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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted)
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CENTURA BANKS, 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:
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CENTURA BANKS, INC.
March 16, 1999
Dear Shareholder:
The 1999 Annual Meeting of Shareholders of Centura Banks, Inc. will be
held at 10:00 a.m. on Wednesday, April 21, 1999, at Edgecombe Community
College, 225 Tarboro Street, Rocky Mount, North Carolina. The meeting agenda is
described in the attached Notice of Annual Meeting and Proxy Statement.
If you are a shareholder of record, we urge you to send in your proxy
promptly for the Annual Meeting, whether or not you plan to attend. Giving your
proxy will not affect your right to vote in person if you attend. If you prefer
you may vote your proxy by telephone, using the toll-free number printed on the
proxy. Whatever your method of choice, please vote your shares at your earliest
convenience. See the attached Proxy Statement for further information regarding
your rights to vote your proxy.
Centura's audited financial statements and other required disclosures are
presented in the 1998 Annual Report on Form 10-K, a copy of which accompanies
the Proxy Statement. Centura's 1998 Annual Report to shareholders will be
mailed to you under separate cover upon your request pursuant to instructions
accompanying the proxy.
We would like to welcome as shareholders those persons who purchased
Centura's stock during 1998.
Sincerely,
/s/ Cecil W. Sewell, Jr.
--------------------------
Cecil W. Sewell, Jr.
Chairman of the Board and
Chief Executive Officer
YOUR PROXY IS IMPORTANT...PLEASE VOTE PROMPTLY
[CENTURA BANKS, INC.]
134 North Church Street
Rocky Mount, North Carolina 27804
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 21, 1999
----------------------------------------
Notice is hereby given that the annual meeting of the shareholders of
Centura Banks, Inc. will be held at Edgecombe Community College, 225 Tarboro
Street, Rocky Mount, North Carolina on Wednesday, April 21, 1999, at 10:00 a.m.
for the following purposes:
1. To elect seven Class III directors for terms of three years;
2. To act upon such other matters as may properly come before said
meeting and any adjournment thereof.
Only shareholders of record at the close of business on February 26, 1999,
will be entitled to notice of and to vote at the annual meeting.
/s/ Joseph A. Smith, Jr.
-------------------------
Joseph A. Smith, Jr.
Corporate Secretary
March 16, 1999
YOUR PROXY IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. YOU ARE REQUESTED TO
FILL IN, DATE, SIGN, AND RETURN THE PROXY SUBMITTED HEREWITH IN THE ENCLOSED
ENVELOPE OR TO VOTE BY TELEPHONE IN THE MANNER DESCRIBED IN THE PROXY. THE
GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE SUCH PROXY OR TO VOTE
IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE MEETING.
CENTURA BANKS, INC.
134 NORTH CHURCH STREET
ROCKY MOUNT, NORTH CAROLINA 27804
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
APRIL 21, 1999
This proxy statement is furnished to all shareholders in connection with
the solicitation by the Board of Directors of Centura Banks, Inc. ("Centura")
of proxies to be used at the annual meeting of shareholders to be held at
Edgecombe Community College, 225 Tarboro Street, Rocky Mount, North Carolina,
at 10:00 a.m. on April 21, 1999, and at all adjournments thereof (the "Annual
Meeting").
The matters to be considered and voted upon at the Annual Meeting will be:
(1) election of seven Class III directors for terms of three years and (2)
action upon such other matters as may properly come before the Annual Meeting
and any adjournment thereof.
This proxy statement and the accompanying proxy are being mailed on or
about March 16, 1999.
PROXIES
A proxy for use at the Annual Meeting is enclosed. Any shareholder who
executes and delivers such proxy or who votes shares by telephone has the right
to revoke such proxy or telephone vote at any time before the Annual Meeting by
filing with Cecil W. Sewell, Jr., Chairman of the Board and Chief Executive
Officer of Centura, an instrument revoking it, or by executing a proxy bearing
a later date, or by telephonic notice revoking such vote or by attending the
Annual Meeting and voting in person. All shares represented by valid proxies
received pursuant to this solicitation that are not revoked before they are
exercised will be voted in the manner specified therein. If no specification is
made, the proxies will be voted in favor of the nominees for election to the
Board of Directors. The Board of Directors is not aware of any other matters
that may be presented for consideration at the Annual Meeting, but, if other
matters do properly come before the meeting, it is intended that all shares
represented by proxies in the accompanying form will be voted by the persons
named in the proxy in accordance with their best judgment.
Solicitation of proxies may be made in person or by mail, or by telephone
or facsimile transmission, by directors, officers, and regular employees of
Centura, none of whom will be specially compensated therefor. Brokerage houses,
nominees, fiduciaries, and other custodians will be requested to forward
solicitation materials to beneficial owners and secure voting instructions, if
necessary, and will be reimbursed for the reasonable out-of-pocket expenses
incurred in sending such solicitation materials to beneficial owners. Centura
has retained W. F. Doring & Company to aid in the solicitation of proxies and
to verify certain records relating to the solicitation at a fee not to exceed
$3,000 plus expenses.
The persons named on the proxy to represent shareholders at the Annual
Meeting are Charles T. Lane of Rocky Mount, North Carolina and O. Tracy Parks
III of Pinehurst, North Carolina.
The costs of preparing, assembling, and mailing this proxy statement and
proxies and the costs associated with the solicitation of such proxies will be
borne by Centura. Shareholders are urged to return their proxies without delay.
VOTING RIGHTS
The Board of Directors of Centura has fixed the close of business on
February 26, 1999, as the record date (the "Record Date") for the determination
of shareholders of Centura entitled to receive notice of and to vote at the
Annual Meeting. As of the Record Date, there were 26,775,003 shares of the
common stock of Centura, no par value per share ("Centura Common Stock"),
issued and outstanding and held by holders of record. Each share of Centura
Common Stock issued and outstanding as of the Record Date is entitled to one
vote on each matter to be voted on at the Annual Meeting.
Of the 26,775,003 shares of Centura Common Stock outstanding on the Record
Date, 1,323,025 shares (representing 4.9%) were held by the Asset Management
Department of Centura's wholly-owned subsidiary, Centura Bank ("Centura Bank"),
in a fiduciary capacity, which shares are included in the total outstanding
shares eligible to vote or to be counted in determining the total number of
shares entitled to vote on each matter to be voted on at the Annual Meeting.
I-1
Some of Centura's shareholders are participants in the Centura Banks, Inc.
Dividend Reinvestment Stock Purchase Plan (the "Dividend Reinvestment Plan")
and, as such, are beneficial owners of shares that are held of record by
Registrar and Transfer Company, Cranford, New Jersey ("R & T"), as agent under
the Dividend Reinvestment Plan. Such shares are eligible to vote and be counted
at the Annual Meeting and, under the terms and conditions of the Dividend
Reinvestment Plan, R&T will vote such shares in accordance with the directions
of shareholders. Shareholders participating in the Dividend Reinvestment Plan
will be mailed a copy of the notice of the Annual Meeting, a copy of this proxy
statement, and a proxy that will be used to direct the voting of shares of
Centura Common Stock held of record by R&T under such plan. Should the
shareholder fail to execute and deliver the proxy to R&T prior to the Annual
Meeting, R&T will not vote said shares. Rights of shareholders to direct voting
under the Dividend Reinvestment Plan arise and are created solely under said
plan.
Also included among the total number of shares entitled to vote and be
counted at the Annual Meeting are shares held by Centura Bank as trustee (the
"Trustee") under the Centura Banks, Inc. 401(k) Plan (the "401(k) Plan"). Each
participant under the 401(k) Plan is entitled to direct the Trustee as to the
manner in which the shares of Centura Common Stock allocated to such
participant's Centura Common Stock fund under the 401(k) Plan are to be voted.
Each such participant is being mailed a copy of the notice of the Annual
Meeting, a copy of this proxy statement, and a proxy that will be used to
direct the voting of shares of Centura Common Stock allocated to a
participant's Centura Common Stock fund under the 401(k) Plan. Upon receipt of
the proxies and tabulation of the vote of the participants under the 401(k)
Plan, the Trustee will vote the Centura Common Stock held under the 401(k) Plan
as instructed. Any shares of Centura Common Stock held under the 401(k) Plan
that are eligible to vote but as to which the Trustee receives no voting
instructions will be voted by the Trustee in its discretion. Rights of
shareholders to direct voting under the 401(k) Plan arise and are created
pursuant to the Internal Revenue Code of 1986, as amended (the "Code"), and the
terms of the plan.
ELECTION OF DIRECTORS
The Restated Articles of Incorporation of Centura require that the Board
of Directors be comprised of not less than 15 nor more than 30 members, as
specified in the Bylaws of Centura, divided into three classes that are equal
or nearly equal in number to each other. Centura's organizational documents
authorize the Board of Directors to amend the Bylaws from time to time to
specify the number of members of the Board within the range just mentioned. The
term of one class expires each year, with the terms of Class III directors
expiring at the Annual Meeting.
At its meeting on February 17, 1999, the Board of Directors amended the
Bylaws to provide that the number of directors of Centura would be
twenty-three, comprised of eight Class I directors, eight Class II directors
and seven Class III directors. The Board of Directors then nominated the seven
persons named below for election as Class III directors. If elected, each of
the persons nominated to serve as a Class III director shall serve a term of
three years or until his or her successor is elected and qualified. The Bylaws
of Centura provide that a vacancy in the Board of Directors may be filled only
by the Board of Directors. Shareholders may not vote for a greater number of
persons than the number of nominees named herein.
In connection with Centura's agreement to acquire First Coastal
Bankshares, Inc., a Virginia thrift holding company, Centura has agreed to add
Floyd E. Kellam, Jr., a First Coastal director, to Centura's board of
directors. At the time of closing of the First Coastal acquisition, the Centura
board will amend the Bylaws to increase its number to twenty-four and will
elect Mr. Kellam to the Centura board of directors to serve as a Class I
director. Mr. Kellam will serve in such capacity until he reaches the mandatory
retirement age of seventy in November 1999. The First Coastal transaction is
currently anticipated to be completed late in the first quarter of 1999.
The persons nominated below will be elected if they receive a plurality of
the votes cast for their election. Unless authority is withheld on the proxy,
all proxies received in response to this solicitation will be voted for the
election of the persons nominated below, except that if any of said persons
shall become unavailable for election, such proxies will be voted for the
election of such persons as management shall designate in substitution for the
nominees so unavailable. Management has no reason to believe that any of its
nominees will be unavailable for election.
The Board of Directors recommends the election of the persons named below
as directors at the Annual Meeting. With respect to the election of directors,
votes may be cast in favor of or withheld from each nominee; votes that are
withheld will be excluded entirely from the vote and will have no effect. Under
the rules of the New York Stock Exchange (the "NYSE"), brokers who hold shares
in street name have the authority to vote on certain items when they have not
received instructions from beneficial owners. Brokers that do not receive
instructions are entitled to vote on the election of directors. Under
applicable North Carolina law, a broker non-vote will have no effect on the
outcome of the election of directors.
I-2
NOMINEES
Term To
Expire at
Principal Occupation And Business Director Meeting For
Name Age (1) Experience For The Past Five Years Since The Year Class
- ------------------------------- --------- ----------------------------------------- --------- ------------ ------
H. Tate Bowers 61 Chief Executive Officer, Bowers Fibers, 1996 2002 III
Inc. (textile manufacturer)
Bernard W. Franklin (2) 46 President, Saint Augustine's College 1998 2002 III
since March 31, 1995; prior to that,
President, Livingstone College,
Salisbury, NC.
Susan E. Gravely 48 President, Vietri, Inc. (wholesale 1998 2002 III
distributor of Italian dinnerware and
decorative accessories)
John H. High 62 President, John H. High & Co., Inc. 1990 2002 III
(real estate development)
Robert L. Hubbard 64 President and CEO, RLH Associates 1990 2002 III
since January 1, 1997 (management
consultants); prior to that, Vice
Chairman, Americal Corporation
(hosiery manufacturer)
William H. Redding, Jr. 62 President, Acme-McCrary Corporation 1995 2002 III
(textile manufacturer)
Charles M. (Terry) Reeves III 55 President, Reeves Properties, Inc. (real 1990 2002 III
estate development)
- ---------
(1) As of April 15, 1999.
(2) Dr. Franklin also serves as a director of Food Lion, Inc.
I-3
DIRECTORS CONTINUING IN OFFICE
Term To
Expire at
Principal Occupation And Business Director Meeting For
Name Age (1) Experience For The Past Five Years Since The Year Class
- -------------------------- --------- ------------------------------------------------------- --------- ------------ ------
Richard H. Barnhardt 64 Chairman, Best of Beers, L.L.C. (beer distributor) 1990 2000 I
since 1998; prior to that, President, Properties, Inc.
(real estate development)
C. Wood Beasley 69 President, Wood Beasley Farms, Inc. 1990 2001 II
Thomas A. Betts, Jr. (2) 57 Since November 3, 1997, Senior Insurance Officer, 1990 2001 II
Centura Insurance Services, Inc.; prior to that date,
partner, Betts & Company (insurance broker and
agent)
Ernest L. Evans 54 President, ELE, Inc., (agri-business management 1996 2000 I
company)
Michael K. Hooker (3) 53 Chancellor, University of North Carolina at Chapel 1996 2000 I
Hill since July 1995; prior to that, President,
University of Massachusetts
William H. Kincheloe (4) 61 President, Bulluck Furniture Company, Inc. and 1990 2000 I
Wildwood Lamps and Accents, Inc.
Charles T. Lane 67 Partner, Poyner & Spruill, L.L.P. (Attorneys at law) 1990 2000 I
Joseph H. Nelson (5) 67 Chairman and President, Davenport Motor Company 1996 2001 II
(automobile sales)
Dean E. Painter, Jr. (6) 55 Chairman, CLG, Inc. (technology leasing) (7) 1996 2001 II
O. Tracy Parks, III 55 Partner, Parks, Pate & Scarborough, L.L.P. 1990 2000 I
(Attorneys at law)
Frank L. Pattillo 56 Vice Chairman, Centura, since April 1998; prior to 1990 2001 II
that date, Group Executive Officer of Centura from
February 1997 to April 1998; Group Executive
Officer and Chief Financial Officer, Centura, from
April 1996 to February1997; prior to that, Senior
Executive Vice President and Chief Financial
Officer, Centura
Cecil W. Sewell, Jr. 52 Chairman of the Board and Chief Executive Officer, 1990 2000 I
Centura from April 1998; Chairman of the Board,
Chief Executive Officer and President, Centura,
from February, 1997 through April 1998; President
and Chief Operating Officer, Centura, from 1993
through February, 1997.
George T. Stronach III 58 Real Estate Developer 1996 2001 II
Alexander P. Thorpe III 61 President, Thorpe & Company, Inc. (investment 1990 2001 II
company)
William H. Wilkerson 52 President, Centura, since April 1998; Group Executive 1990 2001 II
Officer of Centura from April 1996 through April
1998; prior to that Executive Vice President,
Centura
Charles P. Wilkins 54 Partner, Broughton, Wilkins, Webb, & Sugg, P.A. 1996 2000 I
(Attorneys at law)
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(1) As of April 15, 1999.
(2) Betts & Company was acquired by Centura on November 3, 1997. Prior to such
acquisition, Betts & Company was not affiliated with Centura or any of its
subsidiaries; however, Mr. Betts was a director of Centura prior to such
acquisition.
(3) Dr. Hooker also serves as a director of ALLTEL Corporation.
(4) Mr. Kincheloe also serves as a director of North Carolina Railroad Company.
(5) Mr. Nelson also serves as a director of Commonwealth Dealers Life Insurance
Co.
(6) Mr. Painter also serves as a director of CCAir, Inc.
(7) CLG, Inc. was acquired by Centura in November 1996, and is maintained as a
subsidiary of Centura Bank. Prior to such acquisition, CLG, Inc. was not
affiliated with Centura or any of its subsidiaries.
I-4
COMMITTEES AND DIRECTOR ATTENDANCE
During the year ended December 31, 1998, the Board of Directors of Centura
held six meetings. During 1998, each director other than C. Wood Beasley
attended 75% or more of the aggregate of Board of Directors meetings and
meetings of committees of the Board of Directors on which each director served.
The Executive Committee is composed of Messrs. Sewell (Chairman),
Kincheloe, Nelson, Parks, Redding, Reeves, Thorpe and Wilkins. The Executive
Committee reviews overall strategic plans developed by management, deals with
tactical issues relating to corporate development, and acts on behalf of the
Board of Directors between Board meetings. The Board of Directors subsequently
reviews the actions taken by the Executive Committee and either approves,
disapproves, or modifies those actions. During 1998, the Executive Committee
held ten meetings. The independent director members of the Executive Committee
also serve as the Nominating Committee of the Board of Directors. Centura's
Bylaws provide that nominations to the Board of Directors may be made by the
Board of Directors or by a committee of the Board of Directors to which such
duty is delegated. Nominations recommended by shareholders are not considered
by the Nominating Committee. During 1998, the Nominating Committee held four
meetings.
The Compensation and Benefits Committee (the "Compensation Committee") is
composed of Messrs. Redding (Chairman), Barnhardt, Beasley, and Bowers, none of
whom is a Centura officer or employee. The Compensation Committee meets on call
for the purpose of reviewing management's compensation and benefit plans and
making recommendations in connection therewith to the Board of Directors.
During 1998, the Compensation Committee held four meetings.
The Audit Committee is composed of Messrs. Stronach (Chairman), Bowers,
High and Reeves, and Ms. Gravely, none of whom is a Centura officer or
employee. The Audit Committee meets quarterly and is charged with ensuring that
sufficient internal controls and accounting procedures are in existence and
functioning properly for Centura and its subsidiaries. The Audit Committee also
recommends the appointment of independent auditors and serves as an independent
body to review, with or without the presence of management, the reports of
regulatory agencies, external auditors, and internal auditors. The Audit
Committee monitors management's action on recommendations made by auditors or
examiners to ensure timeliness and appropriateness of response. Recommendations
made by the Audit Committee and actions taken by management on such
recommendations are reported to the Board of Directors. During 1998, the Audit
Committee held four meetings.
Other regular or special committees may be appointed by the Board of
Directors to assist the Board in carrying out its duties and responsibilities.
SECURITIES OWNERSHIP
Except for the Centura Bank Asset Management Department, which, as of
February 26, 1999, held 1,323,025 shares of Centura Common Stock in a fiduciary
capacity, or 4.9% of the total shares of Centura Common Stock outstanding and
which, therefore, may be deemed to be a beneficial owner of such shares,
Centura knows of no other persons who beneficially own more than five percent
of the outstanding Centura Common Stock.
I-5
The following table shows the number of outstanding shares of Centura
Common Stock beneficially owned on February 26, 1999, by the individual
nominees and directors of Centura, by the executive officers of Centura, and by
the nominees, directors and executive officers as a group. It is anticipated
that the directors and executive officers of Centura and their affiliates will
vote their shares in favor of the proposals presented at the Annual Meeting.
Individuals have sole voting and investment power over their shares unless
otherwise indicated in the footnotes.
Amount of and Percent
Nature of of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------------------------------- ---------------------- --------
Richard H. Barnhardt 19,348 (1) *
C. Wood Beasley 52,257 (2) *
Thomas A. Betts, Jr. 77,602 (3) *
H. Tate Bowers 22,982 (4) *
Ernest L. Evans 13,986 (5) *
Bernard W. Franklin 291 (6) *
Steven J. Goldstein 8,219 (7) *
Susan E. Gravely 411 (8) *
John H. High 40,545 (9) *
Michael K. Hooker 2,153 (10) *
Robert L. Hubbard 55,085 (11) *
William H. Kincheloe 39,682 (12) *
H. Kel Landis III 24,087 (13) *
Charles T. Lane 30,734 (14) *
Joseph H. Nelson 26,135 (15) *
Dean E. Painter, Jr. 1,121,414 (16) 4.19
O. Tracy Parks III 128,560 (17) *
Frank L. Pattillo 50,182 (18) *
William H. Redding, Jr. 22,568 (19) *
Charles M. Reeves III 119,175 (20) *
Cecil W. Sewell, Jr. 145,136 (21) *
George T. Stronach III 50,792 (22) *
Alexander P. Thorpe III 67,481 (23) *
William H. Wilkerson 51,184 (24) *
Charles P. Wilkins 402,726 (25) 1.50
All nominees, directors and executive officers
as a group (26 persons) 9.70%
- ---------
* Less than 1%.
(1) Includes 10,548 shares that Mr. Barnhardt has the right to acquire through
the exercise of stock options.
(2) Includes 8,937 shares that Mr. Beasley has the right to acquire through the
exercise of stock options.
(3) Includes 13,463 shares with respect to which Mr. Betts has no voting or
investment power, and 9,782 shares that he has the right to acquire
through the exercise of stock options, and 224 shares held in the 401(k)
Plan as to which he is entitled to direct the Trustee as to the manner in
which the shares are voted.
(4) Includes 402 shares with respect to which Mr. Bowers has no voting or
investment power and 3,578 shares that he has the right to acquire through
the exercise of stock options.
(5) Includes 9,915 shares that Mr. Evans has the right to acquire through the
exercise of stock options.
(6) Includes 230 shares that Dr. Franklin has the right to acquire through the
exercise of stock options.
(7) Includes 1,000 shares with respect to which Mr. Goldstein has no voting or
investment power and 3,325 shares that Mr. Goldstein has the right to
acquire through the exercise of stock options, and 1,583 shares held in
the 401(k) Plan as to which he is entitled to direct the Trustee as to the
manner in which the shares are voted.
(8) Includes 232 shares that Ms. Gravely has the right to acquire through the
exercise of stock options.
(9) Includes 7,920 shares with respect to which Mr. High has no voting or
investment power and 313 shares that he has the right to acquire through
the exercise of stock options.
(10) Includes 1,953 shares that Dr. Hooker has the right to acquire through the
exercise of stock options.
(11) Includes 293 shares with respect to which Mr. Hubbard has no voting or
investment power, 40,189 shares with respect to which he shares voting and
investment power, and 12,367 shares that he has the right to acquire
through the exercise of stock options.
I-6
(12) Includes 6,390 shares with respect to which Mr. Kincheloe has no voting or
investment power and 9,980 shares that he has the right to acquire through
the exercise of stock options.
(13) Includes 378 shares with respect to which Mr. Landis has no voting or
investment power, 1,600 shares with respect to which he shares voting and
investment power, 12,296 shares that he has the right to acquire through
the exercise of stock options, and 3,458 shares held in the 401(k) Plan as
to which he is entitled to direct the Trustee as to the manner in which
the shares are voted.
(14) Includes 12,554 shares that Mr. Lane has the right to acquire through the
exercise of stock options.
(15) Includes 1,485 shares with respect to which Mr. Nelson has no voting or
investment power, 3,093 shares with respect to which he shares voting and
investment power, and 13,974 shares that he has the right to acquire
through the exercise of stock options.
(16) Includes 560,707 shares with respect to which Mr. Painter has no voting or
investment power.
(17) Includes 10,220 shares that Mr. Parks has the right to acquire through the
exercise of stock options.
(18) Includes 8,941 shares that Mr. Pattillo has the right to acquire through
the exercise of stock options and 3,519 shares held in the 401(k) Plan as
to which he is entitled to direct the Trustee as to the manner in which
the shares are voted.
(19) Includes 10,219 shares with respect to which Mr. Redding shares voting and
investment power, and 12,249 shares that he has the right to acquire
through the exercise of stock options.
(20) Includes 10,857 shares that Mr. Reeves has the right to acquire through
the exercise of stock options.
(21) Includes 1,648 shares with respect to which Mr. Sewell has no voting or
investment power, 19,197 shares with respect to which he shares voting and
investment power, 44,959 shares that he has the right to acquire through
the exercise of stock options, and 9,034 shares held in the 401(k) Plan as
to which he is entitled to direct the Trustee as to the manner in which
the shares are voted.
(22) Includes 1,485 shares with respect to which Mr. Stronach has no voting or
investment power, 15,167 shares with respect to which he shares voting and
investment power and 4,641 shares that Mr. Stronach has the right to
acquire through the exercise of stock options.
(23) Includes 11,102 shares that Mr. Thorpe has the right to acquire through
the exercise of stock options.
(24) Includes 321 shares with respect to which Mr. Wilkerson has no voting or
investment power, 28,259 shares that Mr. Wilkerson has the right to
acquire through the exercise of stock options, and 9,914 shares held in
the 401(k) Plan as to which he is entitled to direct the Trustee as to the
manner the shares are voted.
(25) Includes 3,772 shares that Mr. Wilkins has the right to acquire through
the exercise of stock options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to regulations promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), Centura's directors, certain officers,
and any person holding more than 10% of Centura Common Stock are required to
report their ownership of Centura Common Stock and any changes in that
ownership to the Securities and Exchange Commission and the NYSE. Specific due
dates for these reports have been established, and Centura is required to
report in this proxy statement any failure to file by these dates during 1998.
All of these filing requirements were satisfied during 1998 by Centura's
directors and officers, except the following:
Charles P. Wilkins did not timely file a report on Form 4 with respect to
shares of Centura Stock disposed of by him in March, 1998, as executor of the
estate of his brother. This report was filed in April, 1998.
DIRECTORS' COMPENSATION
Each director, except those who are officers of Centura, receives an
annual retainer fee of $7,500 plus $750 for each meeting of the Board of
Directors attended and $750 for each committee meeting of the Board of
Directors attended. In addition, each Chairman of a Centura Board committee,
who is not an employee, receives an additional annual retainer of $1,000.
Directors also are reimbursed for their travel expenses incurred to attend
meetings, which, in the aggregate, amounted to approximately $91,183 in 1998.
In addition to the base compensation described above, Centura's
independent directors receive incentive compensation based on the achievement
by Centura of its Economic Value Added ("EVA(R)(1)") target. (See "BOARD
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION -- The Economic Value
Added Incentive Program.") The incentive component provides for a bonus of
50.0% of fees paid during the year if Centura meets its EVA target, with
adjustments (both up and down) if such target is exceeded or is not met. As
more fully discussed below, Centura exceeded its EVA target for 1998 and,
accordingly, Centura directors received aggregate bonus compensation in the
amount of $364,233. All but two of the directors deferred such compensation
through the Directors' Deferred Compensation Plan (discussed below).
In addition to the Incentive Program mentioned above, the Compensation
Committee authorized directors' participation in the Equity Compensation
Program, described below in "BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION," in 1998. This action was taken as the result of a study
conducted during 1998 by the committee that highlighted the expanded
utilization of equity grants as a significant element of director compensation.
The terms and conditions of the grants are identical to those issued to
employees under the program. Grants made under the Equity Compensation Program
(1) EVA(R) is a registered trademark of Stern, Stewart & Co.
I-7
in respect of 1998 performance were awarded in January 1999. Directors were
awarded options (the value of which was 50.0% of total compensation, with the
number of shares determined by the Black-Scholes valuation model) in respect of
30,608 shares of Centura Common Stock.
Certain directors are eligible to participate in the Directors' Deferred
Compensation Plan (for purposes of this section, the "Plan"). The Plan provides
non-employee members of the Board of Directors of Centura and Centura Bank with
an opportunity to defer for income tax purposes the payment of directors' fees.
Under the Plan, directors may elect to receive directors' fees in the form of
an option to buy Centura Common Stock, rather than in cash. The Plan does not
provide directors any additional compensation or benefits, except for the
beneficial effect of the deferral of income. The Plan is administered by the
Compensation Committee which has full authority and sole discretion to
interpret and construe the Plan, including setting rules and regulations
related thereto, and making determinations and taking actions necessary for its
implementation and administration. Options to purchase 21,284 shares of Centura
Common Stock were granted under the Plan during 1998 (including grants relating
to the incentive component of director compensation) to all eligible directors
who chose to participate in the Plan as a group (20 persons).
EXECUTIVE OFFICERS
The following table sets forth the name, age, and position of the
executive officers of Centura. Each executive officer named below was appointed
by the Board of Directors of Centura to a term of office extending until the
death, resignation, retirement, removal, or disqualification of the officer or
until the officer's successor is appointed and qualifies. The business
backgrounds of the officers named below are included in the table of directors
of Centura above, except with respect to Messrs. Goldstein, Landis, and Rogers,
which are provided below.
Name Age (1) Position
- ----------------------------- --------- --------------------------------------------------
Cecil W. Sewell, Jr. (2) 52 Chairman of the Board and Chief Executive Officer
Frank L. Pattillo 56 Vice Chairman
William H. Wilkerson 52 President
Steven J. Goldstein (3) 47 Chief Financial Officer
H. Kel Landis III (4) 42 Group Executive Officer and President of Centura
Bank, the principal subsidiary of Centura
B. Thomas Rogers, Jr. (5) 47 Chief Strategy Development Officer
- ---------
(1) As of April 15, 1999.
(2) Mr. Sewell assumed the offices of Chairman of the Board, Chief Executive
Officer and President on February 2, 1997. In April 1998, Mr. Wilkerson
was elected President and Mr. Sewell ceased to hold that office. Prior to
February 2, 1997, Mr. Sewell served as President and Chief Operating
Officer.
(3) Mr. Goldstein was elected Chief Financial Officer of Centura, effective
February 1, 1997. Prior to that, he was a principal of A.T. Kearney, Inc.;
a principal of EDS Management Consulting Services; a managing director of
BEI/Golumbe, Inc.; and a managing director of Kaplan Smith & Associates;
each of such firms being engaged in management consulting.
(4) Mr. Landis was elected a Group Executive Officer in April 1996. From April
1995 to April 1996, he was an Executive Vice President. Prior to that he
was an Executive Vice President of Centura Bank. Mr. Landis was elected
President of Centura Bank in April 1998.
(5) Mr. Rogers was elected Chief Strategy Development Officer in April 1998.
From April 1996 through April 1998 he was a Group Executive Officer. From
April 1995 to April 1996, he was an Executive Vice President. Prior to
that, he was an Executive Vice President of Centura Bank.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has furnished the following report on executive
compensation in accordance with the rules of the Securities and Exchange
Commission. As noted above under "Committees and Director Attendance," the
Compensation Committee reviews management's compensation and benefit plans and
makes recommendations regarding such plans to the Board of Directors. Review of
and recommendations regarding executive compensation are a significant part of
that responsibility. Set forth below is a summary of the factors taken into
account by the Compensation Committee in assessing executive compensation
generally and the compensation of the Chief Executive Officer in particular.
COMPENSATION OF EXECUTIVE OFFICERS. In general, the performance-related
components of executive compensation at Centura are base salary and payments
under the incentive and equity compensation programs described below. Base
salary is determined on the basis of the position held by the executive and is
assessed in comparison to the salaries of similarly situated executives at
three selected financial institutions in North Carolina and a sample of
thirty-seven comparable financial institutions throughout the United States
with assets between $5.3 and $19 billion. Adjustments to base salary are made
on the basis of the recommendations of the Chief Executive Officer based on the
overall contribution of the executive to the
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attainment of Centura's financial goals and such executive's record of
achievement in directing the activities for which such executive is
responsible. Such adjustments are reviewed in light of the salaries of
comparable executives in the peer groups referred to above. Generally, such
comparison is on the basis of entire compensation, including bonus, and is
targeted at the median of salaries of comparable executives in the peer groups
referred to above. No specific weighting is assigned to the various factors
analyzed in determining the base compensation of executive officers of Centura.
THE ECONOMIC VALUE ADDED INCENTIVE PROGRAM. The Centura EVA incentive
program (the "Incentive Program") provides incentive compensation to certain
key employees, including all executive officers, in a form which relates the
financial reward to an increase in the value of Centura to its shareholders. In
general, EVA is the net operating profit of Centura after taxes, less a capital
charge. The capital charge is intended to represent the return expected by the
providers of Centura's debt and equity capital, and is determined by Centura's
financial consultant on the basis of a formula that takes into account the risk
and cost of providing such capital. Management is of the view that EVA
improvement is the financial performance measure most closely correlated with
an increase in shareholder wealth. EVA improvement can be achieved through
operations in three ways: (i) growth of after-tax operating profits on existing
capital; (ii) investment in projects or businesses that generate a positive
return after taking into account the cost of capital; and (iii) divestiture of
businesses that do not generate a positive return after capital cost.
Under the Incentive Program, the Chief Executive Officer and five other
senior officers of Centura (including the executive officers listed in the
Summary Compensation Table below) comprise the "Strategic Group." For each
member of the Strategic Group, a Target Bonus is declared at the commencement
of each year, which Target Bonus is based on a percentage of the executive's
base salary. Bonuses earned under the Incentive Program are determined by
multiplying the Target Bonus by a Bonus Multiple derived by comparing target
and actual EVA for the year in question and adjusted for a "leverage factor"
that reflects the expected variability of Centura's performance based on
historical factors. The Incentive Program determines target EVA for succeeding
years of the program by a formula that adds the average of target and actual
EVA for the prior year to an expected improvement factor. For 1998, the
expected improvement factor was $1,900,000 per year, resulting in a target EVA
of $10,538,000.
The average of the Target Bonuses for 1998 for all members of the
Strategic Group was set at 40.8% of base salary. Actual EVA for 1998 exceeded
target EVA; as a result, the average of actual bonuses earned for 1998 by
members of the Strategic Group was 56.0% of base salary, or approximately 1.33
times Target Bonus. Pursuant to the Incentive Program, 1998 bonus amounts
earned by each participant were applied as follows: (i) the Target Bonus amount
was paid in 1999; (ii) one-third of the actual bonus amount in excess of the
Target Bonus amount was paid in 1999; and (iii) two-thirds of the actual bonus
amount in excess of the Target Bonus amount was added to a "bonus bank"
comprised of excess bonus amounts earned by the participant in prior years that
remain at risk. One-third of each participant's aggregate "bonus bank" amount
was paid in 1999 in addition to the amounts referred to in the preceding
sentence. The remaining "bonus bank" amount will be paid in future years,
subject to reduction or loss if actual EVA in those years results in bonus
determinations that are less than zero.
In addition to the foregoing, 20% of the 1998 bonus amounts paid to
Strategic Group executives was withheld and used to purchase leveraged stock
options ("LSOs") on Centura Common Stock to be issued under the Omnibus Plan.
The purchase price paid by each executive for each LSO issued in respect of
Incentive Program performance for 1998 was $2.80, with the balance of the
acquisition price of the underlying shares of Centura Common Stock comprising
the option exercise price described below. The option purchase price is 10% of
the closing price of Centura Common Stock as reported on the NYSE Composite
Tape on the date of issue, January 19, 1999 ($72.6875), which amount is then
indexed to the budgeted wage inflation rate. Indexation of the LSO purchase
price was instituted in 1998 to increase the number of shares subject to option
under the Incentive Program, which number had been materially reduced by
increases in the market price of Centura Common Stock over the last several
years. This circumstance had created the anomalous result of reducing the
number of shares subject to options granted to Incentive Program participants
during a period of superior performance. As described below, the features of
the program incenting management to continue to increase shareholder value
remain in place.
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The 1998 LSO's vest in equal annual installments in January 2000, 2001,
2002, 2003 and 2004 and expire in January 2009. The initial exercise price of
the 1998 LSO's is $69.89 (the closing price on the date of issue, $72.6875,
less the option purchase price, $2.80), which shall remain in effect for one
year from the date of issue. For each year thereafter during the option term,
the exercise price will increase as shown below, which increase is intended to
reflect the minimum expected increase in value for holders in Centura Common
Stock. Accordingly, the exercise price for the 1998 LSO's during the period in
which all or a portion of them are vested will be as follows:
For the Year Commencing LSO Exercise
January Price
- ------------------------ -------------
2000 $ 74.17
2001 78.71
2002 83.53
2003 88.65
2004 94.08
2005 99.85
2006 105.96
2007 112.45
2008 119.34
EQUITY COMPENSATION PROGRAM. In addition to the Incentive Program
mentioned above, the Compensation Committee authorized an equity compensation
program (the "Equity Compensation Program") in 1997 to reward and retain
selected officers and employees of Centura. This action was taken as the result
of a study conducted during 1997 by the committee that highlighted the
expanding utilization of equity grants as a significant element of total direct
compensation by firms with whom Centura competes for talent in the marketplace.
The study confirmed the experience of Centura management that Centura was
operating at a distinct disadvantage because of its suboptimum use of
equity-based compensation. Under the Equity Compensation Program, non-qualified
stock options are granted to selected officers and employees at all levels of
the corporation for a ten year term which options will be awarded at market
price and vest over eight years as follows: 10% per year at the end of each of
the first six years; 15% at the end of the seventh year; and 25% at the end of
the eighth year. Grants made under the Equity Compensation Program in respect
of 1998 performance were awarded in January 1999. Named Executive Officers were
awarded options (the value of which was a percentage of base compensation, with
the number of shares determined by use of the Black-Scholes valuation model) in
respect of 126,354 shares of Centura Common Stock, together with cash
performance units having an aggregate value of $644,406, exercisable at the
time of exercise of such options pro rata with the amount of options exercised.
It is the intention of the Compensation Committee to award additional options
and performance units under the Equity Compensation Plan in respect of
performance in 1999. The amount of options awarded for such year and thereafter
is discretionary with the committee and will be made on the basis of Centura's
financial and operating performance and the requirements of the corporation to
attract, retain and motivate the management talent necessary to remain
competitive.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. In setting Mr. Sewell's 1998
base salary as Chairman of the Board and Chief Executive Officer of Centura,
consideration was given to Centura's financial performance in light of its
historical performance, corporate and personal goals established at the
beginning of the year in question, and comparison against a select group of
comparable financial institutions. Return on assets and equity and earnings per
share on an absolute and comparative basis were considered, as were such other
factors as loan losses, capital investment and acquisitions. After reviewing
performance data, base salary information for chief executive officers of
comparable financial institutions was analyzed. Adjustments to base salary were
then considered in light of corporate performance and the relationship of such
compensation to the peer group. No specific weighting was assigned to these
various factors analyzed in determining Mr. Sewell's base salary. During 1998,
Mr. Sewell's base salary was $450,000. In addition, under the Incentive
Program, Mr. Sewell's Target Bonus was 50.0% of Base Salary. As a result of
Centura's performance in 1998, Mr. Sewell received a bonus of 1.33 times his
Target Bonus, of which $233,000 was paid in cash in 1999, and $58,445 was
applied to the purchase of LSOs in respect of 20,866 shares of Centura Common
Stock. Further, under the Incentive Program $7,020 was added to the $127,430
already credited to Mr. Sewell's "bonus bank" account, resulting in $134,450
being credited to that account, which remains at risk as described above.
Finally, under the Equity Compensation Program, Mr. Sewell was granted options
in respect of 47,118 shares of Centura Common Stock and performance units of
$240,300 in respect of such options.
OTHER COMPENSATION ISSUES. In addition to the foregoing components of
executive compensation, the Compensation Committee reviews, on an on-going
basis, other components of compensation, such as benefits and perquisites. In
all cases,
I-10
the objective of the Compensation Committee is to assist senior management in
attracting, motivating, and retaining qualified executive personnel.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Congress has enacted Section
162(m) of the Code, which disallows a tax deduction for any publicly-held
corporation for remuneration exceeding $1 million in any tax year for the Chief
Executive Officer and other executive officers named in the Summary
Compensation Table. Regulations promulgated by the Internal Revenue Service
pursuant to this section of the Code provide exceptions to non-deductibility
for certain "performance based compensation," including equity based
compensation, if performance goals are set by an independent compensation
committee and the terms of the compensation plan are approved by shareholders.
In 1997, the Centura Board of Directors adopted and the shareholders approved
an amendment to the Omnibus Equity Compensation Plan to authorize types of
awards that would be eligible for the "performance based compensation"
exception to Section 162(m). While the Omnibus Equity Compensation Plan has
received shareholder approval in the past, the Incentive Program, the Equity
Compensation Program and the compensation and benefits of the chief executive
officer and other executive officers of Centura have not been submitted to
shareholders for approval.
CENTURA BANKS, INC. COMPENSATION COMMITTEE
WILLIAM H. REDDING, JR., CHAIRMAN RICHARD H. BARNHARDT
C. WOOD BEASLEY H. TATE BOWERS
I-11
EXECUTIVE COMPENSATION
The following tables set forth the annual and long-term compensation
awarded to, earned by, or paid to Centura's Chief Executive Officer, and the
four other most highly compensated officers (collectively, the "Named Executive
Officers") for the years ended December 31, 1998, 1997 and 1996 for services
rendered in any capacities to Centura and/or its subsidiaries. Bonuses are paid
in January of the year following the year in which they are earned.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
------------------------------------
Annual Compensation Awards Payouts
--------------------------------- --------------------------- --------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Salary Bonus Compensation Awards Options/ Payouts Compensation
Principal Position Year ($) ($) ($)(a) ($) SARS(#) ($)(b) ($)
- ------------------------------ ------ --------- --------- --------- ---------- ----------- --------- ------------
Cecil W. Sewell, Jr. 1998 450,000 166,500 0 0 67,984(c) 67,230 27,688(d)
Chairman of the Board 1997 375,000 122,260 0 0 54,796(e) 63,710 26,687(f)
and Chief Executive Officer 1996 325,000 89,240 0 0 7,171 34,820 4,750(g)
William H. Wilkerson 1998 269,000 79,260 0 0 31,244(h) 34,130 17,471(i)
President 1997 230,000 61,390 0 0 26,070(j) 33,440 15,711(k)
1996 210,000 49,850 0 0 4,011 19,530 4,750(g)
H. Kel Landis, III 1998 245,000 72,340 0 0 28,398(l) 30,261 19,840(m)
Group Executive Officer 1997 215,000 57,800 0 0 24,217(n) 29,210 19,659(o)
1996 180,000 40,170 0 0 3,199 15,180 4,750(g)
Frank L. Pattillo 1998 245,000 72,140 0 0 28,470(p) 31,270 18,922(q)
Vice Chairman 1997 210,000 56,010 0 0 23,817(r) 30,730 17,368(s)
1996 190,000 45,020 0 0 3,650 18,120 5,276(t)
Steven J. Goldstein 1998 245,000 73,760 0 0 28,287(u) 23,210 32,577(v)
Chief Financial Officer 1997 204,500 58,430 0 0 22,918(w) 18,650 10,778(x)
- ---------
(a) Amounts reimbursed for payment of taxes on stock awards following
satisfaction of required performance goals.
(b) Comprises the sum of (i) 1/3 of the Bonus amount in excess of the Target
Bonus for the executive in question, plus (ii) 1/3 of the amount credited
for such executive in the "bonus bank" for prior years. See "BOARD
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION -- THE ECONOMIC
VALUE ADDED INCENTIVE PROGRAM."
(c) Consists of 20,866 leveraged options earned under the EVA Incentive Program
and 47,118 options awarded under the Equity Compensation Program.
(d) Consists of matching contributions of $5,000 made by Centura and allocated
to Mr. Sewell under the 401(k) Plan and $22,688 which represents present
value of the yearly interest foregone on the non-term premium paid under a
split-dollar life insurance arrangement.
(e) Consists of 17,296 leveraged options earned under the EVA Incentive Program
and 37,500 options awarded under the Equity Compensation Program.
(f) Consists of matching contributions of $4,750 made by Centura and allocated
to Mr. Sewell under the 401(k) Plan, and $21,937 which represents present
value of the yearly interest foregone on the non-term premium paid under a
split-dollar life insurance arrangement.
(g) Consists of matching contributions made by Centura and allocated to the
respective Named Executive Officer under the 401(k) Plan.
(h) Consists of 10,120 leveraged options earned under the EVA Incentive Program
and 21,124 options awarded under the Equity Compensation Program.
(i) Consists of matching contributions of $5,000 made by Centura and allocated
to Mr. Wilkerson under the 401(k) Plan, and $12,471 which represents
present value of the yearly interest foregone on the non-term premium paid
under a split-dollar life insurance arrangement.
(j) Consists of 8,820 leveraged options earned under the EVA Incentive Program
and 17,250 options awarded under the Equity Compensation Program.
(k) Consists of matching contributions of $4,750 made by Centura and allocated
to Mr. Wilkerson under the 401(k) Plan, and $10,961 which represents
present value of the yearly interest foregone on the non-term premium paid
under a split-dollar life insurance arrangement.
(l) Consists of 9,158 leveraged options earned under the EVA Incentive Program
and 19,240 options awarded under the Equity Compensation Program.
(m) Consists of matching contributions of $5,000 made by Centura and allocated
to Mr. Landis under the 401(k) Plan and $14,840 which represents present
value of the yearly interest foregone on the non-term premium paid under a
split-dollar life insurance arrangement.
(n) Consists of 8,092 leveraged options earned under the EVA Incentive Program
and 16,125 options awarded under the Equity Compensation Program.
(o) Consists of matching contributions of $4,750 made by Centura and allocated
to Mr. Landis under the 401(k) Plan, and $14,909 which represents present
value of the yearly interest foregone on the non-term premium paid under a
split-dollar life insurance arrangement.
(p) Consists of 9,230 leveraged options earned under the EVA Incentive Program
and 19,240 options awarded under the Equity Compensation Program.
(q) Consists of matching contributions of $5,000 made by Centura and allocated
to Mr. Pattillo under the 401(k) Plan, $1,742 of above-market interest
credited during 1998 on compensation deferred by Mr. Pattillo under the
Deferred Compensation Plan, and $12,180 which represents present value of
the yearly interest foregone on the non-term premium paid under a
split-dollar life insurance arrangement.
(r) Consists of 8,067 leveraged options earned under the EVA Incentive Program
and 15,750 options awarded under the Equity Compensation Program.
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(s) Consists of matching contributions of $4,750 made by Centura and allocated
to Mr. Pattillo under the 401(k) Plan, $1,062 of above-market rate
interest credited during 1997 on compensation deferred by Mr. Pattillo
under the Deferred Compensation Plan, and $11,556 which represents present
value of the yearly interest foregone on the non-term premium paid under a
split-dollar life insurance arrangement.
(t) Consists of matching contributions of $4,750 made by Centura and allocated
to Mr. Pattillo under the 401(k) Plan and $526 of above-market rate
interest credited during 1996 on compensation deferred by Mr. Pattillo
under the Deferred Compensation Plan.
(u) Consists of 8,655 leveraged options earned under the EVA Incentive Program
and 19,632 options awarded under the Equity Compensation Program.
(v) Consists of matching contributions of $5,000 made by Centura and allocated
to Mr. Goldstein under the 401(k) Plan, $9,787 in consideration of
relocation expense, and $17,790 which represents present value of the
yearly interest foregone on the non-term premium paid under a split-dollar
life insurance arrangement.
(w) Consists of 7,168 leveraged options earned under the EVA Incentive Program
and 15,750 options awarded under the Equity Compensation Program.
(x) Consists of matching contributions of $1,791 made by Centura and allocated
to Mr. Goldstein under the 401(k) Plan and $8,987 in consideration of
relocation expense.
The following table sets forth certain information concerning stock
options granted to the Named Executive Officers in respect of performance in
1998 (see "BOARD COMPENSATION REPORT ON EXECUTIVE COMPENSATION -- THE ECONOMIC
VALUE ADDED INCENTIVE PROGRAM AND EQUITY COMPENSATION PROGRAM"):
OPTION GRANTS IN RESPECT OF LAST FISCAL YEAR
Potential
Realizable Value
At Assumed Annual
Rates of Stock Price
Appreciation for
Option Term
--------------------------------------
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration
Name Granted(#) Fiscal Year ($/Share) Date 5%($) 10%($)
- ---------------------- --------------- ------------- ------------ ----------- ------------------ ------------------
Cecil W. Sewell, Jr. 20,866(a) 4% 69.89(b) 1/19/09 0(c) 1,319,149(d)
47,118(e) 8% 72.6875(f) 1/19/09 2,159,064 5,409,311
William H. Wilkerson 10,120(a) 2% 69.89(b) 1/19/09 0(c) 639,786(d)
21,124(e) 4% 72.6875(f) 1/19/09 967,954 2,425,109
H. Kel Landis III 9,158(a) 2% 69.89(b) 1/19/09 0(c) 578,969(d)
19,240(e) 3% 72.6875(f) 1/19/09 881,625 2,208,819
Frank L. Pattillo 9,230(a) 2% 69.89(b) 1/19/09 0(c) 583,521(d)
19,240(e) 3% 72.6875(f) 1/19/09 881,625 2,208,819
Steven J. Goldstein 8,655(a) 1% 69.89(b) 1/19/09 0(c) 547,169(d)
19,632 3% 72.6875(f) 1/19/09 899,587 2,253,822
- ---------
(a) Leveraged Stock Options (LSOs) granted under Incentive Program. See "BOARD
COMPENSATION COMMITTEE REPORT EXECUTIVE COMPENSATION -- THE ECONOMIC VALUE
ADDED INCENTIVE PROGRAM."
(b) Closing price of the shares of Centura Common Stock in respect of which
LSOs were granted on the date of grant ($72.6875), less the purchase price
of $2.80 per share.
(c) Because LSOs are purchased for $2.80 per share covered by such options
(with a concomitant cost of such purchase price over the term of the
option) and because the option exercise price increases 6.2% per year over
the option term, an increase in the market value of Centura Common Stock
of 5% results in a realizable value of zero for such options.
(d) Computed on the assumption that each LSO is held for its full ten-year term
and exercised on the last day of such term at the then-applicable purchase
price of $119.34. Realizable value is determined by multiplying the number
of shares subject to the LSOs by the difference between (i) the value of
Centura Common Stock determined by assuming that its market price
increases at a rate of 10% per annum, compounded annually for ten full
years from the price at date of issue ($72.6875), achieving a value at
date of exercise of $187.67 and (ii) a purchase price of $124.45 that is
comprised of (A) the option purchase price increased at the rate of 6.2%
per annum, compounded annually for ten years ($5.11); plus (B) the option
exercise price of $119.34.
(e) Non-qualified Stock Options granted under Equity Compensation Program. See
"BOARD COMPENSATION COMMITTEE REPORT EXECUTIVE COMPENSATION -- EQUITY
COMPENSATION PROGRAM."
(f) Closing price of the shares of Centura Common Stock in respect of which
Non-qualified Stock Options were granted on the date of grant ($72.6875).
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The following table summarizes the options exercised in 1998 by the Named
Executive Officers and the number and value of unexercised options at December
31, 1998.
AGGREGATED OPTIONS EXERCISED IN 1998 AND
YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options at Options at
Shares Acquired December 31, 1998(#) December 31, 1998($)(a)
Name on Exercise(#) Value Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- -------------------------- ---------------- -------------------- ------------------------------- ----------------------
Cecil W. Sewell, Jr ...... 0 0 32,090(b) 74,854 1,887,980 1,082,350
William H. Wilkerson ..... 0 0 26,770 37,309 1,580,305 586,567
Frank L. Pattillo ........ 7,770 391,954 2,635(b) 34,695 172,147 562,748
H. Kel Landis III ........ 5,000 209,350 6,918(b) 32,482 409,550 454,161
Steven J. Goldstein ...... 0 0 237(b) 39,584(c) 13,635 629,944
- ---------
(a) Value of unexercised in-the-money options is calculated by multiplying the
number of unexercised options at December 31, 1998 by the difference in
the closing price of Centura Common Stock reported on the NYSE Composite
Tape on December 31, 1998 and the exercise price of the unexercised
in-the-money options.
(b) Includes options earned through deferral of compensation.
(c) This includes a diminishing stock option grant which will be exercisable
only upon a change of control where the acquiring entity owns at least 75%
of the shares in the new company. The grant will reduce to 8,333 shares on
2/1/99 and 0 shares on 2/1/00.
PENSION PLANS
Centura maintains a noncontributory, qualified pension plan (the "Centura
Pension Plan") covering substantially all employees of Centura and its
subsidiaries that adopt the plan (collectively referred to for purposes of this
section as "Centura"), who have completed one year of service and attained the
age of 21. Centura Bank is the Trustee of the Centura Pension Plan. The Centura
Pension Plan provides a participant with retirement benefits which in 1998 were
based on average compensation during all of the participant's years of credited
service after 1992. Under Sections 401(a)(17) and 415 of the Internal Revenue
Code of 1986, as amended (the "Code"), benefits payable from the Centura
Pension Plan are limited; for 1998, annual benefits may not exceed $130,000,
and the benefit formula cannot take into account compensation in excess of
$160,000 (these limits are adjusted by the Internal Revenue Service from time
to time for cost of living increases). Centura also maintains a
noncontributory, nonqualified supplemental executive retirement plan (the
"SERP"), which provides in part for the payment of additional pension benefits
(the "Excess Benefits") to certain executive employees, including the Named
Executive Officers, to the extent their benefits under the Centura Pension Plan
are reduced on account of the Code limits described above and also provides
additional pension benefits relating to deferred compensation, which is not
provided in the Centura Pension Plan. The Summary Compensation Table set forth
above does not include the amount of the pension contribution, payment or
accrual with respect to the Centura Pension Plan or the Excess Benefit for any
Named Executive Officer, as such amounts cannot readily be separately or
individually calculated by Centura's actuaries.
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The following table illustrates the estimated annual benefits payable to
an employee retiring on December 31, 1998 at normal retirement age from a
combination of the Centura Pension Plan and the Excess Benefit portion of the
SERP, in the following specified compensation and years of service
classifications.
CENTURA PENSION PLAN AND EXCESS BENEFIT TABLE
Average
Compensation Years of Service
- -------------- ---------------------------------------------------------------------
15 20 25 30 35 40
--------- --------- --------- --------- --------- ---------
$ 125,000 30,527 40,702 50,878 61,053 61,053 61,053
$ 150,000 37,277 49,702 62,128 74,553 74,553 74,553
$ 175,000 44,027 58,702 73,378 88,053 88,053 88,053
$ 200,000 50,777 67,702 84,628 101,553 101,553 101,553
$ 225,000 57,527 76,702 95,878 115,053 115,053 115,053
$ 250,000 64,277 85,702 107,128 128,553 128,553 128,553
$ 300,000 77,777 103,702 129,628 155,553 155,553 155,553
$ 400,000 104,777 139,702 174,628 209,553 209,553 209,553
$ 450,000 118,277 157,702 197,128 236,553 236,553 236,553
$ 500,000 131,777 175,702 219,628 263,553 263,553 263,553
$ 550,000 145,277 193,702 242,128 290,553 290,553 290,553
$ 600,000 158,777 211,702 264,628 317,553 317,553 317,553
$ 650,000 172,277 229,702 287,128 344,553 344,553 344,553
Covered compensation under the Centura Pension Plan and under the Excess
Benefit portion of the SERP is gross salary and wages reportable on Form W-2,
including salary reduction contributions to Centura's 401(k) and Flexible
Benefits Plans, incentive pay, overtime and bonuses, but excluding non-cash
items, fringe benefits, moving expenses, deferred compensation payments, and
taxable benefits paid under other plans, such as cash awards to pay taxes on
restricted stock distributions. Deferred compensation is also included in
covered compensation under the Excess Benefit portion of the SERP. The annual
covered compensation used in computing benefits under the Centura Pension Plan
and under the Excess Benefit portion of the SERP for the Named Executive
Officers ("Covered Compensation") is substantially equivalent to the annual
Salary, Bonus, Securities Underlying Options and LTIP Payouts disclosed in the
Summary Compensation Table.
Estimated benefit amounts shown in the table above are not subject to any
deduction for Social Security benefits or other offset amounts, and are based
on a straight life annuity.
As of December 31, 1998, the Named Executive Officers have completed the
following years of credited service under the Centura Pension Plan:
Cecil W. Sewell, Jr. ........ 12
William H. Wilkerson ........ 12
H. Kel Landis, III .......... 11
Frank L. Pattillo ........... 24
Steven J. Goldstein (1) ..... 2
Centura also provides supplemental pension benefits (the "Supplemental
Benefits") to certain executive employees, including the Named Executive
Officers, under the SERP. The Supplemental Benefits are generally payable upon
retirement, death or disability. The Compensation Committee determines the
eligible participants and designs individualized Supplemental Benefit packages
for each participant. Supplemental Benefit retirement dates and payout periods
are set on a case-by-case basis.
I-15
The Supplemental Benefit for the five Named Executive Officers set forth
below is subject to changes in their compensation, but is not dependent on
years of service. The Supplemental Benefit formula for each of these
individuals provides for a monthly retirement payment equal to 70% of his final
monthly Covered Compensation, less amounts payable under the Centura Pension
Plan, the Excess Benefit portion of the SERP, and Social Security payments. The
Supplemental Benefit retirement age is 58, and payments are made for 20 years
for Messrs. Sewell, Wilkerson and Pattillo. The Supplemental Benefit retirement
age is 65 and payments are made for 15 years for Messrs. Landis and Goldstein.
The annual Supplemental Benefit payable for each of these five Named Executive
Officers is set forth below for the specified compensation classifications.
Annual Payment Annual Payment
Named Executive Officer (1998 Comp.)(3) (Maximum Comp.)(4)
- ----------------------------- ----------------- -------------------
Cecil W. Sewell, Jr. ...... $291,630 $352,024
William H. Wilkerson ...... $162,417 $352,029
Frank L. Pattillo ......... $124,742 $299,170
H. Kel Landis III ......... $ 47,984 $116,968
Steven J. Goldstein ....... $109,516 $262,269
- ---------
(1) Although the Social Security offset in the Supplemental Benefit does not
take effect until the Named Executive Officer reaches the age of 62, the
table reflects the full amount of the anticipated Social Security offset.
Prior to age 62, the Supplemental Benefit will include an additional
annual payment of approximately $14,400, $14,508, and $14,088,
respectively, for Messrs. Sewell, Wilkerson, and Pattillo. This additional
payment is not expected to vary with changes in Covered Compensation.
(2) In the event Messrs. Sewell, Wilkerson, and Pattillo do not retire at age
58, their annual Supplemental Benefits would be $31,346, $38,662, and
$40,800, respectively, paid over 15 years commencing upon retirement at
age 65.
(3) This column shows the annual Supplemental Benefit assuming the
participant's final monthly Covered Compensation is equal to his 1998
Covered Compensation as shown in the Summary Compensation Table.
(4) This column shows the annual Supplemental Benefit assuming the
participant's final monthly Covered Compensation is equal to 120% of the
Covered Compensation of the highest paid individual listed in the Summary
Compensation Table.
EXECUTIVE EMPLOYMENT AGREEMENTS
From time to time, Centura enters into employment agreements with certain
of its directors, executive officers, and key employees. None of the Named
Executive Officers currently has such an agreement. In connection with the
acquisition of CLG, Inc. by Centura in November, 1996, Dean E. Painter, Jr., a
director of Centura, entered into an Executive Employment Agreement with CLG
for a term of five years at a base salary of $360,000 and providing for
additional compensation and benefits to Mr. Painter equivalent to those enjoyed
by comparably situated officers of Centura. In connection with the acquisition
of Betts & Company in November, 1997, Thomas A. Betts, Jr., a Centura director,
entered into an Executive Employment Agreement with Centura Insurance Services,
Inc. for a term of five years at a base salary of $240,000, with additional
incentive compensation provided for based on the performance of Mr. Betts and
CIS, and providing for additional benefits to Mr. Betts equivalent to those
enjoyed by comparably situated officers of Centura.
OPTION REPRICING
No action was taken in 1998 to lower the exercise price of an option held
by the Named Executive Officers.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of Centura during 1998 was composed of Messrs.
Redding (Chairman), Barnhardt, Beasley, and Bowers. None of the members of the
Compensation Committee were officers or employees of Centura or its
subsidiaries during 1998 or in prior years.
None of the executive officers of Centura served as a member of the board
of directors or as a member of the compensation committee (or other board
committee performing equivalent functions) of another entity during 1998, which
entity had an executive officer serving on the Board of Directors or as a
member of the Compensation Committee of Centura. Consequently, there are no
interlocking relationships between Centura and other entities that might affect
the determination of the compensation of executive officers of Centura.
I-16
COMPARATIVE COMPANY PERFORMANCE
The following line graph compares the monthly cumulative total shareholder
return of Centura Common Stock for the five-year period beginning December 31,
1993, and ending December 31, 1998, with the monthly cumulative total return of
each of the Standard & Poors Small Cap 600 Index, the Standard & Poors 500
Index, and the SNL NYSE Bank Index.
[GRAPHIC OMITTED]
- ---------
** Figures provided by SNL Securities.
(1) Assumes $100 invested at the close of trading on December 31, 1993 in
Centura Banks, Inc. Common Stock, Standard & Poors Small Cap 600, Standard
& Poors 500, and SNL NYSE Bank Index.
(2) Cumulative total return assumes reinvestment of dividends.
(3) Closing prices of Centura Common Stock reported on the NYSE Composite Tape
on December 31, 1994, 1995, 1996, 1997 and 1998 were $24.375, $35.125,
$44.625, $69.000 and $74.375 respectively.
I-17
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
From time to time, Centura Bank extends credit to executive officers and
directors of Centura, members of their immediate families, and companies with
which they are associated, in the ordinary course of business. During 1998 and
through January 31, 1999, the highest aggregate amount of such extensions of
credit was approximately $23.0 million (approximately 4% of Centura's equity
capital). At December 31, 1998, executive officers and directors, and their
immediate families or related entities, as a group, were indebted to Centura
Bank in the approximate aggregate amount of $22.9 million (approximately 4% of
Centura's equity capital). All extensions of credit to executive officers and
directors were made in the ordinary course of business and on the same terms,
including interest rates and collateral, as those prevailing at the same time
for comparable transactions with unaffiliated parties. These loans do not
involve more than the normal risk of collectibility or present other
unfavorable features. Centura Bank has had, and expects to have in the future,
similar banking transactions with directors, executive officers, principal
stockholders, and their associates.
In November 1997, Centura acquired Betts & Company, an insurance agency,
of which Thomas A. Betts, Jr., a Centura director, was a partner. The
transaction was on an arms-length basis and Mr. Betts took no part in the
deliberations of the Board of Directors regarding the transaction.
In November 1996, Centura acquired CLG, Inc., a technology leasing company
headquartered in Raleigh, North Carolina ("CLG"). Following its acquisition by
Centura, CLG entered into a lease with Painter Properties, which is 100% owned
by Mr. Painter, for CLG's main administrative office building in Raleigh, North
Carolina, providing for total aggregate rental payments over the term of the
lease of approximately $756,000.
Centura Bank has entered into a lease with Cameron-Edenton Company for a
drive-in bank facility in Edenton, North Carolina, which provides for total
aggregate rental payments over the term of the lease of approximately $314,426.
Charles M. (Terry) Reeves, III, a director of Centura, is a 50% partner in
Cameron-Edenton Company.
Centura Bank has entered into a lease with Wren Land Company for a
drive-up banking facility and administrative offices in Wilson, North Carolina,
which provides for total aggregate rental payments over the term of the lease
of approximately $526,134. George T. Stronach III, a director of Centura, owns
one-third of Wren Land Company.
Charles T. Lane, a director of Centura, is a partner in the law firm of
Poyner & Spruill, L.L.P., which firm performed legal services for Centura and
Centura Bank during 1998. During 1998, fees paid to Poyner & Spruill, L.L.P. by
Centura for legal services were, in the aggregate, $1,351,610, which exceeded
five percent of Poyner & Spruill, L.L.P.'s gross revenues.
O. Tracy Parks, III, a director of Centura, is a partner in the law firm
Parks, Pate & Scarborough, L. L. P., which firm performed legal services for
Centura Bank during 1998. During 1998, fees paid to Parks, Pate & Scarborough,
L.L.P. by Centura Bank for legal services did not exceed five percent of the
firm's gross revenues.
SELECTION OF AUDITORS
KPMG LLP, Certified Public Accountants ("KPMG"), served as independent
public accountants for the purpose of auditing Centura's consolidated financial
statements for the year 1998. A representative of KPMG is expected to be
present at the Annual Meeting to answer questions concerning the financial
statements presented and will be permitted to make a statement at the meeting.
SHAREHOLDER PROPOSALS
It is anticipated that Centura will hold its 2000 annual meeting of
shareholders in April 2000. Shareholders wishing to submit proposals for
inclusion in the Centura proxy statement for the 2000 annual meeting must
submit such proposals to the Secretary of Centura by November 17, 1999 in order
to be considered for inclusion in the proxy materials for such meeting. The
Board of Directors of Centura will review any shareholder proposal that is
received by this date and will determine whether any such proposal should be
included in the proxy solicitation materials for the 2000 annual meeting.
Proposals so presented may be excluded from the proxy solicitation materials if
they fail to meet certain criteria established under the Exchange Act.
Shareholders are urged to submit any such proposal to Centura by certified
mail, return receipt requested.
I-18
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors of Centura
knows of no matters that will be presented for consideration at the Annual
Meeting other than as described in this proxy statement. However, if any other
matters should properly come before the Annual Meeting or any adjournment or
postponement thereof and be voted upon, the enclosed proxy will be deemed to
confer discretionary authority upon the individuals named as proxies therein to
vote the shares represented by such proxy as to any such matters.
/s/ Cecil W. Sewell, Jr.
Cecil W. Sewell, Jr.
Chairman of the Board and
Chief Executive Officer
By order of the Board of Directors
March 16, 1999
I-19
(THIS PAGE INTENTIONALLY LEFT BLANK)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CENTURA BANKS, INC.
PROXY/VOTING INSTRUCTION CARD
The signee hereby appoints Charles T. Lane and O. Tracy Parks III, as the
proxies of the signee, with full power of substitution to each of them, to vote
the Common Stock, which the signee is entitled to vote at the Annual Meeting of
Shareholders of Centura Banks, Inc. and any and all adjournments thereof, to be
held at the Edgecombe Community College, 225 Tarboro Street, Rocky Mount, NC on
April 21, 1999, at 10:00 A.M.
COMMON STOCK
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
FOLD AND DETACH HERE
CENTURA BANKS, INC.-- ANNUAL MEETING, APRIL 21, 1999
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF TWO WAYS:
1. Call TOLL FREE 1-888-215-6726 on a Touch Tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this call.
OR
2. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope.
PLEASE VOTE
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES.
- --------------------------------------------------------------------------------
WITH- FOR ALL
FOR HOLD EXCEPT
1. The election of seven Class III [ ] [ ] [ ]
Directors for terms of three
years as follows:
(01) H. TATE BOWERS, (02) BERNARD W. FRANKLIN,
(03) SUSAN E. GRAVELY, (04) JOHN H. HIGH,
(05) ROBERT L. HUBBARD, (06) WILLIAM H. REDDING, JR. AND
(07) CHARLES M. (TERRY) REEVES III
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
Please mark your
votes as indicated [X]
in this example
To act upon such other matters as may properly come before said
meeting and any adjournments thereof.
COMMON STOCK
Please be sure to sign and date Date
this Proxy in the box below.
- ----------------------------------------------------------
Shareholder sign above Co-holder (if any) sign above
The Proxies are directed to vote as specified, and in their discretion on
all other matters which may come before the meeting or any adjournments
thereof. If no direction is given, this proxy will be voted "FOR" the Election
of Directors.
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS CARD. When signing as an
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
***IF YOU WISH TO VOTE BY TELEPHONE, PLEASE READ THE INSTRUCTIONS BELOW***
VOTE BY TELEPHONE
QUICK * * * EASY * * * IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
PLEASE HAVE THIS CARD HANDY WHEN YOU CALL. YOU'LL NEED IT IN FRONT OF YOU IN
ORDER TO COMPLETE THE VOTING PROCESS.
You will be asked to enter the CONTROL NUMBER (look below at right).
OPTION A: To vote as the Board of Directors recommends on THE proposal,
press 1.
Your vote will be confirmed.
OPTION B: If not, press 0. You will hear these instructions:
ITEM 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9. To WITHHOLD FOR AN INDIVIDUAL
NOMINEE, PRESS 0 and listen to the instructions.
IF YOU VOTE BY TELEPHONE, DO NOT RETURN YOUR PROXY.
THANK YOU FOR VOTING
CALL * * * TOLL FREE * * * ON A TOUCH TONE TELEPHONE FOR TELEPONE VOTING:
CONTROL NUMBER
1-888-215-6725 - ANYTIME -------------------
There is NO CHARGE to you for this call. -------------------