To: Date:
----------------------------- -----------------------
From:
-----------------------------
(CSR)
Job Name: Job Number: .FS]1
----------------------------- -------------------
Document: Schedule 14A Information
------------------------
Proxy materials filed with the Securities and Exchange Commission must include
a cover page in the form indicated below in Schedule 14A and the appropriate
box on the cover page must be checked to indicate the type of filing.
Please mark up the template below for your filing.
===============================================================================
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT
OF 1934
(AMENDMENT NO. )
Filed by the Registant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
[X] Definitive Proxy Statement BY RULE 14C-5(D) (2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
PNC BANK CORP.
- - - -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--Enter Company Name Here--
- - - -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on tabel 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 underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
PNC BANK CORP. THOMAS H. O'BRIEN
One PNC Plaza Chairman and Chief Executive Officer
249 Fifth Avenue
Pittsburgh, PA 15222-2707
LOGO
March 18, 1996
Dear Shareholder:
You will find enclosed the notice of meeting, proxy statement and proxy for the
annual meeting of shareholders of PNC Bank Corp., which will be held on
Tuesday, April 23, 1996, on the 15th floor of One PNC Plaza, in Pittsburgh,
Pennsylvania, beginning at 11:00 a.m.
Please review the enclosed material and complete, sign, date and return the
proxy card regardless of whether you plan to attend the annual meeting, so that
the matters coming before the meeting can be acted upon.
We look forward to meeting our shareholders, including the former Midlantic
shareholders who will be joining us for their first PNC Bank annual meeting,
and welcome the opportunity to discuss the business of your company with you.
Cordially,
/s/ Thomas H. O'Brien
Thomas H. O'Brien
LOGO
PNC BANK CORP.
ONE PNC PLAZA
249 Fifth Avenue
PITTSBURGH, PENNSYLVANIA 15222-2707
March 18, 1996
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1996
To The Shareholders:
The annual meeting of the shareholders of PNC Bank Corp. will be held on the
15th floor of One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania, on
Tuesday, April 23, 1996, beginning at 11:00 a.m., local time, for the purpose
of considering and acting upon the following matters:
(1) The election of twenty-one directors to serve until the next annual
meeting and until their successors are elected and qualified;
(2) A proposal to approve the PNC Bank Corp. 1996 Executive Incentive Award
Plan;
(3) A shareholder proposal; and
(4) Such other business as may properly come before the meeting or any
adjournment thereof.
Shareholders of record at the close of business on March 4, 1996 are entitled
to receive notice of, and to vote at, the meeting and any adjournment thereof.
A proxy statement, form of proxy and self-addressed envelope are enclosed.
Please complete, date and sign the proxy. Return it promptly in the envelope
provided, which requires no postage if mailed in the United States. If you
attend the meeting, you may then withdraw your proxy and vote in person.
By Order of the Board of Directors,
/s/ William F. Strome
William F. Strome
Corporate Secretary
LOGO
PNC BANK CORP.
ONE PNC PLAZA
249 Fifth Avenue
PITTSBURGH, PENNSYLVANIA 15222-2707
March 18, 1996
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
APRIL 23, 1996
The enclosed proxy is being solicited by the Board of Directors ("Board of
Directors" or "Board") of PNC Bank Corp. ("Corporation" or "PNC") for use at
the Corporation's annual meeting of shareholders to be held April 23, 1996, or
at any adjournment thereof ("meeting" or "annual meeting"). Solicitation of
proxies may be made by mail, personal interviews, telephone and facsimile by
officers and employees of the Corporation and its subsidiaries. The Corporation
has retained D. F. King & Co., Inc. to assist in the solicitation of proxies
for a fee of $10,000 plus out-of-pocket expenses. Brokerage houses and other
custodians, nominees and fiduciaries will be requested to forward soliciting
material to the beneficial owners of the stock held of record by such persons.
Expenses for such solicitation will be borne by the Corporation. The proxy
statement and form of proxy were first mailed to shareholders on or about March
18, 1996.
The enclosed proxy is revocable at any time prior to the actual voting of
such proxy by the filing of an instrument revoking it, or a duly executed proxy
bearing a later date, with the Corporate Secretary of the Corporation. In the
event your proxy is mailed and you attend the meeting, you may revoke your
proxy and cast your vote personally. All properly executed proxies delivered
pursuant to this solicitation will be voted at the meeting in accordance with
instructions, if any. Unless otherwise directed, proxies will be voted FOR the
election as director of each the persons named on pages 2 and 3, FOR the
proposal to approve the PNC Bank Corp. 1996 Executive Incentive Award Plan, as
described beginning on page 19, and AGAINST the shareholder proposal found on
page 22.
The Board of Directors has fixed the close of business on March 4, 1996 as
the record date for determining shareholders entitled to receive notice of and
to vote at the meeting and any adjournment thereof. On that date, there were
issued and outstanding 341,586,811 shares of the Corporation's common stock,
par value $5.00 per share ("Common Stock") and the following shares of the
Corporation's preferred stock entitled to vote at the meeting: 17,818 shares of
$1.80 Cumulative Convertible Preferred Stock-Series A ("Preferred Stock-A");
4,728 shares of $1.80 Cumulative Convertible Preferred Stock-Series B
("Preferred Stock-B"); 343,273 shares of $1.60 Cumulative Convertible Preferred
Stock-Series C ("Preferred Stock-C") and 466,271 shares of $1.80 Cumulative
Convertible Preferred Stock-Series D ("Preferred Stock-D").
Holders of each share of convertible preferred stock are entitled to a number
of votes equal to the number of full shares of Common Stock which can be
acquired upon conversion of such preferred stock, with holders of Preferred
Stock-A and Preferred Stock-B being entitled to 8 votes per share and the
holders of Preferred Stock-C and Preferred Stock-D being entitled to 4 votes
per 2.4 shares. The holders of Common Stock are entitled to one vote per share.
Holders of record of the Common Stock and preferred stock will vote together as
a single class at the meeting, as described in the section captioned "Voting
Procedures", beginning on page 24. The presence in person or by proxy of the
holders of a majority in voting power of the Common Stock and the preferred
stock will constitute a quorum for the transaction of business at the meeting.
1
THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH BENEFICIAL OWNER OF ITS
SHARES, UPON SUCH SHAREHOLDER'S WRITTEN REQUEST, A COPY (WITHOUT EXHIBITS,
UNLESS OTHERWISE REQUESTED) OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC") FOR
THE YEAR ENDED DECEMBER 31, 1995. REQUESTS FOR COPIES SHOULD BE ADDRESSED TO
GLENN DAVIES, VICE PRESIDENT, FINANCIAL REPORTING, PNC BANK CORP., ONE PNC
PLAZA, 249 FIFTH AVENUE, PITTSBURGH, PENNSYLVANIA 15222-2707. THE ANNUAL REPORT
ON FORM 10-K IS NOT PART OF THE PROXY SOLICITATION MATERIALS.
ITEM 1
ELECTION OF DIRECTORS
INFORMATION CONCERNING NOMINEES
The By-Laws of the Corporation provide that the number of directors shall be
not fewer than five nor more than thirty-six as from time to time determined by
the Board of Directors. Pursuant to the recommendation of the Committee on
Corporate Governance, the Board has acted to fix at twenty-one the number of
directors to be elected at the annual meeting. The persons named below are
nominees for election as directors to hold office until the next annual meeting
of shareholders and the election and qualification of their successors.
The proxies solicited hereby, unless directed to the contrary therein, will
be voted FOR all nominees named below. All of the nominees named below are now
directors of the Corporation and all have consented to being named in this
proxy statement and to serve if elected. In accordance with the retirement
policy of the Board of Directors, Mr. William G. Copeland is not standing for
re-election. The Board of Directors has no reason to believe that any nominee
will be unavailable or unable to serve as a director, but if for any reason any
nominee should not be available or able to serve, the accompanying proxy will
be voted by the persons acting under said proxy in accordance with the
recommendations of the Board of Directors. The table below sets forth the names
of the nominees for election as directors of the Corporation; their principal
occupations as of January 15, 1996; the year they first became directors of the
Corporation; and their directorships of certain other companies. All nominees
have held the position indicated or another senior executive position with the
same entity or one of its affiliates or a predecessor corporation for at least
the past five years, except as otherwise indicated.
Directorships in Public Companies,
Other than the Corporation,
Director Filing Reports with the
Name Age Principal Occupation Since Securities and Exchange Commission
- - - ---- --- -------------------- -------- ----------------------------------
Paul W. Chellgren 53 President and Chief Operating 1995 Ashland Inc.; and
Officer of Ashland Inc. (energy company) Ashland Coal, Inc.
Robert N. Clay 49 President of Clay Holding Company 1987 None
(thoroughbred breeding)
George A. Davidson, Jr. 57 Chairman and Chief Executive 1988 Consolidated Natural Gas Company;
Officer of Consolidated Natural and B.F. Goodrich
Gas Company (public utility
holding company)
David F. Girard-diCarlo 53 Managing Partner of Blank, Rome, 1995 None
Comisky & McCauley (law firm)
Dianna L. Green 50 Senior Vice President of Customer Operations 1995 None
of Duquesne Light Company
(public utility)
C. G. Grefenstette 68 Chairman and Chief Executive Officer 1989 Owens & Minor, Inc.
of The Hillman Company (diversi-
fied operations and investments)
Arthur J. Kania 64 Principal of Trikan Associates 1995 Opt-Sciences Corporation
(real estate management-investment firm)
2
Directorships in Companies,
Other than the Corporation,
Director Filing Reports with the
Name Age Principal Occupation Since Securities and Exchange Commission
- - - ---- --- -------------------- -------- ----------------------------------
Bruce C. Lindsay 54 Chairman and Managing Director of 1995 None
Brind-Lindsay & Company Inc.
(investment company)
W. Craig McClelland 61 Chairman and Chief Executive Officer 1985 Union Camp Corporation; and
of Union Camp Corporation (paper manufacturing Allegheny Ludlum Corporation
and land resources)
Thomas Marshall 67 Vice Chairman of Dynamet Incorporated 1989 Allegheny Ludlum Corporation; and
(titanium superalloy products, machine Ashland Coal, Inc.
components and dye forging); and former Chairman
of Aristech Chemical Corporation (chemicals)
Donald I. Moritz 68 Chairman of the Executive Committee of 1985 Equitable Resources, Inc.
Equitable Resources, Inc.
(energy company--gas utility)
Thomas H. O'Brien 59 Chairman and Chief Executive Officer 1983 Bell Atlantic Corporation; and
of the Corporation Hilb, Rogal and Hamilton Company
Jackson H. Randolph 65 Chairman of Cinergy Corp. 1988 Cinergy Corp.; and
(public utility holding company) Cincinnati Financial Corporation
James E. Rohr 47 President of the Corporation 1989 Allegheny Ludlum Corporation; and
Student Loan Marketing Association
Roderic H. Ross 65 Chairman and Chief Executive Officer 1979 Hunt Manufacturing Company
of Keystone State Life Insurance
Company (insurance company)
Vincent A. Sarni 67 Chairman of the Executive Committee, 1989 PPG Industries, Inc.;
Pittsburgh Baseball Associates Hershey Foods Corporation;
(professional baseball organization); and former The LTV Corporation; and
Chairman and Chief Executive Officer of PPG Amtrol, Inc.
Industries, Inc. (glass, chemicals, coatings
and resins)
Garry J. Scheuring 56 Vice Chairman of the Corporation; and former Chairman, 1995 None
President and Chief Executive Officer of Midlantic
Corporation (financial services)
Richard P. Simmons 64 Chairman of Allegheny Ludlum Corporation 1976 Allegheny Ludlum Corporation; and
(specialty metals) Consolidated Natural Gas Company
Thomas J. Usher 53 Chairman and Chief Executive Officer of USX 1992 USX Corporation
Corporation (energy, steel and diversified business)
Milton A. Washington 60 President and Chief Executive Officer of 1994 None
Allegheny Housing Rehabilitation Corporation
(housing rehabilitation and construction)
Helge H. Wehmeier 53 President and Chief Executive Officer of 1992 None
Bayer Corporation (specialty chemicals,
pharmaceuticals, and imaging and graphic systems)
BOARD AND COMMITTEES
The Board of Directors has six standing committees: an Audit Committee, an
Asset and Liability Management Committee, a Credit Committee, a Committee on
Corporate Governance, a Personnel and Compensation Committee and an Executive
Committee. During 1995, the former Loan and Investment Committee was split into
the Asset and Liability Management Committee and the Credit Committee.
The Audit Committee is responsible for assisting the Board of Directors in
fulfilling its statutory and fiduciary responsibilities for the audit function
of the Corporation and its subsidiaries and in monitoring its
3
accounting and financial reporting practices; determining that the Corporation
has adequate administrative, operational and internal accounting controls and
that the Corporation is operating in accordance with its prescribed procedures
and codes of conduct; determining that the Corporation has in place policies
and procedures to enable it to comply with applicable laws and regulations and
that such compliance is occurring; and providing general oversight for the
internal and external audit function. Its functions include recommending to
the Board of Directors the appointment of the independent auditors and
reviewing with the internal auditors and the independent auditors their annual
audit plans and monitoring their progress during the year. The Committee is
presently comprised of Messrs. Davidson (Chairman), Copeland, Grefenstette,
Moritz, Usher and Wehmeier.
The Asset and Liability Management Committee is primarily responsible for
monitoring the Corporation's interest rate and liquidity risks. In performing
this function, the Committee reviews and approves (when appropriate) key asset
and liability policies regarding interest rate sensitivity, financial
derivatives and funding needs and reviews management reports regarding these
policies and activities related thereto. The Committee is presently comprised
of Ms. Green and Messrs. Grefenstette (Chairman), Clay, O'Brien, Sarni,
Simmons and Wehmeier.
The Credit Committee is responsible for reviewing and approving (when
appropriate) loan policies and reports of compliance therewith; reviewing
credit policy officer committee activities; and reviewing reports regarding
lending and credit activities as well as the Corporation's credit quality. The
Committee is presently comprised of Messrs. McClelland (Chairman), Marshall,
Randolph, Rohr, Ross, and Washington.
The Committee on Corporate Governance is responsible for recommending to the
Board of Directors persons to be nominated for election or appointment as
directors of the Corporation and monitoring and recommending enhancements to
the Corporation's corporate governance framework, particularly with respect to
the structure, processes, and proceedings of the Board of Directors. In
performing the nominating function, the Committee considers director nominees
recommended by shareholders. Such recommendations must be submitted in writing
no later than November 18, 1996 to the Corporate Secretary, PNC Bank Corp.,
One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2707, and
include the name, age, citizenship, residence, qualifications and
directorships and other positions held by the proposed nominee in business
organizations. The Committee is presently comprised of Ms. Green and Messrs.
Sarni (Chairman), Davidson, Randolph, Ross, Simmons and Wehmeier.
The Personnel and Compensation Committee is responsible for recommending to
the Board of Directors the persons to be elected as Chairman, President, and
Vice Chairmen of the Corporation and establishing the compensation of the
executive officers of the Corporation. The Committee also makes
recommendations to the Board of Directors regarding the adoption of employee
benefit, bonus, incentive compensation or similar plans and is responsible for
the administration of most of these plans. The Committee is presently
comprised of Messrs. Usher (Chairman), Clay, Copeland, Marshall, McClelland,
Moritz, and Washington.
The Executive Committee has all the powers of the Board of Directors to the
extent permitted by law and can exercise such powers between meetings of the
Board of Directors. The Committee is presently comprised of Messrs. Simmons
(Chairman), Davidson, Grefenstette, McClelland, O'Brien, Rohr, Sarni and
Usher.
The Board of Directors met twelve times in 1995. The Audit Committee and the
Credit Committee each met four times, and the Personnel and Compensation
Committee met eleven times. The Asset and Liability Management Committee met
three times. The Committee on Corporate Governance met five times in 1995.
Prior to its split into the Credit Committee and the Asset and Liability
Management Committee, the Loan and Investment Committee met once in 1995.
In 1995, each director then serving attended at least 75% of the combined
total of meetings of the Board of Directors held during his or her period of
service and meetings of each committee of the Board on which such director
served.
4
COMPENSATION OF DIRECTORS
Executive officers of the Corporation who are directors or members of
committees of the Board of Directors of the Corporation or its subsidiaries
receive no compensation for serving in such positions. All non-officer
directors of the Corporation are compensated for their services by a per diem
fee of $1,200 for any day's participation in a Board or committee meeting, or
any combination thereof, an annual retainer fee of $32,000 for Board membership
and, in accordance with the terms of the Corporation's 1992 Director Share
Incentive Plan ("Director Share Plan"), a number of shares of Common Stock
having a fair market value on the date of the award equal to $5,000. In
addition, the chairman of each standing committee receives a $3,000 annual
retainer fee. For 1995, the Corporation did not pay more than $65,200 in
aggregate fees, including the value of Common Stock awarded pursuant to the
Director Share Plan, to any one director.
Pursuant to the Directors Retirement Plan, each current or future non-officer
director of the Corporation who served as a director of the Corporation or a
predecessor or acquired corporation or other business entity for at least five
years will be paid an annual cash retirement benefit. The amount of the annual
benefit will be equal to the annual retainer fee in effect for non-officer
directors of the Corporation on the date of the director's retirement. The
annual benefit will be paid for the lesser of ten years or the life of the
retired director, with payment to commence on the later of age 65 or retirement
from the Board of Directors.
COMMON STOCK PURCHASE GUIDELINE
During 1995, upon the recommendation of the Committee on Corporate
Governance, the Board of Directors adopted a Common Stock purchase guideline
which requires that each non-officer director annually purchase Common Stock in
an amount equal to twenty-five percent of the annual retainer fee then in
effect.
5
SECURITY OWNERSHIP OF DIRECTORS AND
EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information concerning beneficial ownership
of the Corporation's Common Stock, as of January 15, 1996, by each director
and nominee for election as a director, each of the five executive officers
named in the Summary Compensation Table on page 14 and all directors and
executive officers of the Corporation, as a group. The number of shares shown
as beneficially owned by each director and executive officer is determined
under the rules of the SEC and the information is not necessarily indicative
of beneficial ownership for any other purpose. For purposes of the table set
forth below, beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire within 60 days of January
15, 1996 through the exercise of any option, warrant or right.
Unless otherwise indicated, each person has sole investment and voting power
with respect to the shares set forth in the following table:
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Amount and Nature
Name of Beneficial Ownership Percent of Class*
- - - ---- ----------------------- -----------------
Richard C. Caldwell 154,243/(1)//(2)/ --
Paul W. Chellgren 4,232 --
Robert N. Clay 3,105 --
William G. Copeland** 6,109 --
George A. Davidson, Jr. 8,436 --
David F. Girard-diCarlo 692 --
Dianna L. Green 994 --
C. G. Grefenstette 470,568/(3)//(4)/ --
Walter E. Gregg, Jr. 154,414/(1)//(2)/ --
Arthur J. Kania 434,689 --
Bruce C. Lindsay 1,184 --
W. Craig McClelland 3,479/(4)/ --
Thomas Marshall 42,777 --
Donald I. Moritz 4,596/(4)/ --
Thomas H. O'Brien 899,918/(1)//(2)/ --
Jackson H. Randolph 11,062 --
Bruce E. Robbins 190,565/(1)//(2)/ --
James E. Rohr 448,317/(1)//(2)//(4)/ --
Roderic H. Ross 5,131 --
Vincent A. Sarni 11,827/(4)/ --
Garry J. Scheuring 843,149/(5)/ --
Richard P. Simmons 62,786/(4)/ --
Thomas J. Usher 3,338 --
Milton A. Washington 18,214 --
Helge H. Wehmeier 1,588 --
Directors and executive officers as a group (34 persons) 4,833,574/(1)//(2)//(4)//(5)/ 1.42
- - - --------
* Percentage numbers are shown only for holdings which equal or exceed 1% of
the class. As of January 15, 1996, there were 341,042,937 shares of the
Corporation's Common Stock issued and outstanding. Where necessary,
percentages were calculated by adding shares subject to exercisable stock
options to the foregoing number.
** Mr. Copeland is not standing for re-election.
6
(1) Includes shares held in the Corporation's Incentive Savings Plan, a
qualified employee benefit defined contribution plan.
(2) Includes shares subject to exercisable stock options held by the executive
officer(s). The shares subject to such options are as follows, for Messrs.
O'Brien (716,000), Rohr (387,000), Gregg (148,000), Caldwell (150,400), and
Robbins (187,000). The aggregate number of shares subject to such options
for the remaining ten executive officers is 609,200.
(3) The amount listed for Mr. Grefenstette includes 142,000 shares held in a
trust of which Mr. Grefenstette is one of three co-Trustees; in that
fiduciary capacity he shares voting and dispositive power over the trust's
assets with the other co-Trustees. The amount listed for Mr. Grefenstette
also includes 316,000 shares owned by Wilmington Securities, Inc., an
indirect wholly-owned subsidiary of The Hillman Company, which is
controlled by the trust. The amount listed for Mr. Grefenstette, however,
does not include 448,000 shares owned by The Hillman Foundation, Inc.; Mr.
Grefenstette, who is a Vice President and Director of the Foundation,
disclaims beneficial ownership of that holding.
(4) Includes shares held jointly and/or indirectly.
(5) Includes shares held in the Midlantic Savings and Investment Plan, a
qualified employee benefit defined contribution plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 4, 1996, the following persons are known to the Corporation to be
the beneficial owners of more than five percent of the Corporation's Common
Stock. In preparing the table shown below, the Corporation has relied, without
further investigation, on the information contained on the copy of the Schedule
13G delivered to it, which was filed jointly by the respective reporting
persons with the SEC under the Securities Exchange Act of 1934 ("Act"). The
numbers shown on the table should be interpreted in light of the related
footnotes.
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership Class
------------------- ----------------------- ----------
The Capital Group Companies, Inc./(1)/ 20,161,700/(2)/ 5.9%/(2)/
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071
PNC Bank Corp. 19,909,072/(4)/ 5.8%/(4)/
PNC Bancorp, Inc./(3)/
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
- - - --------
(1) The shares reported by The Capital Group Companies, Inc. relate to those
attributable to the following two wholly-owned operating subsidiaries,
including the shares reported by the Capital Research and Management
Company ("Capital Research") on a Schedule 13G filed with the SEC: (i)
Capital Research, an Investment Adviser registered under Section 203 of the
Investment Advisers Act of 1940; and (ii) Capital Guardian Trust Company, a
Bank as defined in Section 3(a)(6) of the Act. Each of these subsidiaries
acts separately from the other and from The Capital Group Companies, Inc.
in exercising investment discretion over its managed accounts.
(2) The Capital Group Companies, Inc. reports sole voting power as to 1,530,200
shares and sole dispositive power as to 20,161,700 shares. These shares do
not include any shares as to which Capital Research reports sole voting
power, but do include 18,200,000 shares as to which Capital Research
reports sole dispositive power. Neither The Capital Group Companies, Inc.
nor any of its affiliates own any shares of the Corporation's Common Stock
directly. The shares reported are owned by various institutional
7
accounts under the discretionary investment management of the subsidiaries
identified in footnote (1); no one such managed account owns five percent or
more of the Corporation's Common Stock. Beneficial ownership as to all
shares reported is disclaimed by the reporting persons pursuant to Rule 13d-
4 under the Act.
(3) PNC Bancorp, Inc. is a registered bank holding company and a wholly-owned
subsidiary of the Corporation. PNC Bancorp, Inc. is the direct parent
holding company of the Corporation's subsidiary banks.
(4) As of December 31, 1995, the Corporation's subsidiary banks, acting in
various fiduciary and representative capacities, were deemed to be the
beneficial owners of an aggregate of 19,909,072 shares of Common Stock,
representing 5.8% of outstanding Common Stock; no one subsidiary bank was
the beneficial owner of five percent or more of outstanding Common Stock.
The foregoing aggregate number of shares of Common Stock and percentage of
outstanding Common Stock include 1,713 shares of Preferred Stock--C and
3,104 shares of Preferred Stock--D. The cited figures for Common Stock
reflect conversion of such beneficially owned Preferred Stock into Common
Stock. All of such shares are held in a fiduciary or representative
capacity in numerous separate accounts for the benefit of other persons.
The bank subsidiaries had the power to vote or direct the voting of a
portion of said shares as follows: 16,881,509 sole; 2,539,090 shared. The
bank subsidiaries had the power to dispose or direct the disposition of a
portion of said shares as follows: 4,864,719 sole; 3,364,284 shared.
COMPENSATION OF EXECUTIVE OFFICERS
PERSONNEL AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
One of the primary purposes of the Personnel and Compensation Committee
("Committee") is to oversee on behalf of the Board of Directors ("Board") the
compensation policies and practices of the Corporation. Specific
responsibilities of the Committee include establishing the annual compensation
of the Corporation's executive officers; recommending to the Board the adoption
of employee benefit, bonus, incentive compensation and similar plans; and
administering or monitoring the administration of these plans. Pursuant to the
Corporation's By-laws, no member of the Committee is an officer of the
Corporation.
As stated in prior reports, the executive compensation program is designed to
attract, motivate and retain executive personnel capable of making significant
contributions to the long-term success of the Corporation, while also aligning
the interests of executive officers with those of the shareholders. This
linkage between the interests of the executive officers and shareholders
increases at successively higher levels of management, as a greater proportion
of an executive officer's total compensation is placed at risk by tying it to
the Corporation's financial and Common Stock price performance.
During 1995, the Committee continued its recent annual practice of conducting
a comprehensive review of the Corporation's executive compensation program. In
connection with this review, the Committee retained a compensation consultant
to advise the Committee on the reasonableness of the findings and
recommendations resulting from management's review of the program.
As part of our review of each of the three primary components of the
executive compensation program--base salary, annual incentive, and long-term
incentive--we reviewed comparative compensation data for the domestic banking
industry as a whole, as well as compensation data for a peer group of bank
holding companies consisting of certain money center bank holding companies and
certain regional bank holding companies which compete in markets served by the
Corporation ("Peer Group"). All comparative compensation data was acquired by
management from various nationally recognized compensation consulting firms.
(Note: The banking institutions included in each comparison do not necessarily
include the same group of banking institutions included in the peer group index
used for the Common Stock performance graph
8
on page 19.) When reviewing this data, the Committee asked management and the
compensation consultants to provide analytical and interpretive assistance
regarding comparative compensation practices generally and the Corporation's
compensation program specifically.
As a result of this review, the Committee has concluded that, assuming the
proposed Executive Incentive Award Plan is approved (please see the description
under the caption "Proposal to Approve the PNC Bank Corp. 1996 Executive
Incentive Award Plan" on page 19), the basic structure of the executive
compensation program is appropriate and competitive and continues to serve the
purposes for which it was established.
Base Salary
The Corporation's base salary structure is targeted to the middle of the
competitive marketplace. When determining the appropriate base salary range,
the Corporation's human resources personnel value each executive officer's
position through an annual formal assessment of the position's complexity and
level of responsibility, its importance to the Corporation in relation to other
executive positions, and the competitiveness of an executive's total
compensation. Once the executive officer's position is assessed, it is assigned
a corporate job grade which has a salary range approximating the salary
practices of other banking institutions. Except for the Chief Executive Officer
and President positions, comparative salary data was based on general banking
industry compensation information. With respect to Messrs. O'Brien and Rohr,
however, the comparative data was focused on the compensation data of the chief
executive officers and presidents of the Peer Group, whose scope of duties and
responsibilities more closely approximate Mr. O'Brien's and Mr. Rohr's,
respectively. Subject to the approval of the Committee, the level of base pay
of the Corporation's executive officers within their appropriate salary ranges
is determined on the basis of the relevant comparative compensation data, as
well as the Chief Executive Officer's assessment of each executive's
performance, experience and other relevant factors, such as demonstrated
leadership, job knowledge, management skills, and years of service with the
Corporation.
Annual Incentive Awards
For 1995, the annual incentive or bonus payment opportunity in the
compensation program was provided primarily through the 1994 Annual Incentive
Award Plan ("Incentive Plan"). The Incentive Plan is designed to focus
executives on the achievement of clear performance goals that are within the
relative control of management and should, if achieved, result in the long-term
growth of shareholder value. Consequently, since 1987 the Committee has
consistently linked payments under the Incentive Plan to the Corporation's
earnings per share in relation to the Corporation's budget or profit plan ("EPS
Goal"), as well as to the Corporation's return on average assets and return on
average equity relative to the Peer Group ("Relative Goals"). As indicated in
the Committee's report on executive compensation in last year's proxy
statement, the EPS Goal is now used as the primary performance measure when
making awards under the Incentive Plan. As described below, however, the
Committee continues to consider the Relative Goals as well as the Chief
Executive Officer's assessment of individual performance when determining
actual award payments.
Like the process used to establish base salaries, a methodology is followed
by the Corporation's human resources personnel when recommending annual
incentive awards to the Committee. The target amount payable to an executive
officer as an annual incentive award is a function of the officer's salary
grade, expressed as a percentage of base salary. This percentage amount
generally increases as the executive officer's salary grade increases. On the
assumption that the 1995 target performance goal would be achieved, target
annual incentive awards for 1995 were intended to result in the payment of
median annual incentive amounts, again based on an analysis of comparative
compensation data across the domestic banking industry.
As a result of the annual compensation program review described above, the
Committee continues to believe that the annual incentive system provides an
appropriate linkage among executive performance; annual, objective performance
measures; and long-term shareholder value. However, in order to assure
9
necessary flexibility in the administration of the Incentive Plan and thereby
assure a competitive annual incentive for the Chief Executive Officer and the
next four most highly compensated executive officers, and enable the
Corporation to preserve the federal income tax deductibility of all executive
compensation, the Committee unanimously recommended to the Board the adoption
of the Executive Incentive Award Plan. This proposed plan will be administered
in a manner similar to the Incentive Plan, but these five executives will not
be paid an award under the Incentive Plan.
For the 1995 incentive awards, the Chief Executive Officer established,
subject to Committee approval, the minimum, target, and maximum performance
goal levels for the Corporation's 1995 EPS Goal. Achievement of less than the
minimum level would result in no award payment and achievement at or above the
maximum level could result in a payment not to exceed 150% of the target award.
EPS Goal achievement within the minimum and maximum ranges would be determined
by interpolation. As mentioned above, the Committee determined that it would
continue to consider the Relative Goals when deciding the award payment level.
In the Committee's sole discretion, individual award payments under this Plan
may be decreased or eliminated to reflect individual performance. For 1995, the
Committee determined that the mathematical calculation of the annual incentive
award payment level should result in a payment level of 85.9% of target. This
relative achievement of the EPS Goal during 1995 reflects adjustments to the
Corporation's reported earnings per share for several extraordinary items, such
as the special charges associated with the Corporation's acquisitions completed
during 1995 and the acceleration of the balance sheet repositioning.
When considering the actual 1995 incentive payment level, the Committee noted
that with respect to the Relative Goals, the Corporation did not compare
favorably with the Peer Group. Consequently, notwithstanding the significant
achievements of management during the year, including the negotiation and
completion of the Midlantic and Chemical-New Jersey acquisitions, as well as
the accelerated completion of the Corporation's balance sheet repositioning,
annual incentive payments were reduced to 73% of the target amount, except for
those instances where Mr. O'Brien recommended no reductions or further
reductions based on individual performance. Mr. O'Brien also recommended, and
the Committee approved, that additional bonus payments be made outside the
Incentive Plan to several executive officers, including two of the named
executive officers, as a result of the achievements described above and line of
business initiatives.
Annual Long-Term Incentive Awards
The third primary element of the Corporation's compensation program for
executive officers is the 1992 Long-Term Incentive Award Plan ("Long-Term
Incentive Plan"). The Long-Term Incentive Plan is intended to focus the efforts
of executive officers on performance which will increase the equity value of
the Corporation for its shareholders. Pursuant to the Long-Term Incentive Plan,
the Committee may grant incentive stock options within the meaning of the
Internal Revenue Code of 1986, as amended ("Code") and nonstatutory stock
options to executive officers to purchase shares of Common Stock at an exercise
price per share not less than the fair market value of a share on the date of
grant. In addition, the Committee may grant stock appreciation rights
independently or in tandem with stock option grants; performance units
independently or in tandem with nonstatutory stock options grants; and
incentive or restricted stock. Due to changes in the timing associated with the
Committee's consideration of management's annual nonstatutory stock option
grant recommendations, there were no nonstatutory stock option grants during
1995 (except for grants for new hires or due to promotions). This timing change
was necessitated by the implementation of a revised stock option level
determination methodology which considers relative total shareholder return.
Consequently, nonstatutory stock options were granted on February 13, 1996
rather than in the preceding December, which was the prior practice. This
revised stock option grant methodology employed by the Corporation is described
below.
The number of options granted to optionees is determined by establishing a
number of options having an aggregate value which would place the executive
officer in approximately the 75th percentile of the domestic banking industry
with respect to long-term compensation ("base-line amount"). This base-line
10
amount will be periodically recalculated in order to maintain the 75th
percentile objective. Each year, the stock option grant level may then be
adjusted upward or downward from the base-line amount based upon relative total
shareholder return as compared to the Peer Group. As long as the Corporation's
total shareholder return approximates the median total shareholder return of
the Peer Group, the actual number of options to be granted generally will
approximate the base-line amount. If the Corporation's relative total
shareholder return is significantly higher or lower than median, the number of
options to be granted will be adjusted above or below, respectively, the base-
line amount. The Committee may also increase or decrease grant levels to
reflect individual performance, competitive compensation practices, or other
considerations.
For the 1996 stock option grant, Common Stock appreciation and dividend
payments during 1995 were used to calculate total shareholder return. By 1998,
and in each year thereafter, total shareholder return will be based on Common
Stock appreciation and dividend payments for the three most recent years (i.e.,
for 1998 grants, total shareholder return for 1995 through 1997 will be used to
calculate relative total shareholder return). In order to maintain an overall
competitive grant level, the base-line amount was adjusted upward by ten
percent and, consequently, 1996 option grant levels were increased by
approximately ten percent from the stock option levels granted in 1994.
Special Performance Incentive Share Awards
In June of 1995, a small number of key senior executive officers, including
each of the named executive officers, were granted a performance incentive
share award under the Long-Term Incentive Plan. Pursuant to the terms of the
awards, shares of Common Stock will be issued upon achievement of performance
conditions, at which time the executive will be entitled to receive dividends
and vote the shares. However, as a further retentive element to the awards, the
shares will be forfeited by the executive officer if he or she leaves the
employ of the Corporation within two years after the performance conditions
have been satisfied.
Fifty percent of the incentive shares subject to the award will be issued to
the executive as soon as the Corporation's average Common Stock price reaches
$32.00 per share over twenty consecutive trading days ("performance period")
and the remaining shares will be issued as soon as the Corporation's average
Common Stock price reaches $35.00 per share during a second performance period.
The performance periods must begin on or before December 31, 1998.
The purposes of the 1995 performance incentive share awards are to continue
to retain and motivate key senior executive officers by further aligning their
long-term interests with those of our shareholders and addressing a competitive
long-term compensation gap for key senior executive officers.
CEO Compensation
Whenever the Committee has a meeting where Mr. O'Brien's base salary, annual
incentive award, annual incentive award payment, or an award or grant under the
Long-Term Incentive Plan is on the meeting agenda, the Committee sets aside
time to discuss these matters privately without Mr. O'Brien and other officers
of the Corporation present. During these private sessions, the members of the
Committee debate the merits of the matters under consideration and, as part of
these deliberations, generally consider the Corporation's financial
performance, Common Stock price performance and industry-wide and Peer Group
specific comparative compensation data. The Committee also considers subjective
factors such as Mr. O'Brien's leadership, decision-making skills, experience,
knowledge, board communications and strategic recommendations, as well as the
Corporation's positioning for future performance; the Committee may also seek
the advice of its compensation consultant. Although the Committee does not
place any particular relative weight on one of the foregoing factors over
another, the Corporation's financial performance is generally given the most
weight. All of our decisions regarding the components of Mr. O'Brien's
compensation are reported to the Board at its next regularly scheduled meeting
subsequent to the Committee meeting, and the merits of our decisions (as well
as any other compensation-related recommendations) are also discussed
privately, without Mr. O'Brien and other officers present.
11
For 1995, the Committee made the following decisions regarding Mr. O'Brien's
compensation:
. In December of 1994, based upon the Peer Group comparative compensation
data described above and the Committee's subjective assessment of Mr.
O'Brien's experience, ability to contribute to the Corporation's long-
term success, management skills, and the Corporation's performance in
1994, Mr. O'Brien's 1995 base salary was increased above the level
established for him in 1994.
. In accordance with the methodology employed for calculating annual
incentive awards, Mr. O'Brien's annual incentive payment was $657,000.
As described above, we noted that the 1995 Relative Goals did not
compare favorably with the Peer Group. Consequently, we reduced his
incentive payment to 73% of his target award notwithstanding the
completion of the previously mentioned acquisitions and balance sheet
repositioning.
. Mr. O'Brien was granted an incentive share award of 66,900 shares of
Common Stock in accordance with the conditions described above under the
caption "Special Performance Incentive Share Awards". We determined to
make this grant to address a competitive long-term compensation gap and
to further align Mr. O'Brien's long-term interests with those of our
shareholders. The level of his grant was based primarily upon
comparative compensation data regarding long-term compensation for the
chief executive officers of the Peer Group.
Tax Policy
Section 162(m) of the Code disallows federal income tax deductions for
compensation paid to the Chief Executive Officer and any of the other four
named executive officers in excess of $1 million in any taxable year, subject
to certain exceptions. One exception involves compensation paid pursuant to
shareholder-approved compensation plans that are performance-based. The
Incentive Plan and the Long-Term Incentive Plan were approved by the
Corporation's shareholders in 1994 and 1992, respectively, and the Committee
intends that award payments and grants under those Plans as well as under the
proposed Executive Incentive Award Plan be eligible for this performance-based
exception (and therefore eligible as a federal income tax deduction under the
Code.) The Committee has taken and intends to continue to take whatever actions
are necessary to minimize, if not eliminate, the Corporation's non-deductible
compensation expense, while maintaining, to the extent possible, the
flexibility which the Committee believes to be an important element of the
Corporation's executive compensation program. The Committee's desire to achieve
this balance is further illustrated by the design of the 1996 Executive
Incentive Award Plan and our unanimous recommendation that the Board approve it
and submit it for shareholder approval.
Summary
The Committee remains dedicated to ensuring that the Corporation's
compensation program for executive officers is properly designed to attract,
motivate, and retain officers who are capable of making significant
contributions to the long-term success of the Corporation.
With the assistance of internal human resources personnel and independent
compensation consultants, the Committee will continue to review and evaluate
the Corporation's executive compensation program at least annually.
MEMBERS OF THE COMMITTEE:
Thomas J. Usher (Chairman)
Robert N. Clay
William G. Copeland
Thomas Marshall
W. Craig McClelland
Donald I. Moritz
Milton T. Washington
12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Personnel and Compensation Committee is an officer or former
officer of the Corporation or any of its subsidiaries.
Certain directors, nominees and executive officers and/or their associates,
including certain members of the Personnel and Compensation Committee and their
respective associates, were customers of and had transactions with the
Corporation or its subsidiaries during 1995. Transactions which involved loans
or commitments by subsidiary banks were made in the ordinary course of business
and on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other persons
and did not involve more than normal risk of collectibility or present other
unfavorable features. Blank, Rome, Comisky & McCauley, the law firm for which
Mr. Girard-diCarlo serves as Managing Partner, and Kania, Lindner, Lasak and
Feeney, the law firm of which Mr. Kania is a partner, were retained to provide
legal services to one or more of the Corporation's subsidiaries during 1995 and
may provide similar services during 1996.
13
SUMMARY COMPENSATION TABLE*
The Summary Compensation Table shows, for the Corporation's fiscal years
1993 through 1995, the compensation paid or awarded to Mr. O'Brien, the
Corporation's Chairman and Chief Executive Officer, and the Corporation's next
four most highly compensated, policy making executive officers; the inclusion
of the four executive officers other than Mr. O'Brien in this group was based
on salary and bonus earned during 1995. Mr. O'Brien and the other four
executive officers are referred to collectively as the Corporation's "named
executive officers." For a detailed discussion of the Corporation's executive
compensation program, please refer to the Personnel and Compensation Committee
Report on Executive Compensation, beginning on page 8.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------- ----------------------------------
AWARDS PAYOUTS
---------- --------------
SECURITIES
UNDERLYING LONG-TERM ALL
OTHER OPTIONS/ INCENTIVE PLAN OTHER
NAME & PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ANNUAL COMP($) SARS (#) PAYOUTS ($) COMP ($)
- - - ------------------------- ---- ---------- --------- -------------- ---------- -------------- --------
(A) (B) (C)
THOMAS H. O'BRIEN
Chairman & CEO 1995 900,000 657,000 10,306 0 0 192,397
PNC Bank Corp. 1994 850,000 249,900 2,410 120,000 0 149,934
1993 800,000 1,200,000 2,711 95,000 0 136,623
JAMES E. ROHR
President 1995 570,000 400,000 13,926 0 0 111,035
PNC Bank Corp. 1994 515,000 113,558 3,365 65,000 0 93,306
1993 450,000 400,000 11,035 65,000 0 85,004
WALTER E. GREGG, JR.
Executive Vice President 1995 430,000 300,000 4,914 0 0 77,979
PNC Bank Corp. 1994 375,000 71,663 980 44,000 0 60,561
1993 335,000 298,486 822 44,000 0 61,179
RICHARD C. CALDWELL
Executive Vice President 1995 315,000 157,500 4,667 0 0 30,637
PNC Bank Corp. 1994 305,000 73,810 0 26,500 0 25,450
1993 290,000 195,750 0 26,500 0 25,417
BRUCE E. ROBBINS
Executive Vice President 1995 320,000 116,800 4,022 0 0 96,103
PNC Bank Corp. 1994 305,000 73,810 1,002 26,500 0 81,245
1993 278,333 187,962 907 26,500 0 78,084
- - - ----
*Footnotes to the Summary Compensation Table are set forth on page 15.
14
FOOTNOTES TO SUMMARY COMPENSATION TABLE
(a) Amounts shown represent reimbursement for certain tax liabilities. None of
the named executive officers received perquisites or other personal
benefits, securities, or property during 1995 which, in the aggregate, cost
the Corporation the lesser of $50,000 or 10% of the named executive
officer's salary and bonus earned during that year. Perquisites and other
personal benefits which were received by the named executive officers were
valued on the basis of their incremental cost to the Corporation and its
subsidiaries, as prescribed by the rules of the SEC.
(b) No stock options were granted to the named executive officers in 1995. No
stock appreciation rights ("SARs") were granted in any of the years shown.
(c) The amount shown for each named executive officer for 1995 includes the
dollar value ($9,000) of matching contributions of the Corporation's Common
Stock made pursuant to the Corporation's Incentive Savings Plan, a
qualified employee benefit defined contribution plan. Also included are
1995 contributions made to the Corporation's Supplemental Incentive Savings
Plan, a non-qualified employee benefit defined contribution plan, for
Messrs. O'Brien ($45,000), Rohr ($25,200), Gregg ($16,800), Caldwell
($9,900) and Robbins ($10,200). Finally, the amounts shown also include the
1995 net premiums paid by the Corporation in connection with its Key
Executive Equity Plan, a split-dollar insurance arrangement, on behalf of
Messrs. O'Brien ($138,397), Rohr ($76,835), Gregg ($52,179), Caldwell
($11,737) and Robbins ($76,903). The net premiums disclosed in the
preceding sentence, and included in "All Other Compensation" for 1993 and
1994, represent the full dollar amounts paid by the Corporation for both
the term and non-term portions of the Key Executive Equity Plan.
15
NO OPTION/SAR GRANTS IN 1995
Because no stock options or SARs were granted to any of the named executive
officers during 1995, the Option/SAR Grant Table which was included in previous
proxy materials is unnecessary. Information about stock options or SARs granted
during 1996 will be provided in the required table in the Corporation's 1997
proxy materials. For a discussion of this point, please see the section of the
Personnel and Compensation Committee Report on Executive Compensation captioned
"Annual Long-Term Incentive Award", beginning on page 10.
AGGREGATED OPTION/SAR EXERCISES IN 1995 AND 1995 YEAR-END OPTION/SAR VALUES
This table provides information concerning exercises of stock options/SARs
during 1995 by the named executive officers. The table also shows the number
and value of unexercised options/SARs at the end of 1995.
Number of Securities
Underlying Unexercised Value of Unexercised,
Shares Options/SARs At 1995 In-the-Money Options/
Acquired on Value Year-End (#) SARs at 1995 Year-End
Name Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ------------ -------- ----------- ------------- ----------- -------------
(A)(B) (C)
THOMAS H. O'BRIEN 20,000 $222,500 716,000 0 $6,699,269 0
JAMES E. ROHR 0 0 387,000 0 3,286,465 0
WALTER E. GREGG, JR. 0 0 148,000 0 916,125 0
RICHARD C. CALDWELL 0 0 150,400 0 1,637,987 0
BRUCE E. ROBBINS 9,000 65,530 187,000 0 2,139,749 0
- - - ------
(a) An option or SAR is in-the-money if the fair market value of the underlying
security exceeds the exercise or base price of the option or SAR.
(b) The dollar values shown were calculated by determining the difference
between: (i) the average of the high and low prices of the Corporation's
Common Stock on the New York Stock Exchange on December 29, 1995 (i.e.,
$32.125) and (ii) the exercise prices of the various exercisable options
held by the named executive officer as of December 29, 1995.
(c) The values shown in this column are all zero because no stock options or
SARs were granted to the named executive officers during 1995 and all
options or SARs previously granted are now exercisable.
16
1992 LONG-TERM INCENTIVE AWARD PLAN--AWARDS IN 1995
This table provides information on the performance incentive share awards
made to each of the named executive officers in 1995 under the Corporation's
1992 Long-Term Incentive Award Plan. For a discussion of these awards, please
see the section of the Personnel and Compensation Committee Report on Executive
Compensation captioned "Special Performance Incentive Share Awards" on page 11.
NUMBER OF SHARES, UNITS PERFORMANCE OR OTHER PERIOD UNTIL
NAME OR OTHER RIGHTS (#)(A) MATURATION OR PAYOUT
---- ----------------------- ---------------------------------
Thomas H. O'Brien 66,900 (b)
James E. Rohr 42,400 (b)
Walter E. Gregg, Jr. 31,900 (b)
Richard C. Caldwell 17,600 (b)
Bruce E. Robbins 17,800 (b)
- - - ------
(a) Number shown represents the number of shares of the Corporation's Common
Stock to be issued upon achievement of specified performance conditions, at
which time the named executive officer will be entitled to receive
dividends on and vote the shares issued.
(b) 50% of the incentive shares subject to the award will be issued to the
named executive officer as soon as the Corporation's average Common Stock
price reaches $32.00 per share over twenty consecutive trading days
("performance period"). The remaining 50% of the shares will be issued as
soon as the Corporation's average Common Stock price reaches $35.00 per
share over a second performance period. The performance periods must begin
on or before December 31, 1998. Any shares issued will be forfeited if the
named executive officer leaves the Corporation's employ within two years
after the applicable performance condition has been satisfied.
PENSION BENEFITS
The Corporation maintains a non-contributory pension plan ("Pension Plan")
for employees which is a defined benefit plan under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and is qualified under
Section 401(a) of the Code. The Corporation and certain of its subsidiaries
contribute an actuarially determined amount necessary to fund total benefits
payable to participants employed by them. The amount of the Corporation's
annual contribution to this Plan with respect to a specified participant cannot
readily be calculated by the actuaries for the Pension Plan. Benefits under the
Pension Plan are based on the average of the highest base salary for five
consecutive years during the last ten years of credited service ("final average
compensation"), and are subject to limitations imposed by ERISA and the Code.
Retirement benefits under the Pension Plan are calculated as follows: (i)
1.3% of the final average compensation for each year of credited service up to
25 years, plus (ii) 1% of the final average compensation for each year of
credited service over 25, plus (iii) 0.45% of the final average compensation in
excess of the participant's social security covered compensation (determined as
of the year of retirement) for each year of credited service up to 35 years.
A supplemental benefit plan applicable to all employees of the Corporation
and its subsidiaries provides retirement benefits equal to the difference, if
any, between the maximum benefit allowed under ERISA and the Code and the
amount provided by the Pension Plan. Under the provisions of two separate but
substantially identical supplemental benefit plans, officers who received cash
payments in connection with annual incentive awards (or cash bonuses under
prior cash compensation plans) are eligible for additional retirement benefits
based on the additional payment under the Pension Plan that eligible officers
would receive if cash payments made in connection with annual incentive awards
were included in determining final average compensation for purposes of
calculating such eligible officers' pension benefits.
The following table sets forth the estimated annual benefits payable upon
normal retirement (age 65) pursuant to the provisions of the Pension Plan as
supplemented by the various plans described above to persons in the indicated
final average compensation and credited years of service classifications.
17
Estimated Annual Benefits for Credited Years of Service Indicated
Final Average ------------------------------------------------------------------
Compensation 15 20 25 30 35
------------ -- -- -- -- --
$ 300,000 $ 76,889 $ 102,518 $ 128,148 $ 149,277 $ 170,407
500,000 129,389 172,518 215,648 251,277 286,907
700,000 181,889 242,518 303,148 353,277 403,407
900,000 234,389 312,518 390,648 455,277 519,907
1,100,000 286,889 382,518 478,148 557,277 636,407
1,300,000 339,389 452,518 565,648 659,277 752,907
1,500,000 391,889 522,518 653,148 761,277 869,407
1,700,000 444,389 592,518 740,648 863,277 985,907
1,900,000 496,889 662,518 828,148 965,277 1,102,407
2,100,000 549,389 732,518 915,648 1,067,277 1,218,907
2,300,000 601,889 802,518 1,003,148 1,169,277 1,335,407
2,500,000 654,389 872,518 1,090,648 1,271,277 1,451,907
2,700,000 706,889 942,518 1,178,148 1,373,277 1,568,407
Amounts reported in the Summary Compensation Table on page 14 under the
columns captioned "Annual Compensation--Salary" and "Annual Compensation--
Bonus" would be included in the calculation of final average compensation. The
executive officers included in such table have accumulated the following
credited years of service: Messrs. O'Brien (34), Rohr (24), Gregg (22),
Caldwell (6) and Robbins (23). The foregoing credited years of service were
calculated by rounding each half year or more to the next highest number. The
estimated annual pension benefits shown above are based on a single life
annuity payment method and assume that the benefits are payable beginning at
age 65, with a termination date and payment start date of February 1, 1996. The
normal form of payment for a married person is the joint and survivor annuity,
which provides a lower annual pension during the combined lives of the person
and his or her spouse. The estimated annual benefits listed in the Pension Plan
Table are not subject to any deduction for Social Security benefits or other
offset amounts.
18
COMMON STOCK PERFORMANCE GRAPH
The graph set forth below shows the cumulative shareholder return (i.e.,
price change plus reinvestment of dividends) on the Corporation's Common Stock
during the five-year period ended December 31, 1995, as compared with: (i) an
overall stock market index, the S&P 500 Index; and (ii) a peer group index, the
S&P Major Regional Bank Index ("S&P Banks"). The stock performance graph
assumes that $100 was invested on January 1, 1991 for the five-year period and
also shows the resultant compound growth rate ("CGR") for the performance
period. The yearly points marked on the horizontal axis of the graph correspond
to December 31 of that year.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG PNC, S&P 500 INDEX AND S&P BANKS INDEX
Measurement period
(Fiscal year Covered) PNB BANK S&P 500 S&P 500
- - - --------------------- -------- ------- -------
Measurement PT -
12/31/90 $100 $100 $100
FYE 12/31/91 $227.27 $130.47 $178.89
FYE 12/31/92 $286.72 $140.41 $227.81
FYE 12/31/93 $303.39 $154.56 $241.52
FYE 12/31/94 $231.87 $156.60 $228.59
FYE 12/31/95 $374.33 $215.45 $359.93
ASSUMES $100 INVESTMENT ON JANUARY 1, 1991
TOTAL RETURN=PRICE CHANGE PLUS REINVESTMENT OF DIVIDENDS
ITEM 2
PROPOSAL TO APPROVE THE
PNC BANK CORP. 1996 EXECUTIVE INCENTIVE AWARD PLAN
The Board of Directors is asking shareholders to approve the PNC Bank Corp.
1996 Executive Incentive Award Plan ("Incentive Plan" or "Plan"). The purposes
of the Incentive Plan are to (i) assist the Corporation and its Subsidiaries in
attracting, motivating, and retaining the senior executive officers most
critical to the long-term success of the Corporation and its Subsidiaries, (ii)
promote the identification of their interests with those of the Corporation's
shareholders, and (iii) enable the Corporation to pay annual bonuses
("Incentive Awards") which are based upon the achievement of specified levels
of performance and deductible for purposes of federal income taxation. The
Incentive Plan is intended to be a complement to the Corporation's existing
annual incentive award program, which is currently administered under the PNC
Bank Corp. 1994 Annual Incentive Award Plan ("1994 Plan"). Participants in the
proposed Incentive Plan will not be paid awards under the 1994 Plan.
19
REASONS FOR THE PROPOSAL
Except in 1990, The Corporation has paid cash bonuses to its executive
officers for a number of years as part of its executive compensation program.
The bonus program has been substantially the same since 1987, and the Personnel
and Compensation Committee of the Corporation's Board of Directors believes
that the program continues to fulfill its purposes. Under applicable
Pennsylvania law, the payment of such cash compensation to officers and
employees is a matter within the authority of the Board of Directors (or a
committee thereof) and does not require the approval of shareholders.
As discussed in the Personnel and Compensation Committee Report on Executive
Compensation beginning on page 8 of this proxy statement ("Committee Report"),
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code")
disallows federal income tax deductions for certain executive compensation in
excess of $1 million per year ("$1 million limit"). Under Section 162(m),
compensation that qualifies as "performance-based compensation" is not subject
to the $1 million limit. One of the conditions to qualify cash bonuses as
"performance-based compensation" is shareholder approval of the material terms
of the plan under which the bonuses are paid. In order to give the Personnel
and Compensation Committee the flexibility to make annual Incentive Awards that
are comparable to those found in the marketplace in which the Corporation
competes for executive talent and allow the Corporation to pay Incentive Awards
that qualify as deductible "performance-based compensation" under Section
162(m), the Board of Directors has adopted the Incentive Plan, subject to
shareholder approval.
DESCRIPTION OF THE INCENTIVE PLAN
The following summary of the material aspects of the Incentive Plan is
qualified in its entirety by reference to the full text of the Incentive Plan,
a copy of which is set forth as Exhibit "A" to this proxy statement. Unless
otherwise specified, capitalized terms used in this discussion have the
meanings assigned to them in the Plan.
The Incentive Plan provides that Incentive Awards may be made to the
Corporation's Chief Executive Officer as of the last day of an award period,
which generally will be the Corporation's fiscal year ("Award Period"), and the
next four most highly compensated executive officers of the Corporation or its
Subsidiaries who are employed as of the last day of an Award Period
("Participants"). Directors of the Corporation who are not salaried employees
of the Corporation or a Subsidiary are not eligible to participate in the
Incentive Plan.
The Incentive Plan is administered by the Personnel and Compensation
Committee of the Board or such other committee of directors as may be
designated by the Board in the future ("Committee"). Each member of the
Committee, which must have at least two members, must meet the standards of
independence necessary to be classified as an "outside director" for purposes
of Section 162(m) of the Code. As a result, no Participants or other employees
of the Corporation or its Subsidiaries are permitted to serve on the Committee.
The Committee may, in its discretion, authorize the Corporation's Chief
Executive Officer to act on its behalf, except with respect to matters relating
to such Chief Executive Officer or which are required to be certified by the
Committee under the Plan or by Section 162(m) of the Code or the regulations
promulgated thereunder.
If the Plan is approved by the shareholders, the first Award Period will be
1996. An Incentive Award is a share of a compensation pool established for the
Award Period and is currently payable in cash. No later than 90 days after the
Award Period has commenced, the Committee must establish in writing a
percentage of this pool for each Participant for that Award Period and, if it
chooses, specify the amount ("Carryover Amount") of the compensation pool for
the immediately preceding Award Period not paid as Incentive Awards to
Participants to be carried over to the current Award Period, up to an aggregate
amount of $3 million. The availability of any Carryover Amount for the payment
of Incentive Awards must be subject to the achievement of one or more objective
performance conditions which must also be established by the Committee within
90 days after the commencement of the Award Period, such as the Corporation's
20
return on average assets, return on average equity, earnings per share, or
other financial measure or ratio, whether on an absolute basis or in relation
to a predetermined peer group ("Performance Conditions"). No Participant may be
assigned a percentage of the compensation pool greater than 35% ("Assigned
Percentage Amount") and the sum of all Assigned Percentage Amounts for an Award
Period cannot exceed 100% of the compensation pool.
Following the end of an Award Period, the Committee will compute the size of
the compensation pool by adding (i) one half of one percent of Net Income for
the Award Period plus (ii) the Carryover Amount (if any), the availability of
which is subject to the satisfaction of the Performance Condition or Conditions
("Compensation Pool"). "Net Income" means the consolidated pre-tax net income
of the Corporation as determined in accordance with generally accepted
accounting principles, after adjustment to exclude or include unusual,
infrequently occurring or extraordinary items or cumulative effects of changes
in accounting principles. The Committee will then determine the amount of the
Incentive Awards, if any, to be made to each Participant for the Award Period,
which amount shall not exceed the Assigned Percentage Amount, but may, in the
Committee's sole discretion, be reduced or eliminated to reflect such
qualitative or quantitative performance factors as the Committee deems
relevant. Once the Committee has determined the amount of any Incentive Awards
to be made for an Award Period, it must certify the amounts in writing and
authorize the Corporation to pay the Incentive Awards to the Participants in
accordance with the terms and conditions of the Incentive Plan. Unless
otherwise determined by the Committee, no Incentive Award shall be made to a
Participant unless the Participant is employed by the Corporation or a
Subsidiary as of the date of payment.
The Board may amend, modify or terminate the Incentive Plan in any respect at
any time without the consent of the Participants. The Plan will remain in
effect until terminated by the Board. No Incentive Awards may be granted under
the Incentive Plan after its termination. Once the Incentive Plan is approved
by shareholders, termination of the Plan would not affect any Incentive Awards
outstanding on or after the date of termination and such awards would continue
to be subject to the terms of the Incentive Plan notwithstanding its
termination.
ASSUMED INCENTIVE AWARDS
Because 1996 is the first Award Period established under the Plan, the size
of the Compensation Pool for that Award Period cannot be computed until the
Corporation's 1996 Net Income is known. As a result, the Incentive Awards, if
any, that may be made to Participants for the 1996 Award Period are not
currently determinable.
For purposes of illustration only, the table below sets forth the Incentive
Awards which the Committee has concluded it would have granted had the
Incentive Plan been in effect for 1995.
NEW PLAN BENEFITS
PNC BANK CORP.
1996 EXECUTIVE INCENTIVE AWARD PLAN
Assumed 1995 Incentive
Name and Position Award Dollar Value ($) Number of Units
- - - ----------------- ---------------------- ---------------
Thomas H. O'Brien
Chairman and Chief Executive Officer 657,000 N/A
James E. Rohr
President 400,000 N/A
Walter E. Gregg, Jr.
Executive Vice President 300,000 N/A
21
Assumed 1995 Incentive
Name and Position Award Dollar Value ($) Number of Units
- - - ----------------- ---------------------- ---------------
Richard C. Caldwell
Executive Vice President 157,500 N/A
Bruce E. Robbins
Executive Vice President 116,800 N/A
Executive Officer Group 1,631,300 N/A
Non-Executive Officer Director Group 0 N/A
Non-Executive Officer Employee Group 0 N/A
- - - --------
SHAREHOLDER APPROVAL REQUIRED
Approval of the Incentive Plan requires the affirmative vote of a majority of
the votes cast by the holders of the Common Stock and the voting preferred
stock, voting together as a single class, in person or by proxy, at a meeting
at which a quorum is present. Please see "Voting Procedures," beginning on page
24 for more information. The Incentive Plan will be terminated unless the Plan
is approved by the Corporation's shareholders. The Board might nevertheless
decide to continue to pay annual incentive awards in accordance with its
historical practices. In such event, however, payments made to certain of the
Corporation's executive officers may not be deductible for federal income tax
purposes under Section 162(m) of the Code.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
ITEM 3
SHAREHOLDER PROPOSAL CONCERNING
NON-EMPLOYEE DIRECTOR RETIREMENT BENEFITS
INTRODUCTION
An individual shareholder of the Corporation has notified the Corporation
that he intends to present for action at the annual meeting the following
resolution. The name and address of, and number of shares of Common Stock held
by, the proponent will be furnished by the Corporation to any person, orally or
in writing as requested, promptly upon the receipt of any oral or written
request therefor submitted to its Corporate Secretary.
"RESOLVED, that the shareholders assembled in person and by proxy, recommend
(i) that all future non-employee directors not be granted pension benefits and
(ii) current non-employee directors voluntarily relinquish their pension
benefits."
SUPPORTING STATEMENT OF SHAREHOLDER
Aside from the usual reasons, presented in the past, regarding "double
dipping," that is outside (non-employee) directors who are in almost all cases
amply rewarded with their pension at their primary place of employment, and in
many instances serving as outside pensioned directors with other companies,
there are other more cogent reasons that render this policy as unacceptable.
Traditionally, pensions have been granted in both the private and public
sectors for long-term service. The service component usually represents a
significant number of hours per week. The practice of offering pensions for
consultants is a rarity. Outside directors' service could logically fit the
definition of consultants and pensions for this type of service is an abuse of
the term.
22
But more importantly, outside directors, although retained by corporate
management, namely the CEO, are in reality representatives of shareholders.
Their purpose is to serve as an impartial group to which management is
accountable. Although outside directors are certainly entitled to compensation
for their time and expertise, pensions have the pernicious effect of
compromising their impartiality. In essence, pensions are management's grants
to outside directors to insure their unquestioning loyalty and acquiescence to
whatever policy management initiates, and at times, serving their own self
interests. Thus, pensions become another device to enhance and entrench
management's controls over corporate policies while being accountable only to
themselves. I am a founding member of the Investors Rights Association of
America and I feel this practice perpetuates a culture of corporate management
"cronyism" that can easily be at odds with shareholder and company interest.
A final note in rebuttal to management's contention that many companies offer
their outside directors pensions, so they can attract and retain persons of the
highest quality. Since there are also companies that do not offer their outside
directors pensions, can management demonstrate that those companies that offer
pensions have a better performance record than their non-pensioned peers? In
addition, do we have any evidence of a significant improvement in corporate
profitability with the advent of pensions for outside directors?
BOARD OF DIRECTORS STATEMENT IN OPPOSITION TO THE SHAREHOLDER PROPOSAL
For the reasons set forth below, the Board believes that the best interests
of the Corporation and its shareholders are served by providing a retirement
plan for non-employee directors. Consequently, we recommend a vote AGAINST this
shareholder proposal.
Consistent with its compensation policy for its employees, the Corporation's
compensation program for non-employee directors is designed to attract and
retain the most highly qualified available individuals for service on its Board
of Directors. In order to attain those goals, the compensation paid to the
Corporation's non-employee directors is regularly reviewed to ensure that it is
both reasonable in light of the ever increasing commitment of time,
availability and effort required of directors and competitive with the
compensation offered by comparably situated corporations. When the Directors
Retirement Plan was adopted in 1994, over seventy-five percent of the twenty
largest bank holding companies in the nation provided retirement plans to their
outside directors. A recent survey by a nationally recognized independent
executive search firm of 100 leading multi-billion dollar companies indicates
that approximately 80% provide retirement programs for their non-employee
directors.
The Board firmly believes that the Directors Retirement Plan, which is
described on page 5, is an appropriate component of the compensation program
for non-employee directors and is reasonably designed to encourage talented
individuals to join and continue to serve on the Corporation's Board of
Directors. Although characterized as a pension plan by the proponent, the
Directors Retirement Plan was not designed to provide the same benefits as a
traditional pension plan, since payments under the Plan are limited to the
lesser of ten years or the life of the retired director. Further, a director
must serve as a director for at least five years in order to qualify for
benefits, cannot name a beneficiary to receive payments should he or she fail
to survive the entire ten-year benefit period, and cannot receive a lump sum
distribution under the Plan.
The proponent makes various unsupported statements that the prospect of
receiving retirement benefits somehow compromises the Board's independence and
allegiance to the best interests of the Corporation and its shareholders. While
the proponent recognizes that outside directors are ". . . certainly entitled
to compensation for their time and expertise," he believes that compensation
for that time and expertise which is not paid until after a qualifying director
retires from the Board should be viewed differently from any other form of
compensation, including stock. The Board rejects these assertions and notes
that during the past several years it has taken various steps to further
demonstrate its independence and allegiance to the Corporation and its
shareholders, including the creation of the Committee on Corporate Governance
and its adoption of the requirement that each non-employee director annually
purchase Common Stock in an amount equal to twenty-five percent of the annual
retainer in effect for that year.
23
Finally, the proponent implies that there should be a direct positive
correlation between the potential payment of retirement benefits to directors
and the Corporation's financial performance. The Corporation makes no such
claim. As stated above, directors' compensation, one component of which is the
Directors Retirement Plan, is designed to provide the Corporation with a highly
experienced, capable, and committed Board which can promote the best interests
of the Corporation and its shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE SHAREHOLDER
PROPOSAL.
VOTING PROCEDURES
Pennsylvania law and the Corporation's By-Laws require the presence of a
quorum for the annual meeting. A quorum is constituted by the presence, in
person or by proxy, of shareholders entitled to cast at least a majority of the
votes which all shareholders are entitled to cast on the particular matters to
be voted on. At a duly organized annual meeting, the Corporation's By-Laws
provide that, except as otherwise specified in the Corporation's Articles of
Incorporation or provided by law, each matter shall be decided by a majority of
the votes cast on such matters by the shareholders present at the meeting in
person or by proxy. Votes withheld from director nominees and abstentions will
be counted in determining whether a quorum has been reached, but the failure to
execute and return a proxy will result in a shareholder not being considered
present at the meeting.
Assuming a quorum has been reached, a determination must be made as to the
results of the vote on Item 1, the election of directors; Item 2, the proposal
to approve the PNC Bank Corp. 1996 Executive Incentive Award Plan; and Item 3,
the shareholder proposal relating to non-employee director retirement benefits.
Under Pennsylvania law, the act of "voting" does not include either recording
the fact of abstention or failing to vote for a candidate or for approval or
disapproval of a proposal, whether or not the person entitled to vote
characterizes the conduct as voting. In other words, only those who indicate an
affirmative or negative decision on a matter are treated as voting, so that
ordinarily abstention or a mere absence or failure to vote is not equivalent to
a negative decision.
With respect to Item 1, the twenty-one nominees for election as directors who
receive the greatest number of votes cast at the annual meeting, assuming that
a quorum is present, shall be elected as directors at the conclusion of the
vote tabulation. A withheld vote on any nominee will not affect the voting
results.
With respect to Items 2 and 3, each will be decided by a majority of the
votes cast by the shareholders present at the meeting in person or by proxy.
Holders of preferred stock and Common Stock will vote as a single class. Shares
which are present at the annual meeting but not voted and abstentions will not
be counted as votes cast and therefore will have no effect on the vote on Items
2 or 3.
Under the rules of the New York Stock Exchange, "routine" items are those
upon which broker-dealers holding shares in street name for their customers may
vote, in their discretion, on behalf of any customers who do not furnish voting
instructions within ten days of the annual meeting. In the event, however, that
a non-routine item should come before the annual meeting for a vote, such
broker-dealers would not be able to vote without first receiving voting
instructions from their customers. These broker "non-votes" would not be
considered in the calculation of the majority of the votes cast and therefore
would have no effect on the vote with respect to a non-routine item.
The Corporation has adopted a policy that all proxies, ballots, voting
instructions from employee benefit plan participants and voting tabulations
that identify the particular vote of a shareholder or benefit plan participant
be kept permanently confidential and not be disclosed to the Corporation, its
directors, officers or employees except: (i) as necessary to meet legal
requirements or to pursue or defend legal actions; (ii) to allow
24
the Judge of Election to certify the results of the vote; (iii) when expressly
requested by a shareholder or benefit plan participant; or (iv) in the event of
a contested proxy solicitation. The Corporation has confirmed with its
independent vote tabulator and Judge of Election that its procedures will be
consistent with the foregoing policy.
INDEPENDENT AUDITORS
At its meeting on February 15, 1996, the Board of Directors approved the
recommendation of the Audit Committee for the appointment of Ernst & Young LLP
to audit the consolidated financial statements of the Corporation for 1996.
Ernst & Young LLP performed audit services for the Corporation during 1995.
Such services included an audit of annual consolidated financial statements,
interim reviews of quarterly financial statements, review and consultation
connected with filings with the SEC, internal control reviews required by
regulatory authorities and certain contractual agreements, consultation on tax,
financial accounting and reporting matters, and meetings with the Audit
Committee of the Board of Directors.
Representatives of Ernst & Young LLP are expected to be present at the annual
meeting with the opportunity to make a statement if they desire to do so and to
be available to respond to appropriate questions.
LEGAL PROCEEDINGS
A consolidated purported class action complaint was filed in March 1995 in
the United States District Court for the Western District of Pennsylvania
against the Corporation, its Chairman and Chief Executive Officer, and its
Senior Vice President and Chief Financial Officer, on behalf of a purported
class of persons who purchased the Corporation's securities between April 18,
1994 and November 15, 1994. The lawsuit was consolidated from four lawsuits
filed in November and December 1994. The consolidated complaint alleges
violations of federal securities laws and common law relating to disclosures
regarding the Corporation's net interest income, interest rate risk, future
prospects, and related matters and seeks, among other things, unquantified
damages. Management believes there are meritorious defenses to this
consolidated lawsuit and intends to defend it vigorously. Management believes
that the final disposition will not be material to the Corporation's financial
position.
CERTAIN REPORTS
Section 16(a) of the Act requires the Corporation's directors, certain of its
executive officers, and persons who own more than ten percent of a registered
class of the Corporation's equity securities (currently there are no such
persons), to file with the Corporation, the SEC and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of any equity
securities of the Corporation. During 1995, to the best of the Corporation's
knowledge, all required reports were filed on a timely basis with the following
exception. One transaction involving Roderic H. Ross, one of the Corporation's
directors, was reported for him on the required SEC Form 4 ("Statement of
Changes in Beneficial Ownership"), which was inadvertently filed two weeks past
the due date. In making these statements, the Corporation has relied on the
written representations of its directors and copies of the reports provided to
the Corporation.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders may submit proposals to be considered for shareholder action at
the 1997 annual meeting of shareholders if they do so in accordance with the
applicable SEC rules. Any such proposals must be in writing and received by the
Corporate Secretary of the Corporation no later than November 18, 1996 in order
to be considered for inclusion in the Corporation's 1997 proxy materials.
25
DRAFT-March 7, 1996
EXHIBIT "A"
PNC BANK CORP.
1996 EXECUTIVE INCENTIVE AWARD PLAN
1. GENERAL PURPOSES OF PLAN
The PNC Bank Corp. 1996 Executive Incentive Award Plan is designed to (i)
assist PNC Bank Corp. and its Subsidiaries in attracting, motivating, and
retaining the senior executive officers most critical to the long-term success
of the Corporation and its Subsidiaries, (ii) promote the identification of
their interests with those of the Corporation's shareholders, and (iii) enable
the Corporation to pay annual bonuses which are based upon the achievement of
specified levels of performance and deductible for purposes of federal income
taxation.
2. DEFINITIONS
Terms not otherwise defined herein shall have the following meanings:
2.1 "Award Period" means the Corporation's fiscal year, except to the extent
the Committee determines otherwise, provided that the last day of an Award
Period must be the last day of the Corporation's fiscal year.
2.2 "Board" means the Board of Directors of the Corporation.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means the committee appointed by the Board to establish and
administer the Plan as provided herein; provided, that the Committee shall have
two or more members and each member of the Committee shall be an "outside
director" as defined for purposes of Section 162(m) of the Code. Unless
otherwise determined by the Board, the Personnel and Compensation Committee of
the Board shall be the Committee.
2.5 "Compensation Pool" means, with respect to each Award Period, an amount
equal to the sum of: (i) one-half of one percent of Net Income for the Award
Period, plus (ii) any amounts not paid out of a Compensation Pool for the
immediately preceding Award Period and added to the existing Compensation Pool,
as determined in the Committee's sole discretion; provided, that component (ii)
of a Compensation Pool shall not exceed an aggregate amount of $3 million
during any given Award Period and shall be available for the payment of
Incentive Awards only upon the achievement of one or more Performance
Conditions.
2.6 "Corporation" means PNC Bank Corp. and its successors and assigns and any
corporation which shall acquire substantially all of its assets.
2.7 "Incentive Award" means the share of the Compensation Pool paid to a
Participant for an Award Period, as determined by the Committee in the manner
described in Sections 3 and 5 hereof.
2.8 "Incentive Award Amount" means, with respect to each Participant, the
amount, expressed as a percentage, of a Compensation Pool which he or she may
be paid as an Incentive Award, as established by the Committee pursuant to
Section 5.1.
2.9 "Net Income" means the consolidated pre-tax net income of the Corporation
as determined in accordance with generally accepted accounting principles,
after adjustment to exclude or include unusual, infrequently occurring or
extraordinary items or cumulative effects of changes in accounting principles.
A-1
2.10 "Participant" means a "covered employee" within the meaning of Section
162(m) of the Code who is eligible to receive an Incentive Award, subject to
the terms of the Plan.
2.11 "Performance Conditions" means any objective performance factors the
Committee may deem relevant in determining the availability of amounts carried
forward from the immediately preceding Award Period as described in Sections
5.2 and 5.4 hereof, including, but not limited to, the Corporation's return on
average assets, return on average equity, earnings per share, or other
financial measure or ratio, whether on an absolute basis or in comparison to a
predetermined peer group.
2.12 "Plan" means the PNC Bank Corp. 1996 Executive Incentive Award Plan.
2.13 "Subsidiary" means a corporation of which at least 50% of the total
combined voting power of all classes of stock is owned by the Corporation
either directly or through one or more other subsidiaries.
3. ADMINISTRATION
3.1 Subject to the express provisions of the Plan, the Committee shall have
plenary authority to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to it and to make all other determinations deemed
necessary or advisable for the administration of the Plan, including, but not
limited to, determinations regarding whether to make Incentive Awards, the
terms of all Incentive Awards, the Participants who receive Incentive Awards,
the time or times at which Incentive Award Amounts are established, the Award
Period to which each Incentive Award shall relate, and the actual dollar amount
of any Incentive Award. The determinations of the Committee pursuant to this
authority shall be conclusive and binding. The Committee may, in its
discretion, authorize the Chief Executive Officer of the Corporation to act on
its behalf, except with respect to matters relating to such Chief Executive
Officer or which are required to be certified by the Committee under the Plan,
or by Code Section 162(m) or the regulations promulgated thereunder.
4. ELIGIBILITY
Incentive Awards may be made only to a Participant who is not paid an
incentive award pursuant to the Corporation's 1994 Annual Incentive Award Plan
or any successor plan, with respect to that Award Period.
5. INCENTIVE AWARDS; TERMS OF AWARDS; PAYMENT
5.1 No later than 90 days after the commencement of an Award Period, the
Committee shall, in its sole discretion, establish in writing an Incentive
Award Amount for each Participant for that Award Period. For this purpose, each
Participant may be identified in terms of position or title held, or base
salary paid, during that Award Period, or by such other means as the Committee
may deem appropriate. No Participant shall be assigned an Incentive Award
Amount greater than 35% of the Compensation Pool and the sum of all Incentive
Award Amounts for an Award Period shall not exceed 100% of the Compensation
Pool under any circumstances.
5.2 As soon as practicable following the end of an Award Period, but in all
events prior to making any Incentive Awards, the Committee shall compute and
certify in writing the size of the Compensation Pool for that Award Period, and
shall determine whether any Performance Conditions established for that Award
Period were satisfied. In performing such computation, the Committee may rely
upon financial statements supplied by the Corporation's officers, provided that
the Committee believes such statements to have been prepared in accordance with
generally accepted accounting principles.
5.3 As soon as practicable following the Committee's completion of the
actions specified in Section 5.2, the Committee shall certify in writing the
Incentive Award, if any, to be made to each Participant for that Award Period
and shall authorize the Corporation to make such Incentive Award to each
Participant in accordance with the terms and conditions of the Plan.
A-2
5.4 In the event that the Committee does not exhaust the full amount of the
Compensation Pool through the payment of Incentive Awards, the Committee may,
in its sole discretion and no later than 90 days after the commencement of an
Award Period, certify in writing that all or a portion of the remaining
Compensation Pool shall be added to the Compensation Pool for the Award Period
then commenced; provided, that the Committee shall not be authorized to direct
any such carryover if the amount in question would exceed $3 million; and,
provided further, that the Committee establishes one or more Performance
Conditions that must be achieved during the Award Period in order for such
carryover amount to be available for the payment of Incentive Awards for that
Award Period.
5.5 The Committee may, in its sole discretion, determine not to make an
Incentive Award or reduce an Incentive Award below the applicable Incentive
Award Amount, without the consent of a Participant. Unless otherwise determined
by the Committee, no Incentive Award shall be made to a Participant unless the
Participant is employed by the Corporation or a Subsidiary as of the date of
payment.
5.6 Incentive Awards shall be subject to applicable federal, state and local
withholding taxes and other applicable withholding in accordance with the
Corporation's payroll practices as in effect from time to time.
5.7 The Committee, subject to such terms and conditions as it may determine,
and a Participant pursuant to any deferred compensation plan of the
Corporation, shall have the right to defer the payment of an Incentive Award,
provided, in either case, that any additional amounts credited to such deferred
payment will be based either on a reasonable rate of interest or the actual
rate of return of one or more predetermined investments.
6. TRANSFERABILITY
Until paid to a Participant, Incentive Awards shall not be subject to the
claims of creditors and may not be assigned, alienated, transferred or
encumbered in any way other than by will or pursuant to the laws of descent and
distribution.
7. TERMINATION OR AMENDMENT
The Board may amend, modify or terminate the Plan in any respect at any time
without the consent of the Participants.
8. EFFECTIVENESS OF PLAN AND AWARDS
The Plan shall be void ab initio unless the Plan is approved by a vote of the
Corporation's shareholders at the first meeting of the Corporation's
shareholders following adoption of the Plan by the Board.
9. EFFECTIVE DATE; TERM OF THE PLAN
Subject to shareholder approval pursuant to Section 8, the Plan shall be
effective as of January 1, 1996 and the first Award Period shall be fiscal year
1996. The Plan shall remain in effect until terminated by the Board pursuant to
Section 7. No Incentive Awards may be made under the Plan after its
termination, provided that termination of the Plan shall not affect any
Incentive Awards payable on or after the date of termination and such awards
shall continue to be subject to the terms of the Plan notwithstanding its
termination.
10. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
Directors or as members of the Committee, each of the members of the Committee
shall be indemnified by the Corporation against the
A-3
reasonable expenses, including attorneys' fees, actually and reasonably
incurred in connection with the defense of any action, suit or proceeding, or
in connection with any appeal therein, to which they or any of them may be a
party by reason of any action taken or failure to act under or in connection
with the Plan or any Incentive Award made hereunder, and against all amounts
reasonably paid by them in settlement thereof or paid by them in satisfaction
of a judgment in any such action, suit or proceeding to the maximum extent
permitted by law.
11. GENERAL PROVISIONS
11.1 The establishment of the Plan shall not confer upon any Participant any
legal or equitable right against the Corporation or any Subsidiary, except as
expressly provided in the Plan.
11.2 The Plan does not constitute an inducement or consideration for the
employment of any Participant, nor is it a contract between the Corporation, or
any Subsidiary, and any Participant. Participation in the Plan shall not give a
Participant any right to be retained in the employ of the Corporation or any
Subsidiary.
11.3 Nothing contained in this Plan shall prevent the Board or Committee from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is required, and such arrangements may be either
generally applicable or applicable only in specific cases.
11.4 The Plan shall be governed, construed and administered in accordance
with the laws of the Commonwealth of Pennsylvania.
A-4
PNC BANK CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23,1996--11:00 AM
PLACE: ONE PNC PLAZA, PITTSBURGH, PA
Thomas H. O'Brien, Walter E. Gregg, Jr. and William F. Strome, and each of them
with full power to act alone and with full power of substitution, are hereby
authorized to represent the shareholder named on the reverse side hereof
("shareholder") at the annual meeting of shareholders of PNC Bank Corp. to be
held on April 23, 1996, or at any adjournment thereof, and to vote, as
indicated on the reverse side hereof, the number of shares of Common Stock
and/or Preferred Stock which the shareholder would be entitled to vote if
personally present at said meeting. The above named individuals, and each of
them with full power to act alone, are further authorized to vote such stock
upon any other business as may properly come before the meeting, or any
adjournment thereof, in accordance with their best judgment.
THIS PROXY MAY BE REVOKED BY GIVING THE SECRETARY OF THE MEETING WRITTEN NOTICE
OF REVOCATION OR A SUBSEQUENTLY DATED PROXY AT ANY TIME BEFORE THE VOTING OF
THE SHARES REPRESENTED BY THIS PROXY, OR BY CASTING A BALLOT AT THE MEETING.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
_______________________________________________________________________________
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
- - - -------------------------------------------------------------------------------
FOLD AND DETACH HERE
WILL ATTEND
MEETING [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED IN ITEM 1,
FOR ITEM 2, AND AGAINST ITEM 3. ALL SHARES WILL BE VOTED AS INSTRUCTED BELOW.
IN THE ABSENCE OF AN INSTRUCTION TO THE CONTRARY, ALL SHARES WILL BE VOTED
FOR ALL NOMINEES LISTED IN ITEM 1, FOR ITEM 2, AND AGAINST ITEM 3.
ITEM 1--Election of Directors: Ms. Green and FOR ALL WITHHELD
Messrs. Chellgren, Clay, Davidson, Girard-diCarlo, NOMINEES FOR ALL
Grefenstette, Kania, Lindsay, McClelland, Marshall, [ ] [ ]
Moritz, O'Brien, Randolph, Rohr, Ross, Sarni,
Scheuring, Simmons, Usher, Washington and Wehmeier
(or any substitute nominee in case of unavailability).
[ ] FOR ALL NOMINEES, EXCEPT AS INDICATED BELOW:
------------------------------------------------------
(Write nominee name(s) in the space provided above to
withhold authority.)
ITEM 2--Proposal to approve the PNC FOR AGAINST ABSTAIN
Bank Corp. 1996 Executive [ ] [ ] [ ]
Incentive Award Plan
ITEM 3--Shareholder Proposal FOR AGAINST ABSTAIN
[ ] [ ] [ ]
COMMENTS/ADDRESS CHANGE
PLEASE MARK THIS BOX IF [ ]
YOU HAVE WRITTEN
COMMENTS/ADDRESS CHANGE
ON THE REVERSE SIDE.
SIGNATURE(S) DATE:
------------------------------------------------ -------------
PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING ON BEHALF OF A CORPORATION OR PARTNERSHIP OR AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH PROXY CARD HERE
RETURN PROXY CARD IN ENCLOSED ENVELOPE AFTER COMPLETING, SIGNING AND DATING
ADMISSION TICKET
PNC BANK CORP.
1996 ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 23, 1996
11:00 AM
ONE PNC PLAZA -- 15TH FLOOR
FIFTH AVENUE AND WOOD STREET
PITTSBURGH, PENNSYLVANIA
PLEASE ADMIT NON-TRANSFERABLE
PNC BANK CORP.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1996--11:00 AM
PLACE: ONE PNC PLAZA, PITTSBURGH, PA
ISP INSTRUCTION CARD
To: PNC Bank, N.A., Trustee of the non-ESOP portion of the PNC Bank Corp.
Incentive Savings Plan and PNC Bank, Ohio, N.A., Trustee of the ESOP portion of
the PNC Bank Corp. Incentive Savings Plan.
The signatory on the reverse side hereof, a Participant having Common Stock
and/or Preferred Stock of PNC Bank Corp. credited to my account, does hereby
direct each Trustee to vote the number of shares indicated hereon at the annual
meeting of shareholders to be held on April 23, 1996, or any adjournment
thereof, as indicated.
THIS CARD IS CONTINUED ON THE REVERSE SIDE. PLEASE SIGN ON THE REVERSE SIDE AND
RETURN PROMPTLY.
_______________________________________________________________________________
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
- - - -------------------------------------------------------------------------------
FOLD AND DETACH HERE
WILL ATTEND
MEETING [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED IN ITEM 1,
FOR ITEM 2, AND AGAINST ITEM 3. ALL FULL AND PARTIAL SHARES OF STOCK CREDITED
TO YOUR PLAN ACCOUNT WILL BE VOTED AS DIRECTED BELOW. IN THE ABSENCE OF A
DIRECTION TO THE CONTRARY, ALL SHARES (INCLUDING UNALLOCATED SHARES) WILL BE
VOTED IN THE MANNER REQUIRED OR PERMITTED BY THE GOVERNING PLAN DOCUMENTS.
ITEM 1--Election of Directors: Ms. Green and FOR ALL WITHHELD
Messrs. Chellgren, Clay, Davidson, Girard-diCarlo, NOMINEES FOR ALL
Grefenstette, Kania, Lindsay, McClelland, Marshall, [ ] [ ]
Moritz, O'Brien, Randolph, Rohr, Ross, Sarni,
Scheuring, Simmons, Usher, Washington and Wehmeier
(or any substitute nominee in case of unavailability).
[ ] FOR ALL NOMINEES, EXCEPT AS INDICATED BELOW:
-------------------------------------------------------
(Write nominee name(s) in the space provided above to
withhold authority.)
ITEM 2--Proposal to approve the PNC FOR AGAINST ABSTAIN
Bank Corp. 1996 Executive Incentive [ ] [ ] [ ]
Award Plan
ITEM 3--Shareholder Proposal FOR AGAINST ABSTAIN
[ ] [ ] [ ]
COMMENTS/ADDRESS CHANGE
PLEASE MARK THIS BOX IF [ ]
YOU HAVE WRITTEN
COMMENTS/ADDRESS CHANGE
ON THE REVERSE SIDE.
SIGNATURE DATE:
------------------------------------------------ --------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH INSTRUCTION CARD HERE
RETURN INSTRUCTION CARD IN ENCLOSED ENVELOPE AFTER COMPLETING,
SIGNING AND DATING
ADMISSION TICKET
PNC BANK CORP.
1996 ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 23, 1996
11:00 AM ONE
PNC PLAZA -- 15TH FLOOR
FIFTH AVENUE AND WOOD STREET
PITTSBURGH, PENNSYLVANIA
PLEASE ADMIT NON-TRANSFERABLE
PNC BANK CORP.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1996--11:00 AM
PLACE: ONE PNC PLAZA, PITTSBURGH, PA
MSIP INSTRUCTION CARD
To: Midlantic Bank, National Association, Trustee of the Midlantic Savings and
Investment Plan.
The signatory on the reverse side hereof, a Participant having Common Stock of
PNC Bank Corp. credited to my account, does hereby direct the Trustee to vote
the number of shares indicated hereon at the annual meeting of shareholders to
be held on April 23, 1996, or any adjournment thereof, as indicated.
THIS CARD IS CONTINUED ON THE REVERSE SIDE. PLEASE SIGN ON THE REVERSE SIDE AND
RETURN PROMPTLY.
- - - --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
- - - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
WILL ATTEND
MEETING [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED IN ITEM 1,
FOR ITEM 2, AND AGAINST ITEM 3. ALL FULL AND PARTIAL SHARES OF STOCK CREDITED
TO YOUR PLAN ACCOUNT WILL BE VOTED AS DIRECTED BELOW. IN THE ABSENCE OF A
DIRECTION TO THE CONTRARY, ALL SHARES (INCLUDING UNALLOCATED SHARES) WILL BE
VOTED IN THE MANNER REQUIRED OR PERMITTED BY THE GOVERNING PLAN DOCUMENTS.
ITEM 1--Election of Directors: Ms. Green and FOR ALL WITHHELD
Messrs. Chellgren, Clay, Davidson, Girard-diCarlo, NOMINEES FOR ALL
Grefenstette, Kania, Lindsay, McClelland, Marshall, [ ] [ ]
Moritz, O'Brien, Randolph, Rohr, Ross, Sarni,
Scheuring, Simmons, Usher, Washington and Wehmeier
(or any substitute nominee in case of unavailability).
[ ] FOR ALL NOMINEES, EXCEPT AS INDICATED BELOW:
-------------------------------------------------------
(Write nominee name(s) in the space provided above to
withhold authority.)
ITEM 2--Proposal to approve the PNC FOR AGAINST ABSTAIN
Bank Corp. 1996 Executive Incentive [ ] [ ] [ ]
Award Plan
ITEM 3--Shareholder Proposal FOR AGAINST ABSTAIN
[ ] [ ] [ ]
COMMENTS/ADDRESS CHANGE
PLEASE MARK THIS BOX IF [ ]
YOU HAVE WRITTEN
COMMENTS/ADDRESS CHANGE
ON THE REVERSE SIDE.
SIGNATURE DATE:
------------------------------------------------ --------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH INSTRUCTION CARD HERE
RETURN INSTRUCTION CARD IN ENCLOSED ENVELOPE AFTER COMPLETING,
SIGNING AND DATING
ADMISSION TICKET
PNC BANK CORP.
1996 ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 23, 1996
11:00 AM ONE
PNC PLAZA -- 15TH FLOOR
FIFTH AVENUE AND WOOD STREET
PITTSBURGH, PENNSYLVANIA
PLEASE ADMIT NON-TRANSFERABLE