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:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material under Rule 14a-12
FNB Corp.
-------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than Regristrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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Item 22(a)(2) of Schedule 14A
[ ] Fee computed on table below per Exchangem Act Rules 14a-6(i)(4) and O-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
O-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
FNB CORP.
101 Sunset Avenue
Asheboro, North Carolina 27203
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 2002
-----------------------
Notice is hereby given that the regular Annual Meeting of Shareholders
of FNB Corp. (the "Corporation") will be held at the AVS Banquet Centre, 2045
North Fayetteville Street, Asheboro, North Carolina, on Tuesday, the 14th day of
May, 2002, at one o'clock p.m., preceded by a buffet luncheon beginning at 12:15
p.m., for the following purposes:
1. To elect three Class I Directors to serve for three-year terms
expiring at the Annual Meeting in 2005.
2. To consider approval of an amendment to the Articles of
Incorporation to modify the supermajority shareholder vote
requirement for business combinations.
3. To consider and act upon any other business as may come before the
meeting or any adjournment thereof.
All shareholders are invited to attend the meeting. Only those
shareholders of record at the close of business on March 28, 2002, shall be
entitled to notice of the meeting and to vote at the meeting.
Information relating to the activities and operations of FNB Corp.
during the fiscal year ended December 31, 2001, is contained in the
Corporation's Annual Report, which is enclosed.
By Order of the Board of Directors
Jerry A. Little
Treasurer and Secretary
April 12, 2002
Your Board of Directors urges you to mark, date, sign and return the enclosed
proxy as promptly as possible whether or not you plan to attend the meeting in
person. The proxy may be revoked at any time by notifying the Secretary of FNB
Corp. in writing prior to the voting of the proxy.
FNB CORP.
101 Sunset Avenue
Asheboro, North Carolina 27203
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
The following information is furnished in connection with the solicitation
of proxies by the Board of Directors of FNB Corp. (the "Corporation" or "FNB")
for use at the Annual Meeting of Shareholders to be held on May 14, 2002. The
principal executive offices of the Corporation are located at its wholly owned
subsidiary, First National Bank and Trust Company (the "Bank"), 101 Sunset
Avenue, Asheboro, North Carolina 27203 (Telephone: 336-626-8300). This proxy
statement and the enclosed form of proxy were first sent to shareholders on or
about April 12, 2002.
A proxy may be revoked by the person giving it by delivering a written
notice to the Corporation prior to the meeting or by personally requesting that
it be returned. The shares represented by all properly executed proxies received
by the Corporation in time to be taken to the meeting will be voted; and, if a
choice is specified on the proxy, the shares represented thereby will be voted
in accordance with such specification. If a specification is not made, the proxy
will be voted for the proposals set forth in the Notice of Annual Meeting of
Shareholders.
Solicitation of proxies may be made in person or by mail or telephone by
directors, officers and regular employees of the Corporation or the Bank without
additional compensation therefor. The Corporation may also request banking
institutions, brokerage firms, custodians, nominees and fiduciaries to forward
solicitation material to the beneficial owners of FNB Common Stock held of
record by such person, and the Corporation will reimburse such forwarding
expenses. The Corporation will pay the costs of solicitation of proxies.
VOTING SECURITIES OUTSTANDING AND PRINCIPAL SHAREHOLDERS
Only holders of record of FNB Common Stock at the close of business on
March 28, 2002 (the "Record Date"), are entitled to a notice of and to vote on
matters to come before the Annual Meeting or any adjournment thereof. On the
Record Date, there were 4,750,447 shares of FNB Common Stock issued and
outstanding.
Each share is entitled to one vote on all matters. The presence, in person
or by proxy, of the holders of a majority of the outstanding shares of FNB
Common Stock entitled to vote is necessary to constitute a quorum.
The Corporation is not aware of any holders of more than 5% of the
outstanding shares of FNB Common Stock as of March 28, 2002.
1
EXECUTIVE OFFICERS
The following table sets forth the current executive officers of the
Corporation and also shows their positions with the Bank:
Name Age Position in Corporation Position in Bank
---- --- ----------------------- ----------------
Michael C. Miller 51 Chairman and President Chairman and President
R. Larry Campbell 57 Vice President Senior Vice President
Jerry A. Little 58 Treasurer and Secretary Senior Vice President
and Secretary
The above officers have held executive positions with the Corporation and
the Bank for at least the past five years, except for Mr. Campbell who was the
President and Chief Executive Offficer of Carolina Fincorp, Inc. and Richmond
Savings Bank, Inc., SSB from 1990 to 2000. Officers are elected annually by the
Board of Directors.
ELECTION OF DIRECTORS
The bylaws of the Corporation provide that the number of directors shall
consist of not less than nine nor more than twenty-five, with the exact number
of directors within such maximum and minimum limits to be fixed and determined
from time to time by resolution adopted by a majority of the full Board of
Directors or by resolution of the shareholders at any annual or special meeting
thereof. The Board of Directors has set the total number of directors at 11, all
of whom either will be elected at the 2002 Annual Meeting or were previously
elected and will remain in office after that meeting.
The Board of Directors is divided into three classes: Class I, Class II and
Class III. In accordance with this classification, the members of Class I of the
Board of Directors are to be elected at this Annual Meeting. It is intended that
the persons named in the accompanying form of proxy will vote for the three
nominees listed below for directors of the Corporation in Class I, unless
authority so to vote is withheld. Each nominee is at present a member of the
Board of Directors. Class I directors will serve for three-year terms expiring
at the 2005 Annual Meeting or until their successors shall be elected and shall
qualify. Directors are elected by a plurality of the votes cast. Abstentions and
broker nonvotes will not affect the election results if a quorum is present.
The following information is furnished with respect to the nominees for
election as directors of the Corporation in Class I, and for the directors in
Classes II and III whose terms expire at the Annual Meetings occurring in 2003
and 2004, respectively. Each nominee for Class I director and each director
presently serving in Classes II and III also serves as a director of the Bank.
Nominees for Class I Directors to Serve for Three-Year Terms Expiring at the
Annual Meeting in 2005
Principal Occupation Director
Name Age During the Past Five Years Since
---- --- --------------------------- -----
Darrell L. Frye 56 Vice President of Finance, Harriss & Covington 1999
Hosiery (Manufacturer of men's and ladies'
athletic socks)
J. M. Ramsay III 54 President, Elastic Therapy, Inc.(Manufacturer 1989
of medical and specialty hosiery)
Charles W. Stout, M.D. 69 Retired; Family Physician (in active practice 1989
until 1996)
2
Class II Directors with Continuing Terms Expiring at the Annual Meeting in 2003
Principal Occupation Director
Name Age During the Past Five Years Since
---- --- --------------------------- -----
W. L. Hancock 66 President and Treasurer, Hancock Farms, Inc. 1973
(Purebred cattle)
Cooper M. McLaurin 58 Vice President, McLaurin Industries (Real estate 2001
holding company)
R. Reynolds Neely, Jr. 48 Planning Director, City of Asheboro Planning 1980
Department
Richard K. Pugh 67 Retired; Chairman (until retirement in 1999), 1988
Pugh Oil Company, Inc. (Convenience stores and
petroleum products distribution)
Class III Directors with Continuing Terms Expiring at the Annual Meeting in 2004
Principal Occupation Director
Name Age During the Past Five Years Since
---- --- --------------------------- ------
James M. Campbell, Jr. 63 President and Treasurer, Sew Special, Inc. 1984
(Manufacturer of private label apparel)
R. Larry Campbell 57 Vice President of FNB Corp. (effective 2002) and 2000
Senior Vice President of First National Bank and Trust
Company (effective 2000); formerly President and
Chief Executive Officer, Carolina Fincorp, Inc. and
Richmond Savings Bank, Inc., SSB (1990 - 2000)
Thomas A. Jordan 62 President, Michael Thomas Furniture Company 1984
(Manufacturer of upholstered furniture)
Michael C. Miller 51 Chairman and President of FNB Corp. and 1992
First National Bank and Trust Company (Chairman
effective 1999)
In the event that any nominee should not be available to serve for any
reason (which is not anticipated), it is intended that the persons acting under
the proxy will vote for the election, in his stead, of such other persons as the
Board of Directors of the Corporation may recommend.
Committees of the Board
The Board of Directors holds regular monthly meetings to conduct the normal
business of the Corporation and meets on other occasions when required for
special circumstances. In addition, certain board members serve on standing
committees. Among these committees are the Audit and Compliance, Compensation
and Nominating Committees, whose members and principal functions are as follows:
Audit and Compliance Committee. The Audit and Compliance Committee reviews
significant audit and accounting principles, policies and practices and meets
with the audit manager relative to internal audit functions and with the
independent auditors to review the performance of the audit manager and internal
controls and accounting procedures. The committee also reviews significant
regulatory compliance matters and meets with the compliance officer relative to
the compliance management function. Additionally, the committee reviews
regulatory reports filed with the Federal Reserve Board and Comptroller of the
Currency. Members of this committee are Directors Neely, Frye, Hancock and
Stout. The Audit and Compliance Committee met five times during the 2001 fiscal
year.
3
Compensation Committee. The Compensation Committee deals in broad terms with
personnel matters and reviews the compensation of the senior officers of the
Corporation and the Bank. Members of this committee are Directors J. Campbell,
Neely and Pugh. The Compensation Committee met three times during the 2001
fiscal year.
Nominating Committee. The Board of Directors, as a group, serves as the
Nominating Committee and in that capacity recommends nominees for election to
the Board. Qualified candidates recommended by shareholders will be considered
by the Board. In order for a candidate recommended by a shareholder to be
considered as a nominee at the next annual meeting, the name of the candidate,
together with a written description of the candidate's qualifications, must be
received by the Secretary of FNB Corp., 101 Sunset Avenue, Asheboro, North
Carolina 27203, no later than December 13, 2002.
During the fiscal year ended December 31, 2001, the Board of Directors held
a total of 13 meetings. Each incumbent Director attended 75% or more of the
total number of meetings of the Board and of the committees of the Board on
which he or she served, except for Cooper M. McLaurin who attended 73% of such
meetings.
EXECUTIVE COMPENSATION
Except as otherwise noted, the following table shows for the fiscal years
ended December 31, 2001, 2000 and 1999, the cash and certain other compensation
paid to or received or deferred by persons who were at December 31, 2001 the
chief executive officer of the Corporation and the other executive officers of
the Corporation whose total salary and bonus in 2001 exceeded $100,000.
Summary Compensation Table
Long Term
Annual Compensation Competition
------------------- -----------
Securities
Underlying
Name and Principal Position Stock Options All other
on December 31, 2001 Year Salary Bonus (#) Compensation
- --------------------------- ---- ------ ----- ------------ ------------
Michael C. Miller, Chairman and 2001 $216,875 $ 52,229 - $6,930 (2)
President of the Corporation 2000 192,500 47,888 25,000 6,930
and the Bank 1999 192,500 34,192 7,500 6,680
R. Larry Campbell, Senior Vice 2001 $102,917 $ 16,366 - $3,610 (3)
President of the Bank 2000 (1) 72,500 6,700 3,000 1,778
Jerry A. Little, Senior Vice President 2001 $ 92,000 $ 19,125 - $5,442 (4)
and Secretary of the Bank, Treasurer 2000 87,305 22,215 10,000 5,391
and Secretary of the Corporation 1999 84,788 11,726 3,000 4,999
_________
(1) Mr. Campbell became an employee of the Bank in April 2000.
(2) Amount shown consists of $1,680 paid by the Bank pursuant to a Split Dollar
Insurance Program for executives and $5,250 contributed by the Corporation
to a 401(k) plan.
(3) Amount shown consists of a contribution by the Corporation to a 401(k)
plan.
(4) Amount shown consists of $2,073 paid by the Bank pursuant to a Split Dollar
Insurance Program for executives and $3,369 contributed by the Corporation
to a 401(k) plan.
4
Stock Options
The Corporation did not grant any stock options in the 2001 fiscal year.
The following table shows the number of shares covered by exercisable and
unexercisable options held by the executive officers named in the Summary
Compensation Table as of December 31, 2001. No options were exercised by these
executive officers in 2001.
Option Values at December 31, 2001
Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
December 31, 2001 (#) December 31, 2001 (1)
----------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Michael C. Miller 48,000 24,500 $175,550 $73,325
R. Larry Campbell 25,090 2,400 133,324 8,232
Jerry A. Little 16,200 9,800 64,680 29,330
___________
(1) The closing price of the Corporation's Common Stock on December 31, 2001,
the last trading day of 2001, was $15.18.
Pension Plan Table
The following table shows the estimated annual retirement benefits payable
at the normal retirement age of 65 to participants in the Corporation's
qualified and nonqualified defined benefit plans with salaries in the
classifications indicated.
Pension Plan Table
Approximate Annual Benefit Upon Retirement
For Years of Service Indicated
------------------------------------------
Assumed Average
Compensation for
Final Ten Years 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
- --------------- -------- -------- -------- -------- -------- --------
$100,000 45,046 50,046 50,046 50,046 50,046 53,776
125,000 58,796 65,046 65,046 65,046 65,046 69,464
150,000 72,546 80,046 80,046 80,046 80,046 85,151
175,000 86,296 95,046 95,046 95,046 95,046 100,839
200,000 100,046 110,046 110,046 110,046 110,046 116,526
225,000 113,796 125,046 125,046 125,046 125,046 132,214
250,000 127,546 140,046 140,046 140,046 140,046 147,901
300,000 155,046 170,046 170,046 170,046 170,046 179,276
350,000 182,546 200,046 200,046 200,046 200,046 210,651
The Corporation's defined benefit plans include a noncontributory, qualified
Pension Plan and a noncontributory, nonqualified supplemental executive
retirement plan ("SERP"). The Pension Plan covers substantially all full-time
employees who qualify as to age and length of service. Benefits under the
Pension Plan are based on the employee's compensation, which is comprised of
total annual salary and bonus, total years of service, age at retirement and the
employee's covered compensation under the Social Security Law. As of January 1,
2002, the individuals named in the Summary Compensation Table had the following
credited years of service under the Pension Plan: Mr. Miller, 16 years; Mr.
Campbell, 2 years and Mr. Little, 17 years.
5
The SERP applies to certain executive employees, including the individuals
named in the Summary Compensation Table other than Mr. Campbell. Annual benefits
payable under the SERP are based on factors similar to those for the Pension
Plan and are limited to 60% of Average Compensation, offset by amounts payable
under the Pension Plan and by 50% of Social Security benefits. Average
Compensation for purposes of both the Pension Plan and the SERP means the
average annual compensation during the final ten years of employment.
The benefit amounts listed in the above Pension Plan Table reflect a
straight life annuity. Due to limitations on benefits payable under the SERP,
the annual benefits in the table for 40 years of service result from application
of the Pension Plan. Annual retirement benefits over $160,000 exceed the current
maximum benefits allowable for qualified plans under the Internal Revenue Code.
In connection with the acquisition by the Corporation of Carolina Fincorp,
Inc. in 2000, the Bank assumed the obligations of Richmond Savings Bank, Inc.,
SSB under its Nonqualified Supplemental Retirement Plan with Mr. R. Larry
Campbell. Under that plan, Mr. Campbell is entitled to a retirement benefit of
$30,000 per year payable for 10 years commencing at age 65. The plan also
provides for a $300,000 death benefit payable to Mr. Campbell's beneficiaries if
his employment is terminated by his death prior to age 65.
Director Compensation
Directors who are not also employees of the Corporation or the Bank are paid
$500 for each Board meeting they attend and receive an additional $250 for each
committee meeting attended. In addition, each nonemployee director is paid a
monthly retainer of $500. Directors may elect to defer receipt of their fees and
monthly retainers until their retirement from the Board. Any deferred fees and
retainers become a general obligation of the Corporation to be credited with
interest at the Bank's deposit rate applied to individual retirement accounts
with a two-year term and priced on a monthly variable-rate basis, subject to a
minimum rate of 5.5% per annum.
Employment Agreements
The Bank has entered into employment agreements with Michael C. Miller and
R. Larry Campbell to assure their continuing services to the Bank.
Mr. Miller's employment under his employment agreement may be terminated by
either Mr. Miller or the Bank upon 60 days' prior written notice to the other.
The employment agreement provides that Mr. Miller's salary and benefits will be
as mutually agreed upon by Mr. Miller and the Board of Directors. The employment
agreement also provides that if following a change in control of the Bank or the
Corporation Mr. Miller terminates his employment either voluntarily within 90
days of the change of control or because his authority or responsibilities are
substantially reduced or his salary or benefits are reduced to a level below
that in effect immediately prior to the change of control or because he is
advised to change his residence or principal place of business from Asheboro,
North Carolina, then Mr. Miller will be entitled to receive in three equal
annual installments commencing on the date of termination an aggregate amount
equal to 2.99 times his average total cash compensation for the five fiscal
years immediately preceding the change of control. This amount may be reduced to
the extent necessary to avoid the disallowance of a deduction to the Bank or the
existence of an "excess parachute payment" under the Internal Revenue Code. Mr.
Miller may forfeit this payment if he solicits or encourages a change of control
without the prior approval of the Board of Directors of the Bank or the
Corporation. The agreement also contains provisions that prohibit Mr. Miller
from competing with the Bank during and for a period of time following his
employment with the Bank.
The Bank entered into an employment agreement with Mr. Campbell in
connection with the acquisition in 2000 of Carolina Fincorp, Inc. The agreement
has an annually renewing three-year term, unless either the Bank or Mr. Campbell
notifies the other of its intent not to renew, but the term is not to continue
automatically for more than nine years. The employment agreement provides that
Mr. Campbell will receive an annual base salary initially set at $100,000 with
increases as determined in accordance with the Bank's policies and practices for
employee compensation. The employment agreement also provides that it may be
terminated by the Bank with cause or as a result of Mr. Campbell's death or
disability. Mr. Campbell may terminate the agreement upon 60
6
days' notice to the Bank. In the event the Bank terminates Mr. Campbell's
employment other than by reason of death, disability or "cause," Mr. Campbell
would continue to receive his then annual base salary for the otherwise then
remaining term of the employment agreement. The Bank would also continue to
provide Mr. Campbell with the benefits to which he is entitled under the
agreement, or their economic equivalent, for the remaining term. If Mr.
Campbell's employment is terminated by reason of continued disability, he would
continue to receive his then annual base salary for the otherwise then remaining
term of the agreement, less any disability payments to him from an disability
plan of the Bank or FNB. The agreement contains confidentiality provisions as
well as provisions prohibiting Mr. Campbell from competing with the Bank during
and for a period of time following his employment with the Bank.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for setting the compensation for
the members of senior management of the Corporation and the Bank. The Committee
determines the compensation level of the President, which is reviewed and
ratified by the full Board of Directors, and acts upon the recommendations of
the President as to the compensation of the other senior management employees.
Three nonemployee directors currently serve as members of the Committee: James
M. Campbell, Jr., Chairman, R. Reynolds Neely, Jr. and Richard K. Pugh.
Compensation Philosophy
The Corporation's compensation policies are designed to attract and retain
competent management. The Board's goal is to provide competitive base salaries
to the Corporation's and the Bank's management employees and to give them, as
well as all other employees of the Corporation and the Bank, performance
incentives to motivate superior performance on behalf of the Corporation and its
shareholders. The Corporation has generally used two types of incentive
compensation: annual cash bonuses based on the overall performance of the Bank
and long-term compensation in the form of stock options. The Committee believes
that linking long-term compensation to the value of the Corporation's Common
Stock is especially effective because it aligns the interests of management with
those of the Corporation's shareholders.
Executive Officer Compensation
Annual Compensation. The Committee's recommendations for base salary for the
President and other management employees are based on information available
through industry sources regarding the compensation of executives of other
institutions similar in size and in other respects to the Bank. The Committee
considers annual cash bonuses as an integral part of the Corporation's financial
incentive package to achieve the Corporation's goals. Bonuses are paid to all
employees of the Bank based on the Bank's operating results for the year in a
number of specific areas, with each employee receiving the same percentage of
his or her base salary as every other employee. The Committee generally adopts
the goals for the year at the beginning of the year. Goals are generally
established for the growth in loans and deposits, profit margins, noninterest
income, loan quality and productivity. Senior management employees generally
receive an additional bonus based on similar criteria in the discretion of the
Board, based on the Committee's recommendations.
Long-Term Compensation. The Corporation's long-term incentive compensation
awards are designed to encourage the retention of key executives and to align
their interests with the interests of shareholders. Long-term compensation for
the President and other management employees consists principally of stock
options. The Corporation currently has a Stock Compensation Plan (the "Plan"),
which provides for the grant of incentive and nonqualified options, stock
bonuses and restricted stock. The Corporation believes that stock options
granted under the Plan are performance-based and, therefore, deductible by the
Corporation under Section 162(m) of the Internal Revenue Code. The Plan provides
for other types of compensation, such as stock bonuses and restricted stock,
which will be performance-based only if performance goals are established by the
Committee in compliance with Section 162(m); no substantial stock bonuses of
restricted stock have ever been granted by the Committee. The Committee
administers the Plan and determines, in its discretion, what stock grants will
be made. Stock options have been granted to the President and to other
management employees on an annual basis, except in 2001, since 1994. For further
information regarding the options granted to the President, see "Executive
Compensation - Stock Options" above. The Committee believes that all grants to
the President under the Plan are performance-based for purposes of Section
162(m).
7
CEO Compensation. In setting Mr. Miller's 2001 base salary as President and
Chief Executive Officer of FNB, the Compensation Committee considered the Bank's
and the Corporation's achievement of various performance goals and reviewed the
compensation paid to chief executive officers of comparable financial
institutions of similar asset size. Return on assets and return on equity were
considered, as well as such factors as loan quality and productivity, growth in
loans and deposits, and profitability. The Committee also reviewed national,
regional, statewide and local peer group salary data to determine a competitive
and reasonable base salary. Mr. Miller's base salary and total bonuses in 2001
are shown in the Summary Compensation Table above. The Committee and the Board
of Directors considered this base salary and these bonuses appropriate in view
of their overall assessment of the performance of the President, the Corporation
and the Bank.
Submitted by the Compensation Committee of the Board of Directors:
James M. Campbell, Jr., Chairman
R. Reynolds Neely, Jr.
Richard K. Pugh
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee has ever been an officer
or employee of the Corporation or any of its subsidiaries or performs services
for the Corporation or its subsidiaries other than as a director.
8
PERFORMANCE GRAPH
The following graph and table compare the cumulative total shareholder
return of FNB Common Stock for the five-year period ended December 31, 2001 with
the SNL Southeast Bank Index and the Standard and Poor's 500 Stock Index,
assuming an investment of $100 at the beginning of the period and the
reinvestment of dividends.
[GRAPHIC]
As of December 31,
-------------------------------------------------------
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
FNB Corp. $100.00 $136.39 $197.74 $114.04 $ 89.86 $117.32
SNL Southeast Bank Index 100.00 151.59 161.38 127.00 127.52 158.86
S&P 500 Index 100.00 133.37 171.44 207.52 188.62 166.22
INDEBTEDNESS OF OFFICERS AND DIRECTORS
Certain of the directors and officers of the Corporation and the Bank and
companies with which they are affiliated were customers of and borrowers from
the Bank in the ordinary course of business in 2001. Similar banking
transactions are expected to take place in the future. In the opinion of
management, all outstanding loans and commitments included in such transactions
were made substantially on the same terms, including rate and collateral, as
those prevailing at the time in comparable transactions with other customers and
did not involve more than normal risk of collectibility or contain other
unfavorable features.
9
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 28, 2002, certain information
with respect to the beneficial ownership of FNB Common Stock by directors, by
the executive officers named in the Summary Compensation Table and by directors
and executive officers as a group.
Amount and Nature of
Beneficial Ownership Percent
Name and Address March 28, 2002 (1) (2) of Class
---------------- ----------------------- --------
James M. Campbell, Jr., Director 58,193 1.22
Randleman, NC
R. Larry Campbell, Director 57,091 1.20
Rockingham, NC
Darrell L. Frye, Director 2,800 *
Archdale, NC
W. L. Hancock, Director 115,439 2.43
Franklinville, NC
Thomas A. Jordan, Director 34,661 *
Liberty, NC
Cooper M. McLaurin, Director 14,581 *
Rockingham, NC
Michael C. Miller, Chairman and President 62,124 (3) 1.29
Asheboro, NC
R. Reynolds Neely, Jr., Director 160,440 (4) 3.37
Asheboro, NC
Richard K. Pugh, Director 11,600 *
Asheboro, NC
J. M. Ramsay III, Director 32,630 *
Asheboro, NC
Charles W. Stout, M.D., Director 28,140 *
Asheboro, NC
Jerry A. Little, Treasurer and Secretary 16,979 *
Asheboro, NC
Directors and executive officers 594,678 (3)(4) 12.14
as a group (12 persons)
- ----------
* Less than one percent.
(1) Includes shares held by directors' and executive officers' immediate
families, including spouse and/or children residing in same household. Does
not include 4,620 shares owned by the Ferree Educational and Welfare Fund,
of which Mr. Miller is a trustee and treasurer.
10
(2) Includes shares subject to stock options exercisable as of March 28, 2002 or
within 60 days thereafter for Mr. J. Campbell (8,600 shares), Mr. R.
Campbell (25,090 shares), Mr. Frye (1,600 shares), Mr. Hancock (8,000
shares), Mr. Jordan (8,600 shares), Ms. McLaurin (4,701 shares, subject to
options granted to her husband, Joe M. McLaurin, a former director of the
Corporation), Mr. Miller (48,000 shares), Mr. Neely (8,600 shares), Mr. Pugh
(8,600 shares), Mr. Ramsay (8,600 shares), Dr. Stout (3,200 shares), Mr.
Little (16,200 shares) and all directors and executive officers as a group
(149,791 shares).
(3) Includes 1,725 shares held of record by the estate of Mr. Miller's mother
and over which Mr. Miller has voting and dispository control as executor of
the estate.
(4) Includes 82,292 shares held of record by Mr. Neely's mother and over which
Mr. Neely and his sister have joint voting and dispository control pursuant
to a revocable power of attorney.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Corporation's directors,
its executive officers, and any persons holding more than 10 percent of the
Corporation's stock are required to report their ownership of the Corporation's
stock and any changes in that ownership to the Securities and Exchange
Commission. Specific due dates for these reports have been established and the
Corporation is required to report in this proxy statement any failure to file by
these dates during 2001. All of these filing requirements were satisfied by its
directors, executive officers and 10 percent holders. In making these
statements, the Corporation has relied on the written representations of its
directors, executive officers and 10 percent holders and copies of the reports
that they have filed with the Commission.
INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of KPMG LLP independent
auditors for the Corporation for the 2002 fiscal year. A representative of KPMG
LLP is expected to be present at the Annual Meeting of Shareholders. The
representative will have the opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions,
including those relating to the 2001 audit of the Corporation's financial
statements.
Disclosure of Auditor Fees
The following is a description of the fees billed to FNB by KPMG LLP during
or for the year ended December 31, 2001:
Audit Fees: Audit fees billed to the Corporation by KPMG LLP in connection
with KPMG's audit of the Corporation's annual financial statements for the year
ended December 31, 2001 and KPMG's review of the interim financial statements
included in the Corporation's quarterly reports on Form 10-Q for the year ended
December 31, 2001 totaled $65,000.
Financial Information Systems Design and Implementation Fees: The
Corporation did not engage KPMG LLP to provide advice to the Corporation
regarding financial information systems design and implementation during fiscal
year 2001.
All Other Fees: Fees billed to the Corporation by KPMG LLP during the
Corporation's 2001 fiscal year for all other services totaled $88,080. This
amount included audit-related fees of $56,600, consisting principally of audits
of employee benefit plans and implementation of FDICIA reporting, and non-audit
fees of $31,480, consisting of tax compliance and tax consulting fees.
11
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Corporation's Board of Directors is comprised of
four directors who are not officers or employees of the Corporation. All current
members of the Committee are independent for purposes of the National
Association of Securities Dealers' listing standards. In accordance with its
written charter, which was approved in its current form by the Board of
Directors on June 22, 2000, the Audit Committee assists the Board in fulfilling
its oversight responsibilities by reviewing the financial information that will
be provided to the shareholders of the Corporation and others, the systems of
internal controls established by management and the Board of Directors, and the
audit process.
In performing its oversight function, the Audit Committee reviewed and
discussed the audited consolidated financial statements of the Corporation as of
and for the year ended December 31, 2001 with management and KPMG LLP, the
Corporation's independent accountants. The Audit Committee also discussed with
the Corporation's independent auditors all matters required by generally
accepted auditing standards, including those described in Statement on Auditing
Standards No. 61, as amended, "Communication with Audit Committees" and
discussed and reviewed the results of the independent auditors' examination of
the financial statements.
The Audit Committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Corporation
that might bear on the auditors' independence consistent with Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees." The Audit Committee discussed with the auditors any relationships
that may have an impact on their objectivity and independence and satisfied
itself as to the auditors' independence. The Audit Committee also determined
that the provision of the other non-audit services described under "Independent
Auditors - Disclosure of Audit Fees" by KPMG LLP to the Corporation is
compatible with maintaining KPMG's independence.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the Corporation's audited financial statements be included in the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2001,
for filing with the Securities and Exchange Commission.
Audit Committee
R. Reynolds Neely, Jr., Chairman
Darrell L. Frye
W. L. Hancock
Charles W. Stout, M.D.
12
PROPOSAL - APPROVAL OF AMENDMENT TO
ARTICLES OF INCORPORATION TO MODIFY
SUPERMAJORITY SHAREHOLDER VOTE
REQUIREMENT FOR BUSINESS COMBINATIONS
The Board of Directors proposes that the shareholders approve an amendment
to the Corporation's Articles of Incorporation, as amended, to modify the
requirement that the shareholders of the Corporation approve by a supermajority
vote any merger or consolidation of the Corporation with another entity, the
sale, lease or exchange of substantially all of the Corporation's assets or the
dissolution of the Corporation. The amendment would replace Article IX of the
Corporation's Articles of Incorporation with a new Article IX, a copy of which
is set forth in Appendix A to this proxy statement. You are urged to read the
full text of the proposed new Article IX carefully.
The proposed amendment has the effect of making the 75% shareholder vote
requirement applicable for business transactions involving the merger or
consolidation of the Corporation with another entity, the sale, lease or
exchange of substantially all of the Corporation's assets or the dissolution of
the Corporation only if the transaction has not been approved by the
Corporation's Board of Directors. Where the transaction does not involve a
related party, meaning a holder of 15% or more of the outstanding FNB Common
Stock or that holder's affiliate, the transaction may be approved by
three-fourths of the members of the Board of Directors. If a related party is
involved, the supermajority shareholder vote will not be required if the
transaction has been approved by three-fourths of the "disinterested" members of
the Corporation's Board of Directors. "Disinterested" directors are directors
who are neither affiliated with nor a nominee of the related party, but only if
they were members of the Board of Directors of the Corporation prior to the time
the related party became such or were recommended by a majority of the
disinterested directors then in office.
If the requisite Board approval for the transaction is obtained, the North
Carolina Business Corporation Act would govern, generally requiring the
affirmative vote of the holders of a majority of the outstanding shares of FNB
Common Stock then entitled to vote to approve such transactions. If the proposed
new Article IX is approved, the affirmative vote of the holders of at least 75%
of the outstanding FNB Common Stock would be required to amend its provisions.
Like the existing Article IX, the proposed amendment could make it more
difficult for a third party to acquire control of the Corporation. The proposed
amendment, however, makes it easier for the Corporation to acquire other
entities than does the present Article IX. A critical part of the Corporation's
strategic plan to enhance shareholder value and to promote growth is to acquire
other financial institutions. Fulfilling this plan is made more difficult by the
75% supermajority shareholder vote requirement that must be complied with even
if the Corporation is the acquiror and the Corporation's directors approve the
proposed acquisition. Although the Corporation may make acquisitions without
satisfying the high vote requirement through how it structures the transaction,
such as by using a specially created merger subsidiary or effecting a share
exchange, the structure employed to avoid the 75% vote requirement may add
unnecessary complexity and expense to the transaction.
The proposed amendment does not make it more difficult for an unfriendly
suitor to take over the Corporation than does existing Article IX. A proposed
transaction that is approved by of the Corporation's Board of Directors in the
manner described above would not have to satisfy any supermajority shareholder
vote requirement under the amendment. If that approval is not given, the
acquiror would need to obtain under the amendment the same affirmative vote of
75% of the outstanding FNB Common Stock to approve and complete the proposed
acquisition as is presently required under the Corporation's Articles of
Incorporation.
The amendment is not being proposed in response to any takeover proposal.
The Corporation is not aware of any existing or proposed takeover proposal for
the Corporation and the proposed amendment is not being submitted to the
shareholders in anticipation of a takeover proposal. Rather, the proposed
amendment is being submitted to the shareholders to continue anti-takeover
protection similar to that afforded by existing Article IX but to couple that
protection with flexibility that would permit the Corporation to acquire other
financial institutions.
13
Vote Required and Board Recommendation
The affirmative vote of holders of 75% of the shares of FNB Common Stock
entitled to vote at the meeting is required to approve the proposed amendment.
If the shareholders do not approve the amendment, the Corporation's Articles of
Incorporation, which require the affirmative vote of 75% of the Corporation's
shares to approve various business transactions in all instances, will continue
in effect. The Board of Directors recommends a vote "FOR" the proposal.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next Annual
Meeting of Shareholders must be received by the Secretary of FNB Corp., 101
Sunset Avenue, Asheboro, North Carolina 27203, no later than December 13, 2002
for inclusion in the Corporation's proxy statement and form of proxy relating to
such meeting. If a shareholder notifies the Corporation any later than February
26, 2003 of an intent to present a proposal at the next Annual Meeting of
Shareholders, the Corporation will have the right to exercise its discretionary
voting authority with respect to such proposal without including information
regarding such proposal in its proxy materials related to such meeting.
OTHER MATTERS
There is no business other than as set forth, so far as now known, to be
presented for action by the shareholders at the meeting. It is intended that the
proxies will be exercised by the persons named therein upon matters that may
properly come before the meeting or any adjournment thereof, in accordance with
the recommendations of management.
By Order of the Board of Directors:
Michael C. Miller
Chairman and President
Date: April 12, 2002
14
Appendix A
FNB CORP.
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION
ARTICLE IX
The vote of shareholders of the corporation required to approve any
Business Combination (as defined in paragraph (c)(2) of this Article) shall be
as set forth in this Article IX.
(a) Vote Required for Certain Business Combinations. In addition to any
-----------------------------------------------
vote required by law or these Articles of Incorporation, and except as otherwise
expressly provided in paragraph (b) of this Article IX:
(A) Any merger or consolidation of the corporation with, or
any share exchange providing for the acquisition of any class of
capital stock of the corporation entitled to vote generally in the
election of directors by, any person; or
(B) Any sale, lease, exchange, transfer or other disposition
(in one transaction or a series of transactions) to or with any person,
whether as part of a dissolution or otherwise, of substantially all of
the assets of the corporation or any subsidiary of the corporation; or
(C) The adoption of any plan or proposal for the dissolution
of the corporation proposed by or on behalf of any person;
shall require the affirmative vote of the holders of at least three-fourths
(75%) of the outstanding shares of capital stock of the corporation entitled to
vote generally in the election of directors, considered for this purpose as one
class or voting group ("Voting Stock"). Such affirmative vote shall be required
notwithstanding that no vote may be required, or that some lesser percentage may
be permitted, by law or the Articles of Incorporation or Bylaws of the
corporation, or permitted in any agreement with any national securities exchange
or otherwise.
(b) When Higher Vote Is Not Required. The provisions of
--------------------------------
paragraph (a) of this Article IX shall not be applicable to any Business
Combination that shall have been approved by three-fourths (75%) of the
Disinterested Directors of the corporation.
(c) Definitions. For the purposes of this Article IX:
-----------
(1) A "person" shall mean any individual, firm, corporation or
other entity.
(2) "Business Combination" shall mean any transaction that is
referred to in one or more of the clauses (A) through (C) of paragraph (a) of
this Article.
(3) "Related Party" shall mean any person (other than the
corporation or any subsidiary of the corporation) who or which:
(A) is the beneficial owner, directly or indirectly, of
fifteen percent (15%) or more of the then outstanding shares of Voting
Stock; or
(B) is an Affiliate or Associate of the corporation and at
any time within the three-year period immediately prior to the date in
question was the beneficial owner, directly or indirectly, of fifteen
percent (15%) or more of the then outstanding shares of Voting Stock;
or
(C) is an assignee or has otherwise succeeded to the
beneficial ownership of any shares of Voting Stock that were at any
time within the three-year period immediately prior to the date in
question beneficially owned by any Related Party, if such assignment or
succession shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the meaning of
the Securities Act of 1933, as amended.
A-1
(4) A person shall be a "beneficial owner" of any Voting Stock:
(A) that such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(B) that such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants, options or otherwise, or
(ii) the right to vote, or to direct the vote of any other person,
pursuant to any agreement, arrangement or understanding; or
(C) that are beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
(5) For the purpose of determining whether a person is a Related Party
pursuant to paragraph (c)(3) of this Article IX, the number of shares of Voting
Stock deemed to be outstanding shall include shares deemed owned through
application of paragraph (c)(4) of this Article, but shall not include any other
shares of Voting Stock that may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights, warrants,
options or otherwise.
(6) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended.
(7) A "subsidiary of the corporation" means any corporation of which
a majority of any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended) is owned, directly or indirectly, by the corporation or by a subsidiary
of the corporation or by the corporation and one or more subsidiaries of the
corporation; provided, however, that for the purposes of the definition of
Related Party set forth in paragraph (c)(3) of this Article IX, the term
"subsidiary of the corporation" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or indirectly, by
the corporation.
(8) "Disinterested Director" with respect to any Business
Combination involving a Related Party means (i) any member of the Board of
Directors of the corporation who is unaffiliated with, and not a nominee of, any
Related Party and who was a member of the Board prior to the time that the
Related Party became a Related Party, and (ii) any successor of a Disinterested
Director (or any other member of the Board who became a director after the time
any Related Party became a Related Party) who is unaffiliated with, and not a
nominee of, any Related Party and who was recommended by a majority of
Disinterested Directors then on the Board of Directors. With respect to any
Business Combination not involving a Related Party, "Disinterested Director"
means any member of the Board of Directors of the corporation.
(d) Powers of the Disinterested Directors. Three-fourths (75%) of
-------------------------------------
the Disinterested Directors of the corporation shall have the power and duty to
determine, on the basis of information known to them after reasonable inquiry,
all facts necessary to determine compliance with this Article IX, including,
without limitation, (i) whether a person is a Related Party, (ii) the number of
shares of Voting Stock beneficially owned by any person, (iii) whether a person
is an Affiliate or Associate of another person, and (iv) whether the requirement
of paragraph (b) of this Article IX has been met with respect to any Business
Combination. The good faith determination of three-fourths (75%) of the
Disinterested Directors on such matters shall be conclusive and binding for all
purposes of this Article IX.
(e) No Effect on Fiduciary Obligations of Related Party.
---------------------------------------------------
Nothing contained in this Article IX is to be construed to relieve any Related
Party from any fiduciary obligation imposed by law.
A-2
FNB CORP.
101 Sunset Avenue
Asheboro, North Carolina 27203
Proxy for Annual Meeting of Shareholders - May 14, 2002
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints W. L. Hancock and R. Reynolds Neely, Jr., or
either of them, proxies with full power of substitution to vote all shares of
FNB Corp. standing in the name of the undersigned at the above Annual Meeting of
Shareholders, and all adjournments thereof:
1. ELECTION OF CLASS I DIRECTORS TO SERVE FOR THREE-YEAR TERMS EXPIRING
AT THE ANNUAL MEETING IN 2005: Darrell L. Frye, J. M. Ramsay III and
Charles W. Stout, M.D.
_____ With authority to vote for all nominees listed above, except as
designated below.
_____ Withhold authority to vote for all nominees listed above.
-----------------------------------------------------------------------
To withhold authority to vote for any individual nominee, write the
nominee's name in the space above.
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE ARTICLES OF INCORPORATION to
modify the supermajority shareholder vote requirement for business
combinations.
_____ FOR _____ AGAINST _____ ABSTAIN
3. With discretionary authority upon such other matters as may come before
the meeting.
The Board of Directors recommends a vote for authorization to vote for the
nominees and the amendment to the Articles of Incorporation. The proxy will be
voted accordingly unless otherwise specified.
Dated: _____________________, 2002 __________________________________
Signature of Shareholder
__________________________________
Signature of Shareholder
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title. If more than
one trustee, all should sign. All joint
owners must sign.