<PAGE>
PIONEER AMERICAN HOLDING COMPANY CORP.
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO OUR SHAREHOLDERS:
Notice is hereby given that the annual meeting of shareholders of
PIONEER AMERICAN HOLDING COMPANY CORP. (the "Company") will be held on June 4,
1996, at 10:00 A.M. (prevailing time), at the Corporate Office of Pioneer
American Holding Company Corp., 41 North Main Street, Carbondale, Pennsylvania
for the following purposes:
1. To elect the two Class 1 Directors named herein to serve as
Directors of the Company, as more fully described in the
accompanying Proxy Statement; and
2. To approve an amendment to the Company's Articles of Incorporation
to change the par value of the Company's Common Stock and
Preferred Stock from $10.00 per share to $1.00 per share (a Two
for One stock split has been declared subject to the proposed
amendment being approved and becoming effective).
3. To transact such other business as may properly come before this
meeting or any postponement or adjournment thereof.
The Board of Directors has fixed April 30, 1996 as the record date for
the determination of shareholders entitled to vote at the annual meeting. Only
shareholders of record at the close of business on that date will be entitled to
notice of, and to vote at, the annual meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED
TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY. A SELF-ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors,
Donald A. Hoyle, Jr., President
May 13, 1996
<PAGE>
PIONEER AMERICAN HOLDING COMPANY CORP.
41 North Main Street
Carbondale, Pennsylvania 18407
----------------------------
PROXY STATEMENT
----------------------------
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Pioneer American Holding Company Corp. (the "Company") for use at
the annual meeting of shareholders to be held on June 4, 1996, at 10:00 A.M.
(prevailing time) at the Company's Corporate Office, 41 North Main Street,
Carbondale, Pennsylvania and at any postponement or adjournment thereof. The
approximate date on which this Proxy Statement and the accompanying form of
proxy will first be sent or given to shareholders is May 13, 1996.
Sending in a signed proxy will not affect the shareholder's right to
attend the annual meeting and vote in person since the proxy is revocable. Any
shareholder giving a proxy has the power to revoke it by, among other methods,
giving written notice to the Secretary of the Company at any time before the
proxy is exercised.
The expense of the proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone, telegraph or teletype by directors, officers or employees of the
Company and its bank subsidiary, Pioneer American Bank, National Association
(the "Bank") without additional compensation. Upon request by record holders of
the Company's common stock, par value $10.00 per share (the "Common Stock"), who
are brokers, dealers, banks or voting trustees, or their nominees, the Company
is required to pay the reasonable expenses incurred by such record holders for
mailing proxy material and annual shareholder reports to any beneficial owners
of Common Stock.
A form of proxy is enclosed. If properly executed and received in time
for voting, and not revoked, the enclosed proxy will be voted as indicated in
accordance with the instructions thereon. If no directions to the contrary are
indicated, the persons named in the enclosed proxy will vote all shares of the
Company's Common Stock for election of the two nominees for Class 1
directorships hereinafter named and in favor of Proposal Two.
The enclosed proxy confers discretionary authority to vote with respect
to any and all of the following matters that may come before the meeting: (i)
matters which the Company does not know, a reasonable time before the proxy
solicitation, are to be presented at the meeting; (ii) approval of the minutes
of a prior meeting of shareholders, if such approval does not amount to
ratification of the action taken at the meeting; (iii) the election of any
person to any office for which a bona fide nominee is unable to serve or for
good cause will not serve; (iv) any proposal omitted from this Proxy Statement
and form of proxy pursuant to Rules 14a-8 or 14a-9 under the Securities Exchange
Act of 1934, as amended; and (v) matters incident to the conduct of the meeting.
In connection with such matters, the persons named in the enclosed form of proxy
will vote in accordance with their best judgment.
<PAGE>
The Company is not currently aware of any matters which will be brought
before the annual meeting (other than procedural matters) which are not referred
to in the enclosed notice of the annual meeting.
The Company had 1,400,825 shares of Common Stock outstanding at the
close of business on April 30, 1996, the record date. The presence, in person or
by proxy, of shareholders entitled to cast at least a majority of the votes
which all shareholders are entitled to cast on a particular matter constitutes a
quorum for the purpose of considering such matter. Each share of Common Stock
outstanding is entitled to one vote on each matter which may be brought before
the annual meeting. The election of Directors will be determined by a plurality
vote. Adoption of Proposal Two requires the affirmative vote of a majority of
the votes cast by all shareholders voting in person or by proxy. An abstention,
withholding of authority to vote or broker non-vote, will not have the same
legal effect as an "against" vote and will not be counted in determining whether
the proposal has received the required shareholder vote.
Article 8 of the Company's Articles of Incorporation restricts the
rights of a Person (as hereafter defined) to cast more than 10% of the total
votes which all shareholders are entitled to cast at a meeting, unless
authorized to do so by the Board of Directors and subject to such conditions as
the Board of Directors may impose. The term "Person" includes not only
individuals and entities, but also groups of individuals and entities who act
together for the purpose of acquiring, holding, disposing of or voting Common
Stock.
The casting of votes by a Person as a proxy holder for other
shareholders is not counted in computing the 10% limitation to the extent that
the proxies so voted were revocable and were secured from other shareholders who
are not members of a group which includes such Person. Giving a revocable proxy
to a Person does not in itself cause the shareholder giving the proxy to be a
member of a group which includes such Person. Article 8 provides that the
determination by the Board of Directors of the existence or membership of a
group, and of a number of votes any Person or each member of a group is entitled
to cast, is final and conclusive absent clear and convincing evidence of bad
faith.
In the event of a violation of Article 8 and in addition to other
remedies afforded the Company, the judges of election cannot count votes cast in
violation of Article 8 and the Company or its nominees have an option to acquire
from the violator shares of Common Stock in excess of the 10% limit at prices
which would in certain situations be lower than the then current market prices
of such shares.
The foregoing is a brief summary of Article 8 and is qualified and
amplified in all respects by the exact provisions of the Articles of
Incorporation, which can be obtained in the same manner as the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 (see "ANNUAL
REPORT").
-2-
<PAGE>
PRINCIPAL BENEFICIAL OWNERS OF COMMON STOCK
The following table sets forth, as of April 30, 1996, certain
information with respect to the beneficial ownership of Common Stock by (i) each
person who owns of record or who is known by the Board of Directors to be the
beneficial owner of more than five percent of the outstanding Common Stock, (ii)
each Director, (iii) each of the Executive Officers named in the Summary
Compensation Table below and (iv) all Executive Officers and Directors of the
Company as a group:
<TABLE>
<CAPTION>
Shares of Common
Stock Beneficially Percent of
Name Position Owned (a) Class (b)
- ---- -------- --------- ---------
<S> <C> <C> <C>
Richard Chojnowski Director 73,228 (c) 5.23%
Gene E. Goldenziel Director 28,998 (d) 2.07%
John S. Guzey Chairman/Director 28,000 2.00%
Donald A. Hoyle, Jr. President/Director 62,295 (e) 4.45%
William K. Nasser Director 76,754 (f) 5.48%
One Dunham Drive
Dunmore, PA
Margaret L. O'Connor, R.N. Director 22,408 (g) 1.60%
John W. Reuther Senior Executive Vice 49,583 (h) 3.54%
President/Director
Eldore Sebastianelli Treasurer/Director 24,182 (i) 1.73%
John W. Walski Director 50,572 (j) 3.61%
All Directors and Executive
Officers of the Company as
a group (13 persons) 394,970 28.20%
</TABLE>
- ----------
(a) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission and, accordingly, may
include securities owned by or for, among others, the wife and/or minor
children of the individual and any other relative who has the same home as
such individual, as well as other securities as to which the individual has
or shares voting or investment power or has the right to acquire within 60
days after April 30, 1996. Beneficial ownership may be disclaimed as to
certain of the securities. Except as indicated in the footnotes of this
-3-
<PAGE>
table, the persons named in this table have sole voting and investment
power with respect to all shares of Common Stock indicated.
(b) Does not include shares held by the ESOP except as specifically set forth
herein. As of April 30, 1996, the ESOP held 75,084 shares of which 3,400
shares had not been allocated to individual accounts.
(c) All shares are owned jointly with his mother.
(d) Includes 24,498 shares owned jointly with his spouse and 2,000 shares held
in an IRA account and 2,000 shares held as co-trustee.
(e) Includes 47,985 shares which may be acquired upon the exercise of stock
options. Also includes 4,208 shares owned jointly with his spouse and 4,955
shares held by the ESOP which have been allocated to his individual
account.
(f) Includes 8,292 shares owned jointly with his spouse, 19,856 shares owned
individually by his spouse, 9,602 shares held by him as co-trustee for his
children, and 39,004 shares owned individually among his children and
grandchildren.
(g) Includes 100 shares owned by Estate of husband and 22,308 held as Trustee
for family trust.
(h) Includes 35,754 shares which may be acquired upon the exercise of stock
options. Also includes 32 shares held by him as co-trustee for his
children, 40 shares held jointly with his son, Michael, and 3,911 shares
held by the ESOP which have been allocated to his individual account.
(i) Includes 2,146 shares held as trustee for his granddaughters and 22,036
shares held jointly with his spouse.
(j) Includes 17,324 shares owned jointly with his spouse.
-4-
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's Bylaws provide that the Board of Directors will be
divided into four classes and that each class shall serve for four years. The
Board of Directors has designated the persons listed below to be nominees for
election as Class 1 Directors. The nominees are being nominated to serve until
the end of their terms and until their successors are elected and qualified. The
Company has no reason to believe that either of the nominees will be unavailable
for election; however, should either nominee become unavailable for any reason,
the Board of Directors may designate a substitute nominee. The proxy agents
intend (unless authority has been withheld) to vote for the election of the
Company's nominees.
The Bylaws of the Company require that nominations for Directors to be
elected at an annual meeting of shareholders, except for those made by
management of the Company, must be submitted to the Secretary of the Company in
writing not later than the close of business on the 20th day immediately
preceding the date of the meeting. Such notification shall contain the following
information to the extent known to the notifying shareholder: (a) name and
address of each proposed nominee; (b) the principal occupation of each proposed
nominee; (c) the total number of shares of capital stock of the Company that
will be voted for each proposed nominee; (d) the name and residence address of
the notifying shareholder; and (e) the number of shares of capital stock of the
Company owned by the notifying shareholder. Nominations not made in accordance
herewith may, in such officer's discretion, be disregarded by the presiding
officer of the meeting, and upon the presiding officer's instruction, the vote
talliers may disregard all votes cast for each such nominee. In the event the
same person is nominated by more than one shareholder, the nomination shall be
honored, and all shares of capital stock of the Company shall be counted if at
least one nomination for that person complies with this provision.
Every Director must be a shareholder of the Company and shall own in
the Director's right the number of shares (if any) required by law in order to
qualify as such Director. Any Director shall forthwith cease to be a Director
when the Director no longer holds such shares, which fact shall be reported to
the Board of Directors by the Secretary, whereupon the Board of Directors shall
declare the seat of such Director vacated.
-5-
<PAGE>
Information Concerning Nominees
The following table contains information with respect to the nominees
for Director. Donald Hoyle was first elected to the Board of Directors upon
formation of the Company in 1984. Richard Chojnowski was first appointed to the
Board of Directors in 1994.
<TABLE>
<CAPTION>
Year First
Elected or
Appointed
Director of Principal Occupation
Name Age the Bank for Past Five Years
- ---- --- -------- -------------------
<S> <C> <C> <C>
Class 1 - Term to Expire in 2000
Donald A. Hoyle, Jr. 61 1984 President of Company and Bank
Richard Chojnowski 53 1994 Electrical Contractor
</TABLE>
Information Concerning Continuing Directors
The following table contains certain information with respect to the
Directors whose terms of office expire in 1997, 1998 and 1999. Gene E.
Goldenziel was first elected in 1986, John Reuther was first elected in 1988,
and Margaret L. O'Connor, R.N. was first appointed to the Board of Directors in
1995. All other Directors were first elected upon formation of the Company in
1984.
<TABLE>
<CAPTION>
Year First
Elected or
Appointed
Director of Principal Occupation
Name Age the Bank for Past Five Years
- ---- --- -------- -------------------
<S> <C> <C> <C>
Class 2 - Term to Expire in 1999
Gene E. Goldenziel 48 1985 Attorney - Needle & Goldenziel
William K. Nasser 80 1969 Certified Public Accountant - William K.
Nasser Accountants
John W. Walski 74 1982 Retired - Giant Markets
Class 3 - Term to Expire in 1998
John S. Guzey 88 1960 Retired President-Keystone Pavement &
Construction Co.
Margaret L. O'Connor, R.N. 65 1995 Former Mayor, Clarks Summit
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
Year First
Elected or
Appointed
Director of Principal Occupation
Name Age the Bank for Past Five Years
- ---- --- -------- -------------------
<S> <C> <C> <C>
Class 4 - Term to Expire in 1997
John W. Reuther 46 1988 Senior Executive Vice President of
Company and Bank
Eldore Sebastianelli 75 1980 Co-owner - C&S Excavating Company
</TABLE>
Committees of the Board of Directors and Attendance at Meetings
The Company does not have any nominating committee of the Board of
Directors. Shareholders can submit to management names of nominees for Directors
for review and consideration by the entire Board of Directors, as described
above.
The Bank has an Audit Committee which consists of three directors of
the Bank who are not employees of the Bank and are appointed annually by the
Board of Directors of the Bank. William K. Nasser, Eldore Sebastianelli and John
W. Walski are presently members of this Committee. The Bank's Audit Committee
met two times during 1995 and is responsible for insuring that a suitable
internal control system is maintained and proper examination procedures are
carried out in all areas of the Bank on a continuing basis.
The Bank also has a Planning Committee which is appointed annually by
the Board of Directors of the Bank. Gene E. Goldenziel, Richard Chojnowski,
Margaret L. O'Connor, R.N. and Robert S. Wallis are presently members of this
Committee. The Bank's Planning Committee met two times during 1995 and is
responsible for long-range planning for the Bank including recommending the
compensation for senior officers of the Bank.
The Board of Directors of the Company held five regular meetings during
1995. The Board of Directors of the Bank held 25 regular meetings during 1995.
All incumbent Directors of the Company attended at least 75% of the aggregate of
all the meetings of the Board of Directors and committee meetings of the Bank on
which such Directors serve, with the exception of John Walski, who resides in
Florida for four months, Margaret L. O'Connor, R.N. who resided in Florida for
part of the year and Gene Goldenziel who was absent due to his legal practice.
-7-
<PAGE>
Compensation of Directors
Members of the Board of Directors are compensated at the rate of $200
per meeting of the Company and $500 per meeting of the Bank attended and one
half the fee for meetings of the Bank not attended. Non-management Directors of
the Bank also received an additional fee of $8,000 during 1995.
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS
Executive Compensation
The following table sets forth all cash compensation paid by the
Company and the Bank for services rendered in all capacities to the Company and
its subsidiaries during the fiscal year ended December 31, 1995 to the Chief
Executive Officer of the Company and the Bank and to all Executive Officers of
the Company and the Bank whose salary and bonus exceed $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name and Long Term All Other
Principal Position Annual Compensation Compensation Compensation (a)
- ------------------ ------------------- ------------ ----------------
Year Salary (b) Bonus Stock Options
---- ---------- ----- -------------
<S> <C> <C> <C> <C> <C>
Donald A. Hoyle, Jr. 1995 $181,800 $36,366 - 0 - $53,771
President of the Bank
and the Company 1994 177,500 35,200 16,000 63,364
1993 161,100 29,300 16,000 60,519
John W. Reuther, 1995 $134,750 $23,700 - 0 - $41,926
Senior Executive Vice
President of the Bank and 1994 132,200 22,940 14,000 45,123
the Company
1993 121,300 21,340 14,000 28,671
</TABLE>
(a) For Mr. Hoyle, includes $6,000, $13,664 and $17,580 contributed by the
Company or the Bank on his behalf to the Employee Stock Ownership Plan,
$7,771, $6,000 and $7,089 contributed to the Savings and Investments Plan
and $40,000, $43,700 and $35,850 to pay insurance premiums to fund the
Company's obligations under the Executive Retirement Plan, in 1995, 1994
and 1993, respectively.
For Mr. Reuther, includes $5,390, $10,846 and $12,800 contributed by the
Company or the Bank on his behalf to the Employee Stock Ownership Plan,
$6,536, $6,277 and $5,793 contributed to the Savings and Investments Plan
and $30,000, $28,000 and $10,078 to pay insurance premiums to fund the
Company's obligations under the Executive Retirement Plan, in 1995, 1994
and 1993, respectively.
(b) Includes Directors fees of $16,500 for Mr. Hoyle and $16,250 for Mr.
Reuther.
-8-
<PAGE>
Employment Agreements
The Bank and the Company had entered into employment agreements with
Donald A. Hoyle, Jr. and John W. Reuther on September 30, 1991 providing for
base annual salaries of $121,000 and $89,000, respectively. On October 12, 1993,
the Bank entered into new employment agreements with Mr. Hoyle and Mr. Reuther
providing for base annual salaries of $146,500 and $106,700, respectively. Both
the new and old agreements provide for such higher than base salaries as may be
negotiated from time to time during the term of the agreements as well as
certain additional employment benefits. The base term of the agreements is five
years; the agreements may be terminated by the Bank for cause, upon the death of
the employee and, subject to the following provision concerning change of
control, upon the termination of the employee's employment by resignation or
otherwise. In the event that employee's employment with the Bank is terminated
by the employee or the Bank upon a change in control of the Bank, the Bank will
pay to the employee a lump-sum termination benefit equal to three years' base
annual salary not later than 30 days after termination. In addition, upon such
change in control, for one year, the employee will be reimbursed costs incurred
in connection with the search for a new job and reasonable relocation expenses
and, for two years, all nondiscriminatory employee benefits.
Executive Retirement Plan
On October 25, 1988, the Bank adopted a retirement plan (the "Executive
Retirement Plan") for the benefit of eligible employees. The Executive
Retirement Plan is administered by a committee of the Board which designates the
members who are eligible to participate in the Plan. The purpose of the
Executive Retirement Plan is to assist the Bank and the Company in retaining the
service of certain key employees until their retirement, to induce these key
employees to utilize their best efforts to maintain and enhance the business of
the Bank and the Company and to provide certain benefits to the key employees.
Under the Executive Retirement Plan, the Bank allocates each year an amount on
behalf of the member necessary to provide an annual income at the member's
normal retirement date payable for ten years equal to 35% of the member's
average compensation for his three most highly compensated years of employment.
While benefits under the Executive Retirement Plan are intended to be unfunded
obligations of the Bank, the Bank has elected to purchase insurance policies to
fund the obligations. The account of each member is credited with interest at
the rate of seven percent and compounded annually. A member shall have a 100%
vested interest in his account upon eligibility for retirement, death,
termination of his employment or in the event of a merger or acquisition of the
Bank by another entity. Upon retirement, the member is entitled to the value of
the account distributed in equal installments over a period of five, ten or
fifteen years at the election of the member. Prior to a member's retirement, a
member's beneficiary is entitled to the greater of the value of the member's
account at the time of death, or $200,000 or $250,000 as determined by the Board
of Directors. Donald A. Hoyle, Jr. and John W. Reuther have been designated as
members under the Executive Retirement Plan.
On March 7, 1994, the Bank supplemented the above described "Executive
Retirement Plan" with insurance contracts for the benefit of Donald A. Hoyle,
Jr. and John W. Reuther. The supplemental plan provides that the Bank purchase
life insurance policies on the lives of the named executives. The Bank will
further pay the annual premium due on each such policy until each insured
reaches the age of 65, unless employment is terminated prior to age 65. Each
named executive shall have a 100% ownership interest in his account upon
eligibility for retirement, death, termination of his employment or in the event
of a merger or acquisition of the Bank by another entity. Each named executive
-9-
<PAGE>
has executed a split-dollar agreement granting a collateral interest to the Bank
for all premiums paid by the Bank. At their retirement age of 62, the plan
benefit is estimated at $494,331 for Donald A. Hoyle, Jr. and $724,827 for John
W. Reuther.
Employee Stock Ownership Plan
The Board of Directors of the Bank adopted an Employee Stock Ownership
Plan ("ESOP") effective January l, 1985, and restated effective January l, 1989.
The ESOP is intended to invest primarily in the Common Stock of the Company
("Qualifying Employer Securities"). The assets of the ESOP are held in a trust
fund by the Company, as trustee (the "Trustee"), pursuant to a trust agreement.
Contributions from the Bank to the ESOP are generally required to be
made from net profits, and are made in amounts established in the sole
discretion of the Board of Directors. Each participant is entitled to direct the
Trustee with respect to the voting rights, if any, of any Qualifying Employer
Securities allocated to the participant's account provided that the issuer has a
"registration-type" class of securities. In other cases, the voting of shares
held by the ESOP, in general, will be determined by the Trustee. In addition,
under certain circumstances, a participant (or beneficiary) may exercise a "put
option" granted by the ESOP and require the Company to buy back any Qualifying
Employer Securities distributed to the participant (or beneficiary).
The operation and administration of the ESOP is controlled by a
committee appointed by the Board of Directors. The committee presently consists
of Donald A. Hoyle, Jr., Patricia A. Cobb, Susan Muir and Nina Sticker. The
committee designates investment policies under which the Trustee acts. The Board
of Directors has the sole responsibility to appoint and remove members of the
committee or the Trustee, and for determining the amount of contributions to the
ESOP by the Bank, and to amend or terminate, in whole or in part, the ESOP or
the trust agreement.
Any employee of the Bank in the eligible class of employees is eligible
to become a participant in the ESOP as of the January 1st following the date the
employee completed six months of service with the Bank, and will share in
employer contributions to the ESOP if he has completed 1,000 hours of service in
any year. Each participant shall be fully vested in his account after three
years of service. Stock purchased by the ESOP and dividends received by the ESOP
are allocated among the participants in proportion to their respective
compensation. Upon retirement, death or disability, a participant or his
beneficiaries, as the case may be, will generally be entitled to receive
specified benefits in the form of a single-sum distribution, subject to
alternative forms of distribution. At the discretion of the Committee, benefits
will be distributed in cash or in shares of Common Stock subject to the right of
the participant to elect to receive his benefits in shares of Common Stock. A
participant who separates from service prior to attainment of normal retirement
age has the right to receive distribution of his plan benefits commencing no
later than five years after the plan year in which he separated from service.
Savings and Investment Plan
The Bank sponsors a Savings and Investment Plan ("Savings Plan") for
employees which became effective on September 1, 1985, and was restated
effective January 1, 1989. Any employee who was employed by the Bank on
September 1, 1985 automatically became a participant in the Savings Plan. Any
-10-
<PAGE>
employee who completes 1,000 hours of service in any year is also eligible to
participate in the Savings Plan.
Subject to certain limitations, participants may contribute a portion
of their earnings for each year to the Savings Plan. For the first three percent
of earnings contributed by a participant, the Bank matches the contribution. On
the next three percent of earnings contributed by a participant, the Bank
matches one-half of the contribution. In addition, the Bank may contribute such
additional amounts as it determines. Federal income taxes on the participant's
and the Bank's contributions to the Savings Plan are deferred until the
participant withdraws funds from the Savings Plan. Each participant designates
one or more investment funds for the investment of the contributions made on the
participant's behalf. A participant is 100% vested in his account upon death or
termination of employment for any reason. Upon termination of employment by, or
death of, a participant, the participant or his estate has several alternatives
available for withdrawing funds from the Savings Plan. Withdrawals by a
participant of certain contributions and loans from the Savings Plan are also
permitted in certain situations.
Stock Option Plan
In February 1990, the Board of Directors of the Company adopted a stock
option plan, which was approved by the shareholders of the Company in May 1990
(the "Stock Option Plan"). Pursuant to the Stock Option Plan, stock options may
be granted which qualify under the Internal Revenue Code as incentive stock
options as well as stock options that do not qualify as incentive options. All
officers and key employees of the Company or any current or future subsidiary
who are employed on a full-time basis are eligible to receive options under the
Stock Option Plan. As of December 31, 1995, incentive stock options covering an
aggregate of 81,000 shares had been granted pursuant to the Stock Option Plan at
a $16.00 per share exercise price, incentive stock options covering an aggregate
of 30,000 shares had been granted at a $18.00 per share exercise price,
incentive stock options covering an aggregate of 9,000 shares had been granted
at a $23.00 per share exercise price and incentive stock options covering an
aggregate of 30,000 shares were granted at $26.00 per share exercise price.
The purpose of the Stock Option Plan is to provide additional incentive
to employees of the Company by encouraging them to invest in the Company's
Common Stock and thereby acquire a proprietary interest in the Company and an
increased personal interest in the Company's continued success and progress. The
Stock Option Plan is administered by a committee which is appointed by the Board
of Directors and consists only of Directors who are not eligible to receive
options under the Stock Option Plan. The committee determines, among other
things, which officers and key employees receive an option or options under the
Stock Option Plan, the type of option (incentive stock options or non-qualified
stock options, or both) to be granted, the number of shares subject to each
option, the rate of option exercisability, and, subject to certain other
provisions to be discussed below, the option price and duration of the option.
The aggregate number of shares which may be issued upon the exercise of
options under the Stock Option Plan is 150,000 shares of Common Stock. The
option price for options issued under the Stock Option Plan is to be at least
equal to 100% of the fair market value of the Common Stock as of the date the
option is granted. The fair market value is determined by the committee.
-11-
<PAGE>
Except as otherwise described below, none of the options granted under
the Stock Option Plan may be exercised during the first year after the date
granted. Thereafter each optionee may exercise up to 50% of his option the
second year, up to 75% of his option the third year, and up to 100% of his
option thereafter. In the event of a "change in control" of the Company, as
defined in the Stock Option Plan, each optionee may exercise the total number of
shares then subject to the option. Unless terminated earlier by the option's
terms, incentive stock options expire ten years after the date they are granted
and non-qualified stock options expire ten years and ten days after the date
they are granted.
The following table sets forth certain information concerning the
shares acquired upon exercise of options, the number of unexercised options and
the value of unexercised options at December 31, 1995 held by the Executive
Officers listed in the Summary Table.
OPTION EXERCISES AND YEAR-END VALUE TABLE
Aggregate Option Exercises In Last Fiscal Year
and Option Value at December 31, 1995
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at In-the-Money Options at
December 31, 1995 December 31, 1995(a)
----------------- --------------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
- ---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald A. Hoyle, Jr. 5,015 $110,330 47,985/8,000 $983,648/$140,000
John W. Reuther 4,375 $96,250 35,754/7,000 $714,219/$122,500
</TABLE>
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(a) Based upon the difference between the market value of $39.50 a share on
December 31, 1995 and the exercise price of the option.
Certain Relationships and Related Transactions
The Bank has had and expects to have in the future, loan and other
banking transactions in the ordinary course of business with many of its
Directors, officers, and their associates. All extensions of credit to such
persons have been 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 Bank, do not involve more than a normal risk of collectibility
or present other unfavorable features.
The law firm of Needle & Goldenziel was paid legal fees of
approximately $39,780 from the Company or its subsidiaries for legal services
rendered during 1995. Gene E. Goldenziel, who is a Director of the Bank and the
Company, is a partner in Needle, Goldenziel & Pascale. Needle, Goldenziel &
Pascale has been retained to perform legal services in 1996.
-12-
<PAGE>
Planning Committee Report on Executive Compensation
The Company, through its Board of Directors, has determined that all
matters dealing with executive compensation shall be analyzed by the Planning
Committee. The Board has mandated the exclusion of all management directors in
the analysis process. The independent directors of the Planning Committee have
forwarded the following report on executive compensation. Said report shall be
included in the Pioneer American Holding Company Corp.'s 1996 Proxy Statement.
The Company through its salary administration plan has implemented
compensation policies that compensate all personnel on a fair and equitable
basis, while recognizing demonstrated performance and contribution to the
successful operation of the organization. More explicitly, a determination has
been made through the salary administration process that the relative worth of
the President/Chief Executive Officer to the corporation is high, with extensive
diversification, executive management skills for the entire organization,
effective internal and external communication skills, problem-solving skills
based on analysis of long-range impact and the ability to make administrative
and policy-making decisions required. The relative worth of the Senior Executive
Vice President/Chief Financial Officer and other Executive Officers to the
Corporation is also high with the job requirements identified above also
essential. This relative worth of the Chief Executive Officer and all executive
officers has been translated into salary levels. The salary levels have been
initially determined by reviewing labor market salary data from surveys of
salaries paid in the external labor market for positions comparable to the
executive positions in Pioneer American Bank, N.A. The Human Resources director
procures this salary data for use by the Planning Committee from a third party
independent salary administration firm. The survey sources, whenever possible,
included organizations of comparable size and characteristics, such as number of
employees and asset size, as well as larger financial institutions with
comparable positions.
While the Committee gives significant weight to the financial
performance of the Company in determinations as to executive compensation, such
determinations involve certain subjective judgment and are not based solely upon
specific objective criteria or any formula.
The Committee annually evaluates and recommends base compensation,
bonus compensation and annual and longer-term incentive compensation for the
President/Chief Executive officer, Senior Executive Vice President/Chief
Financial Officer and the other executive officers. Annual increases to the base
salary of the President/Chief Executive Officer, Senior Executive Vice
President/Chief Financial Officer and other executive officers are determined by
industry and peer group standards, national and regional economic conditions,
and by the past and expected future contributions of the individual executive
officers. The base salary of the President/Chief Executive Officer and the
Senior Executive Vice President/Chief Financial Officer for 1995, 1994 and 1993
will be presented in the Company's annual proxy statement.
Bonus compensation is determined on an annual basis by analyzing the
achievement of financial goals, including, but not limited to, growth, earnings,
return on assets and return on equity. Financial statistics for 1995, as will be
presented in the 1995 annual report, reflect success in the attainment of
corporate goals. The bonus of the President/Chief Financial Officer for the 1995
was based on corporate performance as well as on the unique contributions of
these named executive officers to the corporate financial results. All other
executive officers were independently analyzed in their individual performance
in contributing to the corporate success in determining each bonus.
-13-
<PAGE>
In summary, the 1995 compensation of the President/Chief Executive
Officer was fixed separately and was based, among other factors, on a review of
competitive compensation data from surveys and peer companies. Bonus
compensation was paid to the President/Chief Executive Officer based on
corporate performance in 1995.
Generally, Section 162(m) of the Internal Revenue Code denies deduction
to any publicly held company such as the Company for certain compensation
exceeding $1,000,000 paid to the Chief Executive Officer and the four other
highest paid executive officers, including among other things, certain
performance based compensation. The Planning Committee is evaluating to what
extent Section 162(m) applies to the Company's compensation programs.
The foregoing report has been furnished by Gene E. Goldenziel, Esq.,
Richard Chojnowski, Margaret L. O'Connor, R.N. and Robert S. Wallis.
Stock Performance Graph
The following graph shows a comparison of the five-year cumulative
total return for the Company's Common Stock, the S&P Bank Composite Index and
the S&P Small Cap 600 Index assuming an investment in each of $100 on December
31, 1990 and a reinvestment of all dividends.
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Pioneer American 100 83.66 93.49 138.50 227.64 244.30
Holding Company
S&P Small Cap 100 148.89 179.74 213.50 203.31 264.22
600 Index
S&P Bank 100 163.34 215.39 237.45 225.27 358.98
Composite Index
</TABLE>
-14-
<PAGE>
PROPOSAL TWO
Proposal to Amend the Company's
Articles of Incorporation to Change Par Value
The shareholders are being asked to approve the proposal to amend the
Company's Articles of Incorporation to change the par value of both the
Company's Common Stock and Preferred Stock from $10.00 per share to $1.00 per
share.
The principal purpose of the proposed amendment is to facilitate stock
splits and stock dividends with respect to the Company's Common Stock. The
Company has declared a two for one stock split of its Common Stock, subject to
approval and effectiveness of the proposed amendment.
A stock split or stock dividend requires the Company to transfer to its
Capital Account for its Common Stock an amount equal to the par value of the
stock issued in the stock split or stock dividend. The transfer is made from the
accounts entitled "Undivided Profits" or "Additional Paid in Capital", or both.
The current $10.00 Par Value for the Common Stock would eventually exhaust the
Undivided Profits and Additional Paid in Capital accounts if the Company
continues to declare stock splits and stock dividends in the future. Reducing
the Par Value of the Common Stock from $10.00 to $1.00 would permit the Company
to continue to declare stock splits and stock dividends in the future without
exhausting these accounts.
If the amendment is approved by the shareholders and becomes effective,
the Capital Account for the Company's Common Stock would be adjusted to reflect
the revised Par Value of the issued Common Stock. At December 31, 1995, the
Capital Account for its Common Stock was $13,932,000. If the proposed amendment
becomes effective, the Capital Account on the effective date would be reduced to
$1,393,175, reflecting the 1,393,175 shares of Common Stock outstanding and the
balance in that account would be added to the account entitled Additional Paid
in Capital.
The Board of Directors believes that a permanent change in the Par
Value of the Common Stock to $1.00 per share is in the interest of the Company
and its shareholders. Although there are no shares of preferred stock currently
outstanding, the proposed amendment would also change the par value of the
authorized preferred stock from $10.00 to $1.00 per share to conform to the
change in the par value of the Common Stock.
The resolution to be considered by the shareholders at the meeting
reads as follows:
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<PAGE>
RESOLUTION TO CHANGE PAR VALUE
RESOLVED, that the first full paragraph of Article 5 of the Articles of
Incorporation of Pioneer American Holding Company Corp. should be
amended to read in full as follows (the remaining paragraphs of Article
5 to remain unchanged):
"5 The aggregate number of shares, classes of shares and par
value of shares which the Corporation shall have authority to
issue is:
A. 25,000,000 shares of Common Stock with a par value of
$1.00 per share.
B. 1,000,000 shares of Preferred Stock with a par value of
$1.00 per share."
FURTHER RESOLVED, that this amendment shall be presented to the
shareholders of Pioneer American Holding Company Corp. for
consideration of and vote upon this resolution at a time and place and
with a record date, to be hereafter established by the Board of Pioneer
American Holding Company Corp.
FURTHER RESOLVED, that the proper officers of the Pioneer American
Holding Company Corp. are hereby authorized and directed after
shareholder approval of the proposed amendment, to execute, under its
corporate seal, Articles of Amendment to the Articles of Incorporation
and to file such Articles of Amendment with the Pennsylvania Department
of State.
FURTHER RESOLVED, that the Board of Directors of the Pioneer American
Holding Company Corp., may, notwithstanding approval by the
shareholders of Pioneer American Holding Company Corp., at any time
prior to the filing of the Articles of Amendment with the Pennsylvania
Department of State, terminate the proposed amendment and all
transactions contemplated by or incident thereto.
The Board of Directors unanimously recommends that you vote "For"
Proposal Two.
-16-
<PAGE>
OFFICERS OF THE COMPANY AND THE BANK
Information concerning the Executive Officers of the Company is
provided above under "Information Concerning Nominees" and "Information
Concerning Continuing Directors."
The following table sets forth selected information about the officers
of the Bank, each of whom is elected by the Board of Directors and each of whom
holds office at the discretion of the Board of Directors. Except for Christopher
I. Mellon, each of the officers of the Bank has been principally employed as an
officer or employee of the Bank for more than the past five years. "Officer of
the Bank" as used herein means those persons with the title of Senior Vice
President and higher:
<TABLE>
<CAPTION>
Name Age Position with the Bank Held Since
---- --- ---------------------- ----------
<S> <C> <C> <C>
John S. Guzey 88 Chairman 1992
Director 1960
Donald A. Hoyle, Jr. 61 President 1984
Director 1984
John W. Reuther 46 Senior Executive Vice President 1987
Director 1988
Christopher I. Mellon, 31 Executive Vice President (a) 1995
CPA (a)
Patricia A. Cobb, Esq. 38 Senior Vice President 1990
James E. Jackson 52 Senior Vice President 1987
Dorothea C. Metz 70 Senior Vice President 1995
</TABLE>
- ----------
(a) Prior to joining the Bank in 1993, he was employed as Corporate Director of
Strategic Planning, US Foodservice; Senior Vice President of Operations,
Franklin First Savings Bank; and Audit Manager, KPMG Peat Marwick.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of KPMG Peat Marwick acted as the Company's
independent public accountants for the fiscal year ended December 31, 1995 and
has been selected to act as the Company's independent public accountant for the
fiscal year ended December 31, 1996. A representative of KPMG Peat Marwick is
expected to be present at the annual meeting of shareholders and to have the
opportunity to make a statement, if he desires to do so, and is expected to be
available to respond to appropriate questions.
-17-
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals regarding the 1997 Annual Meeting must be
submitted to the Company by January 12, 1997.
ANNUAL REPORT
This Proxy Statement is accompanied by the Annual Report to
Shareholders of the Company for the year ended December 31, 1995.
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 REQUIRED
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WITHOUT CHARGE, EXCEPT
FOR EXHIBITS TO THE REPORT, BY SENDING A WRITTEN REQUEST THEREFOR TO:
Donald A. Hoyle, Jr., President
Pioneer American Holding Company Corp.
41 North Main Street
Carbondale, Pennsylvania 18407
-18-
