SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____ to _____
Commission file number 0-16772
PEOPLES BANCORP INC.
(Exact name of Registrant as specified in its charter)
Ohio
(State or other jurisdiction of incorporation or organization)
31-0987416
(I.R.S. Employer Identification No.)
138 Putnam Street, P. O. Box 738, Marietta, Ohio
(Address of principal executive offices)
45750
Zip Code)
Registrant's telephone number, including area code: (614) 373-3155
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, No Par Value (2,895,746 outstanding at February 28, 1995)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No____
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Based upon the closing price of the Common Shares of the
Registrant on the NASDAQ Stock Market as of February 28, 1995,
the aggregate market value of the Common Shares of the
Registrant held by nonaffiliates on that date was $62,093,054.
For this purpose, certain executive officers and directors are
considered affiliates.
Documents Incorporated by Reference:
1) Portions of Registrant's Annual Report to Shareholders for the
fiscal year ended December 31, 1994, are incorporated by reference
into Parts I and II of this Annual Report on Form 10-K.
2) Portions of Registrant's Definitive Proxy Statement relating to
the annual meeting to be held April 4, 1995 are incorporated by reference
into Part III of this Annual Report on Form 10-K.
Exhibit Index Appears on Pages 14 - 15
Page 1 of 68 Pages
PART I
ITEM 1. BUSINESS.
Introduction
Peoples Bancorp Inc. ("Peoples Delaware") was incorporated
under the laws of the State of Delaware on April 1, 1980.
Peoples Delaware was merged, following Stockholder approval,
into Peoples Bancorp Inc., an Ohio corporation (the "Company"),
effective April 6, 1993, pursuant to a reincorporation
proceeding. The Company's principal business is to act as a
multi-bank holding company. Its wholly-owned subsidiaries are
The Peoples Banking and Trust Company, Marietta, Ohio ("Peoples
Bank"), The First National Bank of Southeastern Ohio ("First
National Bank") and The Northwest Territory Life Insurance
Company, an Arizona corporation ("Northwest Territory").
At December 31, 1994, Peoples Bancorp Inc. (parent company
only) had 21 full-time equivalent employees.
The Peoples Banking and Trust Company
Peoples Bank was chartered as an Ohio banking corporation
under its present name in Marietta, Ohio, in 1902. As of
December 31, 1994, Peoples Bank was one of the largest of ____
banks in Washington and Athens Counties, Ohio, and held _______%
of total assets of all banks in those two counties. At December
31, 1994, it had assets of $432,476,000; deposits of
$355,432,000; and net loans of $313,017,000.
Peoples Bank is a full-service commercial bank. It
provides checking accounts, NOW accounts, Super NOW accounts,
money market deposit accounts, savings accounts, time
certificates of deposit, commercial loans, installment loans,
commercial and residential real estate mortgage loans, credit
cards, automatic teller machines, banking by phone, lease
financing, corporate and personal trust services and safe
deposit rental facilities. Peoples Bank also sells travelers
checks, money orders and cashier's checks. Services are
provided through ordinary walk-in offices, automated teller
facilities called "SuperTeller", and automobile drive-in
facilities called "Motor Bank". At December 31, 1994, the Trust
Department of Peoples Bank held approximately $330 million in
trust and custodial accounts apart from the assets of Peoples
Bank.
With all of its offices located in Ohio, Peoples Bank
serves principally Washington, Athens and Meigs Counties,
together with portions of Hocking, Perry and Vinton Counties in
Ohio and adjacent parts of Northern West Virginia. The business
production office in Newark, Ohio, serves that immediate area in
Licking County. Peoples Bank provides services to its customers
at its main office in downtown Marietta and through SuperTeller
and other banking facilities. Full-service branches and
SuperTellers are located at the Frontier Shopping Center and
inside a grocery store at Pike and Acme Streets in Marietta.
A full-service branch, two Motor Banks and a Super-Teller are
operated in Belpre, Ohio. Full-service branches with Motor
Banks are located in Lowell, Reno and Nelsonville, Ohio. A
full-service branch is located at One North Court Street and at
the Athens Mall in Athens, Ohio. The One North Court Street
office also has a SuperTeller machine. In 1993, Peoples Bank
added three SuperTeller machines on the campus of Ohio
University in Athens, Ohio. These locations were operated by
another local bank prior to Peoples Bank assuming operation of
these machines. A full-service bank is located at Middleport,
Ohio.
At December 31, 1994, Peoples Bank had 223 full-time
equivalent employees.
The First National Bank of Southeastern Ohio
First National Bank is a national banking association
chartered in 1900. It provides services and products that are
substantially the same as those of Peoples Bank. It operates a
commercial bank and motor bank at one location at 415 Main
Street, Caldwell, Ohio. It also has a full-service office on
Marion Street in Chesterhill, Ohio. On January 2, 1991, it
acquired a full-service office on Kennebec Street,
McConnelsville, Ohio. Its market area is comprised of Caldwell,
Chesterhill, McConnelsville and the surrounding area in Noble
and Morgan Counties, Ohio. At December 31, 1994, it had assets
of $61,718,000; deposits of $49,179,000; and net loans of
$41,602,000.
At December 31, 1994, First National Bank had 27
full-time equivalent employees.
The Northwest Territory Life Insurance Company
Northwest Territory was organized under Arizona law in
1983 and was issued a Certificate of Authority to act as a
reinsurance company by the State of Arizona on February 8, 1984.
Northwest Territory reinsures credit life and disability
insurance issued to customers of the banking subsidiaries of the
Company by another insurance company. At its fiscal year end of
November 30, 1994, Northwest Territory had total assets of
$1,200,000 and had gross premium income of $238,000 in 1994,
$231,000 in 1993 and $230,000 in 1992. Northwest Territory
reinsures risks (currently not exceeding $15,000 per insured on
a present value basis) within limits established by governmental
regulations and management policy. Northwest Territory has no
employees.
Customers and Markets
The Company's service area has a diverse economic
structure. Principal industries in the area include metals,
plastics and petrochemical manufacturing; oil, gas and coal
production; and related support industries. In addition,
tourism, education and other service-related industries are
important and growing industries. Excellent transportation
facilities, including highway, river and rail, are available and
have helped the area to develop. Consequently, the Company is
not dependent upon any one industry segment for its business
opportunities.
Competition
The banking subsidiaries of the Company experience
significant competition in attracting depositors and borrowers.
Competition in lending activities comes principally from other
commercial banks in the lending areas of the banks and, to a
lesser extent, from savings associations, insurance companies,
governmental agencies, credit union, brokerage firms and pension
funds. The primary factors in competing for loans are interest
rate and overall lending services. Competition for deposits
comes from other commercial banks, savings and loan
associations, money market funds and credit unions as well as
from insurance companies and brokerage firms. The primary
factors in competing for deposits are interest rates paid on
deposits, account liquidity, convenience of office location and
overall financial condition. The Company believes that its
size, overall banking services and financial condition place it
in a favorable competitive position.
Northwest Territory operates in the highly competitive
industry of credit life and disability insurance. A large
number of stock and mutual insurance companies also operating in
this industry have been in existence for longer periods of time
and have substantially greater financial resources than does
Northwest Territory. The principal methods of competition in
the credit life and disability insurance industry are the
availability of coverages and premium rates. The Company
believes Northwest Territory has a competitive advantage due to
the fact that the business of Northwest Territory is limited to
the accepting of life and disability reinsurance ceded in part
to Northwest Territory from the credit life and disability
insurance purchased by loan customers of Peoples Bank and First
National Bank.
Supervision and Regulation
The following is a summary of certain statutes and
regulations affecting the Company and its subsidiaries. The
summary is qualified in its entirety by reference to such
statutes and regulations.
The Company s a bank holding company under the Bank Holding
Company Act of 1956, as amended, which restricts the activities
of the Company and the acquisition by the Company of voting
shares or assets of any bank, savings association or other
company. The Company is also subject to the reporting
requirements of, and examination and regulation by, the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board"). Subsidiary banks of a bank holding company are subject
to certain restrictions imposed by the Federal Reserve Act on
transactions with affiliates, including any loans or extensions
of credit to the bank holding company or any of its
subsidiaries, investments in the stock or other securities
thereof and the taking of such stock or securities as collateral
for loans or extensions of credit to any borrower; the issuance
of guarantees, acceptances or letters of credit on behalf of the
bank holding company and its subsidiaries; purchases or sales of
securities or other assets; and the payment of money or
furnishing of services to the bank holding company and other
subsidiaries. A bank holding company and its subsidiaries are
prohibited from engaging in certain tying arrangements in
connection with extensions of credit and/or the provision of
other property or services to a customer by the bank holding
company or its subsidiaries.
Bank holding companies are prohibited from acquiring
direct or indirect control of more than 5% of any class of
voting stock or substantially all of the assets of any bank
holding company without the prior approval of the Federal
Reserve Board. In addition, acquisitions across state lines are
limited to acquiring banks in those states specifically
authorizing such interstate acquisitions. However, in September
1995, federal law will permit interstate acquisitions of banks,
if the bank acquired retains its separate charter.
As a national bank, First National Bank is supervised and
regulated by the Comptroller of the Currency. As an Ohio
state-chartered bank, Peoples Bank is supervised and regulated
by the Ohio Division of Banks and the Federal Deposit Insurance
Corporation ("FDIC"). The deposits of First National Bank and
Peoples Bank are insured by the FDIC and those entities are
subject to the applicable provisions of the Federal Deposit
Insurance Act. A subsidiary of a bank holding company can be
liable to reimburse the FDIC if the FDIC incurs or anticipates a
loss because of a default of another FDIC-insured subsidiary of
the bank holding company or in connection with FDIC assistance
provided to such subsidiary in danger of default. In addition,
the holding company of any insured financial institution that
submits a capital plan under the federal banking agencies'
regulations on prompt corrective action guarantees a portion of
the institution's capital shortfall, as discussed below.
Various requirements and restrictions under the laws of the
United States and the State of Ohio affect the operations of
Peoples Bank and First National Bank, including requirements to
maintain reserves against deposits, restrictions on the nature
and amount of loans which may be made and the interest that may
be charged thereon, restrictions relating to investments and
other activities, limitations on credit exposure to
correspondent banks, limitations on activities based on capital
and surplus, limitations on payment of dividends, and
limitations on branching. Pursuant to recent federal
legislation, First National Bank may branch across state lines,
if permitted by the law of the other state. In addition,
effective June 1997, such interstate branching by First National
Bank will be authorized, unless the law of the other state
specifically prohibits the interstate branching authority
granted by federal law.
The Federal Reserve Board has adopted risk-based capital
guidelines for bank holding companies and for state member
banks, such as Peoples Bank and First National Bank. The
risk-based capital guidelines include both a definition of
capital and a framework for calculating weighted-risk assets by
assigning assets and off-balance sheet items broad risk
categories. The minimum ratio of total capital to weighted-risk
assets (including certain off-balance sheet items, such as
standby letters of credit) is 8%. At least 4.0 percentage
points is to be comprised of common stockholder's equity
(including retained earnings but excluding treasury stock),
noncumulative perpetual preferred stock, a limited amount of
cumulative perpetual preferred stock, and minority interests in
equity accounts of consolidated subsidiaries, less goodwill and
certain other intangible assets ("Tier 1 capital"). The
remainder ("Tier 2 capital") may consist, among other things, of
mandatory convertible debt securities, a limited amount of
subordinated debt, other preferred stock and a limited amount of
allowance for loan and lease losses. The Federal Reserve Board
also imposes a minimum leverage ratio (Tier 1 capital to total
assets) of 4% for bank holding companies and state member banks
that meet certain specified condition, including no operational,
financial or supervisory deficiencies and including having the
highest regulatory rating. The minimum leverage ratio is 1.0
-2.0% higher for other bank holding companies and state member
banks based on their particular circumstances and risk profiles
and those experiencing or anticipating significant growth.
National bank subsidiaries, such as First National Bank, are
subject to similar capital requirements adopted by the
Comptroller of the Currency, and state non-member bank
subsidiaries, such as Peoples Bank, are subject to similar
capital requirements adopted by the FDIC. Under an outstanding
proposal of the Comptroller and the FDIC to establish an
interest rate component, First National Bank and Peoples Bank
may be required to have additional capital if their interest
rate risk exposure exceeds acceptable levels provided for in the
regulation as adopted.
The Company and its subsidiaries currently satisfy all
capital requirements. Failure to meet applicable capital
guidelines could subject a banking institution to a variety of
enforcement remedies available to federal and state regulatory
authorities, including the termination of deposit insurance by
the FDIC.
The federal banking regulators have established
regulations governing prompt corrective action to resolve
capital deficient banks. Under these regulations, institutions
which become undercapitalized become subject to mandatory
regulatory scrutiny and limitations, which increase as capital
continues to decrease. Such institutions are also required to
file capital plans with their primary federal regulator, and
their holding companies must guarantee the capital shortfall up
to 5% of the assets of the capital deficient institution at the
time it becomes undercapitalized.
The ability of a bank holding company to obtain funds for
the payment of dividends and for other cash requirements is
largely dependent on the amount of dividends which may be
declared by its subsidiary banks and other subsidiaries.
However, the Federal Reserve Board expects the Company to serve
as a source of strength to its subsidiary banks, which may
require it to retain capital for further investment in
subsidiaries, rather than for dividends for the shareholder of
the Company. Peoples Bank and First National Bank may not pay
dividends to the Company if, after paying such dividends, they
would fail to meet the required minimum levels under the
risk-based capital guideline and the minimum leverage ratio
requirements. Peoples Bank and First National Bank must have
the approval of their respective regulative authorities if a
dividend in any year would cause the total dividends for that
year to exceed the sum of the current year's net profits and the
retained net profits for the preceding two years, less required
transfers to surplus. First National Bank may not pay a
dividend either in an amount greater than its net profits then
on hand, after deducting its losses and bad debts, or if less
than 1/10th of net profits for the preceding six months, for a
quarterly or semi-annual dividend, or the preceding year, for an
annual dividend, was transferred to surplus. Payment of
dividends by the bank subsidiaries may be restricted at any time
at the discretion of the regulatory authorities, if they deem
such dividends to constitute an unsafe and/or unsound banking
practice. These provisions could have the effect of limiting
the Company's ability to pay dividends on its outstanding common
shares.
Northwest Territory is chartered by the State of Arizona
and is subject to regulation, supervision and examination by the
Arizona Department of Insurance. The powers of regulation and
supervision of the Arizona Department of Insurance relate
generally to such matters as minimum capitalization, the grant
and revocation of certificates of authority to transact
business, the nature of and limitations on investments, the
maintenance of reserves, the form and content of required
financial statements, reporting requirements and other matters
pertaining to life and disability insurance companies.
Monetary Policy and Economic Conditions
The commercial banking business is affected not only by
general economic conditions, but also by the policies of various
governmental regulatory agencies, including the Federal Reserve
Board. The Federal Reserve Board regulates money and credit
conditions and interest rates in order to influence general
economic conditions primarily through open-market operations in
United States Government securities, changes in the discount
rate on bank borrowings, and changes in the reserve requirements
against bank deposits. These policies and regulations
significantly affect the overall growth and distribution of bank
loans, investments and deposits, and the interest rates charged
on loans, as well as the interest rates paid on deposits and
accounts.
The monetary policies of the Federal Reserve Board have
had a significant effect on the operating results of commercial
banks in the past and are expected to continue to have
significant effects in the future. In view of the changing
conditions in the economy and the money markets and the
activities of monetary and fiscal authorities, no definitive
predictions can be made as to future changes in interest rates,
credit availability or deposit levels.
Statistical Financial Information Regarding the Company
The following listing of statistical financial information,
which is included in the Company's Annual Report to
Shareholders, provides comparative data for the Company over the
past three and five years, as appropriate. These tables should
be read in conjunction with "Management's Discussion and
Analysis" and the Consolidated Financial Statements of the
Company and its subsidiaries found at pages 35 through 39 and 12
through 29, respectively, of the Company's Annual Report to
Shareholders.
Average Balances and Analysis of Net Interest Income:
Please refer to page 31 of the Company's Annual Report to Shareholders.
Rate Volume Analysis:
Please refer to page 32 of the Company's Annual Report to Shareholders.
Loan Maturities:
Please refer to page 32 of the Company's Annual Report to Shareholders.
Average Deposits:
Please refer to page 31 of the Company's Annual Report to Shareholders.
Maturities Schedule of Large Certificates of Deposit:
Please refer to page 32 of the Company's Annual Report to Shareholders.
Loan Portfolio Analysis:
Please refer to pages 33 and 34 of the Company's Annual Report to
Shareholders.
Securities Analysis:
Please refer to pages 18 through 21 and page 38 of the Company's
Annual Report to Shareholders.
Return Ratios:
Please refer to page 9 of the Company's Annual Report to Shareholders.
Short-term Borrowings:
Please refer to page 22 of the Company's Annual Report to Shareholders.
Effect of Environmental Regulation
Compliance with federal, state and local provisions
regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, has not
had a material effect upon the capital expenditures, earnings or
competitive position of the Company and its subsidiaries. The
Company believes that the nature of the operations of its
subsidiaries has little, if any, environmental impact. The
Company, therefore, anticipates no material capital expenditures
for environmental control facilities for its current fiscal year
of for the foreseeable future. The Company's subsidiaries may
be required to make capital expenditures for environmental
control facilities related to properties which they may acquire
through foreclosure proceedings in the future; however, the
amount of such capital expenditures, if any, is not currently
determinable.
ITEM 2. PROPERTIES
The principal office of the Company and Peoples Bank is
located at 138 Putnam Street, Marietta, Ohio. This location
consists of a five-story, stone-block building and one other
smaller building attached by interior corridors. Peoples Bank
also owns several nearby vacant lots for parking and a nearby
Motor Bank. Peoples Bank owns property on which three
additional full-service and two additional Motor Banks are
located, leases the land on which one full-service branch is
located and leases its other full-service branch. Peoples Bank
also owns a two-story, block building on the Public Square in
Nelsonville, Ohio, an additional office in Nelsonville, together
with an office consisting of a two-story concrete structure at
One North Court Street, Athens, Ohio, and a brick full-service
office in the Athens Mall. The building in the Mall is owned by
Peoples Bank on leased real property.
First National Bank owns a three-story office building of
brick and stone at 415 Main Street in Caldwell, Ohio, and a
one-story masonry and brick building constructed in 1969 located
on Marion Street in Chesterhill, Morgan County, Ohio, together
with a two-story brick structure in McConnelsville, Morgan
County, Ohio, located on Kennebec Street.
In 1993, Peoples Bank completed construction of a
five-story addition to its primary facility in downtown
Marietta. The Company and its subsidiaries own other real
property which, when considered in the aggregate, is not
material to their operations. Management believes that these
properties are in satisfactory condition and adequate.
All of the properties occupied by the Company and its
subsidiaries are owned by the Company or its subsidiaries, with
the exception of the office located in The Plains, Ohio, which
is leased under a lease which expires in June, 2001.
ITEM 3. LEGAL PROCEEDINGS.
There are no pending legal proceedings to which the
Company or its subsidiaries are a party or to which any of their
property is subject other than ordinary routine litigation
incidental to their business, none of which is material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Please refer to page 11 of the Company's Annual Report to
Shareholders, which is incorporated by reference herein.
ITEM 6. SELECTED FINANCIAL DATA.
The table of Selected Financial Data on page 9 of the
Company's Annual Report to Shareholders is incorporated herein
by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
Please refer to Pages 35 through 39 of the Company's
Annual Report to Shareholders, which are incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Financial Statements of Peoples Bancorp
Inc. and it subsidiaries, included on pages 12 through 29 of its
Annual Report to Shareholders for the fiscal year ended December
31, 1994, and the Report of Coopers & Lybrand L.L.P. included
therein at page 30 are incorporated herein by reference.
Following is an index to the financial statements included in
the Annual Report to Shareholders for the fiscal year ended
December 31, 1994:
ANNUAL
FINANCIAL STATEMENTS: REPORT PAGES
Peoples Bancorp Inc. and Subsidiaries:
Report of Independent Accountants 30
Consolidated Balance Sheet as of December 31, 1994 and 1993 12
Consolidated Statement of Income for the Three Years Ended
December 31, 1994 13
Consolidated Statement of Stockholders' Equity for the Three
Years Ended December 31, 1994 14
Consolidated Statement of Cash Flows for the Three Years
Ended December 31, 1994 15
Notes to the Consolidated Financial Statements 16 - 29
Peoples Bancorp Inc.: (Parent Company Only Financial
Statements are included in Note 19 to the
Consolidated Financial Statements) 28 - 29
Quarterly financial data set forth at page 10 of the
Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1994, is incorporated herein be reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Directors and Executive Officers of the Company include
those persons enumerated under "Election of Directors" on pages
5 through 7 of the Company's definitive Proxy Statement relating
to the Company's Annual Meeting of Shareholders to be held April
4, 1995, which section is expressly incorporated by reference.
Other Executive Officers are Carol A. Schneeberger (38), Vice
President/Operations, John T. Underwood (55), Vice
President/Business Development, Rolland B. Swart (56), Vice
President/Business Development, John (Jack) W. Conlon (49),
Chief Financial Officer and Jeffrey D. Welch (40), Treasurer.
Ms. Schneeberger became Vice President/Operations of the Company
in October, 1988. Prior thereto, she was Auditor of the Company
from August, 1987 to October, 1988, and Auditor of Peoples Bank
from January, 1986 to October, 1988. She was Assistant Auditor
of Peoples Bank from January, 1979 to January, 1986. Mr.
Underwood joined the Company at his current position in October,
1993. Prior thereto, Mr. Underwood was Executive Vice
President/Operations for Peoples Bank for more than five years
and has 32 years of banking experience. Mr. Swart joined the
Company in October, 1990 at his current position, left this
position in August, 1993, to become an executive vice president
with Peoples Bank, and then rejoined the Company at his current
position in September, 1994. Mr. Conlon has been Chief
Financial Officer of the Company since April, 1991. He has also
been Chief Financial Officer and Treasurer of Peoples Bank for
more than five years. Mr. Welch has been Treasurer of the
Company since 1985. Certain other information called for in
this Item 10 is incorporated herein by reference to the
Company's definitive Proxy Statement under the caption "Security
Ownership of Certain Beneficial Owners and Management" at page 5.
ITEM 11. EXECUTIVE COMPENSATION.
See "Compensation Committee Interlocks and Insider
Participation" and "Compensation of Executive Officers and
Directors" on page 10, and pages 11 through 14, respectively,
of the Proxy Statement relating to the Company's Annual Meeting
of Shareholders to be held April 4, 1995, which are expressly
incorporated by reference.
Neither the report on executive compensation nor the
performance graph included in the Company's definitive Proxy
Statement relating to the Company's Annual Meeting of
Shareholders to be held on April 4, 1995, shall be deemed to be
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
See "Security Ownership of Certain Beneficial Owners and
Management" on pages 2 through 5 of the Company's definitive
Proxy Statement relating to the Company's Annual Meeting of
Shareholders to be held April 4, 1995, which section is
expressly incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See "Transactions Involving Management" on page 8 of
the Company's definitive Proxy Statement relating to the
Company's Annual Meeting of Shareholders to be held April 4,
1995, which section is expressly incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.
a) (1) Financial Statements
For a list of all financial statements
incorporated by reference in this Annual Report on
Form 10-K, see "Index to Financial Statements"
at Page 12.
a) (2) Financial Statement Schedules
All schedules for which provision is made in the
applicable accounting regulations of the
Securities and Exchange Commission are not required
under the related instructions or are
inapplicable and, therefore, have been omitted.
a) (3) Exhibits
Exhibits filed with this Annual Report on Form 10-K
are attached hereto. For a list of such exhibits,
see "Exhibit Index" beginning at page 14. The
following table provides certain information
concerning executive compensation plans and
arrangements required to be filed as exhibits to
this Annual Report on Form 10-K.
Executive Compensation Plans and Arrangements
Exhibit No. Description Location
----------- ----------- --------
10(a) Deferred Compensation Incorporated herein by reference to
Agreement dated November 16, Exhibit 6(g) to Peoples Delaware's
1976 between Robert E. Evans Registration Statement No. 2-68524
The Peoples Banking and on Form S-14.
Trust Company as amended
March 13, 1979.
10(b) Peoples BancorpInc. Incorporated herein by reference to
Retirement Savings Plan. Exhibit 10(b) of the Company's
Annual Report on Form 10-K for
fiscal year ended December 31, 1993
(File No. 0-16772).
10(d) Peoples BancorpInc. Incorporated herein by reference to
Retirement Plan and Trust. Exhibit 10(d) of the Company's
Annual Report on Form 10-K for
fiscal year ended December 31, 1993
(File No. 0-16772).
10(e) Summary of the Incentive Incorporated herein by reference to
Bonus Plan of Peoples Exhibit 10(f) of Peoples Delaware's
Bancorp Inc. Annual Report on Form 10-K for
fiscal year ended December 31, 1992
(File No 0-16772).
10(f) Peoples Bancorp Inc. Amended Incorporated herein by reference to
and Restated 1993 Stock Exhibit 4 of the Company's Form S-8
Option Plan. filed August 25, 1993 (Registration
Statement No. 33-67878).
(b) Reports on Form 8-K
There were no current reports on Form 8-K filed during the fiscal
quarter ended December 31, 1994.
(c) Exhibits
Exhibits filed with this Annual Report on Form 10-K are
attached hereto. For a list of such exhibits, see "Exhibit Index"
beginning at page 14.
(d) Financial Statement Schedules
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PEOPLES BANCORP INC.
Date: March 24, 1995 By: /s/ ROBERT E. EVANS
Robert E. Evans, President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Signatures Title Date
---------- ---------------------------- --------------
/s/ ROBERT E. EVANS President and ChiefExecutive March 24, 1995
Robert E. Evans Officer and Director
/s/ JEWELL BAKER Director March 24, 1995
Jewell Baker
___________________ Director March 24, 1995
Dennis D. Blauser
/s/ GEORGE W. BROUGHTON Director March 24, 1995
George W. Broughton
/s/ WILFORD D. DIMIT Director March 24, 1995
Wilford D. Dimit
/s/ BARTON S. HOLL Director March 24, 1995
Barton S. Holl
/s/ NORMAN J. MURRAY Director March 24, 1995
Norman J. Murray
/s/ JAMES B. STOWE Director March 24, 1995
James B. Stowe
/s/ PAUL T. THEISEN Director March 24, 1995
Paul T. Theisen
/s/ THOMAS C. VADAKIN Director March 24, 1995
Thomas C. Vadakin
/s/ JOSEPH H. WESEL Chairman of the Board March 24, 1995
Joseph H. Wesel and Director
/s/ JEFFREY D. WELCH Treasurer March 24, 1995
Jeffrey D. Welch (Principal Accounting Officer)
/s/ JOHN W. CONLON Chief Financial Officer March 24, 1995
John W. Conlon
PEOPLES BANCORP INC.
INDEX TO FINANCIAL STATEMENTS
Annual
Financial Statements: Report Pages
--------------------- ------------
Peoples Bancorp Inc. and Subsidiaries:
Report of Independent Accountants 30
Consolidated Balance Sheet as of
December 31, 1994 and 1993 12
Consolidated Statement of Income for
the Three Years Ended December 31, 1994 13
Consolidated Statement of Stockholders' Equity
for the Three Years Ended December 31, 1994 14
Consolidated Statement of Cash Flows for
the Three Years Ended December 31, 1994 15
Notes to the Consolidated Financial Statements 16 - 29
Peoples Bancorp Inc.: (Parent Company Only
Financial Statements are included in
Note 19 to the Financial Statements) 28 - 29
EXHIBIT INDEX
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1994
Exhibit
Number Description Exhibit Location
------- ------------------------ ---------------------------------------
3 (a) Amended Articles of Incororated herein by reference to
Incorporation of Peoples Exhibit 3(a) to the Company's
BancorpInc. Registration Statement on Form 8-B filed
July 20, 1993 (File No. 0-16772).
3 (b) Regulations of Peoples Incorporated herein by reference to
Bancorp Inc. Exhibit 3(b) to the Company's
Registration Statement on Form 8-B
filed July 20, 1993 (File No.
0-16772).
10 (a) Deferred Compensation Incorporated herein by reference to
Agreement dated November Exhibit 6(g) to Peoples Delaware's
16, 1976, between Robert Registration Statement No.2-68524
E. Evans and The Peoples on Form S-14.
Banking and TrustCompany
as amended March 13, 1979.
10 (b) Peoples Bancorp Inc. Incorporated herein by reference to
Retirement Savings Plan. Exhibit 10(b) of the Company's Annual
Report on Form 10-K for fiscal year
ended December 31, 1993
(File No.0-16772).
10 (c) Amended and Restated Loan Pages 16 to 19.
Agreement dated June 30,
1994, issued by the
Company in favor of Fifth
Third Bank.
10 (d) Peoples Bancorp Inc. Incorporated herein by reference to
Retirement Plan and Trust. Exhibit 10(d) of the Compnay's
Annual Report on Form 10-K for fiscal
year ended December 31, 1993
(File No. 0-16772).
10 (e) Summary of the Incentive Incorporated herein by reference
Bonus Plan Peoples to Exhibit 10(f) of Peoples Delaware's
Bancorp Inc. Annual Report on Form 10-K fiscal year
ended December 31, 1992
(File No. 0-16772).
10 (f) Peoples Bancorp Inc. Incorporated herein by reference
Amended and Restated 1993 to Exhibit 4 of the Company's Form
Stock Option Plan S-8 filed August 25, 1993
(Registration Statement No. 33-67878).
11 Computation of Earnings Page 20.
Per Share.
13 Peoples Bancorp Inc. Page 21.
Annual Report to
Shareholders for the
fiscal year ended
December 31, 1994 (not
deemed filed except for
portions thereof which are
specifically incorporated
by reference into this
Annual Report on
Form 10-K).
21 Subsidiaries of Peoples Page 66.
Bancorp Inc.
23 Consent of Independent Page 67.
Accountants.
27 Financial Data Schedule Page 68.
(information mandatory as
SEC EDGAR filer).
THE FOLLOWING INFORMATION IS PRESENTED AS THE PROXY STATEMENT
TO SHAREHOLDERS DATED MARCH 6, 1995.
PEOPLES BANCORP INC.
POST OFFICE BOX 738
MARIETTA, OHIO 45750
(614) 374 - 3155
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
PEOPLES BANCORP INC.
Marietta, Ohio
March 6, 1995
To the Shareholders of Peoples Bancorp Inc.:
You are cordially invited to attend the Annual Meeting of
Shareholders (the "Annual Meeting") of Peoples Bancorp Inc. (the
"Company") to be held at 10:00 a.m., local time, on Tuesday,
April 4, 1995, in the Conference Room of The Peoples Banking and
Trust Company, 235 Second Street, Marietta, Ohio, for the
following purposes:
1. To elect the following Directors for terms of three years each:
Nominee Term Expires In
------- ---------------
Robert E. Evans (for re-election) 1998
Paul T. Theisen (for re-election) 1998
Thomas C. Vadakin (for re-election) 1998
2. To approve the Peoples Bancorp Inc. 1995 Stock Option Plan.
3. To transact such other business as may properly come before
the Annual Meeting and any adjournment or adjournments thereof.
Shareholders of record at the close of business on February 1,
1995, will be entitled to notice of and to vote at the Annual
Meeting and any adjournment or adjournments thereof.
You are cordially invited to attend the Annual Meeting. The
vote of each shareholder is important, whatever the number of
common shares held. Whether or not you plan to attend the
Annual Meeting, please sign, date and return your Proxy promptly
in the enclosed envelope.
The Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1994, accompanies this Notice and Proxy Statement.
By Order of the Board of Directors,
/s/ RUTH I. OTTO
Ruth I. Otto
Corporate Secretary
PEOPLES BANCORP INC.
138 Putnam Street
Marietta, Ohio 45750
(614) 373-3155
PROXY STATEMENT
This Proxy Statement and the accompanying proxy are being
mailed to shareholders of Peoples Bancorp Inc., an Ohio
corporation (the "Company"), on or about March 6, 1995, in
connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") called to be
held on Tuesday, April 4, 1995, or at any adjournment or
adjournments thereof. The Annual Meeting will be held at 10:00
a.m., local time, in the Conference Room of The Peoples Banking
and Trust Company, 235 Second Street, Marietta, Ohio.
The Company has three wholly-owned subsidiaries. They include
The Peoples Banking and Trust Company ("Peoples Bank"), The
First National Bank of Southeastern Ohio ("First National") and
The Northwest Territory Life Insurance Company ("Northwest
Territory").
A proxy for use at the Annual Meeting accompanies this Proxy
Statement and is solicited by the Board of Directors of the
Company. Shareholders of the Company may use their proxies if
they are unable to attend the Annual Meeting in person or wish
to have their common shares of the Company voted by proxy even
if they do attend the Annual Meeting. Without affecting any
vote previously taken, any shareholder executing a proxy may
revoke it at any time before it is voted by filing with the
Secretary of the Company, at the address of the Company set
forth on the cover page of this Proxy Statement, written notice
of such revocation; by executing a later-dated proxy which is
received by the Company prior to the Annual Meeting; or by
attending the Annual Meeting and giving notice of such
revocation in person. Attendance at the Annual Meeting will
not, in and of itself, constitute revocation of a proxy.
Only shareholders of the Company of record at the close of
business on February 1, 1995 (the "Record Date"), are entitled
to receive notice of and to vote at the Annual Meeting and any
adjournment or adjournments thereof. At the close of business
on the Record Date, 2,897,846 common shares were outstanding and
entitled to vote. Each common share entitles the holder thereof
to one vote on each matter to be submitted to shareholders at
the Annual Meeting. A quorum for the Annual Meeting is a
majority of the common shares outstanding. There is no
cumulative voting with respect to the election of directors.
Under the rules of the Securities and Exchange Commission (the
"SEC"), boxes are provided on the form of proxy for shareholders
to mark if they wish either to abstain on a proposal presented
for shareholder approval or to withhold authority to vote for
one or more nominees for election as a director of the Company.
Common shares as to which the authority vote is withheld will be
counted for quorum purposes; however, the effect of an
abstention on the proposal to approve the Peoples Bancorp Inc.
1995 Stock Option Plan is the same as a "no" vote.
Broker/dealers, who hold their customers' common shares in
street name, may, under the applicable rules of the
self-regulatory organizations of which the broker/dealers are
members, submit and sign proxies for such common shares and may
vote such common shares on routine matters, which, under such
rules, typically include the election of directors, but
broker/dealers may not vote such common shares on other matters,
which typically include the approval of compensation plans,
without specific instructions from the customer who owns such
common shares. Proxies signed and submitted by broker/dealers
which have not been voted on certain matters as described in the
previous sentence are referred to as broker non-votes. Such
proxies count toward the establishment of a quorum. Broker
non-votes on the proposal to approve the Peoples Bancorp Inc.
1995 Stock Option Plan will not be considered as votes entitled
to be cast in determining the outcome of that proposal.
As of the date of this Proxy Statement, the Board of Directors
of the Company does not know of any business to be brought
before the Annual Meeting except as set forth in this Proxy
Statement. However, if any matters other than those referred to
in this Proxy Statement should properly come before such Annual
Meeting, or any adjournment or adjournments thereof, it is
intended that the persons named as proxies in the enclosed proxy
may vote the common shares represented by said proxy on such
matters in accordance with their best judgment in light of the
conditions then prevailing.
The Company will bear the costs of preparing and mailing this
Proxy Statement, the accompanying proxy and any other related
materials and all other costs incurred in connection with the
solicitation of proxies on behalf of the Board of Directors.
Proxies will be solicited by mail and may be further solicited,
for no additional compensation, by officers, directors, or
employees of the Company and its subsidiaries by further
mailing, by telephone, or by personal contact. The Company will
also pay the standard charges and expenses of brokerage houses,
voting trustees, banks, associations and other custodians,
nominees, and fiduciaries, who are record holders of common
shares not beneficially owned by them, for forwarding such
materials to and obtaining proxies from the beneficial owners of
common shares entitled to vote at the Annual Meeting.
The Annual Report to the Shareholders of the Company for the
fiscal year ended December 31, 1994 (the "1994 fiscal year") is
enclosed herewith.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, certain
information concerning the beneficial ownership of common shares
by the only person known to the Company to be the beneficial
owner of more than 5% of the outstanding common shares:
Name and Amount and Percent
Address of Nature of of
Beneficial Owner Beneficial Ownership Class<F1>
---------------- -------------------- ---------
Peoples Bank - Trustee 362,636(F2) 12.5%
138 Putnam Street
Marietta, Ohio 45750
[FN]
<F1> The percent of class is based on 2,897,846 common sharesoutstanding on
the Record Date.
<F2> Includes 107,159 common shares, 191,914 common shares, 55,843
common shares and 7,720 common shares as to which the Trust
Department of Peoples Bank has shared investment and sole voting
power, shared investment and voting power, sole voting and
investment power, and sole investment and shared voting power,
respectively. The officers and directors of Peoples Bank and
the Company disclaim beneficial ownership of these common shares
by reason of their positions. Does not include 98,935 common
shares held by the Trust Department in its capacity as Trustee
under the Peoples Bancorp Inc. Retirement Savings Plan with
respect to which the Trust Department has neither voting nor
investment power.
[/FN]
The following table sets forth, as of the Record Date, certain
information with respect to the common shares beneficially owned
by each director of the Company, by each nominee for election as
a director of the Company, by the executive officer of the
Company named in the Summary Compensation Table and by all
executive officers and directors of the Company as a group:
Amount and Nature of Beneficial Ownership<F1>
Common Shares
Common Which Can Be Acquired
Shares Upon Exercise of
Presently Options Eercisable Percent
Name Held Within 60 Days Total of Class<F2>
---- ---------- --------------------- ------ -----------
Jewell Baker 9,936 440 10,376 <F3>
Dennis D. Blauser 7,213<F4> 440 7,653 <F3>
George W. Broughton 39,692<F5> 420 40,112 1.4%
Wilford D. Dimit 3,942<F6> 440 4,382 <F3>
Robert E. Evans<F7> 47,799<F8> 4,000 51,799 1.8%
Barton S. Holl 3,838<F9> 440 4,278 <F3>
Norman J. Murray 3,726<F10> 440 4,166 <F3>
James B. Stowe 12,416<F11> 440 12,856 <F3>
Paul T. Theisen 8,110 440 8,550 <F3>
Thomas C. Vadakin 1,534<F12> 440 1,974 <F3>
Joseph H. Wesel 29,329<F13> 440 29,769 1.0%
All directors and
executive officers
as a group
(numbering 16) 178,618<F14> 17,430 196,048 6.8%
[FN]
<F1> Unless otherwise noted, the beneficial owner has sole voting and
investment power with respect to all of the common shares
reflected in the table. All fractional common shares have been
rounded to the nearest whole common share.
<F2> The percent of class is based upon 2,897,846 common shares
outstanding on the Record Date and the number of common shares,
if any, as to which the named person has the right to acquire
beneficial ownership upon the exercise of options exercisable
within 60 days of the Record Date.
<F3> Reflects ownership of less than 1% of the outstanding common shares.
<F4> Includes 5,358 common shares held jointly by Mr. Blauser with
his wife as to which he exercises shared voting and investment
power and 784 common shares held in an IRA owned by Mr. Blauser.
Does not include 2,933 common shares held of record and
beneficially owned by Mr. Blauser's wife as to which he has no
voting or investment power and disclaims beneficial ownership.
<F5> Does not include 5,856 common shares held of record and
beneficially owned by Mr. Broughton's wife. Also does not
include 8,664 common shares held in the George Broughton's
Children's Trust, an irrevocable trust with Peoples Bank as
Trustee. Peoples Bank exercises sole voting and investment
power with respect to the common shares held in the George
Broughton's Children's Trust and said common shares are included
among the common shares shown as beneficially owned by Peoples
Bank in the preceding table. Also does not include 9,076 common
shares held of record by the Broughton Foods Company Pension
Trust B, as to which Mr. Broughton has no voting or investment
power and disclaims beneficial ownership.
<F6> Includes 660 common shares held jointly by Mr. Dimit with his
wife as to which he exercises shared voting and investment
power.
<F7> Executive officer of the Company named in the Summary
Compensation Table.
<F8> Includes 8,613 common shares allocated to the account of Mr.
Evans in the Peoples Bancorp Inc. Retirement Savings Plan with
respect to which Mr. Evans has the power to direct the voting
and disposition. Does not include 5,980 common shares held of
record and owned beneficially by Mr. Evans' wife and 1,426
common shares held by Mr. Evans' wife as custodian for their
son, as to which common shares Mr. Evans has no voting or
investment power and disclaims beneficial ownership.
<F9> Includes 742 common shares held jointly by Mr. Holl with his
wife as to which he exercises shared voting and investment
power.
<F10> Does not include 7,452 common shares held of record and
beneficially owned by Mr. Murray's wife and 1,600 common shares
held of record and beneficially owned by Mr. Murray's daughter.
Mr. Murray has no voting or investment power with respect to
these common shares and disclaims beneficial ownership thereof.
<F11> Includes 4,954 common shares held jointly by Mr. Stowe with his
wife as to which he exercises shared voting and investment
power. Does not include 17,998 common shares held of record and
beneficially owned by Mr. Stowe's wife as to which he has no
voting or investment power and disclaims beneficial ownership.
<F12> Does not include 14,138 common shares held of record and
beneficially owned by Mr. Vadakin's wife and 2,178 common shares
held by Mr. Vadakin's wife as custodian for her son, as to which
common shares Mr. Vadakin has no voting or investment power and
disclaims beneficial ownership.
<F13> Does not include 6,062 common shares held of record and
beneficially owned by Mr. Wesel's wife as to which he has no
voting or investment power and disclaims beneficial ownership.
Does not include 10,286 common shares held of record by the
Marietta Ignition, Inc. Pension Plan as to which Mr. Wesel has
no voting or investment power and disclaims beneficial
ownership. Mr. Wesel serves as a member of the Administrative
Committee for the Marietta Ignition, Inc. Pension Plan. Peoples
Bank shares voting power with respect to the common shares held
in the Marietta Ignition, Inc. Pension Plan with the Plan
Administrator and said common shares are included among the
common shares shown as beneficially owned by Peoples Bank in the
preceding table.
<F14> Includes common shares held jointly by directors and executive
officers and other persons. Also includes 16,112 common shares
allocated to the respective accounts of executive officers of
the Company in the Peoples Bancorp Inc. Retirement Savings Plan.
See notes (4), (5), and (7) through (13) above.
[/FN]
To the Company's knowledge, based solely on a review of the
copies of the reports furnished to the Company and written
representations that no other reports were required, during the
1994 fiscal year, all filing requirements applicable to
officers, directors and greater than 10% beneficial owners of
the Company under Section 16(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), were complied with;
except that: 1) the Form 3, dated April 12, 1994, and filed on
behalf of George W. Broughton, a director of the Company,
inadvertently omitted 760 common shares held in his account with
a brokerage firm. The omission was reported as a Form 3 holding
on a Form 5, dated February 13, 1995, in which the number of
common shares reported was 1,520, reflecting the two for one
stock split of April 15, 1994; and 2) Rolland B. Swart, an
executive officer of the Company, left the reporting system
effective August 1, 1993, when he changed his position with the
Company and Peoples Bank, and was reported as such on a Form 5
dated February 10, 1994. Mr. Swart again changed his position
with the Company and Peoples Bank, and became subject to the
reporting system on September 16, 1994. However, his initial
Form 3 holdings were reported late in a Form 5 dated February
13, 1995.
ELECTION OF DIRECTORS
(Item 1 on Proxy)
In accordance with Section 2.02 of the Regulations of the
Company, three directors of Class III are to be elected to hold
office for terms of three years each, in each case until their
respective successors are duly elected and qualified. It is the
intention of the persons named in the accompanying proxy to vote
the common shares represented by the proxies received pursuant
to this solicitation for the nominees named below who have been
designated by the Board of Directors, unless otherwise
instructed on the proxy.
The following table gives certain information concerning each
nominee for election as a director of the Company. Unless
otherwise indicated, each person has held his principal
occupation for more than five years.
Position(s) Held For
With the Company and Director Term
its Subsidiaries and Continuously Expiring
Nominee Age Principal Occupation(s) Since In
------- --- ----------------------- ----- --
Robert E. Evans 54 President and Chief Executive 1980 1998
Officer of the Company and
of Peoples Bank; Chairman of
the Board of Northwest
Territory.<F1>
Paul T. Theisen 64 President and Shareholder of 1980 1998
Theisen, Brock, Frye, Erb
& Leeper Co., L.P.A.
Attorneys at Law, Marietta,
Ohio.<F2>
Thomas C. 63 President of Vadakin Inc., 1989 1998
Vadakin Marietta, Ohio, a heavy
industrial cleaning service;
Director, The Airolite
Company, Marietta, Ohio,
a manufacturer of ventilating
louvers.<F3>
[FN]
<F1> Mr. Evans is also a director of Peoples Bank, First National and
Northwest Territory.
<F2> Mr. Theisen is also a director of Peoples Bank and First National.
<F3> Mr. Vadakin is also a director of Peoples Bank.
[/FN]
While it is contemplated that all nominees will stand for
election, if one or more nominees at the time of the Annual
Meeting should be unavailable or unable to serve as a candidate
for election as a director, the proxies reserve full discretion
to vote the common shares represented by the proxies for the
election of the remaining nominees and for the election of any
substitute nominee or nominees designated by the Board of
Directors. The Board of Directors knows of no reason why any of
the above-mentioned persons will be unavailable or unable to
serve if elected to the Board.
Under Ohio law and the Company's Regulations, the three
nominees for election as Class III directors receiving the
greatest number of votes will be elected as directors.
The following table gives certain information concerning the
current directors who will continue to serve after the Annual
Meeting. Unless otherwise indicated, each person has held his
or her principal occupation for more than five years.
Position(s) Held For
With the Company and Director Term
its Subsidiaries and Continuously Expiring
Name Age Principal Occupation(s) Since In
---- --- ----------------------- ------------ --------
Jewell Baker 71 Co-Owner of B & N Coal 1990 1996
Company, Dexter City,
Ohio, a mining and
energy producer;
Director of First National
Bank of Caldwell from 1984
to 1989; Director of
First National from 1989
to 1990.
Dennis D. Blauser 69 President of Blauser Energy 1987 1996
Corp., Marietta, Ohio,
an oil and gas producer;
President of Blauser Well
Service, Inc., Marietta, Ohio,
a servicer of oil and gas
wells; Chairman of the Board
of Marietta Structures
Corporation, Marietta, Ohio,
a builder of bridge beams,
prestressed concrete beams and
pre-engineered siding for
buildings and industrial and
farm silos.
George W. 37 Director and Executive Vice 1994 1997
Broughton President/Sales and
Marketing, Broughton
Foods Co., a processor
and distributor of dairy
products; Director of
SBR, Inc., maker of
replacement windows and
owner of "Wood Crafters"
catalog and stores.<F1>
Wilford D. Dimit 61 President of First 1993 1997
Settlement, Inc., Marietta,
Ohio, a retail clothing
store and restaurant.<F1>
Barton S. Holl 71 Chairman of the Board of 1990 1997
Logan Clay Products, Inc.,
Logan, Ohio, a manufacturer
of clay products.
Norman J. Murray 77 Former President and Chairman 1980 1996
of the Board of The Airolite
Co., Marietta, Ohio, a
manufacturer of ventilating
louvers, retired in 1994;
Chairman of the Board of
Peoples Bank since 1990.<F1>
James B. Stowe 74 Chairman of the Board of 1980 1997
Stowe Truck and Equipment
Co., Marietta, Ohio, a
company which sells heavy
duty trucks and lawn and
garden equipment.<F1>
Joseph H. Wesel 65 Chairman and Chief Executive 1980 1996
Officer of Marietta
Automotive Warehouse, Inc.,
Marietta, Ohio, an
automotive parts wholesaler;
President of Auto Paints
Works Inc., Marietta, Ohio,
a wholesaler/ retailer of
auto paint and body shop
supplies; President of
W.D.A., Inc., Marietta, Ohio,
a real estate holding company;
Director, Marietta Ignition,
Inc., a wholesaler/retailer
of automotive parts and
industrial supplies;
Chairman of the Board of
the Company since 1991.<F1>
[FN]
<F1> Also a director of Peoples Bank.
[/FN]
There is no family relationship between any director, executive
officer, or person nominated or chosen to become a director or
executive officer of the Company.
The Board of Directors of the Company held a total of thirteen
(13) meetings during the Company's 1994 fiscal year. Each
incumbent director attended 75% or more of the aggregate of the
total number of meetings held by the Board of Directors during
the period he or she served as a director and the total number
of meetings held by all committees of the Board of Directors on
which he or she served during the period he or she served except
Jewell Baker (54%).
The Board of Directors of the Company has an Audit Committee
comprised of Jewell Baker, Dennis D. Blauser, George W.
Broughton, Wilford D. Dimit, Barton S. Holl, Norman J. Murray,
James B. Stowe and Joseph H. Wesel (Mr. Wesel serves as an
ex-officio member). The function of the Audit Committee is to
assist the Audit Department of the Company in the annual review
of the loan portfolio of each subsidiary bank, to review the
work schedule of the Audit Department as to when audits of the
subsidiaries are to be conducted and the adequacy of such
audits, to review the adequacy of the Company's system of
internal controls, to investigate the scope and adequacy of the
work of the Company's independent public accountants, and to
recommend to the Board of Directors a firm of accountants to
serve as the Company's independent public accountants. The
Audit Committee met five (5) times during the Company's 1994
fiscal year.
The Board of Directors of the Company has a Compensation
Committee comprised of Norman J. Murray, Paul T. Theisen, Thomas
C. Vadakin and Joseph H. Wesel. The function of the
Compensation Committee is to review and recommend for approval
by the Board of Directors salaries, bonuses, employment
agreements and employee benefit plans for officers and
employees, to supervise the operation of the Company's
compensation plans, to select those eligible employees who may
participate in each plan (where selection is required) and to
prescribe (where permitted under the terms of the plan) the
terms of any stock options granted under any stock option plan
of the Company. The Compensation Committee met two (2) times
during the Company's 1994 fiscal year.
The Board of Directors does not have a standing nominating
committee or committee performing similar functions.
TRANSACTIONS INVOLVING MANAGEMENT
Paul T. Theisen is President and a shareholder in the law firm
of Theisen, Brock, Frye, Erb & Leeper Co., L.P.A. which rendered
legal services to the Company and its subsidiaries during the
Company's 1994 fiscal year and is expected to render legal
services to the Company and its subsidiaries during the
Company's 1995 fiscal year.
During the Company's 1994 fiscal year, its subsidiaries,
Peoples Bank and First National, entered into banking
transactions, in the ordinary course of their respective
businesses, with certain executive officers and directors of the
Company, with members of their immediate families and with
corporations for which directors of the Company serve as
executive officers. It is expected that similar banking
transactions will be entered into in the future. Loans to such
persons have been made on substantially the same terms,
including the interest rate charged and the collateral required,
as those prevailing at the time for comparable transactions with
persons not affiliated with the Company or its subsidiaries.
These loans have been subject to, and are presently subject to,
no more than a normal risk of uncollectibility and present no
other unfavorable features, other than as described in the
following paragraph. The aggregate amount of loans to directors
and executive officers of the Company and their associates as a
group at December 31, 1994, was $5,929,531. As of the date
hereof, all of such loans are performing loans.
Included in the aggregate amount of loans to directors and
executive officers of the Company at December 31, 1994, were
$2,695,897 of loans to Dennis D. Blauser, one of the Company's
directors, and corporations with which he is associated, which
loans are considered by management to be potential problem
loans. In the ordinary course of business, Peoples Bank made
loans to Mr. Blauser and corporations of which he has direct
control. All loans are considered to be performing and current
as of the date hereof. The outstanding loan balances as of
December 31, 1994, to Mr. Blauser and his associated
corporations were as follows: Marietta Structures Corporation,
of which Mr. Blauser is Chairman of the Board, an aggregate of
$2,073,252 at interest rates ranging from 10.25% to 11.00%;
Blauser Well Service Inc., of which Mr. Blauser is President, an
aggregate of $51,599 at interest rates ranging from 6.75% to
9.75%; and Marietta Resources Corporation, of which Mr. Blauser
is President, $24,442 at an interest rate of 10.25%; and a
$476,000 line of credit extended to Mr. Blauser personally at an
interest rate of 9.75%. The remaining loan balances were
personal loans in the aggregate of $70,604.00 at an interest
rate of 9.75%. During the 1994 fiscal year, Mr. Blauser and the
above corporations made payments in the aggregate of $262,887 on
the outstanding loan balances. The largest aggregate amount of
indebtedness by Mr. Blauser and these corporations to Peoples
Bank during the 1994 fiscal year was $2,782,777.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of
the Company's previous filings under the Securities Act of 1933,
as amended, or the Exchange Act that might incorporate future
filings, including this Proxy Statement, in whole or in part,
this Report and the graph set forth on page 15 shall not be
incorporated by reference into any such filings.
In November of 1992, a sub-committee of the Executive Committee
of the Company's Board of Directors was given additional duties
by the Board to act as the Board's Compensation Committee (the
"Committee"). Prior to April 5, 1994, the members of the
Committee were Carl L. Broughton, Norman J. Murray, Paul T.
Theisen, and Joseph H. Wesel, none of whom are compensated
executive officers or employees of the Company or its
subsidiaries. In 1994, Thomas C. Vadakin was appointed to the
Committee to replace Carl L. Broughton, who retired April 5,
1994. Mr. Murray is Chairman of the Board of Peoples Bank and
Mr. Wesel is Chairman of the Board of the Company. The
Committee is to meet periodically to review and recommend for
approval by the Board of Directors salaries, bonuses, employment
agreements and employee benefits plans for officers and
employees, including executive officers of the Company. The
Committee also supervises the operation of the Company's
compensation plans, selects those eligible employees who may
participate in each plan (where selection is permitted) and
prescribes (where permitted under the terms of the plan) the
terms of any stock options granted under any stock option plan
of the Company.
Section 162(m) of the Internal Revenue Code of 1986, as
amended, prohibits a publicly held corporation, such as the
Company, from claiming a deduction on its federal income tax
return for compensation in excess of $1 million paid for a given
fiscal year to the chief executive officer (or person acting in
that capacity) at the close of the corporation's fiscal year and
the four most highly compensated officers of the corporation,
other than the chief executive officer, at the end of the
corporation's fiscal year. The $1 million compensation deduction
limitation does not apply to "performance-based compensation."
The proposed regulations issued by the Internal Revenue Service
under Section 162(m) on December 15, 1993, which were amended on
December 2, 1994 (the "Proposed IRS Regulations") set forth a
number of provisions which compensatory plans, such as the
Incentive Bonus Plan, the Peoples Bancorp Inc. 1993 Stock Option
Plan, and the proposed Peoples Bancorp Inc. 1995 Stock Option
Plan, must contain if the compensation paid under such plans is
to qualify as performance-based for the purposes of Section
162(m). In order to qualify as "performance-based" under the
proposed IRS Regulations, the compensation must be paid solely
on account of the attainment of one or more performance goals
set by a compensation committee comprised solely of two (2) or
more outside directors. The performance goals must be approved
by a majority of shareholders prior to payment of the
remuneration and the compensation committee must certify to the
satisfaction of the goals. Due to the fact that all executive
officers of the Company receive compensation at levels
substantially below the $1,000,000 deductibility limit, the
Committee does not propose at this time to present for
shareholder approval performance goals such as those provided in
the Incentive Bonus Plan discussed below. The Company has
determined that it is not necessary to modify the Peoples
Bancorp Inc. 1993 Stock Option Plan at this time since
compensation paid to executive officers under that Plan would be
exempted under the transition provisions of Section 162(m) and
the proposed IRS Regulations and, therefore, deductible. The
Company is seeking shareholder approval of the proposed Peoples
Bancorp Inc. 1995 Stock Option Plan in a good faith effort to
qualify compensation received thereunder as "performance-based"
for purposes of Section 162(m). If the Peoples Bancorp Inc.
1995 Stock Option Plan is not approved by the shareholders, that
Plan will be null and void. The Committee will rely from time
to time upon advice of the Company's General Counsel regarding
the appropriateness of presenting the Incentive Bonus Plan, or
any similar plan, to shareholders.
The Committee operates under the principle that the
compensation of executive officers should be directly and
significantly related to the financial performance of the
Company. The compensation philosophy of the Company reflects a
commitment to reward executive officers for performance through
cash compensation and through plans designed to enhance the
long-term commitment of officers and employees to the Company
and its subsidiaries. The cash compensation program for
executive officers consists of two elements, a base salary
component and an incentive component payable under the Incentive
Bonus Plan. The combination of base salary and incentive
compensation is designed to relate total cash compensation
levels to the performance of the Company, its subsidiaries and
the individual executive officer. The salaries of executive
officers of the Company, including Mr. Evans' salary, have
remained without substantial adjustment for a number of years,
except for limited increases reflecting cost of living rises and
special meritorious increases or adjustments reflecting
increased responsibilities and promotions. This philosophy was
reflected in Mr. Evans' 1994 base salary, which increased only
4.0% from the prior year. This adjustment was designed to
reflect cost of living increases. Primary reliance has been
placed on the Incentive Bonus Plan for compensation adjustments.
The Incentive Bonus Plan was established in 1988 for certain
senior officers of the Company and its subsidiaries, including
Mr. Evans and the other executive officers of the Company. The
purpose of the Plan is to base compensation, in part, on the
profit performance of the Company. Each year, in January, the
Committee establishes minimum levels of return on equity and net
income which must be met before any incentive bonus is paid. In
1994, the Incentive Bonus Plan required the attainment of a
minimum return on equity of 10.00%, a minimum return on assets
of 1.05%, and income growth based on the highest dollar net
income from either the preceding year or any of the four years
prior to 1994 increasing such year by a 5% compounding factor.
If such minimum levels are met, each officer receives an
incentive bonus equal to a predetermined percentage of salary,
based on the amount by which net income exceeds the minimum
level, up to an approximate maximum of 23% of salary.
Consequently, higher net income creates higher incentive
bonuses. The goals set for 1994 were exceeded and, based upon
the amount by which net income exceeded the minimum level, Mr.
Evans' incentive bonus was approximately 13.5% of his base
salary.
The Company's long-term compensation program consists primarily
of stock options granted under the Company's 1993 Stock Option
Plan (the "1993 Plan"). The Committee believes that stock
ownership by members of the Company's management and stock-based
performance compensation arrangements are important in aligning
the interests of management with those of shareholders,
generally in the enhancement of shareholder value. Options are
granted under the 1993 Plan with an exercise price equal to the
fair market value of the Company's common shares on the date of
grant. If there is no appreciation in the fair market value of
the Company's common shares, the options are valueless. The
Committee granted options based upon its subjective
determination of the relative current and future contribution
each officer has or may contribute to the long-term welfare of
the Company.
In addition to the 1993 Plan, on November 10, 1994, the
Committee approved a recommendation for the Board to adopt the
Peoples Bancorp Inc. 1995 Stock Option Plan (the "1995 Plan"),
included in this Proxy Statement as Annex A. The 1995 Plan,
which was adopted subject to shareholder approval, is designed
to further enhance the long-term compensation for contributions
made by employees of the Company. Incentive stock options will
be granted under the 1995 Plan with an exercise price equal to
the fair market value of the Company's common shares on the date
of grant. No determination has been made with respect to which
employees will be granted incentive stock options or how many
stock options will be granted to any particular employee.
In order to further enhance Mr. Evans' long-term commitment to
Peoples Bank, Peoples Bank entered in a Deferred Compensation
Agreement with him in 1976. Under this Agreement, Mr. Evans
agreed to serve Peoples Bank as an employee until he reaches age
65 or until his earlier retirement, disability or death and
agreed not to engage in activities in competition with Peoples
Bank. The amount of $5,000 is automatically accrued to Mr.
Evans' account upon the completion of each year of service to
Peoples Bank until he reaches normal retirement age.
At various times in the past, the Company has adopted certain
broad-based employee benefit plans in which the Company's
executive officers are permitted to participate on the same
terms as non-executive officer employees who meet applicable
eligibility criteria, subject to legal limitations on the
amounts that may be contributed or the benefits that may be
payable under the plans.
To enhance the long-term commitment of the officers and
employees of the Company and its subsidiaries, the Company
established the Peoples Bancorp Inc. Retirement Savings Plan
(the "Peoples 401(k) Plan") on December 31, 1985. Mr. Evans, as
well as all officers and employees of the Company and its
subsidiaries, may participate in the Peoples 401(k) Plan.
Company matching contributions and participant contributions may
be invested in common shares providing each participant with
motivation toward safe and sound long-term growth of the
Company. Company matching contributions may vary at the
discretion of the Board of Directors.
Submitted by the Compensation Committee of the Company's Board of Directors:
Norman J. Murray, Paul T. Theisen, Thomas C. Vadakin, and Joseph H. Wesel.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Carl L. Broughton, who served as Chairman of the Board of the
Company from 1988 to 1990, served as a member of the
Compensation Committee until his retirement from the Company's
Board of Directors on April 5, 1994. Norman J. Murray, Chairman
of the Board of Peoples Bank, also serves as a member of the
Compensation Committee. Joseph H. Wesel, Chairman of the Board
of the Company, also serves as a member of the Compensation
Committee. Paul T. Theisen, who is President and a shareholder
in the law firm of Theisen, Brock, Frye, Erb & Leeper Co.,
L.P.A. which rendered legal services to the Company and its
subsidiaries during the Company's 1994 fiscal year and is
expected to render legal services to the Company and its
subsidiaries during the Company's 1995 fiscal year, also serves
as a member of the Compensation Committee.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary of Cash and Certain Other Compensation
The following table shows for the last three fiscal years, the
cash compensation paid by the Company and its subsidiaries, as
well as certain other compensation paid or accrued for those
years, to Robert E. Evans, the Chief Executive Officer of the
Company and the only executive officer of the Company whose
total annual salary and bonus for the 1994 fiscal year exceeded
$100,000.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
------------
Awards
------
Securities
Name and Annual Compensation Underlying All Other
Principal Salary Bonus Options/SARs Compensation
Position Year ($)<F1> ($)<F2> (#)<F3> ($)<F4>
--------- ---- ------------------- ------------ ------------
Robert E. Evans, 1994 $175,680 $21,975 14,000 $7,931
President and 1993 $170,000 $32,605 4,000 $7,752
Chief Executive 1992 $162,975 $27,000 0 $6,324
Officer of the
Company and
of Peoples Bank
[FN]
<F1> "Salary" includes fees received by Mr. Evans for services
rendered during 1994, 1993 and 1992 as a director of the Company
and its subsidiaries in the amounts of $12,900, $13,500 and
$12,975, respectively.
<F2> All bonuses reported were earned by Mr. Evans pursuant to
the Incentive Bonus Plan of the Company (the "Incentive Bonus
Plan").
<F3> Represents options granted under the Peoples Bancorp Inc.
1993 Stock Option Plan. See the table under "OPTION GRANTS IN
LAST FISCAL YEAR" for more detailed information on such options.
<F4> "All Other Compensation" includes contributions of $2,931,
$2,752 and $1,324 to the Peoples Bancorp Inc. Retirement Savings
Plan (the "Peoples 401(k) Plan") on behalf of Mr. Evans to match
pre-tax elective deferral contributions (included under
"Salary") made by him to the Peoples 401(k) Plan in 1994, 1993
and 1992, respectively. "All Other Compensation" also includes
the amount of $5,000 for each of 1994, 1993 and 1992 which was
accrued for the account of Mr. Evans pursuant to the terms of a
Deferred Compensation Agreement between Mr. Evans and the
Company. See the discussion in "Deferred Compensation
Agreement."
[/FN]
Grant of Options
The following table sets forth information concerning
individual grants of options made under the Peoples Bancorp Inc.
1993 Stock Option Plan (the "1993 Plan") during the 1994 fiscal
year to the named executive officer. The Company has never
granted stock appreciation rights.OPTION GRANTS IN LAST FISCAL
YEAR
Potential
Realizable
Value at
Assumed Rates
Number of % of of Stock Price
Securities Total Options Appreciation
Underlying Granted to Exercise for Option
Options Employees in Price Expiration Term<F2>
Name Granted(#)<F1> Fiscal Year ($/Share) Date 5%($) 10%($)
---- -------------- ----------- --------- ---------- ------- -------
Robert
E. Evans 14,000 10.3% $23.375 11/10/04 $205,806 $521,552
[FN]
<F1> If Mr. Evans' employment with the Company and its
subsidiaries is terminated by reason of his retirement under the
provisions of any retirement plan of the Company or any
subsidiary or by reason of permanent disability, the options may
be exercised in full for a period of three months following the
date of retirement or permanent disability, subject to the
stated term of the options. If Mr. Evans' employment is
terminated by reason of his death while an employee of the
Company and/or a subsidiary, the options may be exercised in
full for a period of one year, subject to the stated term of the
options. If Mr. Evans' employment is terminated for any other
reason, his options will be forfeited.
<F2> The amounts reflected in this table represent certain
assumed rates of appreciation only. Actual realized values, if
any, on option exercises will be dependent on the actual
appreciation of the common shares of the Company over the term
of the options. There can be no assurances that the Potential
Realizable Values reflected in this table will be achieved.
[/FN]
Option Exercises and Holdings
The following table sets forth information with respect to
unexercised options held as of the end of the 1994 fiscal year
by the named executive officer. No options were exercised
during the 1994 fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
Number Number of
of Securities Securities Underlying Value of Unexercised
Underlying Unexercised Options at In-the-Money Options
Options Value FY-End(#) at FY-End($)<F1><F2>
--------------------------- ---------------------------
Name Exercised Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- --------- ----------- ----------- ------------- ----------- -------------
Robert E. Evans 0 n/a 4,000 14,000 $26,000 $8,750
<FN>
<F1> All values as shown are pre-tax.
<F2> "Value of Unexercised In-the-Money Options at FY-End" is
based upon the fair market value of the Company's common shares
on December 31, 1994 ($24.00) less the exercise price of
in-the-money options at the end of the 1994 fiscal year.
</FN>
Pension Plan
The following table shows the estimated annual pension benefits
payable upon retirement at age 65 on a lifetime annuity basis
under the Peoples Bancorp Inc. Retirement Plan, a funded,
noncontributory pension plan (the "Pension Plan"), to a covered
participant in specified compensation and years of service
classifications.
PENSION PLAN TABLE
Years of Service
---------------------------------------------------
Compensation 15 20 25 30 35
$125,000 $33,687 $44,916 $56,145 $67,374 $67,374
150,000 40,812 54,416 68,020 81,624 81,624
175,000 47,937 63,916 79,895 95,874 95,874
200,000 55,062 73,416 91,770 110,124 110,124
225,000 62,187 82,916 103,645 124,374 124,374
250,000 65,276 87,035 108,794 130,553 130,553
Benefits listed in the Pension Plan Table are not subject to
deduction for Social Security benefits or other amounts and are
computed on a lifetime annuity basis.
Monthly benefits upon normal retirement (age 65) are based upon
40% of "average monthly compensation" plus 17% of the excess, if
any, of "average monthly compensation" over "covered
compensation." For purposes of the Pension Plan, "average
monthly compensation" is based upon the monthly compensation
(including regular salary and wages, overtime pay, bonuses and
commissions) of an employee averaged over the five consecutive
credited years of service which produce the highest monthly
average within the last ten years preceding retirement and
"covered compensation" is the average of the 35 years of social
security wage bases prior to social security retirement age
("covered compensation" for Robert E. Evans as of the end of the
1994 fiscal year was $42,996.)
1994 annual compensation, to the extent determinable, for
purposes of the Pension Plan for Mr. Evans was $175,680. As of
the end of 1994 fiscal year, Mr. Evans had 24 credited years of
service.
Deferred Compensation Agreements
On November 18, 1976, Peoples Bank entered into a Deferred
Compensation Agreement with Mr. Evans and an executive officer
since retired. Under this Deferred Compensation Agreement, Mr.
Evans agreed to serve Peoples Bank as an employee until he
reaches age 65 or until his earlier retirement, disability or
death and agreed not to engage in activities in competition with
Peoples Bank. Under this Agreement, Mr. Evans or his
beneficiaries are entitled to receive specified amounts upon Mr.
Evans' retirement, disability or death, which amounts are
payable monthly for ten years (with interest) or in one lump sum
at the election of Peoples Bank. The principal amount payable
to Mr. Evans is based upon the sum of the amount accrued for his
account during his years of employment with Peoples Bank.
During the Company's 1994 fiscal year, the amount of $5,000 was
accrued for Mr. Evans' account pursuant to his Deferred
Compensation Agreement and as of December 31, 1994, a total of
$105,000 had been accrued to his account. The amount of $5,000
will be accrued to Mr. Evans' account upon the completion of
each year of service to Peoples Bank until he reaches normal
retirement age.
Directors' Compensation
Each director of the Company receives $400 per calendar quarter
and $250 for each meeting attended.
Effective January 1, 1991, the Company established the Peoples
Bancorp Inc. Deferred Compensation Plan for Directors (the
"Directors Deferred Compensation Plan"). Voluntary
participation in the Directors Deferred Compensation Plan
enables a director of the Company, or of one of its
subsidiaries, to defer all or a part of his or her director's
fees, including federal income tax thereon. Such deferred fees
earn interest as provided in the Directors Deferred Compensation
Plan. Distribution of the deferred funds is paid in a lump sum
or annual installments beginning in the first year in which the
person is no longer a director.
Directors, other than those employed by the Company (the
"Non-Employee Directors"), are automatically granted options
under the 1993 Plan on the date they are first elected or
appointed as a director of the Company to purchase 1,100 common
shares at an option price equal to 100% of the fair market value
of the common shares on the date of grant. In addition, every
other year at the Board meeting immediately following the annual
shareholders meeting, commencing in 1993, all Non-Employee
Directors then serving on the Board of Directors, other than a
Non-Employee Director who was first elected as a director at
such annual shareholders meeting or first appointed as a
director at the Board meeting immediately following such annual
shareholders meeting will receive an automatic grant of options
to purchase 1,100 common shares; provided that the number of
common shares subject to options granted to Non-Employee
Directors who have not served a full two years on the Board will
be prorated such that those Non-Employee Directors will receive
options to purchase only a percentage of 1,100 common shares
commensurate with the actual portion of the two years that such
Non-Employee Directors served on the Board. Options granted to
Non-Employee Directors have terms of ten years and become
exercisable with respect to 20% of the common shares subject
thereto on the date of grant and 20% on each of the first,
second, third and fourth anniversaries of the date of grant. If
a Non-Employee Director ceases to be a director for reasons
other than his or her death, the options may be exercised for a
period of three months, subject to the stated term of the
options. If a Non-Employee Director ceases to be a director by
reason of his or her death, the options may be exercised for a
period of one year, subject to the stated term of the options.
If the Peoples Bancorp Inc. 1995 Stock Option Plan is approved
by the shareholders, Non-employee Directors will be
automatically granted options in accordance with the terms of
that Plan. See the discussion in "PROPOSAL TO APPROVE THE
PEOPLES BANCORP INC. 1995 STOCK OPTION PLAN."
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change
in the Company's cumulative total shareholder return (as
measured by dividing (i) the sum of (A) the cumulative amount of
dividends for the measurement period, assuming dividend
reinvestment, and (B) the difference between the price of the
Company's common shares at the end and the beginning of the
measurement period; by (ii) the price of the Company's common
shares at the beginning of the measurement period) against the
cumulative return for an index for NASDAQ Stock Market (U.S.
Companies) comprised of all domestic common shares traded on the
NASDAQ National Market System and the NASDAQ Small-Cap Market
and an index for NASDAQ Bank Stocks comprised of all depository
institutions (SIC Code #602) and depository institutions holding
companies (SIC Code #671) that are traded on the NASDAQ National
Market System and the NASDAQ Small-Cap Market ("NASDAQ Bank
Stocks"), for the five-year period ended December 31, 1994.
THE FOLLOWING FIGURES REPRESENT THE NUMBERS GRAPHED IN THE
PERFORMANCE GRAPH INCLUDED IN THE PRINTED VERSION OF THE PEOPLES
BANCORP INC. PROXY STATMENT. UNDER EDGAR RULES, PEOPLES BANCORP
INC. INCORPORATES THIS GRAPH AS THE TABLE OF NUMBERS PRESENTED
BELOW:
Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31
1989 1990 1991 1992 1993 1994
Peoples Bancorp Inc. $100.00 $97.73 $122.73 $169.36 $215.27 $253.86
NASDAQ Bank Stocks $100.00 $73.23 $120.17 $174.87 $199.29 $198.69
NASDAQ (U.S.
Companies) $100.00 $84.92 $136.28 $158.58 $180.93 $176.92
Notes: 1. Total return assumes reinvestment of dividends.
2. Fiscal Year Ending December 31.
3. Return based on $100 dollars invested on December 31, 1989
in Peoples Bancorp common stock, an index for NASDAQ Stock
Market (U. S. Companies), and NASDAQ Bank Stocks.
PROPOSAL TO APPROVE THE PEOPLES BANCORP INC. 1995 STOCK OPTION PLAN
(Item 2 on Proxy)
On November 10, 1994, the Stock Option and Compensation
Committee of the Company adopted, subject to the approval by the
Board of Directors and the shareholders, the Peoples Bancorp
Inc. 1995 Stock Option Plan (the "1995 Plan"). The Board of
Directors of the Company subsequently adopted the 1995 Plan on
January 16, 1995, subject to approval by the shareholders. The
text of the 1995 Plan is set forth in Annex A to this Proxy
Statement. THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE APPROVAL OF THE 1995 PLAN.
The Company also maintains the Peoples Bancorp Inc. 1993 Stock
Option Plan (the "1993 Plan") under which non-qualified stock
options ("Non-qualified Options") and incentive stock options
("ISOs") (ISOs and Non-qualified Options are referred to
collectively as "Options") may be granted to Non-employee
Directors and key employees of the Company and its subsidiaries.
As of February 21, 1995, a total of 32,000 common shares
remained available for the grant of Options. The Board believes
that the number of common shares remaining available for the
grant of new ISOs under the 1993 Plan is not sufficient to
enable the Company to issue stock option grants, which the
Company expects to make over the next several years. The Board
also believes that the Company should have the flexibility to
grant Options to meet competitive conditions and the particular
circumstances of the individuals who may be eligible to receive
Options. For these reasons, the Board is recommending the
adoption of the 1995 Plan which will make an additional 100,000
common shares available to be reserved for issuance of Options.
The purpose of the 1995 Plan is to advance the interests of the
Company (a) by providing material incentive for the continued
services of those key employees of the Company and its
subsidiaries and the directors of the Company and its
subsidiaries who make significant contributions toward the
Company's success and development by encouraging those key
employees and directors to increase their proprietary interest
in the Company and (b) by attracting new able executives to
employment with the Company and its subsidiaries or to serve as
directors of the Company, or one or more of the subsidiaries of
the Company. To accomplish the purpose, the 1995 Plan
authorizes the grant of ISOs as defined by Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and
Non-qualified Options.
The 1995 Plan authorizes the granting of Options with respect
to 100,000 common shares. If there is any change in the common
shares resulting from a stock split, stock dividend, combination
or exchange of shares or other similar capital adjustment, the
number of common shares available for the grant of Options under
the 1995 Plan, the number of common shares subject to
outstanding Options and the option price of outstanding Options
will be proportionately adjusted to reflect the same. The
100,000 common shares reserved for issuance under the 1995 Plan
represent approximately 3.45% of the outstanding common shares
as of the Record Date. On February 21, 1995, the last reported
sales price of the common shares on the NASDAQ National Market
System was $23.125.
The common shares covered by the 1995 Plan may be either
authorized but unissued shares or treasury shares. If any
outstanding Option under the 1995 Plan for any reason expires or
is terminated without having been exercised in full, the Common
Shares allocable to the unexercised portion of such Option will
(unless the 1995 Plan has been terminated) become available for
subsequent grants of Options under the 1995 Plan.
The following summary of certain provisions of the 1995 Plan is
qualified in its entirety by reference to the copy of the 1995
Plan attached hereto as Annex A.
Administration
The 1995 Plan will be administered by a Stock Option and
Compensation Committee (the "Stock Option Committee") consisting
of not less than three directors of the Company appointed from
time to time by the Board of Directors. Each Stock Option
committee member must be a "disinterested person" within the
meaning of Rule 16b-3 under the Exchange Act and must qualify as
an "outside director" within the meaning of Section 162(m) of
the Code. The Stock Option Committee will grant Options under
the 1995 Plan, interpret the 1995 Plan and make all
determinations necessary for the administration of the 1995
Plan. The Stock Option Committee will have no discretion to
determine who will be eligible for the grant of Non-qualified
Options to Non-employee Directors, Subsidiary Directors (i.e.,
directors of one or more of the Company's subsidiaries who are
neither a director of the Company nor an employee of the Company
or any of its subsidiaries), or Acquisition Subsidiary Directors
(i.e., directors of a corporation which is acquired directly by
the Company and, thereafter, becomes a subsidiary of the
Company), to set the number of Non-qualified Options granted to
any Non-employee Director, Subsidiary Director, or Acquisition
Subsidiary Director, to set the number of common shares subject
to Non-qualified Options granted to any Non-employee Director,
Subsidiary Director, or Acquisition Subsidiary Director, or to
set the date and circumstances of grant of Non-qualified Options
to Non-employee Directors, Subsidiary Directors, or Acquisition
Subsidiary Directors, the term of such Non-qualified Options,
the period within such Non-qualified Options may be exercised or
the exercise price of such Non-qualified Options.
Eligibility
Officers and other key employees of the Company and its
subsidiaries (including the executive officer named in the
Summary Compensation Table) selected by the Stock Option
Committee will be eligible to receive ISOs under the 1995 Plan.
Non-employee Directors, Subsidiary Directors, or Acquisition
Subsidiary Directors will also be participants in the 1995 Plan
solely for the purposes of receiving certain Non-qualified
Options (see discussion on page 22). There are currently ten
Non-employee Directors of the Company, ten Subsidiary Directors
who do not also serve on the Board of the Company, and no
Acquisition Subsidiary Directors.
In addition to the limits imposed on common shares covered by
Non-qualified Options granted to Non-employee Directors,
Subsidiary Directors, and Acquisition Subsidiary Directors (see
discussion beginning on page 19), no key employee may be granted
ISOs covering, in the aggregate, more than 25,000 common shares
during the period in which the 1995 Plan remains in effect. The
1995 Plan also provides that the aggregate fair market value
(determined as of the time an ISO is granted) of the common
shares with respect to which ISOs may become exercisable for the
first time by any individual during any calendar year (under all
option plans of the Company and its subsidiaries) may not exceed
$100,000. It is currently estimated that the group of employees
eligible to receive ISOs under the 1995 Plan will approximate
twenty-five persons, with appropriate adjustments for any
significant change in the size or operations of the Company and
its subsidiaries in the future.
Of the 100,000 common shares which may be issued under the 1995
Plan, an aggregate of 30,000 common shares will be issuable to
Non-employee Directors, Subsidiary Directors, and Acquisition
Subsidiary Directors. The remaining 70,000 common shares will
be issuable to key employees as ISOs under the terms of the 1995
Plan. In the event the entire 30,000 common shares have not
been issued to Non-employee Directors, Subsidiary Directors, and
Acquisition Subsidiary Directors, prior to the date of the 1999
Annual Meeting, that portion of the 30,000 common shares not
covered by the Non-qualified Options so granted may be the
subject of ISOs to be granted to key employees under the terms
of the 1995 Plan.
Other than Non-qualified Options to be granted to Non-employee
Directors and Subsidiary Directors, no determination has been
made under the 1995 Plan regarding the individual identity of
the persons to whom Options may be granted or the number of
common shares which may be allocated to any specific person or
persons.
Duration
Any grant of an Option under the 1995 Plan must be made before
January 19, 2005.
Terms of Options
The exercise price of any Option granted under the 1995 Plan
may not be less than 100% of the fair market value of the common
shares on the date of grant. Fair market value is defined for
purposes of the 1995 Plan to mean the last reported sales price
of a common share on the NASDAQ National Market System or on any
securities exchange on which the common shares may be listed.
No ISO or Non-qualified Option may be exercised after the
expiration of ten years from the date it is granted.
Under the 1995 Plan, no employee will be eligible to receive an
ISO if, at the time of grant, such employee owns of record and
beneficially more than 10% of the total combined voting power of
all classes of stock of the Company or any subsidiary of the
Company unless the exercise price is at least 110% of the fair
market value of the common shares covered by the ISO on the date
of grant and the option term does not exceed five years.
Payment of the exercise price may be made in cash, in common
shares already owned by the participant having a fair market
value on the exercise date equal to the exercise price of the
common shares covered by the Option, or a combination of common
shares and cash, equal in the aggregate to the exercise price
for the common shares covered by the Option. No Option may be
exercised until a period of at least six months has elapsed
since the date of grant.
No Option granted under the 1995 Plan will be assignable or
transferable except, in the event of the death of a participant,
by his will or by laws of descent and distribution. Options are
generally exercisable only by the participant. ISOs awarded to
key employees under the Plan will be exercisable at such times
and will be subject to such restrictions and conditions
including the performance of a minimum period of service as the
Committee may impose at the time of grant of such ISOs;
provided, however, that if the Committee does not specify
another vesting schedule at the time of grant, each ISO will
become exercisable as follows: (i) with respect to 25% of the
common shares covered thereby after 24 months of continuous
employment by the Company and/or one or more subsidiaries; (ii)
with respect to an additional 25% of the common shares covered
thereby after 36 months of continuous employment by the Company
and/or one or more subsidiaries; (iii) with respect to an
additional 25% of the common shares covered thereby after 48
months of continuous employment by the Company and/or one or
more subsidiaries; and (iv) with respect to an additional 25% of
the common shares covered thereby after 60 months of continuous
employment by the Company and/or one or more subsidiaries. If a
key employee does not purchase in any one year the full number
of common shares which may be purchased with his then
exercisable ISOs, such key employee may purchase those common
shares in any subsequent year during the term of the ISOs.
If a key employee's employment with the Company and its
Subsidiaries terminates for any reason other than (i) death of
the key employee, (ii) the disability of the key employee within
the meaning of Section 22(e)(3) of the Code, (iii) the
retirement of the key employee under the provisions of any
retirement plan of the Company or any Subsidiary, or (iv) any
reason (other than for Cause, as defined in the 1995 Plan) after
the key employee has been employed by the Company and/or one or
more Subsidiaries for at least 10 consecutive years prior to the
key employee's termination of employment, the portion of all
ISOs granted under the 1995 Plan to such key employee which are
not otherwise exercisable will terminate effective immediately
upon termination of employment. If the termination of
employment of the key employee was due to retirement under the
provisions of any retirement plan of the Company or any
Subsidiary or if the termination of employment was due to a
reason other than for Cause and the key employee had been
employed by the Company and/or one or more Subsidiaries for at
least 10 consecutive years prior to the key employee's
termination of employment, all of such key employee's ISOs may
be exercised in full, whether or not then exercisable, and the
right of the key employee to exercise the ISOs will terminate
upon the earlier to occur of the expiration of the term of the
ISOs or three months after the date of termination of
employment. If the termination of employment was due to the
death of a key employee who was an employee of the Company
and/or any Subsidiary at the time of his death, such ISOs may be
exercised in full, whether or not then exercisable as defined by
the 1995 Plan, `and the right of the representative or
representatives of the key employee's estate (or the person or
persons who acquire (by bequest or inheritance) the right to
exercise the key employee's ISOs) to exercise the ISOs will
terminate upon the earlier to occur of the expiration of the
term of the ISOs or one year after the date of death of the key
employee. If the termination of employment was due to the
disability of the key employee within the meaning of Section
22(e)(3) of the Code, such ISOs may be exercised in full,
whether or not then exercisable, and the right of the key
employee to exercise the ISOs will terminate upon the earlier to
occur of the expiration of the term of the ISOs or one year
after the date of termination of employment. If the termination
of employment of the key employee was due to reasons other than
for Cause and the key employee had not been employed by the
Company and/or one or more Subsidiaries for at least 10
consecutive years prior to the key employee's termination of
employment, the key employee's ISOs may be exercised only to the
extent then exercisable on the date of termination of
employment, and the right of the key employee to exercise the
ISOs will terminate upon the earlier to occur of the expiration
of the term of the ISOs or three months after the date of
termination of employment. If the termination of employment of
the key employee was for Cause, all ISOs which have not been
exercised as of the date of termination of employment will
terminate immediately as of the date of termination of
employment.
Each Non-employee Director then serving on the Company's Board
and who has served on the Board and/or the Board's of a
Subsidiary of the Company (a "Subsidiary Board") for all or a
portion of at least the five calendar years immediately
preceding the January 1 immediately prior to the date of grant,
will automatically be granted a Non-qualified Option for 750
common shares effective on the date of the 1995 Annual Meeting
in accordance with the Regulations of the Company (the "1995
Annual Meeting") and for 750 common shares effective on the date
on which the annual meeting of the Company's shareholders is
held in 1997 in accordance with the Regulations of the Company
(the "1997 Annual Meeting"). Each Non-Employee Director then
serving on the Company's Board and who has served on the Board
and/or a Subsidiary Board for fewer than the five calendar years
(including all or any portion of any such year) immediately
preceding the January 1 immediately prior to the date of grant,
will automatically be granted a Non-qualified Option for 150
common shares plus 150 common shares for all or any portion of
each calendar year preceding the date of grant during which such
Non-Employee Director has served on the Board and/or a
Subsidiary Board as of such January 1 effective on the date of
each of the 1995 Annual Meeting and the 1997 Annual Meeting.
Any individual who was not a member of the Company's Board on
the date of the 1995 Annual Meeting, (i) who is subsequently
appointed or elected to the Board at least six months prior to
the date on which the annual meeting of the Company's
shareholders is to be held in 1996 in accordance with the
Regulations of the Company (the "1996 Annual Meeting") will
automatically be granted a Non-qualified Option on the date of
such appointment or election for the same number of common
shares as such individual would have received if he had been a
member of the Board on the date of the 1995 Annual Meeting; (ii)
who is subsequently appointed or elected to the Board less than
six months prior to the date of the 1996 Annual Meeting but
prior to such 1996 Annual Meeting will automatically be granted
a Non-qualified Option on the date of such appointment or
election for 75% of the number of common shares which such
individual would have received if he had been a member of the
Board on the date of the 1995 Annual Meeting; (iii) who is
subsequently appointed or elected to the Board on or after the
date of the 1996 Annual Meeting but at least six months prior to
the date of the 1997 Annual Meeting will automatically be
granted a Non-qualified Option on the date of such appointment
or election for 50% of the number of common shares which such
individual would have received if he had been a member of the
Board on the date of the 1995 Annual Meeting; and (iv) who is
subsequently appointed or elected to the Board less than six
months prior to the 1997 Annual Meeting but prior to such 1997
Annual Meeting will automatically be granted a Non-qualified
Option on the date of such appointment or election for 25% of
the common shares which such individual would have received if
he had been a member of the Board on the date of the 1995 Annual
Meeting. Any individual who was not a member of the Board on
the date of the 1997 Annual Meeting and who is subsequently
appointed or elected to the Board prior to the date on which the
annual meeting of the Company's shareholders is to be held in
1999 in accordance with the Regulations of the Company (the
"1999 Annual Meeting") will automatically be granted a
Non-qualified Option on the same basis as described in the
immediately preceding sentence. Any individual who was serving
as a Subsidiary Director or as an Acquisition Subsidiary
Director and is subsequently appointed or elected as a
Non-employee Director after the date of the 1995 Annual Meeting
but prior to the date of the 1997 Annual Meeting, or after the
date of the 1997 Annual Meeting but prior to the date of the
1999 Annual Meeting, as the case may be, and who is to be
granted a Non-qualified Option pursuant to either of the two
immediately preceding sentences, will have deducted from the
number of common shares to be covered by the Non-qualified
Option granted to him as a Non-employee Director, the number of
common shares covered by any Non-qualified Option which he
received as a Subsidiary Director or an Acquisition Subsidiary
Director. Each Non-qualified Option granted to a Non-employee
Director shall have an exercise price equal to 100% of the fair
market value of the common shares on the date of the grant of
such Non-qualified Option. If a Non-employee Director ceases to
be a director of the Company for any reason other than his death
or for Cause (as defined in the 1995 Plan), the Non-qualified
Options granted to him under the 1995 Plan may be exercised in
full, whether or not then exercisable by their terms, on or
before the expiration of the term of the Non-qualified Options;
provided, however, that if the former Non-employee Director
shall die prior to the expiration of the term of the
Non-qualified Options, such Non-qualified Options may only be
exercised on or before the earlier of the expiration of such
term or two years following the date of death. If a
Non-employee Director ceases to be a director of the Company
because of his death, such Non-qualified Options may be
exercised in full, whether or not then exercisable by their
terms, only on or before the earlier of the expiration of the
term of the Non-qualified Options or two years following the
date of death. If a Non-employee Director ceases to be a
director of the Company and/or any subsidiary for Cause, all of
his then unexercised Non-qualified Options shall immediately
terminate.
Each Subsidiary Director then serving on a Subsidiary Board and
who has served on a Subsidiary Board and/or the Company's Board
for all or a portion of at least the five calendar years
immediately preceding the January l immediately prior to the
date of grant, shall automatically be granted a Non-qualified
Option for 375 common shares effective on the date of the 1995
Annual Meeting and for 375 common shares effective on the date
of the 1997 Annual Meeting. Each Subsidiary Director then
serving on a Subsidiary Board and who has served on a Subsidiary
Board and/or the Company's Board for fewer than the five
calendar years (including all or any portion of any such year)
immediately preceding the January 1 immediately prior to the
date of grant shall automatically be granted a Non-qualified
Option for 75 common shares plus 75 common shares for all or any
portion of each calendar year preceding the date of grant during
which such Subsidiary Director has served on a Subsidiary Board
and/or the Company's Board as of such January 1, effective on
the date of each of the 1995 Annual Meeting and the 1997 Annual
Meeting. Any individual who was not a member of a Subsidiary
Board on the date of the 1995 Annual Meeting, (i) who is
subsequently appointed or elected to a Subsidiary Board at least
six months prior to the date of the 1996 Annual Meeting will
automatically be granted a Non-qualified Option on the date of
such appointment or election for the same number of common
shares as such individual would have received if he had been a
member of the Subsidiary Board on the date of the 1995 Annual
Meeting; (ii) who is subsequently appointed or elected to a
Subsidiary Board less than six months prior to the date of the
1996 Annual Meeting but prior to such 1996 Annual Meeting will
automatically be granted a Non-qualified Option on the date of
such appointment or election for 75% of the number of common
shares which such individual would have received if he had been
a member of the Subsidiary Board on the date of the 1995 Annual
Meeting; (iii) who is subsequently appointed or elected to a
Subsidiary Board on or after the date of the 1996 Annual Meeting
but at least six months prior to the date of the 1997 Annual
Meeting will automatically be granted a Non-qualified Option on
the date of such appointment or election for 50% of the number
of common shares which such individual would have received if he
had been a member of the Subsidiary Board on the date of the
1995 Annual Meeting; and (iv) who is subsequently appointed or
elected to a Subsidiary Board less than six months prior to the
1997 Annual Meeting but prior to such 1997 Annual Meeting will
automatically be granted a Non-qualified Option on the date of
such appointment or election for 25% of the common shares which
such individual would have received if he had been a member of
the Subsidiary Board on the date of the 1995 Annual Meeting.
Any individual who was not a member of a Subsidiary Board on the
date of the 1997 Annual Meeting and who is subsequently
appointed or elected to a Subsidiary Board prior to the date of
the 1999 Annual Meeting will automatically be granted a
Non-qualified Option on the same basis as described in the
immediately preceding sentence. Each Non-qualified Option
granted to a Subsidiary Director shall have an exercise price
equal to 100% of the fair market value of the common shares on
the date of the grant of such Non-qualified Option. If a
Subsidiary Director ceases to be a director of a Subsidiary
and/or the Company for any reason other than his death or for
Cause, the Non-qualified Options granted to him under the 1995
Plan may be exercised in full, whether or not then exercisable
by their terms, on or before the expiration of the term of the
Non-qualified Options; provided, however, that if the former
Subsidiary Director shall die prior to the expiration of the
term of the Non-qualified Options, such Non-qualified Options
may be exercised only on or before the earlier of the expiration
of such term or two years following the date of death. If a
Subsidiary Director ceases to be a director of a Subsidiary
and/or the Company because of his death, such Non-qualified
Options may be exercised in full, whether or not then
exercisable by their terms, only on or before the earlier of the
expiration of the term of the Non-qualified Options or two years
following the date of death. If a Subsidiary Director ceases to
be a director of a Subsidiary and/or the Company for Cause, all
of his then unexercised Non-qualified Options shall immediately
terminate.
If the Company directly acquires a corporation such that such
corporation then becomes a subsidiary of the Company (an
"Acquisition Subsidiary"), each Acquisition Subsidiary Director
then serving on the board of directors of the Acquisition
Subsidiary (the "Acquisition Board") and who has served on the
Acquisition Board for all or a portion of at least the five
calendar years immediately preceding the January 1 immediately
prior to the date of grant will automatically be granted a
Non-qualified Option for 375 common shares on the effective date
of the acquisition of the Acquisition Subsidiary by the Company
(the "Acquisition Date") and each Acquisition Subsidiary
Director then serving on the Acquisition Board and who has
served on the Acquisition Board for all or a portion of at least
the five calendar years immediately preceding the January 1
immediately prior to the date of grant will automatically be
granted a Non-qualified Option for 375 common shares effective
on the second anniversary of the Acquisition Date (the
"Acquisition Second Anniversary"). Each Acquisition Subsidiary
Director then serving on the Acquisition Board and who has
served on the Acquisition Board for fewer than the five calendar
years (including all or any portion of any such year)
immediately preceding the January 1 immediately prior to the
date of grant will automatically be granted a Non-qualified
Option for 75 common shares plus 75 common shares for all or any
portion of each calendar year preceding the date of grant during
which such Acquisition Subsidiary Director has served on the
Acquisition Board as of such January 1, effective on the
Acquisition Date and on the Acquisition Second Anniversary,
respectively. Any individual who is not a member of the
Acquisition Board on the Acquisition Date (i) who is
subsequently appointed or elected to the Acquisition Board at
least six months prior to the first anniversary of the
Acquisition Date (the "Acquisition First Anniversary"), will
automatically be granted a Non-qualified Option on the date of
such appointment or election for the same number of common
shares as such individual would have received if he had been a
member of the Acquisition Board on the Acquisition Date; (ii)
who is subsequently elected or appointed to the Acquisition
Board less than six months prior to the Acquisition First
Anniversary but prior to the Acquisition First Anniversary will
automatically be granted a Non-qualified Option on the date of
such appointment or election for 75% of the number of common
shares which such individual would have received if he had been
a member of the Acquisition Board on the Acquisition Date; (iii)
who is subsequently appointed or elected to the Acquisition
Board on or after the date of the Acquisition First Anniversary
but at least six months prior to the Acquisition Second
Anniversary will automatically be granted a Non-qualified Option
on the date of such appointment or election for 50% of the
number of common shares which such individual would have
received if he had been a member of the Acquisition Board on the
Acquisition Date; and (iv) who is subsequently appointed or
elected to the Acquisition Board less than six months prior to
the Acquisition Second Anniversary but prior to the Acquisition
Second Anniversary will automatically be granted a Non-qualified
Option on the date of such appointment or election for 25% of
the common shares which such individual would have received if
he had been a member of the Acquisition Board on the Acquisition
Date. Any individual who was not a member of the Acquisition
Board on the Acquisition Second Anniversary and who is
subsequently appointed or elected to the Acquisition Board prior
to the date of the fourth anniversary of the Acquisition Date
will automatically be granted a Non-qualified Option on the same
basis as described in the immediately preceding sentence. Each
Non-qualified Option granted to an Acquisition Subsidiary
Director shall have an exercise price equal to 100% of the fair
market value of the common shares on the date of the grant of
such Non-qualified Option. If an Acquisition Subsidiary
Director ceases to be a director of an Acquisition Subsidiary
and/or the Company for any reason other than his death or for
Cause, the Non-qualified Options granted to him under the 1995
Plan may be exercised in full, whether or not then exercisable
by their terms, on or before the expiration of the term of the
Non-qualified Options; provided, however, that if the former
Acquisition Subsidiary Director shall die prior to the
expiration of the term of the Non-qualified Options, such
Non-qualified Options may be exercised only on or before the
earlier of the expiration of such term or two years following
the date of death. If an Acquisition Subsidiary Director ceases
to be a director of the Acquisition Subsidiary because of his
death, such Non-qualified Options may be exercised in full,
whether or not then exercisable by their terms, only on or
before the earlier of the expiration of the term of the
Non-qualified Options or two years following the date of death.
If an Acquisition Subsidiary Director ceases to be a director of
an Acquisition Subsidiary for Cause, all of his then unexercised
Non-qualified Options shall immediately terminate.
Amendments and Termination
The Stock Option Committee, with the approval of the Board of
Directors, may terminate the 1995 Plan at any time, and may
amend the 1995 Plan from time to time, without obtaining the
approval of the shareholders of the Company except as such
shareholder approval may be required (a) to satisfy the
requirements of Rule 16b-3 under the Exchange Act, as amended,
or any successor provision, (b) to satisfy applicable
requirements of the Code or (c) to satisfy applicable
requirements of any securities exchange on which are listed any
of the Company's equity securities or any requirements
applicable to issuers whose securities are traded in the NASDAQ
National Market System. No such action to amend or terminate
the 1995 Plan shall reduce the then existing number of any
participant's Options or adversely change the term or conditions
thereof without the participant's consent. No amendment of the
1995 Plan shall result in any Committee member's losing his
status as a Disinterested Person under Rule 16b-3 of the
Exchange Act, with respect to any employee benefit plan of the
Company or result in the 1995 Plan losing its status as a plan
satisfying the requirements of Rule 16b-3 under the Exchange
Act, as amended, or any successor provision. In no event may
the provision of the 1995 Plan governing the grant of
Non-qualified Options to Non-employee Directors, Subsidiary
Directors, or Acquisition Subsidiary Directors be amended, with
or without shareholder approval, more than once every six
months, other than to comport with changes in the Code. If the
1995 Plan is terminated, any unexercised Option shall continue
to be exercisable in accordance with its terms.
Federal Income Tax Consequences
Based on current provisions of the Code and the existing
regulations thereunder, the anticipated federal income tax
consequences in respect of Options under the 1995 Plan are as
described below. The following discussion is not intended to be
a complete statement of applicable law and is based upon the
federal income tax laws in effect on the date hereof.
ISOs
In general, a participant who is granted an ISO does not
recognize taxable income either on the date of grant or the date
of exercise. However, upon the exercise of the ISO, the
difference between the fair market value of the common shares
received and the option price is a tax preference item
potentially subject to the alternative minimum tax. However, on
the later sale or other disposition of the common shares,
generally only the difference between the fair market value of
the common shares on the exercise date and the amount realized
on the sale or disposition is includable in alternative minimum
taxable income.
Upon disposition of common shares acquired from exercise of an
ISO, long-term capital gain or loss is generally recognized in
an amount equal to the difference between the amount realized on
the sale or disposition and the exercise price. However, if the
participant disposes of the common shares within two years from
the date of grant or within one year from the date of the
issuing of the common shares to the participant (a
"Disqualifying Disposition"), then the participant will
recognize ordinary income, as opposed to capital gain, at the
time of disposition in an amount generally equal to the lesser
of (i) the amount of gain realized on the disposition, or (ii)
the difference between the fair market value of the common
shares received on the date of exercise and the exercise price.
Any remaining gain or loss is treated as a short-term or
long-term capital gain or loss depending upon the period of time
the common shares have been held.
The Company is not entitled to a tax deduction upon either
exercise of an ISO or disposition of common shares acquired
pursuant to such exercise, except to the extent that the
participant recognizes ordinary income in a Disqualifying
Disposition.
If the holder of an ISO pays the exercise price, in whole or in
part, with previously acquired common shares, the exchange
should not effect the ISO tax treatment of the exercise. Upon
such exchange, and except for Disqualifying Dispositions, no
gain or loss is recognized by the participant upon delivering
previously acquired common shares to the Company for the payment
of the exercise price. The common shares received by the
participant, equal in number to the previously acquired common
shares exchanged therefor, will have the same basis and holding
period for long-term capital gain purposes as the previously
acquired common shares. (The participant, however, will not be
able to utilize the prior holding period for the purpose of
satisfying the ISO statutory holding period requirements.)
Common shares received by the participant in excess of the
number of previously acquired common shares will have a basis of
zero and a holding period which commences as of the date the
common shares are transferred to the participant upon exercise
of the ISO. If the exercise of an ISO is effected using common
shares previously acquired through the exercise of an ISO, the
exchange of such previously acquired common shares will be
considered a disposition of such common shares for the purpose
of determining whether a Disqualifying Disposition has occurred.
Non-qualified Options
A participant receiving a Non-qualified Option does not
recognize taxable income on the date of grant of the
Non-qualified Option, provided that the Non-qualified Option
does not have a readily ascertainable fair market value at the
time it is granted. In general, the participant must recognize
ordinary income at the time of exercise of the Non-qualified
Option in the amount of the difference between the fair market
value of the common shares on the date of exercise and the
option price. The ordinary income received will constitute
compensation for which tax withholding generally will be
required. The amount of ordinary income recognized by a
participant will be deductible by the Company in the year that
the participant recognizes the income if the Company complies
with the applicable withholding requirements.
Common shares acquired upon exercise of a Non-qualified Option
will have a tax basis equal to their fair market value on the
exercise date or other relevant date on which ordinary income is
recognized, and the holding period for the common shares
generally will begin on the date of exercise or such other
relevant date. Upon subsequent disposition of the common
shares, the participant will recognize long-term capital gain or
loss if the participant has held the common shares for more than
one year prior to disposition, or short-term capital gain or
loss if the participant has held the common shares for one year
or less.
If a holder of a Non-qualified Option pays the exercise price,
in whole or in part, with previously acquired common shares, the
participant will recognize ordinary income in the amount by
which the fair market value of the common shares received
exceeds the exercise price. The participant will not recognize
gain or loss upon delivering such previously acquired common
shares to the Company. The common shares received by a
participant, equal in number to the previously acquired common
shares exchanged therefor, will have the same basis and holding
period as such previously acquired common shares. Common shares
received by a participant in excess of the number of such
previously acquired common shares will have a basis equal to the
fair market value of such additional common shares as of the
date ordinary income is recognized. The holding period for such
additional common shares will commence as of the date of
exercise or such other relevant date.
Other Matters
The 1995 Plan is intended to comply with Section 162(m) of the
Code which was enacted as part of the Omnibus Budget
Reconciliation Act of 1993. Section 162(m) of the Code
prohibits a publicly held corporation, such as the Company, from
claiming a deduction on its federal income tax return for
compensation in excess of $1 million paid for a fiscal year to
the chief executive officer (or person acting in that capacity)
at the close of the corporation's fiscal year and the four most
highly compensated officers of the corporation, other than the
chief executive officer, at the end of the corporation's fiscal
year (collectively, the "Section 162(m) Officers"). The $1
million compensation deduction limitation does not apply to
"performance-based compensation." The proposed regulations
issued by the Internal Revenue Service under Section 162(m) on
December 15, 1993, which were amended on December 2, 1994, (the
"Proposed IRS Regulations") set forth a number of provisions
which compensatory plans must contain if the compensation paid
thereunder is to qualify as "performance-based" for purposes of
Section 162(m).
The 1995 Plan is intended to satisfy the requirements of the
Proposed IRS Regulations. The final regulations under Section
162(m) are not expected to be issued until at least later this
year and the Company cannot predict what requirements the final
regulations under Section 162(m) will contain. The Company is
seeking shareholder approval of the 1995 Plan in a good faith
effort to qualify compensation received thereunder as
"performance-based" for purposes of 162(m). If such shareholder
approval is not obtained, the 1995 Plan will be null and void.
Vote Required
Shareholder approval of the 1995 Plan will require the
affirmative vote of the holders of a majority of the common
shares outstanding and entitled to vote on the proposal to
approve the 1995 Plan. As of the Record Date, the current
executive officers and directors of the Company, their
representative associates and the Trust Department of Peoples
Bank held approximately 22.1% of the common shares of the
Company and corresponding voting power.
The Board of Directors of the Company unanimously recommends
that the shareholders vote for the proposal to approve the 1995
Plan. Unless otherwise directed, the persons named in the
enclosed proxy will vote the common shares represented by all
proxies received prior to the Annual Meeting and not properly
revoked, in favor of the proposal to approve the 1995 Plan.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Any qualified shareholder who desires to present a proposal for
consideration at the 1996 Annual Meeting of Shareholders must
submit the proposal in writing to the Company. If the proposal
is received by the Company on or before November 6, 1995 and
otherwise meets the requirements of applicable state and federal
law, it will be included in the proxy statement and form of
proxy of the Company relating to its 1996 Annual Meeting of
Shareholders.
NOTIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company appointed the accounting
firm of Coopers & Lybrand to serve as independent public
accountants of the Company for the 1994 fiscal year. That firm
has served as independent public accountants for the Company
since 1980. Accountants for the 1995 fiscal year have not been
selected. The Board of Directors has historically appointed
accountants at the meeting held immediately following the Annual
Meeting and intends to do so this year.
The Board of Directors expects that representatives of Coopers
& Lybrand will be present at the Annual Meeting, will have the
opportunity to make a statement if they desire to do so, and
will be available to respond to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors
knows of no other business to be presented for action by the
shareholders at the 1995 Annual Meeting of Shareholders other
than as set forth in this Proxy Statement. However, if any
other matter is properly presented at the Annual Meeting, or at
any adjournment or adjournments thereof, it is intended that the
persons named in the enclosed proxy may vote the common shares
represented by such proxy on such matters in accordance with
their best judgment in light of the conditions then prevailing.
It is important that proxies be voted and returned promptly;
therefore, shareholders who do not expect to attend the Annual
Meeting in person are urged to fill in, sign and return the
enclosed proxy in the self-addressed envelope furnished herewith.
By Order of the Board of Directors
/s/ ROBERT E. EVANS
Robert E. Evans, President and Chief Executive Officer
March 6, 1995
BEGINNING OF ANNEX A:
PEOPLES BANCORP INC. 1995 STOCK OPTION PLAN
PEOPLES BANCORP INC. 1995 STOCK OPTION PLAN
l. Name and Purpose. The purpose of this Plan, which shall be
known as the "Peoples Bancorp Inc. 1995 Stock Option Plan"
(hereinafter referred to as the "Plan") is to advance the
interests of Peoples Bancorp Inc. (the "Company") (i) by
providing material incentive for the continued services of those
key employees of the Company and its Subsidiaries and the
directors of the Company or of one or more of its Subsidiaries
who make significant contributions toward the Company's success
and development by encouraging those key employees and directors
to increase their proprietary interest in the Company; and (ii)
by attracting new able executives to employment with the Company
and its Subsidiaries or to serve as directors of the Company or
of one or more of its Subsidiaries.
2. Definitions. For purposes of this Plan, the following terms
when capitalized shall have the meanings designated herein
unless a different meaning is plainly required by the context.
Where applicable, the masculine pronoun shall mean or include
the feminine and the singular shall include the plural.
(a) "Acquisition Subsidiary" shall mean a corporation which is
acquired directly by the Company and, thereafter, becomes a
Subsidiary.
(b) "Acquisition Subsidiary Director" shall mean a person who
is a director of an Acquisition Subsidiary.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Cause" shall mean that an act of (i) fraud or intentional
misrepresentation or (ii) embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any
Subsidiary, has occurred.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations and rulings thereunder. References
to a particular section of the Code shall include references to
successor provisions.
(f) "Committee" shall mean the Stock Option Committee whose
membership shall be determined under Subsection 3(a) below.
(g) "Common Shares" shall mean the common shares of Peoples
Bancorp Inc.
(h) "Company" shall mean Peoples Bancorp Inc.
(i) "Disinterested Person" shall have the meaning assigned to
such term in Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934,
as amended, or any successor provision.
(j) "Effective Date" shall mean the date on which this Plan
shall become effective, as provided in Section 15 below.
(k) "Employee Director" shall mean a director of the Company
who is also an employee of the Company.
(l) The "Fair Market Value" of a Common Share on any relevant
date for purposes of any provision of this Plan shall mean the
last reported sales price of a Common Share of the Company on
the NASDAQ National Market System or on any securities exchange
on which the Common Shares may be listed on such date or, if
there are no reported sales on such date, then the last reported
sales price on the next preceding day on which such a sale was
transacted.
(m) "Incentive Option" shall mean an option granted under this
Plan which is an incentive stock option under the provisions of
Section 422 of the Code; and any provisions elsewhere in this
Plan or in any such Incentive Option which would prevent such
option from being an incentive stock option may be deleted
and/or voided retroactively to the date of the granting of such
option, by action of the Committee; and the Committee may
retroactively add provisions to this Plan or to any Incentive
Option if necessary to qualify such an option as an incentive
stock option.
(n) "Key Employee" shall mean any employee of the Company
and/or its Subsidiaries (as defined in Subsection 2(s) below)
who in the opinion of the Committee has demonstrated a capacity
for contributing in a substantial measure to the success of the
Company and its Subsidiaries.
(o) "Non-employee Director" shall mean a director of the
Company who is not also an employee of the Company.
(p) "Non-qualified Option" shall mean an option granted under
this Plan which is not an Incentive Option. Such Non-qualified
Option shall not be affected by any actions taken retroactively
as provided in Subsection 2(m) above with respect to Incentive
Options.
(q) "Participant" shall mean a Key Employee selected by the
Committee (under Subsection 3(b) below) to receive Incentive
Options granted under this Plan, a Non-employee Director
receiving Non-qualified Options pursuant to Subsection 5(j)
below, a Subsidiary Director receiving Non-qualified Options
pursuant to Subsection 5(k) below or an Acquisition Subsidiary
Director receiving Non-qualified Options pursuant to Subsection
5(l) below.
(r) "Plan" shall mean the Peoples Bancorp Inc. 1995 Stock
Option Plan.
(s) "Subsidiary" shall mean a corporation which is a
subsidiary corporation of the Company as that term is defined in
Subsection 424(f) of the Code. For purposes of Subsection 5(k)
of this Plan, "Subsidiary" shall not include an Acquisition
Subsidiary.
(t) "Subsidiary Board" shall mean the board of directors of a
Subsidiary.
(u) "Subsidiary Director" shall mean a director of one or more
of the Subsidiaries of the Company who is neither a director of
the Company nor an employee of the Company or of any of its
Subsidiaries.
3. Administration: Selection of Participants.
(a) The Plan shall be administered by the Committee which
shall consist of three or more members of the Board who are
Disinterested Persons to be appointed by the Board from time to
time and to serve at the pleasure of the Board. No person shall
serve as a member of the Committee unless such person also
qualifies as an "outside director" within the meaning of Section
162(m) of the Code. Except as provided in Subsection 5(j)
below, members of the Committee shall not be eligible to
participate in this Plan, or to receive options under it, while
serving on the Committee or during the one year prior to serving
on the Committee.
(b) The Committee shall select the Participants to receive
Incentive Options from among the Key Employees and shall grant
to such Participants Incentive Options under, and in accordance
with, the provisions of the Plan. The Non-employee Directors
shall receive non-discretionary Non-qualified Options in
accordance with Subsection 5(j) below. The Subsidiary Directors
shall receive non-discretionary Non-qualified Options in
accordance with Subsection 5(k) below. The Acquisition
Subsidiary Directors shall receive non-discretionary
Non-qualified Options in accordance with Subsection 5(l) below.
(c) Subject to the express provisions of this Plan, the
Committee shall have authority to adopt administrative
regulations and procedures which are consistent with the terms
of this Plan; to adopt and amend such option agreements as it
deems advisable; to determine the terms and provisions of such
option agreements (including the number of Common Shares with
respect to which Incentive Options are granted to a Participant
who is a Key Employee, the option price for Common Shares and
the date or dates when the option or parts of it may be
exercised) -- which terms shall comply with the requirements of
Section 5 below; to construe and interpret such option
agreements; to impose such limitations and restrictions as are
deemed necessary or advisable by counsel for the Company so that
compliance with the Federal securities laws and with the
securities laws of the various states may be assured; and to
make all other determinations necessary or advisable for
administering this Plan. Notwithstanding the preceding
sentence, the Committee shall have no discretion to determine
who will be eligible for the grant of Non-qualified Options
under Subsections 5(j), 5(k) and 5(l) of the Plan, to set the
number of Non-qualified Options granted to any Non-employee
Director, Subsidiary Director or Acquisition Subsidiary
Director, to set the number of Common Shares subject to
Non-qualified Options granted to any Non-employee Director,
Subsidiary Director or Acquisition Subsidiary Director or to set
the date and circumstances of grants of Non-qualified Options to
Non-employee Directors under Subsection 5(j), to Subsidiary
Directors under Subsection 5(k) or to Acquisition Subsidiary
Directors under Subsection 5(l), the term of such Non-qualified
Options, the period within which such Non-qualified Options may
be exercised or the exercise price of such Non-qualified
Options. Decisions by the Committee may be made either by a
majority of its members at a meeting of the Committee duly
called and held or without a meeting by a writing signed by all
of the members of the Committee. All decisions and
interpretations made by the Committee shall be binding and
conclusive on all Participants, their legal representatives and
beneficiaries.
(d) At least once each calendar year, the Committee shall
report to the Board describing the action which it has taken in
administering the Plan and making such recommendations for
amendments or otherwise as it may deem necessary. The Board
shall have no authority to amend, alter or otherwise change any
terms or conditions of any options granted by the Committee
pursuant to Subsection (b) of this Section or any Non-qualified
Options granted pursuant to Subsection 5(j), Subsection 5(k) or
Subsection 5(l) of this Plan prior to the adoption of such
amendments in accordance with the provisions of Section 14 of
this Plan.
(e) The Committee may designate any officers or employees of
the Company or its Subsidiaries to assist the Committee in the
administration of this Plan but the Committee may not delegate
to them duties imposed on the Committee under this Plan.
4. Shares Subject to the Plan.
(a) The shares to be issued and delivered by the Company upon
exercise of options granted under this Plan are Common Shares
which may be either authorized but unissued shares or treasury
shares, in the discretion of the Committee.
(b) The aggregate number of Common Shares which may be issued
under this Plan shall not exceed 100,000 Common Shares; subject,
however, to the adjustment provided in Section 10 of this Plan
in the event of stock splits, stock dividends, combinations or
exchanges of shares or other similar capital adjustments
occurring after the Effective Date. If any outstanding option
under the Plan for any reason expires or is terminated without
having been exercised in full, the Common Shares allocable to
the unexercised portion of such option shall (unless the Plan
shall have been terminated) become available for subsequent
grants of options under the Plan. No option may be granted
under this Plan which could cause the maximum limit to be
exceeded.
(c) Of the 100,000 Common Shares which may be issued under the
Plan, an aggregate of 30,000 Common Shares shall be issuable to
Non-employee Directors, Subsidiary Directors and Acquisition
Subsidiary Directors upon the exercise of Non-qualified Options
to be granted to them under the terms of the Plan and an
aggregate of 70,000 Common Shares shall be issuable to Key
Employees upon the exercise of Incentive Options to be granted
to them under the terms of the Plan; provided, however, that if
Non-qualified Options covering an aggregate of 30,000 Common
Shares have not been granted to Non-employee Directors,
Subsidiary Directors and Acquisition Subsidiary Directors prior
to the date of the 1999 Annual Meeting, that portion of the
30,000 Common Shares not covered by Non-qualified Options so
granted may be the subject of Incentive Options to be granted to
Key Employees under the terms of the Plan.
(d) During the period in which this Plan remains in effect, no
Non-employee Director may be granted Non-qualified Options
covering, in the aggregate, more than 1,500 Common Shares; no
Subsidiary Director or Acquisition Subsidiary Director may be
granted Non-qualified Options covering, in the aggregate, more
than 750 Common Shares; and no Key Employee may be granted
Incentive Options covering, in the aggregate, more than 25,000
Common Shares (in each case, subject to adjustment as provided
in Section 10 of this Plan).
5. Terms of Options. Options granted under this Plan shall
contain such terms as the Committee shall determine subject to
the following limitations and requirements:
(a) Option price: Subject to the limitations of Subsection
5(h) below, the option price per Common Share shall be not less
than 100% of the Fair Market Value of the Company's Common
Shares on the date of the grant of such option.
(b) Period within which option may be exercised: Subject to
the limitations of Subsections 5(c), 5(h), 5(j), 5(k) and 5(l)
below, each Incentive Option granted under this Plan shall
terminate (become non-exercisable) after the expiration of not
more than ten years from the date of the grant of such Incentive
Option and each Non-qualified Option granted under this Plan
shall terminate (become non-exercisable) after the expiration of
ten years from the date of the grant of such Non-qualified
Option.
(c) Termination of Incentive Options by reason of termination
of employment: If a Participant's employment with the Company
and its Subsidiaries terminates for any reason other than (i)
death of the Participant, (ii) the disability of the Participant
within the meaning of Section 22(e)(3) of the Code, (iii) the
retirement of the Participant under the provisions of any
retirement plan of the Company or any Subsidiary, or (iv) any
reason (other than for Cause) after the Participant has been
employed by the Company and/or one or more Subsidiaries for at
least 10 consecutive years prior to the Participant's
termination of employment, the portion of all Incentive Options
granted under this Plan to such Participant which are not
otherwise exercisable under Subsection 5(i) of this Plan shall
terminate effective immediately upon termination of employment.
If the termination of employment of the Participant was due to
retirement under the provisions of any retirement plan of the
Company or any Subsidiary or if the termination of employment
was due to a reason other than for Cause and the Participant had
been employed by the Company and/or one or more Subsidiaries for
at least 10 consecutive years prior to the Participant's
termination of employment, all of such Participant's Incentive
Options may be exercised in full, whether or not then
exercisable under Subsection 5(i) of this Plan, and the right of
the Participant to exercise the Incentive Options shall
terminate upon the earlier to occur of the expiration of the
term of the Incentive Options or three months after the date of
termination of employment. If the termination of employment was
due to the death of a Participant who was an employee of the
Company and/or any Subsidiary at the time of his death, such
Incentive Options may be exercised in full, whether or not then
exercisable under Subsection 5(i) of this Plan, `and the right
of the representative or representatives of the Participant's
estate (or the person or persons who acquire (by bequest or
inheritance) the right to exercise the Participant's Incentive
Options) to exercise the Incentive Options shall terminate upon
the earlier to occur of the expiration of the term of the
Incentive Options or one year after the date of death of the
Participant. If the termination of employment was due to the
disability of the Participant within the meaning of Section
22(e)(3) of the Code, such Incentive Options may be exercised in
full, whether or not then exercisable under Subsection 5(i) of
this Plan, and the right of the Participant to exercise the
Incentive Options shall terminate upon the earlier to occur of
the expiration of the term of the Incentive Options or one year
after the date of termination of employment. If the termination
of employment of the Participant was due to reasons other than
for Cause and the Participant had not been employed by the
Company and/or one or more Subsidiaries for at least 10
consecutive years prior to the Participant's termination of
employment, the Participant's Incentive Options may be
exercised only to the extent then exercisable under Subsection
5(i) of this Plan on the date of termination of employment, and
the right of the Participant to exercise the Incentive Options
shall terminate upon the earlier to occur of the expiration of
the term of the Incentive Options or three months after the date
of termination of employment. If the termination of employment
of the Participant was for Cause, all Incentive Options which
have not been exercised as of the date of termination of
employment shall terminate immediately as of the date of
termination of employment.
(d) Non-transferability: No option granted under this Plan
shall be assignable or transferable except, in the event of the
death of a Participant, by his will or by the laws of descent
and distribution. An option granted under this Plan shall be
exercisable, during the Participant's lifetime, only by him. In
the event the death of a Participant occurs, the representative
or representatives of his estate, or the person or persons who
acquired (by bequest or inheritance) the right to exercise his
options granted under this Plan, may exercise any of the
unexercised options or parts thereof prior to the expiration of
the applicable exercise period, as specified in Subsections
5(b), 5(c), 5(h), 5(j), 5(k) and 5(l) of this Plan.
(e) More than one option granted to a Participant: More than
one option may be granted to a Participant under this Plan.
(f) Aggregate annual limit on Incentive Options: The
aggregate Fair Market Value (determined at the time of the grant
of the option) of the Common Shares with respect to which
Incentive Options are first exercisable by any Key Employee in
any calendar year under this Plan and any other plans of the
Company and its Subsidiaries shall not exceed $100,000.
(g) Partial exercise: Unless otherwise provided in the option
agreement, any exercise of an option granted under this Plan may
be made in whole or in part.
(h) 10% Shareholder: If a Participant owns (including
constructive ownership pursuant to Section 424(d) of the Code)
more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any of its
Subsidiaries, then each Incentive Option granted under this Plan
to such Participant shall by its terms fix the option price per
Common Share to be at least 110% of the Fair Market Value of the
Common Shares on the date of the grant of such Incentive Option
and such Incentive Option shall terminate (become
non-exercisable) after the expiration of five years from the
date of the grant of such Incentive Option.
(i) Exercisability: Incentive Options awarded to Key
Employees under the Plan shall be exercisable at such times and
shall be subject to such restrictions and conditions including
the performance of a minimum period of service as the Committee
may impose at the time of grant of such Incentive Options;
provided, however, that if the Committee does not specify
another vesting schedule at the time of grant, each Incentive
Option shall become exercisable as follows: (i) with respect to
25% of the Common Shares covered thereby after 24 months of
continuous employment by the Company and/or one or more
Subsidiaries; (ii) with respect to an additional 25% of the
Common Shares covered thereby after 36 months of continuous
employment by the Company and/or one or more Subsidiaries; (iii)
with respect to an additional 25% of the Common Shares covered
thereby after 48 months of continuous employment by the Company
and/or one or more Subsidiaries; and (iv) with respect to an
additional 25% of the Common Shares covered thereby after 60
months of continuous employment by the Company and/or one or
more Subsidiaries. If a Key Employee does not purchase in any
one year the full number of Common Shares which may be purchased
with his then exercisable Incentive Options, such Key Employee
may purchase those Common Shares in any subsequent year during
the term of the Incentive Options.
In no event shall any Incentive Option or any Non-qualified
Option granted under this Plan be exercisable until a period of
at least six months has elapsed from the date of the option
grant.
(j) Non-employee Directors: Each Non-employee Director then
serving on the Board and who has served on the Board and/or a
Subsidiary Board for all or a portion of at least the five
calendar years immediately preceding the January 1 immediately
prior to the date of grant, shall automatically be granted a
Non-qualified Option for 750 Common Shares effective on the date
on which the annual meeting of the Company's shareholders is
held in 1995 in accordance with the Regulations of the Company
(the "1995 Annual Meeting") and for 750 Common Shares effective
on the date on which the annual meeting of the Company's
shareholders is held in 1997 in accordance with the Regulations
of the Company (the "1997 Annual Meeting"). Each Non-Employee
Director then serving on the Board and who has served on the
Board and/or a Subsidiary Board for fewer than the five calendar
years (including all or any portion of any such year)
immediately preceding the January 1 immediately prior to the
date of grant, shall automatically be granted a Non-qualified
Option for 150 Common Shares plus 150 Common Shares for all or
any portion of each calendar year preceding the date of grant
during which such Non-Employee Director has served on the Board
and/or a Subsidiary Board as of such January 1 effective on the
date of each of the 1995 Annual Meeting and the 1997 Annual
Meeting. Any individual who was not a member of the Board on
the date of the 1995 Annual Meeting, (i) who is subsequently
appointed or elected to the Board at least six months prior to
the date on which the annual meeting of the Company's
shareholders is to be held in 1996 in accordance with the
Regulations of the Company (the "1996 Annual Meeting") shall
automatically be granted a Non-qualified Option on the date of
such appointment or election for the same number of Common
Shares as such individual would have received if he had been a
member of the Board on the date of the 1995 Annual Meeting; (ii)
who is subsequently appointed or elected to the Board less than
six months prior to the date of the 1996 Annual Meeting but
prior to such 1996 Annual Meeting shall automatically be granted
a Non-qualified Option on the date of such appointment or
election for 75% of the number of Common Shares which such
individual would have received if he had been a member of the
Board on the date of the 1995 Annual Meeting; (iii) who is
subsequently appointed or elected to the Board on or after the
date of the 1996 Annual Meeting but at least six months prior to
the date of the 1997 Annual Meeting shall automatically be
granted a Non-qualified Option on the date of such appointment
or election for 50% of the number of Common Shares which such
individual would have received if he had been a member of the
Board on the date of the 1995 Annual Meeting; and (iv) who is
subsequently appointed or elected to the Board less than six
months prior to the 1997 Annual Meeting but prior to such 1997
Annual Meeting shall automatically be granted a Non-qualified
Option on the date of such appointment or election for 25% of
the Common Shares which such individual would have received if
he had been a member of the Board on the date of the 1995 Annual
Meeting. Any individual who was not a member of the Board on
the date of the 1997 Annual Meeting and who is subsequently
appointed or elected to the Board prior to the date on which the
annual meeting of the Company's shareholders is to be held in
1999 in accordance with the Regulations of the Company (the
"1999 Annual Meeting") shall automatically be granted a
Non-qualified Option on the same basis as described in the
immediately preceding sentence. Notwithstanding anything to the
contrary in this Section 5(j), any individual who was serving as
a Subsidiary Director or as an Acquisition Subsidiary Director
and is subsequently appointed or elected as a Non-employee
Director after the date of the 1995 Annual Meeting but prior to
the date of the 1997 Annual Meeting, or after the date of the
1997 Annual Meeting but prior to the date of the 1999 Annual
Meeting, as the case may be, and who is to be granted a
Non-qualified Option pursuant to either of the two immediately
preceding sentences, shall have deducted from the number of
Common Shares to be covered by the Non-qualified Option granted
to him under this Subsection 5(j), the number of Common Shares
covered by any Non-qualified Option which he received pursuant
to Subsection 5(k) or Subsection 5(l) of this Plan.
Each Non-qualified Option granted to a Non-employee Director
shall have an exercise price equal to 100% of the Fair Market
Value of the Common Shares on the date of the grant of such
Non-qualified Option.
If a Non-employee Director does not purchase in any one year
the full number of Common Shares which may be purchased with his
then exercisable Non-qualified Options, such Non-employee
Director may purchase those Common Shares in any subsequent year
during the term of the Non-qualified Options.
If a Non-employee Director ceases to be a director of the
Company for any reason other than his death or for Cause, the
Non-qualified Options granted to him under this Plan may be
exercised in full, whether or not then exercisable by their
terms, on or before the expiration of the term of the
Non-qualified Options; provided, however, that if the former
Non-employee Director shall die prior to the expiration of the
term of the Non-qualified Options, such Non-qualified Options
may only be exercised on or before the earlier of the expiration
of such term or two years following the date of death. If a
Non-employee Director ceases to be a director of the Company
because of his death, such Non-qualified Options may be
exercised in full, whether or not then exercisable by their
terms, only on or before the earlier of the expiration of the
term of the Non-qualified Options or two years following the
date of death. If a Non-employee Director ceases to be a
director of the Company and/or any Subsidiary for Cause, all of
his then unexercised Non-qualified Options shall immediately
terminate.
Non-employee Directors shall not be eligible to receive any
options under the Plan other than pursuant to this Subsection
5(j).
(k) Subsidiary Directors: Each Subsidiary Director then
serving on a Subsidiary Board and who has served on a Subsidiary
Board and/or the Board for all or a portion of at least the five
calendar years immediately preceding the January l immediately
prior to the date of grant, shall automatically be granted a
Non-qualified Option for 375 Common Shares effective on the date
of the 1995 Annual Meeting and for 375 Common Shares effective
on the date of the 1997 Annual Meeting. Each Subsidiary
Director then serving on a Subsidiary Board and who has served
on a Subsidiary Board and/or the Board for fewer than the five
calendar years (including all or any portion of any such year)
immediately preceding the January 1 immediately prior to the
date of grant shall automatically be granted a Non-qualified
Option for 75 Common Shares plus 75 Common Shares for all or any
portion of each calendar year preceding the date of grant during
which such Subsidiary Director has served on a Subsidiary Board
and/or the Board as of such January 1, effective on the date of
each of the 1995 Annual Meeting and the 1997 Annual Meeting.
Any individual who was not a member of a Subsidiary Board on the
date of the 1995 Annual Meeting, (i) who is subsequently
appointed or elected to a Subsidiary Board at least six months
prior to the date of the 1996 Annual Meeting shall automatically
be granted a Non-qualified Option on the date of such
appointment or election for the same number of Common Shares as
such individual would have received if he had been a member of
the Subsidiary Board on the date of the 1995 Annual Meeting;
(ii) who is subsequently appointed or elected to a Subsidiary
Board less than six months prior to the date of the 1996 Annual
Meeting but prior to such 1996 Annual Meeting shall
automatically be granted a Non-qualified Option on the date of
such appointment or election for 75% of the number of Common
Shares which such individual would have received if he had been
a member of the Subsidiary Board on the date of the 1995 Annual
Meeting; (iii) who is subsequently appointed or elected to a
Subsidiary Board on or after the date of the 1996 Annual Meeting
but at least six months prior to the date of the 1997 Annual
Meeting shall automatically be granted a Non-qualified Option on
the date of such appointment or election for 50% of the number
of Common Shares which such individual would have received if he
had been a member of the Subsidiary Board on the date of the
1995 Annual Meeting; and (iv) who is subsequently appointed or
elected to a Subsidiary Board less than six months prior to the
1997 Annual Meeting but prior to such 1997 Annual Meeting shall
automatically be granted a Non-qualified Option on the date of
such appointment or election for 25% of the Common Shares which
such individual would have received if he had been a member of
the Subsidiary Board on the date of the 1995 Annual Meeting.
Any individual who was not a member of a Subsidiary Board on the
date of the 1997 Annual Meeting and who is subsequently
appointed or elected to a Subsidiary Board prior to the date of
the 1999 Annual Meeting shall automatically be granted a
Non-qualified Option on the same basis as described in the
immediately preceding sentence.
Each Non-qualified Option granted to a Subsidiary Director
shall have an exercise price equal to 100% of the Fair Market
Value of the Common Shares on the date of the grant of such
Non-qualified Option.
If a Subsidiary Director does not purchase in any one year the
full number of Common Shares which may be purchased with his
then exercisable Non-qualified Options, such Subsidiary Director
may purchase those Common Shares in any subsequent year during
the term of the Non-qualified Options.
If a Subsidiary Director ceases to be a director of a
Subsidiary and/or the Company for any reason other than his
death or for Cause, the Non-qualified Options granted to him
under this Plan may be exercised in full, whether or not then
exercisable by their terms, on or before the expiration of the
term of the Non-qualified Options; provided, however, that if
the former Subsidiary Director shall die prior to the expiration
of the term of the Non-qualified Options, such Non-qualified
Options may be exercised only on or before the earlier of the
expiration of such term or two years following the date of
death. If a Subsidiary Director ceases to be a director of a
Subsidiary and/or the Company because of his death, such
Non-qualified Options may be exercised in full, whether or not
then exercisable by their terms, only on or before the earlier
of the expiration of the term of the Non-qualified Options or
two years following the date of death. If a Subsidiary Director
ceases to be a director of a Subsidiary and/or the Company for
Cause, all of his then unexercised Non-qualified Options shall
immediately terminate.
Subsidiary Directors shall not be eligible to receive any
options under the Plan other than pursuant to this Subsection
5(k).
(l) Acquisition Subsidiary Directors: If the Company directly
acquires a corporation such that such corporation then becomes
an Acquisition Subsidiary, each Acquisition Subsidiary Director
then serving on the board of directors of the Acquisition
Subsidiary (the "Acquisition Board") and who has served on the
Acquisition Board for all or a portion of at least the five
calendar years immediately preceding the January 1 immediately
prior to the date of grant shall automatically be granted a
Non-qualified Option for 375 Common Shares on the effective date
of the acquisition of the Acquisition Subsidiary by the Company
(the "Acquisition Date") and each Acquisition Subsidiary
Director then serving on the Acquisition Board and who has
served on the Acquisition Board for all or a portion of at least
the five calendar years immediately preceding the January 1
immediately prior to the date of grant shall automatically be
granted a Non-qualified Option for 375 Common Shares effective
on the second anniversary of the Acquisition Date (the
"Acquisition Second Anniversary"). Each Acquisition Subsidiary
Director then serving on the Acquisition Board and who has
served on the Acquisition Board for fewer than the five calendar
years (including all or any portion of any such year)
immediately preceding the January 1 immediately prior to the
date of grant shall automatically be granted a Non-qualified
Option for 75 Common Shares plus 75 Common Shares for all or any
portion of each calendar year preceding the date of grant during
which such Acquisition Subsidiary Director has served on the
Acquisition Board as of such January 1, effective on the
Acquisition Date and on the Acquisition Second Anniversary,
respectively. Any individual who is not a member of the
Acquisition Board on the Acquisition Date (i) who is
subsequently appointed or elected to the Acquisition Board at
least six months prior to the first anniversary of the
Acquisition Date (the "Acquisition First Anniversary"), shall
automatically be granted a Non-qualified Option on the date of
such appointment or election for the same number of Common
Shares as such individual would have received if he had been a
member of the Acquisition Board on the Acquisition Date; (ii)
who is subsequently elected or appointed to the Acquisition
Board less than six months prior to the Acquisition First
Anniversary but prior to the Acquisition First Anniversary shall
automatically be granted a Non-qualified Option on the date of
such appointment or election for 75% of the number of Common
Shares which such individual would have received if he had been
a member of the Acquisition Board on the Acquisition Date; (iii)
who is subsequently appointed or elected to the Acquisition
Board on or after the date of the Acquisition First Anniversary
but at least six months prior to the Acquisition Second
Anniversary shall automatically be granted a Non-qualified
Option on the date of such appointment or election for 50% of
the number of Common Shares which such individual would have
received if he had been a member of the Acquisition Board on the
Acquisition Date; and (iv) who is subsequently appointed or
elected to the Acquisition Board less than six months prior to
the Acquisition Second Anniversary but prior to the Acquisition
Second Anniversary shall automatically be granted a
Non-qualified Option on the date of such appointment or election
for 25% of the Common Shares which such individual would have
received if he had been a member of the Acquisition Board on the
Acquisition Date. Any individual who was not a member of the
Acquisition Board on the Acquisition Second Anniversary and who
is subsequently appointed or elected to the Acquisition Board
prior to the date of the fourth anniversary of the Acquisition
Date shall automatically be granted a Non-qualified Option on
the same basis as described in the immediately preceding
sentence.
Each Non-qualified Option granted to an Acquisition Subsidiary
Director shall have an exercise price equal to 100% of the Fair
Market Value of the Common Shares on the date of the grant of
such Non-qualified Option.
If an Acquisition Subsidiary Director does not purchase in any
one year the full number of Common Shares which may be purchased
with his then exercisable Non-qualified Options, such
Acquisition Subsidiary Director may purchase those Common Shares
in any subsequent year during the term of the Non-qualified
Options.
If an Acquisition Subsidiary Director ceases to be a director
of an Acquisition Subsidiary and/or the Company for any reason
other than his death or for Cause, the Non-qualified Options
granted to him under this Plan may be exercised in full, whether
or not then exercisable by their terms, on or before the
expiration of the term of the Non-qualified Options; provided,
however, that if the former Acquisition Subsidiary Director
shall die prior to the expiration of the term of the
Non-qualified Options, such Non-qualified Options may be
exercised only on or before the earlier of the expiration of
such term or two years following the date of death. If an
Acquisition Subsidiary Director ceases to be a director of the
Acquisition Subsidiary because of his death, such Non-qualified
Options may be exercised in full, whether or not then
exercisable by their terms, only on or before the earlier of the
expiration of the term of the Non-qualified Options or two years
following the date of death. If an Acquisition Subsidiary
Director ceases to be a director of an Acquisition Subsidiary
for Cause, all of his then unexercised Non-qualified Options
shall immediately terminate.
Acquisition Subsidiary Directors shall not be eligible to
receive any options under the Plan other than pursuant to this
Subsection 5(l).
6. Period For Granting Options. No options shall be granted
under this Plan subsequent to the tenth anniversary of the
earlier of (a) the day prior to the date on which this Plan is
adopted by the Board or (b) the day prior to the date on which
this Plan is approved by the affirmative vote of the holders of
a majority of the outstanding shares of the Company.
7. No Effect Upon Employment Status. The fact that an employee
has been designated a Key Employee or selected as a Participant
shall not limit or otherwise qualify the right of his employer
to terminate his employment at any time.
8. Method of Exercise. An option granted under this Plan may
be exercised only by written notice to the Committee, signed by
the Participant, or in the event of his death, by such other
person as is entitled to exercise such option. The notice of
exercise shall state the number of Common Shares in respect of
which the option is being exercised, and shall either be
accompanied by the payment of the full option price of such
Common Shares, or shall fix a date (not more than 10 business
days from the date of such notice) for the payment of the full
option price of the Common Shares being purchased. The option
price may be paid in cash, or by the transfer by the Participant
to the Company of Common Shares, free and clear of any liens,
security interests or other encumbrances, already owned by the
Participant which shall be valued at the Fair Market Value of
such Common Shares on the date of such transfer, or by a
combination of cash and such Common Shares, all in accordance
with such regulations, procedures and determinations as may be
adopted by the Committee pursuant to Subsection 3(c) above.
During the option period, no person entitled to exercise any
option granted under this Plan shall have any of the rights or
privileges of a shareholder with respect to any Common Shares
issuable upon exercise of such option until the books of the
Company evidence that such person has become the record owner of
such Common Shares.
9. Implied Consent of Participants. Every Participant, by his
acceptance of an option under this Plan, shall be deemed to have
consented to be bound, on his own behalf and on behalf of his
heirs, permitted assigns and legal representatives, by all of
the terms and conditions of this Plan.
10. Share Adjustments. In the event there is any change in the
Common Shares resulting from stock splits, stock dividends,
combinations or exchanges of shares, or other similar capital
adjustments, equitable proportionate adjustments shall be made
by the Committee in (a) the number of Common Shares available
for the grant of options under this Plan, (b) the number of
Common Shares subject to options granted under this Plan, and
(c) the exercise price of outstanding options.
11. Merger, Consolidation, or Sale of Assets. In the event the
Company shall consolidate with, merge into, or transfer all or
substantially all of its assets (an "Acquisition Transaction")
to another corporation or corporations (herein referred to as
"successor employer corporation"), then each Incentive Option
and each Non-Qualified Option outstanding under the Plan shall
become exercisable in full, whether or not then exercisable by
its terms, immediately upon consummation of the Acquisition
Transaction. As a condition of any such Acquisition
Transaction, the Company shall require that the successor
employer corporation obligate itself to continue this Plan and
to assume all obligations under the Plan in a manner consistent
with the provisions of Section 424(a) of the Code. In the event
that such successor employer corporation terminates for any
reason the employment of any Participant who is a Key Employee
within the one year period immediately following the
consummation of the Acquisition Transaction, such Participant
shall have the right to exercise his then unexercised Incentive
Options during the period ending on the earlier of the
expiration of the term of the Incentive Options or three months
following the date of the Participant's termination of
employment.
12. Company Responsibility. All expenses of this Plan,
including the cost of maintaining records, shall be borne by the
Company. The Company shall have no responsibility or liability
(other than under applicable securities laws) for any act or
thing done or left undone with respect to the price, time,
quantity or other conditions and circumstances of the purchase
of Common Shares under the terms of the Plan, so long as the
Company acts in good faith.
13. Securities Laws. The Committee shall take all necessary or
appropriate action to ensure that all option grants and all
exercises thereof under this Plan are in full compliance with
all Federal and state securities laws. No option granted under
this Plan shall be exercised before the Common Shares subject to
the Plan have been registered or qualified for sale under
appropriate Federal and state securities laws.
14. Amendment and Termination of the Plan. The Committee, with
the approval of the Board, may amend the Plan from time to time
or terminate the Plan at any time without the approval of the
shareholders of the Company except as such shareholder approval
may be required (a) to satisfy the requirements of Rule 16b-3
under the Securities Exchange Act of 1934, as amended, or any
successor provision, (b) to satisfy applicable requirements of
the Code or (c) to satisfy applicable requirements of any
securities exchange on which are listed any of the Company's
equity securities or any requirements applicable to issuers
whose securities are traded in the NASDAQ National Market
System. No such action to amend or terminate the Plan shall
reduce the then existing number of any Participant's options or
adversely change the term or conditions thereof without the
Participant's consent. No amendment of the Plan shall result in
any Committee member's losing his status as a Disinterested
Person with respect to any employee benefit plan of the Company
or result in the Plan losing its status as a plan satisfying the
requirements of Rule 16b-3 under the Securities Exchange Act of
1934, as amended, or any successor provision. In no event shall
Subsection 5(j) of the Plan be amended, with or without
shareholder approval, more than once every six months, other
than to comport with changes in the Code. If the Plan is
terminated, any unexercised option shall continue to be
exercisable in accordance with its terms.
15. Effective Date. The Plan was adopted by the Board on
January 19, 1995. The Plan shall become effective as of the
date it is approved by the affirmative vote of the holders of a
majority of the outstanding shares of the Company. The Plan
shall be null and void if shareholder approval is not obtained
within twelve (12) months of the adoption of the Plan by the
Board.
END OF ANNEX A