,000 $27,500 -0- $3,300
Senior Vice President and 1997 104,000 28,340 11,273 3,437
Secretary 1996 98,300 23,346 7,541 3,262
B. Michael Rauh, Jr. 1998 $95,000 $23,750 -0- $2,850
Senior Vice President - 1997 83,077 22,595 9,101 2,476
Retail Banking 1996 72,000 16,650 5,522 2,389
of the Bank
Stephen M. Bessette 1998 $91,000 $27,750 -0- $2,100
Senior Vice President - 1997 76,827 21,232 6,178 -0-
Retail Lending
of the Bank
<FN>
------------------
(1) 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. The Plan also permits
certain additional discretionary payments.
(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 three-for-two stock splits effected by the Corporation on October
15, 1996, November 19, 1997 and August 3, 1998.
(3) Under the terms in effect during 1998 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%.
(4) Includes $2,700 accrued under the Bank's Supplemental Pension Benefit and
Profit Sharing Plan (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.
</FN>
</TABLE>
-------------------------------------------
<PAGE>
The following table sets forth information with respect to the Named Executives
concerning the exercise of options during the fiscal year ended December 31,
1998 and unexercised options held as of the end of the 1998 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>
John C. Warren 0 $0 49,480 32,264 $487,755 $277,576
David V. Devault 7,856 $126,619 57,922 8,679 $848,574 $72,156
Harvey C. Perry II 6,786 $108,973 44,756 7,523 $659,977 $63,021
B. Michael Rauh, Jr. 1,050 $19,328 24,317 5,932 $327,315 $48,363
Stephen M. Bessette 0 $0 3,089 3,089 $22,356 $22,356
<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, 1998 $21.50 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 1998, 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> <C>
$125,000 $31,653 $42,203 $52,754 $63,305 $73,856
150,000 38,590 51,453 64,317 77,180 90,043
175,000 45,528 60,703 75,879 91,055 106,231
200,000 52,465 69,953 87,442 104,930 122,418
225,000 59,403 79,203 99,004 118,805 138,606
250,000 66,340 88,453 110,567 132,680 154,793
300,000 80,215 106,953 133,692 160,430 187,168
350,000 94,090 125,453 156,817 188,180 219,543
400,000 107,965 143,953 179,942 215,930 251,918
450,000 121,840 162,453 203,067 243,680 284,293
500,000 135,715 180,953 226,192 271,430 316,668
</TABLE>
<PAGE>
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 1998, the covered Social Security compensation level was $31,128.
The years of service accrued for purposes of the Pension Plan in 1998 for the
following Named Executives were: Mr. Warren, 2 years; Mr. Devault, 12 years;
Mr. Perry, 24 years; Mr. Rauh, 7 years; and Mr. Bessette, 1 year.
The benefits shown are straight-life annuity amounts not reduced by a joint
survivorship benefit, which is available.
-------------------------------------------
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
B. Michael Rauh, Jr. 1 year 1.00
Stephen M. Bessette 1 year 1.00
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 Orsinger (Chairperson), Almeida, Bennett, Hirsch, Kennard and
O'Donnell. 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. During 1998, the Bank paid
approximately $25,734 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 Chief Executive Officer for the compensation package
for each other executive officer, and to develop and approve the compensation
package of the Chief Executive Officer. 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 the Chief Executive Officer in following these guidelines to
establish the base salary of the other executive officers for 1998. The base
annual salary established by the Compensation Committee for Mr. Warren,
President and Chief Executive Officer, was $250,000, a 13.6% increase over 1997.
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 Officer, 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
review periodically these performance measures and adjust them as appropriate.
The total target payout for the Chief Executive Officer in 1998 was 37% of base
salary.
In 1998, 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 1998 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. As a general rule, the Stock Option Committee has granted
stock options to the executive officers on an annual basis. However, as a result
of the then pending expiration of the 1988 Plan, the Corporation made a second
grant of options to executive officers under the 1988 Plan in December 1997.
That grant was intended to replace the grants that would otherwise have been
scheduled for May 1998 and there were no stock options granted to executive
officers in 1998 as a result. 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 the long-term stock market performance of the
Corporation's stock. When granting stock options to executive officers, the
Stock Option Committee reviews 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 are based on each
officer's level of responsibility and contribution towards achievement of the
Corporation's business plan and objectives.
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)
Alcino G. Almeida Mary E. Kennard, Esq.
Gary P. Bennett Brendan P. O'Donnell
Larry J. Hirsch James P. Sullivan, CPA
Mary E. Kennard, Esq.
Brendan P. O'Donnell
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,
1998.
Comparison of Five Year Cumulative Total Return
[The line graph referred to in the preceding paragraph appears in this page 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>
1993 1994 1995 1996 1997 1998
- ------------------------------------- ------------- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Washington Trust Bancorp, Inc. $100.00 $136.43 $188.58 $310.80 $538.76 $504.94
The Nasdaq Stock Market (U.S.) $100.00 $97.75 $138.26 $170.01 $208.58 $293.21
KBW Eastern Regional Banks $100.00 $88.77 $150.69 $206.69 $330.74 $344.57
<FN>
These results assume that the value of Washington Trust Bancorp, Inc. Common
Stock and each index was $100 on December 31, 1993. 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 1998, the Bank paid legal fees to a law firm of which a director
is a partner. See "Compensation Committee Interlocks and Insider Participation."
PROPOSAL 2
RATIFICATION OF SELECTION OF AUDITORS
The ratification of KPMG LLP to serve as independent auditors of the Corporation
for the current fiscal year ending December 31, 1999 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
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 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
(collectively, "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 1998 all Section 16(a) filing requirements
applicable to its Insiders were complied with, except that Harvey C. Perry II
and Stephen M. Bessette each inadvertently failed to report on a timely basis
one transaction in 1998.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit a proposal for presentation to the 2000
Annual Meeting of Shareholders must submit the proposal to the Corporation, 23
Broad Street, Westerly, Rhode Island 02891, Attention: President, not later than
November 19, 1999 for inclusion, if appropriate, in the Corporation's Proxy
Statement and the form of proxy relating to the 2000 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, 1998, 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, 1998 as filed with the Securities and Exchange Commission are
available without charge upon written request addressed to Elizabeth B. Eckel,
Vice President, Marketing, 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 19, 1999
<PAGE>
WASHINGTON TRUST BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph J. Kirby, Brendan P. O'Donnell and
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 27, 1999 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)
Please mark your votes as indicated [X]
The Board of Directors recommends that you instruct the proxies to vote FOR all
of the proposals.
FOR WITHHOLD
all nominees AUTHORITY to
(except as vote for all
indicated) nominees
1. ELECTION OF NOMINEES: Gary P. Bennett,
DIRECTORS Larry J. Hirsch, Mary E.
Kennard and Joseph J. Kirby [ ] [ ]
(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 LLP FOR AGAINST ABSTAIN
as independent auditors of the
Corporation for the year ending
December 31,1999. [ ] [ ] [ ]
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: ____________________________________________, 1999
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.
