SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to 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) No fee required
( ) 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>
[SIGNET 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 29, 1997, at 2:00 p.m.,
Eastern Time, for the following purposes:
(a) to elect twelve Directors to serve for the ensuing year;
(b) to approve an amendment of the Corporation's 1994 Stock
Incentive Plan to increase by 500,000 the number of
authorized but unissued shares of the Corporation's common
stock available for issuance under the Plan;
(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 1997; 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 5, 1997, 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
/s/ SARA REDDING WILSON
-----------------------
SARA REDDING WILSON
Corporate Secretary
March 20, 1997
<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 29, 1997, 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 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 20, 1997. 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 5, 1997, are entitled to vote at the meeting. On that
date, there were outstanding 60,194,702 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
twelve 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.
1
<PAGE>
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. Each of the nominees is also a Director of Signet Bank, the
Corporation's banking subsidiary. Messrs. J. Henry Butta, Robert M. Heyssel
and Henry A. Rosenberg, Jr., will not stand for reelection.
The persons named on the enclosed proxy will vote "FOR" the election of
the nominees named below unless authority is withheld. If for any reason any of
the persons named below should become unavailable to serve, proxies will be
voted for the remaining nominees and such other person or persons as the Board
of Directors may designate.
The nominees are:
<TABLE>
<CAPTION>
Principal Occupation or Director of
Employment During the Corporation
Name Last Five Years Since Age
---- ----------------------- ----------- -----
<S> <C>
President, Chief Executive Officer and 1997 54
Director, Dollar Tree Stores, Inc. (Retail
Sales), Norfolk, Virginia. Prior to 1993,
he was President of Dollar Tree Stores, Inc.
[PICTURE]
Macon F. Brock, Jr.
- -------------------------------------------------------------------------------------------------------------------
Chairman of the Board and Chief Executive 1984 57
Officer, Trigon Healthcare, Inc. (Health
Plans), Richmond, Virginia.
[PICTURE]
Norwood H. Davis, Jr.
- -------------------------------------------------------------------------------------------------------------------
Chairman of the Board and Chief Executive 1993 47
Officer, Heilig-Meyers Company (Retail Home
Furnishings), Richmond, Virginia.
[PICTURE]
William C. DeRusha
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation or Director of
Employment During the Corporation
Name Last Five Years Since Age
------ ------------------------ ----------- ---
<S> <C>
Retired on December 17, 1996 from the office 1978 55
of Chairman of the Board of the Corporation
and Chairman of Signet Bank. Prior to May
28, 1996, he was Chairman of the Board and
Chief Executive Officer of the Corporation
and Chairman of Signet Bank.
[PICTURE]
Robert M. Freeman
- -------------------------------------------------------------------------------------------------------------------
Chairman, President and Chief Executive 1995 54
Officer, Cadmus Communications Corporation
(Printing and Publishing), Richmond,
Virginia. Prior to February, 1995, he was
President and Chief Executive Officer of
Cadmus Communications Corporation.
[PICTURE]
C. Stephenson Gillispie, Jr.
- -------------------------------------------------------------------------------------------------------------------
Managing Director, Jonah, LLC (Private 1995 39
Investments), Richmond, Virginia. Prior to
December, 1996, he was Chairman of the Board
and Chief Executive Officer of First Colony
Corporation (Insurance), Richmond, Virginia.
[PICTURE]
Bruce C. Gottwald, Jr.
- -------------------------------------------------------------------------------------------------------------------
President, Hampton University (Educational 1989 56
Institution), Hampton, Virginia, and Owner,
Pepsi-Cola Bottling Company, Houghton,
Michigan.
[PICTURE]
William R. Harvey
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation or Director of
Employment During the Corporation
Name Last Five Years Since Age
------ ----------------------- ----------- ---
<S> <C>
President, Glaize Developments, Inc. (Land 1977 65
Development), Winchester, Virginia. From July
1, 1988 to June 30, 1992, she was Mayor, City
of Winchester, Virginia.
[PICTURE]
Elizabeth G. Helm
- -------------------------------------------------------------------------------------------------------------------
President and Chief Operating Officer of the 1996 45
Corporation and of Signet Bank. Prior to
December 17, 1996, he was Vice Chairman and
Chief Operating Officer of the Corporation
and of Signet Bank. Prior to May 28, 1996,
he was Senior Executive Vice President of the
Corporation and of Signet Bank.
[PICTURE]
T. Gaylon Layfield, III
- -------------------------------------------------------------------------------------------------------------------
Chairman of the Board and Chief Executive 1986 58
Officer of the Corporation, and Chairman of
Signet Bank. Prior to December 17, 1996, he
was President and Chief Executive Officer of
the Corporation. Prior to May 28, 1996, he
was President and Chief Operating Officer of
the Corporation and President and Chief
Executive Officer of Signet Bank.
[PICTURE]
Malcolm S. McDonald
- -------------------------------------------------------------------------------------------------------------------
Vice Chairman and Chief Financial Officer of 1996 57
the Corporation and of Signet Bank. Prior to
May 28, 1996, he was Senior Executive Vice
President and Chief Financial Officer of the
Corporation and of Signet Bank.
[PICTURE]
Wallace B. Millner, III
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation or Director of
Employment During the Corporation
Name Last Five Years Since Age
------ ----------------------- ----------- ---
<S> <C>
Chairman of the Board and Chief Executive 1992 53
Officer of American Trading and Production
Corporation (Diversified Manufacturing, Real
Estate and Oil and Gas Operations),
Baltimore, Maryland. Prior to June, 1992, he
was President and Chief Executive Officer of
American Trading and Production Corporation.
[PICTURE]
Louis B. Thalheimer
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Other Directorships
The nominees are directors of the following companies in addition to
those mentioned in the table:
Mr. Davis: Altris Software, Inc.; Hilb, Rogal and Hamilton Company
Mr. DeRusha: Peebles Inc.
Mr. Freeman: Trigon Healthcare, Inc.
Dr. Harvey: Trigon Healthcare, Inc.; International Guaranty Insurance
Company; Newport News Shipbuilding and Drydock
Company
Mrs. Helm: Shenandoah Life Insurance Company; Trigon Healthcare, Inc.
Mr. McDonald: Peebles Inc.; American Trading and Production Corporation
Stock Ownership
The following table provides information as of February 28, 1997, 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:
5
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name Beneficially Owned (1)(2) % of Class
---- ------------------------- ----------
<S> <C>
Directors
Macon F. Brock, Jr. 1,664 (3) *
J. Henry Butta 3,020 (4) *
Norwood H. Davis, Jr. 87,187 (4)(5) *
William C. DeRusha 3,000 (4) *
C. Stephenson Gillispie, Jr. 2,300 (4) *
Bruce C. Gottwald, Jr. 3,002 (4)(5) *
William R. Harvey 9,280 (4) *
Elizabeth G. Helm 25,932 (3)(4)(5) *
Robert M. Heyssel 4,335 (3)(4) *
Henry A. Rosenberg, Jr. 2,517,340 (4)(5)(6) 4.2
Louis B. Thalheimer 2,517,340 (4)(6) 4.2
Named Executive Officers
Robert M. Freeman** 464,767 (7) *
Malcolm S. McDonald** 353,715 (8) *
T. Gaylon Layfield, III** 154,377 (9) *
Wallace B. Millner, III** 232,479 (10) *
Kenneth H. Trout 108,036 (11) *
Directors & Executive Officers as a group (21) 4,285,832 (12) 7.1
5% Beneficial Owners
Delaware Management Holdings, Inc. 3,132,300 (13) 5.24
</TABLE>
- ---------------------------------------
*Less than 1% of Class
**Messrs. Freeman, McDonald, Millner and Layfield 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) Includes shares for which there is shared voting and/or
investment power as follows: Mr. Brock, 1,300 shares, Mrs. Helm, 5,236
shares, and Dr. Heyssel, 1,200 shares.
(4) Includes 1,000 shares that may be acquired within 60 days by
the exercise of stock options.
(5) Includes shares held in the Amended Investor Stock Purchase
Plan as follows: Mr. Davis, 1,536 shares, Mrs. Helm, 4,093 shares, Mr.
Gottwald, 39 shares, Mr. Rosenberg, 1,649 shares.
(6) Mr. Rosenberg and Mr. Thalheimer, Directors of the
Corporation, and their affiliates, had voting and investment power with
respect to 2,517,340 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 2,924 shares and shared voting and/or investment power as to
1,252,158 shares. Mr. Thalheimer has sole voting and investment power as
to 36,100 shares and shared voting and/or investment power as to 1,252,702
shares.
(7) Includes 294,798 shares that may be acquired within 60 days by
the exercise of stock options, 36,790 shares held in the Employee Savings Plan
and 33,395 shares for which there is shared voting and/or investment power.
(8) Includes 241,668 shares that may be acquired within 60 days by
the exercise of stock options, 12,896 shares held in the Employee Savings Plan,
149 shares held in the Amended Investor Stock Purchase Plan and 5,584 shares for
which there is shared voting and/or investment power.
(9) Includes 114,352 shares that may be acquired within 60 days by
the exercise of stock options, 1,026 shares held in the Employee Stock Purchase
Plan, 1,634 shares held in the Employee Savings Plan and 1,100 shares for which
there is shared voting and/or investment power.
(10) Includes 160,677 shares that may be acquired within 60 days by
the exercise of stock options, 4,268 shares held in the Employee Savings Plan
and 185 shares for which there is shared voting and/or investment power.
(11) Includes 71,643 shares that may be acquired within 60 days by
the exercise of stock options, 2.763 shares held in the Employee Savings Plan
and 8 shares for which there is shared voting and/or investment power.
6
<PAGE>
(12) Includes 1,120,723 shares that may be acquired within 60 days
by the exercise of stock options, 17,677 shares held in the Employee Stock
Purchase Plan, 16,563 shares held in the Amended Investor Stock Purchase Plan,
80,539 shares held in the Employee Savings Plan and 2,577,979 shares for which
there is shared voting and/or investment power.
(13) The Corporation has been advised by Delaware Management
Holdings, Inc. ("Delaware"), 2005 Market Street, Philadelphia, PA 19103, that,
as of December 31, 1996, Delaware had sole voting power with respect to 227,110
shares of the Corporation's Common Stock, sole power to dispose or direct the
disposition of 2,997,600 shares of the Corporation's Common Stock and shared
power to dispose or direct the disposition of 134,700 shares of the
Corporation's Common Stock.
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
1996 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 $27,865 for 1996.
Crown Central Petroleum Corporation, of which Mr. Rosenberg is Chairman
of the Board and Chief Executive Officer and Mr. Freeman was a member of the
Board of Directors, leased space totaling 2,463 square feet to subsidiaries of
the Corporation during 1996 for automatic teller machines located at various
Crown stations. The cost for such space totaled $34,400 for 1996.
Healthkeepers and Health Management Corporation, affiliates of Trigon
Healthcare, Inc., of which Mr. Davis is Chairman of the Board and of which
Messrs. Freeman and Harvey and Mrs. Helm are members of the Board of Directors,
provided hospitalization and medical coverage for eligible employees of the
Corporation and its subsidiaries during 1996. The cost for such coverage totaled
approximately $2,500,000.
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 subsidiary, Signet Bank. Loans made
by Signet Bank 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 1996, the Board of Directors of the Corporation held thirteen
meetings and the Executive Committee met three times. The Audit Committee of the
Corporation met seven times, the Finance Committee met four times, the
Nominating, Governance and Corporate Responsibility Committee met four times and
the Organization and Compensation Committee met five times. All Directors of the
Corporation, except Mr. Gottwald, 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, between Board meetings, has and may exercise
all of the authority of the Board of Directors, except to approve certain
extraordinary transactions. During 1996, 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, Gillispie, Harvey and Thalheimer; and for the last
six months, Mrs. Helm and Messrs. Butta, Gottwald, Heyssel and Rosenberg.
The Audit Committee is composed entirely of outside Directors who are
independent of the management of the Corporation and are free from any
relationship that in the opinion of the Board of Directors would interfere with
their exercise of independent judgment. It recommends the engagement of
independent auditors and reviews the scope of their services; reviews the
Corporation's consolidated financial statements and all audits related to them;
reviews the internal audit function including the scope and extent of internal
audits and credit reviews; reviews the annual management report and investigates
7
<PAGE>
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 1996, the Audit Committee consisted of
Messrs. Butta (Chairman), Davis, Gillispie, Gottwald, Rosenberg and Thalheimer.
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 1996, the Finance Committee consisted of
Messrs. Thalheimer (Chairman) and Mrs. Helm, Messrs. Davis, Heyssel and
Rosenberg.
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 1996, the Nominating, Governance and Corporate
Responsibility Committee consisted of Mrs. Helm (Chairman) and Messrs. DeRusha,
Gillispie, Gottwald and Harvey.
The Organization and Compensation Committee is composed entirely of
outside directors. It 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 administers the Corporation's stock-based compensation plans. During 1996,
the Organization and Compensation Committee consisted of Messrs. Harvey
(Chairman), Butta, DeRusha and Heyssel. Mr. Rosenberg served on the Organization
and Compensation Committee for two meetings in 1996.
Compensation Committee Interlocks and Insider Participation
During 1996, the Organization and Compensation Committee consisted of
Messrs. Harvey (Chairman), Butta, DeRusha, Heyssel and Rosenberg. Mr.
Rosenberg, who served on the Organization and Compensation Committee for two
meetings in 1996, is Chairman of the Board and Chief Executive Officer of Crown
Central Petroleum Corporation.
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 and each
committee meeting. Directors also are reimbursed for reasonable expenses
incurred to attend Board and Committee meetings. Chairmen of Committees receive
an additional $875 per quarter. 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
8
<PAGE>
or substantially all of the assets of the Corporation or other changes of
control as determined by regulatory authorities.
On May 28, 1996, shareholders approved the 1996 Non-Employee Directors
Stock Option Plan (the "Directors Plan"). Pursuant to the Directors Plan,
annually on January 15th each non-employee Director will automatically be
granted a stock option to purchase 1,000 shares of the Corporation's Common
Stock with an exercise price equal to 100% of the fair market value at the date
of grant. Each option shall be 100% exerciseable on the six-month anniversary of
the Date of Grant. Each option terminates on the tenth anniversary of the date
of grant.
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 of the Board
and Chief Executive Officer, the Chief Executive Officer and the three other
most highly compensated Executive Officers (the "Named Executive Officers") for
the years 1994, 1995 and 1996.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Summary Compensation Table
Long Term Compensation
-------------------------
Annual Compensation Awards Payouts
-----------------------------------------------------------------------------------------
Name and Options(1) LTIP(2) All Other(3)
Principal Position Year Salary Bonus /SARs Payouts Compensation
$ $ # $ $
--------------------------------------------------------------------------------------------------------
<S> <C>
Robert M. Freeman 1996 588,000 276,500 50,618 98,775 118,718
Chairman of the Board and 1995 576,500 0 205,173 321,675 29,525
Chief Executive Officer (4) 1994 555,000 439,850 58,348 326,350 42,978
Malcolm S. McDonald 1996 465,000 218,650 25,000 65,100 55,915
Chief Executive Officer (5) 1995 408,000 0 120,860 189,725 29,246
1994 395,000 281,725 36,418 193,550 57,247
T. Gaylon Layfield, III 1996 326,250 138,075 15,600 36,550 19,470
President and Chief 1995 250,000 30,000 66,791 93,000 18,935
Operating Officer (6) 1994 240,000 155,625 29,036 94,075 21,693
Wallace B. Millner, III 1996 298,750 125,750 13,400 33,450 42,376
Vice Chairman and Chief 1995 284,000 54,525 76,033 105,650 21,908
Financial Officer (7) 1994 278,000 200,000 20,559 108,975 45,332
Kenneth H. Trout 1996 239,000 96,975 9,600 26,775 24,553
Senior Executive Vice President 1995 227,250 36,350 50,888 84,525 20,413
Commercial Banking 1994 207,000 107,300 15,272 81,150 22,978
</TABLE>
----------------------------------------------------------------------------
(1) On February 28, 1995, the Corporation distributed to 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.
(2) Payout of long term cash award for three-year performance periods ending on
December 31, 1994, 1995 and 1996.
(3) All Other Compensation includes the following:
(i) Matching contributions under the Corporation's Employee Savings and
unfunded Excess Savings Plans. Employee pretax contributions are
matched at a rate of $0.50 for each $1.00 deferred under the plans
except that no matching contributions are made with respect to
deferrals on compensation which exceeds $250,000. During 1996, each
Named Executive Officer received a matching contribution of $4,500
under the Employee Savings Plan. Messrs. Freeman, McDonald, Layfield
and Trout received a matching contribution of $3,000, and Mr. Millner
received a matching contribution of $2,670, 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 1996, the amounts
accrued were:
9
<PAGE>
<TABLE>
<CAPTION>
Excess Deferred Total 1996
Name Savings Plan Compensation Plan Interest Accrual
---- ------------ ----------------- ----------------
<S> <C>
Robert M. Freeman $ 6,475 $ 4,453 $10,928
Malcolm S. McDonald 2,018 21,106 23,124
T. Gaylon Layfield, III 1,668 2,118 3,786
Wallace B. Millner, III 2,322 20,662 22,984
Kenneth H. Trout 1,410 5,498 6,908
</TABLE>
(iii) Under the Corporation's Split Dollar Life Insurance Plan, individual
whole life insurance is available to certain executive and management
level employees. The participant pays an assumed term cost of the
coverage and the Corporation pays the remainder of the premium. If all
assumptions as to life expectancy and other factors occur in accordance
with projections, the Corporation expects to recover the cost of the
program. The amounts listed below reflect the current value of the
benefits ascribed to life insurance policies purchased on the lives of
the Named Executive Officers.
Name Benefit Value
---- -------------
Robert M. Freeman $ 25,290
Malcolm S. McDonald 25,291
Wallace B. Millner, III 12,222
T. Gaylon Layfield, III 8,184
Kenneth H. Trout 10,145
(iv) Robert M. Freeman received a discretionary award of $75,000.
(4) Robert M. Freeman relinquished his responsibilities as Chief Executive
Officer on May 28, 1996, and retired as Chairman of the Board on December
17, 1996.
(5) Malcolm S. McDonald was designated as Chief Executive Officer on May 28,
1996.
(6) T. Gaylon Layfield, III was designated Vice Chairman and Chief Operating
Officer on May 28, 1996.
(7) Wallace B. Millner, III was designated Vice Chairman and Chief Financial
Officer on May 28, 1996.
Stock Options
The following table provides information concerning the granting of
stock options during 1996 under the Corporation's 1992 Stock Option Plan to the
Named Executive Officers.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Option/SAR Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term(1)
- ------------------------------------------------------------------------------------ --------------
% of Total
Options/SAR's
Options/ Granted to Exercise or
SAR's Employees in Base Price Expiration
Name Granted Fiscal Year ($/Sh) Date 5%($) 10%($)
- -------------------- --------- --------------- ------- --------- --------- --------
<S> <C>
Robert M. Freeman 35,300 (2) 12.0741% $23.87500 1/21/06 $529,841 $1,342,615
11,624 (3) 3.9759% 27.06250 1/25/03 111,917 255,519
3,694 (3) 1.2635% 27.06250 1/21/06 56,846 140,917
Malcolm S. McDonald 25,000 (2) 8.5510% 23.87500 1/21/06 375,242 950,861
T. Gaylon Layfield, III 15,600 (2) 5.3358% 23.87500 1/21/06 234,151 593,337
Wallace B. Millner, III 13,400 (2) 4.5833% 23.87500 1/21/06 201,129 509,661
Kenneth H. Trout 9,600 (2) 3.2836% 23.87500 1/21/06 144,093 365,131
- -----------------------------------------------------------------------------------------------------------------
</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.
(2) Granted as part of the Corporation's annual option grant. The options are
exercisable during the period beginning six months following the grant date
and ending ten years after the grant date so long as the optionee continues
employment with the Corporation or one of its subsidiaries. All options are
granted at the fair market value of the Corporation's Common Stock on the
date of grant. There were no Stock Appreciation Rights (SARs) granted to
plan participants.
10
<PAGE>
(3) Granted as reload options. Reload options are granted when an executive
surrenders currently owned shares to satisfy payment for the exercise of an
option. One reload option is granted for each such share surrendered.
Reload options are exercisable beginning six months after the grant date
and remain exercisable for the remainder of the term of the option for
which shares were surrendered. They are granted at the fair market value of
the Corporation's Common Stock on the date of grant. The reload options do
not have a reload feature.
Stock Option Exercises and Holdings
The following table provides information concerning the exercise of
stock options during 1996 and unexercised stock options held as of December 31,
1996, for the Named Executive Officers.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
---------------------------------------------------
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>
Robert M. Freeman 50,912 $763,128 329,480/ $5,388,449/
156,118 1,842,885
Malcolm S. McDonald 14,489 305,695 241,668/ 4,042,635/
86,400 1,096,200
T. Gaylon Layfield, III 5,874 119,527 114,352/ 1,831,539/
47,800 606,463
Wallace B. Millner, III 9,398 194,759 160,677/ 2,986,712/
54,300 688,931
Kenneth H. Trout 0 0 78,691 1,212,526/
36,400 461,825
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fair market value of the acquired shares of the Corporation's Common
Stock minus the price of the options exercised.
(2) Based on the December 31, 1996 market price of $30.75 per share for the
Corporation's Common Stock minus the exercise prices of the unexercised
stock options held at that time.
Long Term Cash Incentive Plan
The following table provides information concerning awards made during
1996 under the Corporation's Long Term Cash Incentive Plan to the Named
Executive Officers. Cash payments are reported in the Summary Compensation Table
when made.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Long Term Incentive Plans - Awards in Last Fiscal Year
------------------------------------------------------
Estimated Future Payouts
under Non-Stock Price Based Plans(1)
------------------------------------
Number of Performance or
Shares, Units Other Period
or Other Until Maturation Threshold Target Maximum
Name Rights (#)(2) or Payout ($) ($) ($)
- ----------------- ------------ --------------- --------- --------- --------
<S> <C>
Robert M. Freeman 117,600 1/1/96 to 12/31/98 $29,400 $117,600 $235,200
Malcolm S. McDonald 150,000 1/1/96 to 12/31/98 37,500 150,000 300,000
T. Gaylon Layfield, III 86,250 1/1/96 to 12/31/98 21,563 86,250 172,500
Wallace B. Millner, III 61,000 1/1/96 to 12/31/98 15,250 61,000 122,000
Kenneth H. Trout 49,800 1/1/96 to 12/31/98 12,450 49,800 99,600
- --------------------------------------------------------------------------------------------------------------------
</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.
11
<PAGE>
(2) Each unit represents one dollar, based on 1997 base salaries. Actual awards
may be greater if base salaries increase. The awards shown may be
decreased, but not increased 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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Pension Plan Table
------------------
Years of Service
--------------------------------------------------------------------------
Remuneration 15 20 25 (1) 30 or More (1)
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
$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
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The maximum service recognized is 20 years. Service beyond 20
years does not increase the 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
Employee 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 $475,475 for Mr. Freeman, who is credited with 25
years of service, $376,008 for Mr. McDonald, who currently is credited with 26
years of service; $255,379 for Mr. Layfield, who currently is credited with 21
years of service; $233,475 for Mr. Millner, who currently is credited with 26
years of service; and $184,786 for Mr. Trout, who currently is credited with 26
years of service.
Employment Agreements
The Corporation maintains employment agreements for fifteen Executive
Officers, including the Named Executive Officers (except Mr. Freeman). 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
12
<PAGE>
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 (except Mr. Freeman). The
purpose of the Plan is to provide income to displaced employees while they seek
new employment resulting from the elimination of their jobs 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.
Organization and Compensation Committee Report on Executive Compensation
The Organization and Compensation Committee (the "Committee") of the
Board of Directors provides assistance to the Board of Directors in fulfilling
its responsibility to shareholders to ensure that the officers and key
executives of the Corporation are compensated in accordance with executive
compensation policies, strategies and pay levels established by the Committee
from time to time to support corporate-wide strategic objectives. The Committee
is composed entirely of outside directors who are independent of the management
of the corporation and who are not employed by the Corporation.
The Committee monitors the compensation policies it establishes and,
when appropriate, modifies them to react to changing conditions to ensure the
Board and shareholders that the total compensation programs and practices of the
Corporation are competitive with organizations with which the Corporation
competes for executive talent and takes into account and complies with all
appropriate laws and regulations.
The Committee works with the management of the Corporation to establish
a relationship of pay levels to performance of the Corporation and returns to
shareholders of the Corporation. This includes defining and establishing
executive total compensation policy that 1) supports the Corporation's overall
business strategies and objectives, 2) attracts and retains key executives, 3)
links total compensation with business objectives and organizational
performance, and 4) provides competitive total compensation opportunities at a
reasonable cost while enhancing premium shareholder value creation.
The primary components of the executive compensation program which
covers the Named Executive Officers 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.
13
<PAGE>
The Committee approves the selection of companies against which the
Corporation's performance is measured for purposes of determining awards under
the Annual Executive Incentive, 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,
adjusted on January 1. With the exception of the Vice Chairman and Chief
Financial Officer's range, which was adjusted to reflect competitive market
data, the market ranges for 1996 are the same as those established in 1993.
Salary adjustments are considered at the beginning of each calendar
year for non-director Executive Officers. Messrs. McDonald, Layfield and Millner
received promotional salary adjustments in May, but generally receive salary
adjustments annually each July. Salary adjustments are based on the individual's
base salary relative to the market range for positions of similar scope and
responsibility.
Mr. Freeman's base salary of $588,000 was not adjusted during
1996. Mr. McDonald's base salary was adjusted to $500,000 on May 1, 1996.
Messrs. Freeman and McDonald's salaries place them in the upper and lower
thirds, respectively, of their assigned salary range.
Mr. Freeman received a discretionary award of $75,000 in
recognition and appreciation of his contributions to the Corporation during
his tenure as Chairman of the Board and Chief Executive Officer.
Annual Executive Incentive Compensation Plan - This program provides
for annual cash bonuses for Executive Officers based on annual performance
objectives. The performance objectives are established by the Committee and
ratified by the Board in January of the performance year. As is true in the case
of all matters pertaining to plans in which they participate, Messrs. Freeman,
McDonald, Layfield and Millner are required to abstain from voting on the
performance objective. For 1996, the performance objective was established as
the attainment of a targeted return on equity ratio.
Awards for Messrs. Freeman, McDonald and Layfield are based
solely on corporate performance. Mr. Millner's award is based on 80%
corporate performance and 20% on the performance of his organizational
unit. 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
$276,500 and Mr. McDonald's award of $218,650 resulted from the Corporation
falling slightly below its target 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 those 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
14
<PAGE>
performance is attained. Mr. Freeman's award of $98,775 and Mr. McDonald's award
of $65,100 with respect to the performance period ending on December 31, 1996,
resulted from the Corporation falling below its target ranking objective.
Stock Option Plans - Stock options are granted to executives under the
1992 Stock Option Plan. The number of shares is determined as a percentage of
salary divided by the fair market value (FMV) per share the Wednesday before 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 to the median MTB ratio of the 100
largest U.S. banks based on asset size. Specifically, the option derivation
formula is as follows:
<TABLE>
<S> <C>
Salary x Guideline Percentage Corporation's MTB Ratio
- ----------------------------- x ------------------------------------ = Number Shares Granted
Prior Wednesday FMV Median MTB Ratio of 100 Largest Banks
</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 received a grant of 35,300 options and Mr. McDonald
received a grant of 25,000 options determined by applying the criteria and
methodology described above. Based on the Corporation's market to book position,
Messrs. Freeman and McDonald's option grants, as well as the other plan
participants' grants, were adjusted downward. Mr. Freeman's reload grant of
15,318 options resulted from his tendering 15,318 shares of Common Stock for
payment of an option exercise.
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 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 and stock option
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
15
<PAGE>
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, 1991 and ending December 31, 1996. The graph
assumes an investment of $100 in the Corporation's Common Stock and each of the
indices at the market close on December 31, 1991 and the reinvestment of all
dividends, including the Corporation's spin-off of Capital One Financial
Corporation on February 28, 1995, which is treated as a reinvested special
dividend.
[GRAPH]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
- ----------------------------------------------------------------------------------------------------
<S> <C>
Signet $100 $200.28 $317.13 $268.76 $422.51 $564.17
S&P 500 $100 $107.61 $118.46 $120.02 $165.12 $203.03
KBW 50 $100 $127.42 $134.48 $127.62 $204.41 $289.15
- ----------------------------------------------------------------------------------------------------
</TABLE>
APPROVAL OF THE 1994 STOCK INCENTIVE PLAN
As Amended January 28, 1997
Introduction
On February 22, 1994, the Board of Directors of the Corporation
approved and adopted the 1994 Stock Incentive Plan (the "1994 Plan") which was
submitted to and approved by shareholders on April 26, 1994. The 1994 Plan was
amended by the Board of Directors, subject to shareholder approval, on January
28, 1997.
The 1994 Plan, in general, became effective February 22, 1994, and the
modifications to the 1994 plan are described below. Unless sooner terminated by
the Board of Directors, the 1994 Plan will terminate on February 21, 2004. No
incentive awards may be made under the 1994 Plan after termination.
16
<PAGE>
The 1994 Plan is intended to provide a means for selected key
management employees of the Corporation to increase their personal financial
interest in the Corporation, thereby stimulating their efforts on behalf of the
Corporation and its shareholders (references to the "Corporation" in this
section will include any parent and subsidiary corporations).
The 1994 Plan initially authorized the reservation of 300,000 shares of
Common Stock that may be issued with respect to incentive awards. The only
amendment to the 1994 Plan on January 28, 1997 reserved an additional 500,000
shares for the issuance of incentive awards.
The principal features of the 1994 Plan are summarized below.
General
The 1994 Plan, as amended, authorizes the reservation of 800,000 shares
of Common Stock for issuance pursuant to incentive awards. Such incentive awards
may be in the form of restricted stock or incentive stock (as described below).
If an incentive award is canceled, terminates or lapses, any unissued
shares allocable to such incentive award may be subjected again to an incentive
award. Similarly, if shares of restricted stock are reacquired by the
Corporation, such shares may again be subjected to an incentive award under the
1994 Plan. The committee is expressly authorized to make an award to a
Participant conditioned upon the surrender for cancellation of an existing
incentive award.
Adjustments will be made in the number of shares which may be issued
under the 1994 Plan in the event of a future stock dividend, stock split or
similar pro rata change in the number of outstanding shares of common stock or
the future creation or issuance to shareholders generally of rights, options or
warrants for the purchase of common stock or preferred stock.
The Corporation has registered the 1994 Plan under the Securities Act
of 1933. The amendment to the 1994 Plan authorizing an increase in the number of
shares that may be issued under the 1994 Plan will be registered.
The Common Stock is traded on the New York Stock Exchange, and on
February 28, 1997, the closing price was $31.75.
Eligibility
All present and future employees of the Corporation or a subsidiary of
the Corporation who hold positions with management responsibilities are eligible
to receive incentive awards under the 1994 Plan. The Corporation estimates that
it has approximately 263 such employees (nine of whom are Executive Officers).
Administration
The 1994 Plan is administered by a committee comprised of Directors of
the Corporation, which is the Organization and Compensation Committee. The
committee has the power and complete discretion to determine when to grant
incentive awards, which eligible employees will receive incentive awards,
whether the award will be restricted stock or incentive stock, and the number of
shares to be allocated to each incentive award. The committee may impose
conditions upon the transfer of restricted stock or incentive stock received
under the 1994 Plan, and upon the right to receive incentive stock under the
1994 Plan, and may impose such other restrictions and requirements as it may
deem appropriate, including reserving the right for the Corporation to reacquire
shares issued pursuant to an incentive award.
17
<PAGE>
Restricted Stock
Restricted stock issued pursuant to the 1994 Plan is subject to the
following general restrictions: (i) none of such shares may be sold,
transferred, pledged or otherwise encumbered or disposed of until the
restrictions on such shares shall have lapsed or been removed under the
provisions of the 1994 Plan, and (ii) if a holder of restricted stock ceases to
be employed by the Corporation, he will forfeit any shares of restricted stock
on which the restrictions have not lapsed or been otherwise removed.
The committee will establish as to each share of restricted stock
issued under the 1994 Plan the terms and conditions upon which the restrictions
on such shares shall lapse. Such terms and conditions may include, without
limitation, the lapsing of such restrictions at the end of a specified period of
time, the meeting of performance goals, or as a result of the disability, death
or retirement of the participant or a change of control. In addition, the
committee may at any time, in its sole discretion, accelerate the time at which
any or all restrictions will lapse or remove any and all such restrictions.
Incentive Stock
The committee may establish performance programs with fixed goals and
designate key employees as eligible to receive incentive stock if the goals are
achieved. Incentive stock only will be issued in accordance with the program
established by the committee. More than one performance program may be
established by the committee and they may operate concurrently or for varied
periods of time and a participant may participate in more than one program at
the same time. A participant who is eligible to receive incentive stock has no
rights as a shareholder until incentive shares are received.
Transferability of Incentive Awards
The right to receive incentive stock granted under the 1994 Plan, and
during the applicable period of restriction shares of restricted stock, may not
be sold, transferred, pledged or otherwise disposed of, other than by will or by
the laws of descent and distribution. All rights granted to a participant under
the 1994 Plan shall be exercisable during his lifetime only by such participant,
or his guardians or legal representatives. Upon the death of a participant, his
personal representative or beneficiary may exercise his rights under the 1994
Plan.
Amendment of the 1994 Plan and Incentive Awards
The Board of Directors may amend the 1994 Plan in such respects as it
deems advisable; provided, to the extent required by Rule 16(b)-3, the
shareholders of the Corporation must approve any amendment that would (i)
materially increase the benefits accruing to participants under the 1994 Plan,
(ii) materially increase the number of shares of Common Stock that may be issued
under the 1994 Plan, or (iii) materially modify the requirements of eligibility
for participation in the 1994 Plan. Incentive awards granted under the 1994 Plan
may be amended with the consent of the recipient so long as the amended award is
consistent with the terms of the 1994 Plan.
Federal Income Tax Consequences
Generally, an employee will not incur federal income tax when he is
granted restricted stock until restrictions imposed lapse and the stock becomes
transferable. An employee who is eligible to receive incentive stock if
performance goals are met will not incur federal income tax until the incentive
stock is received.
In general, an employee who has received shares of restricted stock
will include in his gross income as compensation income an amount equal to the
fair market value of the shares of restricted stock at the time the restrictions
lapse or are removed. An employee who receives shares of incentive stock will
include in his gross income as compensation income an amount equal to the fair
market value of the shares of incentive stock on the date of transfer to the
employee. Generally, such amounts will be included in income in the tax year in
which such event occurs, but special tax rules may apply in the case of an
insider that would defer recognition of income until the restricted stock or
incentive stock could be
18
<PAGE>
sold by the insider without incurring liability under Section 16 of the
Securities Exchange Act of 1934. The income recognized will be subject to income
tax withholding by the Corporation.
The committee has authority under the 1994 Plan to establish procedures
allowing the employee to deliver already owned Common Stock or to elect to have
a portion of the shares he would otherwise acquire withheld to cover his tax
liabilities. The election will be effective only if made in compliance with the
procedures established by the Committee.
The Corporation usually will be entitled to a business expense
deduction at the time and in the amount that the recipient of an incentive award
recognizes ordinary compensation income in connection therewith. As stated
above, this usually occurs when restrictions imposed upon restricted stock lapse
or upon the receipt of incentive stock. Generally, the Corporation's deduction
is contingent upon the Corporation's meeting withholding tax requirements as to
employees; however, recent tax legislation, enacted August 10, 1993, generally
imposes a $1 million limitation on the amount of the annual compensation
deduction allowable to a publicly-held company in respect of its chief executive
officer and its other four most highly paid executive officers. An exception is
provided for certain performance-based compensation if certain shareholder
approval and outside director requirements are satisfied. Because of certain
interpretational issues under the statutory provisions, and in the absence of
final Internal Revenue Service regulations, there can be no assurance that
incentive stock awarded under the 1994 Plan will qualify for this exception. The
proposed regulations exclude restricted stock from the exception.
Vote Required
Approval of the 1994 Stock Incentive Plan as amended requires the
affirmative vote of the holders of a majority of the votes cast for or against
the proposal at the annual meeting.
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE 1994 STOCK
INCENTIVE PLAN AS AMENDED IS IN THE BEST INTEREST OF ALL SHAREHOLDERS AND,
ACCORDINGLY, RECOMMENDS THAT YOU VOTE "FOR" THE 1994 STOCK INCENTIVE 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 1997, 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 AND NOMINATIONS
FOR 1998 ANNUAL MEETING
Shareholder proposals for inclusion in the Proxy Statement for the 1998
Annual Meeting of the Shareholders must be received by the Corporation no later
than December 20, 1997.
Stockholder nominations for Directors will be considered by the
Corporation if submitted in writing to the Secretary of the Corporation, 7 North
Eighth Street, Richmond, Virginia 23219. Nominations must include the
information specified in clauses (ii) through (v) in the following paragraph.
19
<PAGE>
The Corporation's Bylaws require that shareholders furnish written
notice to the Corporation of any business to be conducted at an annual meeting
which is not included in the Corporation's proxy material or is not brought
before the meeting by or at the direction of the Board of Directors or the
officer presiding over the meeting. Such notice must contain the following
information: (i) a full description of each item of business proposed to be
brought before the meeting, including the reasons for conducting such business
at the meeting and any material interest such shareholder has in such business;
(ii) the name and address of the person proposing such business (or nominating a
nominee for Director); (iii) the class and number of shares held of record, held
beneficially and represented by proxy by such person as the record for the
meeting and as of the date of such notice; (iv) if any item of such business
involves a nomination for Director, all information regarding each such nominee
that would be required to be set forth in a definitive proxy statement filed
with the Securities Exchange Commission pursuant to their rules, and the written
consent of each such nominee to serve as a director if elected; and (v) all
other information that would be required to be filed with the Securities and
Exchange Commission if, with respect to such business, the person were a
participant in a solicitation subject to Section 14 of the Securities Exchange
Act of 1934. Notice of business to be brought before the 1998 Annual Meeting
must be received by the Secretary of the Corporation at the above address on or
after January 29, 1998 and on or before February 28, 1998.
A copy of the Bylaw provisions referred to above may be obtained,
without charge, upon written request to the Secretary.
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>
PROXY
SIGNET(R) BANKING CORPORATION
1997 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) Malcolm S. McDonald, T. Gaylon Layfield, III 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 29, 1997 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 20, 1997,
is acknowledged.
(continued on reverse side)
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
Admission Ticket
Annual Meeting
of
Signet Banking Corporation Shareholders
Tuesday, April 29, 1997
2:00 p.m.
The Jefferson Hotel
Franklin and Adams Streets
Richmond, Virginia
<PAGE>
<TABLE>
<CAPTION>
Please mark
your vote as
indicated in | X |
this example
<S> <C>
1. To elect twelve Directors: Macon F. Brock, Jr., Norwood H. Davis, Jr., 2. To approve an amendment of
FOR all William C. DeRusha, Robert M. Freeman, C. Stephenson Gillispie, Jr., the Corporation's 1994
nominees Bruce C. Gottwald, Jr., William R. Harvey, Elizabeth G. Helm, Stock Incentive Plan
listed to the WITHHOLD T. Gaylon Layfield, III, Malcolm S. McDonald, to increase by 500,000
right (except AUTHORITY Wallace B. Millner, III, Louis B. Thalheimer the number of authorized
as marked to to vote for all but unissued shares of
the contrary) nominees listed (Instruction: To withhold authority to vote for any nominee the Corporation's common
write that nominee's name on the line below.) stock available for
| | | | issuance under the Plan;
----------------------------------- For Against Abstain
| | | | | |
3. To ratify the selection by the Board of Directors 4. To transact such other business as properly
of Ernst & Young LLP as independent auditors to may come before the meeting or any adjournment
audit the financial statements of the Corporation thereof
for 1997; and
For Against Abstain For Against Abstain
| | | | | | | | | | | |
Signature(s)------------------------ Signature(s) --------------------------- Date --------------------------
</TABLE>
NOTE: Please sign exactly as name appears hereon. Only one joint owner need
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
^ FOLD AND DETACH HERE ^
SIGNET BANKING CORPORATION
