PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
CCB FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
CCB FINANCIAL CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fees (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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[ ] 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
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CCB FINANCIAL CORPORATION
111 CORCORAN STREET
POST OFFICE BOX 931
DURHAM, NORTH CAROLINA 27702
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 5, 1994
NOTICE is hereby given that the Annual Meeting of Shareholders of CCB
Financial Corporation (the Corporation) will be held as follows:
PLACE: George Watts Hill Alumni Center, Stadium Drive at Ridge
Road on the campus of the University of North Carolina at
Chapel Hill, Chapel Hill, North Carolina
DATE: Tuesday, April 5, 1994
TIME: 11:00 A.M.
For your convenience, a map with directions to the George Watts Hill Alumni
Center appears on the back outside cover of the accompanying Proxy Statement.
THE PURPOSES OF THE ANNUAL MEETING ARE:
1. To consider a proposal to increase the number of directors of the
Corporation to 18.
2. To elect 18 members of the Board of Directors.
3. To consider a proposal to approve the Corporation's Long-Term
Incentive Plan.
4. To consider a proposal to increase the number of authorized shares
of the Corporation's common and preferred stock from 25,000,000 to
35,000,000.
5. To consider a proposal to ratify the appointment of KPMG Peat
Marwick as the Corporation's independent accountants for 1994.
6. To consider and act on any other matters that may properly come
before the Annual Meeting.
The record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting has been set as the close of business on
February 16, 1994.
EVEN IF YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO MARK, DATE, AND SIGN THE ENCLOSED APPOINTMENT OF PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE
YOUR APPOINTMENT OF PROXY AND VOTE YOUR SHARES IN PERSON.
Sincerely,
ERNEST C. ROESSLER,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
March 15, 1994
CCB FINANCIAL CORPORATION
111 CORCORAN STREET
POST OFFICE BOX 931
DURHAM, NORTH CAROLINA 27702
PROXY STATEMENT
MAILING DATE: MARCH 15, 1994
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 5, 1994
GENERAL
This Proxy Statement is being distributed in connection with the
solicitation by the Board of Directors of CCB Financial Corporation (the
Corporation) of appointments of proxy in the form enclosed herewith for the 1994
Annual Meeting of Shareholders of the Corporation and any adjournments thereof
(the Annual Meeting). The Annual Meeting will be held on Tuesday, April 5, 1994,
beginning at 11:00 A.M., at the George Watts Hill Alumni Center, Stadium Drive
at Ridge Road on the campus of the University of North Carolina at Chapel Hill,
Chapel Hill, North Carolina. For your convenience, a map with directions to the
George Watts Hill Alumni Center appears on the back outside cover of this Proxy
Statement.
As used in this Proxy Statement, the term the Bank refers to the
Corporation's North Carolina-chartered commercial bank subsidiary, Central
Carolina Bank and Trust Company.
VOTING OF APPOINTMENTS OF PROXIES; REVOCATION
Persons named in the enclosed appointment of proxy as proxies for
shareholders at the Annual Meeting are Richard W. Every, Secretary of the
Corporation and the Bank, W. Harold Parker, Jr., Controller of the Corporation
and the Bank, and Manuel L. Rojas, General Auditor of the Bank. Shares
represented by each appointment of proxy which is properly executed, returned,
and not revoked, will be voted in accordance with the directions contained
therein. If no directions are given, those shares will be voted FOR the election
of each of the 18 nominees for director named in Proposal 2 and FOR each of the
other proposals described herein. If, at or before the time of the Annual
Meeting, any nominee named in Proposal 2 becomes unavailable for any reason, the
proxies will be authorized to vote for a substitute nominee. On such other
matters as may properly come before the meeting, the proxies will be authorized
to vote shares represented by appointments of proxy in accordance with their
best judgment.
A shareholder may revoke an appointment of proxy at any time before the
shares represented by it have been voted by filing with Mr. Every an instrument
revoking it or a properly executed appointment of proxy bearing a later date, or
by attending the Annual Meeting and announcing his or her intention to vote in
person.
EXPENSES OF SOLICITATION
The Corporation will pay the cost of preparing, assembling, and mailing
this Proxy Statement and other proxy solicitation expenses. In addition to the
use of the mail, appointments of proxy may be solicited in person or by
telephone by officers, directors, or employees of the Corporation and its
subsidiaries without additional compensation.
RECORD DATE
The Board of Directors has set February 16, 1994, as the record date (the
Record Date) for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting. Only shareholders of record on that date will be
entitled to vote at the Annual Meeting.
VOTING SECURITIES
The voting securities of the Corporation are the shares of its $5.00 par
value common stock (Common Stock), of which 20,000,000 shares were authorized
and 9,516,379 shares were outstanding on the Record Date. During 1993, the
Corporation's convertible subordinated debentures were called for redemption and
substantially all were converted into shares of Common Stock.
VOTING PROCEDURES; VOTES REQUIRED FOR APPROVAL
At the Annual Meeting, each shareholder will be entitled to cast one vote
for each share of Common Stock held of record on the Record Date for each matter
submitted for voting and, in the election of directors, for each director to be
elected.
For Proposal 1 to be approved, a majority of the outstanding shares of
Common Stock must be voted in favor of approval. If Proposal 1 is approved, then
in the voting for directors the 18 nominees receiving the highest numbers of
votes will be elected. If Proposal 1 is not approved, then the 17 nominees
receiving the highest numbers of votes will be elected. In the case of Proposals
3, 4, and 5, for each of such proposals to be approved the number of votes cast
for approval must exceed the number of votes cast against the proposal. Except
in the voting on Proposal 1, abstentions and broker nonvotes will have no
effect. Because the affirmative vote of a majority of all outstanding shares is
required to approve Proposal 1, abstentions and broker nonvotes will have the
same effect as votes against that proposal.
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
Set forth below is information regarding the only person known to
management of the Corporation to beneficially own more than 5% of the issued and
outstanding shares of Common Stock as of January 31, 1994.
PERCENTAGE
AMOUNT AND NATURE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP CLASS(1)
Central Carolina Bank and 718,399(2) 7.55%
Trust Company
Durham, North Carolina
(1) The calculation of the percentage of class beneficially owned is based on
the 9,516,379 shares of the Corporation's Common Stock issued and
outstanding on January 31, 1994.
(2) Shares beneficially owned by the Bank are held through its Trust Department
in various fiduciary capacities. In addition to the shares reflected above,
the Bank holds certain other shares in various fiduciary capacities as to
which the Bank disclaims beneficial ownership. The aggregate number of
shares held by the Bank includes 552,828 shares over which the Bank
exercises sole voting power, 165,721 shares over which the Bank has shared
voting power, 239,418 shares over which the Bank has sole investment power,
and 389,404 shares over which the Bank has shared investment power.
2
Set forth below is information as of January 31, 1994 regarding the
beneficial ownership of Common Stock by the Corporation's current directors,
nominees for election as directors, certain of its executive officers
individually, and by all current directors and executive officers of the
Corporation as a group.
PERCENTAGE
AMOUNT AND NATURE OF OF
NAME BENEFICIAL OWNERSHIP(1) CLASS(2)
J. Harper Beall, III 14,815(3) .16%
James B. Brame, Jr. 534 *
Timothy B. Burnett 500 *
W. L. Burns, Jr. 136,379(4) 1.43%
Arthur W. Clark 26,621 .28%
Kinsley van R. Dey, Jr. 9,067(5) .10%
Mrs. Frances Hill Fox 222,702 2.34%
T. E. Haigler, Jr. 2,125 .02%
George R. Herbert 2,195(6) .02%
Edward S. Holmes 4,320(7) .05%
Owen G. Kenan 3,730(8) .04%
Eugene J. McDonald 1,324(9) .01%
Hamilton W. McKay, Jr., M.D. 3,426(10) .04%
Eric B. Munson 275 *
Ernest C. Roessler 11,031(11) .12%
John B. Stedman 42,815(12) .45%
H. Allen Tate, Jr. 15,461(13) .16%
Dr. Phail Wynn, Jr. 409 *
J. Scott Edwards 17,022(14) .18%
Richard L. Furr 12,000(15) .13%
All current directors and 511,436(16) 5.37%
executive officers as a
group (18 persons)
(1) Except as otherwise noted, each individual exercises sole voting and
investment power with respect to all shares shown as beneficially owned.
(2) An asterisk (*) indicates less than .01%. Except as otherwise noted, the
calculation of the percentage of class beneficially owned is based on the
9,516,379 shares of Common Stock issued and outstanding at January 31,
1994.
(3) Includes 4,734 shares with respect to which Mr. Beall exercises sole voting
and investment power, 5,760 shares with respect to which Mr. Beall
exercises sole voting power only, and 4,321 shares with respect to which
Mr. Beall exercises sole investment power only. The calculation of the
percentage of shares is based on 9,520,700 shares, which is composed of the
9,516,379 shares issued and outstanding at January 31, 1994 plus 4,321
shares subject to an immediately exercisable option held by Mr. Beall.
(4) Includes 34,884 shares with respect to which Mr. Burns exercises shared
voting and investment power and 13,071 shares with respect to which he
exercises sole voting power only.
(5) Includes 1,012 shares with respect to which Mr. Dey exercises shared voting
and investment power.
(6) Includes 2,039 shares with respect to which Mr. Herbert exercises shared
voting and investment power.
(7) Does not include 21,648 shares held by Mr. Holmes' spouse and with respect
to which he disclaims any beneficial ownership.
(8) Includes 3,530 shares with respect to which Mr. Kenan exercises shared
voting and investment power.
(9) Includes 1,224 shares with respect to which Mr. McDonald exercises shared
voting and investment power.
(10) Does not include 1,057 shares held by Dr. McKay's spouse and son and with
respect to which he disclaims any beneficial ownership.
(11) Includes 6,762 shares with respect to which Mr. Roessler exercises sole
voting power only.
(12) Includes 2,366 shares with respect to which Mr. Stedman exercises shared
voting and investment power.
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(13) Includes 6,418 shares with respect to which Mr. Tate exercises shared
voting and investment power. Does not include a total of 2,787 shares held
by or for Mr. Tate's spouse and children and with respect to which he
disclaims any beneficial ownership.
(14) Includes 6,724 shares with respect to which Mr. Edwards exercises sole
voting power only and 262 shares with respect to which Mr. Edwards
exercises shared voting and investment power.
(15) Includes 6,724 shares with respect to which Mr. Furr exercises sole voting
power only and 702 shares with respect to which Mr. Furr exercises shared
voting and investment power.
(16) Includes an aggregate of 424,221 shares with respect to which current
directors and officers exercise sole voting and investment power, 53,934
shares with respect to which they have shared voting and investment power,
and 33,281 shares with respect to which they have sole voting power only.
REPORTS OF CHANGES IN BENEFICIAL OWNERSHIP
Directors, executive officers, and certain principal shareholders of the
Corporation are required by federal law to file reports with the Securities and
Exchange Commission regarding the amount of and changes in their beneficial
ownership of Common Stock. During 1993, three current directors of the
Corporation, Arthur W. Clark, James B. Brame, Jr., and Dr. Phail Wynn, Jr.
acquired 442, 202, and 11 shares of Common Stock, respectively, for which the
required report was not filed by its due date. In each instance, the shares were
purchased by the director under the Corporation's Dividend Reinvestment and
Stock Purchase Plan.
PROPOSAL 1. SETTING THE NUMBER OF DIRECTORS
The Corporation's bylaws provide that the Board of Directors shall consist
of such number of members, not less than five nor more than 30, as from time to
time shall be determined by a majority of the votes which all of the
shareholders are entitled to cast. The number of directors of the Corporation
currently is set at 17. The Board of Directors recommends that the number of
directors be increased by shareholders to 18 and will introduce a proposal to
that effect at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 1.
PROPOSAL 2. ELECTION OF BOARD OF DIRECTORS
Action will be taken at the Annual Meeting to elect a full Board of
Directors. The Board of Directors has nominated the following 18 persons for
election as directors for terms of one year or until their respective successors
are duly elected and qualified.
4
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH OF THE 18
NOMINEES NAMED BELOW.
PRINCIPAL OCCUPATION
NAME AND AGE AND OTHER DIRECTORSHIPS
J. Harper Beall, III President, Fairfield Chair Company (furniture manufacturer)
(52)
James B. Brame, Jr.(2) President, Brame Specialty Co., Inc. (paper products, office supplies,
(48) and office equipment)
Timothy B. Burnett President, Bessemer Improvement Company (industrial and commercial real
(53) estate development)
W. L. Burns, Jr.(3) President and Chief Executive Officer of the Corporation and the Bank
(66) until April 6, 1993; presently serving as Chairman of the Board of the
Corporation and the Bank
Arthur W. Clark Retired since 1987; previously served as Chairman, President, and Chief
(71) Executive Officer, Peoples Security Life Insurance Company
Kinsley van R. Dey, Jr. Retired since 1990; previously served as President and Chief Executive
(69) Officer, Liggett Group, Inc. (cigarette manufacturer); Director, GTE
South (telecommunications company)
Mrs. Frances Hill Fox Secretary-Treasurer, Croasdaile, Inc. (real estate developer)
(85)
T. E. Haigler, Jr. Retired since 1989; previously served as President and Chief Executive
(69) Officer, Burroughs Wellcome Co. (pharmaceutical manufacturer)
George R. Herbert Retired since 1989; previously served as President, and currently is
(71) Vice Chairman and President Emeritus, Research Triangle Institute
(research contractor); also serves as Director, Duke Power Company,
Director, Research Triangle Foundation, and as Trustee Emeritus, Duke
University
Edward S. Holmes Partner, Holmes & McLaurin (attorneys)
(64)
Owen G. Kenan President, Kenan Enterprises, Inc. (commercial real estate holding
(50) company), Kenan Oil Co., Inc. (petroleum products), Kenan
Developments, Inc. (commercial real estate developer); also serves as
Director, Kenan Transport Co., Inc. (bulk products hauler), Vice
Chairman, Flagler Systems, Inc. (hotel and property management), and
Chairman, Kenan Global Enterprises, 11c (international investments)
Eugene J. McDonald President, Duke Management Company (asset management company affiliated
(61) with Duke University); Executive Vice President, Duke University; also
serves as Director, SBSF Funds, Inc., Sphinx Pharmaceuticals, and Flag
Group of Mutual Funds
Hamilton W. McKay, Jr., M.D. Physician, Carolina Allergy Clinic, P.A.
(64)
Eric B. Munson Executive Director, University of North Carolina Hospitals
(51)
Ernest C. Roessler(3) Executive Vice President and Chief Financial Officer of the Corporation
(52) and the Bank until April 6, 1993; presently serving as President and
Chief Executive Officer of the Corporation and the Bank
John B. Stedman(4) Retired since 1989; previously served as Chairman of the Board of
(69) Republic Bank & Trust Co.
H. Allen Tate, Jr.(5) President, Allen Tate Company, Inc. (residential real estate broker)
(62)
Dr. Phail Wynn, Jr. President, Durham Technical Community College
(46)
NAME AND AGE DIRECTOR SINCE(1)
J. Harper Beall, III New nominee
(52)
James B. Brame, Jr.(2) 1993
(48)
Timothy B. Burnett New nominee
(53)
W. L. Burns, Jr.(3) 1972
(66)
Arthur W. Clark 1977
(71)
Kinsley van R. Dey, Jr. 1984
(69)
Mrs. Frances Hill Fox 1946
(85)
T. E. Haigler, Jr. 1974
(69)
George R. Herbert 1973
(71)
Edward S. Holmes 1973
(64)
Owen G. Kenan 1981
(50)
Eugene J. McDonald 1985
(61)
Hamilton W. McKay, Jr., M.D. 1990
(64)
Eric B. Munson 1985
(51)
Ernest C. Roessler(3) 1993
(52)
John B. Stedman(4) 1987
(69)
H. Allen Tate, Jr.(5) 1989
(62)
Dr. Phail Wynn, Jr. 1992
(46)
(1) Refers to the year in which a person first was elected a director of the
Corporation or, if prior to its organization in 1983, the year in which such
person first was elected a director of the Bank.
(2) During 1993, the Bank purchased office supplies and other products from
Brame Specialty Co., Inc. in an aggregate amount of $609,700.
5
(3) Mr. Burns retired from his positions as President and Chief Executive
Officer of the Corporation and the Bank effective April 6, 1993. The Board
of Directors elected Mr. Roessler to succeed Mr. Burns in those positions
effective upon Mr. Burns' retirement.
(4) Mr. Stedman has been nominated for reelection as a director pursuant to an
employment agreement between the Corporation, Republic Bank & Trust Co.
(Republic), and him that became effective during 1986 upon the Corporation's
acquisition of Republic as a wholly-owned subsidiary. Provided that Mr.
Stedman continues to beneficially own at least 37,500 shares of the
Corporation's common stock (as appropriately adjusted to reflect any
recapitalization of the Corporation), the employment agreement provides that
the Corporation will nominate Mr. Stedman for reelection at each Annual
Meeting through 1994.
(5) Mr. Tate is involved, either individually or through his company, as a
principal shareholder, officer, director, or partner in numerous other firms
engaged in the development or sale of real estate, residential construction,
and real estate investments.
DIRECTORS' COMPENSATION
During 1993 each director of the Corporation, other than directors who were
also officers or members of the Executive Committee, received a retainer of
$5,000. If the director was a non-officer member of the Executive Committee, he
received a retainer of $7,000. Directors who also were officers of the
Corporation or the Bank did not receive retainers. Directors received a fee of
$550 for each meeting of the Board of Directors attended and a fee of $500 for
attendance at each meeting of a committee of the Board of Directors. If the
director also was chairman of the committee, he received an additional fee of
$100 for attendance at each committee meeting.
For 1994, the standard director's retainer will be increased to $6,000 and
meeting attendance fees will be increased to $600 for each meeting of the Board
of Directors and $600 for each committee meeting. All other retainers and fees
will remain unchanged.
Directors have the option to defer their fees each year under an
arrangement whereby the Corporation pays interest on deferred amounts at
prevailing money market rates. Total directors' fees payable for 1993 were
$250,350, of which $190,200 was paid to directors and $60,150 was deferred.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors held five regular meetings and one special meeting
during 1993. All incumbent directors attended more than 75% of the total number
of meetings of the Board of Directors and its committees on which they served
during 1993.
The Board of Directors has several standing committees, including an Audit
Committee, a Nominating Committee, and a Compensation Committee. The voting
members of these committees are appointed by the Board of Directors annually
from among its members. Additionally, certain officers of the Corporation and
the Bank are appointed to serve as non-voting, advisory members of each
committee.
The current members of the Audit Committee are Mr. Munson, who serves as
Chairman, and Messrs. Dey, Brame, Burns, and Dr. Wynn. Officers currently
serving as advisory, non-voting members are Messrs. Rojas, Parker, J. Scott
Edwards, Executive Vice President of the Corporation and the Bank, and B. W.
Harris, Jr., retired Comptroller of the Bank. The primary functions of the Audit
Committee are to provide additional assurance regarding the integrity of
financial information used by the Board of Directors and distributed to the
public by the Corporation and to oversee and monitor the activities of the
Corporation's internal and external audit processes. The committee met four
times during 1993.
The current members of the Nominating Committee are Mr. Burns, who serves
as Chairman, and Messrs. Dey, Herbert, Holmes, McDonald, and Mrs. Fox. Messrs.
Every and Roessler currently serve as non-voting, advisory members. The primary
function of the Nominating Committee is to recommend candidates to the Board of
Directors for selection as nominees for election as directors. In making its
recommendations for the 1995 Annual Meeting, the Nominating Committee will
consider nominee candidates recommended by shareholders if their names are
submitted in writing to Mr. Every by November 15, 1994. The committee has met
one time since the 1993 Annual Meeting.
The Compensation Committee administers the Corporation's compensation
program and has responsibility for matters involving the compensation of
executive officers of the Corporation and the Bank. With respect to salaries,
however,
6
the Compensation Committee only establishes salary ranges for executive officers
while the Executive Committee sets actual salaries within those ranges. All
actions of the Compensation Committee are subject to review by the full Board of
Directors. The membership of the Compensation Committee, which met six times
during 1993, is described below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Until the death of George Watts Hill in January 1993, the Compensation
Committee consisted of Mr. Clark, who served as Chairman, and Messrs. Dey,
Haigler, Munson, and Hill, with Messrs. Burns and J. Kent Fawcett, Senior Vice
President and Personnel Director of the Corporation and the Bank, serving as
non-voting, advisory members. Upon Mr. Burns' retirement as President and Chief
Executive Officer of the Corporation and the Bank effective April 6, 1993,
Messrs. Burns and McDonald became voting members of the Compensation Committee
and Mr. Burns' successor, Mr. Roessler, became a non-voting, advisory member.
Prior to April 6, 1993, the Executive Committee, consisted of Mr. Burns,
who served as Chairman, and Messrs. Clark, Haigler, Herbert, Holmes, Roessler,
McDonald, and until his death, Mr. Hill, with Messrs. Edwards and Richard L.
Furr, Executive Vice President of the Corporation and the Bank, serving as
non-voting, advisory members. On April 6, 1993, Mr. Burns stepped down as
Chairman of the Executive Committee and was replaced by Mr. Roessler. During
1993, Messrs. Hill, Burns, Roessler, Fawcett, Edwards, and Furr each served as
an officer of the Corporation and the Bank.
In addition to other law firms, the firm of Holmes & McLaurin was engaged
to provide certain legal services to the Bank during 1993 and is expected to
continue to be so engaged in the future. Mr. Holmes, a partner in that firm,
served as a director and member of the Executive Committee during 1993 and has
been nominated for reelection as a director at the Annual Meeting.
COMPENSATION COMMITTEE REPORT
GENERAL. It is the policy of the Compensation Committee to provide a fully
competitive, performance-based compensation program such as will enable the
Corporation to attract, motivate, and retain qualified executive officers.
During 1993, the Corporation's executive compensation program provided for (a)
annual compensation consisting of base salaries combined with cash incentive
bonuses based on the Corporation's financial performance and (b) long-term
compensation consisting of periodic restricted stock awards combined with cash
incentive compensation based on the Corporation's financial performance. The
Corporation also provided certain other compensation plans customary for
companies of comparable size. The annual and long-term compensation programs
were intended to be competitive with median levels of incentive compensation
paid by the Corporation's competitors and were developed based on
recommendations of an independent compensation consulting firm selected by the
Compensation Committee.
The Omnibus Reconciliation Act of 1993 amended Section 162(m) of the
Internal Revenue Code of 1986, as amended (the Code), to limit the deductibility
of annual compensation in excess of $1,000,000 paid by public corporations to
certain executive officers. As the Corporation presently does not compensate any
officer in an amount approaching $1,000,000 per year, the Compensation Committee
has not adopted a policy with respect to Section 162(m).
The following is a discussion of each element of the compensation program
for 1993 with respect to the Corporation's executive officers named in the
Summary Compensation Table set forth below (the Named Executive Officers),
including Messrs. Burns and Roessler.
ANNUAL COMPENSATION PROGRAM. The 1993 base salary for the Corporation's
Chief Executive Officer was set on a subjective basis by the Executive Committee
within a range determined on an objective basis by the Compensation Committee to
be competitive with the base salaries paid to chief executive officers of
comparable bank holding companies. The Compensation Committee obtained from
Wyatt Data Services, an independent compensation consulting firm, a report
listing the base salaries of the chief executive officers of approximately 80
unnamed bank holding companies ranging in size from $500 million to $10 billion
in total assets. A graphic summary of this information was prepared to correlate
reported base salaries and asset sizes. The correlated average for a bank
holding company having total assets equal in amount to the Corporation's formed
the midpoint of the salary range determined by the Compensation Committee. The
1993 salary set by the Executive Committee for Mr. Roessler was slightly higher
than the minimum of such range.
Through April 1993, Mr. Burns was paid an annualized base salary determined
in the manner described above. The salary set by the Executive Committee fell
between the midpoint and the maximum of the range set by the Compensation
Committee. Upon his retirement as the Corporation's Chief Executive Officer, Mr.
Burns became a part-time government relations, marketing, and acquisitions
consultant to the Corporation. The base salary paid to Mr. Burns for
post-retirement
7
consultant services was determined by reference to a report from Wyatt Data
Services listing the average salaries paid by bank holding companies of
comparable asset size to individuals in similar consulting positions and
adjusted for the part-time nature of Mr. Burns' services.
The 1993 salaries of the other Named Executive Officers were set during
February 1993, within ranges established by the Compensation Committee, by the
Executive Committee based on its evaluation of the performance and levels of
responsibility of each officer and their contribution to the Corporation's
financial performance, measured in terms of its return on assets and return on
equity, for the prior fiscal year. The salary ranges for the other Named
Executive Officers were set by the Compensation Committee based on its
evaluation of the level of demands and responsibility required by each executive
position and by the levels of compensation paid by financial institutions of
comparable size for similar positions. This comparative analysis was based upon
information obtained from Wyatt Data Services regarding salaries paid to
executive officers of bank holding companies of comparable asset size, expressed
in terms of the ratio of such salaries to the salaries of their respective chief
executive officers.
The cash incentive bonuses paid for 1993 to Messrs. Burns and Roessler and
to each of the other Named Executive Officers were determined under the terms of
the Management Performance Incentive Plan (the Incentive Plan) following the end
of fiscal 1993 based on a comparison of the Corporation's 1993 financial
performance, measured in terms of the Corporation's return on assets and return
on equity, to the financial performance of a group of the Corporation's peer
financial institutions consisting of BB&T Financial Corporation, United Carolina
Bancshares Corporation, Southern National Corporation, Centura Banks, Inc.,
Central Fidelity Banks, Inc., and Jefferson Bankshares, Inc. (the Peer Group).
The Incentive Plan uses a target bonus approach to determine the size of each
eligible employee's bonus as well as the overall bonus fund. A participant's
base salary and salary grade as of the first day of the fiscal year is used to
determine such participant's target bonus. During 1993, the participants' salary
grades ranged from a low of 14 to a high of 38 and the target bonus, as a
percentage of annual base salary, ranged from a low of four percent to a high of
25 percent. The overall bonus fund is the sum of the target bonuses of all
participants (the Bonus Fund). The Bonus Fund is subject to adjustment upward or
downward based upon a comparison of the Corporation's return on assets and
return on equity against the average return on assets and return on equity of
the Peer Group. In order for 100 percent of the Bonus Fund to be paid, the
Corporation's combined return on assets and return on equity must equal 110
percent of the Peer Group's combined average as adjusted for material events.
For 1993, the Corporation's performance exceeded the Peer Group's combined
average by approximately 112 percent. Based on that comparison, the cash bonuses
paid to individual Named Executive Officers, including Messrs. Burns and
Roessler, were approximately 105% of the amounts that would have been paid had
the Corporation not exceeded the levels of performance targeted under the
Incentive Plan.
Other forms of annual compensation listed in the Summary Compensation Table
below for 1993 include the Corporation's matching contributions (the Matching
Contributions) to the account of each Named Executive Officer under the
Corporation's Section 401(k) Retirement Savings Plan (the 401(k) Plan) and the
portion of the Corporation's special discretionary contribution to the 401(k)
Plan (the Discretionary Contribution) allocated to the account of each Named
Executive Officer. The Matching Contributions for Messrs. Burns and Roessler and
the other Named Executive Officers were based on a formula contained in the
terms of the 401(k) Plan and were not related to the Corporation's or the
individual officer's performance for the year. The total amount of the
Discretionary Contribution generally was based upon the Corporation's financial
performance for 1993, measured in terms of earnings per share, net income,
return on assets, and return on equity, although there was no specific formula
or other mechanism by which the amount was determined. The portion of the
Discretionary Contribution allocated to the accounts of Messrs. Burns and
Roessler and the other Named Executive Officers was based upon a formula
contained in the terms of the 401(k) Plan.
LONG-TERM INCENTIVE PROGRAM. During 1993, the Corporation's long-term
incentive program consisted of the Restricted Stock Plan (the Stock Plan) and
the Performance Unit Plan (the Unit Plan) which were approved by the
Corporation's shareholders. The Stock Plan and the Unit Plan expired on December
31, 1993 except to the extent such plans continue to govern awards which have
not yet vested. These plans were designed to operate in conjunction with each
other to enhance and reinforce the Corporation's long-term goals by (i)
providing an inducement to the continued employment of key officers, (ii)
providing key officers with the incentive of additional compensation based on
the Corporation's financial performance over an extended period, (iii) insuring
that key officers had the perspective of shareholders, and (iv) structuring a
portion of key officers' incentive compensation such that they were rewarded
only in circumstances beneficial to all shareholders.
Under the Stock Plan, awards of restricted shares of Common Stock were
granted by the Compensation Committee from time to time to key officers of the
Corporation and its subsidiaries based on the Committee's evaluation of the
8
individual level of responsibility and contribution of each officer. Shares
included in each award are held in trust and cannot be sold or transferred by
the officer for a period of from three to five years from the date of grant, as
determined by the Compensation Committee. Shares awarded under the Stock Plan
are distributed to the officer if he remains employed by the Corporation until
the end of the restriction period, without any consideration of the
Corporation's financial performance. Such shares are forfeited if the officer's
employment terminates before the end of that period.
At the time awards were made under the Stock Plan, awards under the Unit
Plan consisting of performance units having a Target Value of $100 each also may
have been granted by the Compensation Committee. At the end of the restriction
period applicable to an officer's Stock Plan award, a percentage (up to 200%) of
the Target Value of each performance unit awarded to that officer may be paid in
cash based on a comparison of the Corporation's financial performance over that
period, measured in terms of return on assets and return on equity, to the
financial performance of a group of the Corporation's peer financial
institutions.
During the fourth quarter of 1992, the Executive Committee engaged an
independent consulting firm to conduct a comprehensive search for an individual
to replace Mr. Burns as Chief Executive Officer upon his retirement in April
1993. The search encompassed both internal and external candidates for the
position. Based in part upon the recommendations of the aforementioned
consulting firm, the Executive Committee elected Mr. Roessler to succeed Mr.
Burns. In order to promote stability and continuity in the executive management
of the Corporation, and to emphasize the value of Messrs. Edwards and Furr as
well as Mr. Roessler to the Corporation and its prospects for future growth, the
Compensation Committee determined that grants of restricted stock in equal
amounts to each individual would be appropriate and in the best interest of the
Corporation and its shareholders. No specific formula or other mechanism was
utilized to determine the amount of such grants. The grants were effected in
1993 under the Stock Plan and are subject to a three-year vesting period.
During 1993, no awards or payments under the Unit Plan were made to Messrs.
Burns or Roessler or to any other Named Executive Officer.
Subject to approval by the shareholders, the Board of Directors has adopted
a new long-term incentive plan which is intended to replace the Stock Plan and
the Unit Plan. See Proposal 3. Approval of the Long-Term Incentive Plan.
COMPENSATION COMMITTEE AT DECEMBER 31, 1993:
ARTHUR W. CLARK, CHAIRMAN
W. L. BURNS, JR.
ERIC B. MUNSON
KINSLEY VAN R. DEY, JR.
T. E. HAIGLER, JR.
EUGENE J. MCDONALD
ERNEST C. ROESSLER*
J. KENT FAWCETT*
EXECUTIVE COMMITTEE AT
DECEMBER 31, 1993:
ERNEST C. ROESSLER, CHAIRMAN
W. L. BURNS, JR.
ARTHUR W. CLARK
T. E. HAIGLER, JR.
GEORGE R. HERBERT
EDWARD S. HOLMES
EUGENE J. MCDONALD
J. SCOTT EDWARDS*
RICHARD L. FURR*
* Denotes a non-voting, advisory member of the committee.
9
EXECUTIVE COMPENSATION
The following table shows, for 1993, 1992, and 1991, the cash and certain
other compensation paid to or received or deferred by the Named Executive
Officers, which include the four current executive officers of the Corporation,
including the Chief Executive Officer, in all capacities in which they served.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
OTHER RESTRICTED SECURITIES PAYOUTS
NAME AND ANNUAL STOCK UNDERLYING LTIP
PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS
POSITION YEAR ($)(1) ($)(2) ($) ($)(3) (POUND) ($)(4)
W. L. Burns, Jr., 1993 $109,187 $24,259 -- -- -- --
President and Chief Executive Officer 1992 309,000 61,134 -- -- -- --
of the
Corporation and the Bank until April 6, 1991 289,667 83,954 -- $ 164,045 -- --
1993 and presently Chairman of the
Board of the Corporation and the Bank
Ernest C. Roessler, 1993 241,323 62,986 -- 53,438 -- --
Executive Vice President of the 1992 161,178 22,654 -- -- -- --
Corporation
and the Bank until April 6, 1993 and 1991 149,350 31,166 -- 65,800 -- --
presently Chief Executive Officer of
the Corporation and the Bank
J. Scott Edwards, 1993 184,608 38,841 -- 53,438 -- --
Executive Vice President of the 1992 156,491 22,361 -- -- -- --
Corporation
and the Bank 1991 147,393 30,758 -- 64,925 -- --
Richard L. Furr, 1993 184,608 38,841 -- 53,438 -- --
Executive Vice President of the 1992 156,972 22,361 -- -- -- --
Corporation
and the Bank 1991 147,393 30,758 -- 64,925 -- --
ALL
NAME AND OTHER
PRINCIPAL COMPENSATION
POSITION ($)(5)
W. L. Burns, Jr., $151,854
President and Chief Executive Officer 16,929
of the
Corporation and the Bank until April 6, 16,179
1993 and presently Chairman of the
Board of the Corporation and the Bank
Ernest C. Roessler, 11,692
Executive Vice President of the 8,223
Corporation
and the Bank until April 6, 1993 and 7,831
presently Chief Executive Officer of
the Corporation and the Bank
J. Scott Edwards, 9,173
Executive Vice President of the 8,087
Corporation
and the Bank 7,746
Richard L. Furr, 9,173
Executive Vice President of the 8,095
Corporation
and the Bank 7,746
(1) Consists of salary payable to each Named Executive Officer, including
portions of salary deferred at the election of each officer.
(2) Consists entirely of cash bonuses paid to the Named Executive Officers under
the Incentive Plan. See Compensation Committee Report.
(3) Reflects the market value, on the date of award, of shares of Common Stock
awarded under the Stock Plan. During 1993, Messrs. Roessler, Edwards, and
Furr were each awarded 1,500 shares of restricted stock under the Stock Plan
which are subject to a three-year vesting period. At December 31, 1993, the
Named Executive Officers held outstanding awards which remained subject to
restrictions under the Stock Plan and which included the following aggregate
numbers and market values of shares: Mr. Burns -- 13,071 shares valued at
$434,611; Mr. Edwards -- 6,724 shares valued at $223,573; Mr. Furr -- 6,724
shares valued at $223,573; Mr. Roessler -- 6,762 shares valued at $224,837.
Shares included in awards under the Stock Plan are eligible to receive
dividends paid by the Corporation on its Common Stock generally.
(4) During 1991 the restriction period expired on certain performance units
previously awarded to the Named Executive Officers under the Unit Plan;
however, the comparison under the Unit Plan of the Corporation's performance
to the performance of its peers resulted in no payment being made on account
of those performance units.
(5) The amount listed for each Named Executive Officer for 1993 includes (i) the
Bank's matching contributions on behalf of that executive officer to the
401(k) Plan and (ii) the portion of the Corporation's 1993 special
discretionary contribution to the 401(k) Plan which was allocated to the
account of that executive officer. Those separate amounts for each Named
Executive Officer are, respectively: Mr. Burns -- $5,960 and $2,963; Mr.
Edwards -- $6,048 and $3,126; Mr. Furr -- $6,048 and $3,126; Mr.
Roessler -- $7,708 and $3,984. In addition, the 1993 amount for Mr. Burns
includes amounts paid in connection with his retirement consisting of
$74,684 for accrued sick leave, $23,292 for accrued vacation, $19,709 under
a supplemental retirement plan, $837 in Common Stock and $209 in cash as
retirement gifts, and director fees of $24,200.
10
PENSION PLAN
The Corporation maintains a qualified, defined benefit pension plan (the
Pension Plan) in which substantially all full-time employees of the Corporation
and its subsidiaries who have been continuously employed for a period of 12
months participate. The following table shows the estimated annual benefit
payable under the Pension Plan to participants following retirement at age 65,
which is the normal retirement age under the Pension Plan, based on various
specified numbers of years of service with the Corporation and its subsidiaries
and various levels of compensation covered under the Pension Plan.
FINAL YEARS OF SERVICE
AVERAGE COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
$100,000........................................ $ 21,825 $ 29,100 $ 36,375 $ 43,650 $ 50,925 $ 58,200
125,000......................................... 27,450 36,600 45,750 54,900 64,050 73,200
150,000......................................... 33,075 44,100 55,125 66,150 77,175 88,200
175,000......................................... 38,700 51,600 64,500 77,400 90,300 103,200
200,000......................................... 44,325 59,100 73,875 88,650 103,425 115,641
225,000......................................... 49,950 66,600 83,250 99,900 115,641 115,641
250,000......................................... 55,575 74,100 92,625 111,150 115,641 115,641
275,000......................................... 61,200 81,600 102,000 115,641 115,641 115,641
300,000......................................... 66,825 89,100 111,375 115,641 115,641 115,641
325,000......................................... 72,450 96,600 115,641 115,641 115,641 115,641
350,000......................................... 78,075 104,100 115,641 115,641 115,641 115,641
Benefits shown in the table are computed as straight life annuities
beginning at age 65 and are not subject to a deduction for Social Security
benefits or any other offset amount. Compensation covered by the Pension Plan
each year is a participant's base salary as reflected on the Summary
Compensation Table set forth above. At his or her retirement, a participant's
annual benefit under the Pension Plan is based on his or her average base salary
for any five consecutive plan years during the last ten years preceding normal
retirement age (Final Average Compensation). However, under tax laws in effect
at December 31, 1993, the amount of a participant's annual compensation taken
into account for benefit calculation purposes under the Pension Plan may not
exceed $235,840, and maximum annual benefits payable under the Pension Plan are
$115,641. As of December 31, 1993, the Final Average Compensation and years of
service of each of the Named Executive Officers would have been: Mr.
Edwards -- $147,753 and 25 years; Mr. Furr -- $147,846 and 21 years; Mr.
Roessler -- $160,056 and 6 years. Mr. Burns retired effective April 6, 1993
after 33 years of service. His annual benefit under the Pension Plan, calculated
as a straight life annuity, is $100,347.
As described above, tax laws place limits on the amount of compensation
that may be taken into account for benefit calculation purposes under the
Pension Plan and in the maximum amount of benefits payable under the Pension
Plan. The Corporation has adopted a supplemental retirement plan which operates
in conjunction with the Pension Plan and under which a retiree will receive
annual benefits in an amount equal to the difference, if any, between his actual
annual benefit under the Pension Plan and the amount he would receive under the
Pension Plan in the absence of the above limitations. Mr. Burns' annual benefit
under the supplemental plan is $25,267. At December 31, 1993, the other Named
Executive Officers would not have qualified for any benefit at retirement under
the supplemental plan.
CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Corporation's Stock Plan and Unit Plan generally provide that
outstanding awards of restricted stock and performance units will become vested
on the date of any merger to which the Corporation is a party but is not the
surviving corporation, or on the date of certain other changes in control of the
Corporation. Also, the Unit Plan provides that, upon the termination of a plan
participant's employment following his death, disability, or retirement, or in
the event his employment is involuntarily terminated under circumstances
determined by the Corporation to have been without his fault, the participant
shall be entitled to payment of a portion of the value, if any, of his
outstanding award of performance units based on the time elapsed since the date
of such award. Under the Stock Plan, upon any such termination of a
participant's employment, the Compensation Committee has the discretion to waive
remaining restrictions on all or any part of the participant's outstanding award
of restricted stock.
11
PERFORMANCE GRAPHS
The following line graphs illustrate the cumulative total shareholder
return on the Corporation's Common Stock over the five-year period ending
December 31, 1993 and the cumulative total return over the same period of the
indexes listed below. Each graph assumes $100 originally invested on December
31, 1988 and that all dividends were reinvested in additional shares.
CCB FINANCIAL CORPORATION
COMPARISON OF CUMULATIVE TOTAL RETURN (1)
YEARS ENDED DECEMBER 31 (2)
(Five-Year Comparison of Cumulative Total Return Graph appears here)
1988 1989 1990 1991 1992 1993
CCB Financial Corporation 100.0 113.8 80.3 135.8 175.3 169.4
NASDAQ(US) 100.0 121.2 103.0 165.2 192.1 219.2
NASDAQ(BANK) 100.0 111.2 81.4 133.6 194.2 221.3
Dow Jones Industrials 100.0 131.6 131.0 162.8 174.8 204.6
S&P 500 Composite 100.0 131.6 127.5 166.2 178.9 196.9
(1) Assumes $100 invested on December 31, 1988 with all subsequent
dividends invested.
(2) Closing price of Common Stock, adjusted where applicable for the 3/2
stock split effected in the form of a 50% stock dividend paid October
1, 1992:
December 31, 1988-23.83
December 31, 1989-26.17
December 31, 1990-17.67
December 31, 1991-28.67
December 31, 1992-35.63
December 31, 1993-33.25
12
The following line graphs illustrate the cumulative total shareholder
return on the Corporation's Common Stock over the ten-year period ending
December 31, 1993 and the cumulative total return over the same period of the
indexes listed below. Each graph assumes $100 originally invested on December
31, 1983 and that all dividends were reinvested in additional shares.
CCB FINANCIAL CORPORATION
COMPARISON OF CUMULATIVE TOTAL RETURN (1)
YEARS ENDED DECEMBER 31 (2)
(Ten-Year Comparison of Cumulative Total Return Graph appears here)
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
CCB Financial Corporation 100.0 137.3 190.7 235.2 253.9 240.1 282.2 190.5 338.3 430.4 421.0
Dow Jones Industrials 100.0 101.0 134.9 171.6 180.9 209.7 275.9 274.7 341.3 366.4 428.9
S&P 500 Composite 100.0 106.2 139.9 165.9 174.5 203.3 267.5 259.1 337.9 363.6 400.2
(1) Assumes $100 invested on December 31, 1983 with all subsequent
dividends invested.
(2) Closing price of Common Stock, adjusted where applicable for the 3/2
stock split effected in the form of a 50% stock dividend paid October
1, 1992 and for the 2 for 1 stock split effected in the form of a 100%
stock dividend paid July 25, 1984:
December 31, 1983-11.29 December 31, 1989-26.17
December 31, 1984-14.96 December 31, 1990-17.67
December 31, 1985-20.17 December 31, 1991-28.67
December 31, 1986-24.19 December 31, 1992-35.63
December 31, 1987-22.67 December 31, 1993-33.25
December 31, 1988-23.83
13
TRANSACTIONS WITH MANAGEMENT
The Bank and the Corporation's other financial institution subsidiaries
have had, and expect to have in the future, lending transactions in the ordinary
course of business with many of their officers and directors and with associates
of such persons. All loans included in such transactions during 1993 were made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons, and
did not involve more than the normal risk of collectibility or present other
unfavorable features.
PROPOSAL 3. APPROVAL OF THE LONG-TERM INCENTIVE PLAN
To enable the Corporation to attract, retain, and motivate key employees
and directors, the Board of Directors has adopted the CCB Financial Corporation
Long-Term Incentive Plan (the LTIP) and will introduce a proposal for
shareholders to approve the LTIP at the Annual Meeting. The LTIP would have a
ten-year term and is intended to replace the Stock Plan and the Unit Plan, both
of which expired by their terms on December 31, 1993. See Compensation Committee
Report. The objective of the LTIP would be to provide the Board of Directors
with the means to reward achievement of long-term goals in a manner more
flexible than that previously available under the Stock Plan, which was limited
to grants of restricted stock, and the Unit Plan, which was limited to grants of
cash-based performance units. Under the provisions of the LTIP, restricted
stock, incentive stock options, non-qualified stock options, and performance
units consisting of cash, restricted stock, or unrestricted stock may be granted
in various combinations to key employees and directors of the Corporation or any
of its subsidiary corporations (the Participants). It currently is the intention
of the Board of Directors to utilize the LTIP only for awards to key employees
of the Corporation and its subsidiary corporations. Although the LTIP will
permit the Board of Directors to choose from an expanded list of cash and
equity-based incentives in designing the Corporation's long-term compensation
program, individual awards under the LTIP need not include all such incentives
and it is the present intention of the Board of Directors to limit individual
awards to no more than two.
ADMINISTRATION OF THE LTIP
The LTIP will be administered by the Compensation Committee. The
Compensation Committee will be authorized to construe and interpret the LTIP and
to promulgate, amend, and rescind rules and regulations relating to the
implementation, administration, and maintenance of the LTIP. Each Participant
receiving an award under the LTIP will enter into an agreement with the
Corporation that sets forth the restrictions, terms, and conditions of the award
(the Award Agreement). The Compensation Committee will make all determinations
necessary or advisable for the LTIP including (a) selecting the LTIP's
Participants, (b) making awards thereunder in such amounts and form as the
Compensation Committee may determine, (c) imposing such restrictions, terms, and
conditions upon such awards as the Compensation Committee may deem appropriate,
and (d) correcting any defect or omission, or reconciling any inconsistency, in
the LTIP or any Award Agreement.
SECURITIES OF THE CORPORATION SUBJECT TO THE LTIP
The Board of Directors will reserve for awards under the LTIP 500,000
shares of the authorized and unissued shares of Common Stock. The number of
shares authorized for issuance under the LTIP may be replenished one time during
the life of the LTIP, up to an additional 500,000 shares, for a total
authorization of up to 1,000,000 shares. If any awards expire unexercised or are
forfeited, terminated, or settled in cash in lieu of Common Stock, the shares of
Common Stock theretofore subject to such awards will generally again be
available for awards under the LTIP. The maximum number of shares of Common
Stock for any Participant for which awards may be granted under the LTIP in any
year is 50,000 shares.
ELIGIBILITY
Employees eligible to participate in the LTIP consist of key employees who
are senior officers of the Corporation or any of its subsidiary corporations. As
of January 31, 1994, there were 43 such employees. Directors who are not
employees of the Corporation or any of its subsidiary corporations will be
eligible to participate in the LTIP only with respect to awards of Non-qualified
Options (as hereinafter defined) and Restricted Stock (as hereinafter defined).
As of January 31, 1994, there were 16 such directors.
STOCK OPTIONS
An option to purchase shares of Common Stock granted under the LTIP will
either (a) qualify under Section 422 of the Code for treatment as an incentive
stock option (Incentive Option) or (b) not qualify for treatment as an incentive
14
stock option under Section 422 of the Code (Non-qualified Option). Hereinafter,
the term Option refers to either an Incentive Option or a Non-Qualified Option.
An Option may be granted alone or in addition to any other award under the LTIP
and will be subject to a periodic vesting schedule. The exercise price of an
Option will be determined by the Compensation Committee at the time of grant
subject to the following limitations: (a) the exercise price of an Incentive
Option may not be less than 100% of the fair market value per share of the
Common Stock on the date of the grant and (b) the exercise price of an Incentive
Option granted to an employee who owns ten percent or more of the combined total
voting power of the Corporation may not be less than 110% of the fair market
value per share of the Common Stock on the date of grant. On January 31, 1994
the last sale price of a share of Common Stock on the Nasdaq National Market was
$37.50. The term of an Option will be such period of time as is fixed by the
Compensation Committee at the time of grant subject to the following
limitations: (a) the term of an Incentive Option may not exceed ten years after
the date of grant and (b) the term of an Incentive Option granted to an employee
who owns ten percent or more of the combined total voting power of the
Corporation may not exceed five years. An Option may be exercised by giving
written notice of exercise to the Corporation specifying the number of shares to
be purchased. Such notice must be accompanied by payment in full of the exercise
price in cash or if permitted by the terms of the governing Award Agreement by
delivery of (a) a fully-secured, recourse promissory note or (b) shares of
Common Stock already owned by the Participant. The Compensation Committee also
may permit Participants to simultaneously exercise an Option, sell the shares of
Common Stock thereby acquired, and use the proceeds from such sale for payment
of the exercise price.
If a Participant purchases Common Stock upon the exercise of an Incentive
Option and either (a) holds it for a period of at least two years following the
date of grant and at least one year from the date the option is exercised (the
Holding Periods) or (b) dies while owning such Common Stock, the Participant
will be subject to federal income tax on the gain realized upon disposition of
such Common Stock at the time of disposition and the amount of gain will be
equal to the amount realized on disposition less the amount paid upon exercise
of the Incentive Option. The Corporation will not be permitted to claim a tax
deduction from federal taxable income at any time in connection an Incentive
Option held for the Holding Periods specified above.
A Participant who receives a Non-qualified Option will not be subject to
federal income tax upon the grant thereof. On the date a Participant exercises a
Non-qualified Option he or she will recognize federal taxable ordinary income
equal to the difference between the exercise price and the fair market value of
the Common Stock purchased. The Corporation will be allowed to deduct from its
federal taxable income an amount equal to the ordinary income recognized by such
Participant upon exercise of the Non-qualified Option. The federal income tax
consequences of the issuance and exercise of a Non-qualified Option may vary
from those described above in circumstances where the exercise price is
significantly less than the fair market value of the underlying Common Stock on
the date of grant or where the Participant is permitted to pay the exercise
price with previously acquired shares of Common Stock.
If a Participant's employment is terminated for any reason other than
disability, retirement, or death before an Option has vested, such Participant's
right to exercise such Option will immediately terminate. If a Participant's
employment is terminated by disability, retirement, or death before an Option
has vested, such Option will vest to the extent determined by the Compensation
Committee.
If a Participant's employment is terminated for any reason other than
disability, retirement, or death, a vested Option will remain exercisable for a
period of up to 30 days following such termination, as determined by the
Compensation Committee. If a Participant's employment is terminated by
retirement or disability, such Participant will have the right to exercise a
vested Option at any time within the one-year period following such termination.
If a Participant dies while entitled to exercise an Option such Participant's
estate, designated beneficiary, or other legal representative will have the
right to exercise such Option at any time within the one-year period from the
date of such Participant's death.
If a non-employee director leaves the Board of Directors for any reason
other than disability, retirement, or death before an Option becomes vested,
such Option will be forfeited. If a non-employee director leaves the Board of
Directors due to disability, retirement, or death before an Option becomes
vested, such Option will vest to the extent determined by the Compensation
Committee.
If a non-employee director leaves the Board of Directors for any reason
other than disability, retirement, or death, a vested Option will remain
exercisable for a period of up to 30 days following such termination, as
determined by the Compensation Committee. If a non-employee director leaves the
Board of Directors due to disability or retirement, such director will have the
right to exercise a vested Option at any time within the one-year period
following such event. If a
15
non-employee director leaves the Board of Directors due to death, such
non-employee director's estate, designated beneficiary, or other legal
representative, as the case may be, will have the right to exercise a vested
Option at any time within the one-year period following such director's death.
RESTRICTED STOCK
Awards under the LTIP may be in the form of shares of Common Stock subject
to certain restrictions imposed by the Compensation Committee (Restricted
Stock). The Compensation Committee may restrict the transferability of
Restricted Stock and require that it be forfeited upon termination of a
Participant's employment or service as a director, as the case may be.
Restricted Stock may be granted alone or in addition to any other award under
the LTIP. The Compensation Committee will determine the number of shares of
Restricted Stock to be granted and may impose different terms and conditions on
any particular grant of Restricted Stock. Shares of Restricted Stock will be
issued in uncertificated form and registered in the name of such Participant and
will be so held until the restrictions thereon have lapsed and all of the terms
and conditions applicable to such award have been satisfied. Awards of
Restricted Stock will only become unrestricted and vest in the Participant in
accordance with the vesting schedule set forth in the underlying Award Agreement
(the Restriction Period). In no event will the Restriction Period be less than
one year after the date on which such award is granted. During the Restriction
Period, Restricted Stock may not be transferred or otherwise disposed of by the
Participant. After satisfaction of the restrictions set by the Compensation
Committee, a certificate for the number of shares of Common Stock which are no
longer subject to such restrictions will be delivered to the Participant. The
remaining shares, if any, issued in respect of such Restricted Stock will either
be forfeited or will continue to be subject to the restrictions set by the
Compensation Committee, as the case may be. A Participant will have, with
respect to shares of Restricted Stock, all of the rights of a shareholder of the
Corporation, including the right to vote such shares and to receive any cash
dividends declared and paid thereon. Stock dividends issued with respect to
Restricted Stock will be treated as additional grants of Restricted Stock and
will be subject to the same restrictions that apply to the shares of Restricted
Stock with respect to which such stock dividends are issued.
If a Participant's employment with or service to the Corporation or any of
its subsidiaries is terminated for any reason other than disability, retirement,
or death prior to satisfaction of the restrictions applicable to a grant of
shares of Restricted Stock, such shares will be forfeited unless the
Compensation Committee in its discretion determines otherwise. In the event of
disability, retirement, or death during the Restricted Period, shares of
Restricted Stock will become free of restrictions to the extent determined by
the Compensation Committee.
PERFORMANCE UNITS
Awards under the LTIP may be in the form of performance-based units, with
each unit representing such monetary amount as is designated by the Compensation
Committee subject to such terms and conditions as the Compensation Committee
deems appropriate (Performance Units), including a requirement that the
Participant forfeit such units in the event certain performance criteria are not
met within a designated period of time. Performance Units may be granted alone
or in addition to any other award under the LTIP. The Compensation Committee
will determine the number of Performance Units to be granted to a Participant.
The Compensation Committee may impose different terms and conditions on any
particular Performance Units granted to any Participant. Participants receiving
grants of Performance Units will only earn into and be entitled to payment in
respect of such awards if the Corporation and the Participant achieve certain
performance goals (the Performance Goals) during and in respect of a designated
performance period (the Performance Period). The Performance Goals and the
Performance Period will be established by the Compensation Committee. The
Compensation Committee will establish Performance Goals for each Performance
Period prior to, or as soon as practicable after, the commencement of such
Performance Period. The Compensation Committee will also establish a schedule
for such Performance Units setting forth the portion of the award which will be
earned or forfeited based on the degree of achievement, or lack thereof, of the
Performance Goals at the end of the relevant Performance Period. In setting the
Performance Goals, the Compensation Committee may use such measures as total
shareholder return, return on equity, return on assets, net earnings per share
growth, comparisons to peer companies, divisional goals, individual or aggregate
Participant performance, or such other measure or measures of performance as the
Compensation Committee may deem appropriate. Such performance measures will be
defined as to their respective components and meaning by the Compensation
Committee. During any Performance Period, the Compensation Committee will have
the authority to adjust the Performance Goals in such manner as the Compensation
Committee deems appropriate with respect to such Performance Period. In addition
to the Performance Goals, the Compensation Committee also may require a minimum
shareholder return threshold be attained before consideration is given to any
results achieved on the Performance Goals.
16
Should the Corporation and the Participant achieve the applicable Performance
Goals, but the minimum shareholder return threshold falls below the minimum
expectations, then the Performance Unit may be deferred by the Compensation
Committee for up to two years until the threshold is exceeded. If the minimum
shareholder return threshold is not achieved within the additional time frame,
then no Performance Unit will be paid. With respect to each Performance Unit,
the Participant will, if the applicable Performance Goals and minimum
shareholder return threshold have been achieved during the relevant Performance
Period, be entitled to receive payment in an amount equal to the designated
value of each Performance Unit times the number of such units so earned. Payment
in settlement of earned Performance Units will be made as soon as practical
following the conclusion of the respective Performance Period in cash, shares of
unrestricted Common Stock, or shares of Restricted Stock, as the Compensation
Committee will determine and provide in the underlying Award Agreement.
If a Participant's employment with the Corporation or any of its subsidiary
corporations is terminated for any reason other than disability, retirement, or
death prior to the completion of any Performance Period, such termination will
result in the forfeiture of the Performance Unit. If termination is due to
disability, retirement, or death, the disposition of non-vested awards will be
determined by the Compensation Committee.
DEFERRAL OF AWARDS UNDER THE LTIP
The Compensation Committee may permit a Participant to elect to defer
receipt of any payment of cash or any delivery of shares of Common Stock that
would otherwise be due to such Participant by virtue of the exercise, earn out,
or settlement of any award made under the LTIP. If any such election is
permitted, the Compensation Committee will establish rules and procedures for
such deferrals, including the payment of reasonable interest or dividend
equivalents.
CHANGES IN CONTROL OF THE CORPORATION
Under the provisions of the LTIP, if a change in control of the Corporation
occurs (a) all stock options then unexercised and outstanding will become fully
exercisable, (b) all restrictions applicable to all Restricted Stock then
outstanding will be deemed lapsed and satisfied, and (c) all Performance Units
will be deemed to have been fully earned as of the date thereof subject to the
limitation that such stock options, shares of Restricted Stock, and Performance
Units have been granted and outstanding for more than six months as of the date
of such change in control.
If (a) a Participant's employment is terminated by the Corporation or any
of its subsidiary corporations prior to a change in control without cause at the
request of a person who has entered into an agreement with the Corporation the
consummation of which will constitute a change in control or (b) the Participant
terminates his or her employment with the Corporation or any of its subsidiary
corporations prior to a change in control of the Corporation and the
circumstance or event which causes such termination occurs at the request of
such person, then a change in control will be deemed to have occurred
immediately prior to such Participant's termination of employment.
If the making of any payment or payments under the LTIP would (a) subject
the Participant to an excise tax under Section 4999 of the Code, or any like or
successor section thereto or (b) result in the Corporation's loss of a federal
income tax deduction for such payments under Section 280G of the Code, or any
like or successor section thereto (either or both, an Adverse Tax Consequence),
then, unless otherwise expressly provided in the underlying Award Agreement, the
payments attributable to the LTIP that are parachute payments within the meaning
of Section 280G of the Code will be reduced, as determined by the Compensation
Committee in its sole discretion, but after consultation with the Participant
affected, to the extent necessary to avoid any Adverse Tax Consequence.
SUSPENSION, TERMINATION, AND AMENDMENT OF THE LTIP
The Board of Directors may suspend, terminate, or amend the LTIP at any
time and from time to time in such respects as the Board of Directors may deem
advisable subject to the limitation that no such amendment will, without
majority stockholder approval, (a) materially increase the number of shares of
Common Stock which may be issued under the LTIP, (b) materially modify the
requirements as to eligibility for participation in the LTIP, (c) materially
increase the benefits accruing to Participants under the LTIP, or (d) extend the
termination date of the LTIP.
A copy of the LTIP is on file and may be inspected by any shareholder at
the offices of the Corporation, and a copy will be available for inspection by
any shareholder at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 3.
17
PROPOSAL 4. INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors of the Corporation has voted to recommend to the
shareholders an amendment to Paragraph 4 of the Corporation's Restated Charter
to increase by 10,000,000 the number of authorized shares of the Corporation's
capital stock (the Amendment). The Corporation presently has 25,000,000 shares
authorized, with 20,000,000 of such shares classified as Common Stock and the
remaining 5,000,000 shares classified as serial preferred stock (Preferred
Stock). On the Record Date, there were 9,516,379 shares of Common Stock and no
shares of Preferred Stock issued and outstanding. If the Amendment is approved
by the shareholders, all additional shares authorized by the Amendment would be
classified as Common Stock. The relative rights and limitations of the Common
Stock would remain unchanged under the Amendment. Holders of Common Stock do not
have any preemptive rights.
The Amendment has been recommended by the Board of Directors to assure that
an adequate supply of authorized, unissued shares is available for future
acquisitions and general corporate needs, such as future stock dividends, stock
splits, or issuance under stock-based benefit plans. There are currently no
plans or arrangements relating to the issuance of any of the additional shares
of the Common Stock proposed to be authorized. If the Amendment is approved by
the shareholders, such shares would be available for issuance without further
action by the shareholders, unless required by the Corporation's Restated
Charter or bylaws or by applicable law.
The issuance of additional shares of Common Stock may, among other things,
have a dilutive effect on earnings per share and on the equity and voting power
of existing holders of Common Stock. The issuance of additional shares of Common
Stock by the Corporation also may potentially have an anti-takeover effect by
making it more difficult to obtain shareholder approval of various actions, such
as a merger or removal of management.
The text of Paragraph 4 of the Restated Charter, as proposed to be amended,
is as follows:
The total number of shares of capital stock which the Corporation has
authority to issue is 35,000,000, of which 30,000,000 shall be common
stock, $5.00 par value, and 5,000,000 shall be serial preferred stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 4.
PROPOSAL 5. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The firm of KPMG Peat Marwick, certified public accountants, has been
appointed by the Board of Directors to serve as the Corporation's independent
accountants for 1994, and a proposal to ratify that appointment will be
introduced at the Annual Meeting. KPMG Peat Marwick has served as independent
accountants for the Corporation since its organization as the parent holding
company of the Bank during 1983, and previously had served as independent
accountants for the Bank since 1975. If shareholders do not approve this
proposal, the Board of Directors will reconsider the appointment.
Representatives of KPMG Peat Marwick are expected to be present at the
Annual Meeting and available to respond to appropriate questions, and will have
an opportunity to make a statement if they so desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 5.
PROPOSALS OF SHAREHOLDERS
It currently is expected that the 1995 Annual Meeting will be held during
April 1995. Any proposal of a shareholder which is intended to be presented at
the 1995 Annual Meeting must be received by the Corporation at its principal
executive office in Durham, North Carolina, not later than November 15, 1994 in
order to be included in the Corporation's proxy statement and form of
appointment of proxy to be issued in connection with that meeting.
March 15, 1994
18
[MAP]
CCB APPOINTMENT
FINANCIAL OF
CORPORATION PROXY
111 Corcoran Street, Post Office Box 931
Durham, North Carolina 27702
THIS APPOINTMENT OF PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS The undersigned hereby
appoints Richard W. Every, W. Harold Parker, Jr.,
and Manuel L. Rojas, and each of them, as attorneys
and proxies, each with full power to appoint his
substitute, and hereby authorizes them to represent
and to vote as directed below all the shares of
common stock of CCB Financial Corporation (the
Corporation) held of record by the undersigned on
February 16, 1994 at the Annual Meeting of
Shareholders of the Corporation to be held on April
5, 1994 and any adjournments thereof. The
undersigned hereby directs that such shares be
voted as follows:
1. SETTING THE NUMBER OF DIRECTORS AT 18: [ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECTION OF DIRECTORS: [ ] FOR All Nominees Listed [ ] WITHHOLD Authority To Vote
Below For All Nominees Listed
Below
2. ELECTION OF DIRECTORS: [ ] WITHHOLD Authority To Vote For Those
Below; and FOR All Other
Nominees Written In The Space Provided
NOMINEES: J. Harper Beall, III, James B. Brame, Jr., Timothy B. Burnett, W. L.
Burns, Jr., Arthur W. Clark, Kinsley van R. Dey, Jr., Mrs. Frances Hill Fox, T.
E. Haigler, Jr., George R. Herbert, Edward S. Holmes, Owen G. Kenan, Eugene J.
McDonald, Hamilton W. McKay, Jr., M.D., Eric B. Munson, Ernest C. Roessler, John
B. Stedman, H. Allen Tate, Jr., and Dr. Phail Wynn, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
3. APPROVAL OF THE LONG-TERM INCENTIVE PLAN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVAL OF PROPOSAL TO INCREASE THE NUMBER OF
AUTHORIZED SHARES FROM 25,000,000 TO 35,000,000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK
AS THE CORPORATION'S INDEPENDENT ACCOUNTANTS FOR
1994: [ ] FOR [ ] AGAINST [ ] ABSTAIN
6. OTHER BUSINESS: On such other matters as may
properly come before the Annual Meeting, the
proxies are authorized to vote the shares
represented by this appointment of proxy in
accordance with their best judgment.
The shares represented by this appointment of proxy will be voted as directed
above. In the absence of any direction, such shares will be voted by the proxies
FOR Proposals 1, 3, 4 and 5 above, and FOR the election of each of the nominees
for director as listed in Proposal 2 by casting an equal number of votes for
each such nominee. If, at or before the time of the meeting, any nominee listed
in Proposal 2 becomes unavailable for any reason, the proxies are authorized to
vote for a substitute nominee.
Please sign exactly as your name(s) appears below. If shares are held by joint
tenants, both should sign. If signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Date: , 1994
Signature
Signature if held jointly
PLEASE PROMPTLY DATE, SIGN, AND RETURN THIS APPOINTMENT OF PROXY USING THE
ENCLOSED ENVELOPE.
***************************************************************************
APPENDIX
On Page 12 under the heading of Performance Graphs the Five-Year
Comparison of Cumulative Total Return graph appears where indicated.
The plot points are listed in the table below that point.
On Page 13 the Ten-Year Comparison of Cumulative Total Return
graph appears where indicated. The plot points are listed in the
table below that point.
A full-page map of George Watts Hill Alumni Center, Stadium Drive at
Ridge Road, Chapel Hill, NC appears between pages 18 and A-1 where noted.