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
FNB CORP.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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:
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>
FNB CORP.
101 Sunset Avenue
Asheboro, North Carolina 27203
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the regular Annual Meeting of Shareholders
of FNB Corp. (the "Corporation") will be held at the AVS Banquet Centre, 2045
North Fayetteville Street, Asheboro, North Carolina, on Tuesday, the 12th day of
May, 1998, at one o'clock p.m., preceded by a buffet luncheon beginning at 12:15
p.m., for the following purposes:
1. To elect three Class III Directors to serve for three-year terms
expiring at the Annual Meeting in 2001.
2. To consider approval of an amendment to the Corporation's Articles
of Incorporation to increase the number of authorized common shares from
5,000,000 to 10,000,000.
3. To consider approval of an amendment to the Corporation's Stock
Compensation Plan to increase the number of common shares covered by the Plan
from 360,000 to 720,000.
4. To consider ratification of the selection of KPMG Peat Marwick LLP,
Certified Public Accountants, as independent auditors of the Corporation for the
1998 fiscal year.
5. To consider and act upon any other business as may come before the
meeting or any adjournment thereof.
All shareholders are invited to attend the meeting. Only those
shareholders of record at the close of business on March 26, 1998, shall be
entitled to notice of the meeting and to vote at the meeting.
Information relating to the activities and operations of FNB Corp.
during the fiscal year ended December 31, 1997, is contained in the
Corporation's Annual Report, which is enclosed.
By Order of the Board of Directors
Michael C. Miller
President
APRIL 13, 1998
YOUR BOARD OF DIRECTORS URGES YOU TO MARK, DATE, SIGN AND RETURN THE ENCLOSED
PROXY AS PROMPTLY AS POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON. THE PROXY MAY BE REVOKED AT ANY TIME BY NOTIFYING THE SECRETARY OF FNB
CORP. IN WRITING PRIOR TO THE VOTING OF THE PROXY.
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
The following information is furnished in connection with the solicitation
of proxies by the Board of Directors of FNB Corp. (the "Corporation" or "FNB")
for use at the Annual Meeting of Shareholders to be held on May 12, 1998. The
principal executive offices of the Corporation are located at its wholly-owned
subsidiary, First National Bank and Trust Company (the "Bank"), 101 Sunset
Avenue, Asheboro, North Carolina 27203 (Telephone: 336-626-8300). This proxy
statement and the enclosed form of proxy were first sent to shareholders on or
about April 13, 1998.
A proxy may be revoked by the person giving it by delivering a written
notice to the Corporation prior to the meeting or by personally requesting that
it be returned. The shares represented by all properly executed proxies received
by the Corporation in time to be taken to the meeting will be voted; and, if a
choice is specified on the proxy, the shares represented thereby will be voted
in accordance with such specification. If a specification is not made, the proxy
will be voted for the proposals set forth in the Notice of Annual Meeting of
Shareholders.
Solicitation of proxies may be made in person or by mail or telephone by
directors, officers and regular employees of the Corporation or Bank without
additional compensation therefor. The Corporation may also request banking
institutions, brokerage firms, custodians, nominees and fiduciaries to forward
solicitation material to the beneficial owners of Corporation Common Stock held
of record by such person, and the Corporation will reimburse such forwarding
expenses. The Corporation will pay the costs of solicitation of proxies.
On March 18, 1998, the Corporation paid a 100% stock dividend with respect
to its outstanding Common Stock. All numbers of shares and share prices with
respect to Common Stock and stock options have been adjusted in this proxy
statement to reflect the stock dividend.
VOTING SECURITIES OUTSTANDING AND PRINCIPAL SHAREHOLDERS
Only holders of record of FNB Common Stock at the close of business on
March 26, 1998 (the "Record Date"), are entitled to a notice of and to vote on
matters to come before the Annual Meeting or any adjournment thereof. On the
Record Date, there were 3,650,686 shares of FNB Common Stock issued and
outstanding.
Each share is entitled to one vote on all matters. The presence, in person
or by proxy, of the holders of a majority of the outstanding shares of FNB
Common Stock entitled to vote is necessary to constitute a quorum.
The Corporation is not aware of any holders of more than 5% of the
outstanding shares of FNB Common Stock as of March 26, 1998.
1
<PAGE>
EXECUTIVE OFFICERS
The current executive officers of the Corporation and of the Bank are as
follows:
NAME AGE POSITION IN CORPORATION POSITION IN BANK
- ---- --- ----------------------- ----------------
Michael C. Miller 47 President and Chief President and Chief
Executive Officer Executive Officer
Jerry A. Little 54 Treasurer and Secretary Senior Vice President
and Secretary
The above officers have held executive positions with the Corporation or
the Bank for at least the past five years. Officers are elected annually by the
Board of Directors.
ELECTION OF DIRECTORS
The bylaws of the Corporation provide that the number of directors shall
consist of not less than nine nor more than twenty-five, with the exact number
of directors within such maximum and minimum limits to be fixed and determined
from time to time by resolution adopted by a majority of the full Board of
Directors or by resolution of the shareholders at any annual or special meeting
thereof. The Board of Directors has set the total number of directors at 10, all
of whom will be elected at the 1998 Annual Meeting or were previously elected
and will remain in office after that meeting.
The Board of Directors is divided into three classes: Class I, Class II and
Class III. In accordance with this classification, the members of Class III of
the Board of Directors are to be elected at this Annual Meeting. It is intended
that the persons named in the accompanying form of proxy will vote for the three
nominees listed below for directors of the Corporation in Class III, unless
authority so to vote is withheld. Each nominee is at present a member of the
Board of Directors. Class III directors will serve for three-year terms expiring
at the 2001 Annual Meeting or until their successors shall be elected and shall
qualify. Directors are elected by a plurality of the votes cast. Abstentions and
broker nonvotes will not affect the election results if a quorum is present.
The following information is furnished with respect to the nominees for
election as directors of the Corporation in Class III, and for the directors in
Classes I and II whose terms expire at the Annual Meetings occurring in 1999 and
2000, respectively. Each nominee for Class III director and each director
presently serving in Classes I and II also serves as a director of the Bank.
2
<PAGE>
NOMINEES FOR CLASS III DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS FOR THREE-YEAR TERMS
EXPIRING AT THE ANNUAL MEETING IN 2001
OCCUPATION DIRECTOR
NAME LAST FIVE YEARS SINCE AGE
- ---- --------------- ----- ---
James M. Campbell, Jr. President and 1984 59
Treasurer, Sew
Special, Inc.
(1979 - Present)
Thomas A. Jordan President, Michael 1984 58
Thomas Furniture
Company
(1983 - Present)
Michael C. Miller President and Chief 1992 47
Executive Officer of
the Corporation
(1994 - Present);
Chief Executive Officer
of the Bank
(1994 - Present);
President of the Bank
(1991 - Present);
Vice President, Treasurer
and Secretary of the
Corporation
(1986 - 1993);
Director,
B. B. Walker Company
3
<PAGE>
DIRECTORS IN CLASS I
DIRECTORS WITH TERMS
EXPIRING AT THE ANNUAL MEETING IN 1999
<TABLE>
<CAPTION>
OCCUPATION DIRECTOR
NAME LAST FIVE YEARS SINCE AGE
- ---- --------------- ----- ---
<S> <C> <C> <C>
James M. Culberson, Jr. Chairman of the Board 1974 69
of the Corporation
(1984 - Present); Chairman of the Board of
the Bank (1974 - Present); President of the
Corporation (1984 - 1993); Chief Executive
Officer of the Bank (1991 - 1993)
J. M. Ramsay III President, 1989 50
Elastic Therapy, Inc.
(1989 - Present)
Charles W. Stout, M.D. Retired; 1989 65
Family Physician
(1962 - 1996)
Earlene V. Ward Secretary and Treasurer, 1976 66
Mid-State Motors, Inc.
(1991 - Present);
Secretary,
Vestal Motor Co.
(1991 - Present)
DIRECTORS IN CLASS II
DIRECTORS WITH TERMS
EXPIRING AT THE ANNUAL MEETING IN 2000
OCCUPATION DIRECTOR
NAME LAST FIVE YEARS SINCE AGE
- ---- --------------- ----- ---
W. L. Hancock President and 1973 62
Treasurer,
Hancock Farms, Inc.
(Purebred Cattle)
(1987 - Present)
4
<PAGE>
OCCUPATION DIRECTOR
NAME LAST FIVE YEARS SINCE AGE
- ---- --------------- ----- ---
R. Reynolds Neely, Jr. Planning Director, 1980 44
City of Asheboro
Planning Department
(1989 - Present)
Richard K. Pugh Chairman of the Board, 1988 63
Pugh Oil Company, Inc.
(1990 - Present)
</TABLE>
In the event that any nominee should not be available to serve for any
reason (which is not anticipated), it is intended that the persons acting under
the proxy will vote for the election, in his stead, of such other persons as the
Board of Directors of the Corporation may recommend.
COMMITTEES OF THE BOARD
The Board of Directors holds regular monthly meetings to conduct the normal
business of the Corporation and meets on other occasions when required for
special circumstances. In addition, certain board members serve on standing
committees. Among these committees are the Audit and Compliance, Compensation
and Nominating Committees, whose members and principal functions are as follows:
AUDIT AND COMPLIANCE COMMITTEE. The Audit and Compliance Committee reviews
significant audit and accounting principles, policies and practices and meets
with the audit manager relative to internal audit functions and with the
Independent Auditors to review the performance of the audit manager and internal
controls and accounting procedures. The committee also reviews significant
regulatory compliance matters and meets with the compliance officer relative to
the compliance management function. Additionally, the committee reviews
regulatory reports filed with the Federal Reserve Board and Comptroller of the
Currency. Members of this committee are Directors Neely, Hancock and Ramsay. The
Audit and Compliance Committee met six times during the 1997 fiscal year.
COMPENSATION COMMITTEE. The Compensation Committee deals in broad terms
with personnel matters and reviews the compensation of the senior officers of
the Corporation and Bank. Members of this committee are Directors Campbell,
Neely, Pugh and Ward. The Compensation Committee met once during the 1997 fiscal
year.
NOMINATING COMMITTEE. The Board of Directors, as a group, serves as the
Nominating Committee and in that capacity recommends nominees for election to
the Board. Qualified candidates recommended by shareholders will be considered
by the Board. In order for a candidate recommended by a shareholder to be
considered as a nominee at the next annual meeting, the name of such candidate,
together with a written description of the candidate's qualifications must be
received by the Secretary of FNB Corp., 101 Sunset Avenue, Asheboro, North
Carolina 27203, no later than December 14, 1998.
During the fiscal year ended December 31, 1997, the Board of Directors held
a total of 14 meetings. Each Director attended 75% or more of the total number
of meetings of the Board and of the committees of the Board on which he or she
served.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table shows, for the fiscal years ended December 31, 1997,
1996 and 1995, the cash and certain other compensation paid to or received or
deferred by persons who were at December 31, 1997 the chief executive officer of
the Corporation and the other officers of the Corporation whose total salary and
bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION STOCK OPTIONS ALL OTHER
ON DECEMBER 31, 1997 YEAR SALARY BONUS (#) COMPENSATION
- ------------------------------------ ---- ------ ----- ------------- ------------
<S> <C> <C> <C> <C> <C>
Michael C. Miller, President and 1997 $175,008 $42,281 10,000 $6,430 (1)
Chief Executive Officer of the 1996 162,504 35,848 15,000 6,430
Corporation and Bank 1995 137,496 36,750 10,000 8,042
</TABLE>
(1) Amount shown consists of $1,680 paid by the Bank pursuant to a Split
Dollar Insurance Program for executives and $4,750 contributed by the
Corporation to a 401(k) plan.
STOCK OPTIONS
The following table provides details regarding stock options granted to the
Named Executive Officers in the 1997 fiscal year. Information concerning stock
options to directors is set forth under the heading "Director Compensation". The
stock options were granted pursuant to the Corporation's Stock Compensation
Plan.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED EXERCISE
OPTIONS TO OR BASE
GRANTED EMPLOYEES PRICE EXPIRATION
NAME (#) (1) IN 1997 ($/SH) DATE
- ---- ------------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Michael C. Miller 10,000 13.3% $17.50 12/9/07
</TABLE>
(1) Incentive Stock Options exercisable one year after the grant date
(December 10, 1997), with 20% of the shares covered thereby becoming exercisable
at that time and an additional 20% of the option shares becoming exercisable on
each successive anniversary date. The price for shares that may be purchased
pursuant to the options is equal to the fair market value of the Corporation's
Common Stock on the date of grant.
6
<PAGE>
The following table shows the number of shares covered by exercisable and
unexercisable options held by Named Executive Officers as of December 31, 1997.
No options were exercised by Named Executive Officers in 1997.
OPTION VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 (#) DECEMBER 31, 1997 (1)
--------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael C. Miller 16,000 34,000 $155,030 $215,020
</TABLE>
(1) The closing price of the Corporation's Common Stock on December 24,
1997, the last day the stock was traded in fiscal 1997, was $20.00.
PENSION PLAN
The Bank maintains a Pension Plan for its employees. The aggregate amount
set aside or accrued during the year ended December 31, 1997 for all benefits to
be paid under the Plan in the event of retirement with respect to all employees,
as a group, was $257,353. The contributions to the Plan are based on actuarial
assumptions covering all employees, as a group, and the contributions
attributable to officers as a group are not determinable. No outside director is
included in the Pension Plan. As of January 1, 1998, the individual named in the
Summary Compensation Table, Mr. Miller, had 12 credited years of service under
such plan. The approximate annual retirement benefits beginning at the normal
retirement age of 65 to plan participants with salaries in the classifications
indicated are listed in the table below. The benefit amounts listed in the
following table reflect a straight life annuity. The benefit amounts listed in
the table are subject to certain adjustments for participants who accrued
benefits under the Plan prior to January 1, 1989.
<TABLE>
<CAPTION>
APPROXIMATE ANNUAL BENEFIT UPON RETIREMENT
FOR YEARS OF SERVICE INDICATED (1)
ASSUMED AVERAGE ----------------------------------------------
COMPENSATION FOR
FINAL TEN YEARS 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
- --------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000 21,893 29,190 36,488 43,786 51,083 56,083
125,000 28,080 37,440 46,801 56,161 65,521 71,771
150,000 34,268 45,690 57,113 68,536 79,958 87,458
175,000 40,455 53,940 67,426 80,911 94,396 103,146
200,000 46,643 62,190 77,738 93,286 108,833 118,833
225,000 52,830 70,440 88,051 105,661 123,271 134,521
250,000 59,018 78,690 98,363 118,036 137,708 150,208
</TABLE>
(1) Annual retirement benefits over $130,000 exceed the current maximum
plan benefits under the Internal Revenue Code.
7
<PAGE>
DIRECTOR COMPENSATION
Directors, other than the Chairman of the Board, who are not also employees
of the Corporation or Bank are paid $400 for each Board meeting they attend and
receive an additional $200 for each committee meeting attended. In addition,
each nonemployee director, other than the Chairman of the Board, is paid a
monthly retainer of $400. The Chairman of the Board receives an annual fee of
$50,000. Directors may elect to defer receipt of their fees and monthly
retainers until their retirement from the Board. Any deferred fees and retainers
become a general obligation of the Corporation to be credited with interest at
the Bank's deposit rate applied to individual retirement accounts with a
two-year term and priced on a monthly variable-rate basis, subject to a minimum
rate of 5.5% per annum.
On December 10, 1997, the Corporation granted to each nonemployee director
a nonqualified stock option to purchase 2,000 shares of Common Stock at the
price of $17.50 per share. The price for shares that may be purchased pursuant
to the options is equal to the fair market value of the Corporation's Common
Stock on date of grant. The stock options first become exercisable on December
10, 1998, with 20% of the shares covered thereby becoming exercisable at that
time and an additional 20% of the option shares becoming exercisable on each
successive anniversary date. The options expire on December 9, 2007.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the President and Chief Executive Officer and
management employees are reviewed by the Corporation's Compensation Committee
(the "Committee"). Four nonemployee directors currently serve as members of the
Committee: James M. Campbell, Jr., Chairman, R. Reynolds Neely, Jr., Richard K.
Pugh and Earlene V. Ward. In addition, compensation decisions regarding the
President and other senior management employees are generally reviewed and
ratified by the full Board of Directors.
COMPENSATION PHILOSOPHY
The Corporation's compensation policies are designed to attract and retain
competent management. The Board's goal is to provide competitive base salaries
to the Corporation's and the Bank's management employees and to give them, as
well as all other employees of the Corporation and the Bank, performance
incentives to motivate superior performance on behalf of the Corporation and its
shareholders. The Corporation has generally used two types of incentive
compensation: annual cash bonuses based on the overall performance of the Bank
and long-term compensation in the form of stock options. The Committee believes
that linking long-term compensation to the value of the Corporation's Common
Stock is especially effective because it aligns the interests of management with
those of the Corporation's shareholders.
EXECUTIVE OFFICER COMPENSATION
ANNUAL COMPENSATION. The Committee's recommendations for base salary for
the President and other management employees are based on information available
through industry sources regarding the compensation of executives of other
institutions similar in size and in other respects to the Bank. The Committee
considers annual cash bonuses as an integral part of the Corporation's financial
incentive package to achieve the Corporation's goals. Bonuses are paid to all
employees of the Bank based on the Bank's operating results for the year in a
number of specific areas, with each employee receiving the same percentage of
his or her base salary as every other employee. The goals for the year are
generally adopted by the Committee at the beginning of the year. Goals are
generally established for the growth in average loans and deposits, profit
margins, noninterest income, loan quality and productivity. Senior management
employees generally receive an additional bonus based on similar criteria in the
discretion of the Board, based on the Committee's recommendations. For 1998, the
President received total bonuses of $42,281. The Committee and the Board
considered these bonuses appropriate in view of their overall assessment that
the performance of President had been outstanding.
8
<PAGE>
LONG-TERM COMPENSATION. The Corporation's long-term incentive compensation
awards are designed to encourage the retention of key executives and to align
their interests with the interests of shareholders. Long-term compensation for
the President and other management employees consists principally of stock
options. The Corporation currently has a Stock Compensation Plan (the "Plan"),
which provides for the grant of incentive and nonqualified options, stock
bonuses and restricted stock. The Corporation believes that stock options
granted under the Plan are performance-based and, therefore, deductible by the
Corporation under Section 162(m) of the Internal Revenue Code. The Plan provides
for other types of compensation, such as stock bonuses and restricted stock,
which will be performance-based only if performance goals are established by the
Committee in compliance with Section 162(m); no substantial stock bonuses of
restricted stock have ever granted by the Committee. The Committee administers
the Plan and determines, in its discretion, what stock grants will be made.
Stock options were granted to the President and to other management employees in
1994, 1995, 1996 and 1997. For further information regarding the options granted
to the President in 1997, see "Executive Compensation - Stock Options" above.
The Committee believes that all grants to the President under the Plan are
performance-based for purposes of Section 162(m).
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
James M. Campbell , Jr., Chairman
R. Reynolds Neely, Jr.
Richard K. Pugh
Earlene V. Ward
COMPENSATION COMMITTEE INTERLOCKS AND INSIDERS PARTICIPATION
None of the members of the Compensation Committee has ever been an officer
or employee of the Corporation or any of its subsidiaries or performs services
for the Corporation or its subsidiaries other than as a director.
9
<PAGE>
PERFORMANCE GRAPH
The following graph and table compare the cumulative total shareholder
return of FNB Common Stock for the five-year period ended December 31, 1997 with
the SNL Southeast Bank Index and the Standard and Poor's 500 Stock Index,
assuming an investment of $100 at the beginning of the period and the
reinvestment of dividends.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
As of December 31,
--------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FNB Corp. $100.00 $124.03 $150.18 $234.01 $303.04 $413.32
SNL Southeast Bank Index 100.00 105.04 105.27 157.89 216.73 328.55
S&P 500 Index 100.00 110.08 111.53 153.44 188.52 251.44
</TABLE>
INDEBTEDNESS OF OFFICERS AND DIRECTORS
Certain of the directors and officers of the Corporation and Bank and
companies with which they are affiliated were customers of and borrowers from
the Bank in the ordinary course of business in 1997. Similar banking
transactions are expected to take place in the future. In the opinion of
management, all outstanding loans and commitments included in such transactions
were made substantially on the same terms, including rate and collateral, as
those prevailing at the time in comparable transactions with other customers and
did not involve more than normal risk of collectibility or contain other
unfavorable features
10
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 26, 1998, certain information
with respect to the beneficial ownership of FNB Common Stock by directors and by
directors and executive officers as a group.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENT
NAME AND ADDRESS MARCH 26, 1998 (1) (2) OF CLASS
- ---------------- ----------------------- --------
James M. Campbell, Jr. 46,855 1.28
Randleman, NC
James M. Culberson, Jr. 37,748 1.03
Asheboro, NC
W. L. Hancock 94,335 2.58
Franklinville, NC
Thomas A. Jordan 28,274 0.77
Liberty, NC
Michael C. Miller 23,989 0.65
Asheboro, NC
R. Reynolds Neely, Jr. 161,976 (3) 4.43
Asheboro, NC
Richard K. Pugh 6,000 0.16
Asheboro, NC
J. M. Ramsay III 25,030 0.69
Asheboro, NC
Charles W. Stout, M.D. 25,740 0.71
Asheboro, NC
Earlene V. Ward 24,612 0.67
Asheboro, NC
Directors and executive officers 480,825 (3) 13.00
as a group (11 persons)
(1) Includes shares held by directors' and executive officers' immediate
families, including spouse and/or children residing in same household. Does not
include 4,620 shares owned by the Ferree Educational and Welfare Fund, of which
Mr. Miller is a trustee and treasurer.
(2) Includes shares subject to stock options exercisable as of March 26,
1998 or within 60 days thereafter for Mr. Campbell (3,000 shares), Mr. Culberson
(3,000 shares), Mr. Hancock (2,400 shares), Mr. Jordan (3,000 shares), Mr.
Miller (16,000 shares), Mr. Neely (3,000 shares), Mr. Pugh (3,000 shares), Mr.
Ramsay (3,000 shares) and all directors and executive officers as a group
(42,000 shares).
11
<PAGE>
(3) Includes 96,156 shares held of record by Mr. Neely's mother and over
which Mr. Neely and his sister have joint voting and dispository control
pursuant to a revocable power of attorney.
Under the securities laws of the United States, the Corporation's
directors, its executive officers, and any persons holding more than 10 percent
of the Corporation's stock are required to report their ownership of the
Corporation's stock and any changes in that ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been established
and the Corporation is required to report in this proxy statement any failure to
file by these dates during 1997. All of these filing requirements were satisfied
by its directors, executive officers and 10 percent holders, except that each of
the directors and executive officers of the Corporation inadvertently failed to
file on a timely basis one report relating to one transaction involving the
grant of stock options during 1997. In making these statements, the Corporation
has relied on the written representations of its directors, executive officers
and 10 percent holders and copies of the reports that they have filed with the
Commission.
PROPOSAL TO APPROVE AN AMENDMENT TO THE ARTICLES OF INCORPORATION
The Board of Directors has proposed and recommends that shareholders
approve an amendment to the Corporation's Articles of Incorporation that would
increase the number of shares of Common Stock that the Corporation has authority
to issue from 5,000,000 shares to 10,000,000 shares. Following adoption of this
amendment, the aggregate number of shares that the Corporation will have
authority to issue would be 10,200,000 shares consisting of 10,000,000 shares of
Common Stock, with one vote per share, and 200,000 shares of preferred stock. As
of March 26, 1998 the Corporation had 3,650,686 shares of Common Stock
outstanding. There are no shares of preferred stock outstanding.
The Board of Directors believes an increase in the authorized shares of
Common Stock will be advantage to the Corporation. Increasing the number of
authorized shares of Common Stock will provide additional shares for issuance
for any valid corporate purpose, including stock dividends, potential
acquisitions and raising capital by sale of additional shares. The Board of
Directors paid a 100% stock dividend on March 18, 1998. The stock dividend
increased the number of shares outstanding from 1,825,343 shares to 3,650,686
shares, as of the stock dividend payment date. The Board of Directors has no
present plans, agreements, or understanding with respect to any transactions
that would require issuance of any authorized Common Stock other than the
issuance of shares through the Corporation's Stock Compensation Plan and
Dividend Reinvestment and Stock Purchase Plan. However, should management deem
it advisable, the Corporation could issue authorized but unissued Common Stock
to consummate any such transaction without the necessity of further shareholder
approval.
The issuance of any additional Common Stock may, among other things, have a
dilutive effect on earnings per share and on the equity of the present holders
of Common Stock, depending upon the terms of these specific transactions.
The proposed amendment requires the approval of a majority of the
outstanding shares of Common Stock of the Corporation entitled to vote at the
Annual Meeting. Abstentions and broker nonvotes will have the effect of a vote
against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE ARTICLES OF INCORPORATION.
12
<PAGE>
PROPOSAL TO APPROVE AN AMENDMENT TO THE STOCK COMPENSATION PLAN
The Corporation's Stock Compensation Plan (the "Plan") has been in effect
since 1993. At the 1997 Annual Meeting, the Shareholders reapproved the Plan and
certain amendments thereto, primarily in order to bring the Plan into compliance
with certain federal tax regulations. The Plan originally authorized the
issuance of 360,000 shares (as adjusted for the recent stock dividend) pursuant
to options and other awards granted under the Plan. Since the Plan has been in
effect for more than five years, most of the shares have been issued, so that
only 4,900 shares are presently available for additional grants under the Plan.
Because the Board considers the Plan to be an effective way to provide long-term
incentives for the Corporation's employees and to align the employees' interest
with those of the Corporation's shareholders, the Board has amended the Plan to
increase the number of shares available for awards under the Plan to 720,000
(the "Plan Amendment").
At the 1994 Annual Meeting, the shareholders approved the FNB Corp. Savings
Institutions Management Compensation Plan, which permitted the Corporation to
grant up to 360,000 shares of common stock (as adjusted for the recent stock
dividend) pursuant to incentive stock options, nonqualified stock options and
restricted and unrestricted stock bonuses in connection with any savings banks
or savings institutions acquired by the Corporation. No shares were ever issued
under that plan, and the Board terminated the plan in February 1998. Thus, the
Stock Compensation Plan is now the only plan of the Corporation providing for
the issuance of Corporation common stock to employees, directors and advisory
directors.
The Corporation is seeking shareholder approval of the Plan Amendment in
order to allow incentive stock options granted under the Plan to receive
favorable tax treatment under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), as described below and to comply with the requirements
of Section 162(m) of the Code. The following summary of the Plan is qualified in
its entirety by express reference to the text of the Plan.
DESCRIPTION OF THE PLAN
The Plan is administered by the Compensation Committee (the "Committee") of
the Board of Directors. The Committee may grant (i) incentive stock options and
restricted and unrestricted stock bonuses to key employees and (ii) nonqualified
stock options to key employees, officers, directors (whether or not employees)
and advisory board members. The Board of Directors is authorized under the Plan
to grant nonqualified options to nonemployee directors and advisory board
members. The Corporation has approximately 100 employees, nonemployee directors
and advisory board members whom it considers eligible to receive awards under
the Plan. The Plan is intended to allow certain key employees, officers,
directors and advisory board members of the Corporation and its subsidiaries to
have an opportunity to acquire an ownership interest in the Corporation and to
encourage them to continue to promote the Corporation's best interests.
The number and class of shares available under the Plan will be adjusted in
the event of stock splits and combinations, stock dividends and similar changes
in the capitalization of the Corporation.
The Plan allows the Committee and the Board of Directors broad discretion
in determining the number of shares and the particular terms of any stock option
or stock bonus. The exercise price of stock options may not be less than the
fair market value of the Common Stock as of the date the option is granted. The
closing market price of the Common Stock as reported on NASDAQ on March 26,
1998, was $27.88 per share. Unless otherwise provided in the Plan or in an
option agreement evidencing such option, one-fifth of each option becomes
exercisable on and after each of the first, second, third, fourth and fifth
anniversary dates of the grant.
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The terms of each option are as provided in the applicable option
agreement, but no stock option granted may have a term in excess of ten years
from the grant date. In addition, any incentive stock option which is granted to
a key employee who holds more than 10% of the total combined voting power of all
classes of stock of the Corporation or its affiliates is exercisable only at a
price which is at least 110% of the fair market value of the Common Stock on the
date of grant and such option may not be exercisable more than five years after
the date on which it is granted. Unless otherwise provided in the applicable
option agreement, all unexercised options terminate three months after an
optionee's termination of employment for any reason other than death. If a
termination of employment is due to death, the option must be exercised, if at
all, within one year of termination.
The Plan may be amended, modified, suspended or terminated by the Board of
Directors of the Corporation provided, however, that no such amendment may (i)
increase the maximum aggregate number of shares available under the Plan, (ii)
change the minimum option exercise price provided in the Plan, (iii) extend the
period during which options and stock bonuses may be exercised or granted or
(iv) expand the class of persons eligible to receive options or stock bonuses.
Unless sooner terminated as provided in the Plan, the Plan will terminate on
March 10, 2003. No options or stock bonuses may be granted after the Plan has
terminated.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Any incentive stock options granted under the Plan are intended to qualify
as "incentive stock options" under Section 422 of the Code. The grant of an
incentive stock option generally does not result in taxable income to the
optionee at the time of grant or at the time of exercise. However, for any year
in which Common Stock is purchased upon exercise of the option, the difference
between the fair market value of the Common Stock at the time of exercise and
its cost to the employee is an item of adjustment for purposes of computation of
an employee's alternative minimum tax under Section 55 of the Code. If the
optionee exercises the option and then sells the Common Stock purchased under
the option at a gain, the excess of the sales price of the Common Stock over its
cost to the optionee is taxable as a long-term capital gain if the sale is made
more than two years from the granting of the option and more than one year from
the transfer of the Common Stock to the optionee. If the sale is made within two
years after the granting of the option or within one year after the Common Stock
is transferred to the optionee, the optionee will generally recognize ordinary
income, equal to the fair market value of the Common Stock on the date of
exercise less the option price, and capital gain (long-term or short-term as the
case may be), equal to the amount realized in excess of the fair market value of
the Common Stock on the date of exercise. No tax deduction is generally
available to the Corporation as a result of the granting of incentive stock
options, the exercise of such options, or the sale by optionees of the Common
Stock purchased. However, the Corporation is entitled to a deduction in an
amount equal to the ordinary income, if any, realized by an optionee on the sale
of Common Stock purchased pursuant to the exercise of an incentive stock option.
Nonqualified options granted under the Plan are not intended to qualify as
"incentive stock options" under Section 422 of the Code. An optionee does not
receive taxable income, and the Corporation receives no deduction, by reason of
the grant of a nonqualified option. On the date any such option is exercised, an
optionee is deemed to receive ordinary income equal to the amount by which the
fair market value of the Common Stock on the exercise date exceeds the option
price. At that time, the Corporation receives a deduction in the same amount.
Stock bonuses granted under the Plan result in the recipient recognizing
ordinary income equal to the fair market value of the Common Stock when the
Common Stock is no longer subject to substantial risk of forfeiture or may be
transferred free of such risk. For unrestricted stock bonuses, the recipient
recognizes this income on the date of grant. In addition, the recipient of a
restricted stock bonus may elect to report this income in the year
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the Common Stock is transferred to him even though the income would otherwise be
deferred. At the time the recipient includes the restricted stock bonus as
income, the Corporation would receive a deduction in the same amount.
The Plan provides that the Committee may, in its discretion, grant tax
reimbursement payments to stock bonus and nonqualified stock option recipients
for use in paying income taxes resulting from such bonuses or options.
Any discussion herein pertaining to a deduction for the Corporation is
qualified by application of Section 162(m) of the Code and the regulations
thereunder. Section 162(m) limits to $1,000,000 per year the allowable deduction
for compensation paid to or accrued by the chief executive officer and the four
most highly compensated officers (other than the chief executive officer),
except that such limit does not include "performance-based compensation," as
that term is defined therein. If the Plan amendment is approved by shareholders
in the manner described below, compensation realized upon the exercise of
options will be "performance-based" if the exercise price is at least equal to
the fair market value of the underlying stock on the date of grant. The Plan is
intended to meet the provisions of Section 162(m) such that any deductions
realized from stock option transactions thereunder will not be limited.
Compensation derived from stock bonus awards granted under the Plan is not
intended to qualify as "performance-based" under the Section 162(m) regulations.
Since stock bonus awards are granted in minimal numbers, the Corporation
believes it is unlikely that granting such awards will result in nondeductible
compensation through the application of Section 162(m).
VOTE REQUIRED; EFFECT OF NONAPPROVAL
In order for incentive stock options granted under the Plan to receive the
favorable tax treatment described above and for options granted under the Plan
to comply with Section 162(m) of the Code and the Regulations thereunder, it is
necessary that the Plan Amendment be approved by the shareholders of the
Corporation. The Plan Amendment will not become effective unless the Plan is
approved by a majority of the votes cast at a shareholders' meeting at which a
quorum is present, either in person or by proxy. Abstentions and broker nonvotes
will have no effect. If such approval is not obtained, the Plan as currently in
effect will remain effective until it expires on March 10, 2003.
PLAN BENEFITS
Because the Plan is discretionary, it is not possible to determine what
options the Committee or the Board of Directors will grant thereunder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE STOCK COMPENSATION PLAN.
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INDEPENDENT AUDITORS
The firm of KPMG Peat Marwick LLP, independent certified public
accountants, has been selected by the Board of Directors as independent auditors
for the 1998 fiscal year. This selection is being presented to the shareholders
for ratification at the Annual Meeting.
A representative of KPMG Peat Marwick LLP is expected to be present at the
Annual Meeting of Shareholders and will be given an opportunity to make a
statement if he desires to do so. Such representative will be available to
respond to questions relating to the 1997 audit of the Corporation's financial
statements.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next Annual
Meeting of Shareholders must be received by the Secretary of FNB Corp., 101
Sunset Avenue, Asheboro, North Carolina 27203, no later than December 14, 1998.
OTHER MATTERS
There is no business other than as set forth, so far as now known, to be
presented for action by the shareholders at the meeting. It is intended that the
proxies will be exercised by the persons named therein upon matters that may
properly come before the meeting or any adjournment thereof, in accordance with
the recommendations of management.
By Order of the Board of Directors:
Michael C. Miller
President
Date: April 13, 1998
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FNB CORP.
101 Sunset Avenue
Asheboro, North Carolina 27203
Proxy for Annual Meeting of Shareholders - May 12, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R. Reynolds Neely, Jr. and Charles W. Stout,
M.D., or either of them, proxies with full power of substitution to vote all
shares of FNB Corp. standing in the name of the undersigned at the above Annual
Meeting of Shareholders, and all adjournments thereof:
1. ELECTION OF CLASS III DIRECTORS TO SERVE FOR THREE-YEAR TERMS EXPIRING
AT THE ANNUAL MEETING IN 2001: James M. Campbell, Jr., Thomas A.
Jordan, Michael C. Miller
_____ With authority to vote for all nominees listed above, except as
designated below.
_____ Without authority to vote for all nominees listed above.
-----------------------------------------------------------------------
To withhold authority to vote for any individual nominee, write the
nominee's name in the space above.
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE ARTICLES OF INCORPORATION to
increase the number of authorized common shares from 5,000,000 to
10,000,000.
_____ FOR _____ AGAINST _____ ABSTAIN
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE STOCK COMPENSATION PLAN to
increase the number of common shares covered by the Plan from 360,000
to 720,000.
_____ FOR _____ AGAINST _____ ABSTAIN
4. PROPOSAL TO RATIFY SELECTION OF KPMG PEAT MARWICK LLP as independent
auditors. _____ FOR _____ AGAINST _____ ABSTAIN
5. With discretionary authority upon such other matters as may come before the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AUTHORIZATION TO VOTE FOR THE
NOMINEES, APPROVAL OF AN AMENDMENT TO THE ARTICLES OF INCORPORATION, APPROVAL OF
AN AMENDMENT TO THE STOCK COMPENSATION PLAN AND THE RATIFICATION OF THE
SELECTION OF AUDITORS. THE PROXY WILL BE VOTED ACCORDINGLY UNLESS OTHERWISE
SPECIFIED.
<TABLE>
<CAPTION>
<S> <C>
Dated: _____________________, 1998 __________________________________
Signature of Shareholder
----------------------------------
Signature of Shareholder
When signing as attorney, executor,
administrator, trustee or guardian, please
give full title. If more than one trustee, all
should sign. All joint owners must sign.
</TABLE>
