<PAGE> 1
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
PARK NATIONAL CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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> 2
PARK NATIONAL CORPORATION
50 North Third Street
Newark, Ohio 43055
(740) 349-8451
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 19, 1999
-------------------------
To the Shareholders of
Park National Corporation: March 10, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders (the
"Annual Meeting") of Park National Corporation (the "Company") will be held at
the offices of The Park National Bank, 50 North Third Street, Newark, Ohio, on
April 19, 1999, at 2:00 p.m., local time, for the following purposes:
1. To elect five directors to serve for terms of three years
each.
2. To transact such other business as may properly come before
the Annual Meeting and any adjournment(s) thereof.
Only shareholders of record at the close of business on February 26,
1999, will be entitled to receive notice of and to vote at the Annual Meeting
and any adjournment(s) thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. THE VOTE OF
EACH SHAREHOLDER IS IMPORTANT, WHATEVER THE NUMBER OF COMMON SHARES HELD.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID,
RETURN-ADDRESSED ENVELOPE. SHOULD YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE
YOUR PROXY AND VOTE IN PERSON. ATTENDANCE AT THE ANNUAL MEETING WILL NOT, IN AND
OF ITSELF, CONSTITUTE REVOCATION OF A PROXY.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM NO. 1 OF THE PROXY CARD AS
DIRECTORS OF THE COMPANY.
By Order of the Board of Directors,
/s/ David C. Bowers
David C. Bowers, Secretary
<PAGE> 3
PARK NATIONAL CORPORATION
50 NORTH THIRD STREET
NEWARK, OHIO 43055
(740) 349-8451
PROXY STATEMENT
This Proxy Statement and the accompanying proxy are being mailed to
shareholders of Park National Corporation, an Ohio corporation (the "Company"),
on or about March 10, 1999, in connection with the solicitation of proxies by
the Board of Directors of the Company for use at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") called to be held on Monday,
April 19, 1999, or at any adjournment(s) thereof. The Annual Meeting will be
held at 2:00 p.m., local time, at the offices of The Park National Bank, 50
North Third Street, Newark, Ohio.
A proxy for use at the Annual Meeting accompanies this Proxy Statement
and is solicited by the Board of Directors of the Company. A shareholder of the
Company may use his proxy if he is unable to attend the Annual Meeting in person
or wishes to have his common shares of the Company voted by proxy even if he
does attend the Annual Meeting. Without affecting any vote previously taken, any
shareholder executing a proxy may revoke it at any time before it is voted by
filing with the Secretary of the Company, at the address of the Company set
forth on the cover page of this Proxy Statement, written notice of such
revocation; by executing a later-dated proxy which is received by the Company
prior to the Annual Meeting; or by attending the Annual Meeting and giving
notice of such revocation in person. ATTENDANCE AT THE ANNUAL MEETING WILL NOT,
IN AND OF ITSELF, CONSTITUTE REVOCATION OF A PROXY.
Only shareholders of the Company of record at the close of business on
February 26, 1999 (the "Record Date"), are entitled to receive notice of and to
vote at the Annual Meeting and any adjournment(s) thereof. At the close of
business on the Record Date, 9,299,751 common shares were outstanding and
entitled to vote. Each common share entitles the holder thereof to one vote on
each matter to be submitted to the shareholders at the Annual Meeting. A quorum
for the Annual Meeting is a majority of the outstanding common shares.
Common shares of the Company represented by signed proxy cards that are
returned to the Company will be counted toward the quorum in all matters even
though they are marked as "withhold authority" regarding the election of
directors or they are not marked at all. Broker-dealers, who hold their
customer's common shares in street name, may, under the applicable rules of the
exchange or other self-regulatory organizations of which the broker-dealers are
members, sign and submit proxy cards for such common shares and may vote such
common shares on routine matters, which, under such rules, typically include the
election of directors, but broker-dealers may not vote such common shares on
other matters, which typically include approval of significant corporate
transactions such as mergers and acquisitions, amendments to the articles of
incorporation or the code of regulations of a corporation and the approval of
stock compensation plans, without specific instructions from the customer who
owns such common shares. Proxy cards signed and submitted by broker-dealers
which have not been voted on certain matters as described in the preceding
sentence are referred to as "broker non-votes".
If written notice is given by any shareholder to the President or the
Secretary of the Company before 2:00 p.m. on April 17, 1999, that the
shareholder desires that the voting for the election of directors be cumulative,
and if an announcement of the giving of such notice is made upon the convening
of the Annual Meeting by the Chairman or Secretary or by or on behalf of the
shareholder giving such notice, each shareholder will have the right to cumulate
such voting power as he possesses in voting for directors. If
<PAGE> 4
cumulative voting is invoked, each shareholder will have votes equal to the
number of directors to be elected, multiplied by the number of common shares
owned by him, and will be entitled to distribute his votes among the candidates
as he sees fit.
The Company will bear the costs of preparing, printing and mailing this
Proxy Statement, the accompanying proxy and any other related materials and all
other costs incurred in connection with the solicitation of proxies on behalf of
the Board of Directors. Proxies will be solicited by mail and may be further
solicited, for no additional compensation, by officers, directors or employees
of the Company and its subsidiaries by further mailing, by telephone or by
personal contact. The Company will also pay the standard charges and expenses of
brokerage houses, voting trustees, banks, associations and other custodians,
nominees and fiduciaries, who are record holders of common shares not
beneficially owned by them, for forwarding such materials to and obtaining
proxies from the beneficial owners of common shares entitled to vote at the
Annual Meeting.
The Annual Report to the Shareholders of the Company for the fiscal
year ended December 31, 1998 (the "1998 fiscal year") is enclosed herewith.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table furnishes certain information, as of the Record
Date (unless otherwise indicated), as to the common shares beneficially owned by
each of the current directors of the Company, by each of the nominees for
election as a director of the Company, by each of the executive officers named
in the Summary Compensation Table, and by all directors and executive officers
of the Company as a group and, to the Company's knowledge, by the only persons
beneficially owning more than 5% of the outstanding common shares:
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership (1)
------------------------
Common Shares
Which Can Be
Acquired Upon
Exercise of
Name of Beneficial Options Percent
Owner or Number of Common Shares Exercisable of Class
of Persons in Group Presently Held Within 60 Days Total (2)
- ------------------- -------------- -------------- ----- --------
<S> <C> <C> <C> <C>
The Park National Bank, 1,080,609(3) 0 1,080,609 11.6%
Trust Department
50 North Third Street
Newark, OH 43055
John L. Warner 811,990(4) 0 811,990 8.7%
868 Shoreham Road
Newark, OH 43055
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
Common Shares
Which Can Be
Acquired Upon
Exercise of
Name of Beneficial Options Percent
Owner or Number Common Shares Exercisable of Class
of Persons in Group Presently Held Within 60 Days Total (2)
- ------------------- -------------- -------------- ----- --------
<S> <C> <C> <C> <C>
Maureen Buchwald 1,270 1,240 2,510 (5)
James J. Cullers 7,161(6) 1,240 8,401 (5)
C. Daniel DeLawder(7) 75,908(8) 4,706 80,614 (5)
D. C. Fanello 850(9) 0 850 (5)
R. William Geyer 4,500(10) 0 4,500 (5)
Philip H. Jordan, Jr., PhD 3,192(11) 0 3,192 (5)
Tami L. Longaberger 1,416 0 1,416 (5)
Howard E. LeFevre 45,554(12)(13) 0 45,554 (5)
Phillip T. Leitnaker 2,214(14) 0 2,214 (5)
William T. McConnell(7) 185,190(12)(15) 0 185,190 2.0%
James A. McElroy 32,494(16) 1,240 33,734 (5)
John J. O'Neill 135,090(12) 0 135,090 1.5%
William A. Phillips 10,221(17) 0 10,221 (5)
J. Gilbert Reese 411,570(12)(18) 0 411,570 4.4%
Rick R. Taylor 1,203 0 1,203 (5)
David C. Bowers(7) 26,763(19) 4,000 30,763 (5)
All current executive
officers and directors
as a group (17 persons) 1,756,586(20) 12,426 1,769,012 19.0%
</TABLE>
- ------------------------
(1) Unless otherwise noted, the beneficial owner has sole voting and
investment power with respect to all of the common shares reflected in the
table. All fractional common shares have been rounded to the nearest whole
common share.
(2) The percent of class is based on 9,299,751 common shares
outstanding and entitled to vote on the Record Date and the number of common
shares, if any, as to which the named person has the right to acquire beneficial
ownership upon the exercise of options exercisable within 60 days of the Record
Date.
(3) Based on information contained in filings with the Securities and
Exchange Commission (the latest of which is dated February 4, 1999), as of
December 31, 1998, the Trust Department of The Park National Bank, a
wholly-owned subsidiary of the Company ("PNB"), as the fiduciary of various
agency, trust and estate accounts, beneficially owned 1,080,609 common shares.
PNB had sole voting and investment power with respect to 1,071,609 of these
common shares and shared voting and investment power with respect to 9,000 of
these common shares. The officers and directors of PNB and the Company disclaim
beneficial ownership of the common shares beneficially owned by the Trust
Department of PNB. The number shown does not include common shares held by PNB's
Trust Department in various trust accounts, as to which PNB's Trust Department
has no voting or investment power.
3
<PAGE> 6
(4) The number shown includes 341,320 common shares held by Mr. Warner
in a family trust for which Mr. Warner serves as trustee and exercises sole
voting and investment power; 9,000 common shares held in a family trust for
which he serves as co-trustee with PNB's Trust Department and exercises shared
voting and investment power; and 5,439 common shares held by the wife of Mr.
Warner as to which she exercises sole voting and investment power.
(5) Represents ownership of less than 1% of the outstanding common
shares.
(6) The number shown includes 550 common shares held by Mr. Cullers'
wife; 589 common shares held in a trust with respect to which Mr. Cullers has
sole voting and investment power; 4,196 common shares held in a Keough plan
maintained by Mr. Cullers' law firm with respect to which Mr. Cullers has voting
and investment power; 149 common shares held by Mr. Cullers as custodian for his
grandchildren; and 60 common shares held by Mr. Cullers' wife as custodian for
their grandchildren. The number shown does not include 19,058 common shares held
by Mr. Cullers as trustee of a trust as to which the grantor has retained sole
voting and investment power.
(7) Executive officer of the Company named in the Summary Compensation
Table.
(8) The number shown includes 33,300 common shares held by the wife of
Mr. DeLawder as to which she exercises sole voting and investment power; 784
common shares held by Mr. DeLawder's daughter and 783 common shares held by Mr.
DeLawder's son as to which Mr. DeLawder exercises shared voting and investment
power; and 5,866 common shares held for the account of Mr. DeLawder in the Park
National Corporation Employees Voluntary Salary Deferral Plan and Trust (the
"Park 401(k) Plan").
(9) The number shown includes 850 common shares held in a trust in
which Mr. Fanello has sole voting and investment power; but does not include 400
common shares held in a grantor trust established for the benefit of the wife of
Mr. Fanello, with respect to which common shares Mr. Fanello has no voting or
investment power.
(10) The number shown includes 584 common shares held by the wife of
Mr. Geyer as to which she exercises sole voting and investment power; and 2,700
common shares held in Mr. Geyer's account in a Keough plan.
(11) The number shown includes 3,192 common shares held in a trust with
respect to which Mr. Jordan has sole voting and investment power.
(12) The number shown does not include 25,520 common shares owned by
the Newark Campus Development Fund, an Ohio not for profit corporation, of which
the following directors of the Company serve as officers and/or trustees:
Messrs. LeFevre, McConnell, O'Neill and Reese. None of these individuals has the
power to vote these common shares without the consent of a majority of the Board
of Trustees and, therefore, each disclaims beneficial ownership of such common
shares.
(13) The number shown includes 45,554 common shares held in an inter
vivos trust created by Mr. LeFevre for which PNB's Trust Department serves as
trustee and Mr. LeFevre exercises sole voting and investment power.
(14) The number shown includes 912 common shares held jointly by Mr.
Leitnaker and his wife as to which they share voting and investment power; and
500 common shares held by the wife of Mr. Leitnaker as to which she exercises
sole voting or investment power.
4
<PAGE> 7
(15) The number shown includes 67,600 common shares held by the wife of
Mr. McConnell as to which she exercises sole voting and investment power; 15,400
common shares held in an inter vivos irrevocable trust established by Mr.
McConnell with respect to which PNB's Trust Department serves as trustee; and
3,304 common shares held for the account of Mr. McConnell in the Park 401(k)
Plan.
(16) The number shown includes 19,058 common shares held in a trust
with respect to which Mr. McElroy exercises sole voting and investment power;
11,457 common shares owned by AMG Industries, Inc., a corporation controlled by
Mr. McElroy; and 605 common shares held by Mr. McElroy's wife as to which she
exercises sole voting and investment power.
(17) The number shown includes 737 common shares held for the account
of Mr. Phillips in the Park 401(k) Plan and 3,500 common shares held by Mr.
Phillips' wife as to which she exercises sole voting and investment power.
(18) The number shown includes 51,120 common shares held by the wife of
Mr. Reese with respect to which she exercises sole voting and investment power.
(19) The number shown includes 3,796 common shares held for the account
of Mr. Bowers in the Park 401(k) Plan and 2,782 common shares held by Mr.
Bowers' wife as to which she exercises sole voting and investment power.
(20) See Notes (4), (6) and (8) through (19) above.
ELECTION OF DIRECTORS
In accordance with Section 2.02 of the Regulations of the Company, the
Board of Directors has set the number of directors at sixteen and at five the
number of directors to be elected at the Annual Meeting to hold office for terms
of three years each and until their respective successors are elected and
qualified. It is the intention of the persons named in the accompanying proxy to
vote the common shares represented by the proxies received pursuant to this
solicitation for the nominees named below who have been designated by the Board
of Directors, unless otherwise instructed on the proxy.
The following table gives certain information concerning each nominee
for election as a director of the Company. Unless otherwise indicated, each
person has had his or her principal occupation for more than five years.
5
<PAGE> 8
<TABLE>
<CAPTION>
Position(s) Held
with the Company and Director of the
its Principal Subsidiaries Company Nominee For
Nominee Age and Principal Occupation(s) Continuously Since Term Expiring In
- ------- --- --------------------------- ------------------ ----------------
<S> <C> <C> <C> <C>
C. Daniel DeLawder 49 Chief Executive Officer since 1994 2002
January 1999, and President since
April 1994, of the Company; Chief
Executive Officer since January
1999, President since April 1993,
Executive Vice President from
March 1992 to April 1993, and a
Director of PNB; Chairman of
Advisory Board since November
1989, and President from 1985 to
March 1992, of the Fairfield
National Division of PNB; Director
of Richland Trust Company, a
wholly-owned subsidiary of the
Company ("Richland")
Philip H. Jordan, 67 Retired. From 1975 to 1995, 1997 2002
Jr., PhD President of Kenyon College;
Director of The First-Knox
National Bank of Mount Vernon, a
wholly-owned subsidiary of the
Company ("FKNB")
Tami L. Longaberger 37 Chief Executive Officer since 1996 2002
1998, President since 1994, and
President, Sales and Marketing,
from 1991 to 1993, of The
Longaberger Company, Dresden, Ohio
(specialty goods manufacturer);
Director of Century National Bank,
a wholly-owned subsidiary of the
Company ("Century")
Howard E. LeFevre 91 Chairman of the Board of 1987 2002
Freight Service, Inc., Newark,
Ohio (leasing and warehousing);
Director of PNB
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
Position(s) Held
with the Company and Director of the
its Principal Subsidiaries Company Nominee For
Nominee Age and Principal Occupation(s) Continuously Since Term Expiring In
- ------- --- --------------------------- ------------------ ----------------
<S> <C> <C> <C> <C>
John J. O'Neill 78 President/Owner of Southgate 1987 2002
Corporation, Newark, Ohio (real
estate development and
management); Director of PNB
</TABLE>
The following table gives certain information concerning the current
directors of the Company whose terms will continue after the Annual Meeting.
Unless otherwise indicated, each person has had his or her principal occupation
for more than five years.
<TABLE>
<CAPTION>
Position(s) Held
with the Company and Director of the
its Principal Subsidiaries Company
Name Age and Principal Occupation(s) Continuously Since Term Expires In
- ------- --- --------------------------- ------------------ ---------------
<S> <C> <C> <C> <C>
James J. Cullers 68 Senior Partner, Zelkowitz, 1997 2000
Barry & Cullers, Attorneys at Law,
Mount Vernon, Ohio; Director of
FKNB
R. William Geyer 67 Partner, Kincaid, Taylor and 1992 2000
Geyer, Attorneys at Law,
Zanesville, Ohio; Director of
Century
William T. McConnell 65 Chairman of the Board since 1986 2000
April 1994, Chief Executive
Officer from July 1986 to January
1999, and President from July 1986
to April 1994, of the Company;
Chairman of the Board since April
1993, Chief Executive Officer from
April 1983 to January 1999,
President from March 1979 to April
1993, and a Director of PNB;
Director of Century; Director of
FKNB
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
Position(s) Held
with the Company and Director of the
its Principal Subsidiaries Company
Name Age and Principal Occupation(s) Continuously Since Term Expires In
- ------- --- --------------------------- ------------------ ---------------
<S> <C> <C> <C> <C>
James A. McElroy 66 Chairman of the Board, AMG 1997 2000
Industries, Inc. (manufacturer of
automobile parts), Mount Vernon,
Ohio; Director of FKNB
William A. Phillips 66 Chairman of the Board since 1990 2000
1986, Chief Executive Officer from
1986 to April 1998, and a Director
of Century
John L. Warner 71 Agent, W. A. Wallace Co., Newark, 1987 2000
Ohio (insurance); Director of PNB
Maureen Buchwald 67 Vice President of Ariel Corporation 1997 2001
(manufacturer of reciprocating
compressors) until her retirement
in 1997; Director of FKNB
D. C. Fanello 77 Vice Chairman and Founder of 1990 2001
Shiloh Corporation, Mansfield,
Ohio (stamping/blanking); Director
of Richland
Phillip T. Leitnaker 71 President and Owner of Phillip 1990 2001
Leitnaker Construction, Inc.,
Baltimore, Ohio (construction
company); Owner of Leitnaker
Farms, Baltimore, Ohio (farming);
President and majority owner of D
& B Paving Company, Baltimore,
Ohio (paving company); Member of
Advisory Board of Fairfield
National Division of PNB
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
Position(s) Held
with the Company and Director of the
its Principal Subsidiaries Company
Name Age and Principal Occupation(s) Continuously Since Term Expires In
- ------- --- --------------------------- ------------------ ---------------
<S> <C> <C> <C> <C>
J. Gilbert Reese 73 Senior Partner, Reese, Pyle, 1987 2001
Drake & Meyer, P.L.L., Attorneys
at Law, Newark, Ohio; Chairman of
the Board of First Federal Savings
& Loan Association of Newark,
Newark, Ohio; Director of PNB
Rick R. Taylor 51 President of Jay Plastics Corp., 1995 2001
Mansfield, Ohio (plastic parts
manufacturer); Director of
Richland
</TABLE>
NOMINATION PROCEDURE
The Regulations of the Company provide that shareholder nominations for
election to the Board of Directors must be made in writing and must be delivered
or mailed to the President not less than 14 days nor more than 50 days prior to
any meeting of shareholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given to the
shareholders, such nomination must be mailed or delivered to the President not
later than the close of business on the seventh day following the day on which
the notice of the meeting was mailed. Such notification must contain the
following information to the extent known to the notifying shareholder: (a) the
name and address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the total number of common shares that will be voted for
each proposed nominee; (d) the name and residence address of the notifying
shareholder; and (e) the number of common shares beneficially owned by the
notifying shareholder. Nominations which the chairman of the meeting determines
are not made in accordance with the Regulations of the Company will be
disregarded.
RECOMMENDATION AND VOTE
Under Ohio law and the Regulations of the Company, the five nominees
for election as directors in the class whose terms expire in 2002 receiving the
greatest number of votes will be elected.
Common shares of the Company represented by the accompanying proxy card
will be voted FOR the election of the nominees named above unless authority to
vote for one or more nominees is withheld. Shareholders of the Company may
withhold authority to vote for the entire slate as nominated or, by writing the
name of one or more nominees in the space provided in the proxy card, withhold
the authority to vote for such nominee or nominees. Common shares as to which
the authority to vote is withheld and broker non-votes will be counted for
quorum purposes but will not be counted toward the election of directors, or
toward the election of the individual nominees specified on the form of proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINEES LISTED ABOVE.
9
<PAGE> 12
CERTAIN MATTERS PERTAINING TO THE BOARD OF DIRECTORS
Committees and Meetings of the Board of Directors
The Board of Directors of the Company held a total of four meetings
during the Company's 1998 fiscal year. Each incumbent director attended 75% or
more of the aggregate of the total number of meetings held by the Board of
Directors during the period he or she served as a director and the total number
of meetings held by all committees of the Board of Directors on which he or she
served during the period he or she served.
The Board of Directors of the Company has an Audit Committee composed
of Howard E. LeFevre, R. William Geyer and John L. Warner. The function of the
Audit Committee is to review the adequacy of the Company's system of internal
controls, to investigate the scope and adequacy of the work of the Company's
independent auditors, and to recommend to the Board of Directors a firm of
accountants to serve as the Company's independent auditors. The Audit Committee
met four times during the Company's 1998 fiscal year.
The Board of Directors of the Company has an Executive Committee
composed of C. Daniel DeLawder, Howard E. LeFevre, William T. McConnell, John J.
O'Neill and J. Gilbert Reese. The Executive Committee performs the functions of
a compensation committee. The Executive Committee reviews and recommends for
approval by the Board of Directors compensation and benefit plans for officers
of the Company, supervises the operation of the Company's compensation plans and
selects those eligible employees who may participate in each plan (where
selection is required). The Executive Committee also reviews large loans
proposed to be made by PNB, Richland, Century and FKNB. The Executive Committee
met eight times during the Company's 1998 fiscal year.
The Board of Directors does not have a standing nominating committee or
committee performing similar functions.
COMPENSATION OF DIRECTORS
Each director of the Company who is not an employee of the Company or
one of its subsidiaries receives as fees an annual retainer (which was paid in
the form of 100 common shares for the 1998 fiscal year), $750 for each meeting
of the Company's Board of Directors attended and $200 for each meeting of a
committee of the Board of Directors attended. If the date of a meeting of the
Company's Board of Directors is changed from that provided for by resolution of
the Board of Directors and a non-employee director is unable to attend such
rescheduled meeting, he or she receives $750 as though he or she had attended
the meeting. Messrs. DeLawder, McConnell and Phillips receive no compensation
for serving as members of the Company's Board of Directors since they are
employees of the Company and/or one of the subsidiaries of the Company.
The Company and its subsidiaries maintain a life insurance policy with
a death benefit of $100,000 on behalf of each director of the Company who is not
an executive officer of the Company. The director has the right to designate the
beneficiary to whom his or her share of the proceeds under the policy is to be
paid. A director becomes fully vested with respect to his or her policy after
three years of service. The Company and its subsidiaries maintain on behalf of
each director who is an executive officer of the Company, in his capacity as an
executive officer, a life insurance policy which will have a death benefit
payable thereunder in an amount equal to approximately two times the named
executive officer's highest annual total compensation during his employment with
the Company and its subsidiaries. The executive officer has the right to
designate the beneficiary to whom his share of the proceeds under the policy is
to be
10
<PAGE> 13
paid. An executive officer's policy remains in effect following his retirement
as long as certain conditions are satisfied.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Committee of the Company's Board of Directors performs
the functions of a compensation committee. William T. McConnell, who serves as
Chairman of the Board of the Company and of PNB and also served as Chief
Executive Officer during the 1998 fiscal year, serves as a member of the
Executive Committee. Mr. McConnell sits on the Board of Directors of Freight
Service, Inc. but not on its compensation committee. Howard E. LeFevre, Chairman
of the Board and a director of Freight Service, Inc., serves as a member of the
Executive Committee of the Company's Board of Directors. J. Gilbert Reese, who
is senior partner in the law firm of Reese, Pyle, Drake & Meyer, P.L.L. which
rendered legal services to certain of the Company's subsidiaries during the
Company's 1998 fiscal year and continues to render legal services to certain of
the Company's subsidiaries during the Company's 1999 fiscal year, is also a
member of the Executive Committee. C. Daniel DeLawder, who is Chief Executive
Officer and President of the Company and of PNB, also serves as a member of the
Executive Committee.
REPORT OF THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, this Report and
the performance graph set forth on page 20 shall not be incorporated by
reference into any such filings.
OVERALL PHILOSOPHY AND ADMINISTRATION
The executive officers of the Company receive no compensation from the
Company. Instead, they are paid by PNB for services rendered in their capacities
as executive officers of the Company and PNB. The Board of Directors of the
Company has a five-member Executive Committee, composed of three outside
directors and Messrs. McConnell and DeLawder. One function of the Executive
Committee is to review and recommend officer compensation levels and Company
benefit plans and to forecast future personnel needs of the Company. During
1998, no decisions of the Executive Committee were modified or rejected in any
material way by the Boards of Directors of PNB or of the Company. Messrs.
McConnell and DeLawder do not vote on any matters with respect to their own
compensation.
The Company's compensation philosophy reflects a commitment to pay for
performance. The compensation program for all officers, including executive
officers, consists of three primary elements -- a base salary component, an
incentive bonus component and a stock option component. The combination of base
salary and incentive bonus is designed to relate total cash compensation levels
to overall performance by the Company and its subsidiaries and individual
performance of the executive officers. The Company's cash compensation
philosophy reflects a significant part of total executive cash compensation to
be "at risk" in the form of an incentive bonus based on the performance of the
Company and its subsidiaries, ranging from 44.24% to 57.64% for 1998, 55.82% to
69.38% for 1997 and 63.77% to 74.68% for 1996, for the four executive officers
of the Company named in the Summary Compensation Table.
Since the late 1980s, the percentage of total executive cash
compensation "at risk" in the form of incentive bonuses has been higher for the
officers of PNB than for the officers of the Company's other
11
<PAGE> 14
subsidiaries. Salaries of PNB officers, including those of Messrs. McConnell,
DeLawder and Bowers, have remained without substantial adjustment for a number
of years, except for limited increases reflecting cost of living raises and
special increases or adjustments reflecting increased responsibilities and
promotions, with primary reliance being placed on the Incentive Bonus Plan for
compensation adjustments. Over the years, there has been an attempt to increase
the incentive-based portion of the cash compensation paid to the officers of the
other subsidiaries of the Company and reduce the adjustment made to the salary
component to bring those percentages more in line with those of the PNB
officers. In the fall of 1997, the determination was made to equalize the
treatment among all of the officers in respect of the cash compensation received
in 1998 (including the incentive bonuses paid in 1998 with respect to the 1997
fiscal year) and future years. This resulted in the amount of incentive bonus
paid in 1998 to each of Messrs. McConnell, DeLawder and Bowers with respect to
the 1997 fiscal year being reduced in comparison to the amount paid in past
years with respect to the Company's performance vis-a-vis its peer bank holding
companies, and resulted in a significant increase in the amount of salary paid
to each of these executive officers in 1998.
The Company believes that it is also important to provide compensation
which serves to incentivize long-term corporate financial performance. In that
connection, the Board of Directors of the Company adopted, and the shareholders
of the Company approved, the Park National Corporation 1995 Incentive Stock
Option Plan (the "1995 Plan"). Under the 1995 Plan, officers and other key
employees of the Company and its subsidiaries are selected by the Executive
Committee to receive incentive stock options, each of which has an option
exercise price equal to 100% of the fair market value of the Company's common
shares on the date of grant. If there is no appreciation in the market value of
the Company's common shares, the incentive stock options will be valueless.
Thus, in contrast to base salary and incentive bonus, option grants are tied
directly to the price performance of the Company's common shares. At the time of
exercise of an incentive stock option (other than an exercise following death,
disability or normal retirement), the option holder must enter into an agreement
with the Company providing that the common shares acquired upon such exercise
may not be sold or otherwise disposed of to any person other than the Company
for a period of five years after the date of exercise. This provides a further
shared interest by the option holders and the shareholders of the Company in the
price performance of the Company's common shares.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), prohibits the deduction by a publicly-held corporation, such as the
Company, of compensation paid to a "covered employee" in excess of $1,000,000
per year, unless certain requirements (relating primarily to "performance-based
compensation") are met. Generally, the Company's covered employees are those
executive officers named in the Summary Compensation Table. None of the
Company's executive officers received more than $1,000,000 of compensation from
the Company and its subsidiaries in 1998, and the Executive Committee does not
anticipate that any of the Company's executive officers will receive more than
$1,000,000 in compensation from the Company and its subsidiaries in 1999.
Accordingly, the Executive Committee does not believe that Section 162(m) will
limit the deductibility of the executive compensation that the Company and its
subsidiaries will pay in 1999.
BASE SALARY
Base salaries for the 1998 fiscal year reported in this Proxy Statement
were determined by the Executive Committee in December, 1997. The increase in
salaries reflected the determination to equalize the treatment among all of the
officers of PNB and the Company's other subsidiaries in respect of cash
compensation received. The actual salary received by each executive officer was
determined by the Executive Committee based upon a subjective evaluation of the
individual responsibilities and contributions of the executive officer and the
Company's strong 1997 financial results. While these factors have a general
influence on the determination of the amount of base salary to be paid to each
executive officer, no
12
<PAGE> 15
specific weighting is given to any of these factors. Mr. McConnell's salary for
1998 was determined by the Executive Committee using these criteria and
represented 44.81% of his total annual cash compensation.
INCENTIVE BONUS
The Executive Committee administers the Company's Incentive Bonus Plan
which enables the officers of PNB, Richland, Century and FKNB to share in any
above-average return on equity (net income divided by average equity) which the
Company may generate during a fiscal year. In 1998, all officers of PNB,
Richland, Century and FKNB, including Messrs. McConnell, DeLawder and Bowers,
were eligible to participate in the Incentive Bonus Plan.
Above-average return on equity is defined as the amount by which the
net income to average equity ratio of the Company exceeds the median net income
to average equity ratio of all U.S. bank holding companies of similar asset size
($1 billion to $3 billion). A formula determines the amount, if any, by which
the Company's return on equity ratio exceeds the median return on equity ratio
of these peer bank holding companies. Twenty percent (20%) of that amount on a
before-tax equivalent basis is available for incentive compensation. If the
Company's return on equity ratio is equal to or less than that of the peer
group, no incentive compensation will be available with respect to that year.
The Chairman of the Board and the President of the Company each receive a fixed
percentage of the amount available for incentive compensation as determined by
the Company's Board of Directors. After deducting those amounts, the remaining
amount is distributed to the officers of PNB, Richland, Century and FKNB on the
basis of their respective contributions to the Company's meeting its short-term
and long-term financial goals during the year in question, which contributions
are subjectively determined by the Chairman of the Board and the President of
the Company and approved by the Executive Committee of the Company's Board of
Directors. Recommendations of the Presidents of the Company's subsidiaries are
considered when determining incentive bonus amounts for officers of those
subsidiaries. The time period over which the determination is made of the
amounts, if any, of incentive compensation to be paid is the fiscal year of the
Company. The determination of the amounts of incentive bonus to be paid and the
payment of such amounts are made during the first two quarters of the next
fiscal year. The Company's return on equity ratio for the 1998 fiscal year
exceeded the median return on equity ratio of its peer bank holding companies.
As of the date of this Proxy Statement, Mr. McConnell, as Chairman of the Board
and Chief Executive Officer of the Company in the 1998 fiscal year, has been
paid $401,530 under the Incentive Bonus Plan with respect to the 1998 fiscal
year as shown in the Summary Compensation Table, reflecting the actions taken by
the Company in the fall of 1998 to equalize the treatment of the salary and
incentive bonus components of cash compensation. Any additional incentive bonus
paid to the named executive officers with respect to the 1998 fiscal year will
be disclosed as earned in 1998 in next year's proxy statement.
STOCK OPTIONS
In proposing the 1995 Plan to the Board of Directors for approval in
1995, Mr. McConnell voluntarily elected not to participate in the 1995 Plan. Mr.
McConnell holds a substantial number of the Company's common shares and believes
the 1995 Plan would be more effective in achieving its goal of long-term
ownership among the officers and other key employees of the Company and its
subsidiaries if the grants made under the 1995 Plan were directed toward
high-performing, younger officers who have not yet acquired a significant
ownership interest in the Company.
In 1998, the Executive Committee approved the grant of incentive stock
options covering an aggregate of 87,352 common shares to 188 key employees of
the Company and its subsidiaries, including the grants made to Messrs. DeLawder
and Bowers described in the table under "GRANTS OF OPTIONS." Upon the exercise
of an option (the "Original Option") in full, the Executive Committee
automatically grants a
13
<PAGE> 16
new option (the "Reload Option") covering the same number of common shares as
were subject to the Original Option so exercised; provided, however that an
optionee (a) may not be granted Reload Options in any one year of the term of
the Original Option as established on the date of grant of such Original Option
covering, with respect to all Reload Options granted in such one year, more than
the number of common shares which were subject to the Original Option on the
date of grant of such Original Option; and (b) will be granted a Reload Option
covering only that number of common shares which will allow the Reload Option
and any other outstanding options granted to the optionee under the 1995 Plan to
qualify as incentive stock options under Section 422 of the Code. Each incentive
stock option (whether an Original Option or a Reload Option) was granted with an
exercise price equal to the fair market value of the common shares on the date
of grant and was fully exercisable as of the grant date. The Executive Committee
granted the Original Options based upon its subjective determination of the
relative current and future contributions each prospective optionee has made or
may make to the long-term welfare of the Company and its subsidiaries.
OTHER COMPENSATION
The Company's officers as well as officers and employees of PNB,
Richland, Century and FKNB are encouraged individually and collectively to
maintain a significant long-term stock ownership position in the Company. This
is fostered not only through the grant of incentive stock options under the 1995
Plan, but also by the Park 401(k) Plan which affords a participant the ability
to receive Company matching contributions representing a greater percentage of
such participant's contributions if such contributions are invested in the
Company's common shares. Since Mr. McConnell already holds a substantial number
of common shares of the Company, he elected not to accept the increased match
when he chose to invest his funds in the Park 401(k) Plan in common shares of
the Company.
The Executive Committee adopted a Supplemental Executive Retirement
Plan (the "SERP") in December 1996. The SERP currently benefits twenty-eight
officers of the Company and its subsidiaries. Effective October 1, 1994, the
Company changed the benefits formula under the Park National Corporation Defined
Benefit Pension Plan (the "Pension Plan") to comply with the applicable limits
under the Code. This change has resulted in a reduced projected pension benefit
to twenty-three officers of the Company and its subsidiaries. Additionally, the
IRS reduced the amount of compensation available in calculating pension benefits
to $150,000 annually (which was increased to $160,000 annually in 1999). This
change has resulted in a reduced projected benefit for four officers of the
Company and its subsidiaries. One officer was impacted by both changes. The
SERP, a non-qualified benefit plan, is designed to restore benefits lost due to
these two changes. The Company purchased life insurance contracts to fund the
SERP. The SERP is designed to provide a monthly retirement benefit of $4,433,
$10,662 and $4,686 for Messrs. McConnell, DeLawder and Bowers, respectively. The
SERP also provides a life insurance benefit for officers of the Company and its
subsidiaries participating in the SERP who die before age 86. These additional
benefits will only be achieved if the investment from the insurance contracts on
funds invested in the contracts exceed a base level return to the Company during
the life of each officer.
SUBMITTED BY THE EXECUTIVE COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
C. Daniel DeLawder, Howard E. LeFevre,
William T. McConnell, John J. O'Neill, and J. Gilbert Reese
14
<PAGE> 17
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the last three fiscal years, the cash
compensation paid by the Company and its subsidiaries, as well as certain other
compensation paid or accrued for those years, to each of the Company's executive
officers whose total annual salary and bonus for the 1998 fiscal year exceeded
$100,000.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
------------
Annual Compensation Awards
------------------- ------
Securities Underlying
Name and (Options/ All Other
Principal Position Year Salary ($) Bonus($)(1) SARs(#)(2) Compensation ($)
- ------------------ ---- ---------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
William T. McConnell, Chairman of the 1998 $325,988 $401,530 0 $8,276(4)
Board and Chief Executive Officer of the 1997 $166,400 $373,895 0 $7,657
Company and of PNB (3) 1996 $166,400 $486,762 0 $4,175
C. Daniel DeLawder, 1998 $217,000 $295,316 1,000 $6,983(4)
President of the Company and of PNB(5) 1997 $110,000 $249,263 1,650 $6,366
1996 $110,006 $324,541 2,056 $5,223
David C. Bowers, Secretary of the 1998 $164,000 $130,139 1,000 $7,242(4)
Company and Senior Vice President of 1997 $ 97,000 $122,554 1,625 $6,549
PNB (6) 1996 $ 97,006 $170,740 1,750 $5,524
</TABLE>
- --------------------
(1) All bonuses reported were earned pursuant to the Company's
Incentive Bonus Plan. The amount of the bonus reported for each executive
officer for 1998 reflects the amount of bonus determined and paid with respect
to the 1998 fiscal year as of the date of this Proxy Statement. Any additional
bonus determined to have been earned by the named executive officers with
respect to the 1998 fiscal year will be disclosed as earned in 1998 in next
year's proxy statement.
(2) These numbers represent options for common shares granted pursuant
to the 1995 Plan. See table under "GRANTS OF OPTIONS" for more detailed
information on such options.
(3) Mr. McConnell stepped down from his position as Chief Executive
Officer of the Company and of PNB effective January 1, 1999.
(4) "All Other Compensation" for 1998 for Messrs. McConnell, DeLawder
and Bowers includes (a) the amounts of $3,758, $778 and $1,186, respectively,
representing the amount of the premium deemed to have been paid on behalf of
each executive officer under a "split-dollar" life insurance policy which has a
death benefit payable thereunder in an amount equal to approximately two times
the named executive officer's highest annual total compensation during his
employment with PNB; (b) the amounts of $1,000, $5,000 and $5,000, respectively,
representing contributions to the Park 401(k) Plan on their behalf to match 1998
pre-tax elective deferral contributions (included under "Salary") made by each
executive officer to the Park 401(k) Plan; and (c) the amounts of $3,518, $1,205
and $1,056, respectively, representing
15
<PAGE> 18
the amount of the premium deemed to have been paid on behalf of each executive
officer under the life insurance policy which funds that officer's account under
the SERP.
(5) Mr. DeLawder was named Chief Executive Officer of the Company and
of PNB effective January 1, 1999.
(6) Mr. Bowers was named Executive Vice President of PNB effective
January 1, 1999.
GRANTS OF OPTIONS
The following table sets forth information concerning individual grants
of options made during the 1998 fiscal year to each of the executive officers
named in the Summary Compensation Table. The Company has never granted stock
appreciation rights.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
% of Potential Realizable
Number of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation
Options Employees in Price Expiration for Option Term(1)
Name Granted(#) Fiscal Year ($/Share) Date 5%($) 10%($)
---- ---------- ----------- --------- ---- -----------------
<S> <C> <C> <C> <C> <C>
William T. McConnell 0 -- -- -- -- --
C. Daniel DeLawder 1,000(2)(3) 1.1% $93.00 5/12/03 $25,695 $56,777
David C. Bowers 1,000(2)(3) 1.1% $93.00 5/12/03 $25,695 $56,777
</TABLE>
- -----------------
(1) The amounts reflected in this table represent certain assumed rates
of appreciation only and have been rounded to the nearest whole dollar. Actual
realized values, if any, on option exercises will be dependent on the actual
appreciation of the common shares of the Company over the term of the options.
There can be no assurances that the Potential Realizable Values reflected in
this table will be achieved.
(2) Each of these options was granted under the 1995 Plan as an
Original Option and was fully exercisable as of the grant date (May 12, 1998).
(3) Upon the exercise of an option (the "Original Option"), the
Executive Committee which administers the 1995 Plan will automatically grant a
new option (the "Reload Option") covering the same number of common shares as
were the subject of the exercise; however, the named executive officer (a) may
not be granted Reload Options in any one year of the term of the Original Option
as established on the date of grant of such Original Option covering, with
respect to all Reload Options granted in such one year, more than the number of
common shares which were subject to the Original Option on the date of grant of
such Original Option; and (b) will be granted a Reload Option covering only that
number of common shares which will allow the Reload Option and any other
outstanding options granted to the executive officer under the 1995 Plan to
qualify as incentive stock options under Section 422 of the Code. If an option
is exercised on or after the named executive officer's termination of
employment, no Reload Options will be granted in connection with such exercise.
In the event of termination of employment of a named executive officer by reason
of normal retirement, his options may thereafter be exercised in full for a
period of three months,
16
<PAGE> 19
subject to the stated term of the options. In the event of termination of
employment of a named executive officer by reason of death or long-term
disability, his options may thereafter be exercised in full for a period of one
year, subject to the stated term of the options. If a named executive officer's
employment is terminated for any other reason, his options are forfeited.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to unexercised
options held as of the end of the 1998 fiscal year by each of the executive
officers named in the Summary Compensation Table. None of such executive
officers exercised options during the 1998 fiscal year.
<TABLE>
FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at FY-End (#) Options at FY-End($)(1)
--------------------- -----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William T. McConnell 0 0 -- --
C. Daniel DeLawder 4,706 0 $193,758 --
David C. Bowers 4,000 0 $160,306 --
</TABLE>
- ----------------------
(1) "Value of Unexercised In-the-Money Options at FY-End" is based upon
the fair market value of the Company's common shares on December 31, 1998
($103.00) less the exercise price of in-the-money options at the end of the 1998
fiscal year; and has been rounded to the nearest whole dollar.
PENSION PLAN; SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The following table shows the estimated pension benefits payable to a
covered participant assuming retirement at a "normal retirement age" of 65 on
October 1, 1998 under the Park Pension Plan based on compensation that is
covered under the Park Pension Plan, years of service with the Company and its
subsidiaries and payment in the form of a 10-year certain and life annuity:
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Estimated Annual Pension Benefits (rounded to nearest $100)(1)
--------------------------------------------------------------
Based on Years of Credited Service Indicated
--------------------------------------------
Annualized Years of Credited Service
Average Monthly -------------------------------------------------------------
Compensation 10 15 20 25 30 35 or more
- --------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $11,600 $17,400 $23,200 $29,000 $34,300 $40,000
125,000 14,600 22,000 29,300 36,600 43,900 51,300
150,000 17,900 26,800 35,700 44,700 53,600 62,500
160,000 19,100 28,700 38,300 47,900 57,400 67,000
and more
</TABLE>
17
<PAGE> 20
- ---------------------
(1) Applicable provisions of the Code currently limit the amount of
annual compensation used to determine plan benefits under a defined benefit
pension plan, such as the Park Pension Plan, and the amount of plan benefits
payable annually under such a plan. The Park Pension Plan is operated in
compliance with such provisions.
The Park Pension Plan covers employees of the Company, PNB, Richland,
Century and FKNB who have attained age 21 and completed one year of credited
service. The Park Pension Plan is funded and noncontributory.
A participant's "average monthly compensation" for purposes of the Park
Pension Plan is based upon an amount equal to the total compensation paid by the
Company or one of its subsidiaries, including elective deferral contributions,
for the five consecutive years of credited service which produce the highest
annual compensation within the last ten years preceding retirement, divided by
sixty. The projected "annualized average monthly compensation" as of the October
1, 1998 anniversary of the Park Pension Plan was $160,000 for each of Messrs.
McConnell, DeLawder and Bowers. Messrs. McConnell, DeLawder and Bowers had
approximately 38, 27 and 12 years of credited service, respectively, under the
Park Pension Plan as of October 1, 1998.
Benefits under the Park Pension Plan become fully vested upon five
years of credited service. The Park Pension Plan provides for the payment of
monthly benefits at "normal retirement date" (the later of age 65 or the fifth
anniversary of the time participation in the Park Pension Plan commenced, but no
later than age 70 1/2) based upon 29% of an employee's average monthly
compensation up to "covered compensation" (as determined annually from a table
prepared by the Internal Revenue Service) plus 45% of an employee's average
monthly compensation in excess of covered compensation, with such benefits being
reduced by 1/420th for each month of credited service less than 420 months at
normal retirement date. The Park Pension Plan also provides for the payment of
minimum monthly benefits at normal retirement date based upon 29% of an
employee's average monthly compensation, with such minimum benefits being
reduced 1/300th for each month of credited service less than 300 months at
normal retirement date. Benefits payable under the Park Pension Plan are not
subject to any deduction for Social Security benefits. Benefits payable under
the Park Pension Plan are adjusted for retirement before normal retirement date.
The normal form of payment of retirement benefits under the Park Pension Plan
will be a life annuity with 120 monthly payments guaranteed. Various other
payment options are available under the Park Pension Plan.
The Executive Committee adopted the SERP in December 1996. The SERP
currently benefits twenty-eight officers of the Company and its subsidiaries.
Effective October 1, 1994, the Company changed the benefits formula under the
Pension Plan to comply with the applicable limits under the Code. This change
resulted in a reduced projected pension benefit to twenty-three officers of the
Company and its subsidiaries. Additionally, the IRS reduced the amount of
compensation available in calculating pension benefits to $150,000 annually
(which was increased to $160,000 annually in 1998). This change resulted in a
reduced projected benefit for four officers of the Company and its subsidiaries.
One officer was impacted by both changes. The SERP, a non-qualified benefit
plan, is designed to restore benefits lost due to these two changes. The Company
purchased life insurance contracts to fund the SERP. The SERP is designed to
provide a monthly retirement benefit of $4,433, $10,662 and $4,686 for Messrs.
McConnell, DeLawder and Bowers, respectively. The SERP also provides a life
insurance benefit for officers of the Company and its subsidiaries participating
in the SERP who die before age 86. These additional benefits will only be
achieved if the investment from the insurance contracts on funds invested in the
contracts exceed a base level return to the Company during the life of each
officer.
18
<PAGE> 21
TRANSACTIONS INVOLVING MANAGEMENT
During the Company's 1998 fiscal year, the Company and its subsidiaries
purchased insurance through W. A. Wallace Co. John L. Warner, a director of the
Company, serves as an agent with W. A. Wallace Co. The aggregate premiums paid
to W. A. Wallace Co. by the Company and its subsidiaries during the Company's
1998 fiscal year were $205,245.
J. Gilbert Reese, a director of the Company, is senior partner in the
law firm of Reese, Pyle, Drake & Meyer, P.L.L. which rendered legal services to
certain of the Company's subsidiaries during the Company's 1998 fiscal year and
continues to render legal services to certain of the Company's subsidiaries
during the Company's 1999 fiscal year.
R. William Geyer, a director of the Company, is a partner in the law
firm of Kincaid, Taylor and Geyer which rendered legal services to certain of
the Company's subsidiaries during the Company's 1998 fiscal year and continues
to render legal services to certain of the Company's subsidiaries during the
Company's 1999 fiscal year.
James J. Cullers, a director of the Company, is senior partner in the
law firm of Zelkowitz, Barry & Cullers which rendered legal services to certain
of the Company's subsidiaries during the Company's 1998 fiscal year and
continues to render legal services to certain of the Company's subsidiaries
during the Company's 1999 fiscal year.
Certain directors and executive officers of the Company, members of
their immediate families and corporations or organizations with which they are
affiliated had banking transactions with PNB, Richland, Century and FKNB, in the
ordinary course of their respective businesses, during the Company's 1998 fiscal
year. It is expected that similar banking transactions will be entered into in
the future. Loans to such persons have been made on substantially the same
terms, including the interest rate charged and collateral required, as those
prevailing at the time for comparable transactions with persons not affiliated
with the Company or its subsidiaries. These loans have been subject to and are
presently subject to no more than a normal risk of uncollectibility and present
no other unfavorable features. The aggregate amount of loans to the seventeen
directors and executive officers of the Company and their associates as a group
at December 31, 1998 was approximately $23,488,000. In addition, loans to the
directors and executive officers of the Company's banking subsidiaries, who are
not also directors or executive officers of the Company, totaled approximately
$21,591,000 at December 31, 1998. As of the date hereof, all of these loans were
performing loans.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the monthly percentage change
in the cumulative total shareholder return on the Company's common shares with
an index for Nasdaq Stock Market (U.S. Companies) comprised of all domestic
common shares traded on The Nasdaq National Market and the Nasdaq Small-Cap
Market and an index for Nasdaq Bank Stocks comprised of all depository
institutions (SIC Code # 602) and holding and other investment companies (SIC
Code # 671) that are traded on The Nasdaq National Market and the Nasdaq
Small-Cap Market ("Nasdaq Bank Stocks"), for the five-year period from December
31, 1993 to December 31, 1998. The "Nasdaq Bank Stocks" index is comprised of
stocks of banks and other depository institutions and their holding companies, a
number of which the Company considers to be within its peer group. The "AMEX
Financial Stocks" index includes the stocks of banks, thrifts, finance companies
and securities broker-dealers. The Company believes that the Nasdaq
19
<PAGE> 22
Bank Stocks index is, therefore, the most appropriate index available to compare
to the cumulative total returns of the Company's common shares. In light of this
preference for the Nasdaq Bank Stocks index, the Company believes that it is
more appropriate to use the Nasdaq Stock Market (U.S. Companies) index than the
American Stock Exchange index as the broad equity market index for comparative
purposes.
<TABLE>
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
As of 12/31/98
<CAPTION>
MAX-DATE 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
<S> <C> <C> <C> <C> <C> <C> <C>
Park National Corporation 305.3 - 09/30/98 100.0 113.3 130.8 149.3 254.7 304.3
Nasdaq Stoc Market (U.S. Companies) 293.2 - 12/31/98 100.0 97.8 138.3 170.0 208.6 293.2
Nasdaq Bank Stocks 351.2 - 04/30/98 100.0 99.6 148.4 195.9 328.0 324.9
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding day is used.
D. The index level for all series was set to $100.0 on 12/31/93.
20
<PAGE> 23
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals by shareholders intended to be presented at the 2000 Annual
Meeting of Shareholders must be received by the Secretary of the Company no
later than November 11, 1999, to be included in the Company's proxy, notice of
meeting and proxy statement relating to such meeting and should be mailed to
Park National Corporation, 50 North Third Street, Newark, Ohio 43055, Attention:
Secretary. If a shareholder intends to present a proposal at the 2000 Annual
Meeting of Shareholders, but has not sought the inclusion of such proposal in
the Company's proxy, notice of meeting and proxy statement, such proposal must
be received by the Secretary of the Company prior to January 25, 2000 or the
Company's management proxies for the 2000 Annual Meeting will be entitled to use
their discretionary voting authority should such proposal then be raised,
without any discussion of the matter in the Company's proxy, notice of meeting
or proxy statement.
NOTIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected Ernst & Young L.L.P.
to serve as independent auditors for the Company for the 1999 fiscal year. That
firm has served as the Company's independent auditors since July 1994.
Representatives of Ernst & Young L.L.P. are expected to be present at the Annual
Meeting, will be given the opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of
no business to be presented for action by the shareholders at the 1999 Annual
Meeting of Shareholders other than as set forth in this Proxy Statement.
However, if any other matter is properly presented at the Annual Meeting, or at
any adjournment(s) thereof, it is intended that the persons named in the
enclosed proxy may vote the common shares represented by such proxy on such
matters in accordance with their best judgment in light of the conditions then
prevailing.
It is important that proxies be voted and returned promptly; therefore,
shareholders who do not expect to attend the Annual Meeting in person are urged
to fill in, sign and return the enclosed proxy in the self-addressed envelope
furnished herewith.
By Order of the Board of Directors,
/s/ David C. Bowers
David C. Bowers, Secretary
March 10, 1999
21
<PAGE> 24
REVOCABLE PROXY
PARK NATIONAL CORPORATION
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 19, 1999
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned holder(s) of Common Shares of Park National Corporation, an
Ohio corporation (the "Company"), hereby constitutes and appoints D. C. Fanello,
Phillip T. Leitnaker and J. Gilbert Reese, or any of them, the Proxy or Proxies
of the undersigned, with full power of substitution, to attend the Annual
Meeting of Shareholders of the Company (the "Annual Meeting") to be held on
April 19, 1999, at the offices of The Park National Bank, 50 North Third Street,
Newark, Ohio, at 2:00 p.m., local time, and any adjournment(s) thereof, and to
vote all of the Common Shares of the Company which the undersigned is entitled
to vote at such Annual Meeting or at any adjournment(s) thereof:
Please be sure to sign and date this Proxy in the boxes below and to the right:
-------------
DATE
-------------
1. TO ELECT AS DIRECTORS OF THE COMPANY ALL OF THE NOMINEES LISTED BELOW TO
SERVE TERMS OF THREE YEARS EACH (EXCEPT AS MARKED TO THE CONTRARY BELOW).*
WITH- FOR ALL
FOR HOLD EXCEPT
[ ] [ ] [ ]
C. DANIEL DELAWDER PHILIP H. JORDAN, JR., PHD TAMI L. LONGABERGER
HOWARD E. LEFEVRE JOHN J. O'NEILL
*INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
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2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS (NONE KNOWN AT THE TIME OF SOLICITATION OF THIS PROXY) AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT(S) THEREOF.
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SHAREHOLDER SIGN TO RIGHT CO-HOLDER (IF ANY) SIGN TO RIGHT
- --------------------------------------------------------------------------------
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Detach above card, sign, date and mail in postage-paid envelope provided.
PARK NATIONAL CORPORATION
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ELECTION OF THE NOMINEES LISTED IN ITEM NO. 1 AS DIRECTORS OF THE COMPANY.
WHERE A CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED BY THIS PROXY
CARD WHEN PROPERLY EXECUTED WILL BE VOTED OR NOT VOTED AS SPECIFIED. IF NO
CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED BY THIS PROXY CARD WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM NO. 1 AS DIRECTORS OF THE
COMPANY. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OR
ANY ADJOURNMENT(S) THEREOF OR IF A NOMINEE FOR ELECTION AS A DIRECTOR NAMED IN
THE PROXY STATEMENT IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE
COMMON SHARES REPRESENTED BY THIS PROXY CARD WILL BE VOTED IN THE DISCRETION OF
THE PROXIES ON SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEE(S) AS THE DIRECTORS
MAY RECOMMEND.
All proxies previously given or executed by the above signed are hereby
revoked. The above signed acknowledges receipt of the accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement for the April 19, 1999
meeting and the Annual Report to Shareholders for the fiscal year ended December
31, 1998.
Please sign exactly as your name appears hereon. When Common Shares are
registered in two names, both shareholders should sign. When signing as
Executor, Administrator, Trustee, Guardian, Attorney or Agent, please give full
title as such. If shareholder is a corporation, please sign in full corporate
name by President or other authorized officer. If shareholder is a partnership
or other entity, please sign that entity's name by authorized person. (Please
note any change of address on this proxy card.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PARK NATIONAL CORPORATION.
PLEASE ACT PROMPTLY -- SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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