-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MDcSnDSICUr99YgkAsv2F8gkznyhYz6WlnH1fYa0v3ClxG40nAtJBHsQTZex8Vjv TZEixZX1gEiuNhHGeqo2tw== 0000928385-99-000912.txt : 19990325 0000928385-99-000912.hdr.sgml : 19990325 ACCESSION NUMBER: 0000928385-99-000912 CONFORMED SUBMISSION TYPE: DEF 14C PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990427 FILED AS OF DATE: 19990324 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST MARYLAND BANCORP CENTRAL INDEX KEY: 0000036510 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 520981378 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14C SEC ACT: SEC FILE NUMBER: 001-07273 FILM NUMBER: 99571562 BUSINESS ADDRESS: STREET 1: FIRST MARYLAND BLDG STREET 2: 25 S CHARLES ST CITY: BALTIMORE STATE: MD ZIP: 21201 BUSINESS PHONE: 4102444000 DEF 14C 1 DEFINITIVE INFORMATION STATEMENT SCHEDULE 14C INFORMATION INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. ) Check the appropriate box: [_] Preliminary Information Statement [_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14c-5(d)(2)) [X] Definitive Information Statement First Maryland Bancorp - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) Payment of Filing Fee (check the appropriate box): [X] No fee required [_] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g) [_] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11. (1) Title of each class of securities to which transaction applies: ________________________________________________________________________ (2) Aggregate number of securities to which transaction applies: ________________________________________________________________________ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ________________________________________________________________________ (4) Proposed maximum aggregate value of transaction: ________________________________________________________________________ (5) Total fee paid: ________________________________________________________________________ [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount previously paid: ________________________________________________________________________ (2) Form, Schedule or Registration Statement No.: ________________________________________________________________________ (3) Filing Party: ________________________________________________________________________ (4) Date Filed: ________________________________________________________________________ Notes: [LOGO OF FIRST MARYLAND BANCORP APPEARS HERE] Dear Stockholder: You are hereby notified that the annual meeting of stockholders of First Maryland Bancorp (the "Corporation") will be held at the Corporation's headquarters, 25 South Charles Street, 22nd Floor, Baltimore, Maryland, on April 27, 1999, at 10:00 a.m., local time. Holders of record of the Company's common stock and preferred stock as of March 18, 1999 are entitled to vote at the meeting. Allied Irish Banks, p.l.c. owns 100% of the outstanding common stock of the Corporation and controls 99% of the voting power of the Corporation's outstanding capital stock. The matters proposed for consideration at the meeting are the election of 22 directors to the Board of Directors of the Corporation. The accompanying Notice of Meeting and Information Statement discuss these matters in further detail. On behalf of the Board of Directors and all of the employees of First Maryland, I wish to thank you for your continued support. Sincerely yours, Jeremiah E. Casey Chairman of the Board FIRST MARYLAND BANCORP 25 South Charles Street Baltimore, Maryland 21201 NOTICE OF ANNUAL MEETING OF STOCKHOLDERSTO BE HELD ON APRIL 27, 1999 To the Stockholders of First Maryland Bancorp: NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the "Annual Meeting") of First Maryland Bancorp, a Maryland corporation (the "Corporation"), will be held at the Corporation's headquarters, 25 South Charles Street, Baltimore, Maryland, on April 27, 1999, at 10:00 a.m., local time, for the following purposes: 1. To elect 22 directors to serve until the 2000 Annual Meeting of Stockholders and until their successors are elected and qualified; and 2. To act upon any other matter which may properly come before the Annual Meeting or any adjournment thereof. The Board of Directors of the Corporation has fixed the close of business on March 18, 1999 as the record date for determining stockholders of the Corporation entitled to notice of and to vote at the Annual Meeting. Your attention is directed to the attached Information Statement and to the enclosed Annual Report on Form 10-K of the Corporation for the year ended December 31, 1998. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. --- By Order of the Board of Directors. /s/ Gregory K. Thoreson Gregory K. Thoreson Senior Vice President and Assistant Secretary Baltimore, Maryland March 24, 1999 INFORMATION STATEMENT This Information Statement is provided in connection with the 1999 Annual Meeting of Stockholders (the "Annual Meeting") of First Maryland Bancorp (the "Corporation"). This Information Statement is first being sent to stockholders on or about March 29, 1999. The close of business on March 18, 1999 has been fixed by the Board of Directors of the Corporation as the record date (the "Record Date") for determining the stockholders of the Corporation entitled to notice of and to vote at the Annual Meeting. On the Record Date, the Corporation had outstanding 597,763,495 shares of common stock, $ 1/7 par value per share (the "Common Stock"), 6,000,000 shares of 7.875% Noncumulative Preferred Stock, Series A, $5.00 par value per share (the "Series A Preferred"), and 90,000 shares of 4.50% Cumulative Redeemable Preferred Stock, $5.00 par value per share (the "4.50% Preferred" and, together with the Series A Preferred, the "Outstanding Preferred"). All of the outstanding Common Stock is owned by Allied Irish Banks, p.l.c. ("AIB"), and AIB controls 99% of the voting power of the Corporation's outstanding capital stock. Each share of Common Stock and each share of Outstanding Preferred entitles the holder thereof to one vote on each matter to be voted upon at the Annual Meeting. Shares of Common Stock and Outstanding Preferred cannot be voted unless the holder of record is present in person or represented by proxy at the Annual Meeting. The matters to be voted upon at the Annual Meeting require the affirmative vote of the holders of a majority of the Common Stock and the Outstanding Preferred present in person or by proxy at the meeting, at which a quorum is present. The presence, in person or by proxy, of at least a majority of the aggregate total number of shares of Common Stock and Outstanding Preferred is necessary to constitute a quorum at the Annual Meeting. For purposes of determining the existence of a quorum, voting and all other matters at the Annual Meeting, the Common Stock and the Outstanding Preferred will be treated as a single class. The Board of Directors is aware of one item of business to be considered at the Annual Meeting: the election of 22 directors to the Board of Directors of the Corporation. NEITHER THE CORPORATION NOR ANY PERSON AFFILIATED WITH THE CORPORATION IS ASKING YOU FOR A PROXY AND YOU ARE ------- REQUESTED NOT TO SEND A PROXY TO THE CORPORATION. ------------------------------------------------ 1 ELECTION OF DIRECTORS The entire Board of Directors of the Corporation is elected at the Annual Meeting. Each director is elected for a term of one year and until a successor is elected and qualified. Except for Messrs. Brady, Buckley and Evans, Ms. Bellamy and Ms. Keating, each of the nominees was elected a director at the 1998 Annual Meeting of Stockholders. Information Concerning Nominees Information concerning the nominees for election as directors is presented below. Each of the nominees has consented to serve as a director if elected. There is no arrangement or understanding between any director and any other person pursuant to which such director was selected as a director. If any nominee becomes unable to accept nomination or election, then the Board of Directors will designate another nominee for election or will reduce the number of directors. Sherry F. Bellamy, age 46, has served as a director of the Corporation and of its wholly owned subsidiary, FMB Bank (formerly The First National Bank of Maryland and herein, "First National"), since January 1999. Since March 1997, she has been the President and Chief Executive of Bell Atlantic-Maryland, Inc., a regional telecommunications company. Prior to March 1997, Ms. Bellamy was a vice president and the general counsel of Bell Atlantic-Washington, D.C. James T. Brady, age 58, has served as a director of the Corporation and of First National since October 1998. Since May 1998, he has been engaged as an education/economic development consultant. From May 1995 to May 1998, Mr. Brady was the Secretary of the Maryland Department of Business and Economic Development. Prior to May 1995, Mr. Brady was a partner with Arthur Andersen LLP in Baltimore, Maryland. Mr. Brady is also a director of McCormick & Company, Inc., a spices and seasonings company. Frank P. Bramble, age 50, has served as a director of the Corporation and of First National since April 1994. He is the Chief Executive Officer of the Corporation and of First National, and in November 1998, Mr. Bramble became the Chief Executive, USA, and a director of Allied Irish Banks, p.l.c. ("AIB"), the parent of the Corporation. From April 1994 to January 1999, Mr. Bramble was the President and Chief Executive Officer of the Corporation and of First National. Mr. Bramble is a permanent member of the Executive Committee. Benjamin L. Brown, age 69, has served as a director of the Corporation and of First National since 1990. Mr. Brown is an attorney and retired in January 1995 as General Counsel and Executive Director of the National Institute of Municipal Law Officers. Mr. Brown is the chairperson of the Community Affairs Committee. Michael D. Buckley, age 54, has served as a director of the Corporation since October 1998. He is the Managing Director, Capital Markets Division, of AIB and has been a director of AIB since 1995. Jeremiah E. Casey, age 59, has served as a director of the Corporation since 1983 and of First National since 1985, and is Chairman of the Corporation and First National. From 1989 through October 1998, Mr. Casey was Chief Executive, USA, of AIB and was a director of AIB from 1992 through October 1998. Mr. Casey is a director of The Rouse Company, a real estate development, management and ownership company ("The Rouse Company"), and is also a director of the Federal Reserve Bank of Richmond, Baltimore Branch. Mr. Casey is a permanent member of the Executive Committee. J. Owen Cole, age 69, has served as a director of the Corporation since 1974 and of First National since 1968. He was Chairman of the Board of the Corporation and of First National until 1987. Mr. Cole is also a member of the Board of Baltimore Gas & Electric Company, a public utility company ("BGE"). Mr. Cole serves on the Community Affairs Committee. Edward A. Crooke, age 60, has served as a director of the Corporation and of First National since 1985. He has been Vice Chairman of BGE since 1998, prior to which he was President and Chief Operating Officer, and he has been a director of BGE since 1988. Mr. Crooke is also a director of Corporate Office Properties Trust, a real estate investment trust. Mr. Crooke serves on the Management and Compensation Committee. 2 John F. Dealy, age 59, has served as a director of the Corporation and of First National since 1981. He is President of The Dealy Strategy Group, a management consulting firm, and is also Chairman and Chief Executive Officer of The Maryland Health Care Product Development Corporation, a venture capital company. In 1998, Mr. Dealy retired as Distinguished Professor in the Georgetown University School of Business. In 1996, Mr. Dealy retired as Senior Counsel to the law firm of Shaw, Pittman, Potts and Trowbridge. Mr. Dealy serves on the Audit Committee. Mathias J. DeVito, age 68, has served as a director of the Corporation and of First National since 1974. He retired as Chief Executive Officer of The Rouse Company in 1995 and as Chairman of the Board in 1997, but continues to serve as Chairman Emeritus and Chairman of its Executive Committee. He is also a director of USAirways Group, Inc. and of Mars Supermarkets, Inc. Mr. DeVito is the chairperson of the Management and Compensation Committee. Jerome W. Evans, age 52, has served as a director and as Vice Chairman and Chief Financial Officer of the Corporation and of First National since January 1999. From August 1994 to August 1996, Mr. Evans was an Executive Vice President, and from August 1996 to January 1999, Mr. Evans was an Executive Vice President and the Chief Financial Officer, of the Corporation and of First National. Prior to joining the Corporation, Mr. Evans was an Executive Vice President with MNC Financial, Inc. in Baltimore, Maryland. Jerome W. Geckle, age 69, has served as a director of the Corporation and of First National since 1975. He retired as Chairman of the Board of PHH Corporation in 1989, prior to which he was Chairman and Chief Executive Officer. He is also a director of BGE. Mr. Geckle serves on the Management and Compensation Committee. Frank A. Gunther, Jr., age 67, has served as a director of the Corporation and of First National since 1976. He is the retired Chairman of the Board and President of Albert Gunther Inc., a contract hardware and industrial mill supply firm. Mr. Gunther serves on the Community Affairs Committee. Margaret M. Heckler, age 67, has served as a director of the Corporation and of First National since 1989. She serves as Special Counsel to Chambers Associates, Incorporated, Washington, D.C. and was U.S. Ambassador to Ireland from 1985 to 1989. Ms. Heckler serves on the Audit Committee. Lee H. Javitch, age 68, has served as a director of the Corporation since July 1997 and of First National since October 1998, and served as a director of Dauphin Deposit Corporation for 15 years. He is a private investor and was formerly the Chairman of the Board and Chief Executive Officer of Giant Food Stores, Inc., Carlisle, Pennsylvania. Mr. Javitch is also a director of Pennsylvania Real Estate Investment Trust, a real estate investment trust. Susan C. Keating, age 48, has served as a director and as President and Chief Operating Officer of the Corporation and of First National since January 1999. From January 1996 to January 1999, Ms. Keating was an Executive Vice President of the Corporation and of First National. Prior to joining the Corporation, Ms. Keating was President and Senior Bank Executive-Maryland with NationsBank, N.A. in Baltimore, Maryland. Gary Kennedy, age 41, has served as a director of the Corporation since June 1997. He has served as Group Financial Director and a director of AIB since May 1997, prior to which he was Vice President, Enterprise Networks Europe and Managing Director, Northern Telecom (Ireland) Ltd. He is a member of the Board of the Industrial Development Authority (Ireland). William T. Kirchhoff, age 57, has served as a director of the Corporation since July 1997 and of First National since October 1998, and served as a director of Dauphin Deposit Corporation for 18 years. He is the President of Cleveland Brothers Equipment Company, Inc., a construction equipment dealer. Henry J. Knott, Jr., age 60, has served as a director of the Corporation and of First National since 1981. He is the President of the Marion I. and Henry J. Knott Foundation, and is the former Chairman and Chief Executive Officer of Real Estate Resource Management, Inc., a real estate management company. Mr. Knott serves on Audit Committee. Andrew Maier II, age 49, has served as a director of the Corporation since July 1997 and of First National since October 1998, and served as a director of Dauphin Deposit Corporation for two years. He is a private investor and was formerly the President and Chief Executive Officer of Maier's Bakery, Reading, Pennsylvania. 3 Thomas P. Mulcahy, age 57, has served as a director of the Corporation since 1993. He has served as Group Chief Executive of AIB since January 1, 1994, prior to which he was Group General Manager of AIB's Capital Markets Division. He has been a director of AIB since 1990. Mr. Mulcahy serves on the Management and Compensation Committee. He is President of the Ireland Chapter of the Ireland-United States Council for Commerce & Industry, Inc. R. Champlin Sheridan, age 69, has served as a director of the Corporation since July 1997 and of First National since October 1998, and served as a director of Dauphin Deposit Corporation for five years. He is the Chairman of The Sheridan Group, Inc., publication and book printing companies. Meetings, Committees and Fees The Board of Directors met six times during 1998 for regularly scheduled meetings. The Board of Directors has standing executive, audit, compensation and community affairs committees. The Executive Committee has two permanent members and six rotating members who are outside directors. The Executive Committee may exercise most of the powers of the Board of Directors in the intervals between meetings of the full Board; it may not, however, declare dividends, issue stock, recommend to stockholders any action requiring stockholder approval, amend the bylaws, or approve mergers. The Executive Committee met six times for regularly scheduled meetings during 1998. The Audit Committee, composed of outside directors, is primarily responsible for ascertaining that the Corporation's financial statements are presented fairly in conformance with generally accepted accounting principles. The committee oversees the Corporation's internal audit function, evaluates the Corporation's system of internal controls, and reviews the external auditors' proposed audit scope and approach and the results of the external audit. The committee also evaluates and approves, on behalf of the Board, the adequacy of the Corporation's allowance for loan and lease losses, and reviews the status of pending or threatened litigation involving the Corporation and its subsidiaries. The Audit Committee met six times for regularly scheduled meetings and once for a special meeting during 1998. The Management and Compensation Committee reviews and recommends compensation arrangements for the Corporation's executive officers and also reviews and recommends action with respect to the Corporation's retirement plans. The Management and Compensation Committee met five times during 1998. The Community Affairs Committee oversees the Corporation's community reinvestment activities. The Committee reviews the Corporation's community outreach efforts, and its efforts to ascertain the credit needs of low and moderate income areas and to develop and market products to meet those needs. The Community Affairs Committee met five times during 1998 for regularly scheduled meetings. Each director who is not also an officer of the Corporation or of AIB receives an annual retainer of $20,000, plus $1,100 for attendance at each meeting of the Board and $900 ($1,100 for the Executive Committee) for attendance at meetings of committees of the Board of which he or she is a member. In addition, each committee chairperson receives an additional $300 per committee meeting, other than the chairperson of the Management and Compensation Committee, who receives an annual retainer of $6,500 in lieu of an additional fee per meeting. During 1998, each of Mr. Javitch and Mr. Mulcahy was unable to attend at least 75% of the aggregate of the meetings of the Board of Directors and of the Board committees on which he serves. Certain Relationships and Transactions Directors and officers of the Corporation, members of their immediate families and AIB and certain affiliates were customers of, and had transactions with, the Corporation, First National and other subsidiaries of the Corporation in the ordinary course of business during 1998. Similar transactions in the ordinary course of business may be expected to take place in the future. All loans to executive officers and directors and members of their immediate families and to AIB and certain affiliates were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve 4 more than normal risk of collectibility or present other unfavorable features. Of the loans outstanding at December 31, 1998, none were contractually past due 90 days or more as to principal or interest and none were classified as nonaccrual, restructured or potential problem loans. Security Ownership of Certain Beneficial Owners and Management Allied Irish Banks p.l.c., Bankcentre, Ballsbridge, Dublin 4, Ireland has owned 100% of the Corporation's Common Stock since March 21, 1989. Messrs. Bramble, Buckley, Mulcahy and Kennedy are directors and/or executive officers of AIB, and as such, each may be deemed to be the beneficial owner of 100% of the Corporation's Common Stock. The following table sets forth the number of AIB Ordinary Shares (including such shares held in the form of AIB Ordinary ADRs but excluding directors' qualifying shares) beneficially owned by each executive officer named in the Summary Compensation Table, each nominee for director, and by all executive officers and directors as a group as of December 31, 1998.
Ordinary Shares (1)(2) ------------- Executive Officers(3) Frank P. Bramble............................................... 469,548 (4) Jeremiah E. Casey.............................................. 464,750 David M. Cronin................................................ 142,202 (4) Walter R. Fatzinger, Jr. ...................................... 162,480 (4) Susan C. Keating............................................... 250,314 (4) Directors Sherry F. Bellamy.............................................. -- James T. Brady................................................. -- Benjamin L. Brown.............................................. -- Michael D. Buckley............................................. 357,385 (4) J. Owen Cole................................................... 14,244 Edward A. Crooke............................................... 100 John F. Dealy.................................................. -- Mathias J. DeVito.............................................. -- Jerome W. Evans(5)............................................. 98,022 (4) Jerome W. Geckle............................................... 100 Frank A. Gunther, Jr........................................... -- Margaret M. Heckler............................................ -- Lee H. Javitch................................................. 87,600 Gary Kennedy................................................... 225,805 (4) William T. Kirchhoff........................................... 264,798 (6) Henry J. Knott, Jr. ........................................... 100 Andrew Maier II................................................ 42,900 (7) Thomas P. Mulcahy.............................................. 786,534 (4) R. Champlin Sheridan........................................... 169,368 All executive officers and directors as a group (24 persons)... 3,536,250
- -------- (1) No individual listed in the table beneficially owns, and all executive officers and directors as a group do not beneficially own, more than one percent of the shares of the indicated class outstanding. (2) Each AIB Ordinary ADR represents six AIB Ordinary Shares. (3) With respect to Messrs. Bramble, Evans and Fatzinger and Ms. Keating, includes holdings of restricted stock. (4) Includes shares subject to currently exercisable stock options. (5) Mr. Evans beneficially owns 1,163 shares of the Outstanding Preferred. (6) Includes 65,232 shares held with sole voting/dispositive powers, 180,000 shares held by the profit sharing plan of which the director is a controlling person, 12,000 shares subject to a presently exercisable option and 7,566 shares held solely by the director's spouse. (7) Includes 2,350 shares held with sole voting/dispositive powers, 4,000 shares held in trust for the benefit of the director and his spouse, and 800 held as custodian for the benefit of the director's children. 5 COMPENSATION OF EXECUTIVE OFFICERS Summary Compensation Table The following summary compensation table sets forth information about salary and other compensation for the Corporation's chief executive officer and each of the four other most highly compensated executive officers (the "named executive officers") for services to the Corporation in all capacities during each of the three years ended December 31, 1998.
Long Term Annual Compensation Compensation -------------------------------- --------------------- Restricted All Other Name and Principal Other Annual Stock LTIP Compensa- Position at 12/31/98 Year Salary Bonus(1) Compensation(2) Award(s)(3) Payout(4) tion(5) - -------------------- ---- ------- -------- --------------- ----------- --------- --------- Jeremiah E. Casey....... 1998 600,000 -0- 5,496 -0- -0- 22,781 Chairman 1997 600,000 450,000 5,496 -0- 1,591,924 24,647 1996 600,000 300,000 5,404 -0- 27,707 Frank P. Bramble........ 1998 600,000 -0- 1,587 -0- -0- 36,963 President and CEO 1997 600,000 450,000 -0- -0- 1,606,200 38,517 1996 525,000 300,000 -0- -0- 38,484 David M. Cronin......... 1998 290,000 -0- 1,265 -0- -0- 13,830 Executive Vice Pres. 1997 290,000 174,000 1,200 -0- 582,713 13,027 and Treasurer 1996 290,000 116,000 1,169 -0- 20,818 Walter R. Fatzinger, Jr. ................... 1998 300,000 -0- -0- -0- -0- 27,947 Executive Vice Pres.(6) 1997 300,000 180,000 -0- -0- 562,925 29,335 1996 275,000 110,100 -0- -0- 31,495 Susan C. Keating........ 1998 375,000 -0- 1,708 -0- -0- 101,418 Executive Vice Pres. 1997 375,000 225,000 -0- 198,062 445,223 321,937 1996 300,000 120,000 -0- 300,000 26,912
- -------- (1) Bonuses are earned in the year specified and generally paid in the following year. (2) Consists of additional compensation in respect of income taxes due on imputed income from executive long term disability insurance premiums paid by the Corporation. (3) This column shows the market value of awards of AIB restricted stock on the date of grant. Restrictions on the stock lapse in equal amounts on the third, fourth and fifth anniversaries of each respective grant. Dividends on restricted stock are paid to the named executive officers in the same manner and amount as paid on the same unrestricted securities. Information concerning number of shares and values of restricted stock holdings at December 31, 1998 is set forth in next table. (4) The 1995 Long Term Incentive Plan established three performance measures on which the amount of a participant's award would be determined: (i) the Corporation's aggregate after-tax profit over the three-year performance period from 1/1/95 to 12/31/97; (ii) the Corporation's return-on-assets ratio ("ROA") for 1997 relative to the ROAs for a peer group of approximately 20 U.S. bank holding companies; and (iii) the Corporation's cost-to-income ratio for 1997. Threshold, target and maximum levels were established for each performance measure, and threshold, target and maximum percentage multipliers were specified for each participant. The threshold, target and maximum multipliers for Messrs. Casey and Bramble were 85%, 170% and 340%, respectively, and for the other named executive officers were 65%, 130% and 260%, respectively. The Corporation's actual performance was measured against the performance measures, and the Management and Compensation Committee determined that the Corporation performed at a level between the target and maximum levels. The multipliers were as follows: Mr. Casey, 268%; Mr. Bramble, 306%; other named executive officers, 205%. The amount of an award equaled the multiplier times average base salary over the performance period. Awards were paid in cash (55%) and/or AIB Ordinary ADRs (45%). The plan terminated as of December 31, 1997. (5) Consists of: (a) the value of split-dollar life insurance premiums paid pursuant to the Corporation's Executive Life Insurance Program of $12,563, $29,763, $6,630, $20,747 and $20,826 during 1998 for Messrs. Casey, Bramble, Cronin and Fatzinger and Ms. Keating respectively; (b) matching contributions under the Corporation's qualified, defined contribution plan of $7,200 for each named executive officer; (c) $73,392 in relocation expenses paid by the Corporation in connection with Ms. Keating's relocation to Harrisburg, PA; and (d) $3,018 in respect of certain earnings on deferred compensation amounts for Mr. Casey. (6) Mr. Fatzinger left the Corporation effective January 26, 1999. 6 The following table sets forth additional information concerning the number of shares and the value of restricted stock holdings of the named executive officers at December 31, 1998.
Name Ordinary ADRs - ---- ------------- Jeremiah E. Casey................................................. -0- Frank P. Bramble.................................................. 6,340 $ 699,778 David M. Cronin................................................... -0- Walter R. Fatzinger, Jr. ......................................... 9,080 $1,002,205 Susan C. Keating.................................................. 11,719 $1,293,485
1997 Stock Option Plan In October 1997, the Corporation's Board of Directors approved the 1997 Stock Option Plan (the "1997 Option Plan"). The purposes of the 1997 Option Plan are to provide incentives to key employees to contribute to the growth and success of the Corporation and of AIB, and to enhance the Corporation's ability to attract, retain and reward the highest quality employees in positions of substantial responsibility. The 1997 Option Plan provides for the grant to key employees of options to acquire AIB American Depository Shares ("AIB ADSs"). The Corporation and an independent trustee have created a trust which has been funded with AIB ADSs acquired by the trust with the proceeds of a loan from the Corporation. Proceeds of option exercises and any dividends and other earnings on the trust assets will be used to repay the loan to the trust. Optionees have no preferential rights with respect to the trust assets, and the trust assets are subject to the claims of the Corporation's general creditors in the event of insolvency. The AIB ADSs are held in the available-for-sale account on the Corporation's balance sheet, and any decline in value of the AIB ADSs in the trust below their original cost will be recorded as an adjustment to the Corporation's stockholders' equity. The 1997 Option Plan is administered by the Management and Compensation Committee of the Board of Directors. AIB will not issue any securities in connection with the 1997 Option Plan, will not receive any proceeds from the exercise of options, and otherwise has no rights or obligations with respect to the 1997 Option Plan. As of December 31, 1998, there were 993,100 AIB ADSs in the trust. The following table sets forth information concerning options ("1998 Options") granted under the 1997 Option Plan to the named executive officers during the year ended December 31, 1998.
Individual Grants ------------------------------------------ Potential % of Realizable Value Total at Assumed Annual No. of Options Rates of Stock Price Securities Granted to Exercise Appreciation for Underlying Employees or Base Option Term(1) Options in Fiscal Price Expiration --------------------- Name Granted(2) Year ($/Sh)(3) Date(4) 5%($) 10%($) ---- ---------- ---------- --------- ---------- ---------- ---------- J.E. Casey.............. -- -- -- -- -- -- F.P. Bramble............ 25,000 5.5% $87.87 10/22/08 $1,381,500 $3,501,000 30,000 6.5% $79.25 10/09/08 1,495,200 3,789,000 D.M. Cronin............. 8,000 1.7% $79.25 10/09/08 398,720 1,010,400 W.R. Fatzinger, Jr...... 10,000 2.2% $79.25 10/09/08 498,400 1,263,000 S.C. Keating............ 12,000 2.6% $79.25 10/09/08 598,080 1,515,600
- -------- (1) Illustrates value that would be realized upon exercise of options immediately prior to expiration of term, assuming the specified annual compound rates of appreciation on AIB ADSs over the option term. (2) All options under the 1997 Option Plan are nonqualified options. A 1998 Option is exercisable for up to 50% of the underlying securities two years after the grant date (October 9 and October 22, 1998) and for the remaining 50% of the securities, three years after the grant date, except in the event of a change in control of the Corporation or of AIB. 7 (3) The exercise price of each option granted under the 1997 Option Plan is equal to the greater of the cost or the market price of AIB ADSs on the date of grant. The number of AIB ADSs subject to an option and the exercise price may be adjusted in the event of a stock dividend or split, recapitalization or similar transaction affecting the outstanding Ordinary Shares of AIB. The exercise price of an option may be paid in cash or through the contemporaneous sale of the underlying AIB ADSs. (4) 1998 Options granted under the 1997 Option Plan expire ten years from the date of grant, subject to certain exceptions relating to the manner of termination of an optionee's employment. An option may not be transferred except by will, by the laws of descent and distribution, or in connection with a limited number of family estate planning transfers. The following table sets forth information concerning exercised and unexercised options under the 1997 Option Plan as of the end of 1998.
Value of Number of Unexercised Unexercised in-the-money Options Options at Shares at 12/31/98 12/31/98($) Acquired Value Exercisable/ Exercisable/ Name on Exercise Realized($) Unexercisable Unexercisable(1) ---- ----------- ----------- ------------- -------------------- J.E. Casey.............. -- -- -- -- F.P. Bramble............ -- -- 60,000/55,000 $3,262,500/1,496,375 D.M. Cronin............. -- -- 14,000/8,000 761,250/249,000 W.R. Fatzinger, Jr...... -- -- 18,000/10,000 978,750/311,250 S.C. Keating............ -- -- 30,000/12,000 1,631,250/373,500
- -------- (1) Based on market value of AIB ADSs at December 31, 1998. Pension Plans The Corporation maintains a non-qualified, supplemental defined benefit pension plan under which maximum retirement benefits for Mr. Casey are determined. The maximum benefit is 70% of covered remuneration, reduced by the benefit payable to Mr. Casey under the Corporation's qualified, defined benefit pension plan in which all eligible employees (including the named executive officer) participate, and by the amount of Social Security benefits. The following table shows the estimated total annual pension benefits payable to Mr. Casey at age 65 under the non-qualified supplemental pension plan and qualified pension plan.
Annual Retirement Benefit at Age 65 With Years of Service Indicated -------------------------- 25 Years Remuneration 15 Years 20 Years or more - ------------ -------- -------- -------- 400,000.............................................. 200,000 220,000 280,000 600,000.............................................. 300,000 330,000 420,000 800,000.............................................. 400,000 440,000 560,000 1,000,000............................................ 500,000 550,000 700,000 1,200,000............................................ 600,000 660,000 840,000
A participant's remuneration covered by the pension plan is average total compensation (salary, bonus and all other cash compensation other than compensation attributable to restricted stock awards and long term incentive awards) for the three calendar years during the last ten years of the participant's career for which the average is the highest. The estimated years of service for Mr. Casey is 41 years. Mr. Bramble is entitled to supplemental retirement benefits under an agreement which provides for a retirement benefit at age 60 of 60% of the average of the highest three years of compensation during his career, offset by benefit payments under the Corporation's qualified defined benefit plan and excess benefit plan, by social security benefits and by benefit payments under defined benefit plans of former employers. Ms. Keating is entitled to supplemental retirement benefits under an agreement that provides for a retirement benefit equal to a minimum of 30% and a maximum of 60% of the average of the highest three years of compensation during the last 10 years of employment, offset by benefit payments under the Corporation's qualified defined benefit plan and excess benefit plan, by social security benefits, and by benefit payments under defined benefit plans of former employers. Mr. Fatzinger was entitled to supplemental retirement benefits under an agreement that required the Corporation to make a deferred compensation contribution of 15% of annual cash compensation at the end of each year of employment. 8 Short Term Incentive Awards The Corporation's annual Short Term Incentive Plan for Senior Officers (the "Annual Bonus Plan") is intended to focus the efforts of executive and senior officers on the attainment of specific annual performance goals that will promote the overall success of the Corporation. Payments under the Annual Bonus Plan are funded out of the Corporation's net income. Under the Annual Bonus Plan, the Management and Compensation Committee (the "Compensation Committee") approves minimum, target and maximum net income levels at the beginning of the year. The Compensation Committee determines the percentage of base salary applicable to each net income level. If the minimum net income level is not achieved, then generally no award is made under the plan. If a higher level of net income is achieved, then the Compensation Committee determines the percentage applicable to the Chief Executive Officer and the percentages applicable to the other executive officers, based on the scope of each officer's duties and responsibilities. Individual performance measures also are considered in setting individual percentages, in the discretion of the Compensation Committee. Such measures include achievement of strategic and tactical objectives, growth, meeting business unit objectives, promoting corporate values, providing leadership to employees and encouraging teamwork. 1989 Long Term Incentive Plan The Corporation's 1989 Long Term Incentive Plan and Trust (the "1989 LTIP") was developed to attract and retain key employees who contribute to the continued growth, development and profitable performance of the Corporation and, thereby, to the continued financial success of AIB. The 1989 LTIP has been approved by the Board of Directors of the Corporation. The 1989 LTIP provides for awards of AIB ordinary ADRs ("incentive shares") to officers eligible to participate in the plan. Incentive shares are restricted and may not be disposed of by an officer for a period of time after the date of an award. The restriction for a specific award lapses in equal installments on the third, fourth and fifth anniversary dates of the award. During the restricted period, the officer is entitled to receive, without restriction, any dividends on the incentive shares. Awards of incentive shares are intended to serve as compensation over a period of several years and generally are made on a biennial basis. The size of an award of incentive shares is based on a percentage of base salary for each participant. As of January 1, 1999, there was a total of 141,807 ordinary ADRs available for awards under the 1989 LTIP. All incentive shares available for awards in any year that are not used and incentive shares that are later forfeited are also available for use in subsequent years. Change in Control Agreements The Corporation has entered into a change-in-control agreement ("Change Agreement") with each named executive officer other than Mr. Casey. Each Change Agreement provides that if an executive is discharged, or if the executive experiences a material reduction in compensation or duties or relocation to an office more than 50 miles from the executive's then current office, in each case within two years following a "change of control," then the executive will be entitled to a severance package comprised of the following elements (subject to any limitations imposed by regulatory authorities): (i) a payment equal to two times annual salary (three times annual salary in the case of the Chief Executive Officer); (ii) payment of the greater of the executive's target or actual bonus for the year in which the change in control occurs; (iii) vesting of all restricted stock awards and stock options; (iv) payment of any target amounts under long-term incentive plans; (v) continuation of all fringe benefit coverage for up to two years; and (vi) outplacement services. For purposes of the Change Agreements, a "change of control" will be deemed to have taken place on the date of the earliest to occur of any of the following events: (i) an unaffiliated third party becomes the beneficial owner of 50% or more of the outstanding ordinary shares of AIB, or 25% or more of the outstanding common stock of the Corporation or of First National; (ii) the commencement of, or first public announcement of the intention of any person to commence, a tender or exchange offer the consummation of which would result in beneficial ownership by a person (other than AIB, the Corporation, any wholly-owned subsidiary of either AIB 9 or the Corporation, or any employee benefit plan of AIB or the Corporation or of any subsidiary of either or any entity holding common stock for or pursuant to the terms of any such plan) of 50% or more of the outstanding common stock of AIB, or 25% or more of the outstanding common stock of the Corporation or of First National; or (iii) as the result of, or in connection with, any cash tender or exchange offer, merger, consolidation or other business combination, sale or disposition of all or substantially all of the Corporation's assets, or contested election, or any combination of the foregoing transactions (a "Transaction"), (a) the persons who were directors of either AIB, the Corporation, or First National immediately before the Transaction shall cease to constitute a majority of the Board of Directors of such entity or any successor to such entity, or (b) the persons who were stockholders of AIB or the Corporation, as applicable, immediately before the Transaction shall cease to own at least 50% of the outstanding voting stock of the applicable entity or any successor to such entity. Compensation Committee Interlocks and Insider Participation Messrs. Crooke, DeVito, Geckle and Mulcahy served on the Compensation Committee during 1998. No member of the Compensation Committee was an officer or employee of the Corporation during 1998. Report of Management and Compensation Committee General. The Compensation Committee, made up of three outside directors and the Group Chief Executive of AIB, is responsible for executive compensation policies. In addition to establishing policies, the Compensation Committee approves all executive compensation arrangements and makes recommendations to the Board of Directors for specific salary amounts and other compensation awards for individual executives. The Corporation's compensation program is designed to attract, motivate and retain executive personnel capable of making significant contributions to the long term success of the Corporation. The primary components of the executive compensation program are competitive base salaries and both short term and long term incentives. Executive officers also participate in other broad based employee compensation and benefit programs. The Corporation retains an independent compensation consulting firm ("Compensation Consultant") to assist the Compensation Committee in performing its duties. The Compensation Consultant provides analytical and general interpretive guidance regarding compensation practices for the banking industry as a whole and for a group of the Corporation's peers, and advises the Compensation Committee on structuring compensation arrangements to achieve the desired quantitative and qualitative goals. In connection with the annual review of the executive compensation program, the Compensation Committee has confirmed with the Compensation Consultant that the executive compensation plans remain competitive and effectively serve the purposes for which they were established. For 1998, the Board approved all recommendations by the Compensation Committee related to the compensation of Frank P. Bramble, the Chief Executive Officer of the Corporation. Base Salary. Base salaries for the Corporation's executive officers are established based upon an analysis of executive salary practices at a group of the Corporation's peer bank holding companies (the "Peer Group"). The Peer Group is selected based on total assets, geographic location, and comparable lines of business. The Compensation Committee believes that base salary should reflect the scope of an executive officer's duties and responsibilities, his or her importance to the Corporation relative to other executive officer positions, and the competitiveness of the executive officer's total compensation relative to similarly situated executives within the Peer Group. Executive officer salary increases are reviewed annually and are based on the executive officer's performance, base salary position relative to the median or average rates paid in the Peer Group and in the broader financial institutions market, and the Corporation's net income during the prior year. In determining Mr. Bramble's base salary, the Committee focused on compensation data for those chief executive officers in the Peer Group whose duties and responsibilities most closely resembled Mr. Bramble's. Annual Bonus Plan. For 1998 awards under the Annual Bonus Plan, the Compensation Committee approved minimum, target and maximum net income levels; the percentages of base salary corresponding to these levels were 25%, 50% and 75%, respectively, for the Chief Executive Officer. The Corporation did not meet the minimum net income level established by the committee for 1998, and Mr. Bramble did not receive a 1998 Annual Bonus Plan award. 10 Long Term Incentives. The Compensation Committee administers the 1989 LTIP, and determines whether, to whom and in what amounts awards are made under those plans. The Board of Directors acts on the recommendations of the Committee regarding proposed awards under the 1989 LTIP to the Chief Executive Officer. No award was made to the Chief Executive Officer under the 1989 LTIP in 1998. The Chief Executive Officer's level of participation in the 1997 Stock Option Plan during 1998 was based primarily on the broad scope of his responsibilities and the significant role he plays in the Corporation achieving the performance goals established under the plan. Internal Revenue Code Section 162(m) Compliance The deductibility of executive compensation in excess of the limit set in Section 162(m) of the Internal Revenue Code 1986, as amended, was not a factor in the Committee's determination of 1998 compensation levels. The Committee will continue to review the Corporation's executive compensation plans to determine what changes, if any, may be advisable in connection with Section 162(m). Mathias J. DeVito, Chairman Jerome W. Geckle Edward A. Crooke Thomas P. Mulcahy OTHER MATTERS As of the date of this Information Statement, the Board of Directors of the Corporation knows of no other business which will be presented for consideration at the Annual Meeting. ---------------- 11 -----END PRIVACY-ENHANCED MESSAGE-----