UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549PAGE>
SCHEDULE 14A
INFORMATION(Rule 14a-101)
Information Required in Proxy Statement
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Fulton Financial Corporation
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(Name of Registrant as Specified In Its Charter)
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FULTON FINANCIAL CORPORATION
P.O. BOX 4887
ONE PENN SQUARE
LANCASTER, PENNSYLVANIA 17604
NOTICE*NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
TO*TO BE HELD APRIL 18, 2000
-------------------------12, 2001
--------------------------
TO THE SHAREHOLDERS OF FULTON FINANCIAL CORPORATION:
NOTICE IS HEREBY GIVEN that, pursuant to the call of its directors, the
regular Annual Meeting of the shareholders of FULTON FINANCIAL CORPORATION will
be held on Tuesday,Thursday, April 18, 2000,12, 2001, at 12:00 noon, at the Hershey Lodge and
Convention Center, West Chocolate Avenue and University Drive, Hershey,
Pennsylvania, for the purpose of considering and voting upon the following
matters:
1. ELECTION OF DIRECTORS. To elect the sixten nominees listed in
the accompanying Proxy Statement for the terms specified.
2. OTHER BUSINESS. To consider such other business as may
properly be brought before the meeting and any adjournments
thereof.
Only those shareholders of record at the close of business on February
28,
200021, 2001 shall be entitled to be given notice of, and to vote at the meeting.
It is requested that you promptly execute the enclosed Proxy and return
it in the enclosed postpaid envelope. You are cordially invited to attend the
meeting. Your Proxy is revocable and may be withdrawn at any time before it is
voted at the meeting.
A copy of the Annual Report of Fulton Financial Corporation is
enclosed.
*BY ORDER OF THE BOARD OF DIRECTORS
---------------------------------------------------------------------
*WILLIAM R. COLMERY
-------------------------------------
Secretary
Enclosures
March 9, 20005, 2001
*BOLD FACE TYPE
PROXY STATEMENT
Dated and To Be MailedMailed: March 9, 20005, 2001
FULTON FINANCIAL CORPORATION
P.O. BOX 4887
ONE PENN SQUARE
LANCASTER, PENNSYLVANIA 17604
(717) 291-2411
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 18, 200012, 2001
TABLE OF CONTENTS
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PAGE
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GENERAL
- -------
Introduction...................................................................
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Date, Time and Place of Meeting................................................
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Shareholders Entitled to Vote..................................................
- -----------------------------
Purpose of Meeting.............................................................
- ------------------
Solicitation of Proxies........................................................
- -----------------------
Revocability and Voting of Proxies.............................................
- -----------------------------------
Voting of Shares and Principal Holders Thereof.................................
- ----------------------------------------------
Shareholder Proposals..........................................................
- ---------------------
Recommendation of the Board of Directors.......................................
- ----------------------------------------
INFORMATION CONCERNING ELECTION OF DIRECTORS
- --------------------------------------------
General Information............................................................
- -------------------
Information about Nominees and Continuing Directors............................
- ---------------------------------------------------
Meetings and Committees of the Board of Directors..............................
- -------------------------------------------------
Compensation of Directors......................................................
- -------------------------
Executive Officers.............................................................
- ------------------
Executive Compensation.........................................................
- ----------------------
Transactions with Directors and Executive Officers.............................
- --------------------------------------------------
Section 16(a) Beneficial Ownership Reporting Compliance........................
- -------------------------------------------------------
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS...............................
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ADDITIONAL INFORMATION.........................................................
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OTHER MATTERS..................................................................
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PAGE
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GENERAL
- -------................................................................. 3
Introduction............................................................ 3
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Date, Time and Place of Meeting......................................... 4
- -------------------------------
Shareholders Entitled to Vote........................................... 4
- -----------------------------
Purpose of Meeting...................................................... 4
- ------------------
Solicitation of Proxies................................................. 4
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Revocability and Voting of Proxies...................................... 4
- ----------------------------------
Voting of Shares and Principal Holders Thereof.......................... 5
- ----------------------------------------------
Shareholder Proposals................................................... 6
- ---------------------
Recommendation of the Board of Directors................................. 6
- ----------------------------------------
INFORMATION CONCERNING ELECTION OF DIRECTORS............................. 6
General Information...................................................... 6
- -------------------
Information about Nominees and Continuing Directors...................... 7
- ---------------------------------------------------
Meetings and Committees of the Board of Directors........................ 11
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Compensation of Directors................................................ 12
- -------------------------
Executive Officers....................................................... 13
- ------------------
Executive Compensation................................................... 14
- ----------------------
Transactions with Directors and Executive Officers....................... 20
- --------------------------------------------------
Section 16(a) Beneficial Ownership Reporting Compliance.................. 20
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RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS......................... 21
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Audit Fees............................................................... 21
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Financial Information Systems Design and Implementation Fees............. 21
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1
All Other Fees..................................................... 21
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ADDITIONAL INFORMATION............................................. 22
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OTHER MATTERS...................................................... 22
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EXHIBITS........................................................... 23
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Exhibit A - Report of Audit Committee.............................. 23
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2
GENERAL
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Introduction
- ------------
Fulton Financial Corporation, a Pennsylvania business corporation and
registered bank holding company, was organized pursuant to a plan of
reorganization adopted by Fulton Bank and implemented on June 30, 1982. On that
date, Fulton Bank became a wholly-owned subsidiary of Fulton Financial
Corporation and the shareholders of Fulton Bank became shareholders of Fulton
Financial Corporation. Since that time, Fulton Financial Corporation has
acquired other banks and currently owns the following subsidiary banks: Fulton
Bank, Delaware National Bank, Lebanon Valley Farmers Bank, FNB Bank, N.A.,
Great
Valley Savings Bank, Hagerstown Trust Company, Lafayette Ambassador Bank, Swineford National Bank,
The Bank of Gloucester County, The Woodstown National Bank & Trust Company, and The
Peoples Bank of Elkton.Elkton and Skylands Community Bank. In addition, Fulton
Financial Corporation has fivethe following direct, non-banking subsidiaries: Fulton
Financial Realty Company (which owns or leases certain properties on which
facilities of Fulton Bank and Lebanon Valley Farmers Bank are located), Fulton Life Insurance Company (which
reinsures credit life, health and accident insurance that is directly related to
extensions of credit by subsidiary banks of Fulton Financial Corporation),
Central Pennsylvania Financial Corp. (which owns, directly or indirectly,
certain limited partnership interests, principally in low-moderate income and
elderly housing projects), FFC Management, Inc. (which holds certain investment
securities and corporate owned life insurance policies) and, Fulton Financial
Advisors, N.A. (which plans to offeroffers fiduciary and other financialinvestment services), Fulton
Insurance Services Group, Inc. (which operates an insurance agency selling life
insurance and related insurance products) and Dearden, Maguire, Weaver &
Barrett, Inc. (which is a registered investment advisor offering investment
management and advisory services).
On December 27, 2000, Fulton Financial Corporation entered into an
Agreement and Plan of Merger with Drovers Bancshares Corporation ("Drovers")
pursuant to which Drovers will be merged with and into Fulton Financial
Corporation. Under the terms of the Agreement, each of the outstanding shares of
common stock of Drovers will be exchanged, as of the effective date of the
merger, for 1.24 shares of common stock of Fulton Financial Corporation.
Consummation of the merger is subject to various conditions, including
regulatory approvals and approval by the shareholders of Drovers. It is
contemplated that the principal subsidiary of Drovers, The Drovers & Mechanics
Bank, will be merged with and into Fulton Bank.
On January 29, 2001, four of Fulton Financial Corporation's subsidiary
banks -- Delaware National Bank, Fulton Bank, The Bank of Gloucester County and
The Woodstown National Bank & Trust Company -- each entered into a Branch
Purchase and Deposit Assumption Agreement with Sovereign Bank ("Sovereign")
pursuant to which a total of 18 branch offices of Sovereign and the related
furniture, fixtures and equipment, as well as approximately $53 million in
loans, will be purchased by such banks, with the banks agreeing to collectively
assume approximately $319 million in deposit liabilities associated with the
branch offices. Consummation of each of these purchase and assumption
transactions is subject to various conditions, including regulatory approvals.
3
The meeting to which this Proxy Statement relates will be the
eighteenthnineteenth Annual Meeting of the shareholders of Fulton Financial Corporation.
Date, Time and Place of Meeting
- -------------------------------
The regular Annual Meeting of the shareholders of Fulton Financial
Corporation will be held on Tuesday,Thursday, April 18, 2000,12, 2001, at 12:00 noon, at the
Hershey Lodge and Convention Center, West Chocolate Avenue and University Drive,
Hershey, Pennsylvania.
Shareholders Entitled to Vote
- -----------------------------
Only those shareholders of record at the close of business on February
28,
200021, 2001 shall be entitled to receive notice of, and to vote at the meeting.
Purpose of Meeting
- ------------------
The shareholders will be asked to consider and vote upon the following
matters at the meeting: (i) to elect sixten directors for the terms specified
herein; and (ii) to consider and vote upon such other business as may be
properly brought before the meeting and any adjournment thereof.
Solicitation of Proxies
- -----------------------
2
This Proxy Statement is furnished in connection with the solicitation
of proxies, in the accompanying form, by the Board of Directors of Fulton
Financial Corporation for use at the Annual Meeting of shareholders to be held
at 12:00 noon on Tuesday,Thursday, April 18, 2000,12, 2001, and any adjournments thereof.
The expense of soliciting proxies will be borne by Fulton Financial
Corporation. In addition to the use of the mails, directors, officers and
employees of Fulton Financial Corporation and its subsidiaries may, without
additional compensation, solicit proxies personally or by telephone.
Revocability and Voting of Proxies
- ----------------------------------
The execution and return of the enclosed proxy will not affect a
shareholder's right to attend the meeting and to vote in person. Any proxy given
pursuant to this solicitation may be revoked by delivering written notice of
revocation to William R. Colmery, Secretary of Fulton Financial Corporation, at
any time before the proxy is voted at the meeting. Unless revoked, any proxy
given pursuant to this solicitation will be voted at the meeting in accordance
with the instructions thereon of the shareholder giving the proxy. In the
absence of instructions, all proxies will be voted FOR the election of the sixten
nominees identified in this Proxy Statement. Although the Board of Directors
knows of no other business to be presented, in the event that any other matters
are properly brought before the meeting, any proxy given pursuant to this
solicitation will be voted in accordance with the recommendations of the
management of Fulton Financial Corporation.
4
Shares held for the account of shareholders who participate in the
Dividend Reinvestment and Stock Purchase Plan and for the account of employees
who participate in the Employee Stock Purchase Plan will be voted in accordance
with the instructions of each shareholder as set forth in his or her proxy. If a
shareholder who participates in these plans does not return a proxy, the shares
held for the shareholder's account by the Plan Agent will not be voted.
Shares held for the account of employees of Fulton Financial
Corporation and its subsidiaries who participate in the Fulton Financial Stock
Fund of the Fulton Financial Corporation Profit Sharing Plan and Affiliate
401(k) Savings Plan will be voted by the Plan Trustee in accordance with the
instructions of each participant as set forth in the separate voting instruction
sheet sent to the participant with respect to such shares. Shares held under the
Fulton Financial Stock Fund with respect to which no voting instructions are
received by the Plan Trustee will be voted by the Plan Trustee FOR the election
of the sixten nominees identified in the Proxy Statement.
Voting of Shares and Principal Holders Thereof
- ----------------------------------------------
At the close of business on February 28, 2000,21, 2001, which is the record
date for determination of shareholders entitled to receive notice of, and to
vote at the meeting and any adjournment thereof, Fulton Financial Corporation
had outstanding 68,156,27472,059,043 shares of common stock. There is no other class of
stock outstanding. As of the record date, 2,371,118 shares of Fulton Financial
Corporation common stock were held by the Trust DepartmentsFulton Financial Advisors, N.A., a
subsidiary of the following Fulton Financial Corporation, subsidiaries as sole fiduciary:
3
Fulton Bank 2,009,473
FNB Bank, N.A. 85,873
Hagerstown Trust Company 122,936
Lafayette Ambassador Bank 38,453
Lebanon Valley Farmers Bank 477,968
The Woodstown National Bank
& Trust Company 52,041
Total: 2,786,744 Shares
=========
fiduciary. The shares held
by the Trust Departments of the foregoing banksFulton Financial Advisors, N.A. as sole fiduciariesfiduciary represent in the aggregate
approximately 4.093.29 percent of the total shares outstanding and will be voted FOR
the election of the sixten nominees identified in this Proxy Statement.
A majority of the outstanding common stock present in person or by
proxy constitutes a quorum for the conduct of business. The judge of election
will treat shares of Fulton Financial Corporation common stock represented by a
properly signed and returned proxy as present at the Annual Meeting for purposes
of determining a quorum, without regard to whether the proxy is marked as
casting a vote or abstaining. Likewise, the judge of election will treat shares
of common stock represented by "broker non-votes" (i.e., shares of common stock
held in record name by brokers or nominees as to which (i) instructions have not
been received from the beneficial owners or persons entitled to vote, (ii) the
broker or nominee does not have discretionary voting power under applicable
rules of the National Association of Securities Dealers, Inc. or the instrument
under which it serves in such capacity, and (iii) over which the record holder
has indicated on the proxy or otherwise notified Fulton Financial Corporation
that it does not have authority to vote such shares on that matter) as present
for purposes of determining a quorum.
Each share is entitled to one vote on all matters submitted to a vote
of the shareholders. A majority of the votes cast at a meeting at which a quorum
is present is required in order to approve any matter submitted to a vote of the
shareholders, except in cases where the vote of a greater number of shares is
required by law or under the Articles of Incorporation or Bylaws. In the case of
the election of directors, the candidates receiving the highest number of votes,
up to the number of directors to be elected, shall be elected to the Board of
Directors. Abstentions and broker non-votes will be counted as shares that are
outstanding, but will not be counted or voted in favor of the election of
directors.
5
To the knowledge of Fulton Financial Corporation, no person owned of
record or beneficially on the record date more than five percent of the
outstanding common stock of Fulton Financial Corporation.
Shareholder Proposals
- ---------------------
Shareholder proposals intended to be presented at the 20012002 Annual
Meeting must be received at the executive offices of Fulton Financial
Corporation at One Penn Square, Lancaster, Pennsylvania not later than November
9, 2000,1, 2001, in order to be included in the proxy statement and
4
proxy form to be
prepared by Fulton Financial Corporation in connection with the 20012002 Annual
Meeting.
Recommendation of the Board of Directors
- ----------------------------------------
The Board of Directors recommends that the shareholders vote FOR the
election of the sixten nominees identified in this Proxy Statement.
INFORMATION CONCERNING ELECTION OF DIRECTORS
--------------------------------------------
General Information
- -------------------
The Bylaws of Fulton Financial Corporation provide that the Board of
Directors shall consist of not less than two nor more than thirty-five persons
and that the directors shall be classified with respect to the time they shall
severally hold office by dividing them into three classes, each consisting as
nearly as possible of one-third of the number of the whole Board of Directors.
The Bylaws further provide that the directors of each class shall be elected for
a term of three years, so that the term of office of one class of directors
shall expire at the Annual Meeting each year. The Bylaws provide that the number
of directors in each class of directors shall be determined by the Board of
Directors.
A majority of the Board of Directors may increase the number of
directors between meetings of the shareholders. Any vacancy occurring in the
Board of Directors, whether due to an increase in the number of directors,
resignation, retirement, death or any other reason, may be filled by appointment
by the remaining directors. Any director who is appointed to fill a vacancy
shall hold office until the next Annual Meeting of the shareholders and until a
successor is elected and shall have qualified. There is a mandatory retirement
provision in the Bylaws, which states that the office of a director shall be
considered vacant at the Annual Meeting of shareholders next following the
director's attaining the age of 70 years.
William E. Rusling has reached the mandatory retirement age of 70, and, as
required under the Bylaws, will be retiring from the Board of Directors as of
the 2000 Annual Meeting. Daniel M. Heisey will also be retiring from the Board
of Directors as of that date.
The Board of Directors has fixed the number of directors at twenty-three.twenty-
four. There are seventeenfourteen continuing directors whose terms of office will expire
at either the 20012002 Annual Meeting or the 20022003 Annual Meeting. The Board of
Directors proposes to nominate the following sixten persons for election to the
Board of Directors for the term specified below:
56
For a Term of Two Years - Class of 2003
---------------------------------------
Craig A. Dally R. Scott Smith, Jr..
For a Term of Three Years - Class of 20032004
-----------------------------------------
JeffreyJames P. Argires Joseph J. Mowad
Donald M. Bowman, Jr. John O. Shirk
Frederick B. Fichthorn James K. Sperry
Charles V. Henry, III Kenneth G. Albertson Rufus A. Fulton, Jr.
Harold D. Chubb Eugene H. Gardner
William H. Clark Clyde W. HorstStoudt
Each of the above nominees is presently a director of Fulton Financial
Corporation. In addition, each nominee currently serves on one bank subsidiary
board of directors and will continue to serve on such board as follows: Messrs.
Chubb, Fulton, GardnerArgires, Fichthorn, Shirk, Smith, Sperry and HorstStoudt - Fulton Bank; Mr. AlbertsonDally -
The Bank of
Gloucester County;Lafayette Ambassador Bank; Mr. Bowman - Hagerstown Trust Company; Mr. Henry -
Lebanon Valley Farmers Bank; and Mr. ClarkMowad - Swineford National Bank.FNB Bank, N.A.
In the event that any of the foregoing nominees is unable to accept
nomination or election, any proxy given pursuant to this solicitation will be
voted in favor of such other persons as the management of Fulton Financial
Corporation may recommend. However, the Board of Directors has no reason to
believe that any of its nominees will be unable to accept nomination or to serve
as a director if elected.
Section 3 of Article II of the Bylaws of Fulton Financial Corporation
requires that nominations, other than those made by or on behalf of the existing
management of Fulton Financial Corporation, must be made in writing and must be
delivered or mailed to the Chief Executive Officer of Fulton Financial
Corporation not less than 14 days nor more than 50 days prior to the date of the
Annual Meeting; provided, however, that if less than 21 days' notice of the
meeting is given to the shareholders, such nominations must be mailed or
delivered to the Chief Executive Officer of Fulton Financial Corporation not
later than the close of business on the seventh day following the day on which
notice of the meeting was mailed. The required notice must set forth the name,
age, residence address and principal occupation of each nominee. The chairman of
the meeting is required to determine whether nominations have been made in
accordance with the requirements of the Bylaws and, if he determines that a
nomination is defective, the nomination and any votes cast for the nominee shall
be disregarded.
Information about Nominees and Continuing Directors
- ---------------------------------------------------
Information concerning the sixten persons to be nominated for election to the
Board of Directors of Fulton Financial Corporation at the 20002001 Annual Meeting
and concerning the seventeenfourteen continuing directors is set forth below, including
the number of shares of Fulton Financial Corporation common stock beneficially
owned, directly or indirectly, as of February 1, 20002001 by each of them. Unless
otherwise indicated in a footnote, shares shown as beneficially owned by each
nominee or continuing director are held either (i) individually by the person
indicated, (ii)
7
individually by the person's spouse or children living in the same household,
(iii) jointly with the person's spouse or children living in the same household,
or (iv) in the name of a bank, broker or nominee for the account of the person
or the person's spouse. No nominee or continuing director owns beneficially more
than one percent of the outstanding common stock of Fulton Financial
Corporation, except Samuel H. Jones, Jr., who owns 1.35%1.40 % percent. Years of
service as a director include service as a director of Fulton Bank prior to the
formation of Fulton Financial Corporation.
6
NOMINEES
--------
CLASS OF 2003
-------------
(Three(Two Year Term)
.JEFFREY G. ALBERTSON,. CRAIG A. DALLY, age 59.44. Attorney, Albertson WardPierce & Dally, LLP (law firm).
Director since 1996.2000. Shares of stock beneficially owned: 118,665./1/
.HAROLD D. CHUBB, age 67. Retired Director of Finance, Brethren in
Christ Denomination in North America. Director since 1975. Shares of
stock beneficially owned: 28,913./2/
.WILLIAM H. CLARK,74,101.
. R. SCOTT SMITH, JR., age 67. Retired Partner, Clark, Schaeffer,
Jones & Eichner (certified public accountants). Director since 1987.
Shares of stock beneficially owned: 9,421.
.RUFUS A. FULTON, JR., age 59. Chairman of the Board,53. President and Chief ExecutiveOperating Officer,
Fulton Financial Corporation. Director since 1984.2001. Shares of stock
beneficially owned: 258,531.192,697.5./3/
.EUGENE H. GARDNER, age 64. President, Gardner, Russo & Gardner
(investment advisor). Director since 1981. Shares of stock
beneficially owned: 20,192./4/
.CLYDE W. HORST, age 61. Chairman of the Board, The Horst Group,
Inc. (diversified holding company). Director since 1978. Shares of
stock beneficially owned: 52,124.
CONTINUING DIRECTORS
--------------------1/
NOMINEES
--------
CLASS OF 2001
.JAMES2004
(Three Year Term)
. JAMES P. ARGIRES, M.D., age 68.69. President, Lancaster Neurosurgical
Associates (neurosurgeon). Director since 1974. Shares of stock
beneficially owned: 18,581.
.DONALD19,954
. DONALD M. BOWMAN, JR., age 61.62. Chairman of the Board, D. M. Bowman, Inc.
(trucking company). Director since 1994. Shares of stock beneficially
owned: 278,514.298,400./5/
.FREDERICK2/
. FREDERICK B. FICHTHORN, age 66.67. Chairman of the Board, F & M Hat Company
(manufacturer and distributor of felt and straw hats). Director since
1993. Shares of stock beneficially owned: 79,667./6/
7
.CHARLES84,094.7
. CHARLES V. HENRY, III, age 65.66. Attorney, Henry & Beaver, LLP (law firm).
Director since 1998. Shares of stock beneficially owned: 112,424.118,042./7/
.JOSEPH4/
. JOSEPH J. MOWAD, M.D., age 64.65. Director of Urology, Geisinger Medical
Center (urologist). Director since 1999. Shares of stock beneficially
owned: 24,237.
.JOHN26,621.
. JOHN O. SHIRK, age 56.57. Attorney, Barley, Snyder,Synder, Senft & Cohen, LLC (law
firm). Director since 1983. Shares of stock beneficially owned:
26,318.27,632./8/5/ Mr. Shirk also serves as a director of Irex Corporation,
which is subject to the periodic reporting requirements of Section 15(d)
of the Securities Exchange Act of 1934.
.JAMES8
. JAMES K. SPERRY, age 67.68. Retired Executive Vice President, Fulton
Financial Corporation, and Retired Chairman of the Board and Chief
Executive Officer of Fulton Bank. Director since 1984. Shares of stock
beneficially owned: 108,857./9/
.KENNETH59,320.10
. KENNETH G. STOUDT, age 55.56. President, The Stoudt Companies (employee
benefit consulting company). Director since 1987. Shares of stock
beneficially owned: 51,125.52,271.768
CONTINUING DIRECTORS
--------------------
CLASS OF 2002
.MARTIN D. COHEN, age 57. Attorney, Cohen & Feeley, P.C. (law firm). Director since 1998. Shares of stock beneficially owned: 121,350./10/
.PATRICKPATRICK J. FREER, age 50.51. President, Strickler Insurance Agency, Inc.
(insurance broker). Director since 1996. Shares of stock beneficially
owned: 36,317./11/
.ROBERT40,978/7/
. ROBERT D. GARNER, age 66.67. Retired Chairman of the Board, Fulton
Financial Corporation. Director since 1981. Shares of stock beneficially
owned: 137,084.110,066./12/
.J.8/
. J. ROBERT HESS, age 65.66. President, Lancaster Malleable Castings Company
(manufacturer of malleable iron castings). Director since 1977. Shares
of stock beneficially owned: 118,647.124,462./13/
.CAROLYN9/
. CAROLYN R. HOLLERAN, age 61.62. Partner, Jerlyn Associates (real estate
investments). Director since 1994. Shares of stock beneficially owned:
16,025.
.SAMUEL17,380.
. SAMUEL H. JONES, JR., age 66.67. President, S J Transportation Co.
(trucking company). Director since 1997. Shares of stock beneficially
owned: 925,228.1,009,849. Mr. Jones also serves as a director of MetaCreations Corp.,Viewpoint
Corporation, which is subject to the periodic reporting requirements of
Section 15(d) of the Securities Exchange Act of 1934.
.DONALD. DONALD W. LESHER, JR., age 55.56. President, Lesher Mack Sales and Service
(truck dealership). Director since 1998. Shares of stock beneficially
owned: 66,973.
8
.STUART66,167.
. STUART H. RAUB, JR., age 66.67. President, Industrial Piping Systems, Inc.
(distributor of industrial piping and related items). Director since
1981. Shares of stock beneficially owned: 38,629.40,447./14/
.MARY10/
. MARY ANN RUSSELL, age 64.65. Retired President and Chief Executive Officer,
Maple Farm, Inc. (provider of health care services). Director since
1991. Shares of stock beneficially owned: 14,046.15,193.
9
CLASS OF 2003
. JEFFREY G. ALBERTSON, age 60. Attorney, Albertson Ward (law firm).
Director since 1996. Shares of stock beneficially owned: 124,620./11/
. HAROLD D. CHUBB, age 68. Retired Director of Finance, Brethren in Christ
Denomination in North America. Director since 1975. Shares of stock
beneficially owned: 29,367./12/
. WILLIAM H. CLARK, JR., age 68. Retired Partner, Clark, Schaeffer, Jones
& Eichner (certified public accountants). Director since 1987. Shares of
stock beneficially owned: 10,126.
. RUFUS A. FULTON, JR., age 60. Chairman of the Board and Chief Executive
Officer, Fulton Financial Corporation. Director since 1984. Shares of
stock beneficially owned: 293,606./13/ Mr. Fulton also serves as a
director of Burnham Corporation, which is subject to the periodic
reporting requirements of Section 15(d) of the Securities Exchange Act
of 1934.
. EUGENE H. GARDNER, age 65. President, Gardner, Russo & Gardner
(investment advisor). Director since 1981. Shares of stock beneficially
owned: 22,046./14/
. CLYDE W. HORST, age 62. Chairman of the Board, The Horst Group, Inc.
(diversified holding company). Director since 1978. Shares of stock
beneficially owned: 54,729.
As of February 1, 2000,2001, Fulton Financial Corporation's directors and
executive officers, as a group, owned of record and beneficially 3,080,215/3,197,074/15/
shares of Fulton Financial Corporation common stock, representing 4.464.41 percent
of such shares then outstanding.
Footnotes
---------
1. Includes 9,5627,447 shares held in the Corporation's Profit Sharing Plan and
146,111 shares which may be acquired pursuant to the exercise of stock
options.
2. Includes 57,277 shares held by Bowman Sales & Equipment, Inc.
3. Includes 3,847 shares held in the F&M Hat Company Profit Sharing Plan. Mr.
Fichthorn disclaims beneficial ownership of any of the shares held in the F&M
Hat Company Profit Sharing Plan beyond his pro rata vested interest as a
participant in such Plan.
4. Includes 464 shares held in a trust.
5. Includes 1,716 shares held in a trust.
10
6. Includes 33,026 shares held in the Corporation's Profit Sharing Plan.
7. Includes 27,610 shares held by Strickler Insurance Agency, Inc. Mr. Freer
disclaims beneficial ownership of any of these shares beyond his pro rata
interest in the company.
8. Includes 11,943 shares held in the Corporation's Profit Sharing Plan, 6,348
shares which may be acquired pursuant to the exercise of stock options and
22,550 shares held by his spouse as trustee under various trusts for
grandchildren.
9. Includes 92,610 shares held by Lancaster Malleable Castings Company. Mr.
Hess disclaims beneficial ownership of any of these shares beyond his pro
rata interest in the company.
10. Includes 1,746 shares held in the Industrial Piping Systems, Inc. 401(k)
Plan. Mr. Raub disclaims beneficial ownership of any shares held in the
Industrial Piping Systems 401(k) Plan beyond his pro-rata vested interest
as a participant in such Plan. Also includes 4,093 shares held by a
revocable trust of which his spouse is settlor.
11. Includes 10,040 shares held in the Albertson Ward Profit Sharing Plan and
18,47319,421 shares which may be acquired pursuant to the exercise of stock
options. Mr. Albertson disclaims beneficial ownership of any of the shares
held in the Albertson Ward Profit Sharing Plan beyond his pro rata vested
interest as a participant in such Plan.
2.12. Includes 2,5101,645 shares held as custodian for grandchildren.
3.13. Includes 21,19523,315 shares held in the Corporation's Profit Sharing Plan and
149,440178,001 shares which may be acquired pursuant to the exercise of stock
options.
4.14. Includes 10,714 shares held in trust.
5. Includes 53,878 shares held by Bowman Sales & Equipment, Inc.
6. Includes 3,664 shares held in the F&M Hat Company Profit Sharing Plan. Mr.
Fichthorn disclaims beneficial ownership of any of the shares held in the
F&M Hat Company Profit Sharing Plan beyond his pro rata vested interest as
a participant in such Plan.
7. Includes 44211,249 shares held in a trust.
8. Includes 1,635 shares held in a trust.
9. Includes 30,366 shares held in the Corporation's Profit Sharing Plan and
13,666 shares which may be acquired pursuant to the exercise of stock
options.
10. Includes 2,955 shares held as custodian for children and 12,250 shares held
by the Martin D. Cohen Foundation.
11. Includes 24,390 shares held by Strickler Insurance Agency, Inc. Mr. Freer
disclaims beneficial ownership of any of these shares beyond his pro rata
interest in the company.
9
12. Includes 44,273 shares held in the Corporation's Profit Sharing Plan, 6,048
shares which may be acquired pursuant to the exercise of stock options and
20,840 shares held by his spouse as trustee under various trusts for
grandchildren.
13. Includes 88,200 shares held by Lancaster Malleable Castings Company. Mr.
Hess disclaims beneficial ownership of any of these shares beyond his pro
rata interest in the company.
14. Includes 1,663 shares held in the Industrial Piping Systems, Inc. 401(k)
Plan. Mr. Raub disclaims beneficial ownership of any shares held in the
Industrial Piping Systems 401(k) Plan beyond his pro-rata vested interest
as a participant in such Plan. Also includes 3,899 shares held by a
revocable trust of which his spouse is settlor.
15. Includes 515,797565,982 shares issuable upon the exercise of stock options, which
shares have been treated as outstanding shares for purposes of calculating
the percentage of outstanding shares owned by directors and executive
officers as a group.
Meetings and Committees of the Board of Directors
- -------------------------------------------------
The Board of Directors of Fulton Financial Corporation has a standing
Audit Committee and Human Resources Committee, which serves as the compensation
committee, but does not have a standing Nominating Committee. The Board of
Directors of Fulton Financial Corporation also has a standing Executive
Committee and Trust Committee.
The functions of the Executive Committee of the Board of Directors of
Fulton Financial Corporation include, among other things, consideration of
compensation for executive officers of Fulton Financial Corporation and
presentation of salary recommendations to the Board of Directors for approval.
Members of the Executive Committee during 19992000 were J. Robert Hess, Chair, Mrs.
11
Holleran and Messrs. Bowman, Fichthorn, Fulton, Garner, and Jones. In 1999,2000, Mr.
Fulton was Chief Executive Officer of Fulton Financial Corporation. Mr. Fulton
does not participate in discussions as to his own compensation. The Executive
Committee met two times during 1999.2000.
Members of the Audit Committee during 19992000 were Carolyn R. Holleran, Chair,
and Messrs. Argires, Chubb, Clark, Freer, Heisey, Raub and Sperry. All members of the
Audit Committee are deemed to be independent under the rules of the Securities
and Exchange Commission which became effective in 2000, except James K. Sperry,
who retired as Executive Vice President of Fulton Financial Corporation and
Chairman and Chief Executive Officer of Fulton Bank on June 30, 1998. The Board
of Directors determined that the continued inclusion of Mr. Sperry as a member
of the Audit Committee for 2000-01 was in the best interests of Fulton Financial
Corporation because of his financial sophistication and experience of having
served as a bank executive for many years. The Audit Committee met eight times
during the year. The Audit Committee is governed by a formal charter which was
adopted in 2000. The functions of the Audit Committee include the following:
performing all duties assigned by the Board of Directors; reviewing with
management and independent public accountants the basis for the reports issued
by Fulton Financial Corporation pursuant to federal and state regulatory
requirements; meeting with the independent public accountants to review the
scope of audit services, significant accounting changes, audit conclusions
regarding significant accounting estimates, assessments as to the adequacy of
internal controls and the resolution of any reportable conditions or weakness,
and compliance with laws and regulations; overseeing the internal audit
function; reviewing regulatory examination reports and management's responses
thereto; and reviewing periodic reports from the loan review function.
Members of the Human Resources Committee during 19992000 were John O. Shirk,
Chair, Mrs. Russell and Messrs. Albertson, Bowman, Garner, Jones Lesher and Rusling.Lesher. Mr.
Fulton serves as
10
an ex-officio member of this Committee. The Committee (and its predecessor, the
Compensation Committee of the Board of Directors of Fulton Bank) met nineeight
times during the year to review benefit and salary administration programs. The
Committee also reviews increases in salariesprograms
(except for executive officers and staff members of Fulton Financial Corporation) and other human
resources matters affecting Fulton Financial Corporation except for the executive officers, and makes
recommendations in this regard to the Board of Directors.its subsidiaries.
Members of the Trust Committee during 19992000 were Kenneth G. Stoudt, Chair
and Messrs. Cohen,Dally, Fichthorn, Gardner, Henry, Hess, Horst and Mowad. The Trust
Committee met sixeight times during the year. The Trust Committee which was formed
in 1999, was initiallyis responsible
for overseeing the activities of the
Investment Management and Trust Services Department of Fulton Bank and the
retail sales of non-FDIC insured investment products by Fulton Bank and other
Fulton Financial Corporation subsidiaries. In the future, it is expected that
the Trust Committee will oversee the activities of Fulton Financial Advisors, N.A., a newly formed subsidiary
of Fulton Financial Corporation, and all trust, investment, insurance and
related financial services which plans to offer fiduciary and other
financial services.it performs, directly or indirectly through an
affiliate.
There were eight meetings of the Board of Directors of Fulton Financial
Corporation and twenty-fivetwenty-six meetings of committees of the Board of Directors of
Fulton Financial Corporation during 1999.2000. No director attended fewer than 75
percent of the aggregate number of meetings of the Board of Directors and of the
various committees on which he or she served, except J. Robert Hess, who
attended 74% of the meetings and Martin D. Cohen, who attended 68% of the
meetings.served.
Compensation of Directors
- -------------------------
Each member of the Board of Directors of Fulton Financial Corporation is
paid an annual fee of $7,500 for his or her services as a director, except that
no fee is paid to any director who is also a
12
salaried officer of Fulton Financial Corporation or one of its subsidiary banks.
In addition, directors are paid a fee of $300 for each Board of Directors
meeting attended. Certain directors have elected to participate in the Fulton
Financial Corporation Deferred Compensation Plan, under which a director may
elect not to receive the normal director's fees when earned, but instead, to
receive them, together with interest, in a lump sum or in installments over a
period of up to twenty (20) years following retirement.
11
Executive Officers
- ------------------
The following persons are the executive officers of Fulton Financial
Corporation:
Name Age Office Held and Term of Office
- ---- --- -------------------------------------------------------------------------------------------
Rufus A. Fulton, Jr. 5960 Chairman of the Board President and Chief Executive Officer of Fulton
Financial Corporation since January, 1999; previously President
and Chief Executive Officer of Fulton Financial Corporation.
Member of Senior Management of Fulton Financial Corporation.
R. Scott Smith, Jr. 5253 President and Chief Operating Officer of Fulton Financial
Corporation since January, 2001; previously Executive Vice
President of Fulton Financial Corporation and since July, 1998, Chairman,
of the BoardPresident and Chief Executive
Officer of Fulton Bank; previously President and Chief
Operating Officer of Fulton Bank. Member
of Senior Management of Fulton Financial Corporation and Fulton Bank.Corporation.
Charles J. Nugent 5152 Senior Executive Vice President and Chief Financial Officer of
Fulton Financial Corporation since January, 2001; previously
Executive Vice President and Chief Financial Officer of Fulton
Financial Corporation. Member of Senior Management of Fulton
Financial Corporation.
Richard J. Ashby, Jr. 5556 Executive Vice President of Fulton Financial Corporation and
since January, 2001, Chairman, President and Chief Executive
Officer of Fulton Bank; previously President and Chief
Operating Officer of Fulton Bank since
January, 1999; previouslyand Chairman of the Board,
President and Chief Executive Officer of Lafayette Ambassador
Bank. Member of Senior Management of Fulton Financial
Corporation and Fulton Bank.
1213
Executive Compensation
- ----------------------
The following Summary Compensation Table shows all compensation paid by
Fulton Financial Corporation for services rendered during the past three fiscal
years by the Chief Executive Officer and each of the most highly compensated
executive officers whose total annual salary and bonus exceeded $100,000 in
1999.2000.
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation Long-TermLong-term Compensation
------------------- ----------------------
Name and All Other
Principal Position Year Salary Bonus Options Compensation*
- ------------------ ---- ------ ----- ------- -------------------------
Rufus A. Fulton, Jr., 2000 $586,444.31 $22,555.55 21,100 $87,966.65
President and Chief 1999 $553,703.80 $21,296.30 21,500 $83,055.57
President and ChiefExecutive Officer 1998 $495,926.08 $19,074.08 21,500 $74,388.91
Executive Officer 1997 $447,777.98 $17,222.23 15,124 $67,166.70
R. Scott Smith, Jr., 2000 $327,407.36 $12,592.59 16,100 $49,111.10
Executive Vice President 1999 $310,074.26 $11,925.93 16,500 $46,511.14
Executive Vice President 1998 $286,722.31 $11,296.30 16,500 $43,008.35
1997 $262,889.12 $10,111.12 11,374 $39,433.37
Charles J. Nugent, 2000 $269,629.62 $10,370.37 15,100 $40,444.44
Executive Vice President and 1999 $255,185.31 $ 9,814.82 15,500 $38,277.80
Executive Vice President andChief Financial Officer 1998 $231,111.40 $ 8,888.90 15,400 $34,666.71
Chief Financial Officer 1997 $207,037.22 $ 7,962.17 10,624 $31,055.58
Richard J. Ashby,Jr. 2000 $241,185.23*** $ 8,814.82 12,600 $36,177.78
Executive Vice President 1999 $224,388.92**** $ 8,407.41 13,000 $33,658.34
Executive Vice President
1998** $204,333.33*** $ 7,666.67 12,700 $ 4,800.00
1997** $192,778.02*** $ 7,222.23 8,749 $ 4,800.00
* Amounts accrued under the Fulton Financial Corporation Profit Sharing Plan
for the account of each named executive officer (and in the case of Mr.
AshbyMr.Ashby
in 1997 and 1998, amounts of employer-matched funds contributed under the Fulton
Financial Corporation Affiliates 401(k) Savings Plan for his account).
** Compensation paid as Chairman of the Board, President and Chief Executive
Officer of Lafayette Ambassador Bank.
*** Includes $5,000,amounts, the receipt of which has been deferred pursuant to the
Fulton Financial Corporation Deferred Compensation Plan.
****Includes $10,000, the receipt of which has been deferred pursuant to the
Fulton Financial Corporation Deferred Compensation Plan.
1314
STOCK OPTION GRANTS IN FISCAL YEAR 19992000
Potential Realized Value Atat
% of Total Assumed Annual Rates of
Options Exercise or Stock Price Appreciation for
Options Granted to Base Price Option Term
Name Granted Employees Per Share Expiration Date 5% 10%
---- ------- --------- --------- --------------- ---------------------------------------------------------------
Rufus A. Fulton, Jr. 21,500 9.18% $20.8421,100 8.52% $19.72 June 30, 2009 $281,782.48 $714,092.002010 $261,677.93 $663,143.43
R. Scott Smith, Jr. 16,500 7.04 20.8416,100 6.50 19.72 June 30, 2009 216,251.65 548,024.242010 199,668.93 506,000.42
Charles J. Nugent 15,500 6.62 20.8415,100 6.10 19.72 June 30, 2009 203,145.51 514,810.652010 187,267.11 474,571.81
Richard J. Ashby, Jr. 13,000 5.55 20.8412,600 5.10 19.72 June 30, 2009 170,380.07 431,776.662010 156,262.60 396,000.30
1415
AGGREGATED STOCK OPTION EXERCISES IN FISCAL YEAR 19992000 AND FISCAL YEAR END OPTION
VALUES
Number of
Unexercised Value of Unexercised
Shares Acquired Value Options at In-the-Money Options at
Name on Exercise* Realized Fiscal Year End** Fiscal Year End*
- ---- ------------ -------- ----------------- ----------------
Rufus A. Fulton, Jr. 6975 $ 77,360.20 149,440 $634,688.13-- -- 178,001 $1,436,297.02
R. Scott Smith, Jr. 7970 109,650.10 132,119 707,710.258,712 $118,132.40 146,111 1,279,754.31
Charles J. Nugent 91,478 317,824.20-- -- 111,140 795,248.85
Richard J. Ashby, Jr. 6756 84,498.57 104,573 574,239.327,257 70,104.96 115,144 1,022,733.45
* Restated to reflect a 10%5% stock dividend paid on June 1, 1999.May 31, 2000.
** All options are currently exercisable.
1516
Executive Committee Report on Executive Compensation
----------------------------------------------------
Compensation for executive officers of Fulton Financial Corporation is
determined by the Board of Directors after receiving recommendations from the
Executive Committee based upon external salary comparisons and individual
performance. In making recommendations to the Board of Directors regarding the
appropriate levels of executive officer compensation for 1999,2000, the Executive
Committee first considered the executive management tiers and corresponding base
salary ranges which had been developed by Towers Perrin, a consultant on
executive compensation, and approved by the Board of Directors in 1995. This
executive compensation program is based, to a significant degree, on peer group
information, because the Board of Directors believes that Fulton Financial
Corporation must offer competitive salaries in order to attract and retain
qualified executive officers.
In making recommendations to the Board of Directors regarding the
appropriate levels of executive officer compensation for 1999,2000, the Executive
Committee also considered the individual performance factors described in this
paragraph. With regard to the compensation paid to executive officers other than
the Chief Executive Officer, the Executive Committee considered information
provided by the Chief Executive Officer as to each executive officer's level of
individual performance, contribution to the organization, and salary history
during the past five years. With regard to the compensation paid to the Chief
Executive Officer, the Executive Committee considered his performance level, the
results of management decisions made by him, and the earnings of Fulton
Financial Corporation during the previous year. The Executive Committee did not
assign a particular weight to any of the foregoing individual performance
factors, nor did it establish specific target levels for individual performance
or corporate earnings. The compensation recommendations of the Executive
Committee were based on its overall subjective assessment of the value of the
services provided by each executive officer to Fulton Financial Corporation,
after giving careful consideration to the peer group compensation information
described above and the individual performance factors discussed in this
paragraph.
The peer group of bank holding companies chosen by the Executive Committee
for purposes of making a comparative analysis of executive compensation for 19992000
did not include all of the same bank holding companies that are incorporated in
the peer group established to compare shareholder returns, as indicated in the
Performance Graph included in this Proxy Statement. The major difference between
the peer groups is that the peer group chosen for executive compensation
analysis included bank holding companies with assets between $2.2$2.4 and $7.2$12.1
billion from a seven-state region of the Eastern United States that were deemed
to be potential competitors with Fulton Financial Corporation in attracting
executive talent, while the peer group chosen for shareholder return analysis
includes bank holding companies with assets between $2 and $8 billion as of
September 30, 1996 that are located in a nine-state (plus the District of
Columbia) region of the Eastern United States. Both peer groups include bank
holding companies that are comparable to Fulton Financial Corporation in terms
of asset size, although they are not necessarily comparable in terms of
financial performance.
Pursuant to an Incentive Stock Option Plan approved by the Board of
Directors and the shareholders in 1996, Fulton Financial Corporation is
authorized to award incentive stock options and non-qualified stock options to
key employees of Fulton Financial Corporation and its
1617
subsidiaries. These stock options enable the recipients to purchase Fulton
Financial Corporation common stock at the prices designated in the awarded
options. The number of options available for grant in any calendar year is
determined depending upon the performance of Fulton Financial Corporation
measured in terms of total shareholder return relative to a peer group,
determined at the sole discretion of those members of the Executive Committee
who are not eligible to receive options under the Incentive Stock Option Plan
for the immediately preceding five year period. The awards of stock options made
to the executive officers of Fulton Financial Corporation during 19992000 were
determined by the Board of Directors based on the recommendations of the
Executive Committee. In making such recommendations, the Executive Committee
considered the number of shares to be optioned and the profitability of Fulton
Financial Corporation, as well as information provided by the Chief Executive
Officer concerning each executive officer's level of individual performance and
contribution to the organization. The Executive Committee did not establish
specific target levels for individual performance or corporate profitability.
The Committee believes, however, that awards of stock options and bonuses are an
appropriate means of compensating executive officers based on the performance of
Fulton Financial Corporation.
EXECUTIVE COMMITTEE
-------------------
J. Robert Hess, Chair Robert D. Garner
Donald M. Bowman, Jr. Carolyn R. Holleran
Frederick B. Fichthorn Samuel H. Jones Jr.
Rufus A. Fulton, Jr.*
* During 19992000, Mr. Fulton was Chairman of the Board, President and Chief
Executive Officer of Fulton Financial Corporation.
Performance Graph
-----------------
The following graph shows cumulative investment returns to shareholders
based on the assumptions that (A) an investment of $100 was made on December 31,
1994,1995, in each of the following: (i) Fulton Financial Corporation common stock;
(ii) the stock of all United States companies traded on the NASDAQ Stock Market;
and (iii) common stock of the peer group of bank holding companies in a nine-
state (plus the District of Columbia) Eastern United States region with total
assets at September 30, 1996 of $2 to $8 billion; and (B) all dividends were
reinvested in such securities over the past five years.
18
Comparison of Five Year-Cumulative Total Returns
Fulton Financial Corporation
(Graph gets inserted)
Legend Description
- ------ -----------
17
FFC FULTON FINANCIAL CORPORATION
NASDAQ NASDAQ Stock Market (U.S. Companies)
Peer Group Self-Determined Peer Group consisting of all bank
holding companies with assets of $2 - $8 billion at 9/30/96
with corporate headquarters in PA, MD, NJ, DE, OH, NY, DC,
VA, WV and NC and not under acquisition agreement as of
12/31/9900
Notes:
- ------
A. The lines represent yearly index levels derived from
compounded daily returns that include all dividends.
B. If the yearly interval, based on the fiscal year-end, is not
a trading day, the preceding trading day is used.
C. The index level for all series was set to 100.0 on 12/31/94.
- --------------------------------------------------------------------------------
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
- --------------------------------------------------------------------------------
FFC 100.00 121.10 142.70 243.03 215.60 195.57
- --------------------------------------------------------------------------------
NASDAQ 100.00 141.33 173.89 213.07 300.25 542.43
- --------------------------------------------------------------------------------
Peer Group 100.00 132.91 171.73 287.51 281.99 238.17
- --------------------------------------------------------------------------------95.
- ---------------------------------------------------------------------------------------------------------------
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- ---------------------------------------------------------------------------------------------------------------
FFC 100.00 117.83 200.67 178.02 161.48 224.30
NASDAQ 100.00 123.04 150.69 212.51 394.92 237.62
Peer Group 100.00 126.91 216.61 210.00 177.18 213.89
Severance Agreements and Survivors' Benefits
--------------------------------------------
Fulton Financial Corporation has entered into severance agreements with
Messrs. Fulton, Smith, Ashby and Nugent (the "Executives"). Under the terms of
those agreements, certain limited severance benefits are payable in the event
that an Executive is discharged or resigns following, and for reasons relating
to, a change in control of Fulton Financial Corporation. Specifically, in the
event of such a discharge or resignation, the Executive would be entitled to
receive from Fulton Financial Corporation an annual benefit consisting of his
then effective base salary, certain fringe benefits in lieu of coverage under
employee benefit plans and a supplemental retirement benefit in lieu of his
continuing participation in the Fulton Financial Corporation Employee Retirement
Plan. Such benefits would be payable, in the case of Mr. Fulton, for a period of
five years and, in the cases of Messrs. Smith, Ashby and Nugent, for a period of
three years, beginning on the date of the Executive's discharge or resignation
and continuing until (i) he elects to terminate benefits in order to accept
employment with another financial services institution; (ii) the end of the year
in which he attains the age of 65; or (iii) he dies, whichever first occurs.
Officers of Fulton Financial Corporation Fulton Bank, and Lebanon Valley
Farmers Bankcertain of its bank
subsidiaries as of April 1, 1992, who had been employed by the Corporation for
at least five years as of that date, are eligible to participate in a survivors'
benefit program. This program provides the employee's spouse, in the event of
the employee's death prior to retirement, with an annual income equal to the
lesser of $25,000 or 25 percent of the employee's final annual salary. This
benefit is paid from the date of
19
death until the employee's 65th birthday with a minimum of ten annual payments.
Messrs. Fulton, Smith and Ashby participate in this program.
Transactions with Directors and Executive Officers
- --------------------------------------------------
18
Some of the directors and executive officers of Fulton Financial
Corporation and the companies with which they are associated were customers of,
and had banking transactions with Fulton Financial Corporation bank subsidiaries
during 1999.2000. All loans and commitments to lend made to such persons and to the
companies with which they are associated were made in the ordinary course of
bank business, on substantially the same terms (including interest rates,
collateral and repayment terms) as those prevailing at the time for comparable
transactions with other persons, and did not involve more than a normal risk of
collectibility or present other unfavorable features. It is anticipated that
similar transactions will be entered into in the future.
Some of the directors of Fulton Financial Corporation are members of law
firms which provided legal services to Fulton Financial Corporation or its
subsidiaries in 19992000 and prior years. The law firm of Albertson Ward, Woodbury,
New Jersey, has provided legal services to The Bank of Gloucester County, a
subsidiary of Fulton Financial Corporation, for many years. In 1999,2000, Albertson
Ward was paid $130,526$108,849 in fees for such services, which constituted more than
five percent (5%) of its gross revenues. Director Jeffrey G. Albertson is a
partner in this firm. The law firm of Barley, Snyder, Senft & Cohen, LLC,
Lancaster, Pennsylvania, provided legal services to Fulton Financial Corporation
and its subsidiaries in 1999.2000. John O. Shirk, a director of Fulton Financial
Corporation, is a partner in this law firm. The law firm of Henry & Beaver, LLP,
Lebanon, Pennsylvania, has, for many years, provided legal services to Lebanon
Valley National Bank, which was merged with a subsidiary of Fulton Financial
Corporation in 1998 to form Lebanon Valley Farmers Bank. In 1999,2000, it provided
legal services to Lebanon Valley Farmers Bank. Director Charles V. Henry, III is
a partner in this law firm. The law firm of Teel, Stetz, Shimer & DiGiacomo,
Nazareth, Pennsylvania has for many years provided legal services to Lafayette
Ambassador Bank and its predecessors and continued to provide such services in
2000. Director Craig A. Dally was a partner in this law firm in 2000. He is now
a partner in the law firm of Pierce & Dally, LLP. In each case, the law firm is
expected to continue to provide legal services to Fulton Financial Corporation
or its subsidiaries in the future.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the directors
and executive officers of Fulton Financial Corporation to file with the
Securities and Exchange Commission initial reports of ownership and reports of
change in ownership of common stock and other equity securities of Fulton
Financial Corporation. To the knowledge of Fulton Financial Corporation, all
Section 16(a) filing requirements applicable to its directors and executive
officers have been complied with, except in the case of Martin D. Cohen, aPatrick J. Freer, the
report of 1,730 shares of Fulton Financial Corporation stock received by
Strickler Insurance Agency, Inc., a salecompany for which he serves as President, in
connection with the merger of Keystone Heritage Group, Inc. in 1998 and
increased by receipt of shares issued for stock dividends and reinvestment of
cash dividends, was not filed in a brokerage account required to be filed on or
before September 10, 1999, was filed later on October 4, 1999; in the casetimely manner as a result of Frederick B. Fichthorn, a late filing was made because he was unaware that
shares owned by the Profit Sharing Plan of F&M Hat Company were reportable by
him even though he has only an undivided pro rata interest in such shares; andoversight; in
the case of Stuart H. Raub, Jr., late filingsa distribution of 2,215 shares of
20
Fulton Financial Corporation stock to him and his wife in November 10, 1999 by
an estate was overlooked and not reported until February 22, 2000; and in the
case of Samuel H. Jones, Jr., 7,536 shares of the Corporation's stock which were
madepurchased with the proceeds of the cash dividend payable in January 2000 were
not reported in a timely manner because he was
unaware that shares owed by the Industrial Piping Systems, Inc. 401(k) Planrecords of the transaction were reportable by him, even though he has only an undivided pro rata interest in
such shares and also because he was unaware that shares which he receivednot
readily available as a beneficiaryresult of an estatethe transfer of his stock between record
ownership and shares purchased in a revocable trust of which his
wife was settlor were reportable by him.brokerage account. In each case, the failure to file a timely
reportsreport was inadvertent.inadvertent and promptly corrected after discovery of the reporting
obligation.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
------------------------------------------------
19
For the year ended December 31, 1999,2000, Fulton Financial Corporation engaged
Arthur Andersen LLP, independent certified public accountants, to audit the
Corporation's financial statements. The appointment of Arthur Andersen LLP for
the current year will be reviewed in the second quarter of 2000.2001. Representatives
of Arthur Andersen LLP are expected to be present at the 20002001 Annual Meeting
with the opportunity to make a statement and to be available to respond to
appropriate questions.
ADDITIONAL INFORMATION
----------------------
A copy of the Annual Report ofAudit Fees
- ----------
Arthur Andersen LLP billed Fulton Financial Corporation on Form 10-K
-------------------------------------------------------------------------
as$215,100 in 2000
for professional services rendered for the audit of the Corporation's annual
financial statements and reviews of the financial statements included in the
Corporation's Forms 10-Q filed with the Securities and Exchange Commission, including financialCommission.
Financial Information Systems Design and Implementation Fees
- --------------------------------------------------------------------------
statements and financial statement schedules, is available without charge------------------------------------------------------------
Arthur Andersen LLP performed limited professional services in 2000 related
to - ----------------------------------------------------------------------------
shareholders upon written request addressed to William R. Colmery, Secretary,
- -----------------------------------------------------------------------------operating, or supervising the operation of, Fulton Financial Corporation
information systems or managing the Corporation's local area network and related
to designing or implementing a hardware or software system that aggregates
source data underlying the financial statements or general information that is
significant to the financial statements of Fulton Financial Corporation. The
aggregate fees billed for such services were $14,815.
All Other Fees
- --------------
Arthur Andersen LLP billed Fulton Financial Corporation a total of $194,468
in 2000 for all non-audit services which it performed. The principal non-audit
services performed by Arthur Andersen LLP in 2000 were the review and
evaluation, as expert witness, of damage claims in certain pending litigation
involving Fulton Financial Corporation and the preparation and review of Federal
and State income tax returns for Fulton Financial Corporation and its
subsidiaries.
The Audit Committee of the Board of Directors of Fulton Financial
Corporation has carefully considered whether the provision of the non-audit
services described above which were performed by Arthur Andersen LLP in 2000
would be incompatible with maintaining the independence of Arthur Andersen LLP
in performing its audit services and has determined that, in its judgment, the
independence of the auditor has not been compromised.
21
ADDITIONAL INFORMATION
----------------------
The Audit Committee has stated that, based on its review and discussion of
the audited 2000 financial statements of Fulton Financial Corporation with
management and the Corporation's auditor, Arthur Andersen LLP, it recommended to
the Board of Directors that the financial statements be included in the Annual
Report on Form 10-K for filing with the Securities and Exchange Commission. A
copy of the report of the Audit Committee of its findings that result from its
financial reporting oversight responsibilities is attached as Exhibit A.
*A COPY OF THE ANNUAL REPORT OF FULTON FINANCIAL CORPORATION ON FORM 10-K
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING FINANCIAL
STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, IS AVAILABLE WITHOUT CHARGE TO
SHAREHOLDERS UPON WRITTEN REQUEST ADDRESSED TO WILLIAM R. COLMERY, SECRETARY,
FULTON FINANCIAL CORPORATION, P.0. BoxBOX 4887, Lancaster, PennsylvaniaLANCASTER, PENNSYLVANIA 17604.
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OTHER MATTERS
-------------
The Board of Directors of Fulton Financial Corporation knows of no matters
other than those discussed in this Proxy Statement which will be presented at
the 20002001 Annual Meeting. However, if any other matters are properly brought
before the meeting, any proxy given pursuant to this solicitation will be voted
in accordance with the recommendations of the management of Fulton Financial
Corporation.
BY ORDER OF THE BOARD OF DIRECTORS
RUFUS A. FULTON, JR.
Chairman of the Board President and
Chief Executive Officer
Lancaster, Pennsylvania
March 9, 2000
205, 2001
* BOLD FACE TYPE
22
EXHIBIT A
---------
Report of Audit Committee
February 15, 2001
To the Board of Directors of Fulton Financial Corporation:
We have reviewed and discussed with management the Company's audited financial
statements as of, and for the year ended December 31, 2000.
We have discussed with representatives of Arthur Andersen, LLP, the Company's
independent auditors, the matters required to be discussed by the Statement on
Auditing Standards No. 61, Communication with Audit Committees, as amended, by
the Auditing Standards Board of the American Institute of Certified Public
Accountants.
We have received and reviewed the written disclosures and the letter from the
independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the auditors the auditors' independence.
Based on the reviews and discussions referred to above, we recommend to the
Board of Directors that the financial statements referred to above be included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2000.
Carolyn R. Holleran, Chair
Patrick J. Freer, Vice Chair
James P. Argires
Harold D. Chubb
William H. Clark, Jr.
Stuart H. Raub, Jr.
James K. Sperry
23
[FRONT SIDE]
PROXY FULTON FINANCIAL CORPORATION PROXY
LANCASTER, PENNSYLVANIA
The undersigned hereby appoints Thomas D. Caldwell, Jr., David S.
Etter and Arthur M. Peters, Jr., or any one of them, as proxies, with full power
of substitution, to represent and vote, as designated below, all of the Fulton
Financial Corporation common stock: (i) held of record by the undersigned on
February 28, 2000,21, 2001, and (ii) which the undersigned is otherwise entitled to vote
at the Annual Meeting of shareholders to be held on Tuesday,Thursday, April 18, 2000,12, 2001, at
12:00 noon, at the Hershey Lodge and Convention Center, West Chocolate Avenue
and University Drive, Hershey, Pennsylvania, or any adjournment thereof.
DIRECTORS RECOMMEND A "FOR" VOTE FOR THE FOLLOWING MATTER:
ELECTION OF DIRECTORS (check one block) [_] FOR
FOR A TWO YEAR TERM: Craig A. Dally and R. Scott Smith, Jr.
FOR A THREE YEAR TERM: JeffreyJames P. Argires, Donald M. Bowman, Jr.,
Frederick B. Fichthorn, Charles V. Henry, III,
Joseph J. Mowad, John O. Shirk, James K. Sperry and
Kenneth G. Albertson, Harold D. Chubb, William H.
Clark, Rufus A. Fulton, Jr., Eugene H. Gardner
and Clyde W. HorstStoudt.
For, except vote withheld from the following
nominee(s):
------------------------------------------------------------------------------------------------
[_] WITHHELD as to all nominees
(Continued, and to be signed, on the other side)
[BACK SIDE]
(Continued from the other side)
This proxy is solicited by the Board of Directors and will be voted as
directed. If no directions are given, this proxy will be voted FOR the election
of the nominees listed.
This proxy also confers authority to vote on any other business that may
be properly brought before the meeting or any adjournment thereof. If any other
business is presented at the meeting, the shares represented by this proxy will
be voted in accordance with the recommendation of the management of Fulton
Financial Corporation.
Date:________________, 2000
---------------------------Dated: , 2001
------------------------
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Signature
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Signature
Please sign exactly as your name appears
hereon. If stock is held in joint names,
each joint owner should sign. If signing
for a corporation or partnership or as
attorney or fiduciary, indicate your
Please mark, sign, date and mail attorney or fiduciary, indicate your
this proxy promptly in the full title. If more than one fiduciary
this proxy promptly in the postage prepaid return has authority over the stock, all should
prepaid return envelope provided. sign.
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