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SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 under sec.240.14a-12
F.N.B. CORPORATION
(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.
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2)of Schedule 14A.
[ ] 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 O-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
O-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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March 25, 2002
[F.N.B. LOGO]
Dear Shareholder:
It is a pleasure to invite you to attend the Annual Meeting of Shareholders of
F.N.B. Corporation. The meeting will be held at the Naples Beach Hotel, located
at 851 Gulf Shore Boulevard North, Naples, Florida 34102, on Monday, May 6,
2002, at 4:00 p.m.
At the meeting, you will be asked to consider and vote upon the election of
eight directors.
Your vote is important regardless of how many shares of stock you own. If you
hold stock in more than one account or name, you will receive a proxy card for
each. Please sign and return each card since each represents a separate number
of votes. Postage paid envelopes are provided for your convenience.
You are cordially invited to attend the Annual Meeting. Please indicate on the
proxy card whether you plan to attend the Annual Meeting.
Regardless of whether you plan to attend, please date and return the enclosed
proxy card(s) as soon as possible. This will not prevent you from voting at the
meeting, but will assure that your vote is counted if you are unable to attend.
As always, the directors, management and staff thank you for your continued
support and interest in F.N.B. Corporation.
/s/ Peter Mortensen /s/ Gary L. Tice
-------------------- -------------------------
Peter Mortensen Gary L. Tice
Chairman President and Chief Executive Officer
[F.N.B. LOGO]
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
-------------------------------------------------------------------
Notice is hereby given that the Annual Meeting of Shareholders of F.N.B.
Corporation (the "Corporation") will be held at the Naples Beach Hotel, located
at 851 Gulf Shore Boulevard North, Naples, Florida 34102, on Monday, May 6,
2002, at 4:00 p.m. Eastern Daylight Time, for the following purposes:
1. To elect eight directors of the Corporation; and
2. To transact such other business as may properly come before
the Annual Meeting and any adjournments thereof.
Only the holders of Common Stock and Series A Preferred Stock of the Corporation
of record on the books of the Corporation at the close of business on February
25, 2002, are entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof.
Enclosed with this Notice are a Proxy Statement and form of proxy. All
shareholders, whether or not they expect to be present at the meeting, are
requested to date and sign the proxy and to return it in the enclosed
self-addressed envelope. Prompt compliance with this request will be
appreciated. Shareholders who attend the meeting may, if they wish, vote in
person even if they have mailed their proxies.
/s/ David B. Mogle
BY ORDER OF THE BOARD OF DIRECTORS
David B. Mogle, Secretary
March 25, 2002
March 25, 2002
[F.N.B. LOGO]
F.N.B. CENTER O 2150 GOODLETTE ROAD NORTH
NAPLES, FLORIDA 34102
PROXY STATEMENT
---------------
The accompanying proxy is being solicited by F.N.B. Corporation (the
"Corporation") in connection with the Annual Meeting of Shareholders to be held
on May 6, 2002, pursuant to the preceding Notice of Annual Meeting. The
approximate date on which this proxy statement and the accompanying form of
proxy are first being sent to shareholders of the Corporation is March 25, 2002.
If the proxy is executed and returned, it may nevertheless be revoked by written
notice to the Secretary of the Corporation at any time prior to the voting
thereof by submitting a later dated proxy or by voting in person at the Annual
Meeting. Unless the proxy is revoked or contains other instructions, the shares
represented thereby will be voted at the meeting in favor of the election of
director nominees named below.
The Board of Directors has fixed February 25, 2002, as the record date for
determination of shareholders entitled to notice of and to vote at the Annual
Meeting. As of that date, the Corporation had outstanding 41,671,105 shares of
Common Stock, 19,174 shares of Series A Cumulative Convertible Preferred Stock
("Series A Preferred Stock") and 125,829 shares of Series B Cumulative
Convertible Preferred Stock ( "Series B Preferred Stock"). The holders of shares
entitled to cast a majority of all votes entitled to be cast, present in person
or represented by proxy, constitute a quorum for the meeting. Holders of Common
Stock are entitled to one vote for each share held and holders of Series A
Preferred Stock are entitled to 6.5 votes for each share held. Holders of Series
B Preferred Stock have no voting rights with respect to their shares of Series B
Preferred Stock.
ELECTION OF DIRECTORS
---------------------
The Bylaws of the Corporation provide that the Board of Directors shall consist
of not fewer than five nor more than 25 persons, the exact number to be
determined from time to time by the Board. The Board of Directors has fixed the
number of directors at fifteen (15), effective as of the date of the Annual
Meeting. Proxies will not be voted for a greater number of persons than the
number of nominees set forth below. Directors are elected by a plurality of the
votes cast at the meeting. Abstentions and shares held in "street" name that are
not cast at the meeting are not counted. Neither the holders of Common Stock nor
the holders of Series A Preferred Stock have cumulative voting rights in the
election of directors.
The Bylaws of the Corporation also provide for classification of the directors
with respect to the time for which they shall severally hold office. The Board
is divided into three classes with the term of office of the directors of each
class to expire at the third annual meeting after their election. At each
succeeding annual meeting of shareholders, successors to the directors of the
class whose term expires are elected. Each director shall hold office for the
term for which he/she is elected and thereafter until his/her successor is duly
elected and qualified or until his/her earlier death, retirement, resignation or
removal.
In recent years, the number of the Corporation's directors has grown principally
as a result of adding members from the Boards of Directors of companies which
the Corporation has acquired. The Board of Directors of the Corporation
presently consists of twenty-two (22) members, including three former directors
of Promistar Financial Corporation ("Promistar") who were elected to the Board
in January 2002 pursuant to the terms of the merger agreement between the
Corporation and Promistar. The Board has determined that its present size may
cause inefficiencies in its deliberations with respect to corporate business
matters, and that a reduction in the size of the Board would be in the best
interests of the Corporation. The reduction of the size of the Corporation's
Board is designed to benefit the Corporation by streamlining the corporate
governance process and ensuring that the Board's composition reflects the
Corporation's geographic and business markets. To achieve such a reduction, the
following directors have agreed to retire from the board, effective immediately
prior to the Annual Meeting: William A. Quinn, Robert Moss, James Weller, Eric
Werner, Paul Lynch, Richard Blackwood and Donna Winner. Each of these directors
has expressed in writing to the Corporation's Board that his or her decision to
retire or not stand for re-election is solely to facilitate a reduction in the
size of the Board. In fact, those directors who have agreed to retire from the
Corporation's Board and who are currently serving on the Board of Directors of a
subsidiary of the Corporation will continue to do so, except Mr. Werner.
Following the retirements of the directors named above, the Board of Directors
will consist of fifteen (15) members, and the Board of Directors has fixed the
size of the Board at fifteen (15), effective as of the Annual Meeting.
The Corporation's Bylaws provide, in accordance with Florida law, that each of
the Corporation's three classes of directors "consist, as nearly as may be
possible, of one-third of the total number of directors constituting the entire
Board of Directors." In view of the reduction in the Corporation's Board size
and in order to assure proper apportionment of the Corporation's directors among
the three classes in accordance with the Bylaws, the Board has determined to
move Director Bomstein from Class I (the term of which expires at the Annual
Meeting) to Class II (with a term expiring at the 2003 Annual Meeting). Pursuant
to Florida law, Mr. Bomstein has been nominated by the Board of Directors for
election at the Annual Meeting as a Class II director.
The following Class I directors, whose terms expire at the Annual Meeting, have
been nominated by the Board of Directors for re-election at the Annual Meeting,
to continue to serve as Class I directors until the 2005 Annual Meeting and
until their successors are elected and qualified: James S. Lindsay, Edward J.
Mace, Peter Mortensen and Gary L. Tice.
In addition, in accordance with the requirements of Florida law, each of the
following former directors of Promistar who were elected to the Corporation's
Board of Directors in January 2002 will stand for re-election at the Annual
Meeting: G. Scott Baton, Harry F. Radcliffe and Earl K. Wahl, Jr. If re-elected,
Mr. Baton will serve as a Class II director until the terms of the Class II
directors expire at the 2003 Annual Meeting, Mr. Radcliffe will serve as a Class
III director until the terms of the Class III directors expire at the 2004
Annual Meeting, and Mr. Wahl will serve as a Class I director until the terms of
the Class I directors expire at the 2005 Annual Meeting
All of the nominees have expressed their willingness to serve if elected. In the
event one or more of the director nominees is unable or unwilling to serve as a
director for any reason (the Corporation knows of no such reason), the persons
named in the enclosed proxy will vote for the other nominees named and such
substituted nominees as may be nominated by the Board of Directors.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
-------------------------------------------------------
Information concerning the stock ownership of the directors and five most highly
compensated executive officers of the Corporation is set forth below. The
principal occupation of each director as of the date hereof and for the past
five years is included in the table. The information concerning beneficial
ownership of Common Stock and Series B Preferred Stock is based upon information
received as of February 25, 2002. No director or executive officer of the
Corporation is the beneficial owner of any shares of Series A Preferred Stock.
Amount and
Amount and Nature of
Nature of Beneficial
Expiration Beneficial Ownership
of Term of Ownership of Percent of Series B Percent
Name and Director Office as Common Stock of Preferred of
Principal Occupation Age Since Director (a) (b)(c) Class (d) Stock (e) Class (d)
----------------------------------------------------------------------------------------------------------------------------------
GARY L. TICE* 54 1997 2002 193,884(f)(g) 0
President and Chief Executive
Officer and of the Corporation since
2001; President and Chief Operating
Officer of the Corporation from
1998-2001; Executive Vice President
and Chief Operating Officer of the
Corporation 1997-1998; and
Chairman of First National Bank of
Florida ("FNBFL")
PETER MORTENSEN* 66 1974 2002 645,609(f) 1.5 0
Chairman of the Corporation since
1988; Chief Executive Officer of the
Corporation 1988-2000; and
Chairman of the Corporation's
subsidiary, First National Bank of
Pennsylvania ("FNBPA")
STEPHEN J. GURGOVITS* 58 1981 2004 155,037(f)(h) 0
Vice Chairman of the Corporation
since 1998; Executive Vice President
of the Corporation 1995-1998; and
President and Chief Executive Officer
of FNBPA since 1988
G. SCOTT BATON, II 66 2002 2002 6,713 0
Chairman and Chief Executive
Officer, Chestnut Ridge Foam, Inc.
(flame resistant foam cushioning)
W. RICHARD BLACKWOOD 60 1985 2004 143,591 8,100 6.4
President, Harry Blackwood Inc.
(insurance and real estate)
ALAN C. BOMSTEIN 56 1999 2002 40,985 0
President and Chief Executive
Officer, Creative Contractors, Inc.
WILLIAM B. CAMPBELL 63 1975 2004 68,333(i)(j) 0
Retired Former Business Executive
CHARLES T. CRICKS 52 1994 2004 60,884(k) 0
Principal, Starboard Ventures;
Executive Vice President and Chief
Operating Officer, Health Care
Solutions, Inc. 1996-1998
HENRY M. EKKER, ESQ 63 1994 2004 24,087 0
Attorney at Law, Partner of Ekker,
Kuster, McConnell & Epstein, LLP
JAMES S. LINDSAY 53 1997 2002 135,507(l) 0
Managing Partner, Dor-J's
Partnership; Licensed Real Estate
Broker, The Lindsay Company
PAUL P. LYNCH 50 1991 2003 126,388(m) 200
Attorney at Law, Partner of Lynch &
Gallitto; President, Paul Lynch
Investments, Inc.
EDWARD J. MACE 45 1997 2002 122,761(n) 0
Edward J. Mace, Certified Public
Accountant; Chief Operating Officer,
Ribek Corporation
ROBERT S. MOSS 64 1994 2002 26,052(o) 0
Chairman, Associated Contractors
of Conneaut Lake, Inc.
WILLIAM A. QUINN 73 1974 2002 9,141 0
Retired Vice President of the
Corporation; and Retired Executive
Vice President & Cashier of FNBPA
HARRY F. RADCLIFFE 52 2002 2002 98,568(p) 0
President and Chief Executive
Officer, Fort Pitt Capital
Management Corporation
WILLIAM J. STRIMBU 41 1995 2003 53,866 0
President, Nick Strimbu, Inc.
(common carrier)
EARL K. WAHL, JR 62 2002 2002 32,632 0
Owner, J.E.D. Corporation
(environmental consulting)
ARCHIE O. WALLACE, ESQ 67 1992 2003 36,626 0
Attorney at Law, Partner of Rowley,
Wallace, Keck, Karson & St. John
JAMES T. WELLER 71 1975 2003 52,600(q) 0
Chairman, Liberty Steel Products,
Inc. (steel processor)
ERIC J. WERNER, ESQ 39 1995 2003 19,064(r) 0
Vice President, Secretary & General
Counsel, Werner Co. (manufacturer
of custom aluminum extrusions and
climbing products)
R. BENJAMIN WILEY 57 1997 2003 11,595 0
Chief Executive Officer, Greater Erie
Community Action Committee
DONNA C. WINNER 55 1994 2004 288,517 0
Co-Owner, The Radisson;
Tara - A Country Inn;
The Winner (clothing store); and
Tiffany's (banquet center)
KEVIN C. HALE* 48 N/A N/A 11,573(f) 0
Executive Vice President &
Chief Operating Officer of the
Corporation since 2002; President &
Chief Executive Officer of First
National Bank of Florida 2000-2001;
Executive Vice President of the
Corporation since 2000;
Chief Operating Officer-Florida
Division 2000-2002
WILLIAM J. RUNDORFF* 53 N/A N/A 65,181(f) 0
Chief Legal Officer of the
Corporation since 2001; Executive
Vice President of the Corporation
since 1995
JOHN D. WATERS* 55 N/A N/A 52,854(f) 0
Vice President and Chief Financial
Officer of the Corporation since 1994
Directors and Executive Officers as a group (30 persons), as the beneficial
owners of 1,515,847 shares of the outstanding Common Stock, owned 3.6% of the
Common Stock of the Corporation as of February 25, 2002, and controlled 3.6% of
the outstanding voting power of the Corporation's issued and outstanding stock
(s).
*Denotes person who served as senior or executive officer with Corporation
during 2001.
(a) The term of office for directors expires at the annual meeting to be
held during the year shown.
(b) Includes (1) the following shares which the director or officer has the
right to acquire within sixty days upon exercise of stock options: Mr.
Mortensen, 536,375 shares; Mr. Tice, 129,708 shares; Mr. Gurgovits,
121,799 shares; Mr. Hale, 11,573 shares; Mr. Rundorff, 60,340 shares;
Mr. Waters, 44,505 shares; Mr. Baton, 6,713; Mr. Blackwood, 4,191
shares; Mr. Bomstein, 10,355 shares; Mr. Campbell, 5,392 shares; Mr.
Cricks, 5,686 shares; Mr. Ekker, 5,031 shares; Mr. Lindsay, 5,385
shares; Mr. Lynch, 4,187 shares; Mr. Mace, 4,488 shares; Mr. Moss,
4,187 shares; Mr. Quinn, 4,412 shares; Mr. Radcliffe, 926; Mr. Strimbu,
4,611 shares; Mr. Wahl, 1,852; Mr. Wallace, 5,050 shares; Mr. Weller,
4,983 shares; Mr. Werner, 3,971 shares; Mr. Wiley, 3,832 shares; Mrs.
Winner, 3,933 shares; and (2) shares which the director has the right
to acquire by conversion of shares of Series B Preferred Stock. Shares
of Series B Preferred Stock are convertible into shares of Common Stock
at the ratio of 2.6104 shares of Common Stock per share of Series B
Preferred Stock.
(c) Except as otherwise indicated, each director possesses sole voting
power and sole investment power as to all shares listed opposite his or
her name or shares these powers with his or her spouse or a wholly
owned company. This does not include the following shares held of
record by the director's spouse or children, or held in trust, and as
to which each director disclaims beneficial ownership: Mr. Mortensen,
364 shares; Mr. Lindsay, 9,443 shares; Mr. Tice, 620 shares; and Mr.
Weller, 40,990 shares.
(d) Unless otherwise indicated, represents less than 1% of the class.
(e) Except as otherwise indicated, each director possesses sole investment
power as to all shares listed opposite his or her name or shares these
powers with his or her spouse or a wholly owned company.
(f) Does not include shares awarded as an employer matching contribution as
a part of the Corporation's 401(k) Plan.
(g) Includes 4,654 shares jointly owned by Mr. Tice and his mother; and
7,804 shares held by the F.N.B. Corporation Salary Savings Plan for Mr.
Tice who has voting power over these shares.
(h) Includes 267 shares owned by Mr. Gurgovits' wife; 6,920 shares owned by
Mr. Gurgovits' wife as a participant in her employer's profit sharing
program and 64 shares held by Mr. Gurgovits as trustee for his
daughter.
(i) Includes 1,901 shares held in an irrevocable trust by the First
National Trust Company. A committee which includes Mr. Campbell holds
sole voting power over the shares, while the First National Trust
Company possesses sole investment power over such shares.
(j) Includes 1,880 shares owned by Mr. Campbell's wife.
(k) Includes 2,327 shares owned by Mr. Cricks' wife and 8,915 shares held
by Mr. Cricks as co-trustee for his mother.
(l) Includes 8,787 shares held by Mr. Lindsay as custodian for two of his
children; 85,530 shares owned by Dor'J's Partnership, of which Mr.
Lindsay is the managing partner; and 1,337 shares held by Mr. Lindsay
as trustee for his mother.
(m) Includes 29,052 shares owned by Mr. Lynch's wife and 38,652 shares held
by the Paul and Marcia Lynch Family Trust.
(n) Includes 466 shares held by Mr. Mace as custodian for three of his
children; 273 shares jointly owned by Mr. Mace and his mother; 6,181
shares held by Mr. Mace as trustee for certain unrelated beneficiaries;
24,465 shares held by the Ribek Corporation Defined Contribution
Pension Trust of which Mr. Mace is a Trustee; and 68,809 shares owned
by Ribek Corporation of which Mr. Mace is Chief Operating Officer.
(o) Includes 168 shares owned by Mr. Moss's wife; 288 shares held by
Mr. Moss as custodian for his two grandchildren.
(p) Includes 2,700 shares owned by Mr. Radcliffe's wife; 1,642 shares held
by each of Mr. Radcliffe's three children.
(q) Includes 655 shares owned by Mr. Weller's wife.
(r) Includes 1,842 shares owned by Mr. Werner's wife; 3,961 shares held by
Mr. Werner's wife as custodian for their two children.
(s) Includes 78,527 shares subject to options exercisable within 60 days.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
--------------------------------------------------------
Section 16(a) of the Securities Exchange Act requires the Corporation's
directors, its executive officers, and persons who own more than ten percent of
a registered class of the Corporation's equity securities (currently there are
no such ten percent shareholders) to file with the Corporation and the SEC
initial reports of ownership and reports of changes in ownership of any equity
securities of the Corporation. With respect to 2001, to the best of the
Corporation's knowledge, all required report forms were filed on a timely basis.
In making this statement, the Corporation has relied in part on written
representations of its directors and certain of its current and former executive
officers, and the copies of reports provided to the Corporation.
DIRECTORS' FEES
---------------
During 2001, each non-employee director was paid an annual retainer of $14,000
and $2,500 for each quarterly Board meeting attended. Each director was issued
stock options during 2001 under the Corporation's 1998 Directors' Stock Option
Plan, which were based on the Board fees earned during the year. Individual
grants to directors ranged from 991 to 1,783 stock options with exercise prices
equal to the fair market value of the Corporation's Common Stock on the date of
grant. Non-employee directors who serve on committees were compensated for their
attendance at various committee meetings of the Corporation and its subsidiaries
at rates ranging from $100 to $900 per meeting attended. In addition, Mr.
Mortensen and Mr. Tice are compensated for attendance at certain board and
committee meetings of the Corporation's Florida affiliates.
Each director of the Corporation may elect to receive shares of Common Stock in
lieu of cash as their compensation for attendance at regular and committee
meetings of the Board of Directors of the Corporation pursuant to the F.N.B.
Corporation Directors' Compensation Plan (the "Plan"). The number of shares of
Common Stock to be issued shall equal the number of shares of Common Stock that
may be purchased with (or having a market value equal to) the amount of cash
otherwise payable to such Director by the Corporation for attendance at such
meetings.
A director may elect to defer receipt of all of his annual fees payable under
the Plan in cash for the period beginning on January 1st of the following year
and continuing until the Corporation receives written notice from the Director
terminating such deferral.
BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS
-----------------------------------------------
Certain directors and executive officers of the Corporation and its subsidiaries
and their associates were customers of, and had transactions with one or more of
the Corporation's subsidiaries in the ordinary course of business during 2001.
Similar transactions may be expected to take place in the future. Loans and
commitments included in such transactions were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and did not involve more than the
normal risk of collectability, nor did they present other unfavorable features.
In addition, the Corporation's subsidiary, First National Trust Company, acts as
fiduciary under various employee benefit plans of and as investment manager to
certain customers, whose officers and directors are also directors of the
Corporation and of its bank subsidiaries.
During 2001, the purchase of goods and services, or the lease of property, by
the Corporation or other subsidiaries of the Corporation in the ordinary course
of business included transactions with various director-related companies. The
amounts involved in these non-credit transactions were not material to the
business of the Corporation or to the business of any such director-related
company. No director had a material interest in any such transaction.
Director Moss' company, Associated Contractors of Conneaut Lake, Inc., performed
certain construction management services for the Corporation's subsidiary banks.
The total payments made to Associated Contractors of Conneaut Lake, Inc. in
connection with these services were approximately $740,918, of which amount, Mr.
Moss' firm remitted approximately $609,741 to various subcontractor firms.
Accordingly, Associated Contractors of Conneaut Lake, Inc. retained
approximately $131,127 of these payments for the services provided to the
Corporation's subsidiary banks. The amounts paid by the Corporation's subsidiary
banks to Associated Contractors of Conneaut Lake, Inc., were not material to the
Corporation or to Associated Contractors of Conneaut Lake, Inc.
First National Bank of Pennsylvania, a wholly owned banking subsidiary of the
Corporation, leases from director Donna Winner and her husband approximately
6,000 square feet of office space in Sharon, Pennsylvania for use as a branch
office facility. The lease agreement provides for a term of twenty years, which
commenced June 1, 2000, and for lease payments at an annual rate of $54,000,
subject to adjustment every five years based on the change in the consumer price
index. First National Bank of Pennsylvania is also required to pay one-half of
real estate taxes, insurance and certain maintenance expenses with respect to
the leased property. The Corporation believes, based upon independent market
research, that the lease rate and terms are comparable to those prevailing in
the Sharon market at the time the lease was entered into.
In February 2001, First National Bank of Pennsylvania completed the sale of two
parcels of real estate located in Sharon, Pennsylvania, to director Donna Winner
and her husband for an aggregate cash purchase price of $216,000. The purchase
price was negotiated on behalf of the Corporation by Stephen J. Gurgovits, Vice
Chairman of the Corporation, and was determined based on independent appraisals
of the two properties, taking into account market conditions, practical
limitations on the future use of the premises, and a restrictive covenant
preventing future use of the premises by competitor banks. The transaction was
approved by a majority of the Corporation's board of directors, with director
Winner abstaining.
The Corporation and Peter Mortensen, the present Chairman of the Board and
former Chief Executive Officer of the Corporation, agreed, effective January 24,
2002, to the buy-out and cancellation of an agreement pursuant to which Mr.
Mortensen had agreed to serve as an advisor to the Corporation during a period
beginning on January 1, 2001, and ending not later than December 31, 2007. The
terms of the buy-out and cancellation agreement are described on Page 18 under
the caption "Termination of Employment Continuation Agreement with Mr.
Mortensen".
BOARD AND COMMITTEE MEETINGS
----------------------------
During 2001, the Board of Directors of the Corporation held four meetings. All
directors attended at least 75% of the aggregate number of meetings of the Board
of Directors and the respective committees on which they serve.
The Board of Directors has appointed an Audit Committee ("Committee") consisting
of Messrs. Lynch, Mace, Moss, Quinn and Werner. Committee members satisfy the
independence requirements of Nasdaq and the Corporation's Audit Committee
Charter, which has been approved by the Board of Directors. Additional
information regarding the functions performed by the Committee, its membership,
and the number of meetings held during the fiscal year is set forth in the
"Report of Audit Committee," included in this annual proxy statement.
The Compensation Committee of the Board of Directors consists of Messrs.
Blackwood, Cricks, Lindsay and Weller. During 2001, Mr. Mortensen, as Chairman,
and Mr. Tice as Chief Executive Officer of the Corporation, attended meetings of
the Corporation's Compensation Committee, but did not vote on any matters and
did not participate in any deliberations regarding their own compensation.
During 2001, the Compensation Committee met six times. Duties of the
Compensation Committee include reviewing the performance of and establishing
compensation for the officers of F.N.B. Corporation and affiliate chief
executive officers; reviewing and approving the compensation of affiliate senior
officers as proposed by affiliate boards of directors; and reviewing
compensation and benefit matters that have corporate-wide significance. The
Compensation Committee also administers the various Stock Option Plans, the
Restricted Stock and Incentive Bonus Plan and the Directors' Compensation Plan
and awards made under these Plans.
The Nominating Committee of the Board of Directors consists of Messrs. Campbell,
Quinn, Strimbu and Wallace. During 2001, the Nominating Committee met two times.
The Nominating Committee is responsible for selecting and recommending to the
Board of Directors nominees for election as director. The Nominating Committee
will consider nominees recommended by shareholders of the Corporation. Such
recommendations must be made in writing, include a statement of the nominee's
qualifications, and be addressed to the Nominating Committee at the address of
the Corporation. Shareholders may also nominate persons for election as
directors in accordance with the procedures set forth in the Corporation's
Bylaws. Written notification of such nomination, containing the required
information, must be mailed or delivered to the Secretary of the Corporation not
less than 14 days prior to the Annual Meeting.
REPORT OF AUDIT COMMITTEE
-------------------------
To Our Shareholders:
The Audit Committee ("Committee") oversees the Corporation's financial reporting
process on behalf of the Board of Directors. Management has the primary
responsibility for the financial statements and the reporting process including
the systems of internal controls. In fulfilling its oversight responsibilities,
the Committee reviewed the audited financial statements in the Annual Report
with management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial statements.
The Committee reviewed with Ernst & Young LLP, its independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Corporation's
accounting principles and such other matters as are required to be discussed
with the Committee in accordance with Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Committee has discussed with Ernst & Young LLP their independence from
management and the Corporation including the matters in the written disclosures
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees). Fees for the last annual audit were $246,830
and all other fees were $546,230, including audit related services of $495,450
and non-audit services of $50,780. Audit related services include fees for
merger and acquisition activity, employee benefit plan audits, consents, and
accounting consultations. Non-audit services consisted principally of various
tax related services and advice. The Committee has considered whether the
provision of non-audit services by Ernst & Young LLP is compatible with
maintaining their independence.
The Committee discussed with the Corporation's internal auditors and Ernst &
Young LLP the overall scope and plans for their respective audits. The Committee
meets with the internal auditors and Ernst & Young LLP, with and without
management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls, and the overall quality of the
Company's financial reporting. The Committee met six times during 2001.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended December 31, 2001
for filing with the Securities and Exchange Commission.
Respectfully submitted,
Edward J. Mace, Chairman
Paul P. Lynch
Robert S. Moss
William A. Quinn
Eric J. Werner
EXECUTIVE COMPENSATION, BENEFITS AND RELATED MATTERS
----------------------------------------------------
REPORT OF COMPENSATION COMMITTEE
--------------------------------
To Our Shareholders:
The following is the Report of the Compensation Committee to Shareholders on the
Corporation's executive compensation policies with respect to compensation
reported for fiscal year 2001. In accordance with the rules of the SEC, this
report shall not be incorporated by reference into any of the Corporation's
future filings made under the Securities Exchange Act of 1934 or under the
Securities Act of 1933, and shall not be deemed to be soliciting material or to
be filed with the SEC under the Securities Exchange Act of 1934 or the
Securities Act of 1933.
RESPONSIBILITIES AND COMPOSITION OF THE COMPENSATION COMMITTEE
--------------------------------------------------------------
The Compensation Committee ("Committee") meets periodically during the course of
the year and establishes compensation programs for executive officers and senior
managers of the Corporation and its affiliates that are designed to attract,
retain, motivate and appropriately reward individuals who are responsible for
the Corporation's short- and long-term profitability, growth and return to
shareholders on their investment. The Committee conducts regular comprehensive
reviews of the Corporation's executive compensation program and establishes the
annual compensation of the Corporation's executive officers. The Committee also
takes action, or recommends that the Board take action, regarding the adoption,
amendment or administration of executive compensation, incentive and benefit
plans. The Committee is comprised entirely of directors who are not officers of
the Corporation or its affiliates.
COMPENSATION PHILOSOPHY AND OBJECTIVES
--------------------------------------
The central objective of the compensation philosophy of the Corporation is to
provide fair and reasonable compensation to all employees, including its
executive officers and senior managers. The Committee maintains that the
compensation of the Corporation's executive officers and senior managers should
be determined by a performance-based framework that enhances shareholder value
through the integration of the overall financial condition and results of the
operation of Corporation with individual contribution and business unit
performance. Within this philosophy, the Committee's specific objectives are to:
(i) provide annual compensation that takes into account the Corporation's
performance relative to its financial goals and objectives and the performance
of functions and business units under the executive's and senior manager's
management and performance against assigned individual goals; (ii) align the
financial interests of the executive officers with those of shareholders by
providing significant equity-based long-term incentives; and (iii) offer a total
compensation program for executive officers based on the level of responsibility
of the executive's position and necessary skills and experience relative to
other senior management positions and comparative compensation of similarly
positioned executives and senior managers of peer group financial institutions.
A critical aspect of the committee's compensation philosophy is that some
portion of the executive officer's and senior manager's total compensation be
"at risk." The "at risk" portion is a function of the executive officer's and
senior manager's performance against Corporation, business unit and individual
goals and objectives.
The following two components of executive officer and senior manager
compensation are "at risk": (i) an annual cash bonus based on short-term
performance; and (ii) stock options as an award for long-term performance. The
total cash compensation opportunities for executive officers and senior managers
is targeted at the median of industry practices among the Corporation's peer
group. In addition, the Corporation's incentive cash and bonus award program is
specifically designed to offer an opportunity for stronger rewards when the
Corporation's performance exceeds its financial goals and objectives.
COMPENSATION COMPONENTS AND PROCESS
-----------------------------------
The major components of the Corporation's executive officer and senior manager
compensation are: (i) base salary, (ii) annual incentive awards and (iii)
long-term incentive awards (typically in the form of stock options or restricted
stock).
The process utilized by the Committee in determining executive officer and
senior manager compensation levels for all of these components is based upon the
Committee's subjective judgment and takes into account objective qualitative and
quantitative factors. However, the Committee emphasizes that in determining
executive officer compensation levels, particular attention is placed on tying a
significant portion of executive compensation to the success of the executive
officer and senior manager and the Corporation in meeting predetermined
financial and other performance goals.
In making compensation decisions, the Committee relies upon the work performed
by its independent compensation consultant and the Corporation's internal
support staff. The independent compensation consultant reviewed market data to
determine relevant compensation practices of the Corporation's peer group. The
Corporation's peer group developed by the independent compensation consultant
consisted of national and regional financial institutions and bank holding
companies that are determined to be indicative of the Corporation's financial
service competitors in terms of size and mix of business. The Committee
determined that the Corporation's peer group identified by the independent
consultant is reasonable to measure the Corporation's compensation practices
given the Corporation's continued and expected growth. The peer information
provides guidance to the Committee, but the Committee does not target total
compensation or any component thereof to any particular point within, or
outside, the range of the peer group results.
In general, the Committee continues to adjust the mix of base salary, annual
incentive awards and long-term incentives. In making such determinations, the
Committee considers various factors and criteria including: (i) relevant
industry compensation practices; (ii) the complexity and level of responsibility
attendant to the executive position and job function; (iii) the importance of
the executive's position to the Corporation compared to other executive
positions; and (iv) the competitiveness of the executive's total compensation.
Specifically, the Committee's focus is to emphasize the amount of executive
compensation that is at risk. Executive officers received annual cash incentive
awards under the Corporation's Executive Incentive Compensation Plan.
LONG-TERM INCENTIVE AWARDS
--------------------------
The stock-based awards (stock option awards and restricted stock grants) are
generally granted to executive officers and senior managers on an annual basis.
It has been the practice of the Committee to grant stock options and restricted
stock to executive officers and senior management. The stock option awards
cannot be issued with an exercise price below the market price of the
Corporation's Common Stock at the time of the award and the exercise price
cannot be changed after the award is issued, except to accommodate any
dividends, stock splits or conversions which would affect all shareholders.
The Committee has historically granted stock options as a means of providing
long-term incentives to employees. All stock options granted by the Corporation
under its 2001 Incentive Plan "vest" incrementally over a five-year period based
on the optionee's continued employment by the Corporation or one of its
principal subsidiaries. The Committee therefore based its 2001 decisions with
regard to the stock options granted to its executive officers primarily upon the
total number of options available for grant, the officer's position and a
multiple of the officer's base salary.
The Committee granted restricted stock in 2001 to certain non-executive officers
and other employees under the Corporation's 2001 Incentive Plan. There were no
restricted stock grants awarded to the Corporation's Executive Officers during
2001. The restricted stock grants are to reward individuals who made a
particularly
important contribution to the Corporation in 2001. These grants are also a key
component of the Committee's long-term incentive compensation policy because
restricted stock granted under this plan only "vests" incrementally over a
five-year period based on the recipient's continued employment by the
Corporation or one of its principal subsidiaries.
CHIEF EXECUTIVE OFFICER COMPENSATION
------------------------------------
When deciding the compensation to be paid to the Corporation's Chief Executive
Officer, the Committee acts privately, without the Chief Executive Officer or
other officers present. As appropriate, the Committee will confer with its
independent compensation consultant to determine whether the Corporation's
Executive Compensation Program is consistent with marketplace practices linking
pay to performance. In general, the Committee considers the Corporation's
overall financial performance and measures such financial performance as
compared to its peer group's financial performance and compensation data when
making decisions regarding the Chief Executive Officer's compensation. In
evaluating the compensation of Mr. Gary Tice for services rendered in 2001 as
Chief Executive Officer of the Corporation, the Committee examined both
quantitative and qualitative factors. The Committee also considers the Chief
Executive Officer's leadership, decision-making skills, experience, knowledge,
communication with the Board and strategic recommendations, as well as the
Corporation's positioning for future performance. The Committee does not place
more relative weight on one of these factors, but the Corporation's financial
performance is generally given the most weight.
The Committee's significant decisions regarding the Chief Executive Officer's
compensation are reported to and discussed with and ratified by the full Board.
These discussions are held privately, without the Chief Executive Officer or any
of the Corporation's other officer's present.
In deciding upon Mr. Tice's compensation, as described in the "Summary
Compensation Table" contained on Page 14 of this proxy statement, the Committee
considered the following significant quantitative accomplishments, in addition
to the Corporation's attainment of financial performance goals for 2001.
- Core operating earnings were $51.8 million, a 18% increase compared
with core operating earnings in 2000. Core operating earnings per
diluted share were $1.95, representing an increase of 16% from the
prior year. Core cash earnings were $2.00 per diluted share, up 17%
compared with core cash earnings per diluted share in 2000.
- The return on average assets and return on average equity, based on
core operating earnings, for 2001 was 1.3% and 14.7%, respectively,
which represented improvements from 1.1% and 13.7%, respectively, from
2000.
- Net interest income during 2001 on a tax-equivalent basis was $173.1
million, which represents a 6% increase from 2000. The net interest
margin for the year ended December 31, 2001 was 4.69%, up from 4.58% in
2000. Non-interest income increased 31% to $82.8 million in 2001,
compared to $63.4 million in 2000. Non-interest income comprised 33% of
net revenues in 2001 compared to 28% in 2000. Following its acquisition
of Promistar Financial Corporation and Central Bank Shares, Inc. in
January 2002, the Corporation had approximately $6.7 billion in assets
and now ranks among the nation's sixty-three largest bank holding
companies.
- The Corporation continued to maintain its superior asset quality in
2001, as evidenced by the Corporation's non-performing assets as a
percentage of total assets at a mere 0.54%.
In addition to the above quantitative considerations, the Committee reviewed the
following noteworthy accomplishments of the Corporation in 2001 that are
qualitative in nature. Mr. Tice was instrumental in the development and
implementation of the Corporation's charter consolidation plan in 2001 as part
of an effort to
improve long-term shareholder value by promoting operational efficiencies and
cost reductions. Under this program, the Corporation's banking affiliates in
Florida and Pennsylvania were combined under a single operating charter in each
state, thereby reducing the number of bank charters subject to regulatory
supervision from 7 to 2. The Corporation's charter consolidation initiative
resulted in significant cost reductions and enhanced efficiencies by the
elimination of certain operational redundancies and duplicative administrative
and regulatory obligations.
The Corporation has embarked upon the implementation of a new state of the art
core data processing system for the Corporation's banking and financial
subsidiaries and anticipates that implementation of this new core system will
promote significantly improved customer service, technological efficiencies,
streamlined operations and meaningful cost savings in the future for the
Corporation.
Under Mr. Tice's stewardship the Corporation has continued to exploit the
substantial revenue opportunities presented by its wealth management, trust,
insurance agency and investment businesses, which increasingly make up a
substantial portion to the Corporation's overall earnings. Moreover, Mr. Tice
has positioned the Corporation to take advantage of the significant revenue
opportunities presented by the integration of the cross-marketing and
cross-sales opportunities between these businesses and the Corporation's banking
subsidiaries.
After considering all of the above-described quantitative and qualitative
factors carefully, the Committee authorized the payment to Mr. Tice of the
compensation described in the Summary Compensation Table contained on Page 14 of
this proxy statement. The Committee's decisions relating to Mr. Tice's
compensation were ratified by the Board. Also, consistent with the principles
and procedures outlined in this Report, the Committee approved the compensation
of the Corporation's other executive officers for 2001 and said decisions were
likewise ratified by the Board.
TAX POLICY
----------
Section 162(m) of the Internal Revenue Code disallows a federal income tax
deduction for compensation over $1 million paid to the Chief Executive Officer
and any of the executive officers included in the Summary Compensation Table
contained on Page 14 of this proxy statement, provided that they are serving in
that capacity as of the last day of the Corporation's fiscal year.
One exception to Section 162(m)'s disallowance of a federal income tax deduction
for compensation over $1 million applies to performance-based compensation paid
pursuant to shareholder-approved plans. Awards made under the 2001 Incentive
Plan can be made eligible for the performance-based exception and therefore
eligible as a federal income tax deduction for the Corporation.
Although the Committee keeps in mind the desirability of controlling the
Corporation's non-deductible compensation expense, the Committee also believes
that it is equally important to maintain the flexibility and competitive
effectiveness of the Corporation's executive compensation program. Therefore,
the Committee may from time to time, decide to make grants and awards which may
not be deductible for federal income tax purposes due to the provisions of
Section 162(m).
CONCLUSION
----------
Based upon its review of the Corporation's executive compensation program, the
Committee believes that the program's basic structure is appropriate,
competitive and effective to serve the purposes for which it was established.
Respectfully submitted,
Charles T. Cricks, Chairman
James T. Weller
W. Richard Blackwood
James S. Lindsay
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
-----------------------------------------------------------
During 2001, Mr. Mortensen, as Chairman, and Mr. Tice, as Chief Executive
Officer of the Corporation, attended meetings of the Corporation's Compensation
Committee, but did not vote on any matter or participate in any deliberations
regarding their own compensation.
Mr. Mortensen serves on the board of directors of Liberty Steel Products, Inc.,
a closely held corporation which is wholly owned by Mr. Weller and his family.
Mr. Weller, a member of the Corporation's Compensation Committee, is Chairman of
Liberty Steel Products, Inc.
EXECUTIVE REMUNERATION
----------------------
The following table sets forth information regarding remuneration paid by the
Corporation and its subsidiaries for the years shown to the Chief Executive
Officer of the Corporation and the four other most highly compensated executive
officers of the Corporation (the "Named Executive Officers").
===================================================================================================================================
SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
Annual Compensation ------------------------------------
Awards Payouts
----------------------------------------------------------------------------------------------------------------
Other Restricted Securities LTIP All Other
Name and Annual Stock Underlying Payouts Compensation
Principal Year Salary Bonus(1) Compensation(2) Award(3) Options ($) ($)
Position ($) ($) ($) ($) (#)
-----------------------------------------------------------------------------------------------------------------------------------
Gary L. Tice 2001 460,000 325,000 None 75,607 None 146,352(4,5)
President and Chief 2000 362,000 180,000 None 43,897 None 150,105
Executive Officer 1999 340,000 223,000 None 40,402 None 163,855
Stephen J. Gurgovits 2001 355,008 176,000 None 42,307 None 43,467(4,5)
Vice Chairman 2000 338,000 121,903 None 41,072 None 28,823
1999 315,000 236,000 None 37,572 None 15,851
Kevin C. Hale(6) 2001 263,000 196,000 None 30,305 None 20,822(4,5)
Executive V.P. and 2000 205,492 50,000 None 27,562 None 2,406
Chief Operating Officer
William J. Rundorff 2001 238,008 95,000 None 21,938 None 21,296(4,5)
Executive V.P. and 2000 227,000 82,581 None 21,383 None 16,870
Chief Legal Officer 1999 214,992 126,000 None 19,473 None 11,338
John D. Waters 2001 227,004 90,000 None 20,925 None 17,681(4,5)
Executive V.P. and 2000 216,500 106,000 None 20,394 None 15,757
Chief Financial Officer 1999 190,008 81,000 None 18,566 None 13,387
===================================================================================================================================
(1) Amount earned by the officer as a cash incentive bonus under the
Corporation's Incentive Cash and Bonus Award Program.
(2) The aggregate amount of payments made to each officer for perquisites or
other personal benefits did not exceed 10% of salary and bonus in 2001.
(3) Aggregate restricted stock holdings in terms of number of shares and dollar
value as of December 31, 2001 for each named executive officer were as
follows: Mr. Tice: 3,003, $79,248; Mr. Gurgovits: 1,574, $41,541;
Mr. Hale: 0, $0; Mr. Rundorff: 994, $26,230 and Mr. Waters 124, $3,259.
(4) Includes the following amounts paid or accrued by the Corporation for 2001
under the following programs to Messrs. Tice, Gurgovits, Hale, Rundorff and
Waters, respectively: 401(k) Plan (employer matching contributions),
$15,300, $5,100, $15,300, $5,100 and $5,100; Basic Retirement Plan (employer
matching contributions relating to 401(k) Plan), $25,905, $31,124, $5,522,
$13,122 and $8,240; Supplemental Disability, $8,969, $5,102, $0, $0 and $0.
(5) Includes the following amounts which represent the present value of imputed
interest on the Corporation's portion of split dollar life insurance
premiums paid during 2001: Mr. Tice, $96,175; Mr. Gurgovits, $2,141;
Mr. Hale, $0; Mr. Rundorff, $3,074 and Mr. Waters $4,340. These premiums
will be returned to the Corporation upon the earlier of either the death of
the covered employee or termination of the policy.
(6) Mr. Hale joined the Corporation in March 2000.
DEFERRED COMPENSATION
---------------------
In addition to the Basic Retirement Plan (more fully described below), the Board
of Directors of the Corporation and FNBPA has established a Deferred
Compensation Plan (the "Compensation Plan") for Mr. Gurgovits and other officers
which commenced January 1, 1986. The Compensation Plan provides for payments of
annual benefits of $25,000 for Mr. Gurgovits for a period of ten years
commencing upon the occurrence of: (a) retirement from the Corporation or FNBPA;
(b) complete and total disability; or (c) the death of the participant in the
event such death occurs prior to retirement. The entire $25,000 will be paid
pursuant to Deferred Compensation Agreements.
STOCK OPTIONS
-------------
The following tables show certain information relating to stock options granted
during the last fiscal year and aggregated stock options for the named executive
officers and all unexercised options held by such officers as of December 31,
2001.
===================================================================================================================================
OPTION GRANTS IN LAST FISCAL YEAR
-----------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value of
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants(1) for Option Term(4)
-----------------------------------------------------------------------------------------------------------------------------------
Securities % of Total Exercise
Underlying Options Granted or Base
Options Granted to Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
-----------------------------------------------------------------------------------------------------------------------------------
Mr. Tice 74,205(2) 13.6 21.70 01/22/11 1,012,669 2,566,317
1,402(3) 5.3 21.70 01/22/11 19,133 48,487
Mr. Gurgovits 40,905(2) 7.5 21.70 01/22/11 558,227 1,414,665
1,402(3) 5.3 21.70 01/22/11 19,133 48,487
Mr. Hale 30,305(2) 5.5 21.70 01/22/11 413,570 1,048,073
Mr. Rundorff 21,938(2) 4.0 21.70 01/22/11 299,386 758,707
Mr. Waters 20,925(2) 3.8 21.70 01/22/11 285,562 726,674
===================================================================================================================================
(1) Adjusted for a 5% stock dividend declared on April 23, 2001.
(2) Options were granted on January 22, 2001 and are 20% vested on
each of the first through fifth anniversaries of the grant date.
(3) Options were granted on January 22, 2001 and are immediately 100% vested.
(4) In order for the gains to be realized over the ten-year term of the option,
the stock price at expiration date January 22, 2011 would be $35.35 and
$56.28, reflecting increases in the overall market price of each share of
Common Stock of the Corporation by approximately 63% and 159%, respectively.
===================================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
-----------------------------------------------------------------------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised
Unexercised In-The-Money Options at
Options at 12/31/01 12/31/01($)(1)
Value --------------------------------------------------------------------
Shares Acquired Realized
Name on Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
-----------------------------------------------------------------------------------------------------------------------------------
Mr. Tice 4,543 89,020 89,037 153,866 1,154,874 748,834
Mr. Gurgovits 8,138 160,757 90,494 105,823 838,199 484,470
Mr. Hale 0 0 5,512 52,355 28,444 255,906
Mr. Rundorff 4,881 96,663 60,340 56,649 597,243 254,977
Mr. Waters 0 0 44,505 55,155 318,994 252,076
===================================================================================================================================
(1) Represents the difference between the aggregate market value a December 31,
2001, of the shares subject to the options and the aggregate option price
of those shares.
RETIREMENT BENEFITS
-------------------
The following table illustrates the maximum annual benefits payable in 2001
under the life annuity option of the Corporation's pension plan, in which
Messrs. Gurgovits, Rundorff and Waters participate, and the Basic Retirement
Plan (more fully described below) upon normal retirement at age 62. Mr. Tice and
Mr. Hale do not participate in the same Corporation pension plans as Messrs.
Gurgovits, Rundorff and Waters, but do participate in the Basic Retirement Plan.
Messrs. Tice and Hale also participate in the F.N.B. Corporation Salary Savings
Plan and Executive Management Supplemental Retirement Plan. The estimated annual
pension payments shown in the chart below are reasonable representations of the
total benefits under the Basic Retirement Plan, the F.N.B. Corporation Salary
Savings Plan, the portion of the Executive Management Supplemental Retirement
Plan related to pension benefits and social security.
======================================================================================================================
ESTIMATED ANNUAL PENSION PAYMENTS
----------------------------------------------------------------------------------------------------------------------
Average Annual Earnings Years of Service
for Five Years Preceding
Retirement --------------------------------------------------------------------------------
10 15 20 25 or More
---------------------------------------------------------------------------------------------------------------------
$200,000 $ 81,555 $ 95,150 $108,744 $122,339
$225,000 $ 99,055 $112,650 $126,244 $139,839
$250,000 $116,555 $130,150 $143,744 $157,339
$275,000 $134,055 $147,650 $161,244 $174,839
$300,000 $151,555 $165,150 $178,744 $192,339
$325,000 $169,055 $182,650 $196,244 $209,839
$350,000 $186,555 $200,150 $213,744 $227,339
$375,000 $204,055 $217,650 $231,244 $244,839
$400,000 $221,555 $235,150 $248,744 $262,339
$500,000 $291,555 $305,150 $318,744 $332,339
$600,000 $361,555 $375,150 $388,744 $402,339
=====================================================================================================================
The retirement benefit for each employee covered by the pension plan is a
monthly benefit in the form of a Five Year Certain and Life annuity, equal to
1.2% of Final Average Earnings plus .5% of Final Average Earnings in excess of
the employee's Covered Compensation (as defined by Section 401(l)(5)(E) of the
Internal Revenue Code) times Years of Service, not to exceed twenty-five (25)
years. The Final Average Earnings figure is calculated using the highest 60
consecutive months of earnings of the last 120 months of service as an employee.
The benefits listed above are not subject to deduction for Social Security.
Compensation included for computation of benefits is base salary as indicated in
the Summary Compensation Table. As of December 31, 2001, credited years of
service under the plan were as follows: Mr. Gurgovits, 40 years; Mr. Rundorff,
11 years; and Mr. Waters, 7 years.
BASIC RETIREMENT PLAN
---------------------
The Basic Retirement Plan (the "BRP") is an unfunded plan providing supplemental
retirement benefits to those officers of the Corporation and its subsidiaries
who are designated by the Board of Directors of the Corporation (the "Board").
The basic benefits under the BRP, payable when a participant retires at or after
the normal retirement date under his employer's defined benefit or defined
contribution plan ("Primary Qualified Plan"), is a monthly benefit equal to
either 50%, 60% or 70% (as determined by the Board) of the participant's highest
average monthly cash compensation during any five consecutive calendar years
within the last ten calendar years of employment. This amount is reduced by the
monthly benefit to which the participant would be entitled under Social Security
at normal retirement under the Primary Qualified Plan in which he participates
and (to the extent the benefit relates to employer contributions other than
matching contributions) under other benefit plans designated by the Board. The
benefit also includes credits equal to matching stock contributions
which certain participants were prevented from receiving pursuant to the
Corporation's 401(k) Plan due to limits imposed by the Internal Revenue Code.
The BRP contains provisions for reducing the basic benefit described above if
the participant retires before his normal retirement age but on or after the
early retirement date permitted by the Primary Qualified Plan. The participant's
rights to benefits under the BRP vest pursuant to a schedule set forth in the
BRP which takes into account years of participation in the BRP and years of
credited service under the participant's Primary Qualified Plan. A participant
automatically becomes 100% vested if he is employed with the Corporation or a
subsidiary on his normal retirement date, if a "change in control" (as defined
in the BRP) occurs, or in the event of his death or total and permanent
disability. Benefits are forfeited in the event a participant's employment is
terminated for cause or if the participant retires before the early retirement
date provided in his Primary Qualified Plan.
EMPLOYMENT AGREEMENTS
---------------------
The Corporation has entered into employment agreements with Messrs. Tice,
Gurgovits, Rundorff, Waters and Hale. Under these agreements, each executive
receives an annual base salary that is subject to periodic increases at the
discretion of the Corporation's Board of Directors. At December 31, 2001, these
annual base salaries were $460,000 for Mr. Tice; $355,008 for Mr. Gurgovits;
$263,000 for Mr. Hale; $238,008 for Mr. Rundorff; and $227,004 for Mr. Waters.
Each of the executives is entitled to receive all other benefits approved by the
Board of Directors and made available to senior executive officers of the
Corporation. In addition, the Corporation has agreed to pay the premiums on
split-dollar life insurance policies with aggregate death benefits of $2,610,000
for Mr. Tice and $811,000 for Mr. Gurgovits.
The employment agreement of each of Messrs. Tice and Gurgovits has a term of
five years, while the employment agreement of each of Messrs. Hale, Rundorff and
Waters has a term of three years. Each of the agreements renews automatically
each year for one additional year; provided, however, that the term of
agreements will not extend beyond the year in which the executive reaches the
age of 65 in the cases of Messrs. Gurgovits and Tice.
In the event the employment of any of the executives is terminated without
cause, the executive is entitled to receive his base salary then in effect
through the end of the term of the Agreement. Upon a change in control of the
Corporation, Messrs. Tice, Gurgovits and Hale would each be entitled to receive
an amount equal to approximately three times his base salary then in effect, and
Messrs. Rundorff and Waters would be entitled receive an amount equal to twice
his base salary then in effect. In addition, Mr. Tice would also be entitled to
receive an amount equal to three times the highest bonus paid to him in the
three-year period prior to the change of control, and the Corporation would be
required to pay the premiums on his split-dollar life insurance policy and
maintain his benefits coverage for up to 36 months from the date of the change
of control.
Each of the employment agreements contains a confidentiality
provision and a covenant not to compete for a term
of up to three years following the date of termination. In addition, the
employment agreements of Messrs. Gurgovits, Tice and Hale contain covenants not
to solicit any of the Corporation's executives or employees for a period of up
to two years following the date of termination.
TERMINATION OF EMPLOYMENT CONTINUATION AGREEMENT WITH PETER MORTENSEN
---------------------------------------------------------------------
The Corporation and Peter Mortensen, the present Chairman of the Board and
former Chief Executive Officer of the Corporation, have agreed to the buy-out
and cancellation of an agreement pursuant to which Mr. Mortensen had agreed to
serve as an internal advisor to the Corporation during a period beginning on
January 1, 2001 and ending not later than December 31, 2007. Under that
agreement, Mr. Mortensen was entitled to receive annual compensation in an
amount equal to one-half of the amount of his salary during 2000, the last
year during which he served as the Corporation's Chief Executive Officer, and
certain other benefits. Mr. Mortensen received $280,000 in salary during 2001
pursuant to this agreement. In consideration of the termination of the
agreement, and in lieu of the payment of any bonus to Mr. Mortensen for 2001,
the Corporation paid $3,166,982 on January 24, 2002, to a trust of which Mr.
Mortensen is the beneficiary and awarded 156,800 stock options to Mr. Mortensen
at an exercise price of $26.90. The Corporation will also provide certain
benefits to Mr. Mortensen until his 72nd birthday, including medical and dental
benefits, use of corporate office space and corporate transportation and
reimbursement of customary business expenses. The buy-out agreement was approved
by the Corporation's Compensation Committee and ratified by the Corporation's
Board. Mr. Mortensen continues to serve as the Chairman of the Corporation and
is entitled to receive all usual and customary fees for his service as a
director of the Corporation.
STOCK PERFORMANCE GRAPH
-----------------------
The following five-year performance graph compares the cumulative total
shareholder return (assuming reinvestment of dividends) on the Corporation's
Common Stock (O) to the Nasdaq Composite Index (|X|), the Nasdaq Bank Index (o)
and the Russell 2000 Index (X). Beginning with the 2002 Proxy, the Corporation
will no longer use the Nasdaq Composite Index (|X|) in future stock performance
graphs. The Corporation believes the Russell 2000 Index (X)(in which the
Corporation stock is included) offers a more appropriate comparative basis of
performance than does the Nasdaq Composite Index (|X|). This stock performance
graph assumes $100 was invested on December 31, 1996, and the cumulative return
is measured as of each subsequent fiscal year end.
F.N.B. CORPORATION FIVE-YEAR STOCK PERFORMANCE
TOTAL RETURN, INCLUDING STOCK AND CASH DIVIDENDS
[GRAPHIC OMITTED]
Period Ending
--------------------------------------------------------------------------
INDEX 12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/312000 12/31/2001
-----------------------------------------------------------------------------------------------------
FNB Corporation 100.00 175.64 141.64 120.46 123.69 168.13
Nasdaq - Total US 100.00 122.48 172.68 320.89 193.01 153.15
Nasdaq Bank Index 100.00 167.41 166.33 159.89 182.38 197.44
Russell 2000 100.00 122.36 119.25 144.60 140.23 143.71
SECURITY OWNERSHIP OF CERTAIN SHAREHOLDERS
------------------------------------------
To the Corporation's knowledge, no shareholder owns in excess of 5% of the
issued and outstanding shares of the Corporation's Common Stock. The following
table sets forth certain information concerning persons known to the Corporation
to be the beneficial owner of 5% or more of the outstanding Series A Preferred
Stock as of February 25, 2002.
====================================================================================================
Shares Percent of Outstanding Series A
Name and Address Beneficially Owned Preferred Stock Beneficially Owned
===================================================================================================
Hilton G. Klein 1,080 5.6
122 Hilton Drive
New Brighton, PA 15066-3510
Joan H. Klein 1,080 5.6
122 Hilton Drive
New Brighton, PA 15066-3510
===================================================================================================
INDEPENDENT AUDITORS
--------------------
Ernst & Young LLP served as independent auditors of the Corporation for the
fiscal year ended December 31, 2001 and has been selected by the Board of
Directors to serve as independent auditors of the Corporation for the fiscal
year ending December 31, 2002. Representatives of Ernst & Young LLP are expected
to be present at the Annual Meeting and will have the opportunity to make a
statement if they desire to do so and to respond to appropriate questions.
AUDIT FEES. Fees for professional services rendered by Ernst Young LLP for the
audit of the Corporation's annual financial statements for the year ended
December 31, 2001 and for the review of the financial statements included in the
Corporation's Reports on Form 10-Q during 2001, were $246,830.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. During 2001, Ernst
& Young LLP did not perform any services with regard to financial information
systems design and implementation.
ALL OTHER FEES. The aggregate fees for all other services provided by Ernst &
Young LLP during 2001 were $546,230, including audit related services of
$495,450 and non-audit services of $50,780. Audit related services include fees
for merger and acquisition activity, employee benefit plan audits, consents, and
accounting consultations. Non-audit services consisted principally of various
tax related services and advice.
The Audit Committee of the Board of Directors has considered whether the
provision of non-audit services by Ernst & Young LLP to the Corporation is
compatible with maintaining such firm's independence. See also "Report of Audit
Committee".
ANNUAL REPORT ON FORM 10-K
--------------------------
Upon written request to the undersigned secretary of the Corporation (at the
address specified on page 1) by any shareholder whose proxy is solicited hereby,
the Corporation will furnish to such shareholder without charge a copy of its
Annual Report on Form 10-K for the year ended December 31, 2002, as filed with
the Securities and Exchange Commission, together with financial statements and
schedules thereto.
ADDITIONAL INFORMATION
----------------------
The Corporation knows of no other matters which will be presented to
shareholders for action at the Annual Meeting. However, if other matters are
presented which are proper subjects for action by shareholders, it is the
intention of those named in the accompanying proxy to vote such proxy in
accordance with their judgment upon such matters.
Solicitation of proxies will be made by employees of the Corporation, and the
cost will be borne by the Corporation. Proxies will be solicited by mail and, in
limited instances, by telephone, telegraph and personal interview. The
Corporation will also request brokerage houses and other custodians, nominees
and fiduciaries to forward soliciting material to the beneficial owners of the
stock held of record by such persons and will reimburse such persons for their
costs incurred in forwarding such materials.
SHAREHOLDER PROPOSALS
---------------------
The Corporation's Bylaws provide that no proposals submitted by a shareholder
of the Corporation for consideration at the Annual Meeting will be considered
unless the Secretary of the Corporation has received written notice of the
matter proposed to be presented from the shareholder on or prior to the date
which is 120 days prior to the date on which the Corporation first mailed its
proxy materials for the prior year's annual meeting of the shareholders.
Accordingly, any shareholder proposal must be submitted to the Corporation by
November 25, 2002, to be considered for the 2003 Annual Meeting of Shareholders.
In accordance with SEC Rule 14a-4(c) under the Securities Exchange Act of 1934,
proxy holders will have discretionary authority to vote in accordance with their
judgment upon any proposal which is not timely received by the Corporation or
which does not otherwise comply with applicable SEC rules, including Rule
14a-4(c).
BY ORDER OF THE BOARD OF DIRECTORS
David B. Mogle, Secretary
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS.
---
ELECTION OF DIRECTORS:
FOR THE TERM OF THREE YEARS: FOR WITHHOLD
James S. Lindsay, Edward J. Mace, all nominees listed authority to vote I(We) will attend the meeting.
Peter Mortensen, Gary L. Tice, Earl K. Wahl, Jr. (except as marked to for all nominees
FOR THE TERM OF TWO YEARS: the contrary below) listed Yes No
Harry F. Radcliffe [ ] [ ] [ ] [ ]
FOR THE TERM OF ONE YEAR:
G. Scott Baton, Alan C. Bomstein
INSTRUCTION: To withhold authority to vote your shares
for any individual nominee, write that nominee's name here:
----------------------------------------------------------
Your shares will be voted for the election of each nominee
whose name is not written in the space above.
In their discretion, the Proxies are authorized to vote upon
such other matters as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED
HEREBY BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES
FOR DIRECTOR.
PLEASE DATE, EXECUTE AND RETURN THIS PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
Daytime Phone:____________________________
Signatures(s): ____________________________________Signature(s)________________________________________Date:_______________________
Please sign exactly as your name appears hereon. When signing as attorney, executor, administrator, trustee, etc., or as officer
of a corporation, please give your full title(s) as such. For joint accounts, each joint owner must sign.
FOLD AND DETACH HERE
Dear Shareholder:
F.N.B. Corporation offers a Dividend Reinvestment and Direct Stock Purchase
Plan for its shareholders.
This plan provides features such as safekeeping to eliminate the risk of loss,
theft or destruction of stock certificates; automatic dividend reinvestment and
purchase of additional common shares without a broker fee.
All of these convenient features are at no cost to you.
If you wish to participate in this Plan, a Prospectus and enrollment form may be
obtained by calling F.N.B. Shareholder Services at 888-441-4FNB (4362).
Sincerely,
F.N.B. Corporation
The Board of Directors recommends a vote FOR the Election of Directors.