SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
First Bancorp
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
<PAGE>
First Bancorp
341 North Main Street
Troy, North Carolina 27371-0508
Telephone (910) 576-6171
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 21, 1999
- --------------------------------------------------------------------------------
To Our Shareholders:
The annual meeting of shareholders of First Bancorp (the "Company") will
be held at the main office of First Bank, 341 North Main Street, Troy, North
Carolina on Wednesday, April 21, 1999 at 3:00 p.m. local time, for the purpose
of considering and acting on the following matters:
1. A proposal to elect eleven (11) nominees to the board of directors to
serve until the 2000 annual meeting of shareholders, or until their
successors are elected and qualified.
2. A proposal to amend the Company's 1994 Stock Option Plan to increase
the number of shares available for issuance by 100,000 shares to
370,000 shares and to extend the automatic annual grants of options to
non-employee directors through June 1, 2003.
3. A proposal to change the par value of the Company's common stock from
five dollars per share to no par value per share.
4. A proposal to ratify the appointment of KPMG LLP as the independent
auditors of the Company for the current fiscal year.
5 Such other business as may properly come before the meeting, or any
adjournment or adjournments thereof.
Only shareholders of record as of the close of business on March 9, 1999
are entitled to notice of and to vote at the annual meeting and any adjournments
thereof.
Whether or not you expect to be present at the annual meeting, please
complete, date and sign the enclosed form of proxy and return it promptly in the
enclosed envelope. If you attend the meeting, your proxy will be returned to you
upon request.
The proxy statement accompanying this notice sets forth further
information concerning the proposals to be considered at the annual meeting. You
are urged to study this information carefully.
Included in this package, in compliance with applicable regulations, is
the Company's 1998 Annual Report on Form 10-K, which includes the Company's
financial statements and other required disclosures.
Also included in the package is a Summary 1998 Annual Report, which
includes a financial overview, the president's letter, and profiles of the
communities the Company serves.
By Order of the Board of Directors
Anna G. Hollers
Secretary
<PAGE>
First Bancorp
341 North Main Street
Troy, North Carolina 27371-0508
Telephone (910) 576-6171
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PROXY STATEMENT
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INTRODUCTION
This proxy statement is furnished to the shareholders of First Bancorp
(hereinafter sometimes referred to as the "Company") by the board of directors
in connection with the solicitation of proxies for use at the annual meeting of
shareholders of the Company to be held on Wednesday, April 21, 1999 at 3:00 p.m.
local time, at the Main Office of First Bank, 341 North Main Street, Troy, North
Carolina, and at any adjournment or adjournments thereof. Action will be taken
at the annual meeting on the items described in this proxy statement and on any
other business that properly comes before the meeting.
This proxy statement and accompanying form of proxy are being mailed to
shareholders on or about March 22, 1999.
Whether or not you expect to attend the annual meeting, please complete,
date and sign the enclosed form of proxy and return it promptly to ensure that
your shares are voted at the meeting.
Any shareholder giving a proxy may revoke it at any time before a vote is
taken (i) by duly executing a proxy bearing a later date; (ii) by executing a
notice of revocation in a written instrument filed with the secretary of the
Company; or (iii) by appearing at the meeting and notifying the secretary of the
intention to vote in person. Unless a contrary choice is specified, all shares
represented by valid proxies received pursuant to this solicitation, and not
revoked before they are exercised, will be voted as set forth in this proxy
statement. In addition, the proxy confers discretionary authority upon the
persons named therein, or their substitutes, with respect to any other business
that may properly come before the meeting.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of the Company's common stock entitled to vote is necessary
to constitute a quorum at the annual meeting. If a quorum is not present or
represented at the annual meeting, the shareholders present and entitled to vote
have the power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum is present or represented. At
any such adjourned meeting at which a quorum is present or represented, any
business may be transacted that might have been transacted at the meeting as
originally notified. A shareholder abstaining from the vote on a particular
proposal and broker non-votes will be counted as present for purposes of
determining if a quorum is present, but will be counted as not having voted on
the proposal in question.
The Company will bear the entire cost of preparing this proxy statement
and of soliciting proxies. Proxies may be solicited by employees of the Company,
either personally, by special letter, or by telephone. The Company also will
request brokers and others to send solicitation material to beneficial owners of
stock and will reimburse them for this purpose.
Page 1 of 23
<PAGE>
VOTING SECURITIES
Only shareholders of record as of the close of business on March 9, 1999
will be entitled to vote at the annual meeting or any adjournment or
adjournments thereof. The number of outstanding shares entitled to vote at the
shareholders meeting is 3,011,382. Shareholders are entitled to one vote for
each share of the Company's common stock.
The following table sets forth the number and percentage of outstanding
shares of the Company's common stock beneficially owned by (i) each person known
by the Company to own more than 5% of the outstanding common stock and (ii) all
officers and directors of the Company as a group, as of December 31, 1998.
<TABLE>
<CAPTION>
TABLE OF PRINCIPAL HOLDERS OF COMMON STOCK
Common Stock
Beneficially Owned (1)
-------------------------
Name and Address Percent of
Title of Class of Beneficial Owner Shares Class
-------------- ------------------- ------ -----
<S> <C> <C> <C>
Common Stock, $5 par George R. Perkins, Jr. 276,719 (2) 9.16%
P.O. Box 525
Sanford, NC 27331
Common Stock, $5 par John C. Willis 221,670 (3) 7.34%
626 E. Main Street
Troy, NC 27371
Common Stock, $5 par All directors and 32.66%
executive officers as a group 986,634
</TABLE>
- -----------------
Notes:
(1) Unless otherwise indicated, each individual has sole voting and investment
power with respect to all shares beneficially owned by such individual.
Also included are shares subject to options (exercisable as of December
31, 1998 or within 60 days after December 31, 1998) granted under the
Company's stock option plan.
(2) Includes exercisable options to purchase 3,000 shares.
(3) Includes 133,100 shares held by his spouse and exercisable options to
purchase 5,000 shares.
Page 2 of 23
<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
The number of directors constituting the board of directors has been fixed
at eleven (11) pursuant to the Company's bylaws.
In the absence of any specifications to the contrary, proxies will be
voted for the election of all eleven (11) of the nominees listed in the table
below by casting an equal number of votes for each such nominee. If, at or
before the time of the meeting, any of the nominees listed below becomes
unavailable for any reason, the proxyholders have the discretion to vote for a
substitute nominee or nominees. The board currently knows of no reason why any
nominee(s) listed below is likely to become unavailable. The Company's Articles
of Incorporation provide that when cumulative voting applies, each shareholder
is "entitled to multiply the number of votes he is entitled to cast by the
number of directors for whom he is entitled to vote and cast the product for a
single candidate or distribute the product among two or more candidates."
Cumulative voting procedures will not be followed at the annual meeting unless a
shareholder calls for cumulative voting as provided in the Company's Articles of
Incorporation, which set forth the procedure by which a shareholder may call for
cumulative voting as follows: "some shareholder or proxyholder announces in open
meeting, before the voting of directors starts, his intention so to vote
cumulatively; and if such announcement is made, the chair shall declare that all
shares entitled to vote have the right to vote cumulatively and shall thereupon
grant a recess of not less than two (2) days, nor more than seven (7) days, as
he shall determine, or of such other period of time as is unanimously agreed
upon." If any shareholder announces his intention to vote his shares on a
cumulative basis, the proxyholders may, in their discretion, vote the shares to
which such proxy relates on a basis other than equally for each of the nominees
named below and for less than all such nominees, but in such event, the
proxyholders will cast such votes in a manner that would tend to elect the
greatest number of such nominees (or any substitutes therefor in the case of
unavailability) as the number of votes cast by them would permit.
NOMINATIONS FOR DIRECTOR
Nominees for election to the board of directors are selected by the
incumbent board prior to each annual meeting, and the nominees listed below were
selected in that manner. Nominations from the shareholders may be made if made
in accordance with the Company's bylaws, which generally require such
nominations to be made in writing and within 60 to 90 days prior to the meeting
at which directors are to be elected and to include certain information about
the proposed nominee, in addition to other requirements. A complete copy of the
bylaw provision setting forth the procedure for shareholder nominations may be
obtained upon written request from the Company's corporate secretary at the
Company's main office.
Page 3 of 23
<PAGE>
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth certain information as of December 31, 1998
with respect to the eleven nominees for election to the board of directors and
the executive officers of the Company (all of these persons may be contacted at
341 North Main Street, Troy, North Carolina 27371):
<TABLE>
<CAPTION>
TABLE OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
Common Stock
Beneficially Owned (1)
Current Director (D), Director -----------------------
Nominee (N), or of Company Number of Percent
Name (Age) Position with Company Since Shares of Class
---------- --------------------- ----- ------ --------
Directors and Nominees
- ----------------------
<S> <C> <C> <C> <C>
James H. Garner (69) President and CEO (D) (N) 1995 23,764 (2) 0.79%
Jack D. Briggs (59) (D) (N) 1983 31,166 (3) 1.03%
David L. Burns (60) (D) (N) 1988 21,084 (4) 0.70%
Jesse S. Capel (66) (D) (N) 1983 73,736 (5) 2.44%
George R. Perkins, Jr. (59) (D) (N) 1996 276,719 (6) 9.16%
G. T. Rabe, Jr. (74) (D) (N) 1987 6,862 (7) 0.23%
Edward T. Taws (64) (D) (N) 1986 14,181 (8) 0.47%
Frederick H. Taylor (59) (D) (N) 1983 131,812 (9) 4.36%
Goldie H. Wallace (52) (D) (N) 1997 117,735 10) 3.90%
A. Jordan Washburn (62) (D) (N) 1995 7,944 11) 0.26%
John C. Willis (55) (D) (N) 1983 221,670 12) 7.34%
Executive Officers
- ------------------
James H. Garner (69) President and Chief 1995 23,764 (2) 0.79%
Executive Officer (D) (N)
Anna G. Hollers (47) Executive Vice President n/a 26,960 13) 0.89%
and Secretary
Teresa C. Nixon (41) Executive Vice President n/a 9,290 14) 0.31%
and Compliance Officer, First Bank
David G. Grigg (48) President of Montgomery n/a 11,817 15) 0.39%
Data Services, Inc.
Jerry M. Arnold (58) Senior Vice President n/a 4,736 16) 0.16%
of Operations, First Bank
Eric P. Credle (30) Senior Vice President and n/a 2,153 17) 0.07%
Chief Financial Officer
Lee C. McLaurin (36) Vice President and Controller n/a 5,005 18) 0.17%
</TABLE>
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Notes to Table of Directors, Nominees and Executive Officers:
(1) Unless otherwise indicated, each individual has sole voting and
investment power with respect to all shares beneficially owned by such
individual. The above table includes executive officers' reported shares
in the 401(k) defined contribution plan, which are voted by the plan
trustee and not by the shareholder for whom such shares are listed. Also
included are shares subject to options (exercisable as of December 31,
1998 or within 60 days after December 31, 1998) granted under the
Company's stock option plan.
<PAGE>
(2) Includes 2,535 shares held in Company's 401(k) defined contribution plan,
4,912 shares held jointly with his spouse and exercisable options to
purchase 16,000 shares.
(3) Includes 466 shares held as custodian for his daughter, 20,389 shares
held jointly with his spouse and
Page 4 of 23
<PAGE>
exercisable options to purchase 5,000 shares.
(4) Includes 12,388 shares held by Mr. Burns' business interests and
exercisable options to purchase 5,000 shares.
(5) Includes 24,736 shares held by Capel Inc. of which Mr. Capel is principal
owner and director and exercisable options to purchase 5,000 shares.
(6) Includes exercisable options to purchase 3,000 shares.
(7) Includes 1,330 shares held by his spouse and exercisable options to
purchase 5,000 shares.
(8) Includes 4,290 shares held by his spouse and exercisable options to
purchase 5,000 shares.
(9) Includes 51,826 shares held by Mr. Taylor's business interests, 46,254
shares held in trusts, 28,532 shares held by his spouse and exercisable
options to purchase 5,000 shares.
(10) Includes exercisable options to purchase 2,000 shares and 69,681 shares
held by her spouse and exercisable options held by her spouse to purchase
4,000 shares.
(11) Includes exercisable options to purchase 4,000 shares.
(12) Includes 133,100 shares held by his spouse and exercisable options to
purchase 5,000 shares.
(13) Includes 534 shares held jointly with her daughters, 3,995 shares held in
the Company's 401(k) defined contribution plan, 1,100 shares held by her
spouse and exercisable options to purchase 12,000 shares.
(14) Includes 2,403 shares held in the Company's 401(k) defined contribution
plan and exercisable options to purchase 6,800 shares.
(15) Includes 104 shares held jointly with his daughters, 52 shares held
jointly with his son, 2,020 shares held in the Company's 401(k) defined
contribution plan and exercisable options to purchase 4,000 shares.
(16) Includes 1,154 shares held in the Company's 401(k) defined contribution
plan and exercisable options to purchase 3,200 shares.
(17) Includes exercisable options to purchase 1,000 shares.
(18) Includes 3,210 shares held in the Company's 401(k) defined contribution
plan and exercisable options to purchase 1,200 shares.
- -----------------
Directors and Nominees
James H. Garner became President and Chief Executive Officer and a director
of the Company and First Bank in 1995. Mr. Garner has been employed by First
Bank since 1969, serving as Executive Vice President from 1989 until 1995.
<PAGE>
Jack D. Briggs is chairman of the board of directors and has been a
director of the Company since 1983 and a director of First Bank since 1976. Mr.
Briggs is a funeral director and retail furniture merchant and is president and
owner of J. Briggs, Inc., Davidson Funeral Home, Inc., and Carter Funeral Home,
Inc.
David L. Burns is President of Z. V. Pate, Inc., a holding company for
agricultural, timber, restaurants and retail sales. Mr. Burns has been a
director of the Company since 1988 and a director of First Bank since 1992.
Jesse S. Capel is Executive Director of Capel, Inc., a rug manufacturer,
importer and exporter. Mr. Capel has been a director of the Company since 1983
and a director of First Bank since 1959.
Page 5 of 23
<PAGE>
George R. Perkins, Jr. is President of Frontier Spinning Mills, LLC, a yarn
manufacturer, and has served in such capacity since 1996. Mr. Perkins has been a
director of the Company and First Bank since 1996.
G. T. Rabe, Jr. is President of Albemarle Oil Co., a distributor of
petroleum products. Mr. Rabe has been a director of the Company since 1987 and a
director of First Bank since 1992.
Edward T. Taws, Jr. is President of Fletcher Industries/Fletcher
International, a manufacturer of textile machinery. Mr. Taws has been a director
of the Company since 1986 and a director of First Bank since 1992.
Frederick H. Taylor is President of Troy Lumber Company. Mr. Taylor has
been a director of the Company since 1983 and a director of First Bank since
1978.
Goldie H. Wallace is a private investor in the Company and other business
interests. Ms. Wallace has been a director of the Company and First Bank since
1997.
A. Jordan Washburn is a sales representative for Morrisette Paper Company.
Mr. Washburn has been a director of the Company since 1995 and a director of
First Bank since 1994.
John C. Willis is a private investor in restaurant and real estate
interests. Mr. Willis has been a director of the Company since 1983 and a
director of First Bank since 1980.
Executive Officers
In addition to Mr. Garner, the executive officers of the Company are as follows:
Anna G. Hollers is Executive Vice President and Secretary of the Company
and Executive Vice President and Secretary of First Bank. She has been employed
by the Company since 1983 and by First Bank since 1972.
Teresa C. Nixon is Executive Vice President - Loan Administration and
Compliance of First Bank. She has been employed by First Bank since 1989.
David G. Grigg has served as President of Montgomery Data Services, Inc.
since its formation in 1984. He was employed by First Bank from 1972 until 1984.
Jerry M. Arnold is Senior Vice President - Operations of First Bank. He has
been employed by First Bank since 1986.
Eric P. Credle is Senior Vice President and Chief Financial Officer of the
Company and First Bank. He has been employed by the Company since September,
1997. He was previously employed for seven years by KPMG LLP as an auditor
concentrating in audits of financial institutions.
Lee C. McLaurin is Vice President and Controller of the Company and First
Bank. He has been employed by the Company since 1987.
<PAGE>
BOARD COMMITTEES, ATTENDANCE AND COMPENSATION
Executive Committee
The Executive Committee is authorized, between meetings of the board of
directors, to perform all duties and exercise all authority of the board of
directors, except those duties and authorities exclusively reserved to the board
of directors by the Company's bylaws or by statute. The 1998 members of the
Committee were Mr. Briggs, Mr. Burns, Mr. Capel, Mr. Garner, Mr. Taylor and Mr.
Willis. The Executive committee held 12 meetings during 1998.
Page 6 of 23
<PAGE>
Audit Committee
The Audit Committee is responsible for reviewing and presenting to the
board of directors information regarding the Company's policies and procedures
with respect to auditing, accounting, internal accounting controls and financial
reporting. The Committee meets with and reviews reports of the Company's
internal auditor and independent certified public accountants and makes reports
and recommendations to the board of directors. The 1998 members of the Committee
were Mr. Briggs, Mr. Burns, Mr. Capel, Ms. Wallace, and Mr. Willis. The Audit
Committee held 7 meetings during 1998.
Compensation Committee
The Compensation Committee is responsible for reviewing the compensation
policies and benefit plans of the Company and for making recommendations
regarding the compensation of its executive officers. The Committee also
administers the Company's stock option plan. The 1998 members of the Committee
were Mr. Briggs, Mr. Capel, Mr. Taws and Mr. Willis. The Compensation Committee
held 6 meetings during 1998.
Long Range Planning Committee
The role of the Long Range Planning Committee is to act upon strategic
matters that involve the allocation of the Company's resources and the growth
and marketability of the Company's products and services. The 1998 members of
the Committee were Mr. Briggs, Mr. Burns, Mr. Capel, Mr. Garner, Mr. Perkins,
Mr. Rabe, Mr. Taylor and Mr. Willis. The Long Range Planning Committee held 6
meetings during 1998.
Attendance
The board of directors held 16 meetings during 1998. In 1998, all of the
directors and nominees attended at least 75% of the aggregate of the meetings of
the board of directors and the committees described above on which they served
during the period they were directors and members of such committees.
Compensation of Directors
Directors of the Company receive compensation of $225 per month during
their terms of office, plus $200 for each monthly meeting attended. In addition,
directors of First Bank receive $200 for each meeting attended. Such directors
who serve on the Executive Committee, Audit Committee, Compensation Committee or
Long Range Planning Committee receive $200 for each committee meeting attended.
All of the directors of the Company are members of the First Bank board of
directors.
Non-employee directors of the Company also participate in the Company's
Stock Option Plan. The non-employee director portion of the Stock Option Plan
provides that on June 1 of each year for a five-year period that began June 1,
1994 and ended on June 1, 1998, each non-employee director of the Company
receives an option to acquire 1,000 shares of the Company's Common Stock over a
10 year term at an exercise price equal to the average of the high and low sales
prices of such stock on the date of grant. Proposal Number 2 of this proxy, if
adopted, would extend the period of these automatic grants through June 1, 2003.
At December 31, 1998, the ten directors who were not employees of the Company
held aggregate options to purchase 47,000 shares at exercise prices ranging from
$10.00 to $33.00.
Page 7 of 23
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table. The following table sets forth compensation
paid by the Company in the forms specified therein for the years ended December
31, 1998, 1997 and 1996 to (i) the chief executive officer of the Company and
(ii) the Company's other executive officers who earned in excess of $100,000 in
salary and bonus during 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
--------------------------------------- ------------------------ -------
(a), (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All
Name, Annual Restricted Underlying Other
Principal Compen- Stock Options/ LTIP Compen-
Position Salary Bonus (1) sation Award (s) SARs Payouts sation (2)
and Year ($) ($) ($) ($) (# sh) ($) ($)
- --------------------------------- ---------- ----------- ------- ----------- --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James H. Garner, 1998 $ 170,000 $ 56,831 $ - $ - - $ - $ 14,521
President and 1997 160,000 50,119 - - - - 8,809
Chief Executive Officer 1996 115,000 86,944 - - - - 8,840
Anna G. Hollers, 1998 $ 120,000 $ 32,000 $ - $ - $ - $ - 7,515
Executive Vice President 1997 99,790 30,000 - - - - 3,969
and Secretary 1996 90,000 9,900 - - - - 3,624
Teresa C. Nixon, 1998 $ 116,000 $ 32,000 $ - $ - $ - $ - 7,064
Executive Vice President 1997 98,500 30,000 - - - - 3,997
and Compliance Officer 1996 83,167 20,000 - - 5,000 - 3,359
Eric P. Credle, 1998 $ 85,000 $ 20,000 $ - $ - - $ - $ 243
Senior Vice President 1997 21,875 5,000 - - 5,000 - -
and Chief Financial Officer
</TABLE>
- --------------
Notes:
(1) Amounts shown represent actual incentive cash bonuses accrued during the
year indicated.
(2) Amounts shown include Company contributions to the Company's defined
contribution plan under Section 401(k) of the Internal Revenue Code that
covers all Company employees and the value of certain split-dollar life
insurance plan premiums paid for the indicated executives, based on the
term insurance value of such payments as calculated under the Internal
Revenue Code P.S. 58 rates or those of the insurer, if higher.
<PAGE>
Defined Split-Dollar
Contribution Insurance
Plan Plan
---- ----
James H. Garner 1998 $10,144 $ 4,417
1997 4,750 4,059
1996 4,109 4,731
Anna G. Hollers 1998 $ 6,783 $ 732
1997 3,291 678
1996 2,994 630
Teresa C. Nixon 1998 $ 6,591 $ 473
1997 3,555 442
1996 2,945 414
Eric P. Credle 1998 $ - $ 243
1997 - -
Page 8 of 23
<PAGE>
Options/SAR Grants in Last Fiscal Year
There were no options or stock appreciation rights granted to the
executive officers listed in the Summary Compensation Table during 1998.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
Set forth below is information concerning the exercise of stock options
during the fiscal year and year-end value of unexercised options by the
executive officers listed in the Summary Compensation Table. No stock
appreciation rights have been granted to the executive officers listed.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Options/SARs at Options/SARs at
at Exercise Value Fiscal Year End (# sh) Fiscal Year End ($)
---------------------------- -----------------------------
Name (# sh) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James H. Garner - $ - 16,000 - $ 294,000 $ -
Anna G. Hollers - - 12,000 3,000 220,500 55,125
Teresa C. Nixon - - 6,800 4,200 110,950 56,175
Eric P. Credle - - 1,000 4,000 1,250 5,000
</TABLE>
Retirement Plans
Retirement Plan. The following table sets forth the estimated annual
pension benefits payable at normal retirement age of 65 to a participant in the
Company's noncontributory defined benefit retirement plan (the "Retirement
Plan").
<TABLE>
<CAPTION>
TABLE OF ANNUAL BENEFITS PAYABLE ON RETIREMENT
UNDER THE RETIREMENT PLAN
Final
Average Years of Service
Annual -----------------------------------------------------------------------------
Compensation 15 20 25 30 35
------------ ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 7,300 $ 9,700 $ 12,100 $ 14,600 $ 17,000
75,000 12,500 16,700 20,900 25,100 29,200
100,000 17,800 23,700 29,600 35,600 41,500
125,000 23,000 30,700 38,400 46,100 53,700
150,000 28,300 37,700 47,100 56,600 66,000
175,000 30,400 40,500 50,600 60,800 70,900
200,000 30,400 40,500 50,600 60,800 70,900
</TABLE>
<PAGE>
Final Average Annual Compensation is the average of the 5 highest
consecutive calendar years earnings out of the 10 calendar years of employment
preceding retirement. Benefits shown are estimated on the basis of "life
annuity" amounts, although participants in the Retirement Plan may choose from a
variety of benefit payment options. For executive officers, current annual
compensation for the purposes of the Retirement Plan may be
Page 9 of 23
<PAGE>
estimated as the sum of the "Salary" and "Bonus" amounts in the "Summary
Compensation Table" under "Compensation of Executive Officers" above. The
Company's executive officers appearing in the Summary Compensation Table who are
participants in the Retirement Plan and their respective credited years of
service are: Mr. Garner, 29 years; Ms. Hollers, 26 years; Ms. Nixon, 9 years;
and Mr. Credle, 1 year.
Supplemental Executive Retirement Plan. The following table sets forth the
estimated annual pension benefits payable at normal retirement age of 65 to
executive officers, other than the CEO, in the Company's Supplemental Executive
Retirement Plan (the "SERP Plan").
<TABLE>
<CAPTION>
TABLE OF ANNUAL BENEFITS PAYABLE ON RETIREMENT
UNDER THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Final
Average Years of Service
Annual -------------------------------------------------
Compensation 10 15 20 or more
------------ -------- -------- ----------
<S> <C> <C> <C> <C>
$ 50,000 $ 15,000 $ 22,500 $ 30,000
75,000 22,500 33,750 45,000
100,000 30,000 45,000 60,000
125,000 37,500 56,250 75,000
150,000 45,000 67,500 90,000
175,000 52,500 78,750 105,000
200,000 60,000 90,000 120,000
</TABLE>
Final Average Annual Compensation is the average of the 5 highest
consecutive calendar years earnings out of the 10 calendar years of employment
preceding retirement. Benefits shown are estimated on the basis of "life
annuity" amounts, although participants in the SERP Plan may choose from a
variety of benefit payment options. For executive officers, current annual
compensation for the purposes of the SERP Plan may be estimated as the sum of
the "Salary" and "Bonus" amounts in the "Summary Compensation Table" under
"Compensation of Executive Officers" above. Benefits shown in the table are
prior to deductions for 50% of social security benefits and benefits paid under
the Retirement Plan. The Company's executive officers, other than the CEO,
appearing in the Summary Compensation Table who are participants in the SERP
Plan and their respective credited years of service are: Ms. Hollers, 20 years
(the maximum for participants other than the CEO); Ms. Nixon, 9 years; and Mr.
Credle, 1 year.
Mr. Garner, the Company's CEO, is also a participant in the SERP Plan. The
provisions of the SERP Plan applicable to him are the same as those described
above, except that his maximum benefit is 65% of Final Average Compensation
compared to 60% for the other participants of the Plan. Based on his years of
service, Mr. Garner has already reached the maximum benefit. Accordingly, his
benefits under the SERP Plan, prior to deductions for 50% of social security
benefits and benefits paid under the Retirement Plan, will be determined by
multiplying his Final Average Compensation times 65%.
<PAGE>
Employment Contracts and Change in Control Agreements
In 1998, the Company entered into Employment Agreements with ten of its
senior officers ("Officers"), including each Officer currently serving as an
executive officer.
The Employment Agreements have two to three year terms that extend
automatically for an additional one year on each anniversary of the date of the
Agreement, unless either party gives the other written notice on or prior to
such anniversary date that such extension will not occur. The initial term for
each Officer in the Summary Compensation Table is three years. The Employment
Agreements provide that the Officers are guaranteed minimum annual salaries
equal to their current annualized base salaries, and shall receive annual
increases that are at least as much as any percentage increase in the U.S.
Consumer Price Index during the preceding twelve months. The Employment
Agreements provide that each Officer will be entitled to such insurance,
pension, profit-sharing
Page 10 of 23
<PAGE>
and other benefit plans as are or may become available generally to employees of
the Company. The Employment Agreements provide that each Officer shall be
eligible for participation in the Company's Supplemental Employee Retirement
Plan, Split Dollar Life Insurance Plan, and Stock Option Plan. The Employment
Agreements also provide that each Officer shall be entitled to reasonable time
off for vacation, sick leave, bereavement leave, jury duty and military
obligations as are or may become available to employees of the Company in
positions similar to those of the Officer.
The Employment Agreements provide the Company the right to terminate the
Officer's employment with no further accrual of compensation or benefits if the
Company finds that the Officer (i) demonstrated gross negligence or willful
misconduct in the execution of the Officer's duties, (ii) committed an act of
dishonesty or moral turpitude, or (iii) been convicted of a felony or other
serious crime, (collectively, "Termination for Cause"). In the event that the
Company terminates an Officer for a reason other than Termination for Cause, the
Company is obligated to pay the Officer's base salary for the remainder of the
agreement term. Employment may be voluntarily terminated by the Officer by
providing at least forty-five days written notice to the Company, in which case
the Officer's compensation, vested rights and employee benefits will accrue
through the date of termination of employment.
The Employment Agreements also contain noncompetition and confidentiality
covenants. The noncompetition covenants provide that that upon termination of
employment with the Company, the Officer may not engage directly, or indirectly,
in any activity or business which is in competition with the business of the
Company within the "Restricted Territory," during the "Restricted Period." The
"Restricted Territory" is a 50-mile radius of each Officer's primary residence
and/or work location. The "Restricted Period" for Termination for Cause or
voluntary employee termination is one year and for termination by the Company
for other than Termination for Cause is the remainder of the agreement term. The
noncompetition covenant also prohibits solicitation or recruitment of any
employees of the Company during the Restricted Period, and prohibits sales
contacts or solicitation from any customer of the Company for any products or
services offered by the Company within the Restricted Territory during the
Restricted Period. The confidentiality covenants prohibit the Officer from
disclosing any confidential business secrets or other confidential data both
during the term of the Agreement and for a period of two years following the
termination of the Agreement.
The Employment Agreements also provide that in the event of a change in
"Control" (as hereinafter defined) of the Company, and the Officer's employment
is terminated by the Company or the Officer for any reason, or no reason, other
than Termination for Cause, the Officer shall be entitled to receive a severance
payment equal to the Officer's base salary times a factor that ranges from 1 to
2.9 (the "multiple). The multiple for each of the Officers named in the Summary
Compensation Table is 2.9. "Control" means the power, directly or indirectly, to
direct the management or policies of the Company or to vote forty percent (40%)
or more of any class of voting securities of the Company. "Change in Control" is
defined as a change in Control of the Company, except that any merger,
consolidation or corporate reorganization in which the owners of the capital
stock entitled to vote ("Voting Stock") in the election of directors of the
Company prior to said combination own sixty-one percent (61%) or more of the
resulting entity's Voting Stock shall not be considered a change in control for
the purpose of the Employment Agreement; provided that a Change in Control shall
be deemed to have occurred if (i) any "person" (as that term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than a trustee
or other
<PAGE>
fiduciary holding securities under an employee benefit plan of the Company, is
or becomes the beneficial owner (as that term is used in Section 13(d) of the
Securities Exchange Act of 1934), directly or indirectly, of thirty-three
percent (33%) or more of the Voting Stock of the Company or its successors; (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Company or its successors
(the "Incumbent Board") cease for any reason to constitute at least a majority
thereof; provided, that any person who becomes a director of the Company after
the beginning of such period whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board shall be
considered a member of the Incumbent Board; or (iii) there occurs the sale of
all or substantially all of the assets of the Company. Notwithstanding the
foregoing, no Change in Control is deemed to occur by virtue of any transaction
which results in the Officer subject to the Employment Agreement in question, or
a group of persons including such Officer, acquiring, directly or indirectly,
thirty-three percent (33%) or more of the combined voting power of the Company's
outstanding securities.
In addition to the Employment Agreement change in control provisions
discussed above, all Memorandums of Options granted under the Company's 1994
Stock Option Plan were amended during 1998 to provide that in the event of a
change in control of the Company, which is defined the same as it is above, all
options become fully vested and immediately exercisable. Also during 1998, the
SERP Plan was amended to fully vest all participants in
Page 11 of 23
<PAGE>
the event of a change in control, which is defined the same as it is above.
REPORT OF THE COMPENSATION COMMITTEE
The fundamental philosophy of the Company's compensation program is to
offer compensation arrangements that are (i) commensurate with individual
contributions to the performance of the Company and (ii) competitive with
publicly owned financial institutions of similar size and performance.
Compensation is designed to attract and retain individuals possessing the
specialized talents required by the Company to remain competitive in the
financial services industry.
In applying this philosophy, the Company's Compensation Committee (the
"Committee"), comprised entirely of non-employee directors, develops
compensation recommendations to be considered by the entire board of directors.
The Committee directly determines the recommendation regarding the compensation
of the Chief Executive Officer (the "CEO"). In addition, the Committee also sets
forth recommendations involving (i) compensation policies, (ii) incentive
compensation, (iii) long-term equity participation and (iv) benefit plans. The
Committee also delegates to the CEO the responsibility to determine appropriate
levels of salaries and incentive bonuses for the other executive officers of the
Company. Additional consideration is given by both the Committee (with regard to
the CEO) and the CEO (with regard to the other executive officers) to the
demonstration of the leadership skills needed to enable the Company to achieve
the business objectives set forth by the board of directors. Periodically,
including in 1998, the Company engages outside compensation consultants to
evaluate and provide recommendations regarding executive officer compensation.
The process of assessing the appropriateness of compensation arrangements
also involves the use of peer data to determine the extent to which the
Company's compensation arrangements are competitive within both the Company's
industry and geographical area. As a part of this assessment, the Committee
(with regard to the CEO) and the CEO (with regard to the other executive
officers) compares the Company's arrangements, both in whole and in part, with
those of other financial institutions of similar size and performance both
within the state and nationally. This peer group is a subset of the broader peer
group to which the Company compares its total returns to shareholders in the
discussion captioned "Shareholder Return Performance" below.
Annual compensation for the Company's CEO and other executive officers
primarily consists of four areas of compensation as set forth below:
* Base salary;
* Annual incentive bonus that is directly linked to corporate earnings
and individual performance;
* Long-term equity participation, through the periodic issuance of
stock options under the Company's stock option plan, in an effort to
more closely align the interests of the executive officers with those
of the Company's shareholders; and
* Benefit plans for executive officers.
BASE SALARY. For the Company's executive officers, including the CEO, base
salaries are targeted to approximate average salaries for individuals in similar
positions with similar levels of responsibilities who are employed by other
<PAGE>
publicly owned banking organizations of similar size and performance. The
Company frequently participates in salary/compensation surveys and has access to
other published salary/compensation data. The results of such surveys are used
by the Committee (with regard to the CEO) and the CEO (with regard to the other
executive officers) in developing the appropriate levels of base salaries for
executive officers.
Effective on January 1, 1997, the Committee adjusted the CEO's salary and
annual incentive bonus to provide for a higher portion of total compensation
coming from base salary, with less reliance on annual incentive bonus (see
below) in order to more closely align the CEO's base salary with those of his
peers. Consistent with this change, the Committee adjusted the CEO's base
salary, effective January 1, 1999, to $182,500.
Regarding the other executive officers, the changes in base salary for 1998
were in the range of 4% to 22% in an effort to more closely align the executive
officers' base salaries with those of their peers.
Page 12 of 23
<PAGE>
ANNUAL INCENTIVE BONUS. For the Company's executive officers, including the
CEO, annual incentive bonuses are directly and indirectly linked to the
Company's earnings and to the executive officer's individual performance as it
relates to enabling the Company to achieve its performance goals.
For 1998, as in prior years, the Committee set the CEO's annual incentive
bonus as a percentage of the net income earned by the Company. Such percentage
for 1998 and 1997 was 1% of consolidated net income. The 1997 percentage was a
decrease from the 2% of net income formula that was in effect in 1996. The
decrease in percentage in 1997 was effected in conjunction with an increase in
base salary, as discussed above.
For the other executive officers, the 1998 annual incentive bonus was based
on a combination of (i) a percentage, as determined by the CEO, of base salary
related to the Company's achievement of predetermined earnings targets and (ii)
additional amounts, at the discretion of the CEO, related to the executive
officer's individual contribution to the overall achievement of Company-wide
earnings targets. Because of the level of Company earnings in 1998, the
salary-based portion of the 1998 incentive bonus for all other executive
officers ranged from 16% to 33% of the respective base salary.
LONG-TERM EQUITY PARTICIPATION. For the Company's CEO, executive officers
and other key employees, stock options may be granted each year at the
discretion of the board of directors. While no formal system is employed in
determining the number of options granted, both in the aggregate or to any one
individual, the Board does consider the Company's current financial performance,
the individual's level of responsibility and the number of previously granted
stock options. Options are not intended to be an on-going component of annual
compensation, but instead are typically granted to attract and retain new
employees, as well as to recognize changes in responsibilities of existing
employees. Consistent with these intentions, the only options granted in the
last three years to the executive officers listed in the Summary Compensation
Table above were 5,000 options that were granted to Ms. Nixon in 1996 as a
result of her assumption of new responsibilities within the Company and
promotion to Executive Vice President and 5,000 options that were granted to Mr.
Credle in 1997 in conjunction with his initial employment by the Company.
BENEFIT PLANS FOR EXECUTIVE OFFICERS. In addition to the aforementioned
methods of compensating executive officers, the Company provides the same
benefits that are afforded to all Company employees, including matching
contributions under the Company's defined contribution plan, retirement benefits
under the Company's pension plan and group insurance covering health, life and
disability. Also, executive officers participate in the Company's Supplemental
Executive Retirement Plan and Split-Dollar Life Insurance Plan.
Page 13 of 23
<PAGE>
EMPLOYMENT AGREEMENTS. During 1998, in addition to the compensation matters
regarding the CEO and executive officers discussed above, the Compensation
Committee also recommended to the board of directors, which was approved, that
the Company enter into Employment Agreements with each executive officer, as
well as three other senior officers. This recommendation was determined to be in
the best interest of the Company, among other reasons, (i) to better compete in
the retention of executive and senior officers with peer banks that have similar
agreements, (ii) to provide certain protections to the Company, including
noncompetition and confidentiality covenants in the event that employment is
terminated, and (iii) to protect the Company, through change in control
provisions, from loss of executive and senior officers as a result of any change
in control possibilities that might arise. The provisions of the Employment
Agreements were previously described in more detail beginning on page 10.
The above is a summary of current practice regarding CEO and executive
officer compensation matters considered by the Committee. Because CEO and
executive officer salaries are not currently (or in the foreseeable future)
expected to exceed those limitations provided under Section 162(m) of the
Internal Revenue Code, the Committee has no specific policy which addresses the
deductibility for income tax purposes of "qualified compensation" under said
code section.
RESPECTFULLY SUBMITTED BY THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS:
Jack D. Briggs Edward T. Taws, Jr.
Jesse S. Capel John C. Willis
Page 14 of 23
<PAGE>
SHAREHOLDER RETURN PERFORMANCE
The performance graph shown below compares the Company's cumulative total return
to shareholders for the five-year period commencing December 31, 1993 and ending
December 31, 1998, with cumulative total return of both the Standard & Poor 500
Index (reflecting overall stock market performance) and an index of banks with
less than $500 million in assets as constructed by SNL Securities, LP
(reflecting changes in banking industry stocks). The graph and table assume that
$100 was invested on December 31, 1993 in each of the Company's Common Stock,
the Standard & Poor's 500 Stock Index and the index of banks with less than $500
million in assets, and that all dividends were reinvested. All data was provided
by SNL Securities, LP.
First Bancorp
Comparison of Five-Year Total Return Performances (1)
Five Years Ending December 31, 1998
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
<TABLE>
<CAPTION>
Total Return Index Values (1)
December 31,
-------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
First Bancorp (2) $ 100.00 $ 103.34 $ 129.28 $ 193.01 $ 372.44 $ 314.52
Index-S&P 500 (2) 100.00 101.32 139.39 171.26 228.42 293.69
Index-Banks less than $500
million (2) 100.00 107.55 147.13 189.37 322.82 294.76
</TABLE>
Notes:
(1) Total return indices were provided from an independent source as indicated
and assume initial investment of $100 on December 31, 1993, reinvestment of
dividends, and changes in market values. Total return index numerical
values used in this example are for illustrative purposes only.
(2) Source: SNL Securities LP, Charlottesville, VA.
Shareholders should recognize that corporations often use a number of other
performance benchmarks (in addition to shareholder return) to set various levels
of executive officer compensation. Shareholders should thus consider other
relevant performance indicators in assessing performance, such as growth in
earnings per share, growth in book value per share, growth in cash dividends per
share, and other performance measures such as return on assets and return on
shareholders' equity.
Page 15 of 23
<PAGE>
Certain Transactions
Certain of the directors, nominees, principal shareholders and officers
(and their associates) of the Company have deposit accounts and other
transactions with First Bank, including loans in the ordinary course of
business. All loans or other extensions of credit made by First Bank to
directors, nominees, principal shareholders and officers of the Company and to
associates of such persons were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with independent third
parties and did not involve more than the normal risk of collectibility. At
December 31, 1998, the aggregate principal amount of loans to directors,
nominees, principal shareholders and officers of the Company and to associates
of such persons was approximately $7,895,000. The Company expects to continue to
enter into transactions in the ordinary course of business on similar terms with
directors, nominees, principal shareholders and officers (and their associates)
of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, the Company's directors,
its executive officers, and any persons holding more than ten percent of the
Company's common stock are required to report their ownership of the Company's
common stock and any changes in that ownership to the Securities and Exchange
Commission and the National Association of Securities Dealers Automated
Quotation System. Specific due dates for these reports have been established,
and the Company is required to report in this proxy statement any failure to
file by these dates during 1998. To the Company's knowledge, all of these filing
requirements were satisfied by the Company's directors and officers and ten
percent holders during 1998, except that Mr. Washburn was delinquent in
reporting one purchase transaction.
The nominees who receive the highest number of votes cast, up to the number
of directors to be elected, shall be elected as directors. The board of
directors recommends that shareholders vote "FOR" Proposal 1 to elect the eleven
nominees as directors. Proxies, unless indicated to the contrary, will be voted
"FOR" the eleven nominees listed above.
Page 16 of 23
<PAGE>
PROPOSAL 2 - APPROVAL OF AMENDMENTS TO THE COMPANY'S
1994 STOCK OPTION PLAN
The Board of Directors is submitting to the shareholders, for their
approval, two amendments to the Company's 1994 Option Plan (the "Option Plan").
The Option Plan was adopted by the Company's Board of Directors (the "Board")
and subsequently approved by the shareholders on April 24, 1994, at which time
it became effective.
The Board believes that the Option Plan has been an important means of
attracting, retaining and motivating key employees and directors. Accordingly,
the Board believes that it is in the best interest of the Company that the
Option Plan continue to operate as it has since inception. The Board recognizes
that two amendments are needed to ensure this.
The Option Plan provides that up to 270,000 shares (as adjusted for the
1996 2-for-1 stock split) may be issued pursuant to the terms of the Option
Plan. The Company currently has available 73,900 shares available for issuance.
The Board recognizes that there may be a need for issuance of additional shares
to meet the goals of the Option Plan during its remaining five year term.
Accordingly, the Board submits to the shareholders for approval an amendment
that would increase the total number of shares that may be issued pursuant to
the Option Plan by 100,000 to 370,000 shares.
The Option Plan currently provides that on June 1 of each calendar year to
and including June 1, 1998 that each non-employee director shall automatically
receive an option to acquire 1,000 shares of common stock (as adjusted for the
1996 2-for-1 stock split) at an exercise price equal to the closing sales price
on the date of the grant. The Board submits to the shareholders for approval an
amendment that would extend these automatic annual grants on June 1 of each
calendar year to and including June 1, 2003. No other provisions or terms of
these grants would change.
The text of the proposed amendments are as follows;
Amendment 1: The last sentence of Section 2 is amended to read: "The
maximum number of shares that may be issued pursuant to this Plan is 370,000."
Amendment 2: The first sentence of the second paragraph of Section 5 of the
Option Plan is amended to read: "On June 1 of each calendar year to and
including June 1, 2003 (or, if June 1 is not a business day, the immediately
preceding business day (the "Grant Date"), each Eligible Director shall
automatically receive from Bancorp an option to acquire 1,000 shares of common
stock at an exercise price equal to the closing sales price of the common stock
on the Grant Date."
The following is additional information regarding the Option Plan:
Summary of the Option Plan
The Option Plan is summarized below. However, this summary is qualified in
its entirety by reference to the text of the Option Plan, a copy of which may be
obtained without charge, by written request to the Company, 341 North Main
Street, Troy, North Carolina 27371, Attention: Anna G. Hollers, Executive Vice
President and Secretary.
<PAGE>
General. The Option Plan provides that the Company may grant options to
purchase the Company's Common Stock ("Options") to employees and directors of
the Company and its subsidiaries. The purposes of the Option Plan are (1) to
align the interests of participating employees and directors with the
shareholders by reinforcing the relationship between shareholder gains and
participant rewards, (2) to encourage equity ownership in the Company by
participants and (3) to provide an incentive to employee participants to
continue their employment with the Company.
The Option Plan divides the persons to whom Options may be granted into two
groups: (i) officers and key employees (Options to such persons being referred
to herein as "Employee Options"), and (ii) directors who are
Page 17 of 23
<PAGE>
neither officers nor employees of the Company (Options to such persons being
referred to herein as "Non-employee Director Options"). An aggregate of 135,000
shares (270,000 shares after adjusting for the 1996 2-for-1 stock split) has
been reserved for grants of Options under the Option Plan. The Employee Options
may qualify as incentive stock options under Section 422 of the Internal Revenue
Code (the "Code"). The numbers of shares that may be granted under the Option
Plan and the number of shares and exercise prices of outstanding Options will be
adjusted to reflect any change in the capitalization of the Company as
contemplated in the Option Plan. On January 31, 1999, the closing sales price
for the Company's Common Stock as reported on the NASDAQ Stock Market was $27.75
per share.
Administration. The Option Plan is administered by the Compensation
Committee of the Board (the "Committee"), composed solely of members who are
"disinterested persons" (persons not eligible to receive Employee Options). The
Committee has complete authority to: (a) determine the employees who will
receive Employee Options, the timing of the grants of Employee Options, and
other terms of such Employee Options, subject to the terms of the Option Plan;
(b) make and amend rules governing the administration of the Option Plan; (c)
construe and interpret the Option Plan; (d) take actions necessary to keep the
Option Plan in compliance with securities, tax and other laws; and (e) to make
other necessary determinations in connection with the administration of the
Option Plan.
The Committee may designate selected Committee members or certain employees
of the Company to assist the Board or Committee in the administration of the
Option Plan and may grant authority to such persons to execute documents,
including Options, on behalf of the Committee, subject to the requirements of
the Section 16 Rules. The Option Plan provides that no member of the Committee
or employee of the Company assisting the Board or Committee in connection with
the Option Plan shall be liable for any action taken or determination made in
good faith.
Eligibility and Criteria for Grants. The Option Plan provides that Employee
Options may be granted to any of the employees of the Company or its
subsidiaries. As of January 31, 1999, the Company had approximately 245
full-time and 41 part-time employees. In making the determination as to the
employees who will be granted Employee Options, the Committee is to consider the
duties of the employee, the employee's present and potential contributions to
the success of the Company, and such other factors as the Committee deems
relevant in connection with accomplishing the purposes of the Option Plan.
The Option Plan also provides that, with respect to Non-employee Director
Options, each non-employee director shall automatically receive on June 1 of
each year, an Option to acquire 500 shares (1,000 after adjusting for the 1996
2-for-1 stock split) of Common Stock at an exercise price equal to the average
of the high and low sales prices of the Common Stock on the date of grant. The
Option Plan provisions for grants of Non-employee Director Options may not be
amended more frequently than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act, or the rules
thereunder. At December 31, 1998, there were 10 directors who were not employees
of the Company.
Terms and Conditions of Options. The price per share at which Employee
Options may be exercised is determined by the Committee at the time of grant,
but the exercise price per share may not be less than 100% of the fair market
value of the Company's Common Stock on the date of the grant. The exercise price
<PAGE>
of Non-employee Director Options is determined as described above. Payment of
the exercise price must be in cash, except that, if permitted by the terms of
the specific Option, payment may be in shares of Common Stock having a fair
market value on the date of exercise equal to the exercise price. Options
granted under the Option Plan may be exercised for any lesser number of shares
than the full amount for which it could be exercised. Such a partial exercise of
an Option does not affect the right to exercise the Option for the remaining
shares subject to the Option.
The Option Plan generally provides that Options are exercisable at such
time and upon such conditions as may be determined by the Committee at the time
of grant, except that the term of such Options may not exceed ten years from the
date of grant.
In general, Options granted under the Option Plan may not be transferred
other than by will or the laws of descent and distribution and during the
optionee's lifetime may be exercised only by the optionee. If an optionee dies
without having exercised an Option, the Option may be exercised by the
optionee's estate or by a person who
Page 18 of 23
<PAGE>
acquired the right to exercise the Option by bequest or inheritance, to the
extent of the shares with respect to which the Option could have been exercised
on the date of the optionee's death.
Amendment of Plan and Options. The Option Plan may be amended, altered or
discontinued by the Board at any time, but no such termination or amendment is
allowed to materially or adversely affect the rights and obligations of a holder
of an Option theretofore granted without such holder's consent. The Committee
may also amend the terms and conditions of any outstanding Option. However, no
action may be taken that would alter or impair any rights or obligations under
any outstanding Option without the consent of the holder of the Option.
Federal Income Tax Consequences. The grant of an Option under the Option
Plan is not a taxable event; the recipient of the Option does not recognize
income for federal income tax purposes, and the Company does not get a tax
deduction.
The Employee Options are designed to qualify as "incentive stock options"
under Section 422 of the Internal Revenue Code. If the employee observes certain
rules applicable to the exercise of the Options and the sale of the shares
thereafter, then the exercise of the Option does not result in the recognition
of taxable income, and the Company is not entitled to a tax deduction as a
result of such exercise. However, if the employee does not follow the rules
applicable to incentive stock options (for example, if shares purchased pursuant
to the exercise of an Employee Option are sold within two years from the date of
grant or within one year after the transfer of such shares to the participant),
then the difference between the fair market value of the shares at the date of
exercise and the exercise price will be considered ordinary income, and the
Company will be entitled to a tax deduction at the same time and in the same
amount. In addition, under certain circumstances the difference between the fair
market value of shares subject to an incentive stock option and the exercise
price for such shares is an adjustment to income for purposes of the alternative
minimum tax (AMT) under the Internal Revenue Code.
The Non-employee Director Options cannot qualify for incentive stock option
treatment. When a director exercises a Non-employee Director Option, he will
recognize taxable income in the amount by which the fair market value of the
shares at the date of exercise exceeds the exercise price, and the Company will
be entitled to a tax deduction at the same time and in the same amount.
Page 19 of 23
<PAGE>
Plan Benefits Table
The following table sets forth the name and position of each person named
in the Summary Compensation Table and the number of outstanding options that
have been granted under the Option Plan to such person during 1998 as well as,
for each of the groups listed below, the total number of outstanding options
granted to the persons in such group during 1998. The Company cannot determine
the number of Options that will be granted to any person during 1999, except
that, if ten persons are serving as non-employee directors of the Company on
June 1, 1999, and assuming the proposed amendments to the Option Plan are
approved by the Company's shareholders at the 1999 annual meeting, the Company's
non-employee directors will each receive options to purchase 1,000 shares on
June 1, 1999, for an aggregate of 10,000 shares. The groups listed in the table
are: the Company's current executive officers, all current outside directors,
and all nonexecutive employees. On January 31, 1999, the closing price per share
of the Company's Common Stock on the NASDAQ Stock Market was $27.75.
<TABLE>
<CAPTION>
Name Position Options
---- -------- -------
<S> <C> <C>
James H. Garner President and Chief -
Executive Officer
Anna G. Hollers Executive Vice President and -
Secretary
Teresa C. Nixon Executive Vice President -
and Compliance Officer
Eric P. Credle Senior Vice President and Chief -
Financial Officer
Executive Group -
Non-Executive Director Group 10,000
Non-Executive Officer Employee Group 5,000
</TABLE>
The affirmative vote of the holders of a majority of shares of common stock
voting at the meeting is required for approval of the proposal to adopt the two
amendments to the Option Plan. The board of directors recommends that
shareholders vote "FOR" Proposal 2. Proxies, unless indicated to the contrary,
will be voted "FOR" Proposal 2.
Page 20 of 23
<PAGE>
PROPOSAL 3 - TO CHANGE THE PAR VALUE OF THE COMPANY'S COMMON STOCK FROM FIVE
DOLLARS PER SHARE TO NO PAR VALUE PER SHARE
The Company's Articles of Incorporation state that the par value of the
Company's common stock shall be set at five dollars. The board of directors has
approved and recommends that the shareholders of the Company approve an
amendment to the Articles of Incorporation to change the par value to zero.
The five dollar par value that was assigned to the Company's common stock
was arbitrarily selected and has no significance so far as the market value of
common stock is concerned. Eliminating the five dollars will eliminate any
confusion this designation may have had or may continue to have concerning the
market value or other aspects of a share of common stock of the Company.
The board of directors recommends that the Company's Articles of
Incorporation be amended to change the par value of the Company's common stock
from five dollars per share to no par value per share.
The affirmative vote of the holders of a majority of shares of common stock
represented and voting at the meeting is required for approval of the proposal.
The board of directors recommends that shareholders vote "FOR" Proposal 3.
Proxies, unless indicated to the contrary, will be voted "FOR" Proposal 3.
Page 21 of 23
<PAGE>
PROPOSAL 4 - RATIFICATION OF INDEPENDENT AUDITORS
Your directors and management recommend that the shareholders ratify the
appointment of KPMG LLP to serve as the independent auditors for the Company for
the year ending December 31, 1999. KPMG LLP has served as the independent
auditors for the Company since April 1991 and has audited the Company's
financial statements for each of the years in the three-year period ended
December 31, 1998. If the appointment of KPMG LLP is not ratified by the
shareholders, the board of directors will reconsider the appointment of auditors
for the current fiscal year.
Representatives of KPMG LLP are expected to be present at the annual
meeting to respond to appropriate questions and will be given an opportunity to
make any statement they consider appropriate.
The affirmative vote of the holders of a majority of shares of common stock
represented and voting at the meeting is required for approval of the proposal.
The board of directors recommends that shareholders vote "FOR" Proposal 4.
Proxies, unless indicated to the contrary, will be voted "FOR" Proposal 4.
Page 22 of 23
<PAGE>
SHAREHOLDERS PROPOSALS FOR 2000 MEETING
Shareholders may submit proposals appropriate for shareholder action at the
Company's 2000 annual meeting consistent with the regulations of the Securities
and Exchange Commission. For proposals to be considered for inclusion in the
proxy statement for the 2000 annual meeting, they must be received by the
Company no later than December 28, 1999. Such proposals should be directed to
First Bancorp, Attn. Anna G. Hollers, 341 North Main Street, Troy, North
Carolina 27371-0508.
By Order of the Board of Directors,
Anna G. Hollers
Secretary
----------------------
The Company will furnish without charge to each person whose proxy is
solicited, and to each person representing that as of the record date for the
meeting he or she was a beneficial owner of shares entitled to be voted at the
meeting, on written request, a copy of the Company's 1998 Annual Report on Form
10-K as filed with the Securities and Exchange Commission, including the
financial statements and schedules thereto, but excluding exhibits. Such written
request should be directed to:
First Bancorp
Attention: Anna G. Hollers
341 North Main Street
Troy, North Carolina 27371-0508
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Page 23 of 23
<PAGE>
First Bancorp
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints James H. Garner and Anna G. Hollers, and
each of them, attorneys and proxies with full power of substitution, to act and
vote as designated below the shares of common stock of First Bancorp held of
record by the undersigned on March 9, 1999, at the annual meeting of
shareholders to be held on April 21, 1999, or any adjournment or adjournments
thereof.
1. PROPOSAL to elect eleven (11) nominees to the board of directors to
serve until the 2000 Annual Meeting of Shareholders, or until their
successors are elected and qualified.
[ ] FOR the 11 nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to to vote for the 11
the contrary below). nominees below.
(Instruction: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below).
Jack D. Briggs George R. Perkins, Jr. Goldie H. Wallace
David L. Burns G. T. Rabe, Jr. A. Jordan Washburn
Jesse S. Capel Edward T. Taws, Jr. John C. Willis
James H. Garner Frederick H. Taylor
2. PROPOSAL to amend the Company's 1994 Stock Option Plan to increase the
number of shares available for issuance by 100,000 shares to 370,000
shares and to extend the automatic annual grants of options to
non-employee directors through June 1, 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL to change the par value of the Company's common stock from five
dollars per share to no par value per share.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL to ratify the appointment of KPMG LLP as the independent
auditors of the Company for the current fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the proxies are authorized to vote on any other
business that may properly come before the meeting.
This proxy when properly executed will be voted as directed herein. If no
direction is made, this proxy will be voted for approval of Proposals 1, 2, 3,
and 4. If , at or before the time of the meeting , any of the nominees listed
above has become unavailable for any reason, the proxies have the discretion to
vote for a substitute nominee or nominees.
<PAGE>
Dated ______________________ , 1999
______________________________
Signature
______________________________
Signature (if jointly held)
(Please sign exactly as the name appears
on this proxy. If signing as attorney,
administrator, executor, guardian, or
trustee, please give title as such. If a
corporation, please sign in full
corporate name by the President or other
authorized officers. If a partnership,
please sign in partnership name by
authorized person.)
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU
ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
