<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
Wachovia Corporation
(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>
(WACHOVIA LOGO)
100 North Main Street
P.O. Box 3099
Winston-Salem, North Carolina 27150
191 Peachtree Street, N.E.
P.O. Box 4148
Atlanta, Georgia 30303
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 19, 1997
TO THE SHAREHOLDERS OF
WACHOVIA CORPORATION
You are cordially invited to attend the Annual Meeting of Shareholders of
Wachovia Corporation to be held at the offices of the Company, 100 North Main
Street, Winston-Salem, North Carolina, on Friday, April 25, 1997, at 10:30 A.M.,
EDT, for the following purposes:
(1) To elect four Directors of Wachovia Corporation for a three-year
term to expire at the 2000 Annual Meeting of Shareholders.
(2) To approve the amended and restated Wachovia Corporation Stock
Plan.
(3) To ratify the appointment of the independent auditors for 1997.
(4) To transact such other business as properly may come before the
meeting.
Shareholders of record at the close of business on February 25, 1997, are
entitled to notice of and to vote at said meeting and any adjournment thereof.
(Signature of L. M. Baker, Jr.)
L. M. Baker, Jr.
Chief Executive Officer
PLEASE MARK, DATE, SIGN AND RETURN YOUR PROXY PROMPTLY.
<PAGE>
(WACHOVIA LOGO)
100 North Main Street
P.O. Box 3099
Winston-Salem, North Carolina 27150
191 Peachtree Street, N.E.
P.O. Box 4148
Atlanta, Georgia 30303
PROXY STATEMENT
MARCH 19, 1997
This Proxy Statement and accompanying Form of Proxy are being mailed to
shareholders on or about March 19, 1997, in connection with the solicitation of
Proxies by the Board of Directors of Wachovia Corporation ("Wachovia" or the
"Company") for use at the Annual Meeting of Shareholders to be held on April 25,
1997, and at any adjournment thereof. The entire cost of such solicitation will
be borne by Wachovia. In addition to solicitation by mail, arrangements will be
made with brokerage houses and other custodians, nominees and fiduciaries to
send proxy materials to their principals, and Wachovia will reimburse them for
their expenses in so doing. Wachovia has retained W. F. Doring & Co. to assist
in such solicitation. The fee to be paid to such firm is not expected to exceed
$7,500, plus reasonable out-of-pocket costs and expenses. Personal solicitation
also may be conducted by Directors, officers and employees of Wachovia and its
subsidiaries.
The shares represented by the accompanying Proxy will be voted if the
Form of Proxy is properly signed and received by Wachovia prior to or at the
time of the meeting. Where a choice is specified on any Proxy as to the vote on
any matter to come before the meeting, the Proxy will be voted in accordance
with such specification. If no choice is specified, the Proxy will be voted in
favor of Proposals 1, 2 and 3. Any Proxy may be revoked at any time prior to the
voting of the Proxy by notifying the Secretary of Wachovia in writing or by
signing and delivering a Proxy with a later date. A Proxy is suspended if the
person giving the Proxy attends the meeting and elects to vote in person.
Throughout this Proxy Statement, reference will be made to the following
subsidiaries of Wachovia: Wachovia Bank of Georgia, National Association
("WBGA"), Wachovia Bank of North Carolina, National Association ("WBNC"), and
Wachovia Bank of South Carolina, National Association ("WBSC"). WBGA, WBNC and
WBSC are national banking associations organized under the laws of the United
States.
Shareholders of record at the close of business on February 25, 1997,
will be entitled to vote at the Annual Meeting of Shareholders. Holders of
Wachovia's common stock, $5.00 par value per share (the "Common Stock"), are
entitled at all meetings of shareholders of Wachovia to one vote for each share
held. At the close of business on February 25, 1997, there were 163,585,323
shares of Common Stock outstanding. All such shares are entitled to be voted at
the meeting.
Under Wachovia's bylaws, a majority of votes entitled to be cast on a
particular matter, represented in person or by proxy, constitutes a quorum for
purposes of all matters to be considered at the Annual Meeting. The bylaws of
Wachovia further provide that once a share is represented for any purpose at a
meeting, it is deemed present for quorum purposes for the remainder of the
meeting and any adjournment thereof, unless a new record date is or must be set
for the adjournment. Abstentions and shares which are withheld as to voting with
respect to one or more of the nominees for Director and abstentions will be
counted in determining the existence of a quorum, but shares held by a broker,
as nominee, and not voted on any matter will not be counted for such purposes.
Under the laws of North Carolina, the persons receiving a plurality of
the votes cast by the shares entitled to vote will be elected as Directors. The
proposal to approve the restated and amended Wachovia Corporation Stock Plan
will be adopted if it receives the affirmative vote of the holders of a majority
of the shares present, or represented, and
<PAGE>
entitled to vote at the Annual Meeting. The proposal to ratify the appointment
of auditors for 1997 will be approved if the votes cast in favor of such
proposal exceed the votes cast against it. Abstentions, shares which are
withheld as to voting with respect to nominees for Director and shares held of
record by a broker, as nominee, that are not voted with respect to any of the
foregoing proposals will not be counted as a vote in favor of or against such
proposal and, therefore, will have no effect on the proposal to elect the four
Directors named herein and the proposal to ratify the appointment of independent
auditors for 1997. However, abstentions will be counted as shares present and
entitled to vote on the proposal to amend the Stock Plan and, therefore, will be
treated as a vote against such proposal.
To Wachovia's knowledge, no shareholder beneficially owned more than 5%
of the outstanding shares of Wachovia Common Stock as of December 31, 1996.
Wachovia's three principal banking subsidiaries held, as of December 31, 1996,
in various fiduciary capacities, an aggregate of 10,544,745 shares, or 6.44%, of
the Common Stock as follows: WBNC (7,790,218 shares, or 4.76%), WBGA (1,776,860
shares, or 1.08%), and WBSC (977,667 shares, or 0.60%).
BOARD OF DIRECTORS
The Board of Directors of Wachovia held four meetings during 1996. Each
incumbent Director attended at least 75% of the aggregate of the total number of
meetings of the Board of Directors and of all committees of the Board on which
such Director served during 1996.
The bylaws of Wachovia provide that the number of Directors shall not be
less than nine nor more than twenty-five. There are presently fifteen Directors
divided into three classes. Mrs. Crandall C. Bowles was a Director of Wachovia
until December 20, 1996, when she elected to resign to comply with government
ethics rules applicable to her spouse's appointment and service as Chief of
Staff to the President of the United States. Pursuant to the provisions of the
Company's bylaws, the Board of Directors has elected Mr. Robert M. Holder, Jr.,
whose term would have expired at the 1997 Annual Meeting, to fill the vacancy
created by the resignation of Mrs. Bowles in the class of Directors whose term
expires at the 1998 Annual Meeting. Messrs. Rufus C. Barkley, Jr., Donald R.
Hughes and Charles McKenzie Taylor are retiring as of the date of the Annual
Meeting pursuant to the provisions of the Company's bylaws pertaining to
retirement age for Directors. At the 1997 Annual Meeting of Shareholders, four
Directors are to be elected to serve for a term of three years, until the 2000
Annual Meeting. If elected, the nominees will serve until their respective terms
expire, except as the age and retirement provisions of Wachovia's bylaws
otherwise require, and until their successors are elected and qualified. The
remaining members of the Board of Directors are expected to continue to serve
until their respective terms expire.
It is not anticipated that any of the nominees will be unable or
unwilling to serve, but if that should occur, it is the intention of the
proxyholders named in the Proxy either to vote for such other person or persons
for the office of Director as may be nominated by the Board of Directors or to
reduce the number of Directors to be elected at the meeting by the number of
such persons unable or unwilling to serve (subject to the requirement of
Wachovia's articles of incorporation that the number of Directors in each of the
three classes be as equal in number as possible). Proxies cannot be voted for a
greater number of nominees than the number named in the Proxy Statement.
Wachovia has an Audit Committee presently consisting of the following
nonmanagement Directors: James W. Johnston, Chairman, Lawrence M. Gressette,
Jr., Robert M. Holder, Jr., Wyndham Robertson and John C. Whitaker, Jr. During
1996, four meetings of the Audit Committee were held. The Audit Committee is
responsible for assuring that there exist viable internal and independent
auditing processes for Wachovia and its subsidiaries and affiliated companies.
The committee recommends to the Board of Directors the appointment of the
independent auditors. The committee maintains open lines of communication with
internal auditors, independent auditors and regulatory examiners for the purpose
of satisfying the committee that audit scopes and programs are comprehensive
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<PAGE>
and adequate to meet needs, that management takes appropriate and timely action
on recommendations made by internal auditors, independent auditors and
regulatory examiners, and that Wachovia personnel cooperate fully with internal
auditors, independent auditors and regulatory examiners. In fulfilling its
responsibilities, the committee reviews and considers written and oral reports
of examinations by the regulatory authorities, management letters or other
comments of independent auditors, reports of the internal auditors, and other
audit-related information it considers appropriate. The Chairman of the Audit
Committee regularly reports to the Board of Directors on the committee's
findings, any recommendations made by the committee, and action taken by
management on such recommendations.
Wachovia has a Management Resources and Compensation Committee presently
consisting of the following nonmanagement Directors: Donald R. Hughes, Chairman,
Rufus C. Barkley, Jr., John L. Clendenin and Sherwood H. Smith, Jr. Mrs. Bowles
also was a member of this Committee until her resignation in December 1996. The
Management Resources and Compensation Committee has the authority for
establishing and administering salary, incentive, benefit and stock plans,
including setting the compensation of senior officers, reviewing and
recommending assignment and succession of top executive management and at least
annually reviewing the performance of the Chief Executive Officer and reporting
its findings to the nonmanagement members of the Board. The Management Resources
and Compensation Committee, or a subcommittee thereof, also serves as the
committee of outside directors authorized to take those actions necessary to
satisfy the qualified performance-based compensation requirements for employer
compensation deductions set forth in Section 162(m) of the Internal Revenue Code
of 1986, as amended. Four meetings of the Management Resources and Compensation
Committee were held during 1996.
Wachovia has a Corporate Governance and Nominating Committee presently
consisting of the following nonmanagement Directors: Sherwood H. Smith, Jr.,
Chairman, Rufus C. Barkley, Jr., John L. Clendenin and Donald R. Hughes. Mrs.
Bowles also was a member of this Committee until her resignation in December
1996. The Corporate Governance and Nominating Committee has the authority for
considering and recommending nominees for the Board of Directors of the Company,
assessing the performance of the Board, evaluating issues of corporate
governance, and recommending the processes and practices through which the Board
shall conduct its business. The Corporate Governance and Nominating Committee
will consider recommendations for Director nominees made by shareholders of the
Company. Such nominations must be made in writing to the Chief Executive Officer
of Wachovia, in accordance with the requirements of the Company's bylaws, and
must state the name, age, address, principal occupation, background and
qualifications of the person recommended, specify the class of Directors to
which such person is nominated, state the number of shares that will be voted
for the person recommended, and indicate the name and residence address of, and
number of shares held by, the shareholder making the recommendation. Three
meetings of the Corporate Governance and Nominating Committee were held during
1996.
In addition, the Board of Directors has Compliance, Credit, Executive and
Finance Committees.
Set forth on the following pages for each nominee for election as
Director of Wachovia, and for each Director whose term will continue after the
Annual Meeting, is a brief statement including the age, year of first election
as a Director of Wachovia, principal occupation and business experience during
the past five years, and certain other directorships, all as of December 31,
1996, unless otherwise indicated.
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<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS
TERM EXPIRING 2000 ANNUAL MEETING
(Photo) JOHN L. CLENDENIN, 62, is Chairman of the Board of BellSouth
Corporation, a telecommunications holding company. He served as
President and Chief Executive Officer of BellSouth until his
retirement as a management employee on December 31, 1996. He
also serves as a Director of Coca-Cola Enterprises, Inc.,
Equifax Inc., National Service Industries, Inc., Providian
Corporation, RJR Nabisco Holdings Corp., RJR Nabisco, Inc., The
Home Depot, Inc., The Kroger Company and Springs Industries,
Inc. Mr. Clendenin was a Director of WBGA from 1981 to 1988 and
was designated a Director of Wachovia upon its organization in
1985. He was elected for his present term at the 1994 Annual
Meeting of Shareholders.
Committees: Corporate Governance and Nominating
Executive
Management Resources and Compensation
(Photo) GEORGE W. HENDERSON, III, 48, is President, Chief Executive
Officer and a Director of Burlington Industries, Inc., which
manufactures textiles and home furnishings. From 1993 to 1995,
he was President and Chief Operating Officer and, prior to
1993, he was a Group Vice President of Burlington Industries,
Inc. Mr. Henderson also serves as a Director of Jefferson Pilot
Corporation. He has been a Director of WBNC since 1995.
(Photo) ROBERT A. INGRAM, 54, is President and Chief Executive Officer
of Glaxo Wellcome Inc., a pharmaceutical company, positions he
has held since 1994. He served as President and Chief Operating
Officer of Glaxo Inc. from 1993 to 1994 and as its Group Vice
President from 1991 to 1993. Mr. Ingram also serves as an
Executive Director of Glaxo Wellcome plc, the parent company of
Glaxo Wellcome Inc.
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<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS - CONCLUDED
TERM EXPIRING 2000 ANNUAL MEETING
(Photo) JOHN G. MEDLIN, JR., 63, is Chairman of the Board of Wachovia.
He also served as Chief Executive Officer until his retirement
as a management employee on December 31, 1993, and as President
until February 1, 1993. Mr. Medlin serves as a Director of
BellSouth Corporation, Burlington Industries, Inc., Media
General, Inc., Nabisco Holdings Corp., National Service
Industries, Inc., RJR Nabisco Holdings Corp., RJR Nabisco, Inc.
and USAir Group, Inc. He was a Director of WBGA, WBNC and WBSC
until April 1994. Mr. Medlin was designated a Director of
Wachovia upon its organization in 1985 and was elected for his
present term at the 1994 Annual Meeting of Shareholders.
Committees: Credit Executive Finance
DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING 1999 ANNUAL MEETING
(Photo) LESLIE M. BAKER, JR., 54, is President and Chief Executive
Officer of Wachovia, positions he has held since January 1,
1994. He was President and Chief Operating Officer of Wachovia
from February 1, 1993 to December 31, 1993, and prior thereto
served as Executive
Vice President. Mr. Baker was President and Chief Executive
Officer of WBNC from January 1,
1990 until May 1, 1993. He has served as a Director of WBNC
since 1990 and as a Director of WBGA and WBSC since 1993. He
also serves as a Director of Carolina Power & Light Company.
Mr. Baker was elected a Director of Wachovia in 1993 by its
Board of Directors to fill a vacancy and was elected for his
present term at the 1996 Annual Meeting of Shareholders.
Committee: Executive
(Photo) LAWRENCE M. GRESSETTE, JR., 64, served as Chairman and Chief
Executive Officer of SCANA Corporation until March 1, 1997,
when he was elected Chairman of the Executive Committee. He
also served as President from 1985 until 1996. SCANA
Corporation is a holding company whose principal subsidiary is
South Carolina Electric & Gas Company, a public utility. He
serves as a Director of InterCel, Inc., SCANA Corporation and
The Liberty Corporation. Mr. Gressette was a Director of WBSC
from 1979 to 1991 and was named a Director of Wachovia by its
Board of Directors in connection with the acquisition of WBSC
in 1991. He was elected for his present term at the 1996 Annual
Meeting of Shareholders.
Committees: Audit Compliance
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DIRECTORS CONTINUING IN OFFICE - CONTINUED
TERM EXPIRING 1999 ANNUAL MEETING
(Photo) THOMAS K. HEARN, JR., 59, is President of Wake Forest
University. Dr. Hearn was a Director of WBNC from 1988 to 1990
and was elected as a Director of Wachovia at the 1990 Annual
Meeting of Shareholders. He was elected for his present term at
the 1996 Annual Meeting of Shareholders.
Committees: Credit Finance
(Photo) HERMAN J. RUSSELL, 66, is Chairman of H. J. Russell & Company,
a management services company. He also served as Chief
Executive Officer until 1996. Mr. Russell serves as a Director
of Citizens Bancshares Corporation, Georgia Power Company and
National Service Industries, Inc. He was a Director of WBGA
from 1983 to 1992 and was elected a Director of Wachovia by its
Board of Directors to fill a vacancy in 1992. Mr. Russell was
elected for his present term at the 1996 Annual Meeting of
Shareholders.
Committees: Credit Finance
(Photo) JOHN C. WHITAKER, JR., 59, is Chairman of the Board and Chief
Executive Officer of Inmar Enterprises, Inc., an information
services and transaction processing company. He was a Director
of WBNC from 1990 until 1996. Mr. Whitaker was elected a
Director of Wachovia at the 1996 Annual Meeting of
Shareholders.
Committees: Audit Compliance
DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING 1998 ANNUAL MEETING
(Photo) HAYNE HIPP, 56, is President and Chief Executive Officer of The
Liberty Corporation, an insurance and broadcasting holding
company. He also serves as a Director of The Liberty
Corporation and SCANA Corporation. Mr. Hipp was a Director of
WBSC from 1984 to 1991 and was named a Director of Wachovia by
its Board of Directors in connection with the acquisition of
WBSC in 1991. He was elected for his present term at the 1995
Annual Meeting of Shareholders.
Committees: Credit Finance
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DIRECTORS CONTINUING IN OFFICE - CONCLUDED
TERM EXPIRING 1998 ANNUAL MEETING
(Photo) ROBERT M. HOLDER, JR., 66, is Chairman of the Board of Holder
Corporation, a general contractor and development firm. He also
served as Chief Executive Officer until 1994. He serves as a
Director of National Service Industries, Inc. Mr. Holder was a
Director of WBGA from 1973 to 1990 and was elected as a
Director of Wachovia at the 1988 Annual Meeting of
Shareholders. He was elected for his previous term at the 1994
Annual Meeting of Shareholders and was elected by the Board of
Directors in January 1997 to fill a vacancy.
Committees: Audit Compliance
(Photo) JAMES W. JOHNSTON, 50, is President and Chief Executive Officer
of Stonemarker Enterprises, Inc., a consulting and investment
company. Until his retirement in 1996, he served as Vice
Chairman of RJR Nabisco, Inc., beginning in 1995; Chairman of
R.J. Reynolds Tobacco International, Inc., beginning in 1993;
and Chairman of the Board of R.J. Reynolds Tobacco Company and
a Director of RJR Nabisco Holdings Corp. Mr. Johnston also was
Chief Executive Officer of R.J. Reynolds Tobacco Company from
1989 to 1995. He serves as a Director of Sealy Corporation. Mr.
Johnston was elected a Director of Wachovia by its Board of
Directors to fill a vacancy in 1990 and was elected for his
present term at the 1995 Annual Meeting of Shareholders.
Committees: Audit Compliance
(Photo) WYNDHAM ROBERTSON, 59, is a writer. A member of the staff of
Fortune magazine for 24 years, she served as Assistant Managing
Editor from 1981 to 1986. From 1986 to 1996, she was Vice
President for Communications of the University of North
Carolina. Miss Robertson serves as a Director of Media General,
Inc. She was a Director of WBNC from 1993 to 1995, and was
elected a Director of Wachovia for her present term at the 1995
Annual Meeting of Shareholders.
Committees: Audit Compliance
(Photo) SHERWOOD H. SMITH, JR., 62, is Chairman of the Board of
Carolina Power & Light Company, a public utility. He also
served as Chief Executive Officer until 1996 and President
until 1992. Mr. Smith serves as a Director of Northern Telecom,
Inc., and Springs Industries, Inc., and a Trustee of
Northwestern Mutual Life Insurance Company. Mr. Smith was a
Director of WBNC from 1980 to 1990 and was designated a
Director of Wachovia upon its organization in 1985. He was
elected for his present term at the 1995 Annual Meeting of
Shareholders.
Committees: Corporate Governance and Nominating
Executive
Management Resources and Compensation
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STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth beneficial ownership of Common Stock by
each Director, nominee for Director and executive officer named in the Summary
Compensation Table and by all Directors, nominees and executive officers as a
group, as of December 31, 1996.
<TABLE>
<CAPTION>
PERCENT
OF
NAME NUMBER OF SHARES CLASS
<S> <C> <C>
Leslie M. Baker, Jr. 126,354 (a)(b)(c)(d) .0771
Rufus C. Barkley, Jr. 105,284 (c)(d)(e)(f) .0643
John L. Clendenin 6,512 (d)(f) .0040
Hugh M. Durden 62,755 (a)(b)(c)(d) .0383
Lawrence M. Gressette, Jr. 9,975 (c)(d)(f) .0061
Thomas K. Hearn, Jr. 4,068 (d)(f) .0025
George W. Henderson, III 2,238 .0014
Hayne Hipp 6,700 (d)(f) .0041
Robert M. Holder, Jr. 19,509 (d)(f) .0119
Donald R. Hughes 7,842 (d)(f) .0048
Robert A. Ingram 200 (g) *
James W. Johnston 6,244 (d)(f) .0038
Walter E. Leonard, Jr. 65,612 (a)(b)(d) .0400
Robert S. McCoy, Jr. 48,095 (a)(b)(c)(d) .0294
John G. Medlin, Jr. 211,264 (c) .1289
G. Joseph Prendergast 72,268 (a)(b)(d) .0441
Wyndham Robertson 1,286 (d)(f) .0008
Herman J. Russell 21,244 (d)(f) .0130
Sherwood H. Smith, Jr. 10,167 (d)(f) .0062
Charles McKenzie Taylor 57,230 (c)(d)(f) .0349
John C. Whitaker, Jr. 3,602 (d)(f) .0022
All Directors, Nominees and
Executive Officers as a Group (23
persons) 1,046,058 (a)(b)(d) .6383
</TABLE>
* Less than one ten-thousandth.
(a) Included are shares held by the Trustee under Wachovia's Retirement
Savings and Profit-Sharing Plan as follows: Mr. Baker, 155 shares;
Mr. Durden, 135 shares; Mr. Leonard, 3,613 shares; Mr. McCoy, 9,345
shares; Mr. Prendergast, 155 shares; and all other executive
officers participating in the Plan, 5,191 shares.
(b) Included are shares subject to stock options granted to Messrs.
Baker (39,382 shares), Durden (18,620 shares), Leonard (33,440
shares), McCoy (17,300 shares), Prendergast (25,000 shares) and
other executive officers (107,924 shares) under Wachovia's stock
option plans and exercisable at December 31, 1996 or within 60 days
thereafter.
(c) Included are shares owned by family members of the following
directors and executive officers who disclaim beneficial ownership
of such shares: Mr. Baker, 75 shares; Mr. Barkley, 2,424 shares; Mr.
Durden, 4,022 shares; Mr. Gressette, 108 shares; Mr. McCoy, 500
shares; Mr. Medlin, 480 shares; and Mr. Taylor, 2,329 shares.
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<PAGE>
(d) Not included are restricted shares reserved for nonemployee
Directors under Wachovia's Stock Plan, the ownership of which will
vest one year from the date of grant of annual awards and three
years from the date of grant of initial awards or upon death,
disability or retirement from the Board of Directors, as follows:
annual awards of 250 shares for each nonemployee Director who was a
member of the Board on April 26, 1996, and initial awards of 1,000
shares for Miss Robertson and Mr. Whitaker. Also not included are
restricted shares reserved for executive officers under the Stock
Plan, the ownership of which will vest five years after the date of
grant and upon the attainment of certain performance goals or upon
such officer's retirement from the Company (or will vest in part
upon such officer's termination of employment due to death or
disability), as follows: Mr. Baker, 88,857 shares; Mr. Durden,
19,000 shares; Mr. Leonard, 43,000 shares; Mr. McCoy, 39,500 shares;
Mr. Prendergast, 45,000 shares; and other executive officers, 65,900
shares.
(e) Beneficial owners have sole voting and investment power with respect
to their shares except for 94,500 shares with respect to which Mr.
Barkley shares investment and voting power.
(f) Not included are deferred stock units held under the Wachovia
Corporation Director Deferred Stock Unit Plan for the accounts of
nonemployee Directors on February 1, 1997, as listed on page 26
herein. Such units are equivalent in value to shares of Wachovia
Common Stock, do not have voting rights and are payable only in cash
after a Director leaves the Board or upon a change in control of the
Company.
(g) Shares acquired upon nomination as a Director, after December 31,
1996.
PROPOSAL TO AMEND WACHOVIA CORPORATION STOCK PLAN
The Wachovia Corporation Stock Plan (the "Plan") was adopted by the
shareholders on April 22, 1994. The purpose of the Plan is to encourage and
enable selected key employees of the Company and related corporations and
nonemployee Directors of the Company to acquire or increase their holdings of
Common Stock and other proprietary interests in the Company in order to promote
a closer identification of their interests with those of the Company and its
shareholders, thereby further stimulating their efforts to enhance the
efficiency, soundness, profitability, growth and shareholder value of the
Company. The Plan was amended and restated effective October 25, 1996 in order
to comply with certain revisions to federal securities laws regulating
transactions in Company securities by directors and officers.
The Board of Directors has determined that it would be in the best
interests of Wachovia and its shareholders to further amend and restate the Plan
in order to better enable the Company to continue to provide competitive, stock-
based incentive compensation opportunities for selected key employees and
nonemployee Directors and to facilitate plan administration in certain respects.
Certain amendments to the Plan require shareholder approval. (See "Proposed
Amendments" beginning on page 12.) The discussion which follows concerning the
operation of the Plan and the proposed amendments is qualified in its entirety
by the Plan, a copy of which is included in this Proxy Statement as Exhibit A.
BACKGROUND; OPERATION OF THE PLAN
The Plan provides for the granting of benefits (collectively referred to
herein as "awards") to selected key employees and nonemployee Directors. Key
employees selected to participate in the Plan may be eligible for the grant of
incentive stock options and nonqualified stock options (collectively,
"options"), stock appreciation rights and restricted stock awards and restricted
units (collectively, "restricted awards"). Nonemployee Directors are eligible
for
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<PAGE>
director awards upon initial election to the Board and annual director awards of
restricted stock (collectively, "director awards"). Awards may be granted under
the Plan as of the effective date (April 22, 1994) but no awards will be granted
after April 21, 2004.
A maximum of 6,000,000 shares of Common Stock is currently authorized for
issuance under the Plan. The number of shares issuable under the Plan is
proposed to be increased each year so that the number of shares authorized and
available for issuance under the Plan is no less than 2.5% of the number of
shares of Common Stock outstanding as of the end of each calendar year. (See
"Proposed Amendments" beginning on page 12.) The number of shares reserved for
issuance under the Plan is subject to adjustment in the event of a change in the
capital stock structure of the Corporation or a related corporation affecting
the Common Stock (due to a merger, stock split, stock dividend or similar
event). On March 3, 1997, the closing sales price of the Common Stock as
reported on the New York Stock Exchange was $62.00.
A "key employee" is defined in the Plan to mean an employee of the
Company or a related corporation who makes significant and important
contributions to the Company or a related corporation, as determined by the
Committee authorized to administer the Plan. Approximately 1,500 persons qualify
as key employees at this time. A "nonemployee Director" is defined in the Plan
as a Director of the Company who is not an employee of the Company or a related
corporation at the time of grant of a Director Award and who has never served as
a senior officer of the Company or a related corporation. Currently thirteen
Directors are nonemployee Directors eligible to participate in the Plan.
The Plan is administered by the Management Resources and Compensation
Committee (the "Committee"). Under the terms of the Plan, the Committee has full
and final authority to take any action with respect to the Plan, including,
without limitation, the authority to determine all matters relating to awards,
including selection of individuals to be granted awards, the types of awards,
the number of shares of Common Stock, if any, subject to an award, and the
terms, conditions, restrictions and limitations of an award; to construe and
interpret the Plan and agreements related to awards; and to make all other
determinations deemed necessary or advisable for administering the Plan. In
addition, the Plan is proposed to be amended to expand the Committee's authority
to accelerate awards. (See "Proposed Amendments," beginning on page 12.) The
Committee also has authority to determine adequate consideration for shares of
Common Stock issuable under the Plan. The Plan is intended to comply with Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations thereunder.
The Plan may be amended or terminated at any time by the Board of
Directors, subject to the following: (i) no amendment or termination may
adversely affect the rights of an award recipient without the recipient's
consent; and (ii) shareholder approval is required of any amendment that would
increase the number of shares issuable under the Plan (except to the extent of
adjustments, as discussed above), permit the granting of awards to Committee
members (except for nondiscretionary Director awards) or materially change the
requirements for eligibility to receive an award.
As noted above, the Plan authorizes the grant of both incentive stock
options and nonqualified stock options, both of which are exercisable for shares
of Common Stock. The option price at which an option may be exercised is the
fair market value per share of the Common Stock on the date of the option grant,
as determined in good faith by the Committee. The "fair market value" means the
closing price per share of the Common Stock on the New York Stock Exchange on
the last trading day prior to the date the option was granted; or if there was
no such sale on such day, the fair market value as determined in accordance with
Section 20.2031-2 of the Federal Estate Tax Regulations, or in any other manner
consistent with the Code. The period during which an option may be exercised is
determined by the Committee at the time of option grant and may not extend more
than 10 years from the date of grant.
Under the terms of the Plan, stock appreciation rights may be granted to
an optionee of an option (a "related option") with respect to all or a portion
of the shares of Common Stock subject to the related option (a "tandem
-10-
<PAGE>
SAR") or may be granted separately (a "freestanding SAR"). (Tandem SARs and
freestanding SARs are collectively referred to herein as "SARs.") The base price
of a freestanding SAR may not be less than the fair market value of the Common
Stock on the date of grant of the SAR. The consideration to be received by the
holder of an SAR (an "SAR holder") may be paid in cash, shares of Common Stock
(valued at fair market value on the date of the SAR exercise), or a combination
of cash and shares of Common Stock, as elected by the SAR holder, subject to the
discretion of the Committee and the terms of the Plan. SARs are exercisable
according to the terms stated in the related agreement. No SAR may be exercised
more than 10 years after it was granted, or such shorter period as may apply to
related options in the case of tandem SARs.
The Plan also authorizes the grant of restricted awards to such eligible
key employees in such numbers, upon such terms and at such times as the
Committee may determine. A restricted award may consist of a restricted stock
award or a restricted unit, or both. Restricted stock awards and restricted
units are payable in cash or whole shares of Common Stock (including restricted
stock), or partly in cash and partly in whole shares of Common Stock, in
accordance with the terms of the Plan and in the sole and absolute discretion of
the Committee. The Committee may condition the grant or vesting, or both, of a
restricted award upon the continued service of the recipient for a certain
period of time, attainment of such performance objectives as the Committee may
determine, or upon a combination of continued service and performance
objectives.
Each nonemployee Director who is newly elected or appointed to the Board
of Directors receives a director award for 1,000 shares of restricted stock (the
"initial director award"). An initial director award is restricted for a period
of three years; provided that, as long as the Director remains in service, one
third of the shares subject to the initial director award is deemed earned and
vests on each of the first three anniversaries of the date of the award grant.
In addition, each nonemployee Director who has been a Director for at least one
year receives an annual director award of 250 shares of restricted stock. An
annual director award is deemed earned and vests one year after the date of
grant so long as the Director is still in service. In addition, a director award
not otherwise forfeited will vest upon the death, disability or retirement of
the Director in accordance with the policies of the Company. Director awards not
otherwise earned are forfeited upon the termination of service of the Director
on the Board of Directors.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary generally describes the principal federal (and not
state and local) income tax consequences of awards granted under the Plan. The
summary is general in nature and is not intended to cover all tax consequences
that may apply to a particular employee or to the Company. The provisions of the
Code and regulations thereunder relating to these matters are complicated and
their impact in any one case may depend upon the particular circumstances.
Incentive stock options granted under the Plan are intended to qualify as
incentive stock options under Section 422 of the Code. Pursuant to Section 422,
the grant and exercise of an incentive stock option generally will not result in
taxable income to the optionee (with the possible exception of alternative
minimum tax liability) if the optionee does not dispose of shares received upon
exercise of such option less than one year after the date of exercise and two
years after the date of grant, and if the optionee has continuously been an
employee of the Company from the date of grant to three months before the date
of exercise (or twelve months in the event of retirement, death or disability).
The Company will not be entitled to a deduction for income tax purposes in
connection with the exercise of an incentive stock option. Upon the disposition
of shares acquired upon exercise of an incentive stock option, the optionee will
be taxed on the amount by which the amount realized upon such disposition
exceeds the option price, and such amount will be treated as long-term capital
gain or loss. If the holding period requirements for incentive stock option
treatment described above are not met, the option will be treated as a
nonqualified stock option.
-11-
<PAGE>
Pursuant to the Code and the terms of the Plan, in no event can there
first become exercisable by an optionee in any one calendar year incentive stock
options granted by the Company with respect to shares having an aggregate fair
market value (determined at the time an option is granted) greater than
$100,000. To the extent an incentive stock option granted under the Plan exceeds
the foregoing limitation, it will be treated for all purposes under the Plan as
a nonqualified stock option. In addition, no incentive stock option may be
granted to an individual who owns, immediately before the time that the option
is granted, stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company.
For federal income tax purposes, the grant of a nonqualified stock
option, SAR or restricted stock award does not result in taxable income to the
holder or a tax deduction to the Company. At the time of exercise of a
nonqualified stock option, the difference between the market value of the stock
on the date of exercise and the option price constitutes taxable ordinary income
to the optionee. The Company is entitled to a deduction in the same year in an
amount equal to the income taxable to the optionee. Similarly, at the time of
exercise of an SAR, the amount of cash and fair market value of shares received
by the SAR holder, less cash or other consideration paid (if any), is taxed to
the SAR holder as ordinary income and the Company receives a corresponding
income tax deduction.
Upon expiration of the restricted period applicable to a restricted stock
award, the fair market value of such shares at such date and any cash amount
awarded, less cash or other consideration paid (if any), is included in the
recipient's ordinary income as compensation, except that, in the case of
restricted stock issued at the beginning of the restriction period, the
recipient may elect to include in his ordinary income as compensation at the
time the restricted stock is awarded, an amount equal to the fair market value
of such shares at such time, less any amount paid therefor. The Company is
entitled to a corresponding income tax deduction to the extent that the amount
represents reasonable compensation and an ordinary and necessary business
expense, subject to any required income tax withholding.
The federal income tax consequences of the award of restricted units and
other restricted awards other than restricted stock will depend on the
conditions of the award. Generally, the transfer of cash or property results in
ordinary income to the recipient and a tax deduction to the Company. If there is
a substantial risk that the property transferred will be forfeited (for example,
because receipt of the property is conditioned upon the performance of
substantial future services), the taxable event is deferred until the risk of
forfeiture lapses unless the recipient elects to accelerate the taxable event to
the date of transfer. Generally, any deduction by the Company occurs only when
ordinary income in respect of an award is recognized by the employee (and then
the deduction is subject to reasonable compensation and withholding
requirements).
PROPOSED AMENDMENTS
Effective March 3, 1997, the Board of Directors adopted a resolution to
amend and restate the Plan. Certain of these amendments require shareholder
approval. These proposals are discussed below.
The Plan is proposed to be amended to provide that, in the event that the
number of shares available for issuance under the Plan as of April 25, 1997 and
as of the last day of each calendar year (commencing in 1997) thereafter is less
than 2.5% of the number of outstanding shares of Common Stock as of such day
(the "replacement amount"), then the maximum number of shares authorized and
available for issuance under the Plan will be increased on such day so that the
maximum number of shares authorized and available for issuance equals the
replacement amount. Awards for approximately 4,794,719 shares of the currently
authorized 6,000,000 shares have already been granted. The proposed amendment to
increase the number of shares available for issuance under the Plan will enable
the Company to continue to offer competitive, stock-based incentive compensation
awards to its key employees and nonemployee Directors. The proposed amendment
also is expected to enable the Company to rely on the current Plan
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<PAGE>
for several more years rather than recommending adoption of a new stock-based
program in the near future. No additional awards will be granted under the Plan
after April 21, 2004.
The Plan is also proposed to be amended to modify current award
limitation provisions. Currently, the Plan provides that, in any 12-month
period, an employee may not receive awards in excess of the following limits:
Options for 75,000 shares; SARs for 75,000 shares; and restricted awards with an
aggregate dollar value greater than $1 million. In order to give the Company
more flexibility in granting awards, the Plan is proposed to be amended to
impose limits of 300,000 shares of Common Stock (or the equivalent value thereof
based on the fair market value of the Common Stock on the date of grant of an
award) that may be subject to awards of any type granted to any employee during
any calendar year. The Company currently does not propose to grant awards to any
specific employee for such amount but desires to have the flexibility to do so
if such awards are merited in the future.
These award restrictions are imposed in order to preserve the Company's
tax deduction for certain awards paid under the Plan in accordance with the
terms of Section 162(m) of the Code and related regulations. Section 162(m) of
the Code was amended as part of the Omnibus Budget Reconciliation Act of 1993 to
deny an employer a deduction for compensation paid to covered employees
(generally, the named executives in the summary compensation table) of a
publicly held corporation that exceeds $1 million unless the compensation is
exempt from the $1 million limitation because it is performance-based
compensation or paid on a commission basis. The Section 162(m) regulations
require that shareholders approve the material terms of compensation performance
goals, including the maximum amount of awards that may be granted to any
employee during a specified period.
The Plan is further proposed to be amended to authorize the Committee (1)
to accelerate the exercisability or vesting of any award under any circumstances
and (2) to provide for automatic acceleration of outstanding options, SARs and
restricted awards (unless the Committee elects not to accelerate such awards) in
the event of a recipient's retirement, displacement, death or disability. As
currently written, the Plan gives the Committee discretion to accelerate
options, SARs and restricted awards under certain circumstances, such as in the
event of a participant's termination due to death, disability or retirement. In
addition, certain minor technical amendments also are proposed in order to
facilitate Plan administration.
-13-
<PAGE>
The amount of compensation that will be paid pursuant to the grant of
awards under the Plan in the current year to the following persons is not yet
determinable due to vesting, performance and other criteria. However, the
following table sets forth the number of awards that have been granted in 1997
under the Plan to each of the following:
NEW PLAN BENEFITS(1)
WACHOVIA CORPORATION STOCK PLAN
<TABLE>
<CAPTION>
NUMBER NUMBER NUMBER NUMBER
OF OF OF OF
RESTRICTED OPTION SAR DIRECTOR
NAME AND POSITION AWARDS GRANTS GRANTS AWARDS
<S> <C> <C> <C>
Leslie M. Baker, Jr.
President, Chief Executive Officer and a
Director........................................... 17,467 75,000 50,000 0
G. Joseph Prendergast
Executive Vice President........................... 15,000 30,000 N/A N/A
Walter E. Leonard, Jr.
Executive Vice President........................... 15,000 30,000 N/A N/A
Robert S. McCoy, Jr.
Executive Vice President and
Chief Financial Officer............................ 15,000 30,000 N/A N/A
Hugh M. Durden
Executive Vice President........................... 8,000 18,000 N/A N/A
Executive Group...................................... 104,467 256,000 50,000 N/A
Non-Executive Director Group......................... N/A N/A N/A (2)
Non-Executive Officer
Employee Group..................................... 128,800 1,513,825 N/A N/A
</TABLE>
(1) Grants and Awards made pursuant to the plan during 1997.
(2) Two hundred fifty shares of restricted stock will be awarded to each
nonemployee Director who has served as a Director for one year as of April
25, 1997, and 1,000 shares of restricted stock will be awarded to each
newly-elected nonemployee Director on the date of his or her initial
election to the Board.
The Board of Directors recommends that the shareholders vote FOR the
proposal to amend the Plan.
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<PAGE>
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young LLP has been appointed independent auditors to make the
annual audit of the consolidated financial statements of Wachovia and its
subsidiaries for the year 1997, upon ratification of that appointment by the
shareholders. Ernst & Young LLP has acted as the independent auditors for WCNC
since 1969 and for Wachovia since its organization as First Wachovia Corporation
in 1985. Wachovia has been advised by Ernst & Young LLP that to the best of its
knowledge no member of the firm has any direct or material indirect financial
interest in Wachovia or any of its subsidiaries, nor has any such member had any
connection during the past three years with Wachovia or any of its subsidiaries
in the capacity of promoter, underwriter, voting trustee, director, officer or
employee. Representatives of Ernst & Young LLP will be present at the Annual
Meeting and will have an opportunity to make a statement if they desire to do
so. Such representatives will be available to respond to appropriate questions.
The Board of Directors recommends that shareholders vote FOR this proposal.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The senior management compensation program is administered by the
Management Resources and Compensation Committee (the "Committee"). The Committee
consists entirely of nonemployee directors who are not eligible to participate
in any of the management compensation programs. The Committee is responsible for
the establishment, review and oversight of all senior management compensation
and benefit policies, plans, programs and agreements. The Committee meets at
least quarterly to evaluate, review and act on senior management compensation
and benefit matters.
Wachovia's senior management compensation program consists of base
salary, annual incentive and stock-based awards based on the performance of the
Company and the responsibility, experience, skills and performance of
participating individuals. These plans utilize competitive peer group
information, and salary grade ranges, maximum incentive pay levels, and stock
award guidelines are established and administered to reinforce the alignment of
the interests of senior management employees with the performance of the Company
and the interests of its shareholders. The peer institutions used for comparison
are fifteen of the highest performing regional banking companies in the country,
all of which are included in the KBW Index used in the Performance Graph on page
18.
The compensation program, including the Senior Management Incentive Plan
and the Stock Plan are designed to enable the Company to receive full deductions
for income tax purposes for qualifying executive compensation which may be
earned by certain executive officers in excess of $1 million.
The Committee engages an independent executive compensation consultant to
assist the Committee in its assessment and evaluation of the appropriateness of
the senior management compensation program. The Committee has determined that
Wachovia's senior management compensation programs, plans and awards are well
within conventional standards of reasonableness and competitive necessity and
are clearly justified by sustained performance which exceeds industry norms.
A description of each of the major elements of the senior management
compensation program and its specific relationship to corporate performance, and
a summary of the decisions and actions taken by the Committee with regard to
1996 senior management compensation and the Chief Executive Officer's
compensation, are set forth below.
BASE SALARY
Members of senior management receive base salaries determined by the
responsibilities, skills and experience related to their respective positions.
Other factors considered in salary determination are individual performance,
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<PAGE>
the success of each business unit in the individual's area of responsibility in
achieving established profit and business plans, Wachovia's median salary ranges
and Wachovia's ability to pay an appropriate and competitive salary. Members of
senior management are eligible for periodic increases in their base salary as a
result of individual performance or significant increases in their duties and
responsibilities. The amount and timing of an increase depends upon the
individual's performance, position of salary within the salary range, and the
time interval and any added responsibilities since the last merit increase. The
salary increases during 1996 for certain executives, including the named
executives, were based on an evaluation by the Committee of the above described
factors.
SENIOR MANAGEMENT INCENTIVE PLAN
Certain members of senior management participate in the Senior Management
Incentive Plan. Personal award opportunities pursuant to the Plan are based upon
the performance criteria applicable to the Company, the individual performance
of each participant and related business unit performances.
The Committee establishes annual corporate performance benchmarks and
potential awards as a percentage of base salary determined upon review of
Wachovia's historical performance and annual business plan, and taking into
account the historical performance of peer institutions. The annual corporate
performance benchmarks are established in terms of: (1) net income per fully
diluted share (50% weight), (2) return on assets (25% weight) and (3) return on
equity (25% weight). The composite corporate performance evaluation factor is
determined by actual financial results for the year in relation to these three
established goals.
The performance of each individual and the business unit for which he or
she is responsible is determined by evaluating each individual's accomplishments
compared with established annual business goals and key strategic objectives.
Based on Committee policies, an individual assessment is made of the employee's
contribution to the achievement of overall Company performance, goals and
objectives. The resulting individual performance evaluation factor may reduce,
but not increase, the employee's award based upon the composite corporate
evaluation factor.
In January 1997, the Committee reviewed and approved the 1996 Senior
Management Incentive Plan award payments to the Chief Executive Officer and
other senior management employees, including the named executives. The payments
were based on individual and business unit performances as compared with goals
established for 1996 and on the Company achieving net income per fully diluted
share of $3.80 (50% weight), an increase of 9% from 1995, and a return of 1.43%
on assets (25% weight) and 17.62% on equity (25% weight).
WACHOVIA CORPORATION STOCK PLAN
The purpose of the Stock Plan is to encourage and enable members of
senior management to own stock or other proprietary interests in the Company,
thereby further enhancing the identification of their interests with the
interests of other shareholders. Members of senior management are eligible to
receive an annual benefit under the Plan in the form of incentive stock options,
nonqualified stock options, stock appreciation rights, restricted stock and/or
restricted units or other stock-related awards. Stock options, restricted stock
and stock appreciation rights ("SARs") have been granted under the Plan. The
stock options and SARs usually are earned over a five-year period. Vesting of
grants of restricted stock is subject to attaining certain specified performance
goals and completion of the restriction period (generally five years). The
number of shares and kinds of awards granted an individual are based upon level
of responsibility, individual performance, the Company's performance, the value
of the options and awards in relation to the individual's base salary, and the
amounts and kinds of prior awards.
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<PAGE>
The Stock Plan is administered in a manner that encourages and enables
members of senior management to increase their stock ownership or other
proprietary interests in the Company over time and to retain for long-term
investment the shares or interests obtained through the Plan.
In early 1996, the Committee awarded stock options, restricted stock and
SARs to the Chief Executive Officer and other members of senior management,
including the named executives. The Committee took into account the
responsibility level and performance of each individual.
As of February 1, 1997, approximately 1,205,281 shares of common stock
were available for grant under the Wachovia Corporation Stock Plan.
1996 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation is determined pursuant to the
same basic factors as described above for other members of senior management. In
establishing the base salary, incentive and stock awards of the Chief Executive
Officer for 1996, the Committee considered Wachovia's overall performance,
record of increase in shareholder value, success in meeting strategic objectives
and the incumbent's personal leadership and accomplishments. These factors were
considered in conjunction with the Company's financial results for 1996 in
relation to the established business plan and in comparison with the performance
of peer organizations. Mr. Baker's 1996 management incentive plan award was
based on the above considerations and the Company's achieving certain annual
performance goals (net income per fully diluted share, return on assets and
return on equity) as described above in this Report under the heading "Senior
Management Incentive Plan."
MANAGEMENT RESOURCES AND COMPENSATION
BOARD OF DIRECTORS OF WACHOVIA CORPORATION
Donald R. Hughes, Chairman
Rufus C. Barkley, Jr.
John L. Clendenin
Sherwood H. Smith, Jr.
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<PAGE>
FIVE-YEAR STOCK PERFORMANCE COMPARISON GRAPH
The graph below presents five-year cumulative total return comparisons
through December 31, 1996, in stock price appreciation and dividends for
Wachovia common stock, the Standard & Poor's 500 Stock Index and the Keefe,
Bruyette & Woods 50 Total Return Index (the "KBW 50"). Returns assume an initial
investment of $100 on the last trading day before the beginning of 1992 and
quarterly reinvestment of dividends. The KBW 50 is a published industry index
providing a market capitalization weighted measure of the total return of 50
money center and major regional U.S. banking companies.
(The Performance Graph appears here. The plot points are listed in the
table below.)
1991 1992 1993 1994 1995 1996
Wachovia $100 $121.24 $122.79 $122.74 $180.57 $230.42
KBW 500 100 127.42 134.48 127.62 240.41 289.15
S&P 500 100 107.61 118.46 120.02 165.12 203.03
Values as of each year-end of a $100 initial investment, assuming
reinvestment of dividends, are shown in the graph and table above.
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<PAGE>
COMPENSATION
The following table sets forth, for the years ended December 31, 1996,
1995 and 1994, the cash compensation paid by Wachovia and its subsidiaries, as
well as other compensation paid or accrued for each of these years, to each of
the five most highly compensated executive officers of the Company (the "named
executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) COMPENSATION ($)(2) AWARDS ($)(3) OPTIONS/SARS(#)
<S> <C> <C> <C> <C> <C> <C>
Leslie M. Baker, Jr. 1996 650,000 380,300 29,190 999,994 75,000/75,000
President and Chief Executive 1995 595,833 387,300 28,622 846,875 30,000/0
Officer 1994 550,000 357,500 14,339 768,750 25,000/0
G. Joseph Prendergast 1996 442,500 219,000 12,580 875,000 25,000/0
Executive Vice President 1995 405,000 222,800 14,206 338,750 15,000/0
1994 353,333 176,700 14,097 153,750 10,000/0
Walter E. Leonard, Jr. 1996 441,667 218,600 11,708 875,000 20,000/0
Executive Vice President 1995 400,000 220,000 22,645 338,750 15,000/0
1994 337,500 168,800 14,867 153,750 10,000/0
Robert S. McCoy, Jr. 1996 391,667 193,900 25,723 875,000 20,000/0
Executive Vice President and 1995 347,083 190,900 26,653 254,063 12,000/0
Chief Financial Officer 1994 315,000 157,500 20,855 123,000 7,500/0
Hugh M. Durden 1996 275,417 123,900 17,827 525,000 15,000/0
Executive Vice President 1995 262,916 131,500 14,241 135,500 8,000/0
1994 240,000 120,000 76,712 92,250 7,500/0
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION ($)(4)
<S> <C>
Leslie M. Baker, Jr. 39,000
President and Chief Executive 35,750
Officer 33,000
G. Joseph Prendergast 26,550
Executive Vice President 24,300
21,200
Walter E. Leonard, Jr. 26,500
Executive Vice President 24,000
20,250
Robert S. McCoy, Jr. 23,500
Executive Vice President and 20,825
Chief Financial Officer 18,900
Hugh M. Durden 16,525
Executive Vice President 15,775
14,400
</TABLE>
(1) Performance-based incentive awards for all years were paid pursuant to the
Wachovia Senior Management Incentive Plan.
(2) All amounts disclosed are attributable to supplemental life insurance, tax
return preparation and financial planning services, company-sponsored social
clubs, company-provided automobiles, and automobile and cost-of-living
allowances, and are below the amounts required to be disclosed under the
rules of the Securities and Exchange Commission except for relocation
related expenses of $71,665 in 1994 for Mr. Durden.
(3) All outstanding restricted awards have a five-year restriction period and
vest subject to certain performance goals. Aggregate outstanding restricted
stock awards and their value at December 31, 1996 were: for Mr. Baker,
88,857 shares valued at $5,020,421; for Mr. Prendergast, 45,000 shares
valued at $2,542,500; for Mr. Leonard, 43,000 shares valued at $2,429,500;
for Mr. McCoy, 39,500 shares valued at $2,231,750; for Mr. Durden, 19,000
shares valued at $1,073,500.
(4) The amounts shown reflect company matching contributions with respect to
individual's participation in Wachovia's Retirement Savings and
Profit-Sharing Plan and the associated equalization plan.
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<PAGE>
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table sets forth information with respect to the named
executives concerning the grant of employee stock options and stock appreciation
rights during 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
NUMBER OF PERCENT OF POTENTIAL REALIZABLE
SECURITIES TOTAL VALUE AT ASSUMED
UNDERLYING OPTIONS/SARS ANNUAL RATES OF STOCK
OPTIONS/SARS GRANTED TO EXERCISE OR PRICE APPRECIATION
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION FOR OPTION TERM (3)
NAME (#)(1) FISCAL YEAR ($/SHARE) (2) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Leslie M. Baker, Jr. 50,000/0 3.50% 43.75 1/24/06 1,375,707 3,486,312
25,000/75,000 6.99 44.6250 4/26/06 2,806,442 7,112,076
G. Joseph Prendergast 25,000/0 1.75 43.75 1/24/06 687,853 1,743,156
Walter E. Leonard, Jr. 20,000/0 1.40 43.75 1/24/06 550,283 1,394,525
Robert S. McCoy, Jr. 20,000/0 1.40 43.75 1/24/06 550,283 1,394,525
Hugh M. Durden 15,000/0 1.05 43.75 1/24/06 412,712 1,045,893
</TABLE>
(1) All stock options and SARs become exercisable over a five-year period in 20%
annual increments.
(2) The exercise price equals the market price of Wachovia's common stock on the
date of the grant.
(3) As required by the Securities and Exchange Commission, potential net gain
from the exercise of stock options and SARs is based on the assumed annual
rates of stock price appreciation of 5% and 10%, over the term of each
option and SAR. Any actual net gains are dependent on the future performance
of the Company's common stock and general market conditions. There is no
assurance that the assumed rates of stock price appreciation utilized in
these calculations will be achieved. In order for these options and SARs to
have value for the executive, the stock price must increase above the
exercise price. Increases in the stock price will benefit all shareholders
commensurately.
-20-
<PAGE>
The following table sets forth information with respect to the named
executives concerning the exercise of options during 1996 and unexercised
options and SARs held at year-end.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS AT
OPTIONS/SARS AT FISCAL YEAR-END
SHARES VALUE YEAR-END (#) ($)(2)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Leslie M. Baker, Jr. 8,818 89,757 15,582/191,591 345,356/2,757,004
G. Joseph Prendergast 15,840 438,182 13,000/47,000 295,625/815,000
Walter E. Leonard, Jr. 4,800 119,801 18,640/40,000 577,670/1,904,601
Robert S. McCoy, Jr. -- -- 8,400/36,100 190,050/617,387
Hugh M. Durden 6,000 155,625 10,760/28,540 257,915/499,257
</TABLE>
(1) Value calculated by subtracting the exercise price from the market value on
the date of exercise, rounded to whole dollars.
(2) Based on market price of $56.50 (market price of the Common Stock on
December 31, 1996), less the exercise price and rounded to whole dollars.
OTHER EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
PENSION PLAN
Wachovia has a defined benefit pension plan entitled the Retirement
Income Plan of Wachovia Corporation (the "plan"). Employees of Wachovia and its
subsidiaries who have completed one year of service, as defined in the plan, are
eligible to participate in the plan. Upon retirement at age 65, a participant
receives (subject to certain limitations) an annual benefit which equals 1.2% of
the average of the highest five consecutive years of base compensation paid
during the ten consecutive years preceding termination or retirement ("final
average compensation"), multiplied by years of service after December 31, 1989.
(For certain highly compensated employees, including the executive officers,
this formula applies to service in 1989.)
PENSION PLAN TABLE
The table below sets forth estimated annual benefits which would become
payable upon retirement at age 65 under the plan to persons in certain specified
salary and years-of-service classifications who are hired on or after January 1,
1990.
<TABLE>
<CAPTION>
AVERAGE BASE SALARY DURING
HIGHEST FIVE CONSECUTIVE ESTIMATED ANNUAL RETIREMENT BENEFITS
YEARS IN THE LAST TEN FOR YEARS OF
YEARS CREDITED SERVICE (1)(2)
BEFORE RETIREMENT 10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 4,986 $ 7,479 $ 9,972 $ 12,465 $ 14,958 $ 17,451
100,000 9,972 14,958 19,944 24,930 29,916 34,902
500,000 49,860 74,790 99,720 124,650 149,580 174,510
1,000,000 99,720 149,580 199,440 249,300 299,160 349,020
1,200,000 119,664 179,496 239,328 299,160 358,992 418,824
</TABLE>
-21-
<PAGE>
(1) Pursuant to the terms of the plan, annual retirement income benefits are not
reduced or offset by Social Security benefits. Estimated annual retirement
benefits shown above are based on a joint and 100% survivor form of
retirement income. The precise amount of the benefit depends upon the age of
a participant and the age of his or her surviving spouse.
(2) Some of the amounts shown exceed the limits imposed by federal law for
qualified pension plans and are payable only to participants in the other
retirement arrangements described below.
Persons hired before January 1, 1990, including the executive officers,
will receive an annual benefit which is generally greater than the amounts shown
in the table above. The benefit computation of such a person will depend upon
the final average compensation and number of years of service before January 1,
1990, and the benefit formula in effect during such years. For employees of SCNC
and its subsidiaries prior to January 1, 1992, the benefits described above will
only apply to service after December 31, 1991.
For persons employed by Wachovia and its subsidiaries before January 1,
1990 and after December 31, 1986, a participant will receive an annual benefit
equal to 1.4% of final average compensation as of December 31, 1989, plus .6% of
final average compensation as of December 31, 1989, in excess of 50% of the 1989
Social Security taxable wage base, multiplied by years of service from January
1, 1987 through December 31, 1989 (or December 31, 1988 in the case of certain
highly compensated employees). In addition, the plan provides a one-time special
supplemental benefit to employees who were employed by Wachovia and its
subsidiaries and were participants in the plan on December 31, 1989, such
employees who retired, became disabled or were terminated without fault and with
vested benefits during 1989, and the beneficiaries of such employees who died
during 1989. The special supplemental benefit is added to each such person's
accrued benefit under the plan in the amount of .5% of annualized rate of
eligible salary on September 1, 1989 (or, if greater, .5% of final average
compensation as of December 31, 1989) multiplied by full years of service
beginning on the January 1 following the employee's date of hire and ending on
December 31, 1989. The special supplemental benefit may be paid in a lump sum
upon retirement, at the employee's option.
For persons employed by Wachovia Corporation of North Carolina, formerly
a subsidiary of Wachovia and the parent company of WBNC, and its subsidiaries
before January 1, 1987, a participant receives an annual benefit equal to 2.5%
of final average compensation as of December 31, 1989, multiplied by years of
service (not in excess of 30 years) before January 1, 1987, reduced by 50%
(prorated for less than 30 years) of the Social Security benefit at his Social
Security retirement age under the law in effect in 1989. In no event may this
benefit exceed 65% of the participant's final average compensation as of
December 31, 1989.
For persons employed by First Atlanta Corporation, formerly a subsidiary
of the Company and the parent company of WBGA, and its subsidiaries before
January 1, 1987, a participant receives an annual benefit calculated as a
ten-year certain and life annuity equal to 1.8% of final average compensation as
of December 31, 1989, multiplied by years of service (not in excess of 35 years)
before January 1, 1987, reduced by 50% (prorated for less than 35 years) of the
Social Security benefit at his Social Security retirement age under the law in
effect in 1989.
For persons employed by South Carolina National Corporation, formerly a
subsidiary of the Company and the parent company of WBSC, and its subsidiaries
before January 1, 1992, a participant receives an annual benefit equal to 50% of
final average compensation (as determined below) less 50% of the Social Security
primary insurance benefit, proportionately reduced for less than 30 years of
service prior to 1992. The final average compensation of such an employee is
equal to the average of the employee's total cash compensation (which for this
purpose excludes incentive compensation payments made under the SCNC Executive
Incentive Compensation Plan) for the 60 consecutive months within the final 120
months prior to January 1, 1992, which will produce the highest average. The
accrued benefit of such a participant as determined on December 31, 1991, is
multiplied by a fraction, the numerator of which is final average compensation
at retirement or other termination of service (as otherwise determined under the
plan) and the denominator of which is final average compensation as so
determined on December 31, 1991.
-22-
<PAGE>
Except as otherwise provided, the benefit amounts described above are
computed on the basis of a straight life annuity, but other payment options are
available which could provide a survivor benefit following the death of the
participant. Retirement prior to age 65 is permitted upon certain circumstances
under the plan. Either of these alternatives could result in an adjustment of
the amount of the benefit received by the participant.
Federal law places certain limitations on the amount of benefits payable
by qualified pension plans. The annual benefit paid to a participant at Social
Security retirement age cannot exceed $120,000 for 1996 and $125,000 for 1997
(adjusted in increments of $5,000 for inflation). In addition, the annual amount
of covered compensation under the plan is limited to $150,000 in 1996 and
$160,000 for 1997 (adjusted in increments of $10,000 for inflation). The 1996
base salary for each of the named executive officers is set forth in the Summary
Compensation Table. For such individuals, full years of credited service are as
follows: Mr. Baker, 26 years; Mr. Durden, 23 years; Mr. Leonard, 26 years; Mr.
McCoy, 12 years; and Mr. Prendergast, 22 years.
RETIREMENT SAVINGS AND PROFIT-SHARING PLAN
Wachovia has a voluntary defined contribution plan entitled the
Retirement Savings and Profit-Sharing Plan of Wachovia Corporation (the "plan").
All employees who have completed one year of service are eligible to participate
in the plan. Wachovia contributes a minimum of $.50 for each $1.00 of up to the
first 6% of base pay contributed by a participant and may make an additional
contribution of up to $.50 for each $1.00 of up to the first 6% of base pay
contributed by a participant each year if the Company meets certain earnings
performance criteria. The criteria for determining any such additional matching
contributions are established by the Management Resources and Compensation
Committee (the "Committee") at the beginning of each year. The Committee also
may approve a special discretionary contribution to the plan of up to 4% of each
eligible employee's base salary paid during the year if the Committee determines
that the Company's performance during the year was truly outstanding.
Federal law limits the maximum annual compensation from which an employee
may elect to make contributions under qualified plans such as the plan to
$150,000 in 1996 and $160,000 for 1997 (adjusted in increments of $10,000 for
inflation). Participants may elect to make all or part of their contributions
under these plans on a before-tax basis provided such before-tax contributions
do not exceed $9,500 in 1996 and 1997 (adjusted in increments of $500 for
inflation). Employee contributions are subject to certain regulatory
restrictions which may limit further the maximum contribution of certain more
highly compensated participants (including the executive officers named in the
Proxy Statement). Wachovia maintains a nonqualified equalization plan designed
to protect selected key employees (including the executive officers named in the
Proxy Statement) of the Company or its subsidiaries from loss of benefits under
the plan resulting from the application of limitations on contributions to
qualified plans contained in the Internal Revenue Code. If contributions under
the plan are not allocated to any of the selected key employees due to those
limitations on contributions, Wachovia will credit to a nonqualified account
under the equalization plan for the employee the amount of such contribution not
so allocated. Amounts credited to each participant's nonqualified account are
credited monthly with an interest equivalent which is based upon the Long-Term
Applicable Federal Rate. These amounts will be paid to the participants in the
equalization plan upon termination of employment. No amounts may be withdrawn
from the equalization plan while the participant is employed by Wachovia or any
of its subsidiaries. The amounts contributed by Wachovia to the equalization
plan are included in the column "All Other Compensation" in the Summary
Compensation Table.
OTHER RETIREMENT ARRANGEMENTS
To assist in executive management succession planning, Wachovia has
entered into nonqualified, unfunded executive retirement agreements with certain
senior officers of the Company, including all of the named executive officers,
three other executive officers and two other senior officers. Under the
agreements, the officer will retire at age 60, or with the permission of the
Committee, at age 55 on a reduced benefit basis provided the executive has
completed ten years of service. The officer will receive an annual benefit equal
to 2.5% of final average compensation
-23-
<PAGE>
multiplied by years of service, up to a maximum of 62.5% of final average
compensation, less the sum of the amounts payable from the Retirement Income
Plan and any other pension plan in which the officer may participate. For this
purpose, final average compensation is the average of the officer's total cash
compensation for the three full calendar years within the final five full
calendar years of employment which will produce the highest average. Base salary
and amounts received by the officer pursuant to the Senior Management Incentive
Plan are included in determining final average compensation. The benefit amount
is computed in the form of a straight life annuity and is payable in monthly
increments or, upon request by the individual and approval by the Committee, may
be payable in a lump sum actuarial equivalent amount.
The following table sets forth estimated total annual benefits which
would become payable under the formula in the executive retirement agreement
(which amounts will be reduced by the benefits paid under the Retirement Income
Plan) to the officers based upon final average compensation and years of
credited service.
<TABLE>
<CAPTION>
AVERAGE COMPENSATION DURING HIGHEST ESTIMATED ANNUAL RETIREMENT BENEFITS
THREE YEARS IN THE LAST FIVE YEARS FOR YEARS OF CREDITED SERVICE
BEFORE RETIREMENT 10 15 20 25
<S> <C> <C> <C> <C>
$ 100,000 $ 25,000 $ 37,500 $ 50,000 $ 62,500
300,000 75,000 112,500 150,000 187,500
500,000 125,000 187,500 250,000 312,500
700,000 175,000 262,500 350,000 437,500
900,000 225,000 337,500 450,000 562,500
1,000,000 250,000 375,000 500,000 625,000
1,100,000 275,000 412,500 550,000 687,500
1,200,000 300,000 450,000 600,000 750,000
</TABLE>
Mr. McCoy's executive retirement agreement is slightly different than
those of the other executives in that his formula grades up by 1% per year of
service from a percentage of 55% should he retire with 10 years of service up to
a maximum of 60% at 15 years of service. All other features of his executive
retirement agreement are identical to those of the other participants.
In addition to the executive retirement agreement and also to assist in
senior management succession planning, Wachovia has entered into supplemental
retirement agreements with one executive officer not named in the Summary
Compensation Table and 12 senior officers of the Company. With the exception of
the level of benefits provided under these agreements, the agreements are
identical to the executive retirement agreements. The officer will receive an
annual benefit equal to 2.0% of final average compensation multiplied by years
of service, up to a maximum of 50.0% of final average compensation, less the sum
of the amounts payable from the Retirement Income Plan and any other pension
plan in which the officer may participate.
The following table sets forth estimated total annual benefits which
would become payable under the formula in the supplemental retirement agreement
(which amounts will be reduced by the benefits paid under the Retirement Income
Plan) to the officers based upon final average compensation and years of
credited service.
<TABLE>
<CAPTION>
AVERAGE COMPENSATION DURING HIGHEST ESTIMATED ANNUAL RETIREMENT BENEFITS
THREE YEARS IN THE LAST FIVE YEARS FOR YEARS OF CREDITED SERVICE
BEFORE RETIREMENT 10 15 20 25
<S> <C> <C> <C> <C>
$ 100,000 $20,000 $ 30,000 $ 40,000 $ 50,000
150,000 30,000 45,000 60,000 75,000
200,000 40,000 60,000 80,000 100,000
250,000 50,000 75,000 100,000 125,000
300,000 60,000 90,000 120,000 150,000
350,000 70,000 105,000 140,000 175,000
</TABLE>
-24-
<PAGE>
In addition to the executive and supplemental retirement agreements and
also to assist in senior management succession planning, Wachovia has a
Retirement Income Benefit Enhancement Plan which covers 16 senior officers of
the Company. The benefits afforded to plan participants are similar to those
afforded under the executive and supplemental retirement agreements with the
following exceptions: (1) the officer will receive an annual benefit equal to
1.5% of final average compensation multiplied by years of service, up to a
maximum of 37.5% of final average compensation, less the sum of the amounts
payable from the Retirement Income Plan and any other pension plan in which the
officer may participate; and (2) the retirement eligibility dates, normal forms
of payment and benefit options are identical to those under the Retirement
Income Plan.
The following table sets forth estimated total annual benefits which
would become payable under the formula in the Retirement Income Benefit
Enhancement Plan (which amounts will be reduced by the benefits paid under the
Retirement Income Plan) to the officers based upon final average compensation
and years of credited service.
<TABLE>
<CAPTION>
AVERAGE COMPENSATION DURING HIGHEST ESTIMATED ANNUAL RETIREMENT BENEFITS
THREE YEARS IN THE LAST FIVE YEARS FOR YEARS OF CREDITED SERVICE
BEFORE RETIREMENT 10 15 20 25
<S> <C> <C> <C> <C>
$ 100,000 $15,000 $22,500 $30,000 $37,500
150,000 22,500 33,750 45,000 56,250
200,000 30,000 45,000 60,000 75,000
250,000 37,500 56,250 75,000 93,750
</TABLE>
EMPLOYMENT AGREEMENTS
Wachovia has entered into Employment Agreements with certain senior
officers of the Company, including each of the named executive officers, four
other executive officers and seven other senior officers. If the Company
terminates the officer's employment without cause, the officer will receive
monthly compensation continuance payments for the period beginning with the date
of termination and ending with the earlier of the third anniversary of the date
of termination or the retirement date of the officer pursuant to the officer's
executive or supplemental retirement agreement, if any, described above. The
monthly amount of compensation continuance is defined as one-twelfth of the sum
of (i) an amount equal to the officer's highest annual rate of salary in effect
during the twelve-month period immediately preceding his date of termination,
(ii) an amount equal to the average of the amounts, if any, awarded to the
officer under Wachovia's Senior Management Incentive Plan for each of the three
consecutive calendar years immediately preceding the year of termination, and
(iii) an amount equal to the average of any annual contributions by the Company
on behalf of the officer under the Retirement Savings and Profit-Sharing Plan
and the associated equalization plan, for each of the three consecutive calendar
years immediately preceding the year of termination. During the period of
compensation continuance, the officer also will receive benefits pursuant to
certain employee benefit plans in which he was participating at the time of
termination or substantially similar benefits, all outstanding stock options
previously granted to the officer will become fully vested and exercisable, and
all previously granted restricted stock awards will become fully vested and
available for distribution to the officer. The Employment Agreements for the
Chief Executive Officer, three of the named executive officers and three other
executive officers also have a change of control feature which extends the
Agreement for three years beyond a change in control of the Company.
DIRECTORS' COMPENSATION
Nonemployee Directors of Wachovia are paid a cash retainer fee of $10,000
per calendar quarter for their services as members of the Board of Directors and
$1,000 per meeting for any special meetings beyond the four regularly scheduled
quarterly meetings of the Board and each committee. There are no additional
payments for attendance at regularly scheduled board or committee meetings.
A nonemployee Director may elect to defer a percentage of his or her cash
retainer fees. The amounts so deferred by the Director may be deferred into the
Wachovia Corporation Director Deferred Stock Unit Plan (the
-25-
<PAGE>
"Deferred Stock Unit Plan") described below or into the Deferred Compensation
Plan for the Board of Directors of Wachovia Corporation (the "Deferred
Compensation Plan"). The amounts deferred into the Deferred Compensation Plan
are credited with an interest equivalent at the published Long-Term Applicable
Federal Rate. These amounts will be paid to the Director after he or she ceases
to be a Director, or to his or her beneficiaries upon death in 120 approximately
equal monthly installments.
The Retirement Pay Plan for the Board of Directors of Wachovia
Corporation was terminated for active Directors on August 1, 1996, and all such
Directors elected to transfer the then present value of their accrued pension
benefits to deferred stock units of equivalent value under the Deferred Stock
Unit Plan described below.
Effective August 1, 1996, Wachovia established the Deferred Stock Unit
Plan which provides for the grant of stock units to nonemployee Directors on a
quarterly basis and also permits certain other benefits to be provided in the
form of stock units. The Deferred Stock Unit Plan provides for the automatic
quarterly grant to each nonemployee Director of such number of stock units equal
to the number of shares of Common Stock that could be purchased for $4,500 on
each quarterly award date. Termination of the Retirement Pay Plan and
establishment of the Deferred Stock Unit Plan increase the amount and proportion
of stock-based compensation of Directors and bring the interests of Directors
and shareholders into even closer alignment.
The Deferred Stock Unit Plan also permits nonemployee Directors to defer
all or a portion of their cash retainer fees into stock units. Such deferred
retainer awards are granted quarterly and are equal to such number of shares of
Common Stock as could be purchased for the amount of the deferred cash retainer
fee on the quarterly award date. Nonemployee Directors with amounts deferred
under the Deferred Compensation Plan or other such plans sponsored by Wachovia
or its subsidiaries are permitted to make a one-time election to transfer
amounts previously accrued under such plans into the Deferred Stock Unit Plan
and to receive, in lieu of accrued account balances under such plans, a credit
of stock units equal in value to such number of shares of Common Stock as could
be purchased for the transferred deferred amount on the next quarterly award
date following the election.
Deferred Stock Unit Plan account balances are fully vested at all times
and are payable in cash after a Director's retirement or termination or upon a
change of control of the Company. The amount of cash payment will equal the fair
market value per share of the Common Stock on the payment date times the number
of deferred stock units redeemed from the Director's account. Payment may be
made in lump sum or installments up to 10 years after retirement. Deferred stock
unit balances under the Deferred Stock Unit Plan also are credited each quarter
with dividend equivalent grants equal to dividends paid on Wachovia Common
Stock.
Following are the accumulated balances of deferred stock units in the
Deferred Stock Unit Plan accounts of nonemployee Directors as of February 1,
1997:
<TABLE>
<S> <C>
Rufus C. Barkley, Jr. ................................................ 1,179.46
John L. Clendenin..................................................... 2,648.66
Lawrence M. Gressette, Jr............................................. 1,293.23
Thomas K. Hearn, Jr................................................... 1,704.11
Hayne Hipp............................................................ 899.38
Robert M. Holder, Jr.................................................. 20,513.68
Donald R. Hughes...................................................... 4,100.77
James W. Johnston..................................................... 839.71
Wyndham Robertson..................................................... 2,270.28
Herman J. Russell..................................................... 3,364.68
Sherwood H. Smith, Jr................................................. 8,265.89
Charles McKenzie Taylor............................................... 3,411.16
John C. Whitaker, Jr. ................................................ 1,319.06
</TABLE>
Both the Deferred Compensation Plan and the Deferred Stock Unit Plan are
administered by the Management Resources and Compensation Committee.
-26-
<PAGE>
Wachovia's Stock Plan provides for the award of 1,000 shares of
restricted stock to each nonemployee Director who is newly elected or appointed
to the Board of Directors of the Company after April 22, 1994, and 250 shares of
restricted stock, at each annual meeting, commencing with the 1994 annual
meeting, to each nonemployee Director who has been a Director for at least one
year. The initial award of 1,000 shares is restricted for three years and is
deemed earned and ownership of the shares vests in the Director on the third
anniversary of the date of grant provided the Director is still in service. The
annual award of 250 shares is deemed earned and vests one year after the date of
grant provided the Director is still in service. In addition, a Director award
not otherwise forfeited will vest upon the death, disability or retirement of
the Director in accordance with the policies of the Company or upon a change in
control. Director awards not otherwise earned shall be forfeited upon the
termination of the Director from service on the Board of Directors.
Wachovia has entered into an agreement with Mr. Medlin whereby he has
agreed to serve, if elected, as nonmanagement Chairman of the Board of Directors
and to provide certain other services to the Company from January 1, 1994 until
April 25, 1997. Wachovia has agreed to pay Mr. Medlin $25,000 per month for his
services during the term of the agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the compensation committee from April 26, 1996, to the
present are: Donald R. Hughes, Chairman, Rufus C. Barkley, Jr., John L.
Clendenin and Sherwood H. Smith, Jr. Crandall C. Bowles served on the
compensation committee until her resignation in December 1996, and from April
28, 1995 to April 26, 1996, James W. Johnston served on the compensation
committee. None of these individuals is or has ever been an officer or employee
of Wachovia. Mr. Baker is a Director of Carolina Power & Light Company but does
not serve on its compensation committee. Mr. Smith, Chairman of the Board of
Carolina Power & Light Company, serves on Wachovia's compensation committee.
CERTAIN TRANSACTIONS INVOLVING MEMBERS OF THE COMMITTEE
Rufus C. Barkley, Jr., Lawrence M. Gressette, Jr. and Hayne Hipp are
directors of The Liberty Corporation, which is the parent of Liberty Life
Insurance Company ("Liberty Life"), for which Mr. Hipp serves as a director. Mr.
Hipp also serves as President and Chief Executive Officer of The Liberty
Corporation. The Hipp family has significant share holdings in The Liberty
Corporation. Wachovia places with Liberty Life certain credit life insurance
purchased by installment loan customers of its subsidiary corporations. The net
premium benefit on this credit life insurance retained by Liberty Life in 1996
was approximately $123,774. Employee-owned universal life insurance policies for
certain Wachovia employees also are written by Liberty Life. During 1996,
Wachovia paid approximately $90,961 in premiums for this plan coverage,
including approximately $42,427 in employee payments toward universal life
insurance plan coverage. Corporate-owned life insurance policies associated with
certain employee benefit obligations are written by Liberty Life. During 1996,
Wachovia paid approximately $1,349,390 in premiums for this coverage.
In December 1990, WBSC entered into a lease of premises for an automated
teller machine near Charleston, South Carolina. The lessors under such lease
include Mr. Barkley, a director of WBSC at that time, and certain members of his
family. The lease was for an initial term of five years (which commenced April
1, 1991) and gave WBSC the option to extend the term for an additional
three-year period. The rent was $600 per month until the lease was renewed for
three years beginning March 29, 1996, at a monthly rent of $650. The Board of
Directors of WBSC (excluding Mr. Barkley) approved this transaction and believes
the terms of this transaction are no less favorable to WBSC than those which
would be offered by the lessors to other prospective lessees in comparable
transactions.
-27-
<PAGE>
CERTAIN TRANSACTIONS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
Directors, nominees and executive officers, members of their immediate
families, and business organizations and individuals associated with them have
been customers of, and have had normal banking transactions with, WBGA, WBNC and
WBSC. All such transactions were made in the ordinary course of business, were
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other
customers, and did not involve more than the normal risk of collectibility or
present other unfavorable features. In addition, Wachovia and its subsidiaries
have engaged in other transactions with such persons, all of which were made on
substantially the same terms as those prevailing at the time for comparable
transactions with other persons.
CERTAIN TRANSACTIONS INVOLVING DIRECTORS NOT ON THE COMPENSATION COMMITTEE
In April 1997, WBNC plans to begin construction on a new office building
and parking deck one block from the corporate headquarters building in
Winston-Salem, North Carolina. The building will be seven floors of
approximately 235,000 total square feet, all of which are expected to be
occupied by WBNC and its affiliates. The parking deck will contain 600 spaces,
450 of which are expected to be utilized by employees of WBNC and its
affiliates. Construction is expected to be completed by June 30, 1998.
After careful consideration and review of possible alternatives and with
the assistance of appropriate independent professionals, management recommended
that the Board of Directors of WBNC retain the services of an experienced
consultant to undertake the planning, design and oversight of construction and
to provide expertise in project management, budgeting, cost control, contracting
with required contractors and specialists, providing guidance to the architect
as to design practicality, and administering the construction process consistent
with prudent industry standards. The criteria for selection of the consultant
included the firm's prior experience with development management of comparable
projects, the capabilities and commitment of its senior principals, its ability
to work in a team environment, its lack of conflicting or competing projects
which could result in a reduction or compromise in the consultant's attention to
the project, the financial stability and reputation in the industry of the
consultant, and the cost of delivery of the services to be provided. Management
evaluated firms located in the southeastern United States, solicited bids from
seven qualified firms and recommended to the WBNC Board and to the Wachovia
Board that the firm of Taylor & Mathis, Inc., a real estate development firm of
which Charles McKenzie Taylor, a Director of Wachovia is an officer, director
and minority shareholder, be retained by WBNC. In January 1997, the WBNC Board
and the Wachovia Board, excluding and not in the presence of Mr. Taylor,
approved such arrangement after thorough discussion and review. WBNC is
negotiating a development management agreement pursuant to which it is estimated
that Taylor & Mathis, Inc., would be paid a fee of approximately $360,000 and
expenses of $30,000 over a two-year period.
Management also has evaluated bids and qualifications of several general
contractors for this project and has recommended that WBNC select Holder-Russell
Construction Company, a joint venture of two construction companies, as general
contractor. The two companies have worked together frequently in similar joint
ventures, including on Wachovia's headquarters building. Robert M. Holder, Jr.,
a Director of Wachovia, is an officer, director and majority shareholder of one
of these companies, and Herman J. Russell, a Director of Wachovia, is an
officer, director and majority shareholder of the other company. In January
1997, the WBNC Board and the Wachovia Board, excluding and not in the presence
of Messrs. Holder and Russell, approved such arrangement after thorough
discussion and review. WBNC, with the assistance of Taylor & Mathis, Inc., is
negotiating a construction contract pursuant to which it is estimated that
Holder-Russell Construction Company would be paid a fee of 3% of the total
project costs (such fee is estimated to be approximately $753,420) plus
expenses.
WBNC entered into a contract effective August 1, 1995, with Taylor &
Mathis, Inc., for the management and operation of the Company's headquarters
building. The management fee is $9,083.33 per month plus 25% of the salary and
travel expenses of the general manager and all of the salaries and benefits of
the on-site employees. The
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contract will continue until December 31, 1997, unless terminated by the
parties. Fees in the amount of approximately $109,000 were paid to Taylor &
Mathis, Inc., under this contract in 1996.
WBGA entered into a lease agreement effective July 1, 1991, with a
Georgia general partnership of which Mr. Holder and members of his family are
the principals, for branch and drive-in banking facilities and office space in
an office building in Atlanta, Georgia. WBGA employed an independent
professional consulting firm to review the lease proposal and insure that the
lease terms and arrangements were fair and competitive. The lease agreement
relates to 40,813 square feet of space for the branch banking location and
office space for a term of 15 years with two five-year extension options. Base
rent is $79,016.61 per month in years one through five, $94,415.07 per month in
years six through ten, and $107,407.43 per month in years 11 through 15. If the
extension options are exercised, rent will be at a negotiated fair market rate
at that time. The lease agreement was amended, effective December 31, 1991, to
add an additional 11,450 square feet of office space for a term of five years
and base rent of $21,945.83 per month following an initial free rent period for
15 months. The amendment provides for a ten-year extension option at a base rent
of $24,216.75 per month in years six through ten and $27,508.62 per month in
years 11 through 15, followed by two five-year extension options at negotiated
fair market rates. The lease agreement was amended a second time, effective
February 22, 1993, to provide for an additional 10,825 square feet for a term of
four years and base rent of $20,746.00 per month following an initial free rent
period of 12 months. This amendment was amended, effective March 20, 1995, to
reduce the added space to 4,897 square feet and the rent to $9,386 per month and
amended again on June 15, 1996 to delete the 4,897 square feet. This amendment
also provides for a ten-year extension option at a base rent of $11,532.68 per
month in years six through ten and $14,644.58 per month in years 11 through 15,
followed by two five-year extension options at negotiated fair market rates. The
lease agreement also provides that WBGA will pay its pro rata share of the
operating expenses of the building in excess of 1992 levels (1993 levels with
respect to space leased under the second amendment) of such expenses which are
paid by the lessor. The total rent and operating expenses paid by WBGA during
1996 was approximately $1,245,839.
Mr. Taylor is a partner in a partnership which leased property used as a
banking office to WBGA until February 15, 1996 when the property was sold.
During 1996, WBGA paid approximately $24,652 to or on behalf of the partnership
as a result of its lease obligations.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Wachovia's
Directors and executive officers, and any persons who own beneficially more than
10% of the outstanding shares of Wachovia Common Stock (there being, to
Wachovia's knowledge, no such 10% shareholders as of December 31, 1996), to file
with the SEC and the New York Stock Exchange reports disclosing their initial
ownership of Wachovia common stock, as well as subsequent reports disclosing
changes in such ownership. To Wachovia's knowledge, based solely on a review of
the copies of such reports furnished to Wachovia and written representations
that no other reports were required during the fiscal year ended December 31,
1996, Wachovia's Directors and executive officers complied with all Section
16(a) filing requirements.
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SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the Proxy Statement and Form
of Proxy to be used in connection with Wachovia's 1998 Annual Meeting of
Shareholders, shareholder proposals must be received by the Secretary of
Wachovia no later than November 18, 1997.
OTHER MATTERS
The management of Wachovia knows of no other business which will be
presented for consideration at the meeting. However, if other matters are
properly presented at the meeting, it is the intention of the proxy holders
named in the accompanying Form of Proxy to vote the Proxies in accordance with
their best judgment.
(Signature of L. M. Baker, Jr.)
L. M. Baker, Jr.
Chief Executive Officer
March 19, 1997
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EXHIBIT A
WACHOVIA CORPORATION
STOCK PLAN
1. PURPOSE.
The purpose of the Wachovia Corporation Stock Plan (the "Plan") is to
encourage and enable selected key employees of Wachovia Corporation (the
"Corporation") and its subsidiaries, and nonemployee Directors of the
Corporation, to acquire or to increase their holdings of common stock of the
Corporation (the "Common Stock") and other proprietary interests in the
Corporation in order to promote a closer identification of their interests with
those of the Corporation and its shareholders, thereby further stimulating their
efforts to enhance the efficiency, soundness, profitability, growth and
shareholder value of the Corporation. This purpose will be carried out through
the granting of benefits (collectively referred to herein as "Awards") to
selected key employees and nonemployee Directors, including but not limited to
the granting of incentive stock options ("Incentive Options"), nonqualified
stock options ("Nonqualified Options"), stock appreciation rights ("SARs"),
restricted stock awards ("Restricted Stock Awards"), and restricted units
("Restricted Units") to selected key employees; and the granting of initial
restricted stock awards ("Initial Director Awards") and annual restricted stock
awards ("Annual Director Awards") to members of the Board of Directors
(individually, a "Director") who are not employees of the Corporation or a
related corporation. (Incentive Options and Nonqualified Options shall be
referred to herein collectively as "Options." Restricted Stock Awards and
Restricted Units shall be referred to herein collectively as "Restricted
Awards." Initial Director Awards and Annual Director Awards shall be referred to
herein collectively as "Director Awards.")
2. ADMINISTRATION OF THE PLAN.
(a) Subject to Section 11 herein, the Plan shall be administered
by the Management Resources and Compensation Committee of the Board of
Directors of the Corporation (the "Committee"). Each member of the
Committee shall be a "nonemployee director," as such term is defined in
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any successor rule. The Committee shall be
comprised of no fewer than the minimum number of nonemployee directors as
may be required by Rule 16b-3.
(b) Any action of the Committee with respect to the Plan may be
taken by a written instrument signed by all of the members of the Committee
and any such action so taken by written consent shall be as fully effective
as if it had been taken by a majority of the members at a meeting duly held
and called. Subject to the provisions of the Plan, and unless authority is
granted to the Chief Executive Officer as provided in Section 2(c), the
Committee shall have full and final authority in its discretion to take any
action with respect to the Plan including, without limitation, the
authority (i) to determine all matters relating to Awards, including
selection of individuals to be granted Awards, the types of Awards, the
number of shares of the Common Stock, if any, subject to an Award, and all
terms, conditions, restrictions and limitations of an Award; (ii) to
prescribe the form or forms of the Agreements evidencing any Awards granted
under the Plan; (iii) to establish, amend and rescind rules and regulations
for the administration of the Plan; and (iv) to construe and interpret the
Plan and Agreements evidencing Awards granted under the Plan, to establish
and interpret rules and regulations for administering the Plan and to make
all other determinations deemed necessary or advisable for administering
the Plan. In addition, the Committee shall have authority, in its sole
discretion, to accelerate the date that any Award which was not otherwise
exercisable or vested shall become exercisable or vested in whole or in
part without any obligation to accelerate such date with respect to any
other Awards granted to any recipient.
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(c) Notwithstanding Section 2(b), and subject to Section 11
herein, the Committee may delegate to the Chief Executive Officer of the
Corporation the authority to grant Awards, and to make any or all of the
determinations reserved for the Committee in the Plan and summarized in
subsection (b) (i) with respect to such Awards, to any individual who, at
the time of said grant or other determination (i) is not deemed to be an
officer or Director of the Corporation within the meaning of Section 16 of
the Exchange Act; (ii) is not deemed to be a Covered Employee; and (iii) is
otherwise eligible under Section 5.
3. EFFECTIVE DATE.
The effective date of the Plan is April 22, 1994 (the "Effective Date").
The Plan was amended and restated effective October 25, 1996, and further
amended and restated effective April 25, 1997. Awards may be granted under the
Plan on and after the effective date, but no awards will be granted after April
21, 2004.
4. SHARES OF STOCK SUBJECT TO THE PLAN.
Subject to the terms of this Section 4, the shares of Common Stock that
may be issued pursuant to Awards shall be 6,000,000 shares of authorized but
unissued shares of the Corporation. Notwithstanding the foregoing, in the event
that the number of shares available for issuance under the Plan as of April 25,
1997, and as of the last day of each calendar year commencing in 1997 and
thereafter (the "Available Shares"), is less than 2.5% of the total number of
shares of the Common Stock outstanding as of such date (the "Replacement
Amount"), then the maximum number of shares authorized and available for
issuance under the Plan shall be increased as of such date by an appropriate
number to equal the greater of the Available Shares or the Replacement Amount.
The Corporation hereby reserves sufficient authorized shares of Common Stock to
meet the grant of Awards hereunder. Any shares subject to an Award which is
subsequently forfeited, expires or is terminated may again be the subject of an
Award granted under the Plan; provided, that if an Option or SAR shall be
accepted for surrender by the Committee pursuant to the terms of the Plan, the
shares subject thereto shall not thereafter be available for the granting of
other Options or Awards. If there is any change in the shares of Common Stock
because of a merger, consolidation or reorganization involving the Corporation
or a related corporation, or if the Board of Directors of the Corporation
declares a stock dividend or stock split distributable in shares of Common
Stock, or if there is a change in the capital stock structure of the Corporation
or a related corporation affecting the Common Stock, the number of shares of
Common Stock reserved for issuance under the Plan shall be correspondingly
adjusted, and the Committee shall make such adjustments to Awards or to any
provisions of this Plan as the Committee deems equitable to prevent dilution or
enlargement of Awards.
5. ELIGIBILITY.
An Award may be granted only to an individual who satisfies the following
eligibility requirements on the date the Award is granted:
(a) With respect to the grant of Awards other than Director
Awards, the individual is an employee of the Corporation or a related
corporation. For this purpose, an individual shall be considered to be an
"employee" only if there exists between the individual and the Corporation
or a related corporation the legal and bona fide relationship of employer
and employee. In determining whether such a relationship exists, the
regulations of the United States Treasury Department relating to the
determination of the employment relationship for the purpose of collection
of income tax on wages at the source shall be applied.
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(b) With respect to the grant of an Award other than a Director
Award, the individual, being otherwise eligible to receive an Award under
this Section 5, (i) is a key employee of the Corporation or a related
corporation; and (ii) is selected by the Committee as an individual to whom
a Restricted Award shall be granted (a "Grantee"), an individual to whom an
Option shall be granted (an "Optionee"), or an individual to whom an SAR
shall be granted (an "SAR Holder"). For the purposes herein, a "key
employee" shall mean an employee of the Corporation or a related
corporation who makes significant and important contributions to the
Corporation or a related corporation. The Committee shall determine which
employees qualify as key employees.
(c) With respect to the grant of Incentive Options, the individual
does not own, immediately before the time that the Incentive Option is
granted, stock possessing more than ten percent of the total combined
voting power of all classes of stock of the Corporation. For this purpose,
an individual will be deemed to own stock which is attributable to him
under Section 424(d) of the Internal Revenue Code of 1986, as amended (the
"Code").
(d) With respect to the grant of a Director Award, the individual
shall be eligible to receive such an Award under the provisions of Section
9.
6. OPTIONS.
(a) GRANT OF OPTIONS. Subject to the limitations of the Plan, the
Committee may in its sole and absolute discretion grant Options to such
eligible key employees in such numbers, upon such terms and at such times
as the Committee shall determine. Both Incentive Options and Nonqualified
Options may be granted under the Plan. To the extent that an Option is
designated as an Incentive Option but does not qualify as such under
Section 422 of the Code, the Option (or portion thereof) shall be treated
as a Nonqualified Option.
(b) OPTION PRICE. The price per share at which an Option may be
exercised (the "Option Price") shall be not less than the fair market value
per share of the shares on the date the Option is granted. For this
purpose, the following rules shall apply:
(i) An Option shall be considered to be granted on the date
that the Committee acts to grant the Option, or on any later date
specified by the Committee as the effective date of the Option.
(ii) The fair market value of the shares shall be determined in
good faith by the Committee and shall be the price per share of the last
sale of such shares on the New York Stock Exchange as reported in THE
WALL STREET JOURNAL for the last trading day prior to the date the
Option is granted; or if there was no such sale on such trading day, the
fair market value shall be determined in accordance with the applicable
provisions of Section 20.2031-2 of the Federal Estate Tax Regulations,
or in any other manner consistent with the Code and accompanying
regulations.
(iii) In no event shall there first become exercisable by the
Optionee in any one calendar year Incentive Options granted by the
Corporation or any related corporation with respect to shares having an
aggregate fair market value (determined at the time an Incentive Option
is granted) greater than $100,000.
(c) OPTION PERIOD AND LIMITATIONS ON THE RIGHT TO EXERCISE
OPTIONS.
(i) The period during which an Option may be exercised (the
"Option Period") shall be determined by the Committee at the time the
Option is granted. Such period shall not extend more than ten years from
the date on which the Option is granted. Any Option or portion thereof
not exercised before expiration of the Option Period shall terminate.
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(ii) An Option may be exercised by giving written notice to the
Corporation at such place as the Committee shall direct. Such notice
shall specify the number of shares to be purchased pursuant to an Option
and the aggregate purchase price to be paid therefor, and shall be
accompanied by the payment of such purchase price. Such payment shall be
in the form of (A) cash; (B) shares of Common Stock owned by the
Optionee at the time of exercise; (C) funds borrowed from a related
corporation; (D) delivery of written notice of exercise to the Committee
and delivery to a broker of written notice of exercise and irrevocable
instructions to promptly deliver to the Corporation the amount of sale
or loan proceeds to pay the Option Price; or (E) a combination of the
foregoing methods. Shares tendered in payment on the exercise of an
Option shall be valued at their fair market value on the date of
exercise, as determined by the Committee by applying the provisions of
Section 6(b)(ii).
(iii) No Option shall be exercised unless the Optionee is, at
the time of exercise, an employee, as described in Section 5(a), and has
been an employee continuously since the date the Option was granted,
subject to Section 12 herein and the following:
(A) The employment relationship of an Optionee shall be
treated as continuing intact for any period that the Optionee is on
military or sick leave or other bona fide leave of absence; provided,
that the period of such leave does not exceed ninety days or, if
longer, as long as the Optionee's right to reemployment is guaranteed
either by statute or by contract. The employment relationship of an
Optionee shall also be treated as continuing intact while the
Optionee is not in active service because of disability; provided,
that shares acquired by the Optionee pursuant to exercise of an
Incentive Option shall be subject to Sections 421 and 422 of the Code
only if and to the extent that such exercise occurs within twelve
months less one day following the date the Optionee's employment is
considered to be terminated because of such disability under Section
422. The Committee shall determine whether there is a disability
within the meaning of this section.
(B) If the employment of an Optionee is terminated because
of (1) retirement, which shall mean termination on or after the date
of his retirement as provided in Section 8(b)(ii), or because of
early retirement under the Retirement Income Plan of Wachovia
Corporation, or any successor plan thereto applicable to the Optionee
(herein, "retirement"), (2) displacement, which shall mean the
termination of the Optionee's employment due to the elimination of
the Optionee's job or position without fault on the part of the
Optionee (herein, "displacement"), or (3) death while the Optionee is
an employee or after retirement or displacement, any Option granted
to the Optionee shall, upon the occurrence of such retirement,
displacement or death, become fully exercisable even if the Option or
any part thereof was not otherwise exercisable at such time;
provided, however, that the Committee, in its sole and absolute
discretion, may determine that the Option or any part thereof shall
not be accelerated. The Committee shall have sole authority to
interpret this Section 6(c)(iii)(B), including authority to determine
if an event triggering acceleration herein has occurred and the date
of termination (the "termination date") due to such event. The Option
must be exercised, if at all, prior to the earlier of: (1) the close
of the period of twelve months next succeeding the termination date,
or (2) the close of the Option Period. In the event of the Optionee's
death, such Option shall be exercisable by such person or persons as
shall have acquired the right to exercise the Option by will or by
the laws of intestate succession.
(C) If the employment of the Optionee is terminated for any
reason other than as provided in subparagraph (B) above, his Option
may be exercised only to the extent exercisable on the date of such
termination of employment, except that the Committee, in its sole and
absolute discretion, may accelerate the date that any Option which
was not otherwise exercisable on the date of such termination of
employment shall be exercised in whole or in part, without any
obligation to accelerate such date with respect to other Options
granted to the Optionee or to accelerate such date with respect to
Options
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granted to any other Optionee, or to treat all Optionees similarly
situated in the same manner. The Option must be exercised, if at all,
prior to the earlier of: (1) the close of the period of three months
less one day next succeeding the date of termination of employment,
or (2) the close of the Option Period. If the Optionee dies following
such termination of employment and prior to the earlier of the dates
specified in (1) and (2) in the immediately preceding sentence, the
Optionee shall be treated as having died while employed under
subparagraph (B) above (treating for this purpose the Optionee's date
of termination of employment as the termination date).
(iv) A certificate or certificates for shares of Common Stock
acquired upon exercise of an Option shall be issued in the name of the
Optionee and distributed to the Optionee (or his beneficiary) as soon as
practicable following receipt of notice of exercise.
(d) NONTRANSFERABILITY OF OPTIONS.
(i) Options shall not be transferable other than by will, the
laws of intestate succession or pursuant to a qualified domestic
relations order (as defined by the Code, or Title I of the Employee
Retirement Income Security Act ("ERISA"), or the rules thereunder). The
designation of a beneficiary does not constitute a transfer. An option
shall be exercisable during the Optionee's lifetime only by him or by
his guardian or legal representative.
(ii) If an Optionee is subject to Section 16 of the Exchange
Act, shares of Common Stock acquired upon exercise of an Option may not,
without the consent of the Committee, be disposed of by the Optionee
until the expiration of six months after the date the Option was
granted.
7. STOCK APPRECIATION RIGHTS.
(a) GRANT OF SARS. Subject to the limitations of the Plan, the
Committee may in its sole and absolute discretion grant SARs to such
eligible key employees in such numbers, upon such terms and at such times
as the Committee shall determine. SARs may be granted to an Optionee of an
Option (hereinafter called a "related Option") with respect to all or a
portion of the shares of Common Stock subject to the related Option (a
"Tandem SAR") or may be granted separately to an eligible key employee (a
"Freestanding SAR"). Subject to the limitations of the Plan, SARs shall be
exercisable in whole or in part upon notice to the Corporation upon such
terms and conditions as are provided in the Agreement relating to the grant
of the SAR.
(b) TANDEM SARS. A Tandem SAR may be granted either concurrently
with the grant of the related Option or (if the related Option is a
Nonqualified Option) at any time thereafter prior to the complete exercise,
termination, expiration or cancellation of such related Option. Tandem SARs
shall be exercisable only at the time and to the extent that the related
Option is exercisable (and may be subject to such additional limitations on
exercisability as the Committee may provide in the Agreement), and in no
event after the complete termination or full exercise of the related
Option. For purposes of determining the number of shares of Common Stock
that remain subject to such related Option and for purposes of determining
the number of shares of Common Stock in respect of which other Awards may
be granted, upon the exercise of Tandem SARs, the related Option shall be
considered to have been surrendered to the extent of the number of shares
of Common Stock with respect to which such Tandem SARs are exercised. Upon
the exercise or termination of the related Option, the Tandem SARs with
respect thereto shall be canceled automatically to the extent of the number
of shares of Common Stock with respect to which the related Option was so
exercised or terminated. Subject to the limitations of the Plan, upon the
exercise of a Tandem SAR, the SAR Holder shall be entitled to receive from
the Corporation, for each share of Common Stock with respect to which the
Tandem SAR is being exercised, consideration equal in
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value to the excess of the fair market value of a share of Common Stock (as
determined in accordance with Section 6(b)(ii) herein) on the date of
exercise over the related Option Price per share; provided, that the
Committee may, in any Agreement granting Tandem SARs, establish a maximum
value payable for such SARs.
(c) FREESTANDING SARS. The base price of a Freestanding SAR shall
be not less than 100% of the fair market value of the Common Stock (as
determined in accordance with Section 6(b)(ii) herein) on the date of grant
of the Freestanding SAR. Subject to the limitations of the Plan, upon the
exercise of a Freestanding SAR, the SAR Holder shall be entitled to receive
from the Corporation, for each share of Common Stock with respect to which
the Freestanding SAR is being exercised, consideration equal in value to
the excess of the fair market value of a share of Common Stock on the date
of exercise over the base price per share of such Freestanding SAR;
provided, that the Committee may, in any Agreement granting Freestanding
SARs, establish a maximum value payable for such SARs.
(d) EXERCISE OF SARS.
(i) Subject to the terms of the Plan, SARs shall be exercisable
in whole or in part upon such terms and conditions as are provided in
the Agreement relating to the grant of the SAR. The period during which
an SAR may be exercisable shall not exceed ten years from the date of
grant or, in the case of Tandem SARs, such shorter Option Period as may
apply to the related Option. Any SAR or portion thereof not exercised
before expiration of the period stated in the Agreement relating to the
grant of the SAR shall terminate.
(ii) SARs may be exercised by giving written notice to the
Corporation at such place as the Committee shall direct. The date of
exercise of the SAR shall mean the date on which the Corporation shall
have received notice from the SAR Holder of the exercise of such SAR.
(iii) No SAR may be exercised unless the SAR Holder is, at the
time of exercise, an employee, as described in Section 5(a), and has
been an employee continuously since the date the SAR was granted,
subject to Section 12 and the provisions of Section 6(c)(iii) herein.
(e) CONSIDERATION; ELECTION. The consideration to be received upon
the exercise of the SAR by the SAR Holder shall be paid in cash, shares of
Common Stock (valued at fair market value on the date of exercise of such
SAR in accordance with Section 6(b)(ii) herein) or a combination of cash
and shares of Common Stock, as elected by the SAR Holder, subject to the
discretion of the Committee and the terms of the applicable Agreement. The
Corporation's obligation arising upon the exercise of the SAR may be paid
currently or on a deferred basis with such interest or earnings equivalent
as the Committee may determine. A certificate or certificates for shares of
Common Stock acquired upon exercise of an SAR for shares shall be issued in
the name of the SAR Holder and distributed to the SAR Holder (or his
beneficiary) as soon as practicable following receipt of notice of
exercise. No fractional shares of Common Stock will be issuable upon
exercise of the SAR and, unless otherwise provided in the applicable
Agreement, the SAR Holder will receive cash in lieu of fractional shares.
(f) LIMITATIONS. The applicable Agreement shall contain such
terms, conditions and limitations consistent with the Plan as may be
specified by the Committee. Unless otherwise so provided in the applicable
Agreement or the Plan, any such terms, conditions or limitations relating
to a Tandem SAR shall not restrict the exercisability of the related
Option.
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(g) NONTRANSFERABILITY.
(i) SARs shall not be transferable other than by will, the laws
of intestate succession or pursuant to a qualified domestic relations
order (as defined by the Code, or Title I of ERISA or the rules
thereunder). The designation of a beneficiary does not constitute a
transfer. SARs may be exercised during the SAR Holder's lifetime only by
him or by his guardian or legal representative.
(ii) If the SAR Holder is subject to Section 16 of the Exchange
Act, shares of Common Stock acquired upon exercise of an SAR may not,
without the consent of the Committee, be disposed of by the SAR Holder
until the expiration of six months after the date the SAR was granted.
8. RESTRICTED AWARDS.
(a) GRANT OF RESTRICTED AWARDS. Subject to the limitations of the
Plan, the Committee may in its sole and absolute discretion grant
Restricted Awards to such eligible key employees in such numbers, upon such
terms and at such times as the Committee shall determine. A Restricted
Award may consist of a Restricted Stock Award or a Restricted Unit, or
both. Restricted Awards shall be payable in cash or whole shares of Common
Stock (including Restricted Stock), or partly in cash and partly in whole
shares of Common Stock, in accordance with the terms of the Plan and the
sole and absolute discretion of the Committee. Restricted Awards payable in
shares of Common Stock shall be granted only from shares reserved and then
available for the granting of Awards under the Plan. The Committee may
condition the grant or vesting, or both, of a Restricted Award upon the
continued service of the Grantee for a certain period of time, attainment
of such performance objectives as the Committee may determine, or upon a
combination of continued service and performance objectives. The Committee
shall determine the nature, length and starting date of the period during
which the Restricted Award may be earned (the "Restriction Period") for
each Restricted Award, which shall be as stated in the Agreement to which
the Award relates. In the case of Restricted Awards based upon performance
criteria, or a combination of performance criteria and continued service,
the Committee shall determine the performance objectives to be used in
valuing Restricted Awards and determine the extent to which such Awards
have been earned. Performance objectives may vary from participant to
participant and between groups of participants and shall be based upon such
Corporation, business unit and/or individual performance factors and
criteria as the Committee in its sole discretion may deem appropriate,
including, but not limited to, earnings per share, return on equity, return
on assets or total return to shareholders. The Committee shall determine
the terms and conditions of each Restricted Award, including the form and
terms of payment of Awards. The Committee shall have sole authority to
determine whether and to what degree Restricted Awards have been earned and
are payable and to interpret the terms and conditions of Restricted Awards
and the provisions herein.
(b) EARNING OF RESTRICTED AWARDS. A Restricted Award granted to a
Grantee shall be deemed to be earned as of the first to occur of the
completion of the Restriction Period, retirement, displacement, death or
disability of the Grantee, or acceleration of the Restricted Award,
provided that, in the case of Restricted Awards based upon performance
criteria or a combination of performance criteria and continued service,
the Committee shall have sole discretion to determine if, and to what
degree, the Restricted Awards shall be deemed earned at the end of the
Restriction Period or upon the retirement, displacement, death or
disability of the Grantee. In addition, the following rules shall also
apply to the earning of Restricted Awards:
(i) COMPLETION OF RESTRICTION PERIOD. For this purpose, a
Restricted Award shall be deemed to be earned upon completion of the
Restriction Period (except as otherwise provided herein for performance-
based Restricted Awards). In order for a Restricted Award to be deemed
earned, the Grantee must have been continuously employed during the
Restriction Period. "Continuous employment" shall mean employment
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with any combination of the Corporation and one or more related
corporations, and a temporary leave of absence with consent of the
Corporation shall not be deemed to be a break in continuous employment.
(ii) RETIREMENT OF THE GRANTEE. For this purpose, the Grantee
shall be deemed to have retired as of the earlier of (A) his normal
retirement date under the Retirement Income Plan of Wachovia
Corporation, or any successor plan thereto applicable to the Grantee, or
(B) his retirement date under a contract, if any, between the Grantee
and the Corporation providing for his retirement from the employment of
the Corporation or a related corporation prior to such normal retirement
date, or (C) a mutually agreed upon early retirement date under the
Retirement Income Plan of Wachovia Corporation or any successor plan
between the Grantee and the Corporation.
(iii) DISPLACEMENT OF THE GRANTEE. For this purpose, the
Grantee shall be deemed to have been displaced in the event of the
termination of the Grantee's employment due to the elimination of the
Grantee's job or position without fault on the part of the Grantee.
(iv) DEATH OR DISABILITY OF THE GRANTEE. Except as otherwise
provided herein for performance-based Restricted Awards, if the Grantee
shall terminate continuous employment because of death or disability
before a Restricted Award is otherwise deemed to be earned pursuant to
this Section 8(b), the Grantee shall be deemed to have earned a
percentage of the Award (rounded to the nearest whole share in the case
of Restricted Awards payable in shares) determined by dividing the
number of his full years of continuous employment then completed during
the Restriction Period with respect to the Award by the number of years
of such Restriction Period.
(v) ACCELERATION OF RESTRICTED AWARD BY THE COMMITTEE.
Notwithstanding the provisions of this Section 8(b), in the event of the
termination of a Grantee for reasons other than retirement,
displacement, death or disability, the Committee, in its sole and
absolute discretion, may accelerate the date that any Restricted Award
granted to the Grantee shall be deemed to be earned in whole or in part,
without any obligation to accelerate such date with respect to other
Restricted Awards granted to the Grantee or to accelerate such date with
respect to Restricted Awards granted to any other Grantee, or to treat
all Grantees similarly situated in the same manner.
(c) FORFEITURE OF RESTRICTED AWARDS. If the employment of a
Grantee shall be terminated for any reason, and the Grantee has not earned
all or part of a Restricted Award pursuant to the terms herein, such Award
to the extent not then earned shall be forfeited immediately upon such
termination and the Grantee shall have no further rights with respect
thereto.
(d) DIVIDEND AND VOTING RIGHTS; SHARE CERTIFICATES. A Grantee
shall have no dividend rights or voting rights with respect to shares
reserved in his name pursuant to a Restricted Award payable in shares but
not yet earned pursuant to Section 8(b). A certificate or certificates for
shares of Common Stock representing a Restricted Award payable in shares
shall be issued in the name of the Grantee and distributed to the Grantee
(or his beneficiary) as soon as practicable following the date that the
shares subject to the Award are earned as provided in Section 8(b). No
certificate shall be issued hereunder in the name of the Grantee except to
the extent the shares represented thereby have been earned.
(e) NONTRANSFERABILITY.
(i) The recipient of a Restricted Award payable in shares shall
not sell, transfer, assign, pledge or otherwise encumber shares subject
to the Award until the Restriction Period has expired or until all
conditions to vesting have been met.
A-8
<PAGE>
(ii) Restricted Awards shall not be transferable other than by
will, the laws of intestate succession or pursuant to a qualified
domestic relations order (as defined by the Code, or Title I of ERISA or
the rules thereunder). The designation of a beneficiary does not
constitute a transfer.
(iii) If a Grantee of a Restricted Award is subject to Section
16 of the Exchange Act, shares of Common Stock subject to such Award may
not, without the consent of the Committee, be sold or otherwise disposed
of within six months following the date of grant of such Award.
9. DIRECTOR AWARDS.
(a) INITIAL AWARD. Each nonemployee Director who is newly-elected
or appointed to the Board of Directors on or after the Effective Date of
the Plan shall receive a Director Award of 1,000 shares of Restricted Stock
(an "Initial Director Award"). An Initial Director Award shall be deemed
granted following the close of business of the Corporation on the date of
the annual or special meeting of shareholders at which the Director was
initially elected or the date of the Board of Directors meeting at which
the Director was initially appointed. Such Initial Director Award shall be
restricted for a period of three years and shall be deemed earned and shall
vest on the third anniversary of the date of grant. A Director who is not a
member of the Board of Directors on the date an Initial Director Award
vests shall forfeit the Award.
(b) ANNUAL AWARD. Commencing with the 1994 Annual Meeting of
Shareholders and for each Annual Meeting thereafter, each nonemployee
Director who has been a Director for at least a year shall receive an
annual grant of 250 shares of Restricted Stock (an "Annual Director Award")
following the close of business of the Corporation on the date of the
Annual Meeting of Shareholders. An Annual Director Award shall be
restricted for a period of one year and shall be deemed earned and shall
vest one year after the date of grant; provided, that a Director who is not
a member of the Board of Directors at the time an Annual Director Award
vests shall forfeit the Award.
(c) DIVIDENDS AND VOTING RIGHTS. Directors shall have no dividend
or voting rights with respect to shares subject to Director Awards until
such Awards have vested.
(d) SHARE CERTIFICATES. A certificate or certificates for shares
of Common Stock representing a Director Award shall be issued in the name
of the Director (or his beneficiary) and distributed to the Director (or
his beneficiary) as soon as practicable following the date that the shares
subject to the Director Award are vested as provided herein. No certificate
shall be issued hereunder in the name of the Director except to the extent
that the shares represented thereby have been vested. At the time the
Director Award or a portion thereof is vested, the Director shall have full
and immediate rights to the shares represented by such certificates (except
to the extent of restrictions imposed by law).
(e) DEATH, DISABILITY OR RETIREMENT OF DIRECTOR. If the service of
a Director as a member of the Board is terminated due to death, disability
or retirement (in accordance with the policies of the Corporation then in
effect for retirement of Directors), and the Director has not yet earned a
Director Award as provided in Section 9(a) or (b), such Director Award
shall be deemed to be fully vested.
(f) FORFEITURE. If the service of a Director as a member of the
Board is terminated for any other reason, and the Director has not earned a
Director Award as provided herein, such Director Award shall be forfeited
immediately upon such termination and the Director shall have no further
rights with respect to such Director Award.
A-9
<PAGE>
(g) NONTRANSFERABILITY.
(i) A recipient of a Director Award shall not sell, transfer,
assign, pledge or otherwise encumber shares subject to a Director Award
until all conditions, if any, subsequent to vesting have been met.
(ii) Shares subject to a Director Award may not be sold or
otherwise disposed of within six months following the date of grant of
such Award.
(h) NONEMPLOYEE DIRECTORS. For the purposes herein (and
notwithstanding the reference in Section 2(a) to nonemployee directors for
administrative purposes), a "nonemployee Director" shall mean a Director
who is not an employee of the Corporation or a related corporation at the
time of the grant of a Director Award and has never served as a senior
officer of the Corporation or a related corporation.
10. WITHHOLDING.
The Corporation shall withhold all required local, state and federal
taxes from any amount payable in cash with respect to an Award. The Corporation
shall require any recipient of an Award payable in shares of the Common Stock to
pay to the Corporation in cash the amount of any tax or other amount required by
any governmental authority to be withheld and paid over by the Corporation to
such authority for the account of such recipient. Notwithstanding the foregoing,
the recipient may satisfy such obligation in whole or in part, and any other
local, state or federal income tax obligations relating to such an Award, by
electing (the "Election") to have the Corporation withhold shares of Common
Stock from the shares to which the recipient is entitled. The number of shares
to be withheld shall have a fair market value [determined in accordance with
Section 6(b)(ii)] as of the date that the amount of tax to be withheld is
determined (the "Tax Date") as nearly equal as possible to (but not exceeding)
the amount of such obligations being satisfied. Each Election must be made in
writing to the Committee prior to the Tax Date.
11. PERFORMANCE-BASED COMPENSATION.
The following provisions shall apply with respect to Section 162(m) of
the Code and the regulations thereunder:
(a) COMPLIANCE WITH CODE SECTION 162(M). It is the general intent
of the Corporation that Awards conferred under the Plan to Covered
Employees, as such term is defined in Section 14(b) herein, shall comply
with the qualified performance-based compensation exception to employer
compensation deductions set forth in Section 162(m) of the Code, and the
Plan generally shall be construed in favor of meeting the requirements of
Section 162(m) of the Code and the regulations thereunder to the extent
possible.
(b) COMMITTEE AUTHORITY AND COMPOSITION. The Committee shall be
authorized to establish performance goals for participants, certify
satisfaction of performance goals and other material terms for
participants, and to take such other action as may be necessary in order to
qualify for the performance-based compensation exception. The Committee
shall be comprised of two or more outside directors (as such term is
defined in Section 162(m) of the Code and the regulations thereunder).
Notwithstanding the foregoing, the committee authorized to take such
actions may be comprised of a subcommittee of the Committee or other
directors who qualify as outside directors (as such term is defined in
Section 162(m) of the Code and the regulations thereunder), and the actions
taken by such subcommittee or other group of outside directors shall be
effective as the action of the Committee to the extent permitted by the
Plan, Rule 16b-3 under the Exchange Act, and Section 162(m) of the Code and
the regulations thereunder.
A-10
<PAGE>
(c) LIMITATIONS ON AWARDS.
(i) In no event shall an employee be granted Awards under the
Plan for more than 300,000 shares of Common Stock (or the equivalent
value thereof based on the fair market value of the Common Stock on the
date of grant of the Award) during any calendar year; provided, however,
that such limitation shall be subject to adjustment as provided in
Section 4 herein.
(ii) The Committee shall not have discretion to increase the
amount of performance-based compensation payable to a participant in the
Plan over the amount determined in accordance with the terms of the
Plan. The Committee shall in any event have the discretion to reduce or
eliminate the amount of an Award that would otherwise be payable to any
participant in accordance with the terms of the Plan.
(d) CHANGE IN PERFORMANCE GOALS. The material terms of the
performance goal or goals pursuant to which Awards are to be made shall be
disclosed to, and subject to the approval of, the shareholders of the
Corporation. Material terms of a performance goal or goals, the targets of
which may be changed by the Committee, shall be disclosed to and subject to
the reapproval of, the shareholders of the Corporation upon a change of the
material terms of the performance goal or goals by the Committee or as may
be otherwise required by Section 162(m) of the Code or the regulations
thereunder.
12. NO RIGHT OR OBLIGATION OF CONTINUED EMPLOYMENT.
Nothing contained in the Plan shall require the Corporation or a related
corporation to continue to employ a Grantee, Optionee or SAR Holder or to
continue an individual as a member of the Board of Directors of the Corporation,
nor shall any such individual be required to remain in the employment of the
Corporation or a related corporation or on the Board of Directors of the
Corporation. Except as otherwise provided in the Plan, Awards granted under the
Plan to employees of the Corporation shall not be affected by any change in the
duties or position of the participant, as long as such individual remains an
employee of the Corporation or a related corporation.
13. RETIREMENT PLANS.
In no event shall any amounts accrued, distributable or payable under the
Plan be treated as compensation for the purpose of determining the amount of
contributions or benefits to which any person shall be entitled under any
retirement plan sponsored by the Corporation or a related corporation that is
intended to be a qualified plan within the meaning of Section 401(a) of the
Code.
14. CERTAIN DEFINITIONS.
For purposes of the Plan, the following terms shall have the meaning
indicated:
(a) "Agreement" means any written agreement or agreements between
the Corporation and the recipient of an Award pursuant to the Plan relating
to the terms, conditions and restrictions of Options, SARs, Restricted
Awards, Director Awards and any other Awards conferred herein.
(b) "Covered employee" shall have the meaning given the term in
Section 162(m) of the Code or the regulations thereunder.
A-11
<PAGE>
(c) "Disability" shall mean the inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death, or
which has lasted or can be expected to last for a continuous period of not
less than twelve months.
(d) "Parent" or "parent corporation" shall mean any corporation
(other than the Corporation) in an unbroken chain of corporations ending
with the Corporation if each corporation other than the Corporation owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in another corporation in the chain.
(e) "Predecessor" or "predecessor corporation" means a corporation
which was a party to a transaction described in Section 424(a) of the Code
(or which would be so described if a substitution or assumption under that
Section had occurred) with the Corporation, or a corporation which is a
parent or subsidiary of the Corporation, or a predecessor of any such
corporation.
(f) "Related corporation" means any parent, subsidiary or
predecessor of the Corporation.
(g) "Restricted Stock" shall mean shares of Common Stock which are
subject to Director Awards or Restricted Awards payable in shares, the
vesting of which is subject to restrictions set forth in the Plan or the
Agreement relating to such Award.
(h) "Subsidiary" or "subsidiary corporation" means any corporation
(other than the Corporation) in an unbroken chain of corporations beginning
with the Corporation if each corporation other than the last corporation in
the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in another corporation in the chain.
15. AMENDMENT AND TERMINATION OF THE PLAN.
The Plan may be amended or terminated at any time by the Board of
Directors of the Corporation; provided, that such amendment or termination shall
not, without the consent of the recipient of an Award, adversely affect the
rights of the recipient with respect to an Award previously granted; and
provided further, that approval by the shareholders of the Corporation shall be
required for any amendment which would (i) increase the number of shares of
Common Stock which may be issued under the Plan, except to the extent of
adjustments pursuant to Section 4; (ii) permit the granting of Awards to any
member of the Committee (except for nondiscretionary Director Awards granted
hereunder); or (iii) materially change the requirements for eligibility to be a
recipient of an Award.
16. RESTRICTIONS ON SHARES.
The Committee may impose such restrictions on any shares representing
Awards and Options hereunder as it may deem advisable, including without
limitation restrictions under the Securities Act of 1933, as amended, under the
requirements of the New York Stock Exchange and under any Blue Sky or state
securities laws applicable to such shares. The Committee may cause a restrictive
legend to be placed on any certificate issued pursuant to an Award hereunder in
such form as may be prescribed from time to time by applicable laws and
regulations or as may be advised by legal counsel.
17. APPLICABLE LAW.
The Plan shall be governed by and construed in accordance with the laws
of the State of North Carolina.
A-12
<PAGE>
18. SHAREHOLDER APPROVAL.
The Plan, as initially adopted, is subject to approval by the
shareholders of the Corporation on or before April 22, 1994. The Plan, as
amended and restated effective April 25, 1997, is subject to approval by the
shareholders of the Corporation at the 1997 Annual Meeting of Shareholders.
Awards granted prior to such shareholder approval shall be conditioned upon and
shall be effective only upon approval of the Plan by such shareholders on or
before such date.
19. PREDECESSOR PLAN.
As of the Effective Date of the Plan, no further options or awards shall
be granted under the Wachovia Corporation Senior Management and Director Stock
Plan, as amended (the "Predecessor Plan"). The Predecessor Plan shall continue
in effect and shall be applicable with respect to all options and awards issued
or granted prior to the Effective Date under the Predecessor Plan.
20. SECTION 16(B) COMPLIANCE.
It is the intention of the Corporation that the Plan shall comply in all
respects with Rule 16b-3 under the Exchange Act, and, if any Plan provision is
later found not to be in compliance with Section 16 of the Exchange Act, the
provision shall be deemed null and void, and in all events the Plan shall be
construed in favor of it meeting the requirements of Rule 16b-3. Notwithstanding
anything in the Plan to the contrary, the Committee, in its sole and absolute
discretion, may bifurcate the Plan so as to restrict, limit or condition the use
of any provision of the Plan to participants who are officers or Directors
subject to Section 16 of the Exchange Act without so restricting, limiting or
conditioning the Plan with respect to other participants.
21. CHANGE OF CONTROL.
(a) Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change of Control (as defined in Section 21(b)
herein):
(i) All Options and SARs outstanding as of the date of such
Change of Control shall become fully exercisable, whether or not then
otherwise exercisable.
(ii) Any restrictions including but not limited to the
Restriction Period applicable to any Restricted Award shall be deemed to
have expired, and such Restricted Awards shall become fully vested and
payable to the fullest extent of the original grant of the applicable
Award.
(iii) The restrictions, if any, applicable to any Director
Award shall be deemed to have expired, and such Director Awards shall be
deemed earned immediately.
(iv) Notwithstanding the foregoing, in the event of a merger,
share exchange, reorganization or other business combination affecting
the Corporation or a related corporation, the Committee may, in its sole
and absolute discretion, determine that any or all Awards granted
pursuant to the Plan shall not vest or become exercisable on an
accelerated basis, if the Board of Directors or the surviving or
acquiring corporation, as the case may be, shall have taken such action,
including but not limited to the assumption of Awards granted under the
Plan or the grant of substitute awards (in either case, with
substantially similar terms as Awards granted under the Plan), as in the
opinion of the Committee is equitable or appropriate to protect the
rights and
A-13
<PAGE>
interests of participants under the Plan. For the purposes herein, the
Committee authorized to make the determinations provided for in this
Section 21(a) (iv) shall be appointed by the Board of Directors,
two-thirds of the members of which shall have been Directors of the
Corporation prior to the merger, share exchange, reorganization or other
business combinations affecting the Corporation or a related
corporation.
(b) For the purposes herein, as "Change of Control" shall be
deemed to have occurred on the earliest of the following dates:
(i) The date any entity or person shall have become the
beneficial owner of, or shall have obtained voting control over, 30% or
more of the outstanding Common Stock of the Corporation;
(ii) The date the shareholders of the Corporation approve a
definitive agreement (A) to merge or consolidate the Corporation with or
into another corporation, in which the Corporation is not the continuing
or surviving corporation or pursuant to which any shares of Common Stock
of the Corporation would be converted into cash, securities or other
property of another corporation, other than a merger of the Corporation
in which holders of Common Stock immediately prior to the merger have
the same proportionate ownership of Common Stock of the surviving
corporation immediately after the merger as immediately before, or (B)
to sell or otherwise dispose of substantially all the assets of the
Corporation; or
(iii) The date there shall have been a change in a majority of
the Board of Directors of the Corporation within a 12-month period
unless the nomination for election by the Corporation's shareholders of
each new director was approved by the vote of two-thirds of the
directors then still in office who were in office at the beginning of
the 12-month period.
(For the purposes herein, the term "person" shall mean any individual,
corporation, partnership, group, association or other person, as such term
is defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act,
other than the Corporation, a subsidiary of the Corporation or any employee
benefit plan(s) sponsored or maintained by the Corporation or any
subsidiary thereof, and the term "beneficial owner" shall have the meaning
given the term in Rule 13d-3 under the Exchange Act.)
A-14
<PAGE>
IN WITNESS WHEREOF, this Wachovia Corporation Stock Plan, as amended and
restated effective April 25, 1997, is, by the authority of the Board of
Directors of the Corporation, executed in behalf of the Corporation, the 25th
day of April, 1997.
WACHOVIA CORPORATION
By:
CHIEF EXECUTIVE OFFICER
ATTEST:
SECRETARY
[CORPORATE SEAL]
A-15
<PAGE>
(WACHOVIA LOGO)
<PAGE>
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Appendix
*******************************************************************************
Wachovia Corporation
Proxy for Annual Meeting of Shareholders
This Proxy is Solicited on Behalf of the Board of Directors of the Corporation
The undersigned hereby appoints Alice Washington Grogan, Secretary, and
Kenneth W. McAllister, Assistant Secretary, of Wachovia Corporation, as
attorneys and proxies to vote all of the shares of COMMON STOCK of Wachovia
Corporation, appearing on the reverse side hereof, held or owned by the
undersigned at the Annual Meeting of Shareholders on April 25, 1997, and at
any adjournments thereof.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS PROXY WILL BE VOTED AS
SPECIFIED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR PROPOSALS
1, 2 AND 3.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name(s) appear(s) on the books of the Company.
Each joint owner should personally sign. Trustees, custodians and other
fiduciaries should indicate the capacity in which they sign and, where more
than one name appears, a majority must sign. If the shareholder is a
corporation, the signature should be that of an authorized officer who
should indicate his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------- -----------------------------
- --------------------------- -----------------------------
- --------------------------- -----------------------------
<PAGE>
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
__________________________________________
Wachovia Corporation
__________________________________________
1. Election of Directors to serve for a three-year term:
For Withhold For All
Except
John L. Clendenin [ ] [ ] [ ]
George W. Henderson, III
Robert A. Ingram
John G. Medlin, Jr.
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s')
name(s). Your shares will be voted for the remaining nominee(s).
For Against Abstain
2. To approve the amended and restated [ ] [ ] [ ]
Wachovia Corporation Stock Plan.
3. Ratification of the appointment of [ ] [ ] [ ]
Ernst & Young LLP as independent
auditors.
4. In their discretion, upon any other business which may properly come
before the meeting or at any adjournment thereof.
Please be sure to sign and date this Proxy. Date
Shareholder(s) sign here
Mark box at right if an address change or comment has been noted
on the reverse side of this card. [ ]
DETACH CARD DETACH CARD
Wachovia Corporation
Dear Shareholder:
Please take note of the important information enclosed with this Proxy. There
are a number of issues related to the management and operation of your
Company that require immediate attention and approval. These are discussed
in the enclosed Proxy Statement.
Please mark the boxes on this Proxy card to indicate how your shares should
be voted. Then sign the card, detach and return it in the enclosed postage-paid
envelope.
Your vote must be received before the Annual Meeting of Shareholders,
April 25, 1997.
Thank you for your prompt consideration of these matters.
Sincerely,
Wachovia Corporation
<PAGE>
Wachovia Corporation
Proxy for Annual Meeting of Shareholders
This Proxy is Solicited on Behalf of the Board of Directors of the Corporation
Wachovia Bank of North Carolina, N.A., Trustee
Wachovia Corporation Retirement Savings and Profit-Sharing Plan
With respect to shares of Common Stock of Wachovia Corporation held for
my account under the Wachovia Corporation Retirement Savings and Profit-Sharing
Plan, you are instructed to sign and forward the proxy being solicited by the
Wachovia Corporation Board of Directors after having directed said proxy to
be voted in the manner I have directed on the form of such proxy appearing
on the reverse hereof. Unless I have otherwise directed on such form, you are
to vote FOR the proposals referred to therein.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR PROPOSALS 1, 2 and 3.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name(s) appear(s) on the books of the Company.
Each joint owner should personally sign. Trustees, custodians and other
fiduciaries should indicate the capacity in which they sign and, where more
than one name appears, a majority must sign. If the shareholder is a
corporation, the signature should be that of an authorized officer who
should indicate his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
__________________________________ _______________________________
__________________________________ _______________________________
__________________________________ _______________________________
<PAGE>
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
__________________________________________
Wachovia Corporation
__________________________________________
Retirement Savings and Profit-Sharing Plan
1. Election of Directors to serve for a three-year term:
For Withhold For All
Except
John L. Clendenin [ ] [ ] [ ]
George W. Henderson, III
Robert A. Ingram
John G. Medlin, Jr.
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s')
names(s). Your shares will be voted for the remaining nominee(s).
For Against Abstain
2. To approve the amended and restated [ ] [ ] [ ]
Wachovia Corporation Stock Plan.
3. Ratification of the appointment of [ ] [ ] [ ]
Ernst & Young LLP as independent
auditors.
4. In their discretion, upon any other business which may properly come
before the meeting or at any adjournment thereof.
Please be sure to sign and date this Proxy. Date
Shareholder(s) sign here
Mark box at right if an address change or comment has been noted
on the reverse side of this card. [ ]
DETACH CARD DETACH CARD
Wachovia Corporation
Dear Participant:
Please take note of the important information enclosed with this Proxy. There
are a number of issues related to the management and operation of your
Company that require immediate attention and approval. These are discussed
in the enclosed Proxy Statement.
Please mark the boxes on this Proxy card to indicate how your shares should
be voted. Then sign the card, detach and return it in the enclosed postage-paid
envelope.
Your vote must be received before the Annual Meeting of Shareholders,
April 25, 1997.
Thank you for your prompt consideration of these matters.
Sincerely,
Wachovia Corporation
