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 ss.240.14a-12
ACNB Corp.
----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the 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:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by the
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:
.......................................................
April 1, 2003
Dear Fellow Shareholders of ACNB Corporation:
On behalf of the Board of Directors, I am pleased to invite you to
attend our Annual Meeting of Shareholders to be held on Tuesday, May 13, 2003,
at 1:00 p.m., Eastern Time, at Adams County National Bank, 675 Old Harrisburg
Road, Gettysburg, Pennsylvania 17325. At the annual meeting, you will have the
opportunity to ask questions and to make comments. Enclosed with the proxy
statement is the notice of meeting, proxy card, ACNB Corporation's 2002 Annual
Review, and ACNB Corporation's 2002 Annual Report on Form 10-K.
The principal business of the meeting is to: fix the number of
directors of the corporation at eleven; fix the number of Class 1 Directors at
four; fix the number of Class 2 Directors at three; fix the number of Class 3
Directors at four; elect three Class 2 Directors for a term of three years; and,
transact any other business that is properly presented at the annual meeting.
The notice of meeting and proxy statement accompanying this letter describe the
specific business to be acted upon in more detail.
I am delighted that you have invested in ACNB Corporation, and I hope
that, whether or not you plan to attend the annual meeting, you will vote as
soon as possible by completing, signing and returning the enclosed proxy card in
the envelope provided. The prompt return of your proxy card will save the
corporation expenses involved in further communications. Your vote is important.
Voting by written proxy will ensure your representation at the annual meeting if
you do not attend in person.
I look forward to seeing you on May 13, 2003, at the corporation's
annual meeting.
Sincerely,
/s/ Thomas A. Ritter
Thomas A. Ritter
President
<page>
ACNB CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
-------------------------------------------------
NOTICE IS HEREBY GIVEN that ACNB Corporation will hold its Annual
Meeting of Shareholders on Tuesday, May 13, 2003, at 1:00 p.m., Eastern Time, at
Adams County National Bank, 675 Old Harrisburg Road, Gettysburg, Pennsylvania
17325, to consider and vote upon the following proposals:
1. To fix the number of directors of the corporation at eleven;
2. To fix the number of Class 1 Directors at four;
3. To fix the number of Class 2 Directors at three;
4. To fix the number of Class 3 Directors at four;
5. To elect three Class 2 Directors, for a term of three years; and,
6. To transact any other business properly presented at the annual
meeting or any adjournment or postponement of the meeting.
Shareholders as of March 18, 2003, are entitled to notice of the
meeting and may vote at the annual meeting, either in person or by proxy.
Management welcomes your attendance at the annual meeting. Whether or
not you expect to attend the annual meeting in person, you are requested to
complete, sign, date and promptly return the enclosed proxy card in the
accompanying postage-paid envelope. The prompt return of your proxy card will
save the corporation expenses involved in further communications. Even if you
return a proxy card, you may vote in person if you give written notice to the
Secretary of the corporation and attend the annual meeting. Returning your proxy
card will ensure that your shares will be voted in accordance with your wishes
and that the presence of a quorum will be assured.
The corporation's Board of Directors is distributing this proxy
statement, proxy card, ACNB Corporation's 2002 Annual Review, and ACNB
Corporation's 2002 Annual Report on Form 10-K on or about April 1, 2003.
By Order of the Board of Directors,
/s/ Thomas A. Ritter
Thomas A. Ritter
President
Gettysburg, Pennsylvania
April 1, 2003
YOUR VOTE IS IMPORTANT.
TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED
PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
<page>
ACNB CORPORATION
16 LINCOLN SQUARE,
GETTYSBURG, PENNSYLVANIA 17325
OTC BB TRADING SYMBOL: ACNB
PROXY STATEMENT
2003 ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 13, 2003
MAILED TO SHAREHOLDERS ON OR ABOUT APRIL 1, 2003
<page>
TABLE OF CONTENTS
PAGE
PROXY STATEMENT
GENERAL INFORMATION...........................................................1
Date, Time and Place of the Annual Meeting...........................1
Description of ACNB Corporation......................................1
VOTING PROCEDURES.............................................................1
Solicitation and Voting of Proxies...................................1
Quorum and Vote Required For Approval................................2
Revocability of Proxy................................................3
Methods of Voting....................................................3
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS.....................................4
Governance...........................................................4
Directors of ACNB Corporation........................................4
Executive Officers of ACNB Corporation...............................4
Committees and Meetings of ACNB Corporation's
Board of Directors..........................................4
Committees and Meetings of Adams County National Bank's
Board of Directors..........................................5
Audit Committee.............................................5
Compensation of the Board of Directors of ACNB
Corporation and Adams County National Bank..................5
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION..........................6
Compensation Committee Report........................................6
Chief Executive Officer Compensation.................................6
Executive Officers Compensation......................................6
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION...................7
EXECUTIVE COMPENSATION........................................................7
Summary Compensation Table...........................................8
Employment Contract with Thomas A. Ritter............................9
Employment Contract with David W. Scott..............................9
Pension Plan........................................................10
401(k) Plan.........................................................11
Group Term Life Insurance Plan......................................11
Senior Management Supplemental Life Insurance Plan..................12
Director Life Insurance Plan........................................12
Director Fee Deferral Plan..........................................12
Executive Retirement Income Agreements..............................12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............................13
ELECTION OF DIRECTORS........................................................13
Qualification and Nomination of Directors...........................13
Information as to Nominees and Directors............................14
<page>
BENEFICIAL OWNERSHIP OF ACNB CORPORATION'S STOCK
OWNED BY PRINCIPAL OWNERS AND MANAGEMENT.....................................16
Principal Shareholders..............................................16
Share Ownership by the Directors, Officers and Nominees.............16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE......................17
STOCK PRICE PERFORMANCE GRAPH................................................18
PROPOSALS....................................................................19
To Fix the Number of Directors of the Corporation at Eleven.........19
To Fix the Number of Class 1 Directors at Four......................19
To Fix the Number of Class 2 Directors at Three.....................19
To Fix the Number of Class 3 Directors at Four......................19
To Elect Three Class 2 Directors for a Term of Three Years..........19
INDEPENDENT AUDITORS.........................................................19
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING................................20
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING........................20
ADDITIONAL INFORMATION.......................................................20
<page>
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
ACNB CORPORATION
MAY 13, 2003
GENERAL INFORMATION
DATE, TIME AND PLACE OF THE ANNUAL MEETING
ACNB Corporation, a Pennsylvania business corporation and registered
financial holding company, furnishes this proxy statement in connection with the
solicitation by the Board of Directors of proxies to be voted at the
corporation's Annual Meeting of Shareholders. The annual meeting will be held at
Adams County National Bank, 675 Old Harrisburg Road, Gettysburg, Pennsylvania
17325, on Tuesday, May 13, 2003, at 1:00 p.m., Eastern Time. Included with this
proxy statement is a copy of the corporation's Annual Report on Form 10-K for
the fiscal year ended December 31, 2002.
The corporation's principal executive office is located at 16 Lincoln
Square, Gettysburg, Pennsylvania 17325. The corporation's telephone number is
(717) 334-3161. All inquiries regarding the annual meeting should be directed to
John W. Krichten, Secretary/Treasurer of ACNB Corporation, at (717) 338-2258.
DESCRIPTION OF ACNB CORPORATION
ACNB Corporation was established in 1983 as a bank holding company
under the laws of Pennsylvania and the Bank Holding Company Act of 1956. ACNB
Corporation's wholly-owned subsidiary is Adams County National Bank. Farmers
National Bank of Newville is a division of Adams County National Bank. The
corporation's primary activity consists of owning and supervising its banking
subsidiary.
We have not authorized anyone to provide you with information about the
corporation; therefore, you should rely only on the information contained in
this document or on documents to which we refer you. Although we believe we have
provided you with all the information helpful to you in your decision to vote,
events may occur at ACNB Corporation subsequent to printing this proxy statement
that might affect your decision or the value of your stock.
VOTING PROCEDURES
SOLICITATION AND VOTING OF PROXIES
The Board of Directors solicits this proxy for use at the corporation's
2003 annual meeting of shareholders. The corporation's directors and officers
and bank employees may solicit proxies in person or by telephone, facsimile,
email or other similar electronic means without additional compensation. Adams
County National Bank will pay the cost of preparing, assembling, printing,
mailing and soliciting proxies and any additional material that the corporation
sends to its shareholders. The corporation will make arrangements with brokerage
firms and other custodians, nominees, and fiduciaries to forward proxy
solicitation materials to the beneficial owners of stock held by these entities.
Adams County National Bank will reimburse these third parties for their
reasonable forwarding expenses.
Only shareholders of record as of the close of business on Tuesday,
March 18, 2003 (the voting record date), may vote at the annual meeting. The
corporation's records show that, as of the voting record date, 5,436,101 shares
of the corporation's common stock were outstanding. On all matters to come
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before the annual meeting, shareholders may cast one vote for each share held.
Cumulative voting rights do not exist with respect to the election of directors.
As of March 18, 2003, the Board of Directors knows of no person who owns of
record or who is the beneficial owner of 5% or more of the corporation's
outstanding common stock.
If your shares are registered directly in your name with ACNB
Corporation's transfer agent, Registrar and Transfer Company, you are
considered, with respect to those shares, the shareholder of record, and these
proxy materials are being sent directly to you by the corporation. As the
shareholder of record, you have the right to grant your voting proxy directly to
the proxy holders or to vote in person at the meeting. The corporation has
enclosed a proxy card for your use.
If your shares are held in a stock brokerage account or by a bank or
other nominee, you are considered the beneficial owner of shares held in street
name, and these proxy materials are being forwarded to you by your broker or
nominee which is considered, with respect to those shares, the shareholder of
record. As the beneficial owner, you have the right to direct your broker how to
vote and you are also invited to attend the meeting. However, because you are
not the shareholder of record, you may not vote your street name shares in
person at the meeting. Your broker or nominee has enclosed a voting instruction
card for you to use in directing the broker or nominee how to vote your shares.
By properly completing a proxy, the shareholder appoints Philip P.
Asper and D. Richard Guise as proxy holders to vote his or her shares as
indicated on the proxy card. Any signed proxy card not specifying to the
contrary will be voted as follows:
FOR fixing the number of Directors of the corporation at eleven;
FOR fixing the number of Class 1 Directors at four;
FOR fixing the number of Class 2 Directors at three;
FOR fixing the number of Class 3 Directors at four; and,
FOR the election of the following nominees as Class 2 Directors for a
term of three years expiring in 2006:
o Wayne E. Lau
o Jennifer L. Weaver
o Harry L. Wheeler
The Board of Directors proposes to mail this proxy statement to the
corporation's shareholders on or about April 1, 2003.
QUORUM AND VOTE REQUIRED FOR APPROVAL
As of the close of business on March 18, 2003, the corporation had
5,436,101 shares of common stock, par value $2.50 per share, issued and
outstanding.
In order to hold the annual meeting, a "quorum" of shareholders must be
present. Under Pennsylvania law, the presence, in person or by proxy, of the
holders of a majority of the shares entitled to vote is necessary to constitute
a quorum for the transaction of business at the meeting. The proxy holders will
count abstentions and broker non-votes as "present" for the purpose of
determining the presence of a quorum. However, the proxy holders will not count
broker non-votes as "present" when determining the presence of a quorum for the
particular matter on which the broker has expressly not voted. If you are a
beneficial owner and do not provide the shareholder of record with voting
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instructions, your shares may constitute broker non-votes. In tabulating the
voting result for any particular proposal, shares that constitute broker
non-votes are not considered entitled to vote on that proposal. Thus, broker
non-votes will not affect the outcome of any of the matters voted upon at the
meeting. Generally, broker non-votes occur when shares held by a broker for a
beneficial owner are not voted with respect to a particular proposal because the
broker has not received voting instructions from the beneficial owner, and the
broker lacks discretionary voting power to vote such shares.
If a quorum is present, approval to fix the number of directors of the
Board of Directors and to fix the number of directors in each class requires the
affirmative "FOR" vote of a majority of all shares present, in person or by
proxy. Abstentions and broker non-votes are not deemed to constitute "votes
cast" and, therefore, do not count either for or against the proposals.
Abstentions and broker non-votes, however, have the practical effect of reducing
the number of affirmative votes required to achieve a majority for the matter by
reducing the total number of shares voted from which the required majority is
calculated.
If a quorum is present, the shareholders will elect the nominees for
director receiving the highest number of "FOR" votes cast by those shareholders
entitled to vote for the election of directors. The proxy holders will not cast
votes for or against any director nominees where the broker withheld authority.
REVOCABILITY OF PROXY
Shareholders of record who sign proxies may revoke them at any time
before they are voted by:
o delivering written notice of the revocation to John W. Krichten,
Secretary/Treasurer of ACNB Corporation, at 16 Lincoln Square,
Gettysburg, Pennsylvania 17325; or,
o delivering a properly executed later-dated proxy to John W.
Krichten, Secretary/Treasurer of ACNB Corporation, at 16 Lincoln
Square, Gettysburg, Pennsylvania 17325; or,
o attending the meeting and voting in person after giving written
notice to the Secretary/Treasurer of ACNB Corporation.
YOU HAVE THE RIGHT TO VOTE AND, IF DESIRED, TO REVOKE YOUR PROXY ANY
TIME BEFORE THE ANNUAL MEETING. SHOULD YOU HAVE ANY QUESTIONS, PLEASE CONTACT
JOHN W. KRICHTEN, SECRETARY/TREASURER, AT (717) 338-2258.
METHODS OF VOTING
Voting by Proxy
1. Mark your selections.
2. Date your proxy card and sign your name exactly as it appears on
your proxy card.
3. Mail the proxy card in the enclosed postage-paid envelope.
Voting in Person
1. Attend the annual meeting and show proof of eligibility to vote
(including proper identification).
2. Obtain a ballot.
3. Mark your selections.
4. Date your ballot and sign your name exactly as it appears in the
corporation's transfer books.
3
<page>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
GOVERNANCE
The Board of Directors oversees all of the corporation's business,
property and affairs. The Chairman and the corporation's officers keep the
members of the Board informed of the corporation's business through discussions
at Board meetings and by providing them reports and other information. During
fiscal year 2002, the corporation's Board of Directors held 12 meetings.
DIRECTORS OF ACNB CORPORATION
The following table sets forth, as of March 18, 2003 (in alphabetical
order), selected information about the corporation's directors.
<table>
<caption>
CLASS OF DIRECTOR AGE AS OF
NAME DIRECTOR SINCE MARCH 18, 2003
- ----- -------- ----- --------------
<s> <c> <c> <c>
Philip P. Asper 3 1988 54
Guy F. Donaldson 3 1982 71
Frank Elsner, III 3 2002 42
D. Richard Guise, Vice Chairman 1 1988 69
Ronald L. Hankey, Chairman 1 1982 63
Edgar S. Heberlig 1 1999 68
Wayne E. Lau 2 1987 68
Thomas A. Ritter 3 2001 51
Marian B. Schultz 1 1992 53
Jennifer L. Weaver 2 1992 56
Harry L. Wheeler 2 1999 62
</table>
EXECUTIVE OFFICERS OF ACNB CORPORATION
The following table sets forth, as of March 18, 2003, selected
information about the corporation's executive officers, each of whom is
appointed by the Board of Directors and each of whom holds office at the Board's
discretion.
POSITION AGE AS OF
NAME AND POSITION HELD SINCE MARCH 18, 2003
- ----------------- ---------- --------------
RONALD L. HANKEY
Chairman of the Board 1982 63
Chief Executive Officer 1982
THOMAS A. RITTER
President 2001 51
Executive Vice President 2000
DAVID W. SCOTT
Executive Vice President 2001 41
JOHN W. KRICHTEN
Secretary 1982 56
Treasurer 1982
LYNDA L. GLASS
Assistant Secretary 1993 42
COMMITTEES AND MEETINGS OF ACNB CORPORATION'S BOARD OF DIRECTORS
During 2002, the corporation's Board of Directors held 12 meetings.
Currently, the corporation does not maintain any standing committees. All
committees are structured at the corporation's bank subsidiary and jointly serve
the bank and the corporation. The corporation's subsidiary bank maintains a
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<page>
standing audit committee and a standing committee that performs the functions of
a compensation committee.
A shareholder who desires to propose an individual for consideration by
the Board of Directors as a nominee for director should submit a recommendation
in writing to the Secretary of the corporation in compliance with the
requirements of Article II, Sections 202 and 203, of the corporation's Bylaws.
Any shareholder who intends to nominate a candidate for election to the Board of
Directors must notify the Secretary of the corporation in writing not less than
14 days prior to the date of any shareholder meeting called for the election of
directors.
COMMITTEES AND MEETINGS OF ADAMS COUNTY NATIONAL BANK'S BOARD OF DIRECTORS
During 2002, Adams County National Bank's Board of Directors held 12
meetings and the Board of Directors of Farmers National Bank of Newville, a
division of Adams County National Bank, held seven meetings. Adams County
National Bank maintains four standing committees: Executive, Audit, Loan and
Trust. Farmers National Bank of Newville does not maintain any committees.
During 2002, each of the directors attended at least 75% of the
combined total number of meetings of the corporation's and of the bank's Boards
of Directors meetings and the committees of which he or she is a member, with
the exception of Director Donaldson.
AUDIT COMMITTEE
The Audit Committee, of which Directors Asper, Lau and Wheeler are
members, held four meetings during fiscal year 2002. The Audit Committee
oversees the accounting and tax functions of the corporation and the bank,
recommends to the Board the engagement of the independent auditors for the year,
reviews with management and the auditors the plan and scope of the audit
engagement, reviews the annual financial statements of the corporation and any
recommended changes or modifications to control procedures and accounting
practices and policies, and monitors with management and the auditors the
corporation's and bank's system of internal controls and its accounting and
reporting practices. The Audit Committee operates pursuant to a written charter
as adopted by the Board of Directors on April 4, 2000.
COMPENSATION OF THE BOARD OF DIRECTORS OF ACNB CORPORATION AND ADAMS COUNTY
NATIONAL BANK
Directors of the corporation are not compensated for their services.
Adams County National Bank does not compensate employee directors for attendance
at Board of Directors meetings or committee meetings. However, in 2002, Adams
County National Bank's non-employee directors were compensated for their
services rendered to the corporation and to Adams County National Bank as
follows:
o $4,000 annual retainer;
o $265 per monthly meeting;
o committee meeting fees paid at the rate of $125 per hour with a
minimum payment of $125; and,
o $250 allowance for a half-day seminar plus expenses, if
applicable, and $400 allowance for a full-day seminar plus
expenses, if applicable.
The non-employee directors of Farmers National Bank of Newville, a
division of Adams County National Bank, were paid in 2002 an annual retainer of
$2,850, plus $265 per meeting for full board meetings and $80 per committee
meeting.
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In the aggregate, Adams County National Bank paid $119,191 to the
members of the Board of Directors for all services rendered in 2002.
BOARD OF DIRECTORS' REPORT ON
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
ACNB Corporation's Board of Directors governs the corporation and its
subsidiary bank. In fulfilling its fiduciary duties, the Board of Directors acts
in the best interests of the corporation's shareholders, customers, and the
communities served by the corporation and the bank. To accomplish the
corporation's strategic goals and objectives, the Board of Directors engages
competent persons who undertake to accomplish these objectives with integrity
and cost-effectiveness. The Board of Directors fulfills part of its strategic
mission through the compensation of these individuals. Officers of the
corporation are not compensated. The bank provides compensation to its officers
and employees.
The corporation seeks to offer competitive compensation opportunities
for all employees based on the individual's contribution and personal
performance. The Executive Committee, comprised of five non-employee directors,
administers the compensation program. The committee seeks to establish a fair
compensation policy to govern executive officers' base salaries and incentive
plans to attract and motivate competent, dedicated and ambitious managers, whose
efforts will enhance the corporation's products and services, the results of
which will be improved profitability, increased dividends to the corporation's
shareholders, and subsequent appreciation in the market value of the
corporation's shares.
The committee annually reviews and recommends to the Board the
compensation of the bank's top executives, including the president and chief
executive officer. As a guideline in determining base salaries, the committee
uses a regional financial industry salary survey which covers financial
institutions in the Pennsylvania, Maryland, Washington, D.C., and Virginia
marketplace. The referenced survey includes more institutions than are contained
in the peer group index in the performance graph.
The Board of Directors does not deem Section 162(m) of the Internal
Revenue Code to be applicable to the corporation at this time. The Board of
Directors intends to monitor the future application of IRC Section 162(m) to the
compensation paid to its executive officers; and, in the event that this section
becomes applicable, the Board of Directors intends to amend the corporation's
and the bank's compensation plans to preserve the deductibility of the
compensation payable under the plans.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Board of Directors determined that the corporation's Chief
Executive Officer's 2002 base salary of $134,727, combined with a $1,366 bonus
and a 401(k) plan payment of $6,733, is appropriate in light of ACNB
Corporation's 2002 performance accomplishments. No direct correlation exists
between the Chief Executive Officer's compensation and ACNB Corporation's 2002
performance. The committee subjectively determines the Chief Executive Officer's
compensation based on a review of all relevant information.
EXECUTIVE OFFICERS COMPENSATION
The committee increased the compensation of the bank's executive
officers by approximately 3.5% in 2002. The committee determined the increases
based on its subjective analysis of the individual's contribution to the
corporation's strategic goals and objectives. In determining whether strategic
goals have been achieved, the committee considers numerous factors, including
the following: the corporation's performance as measured by earnings, revenues,
return on assets, return on equity, market share, total assets, and
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<page>
non-performing loans. Although the committee measured the performance and
increases in compensation in light of these factors, no direct correlation
exists between any specific criterion and the employees' compensation; nor does
the committee, in its analysis, attribute specific weight to any such criteria.
The committee makes a subjective determination after review of all relevant
information, including the above.
In addition to base salary, executive officers of the bank may
participate in the bank's 401(k) plan, pension plan and bonus plan. (See pages
10 and 11 for more information.)
General labor market conditions, the individual's specific
responsibilities and the individual's contributions to the corporation's success
influence total compensation opportunities available to the bank's executive
officers. The committee reviews individuals on a calendar year basis and strives
to offer compensation that is competitive with that offered by employers of
comparable size in our industry. Through these compensation policies, the
corporation strives to meet its strategic goals and objectives to its
constituencies and provide compensation that is fair and meaningful to its
executive officers.
This report is furnished by Adams County National Bank's Executive
Committee that performs the functions of a compensation committee.
D. RICHARD GUISE, CHAIRPERSON
PHILIP P. ASPER
WAYNE E. LAU
MARIAN B. SCHULTZ
JENNIFER L. WEAVER
RONALD L. HANKEY (EX-OFFICIO MEMBER)
THOMAS A. RITTER (EX-OFFICIO MEMBER)
COMPENSATION COMMITTEE INTERLOCKSAND INSIDER PARTICIPATION
Ronald L. Hankey, Chairman and Chief Executive Officer of ACNB
Corporation and Chairman of Adams County National Bank, and Thomas A. Ritter,
President of ACNB Corporation and President and Chief Executive Officer of Adams
County National Bank, are ex-officio members of the Executive Committee that
also performs the functions of a compensation committee. Messrs. Hankey and
Ritter make recommendations to the Executive Committee regarding merit raise
increases for all employees based on a merit appraisal in connection with
recommendations provided by an outside consultant. A merit review of Mr. Hankey
and of Mr. Ritter is conducted by the Executive Committee. Neither Mr. Hankey
nor Mr. Ritter participates in conducting his own review. The merit reviews are
submitted to the entire Board of Directors to be voted upon.
EXECUTIVE COMPENSATION
The table below sets forth information concerning the annual cash and
non-cash compensation paid, awarded or earned for services in all capacities to
the corporation and the bank for the fiscal years ended December 31, 2002, 2001
and 2000 of those persons who were, as of December 31, 2002, (i) Chief Executive
Officer, (ii) President, and (iii) the other most highly compensated executive
officers exceeding $100,000 during 2002.
7
<page>
SUMMARY COMPENSATION TABLE
<table>
<caption>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Securities
Other Restricted Underlying
Annual Stock Options/ LTIP All Other
Name and Principal Salary Bonus Compensation Award(s) SARs Payouts Compensation
Position Year ($) ($) $ ($) (#) ($) ($)
-------- ---- --- --- - --- --- --- ---
<s> <c> <c> <c> <c> <c> <c> <c> <c>
RONALD L. HANKEY 2002 1,366 0 0 0 0 6,733(2)
Chairman of the 2001 166,974(1) 2,107 0 0 0 0 54,164(2)
Board and Chief 2000 210,725 1,985 0 0 0 0 52,860(2)
Executive Officer 198,500
of the corporation
and Chairman of
Adams County
National Bank
THOMAS A. RITTER 2002 175,000 3,500 0 0 0 0 45,750(3)
President of the 2001 165,266 1,652 0 0 0 0 6,677(3)
corporation and 2000 140,000 1,400 0 0 0 0 2,800(3)
President and Chief
Executive Officer
of Adams County
National Bank
DAVID W. SCOTT 2002 116,249 1,006 0 0 0 0 18,631(4)
Executive Vice
President of the
corporation and of
Adams County
National Bank
JOHN W. KRICHTEN 2002 110,645 1,976 0 0 0 0 18,023(5)
Secretary and 2001 105,289 1,052 0 0 0 0 13,167(5)
Treasurer of the 2000 102,023 1,020 0 0 0 0 12,704(5)
corporation and
Senior Vice
President, Cashier
and Chief Financial
Officer of Adams
County National Bank
LYNDA L. GLASS 2002 102,505 2,020 0 0 0 0 7,063(6)
Assistant Secretary 2001 99,118 991 0 0 0 0 5,404(6)
of the corporation
and Senior Vice
President/Banking
Services of Adams
County National Bank
</table>
- --------------------
(1) Figure includes salary and distributions made under Mr. Hankey's Salary
Continuation Plan.
(2) Figure includes amounts contributed by Adams County National Bank to
the 401(k) Plan of $6,733, $6,800 and $5,156 in 2002, 2001 and 2000,
respectively, on behalf of Mr. Hankey. Figure also includes deferred
compensation payments (under Mr. Hankey's Salary Continuation Plan) of
$47,364 and $47,704 in 2001 and 2000, respectively, on behalf of Mr.
Hankey.
(3) Figure includes amounts contributed by Adams County National Bank to
the 401(k) Plan of $7,140, $6,677 and $2,800 in 2002, 2001 and 2000,
respectively, on behalf of Mr. Ritter. Figure also includes deferred
compensation payment (under Mr. Ritter's Salary Continuation Plan) of
$38,610 in 2002, on behalf of Mr. Ritter.
(4) Figure includes amount contributed by Adams County National Bank to the
401(k) Plan of $4,690 in 2002, on behalf of Mr. Scott. Figure also
includes deferred compensation payment (under Mr. Scott's Salary
Continuation Plan) of $13,941 in 2002, on behalf of Mr. Scott.
(5) Figure includes amounts contributed by Adams County National Bank to
the 401(k) Plan of $4,505, $4,294 and $3,767 in 2002, 2001 and 2000,
respectively, on behalf of Mr. Krichten. Figure also includes deferred
compensation payments (under Mr. Krichten's Salary Continuation Plan)
of $13,518, $8,873 and $8,937 in 2002, 2001 and 2000, respectively, on
behalf of Mr. Krichten.
8
<page>
(6) Figure includes amounts contributed by Adams County National Bank to
the 401(k) Plan of $4,292 and $4,002 in 2002 and 2001, respectively, on
behalf of Ms. Glass. Figure also includes deferred compensation
payments (under Ms. Glass' Salary Continuation Plan) of $2,771 and
$1,402 in 2002 and 2001, respectively, on behalf of Ms. Glass.
EMPLOYMENT CONTRACT WITH THOMAS A. RITTER
Effective January 1, 2000, Adams County National Bank, the corporation
and Mr. Thomas A. Ritter entered into an employment agreement for a period of
three years. The agreement renews automatically for additional one-year periods,
unless one party provides the other with written notice of termination. Pursuant
to the agreement, Mr. Ritter was initially employed by the corporation and Adams
County National Bank as an Executive Vice President. The agreement specifies Mr.
Ritter's position and duties, compensation and benefits, and indemnification and
termination provisions. The agreement also contains a non-competition provision,
a confidentiality provision, and a change-in-control provision.
Pursuant to the terms of his employment agreement, Mr. Ritter initially
served as an Executive Vice President of the corporation and the bank and had
other powers and duties that were from time to time prescribed by the Board of
Directors of the corporation and the bank. As compensation for services rendered
to the bank under the agreement, Mr. Ritter, in 2000, was entitled to receive
from the bank an annual salary of $140,000 per year and was subject to future
yearly increases as deemed appropriate by the Board of Directors. The Board of
Directors of the bank, in its discretion, was entitled to pay an incentive
yearly bonus to Mr. Ritter to reward him for his performance. According to the
terms of the agreement, Mr. Ritter was appointed to, and agreed to serve,
without additional compensation, as a director of the Board of Directors of the
bank and the corporation, subject to shareholder approval. Mr. Ritter further
agreed to serve without additional compensation in other positions of the bank
and/or the corporation. Mr. Ritter is also entitled to receive the employee
benefits made available by Adams County National Bank to its employees.
Mr. Ritter's employment agreement provides that, if his employment is
terminated due to his death, disability or by the corporation or Adams County
National Bank for "cause", or the agreement is not renewed by the bank and the
corporation, he is entitled to his full annual salary through the date of
termination at the rate in effect at the time of termination. If Mr. Ritter
terminates his employment for "good reason" (which includes a change in control
of the corporation), he is entitled to his full annual salary from the date of
termination through the last day of the term of the agreement and he may
continue to participate in all employee benefit plans and programs in which he
was previously entitled to participate. In the event Mr. Ritter serves the full
term of his employment agreement, and the bank and the corporation do not renew
his agreement, Mr. Ritter is not entitled to any severance allowance.
To comply with the corporation's and Adams County National Bank's
succession plans, in December 2000, the respective Boards of Directors elected
Mr. Ritter as President of the corporation and President and Chief Executive
Officer of Adams County National Bank, effective January 1, 2001. Further,
effective January 1, 2001, Mr. Ritter was appointed a director of Adams County
National Bank and the corporation. Mr. Hankey remains the Chairman and Chief
Executive Officer of the corporation and the Chairman of Adams County National
Bank.
EMPLOYMENT CONTRACT WITH DAVID W. SCOTT
Effective January 1, 2002, Adams County National Bank, the corporation
and Mr. David W. Scott entered into an employment agreement for a period of
three years. The agreement renews automatically for additional one-year periods,
unless one party provides the other with written notice of termination. Pursuant
to the agreement, Mr. Scott is employed by the corporation and Adams County
National Bank as an Executive Vice President. The agreement specifies Mr.
Scott's position and duties, compensation and benefits, and indemnification and
termination provisions. The agreement also contains a non-competition provision,
a confidentiality provision, and a change-in-control provision.
9
<page>
Pursuant to the terms of his employment agreement, Mr. Scott serves as
an Executive Vice President of the corporation and the bank and has other powers
and duties that are from time to time prescribed by the Board of Directors of
the corporation and the bank. As compensation for services rendered to the bank
under the agreement, Mr. Scott, in 2002, was entitled to receive from the bank
an annual salary of $150,000 per year and is subject to future yearly increases
as deemed appropriate by the Board of Directors. The Board of Directors of the
bank, in its discretion, is entitled to pay an incentive yearly bonus to Mr.
Scott to reward him for his performance. Mr. Scott further agreed to serve
without additional compensation in other positions. Mr. Scott is also entitled
to receive the employee benefits made available by Adams County National Bank to
its employees.
Mr. Scott's employment agreement provides that, if his employment is
terminated due to his death, disability or by the corporation or Adams County
National Bank for "cause", or the agreement is not renewed by the bank and the
corporation, he is entitled to his full annual salary through the date of
termination at the rate in effect at the time of termination. If Mr. Scott
terminates his employment for "good reason" (which includes a change in control
of the corporation), he is entitled to his full annual salary from the date of
termination through the last day of the term of the agreement and he may
continue to participate in all employee benefit plans and programs in which he
was previously entitled to participate. In the event Mr. Scott serves the full
term of his employment agreement, and the bank and the corporation does not
renew his agreement, Mr. Scott is not entitled to any severance allowance.
PENSION PLAN
The employees of Adams County National Bank are covered under the
bank's Group Pension Plan for Employees. The plan is a defined benefit pension
plan under the Employee Retirement Income Security Act of 1974. The plan was
restated November 1, 1998, effective January 1, 1999, and subsequently amended
effective November 1, 2000. Adams County National Bank is the plan
administrator.
Amounts are set aside each year to fund the plan on the basis of
actuarial calculations. The amount of contribution to a defined pension plan on
behalf of a specific employee cannot be separately or individually calculated.
The total pension expense in 2002 for Adams County National Bank's plan was
$562,363. The contribution to the plan made by the bank on behalf of all
employees in 2002 was $274,616. This contribution was sufficient to meet the
legal minimum funding requirements.
Each employee of Adams County National Bank who attains the age of 20
years and six months and who completes six months of eligible service, whichever
is later, is eligible to participate in the plan on the following anniversary of
the plan. The plan generally provides for a prospective benefit at the age of 65
years for the employee's remaining lifetime with payments certain for five
years, calculated as follows: 1% of final average compensation below the
applicable Social Security Covered Compensation and 1.3% of such earnings above
the covered compensation, the total being multiplied by years of credited
service up to a maximum of 45 years of credited service. The minimum benefit is
the amount an employee accrued as of October 31, 1998. If an employee has
completed 30 or more years of vested service, he or she is eligible to retire at
age 62 with no reduction applied to his or her benefit.
The following table shows, for different final average compensation and
for different years of vested service, the annual benefits currently payable
upon retirement at age 65 to a participating employee.
10
<page>
<table>
<caption>
Annual Retirement Income (1)
----------------------------
Years of Service
Final ------------------------------------------------------------------
Average
Compensation 15 25 35 45 or more
------------ -- -- -- ----------
<s> <c> <c> <c> <c>
$ 50,000 $ 8,796 $ 14,661 $ 20,525 $ 26,389
75,000 13,671 22,786 32,900 41,014
100,000 18,546 30,911 43,275 55,639
125,000 23,421 39,036 54,650 70,264
150,000 28,296 47,161 66,025 84,889
175,000 33,171 55,286 77,400 99,514
200,000 38,046 63,411 88,775 112,221
</table>
- ----------------------------------
(1) Assumes normal retirement date (age 65) occurs in 2002. Actual benefits
may be slightly higher on account of benefits earned under the plan
since the 1998 restatement. Later retirement dates produce smaller
retirement benefits as Social Security Covered Compensation increases.
Management cannot determine the extent of the benefits that any
participating employee may be entitled to receive under the plan on the date of
termination of employment because the amount of the benefits is dependent upon,
among other things, the participant's future compensation and the number of
years of vested service on the employee's date of retirement. For 2002, the
covered compensation, as reported above in the Summary Compensation Table,
includes annual cash salary only. At December 31, 2002, under the plan, Mr.
Hankey had 45 years of vested service; Mr. Krichten had 22 years of vested
service; Ms. Glass had 18 years of vested service; Mr. Ritter had 3 years of
vested service; and, Mr. Scott had 1 year of vested service.
401(K) PLAN
Adams County National Bank maintains a defined contribution
profit-sharing 401(k) plan. Adams County National Bank is the plan sponsor and
plan administrator. Ronald L. Hankey, Chairman and Chief Executive Officer of
the corporation and Chairman of Adams County National Bank, and John W.
Krichten, Secretary/Treasurer of the corporation and Senior Vice President,
Cashier and Chief Financial Officer of Adams County National Bank, are the plan
trustees. The plan is subject to certain laws and regulations under the Internal
Revenue Code and participants are entitled to certain rights and protection
under the Employee Retirement Income Security Act of 1974.
An employee is eligible to participate in the plan after working for
six months and attaining the age of 20 years and six months. An eligible
employee may elect to contribute a portion of all wages or other direct
remuneration to the plan. Generally, an eligible employee may not contribute
more than 15% of his or her compensation. Adams County National Bank matches a
percentage of the employee's contribution. In 2002, Adams County National Bank's
contribution equaled 100% of the employee's contribution up to a maximum of 4%
of annual wages. Effective January 1, 2000, Adams County National Bank adopted a
"safe harbor" provision for its 401(k) plan, which vests eligible contributions
immediately upon entering the plan for both employer and employee contributions.
GROUP TERM LIFE INSURANCE PLAN
Adams County National Bank maintains a group term life insurance plan.
All full-time bank employees are eligible to participate in the plan. The
insurance benefit for employees is calculated as 1.5 times salary, with a
maximum of $50,000.
11
<page>
SENIOR MANAGEMENT SUPPLEMENTAL LIFE INSURANCE PLAN
In January 2001, Adams County National Bank implemented a supplemental
life insurance plan for certain officers of the bank to provide death benefits
for each officer's designated beneficiaries. Beneficiaries designated by an
officer are entitled to a split dollar share of the death proceeds from the life
insurance policies on each officer which vary depending on the officer's age at
death, employment status with the bank at the time of death, and eligibility to
receive payments. The plan is unsecured and unfunded, and there are no plan
assets. The bank has purchased single premium bank-owned life insurance policies
on the lives of the officers and intends to use income from the BOLI policies to
offset the plan benefit expenses.
DIRECTOR LIFE INSURANCE PLAN
Effective January 1, 2001, the corporation established a director life
insurance plan. All non-employee directors are eligible for the life insurance
benefit, subject to medical underwriting acceptance. The plan currently insures
seven directors. The director life insurance benefit of $100,000 per
participating director will be provided through a single premium bank-owned life
insurance program because BOLI is a more cost-efficient way of providing the
benefits. The eligible participating directors will not be required to pay any
premiums on the life insurance policy, but will have the imputed value of the
insurance coverage included in their taxable incomes. Benefits are payable upon
death, disability, early retirement, or change in control.
DIRECTOR FEE DEFERRAL PLAN
In January 2001, the bank established a director fee deferral plan.
Directors Schultz, Weaver and Wheeler are current participants. Directors may
defer up to 100% of the director's income. Benefits are payable upon termination
of service. The deferred fees earn interest, and the interest and plan expenses
are funded by BOLI. The aggregate deferred fees for 2002 were $22,252 for the
above-named directors.
EXECUTIVE RETIREMENT INCOME AGREEMENTS
Adams County National Bank entered into retirement income agreements
with certain executive officers of Adams County National Bank to provide
supplemental retirement income benefits to these officers when they reach their
normal retirement date. The benefits are payable in 180 equal monthly
installments. Benefits are also payable upon disability, early retirement,
termination of service, or death. Benefit amounts will be determined by the
individual's number of years of service and compensation at retirement age.
Benefits accrue annually, but no vesting occurs until the individual completes
ten years of service with Adams County National Bank. Estimated liability under
the agreements is accrued as earned by the employee. Adams County National Bank
is the owner and beneficiary of life insurance policies on each officer that, at
December 31, 2002, had an aggregate cash value of approximately $3,613,600.
Adams County National Bank purchased these policies to fund the retirement
income agreements entered into with these individuals. Further information with
respect to these agreements is set forth in the Notes to Consolidated Financial
Statements contained in ACNB Corporation's 2002 Annual Report on Form 10-K,
which is enclosed with this proxy statement.
12
<page>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The corporation and its subsidiary bank have not entered into any
material transactions, proposed or consummated, with any director or executive
officer of the corporation or the bank, or any associate of the foregoing
persons. The corporation and the bank have engaged in and intend to continue to
engage in banking and financial transactions in the ordinary course of business
with directors and officers of the corporation and the bank and their associates
on comparable terms with similar interest rates as those prevailing from time to
time for other bank customers.
Total loans outstanding from the bank at December 31, 2002, to the
corporation's and the bank's officers and directors as a group, including
members of their immediate families and companies in which they had an ownership
interest of 10% or more, amounted to $5,218,109, or approximately 7.4%, of the
bank's total equity capital. The bank made these loans in the ordinary course of
business, and on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons. The loans did not involve more than the normal risk of collection
or present other unfavorable features. The aggregate amount of indebtedness as
of the latest practicable date, March 18, 2003, to the above described group was
approximately $4,935,637.
ELECTION OF DIRECTORS
QUALIFICATION AND NOMINATION OF DIRECTORS
The corporation's Articles of Incorporation and Bylaws authorize the
number of directors to be not less than five and not more than 25. They also
provide for three classes of directors with staggered three-year terms of office
that expire at successive annual meetings. Currently, the number of directors is
set at eleven: Class 1 consists of four directors, Class 2 consists of three
directors, and Class 3 consists of four directors. However, pursuant to Article
11 of the corporation's Articles of Incorporation and Article I, Section 105, of
the corporation's Bylaws, at each shareholder meeting for the election of
directors, the shareholders determine by resolution how many directors will be
elected to serve in each class. The Board of Directors believes that it is in
the corporation's best interest to fix the number of directors to be elected at
the 2002 annual meeting at eleven. The proposed eleven member Board of Directors
will consist of four Class 1 Directors, three Class 2 Directors, and four Class
3 Directors. Shareholders will elect three Class 2 Directors to serve for
three-year terms that expire at the corporation's 2006 annual meeting.
Pursuant to Article II, Section 205, of the corporation's Bylaws,
directors who reach the age of 72 prior to the date of the annual meeting may
not stand for election to the Board of Directors. Therefore, Directors Lower and
Sandoe did not stand for re-election to the corporation's Board of Directors in
2002. They were appointed by the Board of Directors as Directors Emeriti of
Adams County National Bank at the 2002 annual meeting.
The Board of Directors nominated the three persons named below to serve
as Class 2 Directors until the 2006 annual meeting of shareholders or until
their earlier death, resignation or removal from office. The nominees for Class
2 Director are presently members of the Board of Directors, and all have
consented to serve another term as a director if re-elected. If any of the
nominees should be unavailable to serve for any reason, a majority of the Board
of Directors then in office may fill the vacancy until the expiration of the
term of the class of directors to which he or she was appointed.
The proxy holders intend to vote all proxies for the election of each
of the nominees named below, unless you indicate that your vote should be
withheld from any or all of them. Each nominee elected as a director will
continue in office until his successor has been duly elected and qualified, or
until his death, resignation or retirement.
13
<page>
The Board of Directors proposes the following nominees for election as
Class 2 Directors at the annual meeting:
o Wayne E. Lau
o Jennifer L. Weaver
o Harry L. Wheeler
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
PROPOSAL TO ELECT THE NOMINEES LISTED ABOVE AS CLASS 2 DIRECTORS.
INFORMATION AS TO NOMINEES AND DIRECTORS
Set forth below, as of March 18, 2003, is the principal occupation and
certain other information regarding the nominees and other directors whose terms
of office will continue after the annual meeting. You will find information
about their share ownership on pages 16 and 17.
CLASS 1 DIRECTORS (to serve until 2004)
D. RICHARD GUISE Mr. Guise, age 69, has been a member of both
the corporation's and Adams County National
Bank's Boards of Directors since 1988. Mr.
Guise has served as the Vice Chairman of the
corporation and Adams County National Bank
since 1998. He was the President of Adams
County Motors Corp., an automobile
dealership located in Gettysburg,
Pennsylvania, until September 2001. He is
now retired.
RONALD L. HANKEY Mr. Hankey, age 63, is the Chairman and
Chief Executive Officer of the corporation.
He served as the corporation's and Adams
County National Bank's President until
January 1, 2001. He has been a member of the
corporation's Board of Directors and has
served as the Chairman of the Board since
1982. Mr. Hankey has been a member of Adams
County National Bank's Board of Directors
and has served as the Chairman of the Board
since 1975.
EDGAR S. HEBERLIG Mr. Heberlig, age 68, has been a member of
the corporation's Board of Directors since
March 1, 1999, and of Adams County National
Bank's Board of Directors since October 1,
2000. He served as a director of Farmers
National Bank of Newville from 1970 to
October 1, 2000. Mr. Heberlig is a retired
farm structure salesman and a retired Navy
pilot.
MARIAN B. SCHULTZ Ms. Schultz, age 53, has been a member of
both the corporation's and Adams County
National Bank's Boards of Directors since
1992. She is Dean, Academic Programs and
Services, at Shippensburg University,
located in Shippensburg, Pennsylvania.
CLASS 2 DIRECTORS (to serve until 2003)
AND NOMINEES (to serve until 2006)
WAYNE E. LAU Mr. Lau, age 68, has been a member of both
the corporation's and Adams County National
Bank's Boards of Directors since 1987. Mr.
Lau is a retired sales representative for
Destinations, a travel agency located in
East Berlin, Pennsylvania.
14
<page>
JENNIFER L. WEAVER Ms. Weaver, age 56, has been a member of
both the corporation's and Adams County
National Bank's Boards of Directors since
1992. She is the Dean of the Gettysburg
Campus of Harrisburg Area Community College.
HARRY L. WHEELER Mr. Wheeler, age 62, has been a member of
the corporation's Board of Directors since
March 1, 1999, and of Adams County National
Bank's Board of Directors since October 1,
2000. He served as a director of Farmers
National Bank of Newville from 1987 until
October 1, 2000. Mr. Wheeler is the
proprietor of Wheeler Drywall, located in
Carlisle, Pennsylvania.
CLASS 3 DIRECTORS (to serve until 2005)
PHILIP P. ASPER Mr. Asper, age 54, has been a member of the
corporation's and Adams County National
Bank's Boards of Directors since 1988. He is
a building contractor in Biglerville,
Pennsylvania.
GUY F. DONALDSON Mr. Donaldson, age 71, has been a member of
the corporation's Board of Directors since
1982 and of Adams County National Bank's
Board of Directors since 1981. He is a fruit
grower in Ortanna, Pennsylvania, and in 2002
served as President of the Pennsylvania Farm
Bureau.
FRANK ELSNER, III Mr. Elsner, age 42, has been a member of
both the corporation's and Adams County
National Bank's Boards of Directors since
May 2002. He is the President and Chief
Executive Officer of Elsner Engineering
Works, Inc., an engineering and
manufacturing company located in Hanover,
Pennsylvania.
THOMAS A. RITTER Mr. Ritter, age 51, was a member of both the
corporation's and Adams County National
Bank's Boards of Directors from 1997 until
his retirement from each Board in December
1999. From 1986 until December 1999, Mr.
Ritter was an insurance agent in Gettysburg,
Pennsylvania. Mr. Ritter served as an
Executive Vice President of the corporation
and of Adams County National Bank from
January 1, 2000 until December 31, 2000.
Effective January 1, 2001, he became
President of the corporation and President
and Chief Executive Officer of Adams County
National Bank. Also effective January 1,
2001, Mr. Ritter was appointed to the
corporation's and Adams County National
Bank's Boards of Directors. Mr. Ritter was
elected to the corporation's Board of
Directors at the 2001 annual meeting and was
also elected to Adams County National Bank's
Board of Directors at the corporation's
reorganization meeting in 2001.
15
<page>
BENEFICIAL OWNERSHIP OF ACNB CORPORATION'S STOCK
OWNED BY PRINCIPAL OWNERS AND MANAGEMENT
PRINCIPAL SHAREHOLDERS
As of March 18, 2003, the Board of Directors knows of no person who
owns of record or who is known to be the beneficial owner of more than 5% of the
corporation's outstanding common stock.
SHARE OWNERSHIP BY THE DIRECTORS, OFFICERS AND NOMINEES
The following table sets forth, as of March 18, 2003, and from
information received from the respective individuals, the amount and percentage
of the common stock beneficially owned by each director, each nominee for
director, and all executive officers, directors and nominees of the corporation
as a group. Unless otherwise noted, shares are held individually and the
percentage of class is less than 1% of the outstanding common stock.
NAME OF INDIVIDUAL OR AMOUNT AND NATURE OF PERCENTAGE OF
IDENTITY OF GROUP BENEFICIAL OWNERSHIP (1) CLASS
- ----------------- -------------------- -----
CLASS 1 DIRECTORS
- -----------------
D. Richard Guise 8,788 (2) --
Ronald L. Hankey 19,150 (3) --
Edgar S. Heberlig 28,867 (4) --
Marian B. Schultz 2,300 (5) --
CLASS 2 DIRECTORS
- -----------------
Wayne E. Lau 4,812 (6) --
Jennifer L. Weaver 600 --
Harry L. Wheeler 9,039 (7) --
CLASS 3 DIRECTORS
- -----------------
Philip P. Asper 5,234 (8) --
Guy F. Donaldson 2,890 --
Frank Elsner, III 804 --
Thomas A. Ritter 5,087 (9) --
All Officers and Directors 98,266 1.81%
as a Group (11
Directors, 5 Officers,
14 persons in total)
- ---------------------
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in
the General Rules and Regulations of the Securities and Exchange
Commission and may include securities owned by or for the individual's
spouse and minor children and any other relative who has the same home,
as well as securities to which the individual has or shares voting or
investment power, or has the right to acquire beneficial ownership
within 60 days after March 18, 2003. Beneficial ownership may be
disclaimed as to certain of the securities.
(2) These shares are held jointly with Mr. Guise's spouse.
(3) Figure includes 6,228 shares held solely by Mr. Hankey and 12,922
shares held jointly with Mr. Hankey's spouse.
(4) Figure includes 26,375 shares held solely by Mr. Heberlig; 2,266 shares
held jointly with Mr. Heberlig's spouse; and, 226 shares held solely by
Mr. Heberlig's spouse.
16
<page>
(5) Figure includes 700 shares held jointly with Mrs. Schultz's spouse and
1,600 shares held solely by Mrs. Schultz's spouse.
(6) These shares are held jointly with Mr. Lau's spouse.
(7) Figure includes 6,707 shares held solely by Mr. Wheeler; 1,654 shares
held jointly with Mr. Wheeler's spouse; and, 678 shares held solely by
Mr. Wheeler's spouse.
(8) These shares are held jointly with Mr. Asper's spouse.
(9) Figure includes 3,029 shares held solely by Mr. Ritter and 2,058 shares
held solely by Mr. Ritter's spouse.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
corporation's officers and directors, and persons who own more than 10% of the
registered class of the corporation's equity securities, file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors, and greater than 10% shareholders are required by SEC
regulation to furnish the corporation with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of Forms 3, 4 and 5 and
amendments thereto received by it, or written representations from certain
reporting persons that no Forms 5 were required for those persons, the
corporation believes that during the period from January 1, 2002, through
December 31, 2002, its officers and directors complied with all applicable
filing requirements.
17
<page>
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended, except to the
extent we specifically incorporate this information by reference, and shall not
otherwise be deemed filed under the Acts.
The graph compares our stock performance from January 1, 1998, through
December 31, 2002, against the performance of the S&P 500 Total Return Index and
the Mid-Atlantic Custom Peer Group for the same period. The graph shows the
cumulative investment return to shareholders, based on the assumption that a
$100 investment was made on December 31, 1997, in each of the corporation's
common stock, the S&P 500 Total Return Index and the Mid-Atlantic Custom Peer
Group, and that all dividends were reinvested in such securities over the past
five fiscal years. Shareholder return shown on the graph below is not
necessarily indicative of future performance.
[CHART OMITTED: PLOT POINTS AS FOLLOWS:]
<table>
<caption>
PERIOD ENDING
----------- ----------- ----------- ----------- ------------ -----------
INDEX 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
- ----------------------------------------- ----------- ----------- ----------- ----------- ------------ -----------
<s> <c> <c> <c> <c> <c> <c>
ACNB Corporation 100.00 105.36 84.27 79.62 94.15 113.91
S&P 500 100.00 128.55 155.60 141.42 124.63 96.95
Mid-Atlantic Custom Peer Group* 100.00 110.71 96.37 85.44 104.28 132.79
</table>
*MID-ATLANTIC CUSTOM PEER GROUP CONSISTS OF MID-ATLANTIC COMMERCIAL BANKS WITH
ASSETS LESS THAN $1B.
18
<page>
PROPOSALS
1. TO FIX THE NUMBER OF DIRECTORS OF THE CORPORATION AT ELEVEN.
2. TO FIX THE NUMBER OF CLASS 1 DIRECTORS AT FOUR.
3. TO FIX THE NUMBER OF CLASS 2 DIRECTORS AT THREE.
4. TO FIX THE NUMBER OF CLASS 3 DIRECTORS AT FOUR.
5. TO ELECT THREE CLASS 2 DIRECTORS FOR A TERM OF THREE YEARS.
Nominees for Class 2 Director are:
o Wayne E. Lau
o Jennifer L. Weaver
o Harry L. Wheeler
Each has consented to serve a three-year term. (See pages 14 and 15 for
more information on these nominees.)
If any nominee is unable to stand for election, the Board may designate
a substitute. The proxy holders will vote in favor of a substitute nominee. The
Board of Directors has no reason to believe the three nominees for Class 2
Director will be unable to serve if elected.
Cumulative voting rights do not exist with respect to the election of
directors. The affirmative vote of the majority of shares present (in person or
by proxy and entitled to vote at the annual meeting) is needed to elect a
director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE
NOMINEES AS CLASS 2 DIRECTORS.
In the election of directors, you may vote "FOR" all of the nominees or
your vote may be "WITHHELD" with respect to one or more of the nominees. For the
other proposals, you may vote "FOR", "AGAINST" or "ABSTAIN". If you "ABSTAIN",
it has the same effect as a vote "AGAINST". If you sign your proxy card or
broker voting instruction card with no further instructions, your shares will be
voted in accordance with the recommendations of the Board ("FOR" all of the
Board's nominees and "FOR" all other proposals described in this proxy
statement).
INDEPENDENT AUDITORS
Stambaugh o Ness, P.C., Certified Public Accountants, served as the
corporation's independent auditors for its 2002 fiscal year. The corporation has
been advised by Stambaugh o Ness, P.C. that none of its members have any
financial interest in the corporation. In addition to performing customary audit
services, Stambaugh o Ness, P.C. assisted the corporation and the bank with
preparation of their federal and state tax returns, and provided assistance in
connection with regulatory matters, charging the bank for such services at its
customary hourly billing rates. These non-audit services were approved by the
corporation's and the bank's Boards of Directors after due consideration of the
effect of the performance thereof on the independence of the auditors and after
the conclusion by the corporation's and the bank's Boards of Directors that
there was no effect on the independence of the auditors. The Board of Directors
has engaged Stambaugh o Ness, P.C. as the corporation's independent auditors for
the fiscal year ending December 31, 2003.
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Aggregate fees billed to the corporation and the bank by Stambaugh o
Ness, P.C., the independent auditors, for services rendered during the year
ended December 31, 2002, were as follows:
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Audit Fees $109,320
-------------------------------------------------- -----------
Financial Information Systems
Design and Implementation Fees $0
-------------------------------------------------- -----------
All Other Fees(1) $5,270
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TOTAL $114,590
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(1) All other fees consisted principally of review of the
pension plan.
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
In order for a shareholder proposal to be considered for inclusion in
ACNB Corporation's proxy statement for next year's annual meeting, the written
proposal must be received by the corporation no later than December 3, 2003. Any
proposal must comply with Securities and Exchange Commission regulations
regarding the inclusion of shareholder proposals in company-sponsored proxy
materials. If a shareholder proposal is submitted to the corporation after
December 3, 2003, it is considered untimely; and, although the proposal may be
considered at the annual meeting, the corporation is not obligated to include it
in the 2004 proxy statement. Similarly, in compliance with the corporation's
Bylaws, shareholders wishing to nominate a candidate for election to the Board
of Directors, must notify the Secretary in writing no later than 14 days in
advance of the meeting. Shareholders must deliver any proposals or nominations
in writing to the Secretary/Treasurer of ACNB Corporation at its principal
executive office, 16 Lincoln Square, Gettysburg, Pennsylvania 17325.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no matters other than those discussed
in this proxy statement or referred to in the accompanying Notice of Annual
Meeting of Shareholders that may come before the annual meeting. However, if any
other matter should be properly presented for consideration and voting at the
annual meeting or any adjournment or postponement of the meeting, the persons
named as proxy holders will vote the proxies in what they determine to be the
best interest of ACNB Corporation.
ADDITIONAL INFORMATION
In accordance with Securities Exchange Act Rule 14a-3(3)(1), in the
future, ACNB Corporation intends to deliver only one annual report and proxy
statement to multiple shareholders sharing an address unless we receive contrary
instructions from one or more of the shareholders. This method of delivery is
known as "householding". Upon written or oral request, the corporation will
promptly deliver a separate copy of the annual report or proxy statement, as
applicable, to a shareholder at a shared address to which a single copy of the
documents was delivered. Further, shareholders can notify the corporation by
writing or calling John W. Krichten, Secretary/Treasurer of ACNB Corporation, at
16 Lincoln Square, P.O. Box 3129, Gettysburg, Pennsylvania 17325 or (717)
338-2258 to inform the corporation that the shareholder wishes to receive a
separate copy of an annual report or proxy statement in the future. In addition,
if you are receiving multiple copies of the corporation's annual report or proxy
statement, you may request that the corporation deliver only a single copy of
annual reports or proxy statements by notifying the Secretary/Treasurer at the
above address or telephone number.
Upon written request of any shareholder, a copy of ACNB Corporation's
Annual Report on Form 10-K for its fiscal year ended December 31, 2002,
including the financial statements and the schedules, required to be filed with
the Securities and Exchange Commission pursuant to Rule 13a-1 under the
Securities Exchange Act of 1934, may be obtained, without charge, from John W.
Krichten, Secretary/Treasurer of ACNB Corporation, 16 Lincoln Square,
Gettysburg, Pennsylvania 17325.
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ACNB CORPORATION
FORM OF PROXY
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Philip P. Asper and D.
Richard Guise and each or either of them, proxies of the undersigned, with full
power of substitution to vote all of the shares of ACNB Corporation that the
undersigned shareholder may be entitled to vote at the Annual Meeting of
Shareholders to be held at 675 Old Harrisburg Road, Gettysburg, Pennsylvania
17325, on Tuesday, May 13, 2003, 1:00 p.m., Eastern Time, and at any adjournment
or postponement of the meeting, as indicated upon the matters referred to in the
proxy statement, and upon any matters which may properly come before the annual
meeting:
1. TO FIX THE NUMBER OF DIRECTORS OF ACNB CORPORATION AT ELEVEN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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2. TO FIX THE NUMBER OF CLASS 1 DIRECTORS AT FOUR.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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3. TO FIX THE NUMBER OF CLASS 2 DIRECTORS AT THREE.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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4. TO FIX THE NUMBER OF CLASS 3 DIRECTORS AT FOUR.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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5. TO ELECT THREE CLASS 2 DIRECTORS TO SERVE FOR A THREE YEAR TERM.
WAYNE E. LAU HARRY L. WHEELER JENNIFER L. WEAVER
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all nominees
as marked to the listed above
contrary below)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THESE NOMINEES.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
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6. IN THEIR DISCRETION, THE PROXY HOLDERS ARE AUTHORIZED TO VOTE UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY
ADJOURNMENT OR POSTPONEMENT OF THE MEETING.
THIS PROXY, WHEN PROPERLY SIGNED AND DATED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED SHAREHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, 3, AND 4 AND FOR ALL NOMINEES LISTED ABOVE.
Dated: ______________________, 2003 ______________________________
Signature
------------------------------
Number of Shares Held of Record Signature
on March 18, 2003
- ---------------------------
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED PROMPTLY TO
ACNB CORPORATION IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE. IF MORE THAN ONE
TRUSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER SHOULD SIGN.