<PAGE>
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ ] Filed by the Registrant
[X] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X} Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.-14a-11(c) or 240.14a-12
FCNB CORP
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FCNB CORP
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:(1)
---------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
[ ] 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:
---------------------------------------------------------------------------
- ------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 16, 1996
Notice is hereby given that the Annual Meeting of Stockholders of FCNB Corp
(the "Company") will be held at 7200 FCNB Court, Frederick, Maryland 21703 on
Tuesday, April 16, 1996 at 7:00 p.m. for the following purposes:
1. To elect five directors of the Company to hold office until the expiration
of their terms or until their respective successors have been duly elected and
qualified.
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
February 2, 1996 was fixed by the Board of Directors as the record date for
determining stockholders entitled to receive notice of and to vote at the Annual
Meeting. A plurality of votes cast by the stockholders of the Company's
outstanding Common Stock represented in person or by proxy at the Annual Meeting
is necessary to elect the directors.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Helen G. Hahn
-------------------------------
Frederick, Maryland Helen G. Hahn
March 21, 1996 Vice President and Secretary
You are urged to complete, sign, date and return the enclosed proxy promptly.
If you attend the Annual Meeting and decide that you wish to vote in person, you
may revoke your proxy at any time prior to its use.
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished to stockholders of FCNB Corp, a Maryland
corporation (the "Company"), in connection with the solicitation of proxies by
the Board of Directors of the Company to be used at the Annual Meeting of
Stockholders to be held on Tuesday, April 16, 1996 at 7:00 p.m., local time, at
the Company's headquarters, located at 7200 FCNB Court, Frederick, Maryland
21703, and at any adjournment or postponement thereof. The Company is a two-bank
holding company for its wholly-owned bank subsidiaries FCNB Bank, Frederick,
Maryland and Elkridge Bank, Elkridge, Maryland, (collectively, the "Banks").
This proxy material is being mailed to stockholders on or about March 21, 1996.
The Company's mailing address is P.O. Box 240, Frederick, Maryland 21705-0240.
PROXIES AND VOTING
Stockholders of record at the close of business on February 2, 1996 are
entitled to notice of and to vote at the Annual Meeting. At that date there were
outstanding and entitled to vote 5,390,779 shares of Common Stock which were
held by approximately 2,629 holders of record. Each share is entitled to one
vote on all matters.
The cost of solicitation of proxies will be borne by the Company. The
solicitation of proxies generally will be by mail and by directors, officers,
and employees of the Company or its subsidiaries, without additional
compensation to them. In some instances solicitation may be made by telephone,
the costs of which will be borne by the Company. The Company may also reimburse
brokers, custodians, nominees, and other fiduciaries for reasonable
out-of-pocket and clerical expenses for forwarding proxy materials to their
principals.
All shares entitled to vote and represented by a properly executed and
unrevoked proxy received in time for the Annual Meeting will be voted at the
Annual Meeting in accordance with the instructions given thereon. In the absence
of instructions to the contrary, such shares will be voted FOR the election of
the designated nominees for directors. Persons appointed as proxies will also be
entitled to vote in their discretion on other matters that may properly come
before the Annual Meeting and any adjournment or postponement thereof.
Any proxy given by a stockholder may be revoked by the holder at any time
before it is voted at the Annual Meeting by (i) attending the Annual Meeting and
voting in person, (ii) filing a written notice of revocation with the Secretary
of the Company prior to the Annual Meeting, or (iii) duly executing a proxy
bearing a later date and delivering same to the Secretary of the Company prior
to the exercise of the proxy. Written notices of revocation of a proxy should be
addressed to Helen G. Hahn, Vice President and Secretary, FCNB Corp, P.O. Box
240, Frederick, Maryland 21705-0240.
The holders of a majority of the outstanding shares of the Company's Common
Stock present in person or by proxy will constitute a quorum for the transaction
of business at the Annual Meeting. In the event that less than a majority of the
outstanding shares are present at the Annual Meeting, either in person or by
proxy, a majority of the shares so represented may vote to adjourn the Annual
Meeting from time to time without further notice. Directors receiving a
plurality of votes cast will be elected in the order of the number of votes
received. The inspectors of election appointed for the meeting will determine
the existence of a quorum and will tabulate the votes cast at the Annual
Meeting. Abstentions will be treated as shares that are present and entitled to
vote for purposes of determining the presence of a quorum but as unvoted for
purposes of determining the approval of any matter submitted for a vote of
stockholders. If a broker indicates on the proxy that he or she does not have
discretionary authority to vote on a particular matter as to certain shares,
those shares will be counted for general quorum purposes but will not be
considered as present and entitled to vote with respect to that matter.
VOTING SECURITIES
All voting rights are vested exclusively in the holders of the Common Stock
of the Company. Each stockholder is entitled to one vote for each share of
Common Stock owned on all matters brought to a vote of the stockholders. The
Company had 5,390,779 shares of Common Stock outstanding on the February 2, 1996
record date selected for the Annual Meeting. The Company has no other class of
equity securities outstanding.
1
<PAGE>
Persons and groups beneficially owning in excess of 5% of the Common Stock
are required to file certain reports disclosing such ownership pursuant to the
Securities Exchange Act of 1934, as amended (hereinafter called the "Exchange
Act"). The following table sets forth, as of February 2, 1996, certain
information as to the shares of Common Stock beneficially owned by certain
officers of the Company who are not also directors of the Company, and all
officers and directors of the Company as a group. Management knows of no persons
who beneficially owned more than 5% of the outstanding shares of Common Stock at
February 2, 1996.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENTAGE
OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
- ------------------------------------- ------------------------- ------------
<S> <C> <C>
Martin S. Lapera .................... 20,563 (2) 0.38%
Mark A. Severson .................... 8,745 (3) 0.16
Charles E. Weller ................... 13,974 (4) 0.26
All Officers and Directors as a
Group (19 persons)................... 629,087 (5) 11.56
<FN>
- ---------------
(1) Unless otherwise indicated, all shares are owned directly by the named
individuals or by the individuals indirectly through a trust, corporation
or association, or by the individuals or their spouses as custodians or
trustees for the shares of minor children. Except as otherwise indicated,
the named individuals exercise sole voting and investment power over such
shares.
(2) Mr. Lapera is executive vice president of the Company and is executive vice
president, chief operating officer and chief lending officer for FCNB Bank.
The shares attributed to Mr. Lapera include 15,257 shares as to which Mr.
Lapera shares voting and investment power with his wife. Also, included in
the total shares owned are options, currently exercisable, to purchase
4,989 shares of the Company's Common Stock. In addition, Mr. Lapera will
also receive 999 shares of restricted stock when the underlying stock
options are exercised, which shares are not reflected in the table.
(3) Mr. Severson is senior vice president and treasurer of the Company and is
senior vice president and chief financial officer of FCNB Bank. The shares
attributed to Mr. Severson include 1,774 shares as to which Mr. Severson
shares voting and investment power with his wife. Also, included in the
total shares owned are options, currently exercisable, to purchase 5,362
shares of the Company's Common Stock. In addition, Mr. Severson will also
receive 1,072 shares of restricted stock when the underlying stock options
are exercised, which shares are not reflected in the table.
(4) Mr. Weller is senior vice president of the Company and is president of
Elkridge Bank. The shares attributed to Mr. Weller include 432 shares owned
by Mr. Weller's wife, as to which Mr. Weller disclaims beneficial
ownership. Also, included in the total shares owned are options, currently
exercisable, to purchase 13,039 shares of the Company's Common Stock.
(5) Includes an aggregate of 52,410 shares which may currently be acquired by
certain of such executive officers upon the exercise of stock options. In
addition, such officers will also receive an aggregate of 7,876 shares of
restricted stock when the underlying stock options are exercised, which
shares are not reflected in the table. The restricted stock to be received
is based on the formula of one (1) restricted share for every five (5)
shares of Common Stock purchased pursuant to the exercise of stock options.
The restriction period is for three (3) years from the date of receipt, and
if the shares purchased pursuant to the exercise of stock options are sold
within this time period, a pro rata percentage of the restricted shares are
forfeited and must be returned to the Company.
</TABLE>
2
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors has set the number of directors that constitute the
Board of Directors at fourteen. The Articles of Incorporation of the Company
provide that the directors shall be classified with respect to the time for
which they severally hold office into three classes. Each year all of the
directors in one class are elected to serve for a term of three years. The
stockholders will vote at this Annual Meeting for the election of one director
for a one-year term expiring at the Annual Meeting of Stockholders in 1997 and
for four directors for a three-year term expiring at the Annual Meeting of
Stockholders in 1999, or at such time as their respective successors have been
elected and qualified.
Unless otherwise directed in the enclosed form of proxy, the persons named in
such proxy intend to vote FOR the election of the following nominees to serve as
directors for a one-year or a three-year period, as applicable, or until their
respective successors have been duly elected and have qualified. In the event
that any nominee is unable to serve, the persons named in the proxy will vote
for such substitute nominee or nominees as the Board of Directors, in their
discretion, shall determine. At this time, the Board knows of no reason why any
nominee might be unavailable to serve. Messrs. Hewitt and Weinberg are new
nominees, while Ms. Remsberg and Messrs. Grove and Rice are currently serving as
directors of the 1996 class of directors. Mr. Hewitt has been elected to the
Board of Directors, by action of the Board of Directors, in accordance with the
provisions of the Company's merger agreement with Laurel Bancorp, Inc.
("Laurel"), which was consummated on January 26, 1996. In accordance with the
Company's bylaws, Mr. Hewitt is being submitted for election by the stockholders
at the Annual Meeting for a term to expire in 1997 (Class 1997). Ms. Remsberg
and Messrs. Grove, Rice and Weinberg have been nominated by the Board of
Directors to serve for a three-year term to expire in 1999 (Class 1999). Mr.
Weinberg was elected to the Board of Directors, by action of the Board of
Directors, in January 1996, to fill a vacancy in the Class of 1996.
The following table sets forth as to each nominee and director continuing in
office, his or her name, age, the year he or she first became a director of the
Company and the number of shares of Common Stock beneficially owned at February
2, 1996.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
YEAR FIRST YEAR OWNED AT PERCENT
ELECTED TERM FEBRUARY 2, OF
NAME AGE(1) DIRECTOR EXPIRES 1996 (2) CLASS
- ---------------------- ------ ------------ --------- -------------- ---------
<S> <C> <C> <C> <C> <C>
BOARD NOMINEES
Frank L. Hewitt, III . 54 1996 (3) 1997 122,271 (3) 2.27%
Bernard L.Grove, Jr. . 62 1988 1999 10,771 (4) 0.20
Ramona C. Remsberg ... 67 1987 1999 48,000 (5) 0.89
Kenneth W. Rice....... 52 1988 1999 8,781 0.16
Rand D. Weinberg...... 39 1996 (6) 1999 1,000 0.02
DIRECTORS CONTINUING IN OFFICE
Nevin S. Baker........ 73 1986 1997 59,203 (7) 1.10
George B. Callan, Jr.. 64 1986 1997 10,159 0.19
Clyde C. Crum......... 60 1986 1997 38,059 (8) 0.71
DeWalt J. Willard, Jr. 64 1986 1997 30,103 0.56
Miles M. Circo........ 49 1986 1998 928 0.02
James S. Grimes....... 56 1989 1998 4,906 0.09
Gail T. Guyton........ 55 1986 1998 57,001 (9) 1.06
A. Patrick Linton .... 46 1991 1998 59,171(10) 1.09
Jacob R. Ramsburg, Jr. 59 1986 1998 90,681(11) 1.68
<FN>
- -------------
(1) At February 2, 1996.
3
<PAGE>
(2) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has sole or shared voting and/or investment power
with respect to such security. The table includes shares owned by spouses,
other immediate family members in trust, shares held in retirement accounts
or funds for the benefit of the named individuals, and other forms of
ownership, over which shares the persons named in the table possess voting
and investment power. Except as otherwise noted, each person has sole
voting and investment power with respect to all shares beneficially owned.
(3) Mr. Hewitt was elected to the Board of Directors as a member of the Class
of 1997 in connection with the Company's acquisition of Laurel. The shares
attributed to Mr. Hewitt include 28,153 shares as to which he shares voting
and investment power with his wife, 13,920 shares owned by Mr. Hewitt's
children, as to which he has voting and investment power, 2,000 shares held
in trust as to which he has shared voting and investment power and 1,000
shares owned by Mr. Hewitt's wife as to which Mr. Hewitt disclaims
beneficial ownership.
(4) The shares attributed to Mr. Grove include 6,459 shares as to which Mr.
Grove shares voting and investment power with his wife.
(5) The shares attributed to Ms. Remsberg include 2,100 shares held in trust as
to which she has shared voting and investment power.
(6) Mr. Weinberg was elected to the Board of Directors to fill a vacancy in the
Class of 1999.
(7) The shares attributed to Mr. Baker include 37,878 shares held in trust as
to which he has shared voting and investment power.
(8) The shares attributed to Mr. Crum include 4,893 shares owned by Mr. Crum's
wife, as to which Mr. Crum disclaims beneficial ownership.
(9) The shares attributed to Mr. Guyton include 2,364 shares owned by Mr.
Guyton's wife, as to which Mr. Guyton disclaims beneficial ownership and
3,645 shares held in trust by a corporation controlled by Mr. Guyton, as to
which he has shared voting and investment power.
(10) The shares attributed to Mr. Linton include 30,307 shares as to which he
shares voting and investment power with his wife and 2,302 shares owned by
Mr. Linton's children, as to which he has voting and investment power. Mr.
Linton also has options to purchase 28,484 shares, of which 22,187 are
presently exercisable and are included in the total shares beneficially
owned.
(11) The shares attributed to Mr. Ramsburg include 4,906 shares owned by Mr.
Ramsburg's wife, and 4,833 shares owned jointly by Mr. Ramsburg's wife and
son, as to which Mr. Ramsburg disclaims beneficial ownership, and 22,766
shares owned by two corporations controlled by Mr. Ramsburg, as to which he
holds voting and investment power.
</TABLE>
Set forth below is certain information with respect to the nominees for
director and the continuing directors of the Company. Unless otherwise
indicated, the principal occupation listed for each person below has been his or
her occupation for the past five years.
FRANK L. HEWITT, III is retired after being president of Laurel and Laurel
Federal Savings Bank until the merger of Laurel with and into the Company and
the merger of Laurel Federal Savings Bank with and into Elkridge Bank, a
wholly-owned subsidiary of the Company, on January 26, 1996.
BERNARD L. GROVE, JR. is an advisor to Genstar Stone Products, Inc. since
January 1996, after having been president since January 1, 1992, and having
previously served as executive vice president of that company.
RAMONA C. REMSBERG is the former vice chairman of the board of both the
Bank and of the Company, having retired from the Bank and the Company in
September 1993. Mrs. Remsberg served as president of each entity from
December 1987 to January 1991.
KENNETH W. RICE is president of Donald B. Rice Tire Co., Inc., a tire
distribution firm.
RAND D. WEINBERG is a partner with Weinberg & Weinberg, a law firm in
Frederick, Maryland.
MILES M. CIRCO is general manager of Patapsco Designs, Inc., an electronic
design and manufacturing firm.
JAMES S. GRIMES has been Mayor of the City of Frederick, Maryland since
1994 and is president of James S. Grimes, Inc., a full service truck
transportation service operation.
4
<PAGE>
GAIL T. GUYTON, vice chairman of the board of both FCNB Bank, a wholly
owned subsidiary of the Company (the "Bank"), and the Company since January
1995, is president of Morgan-Keller, Inc., a commercial/industrial
construction firm.
A. PATRICK LINTON has been president and chief executive officer of the Bank
and the Company since January 1991. During 1990, he served as executive vice
president of the Company and executive vice president and chief operating
officer of the Bank. Mr. Linton has been an executive officer of the Bank since
1982 and of the Company since 1986, with principal responsibilities in the areas
of finance and administration.
JACOB R. RAMSBURG, JR. is president of Frederick Underwriters, Inc., a
general insurance agency.
NEVIN S. BAKER served as chairman of the board of both the Bank and the
Company until January 1995, having served as chairman of the board and chief
executive officer of each entity from December 1987 to January 1991.
GEORGE B. CALLAN, JR. has been president of Associates in Management, a
company that specializes in historic preservation, museum management and
automotive sales, since July 1, 1991. Prior to that time he was president of
Callan & Cramer, Inc., an automotive parts distribution firm.
CLYDE C. CRUM, chairman of the board of both the Bank and the Company since
January 1995, is president of Clyde C. Crum and Son, Inc., a dairy farm
operation.
DEWALT J. WILLARD, JR. is president of Ideal Buick-GMC, an automobile
dealership.
BOARD AND COMMITTEE MEETINGS
The Board of Directors of the Company has standing Audit and Compensation
committees, but does not have a standing Nominating committee.
The Audit Committee, comprised of Directors Circo, Ramsburg and Willard,
assists the Boards of Directors of the Banks in exercising their fiduciary
responsibilities for oversight of audit and related matters, including corporate
accounting, internal controls and regulatory compliance. Its duties include:
monitoring the Banks' internal controls and procedures; meeting with the
internal auditors and reviewing their reports; recommending the selection of
independent auditors; reviewing the scope of audits conducted by the independent
auditors, as well as the results of their audits; and reviewing policies
relating to compliance with applicable banking and other laws.
The Compensation Committee, comprised of Directors Baker, Grove, and Rice,
reviews and recommends to the Board of Directors the overall compensation policy
for the Company. The Board of Directors for each Bank follows this policy
specifically related to the salaries and other benefits for senior management
thereof.
The Board of Directors of the Company held fifteen meetings during 1995, and
the Audit and the Compensation Committees held seven and six meetings,
respectively, during 1995. Each of the directors of the Company attended at
least 75% of the meetings of the Board of Directors and all committees on which
they served during 1995.
COMPENSATION OF DIRECTORS
During 1995, the directors of the Company did not receive compensation for
attending Board of Directors meetings of the Company. All members of the Board
of Directors of the Company were also members of the Board of Directors of FCNB
Bank and, as such, each non-employee director of FCNB Bank received an annual
retainer of $5,000 and a fee of $200 for each bi-weekly Board of Directors and
committee meeting attended. Any member of the Board of Directors of the Company
who is also on the Board of Directors of Elkridge Bank received committee
meeting fees ranging from $250.00 to $350.00 for each meeting attended. Elkridge
Bank does not pay an annual retainer fee.
5
<PAGE>
Beginning in 1996, the directors of the Company will also receive an annual
retainer fee of $2,000. Also, any director of the Company who is not also on
FCNB Bank's Board of directors will receive a fee of $200 for each monthly
meeting attended.
Directors who agree to defer receipt of at least four years of their annual
retainers may participate in an unfunded deferred compensation plan maintained
by FCNB Bank. Under this plan, deferred amounts earn interest at the rate of 10%
per annum until the director attains age sixty-five, dies or becomes disabled.
Upon any such event, the deferred amount plus credited interest thereon will be
paid to the participant or his beneficiary over a period of up to ten years,
with interest continuing to accrue on the unpaid balance at the rate of 10% per
annum.
The Company paid a total of $94,900 in director and committee fees for the
fiscal year ended December 31, 1995.
Clyde C. Crum received a $25,000 annual fee for his services as Chairman of
the Board of both the Company and FCNB Bank, along with the bi-weekly Board of
Directors meeting fees. However, he did not receive any committee meeting fees.
Effective in January 1996, the annual fee for Mr. Crum was increased to $30,000.
6
<PAGE>
EXECUTIVE OFFICERS' COMPENSATION AND CERTAIN TRANSACTIONS
COMPENSATION -- OVERVIEW
Set forth below are summarized tables of all compensation awarded to, earned
by, or paid to certain executive officers. It should be noted that no cash
compensation was paid to any executive officer of the Company in his or her
capacity as such. Each of the executive officers of the Company received
compensation from the Banks for services rendered in their capacities as
executive officers of the Banks.
The following table sets forth a comprehensive overview of the compensation
for the Company's Chief Executive Officer and the most highly compensated
executive officers for the fiscal year just ended. Comparative data is also
provided for the previous two fiscal years, in selected categories.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------
--------------------------------------------------------------------------------------------------------------------------
RESTRICTED SECURITIES
NAME AND FISCAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS AWARDS(3) OPTIONS COMPENSATION(5)
- ----------------------------------- -------- ---------- ------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
A. Patrick Linton, Director, 1995 $186,352 $66,516 (2) 1,259 6,297 $7,747
President and Chief Executive 1994 161,321 46,283 (2) 1,154 (4) 5,765 (4) 2,087
Officer of the Company and FCNB 1993 155,987 55,500 1,457 (4) 7,284 (4) 2,784
Bank
Martin S. Lapera, 1995 $122,091 $30,513 (2) 497 2,485 $ --
Executive Vice President of the 1994 93,723 23,013 (2) 447 (4) 2,232 (4) --
Company and Executive Vice 1993 88,569 24,700 552 (4) 2,757 (4) 308
President, Chief Operating
Officer and Chief Lending
Officer of FCNB Bank
Charles E. Weller, 1995 $100,836 $12,909 (2) 370 1,852 $ --
Senior Vice President of the
Company and President of
Elkridge Bank(6)
Mark A. Severson, 1995 $ 94,677 $19,620 (2) 298 1,491 $ --
Senior Vice President and 1994 83,309 15,568 (2) 278 (4) 1,389 (4) --
Treasurer of the Company and 1993 79,948 16,200 350 (4) 1,745 (4) 2,000 (7)
Senior Vice President and Chief
Financial Officer of FCNB Bank
<FN>
- ---------
(1) Includes contributions made by the Banks under their 401(k) Profit Sharing
Plans. Contributions made by the Banks in 1995, 1994 and 1993,
respectively, amounted to $8,977, $6,321 and $7,987 for Mr. Linton, $7,091,
$3,723 and $4,569 for Mr. Lapera, and $4,677, $3,309 and $3,948 for Mr.
Severson. Mr. Weller's contribution for 1995 was $3,036.
(2) During 1994, FCNB Bank changed the method of paying the annual bonuses.
There were no cash bonuses paid in 1994, however, annual bonuses accrued as
of December 31, 1995 and 1994 were paid in January 1996 and 1995,
respectively. Previously, the annual bonuses were paid in the year earned.
The annual bonus for Mr. Weller is paid by Elkridge Bank.
(3) The awards of restricted stock received are based on the formula of a grant
of one (1) restricted share for every five (5) shares of Common Stock
purchased pursuant to the exercise of stock options. The restriction period
is for three (3) years from the date of receipt, and if the shares
purchased pursuant to the exercise of stock options are sold within this
time period, a pro rata percentage of the restricted shares are forfeited
and must be returned to the Company. In 1994, Mr. Lapera exercised options
resulting in 696 restricted shares outstanding at year end December 31,
1995.
(4) The amounts shown have been adjusted to reflect a three-for-two stock split
effected in the form of a 50% stock dividend declared in April 1995.
(5) Includes payments for vacation pay taken in lieu of vacation. Included in
the 1995 amount for Mr. Linton are $5,700 of Elkridge Bank directors fees.
(6) Mr. Weller became an executive officer of the Company on March 24, 1995, as
a result of the merger of ENB Financial Corporation with and into the
Company.
(7) This amount consists of moving expenses paid for Mr. Severson.
</TABLE>
7
<PAGE>
Stock Option Plan. The following table sets forth as to the executive
officers whose compensation is reported in the SUMMARY COMPENSATION TABLE
certain information relating to options to purchase Common Stock of the Company
granted during fiscal 1995 under the 1992 Employee Stock Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(5)
- -------------------------------------------------------------------- ------=--------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEE OR BASE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED(#) YEAR ($/SHARE) DATE 5%($) 10%($)
- ----------------- ------------ ------------ ---------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
A. Patrick Linton......... 6,297 (1) 33% $21.00 12/31/05 $36,534 $80,732
Martin S. Lapera.......... 2,485 (2) 13% $21.00 12/31/05 $14,417 $31,859
Charles E. Weller......... 1,852 (3) 10% $21.00 12/31/05 $10,745 $23,743
Mark A. Severson.......... 1,491 (4) 8% $21.00 12/31/05 $ 8,650 $19,115
<FN>
- -----------
(1) The options granted to Mr. Linton to purchase 6,297 shares become
exercisable on December 31, 1996, and entitle Mr. Linton to receive an
aggregate of 1,259 shares of restricted stock when the underlying stock
options are exercised. The awards of restricted stock received are based on
the formula of one (1) restricted share for every five (5) shares of Common
Stock purchased pursuant to the exercise of stock options. The restriction
period is for three (3) years from the date of receipt, and if the shares
purchased pursuant to the exercise of stock options are sold within this
time period, a pro rata percentage of the restricted shares are forfeited
and must be returned to the Company.
(2) The options granted to Mr. Lapera to purchase 2,485 shares become
exercisable on December 31, 1996, and entitle Mr. Lapera to receive an
aggregate of 497 shares of restricted stock when the underlying stock
options are exercised.
(3) The options granted to Mr. Weller to purchase 1,852 shares become
exercisable on December 31, 1996, and entitle Mr. Weller to receive an
aggregate of 370 shares of restricted stock when the underlying stock
options are exercised.
(4) The options granted to Mr. Severson to purchase 1,491 shares become
exercisable on December 31, 1996, and entitle Mr. Severson to receive an
aggregate of 298 shares of restricted stock when the underlying stock
options are exercised.
(5) The assumed annual rates of appreciation in the table are shown for
illustrative purposes only pursuant to applicable SEC requirements. Actual
values realized on stock options are dependent on actual future performance
of the Company's stock, among other factors. Accordingly, the amounts shown
may not necessarily be realized. Does not include the value of restricted
stock awards in conjunction with the grant of options.
</TABLE>
The table set forth below presents the amount and potential value of options
held by each named executive at the end of fiscal 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY
NUMBER OF SECURITIES OPTIONS
SHARES UNDERLYING UNEXERCISED AT FY-END($)
ACQUIRED VALUE OPTIONS AT FY-END(#) EXERCISABLE/
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE UNEXERCISABLE(1)
- ----------------- ------------- -------- ------------------------- ----------------
<S> <C> <C> <C> <C>
A. Patrick Linton........... -- -- 22,187/6,297 $133,737/--
Martin S. Lapera............ -- -- 4,989/2,485 $17,745/--
Charles E. Weller........... -- -- 13,039/1,852 $208,741/--
Mark A. Severson............ -- -- 5,362/1,491 $32,403/--
<FN>
- --------------
(1) Does not include the value of restricted stock awards in conjunction with
the grant of options.
</TABLE>
8
<PAGE>
Profit Sharing Plan. The Company has a Section 401 (k) profit sharing plan
(the "Plan") covering employees meeting certain eligibility requirements as to
minimum age and years of service. Employees may make voluntary contributions to
the Plan through payroll deductions on either a pre-tax or after-tax basis. The
Company makes contributions to the Plan in its discretion, based on a percentage
of each Bank's earnings. The Company's contributions are subject to a vesting
period based upon the completion of five years of service with the Company, at
which time they are fully vested. A participant's account under the Plan,
together with investment earnings thereon, is normally distributable, following
retirement, death, disability or other termination of employment, in a single
lump-sum payment.
The Company's annual contribution to the Plan totaled $241,000 in 1995,
including an aggregate of $23,781 of contributions for the executive officers
named in the SUMMARY COMPENSATION TABLE.
Executive Compensation Plan. FCNB Bank maintains an Executive Compensation
Plan which is intended to provide supplemental retirement benefits to executive
officers designated by the Compensation Committee of FCNB Bank's Board of
Directors. Under this plan, an amount determined by the Committee will be paid
to a participant annually (in twelve monthly payments) for up to ten years
commencing upon the earliest of (a) his or her attaining sixty-five years of age
(or such later date as the participant and the Bank agree), (b) his or her death
or (c) his or her disability. The payments will be made to a participant or his
or her beneficiaries from the general funds of the Bank. Periodically, the
Compensation Committee will approve a change to the amount of annual benefits
payable under the Executive Compensation Plan. Under the plan, the current
annual benefits at normal retirement age established by the Compensation
Committee for Messrs. Linton, and Lapera are $20,000 and $10,000, respectively.
Messrs. Severson and Weller have no benefits under this plan.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company is composed of three outside
directors, Messrs. Nevin S. Baker, Bernard L. Grove, Jr. and Kenneth W. Rice.
Mr. Baker is a former employee of the Company, whereas neither of the remaining
committee members has ever been an employee of the Company or any of its
subsidiaries. The Committee makes recommendations to the full Board of Directors
regarding the adoption, extension, amendment and termination of the Company's
compensation plans. In conjunction with the Company's Chairman and
President/Chief Executive Officer ("CEO"), it reviews the performance of senior
management, recommends annual salary revisions and administers the Company's
compensation plans.
The Committee is guided by the following executive compensation philosophy of
the Company:
1. Enable the Company to attract and retain superior management by
providing a very competitive total compensation package.
2. Align the interests of stockholders and management by providing stock
options as a portion of the executive's total compensation package.
3. Base a portion of the executive's total compensation package upon the
attainment of defined performance goals that support the growth and
appreciation of the Company's value over time.
4. Balance objectives of short-term performance and long-term growth and
appreciation of the Company through a combination of an annual incentive
compensation program using annual cash bonuses, and the stock option plan
that rewards the executives through long-term growth and appreciation of the
Company.
Executive compensation consists primarily of three components: Base
Salary, Annual Bonus, and Stock Options.
BASE SALARY
The Company's policy is to set base salaries for each executive officer
position, including that of the CEO, in a range commensurate for equivalent
banking jobs in the Mid-atlantic region. The Company utilizes outside
consultants to monitor the Company's competitive compensation status. The base
salaries of executive officers are set by the Board of Directors based upon the
Compensation Committee's recommendations.
9
<PAGE>
Executive officers, other than the CEO, are reviewed annually by their
superiors while the CEO is reviewed by the Compensation Committee and the
Executive Committee of the Board of Directors of the Company. Salary adjustments
for executive officers are determined by the quality of their individual
performances and the relationship of their salary to their established salary
range.
Adjustments to the base salary of the CEO are governed by the same factors as
other executive officers, but also specifically take into account the Company's
current financial performance as measured by earnings, asset growth, and overall
financial soundness. The Committee also considers the CEO's leadership in
setting high standards for financial performance, motivating his management
colleagues, and representing the Company and its values to internal and external
communities.
ANNUAL BONUS
The Company has an Employee Performance Bonus Plan (the "Bonus Plan").
Annual bonuses are accrued as of the end of the fiscal year and are paid in
January. The Company's Bonus Plan has several components related to the
Company's performance. For 1995, these components consisted of the Company
achieving pre-determined levels of earnings, appreciation in stockholder value
and asset growth. The CEO's annual cash bonus is strictly related to the
Company's performance goals. The other named executive officers have divisional
performance goals and/or in addition to the Banks' performance goals. Goals for
each component of the Bonus Plan are approved by the Compensation Committee at
the beginning of each year. Annual cash bonuses tied to Bank performance goals
and/or the Company's performance goals are evaluated on a point system. Each
component is given points for equalling or exceeding the predetermined base.
Target goals are determined that exceed the threshold level, as well as maximum
goals. For each specific component, if the threshold level is not achieved, no
bonus is awarded for that component. The maximum potential annual bonus award
for the four named executive officers is 25% to 37.5% of base salary, depending
on the executive's position.
In 1995, the Company substantially exceeded its target performance goals.
Based on these results, the CEO was awarded a bonus of $66,516 which constituted
37.5% of his 1995 base salary. This annual bonus amount was accrued as of
December 31, 1995 and paid in January 1996. The Committee also considered the
performance of the Company's Common Stock and the CEO's role in promoting the
long-term strategic growth of the Company.
For the other named executive officers, divisional bank performance goals
were substantially met in addition to exceeding the target corporate bank
performance goals.
As of December 31, 1995, the total accrued annual bonus for the four named
executive officers in the Bonus Plan was $129,558, which was paid in January
1996.
STOCK OPTIONS
The Company maintains a 1992 Stock Option Plan currently covering 413,438
shares of the Company's Common Stock. This Stock Option Plan provides for grants
by the Compensation Committee of non-qualified stock options, as well as
incentive stock options, thus tying a portion of the executive's compensation
directly to the performance of the Company's stock price. The exercise price of
the option to purchase stock under the plan may not be less than 100% of the
fair market value of the Company's stock on the date of grant. Stock options
become exercisable one year from the date of the grant and expire five and ten
years from the date of the grant. Stock options for the four named executive
officers typically are granted each year for a number of shares, the aggregate
market value of these shares on the date of grant being in a range of 35% to 75%
of the executive officer's base salary. The Stock Option Plan also provides that
the Company will grant one (1) share of restricted stock for every five (5)
shares of Common Stock purchased pursuant to the exercise of options under the
plan. The Common Stock purchased pursuant to the exercise of such options must
be held for a period of three years before the restricted stock granted by the
Company will fully vest to the recipient thereof. Stock options must be
exercised in the sequence in which they were granted.
10
<PAGE>
In 1995, the CEO received options to purchase 6,297 shares with an exercise
price of $21.00 per share. The CEO now owns 36,984 shares of the Company's
Common Stock and holds options to purchase an additional 28,484 shares, of which
22,187 shares are presently exercisable. In 1995, the other named executive
officers received options to purchase an aggregate of 5,828 shares of the
Company's Common Stock with an exercise price of $21.00 per share. The
Compensation Committee believes that significant equity interests in the Company
held by the Company's management align the interests of stockholders and
management.
Stock options are designed to align the interests of executives with those of
the stockholders. This approach is designed to incentivize the creation of
stockholder value over the long term since the full benefit of the compensation
package cannot be realized unless stock price appreciation occurs over a number
of years.
CONCLUSION
Through the programs described above, a moderate portion of the Company's
executive compensation is linked directly to individual and corporate
performance and stock price appreciation. In the case of the CEO, approximately
26% of his total 1995 compensation, including the accrued annual bonus as of
December 31, 1995, consisted of performance-based variable elements. The
Compensation Committee intends to continue the policy of linking executive
compensation to corporate performance and returns to stockholders, recognizing
that ups and downs of the business cycle from time to time may result in an
imbalance for a particular period.
This report has been prepared by the Compensation Committee of the Bank.
Nevin S. Baker Bernard L. Grove, Jr. Kenneth W. Rice
11
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
cumulative total stockholder return on the Company's Common Stock from January
1, 1991 to December 31, 1995. The Company's yearly percentage change in
cumulative total stockholder return as shown below is compared to the NASDAQ
Market Index and the published Industry Peer Group Index consisting of 155
middle Atlantic banks published by Media General Financial Services.
COMPARISON OF 5YR TOTAL RETURN
FCNB, PEER INDEX, AND NASDAQ INDEX
#############################################################################
IMAGE OMITTED
(SEE NARRATIVE DESCRIPTION BELOW OR IN "APPENDIX FOR GRAPHICS AND IMAGES".)
PICKUP: "P1"
=============================================================================
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
<S> <C> <C> <C> <C> <C> <C>
FCNB $100.00 99.30 104.47 138.65 188.26 199.26
PEER GROUP $100.00 133.08 166.65 207.03 196.56 298.47
NASDAQ, INC. $100.00 160.56 186.87 214.51 209.69 296.30
</TABLE>
=============================================================================
#############################################################################
Notes: 1. Total return assumes reinvestment of dividends.
2. Fiscal Year Ending December 31.
3. Return based on $100 dollars invested on January 1, 1991 in FCNB Corp
Common Stock, an index for NASDAQ Stock Market (U.S. Companies), and
Bank peer group.
12
<PAGE>
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS, AND ASSOCIATES
During the past year the Banks have had, and expect to have in the future,
banking transactions in the ordinary course of business with its directors and
officers as well as with their associates. These transactions have been made on
substantially the same terms, including interest rates, collateral, and
repayment terms, as those prevailing at the same time for comparable
transactions with unaffiliated parties. The extensions of credit by the Banks to
these persons have not and do not currently involve more than the normal risk of
collectibility or present other unfavorable features. At December 31, 1995,
loans to directors and officers and their respective associates, including loans
guaranteed by such persons, aggregated $8.8 million, which represented
approximately 18.2% of the consolidated stockholders' equity.
Gail T. Guyton, a director of the Company, is president and a principal
stockholder of Morgan-Keller, Inc., a construction firm which is serving as
construction manager in connection with the development of the Company's new
headquarters project. During 1995, the Company paid Morgan-Keller, Inc. a total
of $6.8 million in construction payments, which included $6.6 million for the
Company's headquarter's project and $227,000 related to various other
construction projects. Morgan-Keller, Inc. will receive approximately $400,000
in fees for serving as the construction manager for the headquarter's project.
Jacob R. Ramsburg, Jr., a director of the Company and the Bank, is president
and a principal stockholder of Frederick Underwriters, Inc., a general insurance
agency which received $88,600 in premiums during 1995 in connection with the
Bank's purchase of certain types of insurance coverage.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Martin S. Lapera and Jacob R. Ramsburg, Jr. failed to file reports
required by Section 16(a) of the Exchange Act on a timely basis during 1995.
Both of these individuals filed one report late, that included one
transaction each.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Keller Bruner and Company,
L.L.C., independent public accountants, to audit the Company's financial
statements for the year ending December 31, 1996. The Company has been advised
by Keller Bruner and Company, L.L.C. that neither that firm nor any of its
associates has any relationship with the Company or the Bank, other than the
usual relationship that exists between independent public accountants and
clients. That firm audited the Company's financial statements for 1995.
Representatives of Keller Bruner and Company, L.L.C. are expected to be present
at the Annual Meeting and will have an opportunity to make a statement if they
so desire and to respond to appropriate questions.
OTHER MATTERS
STOCKHOLDER PROPOSALS
All stockholder proposals intended to be presented at the 1997 Annual Meeting
of Stockholders must be received by the Company at the Company's principal
office in writing not later than November 21, 1996 for inclusion in the
Company's proxy statement and form of proxy relating to that meeting. Any such
proposals shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934. The Company must receive written notice of
any stockholder proposal or nomination to be acted upon at the next annual
meeting, for which inclusion in the Company's proxy materials is not sought, not
less than 30 days nor more than 60 days prior to the 1997 Annual Meeting of
Stockholders, which will be held on or about April 16, 1997.
13
<PAGE>
OTHER BUSINESS
The Board of Directors of the Company knows of no matters to be presented for
action at the meeting other than those mentioned above; however, if any other
matters properly come before the meeting, it is intended that the persons named
in the accompanying proxy will vote on such other matters in accordance with
their best judgment.
FINANCIAL STATEMENTS
The Company's Annual Report to Stockholders, including financial statements,
has been mailed to all stockholders of record as of the close of business on
February 2, 1996. Any stockholder who has not received a copy of such Annual
Report may obtain a copy by writing to the Secretary of the Company. Such Annual
Report is not to be treated as part of the proxy solicitation material or as
having been incorporated herein by reference.
FORM 10-K
Upon receipt of a written request, the Company will deliver, without charge,
to any stockholder of record entitled to vote at the Annual Meeting or to any
beneficial owner of Common Stock, a copy of the Company's annual report on Form
10-K for the fiscal year ended December31, 1995 required to be filed with the
Securities and Exchange Commission under the Exchange Act. Such written requests
should be directed to Mark A. Severson, Senior Vice President and Treasurer,
FCNB Corp, 7200 FCNB Court, P.O. Box 240, Frederick, Maryland 21705-0240.
BY ORDER OF THE BOARD OF DIRECTORS
[sig]
Helen G. Hahn
Vice President and Secretary
Frederick, Maryland
March 21, 1996
14
<PAGE>
FCNB CORP
FORM OF PROXY
FRONT
FCNB CORP
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of FCNB Corp hereby appoints Kenneth E. Fogle,
Edwin J. Reading and William M. Moore, and each of them, the lawful attorneys
and proxies of the undersigned, with full power of substitution, to vote as
designated below all shares of Common Stock of FCNB Corp which the undersigned
is entitled to vote at the Annual Meeting of Stockholders to be held on April
16, 1996, and at any and all adjournments thereof:
(1) ELECTION OF DIRECTORS:
- ---- FOR all nominees listed ---- WITHHOLD AUTHORITY to ---- ABSTAIN
- ---- below (except as marked ---- vote for all nominees ----
to the contrary) listed below
Bernard L. Grove, Jr., Frank L. Hewitt, III, Ramona C. Remsberg, Kenneth W.
Rice, Rand D. Weinberg
(INSTRUCTION: To withhold authority for any individual nominee strike a
line through the nominee's name in the list above.)
(2) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued and to be signed on other side)
<PAGE>
BACK
Shares represented by all properly executed proxies will be voted (or the
vote on such matters will be withheld on specific matters) in accordance with
instructions appearing on the proxy. In the absence of specific instructions to
the contrary, proxies will be voted FOR the Election of Directors.
Dated____________________________________________,1996
-------------------------------------------------
(Signature)
-------------------------------------------------
(Signature)
(PLEASE SIGN AS NAME(S) APPEARS AT LEFT. IF JOINT ACCOUNT, BOTH JOINT OWNERS
MUST SIGN.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED BY THE PERSON(S) GRANTING IT PRIOR TO ITS EXERCISE.
