<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
FIRST-KNOX NATIONAL BANK
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FIRST-KNOX NATIONAL BANK
(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 applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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<PAGE> 2
FIRST-KNOX BANC CORP.
ONE SOUTH MAIN STREET
MOUNT VERNON, OHIO 43050
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, MARCH 26, 1996
TO THE HOLDERS OF COMMON SHARES:
Notice is hereby given that, pursuant to call of its Directors, the regular
Annual Meeting of Shareholders of First-Knox Banc Corp. (the "Corporation")
will be held at Mount Vernon Nazarene College, 800 Martinsburg Road, Mount
Vernon, Ohio 43050, Tuesday, March 26, 1996, at 3:00 p.m., for the purpose of
considering and voting upon the following matters:
1. To elect to the Board of Directors five (5) persons, four (4) of
whom shall serve for a three-year term until the Annual Meeting of
Shareholders in 1999 and one (1) who will serve a two-year term
until the Annual Meeting of Shareholders in 1998, all five (5)
Directors to serve until his respective successor is elected and
qualified.
2. Whatever other business may properly be brought before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on February 16, 1996,
shall be entitled to notice of the meeting and to vote at the meeting or at any
adjournment thereof.
By Order of the Board of Directors,
/s/ Ian Watson
Ian Watson
Secretary
WE URGE YOU TO MARK, DATE, SIGN, AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED
SELF-ADDRESSED ENVELOPE AS PROMPTLY AS POSSIBLE WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
March 1, 1996
<PAGE> 3
FIRST-KNOX BANC CORP.
ONE SOUTH MAIN STREET
BOX 871
MOUNT VERNON, OHIO 43050
MARCH 1, 1996
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of First-Knox Banc Corp. ("the Corporation") of Proxies in
the accompanying form to be voted at the Annual Meeting of Shareholders (the
"Annual Meeting") of the Corporation to be held on March 26, 1996, at 3:00
p.m., at Mount Vernon Nazarene College, 800 Martinsburg Road, Mount Vernon,
Ohio 43050, and at any adjournments thereof. Only those shareholders of record
at the close of business on February 16, 1996, will be entitled to vote at the
Annual Meeting. This Proxy Statement and Proxy are first being sent to
shareholders on or about March 1, 1996.
All costs of solicitation of the Proxies will be borne by the Corporation.
Solicitation will be made by mail. Proxies may be further solicited by
officers, directors, or employees of the Corporation by telephone, written
communication or in person. Any such officers, directors, or employees of the
Corporation soliciting proxies shall receive no compensation beyond their
normal compensation for performing such services. The Corporation will
reimburse banks, brokerage firms, and other custodians, nominees, and
fiduciaries for expenses reasonably incurred by them in sending proxy materials
to the beneficial owners of common shares of the Corporation ("Common Shares").
No solicitation is to be made by specially engaged employees or other paid
solicitors.
VOTING
The holder of each Common Share is entitled to one vote on all matters
including the election of Directors. A shareholder, without affecting any vote
previously taken, may revoke the shareholder's Proxy by giving notice to the
Corporation in writing or in open meeting. Presence at the Annual Meeting does
not in and of itself revoke a Proxy.
In the election of Directors each shareholder may cumulate the shareholder's
votes if notice in writing has been given by any shareholder to the Corporation
before 3:00 p.m. on March 24, 1996, of the shareholder's desire that the
election shall be by cumulative voting and if an announcement of such notice is
made upon the convening of the meeting. If cumulative voting is demanded, each
shareholder will be entitled to multiply the shareholder's total number of
shares held by the number of Directors being elected and then allocate these
votes among the nominees as the shareholder sees fit. Also, if cumulative
voting is involved, the enclosed Proxy would grant discretionary authority to
the proxies named therein to cumulate votes and to distribute such votes to any
one or more candidates as they see fit. In the case of either cumulative or
non-cumulative voting, the persons receiving the largest number of votes in
each class of Directors being elected will be elected.
Common Shares as to which the authority to vote is withheld and broker
non-votes would not be counted toward the election of the individual nominees
specified in the Proxy.
1
<PAGE> 4
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of January 1, 1996, certain information with
respect to the only persons known to the Corporation to be the beneficial
owners of more than five percent (5%) of the outstanding Common Shares of the
Corporation.
<TABLE>
<CAPTION>
Percent of
Name and Address of Number of Shares Common
Beneficial Owner Beneficially Owned (1) Shares (2)
- --------------------- ---------------------- ----------
<S> <C> <C>
Russell E. Ramser, Jr. 227,371 (3) 6.38
20718 Danville-Amity Road
Mount Vernon, Ohio 43050
The First-Knox National Bank 190,023 (4) 5.33
(the "Bank")
Trust Department, Trustee
One South Main Street
Mount Vernon, Ohio 43050
<FN>
(1) Unless otherwise noted, represents sole voting and investment power.
(2) The percent of Common Shares is based upon the sum of (i) 3,560,260 Common
Shares outstanding as of January 1, 1996 and (ii) the number of Common
Shares as to which the named person has the right to acquire beneficial
ownership upon exercise of presently-exercisable stock options.
(3) Includes 11,854 Common Shares owned by Mr. Ramser's wife and 1,000 Common
Shares which Mr. Ramser has the right to acquire beneficial ownership upon
exercise of presently-exercisable stock options.
(4) Includes 71,601 Common Shares, 94,809 Common Shares, 16,438 Common Shares,
and 7,175 Common Shares as to which the trust department has sole voting
and investment power, sole voting and shared investment power, sole voting
and no investment power, and shared voting and investment power,
respectively.
</TABLE>
2
<PAGE> 5
ELECTION OF DIRECTORS
The Board of Directors consists of twelve (12) directors divided into three (3)
classes. The terms of office of five (5) directors of one class expire at the
Annual Meeting. The Code of Regulations of the Corporation (the "Regulations")
provides that the Board of Directors shall be divided into three (3) classes
and that each class consist of an equal number of directors. In order to
equalize the number of directors in each class, Mr. George T. Culbertson, Jr.
has been nominated to stand for election for a two (2) year term until the
Annual Meeting of Shareholders in 1998, and until his successor is elected and
qualified. The other four (4) Directors whose terms expire at the Annual
Meeting have been nominated to serve three (3) year terms until the Annual
Meeting of Shareholders in 1999, and until their respective successors are
elected and qualified.
It is the intention of the persons named in the Proxy to vote for the election
of the five (5) nominees named below unless the Proxy otherwise directs. All
nominees are presently members of the Board of Directors. All of the nominees
have stated their willingness to serve and no reason is presently known why any
of the nominees would be unable to serve as a Director.
There are no family relationships among the executive officers and/or Directors
of the Corporation. Each of the nominees and Directors listed below has
furnished to the Corporation the information set forth with respect to his
principal occupation or employment and his beneficial ownership of securities.
<TABLE>
<CAPTION>
Common
Shares
Beneficially Percent of
Principal Occupation Owned Common Director
Name and Age Since 1991 1/1/96 (1) Shares (2) Since
- ------------ -------------------- ------------ ---------- --------
NOMINEE FOR ELECTION FOR TERM EXPIRING IN 1998
<S> <C> <C> <C> <C>
George T. Culbertson, Jr. Retired. Until 12/92, 9,337 (3) * 1985
Age 71 Chairman of the Board,
Progressive Communica-
tions Corp. (publisher of
Mount Vernon News)
NOMINEES FOR ELECTION FOR TERM EXPIRING IN 1999
James J. Cullers Senior Partner, Zelkowitz, 40,033 (4) 1.12 1985
Age 65 Barry & Cullers (attorneys
& general legal counsel for
the Bank)
Philip H. Jordan, Jr. Chairman of the Board of 3,446 * 1985
Age 64 the Bank. Retired. Prior
to 6/95, President,
Kenyon College
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
Common
Shares
Beneficially Percent of
Principal Occupation Owned Common Director
Name and Age Since 1991 1/1/96 (1) Shares (2) Since
- ------------ -------------------- ------------ ---------- --------
<S> <C> <C> <C> <C>
Noel C. Parrish President, NOE, Inc. 27,274 (5) * 1985
Age 58 (aircraft insurance
financing). Until 1991,
President, Parrish-O'Neill
& Assoc., Inc.
Carlos E. Watkins President and CEO of the 60,341 (6) 1.69 1987
Age 59 Corporation and Bank
DIRECTORS WHOSE TERMS EXPIRE IN 1998
John B. Minor Retired. Pesident Coca- 60,179 (7) 1.69 1985
Age 72 Cola bottling Company of
Mount Vernon prior to
1986
Russell E. Ramser, Jr. Vice Chairman of the 227,371 (8) 6.38 1992
Age 67 Board of the Corporation,
President, Maram Energy
(oil/gas exploration and
production)
Alan E. Riedel Retired. Prior to 3/94, 7,699 (9) * 1994
Age 65 Vice Chairman, Cooper
Industries. Prior to 1992, a
Director and Senior Vice
President, Administration,
Cooper Industries
DIRECTORS WHOSE TERMS EXPIRE IN 1997
Robert S. Gregg President, Phoenix 31,441 (10) * 1985
Age 72 Holding Company. Prior
to 1995, President, Gregg
Manufacturing Co.
(manufacturer of lighting
fixtures)
James A. McElroy Chairman of the Board, 52,289 (11) 1.47 1985
Age 63 AMG Industries. Until
1991, President, AMG
Industries
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
Common
Shares
Beneficially Percent of
Principal Occupation Owned Common Director
Name and Age Since 1991 1/1/96 (1) Shares (2) Since
- ------------ -------------------- ------------ ---------- --------
<S> <C> <C> <C> <C>
William A. Stroud Chairman of the Board 69,400 (12) 1.95 1985
Age 75 of the Corporation. CEO
of the Corporation until
3/21/89
Stephen P. Upham, Jr. Entrepreneur (real 39,936 (13) 1.12 1985
Age 74 estate development and
management of Essup
Park, an industrial park)
Executive Officers and
Directors As a Group
(14 persons) 684,086 (14) 19.04
<FN>
* Represents less than 1% of class.
(1) Represents sole voting and investment power except as otherwise indicated.
For each Director except Mr. Watkins, includes 1,000 Common Shares which
each Director has the right to acquire beneficial ownership upon exercise
of presently-exercisable stock options.
(2) The percent of Common Shares is based upon the sum of (i) 3,560,260 Common
Shares outstanding as of January 1, 1996 and (ii) the number of Common
Shares as to which the named person has the right to acquire beneficial
ownership upon conversion of presently-exercisable stock options.
(3) Includes 478 Common Shares owned by Mr. Culbertson's wife and 6,000
Common Shares held in a trust of which Mr. Culbertson is the beneficiary.
(4) Includes 824 Common Shares owned by Mr. Cullers' wife and 6,290 Common
Shares held in a trust of which Mr. Cullers is the beneficiary. Includes
29,635 Common Shares held in trusts in which Mr. Cullers has voting and
investment power.
(5) Includes 14,233 Common Shares owned by Mr. Parrish's wife.
(6) Includes 3,385 Common Shares owned by Mr. Watkins' wife. Includes 19,418
Common Shares which Mr. Watkins has the right to acquire beneficial
ownership upon exercise of presently-exercisable stock options and 850
Common Shares held in an account for Mr. Watkins' benefit under the
Corporation's Savings Retirement Plan.
(7) Includes 13,309 Common Shares held in a trust of which Mr. Minor is the
beneficiary.
(8) Includes 11,854 Common Shares owned by Mr. Ramser's wife.
(9) Includes 413 Common Shares owned by Mr. Riedel's wife as to which
Mr. Riedel disclaims beneficial ownership.
(10) Includes 7,716 Common Shares owned by Mr. Gregg's wife and 939
Common Shares held by Mr. Gregg as custodian for his children.
(11) Includes 30,389 Common Shares held in a trust of which Mr. McElroy is the
beneficiary and 17,177 Common Shares owned by AMG Industries, Inc., a
corporation controlled by Mr. McElroy, and 907 Common Shares owned by Mr.
McElroy's wife.
(12) Includes 30,580 Common Shares owned by Mr. Stroud's wife.
(13) Includes 33,776 Common Shares held in a trust of which Mr. Upham is the
beneficiary, and 5,160 Common Shares owned by Mr. Upham's wife.
(14) See notes (1) through (13). Includes 33,034 Common Shares which the
executive officers of the Corporation as a group have the right to acquire
upon exercise of presently-exercisable stock options.
</TABLE>
5
<PAGE> 8
NOMINATION OF DIRECTORS
Article III of the Regulations prescribes the method for a shareholder to
nominate a candidate for election to the Board of Directors. Nominations, other
than those made by or on behalf of the existing Board of Directors of the
Corporation, must be made in writing and must be delivered or mailed to the
President of the Corporation and to the Chairman, Federal Reserve Board,
Washington, D. C., not less than 14 days, nor more than 50 days, prior to any
meeting of shareholders called for the election of Directors. Such notification
must contain the following information:
a. Name and address of each proposed nominee.
b. Principal occupation of each proposed nominee.
c. Total number of shares of capital stock of the Corporation
that will be voted for each proposed nominee.
d. Name and residence address of the notifying shareholder.
e. Number of shares of capital stock of the Corporation owned by the
notifying shareholder.
As of the date of this Proxy Statement, no persons have been so nominated for
election at this Annual Meeting.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors meets quarterly and on other occasions when required by
special circumstances. The Board of Directors of the Corporation held eight (8)
meetings during the fiscal year ended December 31, 1995. Each director attended
at least 75% of the aggregate of the number of Board of Directors meetings and
the number of meetings of all committees on which he served during the year,
except for Messrs. Culbertson, Gregg and McElroy.
Messrs. Ramser, Culbertson, Gregg and Upham serve on the Audit Committee of the
Corporation, which met three (3) times in 1995. The Audit Committee makes
recommendations to the Board of Directors concerning the selection and
engagement of the Corporation's independent auditors. It meets with the
independent auditors to discuss and review the annual audit. It also reviews
reports by the internal auditor to the Audit Committees of subsidiaries on
departmental and branch operations.
The Corporation also has a Planning and Budget Committee, a Stock Option
Committee, and a Personnel Committee. The Personnel Committee and Stock Option
Committee each play a role in reviewing and recommending compensation policies
and plans for the Corporation and its affiliates. The Stock Option Committee,
comprised of Messrs. Cullers, Stroud, Ramser and Riedel, met two (2) times
during 1995. The Personnel Committee, the members of which are Messrs. Cullers,
Ramser, Stroud and Jordan, met eleven (11) times during 1995. The Corporation
does not have a standing nominating committee.
6
<PAGE> 9
REMUNERATION OF DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth, for the three (3) fiscal years ended December
31, 1995, cash and non-cash compensation paid by the Bank to Carlos E. Watkins,
President and CEO of the Corporation and the Bank and the only executive
officer of the Corporation to earn salary and bonus in excess of $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation
- --------------------------------------------------------------------------------------------
Awards
Name and ------- All Other
Principal Position Year Salary Bonus (1) Options/SARs (#) Compensation
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Carlos E. Watkins, 1995 $156,465 $39,000 -- $2,772 (2)
President and CEO 1994 149,264 7,500 7,778 (3) 2,772 (2)
of the Corporation 1993 144,264 36,041 -- 3,033 (4)
and Bank
<FN>
(1) All bonuses reported were earned by Mr. Watkins pursuant to the incentive
compensation plan of the Corporation and its affiliate banks (the
"Incentive Compensation Plan"). Bonus amounts are determined and paid in
the year following the year in which they are earned. Such bonus amounts
are reported in the Summary Compensation Table in the year in which they
were earned.
(2) Includes contributions of $2,772 to the Company's Savings Retirement Plan
(the "Savings Retirement Plan") made on behalf of Mr.Watkins to match
pre-tax elective deferral contributions in 1995 and 1994, respectively.
(3) The award was originally granted in regard to 3,704 Common Shares. That
number subsequently was adjusted to reflect a distribution in the nature of
a five percent (5%) stock dividend paid to all shareholders of the
Corporation on October 24, 1994 and a one hundred percent (100%) stock
dividend paid to all shareholders of the Corporation on September 1, 1995.
(4) Includes contributions of $2,698 to the Savings Retirement Plan made on
behalf of Mr. Watkins to match 1993 pre-tax elective deferral contributions
and a contribution of $335 to the Savings Retirement Plan made on behalf of
Mr. Watkins pursuant to a one-time discretionary contribution of 10 Common
Shares to each participant of the Savings Retirement Plan.
</TABLE>
7
<PAGE> 10
GRANT OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
During 1995, no stock options or stock appreciation rights were granted to Mr.
Watkins.
STOCK OPTION AND STOCK APPRECIATION RIGHTS AND EXERCISES AND HOLDINGS
The following table sets forth certain information concerning the value at
December 31, 1995 of unexercised options and SARs held by Mr. Watkins pursuant
to the First-Knox Banc Corp. 1990 Non-Qualified Stock Option and Stock
Appreciation Rights Plan. Mr. Watkins did not exercise any options or SARs
during 1995.
<TABLE>
<CAPTION>
AGGREGATE OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
FY-End Value $25.00
Number of Value of
Shares Underlying Unexercised
Unexercised In-The-Money
Options/SARs Options/SARs
At FY-End (#) at FY-End ($)
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Carlos E.
Watkins - 0 - - 0 - 23,301 17,041 $330,748 $153,498
</TABLE>
DIRECTOR COMPENSATION
Directors who are not employees of the Corporation or its subsidiaries receive
a fee of $3,000 per year plus $300 for each Board meeting and each Board
committee meeting attended. Directors traveling from out of state to attend
Board meetings and each Board committee meeting are reimbursed for reasonable
travel expenses incurred.
Under the First Knox Banc Corp. 1995 Stock Option and Stock Appreciation Rights
Plan, Directors, other than those employed by the Corporation (the
"Non-Employee Directors"), are entitled to receive an annual grant on the first
business day following the date of each annual meeting of shareholders of an
option (the "Company Director Option") to purchase 1,000 Common Shares at an
exercise price equal to the fair market value of the underlying Common Shares
on the date of grant. Company Director Options granted to Non-Employee
Directors become exercisable immediately upon grant and remain exercisable
until the earlier to occur of the following two (2) dates (i) the tenth
anniversary of the date of grant of such Company Director Option or (ii) three
(3) months (twelve months in the case of a Non-Employee Director who becomes
disabled, as defined in Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended (the "Code"), or who dies) after the date the Non-Employee Director
ceases to be a member of the Board, except that if the Non-Employee Director
ceases to be a member of the Board after having been convicted of, or pled
guilty or nolo contendere to, a felony, his Company Director Option would be
canceled on the date he ceases to be a member of the Board.
8
<PAGE> 11
EMPLOYEES' RETIREMENT PLAN
The following table shows the estimated annual benefits payable under The
First-Knox National Bank Employees Retirement Plan (the "Pension Plan") upon
retirement for specified periods of service and levels of remuneration. The
calculations assume that the person elects the annuity basis providing the
maximum monthly payments without benefits to a surviving spouse.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Remuneration Years of Service
- ---------------------------------------------------------------------------------------------
15 20 25 30 35 or More
--- -- --- --- ----------
<S> <C> <C> <C> <C> <C>
$250,000 $45,683 $60,431 $63,929 $67,427 $70,925
225,000 45,683 60,431 63,929 67,427 70,925
200,000 45,683 60,431 63,929 67,427 70,925
175,000 45,683 60,431 63,929 67,427 70,925
150,000 45,683 60,431 63,929 67,427 70,925
125,000 37,916 50,074 52,858 55,641 58,425
100,000 30,148 39,717 41,786 43,856 45,925
</TABLE>
The Pension Plan provides for defined benefits upon retirement based on years
of service, attaining the age of 65 and salary level. The Pension Plan also
provides early retirement benefits and surviving spouses' benefits after
satisfying certain requirements. No reduction in benefits is made as a result
of Social Security benefits received.
The monthly retirement benefit is equal to 30% of average monthly compensation
reduced proportionately, if the employee has less than 20 years of service at
normal retirement, plus 20% of average monthly compensation greater than the
Social Security covered compensation level. The monthly retirement benefit is
further reduced proportionately if the employee has less than 35 years of
service at normal retirement. Certain limitations are imposed on the maximum
benefit payable under the Pension Plan pursuant to Section 415 of the Code. The
benefit is payable as a 5 year certain or life annuity. Average monthly
compensation is defined as the average of the highest five consecutive years of
compensation out of the last ten years worked. Mr. Watkins has eight (8) years
of service credited to him under the Pension Plan. He will be eligible to
retire and receive benefits under the Pension Plan when he attains age 65.
Compensation utilized for pension formula purposes includes only the salary and
annual bonus reported in the Salary and Bonus columns of the Summary
Compensation Table.
The Bank has purchased a life insurance policy on the life of Mr. Watkins.
Under such policy, and a related agreement, Mr. Watkins or his beneficiary
will receive an annual payment of $25,000 for ten years beginning the month
following Mr. Watkins' 65th birthday if he is employed by the Bank at such
time. If Mr. Watkins dies prior to age 65 or he is no longer an employee of
the Bank on his 65th birthday, the Bank is entitled to the proceeds of the
policy. The insurance policy is maintained as a supplemental retirement
benefit to Mr. Watkins. The total cash surrender value of the policy is an
asset of the Corporation to which Mr. Watkins has no right or interest.
9
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Corporation does not have a Compensation Committee, but does have a
Personnel Committee. The members of the Personnel Committee are Messrs.
Cullers, Ramser, Stroud and Jordan, each of whom is an outside Director. The
function of the Personnel Committee is to review officer compensation and
corporate benefit plans, and to forecast future personnel needs of the
Corporation and its affiliates. The Corporation also has a Stock Option
Committee, which administers the First-Knox Banc Corp. 1990 Non-Qualified Stock
Option and Stock Appreciation Rights Plan (this plan expired on March 27, 1995)
and the First-Knox Banc Corp. 1995 Stock Option and Stock Appreciation Rights
Plan (collectively, the "Stock Option Plans"). The members of the Stock Option
Committee are Messrs. Cullers, Ramser, Stroud and Riedel, each of whom is an
outside Director.
Mr. Cullers is a senior partner in the law firm of Zelkowitz, Barry & Cullers
which serves as general legal counsel for the Bank. The Bank paid $47,415 to
Zelkowitz, Barry & Cullers for its legal services in fiscal year 1995.
Zelkowitz, Barry & Cullers has served as legal counsel for the Bank for the
past several years and will be retained in that capacity in the future.
Mr. Stroud is a former officer of the Corporation and the Bank.
REPORT OF STOCK OPTION COMMITTEE AND PERSONNEL
COMMITTEE ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Corporation's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, this Report and
the graph set forth on page 13 shall not be incorporated by reference into any
such filings.
DECISION-MAKING PROCESS. The executive officers of the Corporation receive no
compensation from the Corporation. Instead, they are paid by the Bank for
services rendered in their capacity as executive officers of the Corporation
and the Bank. The Board of Directors of the Corporation has a four-member
Personnel Committee, all of whom are outside Directors, which reviews and
recommends officer compensation and corporate benefit plans and forecasts
future personnel needs of the Corporation and its affiliates. The Board of the
Corporation also has a Stock Option Committee, all of the members of which are
outside Directors, which administers the Stock Option Plans. The Board of
Directors of the Bank has a Personnel Committee, two of the four members of
which are members of the Personnel Committee of the Corporation and all of the
members of which are outside Directors of the Bank.
Executive officer compensation levels, including that of the CEO, are compared
annually with independent surveys of the banking industry. The surveys utilized
include banks of comparable size, market and geographic characteristics to the
Corporation and the Bank. The surveys do not include the banks included in the
KBW 50 Index referenced at page 13 hereof inasmuch as the banks in the KBW 50
Index are larger than the Corporation and the Bank. Based upon the median
values indicated by these surveys, as well as the particular executive
officer's individual contribution to the Corporation and the Bank, the skills
and experiences required by the job, and the potential of the executive
officer, recommenda-
10
<PAGE> 13
tions are made by the Personnel Committees of the Corporation and the Bank,
which recommendations are reviewed and approved by the Board of Directors of the
Bank. During 1995, no decisions of the Committees were modified in any material
way or rejected by the Bank Board.
PHILOSOPHY AND CEO COMPENSATION. The compensation philosophy of the Corporation
and its affiliate banks reflects a commitment to reward executive officers for
performance through cash compensation and stock options. The cash compensation
program for executive officers consists of two elements, a base salary
component and an incentive component payable under the Incentive Compensation
Plan. The combination of base salary and incentive compensation is designed to
relate total compensation levels to the performance of the Corporation, its
affiliates and the individual executive officer. The stock option program is
designed to encourage and create ownership and retention of the Corporation's
stock by key employees, thereby aligning the long-range interests of key
employees with those of the Corporation's shareholders.
The objectives of the Incentive Compensation Plan are to motivate officers and
reward the accomplishment of annual objectives of the Corporation and its
affiliates; reinforce a strong performance orientation with differentiation and
variability in individual awards based on contribution to annual and long-range
business results; and provide a fully competitive compensation package which
will attract, reward, and retain individuals of the highest quality. For
executive officers of the Corporation, including the CEO, incentive awards are
determined as a percentage of annual base salary, which percentage ranges from
zero to fifty percent and are calculated utilizing a corporate goals factor and
a performance factor. The corporate goals factor is based one-third upon the
achievement of increased earnings and two-thirds upon return on beginning
equity of the Corporation and the Bank. The components of this factor must
exceed predetermined threshold levels before any executive incentive
compensation is considered. The determination of the performance factor entails
both an objective and subjective analysis of the executive officer's
performance during the year. Once the threshold for the corporate goals factor
has been attained, the corporate goals factor and the performance factor are
equally weighted. The Incentive Compensation Plan awards for 1995 were paid in
1996.
The decision-making process and compensation philosophy of the Corporation and
the Bank were applied by the Personnel and Stock Option Committees when
determining 1995 compensation for Mr. Watkins. The Committees believe that the
base salary earned by Mr. Watkins in 1995 was fair and reasonable based upon
the performance of the Corporation and the Bank (for example, increased
profitability over the previous fiscal year and strong return on equity, return
on assets and loan quality as compared to comparable banks and bank holding
companies) and when compared with executive compensation levels in the banking
industry as reported by the independent surveys referenced above. Mr. Watkins'
base salary for 1995 approximated the median of the base salaries reported in
those surveys. The base salary earned by Mr. Watkins in 1995 also reflects the
significant management and leadership responsibilities required of Mr. Watkins
in his position as CEO and the effective manner in which Mr. Watkins fulfilled
such responsibilities.
11
<PAGE> 14
Mr. Watkins is rewarded through the Incentive Compensation Plan for his
contribution to the Corporation's and the Bank's performance and operating
results in the same manner as other executive officers. (See discussion above.)
Incentive compensation earned by Mr. Watkins in 1995 was determined as a
percentage of his annual base salary based upon the amount by which the
corporate goals factor criteria were exceeded and the achievement of the
performance factor criteria established for Mr. Watkins. In determining Mr.
Watkins' 1995 incentive compensation, the Committees took into consideration
the following factors: (1) the Corporation's and the Bank's threshold corporate
goals factor criteria for increased earnings and return on equity were
surpassed; (2) the market price of the Common Shares increased during 1995; and
(3) a positive evaluation by the Committees of Mr. Watkins' performance with
respect to performance factors during 1995. The combination of these factors
enabled the Committees to award Mr. Watkins with incentive compensation of
approximately one-half of the total amount of maximum compensation available to
the CEO under the Incentive Compensation Plan. The Incentive Compensation Plan
award earned by Mr. Watkins in 1995 was paid in 1996.
THE STOCK OPTION COMMITTEE THE PERSONNEL COMMITTEE
OF THE CORPORATION OF THE CORPORATION
James J. Cullers James J. Cullers
Russell E. Ramser, Jr. Philip H. Jordan, Jr.
Alan E. Riedel Russell E. Ramser, Jr.
William A. Stroud William A. Stroud
12
<PAGE> 15
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG FIRST-KNOX BANC CORP., S&P 500 INDEX AND KBW 50 INDEX
The following graph sets forth a comparison of five year cumulative total
return among the Common Shares, the S&P 500 Index and the Keefe, Bruyette &
Woods, Inc. KBW 50 Index (the "KBW 50 Index") for the fiscal years indicated.
Information reflected on the graph assumes an investment of $100 on December
31, 1990 in each of the Common Shares, the S&P 500 Index and KBW 50 Index.
Cumulative total return assumes reinvestment of dividends. The KBW 50 Index
represents stock price performance of fifty of the nation's large banks, as
selected by Keefe, Bruyette & Woods, Inc. The Corporation is not among the
fifty banking companies included in the KBW 50. The Corporation has not
identified any published index of stock performance which includes the
Corporation or banking companies comparable to it.
<TABLE>
<CAPTION>
FIRST-KNOX PERFORMANCE CALCULATION
DATE INDEX VALUE KBW INDEX VALUE S & P IN
1995 1995 1995
<S> <C> <C> <C>
12/31/90 100.00 100.00 100.00
06/30/91 101.42 134.26 114.28
12/31/91 109.34 158.27 130.48
06/30/92 116.19 179.45 129.60
12/31/92 128.58 201.68 140.41
06/30/93 136.10 216.35 147.26
12/31/93 161.09 212.85 154.56
06/30/94 222.81 224.77 149.88
12/31/94 223.47 201.99 158.80
06/30/95 231.15 261.79 186.26
12/31/95 277.19 323.52 215.45
</TABLE>
13
<PAGE> 16
INDEBTEDNESS OF AND TRANSACTIONS WITH MANAGEMENT
During 1995 and up to the present date, some of the directors and officers of
the Corporation and its subsidiaries were customers of and had banking
transactions with the Bank and The Farmers and Savings Bank, both of which are
subsidiaries of the Corporation. All of these transactions were in the ordinary
course of each bank's business. All loans and commitments to loan included in
such transactions were made in the ordinary course of business on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons and, in the opinion of
the management of the Corporation, do not involve more than a normal risk of
collectibility or present other unfavorable features.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES 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 ten percent (10%) of the Common Shares to file reports of ownership
and changes in ownership on Forms with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than ten percent (10%) shareholders
are required by SEC regulation to furnish the Corporation with copies of all
such Forms. Based on the Corporation's review of the copies of such Forms, the
Corporation believes that all its officers, directors and greater than ten
percent (10%) shareholders complied with all filing requirements applicable to
them with respect to transactions during 1995 and through the present date.
AUDITING MATTERS
Pursuant to the recommendation of its Audit Committee, the Board of Directors
of the Corporation has retained Crowe, Chizek and Company, LLP, as independent
auditors for the Corporation and its subsidiaries for the year ending December
31, 1996.
In addition to services rendered in connection with their audit function,
Crowe, Chizek and Company reviews and assists with the filing of the
Corporation's federal income tax returns. It is anticipated that a
representative of Crowe, Chizek and Company will be present at the Annual
Meeting and have the opportunity to make a statement if desired and will be
available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come before
the Annual Meeting. However, if any other matters requiring a vote of
shareholders are properly presented to the meeting, it is intended that proxies
in the accompanying form will be voted on such other matters in accordance with
the recommendations of the Board of Directors or in accordance with the best
judgment of the proxy holders on such matters.
14
<PAGE> 17
ANNUAL REPORT
The 1995 Annual Report, including the required audited financial statements of
the Corporation and related financial information, is enclosed with this proxy
soliciting material.
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K INCLUDING FINANCIAL
STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST BY A
SHAREHOLDER. PLEASE ADDRESS YOUR REQUEST TO IAN WATSON, SECRETARY, FIRST-KNOX
BANC CORP., BOX 871, MOUNT VERNON, OHIO 43050, TELEPHONE 614/399-5500 OR
800/837-5266.
PROPOSALS BY SHAREHOLDERS FOR 1997 MEETING
If any shareholder of the Corporation wishes to submit a proposal to be
included in next year's Proxy Statement and acted upon at the annual meeting of
the Corporation to be held in 1997, the proposal must be received by the
Corporation prior to the close of business on November 4, 1996.
MISCELLANEOUS
You are urged to mark, date, sign, and return your proxy promptly. For your
convenience, a self-addressed envelope is enclosed on which no postage is
required if mailed in the United States.
By Order of the Board of Directors,
/s/ Ian Watson
Ian Watson
Secretary
March 1, 1996
15
<PAGE> 18
PLEASE MARK, DATE, SIGN, AND RETURN IMMEDIATELY
FIRST-KNOX BANC CORP.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - MARCH 26, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Know all men by these presents, that I, the undersigned shareholder of
First-Knox Banc Corp. (the "Corporation") do hereby nominate, constitute, and
appoint L. Bruce Levering, Wendell W. McCoy, and Richard B. Murray, and each
of them (with full power to act alone) my true and lawful proxy with full
power of substitution, for me and in my name, place and stead to vote all
the common shares of the Corporation standing in my name on its books on
February 16, 1996, at the Annual Meeting of its Shareholders to be held at
Mount Vernon Nazarene College, 800 Martinsburg Road, Mount Vernon, Ohio, on
March 26, 1996, at 3:00 p.m. or any adjournment thereof, with all powers the
undersigned would possess if personally present, as follows:
1A. To elect four (4) directors, each to hold office for a term of three
(3) years until the Annual Meeting of Shareholders in 1999, and until
their respective successors are elected and qualified.
[ ] FOR ALL NOMINEES LISTED BELOW (except as indicated below)*
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
James J. Cullers, Philip H. Jordan, Jr., Noel C. Parrish, Carlos E. Watkins
*(INSTRUCTIONS: TO WITHHOLD AUTHORITY FOR ANY NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
1B. To elect one (1) director to hold office for a term or two (2) years until
the 1998 Annual Meeting of Shareholders in 1998, and until his respective
successor is elected and qualified.
[ ] FOR THE NOMINEE LISTED BELOW
[ ] WITHHOLD AUTHORITY to vote for the nominee listed below
George T. Culbertson, Jr.
(Continued, and to be signed on reverse side)
<PAGE> 19
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly be brought before the meeting or any
adjournment thereof. The Board of Directors at present knows of no other
business to be presented by or on behalf of the Corporation or its Board of
Directors at the meeting.
This proxy will be voted as specified. UNLESS SPECIFIED, THE PROXY WILL BE
VOTED FOR ALL NOMINEES NAMED IN PROPOSAL NUMBER 1A AND 1B, IF ANY OTHER
BUSINESS IS PRESENTED AT SAID MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE
WITH THE DIRECTIONS OF THE BOARD OF DIRECTORS. The Board of Dirctors recommends
a vote "FOR" each of the nominees listed. THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS and may be revoked prior to its exercise. All previous
proxies given by the undersigned are hereby revoked.
DATE__________________
______________________________
Signature
______________________________
Signature
All joint owners must sign.
When signing as attorney,
executor, administrator,
trustee, or guardian, please
give full title. If more than
one trustee, all should sign.
Please sign, date, and return
your Proxy promptly in the
enclosed envelope.
[ ] I PLAN TO ATTEND THE ANNUAL MEETING.
