<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or section
240.14a-12
Pioneer American Holding Company Corp.
................................................................................
(Name of Registrant as Specified In Its Charter)
N/A
................................................................................
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
................................................................
(2) Aggregate number of securities to which transaction applies:
................................................................
<PAGE>
(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:
................................................................
<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 2, 1998, 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 3 Directors named herein to serve as Directors
of the Company, as more fully described in the accompanying Proxy
Statement; and
2. 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, 1998 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,
/s/ Donald A. Hoyle, Jr.
-------------------------------
Donald A. Hoyle, Jr., President
Carbondale, Pennsylvania
May 12, 1998
<PAGE>
PIONEER AMERICAN HOLDING COMPANY CORP.
41 North Main Street
Carbondale, Pennsylvania 18407
(717) 282-2662
----------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
----------------------------
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 2, 1998, 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 12, 1998.
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 $1.00 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 3 directorships hereinafter named.
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
<PAGE>
such matters, the persons named in the enclosed form of proxy will vote in
accordance with their best judgment.
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 2,901,484 shares of Common Stock outstanding at the
close of business on April 30, 1998, 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. In any matters other than the election of directors, the
affirmative vote of the majority of shares present in person or represented by
proxy at the annual meeting and entitled to vote on the matter shall be the
act of the shareholders. Under the Pennsylvania Business Corporation Law, 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, 1997 (see
"ANNUAL REPORT").
-2-
<PAGE>
PRINCIPAL BENEFICIAL OWNERS OF COMMON STOCK
The following table sets forth, as of April 30, 1998, 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 herein 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 146,456(c) 5.05%
3900 Robert Drive
Olyphant, PA
Gene E. Goldenziel Director 55,996(d) 1.92%
John S. Guzey Chairman/Director 56,000 1.93%
Donald A. Hoyle, Jr. President/Director 112,722(e) 3.82%
William K. Nasser Director 76,612(f) 2.64%
Margaret L. O'Connor Director 44,816(g) 1.54%
John W. Reuther Senior Executive Vice President/ 90,448(h) 3.09%
Director
Eldore Sebastianelli Treasurer/Director 47,020(i) 1.62%
John W. Walski Director 101,144(j) 3.49%
All Directors and Executive Officers
of the Company as a group
(12 Persons) 747,238 24.96%
</TABLE>
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(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, 1998. Beneficial ownership may be
disclaimed as to certain of the securities. Except as indicated in the
footnotes of this 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, 1998, the ESOP held 149,959 shares, all of which
have been allocated to individual accounts.
(c) All shares are owned jointly with his mother.
(d) Includes 21,736 shares owned jointly with his spouse and 4,000 shares
held in an IRA account.
(e) Includes 46,668 shares which may be acquired upon the exercise of stock
options. Also includes 11,252 shares held by the ESOP which have been
allocated to his individual account.
-3-
<PAGE>
(f) Includes 16,584 shares owned jointly with his spouse, 39,712 shares owned
individually by his spouse and 18,704 held as co-trustee of a family
trust.
(g) Includes 200 shares owned by the estate of such director's husband and
44,616 held as trustee for family trust.
(h) Includes 46,000 shares which may be acquired upon the exercise of stock
options. Also includes 16 shares held by him as co-trustee for his son,
80 shares held jointly with his son, Michael, and 8,894 shares held by
the ESOP which have been allocated to his individual account.
(i) Includes 1,748 shares held as trustee for his grandchildren and 45,272
shares held jointly with his spouse.
(j) Includes 34,648 shares owned jointly with his spouse.
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 3 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.
-4-
<PAGE>
Information Concerning Nominees
The following table contains information with respect to the nominees
for Director. Margaret O'Connor was first elected to the Board of Directors of
the Company in 1995. John S. Guzey was first elected to the Board of Directors
upon formation of the Company in 1984.
<TABLE>
<CAPTION>
Year First Elected or
Appointed Director Principal Occupation for
Name Age of the Bank Past Five Years
---- --- ----------- ---------------
Class 3 - Term to Expire in 2002
<S> <C> <C> <C>
John S. Guzey 90 1960 Retired-President of Keystone
Pavement & Construction Company
Margaret L. O'Connor 67 1995 Former Mayor, Clarks Summit, PA
</TABLE>
Information Concerning Continuing Directors
The following table contains certain information with respect to the
Directors whose terms of office expire in 1999, 2000 and 2001. Gene E.
Goldenziel was first elected to the Board of Directors of the Company in 1986.
Richard Chojnowski and John W. Reuther were first appointed to the Board of
Directors of the Company in 1994 and 1988, respectively. All other Directors
were first elected upon formation of the Company in 1984.
<TABLE>
<CAPTION>
Year First Elected or
Appointed Director Principal Occupation for
Name Age of the Bank Past Five Years
---- --- ----------- ---------------
Class 1 - Term to Expire in 2000
<S> <C> <C> <C>
Donald A. Hoyle, Jr. 63 1984 President of Company and Bank
Richard Chojnowski 55 1994 Electrical Contractor
Class 2 - Term to Expire 1999
Gene E. Goldenziel 50 1985 Attorney - Needle, Goldenziel &
Pascale
William K. Nasser 82 1969 Retired Certified Public Accountant -
William K. Nasser Accountants
John W. Walski 76 1982 Retired - Giant Markets
Class 4 - Term to Expire in 2001
John W. Reuther 48 1988 Senior Executive Vice President of
Company and Bank
Eldore Sebastianelli 77 1980 Retired - former co-owner - C&S
Excavating Company
</TABLE>
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<PAGE>
Committees of the Board of Directors and Attendance at Meetings
The Company does not have any audit, nominating or compensation
committees 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 audit and compensation committee
functions are performed by the Bank's committees described below.
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 twice during 1997 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 and Robert S. Wallis are presently members of this
Committee. The Bank's Planning Committee met once during 1997 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 1997. The Board of Directors of the Bank held 24 regular meetings
during 1997. 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 and Margaret L. O'Connor, whose absences were excused by the Board as
such individuals reside in Florida for a portion of the year.
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 $250
for meetings of the Bank not attended. Non-management Directors of the Bank
also received an additional fee of $9,000 during 1997.
-6-
<PAGE>
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, 1997 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. 1997 $190,150 $ 26,040 - 0 - $ 51,119
President and Director
of the Bank and the Company 1996 189,350 38,192 - 0 - 55,560
1995 181,800 36,366 - 0 - 53,771
John W. Reuther, 1997 $141,250 $ 16,807 - 0 - $ 41,478
Senior Executive Vice President
and Director of the Bank 1996 140,000 24,900 - 0 - 41,396
and the Company
1995 134,750 23,700 - 0 - 41,926
</TABLE>
- ---------
(a) For Mr. Hoyle, $7,173 contributed to the Savings and Investment Plan, a
car allowance of $1,840 life insurance premiums paid by the Bank of
$2,106 and insurance premiums paid of $40,000 to fund the Company's
obligations under the Executive Retirement Plan in 1997.
For Mr. Reuther, $6,671 contributed to the Savings and Investment Plan, a
car allowance of $2,139, life insurance premiums paid by the Bank of $913
and insurance premiums paid of $31,755 to fund the Company's obligations
under the Executive Retirement Plan in 1997.
(b) Includes Directors fees of $16,550 and $16,750 paid to Mr. Hoyle and Mr.
Reuther, respectively, during fiscal 1997.
Employment Agreements
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. The 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'
-7-
<PAGE>
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 has executed a split-dollar agreement granting a collateral
interest to the Bank for all premiums paid by the Bank, which collateral
interest is extinguished upon retirement, death, termination of employment or
in the event of a merger or acquisition of the Bank by another entity. At
their retirement age of 65, the plan benefit is estimated at $593,540 for
Donald A. Hoyle, Jr. and $840,766 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
-8-
<PAGE>
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, Nina Sticker
and Gene E. Goldenziel. 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
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,
-9-
<PAGE>
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,
1996, incentive stock options covering an aggregate of 162,000 shares had been
granted pursuant to the Stock Option Plan at a $8.00 per share exercise price,
incentive stock options covering an aggregate of 60,000 shares had been
granted at a $9.00 per share exercise price, incentive stock options covering
an aggregate of 18,000 shares had been granted at a $11.50 per share exercise
price and incentive stock options covering an aggregate of 60,000 shares were
granted at $13.00 per share exercise price. All option amounts and the
exercise prices thereof have been adjusted to give effect to the two for one
stock split effective June 5, 1996.
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 300,000 shares (as adjusted for the
two for one stock split effective June 5, 1996) 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.
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
-10-
<PAGE>
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, 1997 held by the
Executive Officers listed in the Summary Table. No options were granted during
the year ended December 31, 1997.
<TABLE>
<CAPTION>
OPTION EXERCISES AND YEAR-END VALUE TABLE
Aggregate Option Exercises In Last Fiscal Year and Option Value at December 31, 1997
Number of Unexercised Value of Unexercised
Options at In-the-Money Options
December 31, 1997 at December 31, 1997(a)
----------------- -----------------------
Shares
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Donald A. Hoyle, Jr. - 0 - - 0 - 73,878/0 $860,761/0
John W. Reuther 8,297 $132,752 56,000/0 $630,000/0
</TABLE>
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(a) Based upon the difference between the market value of $22.25 per share on
December 31, 1997 and the exercise price of the option (as adjusted for
the two to one stock split effective June 5, 1996).
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 & Pascale was paid legal fees of
approximately $65,773 by or on behalf of the Company or its subsidiaries for
legal services rendered during 1997 (of which $14,250 was paid by borrowers of
the Bank). 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 by the Bank and the Company to perform legal services in 1998.
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<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires the
Company's directors, executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, if any, to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors
and greater than 10% stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no
other reports were required, during the fiscal year ended December 31, 1997,
all Section 16(a) filing requirements applicable to its officers and directors
were complied with.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Pioneer American Bank, N.A., 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 1998 Proxy Statement.
Pioneer American Bank, N.A. 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 the
other executive officers to the Company 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 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 for
characteristics, such as number of employees and asset size, as well as larger
financial institutions with comparable positions.
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
-12-
<PAGE>
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 1996, 1995 and 1994 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
1997, as will be presented in the 1997 annual report, reflect success in the
attainment of corporate goals. The bonus of the President/Chief Executive
Officer and Executive Vice President/Chief Financial Officer for 1997 was
based on corporate performance. All other executive officers were
independently analyzed in their individual performance in contributing to the
corporate success in determining each bonus.
In summary, the 1997 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 1997.
The foregoing report has been furnished by Gene E. Goldenziel,
Esquire, Richard Chojnowski, Margaret L. O'Connor and Robert S. Wallis.
Compensation Committee Interlocks and Insider Participation
The Bank's Planning Committee, which acts as the compensation
committee, is comprised of Directors Chojnowski, Goldenziel, O'Connor and
Wallis. Gene E. Goldenziel, a member of such committee, is a partner with the
law firm of Needle, Goldenziel & Pascale which performs legal services for the
Company and the Bank. During fiscal 1997, $65,773 (of which $14,250 was paid
by borrowers of the Bank) in legal fees were paid to Mr. Goldenziel's firm by
or on behalf of the Company and the Bank.
-13-
<PAGE>
Stock Performance Graph
The following graph shows a comparison of the five-year cumulative
return for the Company's Common Stock, the S&P Small Cap Bank Index and the
S&P Small Cap 600 Index assuming an investment in each of $100 on December 31,
1992 and the reinvestment of all dividends.
<TABLE>
<CAPTION>
Base
Period Years Ending
- ------------------------------------------------------------------------------------------------
Company/Index Dec 92 Dec 93 Dec 94 Dec 95 Dec 96 Dec 97
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pioneer American Holding Company Corp. $100 $148.14 $243.48 $261.31 $327.86 $326.75
Banks Composite 100 110.24 104.59 166.66 235.91 340.76
S&P SmallCap 600 Index 100 118.79 113.12 147.01 178.35 223.98
</TABLE>
-14-
<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. 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:
Name Age Position with the Bank Held Since
---- --- ---------------------- ----------
John S. Guzey 90 Chairman 1992
Director 1960
Donald A. Hoyle, Jr. 63 President 1984
Director 1984
John W. Reuther 48 Senior Executive Vice 1987
President 1988
Director
Patricia A. Cobb, Esquire 40 Senior Vice President 1990
James E. Jackson 54 Senior Vice President 1987
Dorothea C. Metz 72 Senior Vice President 1995
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, 1997 and
has been selected to act as the Company's independent public accountant for
the fiscal year ended December 31, 1998. 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.
SHAREHOLDER PROPOSALS
Shareholder proposals regarding the 1999 Annual Meeting must be
submitted to the Company by January 16, 1999.
-15-
<PAGE>
ANNUAL REPORT
This Proxy Statement is accompanied by the Annual Report to
Shareholders of the Company for the year ended December 31, 1997.
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, 1997
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
-16-
<PAGE>
- --------------------------------------------------------------------------------
PIONEER AMERICAN HOLDING COMPANY CORP.
Proxy for Annual Meeting of Shareholders
June 2, 1998
Solicited on behalf of the Board of Directors
The undersigned hereby constitutes and appoints Daniel J. Corazzi, John J.
Kuna and Basil Telep and each of them, as attorneys-in-fact and proxies of the
undersigned, with full power of substitution for and in the name, place and
stead of the undersigned to appear at the Annual Meeting of Shareholders of
Pioneer American Holding Company Corp. ("Pioneer"), to be held on the 2nd day
of June, 1998, and at any postponement or adjournment thereof, and to vote all
of the shares of Common Stock of Pioneer which the undersigned is entitled to
vote, with all the powers and authority the undersigned would possess if
personally present. The undersigned directs that this proxy be voted as
follows:
Please mark your votes as in this example. /X/
- --------------------------------------------------------------------------------
1. For / / the election of John S. Guzey and Margaret L. O'Connor, as Directors
of Pioneer for terms of four years, as more fully described in the
accompanying Proxy Statement (to withhold authority to vote for all
nominees, check this box: / /)
To withhold authority to vote for an individual nominee, write that nominee's
name on the space provided below.
- --------------------------------------------------------------------------------
2. To transact such other business as may properly come before this meeting or
any postponement or adjournment thereof.
This proxy will, when properly executed, be voted as directed. If no directions
to the contrary are indicated, the persons named herein intend to vote for the
election of the named nominees for director.
(Continued, and to be signed on the reverse side)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
THE PROXY AGENTS PRESENT AND ACTING IN PERSON OR BY THEIR SUBSTITUTES (OR,
IF ONLY ONE IS PRESENT AND ACTING, THEN THAT ONE) MAY EXERCISE ALL THE POWERS
CONFERRED BY THIS PROXY. DISCRETIONARY AUTHORITY IS CONFERRED BY THIS PROXY AS
TO CERTAIN MATTERS DESCRIBED IN THE COMPANY'S PROXY STATEMENT.
The undersigned hereby acknowledges receipt of Pioneer's 1997 Annual
Report to Shareholders, Notice of the Company's 1998 Annual Meeting of
Shareholders and the Proxy Statement relating thereto.
DATE:----------------------------, 1998
(Please date this Proxy)
--------------------------------------
--------------------------------------
Signature(s)
It would be helpful if you signed your
name exactly as it appears on your
stock certificate(s), indicating any
official position or representative
capacity. If shares are registered in
more than one name, all owners should
sign.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
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