SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
_
Filed by the Registrant |_| _
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
_
|X| Definitive Additional Materials
_
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
First United Corporation
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
_
|_| Fee paid previously with preliminary materials: N/A
<PAGE>
_
|_| 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>
FIRST UNITED CORPORATION
March 24, 2000
To Our Shareholders:
On behalf of the Board of Directors and the whole First United
Team, I cordially invite you to attend the Annual Shareholders' Meeting to be
held on Tuesday, April 25, 2000, at 3:00 p.m. in the Rocky Gap Lodge & Golf
Resort, 12601 Lake Shore Drive, Flintstone, Maryland 21530. The notice of
meeting and proxy statement accompanying this letter describe the specific
business to be acted upon.
In addition to the specific matters to be acted upon, there
will be a report on the progress of your Company and an opportunity to ask
questions on matters of general interest to shareholders.
It is important that your shares be represented at the
meeting. Whether or not you plan to attend in person, we would ask that you
mark, sign, date and promptly return the enclosed proxy in the envelope
provided.
There will be a reception with light refreshments immediately
following the shareholders' meeting for all registered shareholders. Please
return the enclosed reservation card if you are planning to attend. I look
forward to seeing you there.
Sincerely yours,
WILLIAM B. GRANT
Chairman of the Board &
Chief Executive Officer
P.O. Box 9 Oakland, MD 21550-0009 Telephone 888-692-2654
<PAGE>
FIRST UNITED CORPORATION
19 South Second Street
P.O. Box 9
Oakland, Maryland 21550-0009
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 24, 2000
To Shareholders of First United Corporation:
Notice is hereby given that the Annual Meeting of the Shareholders of
First United Corporation (the "Company") will be held in the Rocky Gap Lodge &
Golf Resort, 12601 Lake Shore Drive, Flintstone, Maryland 21530. The meeting is
scheduled for:
TUESDAY, APRIL 25, 2000, at 3:00 p.m.
The purposes of the meeting are:
1. To elect six (6) Directors to serve for a three-year term and
until the election and qualification of their successors.
2. To transact such other business as may be properly brought before
the meeting or any adjournment thereof.
IT IS HOPED THAT YOU WILL PLAN TO ATTEND, BUT WHETHER OR NOT YOU
CONTEMPLATE ATTENDING THE MEETING, YOU ARE REQUESTED TO EXECUTE THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY. IF YOU SHOULD ATTEND THE MEETING, YOU MAY
WITHDRAW YOUR PROXY AND VOTE IN PERSON, SHOULD YOU SO DESIRE. ALL SHAREHOLDERS
OF RECORD AT THE CLOSE OF BUSINESS ON FEBRUARY 29, 2000, ARE ENTITLED TO VOTE AT
THIS MEETING.
Anyone acting as proxy agent for a shareholder must present a proxy
properly executed by the shareholder authorizing the agent in form and substance
satisfactory to the judges of election, and otherwise in accordance with the
Company's Bylaws.
By order of the Board of Directors
ROBERT W. KURTZ
Secretary
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
FIRST UNITED CORPORATION
19 South Second Street
P.O. Box 9
Oakland, Maryland 21550-0009
March 24, 2000
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
The enclosed proxy is solicited by the Board of Directors of First
United Corporation (the "Company") in connection with the Annual Meeting of
Shareholders to be held on April 25, 2000, and any adjournment or postponements
thereof. The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited by officers,
Directors and regular employees of the Company personally or by telephone,
telegraph or facsimile. No additional remuneration will be paid to officers,
Directors or regular employees who solicit proxies. The Company may reimburse
brokers, banks, custodians, nominees and other fiduciaries for their reasonable
out-of-pocket expenses in forwarding proxy materials to their principals. The
Company has also engaged ChaseMellon Shareholder Services ("ChaseMellon") to
assist in the solicitation of proxies, at an estimated cost of $5,000 plus
reasonable expenses.
Please complete and sign the enclosed proxy and return it to our
transfer agent, ChaseMellon, promptly. Should you attend the meeting and desire
to vote in person, you may withdraw your proxy by written request delivered to
the Secretary of the Company, prior to its exercise by the named proxies. Also,
your proxy may be revoked before it is exercised, whether or not you attend the
meeting, by notifying Robert W. Kurtz, Secretary, First United Corporation, P.O.
Box 9, Oakland, Maryland 21550-0009, in writing prior to the Annual Meeting of
Shareholders. Your proxy may also be revoked by using a subsequently signed
proxy. Your proxy will be voted in accordance with the instructions on the proxy
card. If no instructions are given, your proxy will be voted FOR the Director
nominees listed below, and in the discretion of the persons named in the proxy
with respect to any other matter properly brought before the meeting. The proxy
materials are first being mailed to shareholders on or about March 24, 2000.
OUTSTANDING VOTING SECURITIES; VOTING RIGHTS
Only shareholders of record of the Company's common stock, par value
$.01 per share ("Common Stock") at the close of business on February 29, 2000
(the "Record Date"), will be entitled to receive notice of and vote at the
Annual Meeting of Shareholders. As of the Record Date, there were 6,080,273
shares of Common Stock outstanding and entitled to be voted at the Annual
Meeting of Shareholders. Each share of Common Stock is entitled to one vote.
Directors are elected by a plurality of the votes cast by the holders of shares
of Common Stock present in person or represented by proxy at the meeting, in
which there is a quorum present. Consequently, withholding of votes, abstentions
and broker non-votes will not affect the outcome of the vote.
<PAGE>
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned as of the Record Date by Directors and executive officers and
by each person that, to the Company's knowledge, beneficially owns more than 5%
of the Company's outstanding Common Stock. Except as otherwise indicated and
except for shares held by members of an individual's family or in trust, all
shares are held with sole dispositive and voting power. The address of each
person listed below is the address of the Company.
<TABLE>
<CAPTION>
Common Stock Percent of
Beneficially Outstanding
DIRECTORS & EXECUTIVE OFFICERS: Owned Common Stock
<S> <C> <C>
David J. Beachy ............................................................ 5,645 .09%
Donald M. Browning.......................................................... 17,821 .29%
Rex W. Burton .............................................................. 9,119 .15%
Paul Cox, Jr................................................................ 1,452 .02%
Richard D. Dailey, Jr. ..................................................... 2,683 .04%
Jeannette R. Fitzwater...................................................... 9,556 .16%
Philip D. Frantz............................................................ 1,487 .02%
William B. Grant ........................................................... 8,127 .13%
Maynard G. Grossnickle...................................................... 9,957 .16%
Eugene D. Helbig, Jr........................................................ 1,819 .03%
Raymond F. Hinkle .......................................................... 5,684 .09%
Robert W. Kurtz ............................................................ 7,672 .13%
Steven M. Lantz............................................................. 1,132 .02%
Andrew E. Mance ............................................................ 49,784 .82%
Elaine L. McDonald.......................................................... 2,498 .04%
Donald E. Moran............................................................. 131,964 2.17%
Karen F. Myers ............................................................. 6,709 .11%
Benjamin W. Ridder.......................................................... 2,005 .03%
I. Robert Rudy.............................................................. 35,307 .56%
James F. Scarpelli, Sr. .................................................... 84,242 (1) 1.35%
Richard G. Stanton.......................................................... 12,813 .20%
Robert G. Stuck............................................................. 2,583 .04%
Frederick A. Thayer, III.................................................... 50,053 .80%
Frederick A. Thayer, IV..................................................... 4,405 .07%
Directors & Executive Officers as a Group (24 persons) ..................... 464,517 7.64%
OTHER BENEFICIAL OWNERS:
Firstoak & Company.......................................................... 611,537(2) 10.06%
</TABLE>
(1) Includes 1365 shares held in the James and Margaret Scarpelli Foundation
Trust which Mr. Scarpelli has a 1/4 interest.
(2) Shares held in the name of Firstoak & Company, a nominee, are administered
by the Trust Department of the Bank in a fiduciary capacity. Firstoak & Company
disclaims beneficial ownership of such shares.
- 2 -
<PAGE>
ELECTION OF DIRECTORS (PROPOSAL NO. 1)
By amendment to the Company's Articles of Incorporation at the 1998
Annual Meeting of Shareholders, the Company's Directors were elected into three
classes, as nearly equal in number as possible, with respect to the time for
which the Directors may hold office. Directors are elected to hold office for
term of three years, and one class of Director expires each year. The terms of
Directors of Class II expire this year. Directors of Class I will hold office
until the 2002 Annual Meeting of Shareholders and Directors of Class III will
hold office until the 2001 Annual Meeting of Shareholders. In each case,
Directors are elected until their successors are duly elected and qualify.
The Directors of Class II are up for election at this Annual Meeting.
The Company's Chairman of the Board and CEO is a member of Class I, and the
Company's President and CFO is a member of Class II. No Director or nominee
holds any directorships in any other public company. The following nominees for
Directors of Class II, their ages as of the Record Date, their principal
occupations and business experience, and certain other information are set forth
below. In the event a nominee declines or is unable to serve as a director,
which is not anticipated, the proxies will be voted for the Board's substitute
nominee.
NOMINEES FOR CLASS II (Term Expires 2003)
<TABLE>
<CAPTION>
Occupation Director
Name Age During Past Five Years Since
<S> <C> <C> <C>
Maynard G. Grossnickle 68 Farmer, Retired 1996
Raymond F. Hinkle 63 Tax Consultant 1996
Robert W. Kurtz 53 President, Chief Financial Officer, 1990
Secretary and Treasurer
First United Corporation;
President and Chief Financial Officer
First United Bank & Trust
Andrew E. Mance 85 Physician 1985
Elaine L. McDonald 51 Vice President1995
Alpine Village / Silver Tree Inn
Donald E. Moran 69 Secretary/Treasurer 1988
Moran Coal Company
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR SUCH NOMINEES.
- 3 -
<PAGE>
The election of directors requires the affirmative vote of holders of a
majority of the shares of Common Stock present and voting. A quorum for the
Annual Meeting consists of a majority of the issued and outstanding shares of
Common Stock present in person or by proxy and entitled to vote, and directors
are elected by a plurality of the votes of the shares present in person or by
proxy and entitled to vote. Consequently, withholding of votes, abstentions and
broker non-votes with respect to shares otherwise present at the Annual Meeting
in person or by proxy will have no effect on the outcome of this vote.
The Company lists below all Directors of Class I and Class III whose
terms do not expire in 2000, including their ages as of the Record Date, and
their principal occupations and business experience.
<TABLE>
<CAPTION>
Occupation Director
Name Age During Past Five Years Since
<S> <C> <C> <C>
David J. Beachy 59 Vice President 1985
Fred E. Beachy Lumber Co., Inc.,
Building Supplies
Donald M. Browning 75 Corporate Secretary, 1985
Browning's, Inc.
Retail Groceries
Rex W. Burton 65 Owner & President, 1992
Burtons, Inc., Dry Goods
Paul Cox, Jr. 60 Owner, Professional Tax Service 1993
Tax Consulting Firm
Richard D. Dailey, Jr. 43 President, Cumberland Electric 1995
Company
William B. Grant 46 Chairman of the Board and 1995
Chief Executive Officer
First United Corporation and
First United Bank & Trust
Karen F. Myers 48 President, Mountaineer Log & 1992
Siding Co., Inc.; Associate Broker,
Long & Foster Realty
I. Robert Rudy 47 President, Rudy's Inc., 1992
Retail Apparel and Sporting Goods
James F. Scarpelli, Sr. 86 Owner, Scarpelli Funeral Home 1985
Richard G. Stanton 60 Banker, Retired 1985
- 4 -
<PAGE>
Robert G. Stuck 53 Vice President, Oakview Motors, Inc. 1995
Frederick A. Thayer, III 66 Judge, Retired 1996
</TABLE>
Family Relationships
As defined by the rules and regulations of the Securities and Exchange
Commission, family relationships exist among Directors, Nominees and Executive
Officers. Director Frederick A. Thayer III is the father of Senior Vice
President Frederick A. Thayer IV. Director I. Robert Rudy is the brother of
Senior Vice President Jeannette R. Fitzwater. Director Karen F. Myers is a first
cousin to Senior Vice President Philip D. Frantz. No other family relationships
exist.
Attendance at Board Meetings
During 1999 the Board of Directors of the Company held eight meetings.
All incumbent Directors attended at least 75% of the Board Meetings and meetings
of each committee of the Board on which such Director served, with the exception
of Richard D. Dailey, Jr., who attended 67% of the board meetings and meetings
of committees on which he served. In addition, Directors of the Company's
subsidiaries have met in accordance with guidelines established by the Board of
Directors.
Committees of the Board of Directors
In addition to meeting as a group, certain members of the Board also
devote their time to certain standing committees. Members of the Board of
Directors of the Company are also members of the Board of Directors of the lead
subsidiary, First United Bank & Trust (the "Bank"). These committees act on
behalf of the Company. Among those committees are the Audit, Asset and Liability
Management, Executive and Strategic Planning Committees. The Chairman of the
Board and CEO of the Company, William B. Grant, is a member of all committees,
except the Audit Committee.
Audit Committee - The Audit Committee, which consists of Richard D. Dailey, Jr.,
Maynard G. Grossnickle, Raymond F. Hinkle, Andrew E. Mance, Elaine L. McDonald,
and M. Kathryn Burkey, an ex-officio member from the Advisory Board, reviews
significant audit and accounting principles, policies and practices, meets with
the Company's auditor to review the Company's internal auditing function, and
meets with the Company's independent auditors to review the results of the
annual audit. This committee met four times in 1999.
Asset and Liability Management Committee - The Asset and Liability Management
Committee, which consists of David J. Beachy, Donald M. Browning, Rex W. Burton,
Richard D. Dailey, Jr., William B. Grant, Maynard G. Grossnickle, Robert W.
Kurtz, Donald E. Moran, James F. Scarpelli, Sr., and Richard G. Stanton, reviews
and recommends changes to the Company's Asset and Liability, Investment,
Liquidity, and Capital Plans. This committee met four times in 1999.
- 5 -
<PAGE>
Executive Committee - The Executive Committee, which consists of David J.
Beachy, Donald M. Browning, William B. Grant, Maynard G. Grossnickle, Robert W.
Kurtz, Donald E. Moran, Karen F. Myers, I. Robert Rudy, Richard G. Stanton and
Frederick A. Thayer, III, is responsible for reviewing and recommending changes
to the Company's Insurance Program, overseeing compliance with the Company's
Bylaws and Articles of Incorporation, supervising the Company's CEO,
recommending to the Board a compensation policy for the CEO and other executive
officers of the Company and its subsidiaries, recommending changes to the CEO's
compensation package based on performance reviews, monitoring the performance of
the Company and its subsidiaries, recommending changes to the Company's and
subsidiaries' personnel policies, and serving as a director nomination
committee. The Executive Committee functions with the authority of the full
Board between meetings of the Board. This committee met three times in 1999.
As provided in Article II, Section 4 of the Bylaws, director nominations from
shareholders will be considered by the Executive Committee if the nomination is
made in writing by notice delivered to the Chairman/CEO of the Company no less
than 150 days nor more than 180 days before the date of the shareholders'
meeting. The notice must contain (i) for each proposed nominee, the name,
address, principal occupation, and the number of shares of the Company Common
Stock owned, (ii) for the notifying shareholder, the name, residence address,
and the number of shares of the Company Common Stock owned, (iii) a written
consent of the proposed nominee as to his or her name being placed in nomination
for Director and a statement by the nominee that the he or she will serve if
elected, and (iv) all information required by Regulation 14A of the Securities
Exchange Act of 1935, as amended, and Rule 14a-11, as promulgated thereunder.
Strategic Planning Committee - The Strategic Planning Committee, which consists
of Rex W. Burton, Paul Cox, Jr., William B. Grant, Raymond F. Hinkle, Robert W.
Kurtz, Donald E. Moran, I. Robert Rudy, Richard G. Stanton, Robert G. Stuck,
Frederick A. Thayer, III, and three Advisory Board members, William H. Fredlock
III, Susan P. Kelley, and Gary R. Ruddell, focuses on long-term planning to
insure that management's decisions take into account the future operating
environment, the development of corporate statements of policy, review of
overall management internal control procedures, and review of management's
internal and external information and communications systems. This committee met
three times in 1999.
REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors' Fees
Directors' fees are paid only to Directors who are not executive
officers of the Company. A director of the Company receives up to $350 for a
Board meeting and up to $175 for each committee meeting of the Board of which
the director is a member, depending on the length of the meeting. Directors who
are not executive officers of the Company are also paid an annual retainer fee
of $7,500.
- 6 -
<PAGE>
Summary Compensation Table
The following table sets forth the total remuneration for services in
all capacities paid during each of the last three fiscal years to the Chief
Executive Officer and each other executive officer of the Company during the
fiscal year ended December 31, 1999.
<TABLE>
<CAPTION>
Name and Annual Compensation All other
Principal Position Year Salary Bonus (1) Compensation(2)(3)
- ------------------ ---- ------ ----- ------------
<S> <C> <C> <C> <C>
William B. Grant 1999 $150,000 $50,000 $ 4,496
Chairman of the Board and 1998 $137,947 $43,425 $ 5,417
CEO 1997 $125,000 $21,370 $ 14,832
Robert W. Kurtz 1999 $117,000 $52,299 $ 811
President, Chief Financial 1998 $117,427 $44,437 $ 715
Officer and Secretary/Treasurer 1997 $117,000 $25,605 $ 10,159
Benjamin W. Ridder 1999 $88,000 $39,336 $ 3,647
Executive Vice President 1998 $88,285 $33,422 $ 3,703
and Director of Retail Banking 1997 $86,784 $17,510 $ 9,402
Jeannette R. Fitzwater 1999 $70,000 $33,390 $ 3,460
Senior Vice President and 1998 $70,000 $28,854 $ 2,796
Director of Human Resources 1997 $68,267 $ 9,899 $ 6,745
Philip D. Frantz 1999 $70,000 $33,390 $ 3,474
Senior Vice President and 1998 $70,000 $28,854 $ 2,784
Director of Operations and 1997 $68,751 $ 9,549 $ 7,950
Support
Eugene D. Helbig, Jr. 1999 $70,000 $29,737 $ 3,460
Senior Vice President and 1998 $70,000 $28,854 $ 2,722
Senior Trust Officer 1997 $69,245 $ 7,781 $ 6,837
Steven M. Lantz 1999 $70,000 $33,107 $ 3,469
Senior Vice President and 1998 $70,000 $28,854 $ 2,818
Senior Lending Officer 1997 $69,244 $10,508 $ 9,231
Frederick A. Thayer, IV 1999 $70,000 $31,307 $ 3,460
Senior Vice President and 1998 $70,000 $28,854 $ 2,764
Director of Sales 1997 $68,250 $ 8,962 $ 6,743
</TABLE>
(1) The pay for performance for 1997, 1998 and 1999 was distributed in
1998, 1999 and 2000, respectively. Mr. Grant has elected to defer the
1999 pay for performance into the Company's Deferred Compensation Plan.
Ms. Jeannette R. Fitzwater has elected to defer $27,446 of her 1999 pay
for performance into the Company's Deferred Compensation Plan.
(2) All amounts shown are for basic and matching contributions made by the
Company for each respective executive officer under the Company's
401(k) Profit Sharing Plan, except for amounts shown for 1997, which
also include contributions made in the following amounts under the
Company's Employee Stock Ownership Plan: $9,817 for Mr. Grant, $9,392
for Mr. Kurtz, $6,253 for Mr. Ridder, $4,354 for Ms. Fitzwater, $5,132
for Mr. Frantz, $4,413 for Mr. Helbig, $4,416 for Mr. Lantz, and $4,350
for Mr. Thayer.
(3) Each executive officer has in excess of seven years of credited service
under the respective plans, and are therefore 100% vested.
- 7 -
<PAGE>
Executive Committee Interlocks and Insider Participation
The Executive Committee consists of David J. Beachy, Donald M.
Browning, William B. Grant, Maynard G. Grossnickle, Robert W. Kurtz, Donald E.
Moran, Karen F. Myers, I. Robert Rudy, Richard G. Stanton and Frederick A.
Thayer, III. Mr. Grant is Chairman of the Board and CEO of the Company and Mr.
Kurtz is President, CFO and Secretary/Treasurer of the Company. Mr. Stanton is
the former Chairman of the Board, President and CEO of the Company.
Executive Committee Report on Compensation
The basic philosophy of the Company's compensation program is to offer
competitive compensation for all executive employees which takes into account
both individual contributions and corporate performance. Compensation levels for
executives were recommended by the Executive Committee and approved by the
non-employee Directors of the Board.
Executive compensation for the Chairman of the Board/CEO, the
President/CFO, and each other executive officer consists of two principal
elements: (i) base salary; and (ii) incentives that are variable, fluctuate
annually, and are linked to the Company's performance, and therefore at risk.
Base salaries are set at levels intended to foster a career development among
executives, consistent with the long-term nature of the Company's business
objectives. In setting base salary levels, consideration is given to
establishing salary levels that approximate the amounts paid for similar
executive positions at other comparable community banking organizations. Salary
adjustments and "at risk" amounts are determined in accordance with the Annual
Incentive Program established for executive officers and other members of senior
management. The incentive program, which was developed in consultation with the
Company's independent accountants, utilizes a targeted goal-oriented approach
whereby each year the committee establishes performance goals based on the
recommendation of the Chairman and CEO. The performance goals include strategic
financial measures such as earnings per share, return on equity, and efficiency
ratio. Each of these elements is weighted approximately the same. The measures
are established annually at the start of each fiscal year and are tied directly
to the Company's business strategy, projected budgeted results and competitive
peer group performance.
The targeted goals are set at levels which only reward continued
exceptional Company performance. The incentive awards are expressed as a percent
of base pay and measured on a range around the targeted goals with a fixed
maximum incentive award. The plan provides a payout equal to 10% of salary for
attaining the minimum goals, a payout of 25% of salary for attaining the
targeted goals, and up to 40% of salary for reaching or exceeding maximum goal
levels. Payout percentages are interpolated for results between various
categories. Performance below certain stated minimum threshold levels will
result in no incentive payout to the executives.
The 1999 goals, as approved by the Board, are shown below, and compared
to the actual results for 1999:
<TABLE>
<CAPTION>
Minimum Target Maximum Actual
------- ------ ------- ------
<S> <C> <C> <C> <C>
Return on Equity 13.00% 13.04% 13.08% 13.56%
Earnings Per Share $ 1.20 $1.31 $1.33 $1.31
Efficiency Ratio 57.99% 57.82% 57.63% 57.91%
</TABLE>
- 8 -
<PAGE>
As the results indicate, Company performance exceeded the maximum
performance for the return on equity, while meeting the target goal with
earnings per share and falling between the minimum and target threshold with the
efficiency ratio.
With respect to Mr. Grant, his incentive compensation was based on
meeting certain financial goals as outlined in the preceding table. The
incentive compensation for each other executive officer was based on a
combination of financial goals of the Company and certain subjective goals on
their personal performance.
EXECUTIVE COMMITTEE
BY: David J. Beachy Karen F. Myers
Donald M. Browning I. Robert Rudy
Maynard G. Grossnickle Richard G. Stanton
Donald E. Moran Frederick A. Thayer, III
COMPENSATION PLANS
Pension Plan
The following table shows the maximum annual retirement benefits
payable under the Company Defined Benefit Pension Plan for various levels of
compensation during the year of service:
<TABLE>
<CAPTION>
APPROXIMATE ANNUAL BENEFIT UPON RETIREMENT AT AGE 65 BASED ON YEARS OF CREDITED SERVICE
FINAL AVERAGE
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
<S> <C> <C> <C> <C> <C>
$ 30,000 $6,000 $8,000 $10,000 $12,000 $14,000
70,000 15,000 20,000 25,000 30,000 35,000
110,000 24,000 32,000 40,000 48,000 56,000
150,000 33,000 44,000 55,000 66,000 77,000
190,000 35,250 47,000 58,750 70,500 82,250
</TABLE>
For purposes of this table, final average compensation shown is twelve
times the average of the highest salary during sixty consecutive months in the
last one hundred twenty months preceding normal retirement. Also, for purposes
of the table, benefits are payable for life with a minimum guarantee of ten
years. Benefits are computed on an actuarial basis. To convert the benefits at
normal retirement to a lifetime only benefit, the amounts would be increased by
a factor of 1.0677%. Social Security benefits are not shown on the table and
would not reduce retirement benefits under the plan.
- 9 -
<PAGE>
Projected Benefits for Highly Compensated Employees:
<TABLE>
<CAPTION>
Current Compensation Credited Service at Estimated Annual
Covered by the Plan Normal Retirement Benefits at Retirement
<S> <C> <C> <C>
William B. Grant $194,950 40 Years $90,250
Robert W. Kurtz $162,152 38 Years $87,050
Benjamin W. Ridder $121,935 30 Years $53,371
Jeannette R. Fitzwater $98,854 40 Years $55,091
Philip D. Frantz $99,246 42 Years $57,301
Eugene D. Helbig $98,854 31 Years $44,417
Steven M. Lantz $99,125 35 Years $50,291
Frederick A. Thayer $98,854 32 Years $45,850
</TABLE>
401(k) Profit Sharing Plan
Bank employees are permitted to contribute a portion of their salary to
the Company's 401(k) Profit Sharing Plan. The Bank makes a matching contribution
equal to 50% of the amount deferred, up to 6% of an employee's salary, provided
that the employee has completed at least one year of service to the Bank. The
Bank may make additional discretionary contributions for employees equal to a
percentage of each employee's salary. No executive officer received a
discretionary contribution for 1999, 1998 or 1997.
Employee Stock Ownership Plan
Employees who complete one year of service to the Bank are eligible to
participate in the Company's Employee Stock Ownership Plan, whereby the Bank
makes contributions to the plan's fund to provide a retirement benefit to the
employee. All contributions under the plan are invested in Company Common Stock.
No contributions were made by the Bank to this plan for 1999 and 1998.
Deferred Compensation Plan
Selected executives and Directors of the Company and its subsidiaries
are permitted to participate in the Company's Non-Tax Qualified Deferred
Compensation Plan. The plan permits each participant to defer income to a "rabbi
trust." The funds are then distributed to the participant at termination of
employment or Director status. The plan benefits are taxed to the participant at
the time of distribution.
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
Some of the Directors and officers of the Company and their associates
were customers of and had banking transactions with the Bank subsidiary of the
Company in the ordinary course of business during 1999. All loans and loan
commitments included in such transactions were made on the same terms, including
interest rate and collateral, as those prevailing at the same time for
- 10 -
<PAGE>
comparable transactions with others, and in the opinion of the management of the
Company, do not involve more than a normal risk of collectability or present
other unfavorable features.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and
the rules promulgated thereunder, the Company's executive officers and Directors
are required to file with the Securities and Exchange Commission reports of
their ownership of Common Stock. Based solely on a review of copies of such
reports furnished to the Company, or written representations that no reports
were required, the Company believes that during the fiscal year ended December
31, 1999, its executive officers and Directors complied timely with the Section
16(a) requirements.
PERFORMANCE GRAPH
Set forth below is a graph showing 5-year cumulative total return of
the Common Stock as compared with all publicly traded banks in the $500 million
to $1 billion Asset-Size Index, and the NASDAQ total index.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Period Ending
-------------------------------------------------------------------------------
Index 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First United Corporation 100.00 81.37 79.88 111.50 94.45 85.36
NASDAQ - Total US 100.00 141.33 173.89 213.07 300.25 542.43
SNL $500M-$1B Bank Index 100.00 132.76 165.97 269.80 265.28 245.56
</TABLE>
- 11 -
<PAGE>
AUDIT COMMITTEE AND INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Ernst & Young, LLP has acted as the Company's
independent public accountants for the year ended December 31, 1999 and has been
recommended by the Audit Committee and selected by the Board of Directors to act
as such for the current fiscal year. No representatives of Ernst & Young, LLP
are expected to be present at the Annual Meeting.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Shareholders' proposals for the 2001 Annual Meeting of Shareholders
pursuant to Rule 14a-8 of the Securities Exchange Act of 1934 must be received
at the Company's principal office not later than November 24, 2000 (120 days
before the date of mailing based on this year's proxy statement date) and meet
all other requirements for inclusion in the proxy statement. All other
shareholder proposals must be received by the Company at its principal office by
February 9, 2001 (45 days before the date of mailing based on this year's proxy
statement date.)
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors is not
aware of any matters, other than those stated above, that may properly be
brought before the meeting. If other matters should properly come before the
meeting or any adjournment thereof, persons named in the enclosed form of proxy
or their substitutes will vote with respect to any such matters in accordance
with their best judgment.
BY ORDER OF THE BOARD OF
DIRECTORS
ROBERT W. KURTZ
Secretary
- 12 -
<PAGE>
PROXY
FIRST UNITED CORPORATION
P.O. Box 9
Oakland, MD 21550-0009
The undersigned hereby appoints Mr. George R. Failing and Mr. William E. Hesen,
and each of them, as Proxies, with the powers the undersigned would possess if
personally present, and with full power of substitution, and hereby authorizes
them to represent and to vote as designated on the reverse side, all the shares
of Common Stock of First United Corporation held of record by the undersigned on
February 29, 2000, at the Annual Meeting of Shareholders to be held on April 25,
2000, or any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. HOWEVER, IN THE ABSENCE OF DIRECTION TO
THE CONTRARY, THE ATTORNEYS NAMED HEREIN INTEND TO VOTE THIS PROXY "FOR"
PROPOSAL 1 HEREON, AND FOR MATTERS WHICH MAY BE PRESENTED AT THE MEETING IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
(Please sign on reverse side and return immediately)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
FIRST UNITED CORPORATION CAPABLE AND EAGER TO MEET THE FINANCIAL NEEDS OF ITS
SHAREHOLDERS
Dividend Reinvestment
- ---------------------
A convenient way to make your shares in First United GROW! Our plan also allows
you to purchase additional shares.
Trust Services
- --------------
First United offers a complete array of trust services designed to meet the
individual needs of our clients. These services include personal trusts, estate
planning, employee benefit plans, estate administration and fully managed IRA's.
Certificate of Deposit
- ----------------------
A complete selection of fully-insured deposit products are available at First
United. Investors can select from a range of maturities. Our skilled Customer
Service Officers are capable of designing investment programs to plan for
college, retirement, and other goals.
Brokerage Services
- ------------------
Full service brokerage is available through PRIMEVEST Financial Services located
at First United. PRIMEVEST offers a broad spectrum of investment products and
<PAGE>
services, such as retirement planning, financial planning, portfolio management
and much more. Our PRIMEVEST Investment Executives devote a high level of
attention to your investment needs.
PRIMEVEST Financial Services, Inc. is an independent, registered broker/dealer.
Member of NASD/SIPC. Securities provided by PRIMEVEST: *Not FDIC Insured *No
Financial Institution Guarantee *May lose value.
President's Club
- ----------------
The President's Club is a truly unique club which brings together the special
customers of First United for informative seminars, delightful trips and special
promotions.
THIS LIST IS ONLY A SAMPLE OF THE SERVICES WHICH YOU, OUR OWNERS, CAN TAKE
ADVANTAGE OF. FOR MORE DETAILS ON THESE EXCITING SERVICES, CALL MY BANK'S
CUSTOMER SERVICE CENTER, TOLL FREE AT (888) 692-2654.
1. Proposal to elect 6 Directors to serve until the 2003 Annual Meeting of
Shareholders and until the election and qualification of their successors.
FOR WITHHOLD
all nominees AUTHORITY
listed (except as to vote for all
marked to the contrary) nominees listed
[ ] [ ]
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list below.)
CLASS I (Term Expires 2003)
Maynard G. Grossnickle
Raymond F. Hinkle
Robert W. Kurtz
Andrew E. Mance
Elaine L. McDonald
Donald E. Moran
2. In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournments thereof.
<PAGE>
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF NOTICE OF THE AFORESAID
ANNUAL MEETING OF SHAREHOLDERS
Signature(s) _____________________ Signature(s)___________________ Date_________
NOTE: Please sign exactly as name appears hereon. Joint holders should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please indicate the capacity in which you are signing. If a corporation or other
entity, please sign in full corporate or entity name by authorized person.
_ _
|_| FOLD AND DETACH HERE |_|
