SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
(X) 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)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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(i)(2) or
Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
LOGO
Signet Banking Corporation
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 Jefferson
Hotel, Franklin and Adams Streets, Richmond, Virginia, on Tuesday, April
25, 1995, 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 an amendment and restatement of the Corporation's
1992 Stock Option Plan to increase by 2,000,000 the number of authorized
but unissued shares of the Corporation's common stock available for
issuance under the Plan and to comply with the provisions of Internal
Revenue Code Section 162(m);
(c) to ratify the selection by the Board of Directors of Ernst &
Young LLP as independent auditors to audit the financial statements of the
Corporation for 1995; and
(d) 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, 1995, 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
SARA REDDING WILSON
Corporate Secretary
March 28, 1995
<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 25, 1995,
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
Executive 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 will be sent to shareholders on or about
March 28, 1995. 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, 1995, are entitled to vote at the meeting.
On that date, there were outstanding 58,552,144 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.
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:
Principal Occupation or Director of
Employment During the Corporation
Name Last Five Years Since Age
(photo) Retired on September 1, 1985 66
1991, from the office of
President and Chief
Executive Officer,
Chesapeake and Potomac
Telephone Company of
Maryland (Telecommuni-
cations), Baltimore,
Maryland. Prior to
January, 1990, he was
President of Chesapeake
and Potomac Telephone
Com-pany of Maryland. He
also is a Director of
Signet Bank/Maryland and
J. Henry Butta Signet Bank/Virginia.
-------------------------------------------------------------------------
(photo) Chairman of the Board and 1984 55
Chief Executive Officer,
Trigon Blue Cross Blue
Shield (Insurance),
Richmond, Virginia. He
also is a Director of
Signet Bank/Maryland and
Signet Bank/Virginia.
Norwood H. Davis, Jr.
-------------------------------------------------------------------------
(photo) Chairman of the Board and 1993 45
Chief Executive Officer,
Heilig-Meyers Company
( R e t a i l H o m e
Furnishings), Richmond,
Virginia. He also is a
Director of Signet
Bank/Maryland and Signet
Bank/ Virginia.
William C. DeRusha
-------------------------------------------------------------------------
(photo) Chairman of the Board and 1978 53
Chief Executive Officer
of the 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
-------------------------------------------------------------------------
(photo) Chairman of the Board and 1995 37
Chief Executive Officer
of First Colony
Corporation (Insurance),
Richmond, Virginia.
Prior to February, 1992,
he was President of First
Colony Investment Company
and Vice President and
Treasurer of Ethyl
Corporation. Prior to
August, 1991, he was
Treasurer of Ethyl
Corporation. He also is
a Director of Signet
Bank/Maryland and Signet
Bank/Virginia.
Bruce C. Gottwald, Jr.
-------------------------------------------------------------------------
(photo) President, Hampton 1989 54
University (Educational
Institution), Hampton,
Virginia, and Owner,
Pepsi-Cola Bottling
Company, Houghton,
Michigan. He also is a
Director of Signet
Bank/Maryland and Signet
William R. Harvey Bank/Virginia.
-------------------------------------------------------------------------
(photo) President, Glaize 1977 63
Developments, Inc. (Land
Development), Winchester,
Virginia. She also is a
Director of Signet
Bank/Maryland and Signet
Bank/Virginia.
Elizabeth G. Helm
-------------------------------------------------------------------------
(photo) President Emeritus, The 1985 66
Johns Hopkins Health
System and 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
-------------------------------------------------------------------------
(photo) President and Chief 1986 56
Operating Officer of the
Corporation and 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
-------------------------------------------------------------------------
(photo) Chairman of the Board and 1985 65
Chief Executive Officer,
Crown Central Petroleum
Corpora-tion (Independent
Refiners/Marketers),
Balti-more, Maryland. He
also is a Director of
Signet Bank/Maryland and
Signet Bank/Virginia.
Henry A. Rosenberg, Jr.
-------------------------------------------------------------------------
(photo) Chairman of the Board and 1992 51
Chief Executive Officer
of American Trading and
Production Corporation
( D i v e r s i f i e d
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 Corpora-tion.
He also is a Director of
Signet Bank/ Maryland and
Signet Bank/Virginia.
Louis B. Thalheimer
-------------------------------------------------------------------------
Stanley I. Westreich resigned from the Board of Directors on February
28, 1995.
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, 1994, to December 31,
1994, all filing requirements applicable to its Directors, Executive
Officers and greater than ten percent shareholders were complied with,
except that Stanley I. Westreich 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: Hilb, Rogal and Hamilton Company
Mr. DeRusha: Best Products Co., Inc.; Peebles Inc.
Mr. Freeman: Crown Central Petroleum Corporation; Trigon Blue Cross
Blue Shield
Mr. Gottwald: Ethyl Corporation; Albemarle Corporation
Mrs. Helm: Shenandoah Life Insurance Company; Trigon Blue Cross Blue
Shield
Dr. Harvey: Trigon Blue Cross Blue Shield; International Guaranty
Insurance Company
Dr. Heyssel: Monsanto Company
Mr. McDonald: Peebles Inc.; American Trading and Production
Corporation
Mr. Rosenberg: USF&G Corporation; American Trading and Production
Corporation
Stock Ownership
The following table provides information as of March 10, 1995 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 by all Directors and Executive Officers of the
Corporation as a group and by those persons or entities known by the Board
of Directors to be the beneficial owners of 5% or more of the Corporation's
Common Stock:
Number of Shares
Name Beneficially Owned (1)(2)(3) % of Class
Directors
J. Henry Butta 2,020 *
Norwood H. Davis, Jr. 97,230 (4) *
William C. DeRusha 1,000 *
Bruce C. Gottwald, Jr. 200 *
William R. Harvey 6,490 *
Elizabeth G. Helm 24,654 (4) *
Robert M. Heyssel 4,290 (4) *
Henry A. Rosenberg, Jr. 2,491,207 (4)(5) 4.3
Louis B. Thalheimer 2,491,207 (5) 4.3
Robert M. Freeman** 310,644 (6) *
Malcolm S. McDonald** 206,742 (7) *
Wallace B. Millner, III 134,669 (8) *
T. Gaylon Layfield, III 91,712 (9) *
Kenneth L. Trout 64,128 (10) *
Directors & Executive Officers
as a group (19) 3,599,988 (11) 6.2
5% Beneficial Owners
Heine Securities Corporation 3,286,000 (12) 5.6
Michael F. Price 3,286,000 (12) 5.6
The Capital Group Companies, Inc. 3,119,000 (13) 5.3
______________________________
*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) On February 28, 1995, the Corporation distributed to eligible
shareholders 58,477,850 shares of common stock of Capital One Financial
Corporation in a tax-free spin-off. On March 15, 1995, the exercise price
and aggregate number of all options outstanding on February 28, 1995, were
adjusted pursuant to a formula that maintained the aggregate value of the
options existing prior to the spin-off. For purposes of this table, the
option shares have not been adjusted.
(4) Includes shares held in the Amended Investor Stock Purchase
Plan, as follows: Mr. Davis, 12,248 shares, Mrs. Helm, 3,185 shares, Dr.
Heyssel, 2,852 shares, Mr. Rosenberg, 1,537 shares.
(5) Mr. Rosenberg and Mr. Thalheimer, Directors of the Corporation,
and their affiliates, had voting and investment power with respect to
2,491,207 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 1,811 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.
(6) Includes 160,152 shares that may be acquired within 60 days by
the exercise of stock options, 35,675 shares held in the Employee Savings
Plan as of February 10, 1995 and 20,283 shares for which there is shared
voting and/or investment power.
(7) Includes 107,260 shares that may be acquired within 60 days by
the exercise of stock options, 12,504 shares held in the Employee Savings
Plan as of February 10, 1995 and 4,564 shares for which there is shared
voting and/or investment power.
(8) Includes 72,120 shares that may be acquired within 60 days by the
exercise of stock options, 3,767 shares held in the Employee Savings Plan
as of February 10, 1995 and 87 shares for which there is shared voting
and/or investment power.
(9) Includes 50,208 shares that may be acquired within 60 days by the
exercise of stock options, 417 shares held in the Employee Stock Purchase
Plan as of February 10, 1995, 1,505 shares held in the Employee Savings
Plan as of February 10, 1995 and 1,100 shares for which there is shared
voting and/or investment power.
(10) Includes 27,888 shares that may be acquired within 60 days by the
exercise of stock options, and 942 shares held in the Employee Savings Plan
as of February 10, 1995.
(11) Includes 518,961 shares that may be acquired within 60 days by
the exercise of stock options, 13,610 shares held in the Employee Stock
Purchase Plan as of February 10, 1995, 19,968 shares held in the Amended
Investor Stock Purchase Plan, 77,327 shares held in the Employee Savings
Plan as of February 10, 1995 and 1,290,741 shares for which there is shared
voting and/or investment power.
(12) The Corporation has been advised by Heine Securities Corporation
("HSC"), 51 J.F.K. Parkway, Short Hills, New Jersey 07078, and Michael F.
Price, President of HSC, that, as of February 2, 1995, HSC and Mr. Price
had voting and investment power with respect to 3,286,000 shares of the
Corporation's Common Stock or 5.6% of the outstanding shares of Common
Stock. HSC further has advised the Corporation that it is an investment
advisor under the Investment Advisors Act of 1940 and that one or more of
HSC's advisory clients is the legal owner of such securities. Pursuant to
investment advisory agreements with its advisory clients, HSC has sole
investment discretion and voting authority with respect to such securities.
HSC and Mr. Price have further advised the Corporation that Mr. Price is
President of HSC, in which capacity he exercises voting control and
dispositive power over such securities. Mr. Price, therefore, may be
deemed to have indirect beneficial ownership over such securities. Neither
Mr. Price nor HSC has any interest in dividends or proceeds from the sale
of such securities, owns any such securities for his or its own account and
disclaims beneficial ownership of all such securities.
(13) The Corporation has been advised by The Capital Group Companies,
Inc. ("CGC"), 333 South Hope Street, Los Angeles, California 90071, that as
of February 8, 1995, Capital Guardian Trust Company and Capital Research
Management Company, operating subsidiaries of CGC, had investment
discretion with respect to 249,000 and 2,870,000 shares, respectively, of
the Corporation's Common Stock or a combined total of 5.3% of the
outstanding shares which was owned by various institutional investors.
Transactions
A subsidiary of American Trading and Production Corporation, of which
Mr. Thalheimer is Chairman of the Board and Chief Executive Officer and of
which Messrs. Rosenberg and McDonald are members of the Board of Directors,
during 1994 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 $48,508.44 in 1994.
Healthkeepers and Health Management Corporation, affiliates of Trigon
Blue Cross Blue Shield, of which Mr. Davis is Chairman of the Board and
Chief Executive Officer, provided hospitalization and medical coverage for
eligible employees of the Corporation and its subsidiaries during 1994.
The cost for such coverage totaled $3,127,513.
Ward Development Company, of which Mr. Westreich is a general partner,
during 1994 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 1994.
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 1994, the Board of Directors of the Corporation held twelve
meetings and the Executive Committee met five times. The Audit Committee
of the Corporation met four times, the Finance Committee met three times,
the Nominating, Governance and Corporate Responsibility Committee met three
times, the Organization and Compensation Committee met six times and the
Stock Option Committee met one time. 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 1994, 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. Davis, DeRusha, Heyssel and Thalheimer;
and for the last six months, Mrs. Helm and Messrs. Butta, Harvey, 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; 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 1994, 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 1994, the Finance Committee
consisted of Messrs. Thalheimer (Chairman) and Davis, 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 1994, the Nominating,
Governance and Corporate Responsibility Committee consisted of Mrs. Helm
(Chairman), Messrs. DeRusha, Harvey 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 1994, the
Organization and Compensation Committee consisted of Messrs. Harvey
(Chairman), Butta, DeRusha, Heyssel and Rosenberg.
Compensation Committee Interlocks and Insider Participation
During 1994, the Organization and Compensation Committee consisted of
Messrs. Harvey (Chairman), Butta, DeRusha , Heyssel and Rosenberg.
Mr. Rosenberg, who serves on 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.
Compensation of the Board
Non-employee 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. 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.
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 1992, 1993 and 1994.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards Payouts
Name and Options (1) LTIP(3) All Other(4)
Principal Position Year Salary Bonus (2)/SARs Payouts Compensation
$ $ # $ $
<S> <C> <C> <C> <C> <C> <C>
Robert M. Freeman 1994 555,000 439,850 29,800 326,350 42,978
Chairman of the Board and 1993 530,200 488,500 68,604 334,975 39,221
Chief Executive Officer 1992 494,100 364,350 50,748 95,250 44,375
Malcolm S. McDonald 1994 395,000 281,725 18,600 193,550 57,247
President and Chief 1993 380,000 316,100 43,312 200,700 49,763
Operating Officer 1992 360,200 246,675 34,348 59,700 58,699
Wallace B. Millner, III 1994 278,000 200,000 10,500 108,975 45,332
Senior Executive Vice President 1993 266,200 127,075 14,126 102,475 44,058
and Chief Financial Officer 1992 254,800 150,000 19,694 29,875 47,936
T. Gaylon Layfield, III 1994 240,000 155,625 14,830 94,075 21,693
Senior Executive Vice President 1993 217,650 163,975 10,772 102,475 17,238
and Consumer Banking Executive 1992 191,100 108,925 11,736 21,700 18,796
Kenneth H. Trout 1994 207,000 107,300 7,800 81,150 22,978
Senior Executive Vice President 1993 197,800 96,000 14,278 43,400 20,367
and Commercial Banking 1992 181,500 82,175 13,010 21,700 18,346
Executive
</TABLE>
(1) Reflects two for one stock split in the form of a 100 percent stock
dividend distributed on July 27, 1993.
(2) On February 28, 1995, the Corporation distributed to eligible
shareholders 58,477,850 shares of common stock of Capital One Financial
Corporation in a tax-free spin-off. On March 15, 1995, the exercise
price and aggregate numb er of all options outstanding on February
28,1995, were adjusted pursuant a formula that maintained the aggregate
value of the options existing prior to the spin-off. For purposes of
this table, the option shares have not been adjusted.
(3) Payout of long term cash award for three-year performance periods
ending on December 31, 1992, 1993 and 1994.
(4) 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 exceeds $250,000. During 1994, each Named
Executive Officer received a matching contribution of $4,500 under the
Employee Savings Plan. During 1994, each Named Executive Officer also
received the maximum profit-based match of $4,500 under the Employee
Savings Plan. Messrs. Freeman, McDonald and Layfield received the
maximum matching contribution of $3,000, and Messrs. Millner and Trout
received matching contributions of $2,224 and $1,397, respectively,
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 1994, the amounts
accrued were:
Excess Deferred Total 1994
Name Savings Plan Compensation Plan Interest Accrual
Robert M. Freeman $ 4,655 $ 3,286 $ 7,941
Malcolm S. McDonald 1,202 17,214 18,416
Wallace B. Millner, III 1,776 15,086 16,862
T. Gaylon Layfield, III 1,032 842 1,874
Kenneth H. Trout 936 2,792 3,728
(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 $ 23,037
Malcolm S. McDonald 26,831
Wallace B. Millner, III 15,086
T. Gaylon Layfield, III 7,819
Kenneth H. Trout 8,853
Options
The following table provides information concerning the granting of
stock options during 1994 under the Corporation's 1992 Stock Option Plan to
the Named Executive Officers.
<TABLE>
Option/SAR Grants in Last Fiscal Year
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term (1)(2)
% of Total
Options/SAR's
Options/ Granted to Exercise or
SAR's Employees in Base Price Expiration
Name Granted (2) Fiscal Year ($/Sh) (2) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Robert M. Freeman 29,800(3) 13.61% 36.5625 1/25/04 685,220 1,736,482
Malcolm S. McDonald 18,600(3) 8.49% 36.5625 1/25/04 427,688 1,083,844
Wallace B. Millner, III 10,500(3) 4.79% 36.5625 1/25/04 241,437 611,848
T. Gaylon Layfield, III 10,500(3) 4.79% 36.5625 1/25/04 241,437 611,848
4,330(4) 1.98% 33.7500 1/27/02 61,926 145,263
Kenneth H. Trout 7,800(3) 3.56% 36.5625 1/25/04 179,353 454,515
</TABLE>
(1) The dollar amounts under these columns are the result of calculations
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) On February 28, 1995, the Corporation distributed to eligible
shareholders 58,477,850 shares of common stock of Capital One Financial
Corporation in a tax-free spin-off. On March 15, 1995, the exercise
price and aggregate number of all options outstanding on February 28,
1995, were adjusted pursuant to a formula that maintained the aggregate
value of the options existing prior to the spin-off. For purposes of
this table, the option shares have not been adjusted.
(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 andending 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 ofan 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.
Stock Option Exercises and Holdings
The following table provides information concerning the exercise of
stock options during 1994 and unexercised stock options held as of
December 31, 1994 for the Named Executive Officers.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<CAPTION> Value of
Number of Unexercised
Unexercised 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 20,400 562,913 160,152/ 1,041,891/
0 0
Malcolm S. McDonald 3,900 107,250 121,860/ 966,279/
0 0
Wallace B. Millner, III 1,150 24,130 78,870/ 830,199/
0 0
T. Gaylon Layfield, III 18,800 438,363 50,208/ 453,768/
4,330 0
Kenneth H. Trout 20,800 290,475 27,888/ 110,136/
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 30, 1994 market price of $28.625 per share for
the Corporation's Common Stock minus the exercise prices of the
unexercised stock options held at that time.
Long Term Cash Incentive Plan
The following table provides information concerning awards made during
1994 under the Corporation's Long Term Cash Incentive Plan to the Named
Executive Officers. Cash payments are reported in the Summary Compensation
Table when made.
<TABLE>
Long Term Incentive Plans - Awards in Last Fiscal Year
<CAPTION>
Estimated Future Payouts
under Non-Stock Price Based Plans (1)
Number of Performance or
Shares, Units Other Period
or Other Until Maturation Threshold Target Maximum
Name Rights (#)(2) or Payout ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Robert M. Freeman 169,500 1/1/94 to 12/31/96 42,375 169,500 339,000
Malcolm S. McDonald 100,000 1/1/94 to 12/31/96 25,000 100,000 200,000
Wallace B. Millner, III 56,800 1/1/94 to 12/31/96 14,200 56,800 113,600
T. Gaylon Layfield, III 50,000 1/1/94 to 12/31/96 12,500 50,000 100,000
Kenneth H. Trout 43,800 1/1/94 to 12/31/96 10,950 43,800 87,600
</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 1995 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 final
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 Employment Retirement, the unfunded Excess
Retirement and Long Term Disability plans, if applicable, and 50% of the
primary Social Security benefit. Projected annual retirement benefits are
$547,168 for Mr. Freeman, who currently is credited with 23 years of
service; $372,199 for Mr. McDonald, who currently is credited with 24 years
of service; $262,900 for Mr. Millner, who currently is credited with 24
years of service; $217,594 for Mr. Layfield, who currently is credited with
19 years of service; and $172,865 for Mr. Trout, who currently is credited
with 24 years of service.
Employment Agreements
The Corporation maintains employment agreements for fourteen 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.
Severance Pay Plan
The Corporation maintains a Severance Pay Plan (the Plan ) for its
employees including the Named Executive Officers. The purpose of the Plan
is to provide income to displaced employees while they seek new employment
resulting from the elimination of their job in connection with the
Corporation s restructuring, reorganization or down-sizing. Benefits under
the plan are not payments for past services, nor is the Plan intended to
provide benefits for employees who leave employment with the Corporation
but whose employment is not in fact interrupted, even though the employment
is with a different employer. All rules and decisions dealing with the
administration of the Plan by the Corporation are uniformly and
consistently applied to all participants under similar circumstances.
Severance benefits will not be paid under the Plan to a participant: (a)
who is offered reassignment with the Corporation to another job that is
reasonably comparable to the job being eliminated, (b) who voluntarily
terminates employment before the date as of which his or her job is
scheduled to be eliminated, (c) whose employment is terminated for reasons
other than job elimination, or (d) who is within a class of employees
eligible to receive an offer of employment from a third party employer.
Severance Pay benefits will not begin, or will be discontinued, if a
participant: (i) accepts reemployment with the Corporation, or (ii) is
offered and refused reemployment with the Corporation in a position
reasonably comparable as to compensation, responsibility and location. A
participant whose employment terminates under circumstances entitling him
or her to receive Severance Pay shall be entitled to receive Severance Pay
benefits for a number of weeks based on the participant s age and length of
service with the Corporation.
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 broad based employee compensation programs. The
Committee is composed entirely of outside Directors who are not eligible,
with the exception of the deferred compensation plans, 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:
(bullet) Total compensation is performance-based.
(bullet) Success measures in performance plans are linked to shareholder
interests.
(bullet) A significant portion of the executives' total compensation is
subject to performance risk.
(bullet) A significant portion of performance-based compensation is tied
to long-term performance.
(bullet) Core compensation (salary and benefits) is maintained at
competitive levels.
(bullet) Corporate performance, as opposed to that of specific lines of
business within the Corporation, carries the predominant weight
in performance-based plans.
(bullet) 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.
The primary components of the executive compensation program are base
salary, the Annual Executive Incentive Compensation Plan, the Executive
Long Term Incentive Plan, and the 1992 Stock Option Plan. Executive
Officers also participate in a 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 return on equity performance does not
reach the level required to make payments under the broad based Employee
Profit Sharing Plan, no awards are paid under the Annual Executive
Incentive Compensation and Executive Long Term Incentive Plans.
The Committee approves the selection of companies against which the
Corporation's performance is measured for purposes of determining awards
under the Executive Long Term Incentive and Stock Option Plans. These
companies are the largest 100 U.S. banks based on asset size.
Base Salary - A base salary grade and market range has been
established for the job of each Executive Officer. Base salary grades and
market ranges are established based on results obtained from published
compensation surveys of executive pay practices within the financial
services industry. Positions are assigned to ranges based primarily on
competitive pay practices and secondarily on internal assessment of the
importance of the position. Market ranges are annually reviewed to assure
continued competitiveness and, when necessary, they are adjusted on January
1. Market ranges for 1994 were not adjusted from 1993 levels.
Salary adjustments are considered at the beginning of each calendar
year for non-director Executive Officers. Messrs. Freeman's and McDonald's
salary adjustments are considered annually each July. Salary adjustments
are based on the individual's position relative to the market range for
positions of similar scope and responsibility. Salary increase guidelines
are the same as those approved for the Corporation's bankwide merit
increase program.
Mr. Freeman's base salary was adjusted to $565,000 on July 1, 1994,
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 continues his position within the market
range of his assigned salary grade.
Annual 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 1994, the performance objective
was established as the attainment of a targeted return on equity ratio.
Awards for Messrs. Freeman and McDonald are based solely on corporate
performance. Award opportunity for other Executive Officers is based 60%
on corporate performance and 40% on the performance of their organizational
units.
The Plan calls for the payment of target awards when objectives are
met. Target percentages for each Executive Officer are established based
on results obtained from published compensation surveys of executive pay
practices within the financial services industry. Targets are set at the
median target percentage for positions of similar scope and
responsibilities. 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 $439,850 resulted from the
Corporation exceeding its targeted corporate performance objective. The
same corporate performance results were employed in determining the awards
of all other plan participants. Organizational unit objectives were also
assessed in determining other plan participants awards.
Executive 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 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 Annual Executive Incentive Compensation Plan,
performance at the level approved by the Board will result in a target
award payment. Target awards are set by the Committee on a discretionary
basis. Target levels have remained constant since plan inception. 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 $326,350 with respect to the performance period ending
on December 31, 1994, 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 number of shares is determined by taking a
percentage of salary and dividing that amount by the fair market value
(FMV) per share the Wednesday prior to the date of grant. The face value
of the grant and corresponding number of options granted is adjusted upward
or downward based on a formula that compares the Corporation's market to
book (MTB) ratio relative to the average market to book ratio of the 100
largest U.S. Banks based on asset size. Specifically, the option
derivation formula is as follows:
<TABLE>
<S> <C><C> <C>
Percentage of Salary Corporation Market to Book Ratio
-------------------- X ---------------------------------- = Number Shares Granted
Prior Wednesday FMV Mean MTB Ratio of 100 LargestBanks
</TABLE>
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 the payment of tax withholding. The reload
options do not have a reload feature.
Mr. Freeman's received a grant of 29,800 options determined by
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 upward.
Internal Revenue Code Section 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 section 162(m). To avoid losing the tax deduction on
executive pay when performance incentives bring individual compensation
above $1 million, the Corporation has obtained shareholder approval of its
performance-based cash incentive plans.
This report is submitted by the Organization and Compensation
Committee of the Corporation's Board of Directors.
William R. Harvey, Chairman
J. Henry Butta
William C. DeRusha
Robert M. Heyssel
Henry A. Rosenberg, Jr.
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, 1989 and ending
December 31, 1994.
(PERFORMANCE GRAPH)
1989 1990 1991 1992 1993 1994
Signet $100 $35.93 $82.22 $164.67 $260.75 $220.98
S&P 500 $100 $96.89 $126.41 $136.04 $149.75 $151.73
KBW 50 $100 $71.81 $113.67 $144.84 $152.86 $145.07
APPROVAL OF THE
1992 STOCK OPTION PLAN
As Amended and Restated January 24, 1995
Introduction
On November 26, 1991, the Board of Directors of the Corporation
approved and adopted the 1992 Stock Option Plan (the "1992 Plan" or "Plan")
which was submitted to and approved by shareholders on March 17, 1992. The
1992 Plan was amended and restated by the Board of Directors, subject to
shareholder approval, on January 24, 1995. The modifications are described
below.
The 1992 Plan became effective January 1, 1992. Unless sooner
terminated by the Board of Directors, the Plan will terminate on December
31, 2001. No incentive awards may be made under the 1992 Plan after
termination.
The 1992 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 the efforts of
these employees and strengthening their desire to remain with the
Corporation (references to the "Corporation" in this section will include
any parent and subsidiary corporations).
The principal features of the 1992 Plan as amended and restated are
summarized below. The summary is qualified by reference to the complete
text of the amended Plan, which is attached as Exhibit I.
General
The 1992 Plan initially authorized the reservation of 1,000,000 shares
(2,000,000 after adjustment for the 2 for 1 stock split on July 27, 1993)
of common stock for issuance pursuant to incentive awards. The 1992 Plan
as amended reserves 4,000,000 shares for the issuance of incentive awards.
Such incentive awards may be in the form of incentive stock options,
nonstatutory stock options and stock appreciation rights (as described
below).
If an incentive award is cancelled, terminates or lapses unexercised,
any unissued shares allocable to such incentive award may be subjected
again to an incentive award. In addition, shares surrendered by or
withheld from an optionee upon the exercise of an option or to pay
applicable federal and state tax withholding requirements upon the exercise
of an option or stock appreciation right may be subjected to an incentive
award under the Plan.
Adjustments will be made in the number of shares which may be issued
under the 1992 Plan in the event of a future stock dividend, stock split or
similar prorata 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 common stock is traded on the New York Stock Exchange, and on
March 10, 1995, the closing price was $18.875.
Eligibility
All present and future employees of the Corporation who hold positions
with management responsibilities are eligible to receive incentive awards
under the 1992 Plan. The Corporation estimates that it has approximately
59 such employees (approximately 15 of whom are officers).
Administration
The 1992 Plan will be administered by a committee (the "Committee")
comprised of directors of the Corporation who are not eligible to
participate in the 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 an incentive or
nonstatutory stock option, whether stock appreciation rights will be
attached to options, and the number of shares to be allocated to each
incentive award. The Committee may impose conditions on the exercise of
options and stock appreciation rights, and may impose such other
restrictions and requirements as it may deem appropriate.
Stock Options
Options to purchase shares of common stock granted under the 1992 Plan
may be incentive stock options or nonstatutory stock options. Incentive
stock options qualify for favorable income tax treatment under Section 422
of the Internal Revenue Code (the "Code"), while nonstatutory stock options
do not. The purchase price of common stock covered by an option may not be
less than 100% (or, in the case of an incentive stock option granted to a
10% shareholder, 110%) of the fair market value of the common stock on the
date of the option grant.
The value of incentive stock options, based on the exercise price,
that can be exercisable for the first time in any calendar year under the
1992 Plan or any other similar plan maintained by the Corporation is
limited to $100,000.
Options may only be exercised at such times as may be specified by the
Committee, provided, however, that incentive stock options may not be
exercised after the first to occur of (i) ten years (or, in the case of an
incentive stock option granted to a 10% shareholder, five years) from the
date on which the incentive stock option was granted, (ii) three months
from the optionee's termination of employment with the Corporation for
reasons other than death or disability, or (iii) one year from the
optionee's termination of employment on account of death or disability.
The Committee may grant options with a provision that an option not
otherwise exercisable will become exercisable upon a "change of control", a
term defined in the Plan. In general, "change of control" means:
(a) The acquisition, other than from the Corporation, by any
individual, entity or group of 20% or more of either the then outstanding
shares of common stock of the Corporation or the combined voting power of
the then outstanding voting securities of the Corporation; or
(b) Individuals who, as of January 24, 1995 constitute the Board
(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 January 24, 1995 whose election or nomination for election by
the Corporation'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 Corporation; or
(c) Approval by the shareholders of the Corporation 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 Corporation
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 Corporation or of its sale or other
disposition of all or substantially all of the assets of the Corporation.
If the option so provides, an optionee exercising an option may pay
the purchase price in cash; by delivering or causing to be withheld from
the option shares, shares of common stock; by delivering a promissory note;
or by delivering an exercise notice together with irrevocable instructions
to a broker to promptly deliver to the Corporation the amount of sale or
loan proceeds from the option shares to pay the exercise price. The
Committee may also provide in the option that an employee who exercises an
option by delivering already owned shares of Corporation common stock will
be automatically granted a new option equal in amount to the number of
shares delivered to exercise the option with an exercise price equal to the
fair market value of the Corporation's common stock on the date of
delivery.
Stock Appreciation Rights
The Committee may award stock appreciation rights with an option, or
the Committee may subsequently award and attach stock appreciation rights
to a previously awarded nonstatutory option, and impose such conditions
upon their exercise as it deems appropriate. When the stock appreciation
right is exercisable, the holder may surrender to the Corporation all or a
portion of his unexercised stock appreciation right and receive in exchange
an amount equal to the excess of (i) the fair market value on the date of
exercise of the common stock covered by the surrendered portion of the
stock appreciation right over (ii) the exercise price of the common stock
under the related option. The Committee may limit the amount which can be
received when a stock appreciation right is exercised. When a stock
appreciation right is exercised, the underlying option, to the extent
surrendered, will no longer be exercisable. Similarly, when an option is
exercised, any stock appreciation rights attached to the option will no
longer be exercisable. The Corporation's obligation arising upon the
exercise of a stock appreciation right may be paid in common stock or in
cash, or in any combination of the two, as the Committee may determine.
Stock appreciation rights may only be exercised when the underlying
option is exercisable. There are further limitations on when an officer,
director or 10% shareholder of the Corporation (an "Insider"), may exercise
a stock appreciation right. In particular, Insiders may not exercise stock
appreciation rights within the first six months after they are granted and
must generally exercise the rights in brief window periods following
quarterly earnings releases.
Compliance with Code Section 162(m)
Code section 162(m) now imposes a $1,000,000 limitation on the amount
of the annual compensation deduction allowable to a publicly held company
with respect to each of its chief executive officer and its other four most
highly paid executive officers. An exception is provided for performance-
based compensation if statutory provisions pertaining to stockholder
approval (and related disclosure) and outside director requirements are
met. In order to qualify compensation recognized upon the exercise of a
nonstatutory stock option or stock appreciation right for the performance-
based exception under Code section 162(m), the 1992 Plan has been amended
to (a) limit the number of shares which can be made subject to the grant of
an option or stock appreciation right in any calendar year to 250,000 for
the chief executive officer and its other four most highly paid executive
officers, and (b) add provisions requiring that the Plan be administered by
two or more directors who are "outside directors" within the meaning of
Code section 162(m) and regulations thereunder.
Transferability of Incentive Awards
An option awarded under the Plan 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
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 Plan.
Amendment of the 1992 Plan and Awards
The directors may amend the 1992 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 1992 Plan, (ii) materially increase the number of
shares of common stock that may be issued under the 1992 Plan, or (iii)
materially modify the requirements of eligibility for participation in the
1992 Plan. Awards granted under the 1992 Plan may be amended with the
consent of the recipient so long as the amended award is consistent with
the terms of the Plan.
Federal Income Tax Consequences
An employee will not incur federal income tax when he is granted a
nonstatutory stock option, incentive stock option or stock appreciation
right.
Upon exercise of a nonstatutory stock option or a stock appreciation
right, an employee generally will recognize compensation income, which is
subject to income tax withholding by the Corporation, equal to the
difference between the fair market value of the common Stock on the date of
the exercise and the option price. The Committee has authority under the
1992 Plan to include provisions allowing the employee to elect to have a
portion of the shares he would otherwise acquire upon exercise of an option
or stock appreciation right withheld to cover his tax liabilities. The
election will be effective only if approved by the Committee and made in
compliance with other requirements set forth in the Plan. When an employee
exercises an incentive stock option, he generally will not recognize income
subject to tax, unless he is subject to the alternative minimum tax.
An employee may deliver shares of common stock instead of cash to
acquire shares under an incentive stock option or nonstatutory stock
option, without having to recognize taxable gain (except in some cases with
respect to "statutory option stock") on any appreciation in value of the
shares delivered. However, if an employee delivers shares of "statutory
option stock" in satisfaction of all, or any part, of the exercise price
under an incentive stock option, and if the applicable holding periods of
the "statutory option stock" have not been met, he will be considered to
have made a taxable disposition of the "statutory option stock."
"Statutory option stock" is stock acquired upon the exercise of incentive
stock options.
Assuming his or her compensation is otherwise reasonable and that
exceptions to the new statutory limitations on compensation deductions by
publicly held companies (as discussed above) imposed by Section 162(m) of
the Code apply, 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 upon exercise of
nonstatutory options and stock appreciation rights. In some cases, such as
the exercise of a nonstatutory option or stock appreciation right, the
Corporation's deduction may be contingent upon the Corporation's meeting
withholding tax requirements. The 1992 Plan as amended is intended to
qualify for the Code section 162(m) exception so that compensation income
recognized upon the exercise of a nonstatutory option or a stock
appreciation right will be performance-based.
No deduction is allowed in connection with an incentive stock option,
unless the employee disposes of common stock received upon exercise in
violation of the holding period requirements.
This summary of Federal income tax consequences of nonstatutory stock
options, incentive stock options, stock appreciation rights, restricted
stock and incentive stock does not purport to be complete. There may also
be state and local income taxes applicable to these transactions. Holders
of incentive awards should consult their own advisors with respect to the
application of the laws to them and to understand other tax consequences of
the awards including possible income deferral for Insiders, alternative
minimum tax rules, taxes on parachute payments and the tax consequences of
the sale of shares acquired under the Plan.
Vote Required
Approval of the 1992 Stock Option Plan as amended and restated
requires the affirmative vote of the holders of a majority of the shares of
common stock voting at the annual meeting.
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE 1992 STOCK OPTION
PLAN AS AMENDED AND RESTATED IS IN THE BEST INTEREST OF ALL SHAREHOLDERS
AND, ACCORDINGLY, RECOMMENDS A VOTE "FOR" THE PROPOSED 1992 STOCK OPTION
PLAN PROPOSAL (ITEM NO. 2 ON YOUR PROXY CARD).
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected Ernst & Young LLP 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 LLP, 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 LLP
will be in attendance at the meeting to respond to appropriate questions
and to make a statement if he so desires.
SHAREHOLDER PROPOSALS FOR
1996 ANNUAL MEETING
Shareholder proposals for presentation to the 1996 Annual Meeting of
the Shareholders must be received by the Corporation no later than November
29, 1995.
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
1992 STOCK OPTION PLAN
(As Amended and Restated January 24, 1995)
1. Purpose. The purpose of this Signet Banking Corporation 1992
Stock Option Plan (the "Plan") is to further the long term stability and
financial success of Signet Banking Corporation (the "Company") by
attracting and retaining key employees of the Company through the use of
stock incentives. It is believed that ownership of Company Stock will
stimulate the efforts of those employees of the Company 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 Awards
granted to such employees under this Plan will strengthen their desire to
remain with the Company and will further the identification of those
employees' interests with those of the Company's shareholders.
2. Definitions. As used in the Plan, the following terms have the
meanings indicated:
(a) "Award" means, collectively, the award of an Option or Stock
Appreciation Right under the Plan.
(b) "Board" means the board of directors of the Company
(c) "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 January 24, 1995, constitute the
Board (as of January 24, 1995 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.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(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 Award is granted
by the Board.
(h) "Disability" or "Disabled" means, as to an Incentive Stock
Option, a Disability within the meaning of Code section 22(e)(3). As
to all other Awards, 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 prices 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 highest bid and lowest
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.
(j) "Incentive Stock Option" means an Option intended to meet
the requirements of, and qualify for favorable Federal income tax
treatment under, Code section 422.
(k) "Insider" means a person subject to Section 16(b) of the
Securities Exchange Act of 1934.
(l) "Nonstatutory Stock Option" means an Option, which does not
meet the requirements of Code section 422, or even if meeting the
requirements of Code section 422, is not intended to be an Incentive
Stock Option and is so designated.
(m) "Option" means a right to purchase Company Stock granted
under the Plan, at a price determined in accordance with the Plan.
(n) "Parent" means, with respect to any corporation, a "parent
corporation" of that corporation within the meaning of Code section
424(e).
(o) "Participant" means any employee who receives an Award under
the Plan.
(p) "Reload Feature" means a feature of an Option described in
an employee's stock option agreement that provides for the automatic
grant of a Reload Option in accordance with the provisions described
in Section 8(d).
(q) "Reload Option" means an Option granted to an employee equal
to the number of shares of already owned Company Stock delivered by
the employee to exercise an Option described in Section 8(d).
(r) "Rule 16b-3" means Rule 16b-3 of 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.
(s) "Stock Appreciation Right" means a right granted under the
Plan to receive from the Company amounts in cash or shares of Company
Stock upon the surrender of an Option.
(t) "Stock Option Committee" or "Committee" means the committee
appointed by the Board as described under Section 13.
(u) "Subsidiary" means, with respect to any corporation, a
"subsidiary corporation" of that corporation within the meaning of
Code section 424(f).
(v) "10% Shareholder" means a person who owns, directly or
indirectly, stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any Parent or
Subsidiary of the Company. Indirect ownership of stock shall be
determined in accordance with Code section 424(d).
(w) "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. Awards of Options and Stock Appreciation Rights may be
granted under the Plan. Options granted under the Plan may be Incentive
Stock Options or Nonstatutory Stock Options.
4. Stock. Subject to Section 12 of the Plan, there shall be
reserved for issuance under the Plan an aggregate of 4,000,000 shares of
Company Stock, which shall be authorized, but unissued shares. Shares
allocable to Options or portions thereof granted under the Plan that expire
or otherwise terminate unexercised may again be subjected to an Award under
the Plan. For purposes of determining the number of shares that are
available for Awards under the Plan, such number shall include the number
of shares surrendered by an optionee or retained by the Company (a) in
connection with the exercise of an Incentive Stock Option or Nonstatutory
Stock Option or (b) in payment of federal and state income tax withholding
liabilities upon exercise of a Nonstatutory Stock Option or a Stock
Appreciation Right.
5. Eligibility.
(a) Any employee of the Company (or Parent or Subsidiary of the
Company) who, in the judgment of the Committee has contributed or can be
expected to contribute to the profits or growth of the Company (or Parent
or Subsidiary) shall be eligible to receive Awards under the Plan.
Directors of the Company who are employees and are not members of the
Committee are eligible to participate in the Plan. The Committee shall
have the power and complete discretion, as provided in Section 13, to
select eligible employees to receive Awards and to determine for each
employee the terms and conditions, the nature of the award and the number
of shares to be allocated to each employee as part of each Award.
(b) The grant of an Award shall not obligate the Company or any
Parent or Subsidiary of the Company to pay an employee any particular
amount of remuneration, to continue the employment of the employee after
the grant or to make further grants to the employee at any time thereafter.
6. Stock Options.
(a) Whenever the Committee deems it appropriate to grant
Options, notice shall be given to the eligible employee stating the number
of shares for which Options are granted, the Option price per share,
whether the Options are Incentive Stock Options or Nonstatutory Stock
Options, the extent to which Stock Appreciation Rights are granted (as
provided in Section 7), and the conditions to which the grant and exercise
of the Options are subject. This notice, when duly accepted in writing by
the eligible employee, shall become a stock option agreement between the
Company and the eligible employee.
(b) The exercise price of shares of Company Stock covered by an
Option shall be not less than 100% of the Fair Market Value of such shares
on the Date of Grant. If the employee is a 10% Shareholder and the Option
is an Incentive Stock Option, the exercise price shall be not less than
110% of the Fair Market Value of such shares on the Date of Grant.
(c) Options may be exercised in whole or in part at such times
as may be specified by the Committee in the employee's stock option
agreement; provided that the exercise provisions for Incentive Stock
Options shall in all events not be more liberal than the following
provisions:
(i) No Incentive Stock Option may be exercised after the
first to occur of (x) ten years (or, in the case of an Incentive
Stock Option granted to a 10% Shareholder, five years) from the
Date of Grant, (y) three months from the employee's retirement or
termination of employment with the Company and its Parent and
Subsidiary corporations for reasons other than Disability or
death, or (z) one year from the employee's termination of
employment on account of Disability or death.
(ii) Except as otherwise provided in this paragraph, no
Incentive Stock Option may be exercised unless the employee is
employed by the Company or a Parent or Subsidiary of the Company
at the time of the exercise (or was so employed not more than
three months before the time of the exercise) and has been
employed by the Company or a Parent or Subsidiary of the Company
at all times since the Date of Grant. If an employee's
employment is terminated other than by reason of his Disability
or death at a time when the employee holds an Incentive Stock
Option that is exercisable (in whole or in part), the employee
may exercise any or all of the exercisable portion of the
Incentive Stock Option (to the extent exercisable on the date of
termination) within three months after the employee's termination
of employment. If an employee's employment is terminated by
reason of his Disability at a time when the employee holds an
Incentive Stock Option that is exercisable (in whole or in part),
the employee may exercise any or all of the exercisable portion
of the Incentive Stock Option (to the extent exercisable on the
date of Disability) within one year after the employee's
termination of employment. If an employee's employment is
terminated by reason of his death at a time when the employee
holds an Incentive Stock Option that is exercisable (in whole or
in part), the Incentive Stock Option may be exercised (to the
extent exercisable on the date of death) within one year after
the employee's death by the person to whom the employee's rights
under the Incentive Stock Option shall have passed by will or by
the laws of descent and distribution.
(iii) An Incentive Stock Option by its terms, shall be
exercisable in any calendar year only to the extent that the
aggregate Fair Market Value (determined at the Date of Grant) of
the Company Stock with respect to which incentive stock options
are exercisable for the first time during the calendar year does
not exceed $100,000 (the "Limitation Amount"). Incentive Stock
Options granted under the Plan and similar incentive options
granted after 1986 under all other plans of the Company and any
Parent or Subsidiary of the Company shall be aggregated for
purposes of determining whether the Limitation Amount has been
exceeded. The Board may impose such conditions as it deems
appropriate on an Incentive Stock Option to ensure that the
foregoing requirement is met. If Incentive Stock Options that
first become exercisable in a calendar year exceed the Limitation
Amount, the excess Options will be treated as Nonstatutory Stock
Options to the extent permitted by law.
(d) Notwithstanding the foregoing, if required by Rule 16b-3, no
Option shall be exercisable within the first six months after it is
granted; provided that this restriction shall not apply if the employee
becomes Disabled or dies during the six-month period.
(e) The Committee may, in its discretion, grant Options which by
their terms become fully exercisable upon a Change of Control,
notwithstanding other conditions on exercisability in the stock option
agreement, and, subject to Rule 16b-3, paragraph (d) shall not apply.
(f) The maximum number of shares with respect to which Options
or Stock Appreciation Rights may be granted in any calendar year to the
Chief Executive Officer and each of the next four most highly compensated
employees is 250,000.
(g) The Committee may, in its discretion, grant Options
containing or amend a Nonstatutory Option previously granted to provide for
a Reload Feature subject to the limitations of Section 8(d).
7. Stock Appreciation Rights.
(a) Whenever the Committee deems it appropriate, Stock
Appreciation Rights may be granted in connection with all or any part of an
Incentive Stock Option. At the discretion of the Committee, Stock
Appreciation Rights may also be granted in connection with all or any part
of a Nonstatutory Stock Option, either concurrently with the grant of the
Nonstatutory Stock Option or at any time thereafter during the term of the
Nonstatutory Stock Option. The following provisions apply to all Stock
Appreciation Rights that are granted in connection with Options:
(i) Stock Appreciation Rights shall entitle the employee,
upon exercise of all or any part of the Stock Appreciation
Rights, to surrender to the Company unexercised that portion of
the underlying Option relating to the same number of shares of
Company Stock as is covered by the Stock Appreciation Rights (or
the portion of the Stock Appreciation Rights so exercised) and to
receive in exchange from the Company an amount in cash or shares
of Company Stock (as provided in the Stock Appreciation Right)
equal to the excess of (x) the Fair Market Value on the date of
exercise of the Company Stock covered by the surrendered portion
of the underlying Option over (y) the exercise price of the
Company Stock covered by the surrendered portion of the
underlying Option. The Committee may limit the amount that the
employee will be entitled to receive upon exercise of the Stock
Appreciation Right.
(ii) Upon the exercise of a Stock Appreciation Right and
surrender of the related portion of the underlying Option, the
Option, to the extent surrendered, shall not thereafter be
exercisable.
(iii) Subject to any further conditions upon exercise imposed
by the Committee, a Stock Appreciation Right issued in tandem
with an Option shall be exercisable only to the extent that the
related Option is exercisable, except that in no event shall a
Stock Appreciation Right held by an Insider be exercisable for
cash within the first six months after it is awarded even though
the related Option is or becomes exercisable, and shall expire no
later than the date on which the related Option expires.
(iv) A Stock Appreciation Right may only be exercised at a
time when the Fair Market Value of the Company Stock covered by
the Stock Appreciation Right exceeds the exercise price of
the Company Stock covered by the underlying Option.
(b) The manner in which the Company's obligation arising upon
the exercise of a Stock Appreciation Right shall be paid shall be
determined by the Committee and shall be set forth in the employee's Option
or the related Stock Appreciation Rights agreement. The Committee may
provide for payment in Company Stock or cash, or a fixed combination of
Company Stock or cash, or the Committee may reserve the right to determine
the manner of payment at the time the Stock Appreciation Right is
exercised. Shares of Company Stock issued upon the exercise of a Stock
Appreciation Right shall be valued at their Fair Market Value on the date
of exercise.
(c) An Insider may only exercise a Stock Appreciation Right for
cash (i) during a Window Period, and (ii) six months after it is granted.
8. Method of Exercise of Options and Stock Appreciation Rights.
(a) Options and Stock Appreciation Rights may be exercised by
the employee giving written notice of the exercise to the Company, stating
the number of shares the employee has elected to purchase under the Option
or the number of Stock Appreciation Rights he has elected to exercise. In
the case of the purchase of shares under an Option, such notice shall be
effective only if accompanied by the exercise price in full in cash;
provided that if the terms of an Option so permit, the employee may (i)
deliver, or cause to be withheld from the Option Shares, shares of Company
Stock (valued at their Fair Market Value on the date of exercise) in
satisfaction of all or any part of the exercise price, (ii) deliver a
properly executed exercise notice together with irrevocable instructions to
a broker to promptly deliver to the Company the amount of the sale or loan
proceeds to pay the exercise price, or (iii) deliver an interest bearing
promissory note, payable to the Company, in payment of all or part of the
exercise price together with such collateral as may be required by the
Committee at the time of exercise. The interest rate under any such
promissory note shall be equal to the minimum interest rate required at the
time to avoid imputed interest to the Participant under the Code.
(b) The Company may place on any certificate representing
Company Stock issued upon the exercise of an Option or Stock Appreciation
Right any legend deemed desirable by the Company's counsel to comply with
Federal or state securities laws, and the Company may require of the
employee a customary written indication of his investment intent. Until
the employee has made any required payment, including any applicable
withholding taxes, and has had issued to him a certificate for the shares
of Company Stock acquired, he shall possess no shareholder rights with
respect to the shares.
(c) As an alternative to making a cash payment to the Company to
satisfy his tax withholding obligations, if the Option or Stock
Appreciation Rights agreement so provides or is amended to so provide, the
employee may, subject to the provisions set forth below, elect to (i)
deliver shares of already owned Company Stock or (ii) 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
employee arising in the year of its exercise upon the exercise of a
Nonstatutory Stock Option or Stock Appreciation Right. The Committee shall
have sole discretion to approve or disapprove any such election. The
following provisions apply to elections to satisfy such tax liabilities:
(i) If the employee is an Insider, his election to deliver
already owned Company Stock upon the exercise of a Nonstatutory
Stock Option or Stock Appreciation Right in order to satisfy such
tax liabilities must be made either (x) during a Window Period or
(y) at least six months before the date the amount of withholding
tax due with respect to the exercise of the Option or Stock
Appreciation Right is calculated.
(ii) If the employee is an Insider, his election to have the
Company retain from the shares of Company Stock to be issued upon
exercise of a Nonstatutory Stock Option or Stock Appreciation
Right the number of shares of Company Stock (or cash to the
extent a Stock Appreciation Right is being exercised for cash)
that would satisfy such tax liabilities must be made either (x)
during a Window Period or (y) at least six months before the
amount of withholding tax due with respect to the exercise of the
Option or Stock Appreciation Right is calculated.
(iii) If the employee is an Insider, his election to
deliver already owned shares of Company Stock may not be made
within six months after the date the Option or Stock Appreciation
Right being exercised is granted, if such election would not be
permissible under Rule 16b-3, except that this restriction shall
not apply if the employee becomes Disabled or dies within the
six-month period.
(iv) If the employee is an Insider, his election to 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 employee (arising in the year of its
exercise upon the exercise of a Nonstatutory Stock Option or
Stock Appreciation Right) may not be made within six months after
the date the Option or Stock Appreciation Right being exercised
is granted, if such election would not be permissible under Rule
16b-3, except that this restriction shall not apply if the
employee becomes Disabled or dies within the six-month period.
(v) The employee's election must be irrevocable.
(vi) The Committee may approve or disapprove an employee's
irrevocable election to deliver to the Company shares of already
owned Company Stock or to have the Company withhold shares of
Company Stock to satisfy an employee's tax liabilities arising
from exercise of a Nonstatutory Stock Option or Stock
Appreciation Right. The Committee shall also have the right
unilaterally to cancel an election previously approved and
require the employee to satisfy such tax liabilities by an
alternative arrangement satisfactory to the Company and the
Committee that does not involve the delivery or withholding of
Company Stock.
(vii) Notwithstanding any of the foregoing provisions,
the manner and timing of elections may be varied from those
provided, and elections previously made as irrevocable may be
revoked, if such variance or revocation is permissible under Rule
16b-3.
(d) If an employee exercises an Option that has a Reload Feature
by delivering already owned shares of Company Stock, the employee shall
automatically be granted a Reload Option. The Reload Option shall be
subject to the following provisions:
(i) The Reload Option shall cover the number of shares of
Company Stock delivered by the employee to the Company to
exercise the Option with the Reload Feature;
(ii) The Reload Option will not have a Reload Feature unless
the Committee directs otherwise;
(iii) The exercise price of shares of Company Stock
covered by a Reload Option shall be 100% of the Fair Market Value
of such shares on the date the employee delivers shares of
Company Stock to the Company to exercise the Option that has a
Reload Feature;
(iv) The Reload Option shall not be exercisable within the
first six months after it is granted; provided that this
restriction shall not apply if the employee becomes Disabled or
dies during the six-month period;
(v) The Reload Option shall be subject to the same
restrictions on exercisability as those imposed on the underlying
Option (possessing the Reload Feature);
(vi) The Reload Option shall not be exercisable until the
expiration of any retention holding period imposed on the
disposition of any shares of Company Stock covered by the
underlying Option (possessing the Reload Feature).
The Committee may, in its discretion, cause the Company to place on any
certificate representing Company Stock issued to a Participant upon the
exercise of an underlying Option (possessing a Reload Feature as evidenced
by the stock option agreement for such Option) delivered pursuant to this
subsection (d), a legend restricting the sale or other disposition of such
Company Stock.
(e) Notwithstanding anything herein to the contrary, Awards
shall always be granted and exercised in such a manner as to conform to the
provisions of Rule 16b-3, or any replacement rule adopted, as the same now
exists or may, from time to time, be amended.
9. Nontransferability of Awards and Options. Options and Stock
Appreciation Rights by their terms, shall not be transferable by the
Participant except by will or by the laws of descent and distribution and
shall be exercisable, during the Participant's lifetime, only by the
Participant or by his guardian or legal representative.
10. Effective Date of the Plan. This Plan shall be effective on
January 1, 1992 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 Option or Stock Appreciation Right shall be
exercisable.
11. Termination, Modification, Change. If not sooner terminated by
the Board, this Plan shall terminate at the close of business on December
31, 2001. No 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
the Code or Rule 16b-3, no change shall be made that materially increases
the total number of shares of Company Stock reserved for issuance pursuant
to Awards granted under the Plan (except pursuant to Section 12), expands
the class of persons eligible to receive Awards, 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 Awards as it
deems appropriate to ensure compliance with Rule 16b-3 and to cause
Incentive Stock Options to meet the requirements of the Code and
regulations thereunder. 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 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 and to Options then outstanding or
to be granted thereunder, the maximum number of shares or securities which
may be delivered under the Plan, the exercise price 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 unexercised Option, the
Committee may adjust appropriately the number of shares covered by the
Option 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 all of the Company's outstanding stock by a
single person or entity, or a sale or transfer of 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
the Committee consisting of not less than two directors of the Company
appointed by the Board. The members of the Committee shall meet the
"outside director" requirements of Code section 162(m) and regulations
thereunder and otherwise meet the requirements of subparagraph (d) below.
The Committee shall have general authority to impose any limitation or
condition upon an Award the Committee deems appropriate to achieve the
objectives of the 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 eligible employees shall receive an Award and
the nature of the Award, (ii) the number of shares of Company Stock to
be covered by each Award, (iii) whether Options shall be Incentive
Stock Options or Nonstatutory Stock Options, (iv) when, whether and to
what extent Stock Appreciation Rights shall be granted in connection
with Options, (v) whether to include a Reload Feature in an option and
to impose limitations on the use of shares acquired through the
exercise of a Reload Option to exercise Options, (vi) the fair market
value of Company Stock, (vii) the time or times when an Award shall be
granted, (viii) whether an Award shall become vested over a period of
time and when it shall be fully vested, (ix) when Options and Stock
Appreciation Rights may be exercised, (x) whether a Disability exists,
(xi) the manner in which payment will be made upon the exercise of
Options or Stock Appreciation Rights, (xii) conditions relating to the
length of time before disposition of Company Stock received upon the
exercise of Options or Stock Appreciation Rights is permitted, (xiii)
whether to approve a Participant's election (x) to deliver shares of
already owned Company Stock to satisfy tax liabilities arising upon
the exercise of a Nonstatutory Stock Option or Stock Appreciation
Right or (y) to have the Company withhold from the shares to be issued
upon the exercise of a Nonstatutory Stock Option or Stock Appreciation
Right that number of shares necessary to satisfy tax liabilities
arising from such exercise, (xiv) notice provisions relating to the
sale of Company Stock acquired under the Plan, and (xv) any additional
requirements relating to Awards that the Committee deems appropriate.
Notwithstanding the foregoing, no "tandem stock options" (where two
stock options are issued together and the exercise of one option
affects the right to exercise the other option) may be issued in
connection with Incentive Stock Options. The Committee shall also
have the power to amend the terms of previously granted 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 or any requirement of the Code applicable to
the Award.
(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) 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. The
Board of Directors from time to time may appoint members previously
appointed and may fill vacancies, however caused, in the Committee.
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 address 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 subject to all
present and future regulations and rulings of the Secretary of the Treasury
or his delegate relating to the qualification of Incentive Stock Options
under the Code. If any provision of the Plan conflicts with any such
regulation or ruling, then that provision of the Plan shall be void and of
no effect.
<PAGE>
PROXY
SIGNET (Register Mark) BANKING CORPORATION
1995 ANNUAL MEETING OF SHAREHOLDERS
SOLICITED 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. Freeman, Malcolm S. McDonald and Sara R.
Wilson, 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 25, 1995 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, 1995, is acknowledged.
(continued on reverse side)
Admission Ticket
ANNUAL MEETING
OF
SIGNET BANKING CORPORATION SHAREHOLDERS
TUESDAY, APRIL 25, 1995
2:00 P.M.
THE JEFFERSON HOTEL
FRANKLIN AND ADAMS STREETS
RICHMOND, VIRGINIA
<PAGE>
1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD J. Henry Butta, Norwood H. Davis, Jr.,
listed to the right AUTHORITY Wiliam C. DeRusha, Robert M. Freeman,
(except as marked to vote for all Bruce C. Gottwald, Jr., William R. Harvey,
to the contrary) nominees listed Elizabeth G. Helm, Robert M. Heyssel,
( ) ( ) Malcolm S. McDonald, Henry A. Rosenberg,
Jr., Louis B. Thalheimer
(Instruction: To withhold authority to vote for any nominee write that
nominee's name on the line below.)
_______________________________________________________________________
2. Proposal to approve an amendment and restatement of the Corporation's
1992 Stock Option Plan to increase by 2,000,000 the number of authorized but
unissued shares of the Corporation's Common Stock available for issuance under
the Plan and to comply with the provisions of Internal Revenue Code Section
162(m).
( ) FOR ( ) AGAINST ( ) ABSTAIN
3. Proposal to ratify the selection by the Board of Directors of Ernst &
Young LLP as independent auditors for the Corporation.
( ) FOR ( ) AGAINST ( ) ABSTAIN
and with discretionary authority on any other matters 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:___________________________, 1995
_______________________________________
Signature of Shareholder(s)
_______________________________________
Signature of Shareholder(s)
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES
SIGNET BANKING CORPORATION
