<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
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:
/ / 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 Rule 14a-11(c) or Rule 14a-12
FIRST FIDELITY BANCORPORATION
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
(LOGO)
FIRST FIDELITY BANCORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 18, 1995
The Annual Meeting of Shareholders of First Fidelity Bancorporation (the
"Company" or "First Fidelity") will be held in the Van Pelt Auditorium of the
Philadelphia Museum of Art, 26th Street and The Benjamin Franklin Parkway,
Philadelphia, Pennsylvania, on Tuesday, April 18, 1995 at 10:00 A.M., to
consider and act upon the following:
1. The election of ten directors.
2. The ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent public accountants for 1995.
3. A shareholder proposal, which management opposes, requesting the
Company's Board of Directors to take certain actions with respect to
the nomination of directors.
4. A shareholder proposal, which management opposes, requesting the
Company's Board of Directors to take certain actions limiting and
reducing executive officer and director compensation.
5. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of record of the Company's Common Stock and Series B
Convertible Preferred Stock at the close of business on March 3, 1995 will be
entitled to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James L. Mitchell
JAMES L. MITCHELL, Secretary
March 13, 1995
PARTICIPANTS IN THE
FIRST FIDELITY BANCORPORATION
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
PLEASE NOTE
If a shareholder participates in the Company's Dividend Reinvestment and
Stock Purchase Plan, the proxy to vote shares registered in the shareholder's
own name will serve as instructions to vote shares held in custody for the
shareholder pursuant to that Plan. Accordingly, First Fidelity Bank, N.A., as
agent under the Plan, will cause those shares held for the account of a
shareholder participating in the Plan to be voted in the same way as the
shareholder votes shares registered in the shareholder's own name. If the
shareholder does not give a proxy, such shares will not be voted.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, MANAGEMENT URGES YOU TO
DATE, SIGN AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE. YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE.
PLEASE BRING THE ENCLOSED ATTENDANCE CARD WITH YOU TO THE MEETING.
<PAGE> 3
(LOGO)
FIRST FIDELITY BANCORPORATION
550 BROAD STREET 123 SOUTH BROAD STREET
NEWARK, NEW JERSEY 07102 PHILADELPHIA, PENNSYLVANIA 19109
------------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 18, 1995
------------------------
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of First Fidelity
Bancorporation (the "Company" or "First Fidelity") for use at the Annual Meeting
of Shareholders to be held in the Van Pelt Auditorium of the Philadelphia Museum
of Art, 26th Street and The Benjamin Franklin Parkway, Philadelphia,
Pennsylvania on Tuesday, April 18, 1995 at 10:00 A.M., and at any adjournment
thereof (the "1995 Annual Meeting"). A shareholder giving a proxy has the right
to revoke it by giving written notice of such revocation to the Secretary of the
Company at any time before it is voted, by submitting to the Company a
duly-executed, later-dated proxy or by voting the shares subject to such proxy
by written ballot at the 1995 Annual Meeting. The presence at the 1995 Annual
Meeting of a shareholder who has given a proxy does not revoke such proxy unless
such shareholder files the aforementioned notice of revocation or votes by
written ballot.
The proxy statement and the enclosed form of proxy are first being mailed
to shareholders on or about March 13, 1995. All shares represented by valid
proxies pursuant to this solicitation (and not revoked before they are
exercised) will be voted as specified in the proxy. If a proxy is signed but no
specification is given, the shares will be voted "FOR" Proposals 1 and 2 (to
elect the Board's nominees to the Board of Directors and in favor of the
ratification of the appointment of KPMG Peat Marwick LLP as the Company's
independent public accountants for 1995) and "AGAINST" Proposals 3 and 4 (the
shareholder proposals described herein).
The solicitation of proxies may be made by directors, officers and regular
employees of the Company or any of its subsidiaries by mail, telephone,
facsimile or telegraph or in person without additional compensation payable with
respect thereto. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to forward proxy soliciting material to the
beneficial owners of stock held of record by such persons, and the Company will
reimburse them for reasonable out-of-pocket expenses incurred by them in so
doing. In addition, the Company has engaged the services of Morrow & Company,
Inc. to solicit proxies at a cost of $25,000 plus expenses. The cost of such
solicitation will be borne by the Company.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At March 3, 1995 (the "Record Date"), the Company had outstanding
80,313,250 shares of common stock, par value $1.00 per share ("Common Stock"),
and 4,770,873 shares of Series B Convertible Preferred Stock, par value $1.00
per share ("Series B Preferred Stock"). Each holder of Common Stock will have
the right to one vote, and each holder of Series B Preferred Stock will have the
right to .39005 of a vote, for each share standing in such holder's name on the
books of the Company as of the close of business on the Record Date with respect
to each of the matters considered at the 1995 Annual Meeting. In the aggregate,
there will be 82,174,129 votes entitled to be cast. The holders of Common Stock
and Series B Preferred Stock will vote together as a single class on all matters
scheduled to come before the 1995 Annual Meeting. There is no right
1
<PAGE> 4
to cumulate votes in the election of directors. Holders of the Company's Series
D Adjustable Rate Cumulative Preferred Stock, par value $1.00 per share, and
Series F 10.64% Preferred Stock, par value $1.00 per share (the "Series F
Preferred Stock"), including holders of depositary shares representing an
interest therein, will not be entitled to vote at the 1995 Annual Meeting.
Holders of the Company's securities will not have any dissenters' rights of
appraisal in connection with any of the matters to be voted on at the 1995
Annual Meeting.
The presence in person or by proxy of a majority of the votes entitled to
be cast will constitute a quorum for purposes of conducting business at the 1995
Annual Meeting. Assuming that a quorum is present, directors will be elected by
a plurality vote; the ratification of auditors will require the affirmative vote
of a majority of the votes cast with respect to such proposal; and the
shareholder proposals (which management opposes) regarding the nomination of the
Company's directors and the imposition of limits on executive officer and
director compensation, similarly will require the affirmative vote of a majority
of the votes cast with respect to each of such proposals. For purposes of
determining the votes cast with respect to any matter presented for
consideration at the 1995 Annual Meeting, only those votes cast "for" or
"against" are included. Pursuant to New Jersey corporate law, abstentions and
broker non-votes are counted only for the purpose of determining whether a
quorum is present.
Based upon information available to the Company, the following shareholders
beneficially owned more than 5% of the Common Stock or Series B Preferred Stock
as of December 31, 1994.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------- ------------------------------------------ ------------ --------
<S> <C> <C> <C>
Common Stock, Banco Santander, S.A. ("Banco Santander") 20,561,913 25.39%
par value Castellana 20 Shares (A)
$1.00 per share 28046 Madrid, Spain
Walter H. Annenberg 4,652,500 5.75%
St. Davids Center (Suite A-200) Shares
150 Radnor-Chester Road
St. Davids, PA 19087
Series B Preferred The Travelers Inc. 261,889 5.47%
Stock, par value 66 East 55th Street Shares
$1.00 per share New York, New York 10022
</TABLE>
- ---------------
(A) During 1994, Banco Santander exercised all of its remaining warrants for
4,752,500 shares of Common Stock. On December 29, 1994, Banco Santander
transferred all of its First Fidelity Common Stock to its wholly-owned
subsidiary, FFB Participacoes e Servieos, S.A., Funchal, Portugal ("FFB
Participacoes"), a second-tier bank holding company incorporated in the
Portugese territory of Madeira. This transfer was made in accordance with
the terms of the Investment Agreement (defined below) and followed approval
by the Federal Reserve Bank of New York. In connection with the transfer,
FFB Participacoes agreed to be bound by the provisions of the Investment
Agreement in the same manner and to the same extent as Banco Santander.
The Investment Agreement (the "Investment Agreement"), dated as of March 18,
1991, between the Company and Banco Santander grants Banco Santander certain
rights to acquire equity securities of the Company under specified
circumstances. Under the Investment Agreement, Banco Santander has gross up
rights (the "Acquisition Gross Up Rights"), in connection with certain
acquisitions by the Company before December 27, 1995, to acquire, at certain
specified prices and subject to certain limitations, Common Stock or other
equity securities of the Company. At December 31, 1994, Banco Santander held
Acquisition Gross Up Rights to acquire $45,942,610 in value of Common Stock
and other equity securities of the Company. In addition, the Investment
Agreement provides Banco Santander with certain gross up rights in the event
that the Company issues equity (other than pursuant to an employee benefit
plan or upon conversion of convertible securities) in order to insure that
Banco Santander maintains the same proportional interest in any class of
outstanding equity.
2
<PAGE> 5
Banco Santander has agreed that until December 27, 1995, it will vote and
cause to be voted all voting securities of the Company owned by Banco Santander
and its affiliates for the Company's nominees to the Board of Directors. With
the exception of shareholder votes regarding certain types of acquisition
proposals, Banco Santander has agreed that with respect to all other matters, it
will either vote in accordance with the recommendation of the Board of Directors
or in the same proportions as the shareholders of the voting securities of the
Company (excluding, at Banco Santander's option, any votes cast by any person
known by the Company to beneficially own voting securities representing at least
10% of the voting power of all voting securities).
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's directors are elected on a staggered term basis, with each
class of directors consisting of approximately one-third of the Board and
standing for re-election once in each three-year period. At the 1995 Annual
Meeting, shareholders of the Company will elect nine directors for three-year
terms and one director for a two-year term.
All persons named herein as nominees for director have consented to serve,
and it is not contemplated that any nominee will be unable to serve, as a
director. However, if a nominee is unable to serve as a director, a substitute
will be selected by the Board of Directors and all proxies eligible to be voted
for the Board's nominees will be voted for such other person.
Set forth below for each nominee is his name, age, the year in which he
became a director of the Company, his principal occupations during the last five
years and any additional directorships in publicly-held companies. The
information is as of February 6, 1995.
TO BE ELECTED FOR A TERM OF THREE YEARS EXPIRING IN 1998:
Louis E. Azzato, 64, Director since 1988. Chairman and Chief Executive Officer
(prior years to May 1994) and director of Foster Wheeler Corporation, an
engineering and construction company, Clinton, New Jersey. Also a director of
Blue Cross and Blue Shield of New Jersey, Inc.
Edward E. Barr, 58, Director since 1988. Chairman, President, Chief Executive
Officer and director of Sun Chemical Corporation, a graphic arts materials
company, Fort Lee, New Jersey; President and Chief Executive Officer of DIC
Americas, Inc., a graphic arts materials company. Also a director of United
Water Management and Services, Inc. and Dainippon Ink & Chemicals, Inc. and
trustee of Northwestern Mutual Life Insurance Company.
Roland K. Bullard, II, 50, Director since 1992. Senior Executive Vice President
(May 1991 to present) of the Company; held various executive positions with
CoreStates Financial Corp. and its subsidiaries (prior years to April 1991).
Lee A. Butz, 61, Director since 1988. President of Alvin H. Butz, Inc., a
construction management firm, Allentown, Pennsylvania. Also a director of Butz
Enterprises, Inc.
Frank M. Henry, 61, Director since 1988. President of Frank Martz Coach Company,
a transportation company, Wilkes-Barre, Pennsylvania. Also a director of C-Tec
Corporation.
Juan Rodriguez Inciarte, 42, Director since 1992. Executive Vice President and
director (June 1991 to present) of Banco Santander, a Spanish banking
organization.
Rocco J. Marano, 66, Director since 1988. Chairman (June 1991 to June 1994) and
director (June 1991 to present) of Blue Cross and Blue Shield of New Jersey,
Inc., a health insurance company, Newark, New Jersey; Chairman and President
(prior years to June 1991) of Bell Communications Research, Inc., a
communications company. Also a director of Bally Entertainment Corporation
(formerly Bally Manufacturing Corporation).
Robert M. Scott, 65, Director since 1988. President and Chief Executive Officer
of the Philadelphia Museum of Art; Attorney and Of Counsel (prior years to 1989)
to Montgomery, McCracken, Walker & Rhoads, Attorneys, Philadelphia,
Pennsylvania.
3
<PAGE> 6
Sefton Stallard, 65, Director since 1988. General Partner of North American
Venture Capital Fund, L.P., a venture capital fund.
TO BE ELECTED FOR A TERM OF TWO YEARS EXPIRING IN 1997:
Donald C. Parcells, 51, Director since 1995. Senior Executive Vice President
(June 1994 to present) of the Company; held various executive positions with the
Company (prior years to June 1994).
The following persons are currently directors in the classes indicated with
terms expiring in 1996 and 1997, respectively.
TERM EXPIRES IN 1996:
Luther R. Campbell, Jr., 66, Director since 1988. Certified Public Accountant,
Campbell, Rappold & Yurasits, Allentown, Pennsylvania. Also a director of Old
Guard Insurance Group.
James G. Cullen, 52, Director since 1989. Vice Chairman and director (February
1995 to present) and President (February 1993 to February 1995) of Bell Atlantic
Corporation, Philadelphia, Pennsylvania; President and Chief Executive Officer
(prior years to January 1993) of Bell Atlantic - New Jersey, Inc. Also a
director of The Prudential Insurance Company of America.
Leslie E. Goodman, 51, Director since 1989. Senior Executive Vice President
(February 1990 to present) of the Company. Also a director of Wawa, Inc.
James D. Morrissey, Jr., 55, Director since 1988. President and Chief Operating
Officer of James D. Morrissey, Inc., a heavy and highway construction company,
Philadelphia, Pennsylvania.
Peter C. Palmieri, 60, Director since 1990. Vice Chairman and Chief Credit
Officer (February 1990 to present) of the Company; Senior Executive Vice
President (prior years to February 1990) of the Bank of New York.
Wolfgang Schoellkopf, 62, Director since 1990. Vice Chairman and Chief Financial
Officer (March 1990 to present) of the Company; Executive Vice President (1988
to March 1990) of Shearson Lehman Hutton Inc.; Executive Vice President (prior
years to 1988) of Chase Manhattan Bank. Also a director of Great Lakes American
Reinsurance Company.
Anthony P. Terracciano, 56, Director since 1990. Chairman of the Board,
President, Chief Executive Officer and Chairman of the Executive Committee
(February 1990 to present) of the Company; President and Chief Operating Officer
(1987 to February 1990) of Mellon Bank Corporation and Mellon Bank; Vice
Chairman (prior years to 1987) of Chase Manhattan Bank. Also a director of Banco
Santander and Bell Atlantic - New Jersey, Inc.
TERM EXPIRES IN 1997:
John Gilray Christy, 62, Director since 1988. Chairman of Chestnut Capital
Corporation, a private investment firm, Flourtown, Pennsylvania; non-executive
Chairman (May 1991 to December 1991) of Fidelity Bank, N.A. ("Fidelity Bank").
Also a director of 1838 Bond Debenture Trading Fund, Ltd., Echo Bay Mines, Ltd.
and The Philadelphia Contributionship.
Gonzalo de Las Heras, 55, Director since 1992. Executive Vice President (May
1990 to present) of Banco Santander, a Spanish banking organization; President
and director (1990 to present) of The Emerging Mexico Fund, Inc., a closed-end
investment company; Senior Vice President and Managing Director (prior years to
May 1990) of Morgan Guaranty Trust Company of New York.
E. James Ferland, 52, Director since 1988. Chairman of the Board, President,
Chief Executive Officer and director of Public Service Enterprise Group
Incorporated, a public utility holding company, Newark, New Jersey, and Chairman
and Chief Executive Officer of Public Service Electric and Gas Company. Also a
director of Foster Wheeler Corporation and The Hartford Steam Boiler Inspection
and Insurance Company.
Arthur M. Goldberg, 53, Director since 1988. Chairman, Chief Executive Officer
and director (1990 to present) of Bally Entertainment Corporation (formerly
Bally Manufacturing Corporation), a diversified holding company engaged in
manufacturing, casino and entertainment businesses, Somerset, New Jersey;
Chairman (February 1993 to present), President and Chief Executive Officer (1990
to present) of Di Giorgio Corporation, a food wholesaler, Somerset, New Jersey;
Managing General Partner of Arveron Investments L.P., an investment company,
Somerset, New Jersey.
4
<PAGE> 7
John R. Kennedy, 64, Director since 1988. President, Chief Executive Officer and
director of Federal Paper Board Company, Inc., a manufacturing company,
Montvale, New Jersey. Also a director of American Maize-Products Company, De
Vlieg-Bullard, Inc., Magma Copper Company and Chase Brass Industries, Inc.
Joseph Neubauer, 53, Director since 1988. Chairman, President, Chief Executive
Officer and director of ARAMARK Corporation (formerly The ARA Group, Inc.), a
services management company, Philadelphia, Pennsylvania; President and Chief
Executive Officer of ARAMARK Services, Inc. Also a director of Federated
Department Stores, Bell Atlantic-Pennsylvania, Inc., and a trustee of The Penn
Mutual Life Insurance Company.
Rebecca Stafford, 58, Director since 1993. President (July 1993 to present) of
Monmouth College, West Long Branch, New Jersey; Professor of Sociology (1992),
President (prior years to 1991) of Chatham College, Pittsburgh, Pennsylvania.
Bernard C. Watson, 66, Director since 1988. Chairman (January 1994 to present)
of The HMA Foundation Inc., Philadelphia, Pennsylvania; President and Chief
Executive Officer (prior years to 1994) of The William Penn Foundation. Also a
director of Comcast Corporation, Comcast Cablevision, Inc. and The Philadelphia
Contributionship.
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below are the class and number of shares of the Company's stock
beneficially owned by each director and nominee and by all directors and
executive officers as a group as of February 1, 1995. Shares shown for each
director or nominee are directly owned unless otherwise indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME TITLE OF CLASS (A)
---- ------------------- -------------------
<S> <C> <C>
Louis E. Azzato Common 3,020 (B)
Edward E. Barr Common 43,172
Roland K. Bullard, II Common 58,334 (C)
Series F Preferred 2,000
Lee A. Butz Common 54,033 (D)
Series F Preferred 6,000 (D)
Luther R. Campbell, Jr. Common 11,200 (E)
Series F Preferred 400 (E)
John Gilray Christy Common 14,508
James G. Cullen Common 2,200
Gonzalo de Las Heras Common 100 (F)
E. James Ferland Common 11,000 (G)
Arthur M. Goldberg Common 190,530 (H)
Leslie E. Goodman Common 116,878 (I)
Frank M. Henry Common 213,744 (J)
Juan Rodriguez Inciarte Common 200 (K)
John R. Kennedy Common 3,646 (L)
Rocco J. Marano Common 8,344
James D. Morrissey, Jr. Common 72,980 (M)
Series B Preferred 13,584 (M)
Joseph Neubauer Common 4,320
Peter C. Palmieri Common 91,054 (N)
Donald C. Parcells Common 52,129 (O)
Wolfgang Schoellkopf Common 87,950 (P)
Series F Preferred 5,000 (P)
Robert M. Scott Common 7,320 (Q)
Rebecca Stafford Common 1,000 (R)
Sefton Stallard Common 3,111
Anthony P. Terracciano Common 240,784 (S)
Series F Preferred 3,000
Bernard C. Watson Common 4,186 (T)
All directors and executive officers as a Common 1,767,775 (U)
group
(35 persons) Series B Preferred 13,584 (U)
Series F Preferred 16,700 (U)
</TABLE>
5
<PAGE> 8
(A) With respect to ownership of Series F Preferred Stock reflected herein, this
table sets forth the number of depositary shares ("Depositary Shares")
beneficially owned by the applicable individuals. Each Depositary Share
represents a one-fortieth interest in a share of Series F Preferred Stock.
(B) Shares held jointly with a member of Mr. Azzato's immediate family.
(C) Includes 53,564 shares subject to options exercisable on or before April 1,
1995.
(D) Includes 2,300 shares of Common Stock held jointly with, and 634 shares held
by, a member of Mr. Butz' immediate family. 1,200 shares of Common Stock and
6,000 Depositary Shares are held by Alvin H. Butz, Inc., a corporation of
which Mr. Butz is president. 3,400 shares are held by company benefit plans
of which Mr. Butz is a trustee.
(E) Includes 400 shares held by a member of Mr. Campbell's immediate family.
1,500 shares of Common Stock are held by the Luther R. Campbell, Jr. Profit
Sharing Trust and 400 Depositary Shares are held by the Luther R. Campbell,
Jr. Pension Plan.
(F) Excludes shares beneficially owned by Banco Santander. See "Voting
Securities and Principal Holders Thereof." Mr. de Las Heras' shares are held
jointly with a member of his immediate family.
(G) Includes 3,500 shares held jointly with, and 7,000 shares held by, a member
of Mr. Ferland's immediate family.
(H) Includes 840 shares held by members of Mr. Goldberg's immediate family.
(I) Includes 104,000 shares subject to options exercisable on or before April 1,
1995.
(J) Includes 5,396 shares held by a member of Mr. Henry's immediate family and
10,000 shares held in the Frank M. Henry Revocable Trust.
(K) Excludes shares beneficially owned by Banco Santander. See "Voting
Securities and Principal Holders Thereof." Mr. Inciarte's shares are held
jointly with a member of his immediate family.
(L) Includes 3,000 shares held by the John R. Kennedy Pension Fund.
(M) Mr. Morrissey's Series B Preferred Stock includes 1,880 shares held jointly
with a member of his immediate family, 210 shares held in custody for
members of his immediate family and 7,734 shares held by BFM, Inc., a
corporation of which Mr. Morrissey is president. Mr. Morrissey disclaims
beneficial ownership of 5,156 of the 7,734 shares held by BFM, Inc. The
Common Stock amount shown does not include the 10,596 shares of Common
Stock into which the 13,584 shares of Series B Preferred Stock are
convertible.
(N) Includes 65,142 shares subject to options exercisable on or before April 1,
1995.
(O) Includes 43,228 shares subject to options exercisable on or before April 1,
1995. Mr. Parcells' shares are held jointly with a member of his immediate
family.
(P) Includes 80,829 shares subject to options exercisable on or before April 1,
1995. 4,000 Depositary Shares are held jointly with a member of Mr.
Schoellkopf's immediate family and 1,000 Depositary Shares are held by PMW
Associates, in which Mr. Schoellkopf is a partner.
(Q) Includes 2,320 shares held by a trust of which Mr. Scott is co-trustee. Mr.
Scott disclaims beneficial ownership of the shares held by the trust.
(R) Shares are held jointly with a member of Dr. Stafford's immediate family.
(S) Includes 175,782 shares subject to options exercisable on or before April 1,
1995 and 815 shares held jointly with a member of Mr. Terracciano's
immediate family. Also includes 2,000 shares held by a member of Mr.
Terracciano's immediate family, of which he disclaims beneficial ownership.
(T) Includes 1,444 shares held jointly with a member of Dr. Watson's immediate
family.
(U) No director held as much as one percent of the outstanding shares of any
class. As a group, the directors and executive officers beneficially owned
2.16% of the Common Stock (including 1.09%, or 891,416 shares, attributable
to options exercisable on or before April 1, 1995), .28% of the Series B
Preferred Stock and .57% of the Series F Preferred Stock. The Common Stock
amount shown does not include the 10,596 shares of Common Stock into which
the 13,584 shares of Series B Preferred Stock are convertible.
6
<PAGE> 9
BOARD COMMITTEES, MEETINGS AND COMPENSATION
The Company has an Audit Committee of the Board of Directors consisting of
Messrs. Ferland (Chairman), Azzato, Butz, de Las Heras, Henry, Scott and
Stallard. This Committee reviews significant audit, accounting and other
principles, policies and practices, the activities of independent auditors and
of the Company's internal auditors, and the conclusions and recommendations of
auditors and the reports of regulatory examiners upon completion of their
respective audits and examinations.
The Company does not have a separate, standing nominating committee, but
the functions of such a committee are performed by either the full Board or its
Executive Committee, which consists of Messrs. Terracciano (Chairman), Barr,
Campbell, Christy, Cullen, de Las Heras, Ferland, Goldberg, Marano, Neubauer and
Watson. The Company's By-laws provide that shareholders wishing to nominate
directors for election may do so by sending a written notice to the Secretary of
the Company so that it is received not later than (i) with respect to an annual
meeting, 60 days in advance of such meeting, and (ii) with respect to a special
meeting, the close of business on the seventh day following the date on which
notice of the meeting is first given to shareholders. Any such notice from
shareholders must set forth (a) the name and address of the shareholder making
the nomination and of the person or persons nominated, (b) a representation that
such shareholder is entitled to vote at the meeting and intends to appear at the
meeting in person or by proxy to nominate the person or persons specified in the
notice, (c) a description of all arrangements between the shareholder and each
nominee and any other persons pertaining to the nomination, (d) all other
information regarding each nominee proposed by the shareholder which would have
been required to be included in a proxy statement filed pursuant to the
Securities and Exchange Commission's proxy rules if the nominee had been
nominated by the Board of Directors and (e) the consent of each nominee to serve
as a director if elected and a representation by the nominee that such person
satisfies, and will satisfy, any qualifications which the Company has
established for directors. The By-laws provide that the chairman of the meeting
may, in his discretion, waive any of the requirements contained in the By-law
provision and acknowledge the nomination of any person which is not made in
compliance with the foregoing provisions.
The Board's Trust Committee, consisting of Messrs. Christy (Chairman),
Campbell, Cullen, Stallard and Watson, monitors, in accordance with relevant
laws, regulations and sound fiduciary principles, the exercise of fiduciary
powers by all authorized subsidiaries of the Company on a uniform and
centralized basis.
The Board's Human Resources Committee, consisting of Messrs. Barr
(Chairman), Christy, de Las Heras, Kennedy, Morrissey, Watson and Dr. Stafford,
deals in broad terms with personnel matters and reviews the compensation of the
chief executive officer and senior officers of the Company and its subsidiaries.
In 1994, the Board of Directors met 14 times, the Audit Committee met 7
times, the Executive Committee met 4 times, the Trust Committee met 4 times, and
the Human Resources Committee met 5 times. During 1994, each director attended
at least 75% of the aggregate of (i) the total number of meetings of the Board
of Directors and (ii) the total number of meetings held by all committees of the
Board on which he or she served, except Mr. Kennedy. From time to time, the
Company also requests directors to serve on Board Committees on an ad hoc basis.
Each non-employee director receives a retainer fee in the amount of $28,000
annually and an attendance fee at the rate of $1,200 for each meeting of the
Board of Directors of the Company or any committee thereof attended.
Non-employee directors who chair committees of the Board receive an additional
retainer of $2,000 annually. Directors may defer this compensation until future
dates; the amounts they receive on such dates are based on a formula which takes
into account both market interest rates and the change in value of shares of
Common Stock during the period of deferral. A director who is an employee of the
Company or any subsidiary receives no fees or other compensation for serving as
a director of either the Company or any subsidiary. No other arrangements were
entered into with a director in consideration of service by that individual on
the Company's Board of Directors.
7
<PAGE> 10
EXECUTIVE COMPENSATION AND TRANSACTIONS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The Company operates from a centralized organizational structure, with
important management decisions addressed at bi-weekly meetings of the Office of
the Chairman of the Company, chaired by Mr. Terracciano. The following table
sets forth, for the fiscal years ended December 31, 1992, 1993 and 1994, the
cash compensation paid by the Company and its subsidiaries, as well as certain
other compensation paid or accrued by such entities for those years, to or with
respect to each of the current members of the Office of the Chairman for
services rendered in all capacities as executive officers during such period.
These individuals (referred to herein as the "Named Officers") were the six most
highly compensated executive officers of the Company during its most recent
fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- ------------------------ --------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND CURRENT SALARY BONUS COMPENSATION AWARDS OPTIONS/ PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(A) ($)(B) ($) SARS(#) ($)(C) ($)(D)
- ------------------------------- ---- -------- -------- ------------- ----------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ANTHONY P. TERRACCIANO......... 1994 $750,000 $400,000 0 0 40,000 $ 0 $ 59,791
Chairman, President and Chief 1993 738,462 475,000 0 0 160,000 572,771 56,415
Executive Officer 1992 675,000 400,000 0 0 0 542,945 50,286
WOLFGANG SCHOELLKOPF........... 1994 415,000 240,000 0 0 20,000 0 33,355
Vice Chairman 1993 410,385 275,000 0 0 84,000 189,563 31,862
1992 389,423 250,000 0 0 0 184,297 29,821
PETER C. PALMIERI.............. 1994 415,000 240,000 0 0 20,000 0 33,202
Vice Chairman 1993 410,385 275,000 0 0 84,000 189,563 29,898
1992 389,423 250,000 0 0 0 184,297 27,876
LESLIE E. GOODMAN.............. 1994 390,000 155,000 0 0 15,000 0 23,143
Sr. Executive Vice President 1993 386,538 155,000 0 0 72,000 121,109 29,941
1992 373,846 155,000 0 0 0 110,578 36,304
ROLAND K. BULLARD, II.......... 1994 363,462 145,000 0 0 10,000 0 12,282
Sr. Executive Vice President 1993 350,000 140,000 0 0 72,000 128,406 11,669
1992 317,308 283,406 0 0 70,000 0 6,597
DONALD C. PARCELLS............. 1994 306,923 190,000 0 0 20,000 0 18,587
Sr. Executive Vice President 1993 275,385 165,000 0 0 54,000 126,375 18,913
1992 249,231 145,000 0 0 0 126,375 16,187
</TABLE>
- ---------------
(A) Mr. Bullard's 1992 bonus includes $128,406 previously reported in the column
under LTIP Payouts. This amount was paid upon acceleration of a previously
granted deferred cash incentive award. The award was accelerated during a
period of less than one year from the date of grant and, accordingly, has
been reclassified as a form of annual compensation.
(B) No Named Officer received perquisites (i.e., personal benefits) in excess of
the lesser of $50,000 or 10% of such individual's reported salary and bonus.
(C) Represents amounts paid upon acceleration of previously granted deferred
cash incentive awards, based on a determination by the Board that
performance goals had been met taking into account performance over a period
longer than one year. These awards may only be used in connection with the
exercise of related options. An option related to a deferred cash incentive
award is generally exercisable commencing one day following the expiration
of the related deferred cash incentive award. If the option and award are
not accelerated by the Human Resources Committee, the deferred cash
incentive award will be of no benefit to the employee receiving the award.
The Human Resources Committee of the Board of
8
<PAGE> 11
Directors has the discretion to accelerate the vesting of the option and the
payment of all or part of the related deferred cash incentive award, based
on whether or not pre-established goals for earnings have been met, and a
consideration of such other factors as the Committee in its discretion deems
appropriate, including decreases in non-performing asset levels and prudent
growth through acquisitions. During 1994, the Committee did not accelerate
the payment of any deferred cash incentive awards for any of the Named
Officers.
(D) Does not include potential contingent performance awards which the Board, in
its discretion, may elect to pay in the future. Other Compensation was
comprised of: (i) contributions by the Company on behalf of the Named
Officers to the Company's Benefit Equalization Plan (the "Supplemental
Plan") (representing the employer's matching obligations under the Company's
401k plan in excess of limitations imposed by the Internal Revenue Code)
(the "Supplemental Contributions"); (ii) earnings on amounts contributed to
the Supplemental Plan (the "Supplemental Plan Earnings"); (iii) matching
contributions made by the Company on behalf of the Named Officers to the
Company's 401k plan (the "401k Contributions"); and (iv) that portion of the
Named Officer's life insurance premium payable in respect of coverage in
excess of $50,000, which is paid by the Company (the "Insurance Premiums").
The Supplemental Contributions for each of the Named Officers for 1994 were
as follows: Mr. Terracciano: $36,000; Mr. Schoellkopf: $15,900; Mr.
Palmieri: $15,900; Mr. Goodman: $14,400; Mr. Bullard: $6,404; and Mr.
Parcells: $9,415. The Supplemental Plan Earnings for each of the Named
Officers for 1994 were as follows: Mr. Terracciano: $8,491; Mr. Schoellkopf:
$3,330; Mr. Palmieri: $3,177; Mr. Goodman: $(2,215); Mr. Bullard: $(422);
and Mr. Parcells: $(1,297). The 401k Contributions for each of the Named
Officers for 1994 were as follows: Mr. Terracciano: $9,000; Mr. Schoellkopf:
$9,000; Mr. Palmieri: $9,000; Mr. Goodman: $9,000; Mr. Bullard: $4,500; and
Mr. Parcells: $9,000. The Insurance Premiums for each of the Named Officers
for 1994 were as follows: Mr. Terracciano: $6,300; Mr. Schoellkopf: $5,125;
Mr. Palmieri: $5,125; Mr. Goodman: $1,958; Mr. Bullard: $1,800; and Mr.
Parcells: $1,469.
9
<PAGE> 12
PENSION PLAN
The following table sets forth the annual benefits which an eligible
employee would receive under the Company's qualified defined benefit pension
plan, as well as the Company's Supplemental Plan that provides benefits that
would otherwise be denied participants by reason of certain Internal Revenue
Code limitations on qualified plan benefits, based on remuneration that is
covered under the plans and years of service with the Company and its
subsidiaries. The amounts reflect accrued benefits under the Company's present
plan, which covers service from January 1, 1989. Formulas under predecessor
plans, which, of the Named Officers, affect only Mr. Goodman, vary only slightly
from those indicated.
YEARS OF SERVICE
<TABLE>
<CAPTION>
REMUNERATION 15 20 25 30 35
- ---------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000.......................... $ 28,056 $ 37,408 $ 46,760 $ 56,112 $ 65,464
150,000.......................... 34,056 45,408 56,760 68,112 79,464
175,000.......................... 40,056 53,408 66,760 80,112 93,464
200,000.......................... 46,056 61,408 76,760 92,112 107,464
225,000.......................... 52,056 69,408 86,760 104,112 121,464
250,000.......................... 58,056 77,408 96,760 116,112 135,464
300,000.......................... 70,056 93,408 116,760 140,112 163,464
400,000.......................... 94,056 125,408 156,760 188,112 219,464
500,000.......................... 118,056 157,408 196,760 236,112 275,464
600,000.......................... 142,056 189,408 236,760 284,112 331,464
700,000.......................... 166,056 221,408 276,760 332,112 387,464
800,000.......................... 190,056 253,408 316,760 380,112 443,464
900,000.......................... 214,056 285,408 356,760 428,112 499,464
</TABLE>
In general, a participant's remuneration covered by the Company's pension
plan is his or her average annual base cash compensation (excluding bonuses,
commissions, overtime pay, deferred pay, any gain on the exercise of stock
options, dividends on restricted stock, lump sum payments of severance pay or
accrued vacation pay and other forms of extra compensation) for his or her
highest paid 60 consecutive calendar months out of the last 120 months of
employment prior to retirement, or the average compensation during his or her
entire period of employment if that is less than 60 months. The benefits shown
are not subject to deduction for Social Security or other offset amounts. The
remuneration covered by the Company's pension plan is reflected in the salary
column in the Summary Compensation Table. The amounts shown reflect a straight
life annuity benefit beginning at age 65. The years of service for each Named
Officer are as follows: Mr. Terracciano: 5; Mr. Schoellkopf: 5; Mr. Palmieri: 5;
Mr. Goodman: 29; Mr. Bullard: 4; and Mr. Parcells: 5.
10
<PAGE> 13
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table contains information regarding the grant of stock
options and stock appreciation rights ("SARs") under the Company's Stock Option
and Restricted Stock Plan, as amended (the "Stock Option Plan"), to the Named
Officers during the year ended December 31, 1994. In addition, in accordance
with rules of the Securities and Exchange Commission (the "Commission"), the
following table sets forth the hypothetical grant date present value with
respect to the referenced options, using the Black-Scholes Option Pricing Model.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (A)
---------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED (#) 1994 ($/SH) DATE VALUE ($)(B)
- ------------------------------ ------------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Anthony P. Terracciano........ 40,000 4.54% $ 45.3750 12-16-04 $412,400
Wolfgang Schoellkopf.......... 20,000 2.27 45.3750 12-16-04 206,200
Peter C. Palmieri............. 20,000 2.27 45.3750 12-16-04 206,200
Leslie E. Goodman............. 15,000 1.70 45.3750 12-16-04 154,650
Roland K. Bullard, II......... 10,000 1.14 45.3750 12-16-04 103,100
Donald C. Parcells............ 20,000 2.27 45.3750 12-16-04 206,200
</TABLE>
- ---------------
(A) Each option grant was of nonqualified stock options. The options generally
are not transferable. The grant (which was accompanied by the grant of a
related deferred cash incentive award) vests 9 years and 10 months from the
date of grant unless accelerated in whole upon a Change in Control Event or
in whole or in part by the Board of Directors in its discretion. See
"Employment Agreements" for the definition of Change in Control Event
applicable to these options.
(B) This estimate of value has been developed solely for purposes of comparative
disclosure in accordance with the rules and regulations of the Commission,
and does not necessarily reflect the Company's view of the appropriate value
or methodology for purposes of financial reporting. The estimated value has
been determined by application of the Black-Scholes option pricing model,
based upon the terms of the option grant and the Company's stock price
performance history as of the date of grant (December 15, 1994). The key
assumptions set forth below used in the valuation are based upon historical
experience, and are not a forecast of future stock price performance or
volatility or of future dividend policy. No adjustments have been made for
possible forfeitures or nontransferability. The model assumes (i) an annual
dividend yield of 4.48%, (ii) an exercise date of 10 years from date of
grant, (iii) a standard deviation of return of the Common Stock of 0.16983
(with volatility calculated over 180 trading days prior to the date of
grant) and (iv) a risk-free rate of return of 7.790%.
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information regarding stock option and SAR
exercises by Named Officers during the year ended December 31, 1994, including
the aggregate value of gains on the date of exercise. In addition, the following
table provides data regarding the number of shares covered by both exercisable
and nonexercisable stock options held by the Named Officers at December 31,
1994. Also reported are the values for the Named Officers' "in-the-money"
options or SARs, which represent the positive spread between the exercise price
of any existing option or SAR and $44.875, the closing sale price of the
Company's Common Stock on December 30, 1994.
11
<PAGE> 14
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/
SHARES VALUE AT FY-END (#) SARS AT FY-END ($)
ACQUIRED ON REALIZED ------------------------- -------------------------
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Anthony P. Terracciano.... 0 $ 0 175,782 187,585 $3,688,728 $339,376
Wolfgang Schoellkopf...... 0 0 80,829 107,250 1,541,491 410,766
Peter C. Palmieri......... 0 0 65,142 107,250 1,227,639 410,766
Leslie E. Goodman......... 4,500 113,779 104,000 99,000 1,923,188 571,500
Roland K. Bullard, II..... 0 0 53,564 109,666 492,180 324,765
Donald C. Parcells........ 4,000 92,000 47,228 73,000 902,742 190,500
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Terracciano entered into a new employment agreement with the Company,
effective as of June 1, 1994. The agreement provides for Mr. Terracciano's
employment as Chairman of the Board, President and Chief Executive Officer of
the Company at a base salary of not less than $750,000 per year. The agreement
provides for a term ending on May 31, 1999, with an automatic renewal of the
agreement on May 31, 1999 that extends the term until the date Mr. Terracciano
attains age 65. The automatic renewal will not occur if the Company gives
written notice to Mr. Terracciano during May, 1998 that the agreement will not
be renewed. The agreement further provides, among other things, (i) that Mr.
Terracciano will be entitled to participate in all employee benefit programs of
the Company, including the Company's Annual Incentive Plan and stock option
plan(s), (ii) for perquisites appropriate to Mr. Terracciano's position, and
(iii) for certain supplemental retirement benefits.
If Mr. Terracciano retires at or after the age of 55, he will be entitled
to receive under his employment agreement an unfunded supplemental retirement
benefit equal to the excess, if any, of the benefits to which he would have been
entitled under the retirement and supplemental retirement plans of his former
employers, taking into account Company service and compensation (if such amounts
are greater than the amounts to which he would be entitled under the Company's
retirement plans) over all retirement benefits paid to him under the plans of
his former employers and under the Company's retirement plans. In calculating
Mr. Terracciano's final average compensation under the Company's retirement
plan, his compensation for any particular year will include any bonus awarded
for that year and, for purposes of calculating the vested portion of benefits
under the Company's retirement plan or savings plan, Mr. Terracciano will be
treated as 100% vested.
Mr. Terracciano's employment agreement also provides that if Mr.
Terracciano's employment is terminated due to either permanent disability, a
without cause termination or a constructive discharge, or after the Company
gives notice that the agreement will not be renewed on May 31, 1999, he will
receive base salary as then in effect, benefits under the Company's health and
insurance plans and certain perquisites until the expiration of the term of the
employment agreement or for the three-year period beginning on the date of
termination of employment, if longer (the "Severance Period"). If Mr.
Terracciano's employment is terminated due to a without cause termination or a
constructive discharge, he will also be entitled to receive (i) an amount equal
to the excess of the present value of the benefits he would be entitled to
receive under the Company's retirement plan and the Company's benefit
equalization plan (as adjusted for a lump sum payment) if Mr. Terracciano had
continued working for the Company during the three-year period beginning on the
date of termination, over the present value of benefits he is actually entitled
to receive under such plans as of the date of termination, (ii) an amount equal
to the Company's contributions that Mr. Terracciano would have been entitled to
receive under the Company's savings plan and benefit equalization plan if Mr.
Terracciano had continued working for the Company during the three-year period
beginning on the date of termination and (iii) an amount equal to the bonus he
would have earned if he had continued working for the Company during the
three-year period beginning on the date of termination. If Mr. Terracciano's
12
<PAGE> 15
employment is terminated for cause or death, or Mr. Terracciano voluntarily
terminates his employment for reasons other than a constructive discharge, or
permanent disability, or upon voluntary or mandatory retirement, (i) he will
receive all earned but unpaid base salary as of the date of termination, (ii) he
will receive any benefits payable under the Company's retirement and other
benefit plans and (iii) his nonexercisable options will be forfeited, except as
otherwise provided under the terms of the Company's stock option plan(s).
Mr. Palmieri entered into a new employment agreement with the Company,
effective as of June 1, 1994. The employment agreement provides for Mr.
Palmieri's employment as Vice Chairman of the Company at a base salary of not
less than $415,000 per year. The agreement provides for a term ending on the
date Mr. Palmieri attains age 65. The agreement further provides, among other
things, (i) that Mr. Palmieri will be entitled to participate in all employee
benefit programs of the Company, including the Annual Incentive Plan and stock
option plan(s), and (ii) for perquisites appropriate to Mr. Palmieri's position.
If Mr. Palmieri's employment is terminated due to either permanent disability, a
without cause termination or a constructive discharge, he will receive his base
salary as then in effect, continued coverage under the Company's health and
insurance plans and certain perquisites until the expiration of the term. If Mr.
Palmieri's employment is terminated due to a without cause termination or a
constructive discharge, he will also be entitled to receive (i) an amount equal
to the excess of the present value of the benefits he would be entitled to
receive under the Company's retirement plan and the Company's benefit
equalization plan (as adjusted for a lump sum payment) if Mr. Palmieri had
continued working for the Company during the three-year period beginning on the
date of termination or until he attains age 65, whichever occurs first, over the
present value of benefits he is actually entitled to receive under such plans as
of the date of termination, (ii) an amount equal to the Company's contributions
that Mr. Palmieri would have been entitled to receive under the Company's
savings plan and benefit equalization plan if Mr. Palmieri had continued working
for the Company during the three-year period beginning on the date of
termination or until he attains age 65, whichever occurs first, and (iii) an
amount equal to the bonus he would have earned if he had continued working for
the Company during the three-year period beginning on the termination date or
until he attains age 65, whichever occurs first. If Mr. Palmieri's employment is
terminated for cause or death, or if Mr. Palmieri voluntarily terminates his
employment for other than a constructive discharge, or permanent disability or
upon voluntary or mandatory retirement, (i) he will receive all earned but
unpaid base salary as of the date of termination, (ii) he will receive any
benefits payable under the Company's retirement and other benefit plans and
(iii) his nonexercisable options will be forfeited, except as otherwise provided
under the terms of the Company's stock option plan(s).
Mr. Schoellkopf entered into a new employment agreement with the Company,
effective as of June 1, 1994. The employment agreement provides for Mr.
Schoellkopf's employment as Vice Chairman of the Company at a base salary of not
less than $415,000 per year. The agreement provides for a term ending on the
date Mr. Schoellkopf attains age 65. The agreement further provides, among other
things, (i) that Mr. Schoellkopf will be entitled to participate in all employee
benefit programs of the Company, including the Annual Incentive Plan and stock
option plan(s), and (ii) for perquisites appropriate to Mr. Schoellkopf's
position. The provisions in Mr. Schoellkopf's employment agreement concerning
termination of employment are similar to the provisions described above with
respect to Mr. Palmieri's employment agreement.
Mr. Goodman entered into a new employment agreement with the Company,
effective as of June 1, 1994. The employment agreement provides for Mr.
Goodman's employment as a Senior Executive Vice President of the Company at a
base salary of not less than $390,000 per year. The agreement provides for a
term ending on May 31, 1997, with an automatic one-year renewal on each May 31st
during the term. In no event will the term continue beyond the date Mr. Goodman
attains age 65, unless the Company extends the agreement. The agreement further
provides, among other things, (i) that Mr. Goodman will be entitled to
participate in all employee benefit plans of the Company, including the Annual
Incentive Plan and stock option plan(s), and (ii) for perquisites appropriate to
Mr. Goodman's position. If Mr. Goodman's employment is terminated due to either
permanent disability, a without cause termination or a constructive discharge,
he will receive his base salary as then in effect and continued coverage under
the Company's health and insurance plans until the expiration of the term. If
Mr. Goodman's employment is terminated for cause or death, or if Mr. Goodman
voluntarily terminates his employment for reasons other than a constructive
discharge or permanent disability,
13
<PAGE> 16
or upon voluntary or mandatory retirement, he will receive all earned but unpaid
salary as of the date of termination, and no other payments will be made or
benefits provided, except for stock options to the extent already exercisable
under terms of the Company's stock option plan(s), and benefits payable under
the Company's retirement and other benefit plans.
Mr. Bullard entered into a new employment agreement with the Company,
effective as of June 1, 1994. The employment agreement provides for Mr.
Bullard's employment as a Senior Executive Vice President of the Company at a
base salary of not less than $350,000 per year. The agreement provides for a
term ending on May 31, 1997, with an automatic one-year renewal on each May 31st
during the term. In no event will the term continue beyond the date Mr. Bullard
attains age 65, unless the Company extends the agreement. The agreement further
provides, among other things, (i) that Mr. Bullard will be entitled to
participate in all employee benefit programs of the Company, including the
Annual Incentive Plan and stock option plan(s), and (ii) for perquisites
appropriate to Mr. Bullard's position. The provisions in Mr. Bullard's
employment agreement concerning termination of employment are similar to the
provisions described above with respect to Mr. Goodman's employment agreement.
Mr. Parcells entered into a new employment agreement with the Company,
effective as of June 1, 1994. The employment agreement provides for Mr.
Parcells' employment as an Executive Vice President of the Company at a base
salary of not less than $280,000 per year. The agreement provides for a term
ending on May 31, 1997, with an automatic one-year renewal on each May 31st
during the term. In no event will the term continue beyond the date Mr. Parcells
attains age 65, unless the Company extends the agreement. The agreement further
provides, among other things, (i) that Mr. Parcells will be entitled to
participate in all employee benefit programs of the Company, including the
Annual Incentive Plan and stock option plan(s), (ii) for perquisites appropriate
to Mr. Parcells' position and (iii) for certain supplemental retirement
benefits.
Mr. Parcells' employment agreement also provides that (i) for purposes of
calculating his aggregate benefits under the Company's retirement plans, Mr.
Parcells will be treated as if he had an additional five years of credited
service, and (ii) if a Change in Control Event occurs (as defined herein) or Mr.
Parcells' employment is terminated due to retirement or voluntary termination
after April 30, 2000, or death, permanent disability, a without cause
termination or a constructive discharge, then for purposes of determining
vesting, eligibility for payment and the amount of benefits payable under the
Company's retirement plans, he will be treated as if he had a number of years of
service equal to the greater of 20 years or the sum of 20 and the number of
years of his actual service with the Company after April 30, 2000 and if Mr.
Parcells has not reached age 55 at the time of his termination of employment, he
will be treated as if he was 55 on the termination date for purposes of
calculating his retirement plan benefits in the form of a single life annuity.
The remaining provisions of Mr. Parcells' employment agreement concerning
termination of employment are similar to the provisions described above with
respect to Mr. Goodman's employment agreement.
In addition to the benefits described above, the employment agreements for
Mr. Terracciano and for each of the other five Named Officers provide that if
the officer terminates his employment due to a Change in Control Event (as
defined below), he will receive (i) his earned but unpaid base salary as of the
date of termination, (ii) any benefits payable under the Company's retirement
plan and other employee benefit plans or programs, (iii) either continued
coverage under the Company's health and insurance plans during the three-year
period beginning on the termination date or the present value of such coverage
in a lump sum, as he so elects, (iv) an amount equal to the base salary and
bonus that he would have earned if he had continued working for the Company
during the three-year period beginning on the termination date, (v) an amount
equal to the excess of the present value of the benefits he would be entitled to
receive under the Company's retirement plan and the Company's benefit
equalization plan (as adjusted for a lump sum payment) if the officer had
continued working for the Company during the three-year period beginning on the
termination date, over the present value of benefits he is actually entitled to
receive under such plans as of the termination date, and (vi) an amount equal to
the Company's contributions that the officer would have been entitled to receive
under the Company's savings plan and benefit equalization plan if the officer
had continued working for the Company during the three-year period beginning on
the termination date.
A Change in Control Event is defined in the employment agreement for Mr.
Terracciano and each of the other five Named Officers to mean the occurrence of
any of the following events: (i) the acquisition by any
14
<PAGE> 17
one person, within the meaning of Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, or more than one person, acting as a group, (other than
the Company, its affiliates and any benefit plans of the Company or its
affiliates), of ownership of stock of the Company possessing 20% or more of the
total voting power of the Company, other than certain acquisitions of stock by
Banco Santander; (ii) the approval by the stockholders of the Company of (a) any
consolidation, merger or similar event of the Company in which the holders of
voting stock of the Company immediately before the event will not own 50% or
more of the voting shares of the continuing or surviving corporation immediately
after such event, or (b) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of the Company; or (iii) a change of 25% in the membership of the Board
within a 12-month period, unless the election or nomination for election by
stockholders of each new director within such period was approved by the vote of
85% of the directors then still in office at the beginning of the 12-month
period.
The employment agreements for Mr. Terracciano and each of the other five
Named Officers provide for reimbursement for excise taxes payable (if any) as a
result of benefits received upon a Change in Control Event concerning the
Company. The reimbursements are designed to put the individuals in the same
position as they would be in if such excise tax had not been imposed.
Under the terms of the Company's Stock Option and Restricted Stock Plan,
all options granted to Mr. Terracciano and each of the other five Named Officers
become fully exercisable and all deferred cash incentive awards made to these
individuals accelerate upon the occurrence of a Change in Control Event (as
defined above).
BOARD HUMAN RESOURCES COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Human Resources Committee, consisting entirely of non-employee
directors who satisfy the outside director requirement under Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), is responsible for
implementing, overseeing and administering the Company's overall compensation
policy. This policy has been designed to support the Company's business
strategies through internally equitable and externally competitive compensation
practices which foster the attraction, retention and motivation of high calibre
personnel at all levels of the organization. The Company's compensation programs
reward performance in order to maintain the Company's competitive market
position.
The purpose of the Company's annual compensation plan for executive
officers is to provide a competitive level of base salary, short-term incentive
compensation and long-term incentive compensation, based generally on the median
compensation levels set by the Company's business and manpower competitors. This
competitive reference group consists of super regional banks located primarily
in the eastern United States. Included in this competitive reference group are
companies which make up the KBW Eastern Bank Index (defined herein) referred to
in the performance graph that follows this report. In determining compensation
for executive officers, the Committee considers corporate earnings, expense
management, asset quality, business growth and acquisition strategies. The
relative weight accorded to each factor by the Committee varies with each
individual's respective responsibilities.
Periodic analysis has shown that the base salaries of the Company's Chief
Executive Officer (the "CEO") and the other five Named Officers as a group
compare favorably with the median of base salaries of similar level executives
within the Company's competitive reference group. Competitive base salary levels
for executive officers are maintained through a salary administration program,
the underlying basis of which is performance evaluation. Evaluations (including
recommendations for salary increases) are made, in the case of the other five
Named Officers, by the CEO and, in the case of the CEO, by this Committee.
Salary increases are based on an evaluation of the extent to which a particular
executive officer is determined to have met or exceeded the established criteria
for that executive officer's position as well as the extent to which such
individual is determined to have furthered Company goals generally. After
reviewing the current practice of the Company's competitive reference group in
1994, the Committee approved a recommendation of the CEO to modify the salary
review cycle for the CEO and the other five Named Officers from an 18 month
cycle to a 24 month cycle. The Committee concurred that this practice was
competitive and appropriate considering the CEO and the other five Named
Officers were paid competitively vis-a-vis the market.
Merit-based salary increase guidelines are adopted each year by the
Committee to reflect changes and trends in labor practices in the Company's
market area as well as in the banking industry generally. These
15
<PAGE> 18
guidelines are drafted by the Company's Human Resources Department based on
surveys conducted by Human Resources personnel as well as on information
provided by expert outside consultants. Under no circumstances do these
merit-based guidelines include any policy of increasing executive officers'
salaries by a minimum percentage.
The Company's short term incentive compensation program provides the
opportunity for executive officers and other key employees to earn incentive
compensation based on the attainment of company-wide goals. This incentive
compensation may be earned under the Company's Annual Incentive Plan ( the
"Annual Incentive Plan").
The Annual Incentive Plan has been established to reward executive officers
and other key employees who contribute most to the Company's growth and
profitability. Based on the Company's successful business year, which resulted
in the achievement of a performance level which significantly exceeded the
minimum targeted level of fully-diluted earnings per share established for 1994,
the Committee agreed that incentive awards would be paid in December, 1994. The
Committee approved the incentive awards for the CEO and the other five Named
Officers which are indicated in the Summary Compensation Table. Each of the
incentive awards were substantially below the Annual Incentive Plan maximum
award of 100% of base salary.
The Company's long term compensation program for executive officers and
other key employees seeks to provide capital accumulation opportunities which
will foster the alignment of their interests and risks with those of the
shareholders. The objectives established for the long term compensation program
include the retention of management and the creation of a strong linkage between
executives' rewards and the performance of the Company's Common Stock. The
program includes stock-based benefits as well as deferred cash compensation
under the Company's Stock Option and Restricted Stock Plan (the "Stock Option
Plan").
Pursuant to the long term compensation program, executive officers and
other key employees may be granted awards of stock options and deferred
compensation opportunities. In general, such awards include the granting of
stock options upon completion of 12 months of employment, assuming all
individual and departmental performance goals have been met. Options granted
include non-qualified options which vest in not more than 10 years from the date
of grant unless all or a part are accelerated in the discretion of the Board or
all are accelerated upon a Change in Control Event. See "Employment Agreements"
for the definition of Change in Control Event. An option related to a deferred
cash incentive award is generally exercisable commencing one day following the
expiration of the related deferred cash incentive award. If the option and award
are not accelerated by the Committee, the deferred cash incentive award will be
of no benefit to the employee receiving the award. The CEO and the other five
Named Officers were awarded stock options and accompanying deferred cash
incentive awards under the Stock Option Plan during 1994. The option awards are
indicated in the Option/SAR Grants in Last Fiscal Year table. In approving the
stock option grants, the Committee noted that a satisfactory level of earnings
was attained in 1994. In determining the size of awards granted to the CEO and
the other five Named Officers, the Committee also considered the steady and
continual improvement in the non-performing assets category, the individual
contributions the executive officers have made to the management and growth of
the Company, Company-wide efficiency ratios, the execution of prudent
acquisition strategies in order to ensure long-term growth and stock performance
in line with or exceeding that of its competitive reference group. All awards
were substantially below the Stock Option Plan maximum of 258,000 shares of
Company Common Stock per person in any calendar year.
Even though performance goals for 1994 were met for acceleration of options
and deferred cash incentive awards, during 1994 and to the date of this report
the Committee has not authorized acceleration of options or awards for the CEO
or any of the other five Named Officers. The Committee may, however, authorize
an acceleration of options or awards in 1995, based on the performance goals met
for 1994 and thereafter. The decision to accelerate the vesting of options and
the payment of all or part of the related deferred cash incentive award is based
on whether or not pre-established goals for earnings have been met and a
consideration of other factors, including decreases in non-performing asset
levels and prudent growth through acquisitions, as the Committee in its
discretion deems appropriate. Deferred cash incentive awards may only be used in
connection with the exercise of the related options.
16
<PAGE> 19
The Committee also approved an amendment to the compensation program to
include a provision in which the vesting of options and the deferred cash
incentive award would be accelerated upon the death or permanent disability of
an optionee.
During 1994, the Committee also reviewed and approved new employment
contracts for the CEO and the other five Named Officers as discussed in the
"Employment Agreements" section.
Section 162(m) of the Code limits the deduction that may be claimed by a
"public company" for compensation paid to certain individuals to $1 million
except to the extent that any such excess compensation is paid pursuant to a
performance-based plan. This provision became effective January 1, 1994 with
respect to the Company. During 1994, in order to comply with Section 162(m) of
the Code, the Company obtained shareholder approval of amendments to the Stock
Option Plan, and of the material terms of the performance goals for payments
under the Annual Incentive Plan and for payments of deferred cash incentive
awards.
SUBMITTED BY THE HUMAN RESOURCES
COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
<TABLE>
<S> <C> <C>
Edward E. Barr
(Chairman) John Gilray Christy Gonzalo de Las Heras
John R. Kennedy James D. Morrissey, Jr. Rebecca Stafford
Bernard C. Watson
</TABLE>
PERFORMANCE GRAPH
The following chart compares the Company's cumulative total shareholder
return (assuming $100 was invested on December 31, 1989 and all dividends were
reinvested) over the past five years with the Standard & Poor's 500 Index and
Keefe, Bruyette & Wood's Index of Eastern Bank Holding Companies (the "KBW
Eastern Bank Index"). The KBW Eastern Bank Index is a nationally recognized
industry index composed of 12 regional bank holding companies located in the
eastern United States, including First Fidelity.
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
MEASUREMENT PERIOD KBW EASTERN STANDARD & FIRST
(FISCAL YEAR COVERED) BANK INDEX POOR'S 500 FIDELITY
<S> <C> <C> <C>
4Q89 100.00 100.00 100.00
1Q90 85.97 97.00 89.78
2Q90 79.89 103.09 81.74
3Q90 56.56 88.92 58.45
4Q90 61.63 96.89 80.80
1Q91 81.56 110.96 115.98
2Q91 86.48 110.72 127.81
3Q91 99.32 116.65 150.92
4Q91 108.38 126.41 155.30
1Q92 116.79 123.22 169.27
2Q92 129.17 125.56 183.97
3Q92 126.32 129.51 170.86
4Q92 149.66 136.64 217.17
1Q93 166.64 141.98 242.25
2Q93 160.60 142.67 245.95
3Q93 163.17 148.36 234.04
4Q93 156.09 149.75 231.49
1Q94 157.09 144.07 227.90
2Q94 165.57 144.68 240.34
3Q94 161.78 151.75 219.84
4Q94 138.56 151.73 237.50
</TABLE>
17
<PAGE> 20
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
Mr. Lee A. Butz, a director of the Company, is a partner in 60 West Broad
Street Realty Company, from which First Fidelity Bank, N.A. ("FFB-NA") leases a
branch office and an adjoining regional loan office in Bethlehem, Pennsylvania.
The current term expires on May 15, 1998 and FFB-NA has one five-year renewal
option. The annual aggregate base rent during the current term is $53,234;
during the remaining option period, the base rent would increase in accordance
with a market formula.
Mr. Frank M. Henry, a director of the Company, is a partner in Frank M.
Henry Associates, from which FFB-NA leases a branch office in Wilkes-Barre,
Pennsylvania. The initial term expires on April 30, 2003 and FFB-NA has four
five-year renewal options. The annual base rent is $69,140 for the year ending
April 30, 1995 and will increase periodically to the amount of $76,140 for the
final year of the initial term. During the option periods, the base rent would
be based on fair market value.
Directors and officers of the Company and their associates were customers
of and had transactions with the Company's subsidiary banks in the ordinary
course of business during the year ended December 31, 1994. Similar transactions
may be expected to take place with the Company's subsidiary banks in the future.
Outstanding loans and commitments made by such subsidiary banks in transactions
with the Company's directors and officers and their associates were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not involve more than a normal risk of collectibility or present other
unfavorable features.
In the opinion of the boards of directors of the respective subsidiary
banks, the terms of all of the transactions described above were no less
favorable to the banks than terms available in comparable transactions from
others and such terms were as favorable as terms that could have been obtained
in arms length transactions with independent third parties.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As previously described, decisions regarding compensation of the Company's
executive officers are made by the Board's Human Resources Committee, comprised
of Messrs. Barr (Chairman), Christy, de Las Heras, Kennedy, Morrissey and Watson
and Dr. Stafford. No executive officer of the Company was a member of the Human
Resources Committee. In addition, none of the members of the Human Resources
Committee has ever served as an officer of the Company or any of its
subsidiaries, other than Mr. Christy, who served as non-executive chairman of
Fidelity Bank for a portion of 1991. During 1994, Mr. Terracciano, Chairman of
the Company, served as a director of Banco Santander. Mr. de Las Heras, an
executive officer of Banco Santander, serves on the Human Resources Committee.
During 1994, persons and entities affiliated with Messrs. Barr, Christy,
Kennedy, Morrissey and Dr. Stafford were parties to loan transactions with
subsidiary banks of the Company. All of such borrowings 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 other persons and did not involve more than the normal risk of
collectibility or present other unfavorable features.
During 1994, the Company purchased from Banco Santander (i) 3,063,297
shares of capital stock of Banco Espanol de Credito, S.A. ("Banesto"),
representing approximately 0.5% of Banesto's outstanding capital stock, for
approximately $18.1 million; and (ii) an aggregate of 250,000 shares of First
Fidelity Common Stock at current market prices, which averaged $44.43 per share.
18
<PAGE> 21
PROPOSAL TWO
RATIFICATION OF AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP as the Company's
independent public accountants for the year ending December 31, 1995. KPMG Peat
Marwick LLP served as the Company's independent accountants for the year ended
December 31, 1994. Although the appointment of independent public accountants is
not required to be approved by shareholders, the Board of Directors believes
shareholders should participate in the selection of the Company's independent
public accountants. Accordingly, the shareholders will be asked at the 1995
Annual Meeting to ratify the Board's appointment of KPMG Peat Marwick LLP as the
Company's independent public accountants for the year ending December 31, 1995.
Representatives of KPMG Peat Marwick LLP will be present at the 1995 Annual
Meeting. They will have an opportunity to make a statement if they so desire and
will be available to respond to appropriate questions of the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL TWO DESCRIBED ABOVE.
19
<PAGE> 22
PROPOSAL THREE
SHAREHOLDER PROPOSAL
Mr. Richard A. Dee, of 115 East 89th Street, New York, New York 10128, a
record owner of 210 shares of Common Stock of the Company as of the Record Date,
has submitted the following statement and proposal, which are presented as
received by the Company:
"Last year, 12% of shares were voted FOR this proposal, the approval of
which will provide First Fidelity stockholders with A CHOICE OF DIRECTOR
CANDIDATES. The previous year, 6% of shares were voted FOR approval.
"STOCKHOLDERS OF PUBLICLY-OWNED CORPORATIONS DO NOT 'ELECT' DIRECTORS.
Directors are selected by incumbent directors and managements - stockholders
merely 'RATIFY' or approve those selections much as they ratify selections of
auditors.
"The term 'Election of Directors' has been misused in corporate proxy
materials for many years to refer to the process by which directors are
empowered. The term is not only inappropriate - it is misleading. WITH NO CHOICE
OF CANDIDATES, THERE IS NO ELECTION.
"Understandably, incumbent directors are anxious to protect their absolute
power over corporate activities. The root of that power is control of Corporate
Governance - which is assured by control of board composition. Unfortunately,
the 'Elective process rights' of stockholders are being ignored.
"Approval of this Corporate Governance proposal will provide stockholders
with a real opportunity to vote -- and to "duly" elect those candidates whose
qualifications and stated intentions they favor.
"Public office-holders are duly elected -- and are held accountable.
Continuing in office depends upon satisfying constituents, not simply
nominators. Corporate directors take office unopposed and answer only to fellow
directors. Far too many directors divide their time between too many companies.
Perhaps the 'pool' from which directors are selected should be expanded to
include many younger highly-qualified business executives and more individuals
with other backgrounds that fit them well to represent stockholders.
"As long as incumbents are allowed to select and to propose only the number
of candidates as there are directorships to be filled, and as long as it is
impossible, realistically, for stockholders to utilize successfully what is
supposed to be their right to nominate and to elect directors, no practical
means will exist for stockholders to replace directors if they become
dissatisfied with them or with the results of corporate policies and/or
performance. Director turnover is desirable because it can reduce the
possibility of inbreeding and provide sources for new ideas and new approaches
to problems.
"IT IS HEREBY PROPOSED THAT THE BOARD OF DIRECTORS, AT ITS NEXT REGULAR
MEETING, ESTABLISH A "NOMINATING COMMITTEE" COMPOSED OF NON-MANAGEMENT
DIRECTORS, AND THAT THE COMMITTEE NOMINATE TWO CANDIDATES FOR EACH DIRECTORSHIP
TO BE FILLED BY THE VOTING OF STOCKHOLDERS AT ANNUAL MEETINGS. IN ADDITION TO
CUSTOMARY PERSONAL BACKGROUND INFORMATION, PROXY STATEMENTS SHALL INCLUDE A
STATEMENT BY EACH CANDIDATE AS TO WHY HE OR SHE BELIEVES THEY SHOULD BE ELECTED.
"Any burden that a company may claim would be imposed upon it by having to
provide a choice of able director candidates is far outweighed by the benefits
that would accrue to its stockholders from a democratically-elected board -- a
board composed of representatives willing to have their respective
qualifications reviewed and weighed carefully by those whose interests they are
to serve.
"Please vote FOR this proposal.
* * * *
20
<PAGE> 23
RESPONSIVE STATEMENT AND RECOMMENDATION OF
THE BOARD OF DIRECTORS OF THE COMPANY
Approval of this proposal would require the Company's Board of Directors to
nominate two candidates for each board position to be filled.
It has been the Company's policy that when the Board's nominating committee
considers names of individuals to recommend to shareholders for election,
including any names that may come directly from shareholders, it recommends one
nominee for each open directorship position. The nominee is the one the Board
believes will best serve the interests of the shareholders. Approval of the
proposal would place the Board in the difficult position of having to recommend
both the individual who it believes is best qualified to serve as a director and
a less attractive second choice. Moreover, it would significantly reduce the
pool of candidates available to serve because many qualified individuals who are
willing to give up their time for board service are not willing to do so for
political campaigns in which the Board is a passive bystander. If proponent or
any other shareholder wants to afford shareholders a choice, there are easily
available mechanisms -- even on the floor at the Annual Meeting -- for
shareholder nominations of additional Board candidates.
We believe that approval of the proposal is NOT in the best interest of the
shareholders and the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE SHAREHOLDER PROPOSAL
DESCRIBED ABOVE.
21
<PAGE> 24
PROPOSAL FOUR
SHAREHOLDER PROPOSAL
Mr. Theodore J. Cole, 24 Alyson Pl., Bloomfield, N.J. 07003-5504, owner of
200 shares of Common Stock of the Company as of the Record Date, has submitted
the following statement and proposal, which are presented as received by the
Company:
RESOLVED: That the shareholders of First Fidelity Bancorporation recommend
the Board of Directors take the necessary initiative to institute a salary and
compensation reduction for all executives and directors who earn more than two
times the salary paid to our President of the United States, that is, NO MORE
THAN $400,000.
REASON 1: There is no corporation which exceeds the size and complexity of
operation of our government of which the President is the C.E.O. Even most
government agencies far exceed the size, as measured by personnel and budget, of
most private corporations. The President now receives $200,000; even heads of
agencies and members of Congress are paid somewhat in excess of $100,000. The
recommended ceiling is sufficient TO MOTIVATE any person to do their best.
REASON 2: Officers of public corporations are the EMPLOYEES AND NOT
OWNERS, except as they may be shareholders in common with other stockholders.
Yet, officers give the appearance that they run the corporation primarily for
their benefit rather than for us shareholders. They drain many millions of
dollars in salaries, stock options and numerous perquisites. When more than the
ceiling is taken, it is an unconscionable expression of greed and abuse of power
with us, stockowners, receiving a disproportion reward for our recent annual
risks.
REASON 3: In this REAL WORLD, many companies have reduced salaries and
offered stock options, others eliminated middle management, in efforts to
enhance shareowners income. FFD, like all banks, has increased our income but
the public still views the compensation excessive. The core depositors of "cheap
money" are switching to other lucrative investments since 1970 and trillions of
dollars (50%) will never come back.
REASON 4: For more than 50 years, management, with charts, stated high
compensation is necessary "to attract, retain and motivate a person". In this
REAL WORLD, economy and merger mania there is no shortage of highly qualified
people (including those working for FFD), who would gladly step in and do as
good a job, if not better! Almost daily you can read about executives seeking
employment at one-half or one-third their former salaries.
REASON 5: To remain competitive in world markets, we must cut our costs
and not overcompensate directors and officers. Even though your ballot is not
secret, I hope you vote for my resolution.
22
<PAGE> 25
RESPONSIVE STATEMENT AND RECOMMENDATION OF
THE BOARD OF DIRECTORS OF THE COMPANY
Superior Company performance depends upon superior employee performance. As
stated in the Board Human Resources Committee Report on Executive Compensation,
the Company's compensation policies, as administered under the Committee's
guidance, support the Company's business strategies through internally equitable
and externally competitive compensation practices, rewarding performance in
order to maintain the Company's competitive market position. Details with
respect to the compensation policy of First Fidelity are contained in the
Report.
Placing arbitrary limits on compensation, as suggested by the proposal,
would remove management's flexibility to compete for, retain and motivate
talented managers necessary to compete in this industry.
We believe that approval of the proposal is NOT in the best interest of the
shareholders and the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE SHAREHOLDER PROPOSAL
DESCRIBED ABOVE.
23
<PAGE> 26
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Any proposal intended to be presented by a shareholder at the 1996 Annual
Meeting of Shareholders must be received by the Company at the address specified
below no later than the close of business on November 13, 1995 to be considered
for inclusion in the Proxy Statement for the 1996 Annual Meeting. Any proposal
should be addressed to James L. Mitchell, Secretary, First Fidelity
Bancorporation, 550 Broad Street, Newark, New Jersey 07102 and should be sent by
certified mail, return receipt requested.
OTHER MATTERS
The Board of Directors does not know of any matters, other than those
referred to in the accompanying Notice for the 1995 Annual Meeting, to be
presented at the meeting for action by the shareholders. However, if any other
matters are properly brought before the meeting or any adjournments thereof, it
is intended that votes will be cast with respect to such matters, pursuant to
the proxies, in accordance with the best judgment of the person acting under the
proxies.
By Order of the Board of Directors
/s/ James L. Mitchell
JAMES L. MITCHELL, Secretary
March 13, 1995
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1994,
INCLUDING FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY STATEMENT. THE ANNUAL
REPORT IS NOT TO BE REGARDED AS PROXY SOLICITING MATERIAL OR AS A COMMUNICATION
BY MEANS OF WHICH ANY SOLICITATION IS TO BE MADE.
24
<PAGE> 27
IMPORTANT INFORMATION
FIRST FIDELITY BANCORPORATION
1995 ANNUAL MEETING
First Fidelity Bancorporation's Annual Meeting of Shareholders will be
held Tuesday, April 18, 1995, at 10:00 a.m. in the Van Pelt Auditorium of the
Philadelphia Museum of Art, 26th Street and The Benjamin Franklin Parkway,
Philadelphia, Pennsylvania. Attendees are asked to enter through the West
Entrance. Cabs are available at the 30th Street Station for the five-minute ride
to the Museum. Vans will be available for the return trip to the 30th Street
Station.
IN ORDER TO BE ADMITTED TO THE 1995 ANNUAL MEETING, YOU WILL BE REQUIRED TO
PRESENT THE ENCLOSED ADMISSION CARD OR PROOF OF YOUR OWNERSHIP OF FIRST FIDELITY
COMMON STOCK OR SERIES B PREFERRED STOCK.
<PAGE> 28
(LOGO)
ANNUAL MEETING OF SHAREHOLDERS
APRIL 18, 1995 AT 10:00 A.M.
THE PHILADELPHIA MUSEUM OF ART
PHILADELPHIA, PA
DIRECTIONS
SOUTHERN LOCATIONS
(SOUTH JERSEY, BALTIMORE, WASHINGTON)
Take I 95 North to I 676 West. Exit at Museum Exit (22nd Street). (-->) Make
right onto 22nd Street and move to the far left hand lane. At first stop light,
make a left turn into the middle left hand lane of the Benjamin Franklin
Parkway. Follow the Parkway around the traffic circle, staying in the right
hand lanes. Follow the signs for Kelly Drive and move into the extreme left
hand lane. At the first stop light, make a left onto 25th Street. Follow 25th
Street along the side of the Museum. Parking is available at the Museum.
Attendees are asked to enter through the West Entrance.
NORTHERN LOCATIONS
(NEW YORK, CONNECTICUT, NORTH JERSEY)
New Jersey Turnpike to Exit 4. Go North on Route 73 to Route 38 West. Take Route
38 West towards Philadelphia to Route 30 West, to the Benjamin Franklin Bridge.
At the end of the Bridge, follow signs for I 676 West. Exit at I 676 West and
follow to Museum Exit (22nd Street). Follow directions from above, starting at
the arrow (-->).
WESTERN AREAS
(VALLEY FORGE, KING OF PRUSSIA)
Take Interstate 76 East to Philadelphia. Exit at Spring Garden Avenue. At end of
ramp, make a left hand turn. Follow around and go through traffic light and
merge around traffic circle. Stay in the middle right hand lane. At the first
stop light, make a left onto 25th Street. Follow 25th Street along the side of
the Museum. Parking is available at the Museum. Attendees are asked to enter
through the West Entrance.
ADMISSION CARD
PLEASE PRESENT THIS CARD AT THE ANNUAL MEETING
(LOGO)
<TABLE>
<S> <C>
FIRST FIDELITY BANCORPORATION FIRST FIDELITY BANCORPORATION
550 BROAD STREET 123 SOUTH BROAD STREET
NEWARK, NJ 07102 PHILADELPHIA, PA 19109
</TABLE>
ANNUAL MEETING OF SHAREHOLDERS
10:00 A.M. Tuesday, April 18, 1995
The Philadelphia Museum of Art
26th Street and the Benjamin Franklin Parkway
Philadelphia, Pennsylvania
______________________________________________________________
NAME (please print)
TRANSPORTATION
Cabs are available at 30th Street Station for the five-minute ride to the
Philadelphia Museum of Art. Attendees are asked to enter through the West
Entrance. Vans will be available for the return trip to 30th Street Station. See
reverse side for driving directions.
Detach Proxy Card Here
- -------------------------------------------------------------------------------
<PAGE> 29
FIRST FIDELITY BANCORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS, APRIL 18, 1995
The undersigned hereby appoints William F. Hyland, Joseph A. McBride,
Martin Meyerson, Harold W. Sonn, and Norman Tanzman, and each of them, attorneys
and proxies with power of substitution, to vote for and on behalf of the
undersigned at the First Fidelity Bancorporation Annual Meeting of Shareholders
to be held on April 18, 1995 and at any adjournment thereof, upon the following
matters and upon any other business that may properly come before the meeting,
as set forth in the related Notice of Meeting and Proxy Statement, both of
which have been received by the undersigned.
This proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. If this proxy is executed but no
direction is made, this proxy will be voted FOR the board's nominees for
director, FOR proposal 2 and AGAINST proposals 3 and 4.
PLEASE INDICATE YOUR VOTE FOR THE ELECTION OF DIRECTORS ON THE OTHER
SIDE. The nominees are: Louis E. Azzato, Edward E. Barr, Roland K.
Bullard, II, Lee A. Butz, Frank M. Henry, Juan Rodriguez Inciarte, Rocco J.
Marano, Donald C. Parcells, Robert M. Scott, and Sefton Stallard.
(CONTINUED, AND TO BE DATED AND SIGNED, ON THE OTHER SIDE)
First Fidelity Bancorporation
P.O. Box 11300
New York, N.Y. 10203-0300
/ /
PLEASE MARK BOXES /X/ IN BLUE OR BLACK INK
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
1. Election of ten directors.
For all Against all
nominees / / nominees / / Exception* / /
* To withhold authority for individual nominees, print nominee's name
and check Exception Box.
________________________________________________________________________
2. Ratification of KPMG Peat Marwick LLP as independent public
accountants for 1995.
For / / Against / / Abstain / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSALS 3 AND 4.
3. Adoption of shareholder proposal described in the Proxy Statement.
For / / Against / / Abstain / /
4. Adoption of shareholder proposal described in the Proxy Statement.
For / / Against / / Abstain / /
If you have noted an
address change or
comments on either side
of this card, mark here: / /
Dated: _________________________, 1995
_____________________________________
_____________________________________
Please sign this proxy and return it promptly whether or not you expect to
attend the meeting. You may nevertheless vote in person if you attend.
Please sign exactly as your name appears hereon. Give full title if an
Attorney, Executor, Administrator, Trustee, Guardian, etc.
For an account in the name of two or more persons, each should sign, or if
one signs, he or she should attach evidence of authority.
SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 30
(LOGO)
ANNUAL MEETING OF SHAREHOLDERS
APRIL 18, 1995 AT 10:00 A.M.
THE PHILADELPHIA MUSEUM OF ART
PHILADELPHIA, PA
DIRECTIONS
SOUTHERN LOCATIONS
(SOUTH JERSEY, BALTIMORE, WASHINGTON)
Take I 95 North to I 676 West. Exit at Museum Exit (22nd Street). (-->) Make
right onto 22nd Street and move to the far left hand lane. At first stop light,
make a left turn into the middle left hand lane of the Benjamin Franklin
Parkway. Follow the Parkway around the traffic circle, staying in the right
hand lanes. Follow the signs for Kelly Drive and move into the extreme left
hand lane. At the first stop light, make a left onto 25th Street. Follow 25th
Street along the side of the Museum. Parking is available at the Museum.
Attendees are asked to enter through the West Entrance.
NORTHERN LOCATIONS
(NEW YORK, CONNECTICUT, NORTH JERSEY)
New Jersey Turnpike to Exit 4. Go North on Route 73 to Route 38 West. Take Route
38 West towards Philadelphia to Route 30 West, to the Benjamin Franklin Bridge.
At the end of the Bridge, follow signs for I 676 West. Exit at I 676 West and
follow to Museum Exit (22nd Street). Follow directions from above, starting at
the arrow (-->).
WESTERN AREAS
(VALLEY FORGE, KING OF PRUSSIA)
Take Interstate 76 East to Philadelphia. Exit at Spring Garden Avenue. At end of
ramp, make a left hand turn. Follow around and go through traffic light and
merge around traffic circle. Stay in the middle right hand lane. At the first
stop light, make a left onto 25th Street. Follow 25th Street along the side of
the Museum. Parking is available at the Museum. Attendees are asked to enter
through the West Entrance.
ADMISSION CARD
PLEASE PRESENT THIS CARD AT THE ANNUAL MEETING
(LOGO)
<TABLE>
<S> <C>
FIRST FIDELITY BANCORPORATION FIRST FIDELITY BANCORPORATION
550 BROAD STREET 123 SOUTH BROAD STREET
NEWARK, NJ 07102 PHILADELPHIA, PA 19109
</TABLE>
ANNUAL MEETING OF SHAREHOLDERS
10:00 A.M. Tuesday, April 18, 1995
The Philadelphia Museum of Art
26th Street and the Benjamin Franklin Parkway
Philadelphia, Pennsylvania
______________________________________________________________
NAME (please print)
TRANSPORTATION
Cabs are available at 30th Street Station for the five-minute ride to the
Philadelphia Museum of Art. Attendees are asked to enter through the West
Entrance. Vans will be available for the return trip to 30th Street Station. See
reverse side for driving directions.
Detach Proxy Card Here
- -------------------------------------------------------------------------------
<PAGE> 31
FIRST FIDELITY BANCORPORATION
SERIES B PREFERRED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS, APRIL 18, 1995
The undersigned hereby appoints William F. Hyland, Joseph A. McBride,
Martin Meyerson, Harold W. Sonn, and Norman Tanzman, and each of them, attorneys
and proxies with power of substitution, to vote for and on behalf of the
undersigned at the First Fidelity Bancorporation Annual Meeting of Shareholders
to be held on April 18, 1995 and at any adjournment thereof, upon the following
matters and upon any other business that may properly come before the meeting,
as set forth in the related Notice of Meeting and Proxy Statement, both of
which have been received by the undersigned.
This proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. If this proxy is executed but no
direction is made, this proxy will be voted FOR the board's nominees for
director, FOR proposal 2 and AGAINST proposals 3 and 4.
PLEASE INDICATE YOUR VOTE FOR THE ELECTION OF DIRECTORS ON THE OTHER
SIDE. The nominees are: Louis E. Azzato, Edward E. Barr, Roland K.
Bullard, II, Lee A. Butz, Frank M. Henry, Juan Rodriguez Inciarte, Rocco J.
Marano, Donald C. Parcells, Robert M. Scott, and Sefton Stallard.
(CONTINUED, AND TO BE DATED AND SIGNED, ON THE OTHER SIDE)
First Fidelity Bancorporation
P.O. Box 11300
New York, N.Y. 10203-0300
/ /
PLEASE MARK BOXES /X/ IN BLUE OR BLACK INK
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
1. Election of ten directors.
For all Against all
nominees / / nominees / / Exception* / /
* To withhold authority for individual nominees, print nominee's name
and check Exception Box.
________________________________________________________________________
2. Ratification of KPMG Peat Marwick LLP as independent public
accountants for 1995.
For / / Against / / Abstain / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSALS 3 AND 4.
3. Adoption of shareholder proposal described in the Proxy Statement.
For / / Against / / Abstain / /
4. Adoption of shareholder proposal described in the Proxy Statement.
For / / Against / / Abstain / /
If you have noted an
address change or
comments on either side
of this card, mark here: / /
Dated: _________________________, 1995
_____________________________________
_____________________________________
Please sign this proxy and return it promptly whether or not you expect to
attend the meeting. You may nevertheless vote in person if you attend.
Please sign exactly as your name appears hereon. Give full title if an
Attorney, Executor, Administrator, Trustee, Guardian, etc.
For an account in the name of two or more persons, each should sign, or if
one signs, he or she should attach evidence of authority.
SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
