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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box: [ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as
permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c)
or sec. 240.14a-12
F.N.B. CORPORATION
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(Name of Registrant as Specified in its Charter)
F.N.B. CORPORATION
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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:
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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 No.:
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3) Filing Party:
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4) Date Filed:
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[F.N.B. Corporation Letterhead]
March 20, 1998
Dear Shareholder:
It is a pleasure to invite you to attend the Annual Meeting of
Shareholders of F.N.B. Corporation. The meeting will be held at the F.N.B. Data
and Accounting Center, located at the corner of South Keel Ridge Road and East
State Street, Hermitage, Pennsylvania, on Wednesday, April 29, 1998, at 4:00
p.m.
At the meeting, you will be asked to consider and vote upon the
election of five directors.
Your vote is important regardless of how many shares of stock you own.
If you hold stock in more than one account or name, you will receive a proxy
card for each. Please sign and return each card since they represent a separate
number of votes. Postage paid envelopes are provided for your convenience.
You are cordially invited to attend the Annual Meeting. Regardless of
whether you plan to attend, please date and return the enclosed proxy card(s) as
soon as possible. This will not prevent you from voting at the meeting, but will
assure that your vote is counted if you are unable to attend.
As always, the directors, management and staff thank you for your
continued support and interest in F.N.B. Corporation.
Sincerely,
/s/ PETER MORTENSEN
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Peter Mortensen
Chairman and Chief Executive Officer
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F.N.B. CORPORATION
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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Notice is hereby given that the Annual Meeting of the Shareholders of
F.N.B. Corporation (the "Corporation") will be held at the F.N.B. Data and
Accounting Center, located at the corner of South Keel Ridge Road and East State
Street, Hermitage, Pennsylvania, on Wednesday, April 29, 1998, at 4:00 p.m.
Eastern Daylight Time, for the following purposes:
1. To elect five (5) directors of the Corporation;
2. To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
As of the date of this Notice, the Board of Directors of the
Corporation does not know of any other business to be transacted at the Annual
Meeting.
Only the holders of Common Stock and Series A Preferred Stock of the
Corporation of record on the books of the Corporation at the close of business
on March 2, 1998 are entitled to notice of and to vote at the Annual Meeting and
any adjournments thereof.
Enclosed with this Notice are a Proxy Statement and form of proxy. All
shareholders, whether or not they expect to be present at the meeting, are
requested to date and sign the proxy and to return it in the enclosed
self-addressed envelope. Prompt compliance with this request will be
appreciated. Shareholders who attend the meeting may, if they wish, vote in
person even if they have mailed their proxies.
BY ORDER OF THE BOARD OF DIRECTORS
David B. Mogle, Secretary
March 20, 1998
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March 20, 1998
F.N.B. CORPORATION
ONE F.N.B. BOULEVARD
HERMITAGE, PENNSYLVANIA 16148-3389
PROXY STATEMENT
The accompanying proxy is being solicited by F.N.B. Corporation (the
"Corporation") in connection with the Annual Meeting of Shareholders to be held
on April 29, 1998 pursuant to the preceding Notice of Annual Meeting. The
approximate date on which this proxy statement and the accompanying form of
proxy are first being sent to shareholders of the Corporation is March 20, 1998.
If the proxy is executed and returned, it may nevertheless be revoked by written
notice to the Secretary of the Corporation at any time prior to the voting
thereof or in open meeting, or by voting in person at the Annual Meeting. Unless
the proxy is revoked or contains other instructions, the shares represented
thereby will be voted at the meeting in favor of the election of the persons
named below as directors.
The Board of Directors has fixed March 2, 1998 as the record date for
determination of shareholders entitled to notice of and to vote at the Annual
Meeting. As of that date, the Corporation had outstanding 15,250,360 shares of
Common Stock, 21,118 shares of Series A Cumulative Convertible Preferred Stock
("Series A Preferred Stock") and 264,870 shares of Series B Cumulative
Convertible Preferred Stock ("Series B Preferred Stock"). The holders of a
majority of the shares outstanding and entitled to vote, present in person or
represented by proxy, constitute a quorum for the meeting. Holders of Common
Stock are entitled to one vote for each share held and holders of Series A
Preferred Stock are entitled to 5.4 votes for each share held. Holders of Series
B Preferred Stock have no voting rights with respect to their shares of Series B
Preferred Stock.
ELECTION OF DIRECTORS
The Bylaws of the Corporation provide that the Board of Directors shall
consist of not fewer than 5 nor more than 25 persons, the exact number to be
determined from time to time by the Board. The number of directors has been
fixed at 22 by the Board of Directors. Proxies will not be voted for a greater
number of persons than the number of nominees set forth below. Directors are
elected by a plurality of the votes actually cast at the meeting. Abstentions
and shares held in "street" name that are not cast at the meeting are not
counted. Neither the holders of Common Stock nor the holders of Series A
Preferred Stock have cumulative voting rights in the election of directors.
The Bylaws of the Corporation also provide for classification of the
directors with respect to the time for which they shall severally hold office.
The Board is divided into four classes with the term of office of the directors
of each class to expire at the fourth annual meeting after their election. At
each succeeding annual meeting of shareholders, successors to the directors of
the class whose term expires are elected. Each director shall hold office for
the term for which he/she is elected and thereafter until his/her successor is
duly elected and qualified or until his/her earlier death, resignation or
removal.
Edward J. Mace, Peter Mortensen, Robert S. Moss, William A. Quinn, and
Gary L. Tice, all of whom have expressed their willingness to serve, have been
nominated for election as directors of the Corporation to hold office for the
term described and until their successors are elected and have qualified. All of
the nominees are presently Directors of the Corporation. In the event one or
more of such persons is unable or unwilling to serve as a director for any
reason (and the Corporation knows of no such reason), the persons named in the
enclosed proxy will vote for the other nominees named and such substituted
nominees as may be nominated by the Board of Directors. Additionally, Mr. Thomas
C. Elliott, whose term expires this year, is retiring from the Board of
Directors after seven years of service in accordance with the Board's retirement
policy. Mr. John R. Perkins has
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resigned from the Board of Directors after 14 years of service but will continue
as Director of Metropolitan National Bank, a subsidiary, and Chairman Emeritus
of Metropolitan National Bank.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
Information concerning directors and executive officers is set forth
below. The principal occupation of each director and executive officer as of the
date hereof and for the past five years is included in the table. The
information concerning beneficial ownership of Common Stock and Series B
Preferred Stock is based upon information received as of March 2, 1998. No
director or executive officer of the Corporation is the beneficial owner of any
shares of Series A Preferred Stock.
Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership
of Term of Ownership of Percent of Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director (a) (b)(c) Class (d) Stock (e) Class (d)
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PETER MORTENSEN 62 1974 1998 121,720(f) 981
Chairman & Chief Executive Officer
of the Corporation since 1988; and
Chairman of First National Bank of
Pennsylvania ("FNBPA"), a
subsidiary
STEPHEN J. GURGOVITS 54 1981 2000 58,423(f)(g) 0
Vice Chairman of the Corporation
since 1998; Executive Vice President
of the Corporation 1995-1998;
Senior Vice President of the
Corporation 1988-1995; and
President & Chief Executive Officer
of FNBPA
GARY L. TICE 50 1997 1998 80,818(h) 0
President & Chief Operating Officer
of the Corporation since 1998;
Executive Vice President & Chief
Operating Officer of the Corporation
1997-1998; and Chairman & Chief
Executive Officer of Southwest
Banks, Inc., a subsidiary since 1997
W. RICHARD BLACKWOOD 56 1985 2000 97,766 8,100 3.0
President, Harry Blackwood Inc.
(insurance and real estate)
WILLIAM B. CAMPBELL 59 1975 2000 78,239(i)(j) 0
Retired Business Executive
CHARLES T. CRICKS 48 1994 2001 48,925(k) 0
Executive Vice President and Chief
Operating Officer, Health Care
Solutions, Inc.
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Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership
of Term of Ownership of Percent of Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director (a) (b)(c) Class (d) Stock (e) Class (d)
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HENRY M. EKKER, ESQ. 59 1994 2001 11,155 0
Attorney at Law, Partner of Ekker,
Kuster & McConnell
THOMAS C. ELLIOTT 74 1991 1998 18,980 0
President & Treasurer, Elliott Bros.
Steel Co. (steel processor)
THOMAS W. HODGE 72 1975 2001 31,761(i) 0
Retired Business Executive
JAMES S. LINDSAY 49 1997 2001 103,771(l) 0
Managing Partner, Dor-J's
Partnership; Licensed Real Estate
Broker, The Lindsay Company
PAUL P. LYNCH 46 1991 2001 95,934(m) 200
Attorney at Law; President & Chief
Executive Officer, Lynch Brothers
Investments, Inc. (real estate)
EDWARD J. MACE 41 1997 1998 75,600(n) 0
Edward J. Mace, Certified Public
Accountant; Chief Operating
Officer, Ribek Corporation
ROBERT S. MOSS 60 1994 1998 11,099 0
Chairman, Associated Contractors of
Conneaut Lake, Inc. (a general
contractor)
RICHARD C. MYERS 69 1997 2000 70,267 0
Retired Business Executive
WILLIAM A. QUINN 69 1974 1998 3,347 0
Retired Vice President of the
Corporation; and Retired Executive
Vice President & Cashier of FNBPA
GEORGE A. SEEDS 67 1992 2000 6,491 0
Retired Business Executive
WILLIAM J. STRIMBU 37 1995 1999 40,419(o) 0
President, Nick Strimbu, Inc.
(common carrier)
ARCHIE O. WALLACE, ESQ. 63 1992 1999 17,858 0
Attorney at Law, Partner of Rowley,
Wallace, Keck, Karson & St. John
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Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership
of Term of Ownership of Percent of Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director (a) (b)(c) Class (d) Stock (e) Class (d)
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JOSEPH M. WALTON 71 1975 1999 21,110 650
Chairman & Chief Executive
Officer, Jamestown Paint Co.
(manufacturer of paint and varnish)
JAMES T. WELLER 67 1975 1999 29,629 0
Chairman, Liberty Steel Products,
Inc. (steel processor)
ERIC J. WERNER, ESQ. 35 1995 1999 115 0
Chief Administrative Officer,
General Counsel & Secretary,
Werner Co. (manufacturer of
climbing products and aluminum
extrusions)
R. BENJAMIN WILEY 53 1997 1999 1,464 0
Chief Executive Officer, Greater
Erie Community Action Committee
DONNA C. WINNER 51 1994 2000 288,937 1.9 0
Co-Owner, The Radisson Shenango,
Tara - A Country Inn,
The Winner (clothing store),
Tiffany's (banquet center)
WILLIAM J. RUNDORFF 49 N/A N/A 26,252(f) 0
Executive Vice President of the
Corporation since 1995, Vice
President of the Corporation 1991-
1995; and Vice President of FNBPA
since 1991
JOHN D. WATERS 51 N/A N/A 13,112(f) 0
Vice President & Chief Financial
Officer of the Corporation; and
Senior Vice President & Chief
Financial Officer of FNBPA since
1994; Executive Vice President &
Chief Financial Officer, WSFS
Financial Corporation 1988-1993
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All directors, director nominees and executive officers as a group (25
persons), as the beneficial owners of 1,170,273 shares of the outstanding
Common Stock, owned 7.7% of the Common Stock of the Corporation as of March
2, 1998 and controlled 7.6% of the outstanding voting power of the
Corporation's issued and outstanding stock.
(a) The term of office for directors expires at the annual meeting to be
held during the year shown.
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(b) Includes (1) the following shares which the officer or director has the
right to acquire within sixty days upon exercise of stock options and/or
warrants: Mr. Mortensen, 40,446 shares; Mr. Gurgovits, 31,678 shares; Mr.
Tice, 28,182 shares; Mr. Rundorff, 22,616 shares; Mr. Waters, 7,923 shares;
Mr. Lindsay, 9,582 shares; Mr. Mace, 1,369 shares; and Mr. Myers, 10,038
shares; and (2) shares which the officer or director has the right to
acquire by conversion of shares of Series B Preferred Stock. Shares of
Series B Preferred Stock are convertible into shares of Common Stock at the
ratio of 2.1476 shares of Common Stock per share of Series B Preferred
Stock.
(c) Except as otherwise indicated, each director possesses sole voting power
and sole investment power as to all shares listed opposite his or her name
or shares these powers with his or her spouse or a wholly owned company.
This does not include the following shares held of record by the director's
spouse or children, or held in trust, and as to which each director
disclaims beneficial ownership: Mr. Mortensen, 267 shares; Mr. Hodge, 2,194
shares; Mr. Lindsay, 7,773 shares; Mr. Walton, 5,920 shares; and Mr.
Weller, 38,836 shares.
(d) Unless otherwise indicated, represents less than 1% of the class.
(e) Except as otherwise indicated, each director possesses sole investment
power as to all shares listed opposite his or her name or shares these
powers with his or her spouse or a wholly owned company. This does not
include 650 shares held of record by Mr. Walton's wife and as to which Mr.
Walton disclaims beneficial ownership.
(f) Does not include shares awarded as an employer matching contribution
as a part of the Corporation's 401(k) Plan.
(g) Includes 3,964 shares owned by Mr. Gurgovits' wife as a participant in her
employer's profit sharing program; and 47 shares held by Mr. Gurgovits as
trustee for his daughter.
(h) Includes 1,478 shares jointly owned by Mr. Tice and his two children; 3,829
shares jointly owned by Mr. Tice and his mother; 454 shares owned by Mr.
Tice's wife; 160 shares owned by Mr. Tice's son; 100 shares owned by Mr.
Tice's daughter; and 4,118 shares held by the Southwest Banks, Inc. and
Affiliates Salary Savings KSOP for Mr. Tice who has voting power over these
shares.
(i) Includes 9,760 shares held in irrevocable trusts by the Trust Department of
FNBPA. A committee which includes Messrs. Campbell and Hodge holds sole
voting power over the shares, while the Trust Department possesses sole
investment power over such shares.
(j) Includes 1,545 shares owned by Mr. Campbell's wife.
(k) Includes 3,727 shares held by Mr. Cricks as co-trustee for his children and
7,336 shares held by Mr. Cricks as co-trustee for his mother.
(l) Includes 10,052 shares held by Mr. Lindsay as custodian for his three
children; 70,368 shares owned by Dor-J's Partnership, of which Mr. Lindsay
is the managing partner; and 1,102 shares held by Mr. Lindsay as trustee
for his mother.
(m) Includes 33,211 shares owned by Mr. Lynch's wife; 910 shares owned by Mr.
Lynch as custodian for his daughters; 754 shares owned by Mr. Lynch's wife
as custodian for his daughters; and 605 shares owned by Mr. Lynch's mother
as custodian for his daughter.
(n) Includes 341 shares held by Mr. Mace as custodian for his three children;
4,523 shares held by Mr. Mace as trustee for certain unrelated
beneficiaries; 20,129 shares held by the Ribek Corporation Defined
Contribution Pension Trust of which Mr. Mace is a Trustee; and 40,260
shares owned by Ribek Corporation of which Mr. Mace is Chief Operating
Officer.
(o) Excludes 18,737 shares held by Nick Strimbu, Inc. Salaried Employees Profit
Sharing Plan of which Mr. Strimbu is a participant.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Upon review of Forms 3, 4 and 5 furnished to the Corporation during or with
respect to its most recent fiscal year, the Corporation has determined that no
officer, director or 10 percent shareholder of the Corporation failed to timely
file or failed to file a report during 1997 as required by Section 16(a) of the
Securities Exchange Act of 1934, except that Messrs. Lindsay and Moss
inadvertently failed to disclose certain shares beneficially owned on their
Forms 3 and 4, respectively, and Mr. Myers inadvertently failed to report a gift
of shares on a timely basis.
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Directors' Fees
During 1997, each non-employee director was paid an annual retainer of
$6,000, $1,000 for each quarterly Board meeting attended in January and April,
and $1,200 for each quarterly Board meeting attended in July and October.
Non-employee directors who serve on committees were compensated for their
attendance at various committee meetings of the Corporation and its subsidiaries
at rates ranging from $150 to $500 per meeting attended. In addition, Messrs.
Mortensen and Tice are compensated for attendance at certain board and committee
meetings of the Florida affiliates. Mr. Campbell, Chairman of the Building
Committee, was paid a special one-time director fee of $50,000 for his
significant commitment related to the successful completion of the new
headquarters building and several other branch construction projects under his
direct responsibility.
Each director of the Corporation may elect to receive shares of common
stock in lieu of cash as their compensation for attendance at regular and
committee meetings of the Board of Directors of the Corporation pursuant to the
F.N.B. Corporation Directors' Compensation Plan (the "Plan"). The number of
shares of common stock to be issued shall equal the number of shares of common
stock that may be purchased with (or having a market value equal to) the amount
of cash otherwise payable to such Director by the Corporation for attendance at
such meetings. During 1997, all Directors elected to receive all or some portion
of their fees in stock.
A director may elect to defer receipt of all of his annual fees payable
under the Plan in shares for the period beginning on January 1 of the following
year and continuing until the Corporation receives written notice from the
Director terminating such deferral. Additionally, Messrs. Mortensen, Gurgovits
and Tice have elected to participate in this plan by having an amount equal to
the director fees paid to non-employee directors deferred from their base
salaries.
Business Relationships and Related Transactions
Certain directors and executive officers of the Corporation and its
subsidiaries and their associates were customers of, and had loans outstanding
from, the Corporation's subsidiaries in the ordinary course of business during
1997. Such loans were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other customers of the Corporation's subsidiaries and did not
involve more than the normal risk of collectability.
During 1997, an F.N.B. subsidiary leased, at fair market value, two
branch office facilities from a partnership of which Mr. Edward J. Mace, a
director, is a 25.4% general partner. The aggregate value of the leases was
$250,060.
Board and Committee Meetings
During 1997, the Board of Directors of the Corporation held four
meetings. All directors except for Messrs. Werner and Wiley attended at least
75% of the aggregate number of meetings of the Board of Directors and the
respective committees on which they serve.
The Board of Directors has an Audit Committee consisting of Messrs.
Hodge, Lynch, Mace, Moss, Quinn and Werner. Duties of the Audit Committee
include engaging independent auditors, reviewing with the independent auditors
the planning and results of the auditing engagement, reviewing the activities
and recommendations of the Corporation's internal auditors and reviewing the
adequacy of internal accounting controls. The Audit Committee met four times
during 1997.
The Board of Directors has a Compensation Committee which includes
Messrs. Blackwood, Cricks, Lindsay, Seeds and Weller. Mr. Mortensen, Chairman
and Chief Executive Officer of the Corporation, serves as an ex officio member
of the Corporation's Compensation Committee, but does not participate or vote in
any deliberations or decision making involving his own compensation. During
1997, the Compensation Committee
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met five times. Duties of the Compensation Committee include reviewing the
performance of and establishing compensation for the officers of F.N.B.
Corporation and affiliate chief executive officers; reviewing and approving the
compensation of affiliate senior officers as proposed by affiliate boards of
directors; and reviewing compensation and benefit matters that have
corporate-wide significance. The Compensation Committee also administers the
various Stock Option Plans, the Restricted Stock and Incentive Bonus Plan and
the Directors' Compensation Plan.
The Board of Directors has a Nominating Committee consisting of Messrs.
Campbell, Elliott, Perkins, Quinn, Seeds and Walton. During 1997, the Nominating
Committee met three times. The Nominating Committee is responsible for selecting
and recommending to the Board of Directors nominees for election as director.
The Nominating Committee will consider nominees recommended by shareholders of
the Corporation. Such recommendations must be made in writing, include a
statement of the nominee's qualifications, and be addressed to the Nominating
Committee at the address of the Corporation. Shareholders may also nominate
persons for election as directors in accordance with the procedures set forth in
the Corporation's Bylaws. Written notification of such nomination, containing
the required information, must be mailed or delivered to the Secretary of the
Corporation not less than 14 days nor more than 50 days prior to the Annual
Meeting.
EXECUTIVE COMPENSATION, BENEFITS AND RELATED MATTERS
REPORT OF COMPENSATION COMMITTEE
To Our Shareholders:
Responsibilities and Composition of the Compensation Committee
The Compensation Committee ("Committee") establishes compensation
programs for executive officers of the Corporation and its affiliates that
attract, retain, motivate and appropriately reward individuals who are
responsible for the Corporation's short- and long-term profitability, growth and
return to shareholders; oversees and administers the Corporation's executive
compensation programs; and determines the compensation of the Corporation's
executive officers. The Committee is comprised entirely of directors who are not
officers of the Corporation or its affiliates. Although Mr. Mortensen, Chairman
and Chief Executive Officer of the Corporation, served as an ex officio member
of the Committee, he did not participate in any deliberations or decision making
involving his own compensation.
Compensation Philosophy and Objectives
The central objective of the compensation philosophy of the Corporation
is to provide fair and reasonable compensation to all employees, including its
executive officers. The Committee maintains that the compensation of the
Corporation's executive officers should be determined in accordance with a
performance-based framework that enhances shareholder value by integrating the
overall financial condition and results, individual contribution, and business
unit performance. Within this philosophy, the Committee's specific objectives
are to: (i) provide annual compensation that takes into account the
Corporation's performance relative to its financial goals and objectives and the
performance of functions and business units under the executive's management and
performance against assigned individual goals; (ii) offer a total compensation
program that takes into account the compensation practices and financial
performance of financial institutions of comparable asset size and complexity
for comparable positions based upon an evaluation of the responsibilities of the
executive's position and attendant skills and experience; (iii) align the
financial interests of the executive officers with those of shareholders by
providing significant equity-based long-term incentives; and (iv) target
compensation levels for executive officers based on the level of responsibility,
scope and complexity of the executive's position relative to other senior
management positions and comparative compensation of similarly positioned
executives of peer financial institutions.
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Compensation Components and Process
The major components of the Corporation's executive officer
compensation are: (i) base salary, (ii) annual incentive awards and (iii)
long-term incentive awards (typically in the form of stock options or restricted
stock).
The process utilized by the Committee in determining executive officer
compensation levels for all of these components is based upon the Committee's
subjective judgment and takes into account both qualitative and quantitative
factors. However, the Committee emphasizes that in determining executive officer
compensation levels, particular attention is placed on tying a significant
portion of executive compensation to the success of the executive officer and
the Corporation in meeting predetermined performance goals. In making
compensation decisions, the Committee relies upon the work performed by its
independent compensation consultant, Strategic Compensation Planning, Inc. The
independent compensation consultant reviewed market data, financial performance,
stock performance and other related performance criteria to determine relevant
compensation practices of various peer groups. The peer groups developed by the
independent compensation consultant consisted of national, regional and other
specially selected groupings of bank holding companies of similar asset size.
The peer information provides guidance to the Committee, but the Committee does
not target total executive compensation or any component thereof to any
particular point within, or outside, the range of the peer group results.
In general, the Committee continues to adjust the mix of base salary,
annual incentive awards and long-term incentives. Specifically, the Committee's
focus is to increase the emphasis on the amount of executive compensation that
is at risk. Base salaries for executive officers are established at levels
considered appropriate in light of the scope of the duties and responsibilities
of each officer's position and taking into account peer group compensation
practices. Executive officers received annual cash incentive awards under the
Corporation's Restricted Stock and Incentive Bonus Plan in accordance with the
target payout percentages established by the Committee for 1997.
Long-Term Incentive Awards
The stock-based awards (stock option awards and restricted stock
grants) are generally granted to executive officers on an annual basis. It has
been the practice of the Committee to grant stock options and restricted stock
to both executive officers and other members of senior management. The stock
option awards cannot be issued with an exercise price below the market price of
the Corporation's common stock at the time of the award and the exercise price
cannot be changed after the award is issued, except to accommodate any
dividends, stock splits or conversions which would affect all shareholders. In
determining the size of each executive officer's stock option award or
restricted stock grant, the Committee considers the results of the peer group
review performed by the independent compensation consultants.
The Committee has historically granted stock options as a means of
providing long-term incentives to employees, rather than as a reward for past
performance. All stock options granted by the Corporation under various Stock
Option Plans "vest" incrementally over a five-year period based on the
optionee's continued employment by the Corporation or one of its principal
subsidiaries. The Committee therefore based its 1997 decisions with regard to
the stock options granted to its executive officers primarily upon the total
number of options available for grant and the officer's position, with
adjustments for individual performance where appropriate.
The Committee also granted restricted stock in 1997 to certain
executive and other senior officers under the Corporation's Restricted Stock and
Incentive Bonus Plan. The restricted stock grants are to reward individuals who
made a particularly important contribution to the Corporation in 1996. These
grants are also a key component of the Committee's long-term incentive
compensation policy because restricted stock granted under this plan only
"vests" incrementally over a five-year period based on the recipient's continued
employment by the Corporation or one of its principal subsidiaries.
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In consideration for the successful implementation of the Corporation's
Florida growth strategy, the independent compensation consultant recommended
that the Committee consider special cash awards for those individuals who
contributed to the development and implementation of the Corporation's Florida
growth strategy. The Committee adopted the independent compensation consultant's
recommendation.
Chief Executive Officer Compensation
In evaluating the compensation of Mr. Peter Mortensen for services
rendered in 1997, as Chairman of the Board as well as Chief Executive Officer of
the Corporation, the Committee examined both quantitative and qualitative
factors.
In looking at quantitative factors, the Committee reviewed the
Corporation's 1997 financial results as compared with those of peer groups and
with the Corporation's financial results for 1996. The Committee reviewed the
Corporation's record net earnings of $33.1 million for 1997, an increase of 67%
from 1996; a 70% increase in the Corporation's common stock price from year-end
1996; and other quantitative factors. The Committee did not apply any specific
quantitative formula which would assign weights to these performance measures or
establish numerical targets for any given factor.
In addition to the above quantitative accomplishments, the Committee
considered the following accomplishments that are qualitative in nature. The
Committee recognized Mr. Mortensen's continued leadership in positioning the
Corporation strategically as demonstrated by the Corporation's continued
expansion into the Florida banking market. The Committee also recognized his
leadership in relation to the placement of greater emphasis on the appropriate
allocation of the Corporation's capital for the purpose of providing greater
return to shareholders. Further, the Committee acknowledged Mr. Mortensen's
continued leadership in community reinvestment and economic development
activities as evidenced by the fact that all of the Corporation's bank
subsidiaries received "satisfactory" or better Community Reinvestment Act
("CRA") ratings, with three subsidiaries having received "outstanding" CRA
ratings following their most recent examinations.
The Committee's decisions relating to Mr. Mortensen's compensation were
ratified by the Board. Also, consistent with the principles and procedures
outlined in this report, the Committee approved the compensation of the
Corporation's other executive officers for 1997 and said decisions were ratified
by the Board.
Respectfully submitted,
James T. Weller, Chairman
W. Richard Blackwood
Charles T. Cricks
James S. Lindsay
George A. Seeds
Compensation Committee Interlocks and Insider Participation
Mr. Mortensen, Chairman and Chief Executive Officer of the Corporation,
served as an ex officio member of the Corporation's Compensation Committee, but
did not participate or vote in any deliberations or decision making involving
his own compensation.
Mr. Mortensen serves on the board of directors of Liberty Steel
Products, Inc., a closely held corporation which is wholly owned by Mr. Weller
and his family. Mr. Weller, a member of the Corporation's Compensation
Committee, is Chairman of Liberty Steel Products, Inc.
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Executive Remuneration
The following table sets forth information regarding remuneration paid
by the Corporation and its subsidiaries for the years shown to the Chairman and
Chief Executive Officer of the Corporation and the four other most highly
compensated executive officers of the Corporation whose aggregate annual
remuneration exceeded $100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
---------------------------------------
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------ ---------------------------------------
Name and Other Restricted Securities LTIP All Other
Principal Year Salary Bonus(1) Annual Stock Underlying Payouts Compensation
Position ($) ($) Compensation(2) Award Options ($) ($)
($) ($) (#)
- -----------------------------------------------------------------------------------------------------------------------------------
Peter Mortensen 1997 378,000 347,800 57,799 266,256 23,542 None 105,083(3,4)
Chairman and Chief 1996 355,008 101,381 38,016 None 17,640 None 36,446
Executive Officer 1995 347,004 99,243 26,920 None 9,261 None 35,472
Stephen J. Gurgovits 1997 265,008 201,901 127,500 13,528 None 38,798(3,4)
Vice Chairman 1996 255,000 53,139 10,972 None 15,435 None 23,090
1995 250,008 78,232 10,529 None 8,102 None 22,256
Gary L. Tice(5) 1997 243,457 183,600 56,330 None None None 154,087(3,4)
President and Chief
Operating Officer
William J. Rundorff 1997 179,004 134,300 80,502 7,117 None 15,707(3,4)
Executive Vice President 1996 161,004 39,410 None 13,230 None 11,203
1995 147,012 35,038 None 6,945 None 9,885
John D. Waters
Vice President and Chief 1997 155,004 124,300 10,000 11,493 None 5,670(3)
Financial Officer 1996 130,008 31,823 10,000 11,025 None 3,575
1995 118,008 16,875 None 2,045 None 0
===================================================================================================================================
1 Amount earned by the officer as a cash incentive bonus under the
Restricted Stock and Incentive Bonus Plan.
2 The aggregate amount of payments made to each officer for perquisites
or other personal benefits did not exceed 10% of salary and bonus
except that in 1997, Mr. Mortensen received country club memberships of
$37,554 and Mr. Tice received a car allowance of $14,892, country club
memberships of $20,688 and directors' fees of $20,750. Amounts shown
for Messrs. Mortensen and Gurgovits for 1996 and 1995 were
reimbursements due to increases in the Federal income tax rates.
3 Includes the following amounts paid or accrued by the Corporation for
1997 under the following programs to Messrs. Mortensen, Gurgovits,
Tice, Rundorff and Waters, respectively: 401(k) Plan (employer matching
contributions), $4,800, $4,800, $13,750, $4,800 and $4,800; Basic
Retirement Plan (employer matching contributions relating to 401(k)
Plan), $44,847, $23,244, $0, $7,191 and $870; Supplemental Disability,
$8,357, $5,052, $7,975, $0 and $0.
4 Includes the following amounts which represent the present value of
imputed interest on the Corporation's portion of split dollar life
insurance premiums paid during 1997: Mr. Mortensen, $47,078; Mr.
Gurgovits, $5,702; Mr. Tice, $132,362; and Mr. Rundorff, $3,716. These
premiums will be returned to the Corporation upon the earlier of either
the death of the covered employee or termination of the policy.
5 Mr. Tice became an executive officer in January 1997 as a result of the
affiliation with Southwest Banks, Inc.
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Deferred Compensation
In addition to the Basic Retirement Plan (more fully described below),
the Board of Directors of FNBPA has established a Deferred Compensation Plan
(the "Compensation Plan") for Messrs. Mortensen and Gurgovits which commenced
January 1, 1986. The Compensation Plan provides for payments of annual benefits
of $102,000 for Mr. Mortensen and $25,000 for Mr. Gurgovits for a period of ten
years commencing upon the occurrence of: (a) retirement from FNBPA; (b) complete
and total disability; or (c) the death of the participant in the event such
death occurs prior to retirement. Of these amounts, $62,000 and $25,000,
respectively, will be paid pursuant to Deferred Compensation Agreements. The
remaining amount for Mr. Mortensen is to be provided by an annuity generated by
the excess cash surrender value of a split dollar life insurance policy. During
1997, it was determined that the cash surrender value of the split dollar life
insurance policy may fall short of the expected level at Mr. Mortensen's
retirement. Accordingly, during 1997, FNBPA accrued an additional $38,448 to
cover the estimated shortfall.
Stock Options
The following tables show certain information relating to stock options
granted during the last fiscal year and aggregated stock options for the named
executive officers and all unexercised options held by such officers as of
December 31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants(1) for Option Term(3)
- ----------------------------------------------------------------------------------------------------------------------------------
Securities % of Total Exercise
Underlying Options Granted to or Base
Options Granted(2) Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- ---------------- ------------------ -------- ---------- ------- --------
Mr. Mortensen 23,542 16.7 22.62 01/26/07 334,899 848,700
Mr. Gurgovits 13,528 9.6 22.62 01/26/07 192,444 487,691
Mr. Tice 0 n/a n/a n/a n/a n/a
Mr. Rundorff 7,117 5.0 22.62 01/26/07 101,244 256,571
Mr. Waters 11,493 8.1 22.62 01/26/07 163,495 414,328
==================================================================================================================================
1 Adjusted for a 5% stock dividend declared on April 23, 1997.
2 Options were granted on January 26, 1997 and are 20% vested on each of
the first through fifth anniversaries of the grant date.
3 In order for the gains to be realized over the ten-year term of the
option, the stock price at the end of the period would be $36.85 and
$58.67, respectively, reflecting increases in the overall market price
of each share of Common Stock of the Corporation by approximately 63%
and 159%, respectively.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
- ----------------------------------------------------------------------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised
Unexercised In-The-Money Options at
Options at 12/31/97 12/31/97($)(1)
---------------------------------------------------------------------
Value
Shares Acquired Realized
Name on Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------- ----------- ------------- ----------- -------------
Mr. Mortensen 0 0 25,370 47,659 682,193 881,937
Mr. Gurgovits 0 0 21,774 34,443 583,421 658,362
Mr. Tice 27,925 703,431 28,434 25,058 1,050,188 919,734
Mr. Rundorff 0 0 15,420 24,578 404,431 482,543
Mr. Waters 0 0 3,015 21,527 61,299 370,244
==================================================================================================================================
1 Represents the difference between the aggregate market value at December 31,
1997 of the shares subject to the options and the aggregate option price of
those shares.
Retirement Benefits
The following table illustrates the maximum annual benefits payable in
1998 under the life annuity option of the Corporation's pension plan, in which
Messrs. Mortensen, Gurgovits, Rundorff and Waters participate, and the Basic
Retirement Plan (more fully described below) upon normal retirement at age 62.
ESTIMATED ANNUAL PENSION PAYMENTS
- ------------------------------------------------------------------------------------------------------------------------
Average Annual Earnings Years of Service
for 5 Years Preceding -------------------------------------------------------------------------
Retirement
10 15 20 25 or More
- ------------------------------------------------------------------------------------------------------------------------
$125,000 $42,254 $52,105 $61,957 $71,808
$150,000 $53,296 $65,300 $77,304 $89,308
$175,000 $69,763 $82,111 $94,460 $106,808
$200,000 $87,263 $99,611 $111,960 $124,308
$225,000 $104,763 $117,111 $129,460 $141,808
$250,000 $122,263 $134,611 $146,960 $159,308
$275,000 $139,763 $152,111 $164,460 $176,808
$300,000 $157,263 $169,611 $181,960 $194,308
$325,000 $174,763 $187,111 $199,460 $211,808
$350,000 $192,263 $204,611 $216,960 $229,308
$375,000 $209,763 $222,111 $234,460 $246,808
$400,000 $227,263 $239,611 $251,960 $264,308
$500,000 $297,263 $309,611 $321,960 $334,308
=========================================================================================================================
The retirement benefit for each employee covered by the pension plan is
a monthly benefit in the form of a Five Year Certain and Life annuity, equal to
1.2% of Final Average Earnings plus .5% of Final Average Earnings in excess of
the employee's Covered Compensation (as defined by Section 401(l)(5)(E) of the
Internal Revenue Code)
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times Years of Service, not to exceed twenty-five (25) years. The Final Average
Earnings figure is calculated using the highest sixty (60) consecutive months of
earnings of the last 120 months of service as an employee. The benefits listed
above are not subject to deduction for Social Security.
Compensation included for computation of benefits is base salary as
indicated in the Summary Compensation Table. As of December 31, 1997, credited
years of service under the plan were as follows: Mr. Mortensen, 39 years; Mr.
Gurgovits, 36 years; Mr. Rundorff, seven years and Mr. Waters, three years.
Basic Retirement Plan
The Basic Retirement Plan (the "BRP") is an unfunded plan providing
supplemental retirement benefits to those officers of the Corporation and its
subsidiaries who are designated by the Board of Directors of the Corporation
(the "Board"). The basic benefits under the BRP, payable when a participant
retires at or after the normal retirement date under his employer's defined
benefit or defined contribution plan ("Primary Qualified Plan"), is a monthly
benefit equal to either 50%, 60% or 70% (as determined by the Board) of the
participant's highest average monthly cash compensation during any five
consecutive calendar years within the last ten calendar years of employment.
This amount is reduced by the monthly benefit to which the participant would be
entitled under Social Security at normal retirement under the Primary Qualified
Plan in which he participates and (to the extent the benefit relates to employer
contributions other than matching contributions) under other benefit plans
designated by the Board. The benefit also includes credits equal to matching
stock contributions which certain participants were prevented from receiving
pursuant to the Corporation's 401(k) Plan due to limits imposed by the Internal
Revenue Code.
The BRP contains provisions for reducing the basic benefit described
above if the participant retires before his normal retirement age but on or
after the early retirement date permitted by the Primary Qualified Plan. The
participant's rights to benefits under the BRP vest pursuant to a schedule set
forth in the BRP which takes into account years of participation in the BRP and
years of credited service under the participant's Primary Qualified Plan. A
participant automatically becomes 100% vested if he is employed with the
Corporation or a subsidiary on his normal retirement date, if a "change in
control" (as defined in the BRP) occurs, or in the event of his death or total
and permanent disability. Benefits are forfeited in the event a participant's
employment is terminated for cause or if the participant retires before the
early retirement date provided in his Primary Qualified Plan.
Employment Agreements
The Corporation has entered into Employment Agreements (collectively, the
"Agreements") with Messrs. Mortensen, Gurgovits, Tice, Rundorff and Waters. Each
of the Agreements provide that on December 31 of each year, the term of
employment of each executive officer will be automatically extended to December
31 of the third calendar year thereafter (unless the Corporation or the
respective executive officer fixes the expiration date of the term of employment
in accordance with provisions contained in the Agreements) and that the officer
will continue to be employed throughout that term at not less than his current
base salary. The term shall not be extended to a date beyond December 31 of the
year during which the executive officer reaches age 62, except for Messrs.
Mortensen and Tice, which is age 65.
The Agreements may be terminated voluntarily by the executive officers
and upon such event, all obligations of the Corporation shall cease as of the
date of termination. The Corporation will be obligated, should it terminate any
of the Agreements other than for cause, to pay the executive officer affected
for the balance of the term of his Employment Agreement then in effect.
Provision is made in the Agreements for termination of their respective
obligations to serve the Corporation and for the payment to them of a bonus
equal to approximately three times their annual compensation for Mr. Gurgovits,
two and a half times for Mr. Tice, and two times for Messrs. Rundorff and
Waters, in the event of a sale or other change of control transaction affecting
the Corporation.
In 1996 the Corporation and Mr. Mortensen entered into a Post-Employment
Services Agreement which replaces the change in control feature of his current
Employment Agreement. Upon cessation of full-time employment under his
Employment Agreement, Mr. Mortensen, pursuant to the terms of the
Post-Employment Services Agreement, shall be required to make himself available
to serve the Corporation as Director and Chairman of the Board and to serve the
Corporation and its subsidiaries as an independent consultant with respect to
various aspects of their business. Mr. Mortensen shall be entitled to receive
compensation for such services.
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STOCK PERFORMANCE GRAPHS
The following five-year performance graph compares the cumulative total
shareholder return (assuming reinvestment of dividends) on the Corporation's
Common Stock (|_|) to the Nasdaq Composite Index (+) and the Nasdaq Bank Index
(*). This stock performance graph assumes $100 was invested on December 31,
1992, and the cumulative return is measured as of each subsequent fiscal year
end.
F.N.B. CORPORATION FIVE-YEAR STOCK PERFORMANCE
TOTAL RETURN, INCLUDING STOCK AND CASH DIVIDENDS
F.N.B. Corporation Nasdaq Composite Nasdaq Banks
------------------ ---------------- ------------
Total Returns ($) 1992 100 100 100
1993 143.42 114.8 114.04
1994 153.35 112.21 113.63
1995 225.33 158.7 169.22
1996 258.78 195.19 223.41
1997 454.53 239.53 377.44
SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS
The following table sets forth certain information concerning persons
known to the Corporation to be the beneficial owner of 5% or more of the
outstanding Series A Preferred Stock as of March 2, 1998. The Corporation is not
aware of any other person who is the beneficial owner of 5% or more of any other
class of the Corporation's voting stock.
Shares Percent of Outstanding Series A
Name and Address Beneficially Owned Preferred Stock Beneficially Owned
- -------------------------------------------------------------------------------------------------------------------------
Cede & Co. 2,436 11.5
Box 20, Bowling Green Station
New York, NY 10274
Hilton G. Klein & Joan H. Klein 2,160 10.2
122 Hilton Drive
New Brighton, PA 15006-3510
I.B.E.W. Local #712 Pension Trust Fund 2,000 9.5
217 Sassafras Lane
P. O. Box 248
Beaver, PA 15009-0248
Hanna Jane Boggs 1,809 8.6
7531 Spring Lake Drive C2
Bethesda, MD 20817-6561
Richard Charles Boggs 1,809 8.6
7531 Spring Lake Drive C2
Bethesda, MD 20817-6561
=========================================================================================================================
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VOTING SHARES HELD IN FIDUCIARY CAPACITY
The Corporation's affiliate, First National Bank of Pennsylvania
(FNBPA), and said affiliate's nominee were as of March 2, 1998 the beneficial
owner of 323,263 shares of the Corporation's Common Stock, or 2.1% of the
outstanding shares of Common Stock. These shares are held by FNBPA with full
voting and/or dispositive power in various fiduciary capacities. FNBPA has or
shares voting power as to 262,642 of these shares, or 1.7% of the total shares
of Common Stock outstanding, and 1.7% of the total voting power of the
Corporation's outstanding Stock. FNBPA will vote the shares over which it has
authority as of the record date for the election of the five candidates for
director.
INDEPENDENT AUDITORS
The Corporation re-appointed Ernst & Young LLP ("Ernst & Young") as
independent auditors for the year ended December 31, 1998. Ernst & Young has
served as the Corporation's independent auditors since 1993. Representatives of
Ernst & Young are expected to be present at the Annual Meeting, and will have
the opportunity to make a statement, if they so desire, and respond to
appropriate questions.
ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST TO THE UNDERSIGNED SECRETARY OF THE CORPORATION
(AT THE ADDRESS SPECIFIED ON PAGE 1) BY ANY SHAREHOLDER WHOSE PROXY IS SOLICITED
HEREBY, THE CORPORATION WILL FURNISH TO SUCH SHAREHOLDER WITHOUT CHARGE A COPY
OF ITS 1997 ANNUAL REPORT ON FORM 10-K TO THE SECURITIES AND EXCHANGE
COMMISSION, TOGETHER WITH FINANCIAL STATEMENTS AND SCHEDULES THERETO.
ADDITIONAL INFORMATION
The Corporation knows of no other matters which will be presented to
shareholders for action at the Annual Meeting. However, if other matters are
presented which are proper subjects for action by shareholders, it is the
intention of those named in the accompanying proxy to vote such proxy in
accordance with their judgment upon such matters.
Solicitation of proxies will be made by employees of the Corporation,
and the cost will be borne by the Corporation. Proxies will be solicited by mail
and, in limited instances, by telephone, telegraph and personal interview. The
Corporation will also request brokerage houses and other custodians, nominees
and fiduciaries to forward soliciting material to the beneficial owners of the
stock held of record by such persons and will reimburse such persons for their
costs incurred in forwarding such materials.
SHAREHOLDER PROPOSALS
Proposals of security holders intended to be presented at the next
Annual Meeting must be received by the Corporation no later than November 19,
1998 for inclusion in the Corporation's proxy statement and form of proxy
relating to such meeting.
BY ORDER OF THE BOARD OF DIRECTORS
David B. Mogle, Secretary
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- -------------------------------------------------------------------------------
F.N.B. Corporation * One F.N.B. Boulevard
* Hermitage, Pennsylvania 16148-3363 * (724) 981-6000