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 Section 240.14a-11(c) or Section 240.14a-12
TRIANGLE BANCORP, INC.
(Name of Registrant as Specified in its Charter)
(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) 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:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
TRIANGLE BANCORP, INC.
4300 Glenwood Avenue
Raleigh, North Carolina 27612
(919) 881-0455
----------------------------------------
Notice of Annual Meeting of Shareholders
----------------------------------------
To Be Held April 28, 1998
NOTICE is hereby given that the Annual Meeting of Shareholders of Triangle
Bancorp, Inc. (the "Corporation") will be held as follows:
Place: Raddison Governors Inn
I-40 at Davis Drive, Exit 280
Research Triangle Park, North Carolina 27709
Date: Tuesday, April 28, 1998
Time: 10:00 A.M.
THE PURPOSES OF THE ANNUAL MEETING ARE:
1. To elect 10 members of the Board of Directors.
2. To consider and act upon a proposal to amend Article 2 of the
Corporation's Articles of Incorporation to increase the number of
authorized shares of common stock from 20,000,000 to 50,000,000.
3. To consider and act upon a proposal to approve the Triangle Bancorp,
Inc. 1998 Omnibus Stock Plan.
4. To consider and act upon a proposal to ratify the appointment of
Coopers & Lybrand L.L.P. as independent public accountants of the
Corporation for 1998.
5. 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 of the close of business on March
6, 1998.
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,
Susan C. Gilbert, Secretary
March 20, 1998
TRIANGLE BANCORP, INC.
4300 Glenwood Avenue
Raleigh, North Carolina 27612
---------------
Proxy Statement
---------------
Mailing Date: On or About March 24, 1998
Annual Meeting of Shareholders
To Be Held April 28, 1998
General
This Proxy Statement is being distributed in connection with the
solicitation by the Board of Directors of Triangle Bancorp, Inc. (the
"Corporation") of appointments of proxy in the form enclosed herewith for the
1998 Annual Meeting of Shareholders of the Corporation and any adjournments
thereof. The meeting will be held Tuesday, April 28, 1998, beginning at 10:00
A.M., at the Radisson Governors Inn, I-40 at Davis Drive, Exit 280, Research
Triangle Park, North Carolina.
Voting of Appointments of Proxies; Revocation
Persons named in the enclosed appointment of proxy as proxies for
shareholders at the Annual Meeting are Steven R. Ogburn, Debra L. Lee and Edward
O. Wessell. 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 10 nominees for director named in
Proposal 1 below and "FOR" each of the other proposals described herein. If, at
or before the time of the Annual Meeting, any nominee named in Proposal 1 has
become 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 Susan C. Gilbert,
Secretary of the Corporation, 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 March 6, 1998, 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.
1
Voting Securities
The voting securities of the Corporation are the shares of its no par value
common stock (the "Common Stock"), of which 20,000,000 shares were authorized
and 13,080,761 shares were outstanding on the Record Date. As of the Record
Date, there were approximately 7,700 holders of record of the Corporation's
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. In accordance with North Carolina law, shareholders are not entitled to
vote cumulatively in the election of directors. In the case of all Proposals,
abstentions and broker nonvotes will have no effect as the vote is determined
only by shares actually voted, not by shares outstanding.
In the case of Proposal 1 below, the 10 directors receiving the greatest
number of votes shall be elected.
In the case of Proposal 2 below, for such proposal to be approved, at least
75% of all shares of Common Stock voted at the Annual Meeting must be voted in
favor of the proposal.
In the case of Proposal 3 below, for such proposal to be approved, the
number of votes cast for approval must exceed the number of votes cast against
the proposal.
In the case of Proposal 4 below, for such proposal to be approved, the
number of votes cast for approval must exceed the number of votes cast against
the proposal.
Beneficial Ownership of Voting Securities
There are no persons who were known to management of the Corporation to
beneficially own more than 5% of the Corporation's Common Stock as of the Record
Date.
Set forth below is information as of February 28, 1997 regarding the
beneficial ownership of the Corporation's Common Stock by its current directors,
and certain named executive officers individually, and by all current directors,
and executive officers of the Corporation as a group.
AMOUNT AND NATURE
NAME OF OF BENEFICIAL OWNERSHIP PERCENT OF
BENEFICIAL OWNER OF STOCK(1) CLASS (2)
- ---------------- ----------------------- ----------
Carole S. Anders 33,507 0.26%
Charles H. Ashford, Jr. 26,344 0.20
Cy N. Bahakel 545,354 4.16
H. Leigh Ballance, Jr. 34,142 0.26
Edwin B. Borden 23,894 0.18
Robert E. Bryan, Jr. 17,017 0.13
David T. Clancy 83,814 0.64
N. Leo Daughtry 50,626 0.39
Syd W. Dunn, Jr. 23,522 0.18
Willie S. Edwards 28,383 0.22
James P. Godwin, Sr. 123,603 0.95
Robert L. Guthrie 26,476 0.20
2
AMOUNT AND NATURE
NAME OF OF BENEFICIAL OWNERSHIP PERCENT OF
BENEFICIAL OWNER OF STOCK(1) CLASS (2)
- ---------------- ----------------------- ----------
John B. Harris, Jr. 31,797 0.24
George W. Holt 81,296 0.62
Earl Johnson, Jr. 48,419 0.37
Debra L. Lee 41,689 0.32
J. L. Maxwell, Jr. 114,431 0.88
Michael A. Maxwell 15,031 0.12
Wendell H. Murphy 39,041 0.30
Steven R. Ogburn 30,113 0.23
Michael S. Patterson 103,950 0.79
Patrick H. Pope 61,636 0.47
William R. Pope 36,136 0.28
Edythe M. Poyner 28,931 0.22
Billy N. Quick, Sr. 53,806 0.41
J. Dal Snipes 29,456 0.23
N. Johnson Tilghman 82,470 0.63
Edward O. Wessell 11,774 0.09
Sydnor M. White, Jr. 40,187 0.31
J. Blount Williams 36,424 0.28
-------- -----
All Executive Officers 1,877,551 14.12%
and Directors as a
Group (30 persons)
(1) Each director and executive officer has sole voting and investment power
over the issued and outstanding shares beneficially owned by such
individual, except for the following shares over which the directors and
executive officers indicated, and the group, share voting and/or investment
power: Ms. Anders - 3,000 shares; Dr. Ashford - 1,976 shares; Mr. Bahakel -
3,000 shares; Mr. Ballance - 3,827 shares; Mr. Clancy - 78,449 shares; Mr.
Daughtry - 400 shares; Mr. Dunn - 5,665 shares; Mr. Edwards - 328 shares;
Mr. Godwin - 105,785 shares; Mr. Guthrie - 10,400 shares; Mr. Harris -
9,194 shares; Mr. Holt - 28,736 shares; Mr. Johnson - 23,289 shares; Ms.
Lee - 1,500 shares; Mr. Michael A. Maxwell - 13,747 shares; Mr. Murphy -
28,490 shares; Mr. Patterson - 3,713 shares; Mr. Ogburn - 1,520 shares; Mr.
Patrick H. Pope - 30,440 shares; Mr. William R. Pope - 285 shares; Ms.
Poyner - 26,433 shares; Mr. Quick - 1,688 shares; Mr. Snipes - 14,233
shares; Mr. Wessell - 1,081 shares; Mr. White - 20,843 shares; Mr. Williams
- 19,891 shares; and members of the group - 437,913 shares.
This column includes certain shares owned by certain related parties of
directors and executive officers as to which shares those directors and
executive officers have disclaimed beneficial ownership, as follows: Dr.
Ashford - 9,400 shares; Mr. Guthrie - 856 shares; Mr. J. L. Maxwell, Jr. -
2,750 shares; Mr. Tilghman - 45,792 shares; and members of the group -
58,798 shares.
This column includes the number of shares for which the director or
executive officer indicated, and the directors and the five current
executive officers of the Corporation as a group, hold options to purchase,
pursuant to the Corporation's 1988 Qualified or Non-Qualified Stock Option
Plans, to the extent such options are vested, and are immediately
exercisable as follows: Ms. Anders - 197 shares; Dr. Ashford - 2,111
shares; Mr. Bahakel - 15,000 shares; Mr. Ballance
3
- 3,000 shares; Mr. Borden - 3,599 shares; Mr. Bryan - 1,999 shares; Mr.
Clancy - 404 shares; Mr. Daughtry - 39 shares; Mr. Dunn - 2,005 shares; Mr.
Edwards - 267 shares; Mr. Godwin - 107 shares; Mr. Guthrie - 362 shares;
Mr. Harris - 8,536 shares; Mr. Holt - 5,000 shares; Mr. Johnson - 406
shares; Ms. Lee - 25,596 shares; Mr. J. L. Maxwell, Jr. - 3,766 shares; Mr.
Michael A. Maxwell - 178 shares; Mr. Murphy - 1,792 shares; Mr. Ogburn -
22,470 shares; Mr. Patterson - 67,840 shares; Mr. Patrick H. Pope - 283
shares; Mr. William R. Pope - 212 shares; Ms. Poyner - 141 shares; Mr.
Quick - 26,910 shares; Mr. Snipes -166 shares; Mr. Tilghman - 8,485 shares;
Mr. Wessell - 11,774 shares; Mr. White - 322 shares; Mr. Williams -298
shares; and members of the group - 213,465 shares.
(2) Based on a total of 13,080,761 shares actually outstanding as of March 6,
1998, and with respect to each director or executive officer, the shares
that would be outstanding if the director or executive officer exercised
his or her options to purchase shares of Common Stock of the Corporation
(to the extent vested) or, with respect to directors and the five current
executive officers of the Corporation as a group, the shares that would be
outstanding if each such individual exercised his or her options to
purchase shares of the Common Stock (to the extent vested).
(3) Included in the beneficial ownership of Mr. Patrick H. Pope and Mr.
Tilghman are 25,718 shares held by a trust in which both Mr. Pope and Mr.
Tilghman have an interest. These shares are reflected separately in the
beneficial ownership of each individual, but are included only once in the
beneficial ownership shown for the group.
Section 16(a) Beneficial Ownership Reporting Compliance
Directors and executive officers of the Corporation are required by federal
law to file reports with the Securities and Exchange Commission regarding their
initial ownership and the amount of and changes in their beneficial ownership of
the Corporation's Common Stock. Based on the Corporation's review of reports
furnished to it, all such reports were timely filed except as follows: Willie S.
Edwards inadvertently failed to report the purchase of 328 shares by his spouse
in December 1995 for which the required report was filed in October 1997; Willie
S. Edwards inadvertently failed to report the purchase of 537 shares on July 21,
1997 for which the required report was filed in September 1997; and David T.
Clancy inadvertently failed to report the sale by the Clancy & Theys Profit
Sharing Plan of 1,617 shares on May 16, 1997 for which the required report was
filed in December 1997.
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors previously has set the number of directors of the
Corporation at 26. The Bylaws of the Corporation provide that directors be
divided into three classes, approximately equal in number, elected to staggered
three-year terms. The 10 directors whose terms expire at the Annual Meeting have
been re-nominated to the Board for the following terms, in order to evenly
stagger the terms among each class of directors as required by the Bylaws.
Name and Age Director Since Business Experience During Past Five Years
- ------------ ------------------ ------------------------------------------
(1)
Two-Year Term:
Cy N. Bahakel 1997 President and owner of Bahakel Communications, Ltd.,
(70) Charlotte, North Carolina (television and radio stations);
formerly Chairman of the Board, Bank of Mecklenburg,
Charlotte, North Carolina
George W. Holt 1995 Retired; Executive Vice President, Triangle Bank from February
(67) 1995 to February 1998; President, Columbus National Bank from
1973 to February 1995
Three-Year Term:
Carole S. Anders 1988 Civic leader, Raleigh, North Carolina
(53)
Charles H. Ashford, Jr. 1993 Retired physician; formerly Vice President of Medical Affairs,
(62) Craven Regional Medical Authority from 1991 to 1996;
previously surgeon with Coastal Surgical Specialists, P.A.,
New Bern, North Carolina
4
Name and Age Director Since Business Experience During Past Five Years
- ------------ ------------------ ------------------------------------------
Edwin B. Borden 1993 President, The Borden Manufacturing Company, Goldsboro, North
(64) Carolina (textile manufacturing); Director of Carolina Power &
Light Company; Director of Jefferson-Pilot Corporation;
Director of Ruddick Corp.; Director of Winston Hotels
Robert E. Bryan, Jr. 1993 Chairman and Partner, Express Stop, Inc., Fayetteville, North
(63) Carolina (convenience stores); President, Bryan Oil Co.
N. Leo Daughtry 1988 Attorney, Daughtry, Woodard, Lawrence & Starling, L.L.P.,
(57) Smithfield, North Carolina
Michael A. Maxwell 1995 Senior Scientist since November 1995, Branch Chief from
(59) December 1974 to November 1995, U.S. Environmental Protection
Agency, Research Triangle Park, North Carolina
Patrick H. Pope 1988 Partner, Pope & Tart (attorneys-at-law), Dunn, North Carolina
(53)
Edythe M. Poyner 1988 President, Capital Land Investment Company, Raleigh, North
(44) Carolina
- ----------
(1) Refers to the year in which a person first was elected or became a director
of the Corporation or, if prior to the Corporation's holding company
reorganization in August 1992, the year in which such person first was
elected a director of Triangle Bank, the Corporation's wholly-owned bank
subsidiary.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE
10 NOMINEES NAMED ABOVE.
Incumbent Directors
The Corporation's current Board of Directors includes the following
directors whose terms will continue after the Annual Meeting. Certain
information regarding those directors is set forth in the following table:
Director Term
Name and Age Since (1) Business Experience During Past Five Years Expires
- ------------ --------- ------------------------------------------ -------
David T. Clancy 1988 President, Clancy & Theys Construction Company, Raleigh, 1999
(49) North Carolina
Syd W. Dunn, Jr. 1993 President and Chairman, Hannah & Dunn, Inc., Greenville, 1999
(72) North Carolina (wine and spirits broker)
Willie S. Edwards 1995 Retired; formerly General Partner in L & B Associates, 1999
(65) Rocky Mount, North Carolina (wholesale liquor
distributor)
Robert L. Guthrie 1988 President and Chief Executive Officer, Associated 1999
(62) Insurers, Inc., Raleigh, North Carolina
John B. Harris, Jr. 1991 Retired; formerly President, Winston Hospitality, Inc. 1999
(68) (hotel management) since 1991; formerly Chairman of the
Board, Triangle Bank 1991 to January 1997
5
Director Term
Name and Age Since (1) Business Experience During Past Five Years Expires
- ------------ --------- ------------------------------------------ -------
Earl Johnson, Jr. 1991 Chairman, Carolina Crane Corp., Raleigh, North Carolina 1999
(66)
J. L. Maxwell, Jr. 1993 Chairman of the Board of Directors, Goldsboro Milling 1999
(71) Co. (turkey and hog producer), Goldsboro, North
Carolina; Director, Atlantic & East Carolina Railway
William R. Pope 1987 President and Chairman of the Board, Pope Enterprises, 1999
(62) Inc. (operator of True-Value Hardware and Variety
Stores), Coats, North Carolina
Billy N. Quick, Sr. 1996 Executive Vice President, Triangle Bank since October 1999
(57) 1996; previously President and Chief Executive Officer,
Granville United Bank, Oxford, North Carolina
James P. Godwin, Sr. 1995 President, Godwin Manufacturing Co., Inc., Dunn, North 2000
(56) Carolina, and Godwin and Gonzalez Specialty Equipment,
Inc., Puerto Rico (truck body manufacturers)
Wendell H. Murphy 1993 President, Murphy Family Farms (swine production) and 2000
(59) Murphy Milling Co. (feed production), Rose Hill, North
Carolina; Director of Smithfield Foods
Michael S. Patterson 1990 Chairman of the Board, Triangle Bancorp, Inc. and 2000
(51) Triangle Bank since February 1997; President since 1990
and Chief Executive Officer since 1991, Triangle Bank;
President and Chief Executive Officer, Triangle Bancorp,
Inc. since August 1992; Director of Bank of Mecklenburg
since October 1997
J. Dal Snipes 1995 President, Snipes Insurance Service, Inc., Dunn, North 2000
(45) Carolina
N. Johnson Tilghman 1988 Partner, Tilghman & Butler, L.L.P. (attorneys-at-law), 2000
(55) Garner, North Carolina since December 1997; formerly
partner, Pope, Tilghman & Tart, Dunn, North Carolina
from 1972 to 1997
Sydnor M. White, Jr. 1991 President, CJS, Inc. (automotive parts distributor), 2000
(49) Raleigh, North Carolina
J. Blount Williams 1988 President, Alfred Williams & Co., Raleigh, North 2000
(44) Carolina (office furniture and supplies)
(1) Refers to the year in which a person first was elected or became a director
of the Corporation or, if prior to the Corporation's holding company
reorganization in August 1992, the year in which such person first was
elected a director of Triangle Bank, the Corporation's wholly-owned bank
subsidiary.
Director Relationships
No director or executive officer is related to another director or
executive officer of the Corporation except for Patrick H. Pope and William R.
Pope, who are third cousins, and Patrick H. Pope and N. Johnson Tilghman who are
brothers-in-law.
Except for Mr. Borden who is a director of Carolina Power & Light Company,
Jefferson-Pilot Corporation, Winston Hotels and Ruddick Corp., and Mr. Murphy
who is a director of Smithfield Foods, no director is a director in any company
with a class of securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934 (the "Exchange Act") or subject to the requirements of
Section 15(d) of the Exchange Act, or any company registered as an investment
company under the Investment Company Act of 1940.
6
Director Compensation
Board Fees. During 1997, directors who were not employees of the
Corporation received an annual retainer of 100 shares of Common Stock of the
Corporation, 60 shares for each Board meeting attended, 30 shares for each
committee meeting attended, and each committee chairman received an additional
10 shares for each meeting attended, and each member of a special committee
established by the Board of Directors during 1997 received 25 shares for each
special committee meeting and each special committee chairman received an
additional 5 shares for each meeting attended. In 1998, the annual retainer
amount will be 110 shares, and directors will receive 35 shares for each Board
meeting attended, 15 shares for each committee meeting attended and each
committee chairman will receive an additional 10 shares for each meeting
attended.
Directors' Deferred Compensation Plans. The Corporation maintains two
deferred compensation plans for outside directors. In 1989, the Corporation
adopted a Deferred Compensation Plan (the "1989 Plan") for outside directors for
cash compensation paid to directors; the 1989 Plan was in operation through
1994. Since January 1, 1995, directors of the Corporation are paid in shares of
Common Stock. Only individuals who were members of the Board of Directors but
who were not employees of the Corporation were eligible to participate in the
1989 Plan. Directors who elected to participate in the 1989 Plan could elect to
defer a minimum of $500 of their compensation for their service as such pursuant
to the 1989 Plan during each year they participated and could elect to defer up
to the full amount of directors' compensation they would receive in $100
increments. Deferred compensation was converted into stock units by dividing the
compensation deferred under the 1989 Plan by the then current value of a share
of the Corporation's Common Stock. Dividends paid to holders of the
Corporation's Common Stock are credited to holders of stock units and are
converted into additional stock units on the same basis as compensation deferred
under the 1989 Plan. Within 60 days after the death, disability or retirement of
a director, the director or his or her estate is entitled to be issued one share
of the Corporation's Common Stock for each stock unit and cash for fractional
stock units. As of December 31, 1997, 49,400 stock units were outstanding under
the 1989 Plan.
The Corporation also maintains the 1997 Deferred Compensation Plan (the
"1997 Plan") pursuant to which directors who are not employees of the
Corporation may elect to defer all or a portion of their compensation for their
service as such during each year in which they participate in the 1997 Plan.
Directors of the Corporation are paid in shares of the Corporation's Common
Stock which, if deferred pursuant to the 1997 Plan, are credited to an account
in the director's name. Dividends paid to holders of the Corporation's Common
Stock are credited to the account of each director participating in the 1997
Plan. Within 60 days after the death, disability or retirement of a director,
the director or his or her estate is entitled to be issued the shares of Common
Stock held in his or her account and cash for any fractional shares. As of
December 31, 1997, 11,455 shares of Common Stock were credited under the 1997
Plan.
1988 Non-Qualified Stock Option Plan. The Corporation has adopted and the
shareholders have approved the 1988 Non-Qualified Stock Option Plan (the
"Non-Qualified Plan") pursuant to which options on 388,002 shares of the
Corporation's Common Stock were available for issuance to members of the
Corporation's Board of Directors and to members of Boards of Directors and
members of advisory boards of directors of any subsidiary of the Corporation.
The duration of the options is ten years from the date of grant. As of December
31, 1997, after giving effect to the exercise and forfeiture of options, options
on 167,027 shares of Common Stock were issued and outstanding. The Non-Qualified
Plan expired on January 4, 1998 and no more options may be issued pursuant to
the Non-Qualified Plan.
Pursuant to the terms of the Non-Qualified Plan: (i) the option price may
not be less than the fair market value of the Corporation's Common Stock on the
date of grant of the options; and (ii) options vest 20% per year from the date
of grant and are exercisable as they vest. If the option holder ceases to
perform services as a director or advisory director of the Corporation or its
subsidiaries for any reason during the five-year period, he or she has one year
from such cessation to exercise his or her vested options.
1998 Omnibus Stock Plan. The Corporation has adopted, subject to
shareholder approval, the 1998 Omnibus Stock Plan. Options covering a total of
32,894 shares of Common Stock have been granted to non-employee directors under
the 1998 Omnibus Stock Plan which options will not be effective unless the
shareholders of the Corporation approve the 1998 Omnibus Stock Plan. The 1998
Omnibus Stock Plan is being presented to the shareholders of the Corporation for
approval as Proposal 3. A full discussion of the 1998 Omnibus Stock Plan is
7
found in this Proxy Statement under the heading "PROPOSAL 3. APPROVAL OF 1998
OMNIBUS STOCK PLAN".
Board of Directors' Meetings and Committees
The Board of Directors of the Corporation held six regular meetings and one
special meeting during 1997. All incumbent directors attended more than 75% of
the total number of meetings of the Board of Directors and its committees during
1997 except for Directors Bahakel, Borden, Daughtry, Guthrie, J. Louis Maxwell,
Jr. and Williams due to other business commitments or illness.
The Board of Directors has several standing committees, including an Audit
Committee and a Compensation Committee. The voting members of these committees
are appointed by the Board of Directors annually from among its members.
The current members of the Audit Committee are Directors Ashford, Bahakel,
Michael A. Maxwell, Murphy, Patrick H. Pope (Chairman), Tilghman and Williams.
The primary functions of the Audit Committee are to give 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 Audit
Committee met four times during 1997.
The Compensation Committee administers the Corporation's compensation
program and has responsibility for matters involving the compensation of
executive officers of the Corporation and its subsidiaries. The current members
of the Compensation Committee are Directors Clancy, Godwin, Guthrie (Chairman),
Johnson, Poyner and White. The Compensation Committee met two times during 1997.
The Board of Directors does not have a standing nominating committee.
Executive Officers
The Corporation has the following executive officers:
8
Officer Positions with the Corporation and Triangle Bank;
Name Age Since Business Experience During Past Five Years
- ---------------------- --- ------- -------------------------------------------------
Michael S. Patterson 51 1990 Chairman of the Board of Triangle Bancorp, Inc. and Triangle
Bank since February 1997; President since 1990 and Chief
Executive Officer since 1991, Triangle Bank; President and
Chief Executive Officer, Triangle Bancorp, Inc. since August
1992; Director of Bank of Mecklenburg since October 1997
H. Leigh Ballance, Jr. 51 1995 Executive Vice President, Triangle Bancorp, Inc. and Triangle
Bank as of March 1995; President and Chief Executive Officer,
Atlantic Community Bancorp, Inc. and Unity Bank & Trust Company
from September 1989 to March 1995.
Steven R. Ogburn 47 1993 Executive Vice President, Triangle Bancorp, Inc. and Triangle
Bank since 1996; Senior Vice President, Triangle Bancorp, Inc.
and Senior Vice President - Credit Administration, Triangle
Bank, 1993 to 1996; Senior Vice President, Centura Bank,
1986-1993
Debra L. Lee 41 1991 Executive Vice President and Chief Financial Officer, Triangle
Bancorp, Inc. and Triangle Bank since 1996; Senior Vice
President and Chief Financial Officer, Triangle Bancorp, Inc.
and Triangle Bank, 1992 to 1996; Director of Bank of
Mecklenburg since October 1997
Edward O. Wessell 56 1991 Executive Vice President, Triangle Bancorp, Inc. and Triangle
Bank since 1997; Senior Vice President, Triangle Bank 1991-1997
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee in January 1997 were Charles H.
Ashford, Jr., Edwin B. Borden (Chairman), John B. Harris, Jr., N. Johnson
Tilghman, and Sydnor M. White, Jr. For the remainder of 1997, the Compensation
Committee was comprised of Edwin B. Borden (Chairman), David T. Clancy, James P.
Godwin, Sr., Earl Johnson, Edythe M. Poyner and Patrick H. Pope.
John B. Harris, Jr. is a director of the Corporation, and in 1996 served as
the Chairman of the Board of Triangle Bank and an employee of Triangle Bank.
Effective January 1, 1997, Mr. Harris ceased being an employee of Triangle Bank
and effective February 1, 1997, Mr. Harris ceased being the Chairman of Triangle
Bank. Michael S. Patterson, President and Chief Executive Officer of the
Corporation, though not a member of the Compensation Committee, advised the
Compensation Committee during 1997 on the compensation to be paid to executive
officers, other than himself, and to employees of the Corporation.
Compensation Committee Report
It is the policy of the Compensation Committee to provide a fully
competitive, performance-based compensation program such as will enable the
Corporation and its subsidiaries to attract, motivate and retain qualified
senior officers. With regard to all senior officers' compensation, the
Compensation Committee's policy is that salary levels will be established and
increases will be given commensurate with the individual officer's level of
responsibility and performance and with the general status of the local economy,
and the overall profit performance of the Corporation and its subsidiaries as it
relates to attainment of budgeted goals for growth, stability and profitability.
The Corporation's executive compensation program includes (a) annual
compensation consisting of base salaries, (b) the potential for cash incentive
bonuses based on the Corporation's financial performance, (c) long-term
incentive compensation consisting of periodic stock options, and (d)
contributions to the individual accounts of all participating employees
(including executive officers) under the Corporation's Section 401(k) salary
9
deferral plan. In addition, the Corporation provides other employee benefits and
welfare plans customary for companies of its size.
The basis for the executive officer compensation reported in 1997 was the
salary range of various positions set in conjunction with the Performance and
Compensation Management Consulting Group of KPMG Peat Marwick LLP ("KPMG")
during the fall of 1994 which reviewed comparable salaries being paid within
North Carolina and the southeastern United States based upon comparable sized
banking institutions. Salary ranges were developed and approved for various
positions with Triangle Bank, including those of the Named Executive Officers.
The 1997 salary set for Mr. Patterson by the Compensation Committee in January
1997 was at the midpoint of the range for his salary. The 1997 salaries for the
other executive officers were set by the Compensation Committee in January 1997
within the salary ranges established for those positions in 1994.
The cash incentive compensation for 1997 was based upon the formula
established within the management incentive compensation plan which plan was
approved by the Board during January 1994. Each executive officer will be
eligible to participate if the Corporation meets at least 80% of its defined
short-term goals, which goals are set annually by the Board. In 1997, the goals
were established in January by the Compensation Committee (and approved by the
Board of Directors) and were based on the Corporation's 1997 projected financial
performance, measured in terms of the Corporation's asset growth, return on
average assets, earnings per share and non-performing assets as a percentage of
loans. For 1997, individual target bonuses for executive officers, as a
percentage of annual base salary, ranged from a low of 40% to a high of 50%.
Actual bonus amounts for executive officers in the short-term incentive plan may
be higher or lower than their target bonus amounts and are based upon a
comparison of the Corporation's actual performance to the designated performance
measures. If the Corporation exceeds its performance goals, each executive
officer receives 1.5% additional bonus for every 1% that the Corporation
exceeded its goals. There is no maximum limitation on the bonus any executive
officer may receive. Payment of bonuses under the short-term incentive plan are
made annually generally within 60 days of the end of the fiscal year. For the
year ended December 31, 1997, the Corporation exceeded the designated
performance measures by a weighted average of 47.52% with asset growth of 57.24%
(on an unpooled basis), return on average assets of 1.20%, earnings per share of
$1.24 and non-performing assets as a percentage of loans of 0.65%. The
performance measures were weighted 15%, 30%, 40% and 15%, respectively.
Consequently, after application of the 1.5% multiplier, the actual bonuses
received by Mr. Patterson and by each of the other executive officers for 1997
were equal to approximately 171% of their respective target bonuses.
The long-term incentive compensation for 1997 was based upon the formula
established within the management incentive compensation plan which plan was
approved by the Board during January 1994. Compensation under the long-term plan
consists of stock options. Each executive officer will be eligible to
participate in the plan if the Corporation meets at least 80% of its defined
long-term goals, which goals are set annually by the Board. In 1997, these goals
were established in January by the Compensation Committee (and approved by the
Board of Directors) and were based on the Corporation's 1997 projected financial
performance, measured in terms of the Corporation's asset growth, return on
average assets, earnings per share and non-performing assets as a percentage of
loans. In November 1997, the Compensation Committee and the Board of Directors
revised certain methods for calculating long-term incentive compensation,
including that for 1997, after consultation with KPMG. The changes made to the
long-term incentive plan calculations included the use of the Black-Sholes
methodology which assigns a present (intrinsic) value to an option at the date
of grant. In 1997, Mr. Patterson was entitled to participate in the long-term
plan at 85% of his salary and the other executive officers at 67.5% of their
respective salaries. That percentage is then multiplied by the amount by which
the Corporation's 1997 performance measures were achieved to obtain the total
dollar amount to which the Black-Sholes methodology is applied to determine the
number of stock options to be awarded to an executive officer. Actual bonus
amounts for executive officers in the long-term incentive plan may be higher or
lower than their target bonus amounts and are based upon a comparison of the
Corporation's annual performance to the designated performance measures. If the
Corporation exceeds it performance goals, each executive officer receives 1.5%
additional long-term bonus for every 1% that the Corporation exceeded its goals.
There is no maximum limitation on the long-term bonus any executive officer may
receive. For the year ended December 31, 1997, the Corporation exceeded the
designated performance measures by a weighted average of 80.08% with the same
actual performance measures as listed above. Each of the four performance
measures is weighted equally at 25% each. Consequently, after application of the
1.5% multiplier, the actual bonuses received by Mr. Patterson and by each of the
other executive officers for 1997 were equal to approximately 220% of their
respective target bonuses. The options awarded in
10
1997 to all employees, including Mr. Patterson and the other four executive
officers, have an exercise price of $29.125 per share, and a term of 10 years
with a third of the options vesting on the first anniversary of the date of
grant, a third vesting on the second anniversary of the date of grant and a
third vesting on the third anniversary of the date of grant, provided the
officer is employed by the Corporation or one of its subsidiaries on the
anniversary date. The number of options awarded to Mr. Patterson and to each of
the other executive officers was based in each case upon a specified percentage
of their current base salary. These options were awarded under the 1998 Omnibus
Stock Plan which must be approved by the shareholders for the options to be
effective. The 1998 Omnibus Stock Plan is being presented to shareholders as
Proposal 3 to this Proxy Statement.
In 1997, annual compensation paid to executive officers included the
Corporation's matching contributions ("Matching Contributions") to the account
of each executive officer under the 401(k) plan and the portion of the
Corporation's special discretionary contribution to the 401(k) plan
("Discretionary Contribution") allocated to the account of each executive
officer. The Matching Contributions for Mr. Patterson and the other 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 officers' performance
for the year. The Matching Contributions, under the terms of the 401(k) plan,
are 100% of the officer's contribution up to a maximum of 2% of the officer's
salary and 50% of the next 4% of an officer's salary that is deferred. Any
Discretionary Contribution is entirely at the discretion of the Corporation's
Board of Directors which in 1997 voted to increase from 50% to 100% the match of
the officer's contribution up to 4% of each officer's salary. As a result, in
1997 the Corporation matched up to a maximum of 6% of a participating executive
officer's salary, the maximum amount any executive officer can contribute to the
plan.
Executive Compensation
Summary of Cash and Certain Other Compensation. The table below indicates
the cash compensation paid by the Corporation as well as other compensation paid
or accrued to the President and Chief Executive Officer and each other executive
officer whose salary and bonus was in excess of $100,000 during 1997 (the "Named
Executive Officers") for services rendered in all capacities during fiscal years
1997, 1996 and 1995, respectively.
Long Term Compensation
Annual Compensation(1) Awards Payouts
------ -------
Other Restricted Securities
Name and Annual Stock Underlying LTIP All Other
Principal Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Position Year ($) ($) ($)(2) ($) (#) ($) ($)(3)
--------- ---- ------- ------- ------------ ---------- ------------ ------- -------------
Michael S 1997 220,000 188,408 -0- -0- 16,044 -0- 9,500
Patterson, 1996 199,799 132,440 -0- -0- 14,483 -0- 9,500
President and 1995 178,230 98,900 -0- -0- 17,500 -0- 10,041
Chief Executive
Officer
H. Leigh Ballance, 1997 122,000 83,585 -0- -0- 8,931 -0- 10,940
Jr., Executive 1996 121,504 58,982 -0- -0- 9,256 -0- 10,629
Vice President 1995 116,000 50,600 -0- -0- 15,000 -0- 5,853
Steven R. Ogburn, 1997 99,000 67,827 -0- -0- 7,190 -0- 8,904
Executive Vice 1996 98,857 47,481 -0- -0- 10,000 -0- 5,553
President 1995 96,957 42,400 -0- -0- 10,000 -0- 4,889
-11-
Other Restricted Securities
Name and Annual Stock Underlying LTIP All Other
Principal Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Position Year ($) ($) ($)(2) ($) (#) ($) ($)(3)
--------- ---- ------- ------- ------------ ---------- ------------ ------- -------------
Debra L. Lee, 1997 103,800 67,827 -0- -0- 7,190 -0- 9,111
Executive Vice 1996 102,925 47,481 -0- -0- 7,062 -0- 7,148
President and 1995 92,425 38,600 -0- -0- 10,000 -0- 4,706
Chief Financial
Officer
Edward O. Wessell, 1997 97,990 50,655 -0- -0- 4,321 -0- 7,895
Executive Vice 1996 90,835 28,899 -0- -0- 4,528 -0- 7,991
President 1995 88,993 25,600 -0- -0- 5,000 -0- 5,786
- ----------
(1) Amounts shown in the table include amounts paid to the Named Executive
Officers as executive officers of the Triangle Bank. Triangle Bank was
reorganized as a wholly-owned subsidiary of the Corporation in August 1992.
Also includes amounts deferred at the election of the Named Executive
Officers under Section 401(k) of the Internal Revenue Code and under
existing deferred compensation agreements between the Named Executive
Officer and the Corporation. The amount of that compensation for the Named
Executive Officers for 1995, 1996 and 1997 under the 401(k) plan was based
on a formula contained in the terms of that plan and was not related to the
Corporation's or the officer's performance for the year.
(2) Perquisites and personal benefits awarded to the Named Executive Officers
did not exceed 10% of the total annual salary and bonus in any year
reported.
(3) The amounts disclosed represent the Corporation's annual contribution on
behalf of the Named Executive Officers to match pre-tax elective deferral
contributions (included under Salary) made by the Named Executive Officers
under Section 401(k) of the Internal Revenue Code, and insurance premiums
paid on behalf of the Named Executive Officer.
Stock Options. The following table sets forth information with regard to
grants of stock options during the fiscal year ended December 31, 1997 to the
Named Executive Officers. All such grants were made under the 1988 Incentive
Stock Option Plan.
STOCK OPTION GRANTS IN 1997
Individual Grants
Number of % of Total
Securities Options Potential Realizable Value
Underlying Granted to Exercise or (2) at Assumed Annual
Options Employees Base Price ($) Expiration Rates of Stock Price
Name Granted (#)(1)r in Fiscal Per Share Date Appreciation for Option
Year Term ($)(at) 5%
5% 10%
Michael S. Patterson 16,044 17.5 18.38 2/18/07 185,403 469,849
H. Leigh Ballance, Jr. 8,931 9.7 18.38 2/18/07 103,206 261,544
Steven R. Ogburn 7,190 7.8 18.38 2/18/07 83,087 210,559
Debra L. Lee 7,190 7.8 18.38 2/18/07 83,087 210,559
Edward O. Wessell 4,321 4.7 18.38 2/18/07 49,933 126,541
- ----------
(1) The options vest and become exercisable at the rate of 20% per year
beginning February 18, 1998, assuming the Named Executive Officer remains
employed by one of the Corporation's subsidiaries. If the Named Executive
Officer's employment terminates before the end of the vesting period, the
Named Executive Officer may exercise vested options for varying periods
after termination (depending on the manner of termination) in accordance
with the plan.
(2) Potential Realizable Value represents the difference between an assumed
stock price and the exercise price for the number of options granted. The
assumed stock price equals the market value of the stock on the grant date
appreciating at the indicated rate over the term of the options.
The following table sets forth information with regard to exercises of
stock options during the fiscal year ended December 31, 1997, by the Named
Executive Officers and the 1997 fiscal year-end value of all unexercised options
held by them.
-12-
AGGREGATED OPTION EXERCISES IN FISCAL 1997
AND FISCAL YEAR END OPTION VALUES
Value of Unexercised
Shares Acquired Value Realized Number of Unexercised In-the-Money Options at
Name on Exercise (#) ($) Options at FY-End (#) FY-End ($) (1)
---- --------------- --- --------------------- --------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Michael S. Patterson -0- -0- 58,237 42,130 1,654,405 909,449
H. Leigh Ballance, Jr. -0- -0- 7,851 25,336 196,114 547,073
Steven R. Ogburn -0- -0- 15,516 24,255 412,401 547,303
Debra L. Lee -0- -0- 20,146 21,440 553,955 472,885
Edward O. Wessell -0- -0- 8,406 11,743 229,820 251,210
- ----------
(1) Closing price of the Corporation's Common Stock at December 31, 1997 was
$35.88
Executive Deferred Compensation Agreements. Michael S. Patterson, President
and Chief Executive Officer of the Corporation, entered into a Deferred
Compensation Agreement dated March 1, 1992, with the Corporation's subsidiary,
Triangle Bank, pursuant to which Mr. Patterson may elect annually to defer up to
$30,000 of compensation, to be recorded in an interest-bearing deferred
compensation account maintained in his name. Such account shall be paid to Mr.
Patterson in approximately equal installments over a ten-year period, with the
first installment to be made on or before 30 days following June 30, 2002. Under
certain circumstances, Mr. Patterson may elect to postpone such first
installment payment until a subsequent date. Triangle Bank may terminate such
deferred compensation plan for Mr. Patterson at any time.
Debra L. Lee, Executive Vice President of the Corporation, entered into a
Deferred Compensation Agreement dated June 9, 1994, with the Corporation's
subsidiary, Triangle Bank, pursuant to which Ms. Lee may elect annually to defer
up to $30,000 of compensation, to be recorded in an interest-bearing deferred
compensation account maintained in her name. Such account shall be paid to Ms.
Lee, at her discretion, upon her voluntary termination of employment or her
retirement either in one lump sum after such termination or retirement or in
approximately equal installments over a ten-year period, with the first
installment to be made on or before 30 days following June 30, 2012. Under
certain circumstances, Ms. Lee may elect to postpone such first installment
payment until a subsequent date, provided that Triangle Bank concurs in such
postponement. Triangle Bank may terminate such deferred compensation plan for
Ms. Lee at any time.
Triangle Bank has established a trust to administer and fund the deferred
compensation plans for Mr. Patterson and Ms. Lee, and, accordingly, contributes
periodically to the trust to fund the plans.
Supplemental Early Retirement Plans. In January 1996, a Supplemental Early
Retirement Plan (the "1996 SERP") was approved by the Board of Directors of the
Corporation for the benefit of Michael S. Patterson, President and Chief
Executive Officer of the Corporation. The 1996 SERP is a benefit plan which will
provide retirement income for Mr. Patterson, in conjunction with the
Corporation's 401(k) plan and Social Security benefits, at an amount equal to
60% of his projected final pay at retirement. The 1996 SERP provides for payment
by the Corporation of the premiums on a life insurance policy insuring Mr.
Patterson's life, which policy will be owned by Mr. Patterson, subject to a
collateral assignment to the Corporation to secure repayment of its interest in
the cash value of the policy. The 1996 SERP includes a deferred compensation
arrangement, by which Mr. Patterson will receive a vested interest in 10% of the
policy's cash value for each year of service with the Corporation. The 1996 SERP
took into consideration the five years of service completed by Mr. Patterson on
the date of the 1996 SERP's implementation, so upon implementation Mr. Patterson
immediately was vested in 50% of the policy's cash value. If Mr. Patterson
completes four additional years of service with the Corporation (from January 1,
1996), he will be eligible to receive all of the cash value, even if his
employment is terminated prior to his retirement. If Mr. Patterson's employment
is terminated before completion of the four additional years of service due to a
change in control of the Corporation, he automatically will become fully vested
in 100% of the policy's cash value. The 1996 SERP also has the benefit of
providing key man coverage on Mr. Patterson.
-13-
Effective January 1, 1998, the Corporation implemented a Supplemental Early
Retirement Plan for four of the Corporation's five executive officers (each plan
collectively referred to herein as the "1998 SERP"), Michael S. Patterson,
Steven R. Ogburn, Debra L. Lee, and Edward O. Wessell. Each 1998 SERP is an
unfunded obligation of the Corporation to pay each individual $50,000 ($66,666
in the case of Mr. Patterson) annually for 15 years after the officer's
retirement at age 65, his or her disability or upon a change of control of the
Corporation. In the event of the officer's early retirement after age 55 but
before age 65, the Corporation will be obligated to pay the officer a percentage
(beginning at 72%) of the retirement benefit for 15 years, depending on the
officer's age at early retirement. Retirement benefits vest 10% per year such
that each officer shall be fully vested on December 31, 2007, or upon attainment
of age 65, whichever date is earlier. In the event of the officer's disability
or a change in control of the Corporation, the officer shall be fully vested. In
the event of an officer's death, the retirement benefit shall be paid to the
officer's spouse, if living.
Executive Employment Agreements and Change in Control Agreements. Mr.
Patterson, the Corporation's President and Chief Executive Officer, entered into
an employment agreement with the Corporation and Triangle Bank in December 1993.
The agreement continues until December 31, 1996, and provides for a base monthly
salary as is determined from time to time by Triangle Bank but not less than
$10,479, together with certain fringe benefits. In the event of the involuntary
termination of his employment by the Corporation without cause, Mr. Patterson is
entitled to continue to receive, on a monthly basis for the remainder of the
term of the Agreement or 12 months after the date of such termination, whichever
is longer, his then current base monthly salary, all fringe benefits, and an
amount equal to the average bonus paid to Mr. Patterson over the prior three
years. Triangle Bank's obligation to make such salary payments and to provide
such fringe benefits terminates upon Mr. Patterson's death or disability. Mr.
Patterson's employment agreement provides for certain payments to him in the
event there is a change in control of the Corporation. Specifically, upon a
change in control, the term of the agreement is set at three years from the date
of the change in control. Further, Mr. Patterson may terminate the agreement
upon a change in control of the Corporation if, after one year from the date of
such change in control, he determines that he has not been assigned duties
commensurate with his duties prior to the change in control under terms or
conditions satisfactory to him. If Mr. Patterson so terminates the agreement,
the agreement provides that the Corporation will pay to him for the remainder of
the term of the agreement an amount equal to 100% of his then base monthly
salary, fringe benefits, and an annual amount equal to the average of the bonus
paid to Mr. Patterson over the prior three years. The agreement further provides
that, unless terminated by the other party, the term automatically is extended
for an additional year on the same terms and conditions set forth in the
agreement. Consequently, the agreement's term automatically was extended to
December 31, 1998.
H. Leigh Ballance, Jr., an Executive Vice President of the Corporation,
entered into an employment agreement with the Corporation and Triangle Bank on
April 1, 1995. The agreement continues until April 1, 1998, and provides for a
base annual salary as is determined from time to time by Triangle Bank but not
less than $116,000, together with certain fringe benefits. In the event of the
involuntary termination of his employment by the Corporation without cause, Mr.
Ballance is entitled to continue to receive, on a monthly basis for the
remainder of the term of the Agreement, his then current base salary and health
and disability insurance coverage. Triangle Bank's obligation to make such
salary payments and to provide such fringe benefits terminates upon Mr.
Ballance's death or disability. Mr. Ballance's employment agreement provides for
certain payments to him in the event there is a change in control of the
Corporation. Specifically, upon a change in control, the term of the agreement
is set at three years from the date of the change in control. Further, Mr.
Ballance may terminate the agreement upon a change in control of the Corporation
if, after one year from the date of such change in control, he determines that
he has not been assigned duties commensurate with his duties prior to the change
in control under terms or conditions satisfactory to him. If Mr. Ballance so
terminates the agreement, the agreement provides that the Corporation will pay
to him for the remainder of the term of the agreement an amount equal to 100% of
his then base monthly salary, fringe benefits, and an annual amount equal to the
average of the bonus paid to Mr. Ballance over the prior three years. The
agreement further provides that, unless terminated by the other party, the term
automatically is extended for an additional year on the same terms and
conditions set forth in the agreement. Effective May 1, 1998, at his election,
Mr. Ballance will no longer serve as an Executive Vice President of the
Corporation and Triangle Bank. Mr. Ballance's current agreement will be
terminated and Mr. Ballance and Triangle Bank will enter into a new employment
agreement (but Mr. Ballance will not serve as an officer) effective May 1, 1998.
-14-
Steven R. Ogburn, an Executive Vice President of the Corporation, and Debra
L. Lee, Executive Vice President and Chief Financial Officer of the Corporation,
each entered into a Change of Control Agreement with the Corporation and
Triangle Bank on June 18, 1996; Edward O. Wessell, Executive Vice President of
the Corporation, entered into a Change of Control Agreement with the Corporation
and Triangle Bank on January 1, 1998. Mr. Ogburn's and Ms. Lee's agreements
continue until June 18, 1998, and Mr. Wessell's agreement continues until
January 1, 2000. Each agreement provides that in the event of a termination of
the officer's employment in connection with, or within 24 months after, a change
of control of the Corporation or Triangle Bank, for reasons other than cause,
the officer shall receive an amount equal to two times (i) his or her then
current salary plus (ii) the average of the cash bonus paid to the officer by
Triangle Bank under Triangle Bank's cash bonus plan during the immediately
preceding two years. Further, in such event, the officer shall continue to
receive for a period of two years after his or her termination all benefits the
officer was receiving and entitled to on his or her termination date, or the
officer may elect to receive the dollar equivalent of such benefits. The officer
may elect to receive all such payments either in one lump sum or in 24 equal
monthly payments. In addition, the officer may terminate the agreement upon a
change of control of the Corporation if, within 24 months of such change of
control, the officer is assigned duties inconsistent with his or her duties at
the time of the change of control, his or her annual base salary is reduced
below the amount in effect prior to the change of control, the officer's
benefits are reduced below the level prior to the change of control (unless
benefits are reduced for all employees), or the officer is transferred to a
location more than 50 miles from Raleigh without the officer's consent. Each
agreement further provides that, unless terminated by the Corporation and
Triangle Bank, notice of which must be given at least 13 months prior to the
next anniversary date, the term automatically is extended for an additional two
years on the same terms and conditions set forth in the agreement.
Performance Graph
The following line graph illustrates the cumulative total shareholder
return on the Corporation's Common Stock over the five-year period ending
December 31, 1997 and the cumulative total return over the same period of the
indexes listed below. Each graph assumes $100 originally invested on December
31, 1992. The Corporation paid a quarterly cash dividend of $.04 per share from
the third quarter of 1994 through the second quarter of 1995, a quarterly cash
dividend of $.06 per share in the third and fourth quarters of 1995, a quarterly
cash dividend of $.07 in the first quarter of 1996, a quarterly cash dividend of
$.08 in the second and third quarters of 1996, a quarterly cash dividend of $.10
in the fourth quarter of 1996 and the first quarter of 1997, a quarterly cash
dividend of $.11 in the second quarter of 1997, and a quarterly cash dividend of
$.12 in the third and fourth quarters of 1997. The numbers in the graph assume
that all cash dividends were reinvested.
The graph reflects the Nasdaq U.S. Index, the Standard & Poors 500 Index
and a regional peer group index based on the common equity securities of a group
of financial institutions in the southeastern United States, which index was
prepared by an entity not affiliated with the Corporation.
-15-
TRIANGLE BANCORP, INC.
PERFORMANCE GRAPH
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Triangle Bancorp, Inc. 100 110 139 201 236 519
Nasdaq Index 100 107 101 160 218 329
S & P 500 Index 100 110 112 153 189 252
Regional Peer Group 100 115 130 179 222 332
Index(1)
- ----------
(1) Includes the following financial institutions: Bank of Granite Corporation,
Carolina First Corporation, CCB Financial Corporation, Centura Banks, Inc.,
Century South Banks, Inc., F & M National Corporation, First Bancorp, First
Charter Corporation, LSB Bancshares, Inc., and MainStreet BankGroup, Inc.
Jefferson Bankshares, Inc. has been removed from the group as it has been
acquired. Sources: FactSet Data Systems, Inc.,
-16-
Indebtedness of Management
The Corporation has had, and expects to have in the future, banking
transactions, including loans, in the ordinary course of business with its and
its bank subsidiaries' directors, executive officers and their associates. In
the opinion of management of the Corporation, the outstanding indebtedness and
commitments to such individuals were made in the ordinary course of business and
on substantially the same terms, including interest rates, collateral, and
payment terms, as those prevailing at the same time for comparable transactions
with other persons, and do not involve more than the normal risk of
collectability or present other unfavorable features. At December 31, 1997,
indebtedness of directors and executive officers of the Corporation to its bank
subsidiaries, Triangle Bank and Bank of Mecklenburg, totaled an aggregate of
approximately $5.1 million or 4.3% of shareholders' equity.
Transactions with Management
In 1997, the Corporation purchased insurance through Associated Insurers,
Inc. ("Associated") as an agent. Robert L. Guthrie, a director of the
Corporation, is the President and Chief Executive Officer of Associated. The
Corporation paid insurance premiums, commissions and consulting fees to
Associated in 1997 in the aggregate amount of $208,000. Also in 1997, the
Corporation paid Clancy & Theys Construction Company $1,747,793 for construction
projects for the Corporation's headquarters building and various branch offices.
David T. Clancy, a director of the Corporation, is President of Clancy & Theys
Construction Company. Office furniture for various of Triangle Bank's offices
and the Corporation's headquarters building were purchased from Alfred Williams
& Co. for an aggregate price of $117,000 in 1997. J. Blount Williams, a director
of the Corporation, is President of Alfred Williams & Co.
Management of the Corporation believes that the terms of these transactions
were at least as favorable to the Corporation as those available from other
sources.
PROPOSAL 2. AMENDMENT OF THE CORPORATION'S AMENDED AND RESTATED ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES
The Board of Directors of the Corporation has voted unanimously to
recommend to the shareholders a proposed amendment to Article II of Triangle's
Amended and Restated Articles of Incorporation to increase the authorized number
of shares of the Corporation's Common Stock from 20,000,000 to 50,000,000. The
relative rights and limitations of the Corporation's Common Stock would remain
unchanged under the amendment. The Corporation's Common Stock does not have any
preemptive rights.
At the Record Date, the Corporation had 13,080,761 shares of the
Corporation's Common Stock issued and outstanding. In addition, 1,321,463 shares
of the Corporation's Common Stock are reserved for issuance under the
Corporation's compensation and stock option plans and stock option plans of
companies the Corporation has acquired, which plans were assumed by the
Corporation as part of each acquisition. Further, an aggregate of 4,200 shares
of the Corporation's Common Stock is reserved for issuance pursuant to warrants
that were assumed by the Corporation upon the merger of Atlantic Community
Bancorp, Inc. into the Corporation on March 31, 1995. Thus, there were 5,593,576
authorized shares of the Corporation's Common Stock unissued and not reserved
for issuance. The Corporation increased its authorized shares in December 1993
from 6,000,000 to 10,000,000 shares upon the acquisition of New East Bancorp,
which resulted in the issuance of 1,374,507 shares of Common Stock. In February
and March 1995, an aggregate of 4,494,111 shares of the Corporation's Common
Stock were issued to fund the acquisitions of Columbus National Bank, Standard
Bank and Trust Company and Atlantic Community Bancorp, Inc. The Corporation
increased its authorized shares in May 1995 from 10,000,000 to 20,000,000 shares
in anticipation of additional acquisitions. Since then, the Corporation has
issued a total of 4,061,885 shares and assumed options covering a total of
386,456 shares of Common Stock in four acquisitions in late 1995, 1996 and 1997
and expects to issue an additional 3,435,352 shares and assume options covering
an additional 208,744 shares of Common Stock in 1998 for the proposed
acquisitions of Guaranty State Bancorp and United Federal Savings Bank. In
addition, the Corporation proposes to reserve 1,000,000 shares of Common Stock
under the 1998 Omnibus Stock Plan which is being presented to the shareholders
for approval as Proposal 3. After giving effect to the Guaranty State Bancorp
and United Federal Savings Bank acquisitions, and assuming approval of the 1998
Omnibus Stock Plan, the Corporation would have approximately 949,000 shares
available for issuance.
-17-
The proposed increase in the Corporation's authorized Common Stock has been
recommended by the Board of Directors to assure that an adequate supply of
authorized but unissued shares is available for future acquisitions and general
corporate needs, such as future stock dividends or stock splits or issuance
under stock based benefit plans. Other than the proposed acquisition of Guaranty
State Bancorp and United Federal Savings Bank, and the proposed 1998 Omnibus
Stock Plan, there are currently no plans or arrangement relating to the issuance
of any of the additional shares of the Corporation's Common Stock proposed to be
authorized. Such shares would be available for issuance without further action
by the shareholders, unless required by the Corporation's Amended and Restated
Articles of Incorporation or bylaws or by applicable law.
The issuance of additional shares of the Corporation's 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 the Corporation's Common Stock.
The issuance of additional shares of the Corporation's 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 Article II as proposed to be amended is as follows:
"The aggregate number of shares which the Corporation is
authorized to issue is 50,000,000 shares. The shares shall
be all of one class, designated as common stock."
THE BOARD OF DIRECTORS RECOMMENDS THE SHAREHOLDERS VOTE "FOR" PROPOSAL 2.
PROPOSAL 3. APPROVAL OF 1998 OMNIBUS STOCK PLAN
On January 27, 1998, the Board of Directors of the Corporation approved the
Triangle Bancorp, Inc. 1998 Omnibus Stock Plan (the "Omnibus Plan"), subject to
approval by the shareholders of the Corporation. The material features of the
Omnibus Plan are described briefly below. Also included below is a table showing
the number and exercise price of options granted under the Omnibus Plan to the
Named Executive Officers, and certain groups identified in the table.
The Omnibus Plan is intended to encourage high levels of performance by the
Corporation's and its subsidiaries' officers and other key employees and to
enable the Corporation and its subsidiaries to recruit, reward, retain and
motivate directors, advisory directors, officers and key employees of experience
and ability on a basis competitive with industry practices. The Omnibus Plan is
administered by the Compensation Committee. Eligibility for awards under the
Omnibus Plan and the amount of those awards are determined solely by the
Compensation Committee. As of the end of 1997, approximately 26 directors, 248
advisory directors, 530 officers and employees were eligible to receive awards
under the Omnibus Plan. Awards under the Omnibus Plan may include incentive
stock options or non-qualified stock options, stock appreciation rights
("SARs"), restricted stock, performance awards or other stock-based awards. The
Compensation Committee also retains sole discretion to determine the terms and
conditions of such awards, including the vesting schedule. The option price for
incentive stock options issued under the Omnibus Plan may not be less than the
fair market value of the Common Stock on the date of grant; however, the
Compensation Committee may exercise discretion as to the exercise price per
share of any non-qualified option awarded under the Omnibus Plan.
The exercise price of options granted under the Omnibus Plan is payable in
cash or, at the discretion of the Compensation Committee, in shares of Common
Stock owned by the optionee having a fair market value equal to the exercise
price, or through a combination of cash and shares of Common Stock. Option
grants will require the withholding of any applicable taxes required to be
withheld upon the exercise of an option.
In the event of a Change of Control of the Corporation, in addition to any
action required or authorized by the terms of an award agreement, the interest
of a holder of an outstanding award will become fully vested and exercisable. In
addition, the Compensation Committee may, at its discretion, recommend that the
Board of Directors take either of the following actions as a result of, or in
anticipation of, any such event: (i) offer to purchase any outstanding award
made pursuant to the Omnibus Plan from the holder for its equivalent cash value,
-18-
as determined by the Compensation Committee, as of the date of the Change of
Control; or (ii) make adjustments or modifications to outstanding awards as the
Compensation Committee deems appropriate.
Under the Omnibus Plan, a "Change of Control" is defined as the earliest
date on which either of the following events occur: (i) an individual, entity,
or group acquires beneficial ownership of 20% or more of the combined voting
power of all classes of the Corporation's outstanding capital stock or control
in any manner of the election of a majority of the directors of the Corporation;
(ii) the Corporation consolidates or merges with or into another corporation,
association, or entity, or is otherwise reorganized, where the Corporation is
not the surviving corporation in such transaction and the holders of the voting
securities of the Corporation immediately prior to such acquisition own less
than a majority of the surviving entity immediately after the transaction; (iii)
the Corporation shall sell substantially all of its assets to another entity
which is not a wholly-owned subsidiary; or (iv) there is, during any period of
two consecutive years, a change in the majority of the Board of Directors unless
the election of each new director was approved by at least two-thirds of the
directors then still in office who were directors at the beginning of such two
year period.
In the event of a reorganization, recapitalization, stock split, stock
dividend, exchange of stock, combination of stock, merger, consolidation or any
other change in the corporate structure of the Corporation which results in a
change in the Common Stock, or in the event of a sale by the Corporation of all
or a significant portion of its assets or any distribution to its shareholders
other than a normal cash dividend, the Compensation Committee may make
appropriate adjustments in the shares covered by the Omnibus Plan and the then
outstanding awards.
The following table sets forth certain information regarding the options
granted under the Omnibus Plan through February 28, 1998:
Number of Securities
Name Dollar Value (1) Underlying Options (#)
---- ---------------- ----------------------
Michael S. Patterson $29.125 36,425
H. Leigh Ballance, Jr. -0- -0-
Steven R. Ogburn 29.125 13,017
Debra L. Lee 29.125 13,017
Edward O. Wessell 29.125 8,836
All five executive officers 29.125 71,295
Non-executive director group 29.125 32,894
Non-executive officer employee 29.125 49,952
group
The Omnibus Plan, and the options granted under it, will not become
effective until receipt of shareholder approval.
Federal Income Tax Consequences
The following is a summary only of the general tax principles applicable to
awards under the Omnibus Plan under federal law as in effect on the date of this
Proxy Statement.
Qualified Stock Options. There are no tax consequences to the optionee upon
the grant of a qualified option pursuant to the Omnibus Plan. There are no tax
consequences to the optionee upon exercise of a qualified stock option, except
that the amount by which the fair market value of the shares at the time of
exercise exceeds the option exercise price is a tax preference item possibly
giving rise to alternative minimum tax. If the shares of Common Stock acquired
are disposed of within two years from the date the option was granted and within
one year after the shares are transferred to the optionee, a "disqualifying
disposition" occurs and gain in an amount equal to the lesser of (i) the fair
market value of the shares on the date of exercise minus the option exercise
price or (ii) the amount realized on disposition minus the option exercise price
(except for certain "wash" sales, gifts or sales to related persons), is taxed
as ordinary income and the Corporation will be entitled to a corresponding
deduction in an amount equal to the optionee's ordinary income at that time. If
the shares of Common Stock acquired are not disposed of within two years from
the date the option was granted and within one year after the shares are
acquired, the optionee will be taxed at the time of the disposition on the
difference between the exercise price and the sale price and the difference will
be taxed as a capital gain or loss.
-19-
Non-Qualified Stock Options. There are no tax consequences to the optionee
upon the grant of a non-qualified option pursuant to the Omnibus Plan. Upon the
exercise of a non-qualified stock option, taxable ordinary income will be
recognized by the holder in an amount equal to the excess of the fair market of
the shares purchased at the time of such exercise over the aggregate option
price. The Corporation will be entitled to a corresponding federal income tax
deduction. Upon any subsequent sale of the shares, the optionee will generally
recognize a taxable capital gain or loss based upon the difference between the
per share fair market value at the time of exercise and the per share selling
price at the time of the subsequent sale of the shares.
Stock Appreciation Rights. There are no tax consequences to the employee
upon the grant of an SAR pursuant to the Omnibus Plan. Upon the exercise of an
SAR, the holder will realize taxable ordinary income on the amount of cash
received and the Corporation will be entitled to a corresponding federal income
tax deduction.
Restricted Stock. Unless the grantee of restricted stock under the Omnibus
Plan makes the election described below, such grantee will not recognize income
and the Corporation will not be allowed a deduction at the time such shares of
restricted stock are granted. While the restrictions on the shares are in
effect, a grantee will recognize compensation income equal to the amount of
dividends received and the Corporation will be allowed a deduction in a like
amount. When the restrictions on the shares are removed or lapse, the excess
fair market value of the shares on the date the restrictions are removed or
lapse over the amount paid by the grantee for the shares will be ordinary income
to the grantee and will be allowed as a deduction for federal income tax
purposes to the Corporation. Upon disposition of the shares, the gain or loss
realized by the grantee will be taxable as capital gain or loss. However, by
filing a Section 83(b) election with the Internal Revenue Service within 30 days
after the date of grant, a grantee's ordinary income will be determined as of
the date of grant. In such case, the amount of ordinary income recognized by
such a grantee and deductible by the Corporation will be equal to the excess of
the fair market value of the shares as of the date of grant over the amount paid
by the grantee for the shares. If such election is made and a grantee thereafter
forfeits his or her stock, no deduction will be allowed for the amount
previously included in such grantee's income.
THE BOARD OF DIRECTORS RECOMMENDS THE SHAREHOLDERS VOTE "FOR" PROPOSAL 3.
PROPOSAL 4. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P., Certified Public Accountants, has
been appointed by the Board of Directors to serve as the Corporation's
independent accountants for 1998, and a proposal to ratify that appointment will
be introduced at the Annual Meeting. If shareholders do not approve this
proposal, the Board of Directors will reconsider the appointment.
Representatives of Coopers & Lybrand are expected to be present at the
Annual Meeting and will have an opportunity to make a statement if they desire
to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 4.
PROPOSALS OF SHAREHOLDERS
It currently is expected that the 1999 Annual Meeting will be held during
April 1999. Any proposal of a shareholder which is intended to be presented at
the 1999 Annual Meeting must be received by the Corporation at its principal
executive office in Raleigh, North Carolina, not later than November 30, 1998 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 20, 1998
-20-
*******************************************************************************
APPENDIX
REVOCABLE PROXY
TRIANGLE BANCORP, INC.
Annual Meeting of Shareholders
April 28, 1998
Appointment of Proxy Solicited by Board of Directors
The undersigned hereby appoints Steven R. Ogburn, Debra L. Lee and Edward O.
Wessell, or any of them, with full powers of substitution, to act as attorneys
and proxies to vote all shares of common stock of Triangle Bancorp, Inc. (the
"Corporation") held of record by the undersigned on March 6, 1998 at the Annual
Meeting of Shareholders to be held at the Radisson Governors Inn, I-40 at Davis
Drive, Exit 280, Research Triangle Park, North Carolina, on Tuesday, April 28,
1998, at 10:00 A.M., and at any adjournments thereof, as follows:
1. Election of directors:
|_| |_|
FOR all nominees WITHHOLD authority to vote
listed below for all nominees
listed below
For Two-Year Term: Cy N. Bahakel, George W. Holt
For Three-Year Terms: Carole S. Anders, Charles H. Ashford, Jr., Edwin B.
Borden, Robert E. Bryan, Jr., N. Leo Daughtry, Michael A. Maxwell, Patrick
H. Pope, Edythe M. Poyner
Instruction: To withhold your vote for one or more nominees, write the
name(s) of such nominee(s) on the line below.
- --------------------------------------------------------------------------------
2. Approval of amendment to the Corporation's Articles of Incorporation to
increase the authorized number of shares of Common Stock from 20,000,000 to
50,000,000.
|_| |_| |_|
FOR AGAINST ABSTAIN
3. Approval of Triangle Bancorp, Inc. 1998 Omnibus Stock Plan.
|_| |_| |_|
FOR AGAINST ABSTAIN
4. Ratification of appointment of Coopers & Lybrand L.L.P., as independent
public accountants for fiscal 1998:
|_| |_| |_|
FOR AGAINST ABSTAIN
5. Transaction of any other business that may properly come before the
meeting.
The Board of Directors recommends a vote FOR each of the listed proposals.
THIS APPOINTMENT OF PROXY WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS ARE
GIVEN, THIS APPOINTMENT OF PROXY WILL BE VOTED FOR PROPOSALS 2, 3 AND 4, AND, IN
THE ELECTION OF DIRECTORS, BY CASTING AN EQUAL NUMBER OF VOTES FOR EACH NOMINEE
LISTED UNDER PROPOSAL 1. IF, AT OR BEFORE THE TIME OF THE MEETING, ANY NOMINEE
LISTED UNDER PROPOSAL 1 HAS BECOME UNAVAILABLE FOR ANY REASON, THE PROXIES HAVE
THE DISCRETION TO VOTE FOR A SUBSTITUTE NOMINEE.
This appointment of proxy may be revoked at any time before it is exercised by
filing with the Secretary of the Corporation either an instrument revoking it or
a duly executed appointment of proxy bearing a subsequent date or by attending
the Annual Meeting and voting in person.
The undersigned acknowledges receipt from the Corporation, prior to the
execution of this appointment of proxy, of the Notice of Annual Meeting, a Proxy
Statement dated March 20, 1998, and the 1997 Annual Report to Shareholders.
Dated:
----------------------------------
----------------------------------
Print Name of Shareholder
----------------------------------
Signature of Shareholder
Please date and sign your name exactly as your name appears on this appointment
of proxy. If shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title.
If shareholder is a corporation, please sign in full corporate name by the
president or other authorized officer. If shareholder is a partnership, please
sign in partnership name by authorized person.
--------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS APPOINTMENT OF PROXY
IN THE ENCLOSED POSTAGE PREPAID ENVELOPE
--------------------------------------------------------------
2