- --------------------------------------------------------------------------------
SANDY SPRING BANCORP
17801 GEORGIA AVENUE
OLNEY, MARYLAND 20832
(301) 774-6400
March 28, 1994
Dear Shareholder:
We invite you to attend the 1994 Annual Meeting of Shareholders of Sandy
Spring Bancorp to be held at the Manor Country Club, 14901 Carrolton Road,
Rockville, Maryland on Wednesday, April 20, 1994 at 3:00 p.m.
The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Annual Meeting. Also enclosed is the
Annual Report showing the results of 1993.
YOUR VOTE IS IMPORTANT. On behalf of the Board of Directors, we urge you
to sign, date and return the enclosed proxy as soon as possible, even if you
currently plan to attend the Annual Meeting. This will not prevent you from
voting in person, but will assure that your vote is counted if you are unable to
attend the Annual Meeting.
If you have any questions, please call Marjorie S. Cook, Corporate
Secretary, or me at (301) 774-6400.
Thank you for the cooperation and continuing support you have given this
institution.
Sincerely,
[INSERT SIGNATURE HERE]
Willard H. Derrick
Chairman of the Board
- --------------------------------------------------------------------------------
SANDY SPRING BANCORP
17801 GEORGIA AVENUE
OLNEY, MARYLAND 20832
(301) 774-6400
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 20, 1994
NOTICE IS HEREBY GIVEN that the 1994 Annual Meeting of Shareholders (the
"Annual Meeting") of Sandy Spring Bancorp ("Bancorp") will be held on Wednesday,
April 20, 1994, at 3:00 p.m. Eastern Time at the Manor Country Club, 14901
Carrolton Road, Rockville, Maryland.
A Proxy and a Proxy Statement for the Annual Meeting and the 1993 Annual
Report to Shareholders are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
(1) The election of three directors of Bancorp for three-year terms; and
(2) Such other business as may properly come before the Annual Meeting or
any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to
come before the Annual Meeting.
Pursuant to the Bylaws, the Board of Directors has fixed the close of
business on March 25, 1994 as the record date for determination of the
shareholders entitled to vote at the Annual Meeting. Only holders of record of
Bancorp's Common Stock at the close of business on that date will be entitled to
notice of and to vote at the Annual Meeting or any adjournments thereof.
In the event that there are not sufficient votes to conduct the election of
directors or to approve such other business as may properly come before the
Annual Meeting, the Annual Meeting may be adjourned in order to permit further
solicitation of proxies by Bancorp.
You are requested to fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and to mail it in the enclosed envelope.
The proxy will not be used if you attend and choose to vote in person at the
Annual Meeting.
By Order of the Board of Directors
[INSERT SIGNATURE HERE]
Marjorie S. Cook
CORPORATE SECRETARY
Olney, Maryland
March 28, 1994
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE
AND COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE THAT IS ENCLOSED
FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF THIS ENVELOPE IS MAILED IN THE
UNITED STATES.
- --------------------------------------------------------------------------------
SANDY SPRING BANCORP
17801 GEORGIA AVENUE
OLNEY, MARYLAND 20832
(301) 774-6400
____________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 20, 1994
____________________
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sandy Spring Bancorp ("Bancorp"") to be
used at the 1994 Annual Meeting of Shareholders (the "Annual Meeting"), to be
held on Wednesday, April 20, 1994, at 3:00 p.m. Eastern Time at the Manor
Country Club, 14901 Carrolton Road, Rockville, Maryland. The accompanying
Notice of Annual Meeting and form of proxy and this Proxy Statement are being
first mailed on or about March 28, 1994 to shareholders of record as of the
close of business on March 25, 1994.
If the enclosed form of proxy is properly executed and returned to Bancorp
in time to be voted at the Annual Meeting, the shares represented thereby will
be voted in accordance with the instructions marked thereon. EXECUTED BUT
UNMARKED PROXIES WILL BE VOTED FOR PROPOSAL I TO ELECT THE THREE NOMINEES OF
BANCORP'S BOARD OF DIRECTORS AS DIRECTORS FOR THREE-YEAR TERMS. Proxies marked
as abstentions and shares held in street name which have been designated by
brokers on proxies as not voted will not be counted as votes cast. Such proxies
will be counted for purposes of determining a quorum at the Annual Meeting.
Except for procedural matters incident to the conduct of the Annual Meeting,
Bancorp does not know of any other matters that are to come before the Annual
Meeting. If any other matters are properly brought before the Annual Meeting,
the persons named in the accompanying proxy will vote the shares represented by
each such proxy on such matters as determined by a majority of the Board of
Directors.
The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. However, shareholders may revoke a proxy at
any time prior to its exercise by filing with the Corporate Secretary of
Bancorp, Marjorie S. Cook, a written notice of revocation, by delivering to
Bancorp a duly executed proxy bearing a later date or by attending the Annual
Meeting and voting in person.
The cost of soliciting proxies will be borne by Bancorp. In addition to
the solicitation of proxies by mail, Bancorp through its directors, officers and
regular employees, may also solicit proxies personally or by telephone or
telegraph. Bancorp also will 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 holders for their reasonable expenses
in doing so.
The securities which can be voted at the Annual Meeting consist of shares
of common stock, par value $1.00 per share (the "Common Stock"), of Bancorp.
Each share entitles its owner to one vote on all matters. The close of business
on March 25, 1994 has been fixed by the Board of Directors as the record date
for determination of shareholders entitled to vote at the Annual Meeting; there
were approximately 1,800 record holders of the Common Stock as of such date.
The number of shares outstanding on March 25, 1994 was 2,119,273. The presence,
in person or by proxy, of at least a majority of the total number of outstanding
shares of Common Stock is necessary to constitute a quorum at the Annual
Meeting.
A copy of the Annual Report to Shareholders for the year ended December 31,
1993 accompanies this Proxy Statement. BANCORP IS REQUIRED TO FILE AN ANNUAL
REPORT ON FORM 10-K FOR ITS YEAR ENDED DECEMBER 31, 1993 WITH THE SECURITIES AND
EXCHANGE COMMISSION ("SEC"). SHAREHOLDERS MAY OBTAIN, FREE OF CHARGE, A COPY OF
SUCH ANNUAL REPORT ON FORM 10-K BY WRITING MARJORIE S. COOK, CORPORATE
SECRETARY, AT SANDY SPRING BANCORP, 17801 GEORGIA AVENUE, OLNEY, MARYLAND 20832.
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 25, 1994 with
respect to the shares of Common Stock beneficially owned by each director and
nominee for director of Bancorp, by certain executive officers of Bancorp and by
all directors and executive officers of Bancorp as a group. This information
is based on information furnished to Bancorp by such persons. To the knowledge
of management, no person owns beneficially more than 5% of the outstanding
shares of Common Stock.
AMOUNT AND PERCENT OF
NATURE OF BENEFICIAL COMMON STOCK
NAME OWNERSHIP(1)(2)(3) OUTSTANDING
____ ____________________ ___________
Andrew N. Adams, Jr. 8,100 *
William M. Canby 26,367 1.24
John Chirtea 4,070 *
Willard H. Derrick 38,117 1.79
Hunter R. Hollar 5,402 *
Charles F. Mess 1,746 *
Robert L. Mitchell 2,000 *
Robert L. Orndorff, Jr. 16,943 *
Louisa W. Riggs 7,205 *
Francis Snowden 15,276 *
W. Drew Stabler 8,606 *
Thomas O. Keech 21,124 *
A. Hardy Pickett 26,621 1.25
All directors and executive
officers as a group
(17 persons) 187,213 8.66
<FN>
__________
*Less than 1% of Bancorp's outstanding Common Stock.
(1) Under the rules of the SEC, an individual is considered to
"beneficially own" any share of Common Stock which he or she,
directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise, has or shares: (1)
voting power, which includes the power to vote, or to direct the
voting of, such security; and/or (2) investment power, which
includes the power to dispose, or to direct the disposition, of
such security. In addition, an individual is deemed to be the
beneficial owner of any share of Common Stock of which he or she
has the right to acquire voting or investment power within 60 days
of March 25, 1994. Includes 41,650 shares of Common Stock subject
to outstanding options which are exercisable within 60 days of
March 25, 1994, of which Willard H. Derrick, Hunter R. Hollar,
Thomas O. Keech and A. Hardy Pickett hold options to purchase
16,000 shares, 5,000 shares, 10,900 shares and 7,250 shares of
Common Stock, respectively. Also includes 4,417 shares, 2,274
shares and 2,907 shares of Common Stock owned by Messrs. Derrick,
Keech and Pickett, respectively, and 1,517 shares of Common Stock
owned by other executive officers, as participants in Bancorp's
Cash and Deferred Profit Sharing Plan and Trust.
(2) Includes shares owned directly by directors and executive officers
of Bancorp as well as shares held by their spouses and minor
children and trusts of which certain directors are trustees.
(3) Fractional shares resulting from participation in the dividend
reinvestment plan have been rounded to the nearest whole share.
2
ELECTION OF DIRECTORS
(PROPOSAL 1)
Pursuant to Bancorp's Bylaws, the directors are divided into three classes,
as nearly equal in number as possible, with the number of directors as specified
in the Bylaws. In general, the term of office of only one class of directors
expires in each year, and their successors are elected for terms of three years
and until their successors are elected and qualified. At the Annual Meeting a
total of three directors will be elected for three-year terms. With respect to
the election of directors, each shareholder of record on the record date is
entitled to one vote for each share of Common Stock held. A plurality of all
the votes cast at the Annual Meeting will be sufficient to elect a nominee as a
director.
Information as to Nominees and Continuing Directors
The following table sets forth the names of the Board of Directors' three
nominees for election as directors. Also set forth is certain other
information, some of which has been obtained from Bancorp's records and some of
which has been supplied by the nominees and continuing directors with respect to
each such person's principal occupation and employment during the past five
years, his or her age at December 31, 1993, the periods during which he or she
has served as a director and his or her positions currently held with Bancorp.
It is the intention of the persons named in the proxy to vote the shares
represented by each properly executed proxy for the election as directors of the
three nominees listed below for terms of three years, unless otherwise directed
by the shareholder. The Board of Directors believes that each of the nominees
will stand for election and will serve if elected as director. If any person
nominated by the Board of Directors fails to stand for election or is unable to
accept election, the proxies will be voted for the election of such other person
or persons as the Board of Directors may recommend.
The Board of Directors recommends a vote "FOR" each of the nominees named
below as a director of Bancorp.
MEMBER CURRENT
POSITION(S) HELD OF BOARD TERM
AGE WITH BANCORP SINCE(1) EXPIRES
--- ---------------- -------- --------
DIRECTOR-NOMINEES:
- ------------------
Andrew N. Adams, Jr. 67 Director 1968 1994
Robert L. Mitchell 57 Director 1991 1994
Robert L. Orndorff, Jr. 37 Director 1991 1994
CONTINUING DIRECTORS:
- ---------------------
Charles F. Mess 55 Director 1987 1995
Louisa W. Riggs 69 Director 1987 1995
Francis Snowden 68 Director 1970 1995
W. Drew Stabler 56 Director 1986 1995
William M. Canby 63 Director 1970 1996
John Chirtea 56 Director 1990 1996
Willard H. Derrick 67 Chairman of the Board 1970 1996
Hunter R. Hollar 45 President, Chief 1990 1996
Executive Officer
and Director
3
<FN>
__________________
(1) The Boards of Directors of Bancorp and its principal subsidiary, Sandy
Spring National Bank (the "Bank"), are composed of the same persons.
Includes term of office as a director of the Bank prior to the formation of
Bancorp as the holding company for the Bank in January 1988.
The principal occupation(s) and business experience of each nominee and
director of Bancorp for the last five years are set forth below.
DIRECTOR-NOMINEES:
ANDREW N. ADAMS, JR. retired in 1989 as President of Ten Oaks Nursery and
Gardens, Inc.
ROBERT L. MITCHELL is President and Chief Executive Officer of C-I/Mitchell
and Best Company which is engaged in homebuilding and real estate development.
ROBERT L. ORNDORFF, JR. is President of RLO Contractors, Inc., an
excavating contractor. Mr. Orndorff is a nephew of A. Hardy Pickett, a Vice
President of Bancorp.
CONTINUING DIRECTORS:
CHARLES F. MESS, M.D. is in the practice of General Orthopedics.
LOUISA W. RIGGS has been President of Riggs Distributing Company since
1989. Prior to that, she was President of Damascus Fuel Company. Both
companies are distributors of retail fuel oil.
FRANCIS SNOWDEN retired in 1990 as Vice President of Bancorp and Senior
Vice President and Cashier of the Bank.
W. DREW STABLER is a partner in Pleasant Valley Farm, a crop and livestock
operation.
WILLIAM M. CANBY is an attorney associated with the law firm of Miller,
Miller and Canby, Chtd. Prior to 1992, Mr. Canby was an attorney and partner in
the same law firm.
JOHN CHIRTEA is retired from LCOR, a national real estate development
company. In prior years, Mr. Chirtea was a partner in the Linpro Co., the
predecessor company of LCOR.
WILLARD H. DERRICK is currently Chairman of the Board of Bancorp and the
Bank. From 1991 through 1993, Mr. Derrick was Chairman of the Board and Chief
Executive Officer of Bancorp and the Bank. Mr. Derrick served as President and
Chief Executive Officer of Bancorp and the Bank from 1987-1991 and prior to that
was President and Chief Executive Officer of the Bank (1972-1987). Mr. Derrick
joined the Bank in 1952.
HUNTER R. HOLLAR became President and Chief Executive Officer of Bancorp
and the Bank on January 1, 1994. From 1990 through 1993, Mr. Hollar served as
President of Bancorp and President and Chief Operating Officer of the Bank.
Prior to that, he served as Senior Vice President and Senior Credit Officer of
Dominion Bank of Richmond, N.A. (1989-1990) and Senior Vice President and
Regional Executive Officer of Dominion Bank of Shenandoah Valley, N.A. (1984-
1988).
CORPORATE GOVERNANCE AND OTHER MATTERS
During fiscal 1993, each of the Company's and the Bank's Boards of
Directors held 12 regular meetings and one special meeting.
The average attendance was 97% for meetings of Bancorp's and the Bank's
Boards of Directors. All incumbent directors attended 75% or more of the
aggregate of (a) the total number of meetings of the Boards of Directors and (b)
the total number of meetings held by all committees on which they served.
4
Bank directors who are not employed by the Bank receive an annual retainer
of $2,000 and fees of $350 for attendance at each meeting of the Board of
Directors, $350 for each Executive Committee meeting, and $250 for other
committee meetings ($150 if held immediately before or after a meeting of the
Board of Directors or another committee). Bancorp directors who are not
employed by Bancorp do not receive any additional compensation except for fees
of $350 for attendance at each meeting of the Board of Directors not held in
conjunction with a meeting of the Bank's Board of Directors and except for fees
of $250 or $150, paid on the same basis as for Bank committee meetings (i.e.,
$250 or $150), for each meeting of the Nominating Committee.
Bancorp's Board of Directors has standing Audit and Nominating Committees.
The Bank has a standing Compensation Committee. The functions, composition and
frequency of meeting for these committees in fiscal 1993 were as follows:
AUDIT COMMITTEE - The Audit Committee is composed of Mrs. Louisa W. Riggs,
Chairman, and Messrs. John Chirtea, Charles F. Mess, Robert L. Mitchell and
Robert L. Orndorff, Jr. The Audit Committee, whose members are neither
officers nor employees of Bancorp or the Bank, provides general oversight of the
internal audit function, reviews the findings of external audits and
examinations, evaluates the adequacy of the Bank's insurance coverage, reviews
the activities of the Bank's Compliance Council, reviews the annual report to
stockholders and Form 10-K on behalf of the Board and monitors internal controls
for financial reporting. During fiscal 1993, four meetings were held.
NOMINATING COMMITTEE - The Nominating Committee is composed of Messrs.
William M. Canby, Chairman, Andrew N. Adams, Jr., Willard H. Derrick, W. Drew
Stabler and Charles F. Mess. The Nominating Committee makes recommendations to
the Board of Directors with respect to nominees for election as directors.
While the Nominating Committee will consider nominees recommended by
shareholders, it has not actively solicited recommendations by Bancorp's
shareholders for nominees nor has it established any procedures for this purpose
other than as set forth in the Bylaws. See "Shareholder Proposals." During
fiscal 1993, no meetings were held.
COMPENSATION COMMITTEE - The Compensation Committee is composed of Messrs.
W. Drew Stabler, Chairman, William M. Canby, John Chirtea, Charles F. Mess and
Robert L. Orndorff, Jr. The Compensation Committee recommends salaries and
other compensation for executive officers, conducts an annual review of the
salary budget, considers other compensation plans and makes recommendations to
the Board, deals with matters of personnel policy and, with the Stock Option
Committee, administers the 1992 and 1982 Stock Option Plans. During fiscal
1993, three meetings were held.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to or earned by (i) the Chief Executive
Officer, and (ii) the four highest paid executive officers of Bancorp whose
salary and bonus earned in 1993 exceeded $100,000 for services rendered in all
capacities to the Bancorp and its subsidiaries. No other executive officer
earned in excess of $100,000 in salary and bonus in 1993.
Long Term Compensation
Annual Compensation ----------------------
Name and Principal ---------------------- Stock Option All Other
Position in 1993 (1) Year Salary Bonus Grants (Shares) Compensation(2)(3)
- -------------------- ---- ------- ------- ----------------- ------------------
Willard H. Derrick 1993 $180,845 $30,000 -- $11,540
Chairman and Chief Executive 1992 173,000 25,000 -- 12,810
Officer of Bancorp and the Bank 1991 165,000 10,000 2,000
(TABLE CONTINUED ON SUCCEEDING PAGE)
(TABLE CONTINUED FROM PRECEDING PAGE)
Long Term Compensation
Annual Compensation ----------------------
Name and Principal ------------------- Stock Option All Other
Position in 1993 (1) Year Salary Bonus Grants (Shares) Compensation(2)(3)
- -------------------- ---- ------- ------ --------------- ------------------
Hunter R. Hollar 1993 149,600 20,000 1,500 9,714
President of Bancorp and President 1992 140,000 20,000 1,500 10,500
and Chief Operating Officer of 1991 130,000 10,000 2,000
the Bank, Director of Bancorp
and the Bank
Thomas O. Keech 1993 112,390 15,000 900 7,049
Vice President and Treasurer of 1992 106,000 14,000 900 7,980
Bancorp and Executive Vice 1991 100,000 8,000 1,200
President and Chief Financial
Officer of the Bank
A. Hardy Pickett (4) 1993 97,263 10,000 -- 5,958
Vice President of Bancorp and 1992 92,500 10,000 750 6,965
Senior Vice President of the 1991 88,000 7,000 1,000
Bank
<FN>
_______________________
(1) Effective January 1, 1994, Mr. Derrick is Chairman of the
Board of Bancorp and the Bank and Hunter R. Hollar became
President and Chief Executive Officer of Bancorp and the
Bank.
(2) As permitted, information will be phased in over a three-
year period. No information is shown with respect to fiscal
years ending prior to December 15, 1992.
(3) Amounts shown in this column pertain to deferred
compensation under the Company's Cash and Deferred Profit
Sharing Plan and Trust. See "Benefits -- Deferred Profit
Sharing Plan."
(4) Mr. Pickett will retire on April 1, 1994.
Certain executive officers of Bancorp and the Bank receive indirect
compensation in the form of personal benefits. The amount of such indirect
compensation received in fiscal 1993 by each named executive officer did not
exceed 10% of the cash compensation paid to or accrued for each such executive
officer.
STOCK OPTION PLANS. Bancorp maintains two stock option plans, the
purposes of which are to attract, retain and motivate key officers of Bancorp
and the Bank by providing key officers with a stake in the success of Bancorp as
measured by the value of its shares.
The 1992 Stock Option Plan (the "1992 Option Plan"), which was
approved by the shareholders at the 1992 Annual Meeting of Shareholders,
authorizes the issuance of up to 135,000 shares of Common Stock, subject to
certain adjustments for changes in Bancorp's capital structure. The 1992 Option
Plan has a term of 10 years from its effective date (January 1, 1992) after
which date no stock options may be granted. As of March 25, 1994, options for
7,050 shares were outstanding under the 1992 Option Plan. The 1982 Stock Option
Plan (the "1982 Option Plan") has been terminated, except with respect to
options which were outstanding on the 1982 Option Plan's termination date. As
of March 25, 1994, options for 34,600 shares were outstanding under the 1982
Option Plan. The 1992 Option Plan and the 1982 Option Plan are referred to
collectively as the "Option Plans."
The Option Plans provide for the grant of "incentive options" as
defined in Section 422 of the Code. The 1992 Option Plan also provides for the
grant of "non-incentive options" to officers and other employees on terms and
conditions consistent with the 1992 Option Plan as the Stock Option Committee,
which administers the Option Plans, may determine. The Stock Option Committee
is comprised of all disinterested (outside) directors (i.e., all directors other
than Messrs. Derrick and Hollar).
Options have been granted under the Option Plans and may continue to
be granted under the 1992 Option Plan only to key employees of Bancorp and its
subsidiaries. Under the Option Plans, the maximum option term is 10 years from
the date of grant. Options which have been granted under the Option Plans are
immediately exercisable upon grant. The exercise price of a stock option may
not be less than 100% of the fair market value of the Common Stock on the date
of grant. The exercise price of stock options must be paid for in full in cash
or shares of Common Stock, or a combination of both, as determined by the Stock
Option Committee. The Stock Option Committee has the discretion when making a
grant of stock options under the 1992 Option Plan to impose restrictions on the
shares to be purchased in exercise of such options.
6
The Committee also has the authority to cancel stock options
outstanding under the 1992 Option Plan with the consent of the optionee and to
grant new options at a lower exercise price in the event that the fair market
value of the Common Stock at any time prior to the exercise of the outstanding
stock options falls below the exercise price of such option. Consistent with
Company policy, however, the Committee does not intend to use this authority to
cancel and reissue stock options at a lower exercise price, whether or not any
decline in the market price of Bancorp's shares is the result of general
economic conditions.
OPTION GRANTS IN FISCAL YEAR 1993
The following table contains information concerning the grant of stock
options under the Option Plans to the Chief Executive Officer and each of the
other executive officers named in the Summary Compensation Table above. The
Option Plans do not provide for the grant of stock appreciation rights.
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
--------------------------------------------------------- ----------------------
% of Total
Options Exercise
Options Granted to or Base
Granted Employees Price
(Number in Fiscal ($ per Expiration
Name of Shares) Year Share) Date 5% 10%
- ---- ---------- ---------- -------- ---------- ----- ------
Willard H. Derrick -- -- % $ -- -- $ -- $ --
Hunter R. Hollar 1,500 47.6 46.00 12/15/2003 43,395 109,965
Thomas O. Keech 900 28.6 46.00 12/15/2003 26,037 65,979
A. Hardy Pickett -- -- -- -- -- --
AGGREGATED OPTION EXERCISES IN
FISCAL YEAR 1993 AND YEAR END OPTION VALUES
The following table sets forth information concerning the exercise of
options by the Chief Executive Officer and the other named executive officers
during the last fiscal year, as well as the value of such options held by such
persons at the end of the fiscal year.
Number of Value of
Unexercised Unexercised
Options In-the-Money
at Options
Fiscal Year End at Fiscal
--------------- Year End
Shares Acquired Immediately ---------------
on Exercise Value Exercisable Immediately
Name (Number of Shares) Realized (1) (Number of Shares) Exercisable
- ------------ ------------------ ------------ ------------------ ---------------
Willard H. Derrick -- $ -- 16,000 $396,960
Hunter R. Hollar -- -- 5,000 40,000
Thomas O. Keech -- -- 10,900 233,478
A. Hardy Pickett 2,000 64,000 7,250 150,510
<FN>
_______________________
(1) Difference between fair market value of underlying securities at exercise
or fiscal year-end and the exercise or base price.
7
PENSION PLAN TABLE
The table below shows estimated annual benefits payable upon retirement to
persons in the specified remuneration and years-of-service categories if such
retirement had occurred on December 31, 1993. The benefits listed are provided
on a 10 year certain-and-life basis and are not subject to deduction for Social
Security or other offset amounts.
Years of Credited Service at Retirement
Highest 5-Year ---------------------------------------------------------------------------------------
Average Earnings 15 20 25 30 35 40 and above
- ---------------- ------ ------- ------- ------- ------- ------------
$25,000 $ 5,625 $ 7,500 $ 9,375 $11,250 $ 13,125 $ 15,000
75,000 16,875 22,500 28,125 33,750 39,275 45,000
125,000 28,125 37,500 46,875 56,250 65,625 75,000
150,000 33,750 45,000 56,250 67,500 78,750 90,000
175,000 39,375 52,500 65,625 78,750 91,875 105,000
200,000 45,000 60,000 75,000 90,000 105,000 120,000
220,000 49,500 66,000 82,500 99,000 115,000 132,000
250,000 56,250 75,000 93,750 112,500 131,250 150,000
300,000 67,500 90,000 112,500 135,000 157,500 180,000
Earnings covered by the Pension Plan are total wages, including
elective pre-tax contributions under Section 401(k) of the Code, overtime pay,
bonuses, and other cash compensation which for the named executives correspond,
in general, to the total of the amounts in the "Salary" and "Bonus" columns in
the Summary Compensation Table. Benefits are computed on a monthly basis at the
rate of 1.5% of highest five-year average monthly earnings multiplied by years
of service up to 40 years for eligible persons retiring at age 65. Early
retirement is also permitted by the Pension Plan at age 55 after at least 10
years of service. As of February 18, 1994, Bancorp's executive officers had
accumulated the following years of credited service toward retirement: Mr.
Derrick - 41 years; Mr. Hollar - 3 years; Mr. Keech - 13 years; and Mr. Pickett
- - 30 years.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. In December 1990, the Board of
Directors of the Bank, upon the recommendation of the Compensation Committee,
approved the adoption of a Supplemental Executive Retirement Plan ("SERP") for
certain selected executives of the Bank. In February 1992, Bancorp agreed to
become a party to the SERP. The SERP is designed to provide certain post-
retirement benefits to enable a targeted level of retirement income to be met
and to provide certain pre-retirement death benefits should the covered
executive die prior to retirement age.
BENEFITS. The SERP provides two forms of benefits to participating
executives. An annual pre-retirement death benefit equal to a specified
percentage of the participating executive's date of death annual salary is
provided. The annual pre-retirement death benefit is payable for a 10-year
period commencing in the year of the executive's death. An annual post-
retirement deferred compensation benefit is also provided. The amount of the
post-retirement benefit is calculated to replace a specified percentage of the
participating executive's final average income. The post-retirement benefit is
payable over a 10-year period commencing at the executive's age 65 (or later
retirement date).
REQUIREMENT FOR BENEFITS. The SERP requires that an individual
contractual agreement be entered into between each participating executive and
the Bank. The amount of benefits payable to the participating executive (or his
beneficiary upon his death) will depend on a number of factors. The executive's
post-retirement deferred compensation benefits vest over a 15-year period, with
such vesting period commencing from the executive's initial date of employment
with Bancorp or the Bank. Payment of the executive's post-retirement deferred
compensation benefit commences at age 65 or the executive's later retirement
date. With approval of the Board of Directors of the Bank, the participating
executive may retire early (on or after age 55) and receive (at age 65) payment
of the vested portion of his post-retirement deferred compensation benefit.
With no approval of the Board of Directors, the executive may retire early and
receive (at age 65) payment of his vested accrued benefit (which is the portion
of such participant's future deferred compensation benefit which has been
currently accrued and expensed for financial accounting purposes).
8
TERMINATION OF EMPLOYMENT. Upon a voluntary termination of employment
(prior to early retirement), the participating executive will receive an amount
equal to his vested accrued benefit, payable as a monthly annuity over a 10-year
period commencing at age 65. Upon a "just cause" termination of employment by
Bancorp or the Bank, the executive will lose all rights to benefits under the
SERP. Upon a termination of employment without just cause, the executive will
automatically become 100% vested in the full post-retirement deferred
compensation benefit, and will begin to receive such benefit (payable over a 10-
year period) at age 65. A just cause termination of a participating executive
is a termination for reasons of theft, fraud, embezzlement, willful misconduct
(causing significant property damage or personal injury), or willful malfeasance
or gross negligence on the part of the executive.
CHANGE-IN-CONTROL. Upon a change-in-control of Bancorp, if the
participating executive is terminated without just cause or terminates
voluntarily for good cause within three years after the change-in-control, then
the executive becomes 100% vested in his post-retirement deferred compensation
benefit. If the change-in-control has not been approved by the Board of
Directors, a lump-sum payment will be made within 30 days after termination of
employment; otherwise, payments begin when the participating executive reaches
normal retirement age. A "Change-in-Control" of Bancorp is defined as (a) the
acquisition of 20% or more of Bancorp's stock, (other than through a Bank-
sponsored tax-qualified retirement plan), (b) a change in a majority of
directors as a result of a merger or, (c) a sale of substantially all of the
assets of Bancorp.
AMENDMENT OR TERMINATION. The Bank may amend or terminate the SERP at
any time. However, the participating executive's vested accrued benefit at the
date of termination of the SERP cannot be revoked or caused to be forfeited.
LOSS OF BENEFITS. If the participating executive competes, directly or
indirectly, with Bancorp or the Bank while covered under the SERP, all rights
the executive (or his beneficiary) may have in benefits under the SERP shall
terminate.
PARTICIPANTS. The following executive officers participate in the
SERP: Willard H. Derrick, Hunter R. Hollar, Thomas O. Keech and A. Hardy
Pickett. The annual pre-retirement death benefits payable to such executives'
named beneficiaries equals the following percentages of such executive's date of
death annual salary: Year 1 (100%), Years 2 through 5 (75%), and Years 6 through
10 (50%). These percentages are slightly lower under Mr. Derrick's Agreement.
The annual post-retirement deferred compensation benefit is designed, in
conjunction with the Bank's pension plan and Social Security retirement
benefits, to replace between 65% and 70% of such participating executive's
projected final average income at retirement date. Using a 70% income
replacement target for Mr. Derrick and Mr. Hollar, and a 65% target for Mr.
Keech and Mr. Pickett, the following amounts are projected to be paid annually
over a 10-year period at age 65: Mr. Derrick ($15,749), Mr. Hollar ($109,420),
and Mr. Keech ($31,022). Because Mr. Pickett's projected retirement income from
the Bank's pension plan and Social Security equals or exceeds the 65% target
level, Mr. Pickett's SERP would not contain a post-retirement benefit after its
initial term expired on December 31, 1993 (however, his SERP would contain a
pre-retirement death benefit).
EMPLOYMENT AGREEMENT. In December 1990, Bancorp and the Bank
(collectively, the "Company") entered into an Employment Agreement ("Agreement")
with Hunter R. Hollar (the "Executive"). The Agreement, after its initial
three-year and one month term which expired on December 31, 1993, provides for
automatic one-year extensions of such term on each January 1; provided neither
party has given written notice to the other party at least 90 days prior to the
renewal date of its intention not to renew the Agreement. Such automatic
renewal has occurred for the year ending December 31, 1994. The Boards of
Directors of Bancorp and the Bank believe that the Agreement assures fair
treatment of the Executive in relation to his career with the Company by
assuring him of some financial security. The Agreement also protects the
shareholders by encouraging the Executive to continue his attention to his
duties without distraction in a potential merger or takeover circumstance and by
helping to maintain the Executive's objectivity in considering any proposals to
acquire the Company.
SALARY AND BONUS. The Agreement provides for the payment of cash and
other benefits to the Executive. During its term, the Executive will receive a
fixed salary (currently $149,600 per year), reviewed annually and subject to
increase at the Board of Directors' discretion. The Agreement also provides
that, at the discretion
9
of the Board of Directors, additional or special compensation based on the
Executive's performance may be paid as deemed appropriate.
EXPENSE REIMBURSEMENT. In addition to the above items, the Agreement
provides for the reimbursement of reasonable business expenses, the use of an
automobile (with reimbursement for expenses), and membership dues at a country
club located in the Olney, Maryland area.
TERMINATION. The Agreement also provides for special separation
payment benefits in the event of termination of the Executive's employment under
certain circumstances. In the event that the Executive is permanently disabled,
the Executive's fixed annual salary shall continue during the then remaining
term of the Agreement, reduced by any payments received by the Executive under a
Company sponsored long-term disability plan. If the Executive's employment with
the Company is terminated (a) by reason of voluntary termination prior to age 65
retirement age, (b) by reason of retirement on or after age 65 retirement age,
(c) by reason of the Executive's death, or (d) for cause, then all obligations
of the Company under the Agreement automatically terminate. Termination for
"cause" shall be deemed to exist if (a) the Executive willfully and wrongfully
refuses to perform services specified under the Agreement, (b) the Executive
materially breaches certain restrictive covenants and nondisclosure requirements
under the Agreement, (c) the Executive engages in acts of dishonesty or fraud in
connection with his services under the Agreement, or (d) the Executive engages
in other serious misconduct of a nature that the continued employment of the
Executive may reasonably be expected to adversely affect the business or
properties of the Company.
If termination of employment occurs for any reason other than those
indicated in the previous paragraph, the Executive shall be entitled to
severance pay equal to the Executive's then fixed salary for a six-month period.
CHANGE-IN-CONTROL. In the event of a Change-in-Control of the Company,
the Executive may be entitled to payment of certain benefits. If within two
years after a change-in-control, the Company shall terminate the Executive's
employment without good cause, or the Executive shall voluntarily terminate
employment for good reason, then the Company shall make a lump-sum cash payment
to the Executive equal to 2.99 times the Executive's then 12-month's annual
salary at the greater of the Executive's salary rate in effect on the date of
the Change-in-Control or the Executive's salary rate in effect on the date his
employment terminated. The Executive shall also be entitled to continue
participation for a three-year period in certain Company-sponsored health and
welfare plans. In no event, however, shall such payments and benefits exceed
the amount allowable as a deduction under Section 280G of the Code. Finally,
the Executive shall not be required to mitigate such payments under the
Agreement and future employment compensation after termination shall not be used
to reduce such payments. The Agreement also contains provisions for the payment
of legal expenses which are related to the enforcement of the Agreement incurred
by the Executive as a result of any termination of employment after a change-in-
control.
DEFINITION OF CHANGE-IN-CONTROL. The Agreement defines a "Change-in-
Control" as (a) the acquisition by any entity, person, or group (other than the
acquisition by a Company-sponsored tax-qualified retirement plan) of beneficial
ownership, as that term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934, of more than 25% of the outstanding capital stock of the Company,
(b) the commencement by any entity, person, or group (other than the Company,
its subsidiaries or tax-qualified plans) of a tender offer or an exchange offer
for more than 20% of outstanding voting stock of the Company, (c) a merger or
consolidation of the Company in which Company shareholders after the merger or
consolidation own less than 80% of the voting stock of the surviving or
resulting corporation, (d) a transfer of substantially all of the property of
the Company other than to an entity to which the Company owns at least 80% of
the voting stock, or (e) the election of the Board of Directors of the Company,
without the recommendation or approval of a majority of the incumbent Board of
Directors of the Company, of the lesser of three directors or directors
constituting a majority of the number of directors of the Company then in
office.
DEFINITION OF GOOD REASON AND GOOD CAUSE. The term "Good Reason" is
generally defined by the Agreement to mean any unfavorable change in the
Executive's position, duties, compensation or benefits. The term "Good Cause"
is generally defined by the Agreement to mean the Executive's conviction of
certain criminal violations, his willful engagement in certain misconduct and
his willful, wrongful and substantial nonperformance of certain assigned duties.
10
BENEFITS. As of December 31, 1993, if a Change-in-Control had occurred
and the Executive had terminated employment with Good Reason or had been
terminated from employment without Good Cause, then $447,304 would have been
payable to the Executive under the Change-in-Control provisions of the
Agreement, subject to the limitations of Section 280G of the Code. Bancorp does
not believe that payment of these amounts would have a material adverse affect
on the financial or operating condition of Bancorp or the Bank.
EXECUTIVE SEVERANCE AGREEMENTS. In December 1990, pursuant to the
recommendation of the Compensation Committee, the Board of Directors of the Bank
voted to adopt Severance Agreements for three executive officers (collectively,
the "Executives") of Bancorp and the Bank (collectively, the "Company"). In
February 1992, Bancorp agreed to become a party to the Severance Agreements.
Each Severance Agreement becomes operative only upon a "Change-in-Control" that
occurs while the Executives are employed by the Company.
BENEFITS. In the event of a Change-in-Control of the Company, the
Executives may be entitled to payment of certain benefits. If within two years
after a Change-in-Control, the Company shall terminate any of the Executives'
employment without good cause, or the Executives shall voluntarily terminate
employment for good reason, then the Company shall make a lump sum cash payment
to each of the Executives equal to 2.99 times the Executive's then 12-month's
annual salary. In no event, however, shall such payments and benefits exceed
the amount allowable as a deduction under Section 280G of the Code. The
Executives shall also be entitled to continue participation for a three-year
period in certain Company-sponsored health and welfare plans. Finally, the
Executives shall not be required to mitigate such payments under the Severance
Agreements and future employment compensation after termination shall not be
used to reduce such payments. The Severance Agreements also contain provisions
for the payment of legal expenses which are related to the enforcement of the
Severance Agreements incurred by the Executives as a result of any termination
of employment after a Change-in-Control.
DEFINITION OF CHANGE-IN-CONTROL. The Severance Agreements define a
"Change-in-Control" as (a) the acquisition by any entity, person, or group
(other than the acquisition by a Company-sponsored tax-qualified retirement
plan) of beneficial ownership, as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934, of more than 25% of the outstanding capital
stock of the Company, (b) the commencement by any entity, person, or group
(other than the Company, any of its subsidiaries or tax qualified plans) of a
tender offer or an exchange offer for more than 20% of the outstanding voting
stock of the Company, (c) a merger or consolidation of the Company in which the
Company's shareholders after the merger or consolidation own less than 80% of
the voting stock of the surviving or resulting corporation, (d) a transfer of
substantially all of the property of the Company other than to an entity of
which the Company owns at least 80% of the voting stock, or (e) the election to
the Board of Directors of the Company, without the recommendation or approval of
a majority of the incumbent Board of Directors of the Company, of the lesser of
three directors or directors constituting a majority of the number of directors
of the Company then in office.
DEFINITION OF GOOD REASON AND GOOD CAUSE. The term "Good Reason" is
generally defined by the Severance Agreements to mean any unfavorable change in
any of the Executives' position, duties, compensation or benefits. The term
"Good Cause" is generally defined by the Severance Agreements to mean any of the
Executives' conviction of certain criminal violations, his willful engagement in
certain misconduct and his willful, wrongful and substantial nonperformance of
certain assigned duties.
PARTICIPATION. As of December 31, 1993, the Board of Directors had
voted to provide Severance Agreements for following Executives: Willard H.
Derrick, Thomas O. Keech and A. Hardy Pickett. In addition, Hunter R. Hollar's
Employment Agreement contains severance provisions similar to those provided the
Executives. As of December 31, 1993, if a Change-in-Control had occurred and
the Executives had terminated employment with Good Reason or had been terminated
from employment without Good Cause, then the following severance payments would
have been payable to the Executives (subject, however, to the limitations of
Section 280G of the Code): Willard H. Derrick ($540,727); Thomas O. Keech
($336,046); A. Hardy Pickett ($290,816). Bancorp does not believe that payment
of these amounts would have a material adverse affect on the financial or
operating condition of Bancorp or the Bank.
11
REPORT OF THE COMPENSATION COMMITTEE
As members of the Compensation Committee, it is our duty to review
compensation policies applicable to executive officers; to consider the
relationship of corporate performance to that compensation; to recommend salary
and bonus levels and stock option grants for executive officers for
consideration by the Boards of Directors of Bancorp and the Bank or their
committees, as appropriate; and to administer various incentive plans of Bancorp
and the Bank.
Under the compensation policy of Bancorp, which is endorsed by the
Compensation Committee, compensation is paid based both on the executive
officer's performance and the performance of the entire company. In assessing
the performance of Bancorp and the Bank for purposes of compensation decisions,
the Compensation Committee considers a number of factors, including profits of
Bancorp and the Bank during the past year relative to their profit plans,
changes in the value of Bancorp's stock, reports of federal regulatory
examinations of Bancorp and the Bank, growth, business plans for future periods,
and regulatory capital levels. The Compensation Committee assesses individual
executive performance based upon its determination of the executive's
contributions to the performance of Bancorp and the accomplishment of Bancorp's
strategic goals, such as the completion of Bancorp's offering of Common Stock in
1992, and the completion of Bancorp's acquisition of First Montgomery Bank of
Maryland and the opening of the Air Park branch office in 1993. In assessing
performance, the members of the Committee do not make use of a mechanical
formula, but instead weigh the described factors as they deem appropriate in the
circumstances.
The 1993 salary levels of Bancorp's executive officers were established
in 1992 consistent with this compensation policy. In November 1992, the Board of
Directors, at the recommendation of the Compensation Committee, moved the normal
effective date for salary adjustments of all officers from January 1 to April 1,
effective in 1993, for administrative reasons, and granted all officers a
payment of 1.5% of their annual salaries in order to offset this three month
delay. In its 1992 review of base compensation and bonuses to be paid in 1993,
the Committee determined that the performance of Mr. Derrick and Mr. Hollar was
excellent, based upon the 1992 financial performance of Bancorp, including the
growth in assets, income, and capitalization during 1992; the financial
performance trends for 1992 and the preceding four years, which include growth
in assets, net income, and stockholders equity in each year; the results of
confidential regulatory examinations; the completion in 1992 of a stock offering
which yielded net proceeds of approximately $7.95 million; Bancorp's planned
levels of financial performance for 1993; the continued involvement of these
officers in community affairs in the communities served by Bancorp; and a
general level of satisfaction with the management of Bancorp and its
subsidiaries. Based upon the results of this review, the salary of Mr. Willard
H. Derrick, who served as the Chairman of the Boards and Chief Executive Officer
of Bancorp and the Bank during 1992 and 1993, was established at $180,000 per
year, which represented an increase of approximately 4.1% over his 1992 base
salary. This base salary level was effective beginning April 1, 1993 through
December 31, 1993. The level of Mr. Hollar's annual salary is subject to the
terms of an Agreement with Bancorp and the Bank entered in 1990. This Agreement
was renewed effective January 1, 1994 for an additional one-year term, and is
renewable for successive one-year terms thereafter. Under this Agreement, Mr.
Hollar's annual salary is reviewed annually and subject to increase at the
discretion of the Board of Directors. Mr. Hollar's salary was increased by 7.1
% effective April 1, 1993, to $150,000. Mr. Hollar became Chief Executive
Officer of Bancorp and the Bank effective January 1, 1994. Mr. Derrick continues
to be Chairman of the Boards of Bancorp and the Bank.
Bonuses for 1993 were awarded in December 1993 based on the executive
officer's performance and the performance of Bancorp and the Bank for the year
1993 consistent with Bancorp policy described above. Bonuses of $30,000,
$20,000, $15,000, and $10,000 were awarded to Mr. Derrick, Mr. Hollar, Mr.
Keech, and Mr. Pickett, respectively, in 1993.
Executive officers of Bancorp and the Bank have been granted incentive
stock options under Bancorp's Stock Option Plans. The purposes of the Stock
Option Plans are to attract, retain and motivate key officers of Bancorp and the
Bank by providing key officers with a stake in the success of Bancorp as
measured by the value of its shares. Options are granted at exercise prices
equal to the fair market value of the shares on the dates of grant. The Stock
Option Committee of the disinterested directors of Bancorp has general
responsibility for granting stock options to key employees and administering the
plans. The Compensation Committee recommends to the Stock Option Committee the
recipients and the amounts and other terms of options to be granted. During
12
1993, incentive stock options for 3,150 shares were granted at an exercise price
of $46 per share. At the request of Mr. Derrick, the Compensation Committee did
not consider granting additional options to him.
The Compensation Committee recommends to the Board of Directors the
amount to be contributed each year to the Bank's Deferred Profit Sharing Plan.
Under this Plan, each participant receives an allocation based upon the
participant's compensation for the year as a percentage of the total
compensation of all eligible participants. Each executive officer of Bancorp
participates in the Plan. In general, the Compensation Committee determines the
amount of the aggregate contribution to the Deferred Profit Sharing Plan based
upon the annual profits of the Bank, its regulatory capital levels, and other
performance factors. For 1993, the Compensation Committee recommended and the
Board of Directors of the Bank approved, an aggregate contribution of $333,000,
or approximately 5.5% of annual compensation of eligible participants.
No member of the Compensation Committee is a former or current officer
or employee of Bancorp or the Bank.
February 24, 1994
COMPENSATION COMMITTEE
W. Drew Stabler, Chairman
William M. Canby
John Chirtea
Charles F. Mess
Robert L. Orndorff, Jr.
STOCK PERFORMANCE COMPARISONS
The graph and table on the following page show the cumulative total
return on the Common Stock over the last five years, compared with the
cumulative total return of the NASDAQ Stock Market Index (U.S. Companies) and
the NASDAQ Bank Stock Index of banks and bank holding companies over the same
period. Cumulative total return on the stock or the index equals the total
increase in value since December 31, 1988 assuming reinvestment of all dividends
paid into the stock or the index, respectively. The graph and table were
prepared assuming that $100 was invested on December 31, 1988 in the Common
Stock and the securities included in the indexes.
13
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
December 31, 1988 through December 31, 1993
[Graph]
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
December 31, 1988 through December 31, 1993
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
Bancorp $100.0 $115.5 $131.6 $143.9 $175.1 $217.0
NASDAQ Stock Market Index (U.S. Companies) 100.0 121.2 103.0 165.2 192.1 219.2
NASDAQ Bank Stock Index 100.0 111.2 81.4 133.6 194.2 221.3
14
TRANSACTIONS AND RELATIONSHIPS WITH MANAGEMENT
Bancorp and the Bank have had in the past, and expect to have in the
future, banking transactions in the ordinary course of business with directors
and executive officers on substantially the same terms, including interest rates
and collateral on loans, as those prevailing at the same time for comparable
transactions with other persons; and, in the opinion of management, these
transactions do not and will not involve more than the normal risk of
collectibility or present other unfavorable features.
Director William M. Canby is an attorney associated with the law firm
of Miller, Miller and Canby, Chtd., which Bancorp and the Bank have retained
during 1993 and expect to retain during the current fiscal year as corporate
counsel. The law firm provides legal services on matters such as routine
litigation, personnel policies and practices, customer account forms and issues
and Bank properties.
SHAREHOLDER PROPOSALS
From time to time, individual shareholders may wish to submit
proposals which they believe should be voted upon by the shareholders. The
Securities and Exchange Commission has adopted regulations which govern the
inclusion of such proposals in Bancorp's annual proxy materials. Shareholder
proposals intended to be presented at the 1995 Annual Meeting of Shareholders
must be received by Bancorp at its executive offices not later than November 28,
1994 in order to be eligible for inclusion in Bancorp's proxy materials for that
Annual Meeting.
In addition, Bancorp's Bylaws require that to be properly brought
before an annual meeting, shareholder proposals for new business must be
delivered to or mailed and received by Bancorp not less than 30 nor more than 90
days prior to the date of the meeting; provided, however, that if less than 45
days notice of the date of the meeting is given to shareholders, such notice by
a shareholder must be received not later than the 15th day following the date on
which notice of the date of the meeting was mailed to shareholders or two days
before the date of the meeting, whichever is earlier. Each such notice given by
a shareholder must set forth certain information specified in the Bylaws
concerning the shareholder and the business proposed to be brought before the
meeting.
Shareholders may also nominate candidates for directors, provided that
such nominations are made in writing and received by Bancorp at its executive
offices not later than December 28, 1994. The nomination should be sent to the
attention of Bancorp's Corporate Secretary and must include, concerning the
director nominee, the following information: full name, age, date of birth,
educational background and business experience, including positions held for at
least the preceding five years. The nomination must also include home and
office addresses and telephone numbers and include a signed representation by
the nominee to timely provide all information requested by Bancorp as part of
its disclosure in regard to the solicitation of proxies for election of
directors. The name of each such candidate for director must be placed in
nomination at the Annual Meeting by a shareholder present in person. The
nominee must also be present in person at the Annual Meeting. A vote for a
person who has not been duly nominated pursuant to these requirements will be
deemed to be void.
COMPLIANCE WITH SECTION 16(a) OF SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
Bancorp's executive officers and directors, and persons who own more than ten
percent of a registered class of Bancorp's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission. Executive officers, directors and greater than ten percent
stockholders are required by applicable regulations to furnish Bancorp with
copies of all Forms 3, 4 and 5 they file.
Based solely on Bancorp's review of the copies of such forms it has
received and written representations from certain reporting persons, Bancorp
believes that all its executive officers, directors, and greater than ten
percent beneficial owners complied with all filing requirements applicable to
them with respect to transactions during fiscal 1993, except that a profit
sharing plan trust of which Mr. Orndorff is a trustee and participant
15
inadvertently failed to file an Initial Statement of Beneficial Ownership of
Securities on Form 3 on a timely basis, though the trust promptly filed a Form 3
when the requirement for doing so was brought to his attention.
INDEPENDENT AUDITORS
The Board of Directors anticipates the selection of Stegman & Company,
certified public accountants, to audit the books and accounts of Bancorp for the
fiscal year ending December 31, 1994. Stegman & Company has served as
independent auditors for Bancorp and its subsidiary and predecessor, Sandy
Spring National Bank of Maryland, without interruption for many years. Stegman
& Company has advised Bancorp that neither the accounting firm nor any of its
members or associates has any direct financial interest in or any connection
with Bancorp and its subsidiary other than as independent public auditors. A
representative of Stegman & Company will be present at the Annual Meeting, will
have the opportunity to make a statement, and will also be available
to respond to appropriate questions.
ACTION WITH RESPECT TO REPORTS
Action taken at the Annual Meeting to approve the minutes of the 1993
Annual Meeting of Shareholders does not constitute approval or disapproval of
any of the matters referred to in such minutes.
By order of the Board of Directors
[INSERT SIGNATURE HERE]
Marjorie S. Cook
Corporate Secretary
Dated: March 28, 1994
16
REVOCABLE PROXY
SANDY SPRING BANCORP
--------------------------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 20, 1994
--------------------------------------------------------------
The undersigned hereby constitutes and appoints Louisa W. Riggs and Francis
Snowden and each of them, the proxies of the undersigned, with full power of
substitution, to attend the annual meeting of shareholders (the "Annual
Meeting") of Sandy Spring Bancorp ("Bancorp") to be held at the Manor Country
Club, 14901 Carrolton Road, Rockville, Maryland on Wednesday, April 20, 1994 at
3:00 p.m. Eastern Time, or at any adjournment thereof, and to vote all the
shares of stock of Bancorp which the undersigned may be entitled to vote, upon
the following matters:
FOR WITHHOLD
I. The election as directors of all nominees / / / /
listed below (except as marked to the
contrary below).
Andrew N. Adams, Jr.
Robert L. Mitchell
Robert L. Orndorff, Jr.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, PRINT THE NOMINEE'S NAME ON THE LINE BELOW.
--------------------------------------------------------------------
II. The transaction of such other business as may properly come before the
Annual Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL DIRECTOR
NOMINEES AS SHOWN IN ITEM I.
______________________________________________________________________________
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS MARKED HEREIN. IF
NO INSTRUCTIONS TO THE CONTRARY ARE MARKED HEREIN, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF DIRECTORS, AND AS DETERMINED BY A MAJORITY OF THE BOARD OF
DIRECTORS AS TO OTHER MATTERS.
_______________________________________________________________________________
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder hereby acknowledges receipt of a copy of the
accompanying Notice of Annual Meeting of Shareholders and Proxy Statement and
hereby revokes any proxy or proxies heretofore given. This proxy may be revoked
at any time prior to its exercise.
____________________________________________________
Signature Date
____________________________________________________
Signature Date
____________________________________________________
Signature Date
Please sign exactly as your name appears above. When signing as attorney,
executor, administrator, trustee or guardian, etc., please give your full title.
If the signer is a corporation, please sign the full name by duly appointed
officer. If shares are held jointly, each holder should sign.
_______________________________________________________________________________
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
_______________________________________________________________________________