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SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
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, 2004
[F.N.B. Corporation. logo]
Dear Shareholder:
It is a pleasure to invite you to attend our Annual Meeting of Shareholders of
F.N.B. Corporation. The meeting will be held at 4:00 p.m., Eastern Daylight
Time, on Wednesday, May 12, 2004, at the Howard Miller Student Center on the
campus of Thiel College in Greenville, Pennsylvania.
At the meeting, you will be asked to consider and vote upon the election of
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.
Whether or not you plan to attend our Annual Meeting, please complete, sign,
date and promptly return the enclosed proxy card in the postage-paid envelope we
have provided to insure that your shares are represented at our Annual Meeting.
This will not prevent you from voting at the meeting, but will assure that your
vote is counted if you are unable to attend.
Please indicate on the card whether you plan to attend our Annual Meeting. If
you attend our Annual Meeting and wish to vote in person, you may withdraw your
proxy and do so.
As always, our directors, management and staff thank you for your continued
interest and support in F.N.B. Corporation.
/s/ Peter Mortensen
Peter Mortensen
Chairman of the Board
/s/ Stephen J. Gurgovits
Stephen J. Gurgovits
President and Chief Executive Officer
[F.N.B. Corporation. logo]
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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Notice is hereby given that the Annual Meeting of Shareholders of F.N.B.
Corporation will be held at 4:00 p.m., Eastern Daylight Time, on Wednesday, May
12, 2004, at the Howard Miller Student Center on the campus of Thiel College,
Greenville, Pennsylvania. At our Annual Meeting, our shareholders will act on
the following matters:
(1) Election of four Class III directors, each for a term of three years
and until their respective successors have been elected;
(2) Election of one Class II director for a term of two years and until
his successor has been elected;
(3) Election of one Class I director for a term of one year and until his
successor has been elected; and
(4) Consideration of other matters that properly come before our Annual
Meeting and any adjournment, postponement or continuation of our
Annual Meeting.
All shareholders of record as of the close of business on March 3, 2004, are
entitled to vote at our Annual Meeting.
Our 2003 Annual Report, which is not part of our proxy soliciting material, is
enclosed.
It is important that your shares be represented and voted at our Annual Meeting.
Please complete, sign, date and return the enclosed proxy card in the envelope
provided whether or not you expect to attend our Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS,
David B. Mogle, Secretary
March 25, 2004
March 25, 2004
[F.N.B. Corporation. logo]
ONE F.N.B. BOULEVARD
HERMITAGE, PA 16148
PROXY STATEMENT
This proxy statement contains information relating to the Annual Meeting of
Shareholders of F.N.B. Corporation to be held on Wednesday, May 12, 2004,
beginning at 4:00 p.m., Eastern Daylight Time, at the Howard Miller Student
Center on the campus of Thiel College, Greenville, Pennsylvania, and at any
adjournment, postponement or continuation of the meeting. This proxy statement
and the accompanying proxy are first being mailed to shareholders on or about
March 25, 2004. Unless the context indicates otherwise, all references in this
proxy statement to "we," "us," "our," "Company," or the "Corporation" mean
F.N.B. Corporation and its subsidiaries, First National Bank of Pennsylvania,
First National Trust Company, First National Investment Services Company, F.N.B.
Investment Advisors, Inc., First National Insurance Agency, Inc., and Regency
Finance Company.
ABOUT OUR ANNUAL MEETING
What is the purpose of our Annual Meeting?
At our Annual Meeting, shareholders will act upon the matters outlined in the
notice of meeting on the cover page of this proxy statement, including the
election of four Class III directors, the election of one Class II director and
the election of one Class I director. In addition, our management will report on
our performance during 2003 and respond to appropriate questions from
shareholders.
VOTING
Who is entitled to vote at our meeting?
Holders of common stock of record at the close of business on the record date,
March 3, 2004, are entitled to receive notice of and to vote at our Annual
Meeting and any adjournment, postponement or continuation of our Annual Meeting.
What are the voting rights of our shareholders?
As of the record date, 46,001,439 shares of common stock were outstanding, each
of which is entitled to one vote with respect to each matter to be voted on at
our Annual Meeting.
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Who can attend our Annual Meeting?
All shareholders as of the record date, or their duly appointed proxies, may
attend our Annual Meeting. Even if you currently plan to attend our Annual
Meeting, we recommend that you also submit your proxy as described below so that
your vote will be counted if you later decide not to attend our meeting.
If you hold your shares in "street name" (that is, through a broker or other
nominee), you will need to bring a copy of a brokerage statement reflecting your
stock ownership as of the record date and check in at the registration desk at
our Annual Meeting.
What constitutes a quorum?
The presence at our Annual Meeting, in person or by proxy, of the holders of a
majority of our outstanding shares of common stock on the record date will
constitute a quorum, permitting the conduct of business at our Annual Meeting.
Proxies received but marked as abstentions and broker non-votes will be included
in the calculation of the number of shares considered to be present at our
Annual Meeting.
How do I vote?
If you or your duly authorized attorney-in-fact complete, properly sign and
return the accompanying proxy card to us, it will be voted as you direct. If you
are a registered shareholder and attend our Annual Meeting, you may deliver your
completed proxy card in person. "Street name" shareholders who wish to vote at
our Annual Meeting will need to obtain a signed proxy from the institution that
holds their shares.
May I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change your vote at any
time before the proxy is exercised by filing with our Secretary either a notice
of revocation or a duly executed proxy bearing a later date. The powers of the
proxy holders will be revoked if you attend our Annual Meeting in person and
request that your proxy be revoked, although attendance at our Annual Meeting
will not by itself revoke a previously granted proxy.
How do I vote my 401(k) plan shares?
If you participate in our 401(k) Plan, you may vote the number of shares of
common stock equivalent to the interests in common stock credited to your
account as of the record date. You may vote by instructing First National Trust
Company, the trustee of the plan, pursuant to the proxy card being mailed with
this proxy statement to plan participants. The trustee will vote your shares in
accordance with your duly executed instructions provided that they are received
by May 7, 2004.
If you do not send instructions, the share equivalents credited to your plan
account will be voted by the trustee in the same proportion that it votes share
equivalents for which it did receive timely instructions.
You may also revoke previously given voting instructions by May 7, 2004 by
filing with the trustee either a written notice of revocation or a properly
completed and signed voting instruction card bearing a later date.
What are our Board's recommendations?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of our Board of Directors. Our Board of Directors recommends a vote:
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o for election of the nominated Class III directors identified in the
"Election of Directors" discussion in this proxy statement;
o for election of the nominated Class II director identified in the
"Election of Directors" discussion in this proxy statement; and
o for election of the nominated Class I director identified in the
"Election of Directors" discussion in this proxy statement.
What vote is required to approve each matter?
Election of Class III Directors ,Class II Director and Class I Director The four
persons receiving the highest number of "FOR" votes cast by the holders of our
common stock for election as Class III directors, the person receiving the
highest number of "FOR" votes cast by the holders of our common stock for
election as Class II director and the person receiving the highest number of
"FOR" votes cast by the holders of our common stock for election as Class I
director will be elected. A properly executed proxy marked "WITHHOLD AUTHORITY"
with respect to the election of one or more directors will not be voted with
respect to the director or directors indicated, although the proxy will be
counted for purposes of determining whether a quorum is present. We do not
permit cumulative voting in the election of directors.
If you sign your proxy card or broker voting instruction card with no further
instructions, your shares will be voted in accordance with the recommendations
of our Board, i.e., for the election of our nominees for Class III directors,
Class II director and Class I director.
Who will pay the costs of soliciting proxies on behalf of our Board of
Directors?
We are making this solicitation and will pay the cost of soliciting proxies on
behalf of our Board of Directors, including expenses of preparing and mailing
this proxy statement. In addition to mailing these proxy materials, the
solicitation of proxies or votes may be made in person or by telephone or
telegram by our regular officers and employees, none of whom will receive
special compensation for such services. Upon request, we will also reimburse
brokers, nominees, fiduciaries and custodians and persons holding shares in
their names or in the names of nominees for their reasonable expenses in sending
proxies and proxy material to beneficial owners.
STOCK OWNERSHIP
Who are the largest owners of our stock?
The following table sets forth certain information concerning persons or
entities known by us to be the beneficial owner of 5% or more of the outstanding
common stock of the Corporation as of March 3, 2004:
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Name and Address Shares Beneficially Percent of Outstanding Common Stock
Owned Beneficially Owned
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Mac-Per-Wolf Company 2,594,307 5.6
310 South Michigan Avenue
Suite 2600
Chicago, Illinois
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INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
How much stock do our directors and executive officers own?
The following table shows the amount and percentage of our outstanding common
stock beneficially owned by each director, each nominee for director, each
executive officer named in the Summary Compensation Table and all of our
executive officers and directors as a group as of March 3, 2004, and sets forth
information concerning the age and principal occupation of the Company's
directors and its five most highly compensated executive officers during 2003:
Expiration Amount and Nature
of Term of of Beneficial
Name and Office as Ownership of
Principal Occupation Director Director Common Stock Percent
(during past 5 years) Age Since (a) (b)(c) (d)
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PETER MORTENSEN 68 1974 2005 548,192 1.2
Chairman of the Corporation since 1988; CEO of the Corporation
1988-2000; and Chairman of the Corporation's subsidiary, First
National Bank of Pennsylvania ("FNBPA")
STEPHEN J. GURGOVITS* 60 1981 2004 375,950(e)(f)
President and CEO of the Corporation since January 2004; Vice
Chairman of the Corporation since 1998; Executive VP of the
Corporation 1995-1998; President and CEO of FNBPA since 1988;
and Director of Sun Bancorp and its subsidiary, Sun Bank,
Lewisburg, Pennsylvania, since 1997
WILLIAM B. CAMPBELL 65 1975 2004 64,287(g)
Retired Former Corporate Executive
HENRY M. EKKER 65 1994 2004 23,280
Attorney at Law
Partner of Ekker, Kuster, McConnell & Epstein, LLP
ROBERT B. GOLDSTEIN 63 2003 2006 28,200
Chairman of the Board, Bay View Capital Corporation
(bank holding company)
HARRY F. RADCLIFFE 53 2002 2004 112,594(h)
Investment Manager, Director of Hawthorne Financial
Corporation (bank holding company)
JOHN W. ROSE 54 2003 2004 90,513
President, McAllen Capital Partners, Inc.;
Director of Bay View Capital Corporation
WILLIAM J. STRIMBU 43 1995 2006 57,440
President, Nick Strimbu, Inc.
(common carrier)
EARL K. WAHL, JR. 63 2002 2005 34,932
Owner, J.E.D. Corporation (environmental consulting)
ARCHIE O. WALLACE 69 1992 2006 46,669
Attorney at Law
Partner of Rowley, Wallace, Keck, Karson & St. John
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Expiration Amount and Nature
of Term of of Beneficial
Name and Office as Ownership of
Principal Occupation Director Director Common Stock Percent
(during past 5 years) Age Since (a) (b)(c) (d)
------------------------------------------------------------------------------------------------------------------------------
R. BENJAMIN WILEY 59 1997 2006 20,665
Chief Executive Officer, Greater Erie Community Action
Committee; and Director of Erie Telecommunications Inc.
GARY L. TICE* (Resigned effective January 1, 2004) 56 1997 N/A 109,188(i)
President and CEO of the Corporation 2001-2003; President
and COO of the Corporation from 1998-2001; Executive VP
and COO of the Corporation 1997-1998; Chairman of First
National Bank of Florida ("FNBFL"); and director of Sun
Bancorp and its subsidiary Sun Bank, Lewisburg,
Pennsylvania, during 2003 (Resigned effective 01/01/04)
KEVIN C. HALE* (Resigned effective January 1, 2004) 50 N/A N/A 0
Executive VP and COO of the Corporation 2002-2003; President
and CEO of FNBFL 2001-2002; Executive VP and COO Florida
Division of the Corporation 2000-2001; and Senior VP of
SunTrust Bank of South Florida 1998-1999
CASS BETTINGER* (Employment terminated effective
December 31, 2003) 61 N/A N/A 5,701(j)
EVP and CAO of the Corporation from 2002-2003; Chairman,
Kaizen Dynamics Inc.; Partner, The Bank CEO Network; and
Chairman, Corporate Culture Dynamics, Inc.
THOMAS FAHEY* (Employment terminated effective
December 31, 2003) 61 N/A N/A 1,050
Executive VP and CFO of the Corporation 2002-2003; Partner,
Ernst & Young, LLP
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP N/A N/A N/A 1,623,559 3.5
(20 persons, including the Company's current executive
officers identified at Item 4A of the Corporation's
December 31, 2003, SEC Form 10K.)
*Denotes person who served as an executive officer of the Corporation during
2003.
(a) The term of office for directors expires at the annual meeting to be held
during the year shown.
(b) Includes the following shares which the director or officer has the right
to acquire within sixty days upon exercise of stock options: Mr. Mortensen,
466,951 shares; Mr. Gurgovits, 336,940 shares; Mr. Radcliffe, 2,938 shares;
Mr. Strimbu, 2,138 shares; Mr. Wallace, 8,747 shares; Mr. Wiley, 6,894
shares; and Mr. Tice, 6,604 shares.
(c) Except as otherwise indicated, each director possesses sole voting power
and sole investment power as to all shares listed opposite his name or
shares these powers with his 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, 426 shares and Mr. Tice, 726 shares.
(d) Unless otherwise indicated, represents less than 1%.
(e) Does not include shares awarded as an employer matching contribution as a
part of the Corporation's 401(k) Plan.
(f) Includes 444 shares owned by Mr. Gurgovits' wife and 8,006 shares owned by
Mr. Gurgovits' wife as a participant in her employer's profit sharing
program.
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(g) Includes 2,072 shares owned by Mr. Campbell's wife.
(h) Includes 2,976 shares owned by Mr. Radcliffe's wife and 1,810 shares held
by each of Mr. Radcliffe's three children.
(i) Includes 5,130 shares jointly owned by Mr. Tice and his mother.
(j) Includes 1,486 shares owned by Mr. Bettinger's wife.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires that our officers and directors, as well as persons who own 10% or more
of a class of our equity securities, file reports of their ownership of our
securities, as well as statements of changes in such ownership, with the
Securities and Exchange Commission (the "SEC"). Based upon written
representations received by us from our officers and directors (we do not have
any shareholders who own 10% or more of any class of our equity securities), and
our review of the statements of ownership changes filed by our officers and
directors with the SEC during 2003, we believe that all such filings required
during 2003 were made on a timely basis.
ELECTION OF DIRECTORS
Our Board of Directors currently consists of 11 members. On December 31, 2003,
we distributed to our shareholders all of the shares we owned in First National
Bankshares of Florida, Inc. (the "Distribution"). We refer to First National
Bankshares of Florida, Inc., as, "Bankshares", in this proxy statement. At the
time of the Distribution, seven of our directors resigned and became directors
of Bankshares. Also, in contemplation of the Distribution, our Board appointed
Robert B. Goldstein (appointment effective August 13, 2003) and John W. Rose
(appointment effective July 9, 2003) to our Board of Directors. In accordance
with the requirements of Florida law, the two newly appointed directors will
stand for re-election at the Annual Meeting. As a result of these changes, our
classes of directors were not as nearly equal as possible as required by our
Bylaws and we have reclassified our classes to make them as balanced as
possible. Consequently, at our Annual Meeting, we will elect four members to
Class III, one member to Class II and one member to Class I. Each newly
appointed director will serve until the expiration of the term of the class of
directors to which he is elected and until his successor has been duly elected.
If elected, Mr. Goldstein will serve as a Class II director until the terms of
the Class II directors expire at the 2006 Annual Meeting and Mr. Rose will serve
as a Class III director until the terms of the Class III directors expire at the
2007 Annual Meeting. The members of each class of directors to be elected at our
Annual Meeting will be elected in separate elections. Unless otherwise
instructed, the proxies solicited by our Board of Directors will be voted for
the election of the nominees named below. All of the nominees are currently
directors.
The Board of Directors has nominated the following directors for election as
Class III directors at the Annual Meeting: William B. Campbell, Stephen J.
Gurgovits, Harry F. Radcliffe and John W. Rose. In addition, as discussed above,
the Board nominated Robert B. Goldstein for election as a Class II director and
Henry M. Ekker for election as a Class I director. Relevant information
concerning these directors is described under the caption titled "Information
Concerning Directors and Executive Officers" of this proxy statement.
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.
Accordingly, the names of the nominees for Class III directors, Class II
director and Class I director to be elected at our Annual Meeting, to serve
until the expiration of their respective terms, are as follows:
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DIRECTORS STANDING FOR ELECTION
CLASS III DIRECTORS CLASS II DIRECTOR CLASS I DIRECTOR
------------------- ----------------- ----------------
William B. Campbell Robert B. Goldstein Henry M. Ekker
Stephen J. Gurgovits
Harry F. Radcliffe
John W. Rose
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE DIRECTOR
NOMINEES IDENTIFIED ABOVE.
CLASS I AND II DIRECTORS CONTINUING IN OFFICE
CLASS I DIRECTORS CLASS II DIRECTOR
Peter Mortensen William J. Strimbu
Earl K. Wahl, Jr. Archie O. Wallace
R. Benjamin Wiley
CORPORATE GOVERNANCE
The SEC and New York Stock Exchange ("NYSE") have implemented new regulations
and listing requirements that govern the corporate governance practices of NYSE
listed companies. Appendix A of this proxy statement sets forth the full text of
the Corporation's Corporate Governance Guidelines which sets forth our corporate
governance principles and practices. Also, a copy of our Corporate Governance
Guidelines is posted on our website at www.fnbcorporation.com.
OUR BOARD OF DIRECTORS AND ITS COMMITTEES
Our Board of Directors determined that the following directors, who constitute a
majority of our Board of Directors, are independent in accordance with the
director independence requirements of the SEC and the NYSE and the independence
standards specified in the Corporate Governance Guidelines of the Board, which
are set forth in Appendix A of this proxy statement: Messrs. Campbell, Ekker,
Goldstein, Mortensen, Radcliffe, Rose, Strimbu, Wahl, Wallace and Wiley.
In determining whether a director is independent under applicable independence
requirements, our Board of Directors considered any transactions and
relationships between each director and any member of his immediate family or
affiliates and the Company and its subsidiaries and affiliates. Our Board of
Directors also examined any transactions and relationships between directors and
their affiliates and members of our senior management and any member of their
immediate family or affiliates. Since banking is a significant portion of our
business, our Board of Directors determined that a director's independence is
not affected where there is a loan relationship between FNBPA and the director
that is performing in accordance with its contractual terms and that has not
been adversely classified or specially mentioned by the federal bank examiners.
Our Board of Directors met 12 times in 2003. All directors attended at least 75%
of the aggregate number of meetings of the Board of Directors and the respective
committees on which they served. All of our directors in 2003 attended our 2003
Annual Meeting. It is the policy of our Board of Directors that all of the
directors attend our annual meetings of shareholders. Our Board of Directors has
an Executive Committee, an Audit Committee, a Nominating and Corporate
Governance Committee, a Compensation Committee and an Investor Relations
Committee.
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EXECUTIVE SESSIONS OF THE BOARD OF DIRECTORS
It is the Company's policy that our Board of Directors hold executive sessions
not less than once a year in which only our independent directors will
participate. The meeting is for the purpose of reviewing the performance of the
Chief Executive Officer and senior management and of reviewing Board performance
and the Company's corporate governance practices. The presiding director of the
meeting is the Board Chairman, if independent, unless the presiding director is
selected by a majority vote of the independent Directors in attendance at the
commencement of each meeting. Shareholders or other interested parties may
communicate with the presiding director or other independent directors in the
manner described under the captioned entitled "Shareholder Communications" of
this proxy statement.
EXECUTIVE COMMITTEE
Our Executive Committee met five times in 2003. Messrs. Mortensen, Campbell,
Goldstein, Gurgovits and Rose are the members of our Executive Committee. The
purpose of our Executive Committee is to provide an efficient means of
considering such matters and taking such actions as may require the attention of
our Board of Directors or the exercise of our Board of Directors' powers or
authorities, consistent with Florida law, in the intervals between meetings of
our Board of Directors.
AUDIT COMMITTEE
Our Audit Committee consists of Messrs. Radcliffe, Goldstein and Wiley. Our
Audit Committee, which met six times in 2003, selects our independent auditors
and reviews our financial reporting process, audit reports and management
recommendations made by our independent public accountants. A copy of our Audit
Committee charter is included as Appendix B to this proxy statement and is
posted on our website at www.fnbcorporation.com. Our Board has reviewed and made
the determinations required by the NYSE and the SEC regarding the independence
and financial acumen of the members of our Audit Committee. In addition, our
Board has determined that the Chairman of our Audit Committee, Mr. Radcliffe, by
virtue of his extensive career in business, and experience in the areas of
banking, finance, investments and business generally, qualifies as an "audit
committee financial expert" within the meaning of applicable requirements of the
SEC and the NYSE.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
Our Nominating and Corporate Governance Committee consists of Messrs. Campbell,
Ekker, Rose, Strimbu, and Wahl. All of the Committee members satisfy applicable
SEC and NYSE independence standards, and the independence criteria specified in
our Corporate Governance Guidelines. This Committee met four times in 2003. Our
Board of Directors adopted a written Charter for our Nominating and Corporate
Governance Committee on March 10, 2004, a copy of which is included as Appendix
C to this proxy statement and is posted on our website at
www.fnbcorporation.com. This Committee assists the Board in developing standards
concerning qualifications and composition of the Corporation's and affiliate
Boards of Directors and the nomination of candidates to stand for election to
the Company Board of Directors at the Annual Meeting of Shareholders; and
promotes the best interest of the Company and its shareholders through the
implementation of prudent and sound corporate governance principles and
practices. In making its recommendations, our Nominating and Corporate
Governance Committee conducts a review and assessment of the nominee's judgment,
experience, temperament, independence and compatibility with the Company's
culture, understanding of the Company's finances, business and operations,
attendance at meetings and such other factors as the Nominating and Corporate
Governance Committee considers relevant. In general, our Nominating and
Corporate Governance Committee seeks to balance the needs for professional
knowledge, business expertise, varied industry knowledge, financial acumen and
CEO-level management experience.
In performing its nominating function, this Committee will consider written
nominations for directors from shareholders to the extent such nominations are
made in accordance with our Bylaws (see discussion under the caption titled
"Shareholder Proposals" of this proxy statement). Recommendations to the
Nominating and Corporate Governance Committee with respect to the 2005 Annual
Meeting of Shareholders must be submitted in writing to the Corporate Secretary
by the deadline specified in the Corporation's Bylaws to the address indicated
in the discussion under the caption titled "Shareholder Proposals" of this proxy
statement. Such
8
recommendations shall include the name, age, citizenship, business and residence
addresses, qualifications, including principal occupation or employment, and
directorships and other positions held by the proposed nominee in business,
charitable, and community organizations. Information must also be provided
concerning: (i) any commercial, industrial, banking, consulting, legal,
accounting, charitable, familial, or other relationships involving the proposed
nominee and us that may be relevant in determining whether the proposed nominee
is independent of us under the then applicable rules of the SEC and the NYSE and
the independence criteria set forth in Company's Corporate Governance
Guidelines; and (ii) the educational, professional and employment-related
background and experience of the proposed nominee, together with any other facts
and circumstances that may be relevant in determining whether the proposed
nominee is an "audit committee financial expert" under then applicable rules of
the SEC and the NYSE.
In performing its corporate governance function, the Committee performs the
following responsibilities: (i) reviews the qualifications and independence of
members of the Board and its various Committees on a regular periodic basis (at
least annually); (ii) recommends to the Board the Company's corporate governance
principles and practices to be included in the Company's Corporate Governance
Guidelines; (iii) recommends independence standards to be used by the Board in
making determinations regarding the independence of the Company's directors;
(iv) monitors the Board's and Corporation's compliance with the Company's
Corporate Governance Guidelines and (v) assists the Board in its annual review
of the Board's performance.
COMPENSATION COMMITTEE
Our Compensation Committee consists of Messrs. Goldstein, Rose and Strimbu. Our
Compensation Committee, which met eight times in 2003, reviews the performance
of our officers and recommends to our Board of Directors the compensation to be
paid to these individuals; reviews and approves goals and objectives relevant to
the compensation of our Chief Executive Officer; reviews and approves the
compensation of affiliate senior officers as proposed by affiliate boards of
directors; and reviews 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 Compensation Committee
also recommends for approval to the Board of Directors the fees for our Board
and Board Committees. Each of the Compensation Committee members is
"independent" in accordance with applicable NYSE standards and the independence
criteria set forth in the Company's Corporate Governance Guidelines. Our Board
adopted a written Compensation Committee Charter on March 10, 2004, a copy of
which is included as Appendix D to this proxy statement and is posted on our
website at www.fnbcorporation.com.
INVESTOR RELATIONS COMMITTEE
The Investor Relations Committee is a newly formed Committee of the Board for
2004. The members of the Investor Relations Committee are Messrs. Campbell,
Goldstein, Radcliffe, Rose and Wallace. The role of the Investor Relations
Committee is to assist the Board in maintaining the integrity and credibility of
the Corporation's investor relations practices and developing strategies to
generate awareness in the capital markets and among certain key audiences, such
as institutional and individual investors and the media and business community,
about the investment opportunity presented by the Company. Additionally, the
Investor Relations Committee is responsible for reviewing and enhancing the
communication and interaction between the Corporation and its shareholders. The
Investor Relations Committee also reviews responses to shareholder grievances
and complaints with the NYSE. The Investor Relations Committee's duties include
oversight of the Corporation's stock transfer and registrar function.
COMPENSATION OF DIRECTORS
Our non-employee directors were paid an annual retainer of $16,000 and $2,200
for each monthly Board of Directors meeting attended in 2003. In addition, the
Chairman of our Board of Directors and the Chairman of each of our Board
Committees were paid a stipend of $5,000. Each director was issued stock options
during 2003 under the Corporation's 1998 Directors' Stock Option Plan, which
were based on the Board fees earned during the year. Individual stock grants to
directors ranged from options to purchase 3,596 shares to 3,874
9
shares of stock with exercise prices equal to the fair market value of our
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 Company in the amount of $1,000 per meeting attended.
Each director may elect to receive shares of common stock in lieu of cash as his
or her compensation for attendance at regular and committee meetings of the
Board of Directors pursuant to the F.N.B. Corporation Directors' Compensation
Plan. The number of shares of common stock to be issued shall equal the number
of shares of common stock having a market value equal to the amount of cash
otherwise payable to such director for attendance at such meetings. A director
may also elect to defer receipt of all of his annual fees payable under the
Directors' Compensation Plan for the period beginning on January 1st of the
following year and continuing until we receive written notice from the director
terminating such deferral.
EXECUTIVE COMPENSATION
The following table shows the compensation we paid during each of the three
fiscal years ended December 31, 2003 for services rendered in all capacities to
our chief executive officer and our four other most highly compensated executive
officers whose compensation exceeded $100,000 in the fiscal year ended December
31, 2003 (the "Named Executive Officers"):
====================================================================================================================================
SUMMARY COMPENSATION TABLE
------------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
-----------------------------------------------------------------------------------------------------------------
Other Restricted Securities
Name and Annual Stock Underlying LTIP All Other
Principal Salary Bonus(1) Compensation(2) Award(3) Options Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
------------------------------------------------------------------------------------------------------------------------------------
Gary L. Tice 2003 650,000 0 112,249 None 64,982 None 315,876(4,5)
President and CEO 2002 600,000 600,000 None 62,809 None 212,594
(Resigned effective 2001 460,000 325,000 None 83,356 None 146,352
01/01/04)
Stephen J. Gurgovits 2003 390,000 0 None 57,042 None 72,517(4,5)
Vice Chairman 2002 375,000 220,439 None 28,996 None 41,614
2001 355,008 176,000 None 46,643 None 43,467
Kevin C. Hale 2003 420,000 0 None 29,162 None 77,918(4,5)
Executive VP and COO 2002 375,000 294,014 None 27,664 None 25,823
(Resigned effective 2001 263,000 196,000 None 33,411 None 20,822
01/01/04)
Thomas Fahey 2003 280,008 0 174,209 None 0 None 813,293(4,5,6)
Executive VP and 2002 132,504 86,571 None 14,700 None 9,197
CFO (Employment
terminated 12/31/03)
Cass Bettinger 2003 335,016 0 34,797 None 0 None 597,073(4,5,6)
Executive VP and CAO 2002 325,008 212,343 409,163 None 0 None 22,923
(Employment terminated
12/31/03)
====================================================================================================================================
(1) Amount earned by the officer as a cash incentive bonus under the
Corporation's Incentive Cash and Bonus Award Program.
10
(2) The aggregate amount of payments made to each officer for perquisites or
other personal benefits did not exceed 10% of salary and bonus except that
in 2003, Messrs. Tice, Fahey and Bettinger, respectively, received a car
allowance of $29,272, $16,041 and $1,647, respectively; plane usage of
$37,073, $0 and $0, respectively; country club memberships of $40,041,
$155,000 and $29,982, respectively; group term life insurance of $2,064,
$3,168 and $3,168, respectively; director's fees of $2,401, $0 and $0,
respectively; and Florida REIT stock of $1,398, $0 and $0, respectively. In
2002, Mr. Bettinger received $2,261 for car allowance, $20,000 club dues,
$3,168 in group term life insurance, $283,734 for relocation expenses and a
$100,000 signing bonus.
(3) Aggregate restricted stock holdings in terms of number of shares and dollar
value as of December 31, 2003, for each Named Executive Officer.
(4) Includes the following amounts paid or accrued by the Corporation for 2003
under the following programs to Messrs. Tice, Gurgovits, Hale, Fahey and
Bettinger, respectively: 401(k) Plan (employer matching contributions),
$18,000, $5,675, $18,000, $18,000 and $17,372; ERISA Excess Profit Sharing
and Lost Match Plan (employer matching contributions relating to 401(k)
Plan and, except for Mr. Gurgovits, profit sharing contributions),
$125,429, $56,070, $51,993, $15,823 and $34,167; Supplemental Disability,
$11,988, $5,102, $7,925, $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 2003: Mr. Tice, $160,459; Mr. Gurgovits, $5,670; Mr.
Hale, $0; Mr. Fahey $0 and Mr. Bettinger, $0. 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) Upon termination of their employment on December 31, 2003, Messrs Fahey and
Bettinger respectively received separation pay of $779,470 and $545,534.
STOCK OPTIONS
The following tables show certain information relating to stock options granted
during the last fiscal year and aggregated stock options for the Named Executive
Officers and all unexercised options held by such officers as of December 31,
2003:
==============================================================================================================================
OPTION GRANTS IN LAST FISCAL YEAR
------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants(1) for Option Term(5)
------------------------------------------------------------------------------------------------------------------------------
Securities % of Total Exercise
Underlying Options Granted to or Base
Options Granted (6) Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
------------------------------------------------------------------------------------------------------------------------------
Mr. Tice 62,683(2) 13.0 25.92 01/20/13 1,021,785 2,589,418
(Resigned 01/01/04) 2,299(3) 0.5 25.92 01/20/13 37,476 94,971
Mr. Gurgovits 27,079(2) 5.6 25.92 01/20/13 441,410 1,118,626
2,299(3) 0.5 25.92 01/20/13 37,476 94,971
Mr. Hale 29,162(2) 6.1 25.92 01/20/13 475,365 1,204,675
(Resigned 01/01/04)
Mr. Fahey 0(4) 0.0 25.92 01/20/13 0 0
(Terminated 12/31/03)
Mr. Bettinger 0(4) 0.0 25.92 01/20/13 0 0
(Terminated 12/31/03)
==============================================================================================================================
(1) Adjusted for a 5% stock dividend declared on April 28, 2003.
(2) Options were granted on January 20, 2003, and are 20% vested on each of the
first through fifth anniversaries of the grant date.
11
(3) Options were granted on January 20, 2003, and are fully vested after one
year.
(4) Options granted on January 20, 2003, were forfeited on December 31, 2003.
(5) In order for the gains to be realized over the ten-year term of the option,
the stock price at expiration date of January 20, 2013, would be $42.22 and
$67.23, reflecting increases in the overall market price of the common
stock of the Corporation by approximately 63% and 159%, respectively.
(6) The exercise price of the Stock Options and number of shares were adjusted
on January 1, 2004, due to the Distribution.
========================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
------------------------------------------------------------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised
Unexercised In-The-Money Options at
Options at 12/31/03 12/31/03($)(1)
------------------------------------------------------------------
Shares Value
Acquired Realized
Name on Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
------------------------------------------------------------------------------------------------------------------------
Mr. Tice 4,796 121,195 156,758 190,870 2,133,859 2,377,202
(Resigned 01/01/04)
Mr. Gurgovits 7,751 153,392 153,804 104,320 2,557,008 1,361,852
Mr. Hale 0 0 37,128 83,496 604,621 1,060,435
(Resigned 01/01/04)
Mr. Fahey 2,940 19,492 0 0 0 0
(Terminated 12/31/03)
Mr. Bettinger 5,512 57,716 0 0 0 0
(Terminated 12/31/03)
========================================================================================================================
(1) Represents the difference between the aggregate market value at December
31, 2003, 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 2004 upon
normal retirement age of 62 under the life annuity option of our Basic
Retirement Plan (BRP), ERISA Excess Profit Sharing and Lost Match Plan (ERISA
Profit Sharing Plan) (excluding matching contributions), ERISA Excess Retirement
Plan (ERISA Retirement Plan) and any applicable qualified retirement plan in
which Messrs. Tice, Fahey, Gurgovits, Hale and Bettinger participate. Messrs.
Fahey, Hale and Tice participate in the F.N.B. Corporation Salary Savings Plan
(Salary Savings Plan), which is different from the retirement plan (F.N.B.
Corporation Retirement Income Plan) in which Mr. Gurgovits participates. Mr.
Bettinger does not participate in the BRP, but is provided nonqualified
retirement benefits under his employment agreement, providing a comparable level
of benefits to the BRP. The estimated annual pension payments shown in the chart
below are reasonable representations of the total benefits under the BRP, ERISA
Profit Sharing Plan (excluding matching contributions), ERISA Plan, Salary
Savings Plan, F.N.B. Corporation Retirement Income Plan and Mr. Bettinger's
employment agreement. Messrs. Tice, Gurgovits and Hale are respectively credited
with the following years of service for annual pension payments described in the
chart on the next page: 20, 43 and 4.
12
=======================================================================================================================
ESTIMATED ANNUAL PENSION PAYMENTS
-----------------------------------------------------------------------------------------------------------------------
Average Annual Earnings Years of Service
for Five Years Preceding ----------------------------------------------------------------------------------------
Retirement 10 15 20 25 30 or more
-----------------------------------------------------------------------------------------------------------------------
$225,000 $60,013 $82,513 $105,013 $113,451 $121,888
$250,000 $68,763 $93,763 $118,763 $128,138 $137,513
$275,000 $77,513 $105,013 $132,513 $142,826 $153,138
$300,000 $86,263 $116,263 $146,263 $157,513 $168,763
$325,000 $95,013 $127,513 $160,013 $172,201 $184,388
$350,000 $103,763 $138,763 $173,763 $186,888 $200,013
$375,000 $112,513 $150,013 $187,513 $201,576 $215,638
$400,000 $121,263 $161,263 $201,263 $216,263 $231,263
$500,000 $156,263 $206,263 $256,263 $275,013 $293,763
$600,000 $221,263 $296,263 $371,263 $401,263 $461,263
$800,000 $301,263 $401,263 $501,263 $541,263 $621,263
=======================================================================================================================
The retirement benefit for each employee covered by our Retirement Income 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 (the "Code") times Years of Service, not to exceed 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.
The retirement benefit for each employee covered by the F.N.B. Corporation
Salary Savings Plan is based on a discretionary contribution credited to the
employee's account, which accumulates investment income. The discretionary
contribution for the past few years has been 6% of pay.
Compensation included in the computation of benefits is base salary and bonus as
indicated under the caption titled "Summary Compensation Table" of this proxy
statement.
NONQUALIFIED PLANS
We maintain three supplemental nonqualified retirement plans. The ERISA Profit
Sharing Plan provides retirement benefits equal to the difference, if any,
between the maximum benefit allowable under the Code and the amount that would
be provided under the Salary Savings Plan or the F.N.B. Corporation Progress
Savings Plan, if no limits were applied. The ERISA Retirement Plan provides
retirement benefits equal to the difference, if any, between the maximum benefit
allowable under the Code and the amount that would be provided under the F.N.B.
Corporation Retirement Income Plan, if no limits were applied.
We maintain a separate supplemental retirement benefit plan, the BRP, applicable
to certain of our officers who are designated by the Board of Directors.
Officers participating in this plan receive a benefit based on a target benefit
percentage based on years of service at retirement and designated tier as
determined by the Board of Directors. When a participant retires, the basic
benefit under the BRP is a monthly benefit equal to the target benefit
percentage times the participant's highest average monthly cash compensation
during five consecutive calendar years within the last ten calendar years of
employment. This monthly benefit is reduced by the monthly benefit the
participant receives from Social Security, his qualified plan benefit (to the
extent the benefit relates to employer contributions other than matching
contributions) and ERISA Profit Sharing Plan benefits (to the extent the benefit
relates to employer contributions other than matching contributions).
13
The BRP contains provisions for reducing the basic benefit if the participant
retires prior to normal retirement (age 62) but on or after early retirement
date (age 55 with 5 years of service). The participant's rights to benefits
under the BRP vest at 100% upon the attainment of age 55 and 5 years of service
or upon normal retirement, "change in control" (as defined in the BRP), death or
disability. Benefits are forfeited in the event a participant's employment is
terminated for cause or a participant terminates employment prior to early
retirement.
EMPLOYMENT AGREEMENTS
Each of our Named Executive Officers were employed under employment agreements
in 2003. Under these agreements, each executive receives an annual base salary
that is subject to periodic increases at the discretion of the Board of
Directors. At December 31, 2003, these annual base salaries were $650,000 for
Mr. Tice; $390,000 for Mr. Gurgovits; $420,000 for Mr. Hale; $335,016 for Mr.
Bettinger; and $280,008 for Mr. Fahey.
Messrs. Tice and Hale resigned their employment from the Company and terminated
their respective employment agreements effective upon the Distribution. Neither
Mr. Tice nor Mr. Hale received any compensation from the Company following their
respective resignations. Messrs. Bettinger's and Fahey's employment and
employment agreements were terminated on December 31, 2003. Mr. Fahey received a
lump sum payment representing the compensation owed under the balance of the
remaining term of his employment agreement. Also, Mr. Bettinger is being paid
the balance of the compensation owed under his employment agreement in three
equal installments with the first installment having been paid in December 2003.
See footnote to the "Summary Compensation Table" of this proxy statement.
During 2003, each of the executives was entitled to receive all other benefits
approved by the Board of Directors and made available to senior executive
officers of the Company. In addition, during 2003 we paid the premiums on
split-dollar life insurance policy of $7,143 for Mr. Gurgovits.
The employment agreement of Mr. Gurgovits has a term of five years and the
employment agreement of Mr. Tice had a term of five years, while the employment
agreement of each of Messrs. Hale, Bettinger and Fahey had a term of three
years. Each of the agreements renews automatically each year for one additional
year; provided, however, that the term of agreements for Messrs. Tice,
Gurgovits, Fahey, Hale and Bettinger will not extend beyond the year in which
the executive reaches the age of 65.
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
Company, Messrs. Tice, Gurgovits, Bettinger and Hale would each be entitled to
receive an amount equal to approximately three times his base salary then in
effect. Mr. Fahey's employment agreement did not have a change in control
provision. In addition, Mr. Tice's provided that he 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 in control, and we would have been
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
in control. The Distribution was not determined to be a change in control of the
Company for purposes of the employment agreements.
Each of the employment agreements contains a confidentiality provision, a
covenant not to compete for a term of up to three years following the date of
termination, and a covenant not to solicit any of our executives or employees
for a period of up to two years following the date of termination.
14
REPORT OF COMPENSATION COMMITTEE
To Our Shareholders:
The following is the Report of the Compensation Committee on our executive
compensation policies with respect to compensation reported for fiscal year 2003
and our plans for 2004. 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 Exchange Act or under the Securities Act of 1933 (the
"Securities Act"), and shall not be deemed to be soliciting material or to be
filed with the SEC under the Exchange Act or the Securities Act.
RESPONSIBILITIES AND COMPOSITION OF THE COMPENSATION COMMITTEE
The Compensation Committee meets periodically during the course of the year and
establishes compensation programs for executive officers and senior managers and
directors 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 growth and profitability. The
Compensation Committee conducts regular comprehensive reviews of the
Corporation's executive compensation program and establishes the annual
compensation of the Corporation's executive officers and directors. The
Compensation 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 Compensation Committee is
comprised entirely of independent directors in accordance with NYSE standards
and the director independence criteria contained in the Company's Corporate
Governance Guidelines set forth in Appendix A to this proxy statement.
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 executive
officers and senior managers, which compensation is determined by a
performance-based framework that enhances shareholder value through the
integration of the overall financial condition and results of the operation of
the Corporation with individual contribution and business unit performance.
Within this philosophy, the Compensation 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, the performance of
functions and business units under the executive'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 each executive officer 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 Compensation 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 principally based on
short-term financial performance goals of the Company; and (ii) restricted stock
grants principally based on longer-term financial performance goals of the
Company. The total cash compensation opportunities for executive officers and
senior managers are targeted at the median of industry practices among the
Corporation's peer group. In addition, the Corporation's incentive cash and
restricted stock award program provides for larger rewards when the
Corporation's performance exceeds its financial goals and objectives and the
performance of its peer group.
15
COMPENSATION COMPONENTS AND PROCESS
The major components of the Corporation's executive officer and senior manager
compensation are: (i) base salary; (ii) annual cash incentive awards; and (iii)
long-term incentive awards.
In determining executive officer and senior manager compensation levels for all
of these components, the Compensation Committee ties 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 addition to these quantitative and qualitative factors,
the Compensation Committee also exercises its judgment in making compensation
determinations.
In making compensation decisions, the Compensation 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 which 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
Compensation 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.
This peer group differs from the indices presented later in the Total Return
Performance graph, which includes a broader representation of companies.
In general, the Compensation Committee continues to adjust the mix of base
salary, annual incentive awards and long-term incentives. In making such
determinations, the Compensation 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; (iv) the competitiveness of
the executive's total compensation; (v) financial performance of the
Corporation; and (vi) accomplishment of the Corporation's and the business
unit's strategic goals.
LONG-TERM INCENTIVE AWARDS
Awards under the 2001 Incentive Plan (stock options and restricted stock) are
generally granted to executive officers and senior managers on an annual basis.
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 that would affect all
shareholders.
The Compensation Committee has historically emphasized stock options providing
long-term incentives to employees. In doing so, optionees' interests are aligned
with those of the shareholders in that they both profit from a rising stock
price. In 2003, the Compensation Committee awarded options to our executive
officers based on the total number of options available for grant, the officer's
position and base salary. Following the Distribution, dividends are expected to
be a more important part of the total return to F.N.B. shareholders.
Accordingly, in the future, the Company will rely more on granting shares of
restricted stock in order to best align the Company's compensation practices to
the corporate financial performance goals and objectives. Restricted stock
awards will vest, in part, based on achievement of corporate financial
performance goals.
In 2003, under the Corporation's 2001 Incentive Plan, the Compensation Committee
granted restricted stock to certain non-executive officers and other employees
who made particularly important contributions to the Corporation. There were no
restricted stock grants awarded to the Corporation's executive officers during
2003.
16
CHIEF EXECUTIVE OFFICER COMPENSATION
The base salary paid to Mr. Gary L. Tice for his service as Chief Executive
Officer of the Company during 2003 is described in the "Summary Compensation
Table" set forth in this proxy statement. Mr. Tice's 2003 base salary was
determined in accordance with the Company's compensation program described above
and was based on considerations of competitive industry practices. Mr. Tice was
not awarded any cash bonus or stock options or grants for his service as Chief
Executive Officer during 2003.
Mr. Tice resigned his employment with the Company on December 31, 2003. Mr.
Stephen J. Gurgovits assumed the position of President and Chief Executive
Officer of the Company effective upon completion of the Distribution on January
1, 2004.
TAX POLICY
Section 162(m) of the Code generally would disallow a federal income tax
compensation deduction to the extent that the Corporation paid in a taxable year
compensation in excess of $1 million to the Chief Executive Officer or to any of
the other executive officers named in the "Summary Compensation Table" of this
proxy statement.
However, performance-based compensation paid pursuant to shareholder-approved
plans and meeting certain other procedural requirements is not subject to the
deduction limitation imposed by Section 162(m). Awards made under the 2001
Incentive Plan can be made eligible for that performance-based exception.
Although the Compensation Committee keeps in mind the desirability of
controlling the Corporation's non-deductible compensation expense, the
Compensation Committee also believes that it is equally important to maintain
the flexibility and competitive effectiveness of the Corporation's executive
compensation program. Therefore, the Compensation 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
Compensation Committee believes that the program's basic structure is
appropriate, competitive and effectively serves the purposes for which it was
established.
Respectfully submitted,
ROBERT B. GOLDSTEIN, CHAIRMAN
JOHN W. ROSE
WILLIAM J. STRIMBU
17
STOCK PERFORMANCE GRAPH
COMPARISON OF TOTAL RETURN ON OUR COMMON STOCK WITH CERTAIN AVERAGES
The following five-year performance graph compares the cumulative total
shareholder return (assuming reinvestment of dividends) on the Corporation's
Common Stock (--) to the Nasdaq Bank Index (o) and the Russell 2000 Index (X).
This stock performance graph assumes $100 was invested on December 31, 1998, 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
12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
-------- -------- -------- -------- -------- --------
F.N.B. Corporation 100.00 85.05 87.33 118.70 133.92 186.64
Russell 2000 100.00 121.26 117.59 120.52 95.83 141.11
NASDAQ Bank Index 100.00 96.15 109.84 118.92 121.74 156.62
18
REPORT OF AUDIT COMMITTEE
To Our Shareholders:
The Audit 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 system of
internal control. In fulfilling its oversight responsibilities, the Audit
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 Audit 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 Audit Committee under generally accepted auditing standards.
The Audit Committee has discussed with Ernst & Young LLP their independence from
management and the Corporation, including the matters in the required written
disclosures. The Audit Committee has considered whether the provision of
non-audit services by Ernst & Young LLP is compatible with maintaining their
independence.
The Audit Committee discussed with the Corporation's internal auditors and Ernst
& Young LLP the overall scope and plans for their respective audits. The Audit
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 Audit Committee met six times during fiscal
year 2003. In addition, the Audit Committee met telephonically to review SEC
filings. The Chairman of the Audit Committee met quarterly with management and
internal and external auditors to review earnings press releases and held
several additional meetings with management to review various audit matters as
needed.
In reliance on the reviews and discussions referred to above, the Audit
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, 2003, for filing with the SEC.
Respectfully submitted,
HARRY F. RADCLIFFE, AUDIT COMMITTEE CHAIRMAN
ROBERT B. GOLDSTEIN
R. BENJAMIN WILEY
19
AUDIT AND NON-AUDIT FEES
Ernst & Young LLP served as independent auditors of the Corporation for the
fiscal year ended December 31, 2003 and 2002. The Company has been advised by
such firm that none of its members or any of its associates has any direct
financial interest or material indirect financial interest in the Corporation or
its subsidiaries. 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.
Fees paid to Ernst & Young LLP for professional services during 2002 and 2003
were as follows:
Audit Audit-Related Tax All Other
----- ------------- --- ---------
2003 $646,519 $1,127,614 $1,987,527 $1,500
2002 $625,701 $561,818 $321,944 $0
AUDIT FEES relate to the audit of the Corporation's annual financial statements,
review of the financial statements included in the Corporation's Reports on Form
10-Q, services provided in connection with regulatory filings and accounting
consultations related to the audit. Audit Fees include $108,452 incurred as a
result of the Distribution.
AUDIT-RELATED FEES relate to merger and acquisition services, audit and
regulatory filing services provided in connection with the Distribution and the
NYSE listing application, employee benefit plan audits, service auditor reports,
internal control reviews and cash management reconciliation consultations.
Audit-Related Fees include $823,709 incurred as a result of the Distribution.
TAX FEES relate to tax services, and include tax compliance, tax planning and
tax advice services. Tax Fees include $1,101,397 incurred as a result of the
Distribution.
ALL OTHER FEES relate to consulting fees not included in the above categories.
AUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY
The Audit Committee is required to pre-approve the audit and non-audit services
performed by the independent auditors in order to assure that the provision of
such services does not impair the auditor's independence. The Audit Committee
annually reviews and pre-approves the services that may be provided by the
independent auditors. The Audit Committee will revise the list of pre-approved
services from time to time, based on subsequent determinations. The Audit
Committee does not delegate its responsibilities to pre-approve services
performed by the independent auditors to management, but may delegate
pre-approval authority to one or more of its members. The member or members to
whom such authority is delegated is required to report any pre-approval
decisions to the Audit Committee at its next scheduled meeting. Pre-approval fee
levels for all services to be provided by the independent auditors will be
established annually by the Audit Committee. Any proposed services exceeding
these levels requires specific pre-approval.
The annual audit services engagement terms and fees are subject to the
pre-approval of the Audit Committee. In addition, the Audit Committee may grant
pre-approval for other audit services, including statutory audits or financial
audits for subsidiaries or affiliates of the Company and services associated
with SEC registration statements, periodic reports and other documents filed
with the SEC.
Audit-related services and tax services must also be pre-approved by the Audit
Committee. Audit-related services include, among others, due diligence services
pertaining to potential business acquisitions/dispositions; accounting
consultations related to accounting, financial reporting or disclosure matters
not classified as "Audit
20
services;" assistance with understanding and implementing new accounting and
financial reporting guidance from rulemaking authorities; financial audits of
employee benefit plans; agreed upon or expanded audit procedures related to
accounting and/or billing records required to respond to or comply with
financial, accounting or regulatory reporting matters; and assistance with
internal control reporting requirements. Tax services to the Company include tax
compliance, tax planning and tax advice services.
The Audit Committee may grant pre-approval to those permissible non-audit
services classified as All Other services that it believes are routine and
recurring services, and that such pre-approval would not impair the independence
of the independent auditors.
TRANSACTIONS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
Certain of our directors and executive officers and their associates were
customers of, and had transactions with one or more of the Company's
subsidiaries in the ordinary course of business during 2003. 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 Company's affiliate, 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
Company and of its bank subsidiaries.
There is no family relationship as defined in the SEC rules or the NYSE rules
between any of our executive officers or directors. Family relationships exist
between certain of our executive officers or directors and the employees of our
subsidiary bank, FNBPA; however, these family relationships do not contravene
NYSE and SEC independence standards. These employees participate in compensation
and incentive plans or arrangements on the same basis as other similarly
situated employees.
In consideration of business consultation that Mr. Rose furnished to us during
2003, we permitted Mr. Rose use of certain excess office space and secretarial
support. Based on an independent valuation, we determined that the value of our
excess office space and secretarial support was approximately $4,000.
In the ordinary course of business, we may use the products and services of
companies, partnerships or firms of which our directors are officers, directors
or owners. Messrs. Ekker and Wallace are partners of law firms that have
provided and are expected during 2004 to provide certain legal service to our
affiliates from time to time. Messrs. Ekker's and Wallace's law firms received
approximately, $28,000 and $14,000, respectively, as payment for services
provided to our affiliates in 2003. As discussed under the caption titled "Our
Board of Directors and Its Committees" in this proxy statement, our Board
determined that neither Mr. Ekker nor Mr. Wallace have a material relationship
with the Company and that both Mr. Ekker and Mr. Wallace are independent under
applicable NYSE independence criteria and our Company's independence standards
as set forth in our Corporate Governance Guidelines.
Upon his retirement as our Chief Executive Officer on December 31, 2000,
Chairman Mortensen continued to provide services as an advisor to the Company
pursuant to an agreement providing that Mr. Mortensen was to be paid annual
compensation in the amount of one-half his base salary in 2000 (approximately
$280,000) and continued participation in the Company's incentive bonus program
during the period January 1, 2001, through December 31, 2007. Subsequently, on
December 20, 2001, Mr. Mortensen agreed to a buy-out and termination of this
agreement and entered into a new severance agreement whereby the Company paid
$3,166,982 on January 24, 2002, to a trust of which Mr. Mortensen is the
beneficiary and awarded him 156,800 options to purchase Company stock.
Additionally, the new severance agreement provides certain deferred benefits to
Mr. Mortensen, until he reaches the age of 72, including medical coverage,
payment of country club dues, corporate transportation and reimbursement of
customary director expenses including use of office space and secretarial
support. Mr. Mortensen's severance agreement does not obligate him to provide
continued services to the Company or its affiliates. The severance agreement was
approved by the Company's Compensation Committee
21
and ratified by the Board. Pursuant to the terms of the severance agreement,
during 2003, F.N.B. paid approximately $4,319 for health/medical benefits,
$100,000 for insurance premiums, $14,282 for country club dues and $2,572 for
expenses related to use of the corporate airplane. As discussed under, "Our
Board of Directors and Its Committees," of this proxy statement, the Board
determined that Mr. Mortensen does not have a material relationship with the
Company and is independent under applicable NYSE standards and the independence
standards set forth in the Company's Corporate Governance Guidelines.
SHAREHOLDER COMMUNICATIONS
Shareholders may send communications to our Board of Directors, and any
individual director, by addressing such communications to the Board of
Directors, or to any individual director, c/o David B. Mogle, Secretary, F.N.B.
Corporation, One F.N.B. Boulevard, Hermitage, Pennsylvania 16148. Mr. Mogle, or
his designee, will promptly forward all such communications submitted and
addressed in this manner to the members of the Board of Directors or any
designated individual director or directors, as the case may be.
SHAREHOLDER PROPOSALS
Any shareholder who, in accordance with and subject to the provisions of Rule
14a-8 of the proxy rules of the SEC, wishes to submit a proposal for inclusion
in our proxy statement for our 2005 Annual Meeting of Shareholders must deliver
such proposal in writing to Corporate Secretary, F.N.B. Corporation, One F.N.B.
Boulevard, Hermitage, Pennsylvania 16148, not later than November 27, 2004.
Pursuant to our By-laws, if a shareholder wishes to present at our 2005 Annual
Meeting of Shareholders (i) a proposal relating to nominations for and election
of directors for consideration by the Nominating Committee of our Board of
Directors or (ii) a proposal relating to a matter other than nominations for and
election of directors, otherwise than pursuant to Rule 14a-8 of the proxy rules
of the SEC, the shareholder must comply with the provisions relating to
shareholder proposals set forth in our By-laws, which are summarized below.
Written notice of any such proposal containing the information required under
our By-laws, as described herein, must be delivered to the attention of our
Secretary at our principal executive offices at F.N.B. Corporation, One F.N.B.
Boulevard, Hermitage, Pennsylvania 16148. The Notice shall be delivered to the
Secretary not less than 14 days prior to the meeting of the shareholders called
for the election of directors; except that if less than 21 days' notice of the
meeting is given to shareholders, the Notice shall be delivered to the Secretary
not later than the earlier of the seventh day following the day on which notice
of the meeting was first mailed to shareholders or the fourth day prior to the
meeting. In lieu of delivery to the Secretary, the Notice may be mailed to the
Secretary by certified mail, return receipt requested, but shall be deemed to
have been given only upon actual receipt by the Secretary.
A written shareholder proposal or shareholder nomination for a nomination of
director must set forth:
(1) the name and address of the nominating shareholder;
(2) a representation that the shareholder is a holder of record of the
Company's voting stock and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the Notice;
(3) such information regarding each nominee as would have been required
to be included in a proxy statement filed pursuant to Regulation 14A
under the Exchange Act had proxies been solicited with respect to such
nominee by the Board of Directors;
(4) a description of all arrangements or understandings among the
shareholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations
are to be made by the shareholder;
22
(5) the written consent of each nominee to serve as a director of the
Company if so elected; and
(6) such other information as may be required by any applicable law or
regulation.
Only candidates nominated by shareholders for election as a member of our Board
of Directors in accordance with our By-law provisions as summarized herein will
be eligible for consideration by the Nominating Committee to be nominated for
election as a member of our Board of Directors at our 2005 Annual Meeting of
Shareholders, and any candidate not nominated in accordance with such provisions
will not be considered or acted upon for election as a director at our 2005
Annual Meeting of Shareholders. See discussion under caption titled "Nominating
and Corporate Governance Committee" of this proxy statement.
OTHER MATTERS
Our Board of Directors does not know of any matters to be presented for
consideration at our Annual Meeting other than the matters described in the
Notice of Annual Meeting. However, if any matters are properly presented,
proxies in the enclosed form returned to us will be voted in accordance with the
recommendation of our Board of Directors or, in the absence of such a
recommendation, in accordance with the judgment of the proxy holder.
BY ORDER OF THE BOARD OF DIRECTORS,
David B. Mogle, Secretary
March 25, 2004
23
APPENDIX A
F.N.B. CORPORATION
CORPORATE GOVERNANCE GUIDELINES OF THE BOARD
Contents
I. Board Mission
A. Director Responsibilities
B. Director Qualifications
II. Functions of the Board
A. Criteria for Composition of the Board, Selection of New Directors
B. Assessing the Board's Performance
C. Formal Evaluation of the Chief Executive Officer
D. Succession Planning and Management Development
E. Board and Management Compensation Review
III. Board composition
A. Size and Composition of the Board
B. Definition of Independence
C. Former Officer-Directors
D. Change of Job Responsibility
E. Director Tenure
F. Retirement Age
G. Limits on Board and Audit Committee Memberships
H. Stock Ownership Requirements
IV. Board Committees
A. Committee Responsibilities
B. Composition of Committees
V. Board Operations
A. Executive Chairman
B. Executive Sessions for Non-Management Directors
C. Committee and Board Agendas
D. Board and Committee Materials and Presentations
E. Regular Attendance of Non-Directors at Board Meetings
F. Board Access to Management
G. Board Interaction with Institutional Investors and Press
H. Board Access to Outside Resources
I. Director Orientation and Continuing Education
J. Code of Business Conduct and Ethics
K. Communications with Board
A-1
I. Board Mission
A. Director Responsibilities
Directors should exercise their business judgment to act in what they
reasonably believe to be in the best interests of the Company and its
shareholders in a manner consistent with their fiduciary duties. Directors are
expected to devote the time and effort necessary to fulfill their Board
responsibilities, including, but not limited to, reviewing the materials sent to
them in advance of meetings and being prepared to participate in the meetings.
Directors should regularly attend meetings of the Board of Directors and of all
Board committees upon which they serve. Directors are expected to attend the
Company's Annual Meeting of Shareholders.
B. Director Qualifications
A majority of the Company directors will be independent in accordance with
the standards described under "Definitions of Independence" below. The Board
will observe all additional criteria for independence established by the New
York Stock Exchange ("NYSE") or other governing laws and regulations. No
director will be deemed independent unless the Board affirmatively determines
that the director satisfies applicable independence criteria.
Directors may be nominated by the Board or by shareholders in accordance
with the Bylaws. The Nominating and Corporate Governance Committee ("Committee")
will review all nominees for the Board in accordance with its charter. The
assessment will include a review of the nominee's judgment, experience,
temperament, independence, compatibility with the Company's culture,
understanding of the Company's finances, business and operations and those of
other related industries, attendance at meetings and such other factors as the
Committee concludes are pertinent in light of the current needs of the Board.
The Committee will select qualified nominees and review its recommendations with
the Board, which will decide whether to invite the nominee to join the Board.
The Chairman of the Board and/or Chairman of the Committee should extend the
Board's invitation to join the Board. The Board will require that nominees
become shareholders of the Company prior to the solicitation of proxies for
their election.
II. Functions of the Board
A. Criteria for Composition of the Board; Selection of New Directors
The Board empowers the Committee to periodically review the criteria for
composition of the Board. Likewise, the Board has delegated to this Committee
the responsibility to evaluate potential new candidates for Board membership in
accordance with the Board qualifications and composition standards and to make
recommendations to the Board. See discussion at "Director Qualifications" above.
B. Assessing the Board's Performance
The Company's Committee annually reviews and reports to the Board on the
effectiveness of the Company's governance processes. The Committee will receive
comments from all Directors and report annually to the Board with an assessment
of the effectiveness of the Company's corporate governance practices and
recommendations for improvement of such practices. This will be discussed with
the full Board annually.
C. Formal Evaluation of the Chief Executive Officer
The Board Compensation Committee makes an evaluation of the Chief Executive
Officer at least annually. The Board of Directors will review the Compensation
Committee report in order to confirm that the Chief Executive Officer is
providing effective leadership for the Company in the long- and short-term.
A-2
D. Succession Planning and Management Development
Succession planning is considered periodically by the Executive Committee.
Generally, the Executive Committee will make management succession planning
recommendations to the Board.
E. Board and Management Compensation Review
The Compensation Committee makes periodic recommendations to the Board
regarding compensation of Company directors based on comparisons with relevant
peer groups and industry practices. The Board believes it is desirable that the
Board's total compensation includes a combination of cash and stock-based
compensation.
Officer-directors receive no separate compensation for the Board service.
III. Board Composition
A. Size and Composition of the Board
The Company Bylaws provide that the Board shall be comprised of between
five (5) and twenty-five (25) members.
B. Definition of Independence
Independence Determinations. The Board may determine a Company
director to be independent if the Board has affirmatively determined that the
Director has no material relationship with the Company, either directly or as
partner, stockholder or officer of an organization that has a material
relationship with the Company. A relationship is material if, in the judgment of
the Board, it would interfere with the director's independent judgment.
Independence determinations will be made on an annual basis for inclusion in the
proxy statement and, if a director joins the Board between annual meetings, at
such time. For these purposes, a director will not be deemed independent if the
director's relationship with the Company is of the type that would expressly
preclude an independence determination under the rules of the New York Stock
Exchange.
Additionally, the Board shall use the following criteria to assess the
independence of the Company's directors:
(a) Relationship to an Entity. The business relationship between the
Company and an entity will be considered in determining director
independence where a director serves as an officer or director of the
entity or, in the case of a for-profit entity, where the director is a
general partner of or owns more than 5% of the equity of such entity.
Such relationships will not be deemed relevant to the independence of
a director who is a non-management Director or a retired officer of an
entity unless the Board determines otherwise.
(b) For-Profit Entities. Where a Company director is director or
officer of a for-profit entity that is a client of the Company,
whether as a borrower of Company's subsidiary, First National Bank of
Pennsylvania, or its affiliate, Sun Bank or customer who obtains
services or products from Company's trust, insurance, or investment
affiliates, the financial relationship between Company and the entity
will not be deemed material to a director's independence; provided (i)
the relationship was entered into on terms substantially similar to
those that would be offered to comparable customers in similar
circumstances, or in the case of a loan, complies with Regulation O of
the Board of Governors of the Federal Reserve System ("Regulation O"),
and (ii) termination of the relationship in the normal course of
business would not reasonably be expected to have a material and
adverse effect on the financial condition, results of operations or
business of the borrower or other customer.
A-3
(c) Law Firms. Where a director is associated as a partner or
associate of, or of counsel to, a law firm that provides services to
the Company or its affiliates, the relationship will not be deemed
material if neither the director nor an immediate family member of the
director provides such services to the Company or its affiliates and
the payments from the Company and its affiliates do not exceed 2% or
$1,000,000, whichever is greater, of the law firm's revenues in each
of the past five years.
(d) Not-For-Profit Entities. The Company supports not-for-profit
entities through grants and other support. Where a director is an
officer of a not-for-profit entity, contributions by the Company will
not be deemed material if, Company's contributions do not exceed 5% of
a not-for-profit entity's total revenues.
(e) Personal Banking and Other Financial Services. The Company's
subsidiary banks provide personal banking and other financial services
to individuals in the ordinary course of its business. The
Sarbanes-Oxley Act prohibits loans to directors and executive
officers, except certain loans in the ordinary course of business by
an insured depository institution in accordance with the requirements
of Regulation O from its subsidiary bank. All such loans that are in
the ordinary course of Company's business will not be deemed material
for director independence determinations unless a director has an
extension of credit that is not performing in accordance with its
contractual terms, is on a non-accrual basis or has been otherwise
specially mentioned or criticized in the most recent federal bank
examination report.
(f) Facts and Circumstances. Company's Corporate Governance Guidelines
acknowledge that the NYSE and above-stated Company independence
standards cannot anticipate or explicitly provide for all
circumstances that may indicate a potential conflict of interest, or
that may signal a material relationship between Company and the
director. Accordingly, in assessing the materiality of a director's
relationship with Company and in making the resulting "independence"
determination, the Corporate Governance Guidelines require that the
Board broadly consider all relevant facts and circumstances not only
from the perspective of the director but also from the standpoint of
persons, organizations, businesses or other entities with which the
director has an affiliation or business, financial or other
relationship.
(g) Audit Committee Requirements. Director members of the Company's
Audit Committee shall also satisfy the "independence" requirements of
Rule 10A-3(b)(1) of the Securities and Exchange Commission ("SEC").
C. Former Officer-Directors
As a general rule, an officer-director is not restricted from serving on
the Board beyond the date he or she retires or resigns as a full-time officer.
D. Change of Job Responsibility
A director may be required to offer his or her resignation following the
loss of principal occupation other than through normal retirement.
E. Retirement Age
Non-management directors shall not stand for re-election to the Board after
they reach the age of 72, except for those directors who are grandfathered under
the Company's policies.
A-4
F. Board and Audit Committee Memberships
Each person serving as a director must devote the time and attention
necessary to fulfill the obligations of a director. Key obligations include
appropriate attendance at Board and committee meetings and appropriate review of
preparatory material. Directors will review proposed service on the Board of any
additional public company or any governmental position with the Committee.
If a member of the Audit Committee wishes to serve on more than a total of
two audit committees, the Board must approve such additional service before the
director accepts the additional position.
G. Stock Ownership Requirements
Applicable bank regulatory requirements specify that the Board members own
a certain minimum amount of qualifying shares of the Company and it is generally
desirable for directors to own a significant number of shares or share
equivalents of F.N.B. Company stock and for new directors to work toward that
goal. The current holdings of Board members meet this objective and it is
unnecessary to set a specific target.
IV. Board Committees
A. Committee Responsibilities
The Board as a whole is responsible for the oversight of management on
behalf of the corporation's stockholders. The board is assisted in its oversight
function by various Board committees.
The Board has the following committees: Audit, Compensation, Nominating and
Corporate Governance, Investor Relations and Executive Committee.
(i) The Board has allocated oversight of risk matters to the Audit
Committee and the Audit Committee is responsible for discussion
of guidelines and policies to govern the process by which risk
assessment and management is undertaken. The director members of
the Audit Committee shall satisfy the criteria for composition
set forth in SEC Rule 10A-3(b)(1) and the Federal Deposit
Insurance Corporation Improvement Act of 1991 and regulations
promulgated pursuant thereto.
(ii) The Committee is responsible for selecting and recommending
nominees for election to the Company's Board of Directors in
order to promote the best interests of the Company and its
shareholders through implementation of prudent and sound
corporate governance principles and practices.
(iii) The Executive Committee provides an efficient means of
considering such matters and taking such actions as may require
Board attention or action in the intervals between regular
meetings of the Board.
(iv) The Compensation Committee reviews performance of senior
management and reviews and implements compensation and benefit
matters having corporate-wide significance.
(v) The Investor Relations Committee is principally responsible for
review and counsel regarding the Company's investor relations
practices.
The number and responsibilities of Committees are reviewed periodically.
Each Company's Board Committee will report to the Board at the next regularly
scheduled Board meeting following a Committee meeting.
A-5
B. Composition of Committees
Membership on the Committees is reviewed each year by the Chairman and the
Nominating and Corporate Governance Committee and approved by the full Board.
There is no strict committee rotation policy. Changes in committee assignments
are made based on committee needs, director experience, interest and
availability, and evolving legal and regulatory considerations. Additionally, in
the reviewing of the composition of the Board committees, the Board will also
consider any listing and/or applicable regulatory qualifications as may be
applicable to specific committees.
Each of the members of the Audit Committee, the Compensation Committee, and
the Nominating and Corporate Governance Committee, will be directors for whom
the Board has made an affirmative independence determination under the
independence standards described in these Guidelines. Additionally, with respect
to the Audit Committee members, the Board shall make an affirmative independence
determination under the independence requirements set forth in SEC Rule
10A-3(b)(1). Officer-directors do not serve on any committee other than the
Board-level Executive Committee and Investor Relations Committee.
Officer-directors and other officers of the Company or its affiliates may attend
committee meetings at the invitation of the committee chairman.
V. Board Operations
A. Executive Chairman
The Board has no set policy on whether or not to have one.
B. Executive Sessions for Non-Management Directors
The non-management Directors will meet regularly in executive session at
least once a year. The meeting is for purpose of reviewing Board performance and
the Company's corporate governance practices. The lead director is the Chairman,
if independent, unless another director is selected as lead director of the
meeting as determined by a vote of the independent non-management Directors.
This meeting or meetings, or others that may be scheduled, will also provide the
opportunity for discussion of such other topics as the non-management Directors
may find appropriate, with discussion to be led by the chairman of the committee
most relevant to the topic, including the Audit Committee, Executive Committee,
Nominating and Corporate Governance Committee and the Investor Relations
Committee. Also, if the non-management Director group includes Directors who are
not independent under these Guidelines and the applicable rules of the New York
Stock Exchange, the Board should at least once a year schedule an executive
session at which only independent Directors are present.
C. Committee and Board Agendas
Committee agendas are prepared based on expressions of interest by
Committee members and recommendations of management. Committee chairs give
substantive input to and approve final agendas prior to committee meetings. The
Chairman of the Board prepares Board agendas based on discussions with all
Directors and issues that arise.
D. Board and Committee Materials and Presentations
To the extent feasible, information regarding items requiring Board and/or
committee approval or action is distributed sufficiently in advance to permit
adequate preparation. Information regarding press and analyst reports is
provided monthly. Detailed financial information is provided monthly and
quarterly. The directors shall maintain the confidentiality of such information
in accordance with applicable company policies.
A-6
E. Regular Attendance of Non-Directors at Board Meetings
During the Board meeting, the Chief Financial Officer, Chief Legal Officer,
Treasurer and the Secretary are present. Other members of management may be
present at the invitation of the Chairman.
F. Board Access to Management
Board members have complete access to management. The Director should use
his or her judgment to ensure that any such contact is not disruptive to the
business operations of the Company. A Director will not discuss with management
investment research involving a company with which the Director is affiliated.
G. Board Interaction with Institutional Investors and Press
F.N.B. management is the sole contact with outside parties. However, from
time to time, Directors may be asked by the Board or management to speak with
others, as appropriate.
H. Board Access to Outside Resources
The main responsibility for providing assistance to the Board rests on the
internal organization. The Board and Board committees can, if they wish to do
so, seek legal or other expert advice from a source independent of management
and shall be provided the resources for such purposes. Generally this would be
with the knowledge of the Chairman, but this is not a condition to retaining
such advisors.
I. Director Orientation and Continuing Education
At such time as a Director joins the Board, the Board and the Chief
Executive Officer will provide appropriate orientation for the Director,
including arrangement of meetings with management. The Board considers it
desirable that Directors participate in continuing education opportunities and
considers such participation an appropriate expense to be reimbursed by the
Company.
J. Code of Business Conduct and Ethics
F.N.B. has a comprehensive Code of Conduct and an Ethics Policy. The Code
of Conduct and Ethics Policy is applicable to all employees and, as modified by
applicable addenda, to Directors. The Code of Conduct and Ethics Policy address
compliance with law; reporting of violations of the Code of Conduct and Ethics
Policy or of laws or regulations; employment and diversity; confidentiality of
information; protection and proper use of the Company's assets; conflicts of
interest; and personal securities and other financial transactions. Each
Director is expected to be familiar with and to follow the Code of Conduct and
Ethics Policy to the extent applicable to them.
K. Communications with Board
Any shareholder may contact any Board member or committee chair. Please
mail correspondence to:
F.N.B. Corporation
Attention (Board Member)
Office of the Secretary
One F.N.B. Boulevard, 6th Floor
Hermitage, PA 16148
A-7
If you have a particular concern regarding accounting, internal accounting
controls, or auditing matters that you wish to bring to the attention of the
Audit Committee of the Board of Directors, please mail correspondence to:
F.N.B. Corporation
Attention: Harry Radcliffe
Chairman, Audit Committee
c/o Audit Department
One F.N.B. Boulevard
Hermitage, PA 16148
Such reports may be done anonymously, if you wish. For complaints that are
not anonymous, we will respect the confidentiality of those who raise concerns,
subject to our obligation to investigate the concern and any obligation to
notify third parties, such as regulators and other authorities.
A-8
APPENDIX B
F.N.B. CORPORATION
AUDIT COMMITTEE CHARTER
I. ORGANIZATION
This charter governs the operations of the F.N.B. Corporation Audit
Committee. The Committee shall review this charter on an annual basis and
recommend any proposed changes to the Board of Directors.
The Committee shall be comprised of not fewer than three members of the
Board, and the Committee's composition shall satisfy the requirements of the
rules of the New York Stock Exchange (the "Exchange"), Section 10A(m)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act"), the rules and regulations
of the Securities and Exchange Commission (the "Commission") and the
requirements under applicable banking laws and regulations. Accordingly, all of
the members shall be directors:
o who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company;
o who do not accept directly or indirectly any consulting, advisory or
other compensatory fees from the Company or any subsidiary of the
Company, other than in the member's capacity as a member of the Board
or any Board committee of the Company or the affiliates of the
Company;
o who are not "affiliated persons" of the Company or any subsidiary of
the Company, as defined by the Commission;
o who are financially literate; and
o who qualify as "independent" directors under the rules of the
Exchange.
In addition, at least one member of the Committee shall be an "audit
committee financial expert," as defined by the Commission, and at least two
members shall have "banking or related financial management expertise," as
defined in 12 CFR Part 363 of the Federal Deposit Insurance Corporation
regulations. The members of the Committee shall be appointed by the Board, and
Committee members may be replaced by the Board. Committee members shall not
serve on more than two other public company audit committees, unless the Board
determines that simultaneous service would not impair the ability of the
Committee member to serve effectively on the Committee and the Board discloses
such determination in the Company's annual proxy statement. The Committee shall
report the results of their activities to the Board of Directors.
II. PURPOSE
The Committee shall provide assistance to the board with respect to their
oversight of:
o the integrity of the Company's financial statements;
o the performance of the Company's internal audit function and
independent auditors;
o the independent auditor's qualifications and independence; and
o the Company's compliance with ethics policies and legal and regulatory
requirements.
The Committee shall prepare its report to be included in the Company's
annual proxy statement, as required by regulations of the Commission.
B-1
III. AUTHORITY AND FUNDING
It is the responsibility of the Committee to maintain free and open
communication between the Committee, independent auditors, the internal auditors
and management of the Company. In discharging its oversight role, the Committee
is empowered to investigate any matter brought to its attention with full access
to all books, records, facilities and personnel of the Company and the authority
to engage outside counsel, auditors and other advisers as it determines
necessary to carry out its duties, at the expense of the Company. The Committee
shall have the authority to engage, and determine funding for, independent
counsel and other advisors to the Committee.
The Company shall provide appropriate funding, as determined by the
Committee, for:
o compensation to the independent auditor for the purpose of preparing
or issuing an audit report or performing other audit, review or attest
services for the Company;
o compensation to any adviser employed by the Committee; and
o ordinary administrative expenses of the Committee that are necessary
or appropriate in carrying out its duties.
IV. DUTIES AND RESPONSIBILITIES
The Committee's role is one of oversight, and the Committee recognizes that
the Company's management is responsible for the preparation and publication of
the Company's financial statements and that the independent auditors are
responsible for auditing those financial statements. In addition, the Committee
recognizes that the Company's financial management personnel, as well as the
independent auditors, because of the nature of their relationship with the
Company are in a position to devote more time and acquire greater knowledge and
more detailed information regarding the Company than do Committee members;
consequently, in carrying out its oversight responsibilities, the Committee
shall not be deemed to provide any expert or special assurance as to the
Company's financial statements or any professional certification as to the
independent auditors' work.
The Committee, in carrying out its responsibilities, believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and circumstances. The Committee should take appropriate actions to
set the overall corporate "tone" for quality financial reporting, sound business
risk practices and ethical behavior. The following shall be the principal duties
and responsibilities of the Committee. These are set forth as a guide with the
understanding that the Committee shall have the discretion to conduct activities
in addition to those listed herein as it deems appropriate given the
circumstances.
1. The Committee shall be directly responsible for the appointment
(subject, if applicable, to shareholder ratification), compensation,
retention, evaluation, termination and oversight of the work of the
independent auditors for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services for the
Company, including resolution of disagreements between management and
the auditor regarding financial reporting. The Committee shall direct
the independent auditors to report directly to the Committee.
2. The Committee shall approve, in advance, all auditing services and all
non-audit services, including the fees and terms thereof, to be
performed by the independent auditors that are permitted under Section
10A of the Exchange Act and the rules and regulations of the
Commission thereunder, subject to the de minimis exceptions under such
rules for permissible non-audit services that are nonetheless approved
by the Committee prior to the completion of the audit. The Committee
may form, and delegate authority to, subcommittees consisting of one
or more members of the Committee when appropriate, including the
authority to grant
B-2
preapprovals of audit and permissible non-audit services, provided
that decisions of such subcommittee to grant preapprovals shall be
presented to the Committee at its next ensuing meeting.
3. At least annually, the Committee shall obtain and review with the
independent auditors their report describing:
o the independent auditors' internal quality control procedures.
o any material issues raised by the most recent internal quality
control review, or peer review, of the independent auditors, or
by any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or
more independent audits carried out by the independent auditors,
and any steps taken to deal with any such issues.
o all relationships between the independent auditors and the
Company, to assess the independent auditors' independence.
4. The Committee shall discuss the Company's annual audited financial
statements and quarterly financial statements with management and the
independent auditors, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" prior to the filing of the respective Annual
Report on Form 10-K or Quarterly Report on Form 10-Q. Also, the
Committee shall discuss the results of the annual audit and the
quarterly reviews and any other matters required to be communicated to
the Committee by the independent auditors under generally accepted
auditing standards.
5. In connection with its review and discussions regarding the Annual
Report on Form 10-K, the Committee (i) shall discuss with the
independent auditors the matters required to be discussed by Statement
of Auditing Standards No. 61, (ii) shall receive and review the
written disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1 and (iii)
discuss with the independent auditors their independence. Based on
these reviews, the Committee shall recommend to the Board of Directors
whether the audited financial statements should be included in the
Annual Report on Form 10-K.
6. The Committee shall receive a report from the independent auditor,
prior to the filing of its audit report with the Commission, on all
critical accounting policies and practices of the Company, all
alternative treatments of financial information within generally
accepted accounting principles ("GAAP") that have been discussed with
management, including the ramifications of the use of such alternative
treatments and disclosures and the treatment preferred by the
independent auditor, and other material written communications between
the independent auditor and management.
7. The Committee shall review:
o major issues regarding accounting principles and financial
statement presentations, including any significant changes in the
Company's selection or application of accounting principles and
major issues as to the adequacy of the Company's internal
controls and any special audit steps adopted in light of any
material control deficiencies;
o analyses prepared by management and/or the independent auditors
setting forth significant financial reporting issues and
judgments made in connection with the preparation of the
financial statements, including analyses of the effects of
alternative GAAP methods on the financial statements;
B-3
o the effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the financial statements of the
Company; and
8. The Committee shall review and discuss the Company's earnings press
releases, including any use of "pro forma," or "adjusted" non-GAAP
information, as well as financial information and earnings guidance
provided to analysts and rating agencies. The Chair of the Committee
may represent the entire Committee for purposes of this review. The
Committee may undertake such review generally, including discussion of
the types of information to be disclosed and the type of presentation
to be made, and need not discuss in advance each earnings release or
each instance in which the company may provide earnings guidance.
9. The Committee shall discuss with management, the internal auditors and
the independent auditors the adequacy and effectiveness of the
accounting and financial controls and policies with respect to risk
assessment and risk management.
10. Periodically, the Committee shall meet separately with management, the
internal auditors and the independent auditors to discuss issues and
concerns warranting Committee attention. The Committee shall provide
sufficient opportunity for the internal auditors and the independent
auditors to meet privately with the members of the Committee.
11. The Committee shall review with the independent auditor any audit
problems or difficulties and management's response.
12. The Committee shall set clear hiring policies for employees or former
employees of the independent auditors that are consistent with Section
10A(l) of the Exchange Act, the regulations of the Commission and the
Exchange's listing standards.
13. The Committee shall review the disclosures and certifications made to
the Committee by the Company's CEO and CFO during their certification
process under Section 302 and 906 of the Sarbanes-Oxley Act of 2002
for the Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
14. The Committee shall establish procedures for the receipt, retention
and treatment of complaints received by the Company regarding
accounting, internal accounting controls, or auditing matters, and the
confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters.
15. The Committee shall receive corporate attorneys' reports of evidence
of a material violation of securities laws or breaches of fiduciary
duty.
16. The Committee shall investigate any reported known or suspected
violations of the Code of Conduct for Senior Executives and Financial
Managers or the Company-wide Code of Ethics where required, and shall
oversee an appropriate response, corrective action and preventative
measures for both. The Committee shall review any proposed amendments
or waivers to the codes and shall make a recommendation to the full
Board of Directors for appropriate action, which will be subject to
public disclosure as required by regulations of the Commission and the
Exchange's listing standards.
17. The Committee shall perform an evaluation of its performance at least
annually to determine whether it is functioning effectively.
B-4
APPENDIX C
F.N.B. CORPORATION
CHARTER OF THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
Mission
The F.N.B. Corporation (the "Company") Nominating and Corporate Governance
Committee (the "Committee") is responsible for (i) identifying and recommending
to the Board individuals qualified to become Board members of the Company,
consistent with the criteria established by the Board; (ii) developing and
recommending to the Board a set of corporate governance principles applicable to
the Company; and (iii) overseeing the evaluation of the Board and the Company's
management.
Membership
The Committee shall consist solely of non-management directors, each of
whom shall be independent in accordance with the independence requirements of
the New York Stock Exchange and the standards set forth in the Company's
"Corporate Governance Guidelines of the Board." The Chairman shall select
members of the Committee, subject to the approval of the Board.
Responsibilities and Authority
The following shall be the principal duties and responsibilities of the
Committee. These are set forth as a guide with the understanding that the
Committee shall have the discretion to conduct activities in addition to those
listed herein as it deems appropriate given the circumstances.
o Making recommendations regarding the composition and size of the Board
and tenure of directors.
o Developing and recommending to the Board of Directors specific
guidelines and criteria for screening and selecting nominees to the
Board of Directors, which should cover, among other things,
experience, skill set and the ability to act on behalf of
shareholders.
o Reviewing the qualifications of, and recommending to the Board of
Directors, those persons to be nominated for membership on the Board
of Directors and to be elected by the Board to fill vacancies and
newly created directorships.
o Reviewing candidates recommended by shareholders in accordance with
the procedures set forth in the Company's Bylaws.
o Conducting the appropriate and necessary inquiries into the
backgrounds and qualifications of possible candidates.
o Considering the performance of incumbent members of the Board of
Directors in determining whether to recommend that they be nominated
for reelection. Such consideration shall include an assessment of each
incumbent member's preparation for, and participation at meetings,
contribution to the cohesiveness and productivity of the Company Board
and compatibility with the Company's corporate culture.
o Identifying responsibilities of the directors, including basic duties
and responsibilities with respect to attendance at Board meetings and
advance review of materials.
C-1
o Developing guidelines with respect to director access to management
and, as necessary or appropriate, independent advisors.
o Developing guidelines and, where appropriate, programs for director
orientation and continuing education.
o Reviewing the duties and composition of committees of the Board,
including a review of the criteria for composition of the Audit
Committee under the rules of the New York Stock Exchange and under the
Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA), and a review of the criteria for composition of the
Compensation Committee under the rules of the New York Stock Exchange,
under Section 162(m) of the Internal Revenue Code and under Section 16
of the Securities Exchange Act of 1934, and identifying and
recommending the Board directors qualified to become members of the
Nominating-Corporate Governance and other Board committees, taking
into account such listing and regulatory criteria, if applicable, as
well as such other factors as the Committee deems appropriate.
o Reviewing shareholder proposals and proposed responses.
o Reviewing and recommending to the Board the Corporate Governance
Guidelines of the Board and any proposed changes to such practices.
o Providing a leadership role in shaping the corporate governance of the
Company.
o Periodically appraising Board and management performance and leading
the Board self-evaluation discussion.
o Performing such other functions and duties as may be requested by the
Board of Directors from time to time.
o Reviewing this Charter at least annually and recommending any proposed
changes to the Board of Directors.
The Committee shall report regularly to the Board of Directors. The
Committee shall have authority to delegate any of its responsibilities to
subcommittees as it may deem appropriate in its sole discretion. Subject to
prior approval by the Company Board, the Committee shall have authority to
retain, terminate and obtain advice, reports or opinions from search firms or
other internal or outside advisors and legal counsel in the performance of its
responsibilities, and to approve related fees and retention terms.
Meetings
The Committee may establish its own schedule for meetings throughout the
year and shall determine the number of meetings necessary and proper for the
conduct of business.
C-2
APPENDIX D
F.N.B. CORPORATION
COMPENSATION COMMITTEE CHARTER
I. COMMITTEE MEMBERS
The Committee will consist of at least three members selected by the F.N.B.
Corporation Chairman and approved by the Board of Directors. All Committee
members will be non-employee directors of F.N.B. Corporation (Company), as
defined by Rule 16b-3 under the Securities and Exchange Act of 1934, meet the
independence requirements of the New York Stock Exchange (NYSE) and qualify as
"outside directors" under Section 162m of the Internal Revenue Code. The Board
will approve Committee members based on the member's competence and ability to
add substance to the deliberations of the Committee. Desirable qualifications
for Committee members include experience in business management, executive
compensation, employee benefits and human resources. The members shall serve for
such terms as the Board may determine and until their successors shall be duly
qualified and appointed. The Board shall designate a chairperson for the
Committee.
II. PURPOSES OF THE COMMITTEE
The Committee assists the Board in fulfilling the Board's responsibilities
regarding the following:
a. oversight of the corporation's compensation policies, including
compensation of the Chief Executive Officer (CEO) and other Company
executives;
b. administration of the Company's equity incentive plans;
c. preparing an annual report on executive compensation for inclusion in
the proxy statement relating to the Company's annual meeting of
shareholders in accordance with applicable rules and regulations of
the NYSE and Securities and Exchange Commission (SEC).
III. MEETINGS
The Committee shall meet as frequently as the Committee deems necessary to carry
out its duties under this charter. The Committee Chairperson, the Chairman of
the Board or Chief Executive Officer may call special meetings of the Committee
as needed. The Committee chairperson shall, in consultation with the other
members of the Committee and appropriate officers of the Company, establish the
agenda for each Committee meeting. The Committee may request any officer or
employee of the Company or any representative of the Company's advisors to
attend a meeting or to meet with any members of the Committee. Any member of the
company's management whose performance or compensation is to be discussed at a
Committee meeting should not attend such meeting or the portion of such meeting
where such issues are discussed by the Committee.
IV. DUTIES, RESPONSIBILITIES AND AUTHORITY OF THE COMMITTEE
The Committee shall have the following duties, responsibilities and authority:
a. in consultation with senior management, to approve the Company's
executive compensation philosophy and to oversee and monitor the
Company's executive compensation policies, plans and programs to
insure that they are consistent with the Board's compensation
philosophy and objectives, as well as the long term interests of the
Company's shareholders.
b. to review and recommend approval of corporate goals and objectives
relevant to CEO compensation, to the Company Board, evaluate the CEO's
performance in light of those goals and objectives and recommend the
CEO's compensation level to the Board based on such evaluation.
D-1
c. to determine and recommend the long term incentive component of CEO
compensation subject to approval of the Board; in determining its
recommendation concerning the long term incentive component, the
Committee will consider the company's performance and relative
shareholder return, the value of similar incentive awards to CEOs at
comparable companies, and the awards given to the company CEO in past
years and such other factors as the Committee deems appropriate.
d. to annually review, approve and recommend to the Board as appropriate,
the compensation, including incentive compensation for other senior
executives of the corporation.
e. make recommendations to the Board with respect to incentive
compensation plans and equity based plans.
f. to retain and terminate any compensation consultant to be used to
assist in the evaluation of Director, CEO or senior executive
compensation and shall have sole authority to approve the consultant's
fees and other retention terms.
g. to obtain advice and assistance from internal or external legal,
accounting or other advisors.
h. to adopt, administer, approve and ratify awards under incentive
compensation and stock plans, including amendments to the awards made
under any such plans and review and monitor awards under such plans.
i. to review and evaluate, at least annually, the compensation of the
Board, including cash and equity compensation, and to recommend any
changes in Board compensation.
j. prepare an annual Committee report on executive compensation for
inclusion in the proxy statement or annual report in accordance with
applicable rules and regulations of the NYSE and Securities and
Exchange Commission (SEC).
k. the Committee may, in its discretion, delegate all or a portion of its
duties and responsibilities to a sub-committee consisting of one or
more members of the Committee, or to senior officers of the company.
The Committee may only delegate to the extent permitted by the rules
of the NYSE, SEC and applicable law. The Committee may not delegate
any of its duties and responsibilities with regard to compensation
arrangements, including salary and short term and long term incentive
awards, with respect to the CEO or any Section 16 officer.
V. REPORTING OF COMMITTEE ACTIVITIES
The Committee shall report the information elicited by its activities to the
Board and, where appropriate, its recommendations for action by the Board at the
next meeting subsequent to that of the Committee. The Committee may similarly
report certain action to the Board for approval, ratification and/or
confirmation.
VI. ANNUAL PERFORMANCE EVALUATION
The Committee shall conduct an annual evaluation of the Committee's performance,
periodically assess the adequacy of its charter, review the assessments with the
Board and recommend changes as needed.
VII. RESOURCES
In order to carry out the duties conferred upon the Committee by the charter,
the Committee is authorized to select, retain, terminate and approve the fees
and other retention terms of special or independent counsel, or other experts or
consultants, as it deems appropriate, without seeking approval of management or
the Board. The Company shall provide for appropriate funding, as determined by
the Committee, for payment of any such fees.
D-2
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F.N.B. CORPORATION
One F.N.B. Boulevard o Hermitage, Pennsylvania 16148
(724) 981-6000
Website: www.fnbcorporation.com
F.N.B. CORPORATION
2004 ANNUAL MEETING OF SHAREHOLDERS
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Tito L. Lima, Louise Lowrey and James G. Orie,
each with full power to act without the others, as Proxies of the undersigned,
each with the full power to appoint his substitute, and hereby authorizes them
to represent and to vote, as indicated on the reverse, all the shares of Common
Stock of F.N.B. Corporation held of record by the undersigned on March 3, 2004
at the Annual Meeting of Shareholders to be held on May 12, 2004 or any
adjournment, postponement or continuation thereof.
(Continued, and to be marked, dated and signed, on the other side.)
FOLD AND DETACH HERE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS.
ELECTION OF DIRECTORS:
CLASS III FOR THE TERM OF THREE YEARS: FOR WITHHOLD
William B. Campbell, Stephen J. Gurgovits all nominees listed authority to vote I(We) will attend the meeting.
Harry F. Radcliffe, John W. Rose (except as marked to for all nominees
CLASS II FOR THE TERM OF TWO YEARS: the contrary below) listed Yes No
Robert B. Goldstein [ ] [ ] [ ] [ ]
CLASS I FOR THE TERM OF ONE YEAR:
Henry M. Ekker
INSTRUCTION: To withhold authority to vote your shares for any
individual nominee, write that nominee's name here:
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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 888-441-4362.
Sincerely,
F.N.B. Corporation