SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[_]Preliminary proxy statement
[_]Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[X]Definitive proxy statement
[_]Definitive additional materials
[_]Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FULTON FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the registrant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_]$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated and state how it was
determined.):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
--------------
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
FULTON FINANCIAL CORPORATION
P.O.P. O. BOX 4887
ONE PENN SQUARE
LANCASTER, PENNSYLVANIA 17604
NOTICE*NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO-----------------------------------------
*TO BE HELD May 2, 1996MAY 1, 1997
-----------------------
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 Thursday, May 2, 1996,1, 1997, 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 seventen nominees listed in the
accompanying Proxy Statement for the terms specified.
2. INCENTIVE STOCK OPTION PLAN.AMENDMENT OF THE ARTICLES OF INCORPORATION. To approve an Incentive Stock Option
Plana proposal
adopted by the Board of Directors and described into amend the accompanying Proxy Statement.Articles of
Incorporation for the purpose of increasing the number of
authorized shares of common stock from 100 million to 200 million
shares.
3. 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 March 14,
199613,
1997 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*BY ORDER OF THE BOARD OF DIRECTORS
WILLIAM-----------------------------------
*WILLIAM R. COLMERY
Secretary
Enclosures
March 26, 199625, 1997
*BOLD FACE TYPE
PROXY STATEMENT
Dated and to be Mailed March 26, 199625, 1997
FULTON FINANCIAL CORPORATION
P.O.P. O. BOX 4887
ONE PENN SQUARE
LANCASTER, PENNSYLVANIA 17604
(717) 291-2411
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON May 2, 1996MAY 1, 1997
TABLE OF CONTENTS
PAGE
GENERAL
Introduction.........................................-----------------
PAGE
----
GENERAL
Introduction...................................................................2
- ------------
Date, Time and Place of Meeting................................................2
- -------------------------------
Shareholders Entitled to Vote..................................................2
- -----------------------------
Purpose of Meeting.............................................................2
- ------------------
Solicitation of Proxies........................................................2
- -----------------------
Revocability and Voting of Proxies.............................................2
- ----------------------------------
Voting of Shares and Principal Holders Thereof.................................3
- ----------------------------------------------
Shareholder Proposals..........................................................4
- ---------------------
Recommendations of the Board of Directors......................................4
- -----------------------------------------
INFORMATION CONCERNING ELECTION OF DIRECTORS
General Information............................................................4
- -------------------
Information about Nominees and Continuing Directors............................5
- ---------------------------------------------------
Meetings and Committees of the Board of Directors..............................4
- ------------------------------------------------
Compensation of Directors.....................................................12
- -------------------------
Executive Officers............................................................12
- ------------------
1
Executive Compensation........................................................14
- ----------------------
Transactions with Directors and Executive Officers............................17
- --------------------------------------------------
Section 16(a) Beneficial Ownership Reporting Compliance.......................17
- -------------------------------------------------------
AMENDMENT OF THE ARTICLES OF INCORPORATION
General Information...........................................................18
- -------------------
Recommendation of the Board of Directors......................................18
- ----------------------------------------
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS..............................19
ADDITIONAL INFORMATION........................................................19
OTHER MATTERS.................................................................19
2
Date, Time and Place of Meeting...................... 2
Shareholders Entitled to Vote........................ 2
Purpose of Meeting................................... 2
Solicitation of Proxies.............................. 2
Revocability and Voting of Proxies................... 2
Voting of Shares and Principal Holders Thereof....... 3
Shareholder Proposals................................ 3
Recommendations of the Board of Directors............ 3
INFORMATION CONCERNING ELECTION OF DIRECTORS
General Information.................................. 3
Information about Nominees and Continuing Directors.. 4
Meetings and Committees of the Board of Directors.... 10
Compensation of Directors............................ 11
Executive Officers................................... 11
Executive Compensation............................... 11
Transactions with Directors and Executive Officers... 16
APPROVAL OF THE INCENTIVE STOCK OPTION PLAN
General Information.................................. 16
Summary of Plan...................................... 16
Recommendation of the Board of Directors............. 18
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS.......... 18
ADDITIONAL INFORMATION.................................... 18
OTHER MATTERS............................................. 18
EXHIBITS
Exhibit A - Incentive Stock Option Plan.............. 19
GENERAL
INTRODUCTIONIntroduction
- ------------
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, Farmers Trust Bank, FNB Bank, N.A., Great Valley Savings Bank, Hagerstown
Trust Company, Lafayette Bank, Swineford National Bank, and The Bank of Gloucester
County.County and The Woodstown National Bank & Trust Company. In addition, Fulton
Financial Corporation has four direct, non-banking subsidiaries: Fulton
Financial Realty Company (which owns or leases certain properties on which
facilities of Fulton Bank and Farmers Trust 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 certain
limited partnership interests in low-moderate income and elderly housing
projects and also owns certain non-banking subsidiaries holding interests in
real estate) and FFC Management, Inc. (which holds certain investment
securities).
The meeting to which this Proxy Statement relates will be the fourteenthfifteenth
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 Thursday, May 2, 1996,1, 1997, 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 March 14,
199613,
1997 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 seventen directors for the terms specified
herein; (ii) to approve an
Incentive Stock Option Plan,a proposal adopted by the Board of Directors to amend
the Articles of Incorporation for the purpose of increasing the number of
authorized shares of common stock from 100 million to 200 million shares; and
(iii) to
3
consider and vote upon such other business as may be properly brought before the
meeting and any adjournment thereof.
Solicitation of Proxies
- -----------------------
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 Thursday, May 2, 1996,1, 1997, 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 seventen
nominees identified in this Proxy Statement and FOR the proposal to approveamend the
Incentive Stock Option Plan.Articles of Incorporation. 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.
Shares held for the account of shareholders who participate in the Dividend
Reinvestment 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
D(formerly known as "Fund D") of the Fulton Financial Corporation Employee
Retirement Plan and 401(k) 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 D 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 seventen nominees identified in the Proxy Statement and FOR
the proposal to approveamend the Incentive Stock Option Plan.Articles of Incorporation.
4
Voting of Shares and Principal Holders Thereof
- ----------------------------------------------
At the close of business on March 14, 1996,13, 1997, 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 29,944,94635,973,617 shares of common stock. There is no other class of
stock outstanding. As of the record date, 1,128,637 shares of Fulton Financial Corporation
common stock were held by the Trust DepartmentDepartments of the following Fulton
BankFinancial Corporation subsidiaries as sole fiduciary, 41,495 shares were held by the Trust Department of Farmers Trust
Bank as sole fiduciary, 38,966 shares were held by the Trust Department of
Lafayette Bank as sole fiduciary, 130,641 shares were held by the Trust
Department of FNB Bank, N.A. as sole fiduciary and 179,475 shares were held by
the Trust Department of Hagerstown Trust Company as sole fiduciary.fiduciary:
Farmers Trust Bank 42,943
-----------
Fulton Bank 1,151,859
-----------
FNB Bank, N.A. 129,782
-----------
Hagerstown Trust Company 149,919
-----------
Lafayette Bank 51,841
-----------
The Woodstown National
Bank & Trust Company 2,160
-----------
Total 1,528,504 Shares
===========
The shares held by the Trust Departments of the foregoing banks as sole
fiduciaries represent in the aggregate approximately 5.074.25 percent of the
total shares outstanding and will be voted FOR the election of the seventen nominees
identified in this Proxy Statement and FOR the proposal to approveamend the Incentive Stock
Option Plan.Articles of
Incorporation.
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 or
casting a vote or abstaining. Likewise, the judge of elections 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. A majorityUnder the Articles of Incorporation, the affirmative vote
of 66-2/3 percent of the votes castoutstanding shares entitled to vote is necessaryrequired in
order to approve the Incentive Stock Option Plan.proposal to amend the Articles of Incorporation.
Abstentions and
5
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 or approval of the
proposal to amend the Articles of Incorporation. Consequently, abstentions and
broker non-votes will have the same effect as a vote against approval of the
proposal to amend the Articles of Incorporation.
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 19971998 Annual Meeting must
be received at the executive offices of Fulton Financial Corporation at One Penn
Square, Lancaster, Pennsylvania not later than December 9, 1996,November 25, 1997, in order to be
included in the proxy statement and proxy form to be prepared by Fulton
Financial Corporation in connection with the 19971998 Annual Meeting.
Recommendations of the Board of Directors
- -----------------------------------------
The Board of Directors recommends that the shareholders vote FOR the
election of the seventen nominees identified in this Proxy Statement and FOR the
proposal to approveamend the Incentive Stock Option Plan.Articles of Incorporation.
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
6
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.
David S. Etter, Henry N. Funk and John F. Garber, Jr. have reached the
mandatory retirement age of 70 and, as required under the Bylaws, will be
retiring from the Board of Directors as of the 1996 Annual Meeting.
On February 29, 1996, Fulton Financial Corporation acquired The Bank of
Gloucester County, which is headquartered in Woodbury, New Jersey. In
connection with this acquisition, Fulton Financial Corporation will appoint
Jeffrey G. Albertson, age 55, who is a director of The Bank of Gloucester
County, to the Board of Directors of Fulton Financial Corporation at the
regularly scheduled Board meeting in May. Mr. Albertson is an attorney with
Albertson, Ward & McCaffrey.
The Board of Directors has presently fixed the number of directors at
twenty-four.twenty-five. There are seventeenfifteen continuing directors whose terms of office will
expire at either the 19971998 Annual Meeting or the 19981999 Annual Meeting. The Board
of Directors proposes to nominate the following seventen persons for election to the
Board of Directors for the terms specified below:
For a Term of Two Years - Class 1999
------------------------------------
Samuel H. Jones, Jr.
For a Term of Three Years - Class of 19992000
-----------------------------------------
Patrick J. Freer ArthurJeffrey G. Albertson Eugene H. Gardner
Thomas D. Caldwell, Jr. Daniel M. Peters,Heisey
Harold D. Chubb Clyde W. Horst
William H. Clark, Jr. Robert D. Garner Stuart H. Raub,William E. Rusling
Rufus A. Fulton, Jr.
J. Robert Hess Mary Ann Russell
Carolyn R. Holleran
Each of the above nominees is presently a director of Fulton Financial
Corporation, except Patrick J. Freer.Corporation. In addition, each nominee currently serves on one affiliate bank subsidiary
board of directors and will continue to serve on such board as follows: Mrs. RussellMessrs.
Caldwell, Chubb, Fulton, Gardner, Heisey and Messrs. Garner, Hess and RaubHorst - Fulton
Bank; Mrs. Holleran - Great Valley Savings Bank; Mr. PetersRusling -
FNBLafayette Bank; Mr. Clark - Swineford National Bank; Mr. Albertson - The Bank N.A.;of
Gloucester County; and Mr. Freer -FarmersJones - The Woodstown National Bank & Trust Bank.Company.
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.
7
Information about Nominees and Continuing Directors
- ---------------------------------------------------
Information concerning the seventen persons to be nominated for election to the
Board of Directors of Fulton Financial Corporation at the 19961997 Annual Meeting
and concerning the seventeenfifteen 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, 19961997 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) 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.Corporation, except Samuel H. Jones, Jr., who owns 1.59%1. Years of
service as a director include service as a director of Fulton Bank prior to the
formation of Fulton Financial Corporation.
NOMINEES
--------
CLASS OF 1999
-------------
(Three(Two Year Term)
(picture of Patrick J. Freer appears here)
PATRICK J. FREER,SAMUEL H. JONES, JR., age 46. Vice63. President, Strickler
Insurance Agency, Inc. (insurance broker)S J Transportation Co.
(trucking company). Director since 1997. Shares of stock
beneficially owned: 20,036/570,392/1/. (pictureMr. Jones also serves as a
director of Robert D. Garner appears here)
ROBERT D. GARNER, age 62. ChairmanMetatools, Inc., which is subject to the periodic
reporting requirements of Section 15(d) of the Board, Fulton Financial
Corporation.Securities Exchange Act
of 1934.
CLASS OF 2000
-------------
(Three Year Term)
JEFFREY G. ALBERTSON, age 56. Attorney, Albertson, Ward & McCaffrey
(law firm). Director since 1981.1996. Shares of stock beneficially owned:
39,994/65,934./2/. Mr. GarnerAlbertson has the right to acquire an additional 47,85112,199
shares pursuant to the exercise of stock options. (pictureThe law firm of
J. Robert Hess appears here)
J. ROBERT HESS, age 61. President, Lancaster Malleable Castings
Company (manufacturerAlbertson, Ward & McCaffrey, Woodbury, New Jersey, has provided legal
services to The Bank of malleable iron castings). Director since
1977. Shares of stock beneficially owned: 69,344/3/.
(picture of Carolyn R. Holleran appears here)
CAROLYN R. HOLLERAN, age 57 Partner, Jerlyn Associates (real
estate investments). Director since 1994. Shares of stock
beneficially owned: 2,543.
(picture of Arthur M. Peters, Jr. appears here)
ARTHUR M. PETERS, JR., age 67. Attorney. Director since
1990. Shares of stock beneficially owned: 107,924.
(picture of Stuart H. Raub, Jr. appears here)
STUART H. RAUB, JR., age 62. President, Industrial Piping
Systems, Inc. (distributor of industrial pipingGloucester County for many years and related
items). Director since 1981. Shares of stock beneficially owned:
13,468.
(picture of Mary Ann Russell appears here)
MARY ANN RUSSELL, age 60. President and Chief Executive
Officer, Maple Farm, Inc. (provider of health care services).
Director since 1991. Shares of stock beneficially owned: 6,276.
CONTINUING DIRECTORS
--------------------
CLASS OF 1997
-------------
(picture of Thomas D. Caldwell, Jr. appears here)is
expected to continue to do so in the future.
THOMAS D. CALDWELL, JR., age 67.68. Attorney, Caldwell & Kearns, P.C.
(law firm). Director since 1982. Shares of stock beneficially owned:
55,008.60,508. The law firm of Caldwell & Kearns, P.C., Harrisburg,
Pennsylvania, has provided legal services to Fulton Bank for many
years and is expected to continue to do so in the future.
(picture of Harold D. Chubb appears here)8
HAROLD D. CHUBB, age 63.64. Retired Director of Finance, Brethren in
Christ Denomination in North America. Director since 1975. Shares of
stock beneficially owned: 18,093/4/19,600/3/.
(picture of William H. Clark, Jr. appears here)
WILLIAM H. CLARK, JR., age 63.64. Partner, Clark, Lauer & Schaeffer
(certified public accountants). Director since 1987. Shares of stock
beneficially owned: 5,170.
(picture of Rufus A. Fulton, Jr. appears here)5,845.
RUFUS A. FULTON, JR., age 55.56. President and Chief Executive Officer,
Fulton Financial Corporation. Director since 1984. Shares of stock
beneficially owned: 33,268/5/48,816/4/. Mr. Fulton has the right to acquire an
additional 73,19973,167 shares pursuant to the exercise of stock options.
(picture of Eugene H. Gardner appears here)
EUGENE H. GARDNER, age 60.61. President, Gardner Investments (investment
advisor). Director since 1981. Shares of stock beneficially owned:
12,205/6/13,455/5/.
(picture of Daniel M. Heisey appears here)
DANIEL M. HEISEY, age 47.48. Vice President, Fulton Bank. Director
since 1993. Shares of stock beneficially owned: 112,175.
(picture of Clyde W. Horst appears here)127,169.
CLYDE W. HORST, age 57.58. Chairman and Chief Executive Officer, The
Horst Group, Inc. (diversified holding company). Director since 1978.
Shares of stock beneficially owned: 26,766.
(picture of William E. Rusling appears here)
29,442.
WILLIAM E. RUSLING, age 66.67. Retired President, Hercules Cement
Company (manufacturer of cement). Director since 1990. Shares of
stock beneficially owned: 25,449.28,050.
CONTINUING DIRECTORS
--------------------
CLASS OF 1998
-------------
(picture of James P. Argires appears here)
JAMES P. ARGIRES, M.D., age 64.65. President, Lancaster Neurosurgical
Associates (neurosurgeon). Director since 1974. Shares of stock
beneficially owned: 10,287.
(picture of Donald M. Bowman, Jr. appears here)11,590.
DONALD M. BOWMAN, JR., age 57.58. Chairman, D. M.D.M. Bowman, Inc. (trucking
company). Director since 1994. Shares of stock beneficially owned:
165,950/7/151,408/6/.
(picture of Richard F. Erdley appears here)
RICHARD F. ERDLEY, age 58. Chairman and Chief Executive Officer,
Swineford National Bank. Director since 1986. Shares of stock
beneficially owned: 7,083. Mr. Erdley has the right to acquire
an additional 28,941 shares pursuant to the exercise of stock
options.
(picture of Frederick B. Fichthorn appears here)
FREDERICK B. FICHTHORN, age 62.63. President, F & M Hat Company
(manufacturer and distributor of felt and straw hats). Director since
1993. Shares of stock beneficially owned: 41,703.
(picture of Bernard J. Metz, Sr. appears here)50,436.
9
BERNARD J. METZ, SR., age 67.68. Chairman, Metz Company (distributor of
mechanical air handling systems). Director since 1992. Shares of
stock beneficially owned: 6,936.
(picture of Donald E. Ruhl appears here)7,882.
DONALD E. RUHL, age 62.63. President, Jacob H. Ruhl, Inc. (insurance
brokers). Director since 1983. Shares of stock beneficially owned:
23,656.
(picture of John O. Shirk appears here)23,820.
JOHN O. SHIRK, age 52.53. Partner, Barley, Snyder, Senft & Cohen, LLP
(law firm). Director since 1983. Shares of stock beneficially owned:
16,033/8/17,634/7/. The law firm of Barley, Snyder, Senft & Cohen, LLP,
Lancaster, Pennsylvania, has provided legal services to Fulton
Financial Corporation and its subsidiaries for many years and is
expected to continue to do so in the future. 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.
(picture of James K. Sperry appears here)
JAMES K. SPERRY, age 63.64. Executive Vice President, Fulton Financial
Corporation, and Chairman of the Board and Chief Executive Officer of
Fulton Bank. Director since 1984. Shares of stock beneficially
owned: 24,211/9/41,040/8/. Mr. Sperry has the right to acquire an additional
65,78245,713 shares pursuant to the exercise of stock options.
(picture of Kenneth G. Stoudt appears here)
KENNETH G. STOUDT, age 52.53. President, Corporate Healthcare
Strategies, Inc.The Stoudt Companies (employee
benefit consulting company). Director since 1987. Shares of stock
beneficially owned: 23,230.26,138.
CLASS OF 1999
-------------
PATRICK J. FREER, age 47. Vice President, Strickler Insurance Agency,
Inc. (insurance broker). Shares of stock beneficially owned:
22,514/9/.
ROBERT D. GARNER, age 63. Chairman of the Board, Fulton Financial
Corporation. Director since 1981. Shares of stock beneficially
owned: 61,201/10/. Mr. Garner has the right to acquire an additional
36,740 shares pursuant to the exercise of stock options.
J. ROBERT HESS, age 62. President, Lancaster Malleable Castings
Company (manufacturer of malleable iron castings). Director since
1977. Shares of stock beneficially owned: 76,318/11/.
10
CAROLYN R. HOLLERAN, age 58 Partner, Jerlyn Associates (real estate
investments). Director since 1994. Shares of stock beneficially
owned: 3,255.
ARTHUR M. PETERS, JR., age 68. Attorney. Director since 1990. Shares
of stock beneficially owned: 118,715.
STUART H. RAUB, JR., age 63. President, Industrial Piping Systems,
Inc. (distributor of industrial piping and related items). Director
since 1981. Shares of stock beneficially owned: 15,305.
MARY ANN RUSSELL, age 61. President and Chief Executive Officer,
Maple Farm, Inc. (provider of health care services). Director since
1991. Shares of stock beneficially owned: 8,040.
As of February 1, 1996,1997, Fulton Financial Corporation's directors and
officers, as a group, owned of record and beneficially 1,187,485/10/1,903,307/12/ shares of
Fulton Financial Corporation common stock, representing 4.15/10/5.29 percent of such
shares then outstanding.
Section 16(a)Footnotes
- ---------
1
As of the Securities Exchange Act of 1934 requires Fulton
Financial Corporation's directors and executive officers to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of Fulton
Financial Corporation. To the knowledgeFebruary 1, 1997, Mr. Jones held 2,317 shares of Fulton Financial
Corporation all
Section 16(a) filing requirements applicable to its directors and executive
officers have been complied with.
Footnotes
---------
/1/stock. In addition, he held 355,047 shares of common stock of
The Woodstown National Bank & Trust Company, which, based on an exchange
ratio of 1.6 shares of Fulton Financial Corporation common stock for each
such share, were converted into 568,075 shares of Fulton Financial
Corporation common stock on February 28, 1997, the effective date of the
acquisition of The Woodstown National Bank & Trust Company. For purposes
of calculating Mr. Jones' percentage of beneficial ownership of the
outstanding common stock of Fulton Financial Corporation as of February 1,
the shares of common stock issuable in connection with the acquisition of
The Woodstown National Bank & Trust Company were included.
2
Includes 14,6616,323 shares held in the Albertson, Ward & McCaffrey Profit
Sharing Plan. Mr. Albertson disclaims beneficial ownership of any of these
shares beyond his pro rata vested interest as a participant in such Plan.
3
Includes 2,141 shares held as custodian for grandchildren.
4
Includes 11,517 shares held in the Corporation's retirement plan.
5
11
Includes 7,811 shares held in a trust.
6
Includes 21,000 shares held by Bowman Sales & Equipment, Inc.
7
Includes 1,082 shares held in a trust.
8
Includes 10,590 shares held in the Corporation's retirement plan.
9
Includes 16,127 shares held by Strickler Insurance Agency, Inc. /2/Mr. Freer
disclaims beneficial ownership of any of these shares beyond his pro rata
interest in the company.
10
Includes 13,93627,059 shares held in the Corporation's retirement plan.
/3/11
Includes 53,01458,315 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.
/4/12
Includes 2,220 shares held as custodian for grandchildren.
/5/ Includes 9,274 shares held in the Corporation's retirement plan.
/6/ Includes 7,101 shares held in a trust.
/7/ Includes 15,691 shares held by Bowman Sales & Equipment, Inc.
and 31,873 shares held by D.M. Bowman, Inc., Profit Sharing Trust.
/8/ Includes 984 shares held in a trust.
/9/ Includes 9,380 shares held in the Corporation's retirement plan.
/10/ Includes 304,590277,189 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 officers as a
group. For purposes of calculating the percentage of outstanding shares,
shares of Fulton Financial Corporation common stock issuable in connection
with the acquisition of The Woodstown National Bank & Trust Company as of
February 28, 1997 were also included. See note 1.
Meetings and Committees of the Board of Directors
- -------------------------------------------------
The Board of Directors of Fulton Financial Corporation has a standing Audit
Committee, but does not have a standing Nominating Committee or Compensation
Committee. Fulton Bank has a standing Compensation Committee, which has been
acting on behalf of Fulton Financial Corporation and will continue to do so
until a Fulton Financial Corporation Compensation Committee is appointed. The
Board of Directors of Fulton Financial Corporation also has a standing Executive
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 Fulton
Bank and chief executive officers of the other subsidiary banks and presentation
of salary recommendations to the Board of Directors for approval.
12
Members of the Executive Committee during 19951996 were Kenneth G. Stoudt, Chairman,
Mrs. Russell and Messrs. Caldwell, Etter, Fulton, Garner, Hess and Peters. In 1995,1996, 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 sixthree times during 1995.1996.
Members of the Audit Committee during 19951996 were David S. Etter,William E. Rusling,
Chairman, Mrs. Holleran and Messrs. Albertson, Bowman, Chubb, Clark, Fichthorn,
Funk,Freer, Metz Peters
and Rusling.Peters. The Audit Committee met eight times during the year.
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
the institution's
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 Compensation Committee of Fulton Bank during 19951996 were
Stuart H. Raub, Jr., Chairman, and Messrs. Garber, Gardner, Hess, Horst and Ruhl.
Messrs. Fulton and Sperry serve as ex-officio members of this Committee.Committee;
however, Mr. Sperry does not participate in discussions as to his own
compensation. The Committee met twelve times during the year to review benefit
and salary administration programs. The Committee also reviews increases in
salaries for officers and staff members of Fulton Financial Corporation, and Fulton Bank
except
for theits executive officers, of these institutions, and makes recommendations in this regard to the
Board of Directors.
There were teneight meetings of the Board of Directors of Fulton Financial
Corporation and twenty-sixtwenty-three meetings of committees of the Boards of Directors
of Fulton Financial Corporation and Fulton Bank during 1995.1996. The following
directors attended fewer than 75 percent of the aggregate number of meetings of
the Board of Directors and of the various committees on which they served:
James
P. Argires, John F. Garber,Donald M. Bowman, Jr. and Clyde W. Horst.Thomas D. Caldwell, Jr.
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 salaried officer of Fulton
Financial Corporation or one of its subsidiary banks. 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.
Executive Officers
- ------------------
13
The following persons are the executive officers of Fulton Financial
Corporation:
Name Age Office Held and Term of Office
---- --- ------------------------------
Rufus A. Fulton, Jr. 55 President and Chief Executive Officer of Fulton
Financial Corporation since January 1993;
previously President, Executive Vice President and
Vice President of Fulton Financial Corporation and
Executive Vice President and Senior Vice President
of Fulton Bank. Member of Senior Management of
Fulton Financial Corporation.
James K. Sperry 63
Name Age Office Held and Term of Office
---- --- ------------------------------
Rufus A. Fulton, Jr. 56 President and Chief Executive Officer
of Fulton Financial Corporation since
January 1993; previously President,
Executive Vice President and Vice
President of Fulton Financial
Corporation and Executive Vice
President and Senior Vice President of
Fulton Bank. Member of Senior
Management of Fulton Financial
Corporation.
James K. Sperry 64 Executive Vice President of Fulton
Financial Corporation and Chairman of
the Board and Chief Executive Officer
of Fulton Bank since January 1993;
previously Vice President of Fulton
Financial Corporation and President,
Executive Vice President and Senior
Vice President of Fulton Bank. Member
of Senior Management of Fulton
Financial Corporation and Fulton Bank.
R. Scott Smith, Jr. 49 Executive Vice President of Fulton
Financial Corporation and President
and Chief Operating Officer of Fulton
Bank since January 1993; previously
Senior Executive Vice President,
Executive Vice President, Senior Vice
President and Vice President of Fulton
Bank. Member of Senior Management of
Fulton Financial Corporation and
Fulton Bank.
Charles J. Nugent 48 Executive Vice President of Fulton Financial
Corporation and President and Chief Operating
Officer of Fulton Bank since January 1993;
previously Senior Executive Vice President,
Executive Vice President, Senior Vice President
and Vice President of Fulton Bank. Member of
Senior Management of Fulton Financial Corporation
and Fulton Bank.
Charles J. Nugent 47 Executive Vice President and Chief
Financial Officer of Fulton Financial
Corporation since November 1992;
previously Senior Vice President,
Chief Financial Officer and Treasurer
of First Peoples Financial Corporation
(New Jersey). Member of Senior
Management of Fulton Financial
Corporation.
14
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
1995.
1996.
SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term - ------------------------------------------------------------------------------------------------------------------------------------Compensation
--------------------- ---------------------------
Name and Principal Position Year Salary Bonus Options All Other
- --------------------------- ---- ------ ------------------ ------- -----
Principal Position Compensation*
- --------------------------- -------------------
- -------------------------------------------------------------------------------------------------------------------------------------------------
Rufus A. Fulton, Jr., 1996 $409,260.80 $15,740.80 11,000 $61,389.12
President and Chief Executive Officer 1995 $361,129.60 $20,834.40 11,000 $54,169.44
President and Chief 1994 $312,963.04 $12,037.04 10,997 $46,944.46
Executive Officer 1993 $266,677.04 $10,185.60 10,999 $30,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
James K. Sperry, 1996 $250,370.44**** $9,629.62 8,800 $37,833.34
Executive Vice President 1995 $236,286.00*** $13,632.00 8,800 $35,729.28
Executive Vice President 1994 $221,482.00** $ 8,518.46$8,518.46 8,798 $33,305.62
1993 $207,037.48 $ 7,962.98 8,936 $30,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
R. Scott Smith, Jr., 1996 $243,629.89 $9,370.38 8,250 $36,544.48
Executive Vice President 1995 $221,499.20 $12,778.80 8,250 $33,224.88
1994 $192,592.66 $7,407.41 8,248 $28,888.90
Charles J. Nugent, 1996 $182,963.04 $7,037.04 7,425 $27,444.46
Executive Vice President 1994 $192,592.66 $ 7,407.41 8,248 $28,888.90
1993 $169,444.66 $ 6,629.99 8,249 $25,481.41
- ------------------------------------------------------------------------------------------------------------------------------------
Charles J. Nugent,and 1995 $165,630.40 $ 9,555.60$9,555.60 7,425 $24,844.56
Executive Vice President 1994 $141,555.70 $ 5,444.45 7,423 $21,233.35
and
Chief Financial Officer 1993 $120,829.45 $ 4,615.40 6,874 -0-
====================================================================================================================================1994 $141,555.70 $5,444.45 7,423 $21,233.35
15
* Amounts accrued under the Fulton Financial Corporation Retirement PlansPlan for
the account of each named executive officer.
** Includes $15,000, the receipt of which has been deferred pursuant to the
Deferred Compensation Plan for Senior Management.
*** Includes $35,000, the receipt of which has been deferred pursuant to the
Deferred Compensation Plan for Senior Management.
**** Includes $50,000, the receipt of which has been deferred pursuant to the
Deferred Compensation Plan for Senior Management.
16
STOCK OPTION GRANTS IN FISCAL YEAR 19951996
Potential Realized Value at
% of Total Assumed Annual Rates of Stock
Options Exercise or Price
% of Total Appreciation for Option
Options Exercise or Term
Options Granted to Base Price Term
Name Granted To Employees Per Share Expiration Date 5% 10%
- -------------------------- ------- ------------ ------------ --------------- -------------------------------- ----------- ---------------- --------------------------------
Rufus A. Fulton, Jr.
11,000 9.80% $18.1259.55% $19.125 June 30, 2005 $125,385.70 $317,751.502006 $132,303.65 $335,283.53
James K. Sperry
8,800 7.84% $18.1257.64% $19.125 June 30, 2005 $100,308.56 $254,201.202006 $105,842.91 $268,226,82
R. Scott Smith, Jr.
8,250 7.35% $18.1257.17% $19.125 June 30, 20052006 $ 94,039.27 $238,313.6299,227.73 $251,462.60
Charles J. Nugent
7,425 6.62% $18.1256.45% $19.125 June 30, 2005 84,635.34 $214,482.262006 $ 89,304.95 $226,316.33
17
AGGREGATED STOCK OPTION EXERCISES IN FISCAL YEAR 19951996 AND FISCAL YEAR END OPTION
VALUES
Number of
Unexercised Value of Unexercised
Number of In-the-Money
Shares Unexercised Options
Acquired Value Options at In-the-Money Options at
Name on ValueExercise Realized Fiscal Year End* Fiscal Year Name Exercise Realized End* End*
- --------------------------- ---------- ---------- ------------ ---------------- ----------- -------- --------------- ---------------
Rufus A. Fulton, Jr. 79,656 $430,257.5311,058 $ 72,087.86 86,444 $596,732.64
James K. Sperry 74,485 $433,714.1915,160 $110,438.95 74,046 $534,442.32
R. Scott Smith, Jr. 3,000 $18,840.00 67,095 $436,750.933,630 $ 25,518.90 78,056 $621,189.92
Charles J. Nugent 21,722 $ 57,907.2431,314 $138,477.31
* All options are currently exercisable.exercisable (or were exercised, in part, subsequent
to the end of Fiscal Year 1996).
18
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 1995,1996, the Executive
Committee retainedfirst considered the executive management tiers and corresponding base
salary ranges which had been developed by Towers Perrin, a consultant on
executive compensation, to
assess the current executive compensation program and to design a performance-
based incentive program. Towers Perrin met with the Committee on several
occasions to review the results of a competitive assessment, outline incentive
program alternatives and present recommendations. To establish competitive
compensation levels, Towers Perrin used the following four sources of
competitive information:
- SNL Executive Compensation Review of Commercial Banks: peer
group of 20 comparably-sized banks.
- Towers Perrin's Banking Survey of Executive Positions:
survey of over 80 banks.
- Bank Administration Institute Survey: survey of 797 banks.
- Confidential Survey: survey of 325 banks.
Overall, Towers Perrin's analysis found that Fulton Financial Corporation's
cash compensation levels for the executive management group are below
competitive norms, particularly at the higher executive levels. Specifically the
analysis showed that:
- Base salaries fall, on average, between the 25th and 50th
percentiles of the market.
- Total cash compensation levels are significantly below
competitive norms, due to the lack of an executive management
incentive plan.
- Stock option grant levels are, for most senior managers,
below competitive norms.
Based on the results of the competitive base salary analysis and the
assessment of internal equity relationships,approved by the Board of Directors on September 19,
1995 approved1995. This executive management tiers and corresponding base salary
ranges. The Executive Committee placed great emphasiscompensation program is based, to a significant degree, on the
peer group information, because the CommitteeBoard 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 1995,1996, 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 does not
include all of the same bank holding companies that are incorporated in the old
or new peer groupgroups established to compare shareholder returns, as indicated in
the Performance Graph included in this Proxy Statement. The major difference betweendifferences
among the two peer groups is that the peer group chosen for executive compensation
analysis includes bank holding companies with assets between $1.8 and $4.7
billion from different regionsa seven-state region of the Eastern United States that are deemed
to be potential competitors with Fulton Financial Corporation in attracting
executive talent, while the old peer group chosen for shareholder return
analysis includesincluded only bank holding companies with assets between $1.1 and $6.1
billion that arewere located in the four-state Middle Atlantic region, because that region iswhich was
the market area for virtually all of Fulton Financial Corporation's business
activities. BothThe new peer group chosen for shareholder return analysis includes
bank holding companies with assets between $2 and $8 billion that are located in
a nine-state (plus the District of Columbia) region of the Eastern United
States. All 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. The peer group of
bank holding companies chosen for shareholder
19
return analysis has changed from that used in last year's proxy statementstatement. The
peer group was changed because mergers and acquisitions in 1995 caused the number of bank holding
companies in the old peer group to be reduced to only three
companies.and also because, with the growth
in the asset size of Fulton Financial Corporation, as well as the geographic
expansion of the market areas of bank holding companies, it was determined that
a new peer group of bank holding companies with larger asset sizes in a region,
which includes states where holding companies which conduct business activities
in Fulton Financial Corporation's market area are based, should be designated.
Pursuant to an Incentive Stock Option Plan approved by the Board of
Directors and the shareholders in 1986, Fulton Financial Corporation is
authorized to award incentive stock options and non-qualified stock options to
key employees of Fulton Financial Corporation and its 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 19951996 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
-------------------
Kenneth G. Stoudt, Chairman J. Robert D. GarnerHess
Thomas D. Caldwell, Jr. J. Robert Hess
David S. Etter Arthur M. Peters, Jr.
Rufus A. Fulton, Jr.* Mary Ann Russell
*During 1995,Robert D. Garner
* During 1996, Mr. Fulton was 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,
1990,1991, in each of the following: (i) Fulton Financial Corporation common stock,stock;
(ii) the stock of all United States companies traded on the NASDAQ Stock Market,Market;
(iii) common stock of the peer group of Middle Atlantic regional 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 (iv) common stock of Fulton
Financial
20
Corporation's former peer group of bank holding companies in a four-state Mid-
Atlantic region with total assets at September 30, 1995 fromof $1.1 to 6.1 billion, and (iv) common stock of
Fulton Financial Corporation's former peer group of Middle Atlantic
regional bank holding companies,$6.1 billion;
and (B) all dividends were reinvested in such securities over the past five
years.
Comparison of Five Year-Cumulative Total Returns
Fulton Financial Corporation
(Performance Graph appears here --
This graph compares the five year cumulative
return of Fulton Financial Corporation to
NASDAQ and two peer groups. Descriptions of
these groups and comparative total returns are
shown below)(Graph gets inserted)
Legend Description
- ------ -----------
FFC FULTON FINANCIAL CORPORATION
NASDAQ NASDAQ Stock Market (US Companies)
New Peer 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 12/31/96
Old Peer Self-Determined Peer Group consisting of all bank holding companies with assets of $1.1
- 6.1$6.1 billion at 9/30/95 with corporate headquarters in PA, MD, NJ and DE and not
acquired after that date or under mergeracquisition agreement Old Peeras of 12/31/96
Notes:
- ------
A. The former self-determined Peer Group consisting oflines represent yearly index levels derived from compounded daily returns that
include all bank holding companies tradeddividends.
B. If the yearly interval, based on NASDAQ with assets of $3 - 5 billion atthe 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 with corporate headquarters in
PA, MD, NJ and DE and not under merger agreement
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 12/31/90.
91.
==========================================================================
12/31/90
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
-------- -------- -------- -------- -------- --------
- --------------------------------------------------------------------------
FFC 100.00 131.30 168.38 200.22 219.36 265.64
- --------------------------------------------------------------------------128.80 153.16 167.80 203.21 239.45
NASDAQ 100.00 160.56 186.86 214.51 209.68 296.30
- --------------------------------------------------------------------------116.38 133.59 130.59 184.67 227.16
New Peer 100.00 143.91 190.71 213.68 212.10 269.93
- --------------------------------------------------------------------------133.45 148.86 153.06 202.68 260.49
Old Peer 100.00 144.54 169.90 186.77 179.72 224.36
==========================================================================130.71 144.85 145.79 186.29 226.93
Severance Agreements and Survivors' Benefits
-----------------------------------------------------------------------------------------
Fulton Financial Corporation has entered into severance agreements with
Messrs. Fulton, Sperry, Smith 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 for a period of five years (or, in the
cases of Messrs. Smith and Nugent, three years) beginning on the date of the
Executive's discharge or resignation and continuing until he elects to terminate
benefits in order to accept employment with another financial services
institution, attains the age of 65 or dies, whichever first occurs.
21
Officers of Fulton Financial Corporation, Fulton Bank, and Farmers Trust
Bank 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 per centpercent of the employee's final annual salary. This benefit is
paid from the date of death until the employee's 65th birthday with a minimum of
ten annual payments. Messrs. Fulton, Sperry, and Smith participate in this
program.
Transactions with Directors and Executive Officers
- --------------------------------------------------
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 1995.1996. All loans and commitments to loan 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.
The law firm of Barley, Snyder, Senft & Cohen, LLP, Lancaster,
Pennsylvania, has provided legal services to Fulton Financial Corporation and
its subsidiaries for many years and is expected to continue to do so in the
future. John O. Shirk, a member of the Board of Directors of Fulton Financial
Corporation, is a partner in this law firm.
APPROVALSection 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 1996, Director Donald M. Bowman,
Jr. filed four late reports with the Securities and Exchange Commission,
disclosing seven transactions which affected his beneficial ownership of Fulton
Financial Corporation common stock. The seven transactions involved the sale of
8,000 shares, in aggregate, of Fulton Financial Corporation stock in 1995 by the
D. M. Bowman, Inc. Profit Sharing Plan, a benefit plan maintained for the
employees of a corporation controlled by Mr. Bowman, and the purchase of 3,400
shares, in aggregate, of Fulton Financial Corporation stock in 1996 by Bowman
Sales & Equipment, Inc., another corporation controlled by Mr. Bowman. Mr.
Bowman was personally unaware that these transactions had occurred until later,
and promptly reported the transactions after he became aware of them.
AMENDMENT OF THE INCENTIVE STOCK OPTION PLAN
-------------------------------------------ARTICLES OF INCORPORATION
22
General Information
- -------------------
The Articles of Incorporation of Fulton Financial Corporation, as presently
in effect, provide that the authorized capital of Fulton Financial Corporation
shall consist exclusively of 100 million shares of common stock, par value $2.50
per share, and 10 million shares of preferred stock without par value. As of
March 13, 1997, there were 35,973,617 shares of common stock outstanding, which
shares were held by 11,703 owners of record. In addition, as of that date
2,426,906 shares of common stock were reserved for issuance pursuant to stock
option plans, 32,815 shares were reserved for issuance pursuant to the Dividend
Reinvestment Plan, and 38,433,338 shares were reserved for issuance pursuant to
the Shareholder Rights Plan adopted on June 20, 1989. Thus, 23,133,324 shares
of common stock are currently available for future financing, acquisitions
and other corporate purposes. (For each additional share issued, one share must
be reserved for issuance pursuant to the Shareholder Rights Plan; therefore,
only 11,566,662 shares remain available for discretionary issuance.) No shares
of preferred stock have been issued by Fulton Financial Corporation.
On September 19, 1995,January 21, 1997, the Board of Directors adopted a proposal to amend
Article 5 of the Articles of Incorporation of Fulton Financial Corporation unanimously approved and adopted an Incentive Stock Option Plan
(the "Plan"). Thefor
the purpose of increasing the Plan is to align the interestsnumber of shareholders and key employees by encouraging and creating ownershipauthorized shares of common stock from
100 million shares to 200 million shares. Under the proposed amendment, no
change would be made in the number of authorized shares of preferred stock. The
Board of Directors believes that it is desirable to have additional authorized
shares of common stock available for issuance for the purpose of raising
additional capital and for use in connection with acquisitions, stock dividends,
stock splits, employee benefit plans and for other general corporate purposes.
Having additional authorized shares of common stock available for issuance in
the future would provide Fulton Financial Corporation with greater flexibility
in pursuing such corporate purposes and would allow additional shares to provide meaningful
long-term incentive opportunities for key employees.be
issued without the expense and delay of further amendments to the Articles of
Incorporation, which would require shareholder approval at an annual or special
shareholders meeting. The Plan is intended
to enablerules of the NASDAQ National Market System, on which
Fulton Financial Corporation to attract and retain qualified
employees who contribute to its success.
Summary of Plan
---------------
A copy of the Plan is attached to this Proxy Statement as Exhibit A.
The following is a summary of the more important terms of the Plan:
The Plan is tocommon stock trades, may, however, require
shareholder approval before additional shares could be administered by a subcommittee of the Executive
Committee of the Board of Directors ofissued under certain
circumstances. Fulton Financial Corporation (the
"Committee"), comprisedhas no present plan or intention to
issue any additional shares of all members ofcommon stock, except for 2,426,906 shares which
have been reserved for issuance in connection with outstanding stock options,
and 32,815 shares which have been reserved for issuance in connection with the
Executive Committee who are
not eligible to receive options under the Plan and who are deemed to be
disinterested. Subject to the limitations set forth in the Plan, the
Committee has complete discretion to determine the time or times, if any,
when options will be granted under the Plan, the number of shares to be
optioned, the eligible employees to whom options will be granted, the
number of shares to be optioned to each eligible employee, whether an
option will be a non-qualified stock option or an incentive stock option,
and any other provisions relating to the granting of options.
Under the Plan, the Committee has authority to grant options up to an
aggregate of 1,500,000Dividend Reinvestment Plan.
The additional shares of Fulton Financial Corporation common stock subject to adjustment for
stock splits, stock dividends, reorganizations,
recapitalizations and other changes in the corporate structure of Fulton
Financial Corporation. No participant may receive options during the lifewhich authorization is sought would be part of the Plan covering or representing more than 400,000 shares.existing class of common
stock and, if and when issued, would have the same rights and privileges as the
shares of common stock presently outstanding. The committee will determine from time to time whether shares to be delivered
upon exercise of an option will consist of authorized but unissued shares
or shares held in treasury. Shares subject to an option which expires
without being exercised shall continue to be available under the Plan.
Options shall be granted under the Plan to persons who are determined
by the Committee to be key employees of Fulton Financial Corporation or any
affiliate. Under the Plan, a "key employee" is defined to mean an employee
of Fulton Financial Corporation or any affiliate, including officers
(whether or not they are directors), who, in the discretion of the
Committee, are determined to have rendered services which tend to
contribute materially to the success of the enterprise.
The number of options available for grant in any calendar year
shall be 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 the Committee, for the
immediately preceding five year period. Under the Plan, "total shareholder
return" is defined to mean the stock price appreciation of a shareholders of Fulton Financial
Corporation common stock plus reinvestmentdo not have preemptive rights in connection with the
issuance of dividends
andadditional shares of common stock.
If approved by the compounding effectshareholders, the proposed amendment will become
effective upon the filing of dividends paid on reinvested dividends,
calculated on a cumulative basis over a five year period.
In general,Articles of Amendment with the option price per share for an option issued pursuant
to the Plan shall not be less than the fair market value per share on the
date the option is granted. During the time that Fulton Financial
Corporation common stock is listed on the National AssociationSecretary of Securities Dealers, Inc. Automated Quotations System ("NASDAQ"), the fair
market value per share shall be the averageState
of the highest and lowest
trading pricesCommonwealth of Pennsylvania. Under the stock on the dateArticles of grant. As of March 1, 1996, the
high and low trading prices for Fulton Financial Corporation common stock
were $22.25 and $21.50, respectively, and the closing sale price was $21.88
per share, as reported on NASDAQ. When an option is exercised, the option
price may be paid in cash, by tendering other sharesIncorporation of
Fulton Financial Corporation, the affirmative vote of 66-2/3 percent of the
outstanding shares entitled to vote is required in order to approve the proposed
amendment.
23
The proposed amendment to increase the number of authorized shares of
common stock havingis not proposed to discourage a fair market value astakeover or change in control of the date of
exercise equal to the total purchase price, by any combination of these
methods of payment, or by any method established by the Committee.
The Committee shall determine the date on which an option shall
expire; provided, however, that options shall terminate not later than ten
years after the date of grant.
During the lifetime of a participant, an option granted pursuant to
the Plan may be exercised only by the participant and only while the
participant is employed by
Fulton Financial Corporation or one of its
affiliates. IfCorporation. Nevertheless, in certain instances, a participant's employment is terminated by reason of death,
disability or retirement, the Committee shall determine the period of time
during which the participant or the participant's heirs or personal
representatives may exercise the option, but such period of time shall not
exceed the option's original expiration date.
Options granted under the Plan may be either incentive stock options
or non-qualified stock options. The federal income tax consequencesproposal to
a
participant and Fulton Financial Corporation will differ depending upon
whether an option is an incentive stock option or a non-qualified stock
option.
A participant who is granted an incentive stock option will not
recognize any taxable income, nor will Fulton Financial Corporation deduct
any compensation expense, upon either the grant or the exercise of an
option. An incentive stock option is subject to a holding period, defined
in the Internal Revenue Code of 1986, as amended (the "Code"), as the later
of two years from the date of the grant of the option or one year from the
date the stock is transferred to the participant upon exercise of the
option. If a participant disposes of stock acquired pursuant to an
incentive stock option after expiration of the holding period, the
participant must recognize as capital gains income the difference between
the option price paid andincrease the amount received upon disposition of the
stock. If a participant disposes of theauthorized stock prior to the expiration of
the holding period, the participant must recognize as compensation income
the difference between the option price paid and the fair market value of
the stock at the time of exercise.may have an anti-takeover effect. In
the event of suchthat a disqualifying
disposition, Fulton Financial Corporation may deduct an amount equal to
such difference as compensation expense.
A participant who receives a non-qualified stock option generally must
recognize compensation income upon exercise of the option in an amount
equal to the difference between the option price paid and the fair market
value of the stock received upon exercise. Such amount may be deducted from
income by Fulton Financial Corporation. When the participant subsequently
sells or disposes of the stock, the participant will recognize as capital
gains income the difference between the fair market value of the stock at
the time of exercise and the amount received upon disposition.
The Board of Directorshostile takeover of Fulton Financial Corporation may terminate
the Plan or amend it in any way; provided, however, that the Board may not,
without the consent of the shareholders of Fulton Financial Corporation,
make any amendment which increases the maximum number of shares as to which
options may be granted under the Plan, changes the class of eligible
employees, materially increases the benefits accruing to an employee under
the Plan, or otherwise requires the approval of the shareholders to
maintain certain exceptions under the Securities Exchange Act of 1934.
Unless previously terminated byis threatened,
the Board of Directors could issue shares of common stock or preferred stock to
dilute the Plan shall
terminate on, and no options shall be granted after, the tenth anniversarystock ownership of persons seeking to obtain control of the effective date of the Plan. The Plan shall become effective on the
date on which it was adopted by the Board of Directors, provided that the
Plan is approved by the shareholders of Fulton Financial Corporation within
one year thereafter.company.
Recommendation of the Board of Directors
- ----------------------------------------
The Board of Directors believes that its proposal to amend the adoptionArticles of
Incorporation for the Planpurpose of increasing the number of authorized shares of
common stock is in the best interests of Fulton Financial Corporation and its
shareholders, and recommends that the Planproposal be approved by the shareholders.
Accordingly, the following resolutionresolutions will be presented to the shareholders at
the 1997 Annual Meeting:
RESOLVED, that the Incentive Stock Option Plan set forth in Exhibit Aproposal of the Board of Directors to amend
the Proxy StatementArticles of Incorporation of Fulton Financial Corporation dated March 26,
1996,for the
purpose of increasing the number of authorized shares of common stock
from 100 million shares to 200 million shares be, and is hereby
approved and adopted by the shareholders of Fulton Financialthe Corporation; and
RESOLVED FURTHER, that the officers and directors of Fulton Financialthe
Corporation be, and are hereby authorized and empowered on behalf of
the Corporation to execute and file Articles of Amendment and to take
all such other actions as they may determine in their discretion to be
necessary or appropriate in order to implementeffect the Incentive Stock
Option Plan in accordance with its terms.
foregoing amendment to
the Articles of Incorporation.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
------------------------------------------------
For the year ended December 31, 19951996 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 1996.1997.
Representatives of Arthur Andersen LLP are expected to be present at the 19961997
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 OF FULTON FINANCIAL CORPORATION ON
FORM*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 WILLIAMas
- -----------------------------------------------------------------------------
filed with the Securities and Exchange Commission, including financial
- -----------------------------------------------------------------------
statements and financial statement schedules, is available without charge to
- ----------------------------------------------------------------------------
shareholders upon written request
- ---------------------------------
24
addressed to William R. COLMERY, SECRETARY, FULTON FINANCIAL CORPORATION,Colmery, Secretary, Fulton Financial Corporation, P.0.
BOX- ------------------------------------------------------------------------------
Box 4887, LANCASTER,
PENNSYLVANIALancaster, Pennsylvania 17604.
- ----------------------------------------
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 19961997 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.
President and Chief Executive Officer
Lancaster, Pennsylvania
March 26, 1996
EXHIBIT A
FULTON FINANCIAL CORPORATION
1996 INCENTIVE STOCK OPTION PLAN
LEGAL PLAN DOCUMENT
SECTION 1. Purpose of the Plan. The purpose of the 1996 Incentive Stock
Option Plan (the "Plan") of Fulton Financial Corporation and its affiliates
is: (i) to align the interests of shareholders and key employees by
encouraging and creating ownership of common stock of the Company; (ii) to
enable the Company to attract and retain qualified employees who contribute
to the Company's success by their ability and ingenuity; and (iii) to
provide meaningful long-term incentive opportunities for key employees who
are responsible for the success of the Company and who are in a position to
make significant contributions toward its objectives.
SECTION 2. Definitions. For purposes of the Plan, the following words or
phrases shall have the meanings assigned to them below:
2.01. "Affiliate" shall mean a parent or subsidiary corporation as
defined in Section 425 of the Code (substituting "Company" for "employer
corporation"), including a parent or subsidiary which becomes such after
the adoption of the Plan.
2.02. "Board" shall mean the Board of Directors of the Company.
2.03. "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
2.04. "Committee" shall mean a subcommittee of the Executive Committee of
the Board, comprised of all members of the Executive Committee who are not
eligible to receive Options under the Plan and who are deemed to be
disinterested.
2.05. "Company" shall mean Fulton Financial Corporation.
2.06. "Date of Grant" in respect of any Option granted under the Plan
shall mean the date on which that Option is granted by the Committee.
2.07. "Date of Exercise" in respect of any Option granted under the Plan
shall mean the date on which the Participant's written notice of exercise
is received by the Secretary of the Company.
2.08. "Disinterested" in respect of a director shall mean a director of
the Company who is considered to be a "disinterested person" within the
meaning of Rule 16b-3 under the Securities and Exchange Act of 1934 and an
"outside director" under Section 162(m) of the Code.
2.09. "Exercise" in respect of an Option shall mean the delivery by the
Participant to the Secretary of the Company of a written notice of exercise
in the form specified by the Committee,
accompanied by payment in full for the Shares to be acquired pursuant to
such exercise.
2.10. "Incentive Stock Option" shall mean an Option issued pursuant to the
Plan that meets the requirements of Section 422 of the Code, as set forth
in Section 9 below.
2.11. "Key Employees" shall mean those employees of the Company or any
Affiliate, including officers (whether or not they are directors), who, in
the discretion of the Committee, are determined to have rendered services
which tend to contribute materially to the success of the Company or an
Affiliate.
2.12. "NASDAQ" shall mean the National Association of Securities Dealers,
Inc. Automated Quotations System.
2.13. "Non-Qualified Stock Option" shall mean an Option issued pursuant to
the Plan that is not intended to be an Incentive Stock Option.
2.14. "Option" means a right, granted to a Participant to purchase Stock
at a specified price during specified time periods. An Option may be either
an Incentive Stock Option or a Non-Qualified Stock Option.
2.15. "Participant" shall mean an employee to whom an Option has been
granted pursuant to the Plan.
2.16. "Peer Group" shall mean those financial institutions selected by the
Committee to be used to determine Options available for grant as described
in Section 5.04 of the Plan.
2.17. "Plan" shall mean this 1996 Incentive Stock Option Plan.
2.18. "Shares" shall mean the $2.50 par value common stock of the Company.
2.19. "Stock" shall also mean the $2.50 par value common stock of the
Company.
2.20. "Ten Percent Shareholder" shall mean a person who on the Date of
Grant owns, either directly or within the meaning of the attribution rules
in Section 425(d) of the Code, stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Company or any
one of its subsidiaries, as defined respectively in Sections 425(e) and
425(f) of the Code.
2.21. "Total Shareholder Return (TSR)" shall mean the stock price
appreciation of a Share plus reinvestment of dividends and the compounding
effect of dividends paid on reinvested dividends, calculated on a
cumulative basis over a five-year period.
SECTION 3. Administration of the Plan.
3.01. The Plan shall be administered by the Committee. The Board may from
time to time remove members from, or add members
to, the Committee. Vacancies on the Committee, however caused, shall be
filled by the Board.
3.02. The Committee shall be vested with full authority to adopt, amend
and rescind such rules and regulations as it deems necessary or desirable
to administer the Plan and to interpret the provisions of the Plan. Any
determination, decision or action of the Committee in connection with the
construction, interpretation, administration or application of the Plan
shall be final, conclusive and binding upon all Participants and any person
claiming under or through an Participant.
3.03. No member of the Committee or of the Board shall be liable for any
determination, decision or action made in good faith with respect to the
Plan or any Option granted under the Plan.
SECTION 4. Stock Subject to the Plan. Subject to adjustment as provided
in Section 10, the Committee shall have the authority to grant Options
under the Plan up to an aggregate of 1,500,000 Shares. For purposes of
qualifying for Section 162(m) of the Code, no Participant may receive
Options during the life of the Plan covering or representing more than
400,000 Shares. As the Committee may determine from time to time, the
Shares optioned may consist either in whole or in part of authorized but
unissued Shares or Shares held in treasury. If an Option is surrendered or
for any reason ceases to be exercisable in whole or in part, the Shares
which were subject to such Option but as to which the Option had not been
exercised shall continue to be available under the Plan.
SECTION 5. Eligibility and Grant of Options.
5.01. Options shall be granted under the Plan only to persons who are Key
Employees of the Company or of any Affiliate, as determined by the
Committee.
5.02. It shall be the responsibility of the Committee to determine: (i)
the time or times, if any, when Options will be granted under the Plan;
(ii) the number of Shares to be optioned; (iii) the eligible employees to
whom Options will be granted; (iv) the number of Shares to be optioned to
each eligible employee; (v) whether an Option will be a Non-Qualified Stock
Option or an Incentive Stock Option; and (vi) any other provisions related
to the granting of Options, subject to Section 13.
5.03. An Incentive Stock Option shall not be granted to a Ten Percent
Shareholder except on such terms concerning the Option price and conditions
of exercise as described in Section 9 with respect to such person. An
Incentive Stock Option shall not be granted to an individual who is not an
employee of the Company.
5.04. The number of Options available for grant in any calendar year shall
be determined depending upon the performance of the Company measured
in terms of Total Shareholder Return (TSR) relative to a Peer Group,
determined at the sole discretion of the Committee, for the five-year
period immediately preceding the
option grant. The number of Options available for grant shall be made in
accordance with the following schedule:
Company's TSR Ranking among the Percent of Total Outstanding Shares
Peer Group for Prior Five-Year Period Available for Option Grants for Plan Year
- ------------------------------------- -----------------------------------------
Top Quartile 0.50%
Second Quartile 0.42%
Third Quartile 0.35%
Fourth Quartile At the Discretion of the Committee
Individual grant levels may vary depending on the Key Employee's tier or salary
grade, individual performance, tenure-related issues, competitive grant
practices, and the size of the total Share pool and the number of participants.
5.05 Options may be granted under the Plan from time to time in substitution for
stock options held by employees of corporations who become or are about to
become Key Employees of the Company or one of its Affiliates as the result of a
merger or consolidation of the employing corporation with the Company or one of
its Affiliates, or the acquisition by the Company or one of its Affiliates of
the assets of the employing corporation, or the acquisition by the Company or
one of its Affiliates of stock of the employing corporation as the result of
which it becomes an Affiliate. The terms and conditions of the substitute
Options so granted may vary from the terms and conditions set forth in this Plan
to such extent as the Board at the time of grant may deem appropriate to conform
in whole or in part, to the provisions of the options in substitution for which
they are granted.
SECTION 6. Option Price.
6.01. Except as otherwise provided in Section 9, below, the Option price per
Share to be acquired pursuant to the exercise of an Option shall not be less
than the fair market value per Share on the Date of Grant, subject to adjustment
as set forth in Section 10 below.
6.02. During such time as the Stock is not listed on an established stock
exchange but is listed in the NASDAQ National Market System, the fair market
value per Share shall be the average of the highest and lowest trading prices of
the Stock on the Date of Grant or, if no trade of Stock occurred on that day,
the fair market value shall be determined by reference to such prices on the
next preceding day on which such prices were quoted.
6.03. During such time as the Stock is not listed on an established stock
exchange or in the NASDAQ National Market System, the fair market value per
Share shall be the average of the closing dealer "bid" and "ask" prices for the
Stock, as quoted by NASDAQ for the Date of Grant or, if no "bid" and "ask"
prices are quoted for that day, the fair market value shall be determined by
reference to such prices on the next preceding day
on which such prices were quoted.
6.04. If the Stock is listed on an established stock exchange or
exchanges, the fair market value shall be deemed to be the closing price of
the Stock on such stock exchange or exchanges on the Date of Grant or, if
no sale of the Stock has been made on any stock exchange on that day, the
fair market value shall be determined in reference to such prices on the
next preceding day on which such prices were quoted.
6.05. In the event the Stock is not traded on an established stock
exchange and no closing dealer "bid" and "ask" prices are available, then
the fair market value of the Stock shall be as determined in good faith by
the Committee.
SECTION 7. Terms and Conditions of Options.
7.01. Each Option shall be evidenced by a written stock option agreement
specifying the number of Shares that may be purchased pursuant to the
Option, the Option price, the term of the Option, and such other terms,
conditions and limitations established by the Committee as are consistent
with the terms of the Plan. The stock option agreement shall identify the
Option as a Non-Qualified Stock Option or an Incentive Stock Option.
7.02. Each Option granted under the Plan shall expire on the date
determined by the Committee and specified in the stock option agreement;
provided, however, that, except as provided in Section 9 and in Section
7.04., below, each option shall terminate not later than the date which is
ten years from the Date of Grant.
7.03. The Committee in its discretion may impose further limitations on
the exercise of Options granted under the Plan.
7.04. An Option granted pursuant to the Plan may be exercised only while
the Participant is employed by the Company or one of its Affiliates and if
not fully exercised prior to termination of employment, will expire on the
date of termination; provided, however, that in the event of a termination
of employment by reason of death, disability or retirement, the Committee
shall determine the period of time during which a Participant or the
Participant's heirs or personal representatives may exercise Options for a
period of time not to exceed the Option's original expiration date.
7.05. During the lifetime of a Participant, an Option granted pursuant to
the Plan shall be exercisable only by the Participant and shall not be
assignable or transferable by him other than by will or the laws of descent
and distribution.
SECTION 8. Exercise of Options. The Committee shall determine the time or
times at which an Option may be exercised in whole or in part. Each
Participant who elects to exercise an Option granted pursuant to this Plan
shall give written notice to the Company of such election and of the number
of Shares he has
elected to purchase, in such form as the Committee shall have prescribed or
approved. At the time of exercise of the Option, the price of the Shares
purchased shall become immediately due and payable (i) in cash or by check,
(ii) by tendering to the Company Shares of the Company having a fair market
value as of the Date of Exercise (determined pursuant to Section 6, above)
equal to the exercise price, (iii) by any combination of the methods of
payment described in (i) and (ii), or (iv) by any method established by the
Committee to facilitate Stock ownership.
SECTION 9. Other Incentive Stock Option Requirements. The Committee is
authorized to grant Incentive Stock Options to Participants subject to the
terms and provisions of Section 422 of the Code, including, but not limited
to, the requirements that: (i) no Incentive Stock Option shall be granted
more than ten years after the effective date of the Plan; (ii) the exercise
price per Share of any Incentive Stock Option shall not be less than 100
percent of fair market value of the Stock on the Date of Grant; and (iii)
the exercise price per Share of any Incentive Stock Option granted to a Ten
Percent Shareholder shall not be less than 110 percent of the fair market
value of the Stock on the Date of Grant. Anything in the Plan to the
contrary notwithstanding, no term of the Plan relating to Incentive Stock
Options shall be interpreted, amended, or altered, nor shall any discretion
or authority granted under the Plan be exercised, so as to disqualify
either the Plan or any Incentive Stock Option under Section 422 of the
Code.
SECTION 10. Changes in Capital Structure.
10.01. In the event of any change in the Shares subject to the Plan or
to any Option granted hereunder, through merger, consolidation,
reorganization, recapitalization, reincorporation, stock split, stock
dividend or other change in the corporate structure of the Company, the
Committee shall appropriately adjust the number of Shares subject to the
Plan and to each outstanding Option, and the price per Share thereof (but
not the total price), so that upon exercise, the Participant shall receive
the same number of Shares he would have received had he been the holder of
all Shares subject to his outstanding Options immediately before the
effective date of such change in the capital structure of the Company. Such
adjustment shall not result in the issuance of fractional shares. Each such
adjustment shall be made in such manner as not to constitute a
"modification" of the Option as defined in Section 425 of the Code.
10.02. If the Company is succeeded by another corporation in a merger or
consolidation or if 50 percent or more of its Stock is acquired by another
corporation, all Options granted under the Plan which are then outstanding
shall be assumed by the successor corporation and each such Option shall be
applicable to the stock of the successor corporation, with only such
modifications as may be necessary to continue the status of an Incentive
Stock Option as an option granted under an incentive stock option plan
within the meaning of Section 422 of the Code.
10.03. Any adjustment by the Committee pursuant to this Section 10 in the
number of Shares subject to the Plan or to any outstanding Option, or to
the price stated in any Option, shall be final, binding and conclusive.
Notice of any adjustment shall be given by the Company to each Participant
holding an Option which shall have been so adjusted.
10.04. The grant of an Option pursuant to the Plan shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve, liquidate, sell or transfer
all or any part of its business or assets.
SECTION 11. Registration of Stock.
11.01. No Option granted pursuant to the Plan shall be exercisable in
whole or in part if at any time the Committee shall determine in its
discretion that the listing, registration or qualification of the Stock
subject to such Option on any securities exchange or under any applicable
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the
granting of such Option or the issuance of Shares thereunder, unless such
listing, registration, qualification, consent or approval may be effected
or obtained free of any conditions not acceptable to the Board.
11.02. If a registration statement under the Securities Act of 1933 with
respect to the Shares issuable upon exercise of any Option granted under
the Plan is not in effect at the time of exercise, as a condition of the
issuance of the Shares, the Committee may require the Participant
exercising the Option to give the Committee a written statement,
satisfactory in form and substance to the Committee, that he is acquiring
the Stock for his own account for investment and not with a view to its
distribution. The Company may place upon any share certificate issued upon
exercise of such Option the following legend or such other legend as the
Committee may prescribe to prevent disposition of the Shares in violation
of the Securities Act of 1933 or any other applicable securities law:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 (the "Act") and may not be sold, pledged,
hypothecated or otherwise transferred or offered for sale in the absence of
an effective registration statement covering such shares which has been
filed under the Act or a written opinion of counsel for the Company that
registration Is not required."
SECTION 12. Tax Withholding. The Company will require that each
Participant, as a condition of exercise of a Non-Qualified Stock Option,
pay or reimburse any taxes the Company is required to withhold in
connection with the grant or exercise of the Option.
SECTION 13. Amendment or Termination of the Plan.
13.01. The Board may at any time amend, modify, suspend or terminate the
Plan; provided that, except as provided in Section 10, above, the Board may
not, without the consent of the shareholders of the Company, make any
amendment or modification which:
(i) increases the maximum number of Shares as to which Options may
be granted under the Plan,
(ii) changes the class of eligible employees,
(iii) increases materially the benefits accruing to an employee
under the Plan, or
(iv) otherwise requires the approval of the shareholders of the
Company in order to maintain the exemption available under
Rule 16b-3 (or any similar rule) under the Securities Exchange
Act of 1934.
13.02. Notwithstanding the provisions of Section 13.01 (i) above, the
Board reserves the right to amend or modify the terms and provisions of the
Plan and of any outstanding Options granted under the Plan to the extent
necessary to qualify any or all Options granted under the Plan for such
favorable federal income tax treatment (including deferral of taxation upon
exercise) as may be afforded employee stock options under Section 422 of
the Code, the regulations promulgated thereunder, and any amendments or
replacements thereof.
13.03. Unless previously terminated by the Board, the Plan shall terminate
on, and no Options shall be granted after, the tenth anniversary of the
effective date of the Plan, as set forth in Section 15 below.
13.04 No amendment, modification or termination of the Plan (whether by
action of the Board or by expiration of the Plan term) shall in any manner
affect any option theretofore granted under the Plan without the consent of
the Participant or any person claiming under or through the Participant.
SECTION 14. General Provisions.
14.01. No Participant or employee shall have any claim to be granted any
Option under the Plan, and there is no obligation for uniformity of
treatment of Participant and employees.
14.02. No Option shall confer on any Participant any of the rights of a
shareholder of the Company unless and until Shares are duly issued or
transferred to the Participant in accordance with the terms of the Option.
14.03. Nothing contained in the Plan or any option agreement shall confer
upon any employee any right to continue in the employ of the Company or any
subsidiary or to interfere in any way with the right of the Company or any
subsidiary to terminate his employment at any time or increase or decrease
his compensation from the rate in existence at the time of granting an
Option.
SECTION 15. Effective Date. The Plan shall become effective on the date on
which it is adopted by the Board, provided that the Plan is approved by the
shareholders of the Company within one year thereafter. The Board may issue
options pursuant to the Plan prior to the approval of the Plan by the
shareholders of the Company, provided that all such options are contingent
upon shareholder approval of the Plan within said one-year period.25, 1997
* BOLD FACE TYPE
25
[FRONT SIDE]
P R O X Y FULTON FINANCIAL CORPORATION P R O X Y
LANCASTER, PENNSYLVANIA
The undersigned hereby appoints Herbert H. Jaffae and Kenneth E.
Shenenberger,David C. Etter, or
either 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 March 14, 1996,13, 1997, and (ii) which
the undersigned is otherwise entitled to vote at the Annual Meeting of
shareholders to be held on Thursday, May 2,
1996,1, 1997, at 12:00 noon, at the Hershey
Lodge and Convention Center, West Chocolate Avenue and University Drive,
Hershey, Pennsylvania, or any adjournment thereof.
1. ELECTION OF DIRECTORS (check one block) [_] FOR
FOR A TWO YEAR TERM: Samuel H. Jones, Jr.
FOR A THREE YEAR TERM: Patrick J. Freer, RobertJeffrey G. Albertson, Thomas D. Garner, J. Robert
Hess, Carolyn R. Holleran, ArthurCaldwell, Jr., Harold
D. Chubb, William H. Clark, Jr., Rufus A. Fulton,
Jr., Eugene H. Gardner, Daniel M. Peters,
Jr., Stuart H. Raub, Jr., Mary Ann RussellHeisey, Clyde W.
Horst, William E. Rusling
For, except vote withheld from the following nominee(s):
------------------------------------------------- -----------------------------------------------------------
[_] WITHHELD as to all nominees
2. APPROVAL OF THE INCENTIVE STOCK OPTION PLANAMENDMENT OF THE ARTICLES OF INCORPORATION
[_] FOR [_]AGAINST [_] ABSTAIN
(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, and FOR the proposal to approve the Incentive Stock Option Plan.amendment of the
Articles of Incorporation.
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.
Dated: , 1996
------------------------------
------------------------------------------------___________________, 1997
__________________________________
Signature
------------------------------------------------__________________________________
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
Please mark, sign, date and mail attorney or fiduciary, indicate your full
this proxy promptly in the postage title. If more than one fiduciary has
prepaid return envelope provided. authority over the stock, all should sign.
-2-