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SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. _)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PROVIDENT BANKSHARES CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PROVIDENT BANKSHARES CORPORATION
114 EAST LEXINGTON STREET
BALTIMORE, MARYLAND 21202
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 18, 2001
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The annual meeting of shareholders of Provident Bankshares Corporation
("Provident"), the holding company for Provident Bank, will be held on April 18,
2001 at 10:00 a.m., local time, at the offices of Provident, 114 East Lexington
Street, Baltimore, Maryland.
The purpose of the annual meeting is to consider and vote upon the
following matters:
1. the election of five directors to a three-year term of office;
2. to approve the amendment to the Provident Bankshares Corporation
Amended and Restated Stock Option Plan to increase the aggregate
number of shares of common stock authorized for issuance under the
plan by 700,000;
3. the ratification of the appointment of PricewaterhouseCoopers LLP
as independent auditors of Provident for the fiscal year ending
December 31, 2001; and
4. such other matters as may properly come before the meeting and at
any adjournments thereof, including whether or not to adjourn the
meeting.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Only shareholders of record at the close of business on February 26,
2001 are entitled to receive notice of the meeting and to vote at the meeting
and any adjournment or postponement of the meeting.
Please complete and sign the enclosed form of proxy, which is solicited
by the Board of Directors, and mail it promptly in the enclosed envelope. The
proxy will not be used if you attend the meeting and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Peter M. Martin
Peter M. Martin
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Baltimore, Maryland
March 12, 2001
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
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PROVIDENT BANKSHARES CORPORATION
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PROXY STATEMENT
-----------------------
This proxy statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Provident Bankshares
Corporation ("Provident" or the "Company") to be used at the annual meeting of
shareholders of the Company. Provident is the holding company for Provident Bank
of Maryland ("Provident Bank" or the "Bank"). The annual meeting will be held on
April 18, 2001 at 10:00 a.m., local time, at Provident's offices at 114 East
Lexington Street, Baltimore, Maryland 21202. The 2001 Annual Report to
Shareholders, including the consolidated financial statements of the Company for
the fiscal year ended December 31, 2000, accompanies this proxy statement which
is first being mailed to shareholders on or about March 14, 2001.
VOTING AND PROXY PROCEDURE
WHO CAN VOTE AT THE MEETING
You are entitled to vote your Provident common stock if the records of
the Company show that you held your shares as of the close of business on
February 26, 2001. As of the close of business on that date, a total of
24,681,269 shares of Provident common stock were outstanding and entitled to
vote. Each share of common stock has one vote.
ATTENDING THE MEETING
If you are a beneficial owner of Provident common stock held by a
broker, bank or other nominee (I.E., in "street name"), you will need proof of
ownership to be admitted to the meeting. A recent brokerage statement or letter
from a bank or broker are examples of proof of ownership. If you want to vote
your shares of Provident common stock held in street name in person at the
meeting, you will have to get a written proxy in your name from the broker, bank
or other nominee who holds your shares.
VOTE REQUIRED
The annual meeting will be held only if there is a quorum. A quorum
exists if a majority of the outstanding shares of common stock entitled to vote
is represented at the meeting. If you return valid proxy instructions or attend
the meeting in person, your shares will be counted for purposes of determining
whether there is a quorum, even if you abstain from voting. Broker non-votes
also will be counted for purposes of determining the existence of a quorum. A
broker non-vote occurs when a broker, bank or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received voting instructions from the beneficial owner. Under Maryland corporate
law and Provident's Articles of Incorporation and Bylaws, proxies specifying an
abstention as to a proposal will cause the shares to be counted toward a quorum,
but not counted as voting for the proposal.
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In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees, or withhold votes as to specific
nominees. There is no cumulative voting for the election of directors. Directors
must be elected by a plurality of the votes cast at the annual meeting. This
means that the nominees receiving the greatest number of votes will be elected.
Votes that are withheld and broker non-votes will have no effect on the outcome
of the election. In voting on the approval of the amendment to the Provident
Bankshares Corporation Amended and Restated Stock Option Plan and on the
ratification of the appointment of PricewaterhouseCoopers LLP as independent
auditors, you may vote in favor of the proposal, vote against the proposal or
abstain from voting. These matters will be decided by the affirmative vote of a
majority of the votes cast at the annual meeting. On these matters, abstentions
and broker non-votes will have no effect on the voting.
VOTING BY PROXY
The Board of Directors of Provident is sending you this proxy statement
for the purpose of requesting that you allow your shares of Provident common
stock to be represented at the annual meeting by the persons named in the
enclosed proxy card. All shares of Provident common stock represented at the
meeting by properly executed proxies will be voted in accordance with the
instructions indicated on the proxy card. If you sign, date and return a proxy
card without giving voting instructions, your shares will be voted as
recommended by the Company's Board of Directors. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR, FOR APPROVAL OF THE
AMENDMENT TO THE PROVIDENT BANKSHARES CORPORATION AMENDED AND RESTATED STOCK
OPTION PLAN, AND FOR RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
AUDITORS.
If any matters not described in this proxy statement are properly
presented at the annual meeting, the persons named in the proxy card will use
their own judgment to determine how to vote your shares. This includes a motion
to adjourn or postpone the meeting in order to solicit additional proxies. If
the annual meeting is adjourned or postponed, your Provident common stock may be
voted by the persons named in the proxy card on the new meeting date as well,
unless you have revoked your proxy. The Company does not know of any other
matters to be presented at the meeting.
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy you must either advise the Secretary of the
Company in writing before your common stock has been voted at the annual
meeting, deliver a later dated proxy, or attend the meeting and vote your shares
in person. Attendance at the annual meeting will not in itself revoke your
proxy.
If your Provident common stock is held in "street name," you will
receive instructions from your broker, bank or other nominee that you must
follow in order to have your shares voted. Your broker or bank may allow you to
deliver your voting instructions via the telephone or the Internet. Please see
the instruction form provided by your broker, bank or other nominee that
accompanies this proxy statement.
Provident will pay the cost of solicitation of proxies on behalf of its
management. In addition to the solicitation of proxies by mail, Innisfree M&A
Incorporated, a proxy solicitation firm, will assist Provident in soliciting
proxies for the annual meeting for a fee of $10,000, plus out-of-pocket
expenses. Proxies may also be solicited personally or by telephone by directors,
officers and other employees of Provident and its subsidiary, Provident Bank,
without additional compensation. Provident will also request persons, firms and
corporations holding shares in their names, or in the name of their nominees,
which are beneficially owned by others, to send proxy materials to, and obtain
proxies from, such beneficial owners, and will reimburse such persons for their
reasonable expenses in doing so.
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STOCK OWNERSHIP
The following table provides information about the shares of Provident
common stock that may be considered to be owned by each director, nominee or
named executive officer of Provident and by all its directors and executive
officers as a group as of February 26, 2001. Unless otherwise indicated, each of
the named individuals has sole voting power and sole investment power with
respect to the shares shown.
NUMBER OF
NUMBER SHARES THAT MAY
OF SHARES BE ACQUIRED
OWNED WITHIN 60 DAYS PERCENT OF
(EXCLUDING BY EXERCISING COMMON STOCK
NAME OPTIONS) OPTIONS OUTSTANDING(13)(14)
- ----- -------- ------------- -------------------
DIRECTORS
Melvin A. Bilal..................................... 268 15,917 *
Ward B. Coe, III, Esquire........................... 61 15,424 *
Frederick W. Meier, Jr.............................. 2,319 12,993 *
Sister Rosemarie Nassif............................. 1,334 14,700 *
Gary N. Geisel...................................... 9,782(1) 47,462 *
Thomas S. Bozzuto................................... 3,774(2) 11,218 *
Charles W. Cole, Jr................................. 4,284 14,576 *
Barbara B. Lucas.................................... 2,602 12,993 *
Carl W. Stearn...................................... 52,218(3) 132,291 *
Enos K. Fry......................................... 37,851(4) 44,212 *
Herbert Jorgensen................................... 28,286(5) 72,112 *
Francis G. Riggs.................................... 84,429(6) 13,237 *
Dr. Calvin W. Burnett............................... 3,291 12,214 *
Pierce B. Dunn...................................... 41,866(7) 15,917 *
Mark K. Joseph...................................... 9,839 15,917 *
Peter M. Martin..................................... 129,457(8) 91,516 *
Sheila K. Riggs..................................... 47,498(9) 13,237 *
NAMED EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS
John P. Novak....................................... 4,302(10) 21,256 *
Richard J. Oppitz................................... 11,185(11) 32,532 *
Dennis A. Starliper................................. 17,466(12) 18,972 *
All directors and executive officers as a group
(20 persons)............................... 492,112 628,696 4.43%
- ----------------------------
(1) Includes 2,846 shares held in 401(k) plan.
(2) Includes 2,153 shares held by spouse.
(3) Includes 11,414 shares held in 401(k) plan.
(4) Includes 3,785 shares held in individual retirement account; 11,032 shares
held in 401(k) plan; and 5,402 shares held by spouse.
(5) Includes 4,122 shares held in individual retirement account and 1,438
shares held by spouse.
(6) Includes 3,043 shares held by Riggs, Counselman, Michaels & Downes, Inc.
and 12,636 shares held as custodian.
(7) Includes 130 shares held by spouse; 1,645 shares held as custodian; and
28,460 shares held as trustee.
(8) Includes 8,212 shares held in 401(k) plan.
(9) Includes 2,308 shares held as custodian.
(10) Includes 2,006 shares held in 401(k) plan.
(11) Includes 9,946 shares held in 401(k) plan.
(12) Includes 15,161 shares held in 401(k) plan.
(13) Less than 1%, unless otherwise indicated.
(14) Percentages with respect to each person or group of persons have been
calculated on the basis of 24,681,269 shares of Provident's common stock,
the number of shares of the Company's common stock outstanding and
entitled to vote as of February 26, 2001, plus the number of shares of the
Company's common stock which such person or group of persons has the right
to acquire within 60 days after February 26, 2001 by the exercise of stock
options.
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INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
After obtaining shareholder approval, Provident and Provident Bank will
consider granting stock options to directors, officers and employees of
Provident and Provident Bank under the Provident Bankshares Corporation Amended
and Restated Stock Option Plan.
PROPOSAL 1. ELECTION OF DIRECTORS
Provident's Board of Directors consists of 17 directors, of which 14 are
independent directors and three are members of management. The Board is divided
into three classes with three-year staggered terms, with approximately one-third
of the directors elected each year. The Board of Directors' nominees for
election this year, to serve for a three-year term, or until their respective
successors have been elected and qualified are Melvin A. Bilal, Ward B. Coe,
III, Esquire, Frederick W. Meier, Jr., Sister Rosemarie Nassif and Gary N.
Geisel.
If any nominee is unable to serve or declines to serve for any reason,
it is intended that proxies will be voted for the election of the balance of
those nominees named and for such other persons as may be designated by the
present Board of Directors. The Board has no reason to believe that any of the
persons named will be unable or unwilling to serve. No person being nominated as
a director is being proposed for election pursuant to any agreement or
understanding between any such person and the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL
NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS AND CERTAIN
EXECUTIVE OFFICERS
Information regarding the nominees for election at the annual meeting,
as well as information regarding the continuing directors whose terms expire in
2002 and 2003, is provided below. Unless otherwise stated, each nominee has held
his or her current occupation for the last five years. The age indicated in each
nominee's biography is as of December 31, 2000. The indicated period for service
as a director includes service as a director of Provident Bank.
NOMINEES FOR ELECTION OF DIRECTOR
MELVIN A. BILAL is President of Bilal Consulting. Previously, Mr. Bilal
was with Chapman Worldwide Financial Services. Prior to Chapman, Mr. Bilal was
the owner and Managing Executive of the Bilal Group, Inc., a provider of long
and short term staffing needs. Prior to this position, he was President and
founder of Security America Services, Inc. a security consulting firm. Age 58.
Director since 1992.
WARD B. COE, III is a partner of the law firm of Whiteford, Taylor &
Preston, LLP. Age 55. Director since 1997.
FREDERICK W. MEIER, JR. is President of Lord Baltimore Capital Corp.,
formerly ATAPCO Capital Management Group. Prior to being elected to this
position in 1996, Mr. Meier was an Executive Vice President of First Maryland
Bancorp and First National Bank of Maryland. Age 57. Director since 1997.
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SISTER ROSEMARIE NASSIF is the President of Holy Names College, Oakland,
California. Previously, Sister Nassif was Executive Director of the Fund for
Educational Excellence. Prior to this position, she was President of the College
of Notre Dame of Maryland. Age 59. Director since 1992.
GARY N. GEISEL was named President and Chief Operating Officer (COO) of
Provident and Provident Bank in January 2001 and was also elected to the
Provident and Provident Bank Boards of Directors to fill a vacancy which existed
on each of those Boards. Before becoming President and COO, Mr. Geisel had been
a member of Provident Bank's Office of the Chairman since its creation in 1999
and Group Manager, Community Banking of Provident Bank since 1997. Prior to
joining Provident Bank, Mr. Geisel was an executive officer with Citizens Bank
of Maryland. Age 52.
DIRECTORS CONTINUING IN OFFICE
The following directors have terms ending in 2002:
THOMAS BOZZUTO is Chief Executive Officer of The Bozzuto Group, a
full-service residential company located in Greenbelt, Maryland. Age 54.
Director since 1998.
CHARLES W. COLE, JR. is Chairman of the Board of Legg Mason Trust F.S.B.
and was previously Vice Chairman of the Board and Managing Director of Brown
Investment Advisory and Trust Co. Prior to that position, Mr. Cole was the
President and Chief Executive Officer of First Maryland Bancorp and the First
National Bank of Maryland. Age 65. Director since 1995.
BARBARA B. LUCAS is Senior Vice President and Corporate Secretary of The
Black & Decker Corporation. Age 55. Director since 1996.
FRANCIS G. RIGGS is Executive Vice President and a director of Riggs,
Counselman, Michaels & Downes, Inc., an insurance brokerage company. Age 63.
Director since 1972.
CARL W. STEARN served as Chairman of the Board and Chief Executive
Officer of Provident and Provident Bank prior to his retirement in 1998. He
serves as Chairperson of Provident's Executive Committee. Age 68. Director since
1990.
ENOS K. FRY has been Group Manager, Washington Metro Area of Provident
Bank since 1997. Prior to joining Provident Bank, he served in various executive
capacities with Citizens Savings Bank, F.S.B., including President, director and
Vice Chairman of the Board, until Citizens Savings was acquired by Provident
Bank in 1997. Age 57. Director since 1997.
HERBERT W. JORGENSEN served as Chairman of the Board and Chief Executive
Officer of Citizens Savings from 1994 until it was acquired by Provident Bank in
1997. Prior to this position, he served as Citizens Savings' Vice Chairman of
the Board. Mr. Jorgensen has advised the Board of Directors of his intention to
retire from the Board after the upcoming annual meeting of shareholders.
The following directors have terms ending in 2003:
DR. CALVIN W. BURNETT is President of Coppin State College, Baltimore,
Maryland and serves as Chairperson of Provident's Nominating Committee. Age 68.
Director since 1984.
PIERCE B. DUNN is Chairman of the Board of MIRCON, Inc., an
environmental and engineering company. Age 50. Director since 1987.
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MARK K. JOSEPH is Chairman and Chief Executive Officer of Municipal
Mortgage and Equity, LLC, a lender which invests in real estate backed tax
exempt bonds. Mr. Joseph is also Chairman of the Board and founder of The
Shelter Group, a real estate development, property and asset management company.
Mr. Joseph serves as Chairperson of Provident's Audit Committee. Age 62.
Director since 1993.
PETER M. MARTIN has been Chairman of the Board and Chief Executive
Officer of Provident and Provident Bank since 1998. Mr. Martin also served as
President of Provident and Provident Bank from 1990 until January 2001 and has
been employed by Provident and Provident Bank since 1990. Age 63. Director since
1990.
SHEILA K. RIGGS is the Chairperson of the Maryland Health and Higher
Education Facilities Authority which issues bonds to finance health care and
higher education facilities. Mrs. Riggs serves as Chairperson of Provident's
Compensation Committee. Age 57. Director since 1982.
NAMED EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS
JOHN F. NOVAK is an Executive Vice President of Provident Bank.
Previously, Mr. Novak served as a member of Provident Bank's Office of the
Chairman, Group Manager, Consumer Banking and Managing Director, Consumer
Lending Division. Age 54.
RICHARD J. OPPITZ is an Executive Vice President of Provident Bank.
Previously, Mr. Oppitz served as a member of Provident Bank's Office of the
Chairman, Group Manager, Commercial Banking and Managing Director, Credit
Administration Division. Age 54.
DENNIS A. STARLIPER is the Chief Financial Officer of Provident and
Executive Vice President of Provident Bank. Previously, Mr. Starliper served as
a Group Manager, Treasurer and Managing Director, Treasury Division of Provident
Bank. Age 54.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
OF THE BOARD OF DIRECTORS
The Board of Directors of Provident conducts business through meetings
and the activities of the Board and its committees. The Board of Directors
generally meets on a monthly basis and may have additional meetings as needed.
During the fiscal year ended December 31, 2000, the Board of Directors held 12
meetings. All of the directors of the Company attended at least 75% of the total
number of Board meetings held and committee meetings on which such directors
served during the fiscal year ended December 31, 2000. The Board of Directors of
the Company and Bank maintain committees, the nature and composition of which
are described below.
AUDIT COMMITTEE. The Audit Committee consists of Messrs. Joseph, Coe,
Cole, Dunn, Jorgensen and Meier. The committee reviews and reports to the Board
of Directors on examinations of Provident Bank and its subsidiaries by
regulatory authorities, recommends independent accountants for appointment by
the Boards of Provident and Provident Bank, reviews the scope of the work of the
independent accountants and their reports, and reviews the activities and
actions of the Bank's internal auditors. The Audit Committee met eight times
during 2000.
COMPENSATION COMMITTEE. The Compensation Committee consists of Mrs.
Riggs, Mrs. Lucas, Sister Nassif and Messrs. Bozzuto, Cole, Dunn and Riggs. The
committee reviews and determines salaries and other benefits for executive and
senior management of Provident and its
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subsidiaries, reviews and determines employees to whom stock options are to be
granted and the terms of such grants, and reviews the selection of officers who
participate in incentive and other compensatory plans and arrangements. The
Compensation Committee met four times during 2000.
NOMINATING COMMITTEE. The Nominating Committee consists of Dr. Burnett,
Mrs. Lucas, and Messrs. Bilal, Bozzuto and Coe. The committee nominates persons
for election to the Board of Directors of Provident and Provident Bank. The
Nominating Committee will consider shareholder recommendations submitted to it
in writing in care of Provident in accordance with its Bylaws. The Nominating
Committee met one time during 2000.
DIRECTORS' COMPENSATION
Each outside director of Provident and Provident Bank receives an annual
retainer of $14,000 for service as director. Each outside director also receives
a fee of $750 for attendance at regular or special Board meetings, except that a
single fee is paid if the Provident and Provident Bank Board meetings are held
on the same day. Finally, outside directors who are members of Board committees
receive a fee of $750 for attendance at committee meetings, while the
chairpersons of such committees receive a fee of $900.
Provident and Provident Bank have a deferred compensation plan for
non-employee directors. Each year, a director may elect to defer payment of all
or part of the director's fees for that year until the individual ceases to be a
director. Interest is accrued on the deferred amount at the prime rate. Payment
of the deferred amount may be made to the director or to his or her beneficiary.
In addition, non-employee directors are eligible to receive options under the
Provident Bankshares Corporation Amended and Restated Stock Option Plan (the
"Stock Option Plan"). The Non-Employee Directors' Severance Plan provides that
if a director's service is terminated following a "change in control" (as
defined in the Plan) of Provident or the Bank, the director will be entitled to
receive a payment equal to five times the director's annual retainer.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following information is furnished for the Chief Executive Officer
and all other executive officers of Provident and Provident Bank employed at the
end of the fiscal year by the Company and the Bank who received salary and bonus
in excess of $100,000 during fiscal 2000. These persons are sometimes referred
to in this proxy statement as the "named executive officers."
ANNUAL COMPENSATION
-----------------------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITIONS YEAR ($) ($) ($) (#) ($)(2)
- ------------------------------------------- ------ --------- --------- ------------- ----------- -------------
Peter M. Martin 2000 $465,000 $146,000 $ 2,336(1) 40,000 $82,552
Chairman of the Board, President and 1999 433,350 216,675 3,846 50,000 72,951
Chief Executive Officer of Provident and 1998 405,000 121,500 4,358 10,000 56,527
Provident Bank
Gary N. Geisel 2000 $248,600 $ 53,000 $ -- 20,000 $ 7,650
Group Manager, Community Banking 1999 226,000 90,400 -- 25,000 7,200
1998 212,000 51,000 -- 10,000 7,500
John F. Novak 2000 $232,100 $ 50,000 $ -- 20,000 $ 7,622
Group Manager, Consumer Banking 1999 211,000 84,400 -- 25,000 7,200
1998 195,000 51,000 -- 10,000 7,500
Richard J. Oppitz 2000 $225,500 $ 44,000 $ -- 20,000 $ 6,119
Group Manager, Commercial Banking 1999 205,000 82,000 -- 25,000 7,200
1998 191,000 46,000 -- 10,000 5,651
Dennis A. Starliper 2000 $208,650 $ 41,000 $ -- 12,000 $ 6,831
Group Manager and Chief Financial 1999 195,000 46,000 -- 6,000 7,200
Officer 1998 185,000 42,000 -- 5,000 6,428
____________________________
(1) Represents grossed-up reimbursement for the tax effect of reportable
incremental imputed income for the split dollar insurance agreements.
(2) The amounts shown in this column for the last fiscal year are derived
from the following figures for Mr. Martin: $7,650 of employer-provided
contributions under the Bank's 401(k) plan, and $74,902 in economic value
of Bank-paid split-dollar life insurance premiums. The amounts shown for
Messrs. Geisel, Novak, Oppitz and Starliper were employer-provided
contributions under the Bank's 401(k) plan.
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CHANGE IN CONTROL AGREEMENTS
Provident and Provident Bank have entered into change in control
agreements with Messrs. Martin, Geisel, Novak, Oppitz and Starliper. Each
agreement is extended on a daily basis unless written notice of non-renewal is
given by the Board of Directors. The agreements provide that if involuntary
termination or, under certain circumstances, voluntary termination follows a
change in control of the Company or the Bank, the executive officer is entitled
to receive a severance payment equal to three times his average annual
compensation for the five most recent taxable years preceding termination. The
Company or the Bank would also continue and pay for life, health and disability
coverage for 36 months following termination. Payments to the executive officer
under the agreements are paid by the Company to the extent that payments (or
other benefits) are not paid by the Bank. Notwithstanding that both the Company
and the Bank change in control agreements provide for a severance payment in the
event of a change in control, no duplicate payments would be made under the
agreements.
STOCK OPTION GRANTS
The following table lists all grants of options under the Stock Option
Plan to the named executive officers for 2000 and contains certain information
about potential value of those options based upon certain assumptions as to the
appreciation of the Company's stock over the life of the option.
OPTIONS GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL EXERCISE OR ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS BASE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO PRICE FOR OPTIONS(3)
OPTIONS EMPLOYEES IN PER EXPIRATION ---------------------------------
NAME GRANTED FISCAL YEAR SHARE DATE 5% 10%
- ------ ------------- ----------- ---------- ---------- ---------------------------------
Peter M. Martin 40,000(1) 6.6% $19.44 12/20/10 $489,029 $1,239,281
Gary N. Geisel 20,000(2) 3.3 19.44 12/20/10 244,515 619,641
John F. Novak 20,000(2) 3.3 19.44 12/20/10 244,515 619,641
Richard J. Oppitz 20,000(2) 3.3 19.44 12/20/10 244,515 619,641
Dennis A. Starliper 12,000(2) 2.0 19.44 12/20/10 146,709 371,785
____________________________
(1) Options become exercisable in two equal installments commencing on
December 20, 2001. Options become immediately exercisable if Mr. Martin's
employment is terminated due to death or disability or upon a change in
control.
(2) Options become exercisable in three equal annual installments commencing
on December 20, 2001. Options become immediately exercisable upon
optionee's termination of employment due to death or disability or upon a
change in control.
(3) The dollar gains under these columns result from calculations required by
the SEC's rules are not intended to forecast future price appreciation of
the common stock. It is important to note that options have value only if
the stock price increases above the exercise price shown in the table
during the effective option period. In order for the executive to realize
the potential values set forth in the 5% and 10% columns in the table, the
price per share of Provident's common stock would be approximately $31.67
and $50.42, respectively, as of the expiration date of the options.
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STOCK OPTION EXERCISES AND HOLDINGS
The following table reflects all stock option exercises by the named
executive officers during 2000 and includes the number of shares covered by all
remaining unexercised stock options as of December 31, 2000. Also reported are
the values for "in-the-money" options which represent the difference between the
exercise price of any such remaining unexercised options and the year-end market
price of the common stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUE
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR END IN-THE-MONEY OPTIONS
(#) AT FISCAL YEAR END ($)(1)
--------------------------- ---------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------- ------------ ----------- ----------- ------------- ----------- -------------
Peter M. Martin 5,000 $54,850 91,516 196,629 $1,004,779 $151,050
Chairman of the Board,
President and Chief Executive
Officer
Gary N. Geisel -- -- 45,147 53,196 192,051 75,525
Group Manager, Community
Banking
John F. Novak -- -- 28,941 53,196 103,079 75,525
Group Manager, Consumer
Banking
Richard J. Oppitz -- -- 30,217 53,196 119,795 75,525
Group Manager, Commercial
Banking
Dennis A. Starliper -- -- 23,005 19,674 267,252 24,756
Group Manager, Chief
Financial Officer
- --------------------------------
(1) The closing price of the common stock on December 29, 2000 (the last
trading day of 2000) was $20.88.
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PENSION PLANS
The following table sets forth the estimated annual pension benefits
payable to a participant at normal retirement age (age 65) under Provident
Bank's Pension Plan and its Supplemental Executive Retirement Income Plan
("Supplemental Plan"), based on both the remuneration that is covered under
these plans and years of service with Provident and its subsidiaries.
YEARS OF SERVICE
------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------------ ----------- ----------- ------------ ------------- ------------
125,000 26,250 35,000 43,750 43,750 43,750
150,000 31,500 42,000 52,500 52,500 52,500
175,000 36,750 49,000 61,250 61,250 61,250
200,000 42,000 56,000 70,000 70,000 70,000
225,000 47,250 63,000 78,750 78,750 78,750
250,000 52,500 70,000 87,500 87,500 87,500
275,000 57,750 77,000 96,250 96,250 96,250
300,000 63,000 84,000 105,000 105,000 105,000
325,000 68,250 91,000 113,750 113,750 113,750
350,000 73,500 98,000 122,500 122,500 122,500
375,000 78,750 105,000 131,250 131,250 131,250
400,000 84,000 112,000 140,000 140,000 140,000
425,000 89,250 119,000 148,750 148,750 148,750
450,000 94,500 126,000 157,500 157,500 157,500
This table reflects the annual benefits payable at the executive
officer's 65th birthday in the form of an annuity for the executive officer's
life with a 15-year guarantee in favor of the executive officer's spouse. Under
this form, should the executive officer die within 15 years after the benefits
start, the executive's surviving spouse, if any, will continue to receive the
same pension benefits until the end of that 15-year period. The table also
reflects the maximum benefits payable under the Provident Bank of Maryland
Pension Plan, a tax-qualified funded plan and certain supplemental retirement
income agreements providing 50% of the excess (unfunded benefits). The benefits
reflected in the table are offset or reduced by 100% of the executive officer's
estimated primary Social Security benefit.
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The following table sets forth the respective years of service credited
for Pension Plan purposes as of December 31, 2000, and the estimated years of
service at the respective normal retirement dates for the named executive
officers.
YEARS OF SERVICE YEARS OF SERVICE
NAME AT 12/31/00 AT NORMAL RETIREMENT
- ------ ------------- --------------------
Peter M. Martin 10.8 13.4
Gary N. Geisel 3.2 16.6
John F. Novak 9.5 19.7
Richard J. Oppitz 7.8 18.8
Dennis A. Starliper 15.5 26.5
Provident maintains the Supplemental Plan for certain executive officers
which will pay 72.3% of the difference between 70% of final pay and the amounts
paid by the Pension Plan and Social Security benefits. Compensation used in
calculating the annual normal retirement benefit amounts reflected in the
Pension Plan table is the executive officer's highest rate of base annual
salary, reported in the third column of the Summary Compensation table, and does
not include bonuses or other amounts reported in any of the remaining columns of
the Summary Compensation Table.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Francis G. Riggs is a director of Provident and Provident Bank, and a
member of the Compensation Committee. Mr. Riggs is Executive Vice President and
a director of Riggs, Counselman, Michaels & Downes, Inc. From January l to
December 31, 2000, the Bank paid Riggs, Counselman, Michaels & Downes, Inc.
$617,902 for premiums related to insurance services.
THE FOLLOWING REPORTS OF THE COMPENSATION COMMITTEE AND AUDIT COMMITTEE
AND THE STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY
ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
THE SECURITIES EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"), EXCEPT AS TO THE
EXTENT THAT PROVIDENT SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE,
AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
REPORT OF THE COMPENSATION COMMITTEE
COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Recommendations regarding
all of the components of the compensation of Provident's Chairman, President and
Chief Executive Officer are made by the Board's seven member Compensation
Committee to, and are approved by, the Board of Directors. The Board of
Directors did not reject or modify in any material way any of the
recommendations of the Compensation Committee during fiscal year 2000. Each
member of the Compensation Committee is a non-employee director. The following
report has been prepared by the Compensation Committee and addresses the
compensation policies of Provident for 2000 as they affected Mr. Martin, the
Chairman, President and Chief Executive Officer, and other named executive
officers.
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EXECUTIVE OFFICER COMPENSATION POLICIES AND OBJECTIVES. The policies and
objectives of the Compensation Committee are designed to assist Provident and
its subsidiaries in attracting and retaining qualified executives, to recognize
individual contributions toward the achievement of short and long-term
performance goals and to closely align the financial interests of the senior
managers of Provident and its subsidiaries with those of its shareholders. In
furtherance of these objectives, Provident maintains a compensation program for
executive officers which consists of both cash and equity-based compensation.
From time to time the Compensation Committee retains independent compensation
consultants to work with it on executive compensation matters. The Compensation
Committee also has access to competitive data regarding executive compensation
levels and practices.
EXECUTIVE COMPENSATION PROGRAMS AND RELATIONSHIP TO PERFORMANCE. The
annual compensation of Provident's named executive officers consists of a base
salary and an annual bonus. In the case of Mr. Martin, this annual bonus is
determined under the terms of the Provident Bankshares Corporation Executive
Incentive Plan ("EIP"); in the case of Messrs. Geisel, Novak and Oppitz, the
Office of the Chairman Incentive Plan ("OCIP"); and, in the case of Mr.
Starliper, the Group Management Incentive Plan ("GMIP"). The Compensation
Committee establishes, on an annual basis, the base salary of the Chief
Executive Officer, generally based upon a review of the performance of the Chief
Executive Officer during the prior year and competitive data for that position.
The Chief Executive Officer recommends to the Compensation Committee a salary
level for the other named executive officers based upon a performance review of
each executive officer. The Compensation Committee also approves the
participation of key executives in the EIP, the OCIP and the GMIP and is
responsible for the granting of options under the Stock Option Plan.
EXECUTIVE INCENTIVE PLAN. Under the EIP, for purposes of establishing
incentive awards, three after-tax net income targets for the upcoming year are
established: threshold, budget and maximum. Additionally, the Compensation
Committee sets a percentage of base salary to be eligible to be received as
incentive compensation at each of the threshold, budget and maximum targets. If
actual after-tax net income reaches the threshold, budget or maximum targets,
participants will automatically receive 75% of the designated percentage of base
salary as incentive compensation. The remaining 25% of the award potential is
based on individual performance against goals, namely: management of the Company
with emphasis on development and retention of key personnel; implementation of
new initiatives; financial progress in addition to net earnings; and risk
management. In the event that actual after-tax net income is less than the
threshold after-tax net income target, no incentive compensation is payable. The
Compensation Committee reviews the terms of the EIP each year to assure that, in
operation, it is furthering the committee's compensation policy objectives.
Incentive compensation earned under the EIP is paid within one month of the end
of the fiscal year. Payment of all or any part of the incentive compensation
earned under the Executive Incentive Plan may be deferred.
OFFICE OF THE CHAIRMAN INCENTIVE PLAN. Under the OCIP, for purposes of
establishing incentive awards, three after-tax net income targets for the
upcoming year are established: threshold, budget and maximum. Additionally, the
Compensation Committee sets a percentage of base salary to be eligible to be
received as incentive compensation at each of the threshold, budget and maximum
targets. If actual after-tax net income reaches the threshold, budget or maximum
targets, participants will automatically receive 75% of the designated
percentage of base salary as incentive compensation. The remaining 25% of the
award potential is based on the individual's performance against goals, namely:
management of the Company with emphasis on development and retention of key
personnel; implementation of new initiatives; financial progress in addition to
net earnings; and risk management. In the event that actual after-tax net income
is less than the threshold after-tax net income target, no incentive
compensation is payable. The Compensation Committee reviews the terms of the
OCIP each
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year to assure that, in operation, it is furthering the committee's compensation
policy objectives. Incentive compensation earned under the OCIP is paid within
one month of the end of the fiscal year. Payment of all or any part of the
incentive compensation earned under the OCIP may be deferred.
GROUP MANAGEMENT INCENTIVE PLAN. Under the GMIP, for purposes of
establishing incentive awards, after-tax net income targets for the upcoming
year are established with a threshold and a maximum, based on Provident's annual
budget as approved by the Board of Directors. Additionally, the Compensation
Committee sets a sliding scale percentage of base salary eligible to be received
as incentive compensation. If actual after-tax net income reaches the threshold
or maximum targets, Mr. Starliper receives a percentage of base salary as
incentive compensation. If the actual after-tax net income is less than the
maximum, but greater than the threshold or budgeted after-tax net income
targets, the percentage of base salary which may be received as incentive
compensation is increased proportionately. The award potential is based on
corporate and individual performance goals. In the event that actual after-tax
net income is less than the threshold after-tax income target, no incentive
compensation is payable. The Compensation Committee reviews the terms of the
GMIP each year to assure that, in operation, it is furthering the committee's
compensation policy objectives. Incentive compensation earned under the GMIP is
paid within one month of the end of the Bank's fiscal year. Payment of all or
any part of the incentive compensation earned under the GMIP may be deferred.
STOCK OPTION PLAN. Long-term incentives for the named executive officers
are provided through the Stock Option Plan. The Stock Option Plan authorizes the
issuance of non-qualified stock options to key officers and certain employees of
Provident and its subsidiaries. Subject to the general limits prescribed by the
Stock Option Plan, the Compensation Committee has the authority to determine the
individuals to whom stock options are awarded, the terms of the options and the
number of shares subject to each option. Although the Compensation Committee's
decisions are discretionary and no specific formula is used in the decision
making, the number of options granted is based generally upon position level and
performance. Through the award of stock options, the objective of aligning the
long-range interests of the executive officers with those of the shareholders is
met by providing the executive officers with the opportunity to build a
meaningful ownership stake in Provident.
OTHER COMPENSATION PLANS. The named executive officers participate in
the Company's health and welfare and qualified retirement plans on the same
terms as non-executive employees who meet the applicable eligibility criteria,
subject to any legal limitations on the amounts that may be contributed or the
benefits that may be payable under these plans.
In addition to the qualified retirement plans, Provident Bank maintains
the Supplemental Plan in which Mr. Martin participates. The Supplemental Plan
provides additional benefits to Mr. Martin upon retirement equal to 72.3% of 70%
of final pay, reduced by Social Security and the age-65 benefit accrued under
the Bank's Pension Plan and then proportionately reduced for less than 25 years
of service. The Supplemental Plan is unfunded, so that amounts payable represent
unsecured liabilities of the Bank, subject to the claims of secured creditors.
The Bank has also purchased four insurance policies on the life of Mr. Martin.
Two policies are split-dollar arrangements, subject to collateral assignment
agreements. The other two are corporate-owned life insurance policies.
CHIEF EXECUTIVE OFFICER COMPENSATION. The Compensation Committee set Mr.
Martin's base compensation for the fiscal year 2000 at $465,000, which
represents a 7.3% increase over his 1999 base salary. In establishing his base
salary, the Compensation Committee reviewed Mr. Martin's performance for the
prior year and also considered the compensation of chief executive officers of
banking organizations in the Baltimore metropolitan area. The increase for 2000
reflects the
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Compensation Committee's recognition of Mr. Martin's contribution to the
successful implementation of measures to improve the financial performance of
Provident Bank, the earnings growth and the increase in the return on and amount
of shareholder equity. For Mr. Martin's 2000 bonus, the Compensation Committee
recognized, among other accomplishments, the successful integration of the
acquisition of Harbor Federal Bancorp, Inc. and the increase in Provident's
stock price in 2000. The threshold target for 2000 was met, resulting in a
formula and performance driven payout of $146,000.
COMPENSATION OF OTHER NAMED EXECUTIVE OFFICERS. Recommendations
regarding the base salary of the other named executive officers are made to the
Compensation Committee by the Chief Executive Officer and are either approved or
modified by the Compensation Committee. The recommendations as to the salaries
of the other named executive officers is based upon a review of their
performance during the prior year provided by the Chief Executive Officer. The
Compensation Committee did not reject or modify in any material way any of the
recommendations of the Chief Executive Officer concerning the base salaries of
the other named executive officers for 2000.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE PROVIDENT BANKSHARES
CORPORATION BOARD OF DIRECTORS
SHEILA K. RIGGS (CHAIRPERSON)
THOMAS S. BOZZUTO
CHARLES W. COLE, JR.
PIERCE B. DUNN
BARBARA B. LUCAS
SISTER ROSEMARIE NASSIF
FRANCIS G. RIGGS
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PERFORMANCE GRAPH
The SEC requires that Provident include in this proxy statement a
line-graph comparing cumulative shareholder returns as of December 31 for each
of the last five years among the common stock, a broad market index and either a
nationally-recognized industry standard or an index of peer companies selected
by Provident, assuming in each case both an initial $100 investment and
reinvestment of dividends. Consistent with past practice, the Board of Directors
has selected the Nasdaq Market Index as the relevant broad market index because
prices for the common stock are quoted on the Nasdaq National Market.
Additionally, the Board of Directors has selected the Middle Atlantic Banks
Index as the relevant industry standard because such index consists of financial
institutions which are headquartered in the mid-Atlantic region and the Board
believes that such institutions generally possess assets, liabilities and
operations more similar to those of Provident and its subsidiaries than other
publicly-available indices.
COMPARATIVE TOTAL RETURNS
PROVIDENT BANKSHARES CORPORATION, THE NASDAQ MARKET INDEX AND
THE MG INDEX FOR THE MID-ATLANTIC REGION
[GRAPH APPEARS HERE]
SUMMARY
12/29/95 12/31/96 12/31/97 12/31/98 12/31/99 12/29/00
-------- -------- -------- -------- -------- --------
PROVIDENT BANKSHARES CORPORATION....... $100.00 $135.24 $237.67 $197.96 $148.45 $196.77
NASDAQ MARKET INDEX.................... 100.00 $124.27 $152.00 $214.39 $378.12 $237.66
MG INDEX FOR THE MID-ATLANTIC REGION... 100.00 $133.60 $217.88 $239.83 $189.78 $214.77
NOTES:
A. THE LINES REPRESENT MONTHLY INDEX LEVELS DERIVED FROM COMPOUNDED DAILY
RETURNS THAT INCLUDE REINVESTMENT OF ALL DIVIDENDS.
B. THE INDEXES ARE RE-WEIGHTED DAILY USING THE MARKET CAPITALIZATION ON THE
PREVIOUS TRADING DAY.
C. IF THE MONTHLY INTERVAL, BASED ON THE FISCAL YEAR-END, IS NOT A TRADING
DAY, THE PRECEDING TRADING DAY IS USED.
D. THE INDEX LEVEL FOR ALL SERIES WAS SET TO $100.00 ON DECEMBER 29, 1995.
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REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is responsible for assisting
the Board in fulfilling its responsibility to the shareholders relating to
corporate accounting, reporting practices and the quality and integrity of the
financial reports of the Company. Additionally, the Audit Committee selects the
auditors and reviews their independence and their annual audit. The Audit
Committee is comprised of six directors, each of whom is independent under the
Nasdaq's listing standards. The Audit Committee acts under a written charter
adopted by the Board of Directors, a copy of which is attached to this proxy
statement as Appendix A.
The Audit Committee reviewed and discussed the annual financial statements
with management and the independent accountants. As part of this process,
management represented to the Audit Committee that the financial statements were
prepared in accordance with generally accepted accounting principles. The Audit
Committee also received and reviewed written disclosures and a letter from the
accountants concerning their independence as required under applicable standards
for auditors of public companies. The Audit Committee discussed with the
accountants the contents of such materials, the accountants' independence and
the additional matters required under Statement on Auditing Standards No. 61.
Based on such review and discussions, the Audit Committee recommended that the
Board of Directors include the audited consolidated financial statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 for
filing with the SEC.
MARK K. JOSEPH (CHAIRPERSON)
WARD B. COE, III, ESQUIRE
CHARLES W. COLE, JR.
PIERCE B. DUNN
HERBERT W. JORGENSEN
FREDERICK W. MEIER, JR.
AUDIT FEES
The aggregate fees Provident paid to PricewaterhouseCoopers LLP for the
annual audit and for the review of Provident's Forms 10-Q for the fiscal year
2000 totaled $147,000.
ALL OTHER FEES
The aggregate fees Provident paid to PricewaterhouseCoopers LLP for all
other non-audit services, including fees for tax-related services, during fiscal
year 2000 totaled $87,366.
The Audit Committee believes that the non-audit fees paid to
PricewaterhouseCoopers LLP are compatible with maintaining
PricewaterhouseCoopers LLP's independence.
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COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires Provident's
executive officers and directors, and persons who own more than 10% of any
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC. Executive officers, directors
and greater than 10% shareholders are required by regulation to furnish the
Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of the reports it has received and
written representations provided to the Company from the individuals required to
file the reports, the Company believes that, with the exception of Mark Joseph,
a director of Provident and Provident Bank, each of the Company's executive
officers and directors has complied with applicable reporting requirements for
transactions in Provident's common stock during the fiscal year ended December
31, 2000. Mr. Joseph is a participant in the Provident Bankshares Corporation
Dividend Reinvestment Program. From time to time, Mr. Joseph makes cash
contributions to the Plan, consistent with the terms of the Plan. Once each in
1998 and 1999 and twice in 2000, shares acquired by virtue of such cash
contributions were inadvertently not reported. Mr. Joseph filed the necessary
reports in September 2000.
TRANSACTIONS WITH MANAGEMENT
Periodically, Provident Bank may engage in lending transactions in the
ordinary course of business with its officers and directors, as well as entities
associated with such persons. Such transactions are made in the ordinary course
of business and on substantially the same terms, including interest rate and
collateral, as those prevailing at the time for comparable transactions with
other persons. Loans to such persons do not involve more than the normal risk of
collectibility or present other unfavorable features.
PROPOSAL 2. AMENDMENT OF THE PROVIDENT BANKSHARES CORPORATION
AMENDED AND RESTATED STOCK OPTION PLAN
Provident's shareholders are being asked to approve an amendment to the
Provident Bankshares Corporation Amended and Restated Stock Option Plan to
increase by 700,000 the number of shares of Provident common stock that the
Company may issue under the Plan. The Company's Board of Directors adopted the
amendment on December 20, 2000, subject to shareholder approval. As of the
record date, only 166,845 shares remained available under the Plan for the
future grant of options. The Company believes that an adequate reserve of shares
available for issuance under the Plan is necessary to enable the Company to
compete effectively with other financial institutions to attract and retain key
personnel and to secure the services of experienced and qualified persons as
directors.
The Company anticipates that, following the receipt of shareholder approval
of the amendment to increase the number of shares available under the Plan, it
will, from time to time, grant awards to eligible directors, officers and other
employees as part of the Company's overall compensation strategy. However, the
Company has not made any specific determinations regarding the persons eligible
to receive awards, the size of awards or the terms of awards.
Provident's Board of Directors has also amended the Plan to provide that the
Company may not reprice stock options granted without first obtaining
shareholder approval. This amendment to the Plan does not require approval of
Provident's shareholders.
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SUMMARY OF THE STOCK OPTION PLAN
The following summary of the Stock Option Plan is qualified in its entirety
by the complete provisions of the Plan attached as Appendix B.
PARTICIPANTS. All directors, officers and other employees of Provident and
its subsidiaries are eligible to participate in the Stock Option Plan.
TYPES OF AWARDS. The Stock Option Plan authorizes the grant of non-statutory
stock options (each an "NSO") to participants. Non-statutory stock options are
stock options that do not meet the requirement of Section 422 of the IRC.
ADMINISTRATION. The Compensation Committee administers the Stock Option
Plan. The Compensation Committee also determines the number of shares for which
options shall be granted, the price to be paid upon the exercise of each option
and the termination date of the options. All of the foregoing determinations are
subject to the approval of the Board of Directors.
NUMBER OF SHARES OF COMMON STOCK AVAILABLE. As noted above, only 166,845
shares currently remain available for issuance in connection with the exercise
of options under the Stock Option Plan. Subject to shareholder approval of
Proposal 2, the number of shares of common stock available for issuance under
the Plan will increase by 700,000. Any shares subject to an award which expire
or are terminated unexercised will again be available for issuance under the
Plan.
TERMS OF STOCK OPTION GRANTS. The exercise price of each stock option grant
will not be less than the fair market value of Provident's common stock on the
date of the grant. Options may be exercised in whole or in part once they become
exercisable.
If an option holder ceases to be a director, officer or employee of
Provident or its subsidiaries due to death or disability, all of the optionee's
options will immediately become fully exercisable and will remain so for a
period of 60 days from the date of termination of service, but in no event after
their respective expiration dates.
If an option holder ceases to be director, officer or employee of Provident
or its subsidiaries as a result of retirement, all of the optionee's options
that were fully exercisable on the date of termination of service will remain
exercisable until their respective termination dates. All of the optionee's
options that were not exercisable on that date will terminate immediately.
If an optionee ceases to be a director, officer or employee of Provident or
its subsidiaries for any reason other than death, disability or retirement, all
of the optionee's options that were fully exercisable on the date of termination
of service will remain for a period of 30 days from the date of termination of
service, but in no event later than the termination period of the option. All of
the optionee's options that were not exercisable on the date of termination will
terminate immediately.
EFFECT OF A CHANGE IN CONTROL. In the event of a change in control (as
defined in the Plan) of the Company, each outstanding stock option grant will
become fully vested and immediately exercisable.
AMENDMENT OF THE PLAN. The Board of Directors may generally amend or
terminate the Plan at any time, provided that no amendment may adversely affect
the rights of an optionee.
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FEDERAL INCOME TAX CONSEQUENCES. The following brief description of the tax
consequences of stock option grants under the Plan is based on federal income
tax laws currently in effect and does not purport to be a complete description
of such federal income tax consequences.
There are generally no federal income tax consequences either to the
optionee or to the Company upon the grant of an NSO. Upon the exercise of an
NSO, the excess of the date-of-exercise fair market value of the shares acquired
over the option price will generally be taxable to the optionee as ordinary
income and deductible by the Company, provided the Company properly withholds
taxes in respect of the exercise. This disposition of shares acquired upon the
exercise of an NSO will result in a capital gain or loss for the optionee, but
will have no tax consequences for the Company.
PAYOUT ALTERNATIVES. The Compensation Committee has the sole discretion to
determine the form of payment for the exercise of an option. The committee may
indicate acceptable forms in the award agreement covering such options or may
reserve its decision to the time of exercise. No option is to be considered
exercised until payment in full is accepted by the committee. The committee may
permit the following forms of payment for options: (1) in cash or by certified
check; (2) through borrowed funds, to the extent permitted by law; or (3) by
tendering previously acquired shares of common stock. Any shares of common stock
tendered in payment of the exercise price of an option shall be valued at the
fair market value of the common stock on the date prior to the date of exercise.
ADJUSTMENTS. In the event of any change in the outstanding shares of
Provident's common stock by reason of any stock dividend or split,
recapitalization, merger, consolidation, spin-off, reorganization, combination
or exchange of shares, or other similar corporate change, or other increase or
decrease in such shares without receipt or payment of consideration by
Provident, the Compensation Committee, in its discretion, may make such
adjustments to previously granted awards, to prevent dilution, diminution or
enlargement of the rights of the participants. All awards under the Stock Option
Plan shall be binding upon any successors or assigns of Provident.
NONTRANSFERABILITY. No awards under the Stock Option Plan are transferable
by the recipient other than by will or the laws of descent and distribution.
With the consent of the Compensation Committee, an optionee may designate a
person or his or her estate as beneficiary of any award to which the recipient
would then be entitled, in the event of the death of the employee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
PROPOSED AMENDMENT TO THE PROVIDENT BANKSHARES CORPORATION AMENDED AND RESTATED
STOCK OPTION PLAN.
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Provident's independent auditors for the fiscal year ended December 31, 2000
were PricewaterhouseCoopers LLP. Provident's Board of Directors has reappointed
PricewaterhouseCoopers LLP to continue as Provident's independent auditors for
the fiscal year ending December 31, 2001, subject to ratification of such
appointment by shareholders.
Representatives of PricewaterhouseCoopers LLP will be present at the annual
meeting. They will be given an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
shareholders present at the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT AUDITORS OF
PROVIDENT.
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ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
The Company must receive proposals that shareholders seek to include in the
proxy statement for the Company's next annual meeting no later than November 13,
2001. If next year's annual meeting is held on a date more than 30 calendar days
from April 18, 2002, a shareholder proposal must be received by a reasonable
time before the Company begins to print and mail its proxy solicitation for such
annual meeting. Any shareholder proposals will be subject to the requirements of
the proxy rules adopted by the SEC.
The Company's Bylaws provide that in order for a shareholder to make
nominations for the election of directors or proposals for business to be
brought before the annual meeting, a shareholder must deliver notice of such
nominations and/or proposals to the Corporate Secretary not less than 90 days
before the date of the annual meeting; provided that if less than 100 days'
notice or prior public disclosure of the date of the annual meeting is given to
shareholders, such notice must be delivered not later than the close of the
tenth day following the day on which notice of the date of the annual meeting
was mailed to shareholders or prior public disclosure of the meeting date was
made. A copy of the full text of the Bylaw provisions discussed above may be
obtained by writing to the Corporate Secretary at 114 East Lexington Street,
Baltimore, Maryland 21202.
Provident's Annual Report to Shareholders and Annual Report on Form 10-K
accompany this proxy statement.
By Order of the Board of Directors
/s/ Peter M. Martin
PETER M. MARTIN
Chairman of the Board and
Chief Executive Officer
Baltimore, Maryland
March 12, 2001
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APPENDIX A
PROVIDENT BANK OF MARYLAND/
PROVIDENT BANKSHARES CORPORATION
AUDIT COMMITTEE CHARTER
SECTION 1. ELECTION, NUMBER AND QUALIFICATIONS.
The Audit Committee shall be comprised of a chairman and three or more
members, all of whom are directors not simultaneously serving as officers or
employees of the Corporation. The chairman and each member shall be independent
directors within the meaning of the NASDAQ Audit Committee Requirements and
shall have a working familiarity with basic financial and accounting practices.
At least one member of the Committee shall have accounting or related financial
management experience. The chairman and members of the Committee shall be
appointed by majority vote of the Board of Directors.
SECTION 2. GENERAL POWERS AND DUTIES.
The primary responsibility of the Committee is to ensure the Board of
Directors receives objective information regarding policies, procedures and
activities of the Corporation with respect to auditing, accounting, internal
controls, financial and operational reports, loan review, and such other
activities of the Corporation as may be directed by the Board of Directors.
Within this objective, the Committee is directed to perform at least the
following duties:
a. Review the independence, qualifications and retention of the
independent auditors who are ultimately accountable to the Audit
Committee and the Board. Review each audit provided by the
independent auditors.
b. Review with management and the independent auditors the 10-Q and
10-K prior to its filing.
c. Review the arrangements and scope of the independent auditor's
audit plan prior to commencement of their annual examination of
the Corporation's financial statements.
d. Review the performance of the independent auditors including, as
required by circumstances:
1. The basis of any significant changes in the Corporation's
accounting principles and methods of their application;
2. The independent auditor's comments on significant
weaknesses in internal controls and consideration given or
corrective action taken by management; and
3. Other matters relating to the audits of the Corporation's
annual or quarterly financial statements or other auditing
results as may be of concern to the Committee or the
independent auditors.
e. Review the independence of the Internal Audit Division to ensure
the staff has sufficient independence, despite their status as
employees, to freely conduct internal auditing without management
interference.
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f. Review the general scope of planned internal auditing activities
prior to their commencement.
g. Review the results of internal audits and the performance of the
Internal Audit Division, including, as required by circumstances:
1. Action taken by the Corporation's management on
recommendations made by the Audit Division;
2. Reports of defalcations made to regulatory authorities.
Other matters relating to internal audit activities as may
be of concern to the Committee or the internal auditors.
h. Review the independent auditors and/or internal auditor's
assessment of the Corporation's compliance with various policies
and procedures instituted by management to ensure adequate
internal accounting controls.
i. Review the general scope of planned portfolio examinations and
the results of portfolio examinations performed.
j. Review the report of the adequacy of the Loan/Lease Loss Reserve
prepared by Credit Risk Review.
k. Review activity of the Retirement Benefits Committee.
l. Review the quarterly activity of the Security Department.
m. Review the quarterly report of Defensive Litigation.
n. On at least an annual basis, review this charter.
SECTION 3. REPORTS.
The Committee shall report the results and conclusions resulting from all
its review activities, including those specified in the preceding section,
together with its recommendations for action to the Board of Directors at their
next meeting subsequent to that of the Committee. Any action by the Committee
shall be similarly reported to the Board of Directors for approval,
ratification, and/or confirmation.
SECTION 4. MEETINGS.
The Committee shall meet at least four (4) times annually and such meetings
shall, during their course and in total, provide for at least:
a. Time for attendance of only the Managing Director and Auditor to
review the scope of planned auditing activities and internal
auditing results.
b. Time for attendance of only the Credit Risk Review Manager to
review the scope of planned review activities and results.
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c. Representatives of the independent auditors to attend at least
two meetings to present the results of their annual audit.
d. Representatives of the Audit Division, Credit Risk Review
Department, the Security Department, and General Counsel to
present their results.
SECTION 5. OUTSIDE AUDITORS.
In order to carry out their duties, the Committee is authorized to employ
and to confer with such additional outside advisors and consultants, as it may
deem necessary and appropriate, and to authorize the Corporation to pay
reasonable compensation for such services.
SECTION 6. VACANCIES.
Any vacancy which may occur in the Committee shall be filled by the Board of
Directors, but in the absence of a member or members of the Committee, the
members thereof present (whether or not they constitute a quorum) may appoint a
qualified member or members of the Board of Directors to act in the place or
places of such absent member or members.
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APPENDIX B
PROVIDENT BANKSHARES CORPORATION
AMENDED AND RESTATED STOCK OPTION PLAN
1. PURPOSE. This Stock Option Plan (herein the "Plan") is intended as an
employment incentive and to encourage stock ownership by certain directors, key
officers and employees of the Corporation and any Subsidiary, so that they may
increase their proprietary interest in the Corporation's success. In this way,
the Corporation will be assisted in its efforts to attract and retain highly
qualified management personnel.
2. ADMINISTRATION. The Plan shall be administered, construed and interpreted
by the Compensation Committee, as appointed by the Board of Directors of the
Corporation as defined under Section 6(f) (herein the "Committee"). The
Committee is authorized, subject to the provisions of the Plan, to establish
such rules and regulations as it sees necessary for the proper administration of
the Plan and to make whatever determinations and interpretations in connection
with the Plan it sees as necessary or advisable. All determinations and
interpretations made by the Committee shall be binding and conclusive on all
participants in the Plan and on their legal representatives and beneficiaries.
The Board of Directors may from time to time remove members from, or add members
to, the Committee, and vacancies on the Committee, however caused, shall be
filled by the Board of Directors. Subject to the provisions of the Plan, the
Committee shall determine:
(a) The directors, officers and employees to whom options
shall be granted;
(b) The number of shares on which options shall be granted to
each director, officer and employee;
(c) The price to be paid for the shares upon the exercise of
each option;
(d) The termination date of such options; and
(e) All other matters deemed necessary or advisable for the
administration of the Plan.
No member of the Board of Directors or the Committee shall be liable for any
action or determination made in good faith, and the members shall be entitled to
indemnification and reimbursement in the manner provided in the Corporation's
Articles of Incorporation or otherwise provided by law. The Committee shall
furnish the Board with copies of all decisions, orders and determinations made
by the Committee.
3. ELIGIBILITY. Subject to the terms herein, directors, key salaried
officers and employees of the Corporation, or of any present or future
Subsidiary, as the Committee shall determine from time to time shall be eligible
to participate in the Plan. An Optionee may hold more than one (1) option, but
only on the terms and conditions herein set forth.
4. STOCK. The stock subject to the options and other provisions of the Plan
shall be shares of the Corporation's $1.00 par value common stock which is
authorized but unissued, or reacquired common stock (herein sometimes "Common
Stock"). The maximum aggregate number of shares issued under the Plan shall be
2,724,301 (as of December 20, 2000) shares, subject to adjustment in accordance
with the provisions of Section 5(g) hereof. This authorization shall be
increased automatically on each
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succeeding annual anniversary of the adoption of the Plan so that the number of
shares authorized under the Plan equals 17% of the then outstanding shares of
Corporation Common Stock.
In the event that any outstanding option under the Plan for any reason
expires or is terminated prior to the end of the period during which options may
be granted under the Plan, the shares of Common Stock allocable to the
unexercised portion of such option may again be subjected to an option under the
Plan.
No participant under this Plan may receive awards with respect to shares of
Common Stock that exceed 350,000 shares in any calendar year.
5. TERMS AND CONDITIONS OF OPTIONS. Stock options granted pursuant to the
Plan to eligible employees shall be evidenced by agreements in such form as the
Committee shall, from time to time, approve, which agreements shall in substance
include and comply with and be subject to the following terms and conditions:
(a) MEDIUM AND TIME OF PAYMENT. The option price shall be payable
in United States dollars upon the exercise of the option and may be paid in cash
or by certified check, bank draft or money order payable to the order of the
Corporation. Stock options may be exercised pursuant to a "cashless exercise" of
an option in accordance with applicable securities laws. Payment of the purchase
price may be made, in whole or in part, through the surrender of shares of the
Common Stock of the Corporation at the Fair Market Value of such shares on the
date of surrender determined in the manner described in Section 6(g).
(b) NUMBER OF SHARES. The option shall state the total number of
shares to which it pertains. No option may be exercised for less than one
hundred (100) shares unless the issue of a lesser number is enough to exhaust
the option.
(c) OPTION PRICE. The option price shall not be less than the
fair market value of the shares of Common Stock of the Corporation on the date
that the option is granted. The Fair Market Value is defined under Section 6(g),
except that for the initial grant of options under the Plan, the "public
offering price" as defined in the Form S-1 Registration Statement filed by the
Corporation with the Securities and Exchange Commission shall be deemed to be
Fair Market Value per share of the Common Stock. The "date that the option is
granted" shall be the date identified in the stock option agreement; provided,
however, that the Optionee shall have no rights under such option until he
executes the option agreement described in this Section.
(d) EXPIRATION OF OPTIONS. Each option granted under the Plan
shall expire not more than ten (10 ) years from the date such option is granted,
as determined by the Committee.
(e) DATE OF EXERCISE. Except as may otherwise be determined by
the Committee at the time such option is granted, an option is fully vested and
may be exercised at any time immediately after: (i) a Change in Control, as
defined in Paragraph 6(a) hereof; or (ii) the date that the option or right is
granted as to not more than one-half (1/2) of the shares of Common Stock to
which it pertains. As of the first anniversary of the date that the option is
granted, the option may be exercised as to the remaining one-half (1/2) of the
shares of Common Stock to which it pertains. Notwithstanding the above, the
Committee may, in its sole discretion, accelerate the time at which any stock
option may be exercised in whole or in part.
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Except as herein otherwise provided, any option may be exercised in whole at
any time, or in part from time to time, during its term.
(f) TERMINATION OF EMPLOYMENT.
(i) In the event an Optionee ceases to be a director,
officer or employee of the Corporation or a Subsidiary due to death or
Disability, all of the Optionee's options shall immediately become fully vested
and exercisable and shall remain so for a period of sixty (60) days from the
date of termination of service as a director or officer or of employment, but in
no event after their respective expiration dates.
(ii) In the event an Optionee ceases to be a director,
officer or employee of the Corporation or a Subsidiary as a result of
Retirement, all of the Optionee's options that were fully vested and exercisable
on the date of termination of service as a director or officer or of employment
shall remain fully vested and exercisable and shall remain so until their
respective termination dates. All of the Optionee's options that were not fully
vested and exercisable on such date shall be terminated immediately.
Notwithstanding the above, in the event an Optionee ceases to be a director of
the Corporation as a result of Retirement within one (1) year of the effective
date of the Plan, all of such Optionee's options shall immediately become fully
vested and exercisable and shall remain so until the respective termination
period of the option.
(iii) In the event an Optionee ceases to be a director,
officer or employee of the Corporation or a Subsidiary for any reason whatsoever
other than death, Disability or Retirement, all of the Optionee's options that
were fully vested and exercisable on the date of termination of service as a
director or officer or of employment shall remain fully vested and shall be
exercisable for a period of thirty (30) days from said date of termination of
service, but in no event later than the termination period of the option. All of
the Optionee's options that were not fully vested and exercisable on said date
of termination shall be terminated immediately.
(g) ADJUSTMENTS ON CHANGES IN STOCK. In the event of any change
in the outstanding shares of Common Stock of the Corporation by reason of any
stock dividend or split, recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares, or other similar corporate
change, or other increase or decrease in such shares without receipt or payment
of consideration by the Corporation, the Committee, in its discretion, may deem
it appropriate to adjust previously granted awards, to prevent dilution or
enlargement of the rights of the Participant, including any or all of the
following:
(i) adjustments in the aggregate number or kind of shares
of Common Stock which may be awarded under the Plan;
(ii) adjustments in the aggregate number or kind of shares
of Common Stock covered by awards already made under the Plan; or
(iii) adjustments in the purchase price of outstanding
Stock Options.
(h) ASSIGNABILITY. No option shall be assignable or transferable
except by will or by the laws of descent and distribution. During the lifetime
of an Optionee, an option shall be exercisable only by him, his legal
representative or his guardian.
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(i) TAX WITHHOLDING. The Optionee may remit to the Corporation at
the time of exercise of any option any taxes required to be withheld by the
Corporation under federal, state or local law as a result of the exercise of
such option or right. If the Optionee does not remit such taxes at the time of
exercise of an option, the Optionee will be deemed to have authorized the
Corporation to withhold such taxes in accordance with applicable law from any
regular cash compensation payable to him. If this Plan is qualified under 17
C.F.R. Section 240.16b-3 ("Rule 16b-3") under the Securities and Exchange Act of
1934, as amended (the "Exchange Act"), then any withholding shall comply with 17
C.F.R. Section 240.166-3(e).
(j) OTHER CONDITIONS. The option agreements authorized under the
Plan may contain such other provisions as the Committee shall deem advisable.
6. CERTAIN DEFINITIONS. For purpose of the Plan, the following
terms shall have the meanings set forth below:
(a) "Change in Control" means an event of nature that: (i) would
be required to be reported in response to Item 1(a) of the current report on
Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Bank or the Corporation within the meaning of the
Change in Bank Control Act and the Rules and Regulations promulgated by the
Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R. Section 303.4(a)
with respect to the Bank, and the Board of Governors of the Federal Reserve
System ("FRB") at 12 C.F.R. Section 225.41(b) with respect to the Corporation,
as in effect on the date hereof; or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Bank or the Corporation
representing 10% or more of the Bank's or the Corporation's outstanding
securities except for any securities of the Bank purchased by the Corporation or
any securities of the Bank or the Corporation purchased by any employee benefit
plan of the Bank or the Corporation, or (B) individuals who constitute the Board
on the date hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of at least
75% of the directors comprising the Incumbent Board, or whose nomination for
election by the Corporation stockholders was approved by the same Nominating
Committee serving under an Incumbent Board, shall be, for purposes of this
clause (B), considered as though he were a member of the Incumbent Board, or (C)
a plan of reorganization, merger, consolidation, sale of all or substantially
all the assets of the Bank or the Corporation or similar transaction occurs in
which the Bank or Corporation is not the resulting entity, or (D) a solicitation
of stockholders of the Corporation, by someone other than the current management
of the Corporation, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Corporation or Bank with one or more
corporations, a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Bank or the
Corporation, or (E) a tender offer is made for 20% or more of the voting
securities of the Bank or Corporation then outstanding.
(b) "Disability" shall mean a permanent and total disability as
defined by Section 72(m)(7) of the Internal Revenue Code of 1986, as from time
to time amended, or any successor thereto of similar import.
(c) "Optionee" shall mean a director, officer or employee of the
Corporation or of any Subsidiary to whom an option is granted under the Plan.
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(d) "Retirement" shall mean the termination of employment of an
individual upon his attaining age 65 or other normal or early retirement age
pursuant to the regular retirement plan of the Corporation or any Subsidiary.
(e) "Subsidiary" shall mean: (i) a member of a controlled group
of corporations of which the Corporation is a member or (ii) an unincorporated
trade or business which is under common control with the Corporation as
determined in accordance with Section 414(c) of the Internal Revenue Code (the
"Code") and the regulations issued thereunder. For purposes hereof, a
"controlled group of corporations" shall mean a controlled group of corporations
as defined in Section 1563(a) of the Code determined without regard to Sections
1563(a)(4) and (3)(3)(C).
(f) "Committee" means a committee consisting of two or more
disinterested directors of the Corporation, who shall be appointed by the Board
of Directors. A member of the Board of Directors shall be deemed to be
"disinterested" only if he satisfies (i) such requirements as the Securities and
Exchanges Commission may establish for non-employee directors administering
plans intended to qualify for exemption under Rule 16b-3 (or its successor)
under the Exchange Act and (ii) such requirements as the Internal Revenue
Service may establish for outside directors acting under plans intended to
qualify for exemption under Section 162(m)(4)(C) of the Code.
(g) "Fair Market Value" shall mean, when used in connection with
the Common Stock on a certain date, the average of the reported highest bid and
lowest ask price of the Common Stock as reported on the Nasdaq National Market
(as published by The Wall Street Journal, if published) on such date or if the
Common Stock was not traded on such date, on the next preceding day on which the
Common Stock was traded thereon or the last previous date on which a sale is
reported.
7. MODIFICATION OF OPTIONS. Subject to the terms and conditions and within
the limitations of the Plan, the Committee may modify, extend or renew
outstanding options (to the extent not theretofore exercised) and authorize the
granting of new options in substitution therefor; provided, however, that any
such modifications shall be limited to those which are not adverse to the
interests of the Optionee or are necessary to cause the Plan, options to comply
with any applicable legal requirements; and provided, further, that subject to
paragraph (g) of Section 5, the Committee may not, without prior shareholder
approval, allow the option price for any previously granted option to be reduced
or otherwise repriced after the date of grant.
8. AMENDMENT OF THE PLAN. The Board of Directors may, from time to time,
with respect to any shares reserved under the Plan but not subject to options,
revise or amend the Plan in any respect. However, the Board of Directors may
not, without stockholder approval, (a) increase the number of shares of Common
Stock which may be reserved for issuance under the Plan, except as provided in
Paragraph 5(g) hereof, (b) fix the option price at less than the Fair Market
Value of the Common Stock of the Corporation on the date the option is granted,
(c) change the provisions relating to the administration of the Plan by a
Committee, (d) extend the period during which options may be granted or
exercised beyond the times originally prescribed, or (e) change the persons
eligible to participate in the Plan.
Notwithstanding the above stated paragraph, sections of the Plan governing
the grants to Non-Employee Directors shall not be amended more than once every
six months other than to comport with the Code or the Employee Retirement Income
Security Act, as amended ("ERISA"), if applicable.
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9. TERMINATION. The Board of Directors may terminate the Plan at any time,
and no option shall be granted thereafter. Such termination shall not affect the
validity of any option agreement then outstanding.
10. EFFECTIVE DATE. The Plan shall become effective when it is approved by
the holders of a majority of the Common Stock of the Corporation.
11. DESIGNATION OF BENEFICIARY. An Optionee may, with the consent of the
Committee, designate a person or persons to receive, in the event of death, any
stock option to which the Optionee would then be entitled. Such designation will
be made upon forms supplied by and delivered to the Corporation and may be
revoked in writing. If a Participant fails to effectively designate a
beneficiary, then the Participant's estate will be deemed to be the beneficiary.
12. RIGHTS OF SHAREHOLDER. No Participant shall have any rights as a
shareholder with respect to any shares covered by a stock option until the date
of issuance of a stock certificate for such shares. Nothing in this Plan or in
any award granted confers on any person any right to continue in the employ of
the Corporation or its Subsidiary or interferes in any way with the right of the
Corporation or its Subsidiary to terminate a Optionee's services as an officer
or other employee at any time.
13. APPLICABLE LAW. The Plan will be administered in accordance with the
laws of Maryland.
14. COMPLIANCE WITH SECTION 16. If this Plan is qualified under Rule 16b-3,
with respect to persons subject to Section 16 of the Exchange Act, transactions
under this Plan are intended to comply with all applicable conditions of the
Rule 16b-3 or its successors under the Exchange Act. To the extent any
provisions of the Plan or action by the Committee fail to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee.
15. OPTIONS CONTINUE AS A RESULT OF A SUCCESSOR. The obligations of the
Corporation under the Plan shall be binding upon any organization which shall
succeed to all or substantially all of the assets of the Corporation, and the
term "Corporation," whenever used in the Plan, shall mean and include any such
organization after the succession.
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PROVIDENT BANKSHARES CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
APRIL 18, 2001
10:00 A.M. LOCAL TIME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of the Board of
Directors of Provident Bankshares Corporation (the "Company"), each with full
power of substitution, to act as proxy for the undersigned, and to vote all
shares of common stock of the Company which the undersigned is entitled to vote
only at the Annual Meeting of Shareholders, to be held on April 18, 2001, at
10:00 a.m. local time, at the Company's offices at 114 East Lexington Street,
Baltimore, Maryland and at any and all adjournments thereof, with all of the
powers the undersigned would possess if personally present at such meeting as
follows:
1. The election as directors of all nominees listed (except as
marked to the contrary below).
FOR VOTE WITHHELD FOR ALL EXCEPT
|_| |_| |_|
Melvin A. Bilal Ward B. Coe, III Frederick W. Meier, Jr.
Sister Rosemaraie Nasif Gary N. Geisel
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME ON THE LINE
PROVIDED BELOW.
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2. The approval of the amendment to the Provident Bankshares
Corporation Amended and Restated Stock Option Plan.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. The ratification of the appointment of PricewaterhouseCoopers LLP
as independent auditors of Provident Bankshares Corporation for
the year ending December 31, 2001.
FOR AGAINST ABSTAIN
|_| |_| |_|
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
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THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3.
IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, INCLUDING WHETHER OR
NOT TO ADJOURN THE MEETING, THIS PROXY WILL BE VOTED BY THE PROXIES IN THEIR
BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING. THIS PROXY ALSO CONFERS
DISCRETIONARY AUTHORITY ON THE BOARD OF DIRECTORS TO VOTE WITH RESPECT TO THE
ELECTION OF ANY PERSON AS DIRECTOR WHERE THE NOMINEES ARE UNABLE TO SERVE OR FOR
GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder may sign but only one signature is
required.
Date ______________________ ____________________________________
Signature of Shareholder
Date ______________________ ____________________________________
Signature of Shareholder
The above signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Shareholders and of a
proxy statement dated March 12, 2001 and of the Annual Report to Shareholders.