SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Signet Banking Corporation
(Name of Registrant as Specified in its Charter)
Signet Banking Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
Signet Banking Corporation Logo
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE HEREBY IS GIVEN that the annual meeting of shareholders of Signet
Banking Corporation (the "Corporation") will be held at The Engineering
Society of Baltimore, Inc., 11 West Mount Vernon Place, Baltimore, Maryland,
on Tuesday, April 26, 1994 at 2:00 p.m., Eastern Time, for the following
purposes:
(a) to elect eleven Directors to serve for the ensuing year;
(b) to approve the Corporation's Annual Executive Incentive
Compensation Plan;
(c) to approve the Corporation's Executive Long-Term
Incentive Plan;
(d) to approve the Corporation's 1994 Stock Incentive Plan;
(e) to ratify the selection by the Board of Directors of
Ernst & Young as independent auditors to audit the
financial statements of the Corporation for 1994; and
(f) to transact such other business as properly may come
before the meeting or any adjournment thereof.
Only shareholders of the Corporation's Common Stock of record at the
close of business on March 10, 1994 will be entitled to vote at the meeting
and any adjournment thereof.
The Board of Directors believes that the above proposals are in the best
interests of the Corporation and its shareholders and therefore recommends
that you vote "FOR" each proposal.
It is important that your shares be represented and voted. Please mark,
date and sign the enclosed proxy and return it promptly in the enclosed
envelope, regardless of whether you expect to attend the meeting. If for any
reason you desire to revoke your proxy, you may do so at any time before it is
voted. You are cordially invited to attend the meeting.
By Order of the Board of
Directors
Signature
ANDREW T. MOORE, JR.
Secretary
March 28, 1994
<PAGE>
PROXY STATEMENT
Proxies in the form enclosed are solicited by the Corporation to be
voted at the annual meeting of shareholders to be held on April 26, 1994 and
any adjournment thereof. Proxies may be revoked at any time before they are
voted by delivery of notice of revocation to the Corporation's Senior Vice
President and Corporate Secretary. Unrevoked proxies will be voted as
designated thereon. The cost of this solicitation will be borne by the
Corporation. Proxies may be solicited by regular employees at nominal cost by
telephone or visit and brokers and nominees will be reimbursed for their
expenses in soliciting proxies from beneficial owners. In addition, the
Corporation has retained Georgeson & Co., Inc. to assist in the solicitation
of proxies for an aggregate fee of not more than $8,000 plus reasonable out-
of-pocket expenses. It is contemplated that this proxy statement and the
enclosed proxy first will be sent to shareholders on March 28, 1994. The
mailing address of the principal office of the Corporation is 7 North Eighth
Street, P. O. Box 25970, Richmond, Virginia 23260.
Only shareholders of the Corporation's Common Stock of record at the
close of business on March 10, 1994 are entitled to vote at the meeting. On
that date, there were outstanding 56,706,167 shares of Common Stock of the
Corporation entitling the holders thereof to one vote per share on all matters
brought before the meeting.
Except for the election of Directors, action on matters submitted to a
vote of the shareholders at the meeting will be approved if a quorum is
present and the votes cast in favor of the matter constitute a majority of the
votes cast for or against the matter. With respect to the election of
Directors, the eleven nominees receiving the greatest number of votes cast for
the election of Directors will be elected, assuming a quorum is present at the
meeting. Presence in person or by proxy of a majority of the outstanding
shares of Common Stock entitled to vote at the meeting will constitute a
quorum. Shares for which the holder has elected to abstain or withhold the
proxies' authority to vote (including broker non-votes) on a matter will count
toward a quorum but will have no effect on the action taken with respect to
such matter.
The Corporation has been advised by FMR Corp. ("FMR"), 82 Devonshire
Street, Boston, Massachusetts 02109-3614, and Edward C. Johnson, 3d, a
controlling shareholder of FMR, that as of December 31, 1993 they, through
investment advisory and banking subsidiaries of FMR, beneficially owned an
aggregate of 4,126,303 shares of the Corporation's Common Stock or 7.30% of
the outstanding shares. Of these shares, 3,064,803 were beneficially owned as
a result of FMR's and Mr. Johnson's control over a wholly-owned subsidiary of
FMR that acts as investment advisor to several investment companies known as
the Fidelity funds and, as a result, has sole power to dispose of the
Corporation's shares held by the funds. Power to vote the shares held by the
Fidelity funds resides with the Boards of Trustees of the funds, which direct
the investment advisor to vote the shares in accordance with written
guidelines, and does not reside with FMR or Mr. Johnson. Additionally,
970,300 shares are beneficially owned through a wholly-owned banking
subsidiary of FMR that, as investment manager of certain institutional
accounts, has sole dispositive power over all of such shares and sole voting
power over 606,000 of such shares.
The Corporation also has been advised by Barrow, Hanley, Mewhinney &
Strauss, Inc. ("BHM&S"), 280 Crescent Court, 19th Floor, Dallas, Texas 75201,
that, as of February 28, 1994, BHM&S had voting and investment power with
respect to 3,025,300 shares of the Corporation's Common Stock or 5.4% of the
outstanding shares of Common Stock. BHM&S further has advised the Corporation
that it is an investment advisor under the Investment Advisors Act of 1940 and
that the right to receive or the power to direct the receipt of dividends
from, or the proceeds from the sale of, the Common Stock is held by certain
clients of BHM&S, none of which has such right or power with respect to five
percent or more of the Common Stock.
ELECTION OF DIRECTORS
The persons named below have been nominated to serve as Directors of the
Corporation until the next annual meeting of shareholders and until their
successors duly have been elected. Each nominee has agreed to serve if
elected.
The persons named on the enclosed proxy will vote "FOR" the election of
the nominees named below unless authority is withheld. If for any reason any
of the persons named below should become unavailable to serve, proxies will be
voted for the remaining nominees and such other person or persons as the Board
of Directors may designate.
The nominees are:
<TABLE>
Principal Occupation or Director of
Employment During The Corporation
Name Last Five Years Since Age
<S> <C> <C> <C>
Retired on September 1, 1991, 1985 65
from the office of President
PHOTO and Chief Executive Officer,
Chesapeake and Potomac
Telephone Company of Maryland
(Telecommunications),
Baltimore, Maryland. Prior to
January, 1990, he was
President of Chesapeake and
Potomac Telephone Company of
Maryland. He also is a
Director of Signet
Bank/Maryland and Signet
Bank/Virginia.
J. Henry Butta
Chairman of the Board and 1984 54
Chief Executive Officer, Blue
PHOTO Cross and Blue Shield of
Virginia (Insurance),
Richmond, Virginia. Prior to
July, 1989, he was Chairman of
the Board and Chief Executive
Officer of Consolidated
Healthcare, Inc. He also is a
Director of Signet
Bank/Maryland and Signet
Bank/Virginia.
Norwood H. Davis, Jr.
Chairman of the Board and 1993 44
Chief Executive Officer,
PHOTO Heilig-Meyers Company (Retail
Home Furnishings), Richmond,
Virginia. He also is a
Director of Signet
Bank/Maryland and Signet Bank/
Virginia.
William C. DeRusha
</TABLE>
<TABLE>
Principal Occupation or Director of
Employment During The Corporation
Name Last Five Years Since Age
<S> <C> <C> <C>
Chairman of the Board and 1978 52
Chief Executive Officer of the
PHOTO Corporation and Chairman of
Signet Bank/Maryland, Signet
Bank, N.A. and Signet
Bank/Virginia. Prior to
April, 1990, he was President
and Chief Executive Officer of
the Corporation and Signet
Bank/Virginia. Prior to
April, 1989, he was President
and Chief Operating Officer of
the Corporation and President
and Chief Executive Officer of
Signet Bank/Virginia. He also
is a Director of Signet
Bank/Maryland and Signet
Bank/Virginia.
Robert M. Freeman
President, Hampton University 1989 53
(Educational Institution),
PHOTO Hampton, Virginia, and Owner,
Pepsi-Cola Bottling Company,
Houghton, Michigan. He also
is a Director of Signet
Bank/Maryland and Signet
Bank/Virginia.
William R. Harvey
President, Glaize 1977 62
Developments, Inc. (Land
PHOTO Development), Winchester,
Virginia. She also is a
Director of Signet
Bank/Maryland and Signet
Bank/Virginia.
Elizabeth G. Helm
President Emeritus, The Johns 1985 65
Hopkins Health System and
PHOTO Consultant. Prior to July 1,
1992 he was President, Chief
Executive Officer and Trustee,
Johns Hopkins Health System
and Johns Hopkins Hospital
(Medical Care Services),
Baltimore, Maryland. He also
is a Director of Signet
Bank/Maryland and Signet
Bank/Virginia.
Robert M. Heyssel
</TABLE>
<TABLE>
Principal Occupation or Director of
Employment During The Corporation
Name Last Five Years Since Age
<S> <C> <C> <C>
President and Chief Operating 1986 55
Officer of the Corporation and
PHOTO President and Chief Executive
Officer of Signet
Bank/Virginia. Prior to
April, 1990, he was Vice
Chairman of the Corporation,
Signet Bank/Maryland and
Signet Bank/Virginia. He also
is a Director of Signet
Bank/Maryland, Signet Bank,
N.A. and Signet Bank/Virginia.
Malcolm S. McDonald
Chairman of the Board and 1985 64
Chief Executive Officer, Crown
PHOTO Central Petroleum Corporation
(Independent
Refiners/Marketers), Balti-
more, Maryland. He also is a
Director of Signet
Bank/Maryland and Signet
Bank/Virginia.
Henry A. Rosenberg, Jr.
Chairman of the Board and 1992 50
Chief Executive Officer of
PHOTO American Trading and
Production Corporation
(Diversified Manufacturing,
Real Estate and Oil and Gas
Operations), Baltimore,
Maryland. Prior to June, 1992,
he was President and Chief
Executive Officer of American
Trading and Production
Corporation. Prior to January,
1991, he was President and
Chief Operating Officer of
American Trading and
Production Corporation. He
also is a Director of Signet
Bank/ Maryland and Signet
Bank/Virginia.
Louis B. Thalheimer
President, Westfield Realty, 1985 57
Inc. (Real Estate
PHOTO Development), Arlington,
Virginia. He also is a
Director of Signet
Bank/Maryland and Signet
Bank/Virginia.
Stanley I. Westreich
</TABLE>
Michael D. Sullivan resigned from the Board of Directors on December 27,
1993.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's Executive Officers and Directors and persons who own more than
ten percent of the Corporation's Common Stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange, Inc. Executive Officers, Directors and greater than ten
percent shareholders are required to furnish the Corporation with copies of
all Section 16(a) reports that they file.
Based solely on its review of the copies of Section 16(a) reports
received by it, or written representations from certain reporting persons that
no such reports were required for those persons, the Corporation believes
that, during the period from January 1, 1993 to December 31, 1993, all filing
requirements applicable to its Directors, Executive Officers and greater than
ten percent shareholders were complied with, except that Norwood H. Davis, Jr.
filed late one report covering one transaction.
Other Directorships
The nominees are directors of the following companies in addition to
those mentioned in the table:
Mr. Davis: Home Nutritional Services, Inc.
Mr. DeRusha: Peebles Inc.
Mr. Freeman: Blue Cross and Blue Shield of Virginia; Crown Central
Petroleum Corporation
Mrs. Helm: Blue Cross and Blue Shield of Virginia; Shenandoah Life
Insurance Company
Dr. Harvey: Blue Cross and Blue Shield of Virginia; International
Guaranty Insurance Company
Dr. Heyssel: Monsanto Company
Mr. McDonald: Peebles Inc.
Mr. Rosenberg: USF&G Corporation
Stock Ownership
The following table provides information as of March 15, 1994 as to the
shares of the Corporation's Common Stock beneficially owned, as that term is
defined by the Securities and Exchange Commission, by each nominee for
Director, by each of the five Executive Officers named in the Summary
Compensation Table on page 9 and by all Directors and Executive Officers of
the Corporation as a group:
Number of Shares
Name Beneficially Owned (1)(2) % of Class
Directors
J. Henry Butta 2,020 *
Norwood H. Davis, Jr. 96,539 *
William C. DeRusha 1,000 *
William R. Harvey 6,490 *
Elizabeth G. Helm 24,486 *
Robert M. Heyssel 4,290 *
Henry A. Rosenberg, Jr. 2,491,163 (3) 4.4
Louis B. Thalheimer 2,491,163 (3) 4.4
Stanley I. Westreich 531,752 (4) 1.0
Named Executive Officers
Robert M. Freeman** 325,301 (5) *
Malcolm S. McDonald** 212,209 (6) *
Wallace B. Millner, III 139,348 (7) *
T. Gaylon Layfield, III 97,898 (8) *
Robert J. Merrick 91,559 (9) *
Directors & Executive
Officers as a group (24) 4,419,597 (10) 7.8
*Less than 1% of Class
**Messrs. Freeman and McDonald also are Directors of the Corporation.
(1) Under a policy adopted by the Board of Directors, each Director
must own 1,000 shares of Common Stock within twelve months of his or her
election.
(2) Each person individually has sole voting and investment power
over all of the shares listed except as set forth below.
(3) Mr. Rosenberg and Mr. Thalheimer, Directors of the Corporation,
and their affiliates, had voting and investment power with respect to
2,491,163 shares of Common Stock of the Corporation. Mr. Rosenberg and Mr.
Thalheimer each are deemed to be the beneficial owner of all the shares held
by the group. Mr. Rosenberg has sole voting and investment power as to 1,767
shares and shared voting and/or investment power as to 1,252,158 shares. Mr.
Thalheimer has sole voting and investment power as to 20,100 shares and
shared voting and/or investment power as to 1,252,682 shares.
(4) Includes 199,386 shares as to which Mr. Westreich has shared
voting and/or investment power.
(5) Includes 150,752 shares that may be acquired within 60 days by
the exercise of stock options, 29,800 shares that may be acquired on or after
July 25, 1994 by the exercise of stock options, 34,470 shares held in the
Employee Savings Plan and 35,557 shares for which there is shared voting and/or
investment power.
(6) Includes 103,260 shares that may be acquired within 60 days by
the exercise of stock options, 18,600 shares that may be acquired on or after
July 25, 1994 by the exercise of stock options, 12,076 shares held in the
Employee Savings Plan and 4,564 shares for which there is shared voting and/or
investment power.
(7) Includes 69,020 shares that may be acquired within 60 days by
the exercise of stock options, 10,500 shares that may be acquired on or after
July 25, 1994 by the exercise of stock options, 5,414 shares held in the
Employee Savings Plan and 87 shares for which there is shared voting and/or
investment power.
(8) Includes 50,508 shares that may be acquired within 60 days by
the exercise of stock options, 10,500 shares that may be acquired on or after
July 25, 1994 by the exercise of stock options, 237 shares held in the Employee
Stock Purchase Plan, 1,448 shares held in the Employee Savings Plan and 1,100
shares for which there is shared voting and/or investment power.
(9) Includes 62,640 shares that may be acquired within 60 days by
the exercise of stock options, 7,800 shares that may be acquired on or after
July 25, 1994 by the exercise of stock options, 155 shares held in the Employee
Savings Plan and 2,368 shares for which there is shared voting and/or
investment power.
(10) Includes 656,266 shares that may be acquired within 60 days by
the exercise of stock options, 124,300 shares that may be acquired on or after
July 25, 1994 by the exercise of stock options, 12,146 shares held in the
Employee Stock Purchase Plan, 179,793 shares held in the Amended Investor
Stock Purchase Plan, 78,026 shares held in the Employee Savings Plan and
1,496,606 shares for which there is shared voting and/or investment power.
Transactions
Subsidiaries of American Trading and Production Corporation, of which
Mr. Thalheimer is Chairman of the Board and Chief Executive Officer, during
1993, leased to a subsidiary of the Corporation a total of 4,039 square feet
in the Blaustein Building, Baltimore, Maryland. Rent for this space,
including escalation, totaled $54,189 in 1993.
During 1992, the officers and directors of American Trading Real Estate
Company, Inc. ("Atreco"), a wholly-owned subsidiary of American Trading and
Production Corporation, of which Mr. Thalheimer is Chairman of the Board and
Chief Executive Officer, decided that Atreco should avail itself of the non-
recourse provision of a mortgage note held by the Prudential Insurance Company
of America (Prudential). The mortgage note was secured by an office building
in Los Angeles, California. The office building, known as Wilshire Square II,
was not generating sufficient cash flow to cover debt payments required by the
note. After lengthy but amicable negotiations with Prudential, Atreco was
unsuccessful in restructuring the debt. Thereupon, Atreco suspended debt
payments pursuant to a stipulation mutually agreed upon with Prudential. On
December 11, 1992, the Superior Court of California for the County of Los
Angeles appointed a receiver to expedite foreclosure. The office building was
consequently purchased by Prudential in settlement of the mortgage note on
April 29, 1993 at the foreclosure sale.
Ward Development Company, of which Mr. Westreich is a general partner,
during 1993, leased to a subsidiary of the Corporation a total of 3,326 square
feet in an office building in Arlington, Virginia. Rent for this space
totaled $111,485 in 1993.
Most of the Directors, partnerships of which they are general partners
and corporations of which they are directors or officers maintain normal
banking relationships with the Corporation's banking subsidiaries, Signet
Bank/Maryland, Signet Bank, N.A. and Signet Bank/Virginia. Loans made by
these banking subsidiaries to such persons and other entities are 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, general partnerships and corporations and do
not involve more than normal risk of collectibility or present other
unfavorable features.
Board and Committee Meetings
During 1993, the Board of Directors of the Corporation held thirteen
meetings and the Executive Committee met three times. The Audit Committee of
the Corporation met four times, the Finance Committee met six times, the
Nominating, Governance and Corporate Responsibility Committee met three times,
the Organization and Compensation Committee met five times and the Stock
Option Committee met two times. All Directors of the Corporation attended at
least 75% of the aggregate of all meetings of the Board and Committees on
which they served.
Committees of the Board
The Executive Committee, during the interim between Board meetings, has
and may exercise all of the authority of the Board of Directors, except to
approve certain extraordinary transactions. During 1993, the Executive
Committee of the Corporation consisted of permanent members Messrs. Freeman
(Chairman) and McDonald. The other members of the Committee who served for
the first six months were Messrs. Butta, Davis and Thalheimer; and for the
last six months, Mrs. Helm and Messrs. Heyssel and Rosenberg.
The Audit Committee is composed entirely of outside Directors who are
independent of the management of the Corporation and are free from any
relationship that in the opinion of the Board of Directors would interfere
with their exercise of independent judgment. It recommends the engagement of
independent auditors and reviews the scope of their services; reviews the
Corporation's consolidated financial statements and all audits related to
them; the Committee reviews the internal audit function including the scope
and extent of internal audits and credit reviews; reviews the annual
management report and investigates any matter brought to its attention within
its purview. Also, the Committee reviews all reports of examination and
management's responses and annually reviews transactions involving the
Corporation and any Director, Executive Officer or their affiliates. During
1993, the Audit Committee consisted of Messrs. Butta (Chairman), Davis,
Rosenberg, Thalheimer and Westreich.
The Finance Committee reviews the Corporation's financial condition and
finance plans designed to assure capital adequacy and liquidity and is
responsible for recommendations concerning any dividend change. The Finance
Committee also reviews the investment performance of the Corporation and its
Trust subsidiary. During 1993, the Finance Committee consisted of Messrs.
Thalheimer (Chairman), Butta, Mrs. Helm and Dr. Heyssel.
The Nominating, Governance and Corporate Responsibility Committee
considers candidates for election as Directors and is responsible for keeping
abreast of developments with regard to corporate governance in general and
Directors' duties and responsibilities in particular and corporate
contributions. It also considers nominees recommended by shareholders whose
recommendations should be submitted to it through the Corporate Secretary of
the Corporation. During 1993, the Nominating, Governance and Corporate
Responsibility Committee consisted of Mrs. Helm (Chairman), Messrs. Harvey,
Sullivan and Westreich.
The Organization and Compensation Committee recommends to the Board the
election and reelection of officers, considers changes in compensation,
promotions and reviews matters related to management succession. The
Organization and Compensation Committee also serves as the Employee Stock
Purchase Committee and the Stock Option Committee. During 1993, the
Organization and Compensation Committee consisted of Messrs. Rosenberg
(Chairman), Davis, Harvey, Heyssel and Sullivan.
Compensation Committee Interlocks and Insider Participation
Mr. Rosenberg, who serves as Chairman of the Organization and
Compensation Committee is Chairman of the Board and Chief Executive Officer of
Crown Central Petroleum Corporation. Mr. Freeman, Chairman of the Board and
Chief Executive Officer of the Corporation, is a Director of Crown Central
Petroleum Corporation, but does not serve on its Compensation Committee.
Crown Central Petroleum Corporation, of which Mr. Rosenberg is Chairman
of the Board and Chief Executive Officer, during 1993, leased to subsidiaries
of the Corporation a total of 3,077 square feet for automatic teller machines
located at various Crown stations in Maryland and Virginia. Rent for this
space totaled $60,000 in 1993.
Mr. Davis, who is Chairman of the Board and Chief Executive Officer of
Blue Cross and Blue Shield of Virginia, served on the Organization and
Compensation Committee until July 1993. Mr. Freeman subsequently became a
Director of Blue Cross and Blue Shield of Virginia.
Compensation of the Board
Directors of the Corporation are paid an annual retainer of $14,000 plus
$850 for attendance at each meeting of the Board, Executive, Audit and
Organization and Compensation Committees and $650 for each Finance and
Nominating, Governance and Corporate Responsibility Committee meeting
attended. Directors also are reimbursed for reasonable expenses incurred to
attend Board and Committee meetings. Chairmen of Committees receive an
additional $3,500 per annum. Directors who also are officers receive no
retainer or Committee Chairman fee and no compensation for meetings attended.
The Corporation maintains a plan pursuant to which Directors voluntarily
may defer all of their fees for services performed for the Corporation (in
their capacity as Directors) and receive deferred income benefits. Directors
who participate will begin to receive their deferred income benefits when they
cease to be Directors. Deferred income benefits also are payable to the
beneficiaries or estates of Directors who die before the receipt of their
benefits. Benefits generally are payable in monthly installments beginning
within 90 days after retirement and extending no later than the date the
individual attains age 80. The Corporation also maintains a plan pursuant to
which Directors previously were permitted to defer all or a portion of their
fees in order to receive income benefits. Directors who deferred fees will
receive income benefits over a fifteen year period beginning when they cease
to serve as Directors. No deferrals have been made under this plan since
December, 1987 and no additional deferrals will be made under this plan.
With respect to these deferred plans, upon a change of control and
unless a Director made and filed with the Corporation before January 1, 1994
an irrevocable election to defer receipt of payments to his retirement or
earlier termination of employment, the Corporation shall pay to each Director
within thirty days of the change of control, a lump sum equal to such
Director's account balance, the present value of the accrued benefit or, for
those former Directors currently receiving benefits, the present value of the
remaining benefits as of the date of the change of control.
Executive Compensation
Summary Compensation Table
The following table provides certain information concerning annual and
long term compensation paid to or accrued on behalf of the Chairman and Chief
Executive Officer and the four other most highly compensated Executive
Officers (the "Named Executive Officers") for the years 1991, 1992 and 1993.
<TABLE>
Summary Compensation Table
Long Term
Compensation
----------------------
Annual Compensation Awards Payouts
- --------------------------------------------------------------------- ----------- --------
Name and Options/(1) LTIP/(2) All Other/(3)
Principal Position Year Salary Bonus SARs Payouts Compensation
$ $ # $ $
<S> <C> <C> <C> <C> <C> <C>
Robert M. Freeman 1993 530,200 488,500 68,604 334,975 39,221
Chairman of the Board 1992 494,100 364,350 50,748 95,250 44,375
and Chief Executive 1991 448,900 0 71,400 0 39,236
Officer
Malcolm S. McDonald 1993 380,000 316,100 43,312 200,700 49,763
President and Chief 1992 360,200 246,675 34,348 59,700 58,699
Operating Officer 1991 332,700 0 49,800 0 53,264
Wallace B. Millner, III 1993 266,200 127,075 14,126 102,475 44,058
Senior Executive Vice 1992 254,800 150,000 19,694 29,875 47,936
President and Chief 1991 243,800 0 28,800 0 29,605
Financial Officer
T. Gaylon Layfield, III 1993 217,650 163,975 10,772 102,475 17,238
Senior Executive Vice 1992 191,100 108,925 11,736 21,700 18,796
President 1991 184,200 0 18,200 0 12,931
Robert J. Merrick 1993 223,500 94,175 11,104 86,800 32,306
Executive Vice 1992 218,600 85,075 12,936 23,925 32,264
President and 1991 213,800 0 23,400 0 22,611
Chief Credit Officer
</TABLE>
(1) Reflects two for one stock split in the form of a 100 percent stock
dividend distributed on July 27, 1993.
(2) Payout of long term cash awards for performance periods ending on
December 31, 1991, 1992 and 1993.
(3) All Other Compensation includes the following:
(i) Matching contributions under the Corporation's Employee Savings and
unfunded Excess Savings plans. Employee pretax contributions are
matched at a rate of $0.50 for each $1.00 deferred under the plans
except that no matching contributions are made with respect to deferrals
on compensation which exceed the Internal Revenue Code Section
401(a)(17) maximum allowable compensation. During 1993, each Named
Executive Officer received the maximum matching contribution of $4,497
under the Employee Savings Plan. Also, each Named Executive Officer
received the maximum matching contribution of $2,578 under the unfunded
Excess Savings plan.
(ii) Above market interest (as defined by the Securities and Exchange
Commission) accrued on balances maintained under the unfunded Excess
Savings and unfunded deferred compensation plans. For 1993, the
amounts accrued were:
<TABLE>
Excess Deferred Total 1993
Name Savings Plan Compensation Plan Interest Accrual
<S> <C> <C> <C>
Robert M. Freeman $ 6,630 $ 3,986 $ 10,616
Malcolm S. McDonald 1,422 16,190 17,612
Wallace B. Millner, III 2,635 20,248 22,883
T. Gaylon Layfield, III 1,549 1,307 2,856
Robert J. Merrick 3,165 9,692 12,857
</TABLE>
(iii) Under the Corporation's Split Dollar Life Insurance Plan,
individual whole life insurance is available to certain executive and
management level employees. The participant pays an assumed term cost
of the coverage and the Corporation pays the remainder of the premium.
If all assumptions as to life expectancy and other factors occur in
accordance with projections, the Corporation expects to recover the
cost of the program. The amounts listed below reflect the current
value of the benefits ascribed to life insurance policies purchased on
the lives of the Named Executive Officers.
Name Benefit Value
Robert M. Freeman $ 21,530
Malcolm S. McDonald 25,076
Wallace B. Millner, III 14,099
T. Gaylon Layfield, III 7,307
Robert J. Merrick 12,374
Stock Options
The following table provides information concerning the granting of
stock options during 1993 under the Corporation's 1992 Stock Option Plan to
the Named Executive Officers.
<TABLE>
Option/SAR Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term(1)
- ------------------------------------------------------------------------------------- ------------------------------
% of Total
Options/SAR's
Options/ Granted to Exercise or
SAR's Employees in Base Price Expiration
Name Granted(2) Fiscal Year ($/Sh)(2) Date 0%($) 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C> <C>
Robert M. Freeman 38,800(3) 12.65% 23.71875 1/26/03 0 578,764 1,466,701
22,916(4) 7.47% 27.75000 1/27/02 0 327,147 794,697
6,888(5) 2.25% 27.75000 1/21/01 0 84,364 199,265
Malcolm S. McDonald 24,400(3) 7.96% 23.71875 1/26/03 0 363,965 922,359
14,920(4) 4.87% 27.75000 1/27/02 0 212,997 517,406
3,992(5) 1.30% 27.75000 1/21/01 0 48,894 115,486
Wallace B. Millner, III 12,200(3) 3.98% 23.71875 1/26/03 0 181,982 461,179
1,926(5) 0.63% 27.68750 1/21/01 0 23,606 55,752
T. Gaylon Layfield, III 9,000(3) 2.93% 23.71875 1/26/02 0 134,249 340,214
1,772(5) 0.58% 27.68750 1/21/01 0 21,636 51,095
Robert J. Merrick 9,000(3) 2.93% 23.71875 1/26/02 0 134,249 340,214
2,104(5) 0.69% 29.31250 1/21/01 0 28,393 67,560
</TABLE>
(1) The dollar amounts under these columns are the result of calculations at
0% and at the 5% and 10% rates set by the Securities and Exchange
Commission and therefore are not intended to forecast possible future
appreciation, if any, of the Corporation's stock price. The Corporation
did not use an alternative formula for a grant date valuation, as it is
not aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors.
(2) Reflects two for one stock split in the form of a 100 percent stock
dividend distributed on July 27, 1993.
(3) Granted as part of the Corporation's annual option grant. The options
are exercisable during the period beginning six months following the
grant date and ending ten years after the grant date so long as the
optionee continues employment with the Corporation or one of its
subsidiaries. All options are granted at the fair market value of the
Corporation's Common Stock on the date of grant. There were no Stock
Appreciation Rights (SARs) granted to plan participants.
(4) Granted as reload options. Reload options are granted when an executive
surrenders currently owned shares to satisfy payment for the exercise of
an option. One reload option is granted for each such share
surrendered. Reload options are exercisable beginning six months after
the grant date and remain exercisable for the remainder of the term of
the option for which shares were surrendered. They are granted at the
fair market value of the Corporation's Common Stock on the date of
grant. The reload options do not have a reload feature.
(5) Granted on the same basis as reload options. The options are
exercisable during the period beginning six months following the grant
date and ending January 21, 2001. These options were granted when an
executive surrendered currently owned shares to satisfy payment for the
exercise of options originally granted January 22, 1991. One option is
granted for each such share surrendered. They are granted at the fair
market value of the Corporation's Common Stock on the date of grant.
These options do not have a reload feature. With respect to the Named
Executive Officers, no further option grants of this type will be made.
Stock Option Exercises and Holdings
The following table provides information concerning the exercise of
stock options during 1993 and unexercised stock options held as of December
31, 1993 for the Named Executive Officers.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
Value of
Number of Unexercised
Unexercisable In-the-Money
Options/SAR's at Options/SAR's at
FY-End(#) FY-End(#)(2)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($)(1) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Robert M. Freeman 98,400 1,903,488 120,948/ 2,120,086/
29,804 219,805
Malcolm S. McDonald 64,900 1,263,444 88,248/ 1,598,174/
18,912 139,476
Wallace B. Millner, III 15,900 381,094 67,594/ 1,287,665/
1,926 14,144
T. Gaylon Layfield, III 13,200 316,388 56,736/ 1,137,403/
1,772 13,179
Robert J. Merrick 22,600 578,981 62,640/ 1,183,908/
0 0
</TABLE>
(1) The fair market value of the acquired shares of the Corporation's Common
Stock minus the price of the options exercised.
(2) Based on the December 31, 1993 market price of $35.125 per share for the
Corporation's Common Stock minus the exercise prices of the unexercised
stock options held at that time.
Long Term Cash Incentive Plan
The following table provides information concerning awards made during
1993 under the Corporation's Long Term Cash Incentive Plan to the Named
Executive Officers. Cash payments are reported in the Summary Compensation
Table when made.
<TABLE>
Long Term Incentive Plans - Awards in Last Fiscal Year
Estimated Future Payouts
Under Non-Stock Price Based Plans(1)
------------------------------------
Number of Performance or
Shares, Units Other Period
or Other Until Maturation Threshold Target Maximum
Name Rights(#)(2) or Payout ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Robert M. Freeman 163,000 1/1/93 to 12/31/95 34,125 163,500 327,000
Malcolm S. McDonald 97,500 1/1/93 to 12/31/95 24,375 97,500 195,000
Wallace B. Millner, III 53,250 1/1/93 to 12/31/95 13,325 53,250 106,500
T. Gaylon Layfield, III 48,000 1/1/93 to 12/31/95 12,000 48,000 96,000
Robert J. Merrick 44,700 1/1/93 to 12/31/95 11,175 44,700 89,400
</TABLE>
(1) The Corporation's total shareholder return (TSR) ranking relative to the
100 largest U.S. banks based on asset size determines award levels. The
target award will be paid if the TSR ranking objective is met. The
threshold amount will be earned by the achievement of 50% of the TSR
ranking objective and the maximum award will be earned when the
Corporation's TSR ranking is double the targeted objective. No awards
are paid for performance below the threshold level. Awards are based on
a percentage of the Named Executive Officer's base salary .
(2) Each unit represents one dollar, based on 1994 base salaries. Actual
awards may be greater if base salaries increase. The awards shown may
be increased, but not decreased at the discretion of the Organization
and Compensation Committee.
Pension Plans
The following table shows the estimated total annual pension benefits
payable at normal retirement age (age 65) to individuals covered under both
the Corporation's qualified Employee Retirement and nonqualified Executive
Employee Supplemental Retirement Plans.
Pension Plan Table
Years of Service
Remuneration 15 20 25(1) 30 or More(1)
$250,000 $103,125 $137,500 $137,500 $137,500
300,000 123,750 165,000 165,000 165,000
350,000 144,375 192,500 192,500 192,500
400,000 165,000 220,000 220,000 220,000
450,000 185,625 247,500 247,500 247,500
500,000 206,250 275,000 275,000 275,000
550,000 226,875 302,500 302,500 302,500
600,000 247,500 330,000 330,000 330,000
650,000 268,125 357,500 357,500 357,500
700,000 288,750 385,000 385,000 385,000
750,000 309,375 412,500 412,500 412,500
800,000 330,000 440,000 440,000 440,000
850,000 350,625 467,500 467,500 467,500
900,000 371,250 495,000 495,000 495,000
950,000 391,875 522,500 522,500 522,500
1,000,000 412,500 550,000 550,000 550,000
1,050,000 433,125 577,500 577,500 577,500
(1) The maximum service recognized is 20 years. Service beyond 20 years
does not increase the age 65 pension benefit.
Executive Employee Supplemental Retirement Plan (the "Plan")
participants will receive upon retirement at age 65 with 20 years of service
an annual retirement income for life equal to 55% of their average annual
compensation (as reported in the Summary Compensation Table as salary and
bonus) during the highest three of their last five calendar years of
employment. Amounts payable under the Plan will be reduced by payments
determined under the Employee Retirement and Long Term Disability plans, if
applicable, and 50% of the primary Social Security benefit. Projected annual
retirement benefits are $560,285 for Mr. Freeman, who currently is credited
with 22 years of service; $382,855 for Mr. McDonald, who currently is credited
with 23 years of service; $216,301 for Mr. Millner, who currently is credited
with 23 years of service; $209,894 for Mr. Layfield who currently is credited
with 18 years of service; and $174,721 for Mr. Merrick, who currently is
credited with 17 years of service.
Employment Agreements
The Corporation maintains employment agreements for fifteen Executive
Officers including the Named Executive Officers. The purpose of these
agreements is to assure shareholders that the business of the Corporation will
continue with a minimum of disruption in the event a change of control of the
Corporation occurs. A change of control is defined as the acquisition of 20%
or more of the Corporation's Common Stock or voting securities by a person or
group, a change in the majority of the Board of Directors, a merger,
liquidation, dissolution or sale of all or substantially all of the assets of
the Corporation or other changes of control as determined by regulatory
authorities. The agreements also are intended to provide greater employment
security to key operational and management executives if such a change of
control occurs. If within three years of a change of control, such officers
are assigned to positions of lesser responsibilities or authority or receive
lesser compensation, benefits or perquisites and as a result they terminate
employment, or if their employment is terminated for reasons other than for
cause, each such executive will be entitled to a lump sum payment within 30
days equal to the executive's base salary through the date of termination, a
proportionate bonus based upon the executive's annual bonus for the last
fiscal year and three times the sum of the executive's annual base salary,
annual bonus and profit sharing awards. The executive also will be entitled
to a lump sum payment equal to the accrued value of the benefit the executive
would have received under the Corporation's qualified and supplemental
retirement plans had the executive remained employed for the remainder of the
three year period. The Corporation will pay all income and excise taxes and
any interest or penalties with respect to such taxes that may be imposed
pursuant to Section 4999 of the Internal Revenue Code on such lump sum payment
or other benefits under such agreements. The agreements also provide for the
payment of severance benefits after voluntary termination of employment
provided that such voluntary termination occurs during the 30 day window
period beginning one year after the change of control.
Organization and Compensation Committee Report on Executive Compensation
The Organization and Compensation Committee (the "Committee") of the
Board of Directors is responsible for recommending to the Board of Directors
for final action the implementation, amendment or termination of executive and
certain other broad based employee compensation programs. It also is
responsible for administering approved executive compensation plans. The
Committee is composed entirely of outside directors who are not eligible, with
the exception of the deferred compensation plan, to participate in the plans
it recommends or administers.
The Corporation's executive compensation philosophy calls for executive
compensation programs which motivate executives to take actions directed
toward the creation of premium shareholder value and attainment of "Best Bank"
status, as characterized by consistently high profitability, financial
strength and service quality. To these ends the Committee has adopted the
following strategies:
o Total compensation is performance based.
o Success measures in performance plans are linked to shareholder
interests.
o A significant portion of the executives' total compensation is
subject to performance risk.
o A significant portion of performance based compensation is tied
to long term performance.
o Core compensation (salary and benefits) is maintained at
competitive levels.
o Corporate performance, as opposed to that of specific lines of
business within the Corporation, carries the predominant weight
in performance based plans.
o Total compensation is at market level when the Corporation's
performance is competitive and falls below or exceeds market
levels when performance varies from the market's performance.
During 1993, the Committee engaged an independent consultant to assess
the competitiveness of the Corporation's total executive compensation program
against those of other banks of similar asset size.
The primary components of the executive compensation program are base
salary, the Executive Incentive Compensation Plan, the Long Term Cash
Incentive Plan and the 1983 and 1992 Stock Option Plans. Executive Officers
also participate in the full array of broad based employee compensation and
benefit programs except for the Employee Profit Sharing and group life
insurance plans. In lieu of participation in the group life insurance plan,
Executive Officers participate in the Split Dollar Life Insurance Plan. In
years in which net income performance does not reach the level required to
make payments under the broad based Employee Profit Sharing Plan, no awards
are paid under the Executive Incentive Compensation and Long Term Cash
Incentive Plans.
The Committee approves the selection of companies against which the
Corporation's performance is measured for purposes of determining awards under
the Long Term Cash Incentive and Stock Option Plans. These companies are the
100 largest U.S. banks based on asset size.
Base Salary - Base salaries are targeted at the 50th percentile of the
competitive market. Because of the high correlation between base salaries and
bank asset sizes, the competitive market is defined as banks of similar asset
size. Mr. Freeman's base salary was adjusted to $545,000 on July 1, 1993
consistent with the above criteria and within the same guidelines established
by the Committee with respect to all other executives of the Corporation. Mr.
Freeman's salary is slightly below the competitive market.
Executive Incentive Compensation Plan - This program provides for annual cash
bonuses for Executive Officers based on annual performance objectives. The
performance objectives are recommended by the Committee to the Board for final
approval in January of the performance year. As is true in the case of all
matters pertaining to plans in which they participate, Messrs. Freeman and
McDonald are required to abstain from voting on the performance objective.
For 1993, the performance objective was established as the attainment of
budgeted net income.
Awards for Messrs. Freeman and McDonald are based solely on corporate
performance. Award opportunity for the other Executive Officers is based 60%
on the corporate performance and 40% on the performance of their
organizational units. Executive Officer awards can be leveraged individually
upward or downward, within plan guidelines, based on personal achievements.
The plan calls for the payment of target awards when objectives are met.
These awards are increased or decreased when objectives are exceeded or not
attained. No award is paid unless a minimum level of performance is attained.
Mr. Freeman's award of $488,500 resulted from the Corporation exceeding its
targeted performance objectives and the Committee's decision to
discretionarily increase Mr. Freeman's award based on his personal
performance. The same criteria and corporate performance results were
employed in determining the awards to all other plan participants.
Long Term Cash Incentive Plan - This program provides for annual cash bonuses
based on rolling three-year performance periods. The ongoing performance
objective under this plan is based on a targeted ranking of the Corporation's
Total Shareholder Return (TSR) to that of the 100 largest U.S. banks based on
asset size. TSR is the annualized rate of return resulting from stock price
appreciation and dividend payments.
Consistent with the Executive Incentive Compensation Plan, performance
at the level approved by the Board will result in a target award payment.
Awards are increased or decreased when objectives are exceeded or not
attained. No award is paid unless a minimum level of performance is attained.
Mr. Freeman's bonus of $334,975 with respect to the performance period ending
on December 31, 1993 resulted from the Corporation exceeding its targeted
ranking objective.
Stock Option Plans - Stock options are granted to executives under the 1992
Stock Option Plan. The actual number of options granted is adjusted upward or
downward based on the Corporation's market to book ratio relative to the
average market to book ratio of the 100 largest U.S. banks based on asset
size. All options are granted at the market value of the Corporation's Common
Stock on the date of grant. Reload options are granted to an executive when
shares of Common Stock owned by the executive are tendered in payment of the
exercise price of the stock option. Reload options are not granted for shares
surrendered in payment of tax withholding. The reload options do not have a
reload feature. There will be no further grants under the 1983 Stock Option
Plan.
Mr. Freeman's grant of 38,800 options consisted of two components.
First, 34,600 options were granted applying the criteria and methodology as
described above. Based on the Corporation's market to book position, Mr.
Freeman's option grant, as well as the other plan participants' grants, was
adjusted downward. However, given the Corporation's strong 1992 net income
performance and the fact that the Committee elected not to increase Mr.
Freeman's 1992 annual cash award under the Executive Incentive Compensation
Plan for individual performance, the Committee made a discretionary grant to
Mr. Freeman of an additional 4,200 options. Mr. Freeman's reload grant of
22,916 options resulted from his tendering 22,916 shares of Common Stock for
payment of an option exercise and his grant of 6,888 options was on the same
basis as a reload option and was granted as a result of his tendering 6,888
shares of Common Stock as payment of an option exercise.
Internal Revenue Code 162(m) Compliance - The Corporation's pay philosophy is
performance focused. The Corporation believes it is important to recognize
and reward those who contribute to the creation of premium shareholder value.
Within this compensation foundation, executives are rewarded at above market
levels when they perform at above market expectations, regardless of
arbitrarily imposed limits, such as that created by IRC 162(m). Thus, to
avoid losing the tax deduction on executive pay when performance incentives
bring individual compensation above $1 million, the Corporation seeks
shareholder approval of its performance based incentive plans.
This report is submitted by the Organization and Compensation Committee
of the Corporation's Board of Directors.
Henry A. Rosenberg, Jr., Chairman
William R. Harvey
Robert M. Heyssel
William C. DeRusha
Performance Graph
The graph below compares the cumulative annual total shareholder return
on the Corporation's Common Stock against the cumulative total return of the
S&P Composite 500 Stock Index and the Keefe, Bruyette & Woods, Inc. 50 Index
(a published market capitalization weighted bank stock index) for the five
year period commencing December 31, 1988 and ending December 31, 1993.
(Performance Graph)
1988 1989 1990 1991 1992 1993
Signet $100.00 $112.66 $40.37 $94.77 $189.80 $300.55
S&P 500 $100.00 $131.70 $127.62 $166.54 $179.20 $197.26
KBW 50 $100.00 $118.91 $85.40 $135.16 $172.23 $181.76
APPROVAL OF THE 1994
ANNUAL EXECUTIVE INCENTIVE COMPENSATION PLAN
AND EXECUTIVE LONG-TERM INCENTIVE PLAN
Introduction
On February 22, 1994, the Organization and Compensation Committee (the
"Committee") adopted the Annual Executive Incentive Compensation Plan (the
"Short-Term Plan") and amended and restated the Executive Long-Term Incentive
Plan (the "Long-Term Plan"). Each plan is intended to reward eligible senior
executives with an award if the performance goals set forth in the plan or set
by the Committee pursuant to the terms of the plan are met. Each plan as
adopted and restated is subject to approval by the Corporation's shareholders.
The plans are intended to meet the requirements of Section 162(m) of the
Internal Revenue Code, and regulations thereunder, so that compensation
received pursuant to the plans will be incentive compensation excludable from
the $1 million limitation on deductible compensation.
The Omnibus Budget Reconciliation Act ("OBRA") became law in 1993.
Under the new law publicly-held companies may be limited beginning with tax
years after 1993 as to income tax deductions to the extent total remuneration
paid to any of the chief executive officer or the next four executive officers
exceeds $1 million in any one year. However, OBRA provides an exception for
"performance-based" remuneration. In general, the new law requires that
before the beginning of the year a compensation committee consisting solely of
two or more outside directors set objective performance standards which must
be met and establish the formula for computing the performance-based amounts
to be paid to each covered executive. The material terms of the plan pursuant
to which the remuneration will be paid must be approved by a majority of the
shareholders in order for the cash awards to qualify as "performance-based"
remuneration.
The Short-Term Plan (attached as Exhibit I) and the amended and restated
Long-Term Plan, which includes the performance periods 1992-1994 and 1993-1995
(attached as Exhibit II), became effective February 22, 1994, subject to
shareholder approval, and will be applicable to 1994 and subsequent years
unless and until terminated by the Board of Directors. Current proposed
Internal Revenue Service regulations under Section 162(m) may require that
both the Short-Term Plan and the Long-Term Plan be submitted for re-approval
by shareholders in 1999.
Description of the Short-Term Plan
The Short-Term Plan is an annual bonus plan in which only the
Corporation's Chairman and President participate. The Short-Term Plan
establishes a linkage between the annual awards and the Corporation's
financial performance. Each fiscal year (called a Performance Year in the
Short-Term Plan), the Committee will fix in advance the performance criteria
and goals to be achieved before any award will be payable. The performance
criteria which the Short-Term Plan authorizes the Committee to select for a
Performance Year are earnings per share, return on equity, earnings, return on
average assets, operating revenues, net interest margin or market to book
ratio, which may be used singularly or in combination, as the Committee
determines, to measure the performance of the Corporation. The performance
criteria and targets set by the Committee may vary from year to year.
If and to the extent the performance criteria set by the Committee are
achieved, all or a portion of the award will be paid as a percentage of each
participant's base salary earned for the performance period as explained in
the benefits table below. For example, if the performance criteria percentage
fixed by the Committee is achieved for 1994, the Chairman will receive a
target award of 50% of base salary. If the percentage achieved for 1994 is
less than 90% of the target, the Chairman will not receive an award. If
the percentage achieved is 140% of the target, the Chairman will receive an
award equal to 100% of base salary. The percentage of salary payable under
the 1994 performance plan changes depending upon and in relation to where the
Corporation's performance for the year expressed as a percentage falls within
the range of 90% to 140% of the 1994 target. If the maximum target for 1994
is achieved, the Chairman could receive an award under the Short-Term Plan of
$570,000. In succeeding Performance Years, the awards may be larger or
smaller depending upon a variety of factors, such as the extent to which
performance targets are met, the base salary for that Performance Year, and
the individual target award percentages, but in no event will a participant
receive an award in any year that exceeds $1,000,000.
The following table shows the range of benefits that might be received
by current participants in the Short-Term Plan (subject to shareholder
approval of the Short-Term Plan).
Short-Term Plan Benefits (1)
Percentage of Base Salary (2)
89% of 100% of 140% of
Name and Position Target Target Target
Robert M. Freeman 0% 50% 100%
Chairman of the Board and
Chief Executive Officer
Malcolm S. McDonald 0% 45% 90%
President and Chief
Operating Officer
Executive Group 0% 45 - 50% 90 - 100%
___________________________
(1) Awards are not paid until the Compensation Committee certifies that the
performance goals have been achieved and other plan requirements have
been satisfied. Because the market price of the Corporation's Common
Stock on the date of such certification is indeterminable, no "units"
are shown in the table. The awards shown in the table for each
participant may be decreased, but not increased, at the discretion of
the Compensation Committee.
(2) "Target" means the performance criteria and goals established annually
by the Compensation Committee. Awards depend on the Corporation's
performance compared to such Target. The percentages of base salary
shown in the table may be changed by the Compensation Committee in
future years. The Short-Term Plan provides that the maximum award
payable to any participant with respect to a performance year is
$1,000,000.
Description of the Long-Term Plan
The Long-Term Plan covers the members of the Corporation's management
committee which includes the Chairman (and CEO), the President (and COO) and
other senior executive department heads. An award may be earned depending
upon the Corporation's performance over rolling consecutive three-year
performance periods. The initial three-year performance period under the
amended and restated plan began January 1, 1992 and ends December 31, 1994.
Generally, a new three-year Performance Period begins each January 1st. As in
the case of the Short-Term Plan, the Long-Term Plan establishes a linkage
between the awards and the Corporation's financial performance.
For Performance Periods beginning before January 1, 1995, the
performance goal for the Long-Term Plan compares the total shareholder return
(generally defined in the plan as the annualized increase in the market value
of the Corporation's Common Stock plus dividends) to the Corporation's
shareholders over consecutive rolling three-year periods with the total
annualized shareholder return for the median bank in a list of the largest one
hundred publicly traded banks over the same period ranked in order of total
shareholder return. If and to the extent the performance criteria set by the
Committee are achieved, all or a portion of the award will be paid as a
percentage of each participant's base salary for the last year of the
Performance Period, as explained in the benefits table below. For example, if
the Corporation's total shareholder return is equal to the total shareholder
return for the median bank, the Chairman will receive a bonus that is 30% of
his base salary earned for the last year of the three-year Performance Period.
If the Corporation's percentile ranking is less than 50, the bonus percentage
decreases by 4% for each percentile less than 50 and if the Corporation's
total shareholder return rank places it below the 26th percentile ranking, no
bonus will be payable. If the Corporation's total shareholder return exceeds
the return of the median bank, the bonus percentage increases by 2% for each
percentile rank over the 50th percentile. If the Corporation's percentile
ranking is 100, the Chairman may receive an award of 60% of base salary. If
maximum performance for the period ending December 31, 1994 is achieved, the
Chairman could receive an award under the Long-Term Plan of $400,000 based upon
current base salary. In succeeding Performance Periods, the awards may be
larger or smaller depending upon a variety of factors, such as the extent to
which performance targets are met, the base salary for the last year of the
Performance Period and target award percentages, but in no event will a
participant receive an award, with respect to any Performance Period that
exceeds $750,000.
For Performance Periods beginning after December 31, 1994, the plan
authorizes the Committee to (a) utilize, in addition to Total Shareholder
Return, one or more of the performance criteria that are available and
described under the Short-Term Plan, (b) fix Performance Periods that are four
or five years instead of three, and (c) change the number and constituency of
the comparison group of banks.
The following tables shows the range of benefits that might be received
by current participants in the Long-Term Plan (subject to shareholder approval
of the Long-Term Plan).
<TABLE>
Long-Term Plan Benefits (1)
Percentage of Base Salary (2)
50% of 100% of 200% of
Target Target Target
Name and Position Ranking Objective Ranking Objective Ranking Objective
<S> <C> <C> <C>
Robert M. Freeman 0% 30% 60%
Chairman of the Board and
Chief Executive Officer
Malcolm S. McDonald 0% 25% 50%
President and Chief
Operating Officer
Wallace B. Millner, III 0% 20% 40%
Senior Executive Vice
President and Chief
Financial Officer
T. Gaylon Layfield, III 0% 20% 40%
Senior Executive Vice
President
Robert J. Merrick 0% 20% 40%
Executive Vice President
and Chief Credit Officer
Executive Group 0% 17.5 - 30% 35 - 60%
</TABLE>
___________________________
(1) Awards are not paid until the Compensation Committee certifies that the
performance goals have been achieved and other plan requirements have
been satisfied. Because the market price of the Corporation's Common
Stock on the date of such certification is indeterminable, no "units"
are shown in the table. The awards shown on the table for each of the
Named Executive Officers may be decreased, but not increased, at the
discretion of the Compensation Committee.
(2) For the performance periods ending in 1994, 1995 and 1996, "Target"
means the total annualized shareholder return over a three year period
for the median bank in a list of the largest one hundred publicly traded
banks. Awards depend upon the Corporation's performance compared to
such median bank. The percentages of base salary shown in the table may
be changed by the Compensation Committee for performance periods ending
after 1996. The Long-Term Plan provides that the maximum award payable
to any participant with respect to a Performance Period is $750,000.
Payment of Awards
Before any award may be paid pursuant to either of the plans, the
Committee must certify that the performance goals have been achieved and any
other requirements of the plans have been satisfied. No payment will be made
unless and until the Committee makes that certification. A participant may
elect to defer any payment otherwise due by filing a timely election under the
Corporation's 1988 Deferred Compensation Plan. Even though the performance
goals have been met, the Committee has the right under either of the plans to
reduce or eliminate entirely any award for any Performance Year or Performance
Period if it is determined to be in the best interests of the Corporation to
do so.
All awards will be paid within 60 days after the last day of the
Performance Year or Performance Period (in the case of the Long-Term Plan) to
which the award relates. A participant shall receive no award if the
participant's employment terminates before the last day of the Performance
Year or Performance Period (in the case of the Long-Term Plan) for any reason
other than death, disability or retirement or the sale or other disposition of
the business unit in which the participant is employed. If termination of
employment occurs because of the occurrence of one of the preceding events, a
prorated award will be paid. Awards may be paid at the discretion of the
Committee in either or a combination of cash or shares of the Corporation's
Common Stock pursuant to the provisions of the Corporation's 1994 Stock
Incentive Plan.
Administration
Each plan will be administered by the Organization and Compensation
Committee of the Board of Directors, as long as the composition of the
Committee consists solely of two or more outside directors as that term is
defined in Code Section 162(m). The Committee has the authority to establish
performance goals and targets under the Short-Term Plan and after 1994 under
the Long-Term Plan. The performance goals and targets are fixed in the Long-
Term Plan for Performance Periods beginning before 1995.
Amendment and Termination
The Board may amend or terminate either of the plans at any time as it
deems appropriate; provided that (a) no amendment or termination of a plan
after the end of a Performance Year or Performance Period may increase or
decrease the awards for the Performance Year just ended, and (b) to the extent
required to meet the requirements of Code Section 162(m) for performance-based
compensation, any amendment that makes a material change to a plan must be
approved by the shareholders of the Corporation. The Board is specifically
authorized to amend either plan as necessary or appropriate to comply with
Code Section 162(m) and regulations issued thereunder, or to comply with or
avoid administration of either plan in a manner that could result in a
participant incurring liability under Section 16(b) of the Securities Exchange
Act of 1934.
Federal Income Tax Consequences
A participant will not incur federal income tax until a payment is made
or shares are distributed pursuant to either of the plans.
In general, a participant who receives only cash will include the amount
received in his gross income as compensation income in the year received. A
participant who receives all or part of his award in shares of incentive stock
will include in his gross income as compensation income an amount equal to the
fair market value of the shares of incentive stock on the date of transfer to
the employee. Generally, such amounts will be included in income in the tax
year in which such event occurs, but special tax rules may apply in the case
of insiders (such as the participants in the plans) that would defer
recognition of income until the incentive stock could be sold by the insider
without incurring a liability under Section 16(b) of the Securities Exchange
Act of 1934 unless the insider makes a timely election to recognize the
compensation as of the date and based on the value of the shares when
received. The income recognized will be subject to income tax withholding by
the Corporation.
The Corporation usually will be entitled to a business expense deduction
at the time and in the amount that the recipient of the award recognizes
ordinary compensation income in connection therewith. The terms of each of
the plans and the administration thereof are intended to comply with OBRA (as
discussed above), that generally imposes a $1 million limitation on the amount
of the annual compensation deduction allowable to a publicly-held company in
respect of its chief executive officer and its other four most highly paid
officers, so that an award paid in cash or incentive shares to a participant
pursuant to either of the plans will fall within the exception provided for
performance-based compensation. If for any reason either of the plans or the
administration thereof is determined not to meet the requirements of Code
Section 162(m), and regulations thereunder, for any Performance Year or
Performance Period, none or only a portion of the cash awards for that year
may be fully deductible.
Vote Required
Approval of the Annual Executive Incentive Compensation Plan and the
Executive Long-Term Incentive Plan requires in each case the affirmative vote
of the holders of a majority of the votes cast for or against the proposal at
the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ANNUAL
EXECUTIVE INCENTIVE COMPENSATION PLAN PROPOSAL (ITEM NO. 2 ON YOUR PROXY CARD)
AND THE EXECUTIVE LONG-TERM INCENTIVE PLAN PROPOSAL (ITEM NO. 3 ON YOUR PROXY
CARD).
APPROVAL OF THE 1994 STOCK INCENTIVE PLAN
Introduction
On February 22, 1994, the Board of Directors of the Corporation approved
and adopted the 1994 Stock Incentive Plan (the "1994 Plan") and directed that
it be submitted to shareholders for approval.
The 1994 Plan became effective February 22, 1994. Unless sooner
terminated by the Board of Directors, the 1994 Plan will terminate on February
21, 2004. No incentive awards may be made under the 1994 Plan after
termination.
The 1994 Plan is intended to provide a means for selected key management
employees of the Corporation to increase their personal financial interest in
the Corporation, thereby stimulating their efforts on behalf of the
Corporation and its shareholders (references to the "Corporation" in this
section will include any parent and subsidiary corporations).
The 1994 Plan sets a maximum authorization of 300,000 shares of Common
Stock that may be issued with respect to incentive awards.
The principal features of the 1994 Plan are summarized below. The
summary is qualified by reference to the complete text of the 1994 Plan which
is attached as Exhibit III.
General
The 1994 Plan authorizes the reservation of 300,000 shares of Common
Stock for issuance pursuant to incentive awards. Such incentive awards may be
in the form of restricted stock or incentive stock (as described below).
If an incentive award is canceled, terminates or lapses, any unissued
shares allocable to such incentive award may be subjected again to an
incentive award. Similarly, if shares of restricted stock are reacquired by
the Corporation, such shares may again be subjected to an incentive award
under the 1994 Plan. The committee is expressly authorized to make an award
to a Participant conditioned upon the surrender for cancellation of an
existing incentive award.
Adjustments will be made in the number of shares which may be issued
under the 1994 Plan in the event of a future stock dividend, stock split or
similar pro rata change in the number of outstanding shares of common stock or
the future creation or issuance to shareholders generally of rights, options
or warrants for the purchase of common stock or preferred stock.
The Corporation presently intends to register the 1994 Plan under the
Securities Act of 1933 after shareholder approval is received.
The Common Stock is traded on the New York Stock Exchange, and on March
15, 1994, the closing price was $39.00.
Eligibility
All present and future employees of the Corporation or a subsidiary of
the Corporation who hold positions with management responsibilities are
eligible to receive incentive awards under the 1994 Plan. The Corporation
estimates that it has approximately 247 such employees (fifteen of whom are
Executive Officers).
Administration
The 1994 Plan will be administered by a committee comprised of Directors
of the Corporation who are not eligible to participate in the 1994 Plan or any
similar plan of the Corporation. It is anticipated that the committee will be
the Organization and Compensation Committee. The committee has the power and
complete discretion to determine when to grant incentive awards, which
eligible employees will receive incentive awards, whether the award will be
restricted stock or incentive stock, and the number of shares to be allocated
to each incentive award. The committee may impose conditions upon the
transfer of restricted stock or incentive stock received under the 1994 Plan,
and upon the right to receive incentive stock under the 1994 Plan, and may
impose such other restrictions and requirements as it may deem appropriate,
including reserving the right for the Corporation to reacquire shares issued
pursuant to an incentive award.
Restricted Stock
Restricted stock issued pursuant to the 1994 Plan is subject to the
following general restrictions: (i) none of such shares may be sold,
transferred, pledged or otherwise encumbered or disposed of until the
restrictions on such shares shall have lapsed or been removed under the
provisions of the 1994 Plan, and (ii) if a holder of restricted stock ceases
to be employed by the Corporation, he will forfeit any shares of restricted
stock on which the restrictions have not lapsed or been otherwise removed.
The committee will establish as to each share of restricted stock issued
under the 1994 Plan the terms and conditions upon which the restrictions on
such shares shall lapse. Such terms and conditions may include, without
limitation, the lapsing of such restrictions at the end of a specified period
of time, the meeting of performance goals, or as a result of the disability,
death or retirement of the participant or a change of control. In addition,
the committee may at any time, in its sole discretion, accelerate the time at
which any or all restrictions will lapse or remove any and all such
restrictions.
Incentive Stock
The committee may establish performance programs with fixed goals and
designate key employees as eligible to receive incentive stock if the goals
are achieved. Incentive stock only will be issued in accordance with the
program established by the committee. More than one performance program may
be established by the committee and they may operate concurrently or for
varied periods of time and a participant may participate in more than one
program at the same time. A participant who is eligible to receive incentive
stock has no rights as a shareholder until incentive shares are received.
Transferability of Incentive Awards
The right to receive incentive stock granted under the 1994 Plan, and
during the applicable period of restriction shares of restricted stock, may
not be sold, transferred, pledged or otherwise disposed of, other than by will
or by the laws of descent and distribution. All rights granted to a
participant under the 1994 Plan shall be exercisable during his lifetime only
by such participant, or his guardians or legal representatives. Upon the
death of a participant, his personal representative or beneficiary may
exercise his rights under the 1994 Plan.
Amendment of the 1994 Plan and Incentive Awards
The Board of Directors may amend the 1994 Plan in such respects as it
deems advisable; provided that the shareholders of the Corporation must
approve any amendment that would (i) materially increase the benefits accruing
to participants under the 1994 Plan, (ii) materially increase the number of
shares of Common Stock that may be issued under the 1994 Plan, or (iii)
materially modify the requirements of eligibility for participation in the
1994 Plan. Incentive awards granted under the 1994 Plan may be amended with
the consent of the recipient so long as the amended award is consistent with
the terms of the 1994 Plan.
Federal Income Tax Consequences
Generally, an employee will not incur federal income tax when he is
granted restricted stock until restrictions imposed lapse and the stock
becomes transferable. An employee who is eligible to receive incentive stock
if performance goals are met will not incur federal income tax until the
incentive stock is received.
In general, an employee who has received shares of restricted stock will
include in his gross income as compensation income an amount equal to the fair
market value of the shares of restricted stock at the time the restrictions
lapse or are removed. An employee who receives shares of incentive stock will
include in his gross income as compensation income an amount equal to the fair
market value of the shares of incentive stock on the date of transfer to the
employee. Generally, such amounts will be included in income in the tax year
in which such event occurs, but special tax rules may apply in the case of an
insider that would defer recognition of income until the restricted stock or
incentive stock could be sold by the insider without incurring a liability
under Section 16 of the Securities Exchange Act of 1934. The income
recognized will be subject to income tax withholding by the Corporation.
The committee has authority under the 1994 Plan to establish procedures
allowing the employee to deliver already owned Common Stock or to elect to
have a portion of the shares he would otherwise acquire withheld to cover his
tax liabilities. The election will be effective only if made in compliance
with the procedures established by the Committee.
The Corporation usually will be entitled to a business expense deduction
at the time and in the amount that the recipient of an incentive award
recognizes ordinary compensation income in connection therewith. As stated
above, this usually occurs when restrictions imposed upon restricted stock
lapse or upon the receipt of incentive stock. Generally, the Corporation's
deduction is contingent upon the Corporation's meeting withholding tax
requirements as to employees; however, recent tax legislation, enacted August
10, 1993, generally imposes a $1 million limitation on the amount of the
annual compensation deduction allowable to a publicly-held company in respect
of its chief executive officer and its other four most highly paid executive
officers. An exception is provided for certain performance-based compensation
if certain shareholder approval and outside director requirements are
satisfied. Because of certain interpretational issues under the statutory
provisions, and in the absence of final Internal Revenue Service regulations,
there can be no assurance that incentive stock awarded under the 1994 Plan
will qualify for this exception. The proposed regulations exclude restricted
stock from the exception.
Vote Required
Approval of the 1994 Stock Incentive Plan requires the affirmative vote
of the holders of a majority of the votes cast for or against the proposal at
the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE 1994 STOCK
INCENTIVE PLAN PROPOSAL (ITEM NO. 4 ON YOUR PROXY CARD).
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected Ernst & Young as independent
auditors to audit the financial statements of the Corporation for 1994, and
the shareholders are requested to ratify their selection by the vote of a
majority of the shares represented and voting at the meeting. Ernst & Young,
which has no financial interest in the Corporation or its subsidiaries, has
audited the financial statements of the Corporation for each year since its
incorporation. A representative of Ernst & Young will be in attendance at the
meeting to respond to appropriate questions and to make a statement if he so
desires.
SHAREHOLDER PROPOSALS FOR
1995 ANNUAL MEETING
Shareholder proposals for presentation to the 1995 Annual Meeting of the
Shareholders must be received by the Corporation no later than November 28,
1994.
OTHER MATTERS
Management is not aware of any matters to be presented for action at the
meeting other than as set forth herein. If any other matters properly come
before the meeting, or any adjournment thereof, the person or persons voting
the proxies will vote them in accordance with his or their best judgment.
<PAGE>
EXHIBIT I
SIGNET BANKING CORPORATION
ANNUAL EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Purpose. The Organization and Compensation Committee adopted on and
effective February 22, 1994 the Annual Executive Incentive Compensation Plan
(the "Plan"). The Plan is intended to reward eligible participants with an
award if the performance goals fixed by the Committee pursuant to the terms of
the Plan are met. The Plan is subject to approval by Signet shareholders and
is intended to meet the requirements of section 162(m) of the Internal Revenue
Code, and regulations thereunder, so that compensation received pursuant to the
Plan will be incentive compensation excludable from the $1 million limitation
on deductible compensation.
2. Definitions. As used in the Plan, the following terms have the
meanings indicated:
(a) "Award Table" means a table similar in type to Exhibit A
with changes necessary to adapt to the performance criteria
selected by the Committee for the Performance Year and to display other
objective factors necessary to determine the amount, if any, of the
award for the Performance Year.
(b) "Board" means the board of directors of the Company.
(c) "Book Value per Common Share" means the value of a share of
common stock determined by dividing total common stockholders'
equity at the end of a period by the total number of common shares
outstanding at the end of the same period.
(d) "Code" means the Internal Revenue Code of 1986, as amended,
and regulations thereunder.
(e) "Committee" means the committee appointed by the Board as
described in Section 6.
(f) "Company" means Signet Banking Corporation, a Virginia
corporation.
(g) "Company Stock" means the common stock of the Company.
(h) "Disability" means a condition that entitles the Participant
to disability payments under the terms of the Company's long-
term disability plan.
(i) "Earnings" means the after-tax consolidated net income of
the Company computed in accordance with generally accepted
accounting principles and adjusted to eliminate (i) any gain or
loss attributable to the disposition of investment in
subsidiaries, and (ii) extraordinary and non-recurring items of
income or loss.
(j) "Earnings per Share" means that portion of the Company's net
income allocable to each outstanding share of common stock
during the accounting period based on the average number of
shares outstanding, applicable equivalents (stock options) and
additional contingently issuable shares (related to conversion
of debentures).
(k) "Fair Market Value" means, on any given date, the average of
the high and low price on such date as reported on The New York
Stock Exchange - Composite Transactions Tape. In the absence of
any such sale, fair market value means the average of the
closing bid and asked prices of a share of Common Stock on such
date as reported by such source. In the absence of such average
or if shares of Common Stock are no longer traded on The New
York Stock Exchange, the fair market value shall be determined
by the Committee using any reasonable method in good faith.
(l) "Incentive Stock" means Company Stock issued in payment of
all or part of an award when Performance Goals are achieved
pursuant to the terms of the Plan and the Company's 1994 Stock
Incentive Plan.
(m) "Market to Book Ratio" means the market price per share of
common stock divided by book value per common share.
(n) "Net Interest Margin" means total net interest income (tax-
exempt income adjusted to a tax equivalent basis) divided by
average interest earning assets.
(o) "Operating Revenue" means total interest income plus total
non-interest operating income as shown on the Company's income
statement.
(p) "Participant" means any person eligible to receive an award
under the Plan.
(q) "Performance Goal" means one or more of Earnings Per Share,
Return on Equity, Earnings, Return on Average Assets, Operating
Revenue, Net Interest Margin or Market to Book Ratio, which may
be used singularly or in combination, as the Committee
determines, to measure the performance of the Company for the
purpose of determining whether an award will be payable
under the Plan for the Performance Year.
(r) "Performance Year" means a calendar year which is also the
Company's fiscal year. The initial Performance Year is 1994.
(s) "Plan" means the Signet Banking Corporation Annual Executive
Incentive Compensation Plan.
(t) "Retirement" or "Retires" means the termination of
employment of a Participant on or after the Participant's Early
Retirement Date under the Company's Cash Balance Plan for
reasons other than death.
(u) "Return on Average Assets" means Earnings for the accounting
period divided by total average assets.
(v) "Return on Equity" or "ROE" means the Company's Earnings for
the Performance Year of computation expressed as a percentage of
the average common stock ownership during the Performance Year
as set forth in the Company's annual report.
(w) "Salary" means base salary earned for each Performance Year
determined in accordance with principles employed for reporting
salary to the Company's shareholders in the annual Proxy
Statement.
3. Participation. Participation in the Plan shall be limited to the
Chairman (and Chief Executive Officer) and the President (and Chief Operating
Officer). A person who becomes a Participant after the commencement of a
Performance Year shall be eligible to receive a pro rata award pursuant to
Section 4 based on the ratio that the number of full months remaining in the
Performance Year after his or her date of participation bears to the number 12.
4. Determination of Awards.
(a) Before April 1, 1994 and thereafter before the beginning
of each Performance Year, the Committee will complete and adopt an Award
Table substantially in the form attached as Exhibit A. The Award Table
will fix the objective components for determining whether an award will
be paid and, if so, the amount of the award. Awards are based on a
percentage of each Participant's Salary for the Performance Year if and
to the extent the Performance Goal is achieved. The Performance Goal
shall be the attainment of a target percentage or range of target
percentages of the Performance Goal for the Performance Year. The
amount payable to a Participant for the Performance Year will be
determined from the Award Table as a percentage of Salary if the target
percentages expressed as a percentage of the Performance Goal are within
the range of percentages fixed by the Committee for the Performance
Year. The Committee may establish such threshold requirements for the
payment of an award and limitations on the amount of the award as the
Committee shall deem appropriate. Once fixed, the Performance Goals and
targets for a Performance Year may not be modified after the Performance
Year begins.
(b) Before any award may be paid for a Performance Year, the
Committee shall certify that the Performance Goals and any other
requirements of the Plan have been satisfied for the Performance Year.
No payments shall be made unless and until the Committee makes this
certification.
(c) Even though the Performance Goals have been met, (i) no
award to a Participant with respect to a Performance Year shall exceed
$1,000,000, and (ii) the Committee expressly reserves the right to
reduce or eliminate entirely any award if it determines it is in the
best interests of the Company to do so. Such determination shall be
conclusive and binding.
5. Payment of Awards.
(a) If the Committee has made the certification required
pursuant to Section 4(c), subject to Section 4(d), awards shall be
payable not later than 60 days following the last day of the Performance
Year for which they are computed. A Participant may defer receipt of an
award by filing a timely election pursuant to the Company's 1988
Deferred Compensation Plan. All awards under the Plan are subject to
federal, state and local income and payroll tax withholding when paid in
cash or Incentive Stock as provided in (b).
(b) The Committee may in its discretion pay all or any part
of an award to the extent not subject to a deferral election in shares
of Company common stock pursuant to the provisions of the Company's 1994
Stock Incentive Plan that authorizes the issuance of Incentive Stock
pursuant to incentive programs established by the Committee when
performance criteria have been achieved. Matters pertaining to the
issuance of Incentive Stock (including the discharge by each Participant
of his or her tax withholding obligations) shall be governed by the
provisions of the 1994 Stock Incentive Plan. The portion of an award
that is distributed in shares of Incentive Stock shall be based on the
Fair Market Value of such shares on the trading date next preceding the
date of distribution of the award.
(c) A Participant shall receive no award for a year if the
Participant's employment with the Corporation and its subsidiaries
terminates prior to the last day of the Performance Year for any reason
other than death, Disability, Retirement, or sale or other disposition
of the business unit in which the Participant was employed. A
Participant who terminates employment for one of the reasons described
in the preceding sentence shall be eligible to receive a pro rata award,
if an award is otherwise payable pursuant to Section 4, based on the
ratio that the number of completed months elapsed during the Performance
Year to the date the event occurred bears to 12. A Participant shall
not forfeit an award if the Participant's employment terminates after
the end of the applicable Performance Year, but prior to the
distribution of the award for such year.
(d) If a Participant dies and is subsequently entitled to
receive an award under the Plan, the award shall be paid to the personal
representative of the Participant's estate.
6. Administration.
(a) The Plan shall be administered by the Organization and
Compensation Committee of the Board of Directors (the "Committee"),
which shall be comprised solely of two or more "outside directors", as
that term is defined for purposes of Code Section 162(m).
(b) The Board from time to time may appoint members
previously appointed and may fill vacancies, however caused, in the
Committee. Insofar as it is necessary to satisfy the requirements of
Section 16(b) of the Securities Exchange Act of 1934, no member of the
Committee shall be eligible to participate in the Plan or in any other
plan of the Company or any Parent or Subsidiary of the Company that
entitles Participants to acquire stock, stock options or stock
appreciation rights of the Company or any Parent or Subsidiary of the
Company, and no person shall become a member of the Committee if, within
the preceding one-year period, the person shall have been eligible to
participate in such a plan (other than a "safe harbor plan" permitted
under Rule 16b-3(C)(2)(i) and (ii)).
(c) If any member of the Committee fails to qualify as an
"outside director" or otherwise meet the requirements of this section,
such person shall immediately cease to be a member of the Committee
solely for purposes of the Plan and shall not take part in future
Committee deliberations.
(d) The Committee may adopt rules and regulations for
carrying out the Plan, and the Committee may take such actions as it
deems appropriate to ensure that the Plan is administered in the best
interests of the Company. The Committee has the authority to construe
and interpret the Plan, resolve any ambiguities, and make determinations
with respect to the eligibility for or amount of any award. The
interpretation, construction and administration of the Plan by the
Committee shall be final and conclusive. The Committee may consult with
counsel, who may be counsel to the Company, and shall not incur any
liability for any action taken in good faith in reliance upon the advice
of counsel.
7. Rights. Participation in the Plan and the right to receive awards
under the Plan shall not give a Participant any proprietary interest in the
Company, any subsidiary or any of their assets. No trust fund shall be created
in connection with the Plan, and there shall be no required funding of amounts
that may become payable under the Plan. A Participant shall for all purposes be
a general creditor of the Company. The interests of a Participant cannot be
assigned, anticipated, sold, encumbered or pledged and shall not be subject to
the claims of his creditors. Nothing in the Plan shall confer upon any
Participant the right to continue in the employ of the Company or any subsidiary
or shall interfere with or restrict in any way the right of the Company and its
subsidiaries to discharge a Participant at any time for any reason whatsoever,
with or without cause.
8. Successors. The Plan shall be binding on the Participants and their
personal representatives. If the Company becomes a party to any merger,
consolidation, reorganization or other corporate transaction, the Plan shall
remain in full force and effect as an obligation of the Company or its successor
in interest.
9. Amendment and Termination. The Board may amend or terminate the Plan
at any time as it deems appropriate; provided that (a) no amendment or
termination of the Plan after the end of a Performance Year may increase or
decrease the awards for the Performance Year just ended, and (b) to the extent
required to meet the requirements of Code Section 162(m) for performance-based
compensation, any amendment that makes a material change to the Plan must be
approved by the shareholders of the Company. The Board is specifically
authorized to amend the Plan and take such other action as necessary or
appropriate to comply with Code Section 162(m) and regulations issued
thereunder, and to comply with or avoid administration of the Plan in a manner
that could result in a Participant incurring liability under Section 16(b) of
the Securities Exchange Act of 1934 and regulations issued thereunder.
10. Interpretation. If any provision of the Plan would cause the Plan
to fail to meet the Code Section 162(m) requirements for performance-based
compensation, then that provision of the Plan shall be void and of no effect.
The Plan shall be interpreted according to the laws of the Commonwealth of
Virginia.
<PAGE>
Exhibit A
AWARD TABLE
PERFORMANCE YEAR 19___
A--------( - )------B------( + )--------C
_______% _______% _______%
Target Minimum Target Target Maximum
% of Salary % of Salary % of Salary
Chairman --% --% --%
President --% --% --%
Before the beginning of each Performance Year, the Committee will complete and
evidence in writing the following process relative to Plan administration for
the Performance Year.
Award Derivations
1. Specify performance criteria to be used as the Performance Goal for the
Performance Year (i.e., one or more of earnings per share, return on
equity, earnings, return on average assets, operating revenues, net
interest margin or market to book ratio, which may be used singularly or
in combination, as the Committee determines, to measure the performance
of the Company for the purpose of determining whether an award will
be payable under the Plan for the Performance Year).
2. Fix target Performance Goal and percentage of salary. (B)
3. Fix threshold Performance Goal below which no award is payable. Fix
percent of Target Award payable at threshold performance and percentage
of salary. (A)
4. Fix maximum Performance Goal which results in maximum permitted award
and fix percentage of salary. (C)
5. If the percentage achieved for the Performance Year is less or greater
than the percentage specified in B, the percentage award payable will be
determined by interpolating, as provided in the Plan, percentages
between A and B and B and C, as the case may be.
<PAGE>
EXHIBIT II
SIGNET BANKING CORPORATION
EXECUTIVE LONG-TERM INCENTIVE PLAN
(As Amended and Restated February 22, 1994)
1. Purpose. On November 26, 1990, the Organization and Compensation
Committee (the "Committee") adopted a long-term cash incentive plan effective
for rolling three-year performance periods beginning January 1, 1991. On
February 22, 1994, the Committee restated the long-term cash incentive plan as
the Executive Long-Term Incentive Plan (the "Plan") to provide as hereinafter
set forth. The Plan is intended to reward eligible participants with
additional compensation if the performance goals set forth in the Plan or
fixed by the Committee pursuant to the terms of the Plan are met. The Plan is
subject to approval by Company shareholders and is intended to meet the
requirements of section 162(m) of the Internal Revenue Code, and regulations
thereunder, so that compensation received pursuant to the Plan will be
incentive compensation excludable from the $1 million limitation on deductible
compensation.
2. Definitions. As used in the Plan, the following terms have the
meanings indicated:
(a) "Award Table" means a table similar in type to Exhibit A
with changes necessary to adapt the table to the performance criteria
selected by the Committee for the Performance Year and to display other
objective factors necessary to determine the amount, if any, of the
award for the Performance Year.
(b) "Board" means the board of directors of the Company.
(c) "Book Value per Common Share" means the value of a share of
common stock determined by dividing total common stockholders' equity at
the end of a period by the total number of common shares outstanding at
the end of the same period.
(d) "Code" means the Internal Revenue Code of 1986, as amended,
and regulations thereunder.
(e) "Committee" means the committee appointed by the Board as
described in Section 6.
(f) "Company" means Signet Banking Corporation, a Virginia
corporation.
(g) "Company Stock" means the common stock of the Company.
(h) "Comparison Bank" means a bank included in the Comparison
Group at the beginning and end of a Performance Period.
(i) "Comparison Group" means for Performance Periods beginning
before January 1, 1995 the one hundred largest publicly traded banking
corporations headquartered in the United States ranked on the basis of
total assets both on the first and last days of a Performance Period.
If two Comparison Banks merge during a Performance Period, the next
largest eligible bank in size shall be added to the Comparison Group as
of the first day of the Performance Period as though originally included
in the Comparison Group. A Comparison Bank that fails during a
Performance Period shall be included for the Performance Period in which
the event occurs even though not within the Comparison Bank definition
at the end of the Performance Period. For Performance Periods beginning
after December 31, 1994, the term means the peer group of banking
corporations selected by the Committee and fixed in writing before the
beginning of the Performance Period.
(j) "Disability" means a condition that entitles the Participant
to disability payments under the terms of the Company's long-term
disability plan.
(k) "Earnings" means the after-tax consolidated net income of
the Company computed in accordance with generally accepted accounting
principles and adjusted to eliminate (i) any gain or loss attributable
to the disposition of investment in subsidiaries, and (ii) extraordinary
and non-recurring items of income or loss.
(l) "Earnings per Share" means that portion of the Company's net
income allocable to each outstanding share of common stock during the
accounting period based on the average number of shares outstanding,
applicable equivalents (stock options) and additional contingently
issuable shares (related to conversion of debentures).
(m) "Fair Market Value" means, on any given date, the average of
the high and low price on such date as reported on The New York Stock
Exchange-Composite Transactions Tape. In the absence of any such sale,
fair market value means the average of the closing bid and asked prices
of a share of Common Stock on such date as reported by such source. In
the absence of such average or if shares of Common Stock are no longer
traded on The New York Stock Exchange, the fair market value shall be
determined by the Committee using any reasonable method in good faith.
(n) "Incentive Stock" means Company Stock issued in payment of
all or part of an award when Performance Goals are achieved pursuant to
the terms of the Plan and the Company's 1994 Stock Incentive Plan.
(o) "Market to Book Ratio" means the market price per share of
common stock divided by book value per common share.
(p) "Median Total Shareholder Return" means the Total
Shareholder Return realized by shareholders of the median Comparison
Bank ranked on the basis of Total Shareholder Return as of the last day
of the relevant Performance Period.
(q) "Net Interest Margin" means total net interest income (tax-
exempt income adjusted to a tax equivalent basis) divided by average
interest earning assets.
(r) "Operating Revenue" means total interest income plus total
non-interest operating income as shown on the Company's income
statement.
(s) "Participant" means any person eligible to receive an award
under the Plan.
(t) "Performance Goal" means for Performance Periods beginning
before January 1, 1995 the amount of Total Shareholder Return computed
for a share of Signet common stock specified by the Committee that when
expressed as a percentage and compared with the Comparison Group falls
within the ranking scale between the 25th percentile and including the
100th percentile for such Performance Period. For Performance Periods
beginning after December 31, 1994, the term means Total Shareholder
Return as described in the preceding sentence unless before the first
day of Performance Period the Committee selects in writing as the
Performance Goal one or more of Earnings Per Share, Return on Equity,
Earnings, Return on Average Assets, Operating Revenue, Net Interest
Margin or Market to Book Ratio, which may be used singularly or in
combination, as the Committee determines, to measure the performance of
the Company for the purpose of determining whether an award will be due
under the Plan for the Performance Period.
(u) "Performance Period" means for periods beginning before
January 1, 1995 three consecutive Performance Years. The initial
Performance Period for the restated plan begins January 1, 1992 and ends
December 31, 1994. After December 31, 1994, the term means not less
than three or more than five Performance Years fixed by the Committee in
writing before the beginning of the Performance Period. A new
Performance Period begins each January 1st.
(v) "Performance Year" means a calendar year which is also the
Company's fiscal year.
(w) "Plan" means the Signet Banking Corporation Executive Long-
Term Incentive Plan, as amended and restated February 22, 1994.
(x) "Retirement" or "Retires" means the termination of
employment of a Participant on or after the Participant's Early
Retirement Date under the Company's Cash Balance Plan for reasons other
than death.
(y) "Return on Average Assets" means Earnings for the accounting
period divided by total average assets.
(z) "Return on Equity" or "ROE" means the Company's Earnings for
the Performance Year of computation expressed as a percentage of the
average common stock ownership during the Performance Year as set forth
in the Company's annual report.
(aa) "Salary" means base salary earned for the last Performance
Year in a Performance Period determined in accordance with principles
employed for reporting salary to the Company's shareholders in the
annual Proxy Statement.
(ab) "Total Shareholder Return" means for each Performance
Period (i) the increase in the average trading price of a share of
common stock during the month of December in which ends the Performance
Period (the ending price) over the average trading price of a share of
common stock during the month of December preceding the first day of the
Performance Period (the beginning price), plus (ii) the value of
distributions with respect to a share of common stock during the
Performance Period, expressed as an annualized rate of return for the
Performance Period.
3. Participation. Participation in the Plan shall be limited to the
members of the Company's management committee, as determined by the Committee,
which shall include the Chairman (and Chief Executive Officer), the President
(and Chief Operating Officer), and the officers specified in Section 4(a) or
in the Award Table. A person who becomes a Participant after the commencement
of a Performance Period shall be eligible to receive a pro rata award pursuant
to Section 4 based on the ratio that the number of full months remaining in
the Performance Period after his or her date of participation bears to 36 or
such greater number of months in the Performance Period.
4. Determination of Awards.
(a) For and with respect to each Performance Period
beginning before January 1, 1995, the Committee shall determine whether
and the extent to which the Performance Goal has been achieved. If the
percentage of the Performance Goal achieved is 100% (i.e., the Company's
Total Shareholder Return equals the Median Total Stockholder Return),
each Participant will receive the following target percentage of his or
her Salary set forth in Column B:
A --------------- B --------------- C
50% 100% 200%
Target Minimum Target Target Maximum
Title % of Salary % of Salary % of Salary
Chairman 0 30% 60%
President 0 25% 50%
CFO 0 20% 40%
OIC-Retail 0 20% 40%
OIC-Credit 0 20% 40%
OIC-Commercial 0 20% 40%
OIC-Real Estate 0 20% 40%
OIC-ITS 0 20% 40%
OIC-PIFA 0 17.5% 35%
OIC-HR 0 17.5% 35%
OIC-Cons. RE 0 17.5% 35%
Controller 0 17.5% 35%
General Counsel 0 17.5% 35%
If the percentage of the Performance Goal achieved exceeds the Median
Total Shareholder Return, the target percentage of Salary specified in
Column B shall be increased by 2% for each percentile by which the
Median Total Shareholder Return has been exceeded up to the maximum
shown in Column C. If the percentage of the Performance Goal achieved
is less than the Median Total Shareholder Return, the target percentage
of Salary specified in Column B shall be decreased by 4% for each
percentile by which the Performance Goal achieved is less than the
Median Total Shareholder Return. No award will be paid if the level
of Total Shareholder Return achieved is less than the 26th percentile.
(b) Before January 1, 1995 and thereafter before the beginning of
each Performance Period, the Committee will complete and adopt an Award Table
substantially in the form attached as Exhibit A. The Award Table will fix the
Performance Period, the Performance Goal and all other relevant objective
components for determining whether an award will be due and, if so, the amount
of the award. Awards are based on a percentage of each Participant's Salary for
the Performance Period if and to the extent the Performance Goal is achieved.
The Performance Goal shall be the attainment of a target percentage or range of
target percentages of the Performance Goal for the Performance Period. The
amount payable to a Participant for the Performance Period will be
determined from the Award Table as a percentage of Salary if the target
percentages expressed as a percentage of the Performance Goal are within
the range of percentages fixed by the Committee for the Performance
Period. The Committee may establish such threshold requirements for the
payment of an award and limitations on the amount of the award as the
Committee shall deem appropriate. Once fixed, the Performance Period,
the Performance Goals and targets for a Performance Period may not be
modified after the Performance Period begins.
(c) Before any award may be paid for a Performance Period, the
Committee shall certify that the Performance Goals and any other
requirements of the Plan have been satisfied for the Performance Period.
No payments shall be made unless and until the Committee makes this
certification.
(d) Even though the Performance Goals have been met, (i) no
award to a Participant with respect to a Performance Period shall exceed
$750,000, and (ii) the Committee expressly reserves the right to reduce
or eliminate entirely any award if it determines it is in the best
interests of the Company to do so. Such determination shall be
conclusive and binding.
5. Payment of Awards.
(a) If the Committee has made the certification required
pursuant to Section 4(c), subject to Section 4(d), awards shall be
payable not later than 60 days following the last day of the Performance
Period for which they are computed. A Participant may defer receipt of
an award by filing a timely election pursuant to the Company's 1988
Deferred Compensation Plan. All awards under the Plan are subject to
federal, state and local income and payroll tax withholding when paid in
cash or Incentive Stock as provided in (b).
(b) The Committee may in its discretion pay all or any part of an
award to the extent not subject to a deferral election in shares of Company
common stock pursuant to the provisions of the Company's 1994
Stock Incentive Plan that authorizes the issuance of Incentive Stock
pursuant to incentive programs established by the Committee when
performance criteria have been achieved. Matters pertaining to the
issuance of Incentive Stock (including the discharge by each Participant
of his or her tax withholding obligations) shall be governed by the
provisions of the 1994 Stock Incentive Plan. The portion of an award
that is distributed in shares of Incentive Stock shall be based on the
Fair Market Value of such shares on the trading date next preceding the
date of distribution of the award.
(c) A Participant shall not receive an award if the
Participant's employment with the Company and its subsidiaries
terminates prior to the last day of the Performance Period for any
reason other than death, Disability, Retirement, or sale or other
disposition of the business unit in which the Participant was employed.
A Participant who terminates employment for one of the reasons described
in the preceding sentence shall be eligible to receive a pro rata award,
if an award is otherwise payable pursuant to Section 4, based on the
ratio that the number of full months elapsed during the Performance
Period to the date the event occurred bears to 36 or such greater number
of months in the Performance Period. A Participant shall not forfeit an
award if the Participant's employment terminates after the end of the
applicable Performance Period, but prior to the distribution of the
award, if any, for such year.
(d) If a Participant dies and is subsequently entitled to
receive an award under the Plan, the award shall be paid to the personal
representative of the Participant's estate.
6. Administration.
(a) The Plan shall be administered by the Organization and
Compensation Committee of the Board of Directors (the "Committee"),
which shall be comprised solely of two or more "outside directors", as
that term is defined for purposes of Code Section 162(m).
(b) The Board from time to time may appoint members previously
appointed and may fill vacancies, however caused, in the Committee. Insofar as
it is necessary to satisfy the requirements of Section 16(b) of the Securities
Exchange Act of 1934, no member of the Committee shall be eligible to
participate in the Plan or in any other plan of the Company or any Parent or
Subsidiary of the Company that entitles Participants to acquire stock, stock
options or stock appreciation rights of the Company or any Parent or Subsidiary
of the Company, and no person shall become a member of the Committee if, within
the preceding one-year period, the person shall have been eligible to
participate in such a plan (other than a "safe harbor plan" permitted under Rule
16b-3(C)(2)(i) and (ii).
(c) If any member of the Committee fails to qualify as an
"outside director" or otherwise meet the requirements of this section,
such person shall immediately cease to be a member of the Committee
solely for purposes of the Plan and shall not take part in future
Committee deliberations.
(d) The Committee may adopt rules and regulations for carrying out
the Plan, and the Committee may take such actions as it deems appropriate to
ensure that the Plan is administered in the best interests of the Company. The
Committee has the authority to construe
and interpret the Plan, resolve any ambiguities, and make determinations
with respect to the eligibility for or amount of any award. The
interpretation, construction and administration of the Plan by the
Committee shall be final and conclusive. The Committee may consult with
counsel, who may be counsel to the Company, and shall not incur any
liability for any action taken in good faith in reliance upon the advice
of counsel.
7. Rights. Participation in the Plan and the right to receive awards
under the Plan shall not give a Participant any proprietary interest in the
Company, any subsidiary or any of their assets. No trust fund shall be created
in connection with the Plan, and there shall be no required funding of amounts
that may become payable under the Plan. A Participant shall for all purposes be
a general creditor of the Company. The interests of a Participant cannot be
assigned, anticipated, sold, encumbered or pledged and shall not be subject to
the claims of his creditors. Nothing in the Plan shall confer upon any
Participant the right to continue in the employ of the Company or any
subsidiary or shall interfere with or restrict in any way the right of the
Company and its subsidiaries to discharge a Participant at any time for any
reason whatsoever, with or without cause.
8. Successors. The Plan shall be binding on the Participants and their
personal representatives. If the Company becomes a party to any merger,
consolidation, reorganization or other corporate transaction, the Plan shall
remain in full force and effect as an obligation of the Company or its successor
in interest.
9. Amendment and Termination. The Board may amend or terminate the Plan
at any time as it deems appropriate; provided that (a) no amendment or
termination of the Plan after the end of a Performance Year may increase or
decrease the awards for the Performance Year just ended, and (b) to the extent
required to meet the requirements of Code Section 162(m) for performance-based
compensation, any amendment that makes a material change to the Plan must be
approved by the shareholders of the Company. The Board is specifically
authorized to amend the Plan as necessary or appropriate to comply with Code
Section 162(m) and regulations issued thereunder, and to comply with or avoid
administration of the Plan in a manner that would result in a Participant
incurring liability under Section 16(b) of the Securities Exchange Act of 1934
and regulations issued thereunder.
10. Interpretation. If any provision of the Plan would cause the Plan
to fail to meet the Code Section 162(m) requirements for performance-based
compensation, then that provision of the Plan shall be void and of no effect.
The Plan shall be interpreted according to the laws of the Commonwealth of
Virginia.
<PAGE>
Exhibit A
AWARD TABLE
PERFORMANCE PERIOD BEGINNING 1/1/___ AND ENDING 12/31/___
A--------( - )------B------( + )--------C
_______% _______% _______%
Target Minimum Target Target Maximum
Title % of Salary % of Salary % of Salary
Chairman --% --% --%
President --% --% --%
Chief Financial
Officer --% --% --%
OIC-Retail --% --% --%
OIC-Credit --% --% --%
OIC-Commercial --% --% --%
OIC-Real Estate --% --% --%
OIC-ITS --% --% --%
OIC-PIFA --% --% --%
OIC-Human
Resources --% --% --%
OIC-Cons. RE --% --% --%
Controller --% --% --%
General Counsel --% --% --%
Award Derivations
Before the beginning of each Performance Year, the Committee will complete and
evidence in writing the following process relative to Plan administration for
the Performance Year.
1. Specify the number of years in the Performance Period and the beginning
and ending dates.
2. Specify any additions or changes in participation.
3. Specify performance criteria to be used as the Performance Goal for the
Performance Year (i.e., total shareholder return or one or more of
earnings per share, return on equity, earnings, return on average
assets, operating revenues, net interest margin or market to book ratio,
which may be used singularly or in combination, as the Committee
determines, to measure the performance of the Company for the purpose of
determining whether an award will be payable under the Plan for the
Performance Year).
4. Fix target Performance Goal and percentage of salary. (B)
5. Fix threshold Performance Goal below which no award is payable. Fix
percent of Target Award payable at threshold performance and percentage
of salary. (A)
6. Fix maximum Performance Goal which results in maximum permitted award
and fix percentage of salary. (C)
7. If the percentage achieved for the Performance Year is less or greater
than the percentage specified in B, the percentage award payable will be
determined by interpolating percentages, as provided in the Plan,
between A and B and B and C, as the case may be. If necessary or
desirable, fix percentage or other measure of adjusting (increasing or
decreasing) awards for results greater or lesser than 100% of the target
goal.
<PAGE>
EXHIBIT III
SIGNET BANKING CORPORATION
1994 STOCK INCENTIVE PLAN
1. Purpose. The Signet Banking Corporation 1994 Stock Incentive Plan
(the "Plan") was adopted February 22, 1994 subject to approval by
shareholders. The Plan was adopted to further the long term stability and
financial success of Signet Banking Corporation (the "Company") by attracting
and retaining key employees through the use of stock incentives. It is
believed that ownership of Company Stock will stimulate the efforts of
eligible participants upon whose judgment and interest the Company is and will
be largely dependent for the successful conduct of its business. It is also
believed that Incentive Awards granted to such participants under this Plan
will strengthen their desire to remain with and provide services to the
Company and will further the identification of their interests with those of
the Company's shareholders.
The Plan is intended to conform to the provisions of Securities and
Exchange Commission Rule 16b-3 ("Rule 16b-3").
2. Definitions. As used in the Plan, the following terms have the
meanings indicated:
(a) "Board" means the board of directors of the Company.
(b) "Change of Control" means:
(i) The acquisition, other than from the Company, by
any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended), of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Securities Exchange Act of 1934) of
20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors, but excluding for this
purpose, any such acquisition by the Company or any of its
subsidiaries, or any employee benefit plan (or related trust) of
the Company or its subsidiaries, or any corporation with respect
to which, following such acquisition, more than 50% of,
respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by the individuals and entities
who were the beneficial owners, respectively, of the common
stock and voting securities of the Company immediately prior to
such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the then
outstanding shares of common stock of the Company or the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors, as the case may be; or
(ii) Individuals who, as of the date hereof,
constitute the Board (as of the date hereof the "Incumbent
Board") cease for any reason to constitute at least a majority
of the Board, provided that any individual becoming a director
subsequent to the date hereof whose election or nomination for
election by the Company's shareholders was approved by a vote of
at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office
is in connection with an actual or threatened election contest
relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act of 1934); or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with
respect to which the individuals and entities who were the
respective beneficial owners of the common stock and voting
securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such reorganization, merger or
consolidation, or a complete liquidation or dissolution of the
Company or of its sale or other disposition of all or
substantially all of the assets of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the committee appointed by the Board as
described under Section 13.
(e) "Company" means Signet Banking Corporation, a Virginia
corporation.
(f) "Company Stock" means common stock of the Company. If the
par value of the Company Stock is changed, or in the event of a change
in the capital structure of the Company (as provided in Section 12), the
shares resulting from such a change shall be deemed to be Company Stock
within the meaning of the Plan.
(g) "Date of Grant" means the date on which an Incentive Award
is granted by the Committee.
(h) "Disability" or "Disabled" means, in general, the inability
to perform the services for which the Participant was employed. The
Committee shall determine whether a Disability exists and such
determination shall be conclusive.
(i) "Fair Market Value" means, on any given date, the average of
the high and low price on such date as reported on The New York Stock
Exchange-Composite Transactions Tape. In the absence of any such sale,
fair market value means the average of the closing bid and asked prices
of a share of Company Stock on such date as reported by such source. In
the absence of such average or if shares of Company Stock are no longer
traded on The New York Stock Exchange, the fair market value shall be
determined by the Committee using any reasonable method in good faith.
(j) "Incentive Award" means, collectively, the award of
Restricted Stock or Incentive Stock under the Plan.
(k) "Incentive Stock" means Company Stock awarded when
performance goals are achieved pursuant to an incentive plan as provided
in Section 7.
(l) "Insider" means a person subject to Section 16(b) of the
Securities Exchange Act of 1934.
(m) "Parent" means, with respect to any corporation, a "parent
corporation" of that corporation within the meaning of Section 424(e) of
the Code.
(n) "Participant" means any person who receives an Incentive
Award under the Plan.
(o) "Restricted Stock" means Company Stock awarded upon the
terms and subject to the restrictions set forth in Section 6.
(p) "Restricted Stock Award" means an award of Restricted Stock
granted under the Plan.
(q) "Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Securities Exchange Act of 1934. A
reference in the Plan to Rule 16b-3 shall include a reference to any
corresponding rule (or number redesignation) of any amendments to Rule
16b-3 enacted after the effective date of the Plan's adoption.
(r) "Subsidiary" means, with respect to any corporation, a
"subsidiary corporation" of that corporation within the meaning of
Section 424(f) of the Code.
(s) "Window Period" means the period beginning on the third
business day and ending on the twelfth business day following the
release for publication of quarterly or annual summary statements of the
Company's sales and earnings. The release for publication shall be
deemed to have occurred if the specified financial data (i) appears on a
wire service, (ii) appears in a financial news service, (iii) appears in
a newspaper of general circulation or (iv) is otherwise made publicly
available.
3. General. The following types of Incentive Awards may be granted
under the Plan: Restricted Stock and Incentive Stock.
4. Stock. Subject to Section 12 of the Plan, there shall be reserved
for issuance under the Plan an aggregate of 300,000 shares of Company Stock,
which shall be authorized, but unissued shares. Shares allocable to Incentive
Awards under this Plan, that expire or terminate may again be subjected to an
Incentive Award under the Plan. The Committee is expressly authorized to make
an Incentive Award to a Participant conditioned upon the surrender for
cancellation of an existing Incentive Award. For purposes of determining the
number of shares that are available for issuance under the Plan, such number
shall, if permissible under Rule 16b-3, include the number of shares
surrendered by a participant or retained by the Company in payment of federal
and state income tax withholding liability upon exercise or receipt of an
Incentive Award.
5. Eligibility.
(a) All present and future employees who hold positions with
management responsibilities with the Company (or any Parent or
Subsidiary of the Company, whether now existing or hereafter created or
acquired) shall be eligible to receive Incentive Awards under the Plan.
The Committee shall have the power and complete discretion, as provided
in Section 13, to select persons to receive Incentive Awards and to
determine for each Participant the terms and conditions, the nature of
the award and the number of shares to be allocated to each Participant
as part of each Incentive Award.
(b) The grant of an Incentive Award shall not obligate the
Company or any Parent or Subsidiary of the Company to pay a Participant
any particular amount of remuneration, to continue the employment of the
Participant after the grant or to make further grants to the Participant
at any time thereafter.
6. Restricted Stock Awards.
(a) Whenever the Committee deems it appropriate to grant a
Restricted Stock Award, notice shall be given to the Participant stating
the number of shares of Restricted Stock for which the Restricted Stock
Award is granted and the terms and conditions to which the Restricted
Stock Award is subject. This notice, when accepted in writing by the
Participant shall become an award agreement between the Company and the
Participant and certificates representing the shares shall be issued and
delivered to the Participant. A Restricted Stock Award may be made by
the Committee in its discretion without cash consideration.
(b) Restricted Stock issued pursuant to the Plan shall be
subject to the following restrictions:
(i) Restricted Stock may not be sold, assigned,
transferred or disposed of within a six-month period beginning
on the Date of Grant, and Restricted Stock may not be pledged,
hypothecated or otherwise encumbered within a six-month period
beginning on the Date of Grant if such action would be treated
as a sale or disposition under Rule 16b-3.
(ii) None of such shares may be sold, assigned,
transferred, pledged, hypothecated, or otherwise encumbered or
disposed of until the restrictions on such shares shall have
lapsed or shall have been removed pursuant to paragraph (d) or
(e) below.
(iii) If a Participant ceases to be employed by the
Company or a Parent or Subsidiary of the Company, the
Participant shall forfeit to the Company any shares of
Restricted Stock, the restrictions on which shall not have
lapsed or shall not have been removed pursuant to paragraph (d)
or (e) below, on the date such Participant shall cease to be so
employed.
(c) Upon the acceptance by a Participant of a Restricted
Stock Award, such Participant shall, subject to the restrictions set
forth in paragraph (b) above, have all the rights of a shareholder with
respect to the shares of Restricted Stock subject to such Restricted
Stock Award, including, but not limited to, the right to vote such
shares of Restricted Stock and the right to receive all dividends and
other distributions paid thereon. Certificates representing Restricted
Stock shall bear a legend referring to the restrictions set forth in the
Plan and the Participant's award agreement.
(d) The Committee shall establish as to each Restricted
Stock Award the terms and conditions upon which the restrictions set
forth in paragraph (b) above shall lapse. Such terms and conditions may
include, without limitation, the passage of time, the meeting of
performance goals, the lapsing of such restrictions as a result of the
Disability, death or retirement of the Participant, or the occurrence of
a Change of Control.
(e) Notwithstanding the forfeiture provisions of paragraph
(b) (ii) above, the Committee may at any time, in its sole discretion,
accelerate the time at which any or all restrictions will lapse or
remove any and all such restrictions.
(f) Each Participant shall agree at the time his Restricted
Stock Award is granted, and as a condition thereof, to pay to the
Company, or make arrangements satisfactory to the Company regarding the
payment to the Company of, the aggregate amount of any Federal, state or
local taxes of any kind required by law to be withheld with respect to
the shares of Restricted Stock subject to the Restricted Stock Award.
Until such amount has been paid or arrangements satisfactory to the
Company have been made, no stock certificate free of a legend reflecting
the restrictions set forth in paragraph (b) above shall be issued to
such Participant.
(g) The Company may place on any certificate representing
Company Stock issued in connection with an Incentive Award any legend
deemed desirable by the Company's counsel to comply with Federal or
state securities laws, and the Company may require a customary written
indication of the Participant's investment intent.
7. Incentive Stock Awards.
(a) Incentive Stock may be issued pursuant to the Plan in
connection with incentive programs established from time to time by the
Committee when performance criteria established by the Committee as part
of the incentive program have been achieved. If the objectives
established by the Committee as a prerequisite to the receipt of
Incentive Stock have not been achieved, no stock will be issued, except
as provided in (c). A Participant eligible for the receipt or issuance
of incentive shares will have no rights as a stockholder before actual
receipt of the Incentive Stock.
(b) Whenever the Committee deems it appropriate, the
Committee may establish an incentive program and notify Participants of
their participation in and the terms of the incentive program. More
than one incentive program may be established by the Committee and they
may operate concurrently or for varied periods of time and a Participant
may be permitted to participate in more than one incentive program at
the same time. Incentive Stock will be issued only subject to the
incentive program and the Plan and consistent with meeting the
performance goals set by the Committee. A Participant in an incentive
program shall have no rights as a shareholder until Incentive Stock is
issued. Incentive Stock may be issued without cash consideration.
(c) The Committee may provide in the incentive program, or
subsequently, that Incentive Stock will be issued if a Change of Control
occurs even though the performance goals set by the Committee have not
been met.
(d) A Participant's interest in an incentive program may not
be sold, assigned, transferred, pledged, hypothecated, or otherwise
encumbered.
(e) Each Participant shall agree as a condition of his
participation in an incentive program and the receipt of Incentive
Stock, to pay to the Company, or make arrangements satisfactory to the
Company regarding the payment to the Company of, the aggregate amount of
any Federal, state or local taxes of any kind required by law to be
withheld with respect to the shares of Incentive Stock received. Until
such amount has been paid or arrangements satisfactory to the Company
have been made, no stock certificate free of a legend reflecting the
restrictions set forth in paragraph (b) above shall be issued to such
Participant.
(f) The Company may place on any certificate representing
Company Stock issued in connection with an Incentive Award any legend
deemed desirable by the Company's counsel to comply with Federal or
state securities laws, and the Company may require a customary written
indication of the Participant's investment intent.
8. Applicable Withholding Taxes. As an alternative to making a cash
payment to the Company to satisfy tax withholding obligations, the Committee
may establish procedures permitting the Participant to elect to (a) deliver
shares of already owned Company Stock or (b) have the Company retain that
number of shares of Company Stock that would satisfy all or a specified
portion of the Federal, state and local tax liabilities of the Participant
arising in the year the Incentive Award becomes subject to tax. Any such
election shall be made only in accordance with procedures established by the
Committee.
9. Nontransferability of Incentive Awards. Incentive Awards, by their
terms, shall not be transferable except by will or by the laws of descent and
distribution.
10. Effective Date of the Plan. The Plan shall be effective on February
22, 1994 and shall be submitted to the shareholders of the Company for
approval. Until (i) the Plan has been approved by the Company's shareholders,
and (ii) the requirements of any applicable State securities laws have been
met, no Restricted Stock shall be awarded, and no Incentive Stock shall be
issued.
11. Termination, Modification, Change. If not sooner terminated by the
Board, this Plan shall terminate at the close of business on February 21,
2004. No Incentive Awards shall be made under the Plan after its termination.
The Board may terminate the Plan or may amend the Plan in such respects as it
shall deem advisable; provided, that, if and to the extent required by Rule
16b-3, no change shall be made that materially increases the total number of
shares of Company Stock reserved for issuance pursuant to Incentive Awards
granted under the Plan (except pursuant to Section 12), materially modifies
the requirements as to eligibility for participation in the Plan, or
materially increases the benefits accruing to Participants under the Plan,
unless such change is authorized by the shareholders of the Company.
Notwithstanding the foregoing, the Board may amend the Plan and unilaterally
amend Incentive Awards as it deems appropriate to ensure compliance with Rule
16b-3. Except as provided in the preceding sentence, a termination or
amendment of the Plan shall not, without the consent of the Participant,
detrimentally affect a Participant's rights under an Incentive Award
previously granted to him.
12. Change in Capital Structure.
(a) In the event of a stock dividend, stock split or
combination of shares, recapitalization or merger in which the Company
is the surviving corporation or other change in the Company's capital
stock (including, but not limited to, the creation or issuance to
shareholders generally of rights, options or warrants for the purchase
of common stock or preferred stock of the Company), the number and kind
of shares of stock or securities of the Company to be subject to the
Plan, the maximum number of shares or securities which may be delivered
under the Plan, and other relevant provisions shall be appropriately
adjusted by the Committee, whose determination shall be binding on all
persons. If the adjustment would produce fractional shares with respect
to any Incentive Award, the Committee may adjust appropriately the
number of shares covered by the Incentive Award so as to eliminate the
fractional shares.
(b) If the Company is a party to a consolidation or a merger
in which the Company is not the surviving corporation, a transaction
that results in the acquisition of substantially all of the Company's
outstanding stock by a single person or entity, or a sale or transfer of
substantially all of the Company's assets, the Committee may take such
actions with respect to outstanding Incentive Awards as the Committee
deems appropriate.
(c) Notwithstanding anything in the Plan to the contrary,
the Committee may take the foregoing actions without the consent of any
Participant, and the Committee's determination shall be conclusive and
binding on all persons for all purposes.
13. Administration of the Plan. The Plan shall be administered by a
Committee consisting of not less than three Directors of the Company, who meet
the requirements of paragraph (d) below and are appointed by the Board.
Subject to paragraph (d) below, the Committee shall be the Compensation
Committee unless the Board shall appoint another Committee to administer the
Plan. The Committee shall have general authority to impose any limitation or
condition upon an Incentive Award the Committee deems appropriate to achieve
the objectives of the Incentive Award and the Plan and, in addition, and
without limitation and in addition to powers set forth elsewhere in the Plan,
shall have the following specific authority:
(a) The Committee shall have the power and complete
discretion to determine (i) which Participants shall receive Incentive
Awards and the nature of each Incentive Award, (ii) the number of shares
of Company Stock to be covered by each Incentive Award, (iii) the fair
market value of Company Stock, (iv) the time or times when an Incentive
Award shall be granted, (v) whether an Incentive Award shall become
vested over a period of time and when it shall be fully vested, (vi)
whether a Disability exists, (vii) conditions relating to the length of
time before disposition of Company Stock received in connection with an
Incentive Award is permitted, (viii) whether to approve a Participant's
election to deliver shares of already owned Company Stock or to have the
Company withhold from the shares to be issued to satisfy tax liabilities
in connection with an Incentive Award, (ix) the terms and conditions
applicable to Restricted Stock Awards, (x) the terms and conditions on
which restrictions upon Restricted Stock shall lapse, (xi) whether to
accelerate the time of receipt of Incentive Stock or the time when any
or all restrictions with respect to Restricted Stock will lapse or be
removed, (xii) notice provisions relating to the sale of Company Stock
acquired under the Plan, (xiii) the terms of incentive programs,
performance criteria and other factors relevant to the issuance of
Incentive Stock or the lapse of restrictions on Restricted Stock, and
(xiv) any additional requirements relating to Incentive Awards that the
Committee deems appropriate. The Committee shall also have the power to
amend the terms of previously granted Incentive Awards so long as the
terms as amended are consistent with the terms of the Plan and provided
that the consent of the Participant is obtained with respect to any
amendment that would be detrimental to him, except that such consent
will not be required if such amendment is for the purpose of complying
with Rule 16b-3.
(b) The Committee may adopt rules and regulations for
carrying out the Plan. The interpretation and construction of any
provision of the Plan by the Committee shall be final and conclusive.
The Committee may consult with counsel, who may be counsel to the
Company, and shall not incur any liability for any action taken in good
faith in reliance upon the advice of counsel.
(c) A majority of the members of the Committee shall
constitute a quorum, and all actions of the Committee shall be taken by
a majority of the members present. Any action may be taken by a written
instrument signed by all of the members, and any action so taken shall
be fully effective as if it had been taken at a meeting.
(d) The Board from time to time may appoint members
previously appointed and may fill vacancies, however caused, in the
Committee. If and to the extent required by Rule 16b-3, all members of
the Committee shall be "disinterested persons," as that term is defined
in Rule 16b-3.
14. Notice. All notices and other communications required or
permitted to be given under this Plan shall be in writing and shall be
deemed to have been duly given if delivered personally or mailed first
class, postage prepaid, as follows (a) if to the Company - at its
principal business to the attention of the Treasurer; (b) if to any
Participant - at the last address of the Participant known to the sender
at the time the notice or other communication is sent.
15. Interpretation. The terms of this Plan are governed by the
laws of the Commonwealth of Virginia.
<PAGE>
PROXY
SIGNET(R) BANKING CORPORATION
1994 Annual Meeting of Shareholders
Solicitated on behalf of the Board of Directors
The Shareholder(s) whose signature(s) appear(s) on the reverse side of this
proxy hereby appoint(s) Robert M. Freeeman, Malcolm S. McDonald and Andrew T.
Moore, Jr., or any one of them, proxies, with full power of substitution in
each, to vote all shares of Common Stock of Signet Banking Corporation owned by
the Shareholder(s) at the Annual Meeting of Shareholders of Signet Banking
Corporation to be held on April 26, 1994 and any adjournment thereof.
This proxy shall be voted FOR each of the matters listed on the reverse side, if
no specification is made. Receipt of the Proxy Statement dated March 28, 1994,
is acknowledged.
(continued on reverse side)
1. Election of Directors J. Henry Butta, Norwood H. Davis, Jr., William C.
DeRusha, Robert M. Freeman, William R. Harvey,
Elizabeth G. Helm, Robert M. Heyssel, Malcolm S.
McDonald, Henry A. Rosenberg, Jr., Louis B.
Thalheimer, Stanley I. Westreich.
FOR all nominees WITHHOLD
listed to the right AUTHORITY (Instructions: To withhold authority to vote
(except as marked to vote for any nominee write that nominee's name
to the contrary) all on the line below.)
nominees
listed ----------------------------------------------
( ) ( )
2. Proposal to approve the Corporation's Annual Executive Incentive Compensation
Plan.
( ) FOR ( ) AGAINST ( ) ABSTAIN
3. Proposal to approve the Corporation's Executive Long-Term Incentive Plan.
( ) FOR ( ) AGAINST ( ) ABSTAIN
4. Proposal to approve the Corporation's 1994 Stock Incentive Plan.
( ) FOR ( ) AGAINST ( ) ABSTAIN
5. Proposal to ratify the selection by the Board of Directors of Ernst & Young
as Independent Auditors for the Corporation.
( ) FOR ( ) AGAINST ( ) ABSTAIN
and with discretionary authority on any other matter that may come before the
meeting.
(Please sign exactly as your name or
names appear to the left. Only one
joint tenant need sign. Fiduciaries
should give their full titles.)
Dated: __________________________, 1994
_______________________________________
Signature of Shareholder(s)
_______________________________________
Signature of Shareholder(s)
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"'
*******************************************************************************
APPENDIX
On page 2 the first photograph is J. Henry Butta
On page 2 the second photograph is Norwood H. Davis, Jr.
On page 2 the third photograph is William C. DeRusha
On page 3 the first photograph is Robert M. Freeman
On page 3 the second photograph is William R. Harvey
On page 3 the third photograph is Elizabeth G. Helm
On page 4 the fourth photograph is Robert M. Heyssel
On page 4 the first photograph is Malcolm S. McDonald
On page 4 the second photograph is Henry A. Rosenberg, Jr.
On page 4 the third photograph is Louis B. Thalheimer
On page 4 the fourth photograph is Stanley I. Westreich
