Table of Contents
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
[X] |
|
Filed by a Party other than
the Registrant [ ] |
|
|
|
|
|
Check the appropriate
box: |
|
|
[ ] |
|
Preliminary Proxy
Statement |
[ ]
|
Soliciting Material Under Rule
14a-12 |
[ ] |
|
Confidential, For Use of
the Commission Only (as permitted by Rule 14a-6(e)(2)) |
|
|
[X] |
|
Definitive Proxy
Statement |
|
[ ] |
|
Definitive Additional
Materials |
|
|
FULTON FINANCIAL CORPORATION |
|
|
(Name of Registrant as
Specified In Its Charter) |
|
|
|
|
|
|
|
|
(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant) |
|
Payment of Filing Fee (Check
the appropriate box): |
[X] |
|
No fee required. |
[
] |
|
Fee computed on
table below per Exchange Act Rules 14a-6(i)(4) and
0-11. |
|
|
1) |
|
Title of each class of
securities to which transaction applies: |
|
|
|
|
|
|
|
2) |
|
Aggregate number of
securities to which transaction applies: |
|
|
|
|
|
|
|
3) |
|
Per unit price or
other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined): |
|
|
|
|
|
|
|
4) |
|
Proposed maximum
aggregate value of transaction: |
|
|
|
|
|
|
|
5) |
|
Total fee
paid: |
|
|
|
|
|
[
] |
|
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: |
|
|
|
|
|
Table of Contents
P.O. Box 4887
One Penn
Square
Lancaster, Pennsylvania 17604
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD
TUESDAY, MAY 5, 2015 AT
10:00 A.M.
TO THE SHAREHOLDERS OF
FULTON FINANCIAL CORPORATION:
NOTICE IS HEREBY GIVEN
that, pursuant to the call of its directors, the Annual Meeting of the
shareholders of FULTON FINANCIAL CORPORATION (Fulton) will be held on Tuesday,
May 5, 2015, at 10:00 a.m., at the Lancaster Marriott at Penn Square, 25 South
Queen Street, Lancaster, Pennsylvania, for the purpose of considering and voting
upon the following matters:
|
1. |
ELECTION OF
DIRECTORS. The election of eleven (11) directors to serve for one-year
terms; |
|
|
|
2. |
EXECUTIVE
COMPENSATION PROPOSAL. A non-binding say on pay (Say-on-Pay) resolution
to approve the compensation of the named executive officers; |
|
|
|
3. |
RATIFICATION OF
INDEPENDENT AUDITOR. The ratification of the appointment of KPMG LLP as
Fultons independent auditor for the fiscal year ending December 31, 2015;
and |
|
|
|
4. |
OTHER BUSINESS. Such
other business as may properly be brought before the meeting and any
adjournments thereof. |
Only those shareholders of
record at the close of business on February 27, 2015, shall be entitled to be
given notice of, to attend and to vote at, the meeting. Please take a moment now
to cast your vote over the Internet or by telephone in accordance with the
instructions set forth on the enclosed proxy card, or, alternatively, if you
received paper copies of the Proxy Statement and proxy card, to complete, sign
and date the enclosed proxy card and return it in the postage-paid envelope
provided. Shareholders attending the Annual Meeting in person may vote in
person, even if they have previously voted by proxy.
Voting via the Internet or
by telephone is fast and convenient, and your vote is immediately tabulated and
confirmed. Your Proxy is revocable and may be withdrawn at any time before it is
voted at the meeting. You are
cordially invited to attend the meeting. If you plan on attending, please RSVP
that you will attend using the enclosed postcard.
A copy of Fultons Annual
Report on Form 10-K is also enclosed.
Sincerely, |
|
Daniel R.
Stolzer Corporate Secretary |
Enclosures
March 24,
2015
Table of Contents
PROXY STATEMENT
Dated and To Be Mailed on
or about: March 24, 2015
P.O. Box 4887, One Penn
Square
Lancaster, Pennsylvania 17604
(717) 291-2411
ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 5, 2015 AT 10:00 A.M.
TABLE OF
CONTENTS
Table of Contents
x
Table of Contents
ANNUAL MEETING
SUMMARY
The annual meeting of the
shareholders of Fulton (the Annual Meeting) for 2015 will be held on Tuesday,
May 5, 2015, at 10:00 a.m., at the Lancaster Marriott at Penn Square, 25 South
Queen Street, Lancaster, Pennsylvania. The Board of Directors has approved an
agenda consisting of four items for the Annual Meeting, as described in the
meeting notice and in more detail herein.
The Board of Directors
recommends that shareholders vote FOR the election of the eleven (11) director
nominees identified in this Proxy Statement, FOR the approval of the non-binding
Say-on-Pay resolution to approve the compensation of the named executive
officers and FOR the ratification of the appointment of KPMG LLP as Fultons
independent auditor for the fiscal year ending December 31,
2015. Fulton encourages you to
vote your shares in advance of the Annual Meeting either by voting via the
Internet (www.proxyvote.com), voting by telephone (see instructions on the
enclosed Proxy Card) or, if you received paper copies of the Proxy Statement and
proxy card, by returning your proxy card by mail so that your shares will be
represented and voted at the Annual Meeting if you cannot attend in person and
are eligible to vote.
Voting via the Internet
or by telephone is fast and convenient, and your vote is immediately tabulated
and confirmed. Please see the Internet and telephone voting instructions on the
proxy card for more details.
If you would like to reduce
the costs incurred by Fulton in mailing proxy material, you can consent to
receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery,
please go to www.proxyvote.com and have your proxy card in hand when you access
the website, then follow the instructions at www.proxyvote.com to obtain your
records and to create an electronic voting instruction form. Follow the
instructions for voting by Internet and, when prompted, indicate that you agree
to receive or access shareholder communications electronically in future
years.
GENERAL
Introduction
Fulton Financial
Corporation, a Pennsylvania business corporation and registered financial
holding company, was organized pursuant to a plan of reorganization adopted by
Fulton Bank and implemented on June 30, 1982. On that date, Fulton Bank became a
wholly owned subsidiary of Fulton, and the shareholders of Fulton Bank became
shareholders of Fulton. Since that time, Fulton has acquired other banks, Fulton
Bank adopted a national charter, and today Fulton owns the following community
banks: FNB Bank, N.A., Fulton Bank, N.A., Fulton Bank of New Jersey, Lafayette
Ambassador Bank, Swineford National Bank and The Columbia Bank.
In addition, Fulton has
several other direct subsidiaries, including: Fulton Insurance Services Group,
Inc. (which operates an insurance agency selling life insurance and related
insurance products); Fulton Financial Realty Company (which owns or leases
certain properties on which branch and operational facilities are located);
Fulton Reinsurance Company, Ltd. (which reinsures credit life, health and
accident insurance that is directly related to extensions of credit by
subsidiary banks of Fulton); Central Pennsylvania Financial Corp. (which owns,
directly or indirectly, certain limited partnership interests, principally in
low- to moderate-income and elderly housing projects); and FFC Management, Inc.
(which holds certain investment securities and corporate-owned life insurance
policies).
RSVP, Date, Time and
Place of Meeting
The Annual Meeting will
be held on Tuesday, May 5, 2015, at 10:00 a.m., at the Lancaster Marriott at
Penn Square, 25 South Queen Street, Lancaster, Pennsylvania.
You are cordially invited
to attend the Annual Meeting. In order for Fulton to plan and prepare for the
proper number of shareholders, if you plan on attending, please RSVP and confirm that you will attend by
completing and returning the postcard enclosed. Light refreshments will be
available starting at 9:00 a.m., and the business meeting will start promptly at
10:00 a.m. Shareholders are
encouraged to arrive early. Public parking is available in downtown Lancaster.
For a list of parking locations, please consult the Lancaster Parking Authority
website at www.lancasterparkingauthority.com, or consult the information in the
Annual Meeting Invitation and Reservation Form.
1
Table of Contents
Each shareholder may be
asked to present valid picture identification, such as a drivers license, and
proof of share ownership, such as a copy of a brokerage statement or a copy of
your ballot. Large bags, cameras, cell phones, recording devices and other
electronic devices will not be permitted at the Annual Meeting, and individuals
not complying with this request are subject to dismissal from the Annual
Meeting. In the event of an adjournment, postponement or emergency that may
change the Annual Meetings time, date, or location, Fulton will make an
announcement, issue a press release or post information at www.fult.com to
notify shareholders as appropriate. The information on our website is not part
of this Proxy Statement. References to Fultons website in this Proxy Statement
are intended to serve as inactive textual references only.
This Proxy Statement
relates to the Annual Meeting of shareholders to be held on Tuesday, May 5, 2015
at 10:00 a.m. Attendance at the Annual Meeting will be limited to shareholders
of record at the close of business on February 27, 2015 (the Record Date),
their authorized representatives and guests of Fulton.
Shareholders Entitled to
Vote and Attend Meeting
Only those shareholders of
record as of the Record Date shall be entitled to receive notice of, attend, and
vote at, the Annual Meeting.
Purpose of
Meeting
Fulton shareholders will be
asked to consider and vote upon the following matters at the Annual Meeting: (i)
the election of eleven (11) directors to serve for one-year terms; (ii) the
non-binding Say-on-Pay resolution to approve the compensation of the named
executive officers; (iii) the ratification of the appointment of KPMG LLP as
Fultons independent auditor for the fiscal year ending December 31, 2015; and
(iv) such other business as may be properly brought before the Annual Meeting
and any adjournments thereof.
Solicitation of
Proxies
This Proxy Statement is
furnished in connection with the solicitation of proxies, in the accompanying
form, by the Board of Directors of Fulton for use at the Annual Meeting to be
held at 10:00 a.m. on Tuesday, May 5, 2015, and any adjournments or
postponements thereof. Fulton is making this solicitation and will pay the
entire cost of preparing, assembling, printing, mailing and distributing the
notices and these proxy materials and soliciting votes. In addition to the
mailing of the notices and these proxy materials, the solicitation of proxies or
votes may be made in person, by mail, telephone or by electronic communication
by Fultons directors, officers and employees, who will not receive any
additional compensation for such solicitation activities. Fulton has engaged
Laurel Hill Advisory Group, LLC, to aid in the solicitation of proxies in order
to assure a sufficient return of votes on the proposals to be presented at the
Annual Meeting. The fee for such services is estimated at $7,000, plus
reimbursement for reasonable research, distribution and mailing
costs.
Arrangements will be made
with brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of stock held of
record by such persons, and Fulton will reimburse them for reasonable
out-of-pocket expenses incurred by them in connection therewith.
Revocability and Voting
of Proxies
The execution and return of
the enclosed proxy card, or voting by another method, will not affect a
shareholders right to attend the Annual Meeting and to vote in person. A
shareholder may revoke any proxy given pursuant to this solicitation by
delivering written notice of revocation to the Corporate Secretary or Assistant
Corporate Secretary of Fulton, sending a new proxy card at any time before the
shares are voted by the proxy at the Annual Meeting, or by voting by another
method at any time before the applicable deadline for voting set forth on the
proxy card. Unless revoked, any proxy given pursuant to this solicitation will
be voted at the Annual Meeting, including any adjournment or postponement
thereof, in accordance with the written instructions of the shareholder giving
the proxy. In the absence of instructions, all proxies will be voted FOR the
election of the eleven (11) director nominees identified in this Proxy
Statement, FOR the approval of the non-binding Say-on-Pay resolution to approve
the compensation of the named executive officers, and FOR the ratification of
the appointment of KPMG LLP as Fultons independent auditor for the fiscal year
ending
2
Table of Contents
December 31, 2015. Although
the Board of Directors knows of no other business to be presented, in the event
that any other matters are properly brought before the Annual Meeting, any proxy
given pursuant to this solicitation will be voted in accordance with the
recommendations of the Board of Directors of Fulton as permitted by Rule
14a-4(c) under the Securities Exchange Act of 1934, as amended (the Exchange
Act). If you are a registered shareholder of record who holds stock in
certificates or book entry with Fultons transfer agent and you do not cast your
vote, no votes will be cast on your behalf on any of the items of business at
the Annual Meeting.
Shares held for the account
of shareholders who participate in the Dividend Reinvestment and Stock Purchase
Plan and for the account of employees who participate in the Employee Stock
Purchase Plan (the ESPP) will be voted in accordance with the instructions of
each shareholder as set forth in his or her proxy. If a shareholder who
participates in these plans does not return a proxy, the shares held for the
shareholders account will not be voted.
Shares held for the account
of employees of Fulton and its subsidiaries who participate in the Fulton
Financial Common Stock Fund of the Fulton Financial Corporation 401(k)
Retirement Plan (the 401(k) Plan), will be voted by Fulton Financial Advisors,
a division of Fulton Bank, N.A., as plan trustee (Plan Trustee) in accordance
with the instructions of each participant as set forth in the separate voting
instruction card sent to the participant with respect to such shares. To allow
sufficient time for the Plan Trustee to vote, participants voting instructions
must be received by April 30, 2015.
Each participant in the
401(k) Plan (or the beneficiary of a deceased participant) is entitled to direct
the Plan Trustee how to vote shares of common stock of Fulton which are
allocated to his or her account under the 401(k) Plan on any matter on which
other holders of Fultons common stock are entitled to vote. If no direction is
given, then the 401(k) Plan shares will not be voted by the Plan Trustee. The
Plan Trustee has established procedures that are designed to safeguard the
confidentiality of information about each Plan Participants purchase, holding,
sale and voting of the common stock. If a 401(k) Plan Participant has questions
about these procedures or concerns about the confidentiality of this
information, please contact the Retirement Plan Administrative Committee and
direct the inquiry to Fulton Financial Corporation, Attn: RPAC Benefits, P.O.
Box 4887, One Penn Square, Lancaster, PA 17604.
Voting Shares Held in
Street Name
If you hold shares in
street name with a bank or broker, it is important that you instruct your bank
or broker how to vote your shares if you want your shares to be voted on the
election of directors (Proposal 1 of this Proxy Statement) and on the
non-binding Say-on-Pay resolution to approve the compensation of the named
executive officers (Proposal 2 of this Proxy Statement). If you hold your shares
in street name and you do not instruct your bank or broker how to vote your
shares in the election of directors or any non-routine matters, such as Proposal
2 of this Proxy Statement, no votes will be cast on your behalf for the election
of directors or Proposal 2. Your bank or broker will, however, continue to have
discretion to vote any uninstructed shares on the ratification of the
appointment of Fultons independent auditor (Proposal 3 of this Proxy Statement)
and other matters that your bank or broker considers routine. If you hold shares
in street name with a bank or broker and you wish to vote your shares in person
at the Annual Meeting, you will need to obtain a legal proxy from your bank or
broker authorizing you to vote the shares at the Annual Meeting.
Voting of Shares and
Principal Holders Thereof
At the close of business on
the Record Date, Fulton had 179,042,922 shares of common stock outstanding and
entitled to vote. There is no other class of capital stock outstanding. As of
the Record Date 2,696,523 shares of Fulton common stock were held by Fulton
Financial Advisors (FFA), a division of Fulton Bank, N.A., as the Plan
Trustee, or in a fiduciary capacity for fiduciary accounts. The shares held in
this manner, in the aggregate, represent approximately 1.5% of the total shares
outstanding. Shares that are held in the applicable plan are voted by the
beneficiaries. Shares for which FFA serves as a co-fiduciary will be voted by
the co-fiduciary, unless the co-fiduciary declines to accept voting
responsibility, in which case, FFA will vote to abstain on all proposals. Shares
for which FFA serves as sole trustee of a revocable trust, shares for which FFA
acts as agent for an investment management account, and shares for which FFA
acts as custodian for a custodial account, are voted by the settlor of the
revocable trust and the principal of the agency or custodial account unless the
governing document provides for FFA to vote the shares, in which case FFA will
vote to abstain on all proposals. Shares for which FFA is acting as sole trustee
of an irrevocable trust or as guardian of the estate of a minor or an
incompetent person are voted by FFA and in such cases, FFA will vote to abstain
on all proposals.
3
Table of Contents
The holders of a majority
of the outstanding common stock present in person or by proxy at the Annual
Meeting constitutes a quorum for the conduct of business. The judge of election
will treat shares of Fulton common stock represented by a properly signed and
returned proxy as present at the Annual Meeting for purposes of determining a
quorum, without regard to whether the proxy is marked or designated as casting a
vote or abstaining. Likewise, the judge of election will treat shares of common
stock represented by broker non-votes as present for purposes of determining a
quorum.1
Each share is entitled to
one vote on all matters submitted to a vote of the shareholders. A majority of
the votes cast at a meeting at which a quorum is present is required in order to
approve any matter submitted to a vote of the shareholders, except for the
election of directors, or in cases where the vote of a greater number of shares
is required by law or under Fultons Articles of Incorporation or Bylaws.
In the case of the election
of directors, the eleven (11) candidates receiving the highest number of votes
cast at the Annual Meeting shall be elected to the Board of Directors for terms
of one (1) year. The affirmative vote of a majority of the common stock present
or represented by proxy and voting at the Annual Meeting is required for
approval of the non-binding Say-on-Pay resolution to approve the compensation of
the named executive officers and the ratification of Fultons independent
auditor.
Abstentions and broker
non-votes will be counted as shares that are present at the Annual Meeting for
determining the presence of a quorum, but will not be counted as votes cast on
the election of directors, the non-binding Say-on-Pay resolution to approve the
compensation of the named executive officers, or the ratification of Fultons
independent auditor. Abstentions and broker non-votes will have no effect on the
election of directors, the non-binding Say-on-Pay resolution concerning
executive compensation, or the ratification of Fultons independent auditor,
since only votes cast will be counted.
To the knowledge of Fulton,
on the Record Date, no person or entity owned of record, or beneficially, more
than 5% of the outstanding common stock of Fulton, except those listed on page
13 under Security Ownership of Directors, Nominees, Management and Certain
Beneficial Owners.
Internet Availability of
Proxy Materials
Important Notice
Regarding the Availability of Proxy Materials
for the Annual Meeting to be
Held on May 5, 2015
In accordance with the
rules of the Securities and Exchange Commission (the SEC), we are advising our
shareholders that we are furnishing proxy materials (i.e., this Proxy Statement,
2014 Annual Report and proxy card) to some of our shareholders on the Internet
at www.proxyvote.com rather than mailing paper copies of the materials to those
shareholders. As a result, some of the shareholders will receive a Notice of
Internet Availability of Proxy Materials and other shareholders will receive
paper copies of this Proxy Statement, 2014 Annual Report and proxy card. The
Notice of Internet Availability of Proxy Materials contains instructions on how
to access this Proxy Statement, 2014 Annual Report and proxy card over the
Internet, instructions on how to vote shares, as well as instructions on how to
request a paper copy of our proxy materials, if shareholders so desire. Fulton
believes electronic delivery should expedite the receipt of materials,
significantly lower costs and help to conserve natural resources.
Whether shareholders
receive the Notice of Internet Availability of Proxy Materials or paper copies
of the proxy materials, the Proxy Statement, the 2014 Annual Report, the proxy
card, and any amendments to the foregoing materials that are required to be
furnished to shareholders, are available for review online at
http://materials.proxyvote.com/360271.
This Proxy Statement and
our 2014 Annual Report also are available in the Investor Relations section of
Fultons website at www.fult.com. Shareholders may access this material by
choosing the Investor Relations tab at the top of the page, and then SEC
Filings from the items listed in the Investor Relations section.
____________________
1 Broker
non-votes are shares of common stock held in record name by brokers or nominees
as to which (i) instructions have not been received from the beneficial owners
or persons entitled to vote; and (ii) the broker or nominee does not have
discretionary voting power to vote such shares on a particular
proposal.
4
Table of Contents
Recommendation of the
Board of Directors
The Board of Directors
recommends that shareholders vote FOR the election of the eleven (11) director
nominees identified in this Proxy Statement, FOR the approval of the non-binding
Say-on-Pay resolution to approve the compensation of the named executive
officers and FOR the ratification of the appointment of KPMG LLP as Fultons
independent auditor for the fiscal year ending December 31, 2015.
Shareholder Proposals
Under SEC rules,
shareholder proposals intended to be considered for inclusion in Fultons Proxy
Statement and form of proxy for the 2016 Annual Meeting must be received at the
principal executive offices of Fulton at One Penn Square, Lancaster,
Pennsylvania no later than November 25, 2015. With respect to any shareholder
proposal not received at Fultons principal executive offices by February 8,
2016, which is forty-five (45) calendar days before the one year anniversary of
the date Fulton released the previous years annual meeting Proxy Statement to
shareholders, will be considered untimely and, if presented at the 2016 Annual
Meeting, the proxy holders will be able to exercise discretionary authority in
voting on any such proposal to the extent authorized by Rule 14a-4(c) under the
Exchange Act. All shareholder proposals must comply with Rule 14a-8 under the
Exchange Act, as well as Fultons Bylaws.
Generally, under applicable
SEC rules, a shareholder may not submit more than one proposal, and the
proposal, including any accompanying supporting statement, may not exceed 500
words. In order to be eligible to submit a proposal, a shareholder must have
continuously held at least $2,000 in market value of Fulton common stock for at
least one year before the date the proposal is submitted. Any shareholder
submitting a shareholder proposal to Fulton must also provide Fulton with a
written statement verifying ownership of stock and confirming the shareholders
intention to continue to hold the stock through the date of the 2016 Annual
Meeting. The shareholder, or a qualified representative, must attend the 2016
Annual Meeting in person to present the proposal. The shareholder must also
continue to hold the applicable amount of Fulton common stock through the date
of the 2016 Annual Meeting.
Contacting the Board of
Directors
Any shareholder of Fulton
who desires to contact the Board of Directors may do so by writing to: Board of
Directors, Fulton Financial Corporation, P.O. Box 4887, One Penn Square,
Lancaster, PA 17604. These written communications will be provided to the Chair
of the Executive Committee of the Board of Directors who will determine further
distribution based on the nature of the information in the communication. For
example, communications concerning accounting, internal accounting controls or
auditing matters will be shared with the Chair of the Audit Committee of the
Board of Directors.
Code of
Conduct
Fultons Code of Conduct
(the Code of Conduct) governs the conduct of its directors, officers and
employees. Fulton provides the Code of Conduct to each director, officer and
employee when starting their position, and they are required to annually
acknowledge their review of the Code of Conduct. In 2014, after a review by the
Nominating and Corporate Governance Committee, minor updates were made to the
Code of Conduct to enhance the language and clarity of several existing
provisions. These updates included adding examples of situations that involve,
or may involve conflicts of interest. The gift allowance amount was also
increased from $100 to $200, with permissibility of giving gifts limited to
certain narrow circumstances. However, gifts of cash or cash-equivalents, such
as checks, money orders and gift cards for general use (i.e., bank gift cards or
similar items) in any amount are expressly prohibited by the Code of Conduct.
Fultons employees and directors are expected to recognize and avoid conflicts
of interest situations in which personal interest or relationships interfere
with, might interfere with, or appear to interfere with, their responsibilities
to Fulton. A current copy of the Code of Conduct can be obtained, without cost,
by writing to the Corporate Secretary at: Fulton Financial Corporation, P.O. Box
4887, One Penn Square, Lancaster, PA 17604. The current Code of Conduct, future
amendments and any waivers are also posted and available on Fultons website at
www.fult.com.
5
Table of Contents
Corporate Governance
Guidelines
Fulton has adopted
Corporate Governance Guidelines (the Governance Guidelines) that include
guidelines and Fultons policy regarding the following topics: (1) the size of
the Board of Directors; (2) director qualifications; (3) majority vote standard;
(4) service on other boards and director change in status; (5) meeting
attendance and review of meeting materials; (6) director access to management
and independent advisors; (7) designation of a Lead Director; (8) executive
sessions; (9) Chief Executive Officer (CEO) evaluation and succession
planning; (10) Board of Directors and committee evaluations; (11) stock
ownership guidelines; (12) communications by interested parties; (13) Board of
Directors and committee minutes; (14) Codes of Conduct; and (15) disclosure and
update of the Governance Guidelines. On January 21, 2014, the Governance
Guidelines were amended to add a majority vote standard for an uncontested
election of directors. The Governance Guidelines were last updated on June 17,
2014 to add the provision that Fulton encourages each member of the Board of
Directors to attend outside education programs of relevance to their board
service as one component of its corporate governance and general board education
process. A copy of the current Governance Guidelines can be obtained, without
cost, by writing to the Corporate Secretary at: Fulton Financial Corporation,
P.O. Box 4887, One Penn Square, Lancaster, PA 17604. The Governance Guidelines
are also posted and available on Fultons website at www.fult.com.
SELECTION OF
DIRECTORS
General Information
The Bylaws of Fulton
provide that the Board of Directors shall consist of at least five (5) but not
more than thirty-five (35) persons, and that the Board of Directors shall
determine the number of directors. Pursuant to Fultons Bylaws, as amended, all
nominees elected to the Board of Directors are elected for one-year terms.
A majority of the Board of
Directors may increase or decrease the number of directors between meetings of
the shareholders. Any vacancy occurring in the Board of Directors, whether due
to an increase in the number of directors, resignation, retirement, death or any
other reason may be filled by appointment by the remaining directors. Any
director who is appointed to fill a vacancy shall hold office until the next
Annual Meeting of the shareholders and until a successor is elected and shall
have qualified.
Fultons Bylaws limit the
age of director nominees, and no person may be nominated for election as a
director who will attain the age of seventy-two (72) years on or before the date
of the Annual Meeting at which he or she is to be elected. In addition, Fulton
has adopted a Voluntary Resignation Policy for directors that generally requires
a director to tender his or her resignation when the directors effectiveness as
a member of the Board of directors may be substantially impaired. Circumstances
that require a resignation to be submitted include, but are not limited to: (i)
a director failing to attend at least 62.5% of meetings of the Board of
Directors or its committees without a valid reason; and (ii) unless such an
event is promptly cured to the satisfaction of Fulton, any extension of credit
by any of Fultons subsidiary banks for which the director or a related interest
of the director is an obligor or guarantor is: a) classified by Fulton as
nonaccrual, sixty (60) or more days past due, or restructured; b) assigned a
risk rating of substandard or less; or c) not in material compliance with
Board of Governors of the Federal Reserve Systems Regulation O (12 C.F.R. Part
215) (Regulation O). In addition, in January 2014, Fulton added a majority
vote standard to the Voluntary Resignation Policy for directors that requires a
director to tender his or her resignation if a director does not receive a
majority of the votes cast in an uncontested election for the Board of
Directors. While the policy sets forth events which might cause a director to
tender his or her resignation, it also directs Fultons Board of Directors to
consider carefully, on a case-by-case basis, whether or not Fulton should accept
such a resignation.
Majority Vote
Standard
In January 2014, Fultons
Nominating and Corporate Governance Committee recommended, and the Board of
Directors adopted, a majority vote standard for uncontested director elections
by revising its Governance Guidelines and Voluntary Resignation Policy for
Directors. In an uncontested election at a Fulton annual meeting of shareholders
occurring after January 2014, any nominee for director who does not receive a
majority of the votes cast in an uncontested election for the Board of Directors
is required to promptly tender his or her resignation following certification of
the shareholder vote. As further described in the Governance Guidelines, the
Nominating and Corporate Governance Committee shall consider the resignation
tendered and recommend to the Board of Directors whether to accept it.
6
Table of Contents
Procedure for
Shareholder Nominations
Section 3 of Article II of
Fultons Bylaws requires shareholder nominations of director candidates to be
made in writing and delivered or mailed to the Chairman of the Board or the
Corporate Secretary not less than the earlier of (a) one hundred twenty (120)
days prior to any meeting of shareholders called for the election of directors
or (b) the deadline for submitting shareholder proposals for inclusion in a
Proxy Statement and form of proxy as calculated under Rule 14a-8(e) promulgated
by the SEC under the Exchange Act. For the 2016 Annual Meeting this deadline
date is November 25, 2015. Further, the notice to the Chairman of the Board or
the Corporate Secretary of a shareholder nomination shall set forth: (i) the
name and address of the shareholder who intends to make the nomination and a
representation that the shareholder is a holder of record of stock of Fulton
entitled to vote at such meeting and intends to be present in person or by proxy
at such meeting to nominate the person or persons to be nominated; (ii) the
name, age, business address and residence address of each nominee proposed in
such notice; (iii) the principal occupation or employment of each such nominee;
(iv) the number of shares of capital stock of Fulton that are beneficially owned
by each such nominee; (v) a statement of qualifications of the proposed nominee
and a letter from the nominee affirming that he or she will agree to serve as a
director of Fulton, if elected by the shareholders; (vi) a description of all
arrangements or understandings between the shareholder submitting the notice and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; and (vii) such other information regarding each nominee proposed by
the shareholder as would have been required to be included in the Proxy
Statement filed pursuant to the proxy rules of the SEC had each nominee been
nominated by or at the direction of the Board of Directors. The chairman of the
meeting shall determine whether nominations have been made in accordance with
the requirements of the Bylaws and, if the chairman determines that a nomination
is defective, the nomination and any votes cast for the nominee shall be
disregarded. Shareholder nominees are subject to the same standard of review as
nominees of Fultons Board of Directors or its Nominating and Corporate
Governance Committee.
Director Qualifications
and Board Diversity
In considering any
individual nominated for membership on the Board of Directors, including those
nominated by a shareholder, Fulton considers a variety of factors, including
whether the candidate is recommended by executive management, the individuals
professional and personal qualifications, including business experience,
education, community and charitable activities, and the individuals familiarity
with a market or markets in which Fulton is located or is seeking to locate, or
with a market that is similar to those in which Fulton is located or is seeking
to locate. Fulton does not have a separate written policy regarding how
diversity is to be considered in the director nominating process. Generally,
however, Fulton takes into account diversity in business experience, community
service, skills, professional background and other qualifications, as well as
diversity in race, national origin and gender, in considering individual
candidates. Fultons Governance Guidelines provide that Fultons Board of
Directors should be sufficient in size to achieve diversity in business
experience, community service and other qualifications among non-employee
directors while still facilitating substantive discussions in which each
director can participate meaningfully. In 2004, the Board of Directors formed
the Nominating and Corporate Governance Committee of the Board of Directors,
whose members are independent in accordance with the NASDAQ listing standards.
The charter for the Nominating and Corporate Governance Committee is posted and
available on Fultons website at www.fult.com. The Nominating and Corporate
Governance Committee is responsible for recommending director nominees to the
Board of Directors and for the Governance Guidelines. Information on the
experience, qualifications, attributes or skills of Fultons directors and
nominees is described under Director and Nominee Biographical Information
below.
7
Table of Contents
ELECTION OF DIRECTORS
PROPOSAL ONE
General
Information
For the 2015 Annual
Meeting, the Board of Directors has fixed the number of directors at eleven
(11). Pursuant to Fultons Bylaws, as amended, nominees to the Board of
Directors are elected for one-year terms. The Board of Directors has nominated
the following eleven (11) people for election to the Board of Directors for a
term of one year:
2015 Director
Nominees
John
M. Bond, Jr. |
Lisa
Crutchfield |
Denise L. Devine |
Patrick J. Freer |
George W. Hodges |
Albert Morrison III |
James R. Moxley III |
R.
Scott Smith, Jr. |
Gary
A. Stewart |
Ernest J. Waters |
E.
Philip Wenger |
|
Each of the above nominees
is presently a director of Fulton, except for James R. Moxley III. Following the
recommendation of the Nominating and Corporate Governance Committee, the Board
of Directors approved the nomination of the above individuals. However, in the
event that any of the foregoing 2015 director nominees are unable to accept
nomination or election, any proxy given pursuant to this solicitation will be
voted in favor of such other persons as the Board of Directors may recommend.
The Board of Directors has no reason to believe that any of its director
nominees will be unable to accept nomination or to serve as a director, if
elected by a majority of the shares voted at the Annual Meeting.
Vote
Required
The eleven (11) candidates
receiving the highest number of votes cast at the Annual Meeting shall be
elected to the Board of Directors. Abstentions and broker non-votes will be
counted as shares that are present at the Annual Meeting, but will not be
counted as votes cast in the election of directors.
Under the Governance
Guidelines, in an uncontested election of directors, any nominee for director
who does not receive a majority of the votes cast is required to promptly tender
his or her resignation following certification of the shareholder vote. As
further described in the Governance Guidelines, the Nominating and Corporate
Governance Committee shall consider the resignation tendered and recommend to
the Board of Directors whether to accept it.
Recommendation of the
Board of Directors
The Board of Directors
recommends that shareholders vote FOR the election of the eleven (11) director
nominees identified in this Proxy Statement to serve for one-year
terms.
Information about
Nominees, Directors and Independence Standards
Information concerning the
experience, qualifications, attributes or skills of the eleven (11) persons
nominated by Fulton for election to the Board of Directors at the 2015 Annual
Meeting is set forth below, including whether they were determined by the Board
of Directors to be independent for purposes of the NASDAQ listing
standards.
Fulton is a NASDAQ listed
company and follows the NASDAQ listing standards for Board of Directors and
committee independence. The Board of Directors determined that nine (9) of
Fultons eleven (11) director nominees are independent, as defined in the
applicable NASDAQ listing standards. Specifically, the Board of Directors found
that Directors Bond, Crutchfield, Devine, Freer, Hodges, Morrison, Stewart and
Waters, as well as Mr. Moxley, met the definition of independent director in the
NASDAQ listing standards and that each of these directors is free of any
relationships that would interfere with his or her individual exercise of
independent judgment. In addition, members of the Audit Committee and the Human
Resources Committee (the HR Committee) of the Board of Directors meet the
requirements for independence under the NASDAQ listing standards, and the rules
and regulations of the SEC for service on the Audit Committee or the HR
Committee, as applicable. In reviewing director independence, the Board of
Directors considered the relationships and other arrangements, if any, of each
director. The other types of relationships and transactions that were reviewed
and considered are more fully described in Related Person Transactions on page
19.
8
Table of Contents
Director and Nominee
Biographical Information
The following information
regarding each director nominees background, experience, qualifications,
attributes or skills represents the information that led Fulton to conclude that
these persons should be nominated to serve as a director of Fulton.
|
|
JOHN M. BOND, JR.
(Independent Director), age 71. |
|
|
|
Director of Fulton
since 2006 and The Columbia Bank since 1988. Mr. Bond served as a Director
of the Federal Home Loan Bank of Atlanta, 2005 through 2014. He was a
Director of Columbia Bancorp from 1987 to 2006 when Columbia Bancorp
merged with Fulton and retired as CEO of The Columbia Bank in 2006. He was
the former Chairman of the Maryland Bankers Association, 2001 to 2002, and
served as a Trustee of Goucher College, 1997 to 2014, and was Chairman of
the Board, 2004 to 2009 and now serves as a Trustee Emeritus. Mr. Bond was
admitted to practice law in New York.
Mr. Bond offers
Fultons Board of Directors years of bank executive management and
financial expertise, strong knowledge of the financial services industry
and knowledge of the suburban markets near Baltimore and Washington DC, as
well as northern Virginia. Mr. Bond also brings a focused historical
perspective to the Fulton Board with his prior corporate governance
experience and having held leadership positions at an entity acquired by
Fulton. Mr. Bond serves as Chair of Fultons Audit Committee and as a
financial expert, as defined by SEC regulations. He is also a member of
Fultons Executive Committee, Human Resources Committee and the Special
Joint Board Compliance Committee. |
|
|
|
|
|
LISA
CRUTCHFIELD (Independent
Director), age 52. |
|
|
|
Director of Fulton
since 2013. Ms. Crutchfield has been a Director of Unitil Corporation
(NYSE:UTL) from 2012 to present. Since September of 2013, Ms. Crutchfield
has led the CEO Council for Growth and the Greater Philadelphia Chamber of
Commerce in policy, strategy and legislative functions. Prior to her role
at the CEO Council, she served as executive vice president and chief
regulatory and compliance officer for National Grid USA from 2008 to 2011.
In this role Ms. Crutchfield also served as a non-independent director on
the board of National Grid USA. She has also held executive roles with
PECO Energy Company, TIAA-CREF and Duke Energy. In 1993, Crutchfield was
appointed to serve as vice chairman of the Pennsylvania Public Utility
Commission. Ms. Crutchfield is a graduate of Yale University with a B.A.
in economics and political science. She is also a graduate of the Harvard
School of Business and holds a M.A. of Business Administration, with a
distinction in finance.
Ms. Crutchfield
brings more than 20 years of experience leading corporate teams and has
extensive knowledge of the financial industry and business practices with
expertise in risk mitigation, compliance and regulatory matters. She is
also a member of Fultons Nominating and Corporate Governance Committee
and Risk Committee. |
9
Table of Contents
|
|
DENISE L. DEVINE
(Independent Director),
age 59. |
|
|
|
Director of Fulton
since 2012. Ms. Devine is the founder and has been the Chief Executive
Officer of Nutripharm, Inc. since 1997, a company that has generated a
portfolio of composition and process patents to create innovative natural
food, beverage, pharmaceutical and nutraceutical products that facilitate
nutrition and lifelong health. She has also been dedicated to developing
and marketing convenient and natural beverage and snack solutions for the
healthy growth and development of children. Ms. Devine, a certified public
accountant, also previously served as Chief Financial Officer for Energy
Solutions International and in financial management positions for Campbell
Soup Company. Ms. Devine has served as Chair of the Pennsylvania State
Board of Accountancy and on the Board of the American Institute of CPAs.
Since 2006, Ms. Devine has served on the Board of Trustees of Villanova
University and is currently the Chair of the Villanova University Audit
and Risk Committees. She has also served as a member of the Board of
Lourdes Health System since 2010.
Ms. Devine has
substantial management, business and finance experience which adds
valuable outside experience to Fultons Board of Directors and its
committees. She received an MBA from the Wharton School of the University
of Pennsylvania, an M.S. in Taxation from Villanova Law School, and a B.S.
in Accounting from Villanova University, where she graduated first in her
class. Ms. Devine is a member of Fultons Audit Committee and is the Vice
Chair of Fultons Human Resources Committee. |
|
|
|
|
|
PATRICK J. FREER
(Independent Director), age
65. |
|
|
|
Director of Fulton
since 1996. Mr. Freer was a Director of Lebanon Valley Farmers Bank,
formerly known as Farmers Trust Bank, from 1980 until it was combined with
Fulton Bank in 2007. He is the President of Strickler Insurance Agency,
Inc. (insurance broker) and a Certified Insurance Counselor.
Mr. Freer brings to
the Fulton Board of Directors an extensive knowledge of insurance,
investments, finance and risk management as well as valuable knowledge of
Fulton through his tenure of more than fifteen (15) years on its Board of
Directors and as a bank director from 1980 to 2007. Mr. Freer has long
been an active member in his community, helping with numerous capital
campaigns and community projects. Mr. Freer has been a board member of the
American Cancer Society, Lebanon County Economic Development Authority,
Center of Lebanon Association and the Lebanon County Mental Health
Association and has served as past president of the Lebanon Valley Sertoma
Club and Lebanon County Christian Ministries. Mr. Freer serves as a member
of Fultons Human Resources Committee and is the Vice Chair of Fultons
Nominating and Corporate Governance Committee. |
|
|
|
|
|
GEORGE W.
HODGES (Independent
Director), age 64. |
|
|
|
Director of Fulton
since 2001 and currently serves as Lead Director of Fulton. Mr. Hodges was
a Director of Drovers & Mechanics Bank, until it was merged into
Fulton Bank in 2001, and has served on the Board of Directors of Fulton
Bank since 2012. He has been a Director of York Water Company from 2000 to
present (NASDAQ:YORW), Director of The Wolf Organization, Inc. from 2008
to present (regional distributor and sourcing company of kitchen and bath
products and specialty building products), a Director of Burnham Holdings,
Inc. from 2006 to present, the parent company of fourteen subsidiaries
that are leading domestic manufacturers of boilers and related HVAC
products and accessories (including furnaces, radiators and air
conditioning systems), for residential, commercial and industrial
applications, and has served on the boards of various for profit,
non-profit and community organizations. Mr. Hodges served as non-executive
Chairman of the Board of The Wolf Organization from 2008 to 2009. Prior to
being Chairman, Mr. Hodges was a member of the Office of the President of
The Wolf Organization from 1986 to 2008. He has served as Chairman of the
Board of York Water Company since 2011.
Mr. Hodges brings
considerable financial expertise and business knowledge to the Fulton
Board of Directors, both through his business experience and his service
on other boards and completed the requirements for the National
Association of Corporate Directors (NACD) Board Leadership Fellow
Program from 2012 to 2014. His extensive business experience, financial
expertise, and background are also invaluable for Fultons Audit Committee
where he serves as Vice Chair and as a financial expert, as defined by
SEC regulations. Mr. Hodges also serves as Chair of Fultons Executive
Committee and is a member of Fultons Human Resources
Committee. |
10
Table of Contents
|
|
ALBERT MORRISON III
(Independent Director), age 68. |
|
|
|
Director of Fulton
since 2012. Mr. Morrison is the Chairman of the Board of Burnham Holdings,
Inc., the parent company of fourteen subsidiaries that are leading
domestic manufacturers of boilers and related HVAC products and
accessories (including furnaces, radiators and air conditioning systems),
for residential, commercial and industrial applications. Mr. Morrison was
elected as a director of Burnham in 1986, became President and Chief
Executive Officer of Burnham in 1988 and has served as Chairman since
2002. Mr. Morrison retired as Chief Executive Officer, effective in April
2012, after thirty-eight years of service with Burnham Holdings,
Inc.
As a long-time CEO
and director of a manufacturing company, Mr. Morrison brings extensive
business, financial, acquisition and human resources skills to Fultons
Board of Directors and its Audit Committee, where he serves as a member.
Mr. Morrison also serves as Chair of Fultons Risk Committee and is a
member of Fultons Executive Committee and the Special Joint Board
Compliance Committee. |
|
|
|
|
|
JAMES R. MOXLEY
III (Independent Director
Nominee), age 54. |
|
|
|
Director Nominee for
election to Fultons Board of Directors at the 2015 Annual Meeting. Mr.
Moxley has been a director of The Columbia Bank since 1999. He is admitted
and licensed to practice law in Maryland and a former real estate attorney
with Venable, Baetjer and Howard, now known as Venable LLP (law firm).
Since 1992 Mr. Moxley has served as a Principal of the Security
Development Corporation (a Washington-Baltimore real estate land
development company). He has served as a trustee of Glenelg Country School
from 1996 to present, trustee of the Howard Hospital Foundation from 2014
to present, and is active on numerous community boards and committees in
Maryland.
Mr. Moxley brings
banking expertise to Fultons Board of Directors that he gained as a
director of The Columbia Bank. He also has extensive business, tax and
legal experience in the development of real estate. Mr. Moxley currently
serves as a member of the Special Joint Board Compliance Committee as a
subsidiary bank director representing The Columbia Bank. |
|
|
|
|
|
R. SCOTT SMITH,
JR., age
68. |
|
|
|
Director of Fulton
since 2001. Mr. Smith is the retired Chairman of the Board and CEO of
Fulton. He served as Chairman of the Board and CEO from January 2006 to
December 2012 and also served as a Director of Fulton Bank from 1993 to
2002. He was a Director of The Federal Reserve Bank of Philadelphia from
2010 to 2013 and a member of the Federal Advisory Council to the Federal
Reserve Board, Washington, DC from 2008 to 2010. Mr. Smith was a Director
of the American Bankers Association from 2006 to 2009, was employed by
Fulton from 1978 to 2012 in various positions and worked in financial
services since 1969. In 2014, Mr. Smith became a director of Herr Foods,
Inc. (snack food manufacturer), and IREX Corp. (a specialty contracting
organization), and he continues to be active in the Lancaster
community.
Mr. Smiths various
management roles during his over thirty years of service in banking give
him a broad understanding of the financial services industry, Fultons
operations, corporate governance matters and leadership experience
qualifying him to serve on Fultons Board of Directors. Mr. Smith serves
as a member of Fultons Risk Committee. |
11
Table of Contents
|
|
GARY A.
STEWART (Independent
Director), age 67.
Director of Fulton
since 2001. Mr. Stewart is the Chairman of The Stewart Companies (a
holding company that oversees and manages a diverse group of subsidiaries
based in the United States), Vice President of Apple Automotive Group,
Inc., a Partner of Stewart Properties (real estate developer), President
of Aspen Equity Group LLC (real estate) and has served on the boards of
various for profit, non-profit and community organizations. He was a
Director of York Bank & Trust Company from 1981 to 1998, and was a
Director of Drovers & Mechanics Bank until it was merged into Fulton
Bank in 2001.
Mr. Stewart has
relevant business experience that includes extensive experience in real
estate acquisition, development, finance and management and bank board
service qualifying him for service as a member of the Board of Directors.
Mr. Stewart serves as Vice Chair of Fultons Executive Committee and Chair
of Fultons Nominating and Corporate Governance Committee, and is also a
member of Fultons Risk Committee. |
|
|
|
|
|
ERNEST J.
WATERS (Independent
Director), age 65.
Director of Fulton
since 2012 and Director of Fulton Bank, N.A. since 2011. Mr. Waters
retired from Metropolitan Edison, a FirstEnergy company, in 2009, where he
served as the Area Vice President and Area Manager. Mr. Waters joined the
FirstEnergy companies (an investor-owned utility) in 1976 and held various
positions in Auditing and Marketing during his tenure. He also served as
an expert accounting witness in setting rates before the Pennsylvania
Public Utility Commission. Prior to joining the FirstEnergy companies, Mr.
Waters was a public accountant and business consultant in Philadelphia. He
is a former certified public accountant and holds an MBA from the
University of Pittsburgh. Since 2007, Mr. Waters has served on the Board
of Directors of the York Water Company (NASDAQ: YORW) where he chairs
their Compensation Committee and is a member of the Audit Committee. In
addition, Mr. Waters has served at leadership and committee levels with
numerous community and nonprofit organizations. He is the past Chairman of
the Board of York Hospital and is currently a member of the Board, and
chairs the Audit Committee for Wellspan Health, York Hospitals parent
company.
Mr. Waters has
business, regulatory, leadership, board service and accounting expertise
that brings valuable perspectives to Fultons Board of Directors and has
completed the requirements for the NACD Board Leadership Fellow Program
during 2014. He is the Chair of the Special Joint Board Compliance
Committee and Vice Chair of Fultons Risk Committee. He is also a member
of Fultons Audit Committee. |
|
|
|
|
|
E. PHILIP
WENGER, age 57.
Director of Fulton
since 2009. Mr. Wenger became Chairman of the Board, Chief Executive
Officer and President of Fulton effective on January 1, 2013. He
previously served as President and Chief Operating Officer of Fulton from
2008 to 2012, a Director of Fulton Bank from 2003 to 2009, Chairman of
Fulton Bank from 2006 to 2009 and has been employed by Fulton in a number
of positions since 1979.
Mr. Wenger possesses
an extensive knowledge of the many aspects of banking operations through
more than thirty years of experience in the financial services industry.
He has gained valuable insight through his experience in different banking
areas, including retail banking, commercial banking, bank operations and
systems. Mr. Wenger serves as a member of Fultons Executive Committee and
the Special Joint Board Compliance
Committee. |
12
Table of Contents
Security Ownership of
Directors, Nominees, Management and Certain Beneficial Owners
The following table sets
forth the number of shares of common stock beneficially owned 1 as of
the Record Date by each director and nominee, and the named executive officers,
Messrs. Wenger, Barrett, Shreiner, Roda and Rohrbaugh, (collectively the Named
Executive Officers or Executives and individually, an Executive) and those
persons known to be the beneficial owner of more than 5% of Fultons common
stock. Except as to the beneficial owners and other principal holders listed
below, to the knowledge of Fulton, no person or entity owned of record or
beneficially on the Record Date more than 5% of the outstanding common stock of
Fulton. Unless otherwise indicated in a footnote, shares shown as beneficially
owned by each nominee and director or the Executives are held individually by
the person. The directors, nominees and the Executives of Fulton, as a group,
owned of record and beneficially 2,245,856 shares of Fulton common stock,
representing 1.25% of such shares then outstanding. Shares representing less
than one percent of the outstanding shares are shown with a *
below.
|
|
|
|
Number of |
|
|
|
|
|
|
Common Shares |
|
|
Name of |
|
|
|
Beneficially |
|
Percent of |
Beneficial
Owner |
|
Title |
|
|
Owned 2 3 4 |
|
Class |
Patrick S. Barrett |
|
Senior Executive Vice President and Chief
Financial Officer |
|
31,077 |
5 |
|
* |
John M. Bond, Jr. |
|
Director and Nominee |
|
424,770 |
6 |
|
* |
Lisa Crutchfield |
|
Director and Nominee |
|
1,479 |
|
|
* |
Craig A. Dally |
|
Director |
|
147,256 |
7 |
|
* |
Denise L. Devine |
|
Director and Nominee |
|
7,178 |
8 |
|
* |
Patrick J. Freer |
|
Director and Nominee |
|
101,978 |
9 |
|
* |
George W. Hodges |
|
Director and Nominee |
|
40,489 |
10 |
|
* |
Albert Morrison III |
|
Director and Nominee |
|
25,998 |
|
|
* |
James R. Moxley III |
|
Nominee |
|
103,208 |
11 |
|
* |
Craig A. Roda |
|
Senior Executive Vice President |
|
173,128 |
12 |
|
* |
Philmer H. Rohrbaugh |
|
Senior Executive Vice President |
|
|
|
|
|
|
|
and Chief Risk Officer |
|
35,022 |
13 |
|
* |
James E. Shreiner |
|
Senior Executive Vice President |
|
302,199 |
14 |
|
* |
R. Scott Smith, Jr. |
|
Director and Nominee |
|
323,928 |
15 |
|
* |
Gary A. Stewart |
|
Director and Nominee |
|
194,689 |
16 |
|
* |
Ernest J. Waters |
|
Director and Nominee |
|
8,847 |
|
|
* |
E.
Philip Wenger |
|
Director, Nominee, Chairman of the Board, |
|
|
|
|
|
|
|
President and Chief Executive Officer |
|
324,611 |
17 |
|
* |
Total Ownership |
|
Directors, Nominees and Executives as a
Group |
|
|
|
|
|
|
|
(16 Persons) |
|
2,245,856 |
|
|
1.25% |
|
|
|
|
|
|
|
|
Other Principal
Holders |
|
|
|
|
|
|
|
BlackRock, Inc. |
|
N/A |
|
11,472,271 |
18 |
|
6.2% |
55 East 52nd Street |
|
|
|
|
|
|
|
New York, NY 10022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State Street Corporation |
|
N/A |
|
11,174,718 |
19 |
|
6.0% |
One Lincoln Street |
|
|
|
|
|
|
|
Boston, MA 02111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Vanguard Group |
|
N/A |
|
11,277,012 |
20 |
|
6.08% |
100 Vanguard Blvd. |
|
|
|
|
|
|
|
Malvern, PA 19355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dimensional Fund |
|
N/A |
|
10,036,972 |
21 |
|
5.42% |
Advisors LP |
|
|
|
|
|
|
|
Building One |
|
|
|
|
|
|
|
6300 Bee Cave Road |
|
|
|
|
|
|
|
Austin, TX 78746 |
|
|
|
|
|
|
|
13
Table of Contents
____________________
1 Beneficial
ownership is determined in accordance with SEC Rule 13d-3, which provides that a
person is deemed to own any stock for which that person has or shares: (i)
voting power, which includes the power to vote or to direct the voting of the
stock; or (ii) investment power, which includes the power to dispose or direct
the disposition of the stock; or (iii) the right to acquire beneficial ownership
within 60 days after the Record Date.
2 Includes
307,292 shares issuable upon the exercise of vested stock options and 152,771
shares of unvested restricted stock, which have been treated as outstanding
shares for purposes of calculating the percentage of outstanding shares owned by
directors and Executives as a group.
3 As of the
Record Date, none of the listed individuals had pledged Fulton stock except for
Mr. Stewart, who has pledged 74,755 shares in connection with a collateral
account with his broker related to a line of credit with the same
broker.
4 Fulton has
established stock ownership guidelines for Fulton directors and certain
officers. Achievement of the levels of ownership required by the stock ownership
guidelines is reviewed and determined annually based on the closing price of
Fulton stock on December 31. In 2013, the targeted ownership for directors was
increased to $175,000 in fair market value of Fulton common stock, and directors
that did not own shares at this level were given five (5) years to achieve this
level of ownership. For Executive officers, the targeted stock ownership differs
by position. The CEO is required to acquire shares with a fair market value of
two (2) times the CEOs annual base salary, the President and the Chief
Financial Officer are required to acquire shares with a fair market value of 1.5
times their respective annual base salary, and certain other officers are
required to acquire shares with a fair market value of one (1) times their
respective annual base salary. In the case of newly-appointed or elected
directors and officers, the required level of stock ownership may be achieved
over a period of five (5) years and compliance is determined at the calendar
year end of the year in which the five year anniversary of appointment or
election occurs. As of December 31, 2014, all of Fultons directors and
Executives have satisfied the stock ownership guidelines, except Directors
Crutchfield, Devine and Waters, and Mr. Barrett and Mr. Rohrbaugh. Under the
revised ownership guidelines, Director Devine, Director Waters and Mr. Rohrbaugh
are required to achieve the targeted stock ownership level by December 31, 2018.
Director Crutchfield and Mr. Barrett are required to achieve the targeted stock
ownership level by December 31, 2019.
5 Mr. Barretts
ownership includes 31,077 shares of unvested restricted stock.
6 Mr. Bonds
ownership includes 28,684 shares which may be acquired pursuant to the exercise
of vested stock options and 136,723 shares held solely by his spouse.
7 Mr. Dallys
ownership includes 12,602 shares held in an IRA, 2,065 shares held jointly with
his spouse. Mr. Dallys current term as a Fulton director will end at the 2015
Annual Meeting. He is currently a Court of Common Pleas Judge in Northampton
County, Pennsylvania and is not continuing as a Fulton director due to a
Judicial Rule change effective in 2015 that generally prohibits Judges in
Pennsylvania from serving on corporate boards.
8 Ms. Devines
ownership includes 1,000 shares held jointly with her spouse.
9 Mr. Freers
ownership includes 92,711 shares held jointly with his spouse and 328 shares
held solely by his spouse.
10 Mr. Hodges
ownership includes 21,430 shares held in a 401(k) plan.
11 Mr. Moxleys
ownership includes 39,115 shares held by the Moxley Family Trust, 631 shares
held solely by his spouse, 13,100 shares held by Mr. Moxley as custodian for his
children, 10,104 shares held in a 401(k) plan and 1,962 shares which may be
acquired pursuant to the exercise of vested stock options that he acquired in
2005 as a director of Columbia Bancorp, Inc. before it was acquired by Fulton in
2006.
12 Mr. Rodas
ownership includes 41,366 shares of unvested restricted stock, 78,680 shares
which may be acquired pursuant to the exercise of vested stock options, 17,907
shares in Fultons ESPP and 9,397 shares held jointly with his
spouse.
13 Mr.
Rohrbaughs ownership includes 21,320 shares of unvested restricted stock,
13,000 shares held in an IRA and 701 shares held jointly with spouse.
14 Mr. Shreiner
retired effective December 31, 2014. Mr. Shreiners ownership includes 88,636
shares in Fultons ESPP and held jointly with his spouse and 98,983 shares which
may be acquired pursuant to the exercise of vested stock options.
15 Mr. Smiths
ownership includes 302,344 shares held jointly with spouse and 15,539 shares
held in an IRA.
16 Mr. Stewarts
ownership includes 89,635 shares held in a grantor retained annuity trust and
89,283 shares held by The Stewart Foundation. Mr. Stewart disclaims beneficial
ownership of any of The Stewart Foundation shares beyond his pro rata
interest.
14
Table of Contents
17 Mr. Wengers
ownership includes 37,625 shares held jointly with his spouse, 59,008 shares of
unvested restricted stock, 68,371 shares held in Fultons 401(k) Plan and 98,983
shares which may be acquired pursuant to the exercise of vested stock options.
Also includes 2,822 shares held in Fultons 401(k) Plan by his spouse and 523
shares held by Mr. Wenger as custodian for his children.
18 This
information is based solely on a Schedule 13G filed with the SEC on January 30,
2015 by BlackRock, Inc., which reported sole voting power and sole dispositive
power as to 10,873,938 and 11,472,271 shares, as of December 31,
2014.
19 This
information is based solely on a Schedule 13G filed with the SEC on February 12,
2015 by State Street Corporation, which reported shared voting power and shared
dispositive power as to 11,174,718 shares, as of December 31, 2014.
20 This
information is based solely on a Schedule 13G filed with the SEC on February 10,
2015 by The Vanguard Group, which reported sole voting power and sole
dispositive power as to 127,026 and 11,168,186 shares, and shared dispositive
power as to 108,826 shares, as of December 31, 2014.
21 This
information is based solely on a Schedule 13G filed with the SEC on February 5,
2015 by Dimensional Fund Advisors LP, which reported sole voting power and sole
dispositive power as to 9,844,642 and 10,036,972 shares, as of December 31,
2014.
15
Table of Contents
INFORMATION CONCERNING
THE BOARD OF DIRECTORS
Meetings and Committees of the Board of
Directors
There were ten (10) regular
and special meetings of the Board of Directors of Fulton and sixty-one (61)
meetings of the committees of the Board of Directors of Fulton during 2014. No
director attended fewer than 75% of (i) all meetings of the Board of Directors,
(ii) all of the meetings of the committees of the Board of Directors on which a
director served, or (iii) the aggregate number of meetings of the Board of
Directors and of the committees of the Board of Directors on which he or she
served in 2014.
The Board of Directors of
Fulton has the following five regular standing committees: Audit, Executive,
Human Resources, Nominating and Corporate Governance and Risk. Fulton also
established the Special Joint Board Compliance Committee (the Compliance
Committee) as further described below. The following table represents the
membership on each Fulton committee as of the date of this Proxy
Statement:
|
Audit |
Executive |
Human |
Nominating |
Risk |
Compliance |
|
|
|
Resources |
and Corporate |
|
|
|
|
|
|
Governance |
|
|
John M. Bond, Jr. 1 2 |
Chair |
Member |
Member |
|
|
Member |
Lisa Crutchfield 1 |
|
|
|
Member |
Member |
|
Craig A. Dally 1 |
|
Member |
Chair |
Member |
|
|
Denise L. Devine 1 |
Member |
|
Vice
Chair |
|
|
|
Patrick J. Freer 1 |
|
|
Member |
Vice
Chair |
|
|
George W. Hodges 1 2 3 |
Vice
Chair |
Chair |
Member |
|
|
|
Albert Morrison III 1 |
Member |
Member |
|
|
Chair |
Member |
R. Scott Smith, Jr. |
|
|
|
|
Member |
|
Gary A. Stewart 1 |
|
Vice
Chair |
|
Chair |
Member |
|
Ernest J. Waters 1 |
Member |
|
|
|
Vice
Chair |
Chair |
E. Philip Wenger |
|
Member |
|
|
Member 4 |
Member |
1-independent director |
|
2-Audit Committee Financial Expert |
|
3-Lead Director |
|
4-Ex-officio member per
bylaws |
Human Resources
Committee Interlocks and Insider Participation
HR Committee. Fulton
maintains a Human Resources Committee (defined above as the HR Committee), and
all members of the HR Committee meet the independence requirements of the NASDAQ
listing standards for membership on compensation committees. More information
regarding the HR Committee can be found in the Compensation Discussion and
Analysis section of this Proxy Statement beginning on page 23. There are no
interlocking relationships, as defined in applicable SEC regulations, involving
members of the HR Committee. Certain directors may have indirect relationships
described in Related Person Transactions beginning on page 19. The HR
Committee is responsible for approving or recommending to the Board of Directors
the compensation and equity awards for the Executives, administration of
Fultons ESPP and the 401(k) Plan, approving employment agreements for the
Executives and other officers of Fulton and fulfilling other broad-based human
resources duties. The HR Committee met a total of nine (9) times in 2014. The HR
Committee is governed by a formal charter, which was last amended in September
2014, and which is available on Fultons website at
www.fult.com.
Other Board
Committees
Audit Committee. All
members of the Audit Committee meet the independence requirements of the NASDAQ
listing standards, and the rules and regulations of the SEC for membership on
audit committees. Each of Directors Bond and Hodges have been determined to
qualify, been designated by the Board of Directors, and agreed to serve, as an
Audit Committee financial expert as defined by SEC regulations. Director
Hodges has served as a financial expert of Fulton since 2008, and Director
Bond was designated as an additional financial expert by Fultons Board of
Directors in 2013. The Audit Committee met twelve (12) times during 2014. The
Audit Committee is governed by a formal charter, which was last amended in
September 2014, and which is available on Fultons website at www.fult.com. The
Audit Committees pre-approval policy and procedure for audit and non-audit
services is set forth in its charter. The functions
16
Table of Contents
of the Audit Committee
include: sole authority to appoint, evaluate, retain, or terminate the
independent auditor; direct responsibility for the compensation and oversight of
the work of the independent auditor; oversight of the overall relationship with
the independent auditor; meeting with the independent auditor to review the
scope of audit services; reviewing and discussing with management and the
independent auditor annual and quarterly financial statements and related
disclosures; overseeing the internal audit function, including hiring and
replacing the chief audit executive; reviewing and approving related person
transactions; establishing procedures and handling complaints concerning
accounting, internal accounting controls, or auditing matters; and those risk
management matters outlined in the Audit Committee Charter. In addition, with
respect to any bank subsidiary of Fulton that has not established its own
independent audit committee, it is intended that Fultons Audit Committee, in
carrying out its responsibilities, will also satisfy the obligations imposed on
such bank subsidiary of Fulton relating to the establishment and duties of an
independent audit committee as set forth in Section 36 of the Federal Deposit
Insurance Act and its implementing regulations.
Nominating and Corporate
Governance Committee. All members of the Nominating and Corporate Governance
Committee meet the independence requirements of the NASDAQ listing standards.
The Nominating and Corporate Governance Committee met eight (8) times during
2014. The Nominating and Corporate Governance Committee is responsible for,
among other things, recommending to the Board of Directors nominees for election
to the Board of Directors and assisting the Board of Directors with corporate
governance matters including, the review and approval of all changes to the Code
of Conduct, Governance Guidelines and the responsibility for guidelines and
procedures to be used by directors in completing Board of Directors evaluations
used in monitoring and evaluating the performance of the Board of Directors and
committees. The Nominating and Corporate Governance Committee also has the
primary responsibility for determining annually the compliance of Fultons
directors and Executives with Fultons stock ownership guidelines. The
Nominating and Corporate Governance Committee is governed by a formal charter,
which was last amended in September 2014, and is available on Fultons website
at www.fult.com.
Executive Committee.
The Executive Committee met one (1) time during 2014. Except for the powers
expressly excluded in Section 5 of Article III of the Bylaws, the Executive
Committee exercises the powers of the Board of Directors between board
meetings.
Risk Committee. Fultons
Risk Committee met nine (9) times during 2014. The Risk Committee is responsible
for providing oversight of the risk management function of Fulton, including
assisting the Board of Directors with its oversight of Fultons policies,
procedures and practices relating to assessment and management of Fultons
enterprise-wide risks, including those risks identified in Fultons Enterprise
Risk Management Policy, currently, credit risk, market risk, liquidity risk,
operational risk, legal risk, compliance and regulatory risk, reputation risk
and strategic risk. The Risk Committee is governed by a formal charter, which
was last amended in September 2014, and is available on Fultons website at
www.fult.com.
Compliance
Committee. The Special Joint Board Compliance Committee (defined above as
the Compliance Committee) was established to assist the Board of Directors and
the Boards of Fultons subsidiary banks, in fulfilling their respective
oversight responsibilities regarding (i) the development and maintenance of an
enhanced compliance risk management function at Fulton to serve Fulton and its
subsidiary banks, and (ii) ensuring the satisfactory delivery of
compliance-related services to Fulton and its subsidiary banks. The formal
charter governing the Compliance Committee was amended following the issuance by
federal banking regulators of the first enforcement orders relating to Bank
Secrecy Act and anti-money laundering (BSA/AML) compliance matters at Fultons
subsidiary banks to provide that the Compliance Committee would also serve as a
vehicle through which the Board of Directors and the Boards of its subsidiary
banks would oversee and ensure compliance with the enforcement orders. See Item
3. Legal Proceedings in Fultons Annual Report on Form 10-K, for the year ended
December 31, 2014, for additional information regarding the enforcement orders
issued to Fulton and its subsidiary banks. The Compliance Committee is comprised
of four Fulton directors and directors from each of Fultons subsidiary banks,
and it met twelve (12) times in 2014.
Boards Role in Risk
Oversight
Fultons Risk Committee is
primarily responsible for overseeing the management of Fultons enterprise-wide
risks and the Board of Directors continues to regularly review information
regarding Fultons exposure to credit risk, market risk, liquidity risk,
operational risk, compliance and regulatory risk, legal risk, reputation risk,
and strategic risk, as well as Fultons strategies to monitor, control and
mitigate its exposure to these risks. In addition, the HR Committee is
responsible for overseeing the management of risks relating to all of Fultons
compensation plans. The Audit Committee
17
Table of Contents
shares with the Risk
Committee a general oversight role in Fultons risk management process in the
context of the Audit Committees responsibility for financial reporting and its
evaluation and assessment of the adequacy of Fultons internal control
structure. The Nominating and Corporate Governance Committee manages risks
associated with the independence of the Board of Directors, potential conflicts
of interest and governance matters. The Compliance Committee is responsible for
overseeing management of certain risks related to compliance and regulatory
matters. While each of Fultons committees are responsible for overseeing the
management of certain risks, Fultons Risk Committee is primarily responsible
for overseeing the management of such risks for Fulton, and the entire Board of
Directors is regularly informed through committee reports and review of
committee meeting minutes about such risks.
The Board of Directors also
utilizes Fultons Chief Risk Officer and other members of Fultons Enterprise
Risk Management Committee, which is Fultons officer-level risk management
committee, to oversee and manage existing and emerging risks and serve as a
review forum prior to escalation to the Risk Committee and the Board of
Directors. This officer-level risk management committee provides additional
oversight for Fultons risk management and compliance programs. In addition, in
December 2014, Fultons Board of Directors adopted a revised formal Risk
Appetite Statement which sets forth both the qualitative and quantitative
parameters within which Fulton executes its business strategies. This document
also outlines the general framework within which Fulton manages risk in the
context of Fultons core values and its management philosophy, which seeks to
balance the risk it assumes in serving its customers and communities with the
return it earns for its shareholders. Fultons framework for risk management
consists of three lines of defense: 1) business units, bank operations, shared
services and corporate staff office functions (collectively known as front line
units) have primary responsibility for risk management and compliance, and they
each drive deployment, process management, controls, policies and procedures,
training and communication; 2) independent risk management units (consisting of
risk management, compliance, loan review, vendor risk management, fraud risk
management, Bank Secrecy Act compliance and other risk management activities)
have oversight responsibility for risk management and compliance, and these
units educate, advise and monitor business unit risk and compliance activities;
and 3) Fultons Internal Audit function periodically independently validates the
effectiveness of risk management activities and operational controls, and
reports results to management and the Board of Directors.
Fultons risk appetite is
centered on Fultons objective to consistently increase and enhance shareholder
value. Fultons Board of Directors, and the committees that monitor risk, assess
and oversee the management of risk, including the establishment, tracking and
reporting of key risk indicators within the primary risk categories of credit,
market, liquidity, operational, legal, compliance and regulatory, reputation and
strategic risk. Fultons key risk indicator thresholds reflect Fultons
objective to consistently increase and enhance shareholder value and maintain
capital at a level and quality that supports Fultons long-term strategic
objectives and complies with regulatory guidelines. Finally, Fulton engages in
ongoing risk assessment, capital management and stress testing to ensure that
Fulton has adequate capital to absorb potential losses under various stress
scenarios.
Lead Director and
Fultons Leadership Structure
Director Hodges currently
serves as Fultons Lead Director and is the independent Chair of the Executive
Committee. He is also Vice Chair of the Audit Committee and a member of the
Human Resources Committee. The Board of Directors has made a determination that
a structure which includes a Lead Director and a combined Chairman/CEO is
appropriate for Fulton. Pursuant to the Governance Guidelines, the Board of
Directors designates for a term of at least one (1) year, and publicly discloses
in Fultons Proxy Statement, the independent non-employee director who will lead
the non-employee directors executive sessions and preside at all meetings of
the Board of Directors at which the Chairman is not present. The Governance
Guidelines also require that the Lead Director shall, as appropriate: serve as a
liaison between the Chairman and the independent directors; approve information
sent to the Board of Directors; approve meeting schedules to assure that there
is sufficient time for discussion of all agenda items; and have the authority to
call meetings of the independent directors.
Similar to many public
companies, the leadership structure of Fulton combines the positions of Chairman
and CEO. This structure permits the CEO to manage Fultons daily operations and
provides a single voice for Fulton when needed. Fulton believes that separation
of these roles is not necessary because the Lead Director acts to counterbalance
the combined Chairman and CEO positions. In addition, approximately 82% of
Fultons directors (9 out of 11) are independent under applicable NASDAQ
standards, which provides an appropriate level of independent oversight at Board
of Directors meetings and executive sessions. Finally, Fultons HR Committee,
Nominating and Corporate Governance Committee and Audit Committee are all
currently, and will continue to be, comprised solely of independent
directors.
18
Table of Contents
Executive
Sessions
The independent directors
of the Fulton Board of Directors met six (6) times in executive session at which
only independent directors were present in 2014. The Chair of the Executive
Committee, George W. Hodges, who also served as the Lead Director, conducted
these executive sessions of the independent directors.
Annual Meeting
Attendance
Pursuant to Fultons
Governance Guidelines, Fulton expects directors to attend the Annual Meeting in
person unless their absence is excused. All members of the Board of Directors,
except for one (1) member, whose absence was excused by the Chairman, attended
the 2014 Annual Meeting.
Director Education and
Board of Directors Development
Fulton encourages its
directors to attend outside seminars and educational programs as part of its
corporate governance and general board education process. These educational
opportunities are in addition to the education and development presentations
that are provided during Fulton Board of Directors meetings and seminars. For
example, third parties are periodically asked to provide the Board of Directors
with presentations on governance, the economy, regulatory, compliance and a
variety of other topics of interest. In addition, Directors Dally, Hodges and
Waters completed the requirements for the NACD Board Leadership Fellow Program
during 2014. In order to become NACD Fellows, individuals must demonstrate their
knowledge of the leading trends and practices that define exemplary corporate
governance, and commit to developing professional insights through a
sophisticated course of ongoing study. In addition, to further enhance director
education, a needs analysis was conducted by Fultons Chief Learning Officer in
December 2014 in the form of one-on-one interviews with each Fulton director to
solicit individual input and feedback. With the oversight of the Nominating and
Corporate Governance Committee, Fulton will continue to promote board
development and ensure directors are kept current in a selection of topics via
onsite programs sponsored by Fulton, and external and remote learning
opportunies.
Legal
Proceedings
There are no material legal
proceedings to which any director, officer, nominee, affiliate or principal
shareholder, or any associate thereof, is a party adverse to Fulton, or in which
any such person has a material interest adverse to Fulton.
Related Person
Transactions
Financial Products
and Services: Some of the
current directors and Executives of Fulton, their family members and the
companies with which they are associated, were customers of, and/or had banking
transactions with, Fultons subsidiaries during 2014. These transactions
included deposit accounts, trust relationships, loans and other financial
products and services provided in the ordinary course of business by different
Fulton subsidiaries. All loans and commitments to lend made to such persons and
to the companies with which they are associated were made in the ordinary course
of business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable loans with persons
not related to the lender, and did not involve more than a normal risk of
collectability or present other unfavorable features. It is anticipated that
similar transactions will be entered into in the future. By using Fultons
products and services, directors and Executives have the opportunity to become
familiar with the wide array of products and services offered by Fultons
subsidiaries to customers.
Other
Transactions: Applicable SEC
regulations require Fulton to disclose transactions with certain related persons
where the annual amount involved exceeds $120,000. However, a person who has a
position or relationship with a firm, corporation, or other entity that engages
in a transaction with Fulton is not deemed to have a material interest in a
transaction where the interest arises only from such persons position as a
director of the firm, corporation or other entity and/or arises only from the
ownership by such person in the firm, corporation or other entity if that
ownership is under 10%, excluding partnerships. Amounts paid to entities in
which a related person does not have a material interest or were obtained by a
low bid pursuant to a formal request for proposal to provide services are not
required to be disclosed. During 2014, Fulton did not have any related person
transactions in excess of $120,000 requiring specific disclosure.
19
Table of Contents
Fulton considered the
related person transactions with the members of the Board of Directors and
senior officers that do not require specific disclosure, when it made the
determinations that nine (9) of Fultons eleven (11) director nominees, or
approximately 82% of its director nominees who are standing for election at the
2015 Annual Meeting, are independent in accordance with the NASDAQ listing
standards. See Information about Nominees, Directors and Independence
Standards on page 8 for more information.
Family
Relationships: SEC
regulations generally require disclosure of any employment relationship or
transaction with a related person where the amount involved exceeds $120,000. In
fiscal year 2014, there were no family relationships among any of the members of
the Board of Directors and senior management of Fulton, except for Messrs.
Wenger and Roda, who are related by marriage and are brothers-in-law. Further,
Mr. Brad Roda, the brother-in-law of Mr. Wenger and brother of Mr. Roda, was
also employed by Fulton. In 2014, Mr. Brad Roda received annual compensation
consisting of base salary, equity awards and cash bonus totaling approximately
$124,000, plus other benefits on the same basis as other similarly situated
employees. Mr. Brad Roda became SVP/Division Sales Manager-Merchant Card
Services of Fulton Bank in 2010, and has been employed by Fulton in various
positions since 1981. In addition, as of December 31, 2014, other family
relationships existed among senior management and some of the approximately
3,560 full-time equivalent employees of Fulton and its subsidiaries. These
Fulton employees participate in compensation, benefit and incentive plans on the
same basis as other similarly situated employees.
Related Person
Transaction Policy and Procedures: Fulton does not have a separate policy specific to related person
transactions. Under the Code of Conduct, however, employees and directors are
expected to recognize and avoid those situations where personal interest or
relationships might interfere, or appear to interfere, with their
responsibilities to Fulton. The Code of Conduct also requires thoughtful
attention to the problem of conflicts and the exercise of the highest degree of
good judgment. Under the Code of Conduct, directors must provide prompt notice
to Fulton of all new or changed business activities, related person
relationships and board directorships as they arise.
In addition, Fulton and its
subsidiary banks are subject to Regulation O, which governs loans by federally
regulated banks to certain insiders, including an executive officer, director or
10% controlling shareholder of the applicable bank or bank holding company, or
an entity controlled by such executive officer, director or controlling
shareholder (an Insider). Each Fulton subsidiary bank is required to follow a
Regulation O policy that prohibits the affiliate bank from making loans to an
Insider unless the loan (i) is made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
loans with persons not related to the lender; and (ii) does not involve more
than the normal risk of repayment or present other unfavorable features. Fulton
and its subsidiary banks are examined periodically by bank regulators and
Fultons Internal Audit Department for compliance with Regulation O to ensure
that internal controls exist within Fulton and its subsidiary banks to monitor
Fultons compliance with Regulation O.
In accordance with Fultons
Audit Committee Charter and NASDAQ listing standards, the Audit Committee is
charged with the responsibility to at least annually, conduct an appropriate
review and provide oversight of all transactions with related persons as defined
in applicable SEC regulations. This responsibility includes reviewing an annual
report regarding the related person transactions, if any, with each member of
Fultons Board of Directors, Executives and other senior officers during the
prior year. At a meeting in February 2015, the Audit Committee reviewed a report
of all existing related person transactions involving Fultons directors and the
Executives. The Audit Committee concluded that the loans and other banking
services provided to the directors and the Executives of Fulton and their
related interests were provided in the ordinary course of business and on
substantially the same terms as those prevailing at the time for comparable
transactions with others. The Audit Committee also reviewed all other related
person transactions for any potential conflict of interest situations with the
directors and the Executives of Fulton, and concluded that there were no
conflicts present, and ratified all the transactions reviewed.
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the
Exchange Act, requires Fultons Executives, its principal accounting officer,
its directors, and any persons owning 10% or more of Fultons common stock, to
file with the SEC, in their personal capacities, initial statements of
beneficial ownership on Form 3, statements of changes in beneficial ownership on
Form 4 and annual statements of beneficial ownership on Form 5. Persons filing
such beneficial ownership statements are required by SEC regulation to furnish
Fulton with copies of all such statements filed with the SEC. The rules of the
SEC regarding the
20
Table of Contents
filing of such statements
require that late filings of such statements be disclosed in Fultons Proxy
Statement. Based solely on Fultons review of Forms 3 and 4 and amendments
thereto furnished to Fulton during the 2014 fiscal year, including Forms 5 and
amendments thereto furnished to Fulton, and on written representations from
Fultons directors, Executives and other officers, Fulton believes that all such
statements were timely filed in 2014.
Board of Directors and
Committee Evaluations
Pursuant to its charter,
the Nominating and Corporate Governance Committee reviews and recommends to the
Board of Directors guidelines and procedures to be used by directors in
monitoring and evaluating the performance of the Board of Directors and its
committees. The Board of Directors and its committees, except the Executive
Committee, conduct an annual self-evaluation of the performance of the Board of
Directors and committees. Anonymous board and committee evaluation
questionnaires were last completed in the fourth quarter of 2014. The results
were compiled by Fultons Legal Department and presented to the Nominating and
Corporate Governance Committee in December 2014, and the members of each
committee also received a summary report of the results of that committees
questionnaire. The Nominating and Corporate Governance Committee reported the
results to the Board of Directors at its December 2014 regular meeting, and the
Board of Directors and each of the committees discussed the summary of their
respective annual evaluations.
Compensation of
Directors
In 2013, the Board of
Directors last reviewed and significantly updated the overall cash and equity
compensation paid to the members of the Board of Directors. In determining to
update the overall cash and equity compensation paid to the directors, the Board
of Directors considered, among other factors, a survey of peer director
compensation prepared by Fultons compensation consultant. Annually, the Board
of Directors ratifies director compensation as part of its organizational
meeting, and this ratification of compensation was done in June 2014. The fees
paid by Fulton to directors in 2014 were unchanged. Each member of the Board of
Directors was paid a retainer fee and meeting fees for his or her services as a
director, except that no fee is paid to any director who is also a salaried
officer of Fulton. Thus, Mr. Wenger did not receive any director fees or
additional compensation in 2014 for serving as a member of the Board of
Directors. Non-employee directors receive a quarterly retainer of $8,750 in
cash. Non-employee directors are also paid a cash fee of $2,000 for each Board
of Directors meeting attended and $1,000 in cash for each committee meeting
attended, except the $1,000 meeting fee is not paid when the committee meeting
for a standing committee is held in conjunction with a regular Board of
Directors meeting attended by the director. However, the members of the
Compliance Committee are paid $1,000 in cash per meeting attended regardless of
when it is held. The Board of Directors has also approved, in certain
circumstances, the payment of a $1,000 per meeting cash fee for attending
educational and other meetings. Directors are paid a cash fee of $2,000 for any
special Board of Directors meeting attended. The Lead Director also receives an
additional quarterly cash retainer of $7,500 and each committee chairperson
receives an additional cash retainer of $3,125 per quarter. If a director serves
on the board of a Fulton subsidiary bank, he or she is paid separately for that
service and amounts are included in the footnotes in the table below. In
addition, directors are also paid $1,000 in cash for attendance at
Fulton-sponsored educational seminars and other meetings attended, but these
seminars and meetings are not included for purposes of calculating director
attendance rates since they are a voluntary activity.
Pursuant to the 2011
Directors Equity Participation Plan (the 2011 Director Plan), each
non-employee director received two awards of shares of Fultons common stock,
without restriction or vesting requirements, having a market value of $17,500,
at the time of grant on June 1, 2014 and November 1, 2014, with each award
rounded up to the next whole share. A similar $17,500 stock award is expected to
be made shortly after Fultons 2015 Annual Meeting to all non-employee directors
that are elected at the Annual Meeting, and an additional award is anticipated
to be made on or about November 1, 2015.
Fulton also reimburses
directors for business and other director-related expenses incurred in the
performance of their service as directors of Fulton and provides non-employee
directors with a $50,000 term life insurance policy while they are directors.
Certain directors have elected to participate in the Fulton Deferred
Compensation Plan, under which a director may elect not to receive his or her
cash directors fees when earned, but instead, to receive them, together with
any returns earned on investments selected by the participating director, in a
lump sum or in installments over a period of up to twenty (20) years following
retirement. The only current non-employee Fulton directors who have previously
established accounts to defer fees or had balances from prior years are
Directors Bond, Devine, Smith and Waters.
21
Table of Contents
Certain Fulton directors
also serve on the boards of certain Fulton subsidiary banks, and these directors
are compensated with a retainer, meeting fees, or both for their service on each
of those individual boards. The following table summarizes all of the
compensation paid to and received by each non-employee Fulton director who
served during 2014.
DIRECTOR COMPENSATION
TABLE
Name
1 |
Fees |
Stock |
Option |
Non-Equity |
Change in |
All
Other |
Total |
|
Earned |
Awards 2 |
Awards |
Incentive |
Pension |
Compensation 3
4 |
|
|
|
|
or Paid in |
|
|
|
|
Plan |
Value and |
|
|
|
|
|
|
Cash |
|
|
|
|
Compensation |
Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings |
|
|
|
|
|
|
($) |
|
($) |
|
($) |
($) |
($) |
($) |
|
|
($) |
|
Joe
N. Ballard |
20,667 |
|
0 |
|
0 |
0 |
0 |
0 |
|
|
20,667 |
|
John
M. Bond, Jr. |
84,000 |
|
35,000 |
|
0 5 |
0 |
0 |
0 |
|
|
119,000 |
|
Lisa
Crutchfield |
30,417 |
|
17,500 |
|
0 |
0 |
0 |
0 |
|
|
47,917 |
|
Craig A. Dally |
71,500 |
|
35,000 |
|
0 |
0 |
0 |
0 |
|
|
106,500 |
|
Denise L. Devine |
62,000 |
|
35,000 |
|
0 |
0 |
0 |
0 |
|
|
97,000 |
|
Patrick J. Freer |
58,000 |
|
35,000 |
|
0 |
0 |
0 |
0 |
|
|
93,000 |
|
George W. Hodges |
93,000 |
|
35,000 |
|
0 |
0 |
0 |
0 |
|
|
128,000 |
|
Albert Morison III |
83,000 |
|
35,000 |
|
0 |
0 |
0 |
0 |
|
|
118,000 |
|
R.
Scott Smith, Jr. |
58,000 |
|
35,000 |
|
0 |
0 |
0 |
16,866 |
6 |
|
109,866 |
|
Gary
A. Stewart |
70,500 |
|
35,000 |
|
0 |
0 |
0 |
0 |
|
|
105,500 |
|
Ernest J. Waters |
85,042 |
|
35,000 |
|
0 |
0 |
0 |
0 |
|
|
120,042 |
|
____________________
1 Directors
listed represent all the non-employee Directors of Fulton serving during 2014.
Director Ballard retired as a director of Fulton effective with the 2014 Annual
Meeting.
2 Fultons
non-employee Directors were granted Fulton common stock as part of their 2014
compensation pursuant to the 2011 Director Plan. A $17,500.00 equity award in
1,459 shares of common stock was granted on June 1, 2014 and a second $17,500.00
equity award in 1,479 shares of common stock was granted on November 1, 2014.
The awards were granted without restriction or vesting requirements, were
rounded up to the next whole share of Fulton common stock, and the amount shown
does not reflect the value of any dividends on these shares during 2014.
Director Ballard retired as a director of Fulton and was not eligible to receive
any equity awards in 2014.
3 Unless
otherwise noted, the amount excludes perquisites and other personal benefits
with an aggregate value of less than $10,000. Fultons methodology to calculate
the aggregate incremental cost of perquisites and other personal benefits was to
use the amount disbursed for the item. Where a benefit involved assets owned by
Fulton, an estimate of the incremental cost was used.
4 In addition to
the fees listed in the table, Fulton also paid $48 per year for an individual
$50,000 term life insurance policy for each of the Directors during 2014. Some
of Fultons Directors also serve on boards of Fultons subsidiary banks and
received director fees for bank board service. During 2014, Director Ballard
received $3,800 in fees from The Columbia Bank, Director Bond received $16,500
in fees from The Columbia Bank, Director Dally received $17,800 in fees from
Lafayette Ambassador Bank, Director Hodges received $26,000 in fees from Fulton
Bank, N.A., and Director Waters received $26,750 in fees from Fulton Bank,
N.A.
5 Fulton
Directors did not receive options as part of their 2014 compensation; however,
as of December 31, 2014, Mr. Bond held 28,684 exercisable options that
previously were awarded to him by Columbia Bancorp, which was acquired by Fulton
in February 2006.
6 This includes
$13,626 for club membership fees and other perquisites received by Director
Smith during 2014.
22
Table of Contents
INFORMATION CONCERNING
COMPENSATION
Compensation Discussion
and Analysis
Executive
Summary
Fulton believes that the
compensation of its Executives should reflect Fultons overall performance and
the contribution of its Executives to that performance. Cash awards (Annual
Cash Incentive Awards ) and long term equity (LTI) awards earned by the
Executives under Fultons Amended and Restated Equity and Cash Incentive
Compensation Plan (the 2013 Plan) are determined based on performance goals
and the HR Committees subjective assessment of Fultons and the Executives
performance in the preceding year.
Fultons Annual Report on
Form 10-K, for the year ended December 31, 2014, which is included with this
Proxy Statement, includes highlights of Fultons 2014 performance, including
diluted earnings per share growth, average loan and core deposit growth,
improvement in asset quality, a decrease in non-interest expenses and continued
strong capital levels, which were achieved despite revenue growth challenges
resulting primarily from the persistent low interest rate environment and
competition. Some of those highlights are:
● |
Net Income Per Share Growth Diluted net
income per share increased $0.01, or 1.2%, to $0.84 per diluted share,
compared to $0.83 in 2013. |
● |
Core Deposit Growth Average demand and
savings deposit accounts increased $530.7 million, or 5.7%, in comparison
to 2013. |
● |
Loan Growth Average loans increased $306.7
million, or 2.4%, in comparison to 2013, with notable increases in
commercial mortgages, residential mortgages and construction loans. |
● |
Asset Quality Overall asset
quality improved in 2014, with decreases in non-performing loans, net
charge-offs and overall delinquency levels resulting in a 69.1% decrease
in the provision for credit losses to $12.5 million. |
During 2014, the HR
Committee made the following awards and decisions impacting compensation for the
Executives:
Salaries: In 2014,
Messrs. Wenger, Barrett, Shreiner, Roda and Rohrbaugh each received base salary
increases ranging from 1.375% to 2.75%, based on an assessment of their
individual performance, and the results of a review by the independent
compensation consultant retained by the HR Committee, McLagan, an Aon Hewitt
Company, of base salaries of comparable executives employed by institutions
within Fultons peer group. These 2014 salary increases were effective April 1,
2014.
Annual Cash Incentive
Awards: As in previous years,
the actual payout levels of the Annual Cash Incentive Awards to the CEO and the
other Executives were determined based on an assessment of Fultons and each
Executives performance measured through the use of a scorecard for each of
the Executives, with the scorecard reflecting a series of qualitative and
quantitative criteria established annually for each of the Executives and
designed to measure performance in achieving certain of Fultons financial
targets relative to Fultons peers, risk management goals, and business
objectives specific to each of the Executives, and HR Committee discretion to
reduce the amount of any Annual Cash Incentive Award determined based on
scorecard performance.
Annually, the HR Committee
establishes a target amount for the Annual Cash Incentive Award expressed as a
percentage of base salary for Mr. Wenger and the other Executives. In the table
below, the second column reflects the percentage of the potential target Annual
Cash Incentive Award for 2014 performance for Mr. Wenger and the other
Executives based solely on their performance measured through their respective
scorecards, and the third column reflects the actual Annual Cash Incentive
Awards paid to Mr. Wenger and the other Executives based on scorecard
performance and the exercise, if any, of the HR committees discretion to reduce
the amount of any Annual Cash Incentive Award determined based on scorecard
performance. With respect to the Annual Cash Incentive Awards paid to the
Executives for 2014 performance, the HR Committee did not exercise its
discretion to reduce the amounts of the Annual Cash Incentive Awards.
|
|
Annual Cash |
|
% of Target - Determined
under |
Incentive Award Paid for |
|
2014 Scorecard |
2014 Performance |
Wenger |
39% |
$316,091 |
Other Executives |
34%
to 45% |
$68,473 to
$100,307 |
23
Table of Contents
2014 LTI Performance
Awards: In 2014, Fulton
utilized a new long-term incentive plan design under the 2013 Plan where
performance stock units (Performance Shares) were granted to the Executives on
a formulaic basis, Performance Shares are earned, and subsequently vest based on
Fultons future performance and satisfaction of the Continuous Service
requirement defined in the 2013 Plan.
● |
Grant Value: Performance Shares were granted
initially at the target number of units, calculated based on a percentage
of each Executives base salary and the price of Fulton stock on the April
1, 2014 grant date. For 2014, the target number of Performance Shares was
determined using 125% of base salary for the CEO and 75% of base salary
for the other Executives. |
● |
Performance Measurement: The Performance Shares
are comprised of three component parts: (i) 37.5% of the number of
Performance Shares are contingent on Fultons future 3-year total
shareholder return (TSR) as compared to peers; (ii) 37.5% of the number
of Performance Shares is contingent on Fulton meeting an absolute 2014
return on assets (ROA) goal; and (iii) 25% of the number of Performance
Shares is subject to time-vesting. |
● |
Results: Fultons 2014 ROA of 0.93% was slightly
below the target goal of 0.94% and resulted in an approximate 10%
reduction in the number of units earned under this portion of the plan.
The 3-year TSR performance period is not yet complete and the number of
earned units has not been determined. |
● |
Vesting: Units vest three years after the grant
date. For the ROA and time-vested portions, vesting is also subject to
Fulton achieving a threshold level of net income for the year ending
December 31, 2016 of not less than the aggregate dollar amount of all
dividends declared and paid to shareholders during the last four full
quarters prior to date of grant (the Profit Trigger).
|
Shareholder
Say-on-Pay Proposal and Frequency of Future Proposals
As required by SEC rules,
Fulton submitted a non-binding Say-on-Pay Proposal to its shareholders at
Fultons 2014 Annual Meeting, and the shareholders approved Fultons 2014
Say-on-Pay Proposal. This years non-binding 2015 Say-on-Pay Proposal is
described on page 52.
Fulton viewed the results
of the 2014 Say-on-Pay Proposal as supporting its compensation policies and
decisions for the Executives, and the Board and its HR Committee will consider
this years non-binding proposal as a barometer of shareholder support for the
current compensation programs for the Executives. Approximately 96% of the
shareholders who cast a vote in 2014 voted in favor of, and approved, Fultons
2014 Say-on-Pay proposal. In particular, the HR Committee viewed the number of
votes cast in favor of Fultons 2014 Say-on-Pay proposal to be a positive
endorsement of the current pay programs and practices. Fulton will continue to
monitor the level of support for each annual Say-on-Pay Proposal. However, the
outcome of any past or future non-binding shareholder Say-on-Pay vote will not
be the only factor that the HR Committee and Board of Directors will consider in
making future decisions related to executive compensation. Since first
implemented and presented to shareholders in 2011, Fultons shareholders have
consistently approved its Say-on-Pay Proposals and the following are the
approximate results for each year:
|
% of Shares Voted FOR
Fultons Say-on-Pay Proposal |
|
Of total shares voted |
Of total shares voted
FOR, |
Year |
FOR and
AGAINST |
AGAINST and
ABSTAIN |
2014 |
96% |
93% |
2013 |
94% |
91% |
2012 |
93% |
91% |
2011 |
91% |
90% |
The 2011 annual meeting of
shareholders was the last time that Fulton submitted to shareholders a
non-binding proposal asking shareholders whether Fulton should submit its
Say-on-Pay Proposal to shareholders every one, two or three years. This proposal
is commonly known as a Say-When-on-Pay Proposal. The shareholders approved
Fultons 2011 recommendation that the Say-on-Pay Proposal should be submitted to
shareholders on an annual basis. Although Fulton believes that having a
Say-on-Pay vote each year continues to be appropriate for 2015, Fultons HR
Committee and
24
Table of Contents
Board of Directors will
continue to evaluate the frequency of the non-binding Say-on-Pay Proposal and
might recommend that shareholders approve a different frequency in the future.
Under current SEC rules, publicly traded companies are required, no less
frequently than once every six years, to provide for a separate shareholder
Say-When-on-Pay advisory vote in Proxy Statements for annual meetings to
determine whether the Say-on-Pay vote will occur every one, two or three years.
Fulton anticipates submitting a new Say-When-on-Pay Proposal to shareholders
on or before Fultons Annual Meeting of Shareholders in 2017.
Pay for
Performance
Fulton operates in a highly
complex business environment and competes with many well-established financial
services businesses. The Annual Cash Incentive Award component of Fultons
Executive compensation program involves awards that are payable if
pre-established corporate and individual performance objectives are achieved.
The HR Committee believes that the Annual Cash Incentive Awards and Performance
Shares under the 2013 Plan further Fultons business plan and seeks to ensure
that the interests of the Executives, both short-term and long-term, are aligned
with the interests of Fultons shareholders. The performance-based compensation
that Fulton awards helps to align these interests by offering each Executive the
opportunity to earn an Annual Cash Incentive Award upon achieving both an
established annual corporate performance goal and certain specific individual
performance goals, and the LTI awards under the 2013 Plan align these interests
by offering the Executive the opportunity to earn longer-term
compensation.
The core of Fultons
compensation philosophy is to link pay to performance on both a short-term and
long-term basis. Annual Cash Incentive Awards are at-risk performance-based
awards because if the ROE threshold target is not met or scorecard performance
factors are not achieved, then the amount of the Annual Cash Incentive Award may
be reduced or the Executive may not receive the award. The 2014 Performance
Shares are at-risk because, in addition to the amount of annual awards being
linked to Fultons performance, these awards are subject to vesting and possible
forfeiture, maintaining alignment with shareholders regardless of stock price
movement, and Performance Shares only increase in value if Fultons share price
increases over the term of the award. With these compensation elements, Fulton
seeks to reward the Executives for their contributions to Fultons financial and
non-financial achievements. Comparing (i) salary paid in 2014, to (ii) the
Annual Cash Incentive Awards earned for 2014 performance and Performance Shares
granted in 2014, as outlined below, 59% of the Mr. Wengers total compensation
was at-risk, as described herein. The 2014 percent of compensation at-risk
for Messrs. Barrett, Shreiner, Roda and Rohrbaugh was 47%, 47%, 45%, and 46%,
respectively. The following table and pie charts show the mix of base salary,
Annual Cash Incentive Awards paid and Performance Shares granted to the
Executives in 2014, as reported in the Summary Compensation Table on page
41.
2014 Compensation Mix
Chart
Salary, Annual
Cash Incentive Award and Performance Shares as a % of Total
Compensation
25
Table of Contents
Executive |
Base Salary Paid |
Annual Cash Incentive |
Grant Date Fair Value |
Total Executive |
|
in 2014 |
Awards Paid for 2014 |
of Performance
Shares |
Compensation for
2014 |
|
|
|
Awarded in 2014 1 |
|
Wenger |
$953,518 |
316,091 |
$1,048,711 |
$2,318,320 |
Barrett |
$445,810 |
100,307 |
$297,131 |
$843,248 |
Shreiner |
$432,192 |
90,760 |
$287,338 |
$810,290 |
Roda |
$402,782 |
68,473 |
$265,793 |
$737,048 |
Rohrbaugh |
$483,315 |
91,830 |
$318,936 |
$894,081 |
____________________
1 Amount
represents the grant date fair value of Performance Shares. The per-share grant
date fair value for Performance Shares with non-market based performance
conditions is based on the closing price of Fulton common stock on the date the
shares were awarded, or $12.61. The per-share grant date fair value for
Performance Shares with market based conditions is estimated based on the use of
a Monte Carlo valuation methodology, which resulted in a per-share grant date
fair value of $10.33. The weighted average per-share grant date fair value of
all Performance Shares granted was $11.755. For additional information
concerning the valuation of Performance Shares with market based conditions,
including the assumptions made in determining that valuation, see Fultons
Annual Report on Form 10-K for the year ended December 31, 2014, Item 8
Financial Statements and Supplementary Data, Note O Stock-Based Compensation
Plans.
Compensation
Philosophy
Objectives:
Fultons executive compensation philosophy and programs are intended to achieve
three objectives:
Align
interests of the Executives with shareholder interests Fulton believes
that the interests of the Executives should be closely aligned with those of its
shareholders. Fulton attempts to align these interests by evaluating the
Executives performance in relation to key financial measures, which it believes
correlate with consistent long-term shareholder value and increasing
profitability, without compromising Fultons culture and overall risk
profile.
Link pay to performance
Fulton believes in a close link between pay to the Executives and the overall
performance of Fulton on both a short-term and long-term basis. It seeks to
reward the Executives for their contributions to Fultons financial and
non-financial achievements and to differentiate rewards to the Executives based
on their individual contributions.
Attract, motivate and retain
talent Fulton believes its long-term success is closely tied to the
attraction, motivation and retention of highly talented employees and a strong
management team. While a competitive compensation package is essential in
competing for and retaining talented employees in a competitive market, Fulton
also believes that non-monetary factors, such as a desirable work environment
and successful working relationships between employees and managers, are
critical to providing a rewarding employee experience.
To achieve these three
objectives, Fulton provides the following elements of Executive
compensation:
Base Salary Fulton generally
sets Executive base salaries near the market median at comparable peer companies
and to reflect individual job responsibilities, experience and
tenure.
Annual Cash Incentive Awards
Annual Cash Incentive Awards are designed to focus the attention of the
Executives on the achievement of annual business goals. Under Fultons 2013
Plan, awards at the target level of performance are designed to position total
cash compensation near the market median. The 2013 Plan provides the Executives
with the opportunity to earn cash compensation above the median for superior
performance.
Equity Awards Fulton
believes in providing LTI awards in the form of equity in order to focus the
Executives on delivering long-term performance and shareholder value. The LTI
program is also designed to provide the Executives with a long-term
wealth-building opportunity that acts as a balance to short-term incentives,
ensures a focus on the long-term stability of the organization and incorporates
vesting terms that encourage executive retention. Fulton believes in equity
award levels that are fair and market competitive, both in isolation and in the
context of total compensation.
26
Table of Contents
● Benefits Fulton believes in providing benefits
that are competitive in the marketplace and that encourage the Executives to
remain with Fulton. Retirement benefits are designed to provide reasonable
long-term financial security.
● Perquisites Fulton believes in providing the
Executives and other officers with basic perquisites that are necessary for
conducting Fultons business.
HR Committee
Membership and Role
The HR Committee is
currently comprised of five (5) independent directors, all of whom are appointed
annually by Fultons Board of Directors. Each member of the HR Committee
qualifies as an independent director under the NASDAQ listing standards and
meets the additional NASDAQ independence requirements specific to compensation
committee members, and no member of the HR Committee is a party to a related
person transaction in excess of $120,000 as more fully described in Related
Person Transactions on page 19. There are no interlocking relationships, as
defined in the regulations of the SEC, involving members of the HR Committee.
For a further discussion on director independence, see the Information about
Nominees, Directors and Independence Standards section on page 8 of this Proxy
Statement.
Pursuant to its charter,
which is available on Fultons website at www.fult.com, and consistent with
NASDAQ rules, the role of the HR Committee is to assist the Board of Directors
in evaluating and setting salaries, bonuses and other compensation of the
Executives, to administer Fultons equity and other compensation plans and to
take such other actions, within the scope of its charter, as the HR Committee
deems necessary or appropriate. The HR Committee relies upon such performance
data, statistical information and other data regarding executive compensation
programs, including information provided by Fultons Human Resources Department,
Fultons officers and outside advisors, as it deems appropriate. The HR
Committee has unrestricted access to individual members of management and
employees and may ask them to attend any HR Committee meeting or to meet with
any member of the HR Committee. The HR Committee also has the power and
discretion to retain, at Fultons expense, such independent counsel and other
advisors or experts as it deems necessary or appropriate to carry out its
duties.
Fultons executive
compensation process consists of establishing targeted overall compensation for
each Executive and then allocating that targeted total compensation among base
salary, cash incentive compensation and equity awards. Fulton does not have a
policy or an exact formula with regard to the allocation of compensation between
cash and non-cash elements, except that the HR Committee has established a
methodology and an award matrix for cash incentive compensation payments and
equity awards under the 2013 Plan, as described in more detail below. Consistent
with Fultons compensation philosophy, however, the HR Committee determines the
amount of each type of compensation for the Executives by: reviewing publicly
available executive compensation information of twenty-one (21) peer group
companies (as defined and listed below); consulting with outside advisors and
experts; considering the complexity, scope and responsibilities of the
individuals position; consulting with the CEO with respect to the other
Executives; assessing possible demand for the Executives by competitors and
other companies; and evaluating the compensation appropriate to attract
executives to Fultons headquarters in Lancaster, Pennsylvania.
Role of
Management
Management assists the HR
Committee in recommending agenda items for its meetings and by gathering and
producing information for these meetings. As requested by the HR Committee, the
CEO, other Executives and other officers participate in HR Committee meetings to
provide background information, compensation recommendations for other officers,
performance evaluations and other items requested by the HR Committee. As part
of the performance evaluation process, all the Executives are asked to complete
an annual self-assessment of their overall performance. The HR Committee,
without management present, reviews the CEOs self-assessment. The CEO reviews
the self-assessment forms prepared by the other Executives and shares his
comments and recommendations with respect to the performance of the other
Executives with the HR Committee. The Executives are not present for the HR
Committees discussions, deliberations and decisions with respect to their
individual compensation. The HR Committee Charter, last amended in 2014,
provides that the CEO may not be present during HR Committee voting or HR
Committee deliberations regarding the CEOs compensation. The Board of
Directors, in executive session, with only the independent directors present,
makes all final determinations regarding the compensation of the Executives,
after considering recommendations made by the HR Committee.
27
Table of Contents
Compensation Plan
Risk Review
At its February 24, 2015
meeting, the HR Committee conducted its annual compensation plan risk review of
all compensation plans in effect as of December 31, 2014. At this meeting,
Fultons Chief Risk Officer (CRO) discussed his review of Fultons
compensation plans with a focus on three compensation risk management
components: 1) governance and policies; 2) inherent risk in plan design and
mitigating factors; and 3) internal controls and monitoring. The HR Committee
has reviewed and considered all of such plans and practices and does not believe
that Fultons compensation policies and practices create risks that are
reasonably likely to have a material adverse effect on Fulton.
The HR Committee considered
various factors that have the effect of mitigating risk and, with the assistance
of Fultons CRO and Legal and Human Resources staff members, reviewed Fultons
compensation policies and practices for all employees, including the elements of
Fultons executive compensation programs, to determine whether any portion of
such compensation encourages excessive risk taking. To assist in the annual
review, Fulton retained Pearl Meyer & Partners (PM&P) to conduct an
independent third-party risk assessment of the design, operation and oversight
of Fultons primary incentive plans, including all plans in which the Executives
and other employees identified by Fulton as potential material risk takers
within the organization participated. PM&P advised that all reviewed plan
designs and established policies and procedures are aligned with the interagency
Guidance on Sound Incentive Compensation Policies, the overall risk profile of
Fultons incentive compensation arrangements has improved over time, Fulton has
spearheaded meaningful changes in response to PM&P findings and
recommendations from prior reviews, and it did not have any recommended plan
design changes at that time. The HR Committee concluded that risks associated
with Fultons compensation plans are mitigated by a variety of factors,
including:
1) the multiple elements of
Fultons compensation packages, including base salary, payments of annual cash
incentives and equity awards; the fact that equity awards vest over a number of
years and that equity awards are generally intended to motivate employees to
take a long-term view of Fultons business; and the use of clawbacks, caps and
balanced metrics in certain plans;
2) the structure of
Fultons annual cash incentive programs, which are based on (a) a number of
different performance measures and scorecards to avoid employees placing undue
emphasis on any particular performance metric at the expense of other aspects of
Fultons business, and (b) performance targets that do not require undue
risk-taking to achieve a stated metric or performance factor;
3) effective management
processes for developing strategic and annual operating plans, and strong
internal financial controls;
4) the review by Fultons
Internal Audit Department of the controls related to incentive compensation and
certain metrics used to determine executive compensation, such as the Executive
scorecards; and
5) proper governance and
oversight of Fultons programs by the Board of Directors, the HR Committee,
Fultons Enterprise Risk Management Committee, Fultons CRO and Fultons Human
Resources staff.
Use of
Consultants
The HR Committee retained
McLagan as its sole independent compensation consultant for 2014. McLagan has
served as the sole independent compensation consultant for the HR Committee
since June 2010. McLagan was originally was retained by Fulton in 2009 for a
compensation plan risk review project. McLagan performed a variety of
assignments during 2014 at the direction of the HR Committee, including
conducting a compensation market analysis related to Fultons Executives, a
scorecard review, an overall compensation policy review, extensive work related
to the initial awards under the 2013 Plan, and providing general compensation
advice regarding Fultons Executives.
28
Table of Contents
During 2014, McLagan was
instructed by the HR Committee to compare Fultons current compensation
practices and executive compensation payments with those of its peers, evolving
industry best practices and regulatory guidance. Based on that comparison,
McLagan was asked to recommend changes in Fultons executive compensation
practices that were consistent with Fultons executive compensation philosophy
and objectives as described above.
The specific instructions
given to the consultant and fees to be paid were generally outlined in
engagement letters that described the scope and performance of duties under each
project. Fulton does not have a policy that limits the other services that an
executive compensation consultant can perform. McLagan and its affiliates did
not provide additional services to Fulton or its affiliates in 2014 with
associated fees in excess of the $120,000 threshold established under SEC rules
and regulations requiring disclosure in this Proxy Statement.
At its February 24, 2015
meeting, the HR Committee considered the independence of McLagan in light of the
SEC rules and NASDAQ listing standards related to compensation committee
consultants. The HR Committee requested and received a report from McLagan
addressing its independence as a compensation consultant to the HR Committee,
including the following factors: (1) other services provided to Fulton by
McLagan; (2) fees paid by Fulton as a percentage of McLagans total revenue; (3)
policies or procedures maintained by McLagan that are designed to prevent a
conflict of interest; (4) any business or personal relationships between the
individual consultants performing work for the HR Committee and a member of the
HR Committee; (5) any company stock owned by the individual consultants
performing work for the HR Committee; and (6) any business or personal
relationships between Fultons executive officers and the individual consultants
performing work for the HR Committee. The HR Committee discussed these
considerations and concluded that the work performed by McLagan and its
consultants involved in the engagements did not raise any conflict of interest,
and further concluded that McLagan continues to satisfy the applicable rules and
standards related to the independence of compensation committee
consultants.
Use of Peer
Groups
The HR Committee reviewed
and updated Fultons peer group in early 2014. At that time, the HR Committee
asked McLagan to review Fultons then current peer group which was last updated
in 2012 (the 2012 Peer Group), consider new peers and recommend a new peer
group to be used by Fulton for 2014 (the 2014 Peer Group). To establish an
appropriate peer group, similar to the methodology McLagan used in making the
peer group recommendation previously, McLagan initially defined a broad list of
all financial institutions with $10 to $30 billion in assets nationwide and,
from these companies, made recommendations based on a variety of factors,
including geographic focus, business model, asset size, loan portfolio, and
revenue composition to determine the most relevant comparators. As a result of
their 2014 review, McLagan recommended changes in order to move the median asset
size of the peer group to be more in line with Fultons asset size. These
changes were accomplished by removing the two largest peers from the 2012 Peer
Group, which were Peoples United Financial, Inc. and City National Corporation.
McLagan screened a pool of replacements based on similar factors used to select
the 2012 Peer Group. Based on the above factors, National Penn Bancshares Inc.,
PrivateBancorp Inc. and Trustmark Corp. were recommended as additions to the
peer group, such that Fulton would be positioned closer to the median in terms
of asset size (45th percentile), market capitalization (52nd percentile),
revenue (47th percentile) and employee base (61st percentile).
The 2012 Peer Group was
used to help in the review of overall compensation and in setting 2014 base
salaries. The 2014 Peer Group was used for 2015 compensation decisions and
utilized for performance metrics related to the 2014 Performance Shares, the
peer group for Executive scorecard peer metrics and to gauge Fultons overall
financial performance. The HR Committee will continue to evaluate the 2014 Peer
Group to confirm that it continues to be appropriate for Fulton.
29
Table of Contents
The 2014 Peer Group is also
used by Fulton for financial performance comparison purposes. During 2014, this
2014 Peer Group was used as the peer group for the Performance Shares, and for
certain scorecard performance factors under the Annual Cash Incentive Awards, as
discussed below. As of December 31, 2014, the twenty-one (21) members of the
2014 Peer Group and their stock trading symbols and the location of their
principal executive offices were:
2014 Peer Group |
Ticker |
City State |
Associated Banc-Corp |
ASB |
Green Bay WI |
BancorpSouth, Inc. |
BXS |
Tupelo MS |
BOK
Financial Corp. |
BOKF |
Tulsa OK |
Commerce Bancshares, Inc. |
CBSH |
Kansas City MO |
Cullen/Frost Bankers, Inc. |
CFR |
San
Antonio TX |
F.N.B. Corporation |
FNB |
Pittsburgh PA |
FirstMerit Corporation |
FMER |
Akron OH |
Hancock Holding Company |
HBHC |
Gulfport MS |
IBERIABANK Corporation |
IBKC |
Lafayette LA |
International Bancshares Corp. |
IBOC |
Laredo TX |
National Penn Bancshares, Inc. |
NPBC |
Allentown PA |
PrivateBancorp, Inc. |
PVTB |
Chicago IL |
Prosperity Bancshares, Inc. |
PB |
Houston TX |
Susquehanna Bancshares, Inc. |
SUSQ |
Lititz PA |
TCF
Financial Corporation |
TCB |
Wayzata MN |
Trustmark Corporation |
TRMK |
Jackson MS |
UMB
Financial Corporation |
UMBF |
Kansas City MO |
Umpqua Holdings Corporation |
UMPQ |
Portland OR |
Valley National Bancorp |
VLY |
Wayne NJ |
Webster Financial Corporation |
WBS |
Waterbury CT |
Wintrust Financial Corporation |
WTFC |
Rosemont
IL |
Elements of Executive
Compensation
Fultons executive
compensation program currently provides a mix of base salary, cash incentive and
equity-based components, as well as retirement benefits, health plans and other
benefits as follows:
Base
Salary: Consistent with its
compensation philosophy, Fulton generally seeks to set base salary for the
Executives in line with the market median overall. Fulton sets salaries on an
individual-by-individual basis and seeks to provide base salary appropriate for
the persons position, experience, responsibilities and performance.
In making recommendations
to the Board of Directors regarding the appropriate base salaries for 2014, the
HR Committee received a recommendation from McLagan, which considered base
salaries paid by members of the 2012 Peer Group to peer officers who held
similar roles and who were positioned similarly to the Executives in their
respective organizations.
With regard to the base
salary compensation paid to Mr. Wenger, the HR Committee also considered his
scorecard performance that included the attainment of certain corporate goals,
results of his management decisions, the earnings of Fulton during the previous
year and other factors, such as the HR Committees perspective of his overall
performance. With regard to the compensation paid to the other Executives, the
HR Committee also considered information provided by Mr. Wenger for Messrs.
Barrett, Shreiner, Roda and Rohrbaugh, which included an assessment of each
Executives level of individual performance, attainment of performance goals set
forth in individual scorecards, overall contributions to the organization and
salary history. In addition, the HR Committee considered its own perceptions of
the performance of each Executive.
30
Table of Contents
On March 18, 2014, after a
review of the Executives competitive positioning to market using 2012 Peer Group
data and internal equity comparisons presented by McLagan, the HR Committee
recommended, and the Board of Directors approved, base salary adjustments
effective April 1, 2014, as set forth in the table below. All the Executives
received a 2.75% increase in 2014 except for Mr. Barrett, who received an
increase of 1.375% reflecting his tenure in the Chief Financial Officer
position. The base salaries for 2013 and 2014 were:
Executive |
2013 Base Salary |
2014 Base Salary |
Wenger |
$900,000 |
$924,750 |
Barrett |
$425,000 |
$430,844 |
Shreiner |
$411,000 |
$422,303 |
Roda |
$380,175 |
$390,630 |
Rohrbaugh |
$456,188 |
$468,733 |
Annual Cash Incentive
Awards: Fultons Annual Cash
Incentive Awards are designed so that no annual cash incentive is paid unless
Fulton achieves a predetermined performance threshold metric. Since 2011, based
on a recommendation by McLagan, the HR Committee has utilized a threshold
performance target for annual cash incentive awards based on return on equity
(ROE). Unless this ROE target is met, the Annual Cash Incentive Awards will
not be paid. Fultons Executive scorecards rely heavily on Fultons performance
relative to peers in several categories and an absolute predetermined ROE
performance hurdle provides balance in the overall approach to determining
incentives. The HR Committee set the 2014 ROE threshold at 6.19%, which was
equal to 80% of Fultons budgeted ROE for 2014 of 7.74%. The HR Committee
viewed this performance threshold as a reachable goal, but not a level which
guarantees payment of an annual cash incentive, to ensure that the Executives
are paid for performance. For the 2014 Annual Cash Incentive Awards, the HR
Committee added, in addition to ROE, a positive net income trigger for the year
intended to qualify the awards as performance-based compensation under Section
162(m) of the Internal Revenue Code. Although Fulton used a ROE performance
hurdle as a plan threshold for prior annual cash incentive awards, and decided
to do so again for the 2014 Annual Cash Incentive Awards, with the inclusion of
an additional positive net income trigger, a different threshold performance
trigger may be used in future years.
The HR Committee, at its
February 2015 meeting, determined that:
●The 2014 ROE
target of 6.19% had been achieved;
●Actual 2014
ROE was 7.62%, which was slightly below Fultons budgeted ROE of 7.74%;
and
●The 2014
positive net income trigger was met because Fulton had positive net income of
$157.9 million in net income during 2014.
The Annual Cash Incentive
Awards were designed by the HR Committee to be substantially based on formulaic
scorecard results with the HR Committee exercising negative discretion in its
sole judgment, as appropriate. Performance factors in the scorecards that are
more directly aligned with the interests of shareholders, such as financial
performance, are generally given greater weight. Based upon the recommendation
and the market review conducted by McLagan at the time Fulton began compensating
its Executives, in part, through plan-based annual cash incentives, the HR
Committee determined that the Annual Cash Incentive Award amounts payable to
each Executive should be a percentage of the Executives base salary. For his
2014 Annual Cash Incentive Award, Mr. Wenger had threshold, target and maximum
award percentages that were different from the other Executives reflecting his
position and responsibilities as the CEO. The 2014 Annual Cash Incentive Awards
were made pursuant to the terms and provisions of the 2013 Plan, and the HR
Committee approved these awards as a Performance Compensation Award under
Article 10 of the 2013 Plan. The Annual Cash Incentive Awards are designed such
that, if performance is below the threshold level or scorecard results are less
than a numeric score of 2, no Annual Cash Incentive Award is paid to the
Executive.
In early 2014, the HR
Committee reviewed and approved updated scorecards to be used for 2014 and
determined that the Executives should all be reviewed based on a uniform
scorecard with similar category weightings, except for Mr. Rohrbaugh who, as
Chief Risk Officer, has a scorecard with a greater weight on risk-related
categories as a result of his job responsibilities. However, all the scorecards
contained the similar risk management performance categories. Performance is
assessed under the 2014 Executive scorecards with possible scores ranging from 0
to 5 for each factor.
31
Table of Contents
Where scorecard results
fall in between the scores for threshold, target and maximum award levels, the
Annual Cash Incentive Award is interpolated on a straight line basis, and
approved by the HR Committee. For 2014 the maximum potential payout for the
Executives was reduced by the HR Committee to 150% of target from 200% of
target. The possible payout level was also reduced at the threshold from 50% of
target to 25% of target. In addition, the 2014 Executive scorecards contain
fewer individual goals to increase focus on items of greatest strategic
importance to each individual Executive.
The Annual Cash Incentive
Awards are calculated with a scorecard result and payout in accordance with the
following matrix.
|
2014 Annual Cash Incentive Award Matrix |
|
|
|
CEO
Payout |
SEVP
Payout |
|
Scorecard |
% of
Target |
as a %
of |
as a %
of |
2014 Award Level |
Result |
Award |
Base Salary |
Base Salary |
Threshold |
2.00 |
25.0% |
21.3% |
12.5% |
Target |
3.00 |
100.0% |
85.0% |
50.0% |
Maximum |
4.50 |
150.0% |
127.5% |
75.0% |
For 2014, the three primary
scorecard performance categories and the performance sub-categories for each
Executive were:
2014 Executive Scorecard |
Primary Performance Categories |
Performance Sub-categories |
Financial Results compared to peers |
●Earnings Per Share Growth
●Return on Assets
●Average Core Deposit Growth
●Average Loan Growth |
Risk Management |
●Fulton Average - Audit Results Internal
Audits
●Audit Results Regulatory Exams (Only Wenger,
Roda & Rohrbaugh)
●Issue Remediation Internal
Audits
●Issue Remediation Regulatory
Exams
●Timely Completion of Risk and Compliance
Training |
Business Objectives and Goals Specific to
Each Executive |
●Capital Ratings
●Liquidity and Funding
●Other performance goals specific to the
individual Executive, such as:
-Mr. Wenger - Performance Results of the
Executive Team
-Mr. Barrett - Stress Testing and Capital
Planning; M&A Playbook
-Mr. Shreiner - Target Operating Model; and
Facility Management Structure
-Mr. Roda - Major Corporate Initiatives
assigned by CEO
-Mr. Rohrbaugh - Develop and implement a
strategy to stand-up a broad monitoring and testing function; and
remediation of BSA/AML compliance program
deficiencies. |
At its March 2015 meeting
the HR Committee reviewed the overall 2014 performance and scorecard results for
each Executive, and determined that each of the Executives achieved a level of
performance in 2014 that qualified the Executives for an Annual Cash Incentive
Award between the threshold and target payout performance levels established for
2014.
32
Table of Contents
In addition to the
scorecard results and information provided on individual critical performance
factors for each Executive, the HR Committee also considered the overall
progress Fulton and its subsidiary banks made during 2014 in continuing to
improve and enhance its risk management and regulatory compliance
infrastructures, and Fultons commitment to strengthen its regulatory compliance
and risk management functions to address identified deficiencies in these areas.
In particular, the HR Committee considered:
● |
The overall rigorous work effort that the
Executives and other employees of Fulton and its subsidiary banks have
been engaged in throughout 2014 to build-out Fultons risk and regulatory
compliance infrastructure, particularly related to compliance with respect
to BSA/AML requirements; |
● |
The progress that had been made with respect to
the build-out, noting that although substantial progress was evident,
there remained a significant amount of unfinished work as well; |
● |
The action taken to reduce, by 30%, the annual
cash incentive awards paid to the Executives for their performance during
2013. The HR Committee and the Board of Directors exercised discretion in
reducing the amounts of the Annual Cash Incentive Awards paid to the
Executives for 2013 performance to emphasize the need to continue to
strengthen Fultons risk management framework and regulatory compliance
programs, to encourage the Executives to accelerate their efforts in these
areas, to provide tangible evidence of the importance the Board of
Directors attaches to the need to strengthen Fultons risk and regulatory
compliance management infrastructures, and to reinforce the tone from the
top regarding the critical importance of accelerating completion of that
work to build stronger and sustainable regulatory compliance and risk
management processes that will support Fulton as it continues to grow;
and |
● |
Adjustments made to the risk
management, regulatory compliance and other performance factors reflected
in the scorecards used to assess the performance of each of the Executives
during 2014, which sharpened the focus of, and placed greater emphasis on,
those performance factors. |
In evaluating these
factors, the HR Committee weighed the 2014 scorecard results for the Executives,
including the impact of adjustments to the performance factors in the scorecards
discussed above, which resulted in significantly lower potential Annual Cash
Incentive Awards for each of the Executives for 2014 performance, as compared to
both the award targets and the Annual Cash Incentive Awards paid to the
Executives for 2013 performance1, and that, accordingly, due
recognition of the BSA/AML compliance and other corporate challenges had already
been appropriately reflected in the 2014 scorecard results for the Executives
and any additional discretionary reduction would be unnecessarily punitive and
may conceivably inhibit or disserve the achievement of important corporate
objectives, needs and goals.
For these reasons, the HR
Committee determined not to exercise its discretion to reduce the Annual Cash
Incentive Awards paid to the Executives for their 2014 performance determined by
the scorecard results for each.
The following is a tabular
summary of the primary scorecard performance categories with their corresponding
weights for the categories, the total score for each Executive on their
respective 2014 scorecard and the Annual Cash Incentive Award earned by each of
the Executives.
2014 Executive Scorecard Performance
Categories |
Wenger |
Barrett |
Shreiner |
Roda |
Rohrbaugh |
Financial Results compared to peers |
40% |
40% |
40% |
40% |
30% |
Risk
Management |
30% |
30% |
30% |
30% |
40% |
Business Objectives Specific to Each Executive |
30% |
30% |
30% |
30% |
30% |
Total Score for each Executive |
2.28 |
2.40 |
2.34 |
2.18 |
2.26 |
Annual Cash Incentive Award Earned |
$316,091 |
$100,307 |
$90,760 |
$68,473 |
$91,830 |
____________________
1 The Annual
Cash Incentive Award paid to Mr. Barrett for 2013 performance was adjusted to
reflect his employment by Fulton for only the final two months of 2013. As a
result, although the Annual Cash Incentive Award paid to Mr. Barrett for 2014
performance was approximately 45% of Mr. Barretts award target, it was
significantly greater than the adjusted Annual Cash Incentive Award paid to Mr.
Barrett for 2013 performance.
33
Table of Contents
Options, Restricted
Shares and Other Equity Awards: The Executives did not receive any options or restricted shares in 2014
because Fulton shifted to the use of Performance Shares as LTI in 2014. The form
of Performance Shares granted were restricted stock units issued pursuant to the
2013 Plan in an amount based on a designated percentage of the Executives
January 1, 2014 annual base salary. Fultons HR Committee believes that the
Performance Shares and other equity-based compensation align the interests of
the Executives with those of Fultons shareholders, and encourage the Executives to think
like owners. Therefore, the HR Committee believes that equity awards are an
appropriate means of motivating, rewarding and compensating the Executives and
other key officers based on the future performance of Fulton. Historically, pay
for performance included the discretionary award of options and restricted
shares to the Executives. During 2012 and 2013, the HR Committee worked in
conjunction with McLagan to develop the structure and features of LTI granted
under the 2013 Plan in the form of Performance Shares, which were first granted
to the Executives in 2014, to incorporate vesting provisions linked to Fultons
future performance. Each grant of Performance Shares in 2014 was broken into
three component parts with the following allocations, performance features and
vesting criteria.
|
|
2014 |
2015 |
2016 |
Performance Share |
37.5% Allocation |
Component A Grant |
Component A |
Performance Feature |
1 Yr
Absolute ROA Goal |
|
Profit Trigger |
|
Vesting Criteria |
|
2 Yr
Cliff Vest after Profit Trigger |
Performance Share |
37.5% Allocation |
Component B Grant |
Component B |
Performance Feature |
3 Yr
Relative Total Shareholder Return Goal To Peers |
|
Vesting Criteria |
3 Yr
Vest After Achievement of Total Shareholder Return Goal |
Performance Share |
25% Allocation |
Component C Grant |
Component C |
Performance Feature |
|
Profit Trigger |
|
Vesting Criteria |
3 Yr
Cliff Vest after Profit Trigger |
The HR Committee, with
McLagans recommendations and assistance, crafted the 2014 Performance Shares
under the 2013 Plan with the intention that they qualify as performance-based
compensation for purposes of Section 162(m) of the Internal Revenue Code, as
amended (the Tax Code). Each Executive has a defined target award for
Performance Shares based on a percentage of salary. The Performance Shares are
earned in subsequent years based on several performance goals, including
achievement of the Profit Trigger and the satisfaction of the 2013 Plans
Continuous Service requirement. The three Components are:
● |
Component A - Fultons absolute ROA for 2014,
which will determine the share amount, and the shares will then only vest
if Fulton achieves the Profit Trigger; |
● |
Component B - Fultons three-year total
shareholder return compared to its peer group, which will determine the
share amount; and |
● |
Component C - the remainder to cliff vest after
three years, provided that Fulton achieves the Profit
Trigger. |
The Performance Shares are
granted formulaically, with the Component C amount (allocated at 25% of the
award target for 2014) based on HR Committee discretion, which can range from 0%
and 150% of the award target for this component of the award. For 2014, the HR
Committee established the allocations of the Performance Shares among Components
A, B and C at 37.5%, 37.5% and 25%, respectively, resulting in an aggregate
Performance Share grant to each of the Executives on April 1, 2014 at their
respective award targets, using the award matrix and the price of Fultons
common stock at the time of grant. Based on the level of Fultons achievement of
the specified performance goals, the actual number of shares of Fulton common
stock the Executives may receive after completion of the three-year performance
period for the 2014 Performance Shares may range from 0% to 137.5% of the award
target, after giving effect to Fultons absolute ROA for the year ended December
31, 2014, which fell between the threshold and target levels.
Earned Performance Shares,
together with dividend equivalents accrued during the performance period on
earned Performance Shares, are settled in shares of Fulton common stock on a
1-for-1 basis after the expiration of the three-year performance period and
satisfaction of vesting criteria under the 2013 Plan. ROA was utilized for
Component A because it was a clear performance goal that would be measured
relative to Fultons budget. TSR was utilized for Component B so that
performance could be measured relative to peers. Further, Components A and B are
adjusted after
34
Table of Contents
their respective one- and
three-year performance periods, but are forfeited if the corresponding threshold
performance goal is not met. Components A and C are also forfeited if the Profit
Trigger is not achieved or if the Executive does not satisfy the Continuous
Service requirement in the 2013 Plan.
The performance goals and
potential payouts for ROA and TSR Components A and B are:
Category |
Component A |
Component A |
Component B |
Component B |
|
Performance Goal |
Payout Potential |
Performance Goal |
Payout Potential |
Threshold |
ROA
of 0.85% |
0% |
|
25th Percentile TSR |
0% |
|
Target |
ROA
of 0.94% |
100% |
|
50th Percentile TSR |
100% |
|
Maximum |
ROA
of 1.00% |
150% |
|
80th Percentile TSR |
150% |
|
For 2014, the award target
levels for Performance Share recommended by McLagan were 125% for the CEO and
75% for other Executives. The second column of the table below reflects the
total Performance Shares granted to each of the Executives on April 1, 2014. The
other columns of the table reflect the allocation of the Performance Shares
among the three components described above. With respect to Component A of the
Performance Shares granted to the Executives in 2014, the fourth column of the
table reflects the potential number of Performance Shares the Executives will
earn, if the Profit Trigger is achieved. Because Fulton achieved a ROA of 0.93%
in 2014, which fell between the threshold and target levels for performance, the
number of Component A Performance Shares the Executives may earn appearing in
the fourth column of the table reflects a reduction, interpolated on a straight
line basis, to reflect a level of performance falling between the threshold and
target levels. The potential number of Component A Performance Shares the
Executives will earn, if the Profit Trigger is achieved, will not further change
during the three-year performance period, except for the accrual of dividend
equivalents on the Component A Performance Shares actually earned by the
Executives. With respect to Component B of the Performance Shares granted to the
Executives in 2014, which appear in the fifth column of the of the table, the
potential number of shares the Executives will earn, if the Profit Trigger is
achieved, will not be determined until Fultons three-year total shareholder
return compared to its peer group for the period April 1, 2014 to March 31, 2017
can be calculated. With respect to Component C of the Performance Shares granted
in 2014, which appear in the sixth column of the table, the potential number of
Performance Shares the Executives will earn will not change during the
three-year performance period, except for the accrual of dividend equivalents on
the Component C Performance Shares actually earned by the Executives; however,
the Executives will only earn the Component C Performance Shares if the Profit
Trigger is achieved. In order to earn any of the three components of the
Performance Shares, an Executive must satisfy the Continuous Service requirement
in the 2013 Plan.
|
Total |
|
|
|
|
|
|
Performance |
Component A |
Component A |
Component B |
|
Total Grant Date |
|
Shares |
(ROA Goal) |
Shares Based |
(TSR Goal) |
Component C |
Fair Value |
|
Awarded |
Shares |
on ROA |
Shares |
Shares |
of Shares |
Executive |
April 1, 2014 |
Awarded |
Achieved |
Awarded |
Awarded |
Awarded 1 |
Wenger |
89,214 |
33,455 |
30,032 |
33,455 |
22,304 |
$1,048,711 |
Barrett |
25,277 |
9,479 |
8,509 |
9,479 |
6,319 |
$297,131 |
Shreiner |
24,444 |
9,167 |
8,229 |
9,167 |
6,110 |
$287,338 |
Roda |
22,611 |
8,479 |
7,611 |
8,479 |
5,653 |
$265,793 |
Rohrbaugh |
27,132 |
10,175 |
9,134 |
10,175 |
6,782 |
$318,936 |
____________________
1 Amount
represents the grant date fair value of Performance Shares. The per-share grant
date fair value for Performance Shares with non-market based performance
conditions is based on the closing price of Fulton common stock on the date the
shares were awarded, or $12.61. The per-share grant date fair value for
Performance Shares with market based conditions is estimated based on the use of
a Monte Carlo valuation methodology, which resulted in a per-share grant date
fair value of $10.33. The weighted average per-share grant date fair value of
all Performance Shares granted was $11.755. For additional information
concerning the valuation of Performance Shares with market based conditions,
including the assumptions made in determining that valuation, see Fultons
Annual Report on Form 10-K for the year ended December 31, 2014, Item 8
Financial Statements and Supplementary Data, Note O Stock-Based Compensation
Plans.
35
Table of Contents
Employee Stock
Purchase Plan: The Employee
Stock Purchase Plan (ESPP) was designed to advance the interests of Fulton and
its shareholders by encouraging Fultons employees and the employees of its
subsidiary banks and other subsidiaries to acquire a stake in the future of
Fulton by purchasing shares of the common stock of Fulton. Currently, Fulton
limits payroll deduction and annual employee participation in the ESPP to
$7,500. During 2014, Messrs. Roda, Rohrbaugh and Shreiner participated in ESPP
and have shares the ESPP. The Executives participating in the ESPP are eligible
to purchase shares through the ESPP at a discount, currently 15%, on the same
basis as other Fulton employees participating in the ESPP.
Defined Contribution
Plan 401(k) Plan: Fulton
provides a qualified defined contribution plan, in the form of a 401(k) Plan, to
the Executives and other employees and provides for employer matching
contributions that satisfy a non-discrimination safe-harbor available to
401(k) retirement plans. This safe-harbor employer matching contribution is
equal to 100% of each dollar a participant elects to contribute to the 401(k)
Plan, but the amount of contributions that are matched by Fulton is limited to
5% of eligible compensation. In addition, certain Fulton employees, including
the Executives, except for Messrs. Barrett and Rohrbaugh, are eligible for an
additional employer profit sharing contribution under the 401(k) Plan, which for
2014 was equal to 2.5% of a participants eligible compensation. The annual
profit sharing contribution to the 401(k) plan was discontinued effective
January 1, 2015, for all participants, including the Executives.
Deferred Compensation
Agreements: Fultons
nonqualified deferred compensation plans include (1) the Fulton Deferred
Compensation Plan, under which officers, directors and advisory board members
can elect to defer receipt of fees and certain management employees can elect to
defer receipt of cash compensation, and (2) a series of essentially identical
Supplemental Executive Retirement Plan Agreements entered into with a certain
group of senior managers, including the Executives, for the purpose of crediting
them with full employer contributions each year equal to the contributions they
would have otherwise been eligible to receive under the 401(k) Plan, if not for
the limits imposed by the Tax Code on the amount of compensation that can be
taken into account under a tax-qualified retirement plan. Fultons deferred
compensation contributions for the Executives in 2014 are stated in footnote 9
of the Summary Compensation Table on page 41. The deferred compensation plan
accounts of each participant are held and invested under the Fulton Nonqualified
Deferred Compensation Benefits Trust, with Fulton Financial Advisors, a division
of Fulton Bank, N.A., serving as trustee. The participants are permitted to
individually direct the investment of the deferred amounts into various
investment options under the Nonqualified Deferred Compensation Benefits
Trust.
Defined Benefit
Pension Plans: Fulton has not
had an historical practice of using defined benefit pension plans to provide
employees or the Executives with retirement benefits, but some defined benefit
plans have been assumed in different merger transactions over time, and any such
acquired plans were continued only for the then current plan participants.
However, none of the Executives participate in such pension plans.
Survivors Benefit
Life Insurance and Other Death Benefits: Employees of Fulton and certain of its bank
subsidiaries, who had been employed by Fulton for at least five (5) years as of
April 1, 1992, were eligible to participate in a survivors benefit program,
which was discontinued for all participants, including the Executives, on
February 1, 2014. This program provided the employees spouse, in the event of
the employees death prior to retirement, with an annual income equal to the
lesser of $25,000 or 25% of the employees final annual salary. This benefit is
paid from the date of death until the employees sixty-fifth (65th) birthday,
subject to a minimum of ten (10) annual payments having been made. During 2014,
Messrs. Wenger, Shreiner and Roda previously participated in this program
because each had been employed by Fulton for at least five (5) years as of April
1, 1992. Messrs. Barrett and Rohrbaugh were hired after April 1, 1992 and were
not eligible for this benefit. The estates of each of the Executives are also
eligible for a payment equal to two (2) times base salary (plus an amount equal
to applicable individual income taxes due on such amounts) from Fulton pursuant
to individual Death Benefit Agreements between Fulton and each Executive, should
the Executive die while actively employed by Fulton. Upon the Executives
retirement, the post retirement benefit payable upon the individuals death is
reduced to $5,000.
Health, Dental and
Vision Benefits: Fulton
offers a comprehensive benefits package for health, dental and vision insurance
coverage to all full-time employees, including the Executives, and their
eligible spouses and children. Fulton pays a portion of the premiums for the
coverage selected, and the amount paid varies with each health, dental and
vision plan. All of the Executives have elected one of the standard employee
coverage plans available.
36
Table of Contents
Retiree Benefit
Payments: Generally,
employees who were hired or joined Fulton as a result of a merger prior to
January 1, 1998, and who retired prior to February 1, 2014 having attained age
sixty-five (65) with at least ten (10) years of full-time service, were eligible
for post-retirement benefits. Post-retirement benefits included health coverage
plus death benefits. The level of coverage and the cost to the retiree depends
on the retirees date of retirement and completed years of full-time service
after attainment of age forty (40). As a result of their length of service with
Fulton, the Executives, except Messrs. Barrett and Rohrbaugh, were eligible to
receive these post-retirement benefits at an annual cost to the Executive
similar to other employees with similar years of service. Fulton does not
provide post-retirement medical, dental and vision benefits to any current
full-time employees of Fulton and its affiliates. Because none of the Executives
retired before February 1, 2014, they will not be eligible to receive these
post-retirement benefits.
Other Executive
Benefits: Fulton provides the
Executives with a variety of perquisites and other personal benefits that the HR
Committee believes are necessary to facilitate the conduct of Fultons business
by the Executives and are reasonable and consistent with the overall
compensation program for the CEO and the other Executives. In addition, these
benefits enable Fulton to attract and retain talented senior officers for key
positions, as well as provide the Executives and other senior officers with
opportunities to be involved in their communities and directly interact with
current and prospective customers of Fulton. The 2014 amounts are included in
the All Other Income column of the Summary Compensation Table on page 41 of
this Proxy Statement. The Executives are provided with company-owned
automobiles, club memberships and other executive benefits consistent with their
positions. Fulton does not have a direct or indirect interest in any corporate
aircraft. Generally, the Executives travel on commercial aircraft, by train or
in vehicles provided by Fulton. In addition, if spouses accompany an Executive
when traveling on business or attending a corporate event, Fulton pays the
travel and other expenses associated with certain spousal travel for the
Executive. Fulton also includes spousal travel and personal vehicle use as part
of the Executives reported W-2 income.
Employment
Agreements
Fulton believes that a
company should provide reasonable severance benefits to employees. For most
employees, Fulton has a policy that, in general, provides for severance benefits
to be paid upon a reduction in force or position elimination. These severance
arrangements are intended to provide the employees with a sense of security in
making the commitment to dedicate their professional careers to the success of
Fulton. With respect to the Executives and certain other employees, the
severance benefits provided reflect the fact that it may be difficult for them
to find comparable employment within a reasonable period of time. The levels of
these benefits for the Executives in the event of a change in control of Fulton
are discussed in footnote 6 in the Potential Payments Upon Termination and
Golden Parachute Table on page 48 under Termination Without Cause or for Good
Reason - Upon or After a Change in Control.
Fulton has entered into
employment agreements with certain of its key employees, including each of the
Executives. Fultons employment agreements with Mr. Wenger and Mr. Shreiner were
entered into on June 1, 2006, and amended on November 12, 2008. Fultons
employment agreements with Messrs. Roda, Rohrbaugh and Barrett were entered into
on August 1, 2011, November 1, 2012 and November 4, 2013, respectively. The
employment agreements with the Executives (individually, an Employment
Agreement, and collectively, the Employment Agreements), continue until
terminated and each provides that the Executive is to receive a base salary,
which is set annually, and is entitled to participate in Fultons incentive
bonus programs as in effect from time to time, and participate in Fultons
retirement plans, welfare benefit plans and other benefit programs.
The Employment Agreements
with the Executives contain restrictions on the sharing of confidential
information, as well as non-competition and non-solicitation covenants that
continue for one year following termination of employment. The non-competition
and non-solicitation covenants will not apply if the Executive terminates
employment for good reason or if the Executives employment is terminated
without cause, as defined in the Employment Agreements. These provisions of the
Employment Agreements are further outlined in the Potential Payments Upon
Termination and Golden Parachute Table section on page 48. The Employment
Agreements Fulton executed with Messrs. Barrett, Roda and Rohrbaugh are similar
to the Employment Agreements Fulton executed with the Mr. Wenger and Mr.
Shreiner, except that they do not contain an excise tax gross-up for taxes
applicable to termination payments as a result of the Executives termination.
The Employment Agreements with Messrs. Barrett, Roda and Rohrbaugh, provide
that, in the event a payment to be made in connection with their termination of
employment would result in the imposition of an excise tax under Section 4999 of
the Tax Code, such payment would be retroactively reduced, if necessary, to the
extent required
37
Table of Contents
to avoid such excise tax
imposition and, if any portion of the amount payable the Executive is determined
to be non-deductible pursuant to the regulations promulgated under Section 280G
of the Tax Code, Fulton would be required to pay to the Executive only the
amount determined to be deductible under Section 280G.
Other Compensation
Elements
162(m) and Tax
Consequences: Although Fulton
takes into account its ability to deduct compensation expense in determining its
taxable income, tax deductibility is not a primary objective of its compensation
programs. Section 162(m) of the Tax Code disallows the deductibility by Fulton
of any compensation over $1 million per year paid to certain employees and the
Executives unless certain criteria are satisfied.
409A
Changes: Section 409A of the
Tax Code, effective January 1, 2005, defines what constitutes a nonqualified
deferred compensation plan, conditions income tax deferrals under such plans on
their compliance with certain distribution, acceleration, election and funding
restrictions, and also imposes excise tax and interest penalties for
noncompliance. In order to preserve intended tax deferrals and to avoid the
imposition of excise taxes and interest penalties, Fulton has identified all
such nonqualified deferred compensation plans it maintains and to the extent
necessary, timely amended each, to meet the Section 409A requirements, and to
alter the administration of each, where necessary, to comply with Section
409A.
Discussion of Equity
Award Process: Fulton does
not have a formal written policy as to when equity awards are granted during the
year, but in March 2014, Fulton awarded Performance Shares, options and
restricted stock to eligible participants under the 2013 Plan with a grant date
of April 1, 2014, so that the equity awards could be considered by the HR
Committee at the same time as the cash incentive awards under the 2013 Plan.
Fulton does not backdate options or grant options retroactively, and does not
coordinate option grants with the release of positive or negative corporate
news. The 2013 Plan, which amended and restated the 2004 Stock Option and
Compensation Plan, does not permit the award of discounted options, the reload
of stock options, or the re-pricing of stock options. Pursuant to the terms of
the 2013 Plan, option prices are determined based on the closing price on the
grant date. Under the 2013 Plan, an option exercise price shall not be less than
100% of the fair market value of Fultons stock on the date of grant. The 2013
Plan defines fair market value to be the closing price on the date of grant, or
if no sales of shares were reported on any stock exchange or quoted on any
interdealer quotation system on that day, the price on the next preceding
trading day on which such price was quoted.
Stock Hedging Policy
and Stock Trading Procedures:
Fulton has adopted an Insider Trading Policy and Compliance Procedures to
facilitate securities law compliance in a number of areas. Pursuant to this
policy, Fulton requires that all directors, officers, and employees of Fulton
and its affiliates adhere to certain procedures when trading in Fulton common
stock or any other security issued by Fulton or its subsidiaries. Among other
requirements, directors, officers and employees of Fulton and its subsidiaries
that know of material, non-public information about Fulton may not (i) buy or
sell Fulton stock while the information remains non-public, or (ii) disclose the
information to relatives, friends or any other person. In addition, the
Executives and directors of Fulton and Fultons banking subsidiaries and certain
other officers are prohibited from engaging in speculative transactions
involving Fultons securities. This prohibition encompasses short sales and
puts along with other trading that anticipates a decline in price. These
instruments can involve a bet against Fulton, raise issues about the insider
knowledge of the person involved or create a conflict of interest and are
therefore prohibited by Fultons policy. In 2014 Fulton updated the Insider
Trading Policy and Compliance Procedures to prohibit the pledging of shares, but
grandfathered any pledges made prior to the amendment.
Stock Ownership
Guidelines: Fulton believes
that broad-based stock ownership by directors, officers and employees is an
effective method to align the interests of its directors, officers and employees
with the interests of its shareholders. In 2009, Fulton first adopted Governance
Guidelines that included a formal Fulton common stock ownership guideline for
directors and the Executives. The director ownership guidelines were updated in
September 2013, and each director is presently encouraged to own at least
$175,000 of Fulton common stock, which is five (5) times the annual director
cash retainer, within the later of five (5) full calendar years of first
becoming a director, or five (5) full calendar years after the guideline was
changed.
38
Table of Contents
A similar guideline exists
for the Executives. The guideline for the Executives was last updated and
approved in 2013, with the recommended ownership guideline calculated as a
multiple of the Executives base salary, depending upon the position of the
Executive as follows:
Executive Position |
Fulton Common Stock Ownership Guideline
as |
|
a
Multiple of Base Salary |
CEO |
2.0 |
President |
1.5 |
CFO |
1.5 |
Other Executives |
1.0 |
Compliance with the stock
ownership guidelines is determined annually based on stock ownership and the
closing stock price as of December 31 of the prior year. Ownership excludes
stock options and unvested restricted stock, but includes all other shares
beneficially owned and reported on an individuals Form 3, Form 4 or Form 5
filed with the SEC, including shares held in retirement accounts, indirect
ownership and jointly held shares. Once an Executive or Director has achieved
the ownership guideline, he or she remains in compliance with the ownership
guideline regardless of changes in base salary or the price of Fultons common
stock, as long as he or she retains the same number of shares or a higher
amount. However, if an Executive is promoted to CEO, President or CFO with a
base salary increase, he or she would be permitted to satisfy the new stock
ownership requirement for the new position and base salary over a period of five
(5) full calendar years.
As described in more detail
in footnote 4 on page 14, except for Messrs. Barrett and Rohrbaugh, all of the
Executives have satisfied the stock ownership guidelines for 2014. Mr. Rohrbaugh
has until December 31, 2018, to satisfy the stock ownership guidelines for his
position. Mr. Barrett has until December 31, 2019, to satisfy the stock
ownership guidelines for his position. As of December 31, 2014, all of Fultons
directors have satisfied the stock ownership guidelines, except Directors
Crutchfield, Devine and Waters. Under the revised ownership guidelines,
Directors Devine and Waters are required to achieve the targeted stock ownership
level by December 31, 2018. Director Crutchfield is required to achieve the
targeted stock ownership level by December 31, 2019.
Management
Succession: The topic of
management succession is discussed and reviewed at least annually at Fulton. At
the December 2014 meeting of the Board of Directors, senior officers in Fultons
Human Resources Department discussed and reviewed the succession planning
processes used by management to identify successors for each Executive at
Fulton.
Clawback
Policies: Compensation
recovery policies, or clawbacks, began to be used with the enactment of the
Sarbanes-Oxley Act in 2002, which required that, in the event of any restatement
based on executive misconduct, public companies must recoup incentives paid to
the companys CEO and CFO within 12 months preceding the restatement. The
incentive- and equity-based compensation paid to Fultons CEO and CFO is currently
subject to the Sarbanes-Oxley clawback provision, which is set forth in Section
304 of the Sarbanes-Oxley Act and provides that, if an issuer is required to
prepare an accounting restatement due to material noncompliance of the issuer,
as a result of misconduct, with any financial reporting requirement under the
securities laws, the CEO and CFO shall reimburse the issuer for any bonus or
other incentive-based or equity-based compensation received, and any profits
realized from the sale of the securities of the issuer, during the year
following issuance of the original financial report.
In addition, the HR
Committee has discussed and is in the process of implementing clawback policies
and procedures in various compensation plans and agreements. This included
inserting a clawback provision in Messrs. Barretts and Rohrbaughs Employment
Agreements and all new senior officer employment agreements. In December 2012,
the HR Committee approved a Compensation Recovery Clawback Provision and a
Severance and Golden Parachute Policy for officers, including the Executives.
The HR Committee also has approved a broad general clawback provision in the
2013 Plan. Under the 2013 Plan, all cash and equity awards under the 2013 Plan
are subject to such deductions and clawbacks as may be required to be made
pursuant to any law, government regulation or stock exchange listing
requirement, or any policy adopted by Fulton whether pursuant to any such law,
government regulation or stock exchange listing requirement or
otherwise.
39
Table of Contents
In 2014 the HR Committee
adopted a Compensation Recovery Clawback Policy (Clawback Policy) to govern
clawback provisions for all participants, including the Executives, in the 2013
Plan, and subject to limited exceptions, other incentive compensation plans. The
Clawback Policy identifies the events, such as: a material restatement of
Fultons or any of its affiliates financial statements that would have the
effect of lowering the amount of incentive compensation paid, if the incentive
compensation payments had been calculated using the restated financial
statements; the use of a materially inaccurate performance metric in the
determination of the amount of incentive compensation; or a violation of the
Code of Conduct by one or more senior-level officers, in the absence of which,
the amount of incentive compensation would have been lower, the occurrence of
which event or events would trigger an evaluation to determine whether the
portion of incentive compensation paid that exceeds the amount of incentive
compensation that would have been paid in the absence of the triggering event or
events should be recovered from the participants that received the excess
incentive compensation.
Finally, the Dodd-Frank
Wall Street Reform and Consumer Protection Act mandates that the SEC adopt rules
that require publicly traded companies to adopt a formal clawback policy.
Pending final clawback rules from the SEC, the HR Committee will continue to
monitor and consider the use of clawbacks and update the Clawback Policy for any
new or amended compensation agreements and plans with the Executives.
Human Resources
Committee Report
The HR Committee reviewed
and discussed the foregoing Compensation Discussion and Analysis with management
and, based on the review and discussions, the HR Committee recommended to the
Board of Directors that the Compensation Discussion and Analysis above be
incorporated in Fultons Annual Report on Form 10-K for the year ended December
31, 2014, and the 2015 annual Proxy Statement, as applicable.
As described above in the
Compensation Discussion and Analysis section, in performing its compensation
risk evaluation, the HR Committee met with the CRO regarding the material risks
facing Fulton, and consulted with human resources personnel about Fultons
various compensation plans. Based on the foregoing review, the HR Committee
concluded that Fultons compensation policies and practices in 2014 did not
create risks that are reasonably likely to have a material adverse effect on
Fulton.
Human Resources
Committee
Craig A. Dally, Chair
Denise L. Devine, Vice Chair
John M. Bond, Jr.
Patrick J. Freer
George W. Hodges
40
Table of Contents
SUMMARY COMPENSATION
TABLE
Name
and Principal |
Year |
Salary 2 |
Bonus 3 |
Stock |
Option |
Non-Equity |
Change in |
All
Other |
Total |
Position 1 |
|
|
|
Awards 4 5 |
Awards 6 |
Incentive |
Pension |
Compensation 9 |
|
|
|
|
|
|
|
Plan |
Value and |
|
|
|
|
|
|
|
|
|
Compensation 7 |
Non- |
|
|
|
|
|
|
|
|
|
|
|
qualified |
|
|
|
|
|
|
|
|
|
|
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
|
|
|
|
|
|
|
|
|
|
Earnings 8 |
|
|
|
|
|
($) |
($) |
($) |
($) |
($) |
($) |
($) |
($) |
E.
Philip Wenger Chairman, Chief
Executive Officer and
President of Fulton |
2014 |
953,518 |
0 |
1,048,711 |
0 |
316,091 |
|
0 |
132,529 |
|
2,450,849 |
2013 |
900,000 |
0 |
360,844 |
0 |
503,370 |
|
0 |
147,198 |
|
1,911,412 |
2012 |
598,077 |
0 |
250,646 |
0 |
360,640 |
|
0 |
118,380 |
|
1,327,743 |
Patrick S. Barrett 10 Senior Executive Vice President and
Chief Financial Officer of
Fulton |
2014 |
445,810 |
0 |
297,131 |
0 |
100,307 |
|
0 |
191,176 |
|
1,034,424 |
2013 |
57,211 |
200,000 |
393,000 |
0 |
18,822 |
|
0 |
0 |
|
669,033 |
2012 |
- |
- |
- |
- |
- |
|
- |
- |
|
- |
James E. Shreiner 11 Senior Executive Vice President of
Fulton |
2014 |
432,192 |
0 |
287,338 |
0 |
90,760 |
|
0 |
69,139 |
|
879,429 |
2013 |
407,616 |
0 |
262,333 |
0 |
134,235 |
|
0 |
79,969 |
|
884,153 |
2012 |
393,269 |
0 |
182,223 |
0 |
232,029 |
|
0 |
78,483 |
|
886,004 |
Craig A. Roda Senior Executive
Vice President of Fulton |
2014 |
402,782 |
0 |
265,793 |
0 |
68,473 |
|
0 |
65,554 |
|
802,602 |
2013 |
377,044 |
0 |
252,954 |
0 |
124,048 |
|
0 |
76,856 |
|
830,902 |
2012 |
368,116 |
0 |
175,708 |
0 |
221,974 |
|
0 |
77,782 |
|
843,580 |
Philmer H. Rohrbaugh 12 Chief Risk Officer and Senior Executive
Vice President of
Fulton |
2014 |
483,315 |
0 |
318,936 |
0 |
91,830 |
|
0 |
13,833 |
|
907,914 |
2013 |
454,286 |
150,000 |
0 |
0 |
151,124 |
|
0 |
47,303 |
|
802,713 |
2012 |
64,040 |
0 |
196,100 |
0 |
0 |
|
0 |
2,790 |
|
262,930 |
____________________
1 Titles
and positions listed are as of Fultons fiscal year-end of December 31,
2014. |
2
Represents the 2012, 2013 and 2014 base salary amounts paid to and earned
by each of the Executives named in this table. Annual base salaries are
paid in biweekly installments. During 2012 and 2013 the Executives were
paid in 26 biweekly installments. During 2014, there were 27 such biweekly
installments which resulted a higher base pay amount. On March 17, 2015,
upon the recommendation of the HR Committee, the Board of Directors
approved 2015 annual base salaries for Messrs. Wenger, Barrett, Roda and
Rohrbaugh of $950,181, 442,692, 401,372, and 481,623, respectively.
These changes to annual base salary are effective April 1,
2015. |
3 The HR
Committee did not award any bonus payments in 2012, 2013 or 2014 to the
Executives, except for the bonuses paid to Mr. Rohrbaugh paid in January
2013 and Mr. Barrett in December 2013 in connection with their acceptance
of employment with Fulton. |
4 Amounts
represent the grant date fair values of restricted stock awards and
Performance Shares. There were no forfeitures of restricted stock or
Performance Shares during 2012, 2013 and 2014 by any of the Executives.
The per-share fair values of restricted stock awards for 2012 and 2013 are
equal to the average of the high and low trading prices of Fulton common
stock on the date the shares were awarded. The per-share grant date fair
value for Performance Shares granted in 2014 with non-market based
performance conditions is based on the closing price of Fulton common
stock on the date the shares were awarded, or $12.61. The per-share grant
date fair value for Performance Shares with market based conditions is
estimated based on the use of a Monte Carlo valuation methodology, which
resulted in a per-share |
41
Table of Contents
grant date fair value of
$10.33. The weighted average per-share grant date fair value of all Performance
Shares granted was $11.755. For additional information concerning the valuation
of Performance Shares with market based conditions, including the assumptions
made in determining that valuation, see Fultons Annual Report on Form 10-K for
the year ended December 31, 2014, Item 8 Financial Statements and
Supplementary Data, Note O Stock-Based Compensation Plans. The grant date
fair value for Performance Shares granted in 2014 is based on the probable
outcomes of the performance conditions as determined in accordance with FASB ASC
Topic 718. The grant date fair value of the Performance Shares granted in 2014,
assuming the highest level of performance conditions is met, would have been
$1,441,962 for Mr. Wenger, $408,545 for Mr. Barrett, $395,085 for Mr. Shreiner,
$365,451 for Mr. Roda and $438,532 for Mr. Rohrbaugh. The per-share grant date
fair value of shares awarded on March 30, 2012, (April 1, 2012 was not a trading
day) and April 1, 2013 were $10.475 and $11.58, respectively.
The number of restricted
stock shares awarded to Messrs. Wenger, Shreiner and Roda on April 1, 2012 was
23,928, 17,396 and 16,774, respectively. The number of restricted stock shares
awarded to Messrs. Wenger, Shreiner and Roda on April 1, 2013 was 31,161, 22,654
and 21,844, respectively. The number of Performance Shares awarded to Messrs.
Wenger, Barrett, Shreiner, Roda and Rohrbaugh on April 1, 2014 was 89,214,
25,277, 24,444, 22,611 and 27,132, respectively.
5 The HR
Committee did not award Mr. Rohrbaugh an annual stock award in 2013 because he
received a restricted stock award of 20,000 restricted shares, with a fair value
of $9.805 per share, granted on November 1, 2012 in connection with his
acceptance of employment with Fulton. The stock award granted to Mr. Barrett in
2013 represents 30,000 shares of restricted stock, with a fair value of $13.10
per share, granted on December 2, 2013 in connection with this acceptance of
employment with Fulton.
6 Fulton did not
award options in 2012, 2013 and 2014 to the Executives and there were no
forfeitures of options during 2012, 2013 or 2014 by any of the Executives. The
2002 grant, expired in 2012, including the following number of options by
Executive: Wenger 19,898; Shreiner 21,706; and Roda 14,471. The 2003
grant, expired in 2013, including the following number of options by Executive:
Wenger 20,673; Shreiner 20,673; and Roda 16,538. The 2004 grant expired in
2014, including the following number of options by Executive: Wenger 45,939;
Shreiner 45,939; and Roda 28,876.
7 The 2013 cash
incentive payment to Mr. Barrett was adjusted to reflect his employment by
Fulton for only the final two months of 2013. These Annual Cash Incentive Awards
are substantially based on a scorecard results as described further on page
31.
8 Fulton has
determined that the Executives did not receive above-market earnings on their
nonqualified deferred compensation accounts, and therefore, such earnings are
not required to be reported in this table column for 2012, 2013 or 2014. All
participants in the nonqualified deferred compensation plan, which also includes
senior managers other than the Executives, are permitted to select various
investment options listed in footnote 2 of the Nonqualified Deferred
Compensation Table on page 47. The rate of return for an individual
participants account is based on the performance of the various investment
options selected by each participant.
42
Table of Contents
9 All Other
Compensation includes Fultons payments for qualified profit sharing plan
contributions, qualified employer matching contributions, nonqualified profit
sharing plan contributions, nonqualified employer matching contributions, club
membership fees, use of company provided automobiles, certain travel expenses
where spouses traveled with the Executives and attended Fulton events, plus
other personal benefits received by each of the Executives. The methodology used
to calculate the aggregate incremental cost of perquisites and other personal
benefits was to use the amount disbursed for the items. Where a benefit involved
assets owned by Fulton, an estimate of the incremental cost was used. Amounts
for vehicles include the personal use and other financial benefit the Executive
received for an automobile as reported on their W-2. During 2014, Mr. Barrett
received a total of $181,172 for relocation benefits pursuant to his employment
agreement dated November 4, 2013 which provided for the reimbursement of
temporary housing, home-finding trips, payment of all moving costs, and
appropriate tax gross-up to accommodate for the taxation of any income. The
breakdown and total of all other compensation for each Executive for 2012, 2013
and 2014 is shown in the table below. The Other Perquisites column in the
table below includes personal travel, employee service awards paid to all
employees for achieving certain years of service and other small benefits that
individually are less than ten percent of all perquisites received by the
Executive.
|
|
Qualified |
Nonqualified |
Club |
Automobile |
Other |
Total All Other |
Name |
Year |
Retirement |
Retirement |
Memberships |
Perquisites |
Perquisites |
Compensation |
|
|
Plan
Company |
Plan
Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution |
Contribution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($) |
($) |
($) |
($) |
($) |
($) |
E. Philip Wenger |
2014 |
|
19,500 |
|
|
89,805 |
|
|
16,970 |
|
|
3,527 |
|
|
2,727 |
|
|
132,529 |
|
|
2013 |
|
25,500 |
|
|
100,564 |
|
|
16,978 |
|
|
2,921 |
|
|
1,235 |
|
|
147,198 |
|
|
2012 |
|
25,000 |
|
|
67,040 |
|
|
16,759 |
|
|
2,945 |
|
|
6,636 |
|
|
118,380 |
|
Patrick S. Barrett |
2014 |
|
0 |
|
|
2,486 |
|
|
3,544 |
|
|
3,074 |
|
|
182,072 |
|
|
191,176 |
|
|
2013 |
|
0 |
|
|
0 |
|
|
0 |
|
|
0 |
|
|
0 |
|
|
0 |
|
|
2012 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
James E. Shreiner |
2014 |
|
19,500 |
|
|
22,982 |
|
|
12,670 |
|
|
10,571 |
|
|
3,416 |
|
|
69,139 |
|
|
2013 |
|
25,500 |
|
|
38,504 |
|
|
12,894 |
|
|
1,038 |
|
|
2,033 |
|
|
79,969 |
|
|
2012 |
|
25,000 |
|
|
37,177 |
|
|
12,498 |
|
|
2,836 |
|
|
972 |
|
|
78,483 |
|
Craig A. Roda |
2014 |
|
19,500 |
|
|
20,492 |
|
|
14,734 |
|
|
3,122 |
|
|
7,706 |
|
|
65,554 |
|
|
2013 |
|
25,500 |
|
|
34,438 |
|
|
12,958 |
|
|
3,113 |
|
|
847 |
|
|
76,856 |
|
|
2012 |
|
25,000 |
|
|
34,406 |
|
|
14,259 |
|
|
3,357 |
|
|
760 |
|
|
77,782 |
|
Philmer H. Rohrbaugh |
2014 |
|
0 |
|
|
0 |
|
|
13,083 |
|
|
0 |
|
|
750 |
|
|
13,833 |
|
|
2013 |
|
0 |
|
|
0 |
|
|
45,055 |
|
|
0 |
|
|
2,248 |
|
|
47,303 |
|
|
2012 |
|
0 |
|
|
0 |
|
|
0 |
|
|
0 |
|
|
2,790 |
|
|
2,790 |
|
10 Effective
December 31, 2013, Charles J. Nugent retired as Fultons Chief Financial
Officer. Effective January 1, 2014, Patrick S. Barrett became Fultons Chief
Financial Officer following Mr. Nugents retirement. Mr. Barrett was hired and
first became an Executive officer effective November 4, 2013, and pursuant to
SEC rules, compensation for 2012 is not included.
11 Effective
December 31, 2014, Mr. Shreiner retired as an Executive Officer of
Fulton.
12 Mr. Rohrbaugh
was hired and first became an Executive officer effective November 1, 2012, and
the compensation for 2012 is for the two months he was employed in
2012.
43
Table of Contents
GRANTS OF PLAN-BASED
AWARDS TABLE
Name |
Grant |
Approval |
Estimated Future or Possible |
Estimated Future or Possible |
All
Other |
All
Other |
Exercise |
Grant |
|
Date |
Date 1 |
Payouts Under
Non-Equity |
Payouts Under
Equity |
Stock |
Option |
or Base |
Date
Fair |
|
|
|
Incentive Plan Awards 2 |
Incentive Plan Awards 3 |
Awards: |
Awards: |
Price of |
Value
of |
|
|
|
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
Number |
Number of |
Option |
Stock
and |
|
|
|
|
|
|
|
|
|
of Shares |
Securities |
Awards |
Option |
|
|
|
|
|
|
|
|
|
of Stock |
Underlying |
|
Awards |
|
|
|
|
|
|
|
|
|
or
Units |
Options |
|
|
|
|
|
($) |
($) |
($) |
(#) |
(#) |
(#) |
(#) |
(#) |
($/Sh) |
($) |
E.
Philip Wenger |
4/1/2014 |
3/17/2014 |
- |
- |
- |
22,304 |
89,214 |
122,668 |
- |
- |
- |
1,048,711 |
E.
Philip Wenger |
- |
3/17/2014 |
202,623 |
810,490 |
1,215,735 |
- |
- |
- |
- |
- |
- |
- |
Patrick
S. Barrett |
4/1/2014 |
3/17/2014 |
- |
- |
- |
6,319 |
25,277 |
34,755 |
- |
- |
- |
297,131 |
Patrick
S. Barrett |
- |
3/17/2014 |
55,726 |
222,905 |
334,357 |
- |
- |
- |
- |
- |
- |
- |
James E.
Shreiner |
4/1/2014 |
3/17/2014 |
- |
- |
- |
6,110 |
24,444 |
33,610 |
- |
- |
- |
287,338 |
James E.
Shreiner |
- |
3/17/2014 |
54,024 |
216,096 |
324,144 |
- |
|
- |
- |
- |
- |
- |
Craig A.
Roda |
4/1/2014 |
3/17/2014 |
- |
- |
- |
5,653 |
22,611 |
31,089 |
- |
- |
- |
265,793 |
Craig A.
Roda |
- |
3/17/2014 |
50,348 |
201,391 |
302,087 |
- |
- |
- |
- |
- |
- |
- |
Philmer
H. Rohrbaugh |
4/1/2014 |
3/17/2014 |
- |
- |
- |
6,782 |
27,132 |
37,306 |
- |
- |
- |
318,936 |
Philmer
H. Rohrbaugh |
- |
3/17/2014 |
60,414 |
241,657 |
362,486 |
- |
- |
- |
- |
- |
- |
- |
____________________
1 Fulton
approved the grants of Performance Shares at the March 2014 HR Committee and
Board of Directors meetings, pursuant to the 2013 Plan, with a grant date of
April 1, 2014. Fulton also approved a non-equity incentive plan award under the
2013 Plan on March 17, 2014.
2 The Executives
were eligible to receive an Annual Cash Incentive Award for 2014 pursuant to the
2013 Plan that is discussed on page 31.
3 The amounts in
this column represent the Performance Shares granted to the Executives on April
1, 2014 and the number of Performance Shares granted was based on the April 1,
2014 closing price of $12.61. Performance Shares may become earned and vested
based on the actual performance level achieved over a three-year performance
period with respect to the following performance measures: (i) 37.5% of the
Performance Share will become earned and vested based on the actual performance
level achieved with respect to absolute ROA of Fulton for the period of January
1, 2014 through December 31, 2014 and the Profit Trigger; (ii) 37.5% of the
Performance Share will become earned and vested based on the actual performance
level achieved with respect to Three-Year Relative TSR for the period of April
1, 2014 through March 31, 2017; and (iii) the balance vested based on the actual
performance level achieved with respect to the Profit Trigger. The actual number
of Performance Share units earned and vested will be based on the actual
performance level and will be interpolated on a straight-line basis for pro-rata
achievement of the performance goals, if applicable, rounded down to the nearest
whole number. Performance Shares also accrue dividends which will be added to
the award upon vesting.
44
Table of Contents
OUTSTANDING EQUITY AWARDS
AT FISCAL YEAR-END TABLE
|
Option Awards 1 |
Stock Awards 2 |
Name |
Number of |
Number of |
Equity |
Option |
Option |
Number |
Market |
Equity |
Equity |
|
Securities |
Securities |
Incentive |
Exercise |
Expiration |
of
Shares |
Value
of |
Incentive |
Incentive |
|
Underlying |
Underlying |
Plan |
Price |
Date |
or Units
of |
Shares
or |
Plan |
Plan |
|
Unexercised |
Unexercised |
Awards: |
($) |
|
Stock
That |
Units
of |
Awards: |
Awards: |
|
Options |
Options |
Number of |
|
|
Have
Not |
Stock
That |
Number
of |
Market |
|
(#) |
(#) |
Securities |
|
|
Vested |
Have
Not |
Unearned |
or
Payout |
|
Exercisable |
Unexercisable |
Underlying |
|
|
(#) 3 |
Vested |
Shares, |
Value
of |
|
|
|
Unexercised |
|
|
|
($)
4 |
Units
or |
Unearned |
|
|
|
Unearned |
|
|
|
|
Other |
Shares, |
|
|
|
Options |
|
|
|
|
Rights |
Units
or |
|
|
|
(#) |
|
|
|
|
That
Have |
Other |
|
|
|
|
|
|
|
|
Not
Vested |
Rights
That |
|
|
|
|
|
|
|
|
(#)
5 |
Have
Not |
|
|
|
|
|
|
|
|
|
Vested |
|
|
|
|
|
|
|
|
|
($)
6 |
E.
Philip Wenger |
40,687 |
0 |
0 |
17.12 |
6/30/2015 |
- |
- |
- |
- |
E.
Philip Wenger |
24,000 |
0 |
0 |
15.89 |
6/30/2016 |
- |
- |
- |
- |
E.
Philip Wenger |
24,000 |
0 |
0 |
14.415 |
6/30/2017 |
- |
- |
- |
- |
E.
Philip Wenger |
10,296 |
0 |
0 |
9.965 |
6/30/2018 |
- |
- |
- |
- |
E.
Philip Wenger |
- |
- |
- |
- |
- |
58,605 |
724,358 |
- |
- |
E.
Philip Wenger |
- |
- |
- |
- |
- |
- |
- |
89,214 |
1,102,685 |
Patrick
S. Barrett |
- |
- |
- |
- |
- |
30,865 |
381,491 |
- |
- |
Patrick
S. Barrett |
- |
- |
- |
- |
- |
- |
- |
25,277 |
312,424 |
James E.
Shreiner |
40,687 |
0 |
0 |
17.12 |
6/30/2015 |
- |
- |
- |
- |
James E.
Shreiner |
24,000 |
0 |
0 |
15.89 |
6/30/2016 |
- |
- |
- |
- |
James E.
Shreiner |
24,000 |
0 |
0 |
14.415 |
6/30/2017 |
- |
- |
- |
- |
James E.
Shreiner |
10,296 |
0 |
0 |
9.965 |
6/30/2018 |
- |
- |
- |
- |
James E.
Shreiner |
- |
- |
- |
- |
- |
35,155 |
434,516 |
- |
- |
James E.
Shreiner |
- |
- |
- |
- |
- |
- |
- |
24,444 |
302,128 |
Craig A.
Roda |
21,000 |
0 |
0 |
17.12 |
6/30/2015 |
- |
- |
- |
- |
Craig A.
Roda |
16,000 |
0 |
0 |
15.89 |
6/30/2016 |
- |
- |
- |
- |
Craig A.
Roda |
18,000 |
0 |
0 |
14.415 |
6/30/2017 |
- |
- |
- |
- |
Craig A.
Roda |
7,722 |
0 |
0 |
9.965 |
6/30/2018 |
- |
- |
- |
- |
Craig A.
Roda |
15,958 |
0 |
0 |
10.88 |
6/30/2021 |
- |
- |
- |
- |
Craig A.
Roda |
- |
- |
- |
- |
- |
41,083 |
507,786 |
- |
- |
Craig A.
Roda |
- |
- |
- |
- |
- |
- |
- |
22,611 |
279,472 |
Philmer
H. Rohrbaugh |
- |
- |
- |
- |
- |
21,175 |
261,723 |
- |
- |
Philmer
H. Rohrbaugh |
- |
- |
- |
- |
- |
- |
- |
27,132 |
335,352 |
45
Table of Contents
____________________
1 The number of
securities underlying the options and the option exercise price has been
adjusted for stock dividends and stock splits, if any, which have occurred since
the option grant date.
2 Restricted
stock awards listed were granted April 1, 2012 and April 1, 2013. Pursuant to
the 2013 Plan, dividends paid by Fulton on restricted stock awards are
reinvested and subject to the same restrictions as the original award.
Therefore, the number of securities underlying the restricted stock awards has
been adjusted as of December 31, 2014 for dividends that have accrued since the
grant date. As of December 31, 2014, the dividends reflected in the restricted
stock awards to Messrs. Wenger, Barrett, Shreiner, Roda and Rohrbaugh were:
3,516, 865, 4,895, 2,465, and 1,175, respectively.
3 The restricted
stock awards cliff-vest (100%) three years from the date of the original grant.
Shares listed are as of December 31, 2014. Mr. Shreiners unvested restricted
stock awards, the original award and all accrued dividends, vested upon his
retirement on December 31, 2014.
4 Market value
of restricted shares awarded in 2013 and 2012 is based on the December 31, 2014
closing price of $12.36.
5 Shares represent the number of Performance
Shares issued to the Executives in 2014 on April 1, 2014, without any accrued
dividends, pursuant to the 2013 Plan. Mr. Shreiners Performance Shares did not
vest upon his retirement on December 31, 2014.
6 Market value
of Performance Shares shown is based on the December 31, 2014 closing price of
$12.36.
OPTION EXERCISES AND
STOCK VESTED TABLE 1
|
Option Awards |
Stock Awards |
Name |
Number of |
Value Realized |
Number of |
Value Realized |
|
Shares |
on Exercise |
Shares |
on Vesting
2 |
|
Acquired |
|
Acquired |
|
|
|
|
on Exercise |
|
on Vesting |
|
|
|
|
(#) |
($) |
(#) |
($) |
E.
Philip Wenger |
0 |
0 |
|
22,882 |
|
|
286,826 |
|
Patrick S. Barrett |
0 |
0 |
|
0 |
|
|
0 |
|
James E. Shreiner |
0 |
0 |
|
79,498 |
|
|
993,695 |
|
Craig A. Roda |
0 |
0 |
|
5,758 |
|
|
72,177 |
|
Philmer H. Rohrbaugh |
0 |
0 |
|
0 |
|
|
0 |
|
____________________
1 Except for
Messrs. Barrett and Rohrbaugh, all of the Executives had restricted stock that
vested during 2014.
2 Shares that
vested on July 1, 2014 for Messrs. Wenger, Shreiner and Roda were valued at
$12.535 per share, the average of the high and low trading price on July 1,
2014. Mr. Shreiner retired on December 31, 2014, and 35,155 of his shares vested
upon retirement and were valued at 12.455 per share, at the average of the high
and low trading price on December 31, 2014.
46
Table of Contents
PENSION BENEFITS TABLE
1
Name |
Plan Name |
Number
of Years |
Present |
Payments During |
|
|
|
|
Credited Service |
Value of
Accumulated |
Last
Fiscal Year |
|
|
|
|
|
Benefit |
|
|
|
|
|
(#) |
($) |
($) |
E.
Philip Wenger |
|
NA |
|
- |
- |
- |
Patrick
S. Barrett |
|
NA |
|
- |
- |
- |
James E.
Shreiner |
|
NA |
|
- |
- |
- |
Craig A.
Roda |
|
NA |
|
- |
- |
- |
Philmer
H. Rohrbaugh |
|
NA |
|
- |
- |
- |
____________________
1 In 2014, none
of the Executives participated in or had an account balance in any qualified or
nonqualified defined benefit plans sponsored by Fulton or any Fulton subsidiary
bank.
NONQUALIFIED DEFERRED
COMPENSATION TABLE
Name |
Executive |
Registrant |
Aggregate Earnings |
Aggregate |
Aggregate Balance |
|
Contributions in
Last |
Contributions in
Last |
in Last FY
2 |
Withdrawals/ |
at Last FYE 3 |
|
FY |
FY 1 |
|
|
|
Distributions |
|
|
|
|
($) |
($) |
($) |
($) |
($) |
E.
Philip Wenger |
|
59,844 |
|
|
89,805 |
|
|
40,005 |
|
|
0 |
|
|
754,839 |
|
Patrick
S. Barrett |
|
14,675 |
|
|
2,486 |
|
|
342 |
|
|
0 |
|
|
17,503 |
|
James E.
Shreiner |
|
113,935 |
|
|
22,982 |
|
|
33,205 |
|
|
0 |
|
|
498,130 |
|
Craig A.
Roda |
|
18,540 |
|
|
20,492 |
|
|
10,674 |
|
|
0 |
|
|
249,532 |
|
Philmer
H. Rohrbaugh |
|
0 |
|
|
0 |
|
|
0 |
|
|
0 |
|
|
0 |
|
____________________
1 Fultons
contributions toward nonqualified deferred compensation for each of the
Executives are listed in this column. See the table contained in footnote 9 of
the Summary Compensation Table on page 41. Amounts listed as registrant
contributions in this Nonqualified Deferred Compensation Table are also included
as part of the Executives Total All Other Compensation in the Summary
Compensation Table. 2014 contributions were credited to each of the Executives
accounts in early 2015.
2 The Executives
direct the investment of their nonqualified deferred compensation contributions
into various standard investment options offered from a set menu of investment
funds. In 2014, the available investment funds included Federated Total Return
Bond Fund (FTRBX), Fidelity Adv Div Intl I (FDVIX), Goldman Sachs Core Fixed
Income Inst. Fund (GSFIX), Goldman Sachs Gr Opp I (GGOIX), Goldman Sachs Mid Cap
Value Fund (GSMCX), GS Financial Square Govt Fund #465 (FGTXX), GS Finl Sq
Prime Obligations MM Fund #474 (FSMXX), MFS Research International Fund I
(MRSIX), MFS Value Fund I (MEIIX), PIMCO Real Return Fund (PRTNX), T. Rowe Price
Gr Stk (PRGFX), Vanguard 500 Index Fund Adm (VFIAX), Vanguard Mid Cap Index Adm,
Blend (VIMAX), Vanguard Short Term Bond Index Fund (VBIRX), Vanguard Small Cap
Growth Fund Adm (VSGAX), Vanguard Small Cap Index Fund Adm (VSMAX), Vanguard
Small Cap Value Fund Adm (VSIAX), Vanguard STAR Fund (VGSTX) and Vanguard
Windsor II Adm (VWNAX). The Executives may change their individual elections by
completing a new election form. A discussion of the Deferred Compensation
Agreements and Defined Benefit Pension Plans are included on page 36.
3 Balances
include the 2014 contributions made by Fulton and credited to the Executives
accounts in early 2015.
47
Table of Contents
POTENTIAL PAYMENTS UPON
TERMINATION
AND GOLDEN PARACHUTE COMPENSATION TABLE
Name |
Cash
($) |
Equity
($) |
Pension/NQDC
($) |
Perquisites/ |
Tax |
Other
($) |
Total
($) |
|
|
|
|
Benefits
($) |
Reimbursement
($) |
|
|
Voluntary
Termination 1 or Termination for Cause as of December 31, 2014
2 3 |
E. Philip
Wenger |
0 |
24,659 |
0 |
0 |
0 |
0 |
24,659 |
Patrick S.
Barrett |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
Craig A.
Roda |
0 |
42,112 |
0 |
0 |
0 |
0 |
42,112 |
Philmer H.
Rohrbaugh |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
Termination
Without Cause or for Good Reason Before a Change in Control as of
December 31, 2014 4 5 |
E. Philip
Wenger |
924,750 |
24,659 |
0 |
12,000 |
0 |
0 |
961,409 |
Patrick S.
Barrett |
430,844 |
0 |
0 |
12,000 |
0 |
0 |
442,844 |
Craig A.
Roda |
390,630 |
42,112 |
0 |
12,000 |
0 |
0 |
444,742 |
Philmer H.
Rohrbaugh |
468,733 |
0 |
0 |
12,000 |
0 |
0 |
480,733 |
Termination
Without Cause or for Good Reason - Upon or After a Change in Control as of
December 31, 2014 6 7 8 9 |
E. Philip
Wenger |
2,856,240 |
1,851,702 |
214,218 |
74,000 |
1,053,596 |
0 |
6,049,756 |
Patrick S.
Barrett |
1,062,302 |
693,915 |
79,672 |
74,000 |
0 |
0 |
1,909,889 |
Craig A.
Roda |
1,175,026 |
829,370 |
88,126 |
74,000 |
0 |
0 |
2,166,522 |
Philmer H.
Rohrbaugh |
1,239,714 |
597,075 |
92,978 |
74,000 |
0 |
0 |
2,003,767 |
Termination Due to
Retirement as of December 31, 2014 10 11 |
E. Philip
Wenger |
0 |
749,017 |
0 |
1,075 |
0 |
0 |
750,092 |
Patrick S.
Barrett |
0 |
381,491 |
0 |
375 |
0 |
0 |
381,866 |
James E. Shreiner
12 |
0 |
459,175 |
0 |
975 |
0 |
0 |
460,150 |
Craig A.
Roda |
0 |
549,898 |
0 |
1,050 |
0 |
0 |
550,948 |
Philmer H.
Rohrbaugh |
0 |
261,723 |
0 |
250 |
0 |
0 |
261,973 |
Termination Due to
Disability as of December 31, 2014 13 14 |
E. Philip
Wenger |
1,017,225 |
1,851,702 |
0 |
0 |
0 |
0 |
2,868,927 |
Patrick S.
Barrett |
473,928 |
693,915 |
0 |
0 |
0 |
0 |
1,167,843 |
Craig A.
Roda |
429,693 |
829,370 |
0 |
0 |
0 |
0 |
1,259,063 |
Philmer H.
Rohrbaugh |
515,606 |
597,075 |
0 |
0 |
0 |
0 |
1,112,681 |
Termination Due to
Death as of December 31, 2014 15 16 |
E. Philip
Wenger |
1,849,500 |
1,851,702 |
0 |
0 |
1,433,830 |
0 |
5,135,032 |
Patrick S.
Barrett |
861,688 |
693,915 |
0 |
0 |
668,026 |
0 |
2,223,629 |
Craig A.
Roda |
781,260 |
829,370 |
0 |
0 |
605,674 |
0 |
2,216,304 |
Philmer H.
Rohrbaugh |
937,466 |
597,075 |
0 |
0 |
726,773 |
0 |
2,261,314 |
____________________
1 Voluntary
Termination: In the event an
Executives employment is voluntarily terminated by the Executive other than for
Good Reason, which is defined in the Employment Agreement and described in
footnote 4 below, Fultons obligations are limited to the payment of the
Executives base salary through the effective date of the Executives
termination date, together with any applicable expense reimbursements and all
accrued and unpaid benefits and vested benefits in accordance with the
applicable employee benefit plans. No other payments are required, and under the
2013
48
Table of Contents
Plan, unvested stock
options, Performance Shares and unvested restricted stock grants are forfeited
by the Executive as a result of voluntary termination. The amount listed under
Equity is the value of the Executives vested and in the money stock options
as of December 31, 2014 based on Fultons closing price of $12.36.
2
Termination for
Cause: If an Executives
employment is terminated for Cause, Fulton is not obligated to make any
further payments to the Executive under the Employment Agreement, other than
amounts (including salary, expense reimbursement, etc.) accrued under the
Employment Agreements as of the date of such termination. Under the 2013 Plan,
unexercised stock options, Performance Shares and unvested restricted stock
grants are forfeited by an Executive terminated for Cause, which is defined in
the Employment Agreement to include an act of dishonesty constituting a felony,
use of alcohol or other drugs which interferes with the performance by the
Executive of the Executives duties, intentional refusal by the Executive to
perform duties, or conduct that brings public discredit on, or injures the
reputation of, Fulton.
3 The value
listed under Equity is the value of the Executives vested and in the money
stock options as of December 31, 2014 based on Fultons closing price of
$12.36.
4
Termination Without Cause or for
Good Reason Before a Change in Control: If an Executive terminates the Executives employment for Good Reason or
his employment is terminated by Fulton Without Cause, the Executive is
entitled to receive his base salary for a specified period of time and in the
sole discretion of Fulton, the Executive also may receive an additional cash
bonus. For the Executives in this section, that period is one (1) year. The
Executive also would continue to participate in employee health and other
benefit plans for which the Executive is eligible during the specified time
period. If the Executive is not eligible to continue to participate in any
employee benefit plan, the Executive will be compensated on an annual basis, in
advance, for such plan at Fultons cost plus any permitted gross up for any
taxes applicable thereto. Under the 2013 Plan, unexercised stock options and
unvested restricted stock grants are forfeited by an Executive terminated
Without Cause or for Good Reason. Good Reason is defined in the Employment
Agreement to include a breach by Fulton of its material obligations without
remedy, a significant change in the Executives authority, duties, compensation
or benefits, or a relocation of the Executive outside a certain distance from
where he previously was based. Without Cause is defined in the Employment
Agreement to include any reason other than for Cause.
5 Cash amount
listed for each Executive includes a severance payment based on the Executives
2014 base salary times the applicable multiple. The amounts listed under Cash
assume no discretionary bonus was paid to the Executives by Fulton. Equity
amounts listed are the value of vested stock options as of December 31, 2014.
Perquisites/Benefits include a monthly estimate of $1,000 for the value of
health and benefit expenses paid by Fulton for the severance period attributed
to each Executive.
6
Termination Without Cause or for
Good Reason Upon or After a Change in Control: The Executives and other employees have
contributed to the building of Fulton into the successful enterprise it is
today, and Fulton believes that it is important to protect them in the event of
a Change in Control. Further, Fulton believes that the interests of
shareholders will be best served if the interests of the Executives are aligned
with them, and providing Change in Control benefits should eliminate or mitigate
any reluctance of the Executives to pursue potential Change in Control
transactions that may be in the best interests of shareholders. Based on a
review in 2006 by the Hay Group, Fultons Compensation Consultant at the time,
of typical Change in Control provisions offered by Fultons peers and the
recommendation of the Hay Group, Fulton determined that the potential Change in
Control benefits it offers the Executives are typical for the financial services
industry and reasonable relative to the overall value of Fulton.
A Change in Control is
defined in the Employment Agreements to include the acquisition of the
beneficial ownership of more than 50% of the total fair market value or voting
power of the stock of Fulton by any one person or group of persons acting in
concert; a change in the composition of the Board of Directors of Fulton during
any period of twelve (12) consecutive months such that a majority of the Board
of Directors is replaced by Directors whose appointment was not endorsed by a
majority of the Board of Directors before such appointment or election; the
acquisition by any person or group of persons acting in concert during any
twelve (12) month period of 30% or more of the total voting power of the stock
of Fulton or of 40% or more of the total assets (on a gross fair value basis) of
Fulton. If, during the period beginning ninety (90) days before a Change in
Control and ending two (2) years after such Change in Control, an Executive is
terminated by Fulton Without Cause or an Executive resigns for Good Reason,
Fulton is required to pay the Executive two (2) times the sum of the
Executives: (i) annual base salary immediately before the Change in Control;
and (ii) the highest annual cash bonus or other incentive compensation awarded
to the Executive over the prior three (3) years. The Executive also is entitled
to receive: (i) an amount equal to that portion of Fultons retirement plan,
401(k) plan or deferred compensation plan contributions for the Executive which
were not vested, plus the amount of any federal, state or local income taxes due
on such amount; (ii) payment of up to $10,000 for outplacement services; and
(iii) continuation of other
49
Table of Contents
employee benefits to the
same extent provided to employees generally for a period of two (2) years. If
the Executive is not eligible to continue to participate in any employee benefit
plan, the Executive will be compensated on an annual basis, in advance, for such
plan at Fultons cost plus any permitted gross up for any taxes applicable
thereto.
Only Mr. Wengers
Employment Agreement provides that, in the event any payment or distribution by
Fulton to or for the benefit of Mr. Wenger would be subject to excise tax as a
Golden Parachute, Mr. Wenger will be entitled to receive an additional payment
equal to the total excise tax imposed. The determination that a gross up
payment is required and its amount is to be made by a tax adviser and Fulton is
responsible for the advisers fees and expenses. Fultons Compensation
Consultant advised the HR Committee in 2006 that this gross up provision was a
typical provision in such agreements. In keeping with Fultons objective to
offer a competitive contract when they were offered, this provision was included
in the Employment Agreements in 2006, but more recent agreements, such as the
agreements with Messrs. Barrett, Roda and Mr. Rohrbaugh, do not contain a gross
up provision.
Generally, the 2013 Plan
provides for vesting of unvested stock options and restricted shares upon a
Change in Control. However, with respect to Performance Shares, in the event of
a Change in Control, all incomplete performance periods in respect of such
Performance Shares in effect on the date the Change in Control occurs shall end
on the date of such change and the HR Committee shall (i) determine the extent
to which Performance Goals with respect to each such performance period have
been met based upon such audited or unaudited financial information then
available as it deems relevant and (ii) cause to be paid to the Executives
partial or full Performance Shares with respect to performance goals for each
such performance period based upon the HR Committees determination of the
degree of attainment of performance goals or, if not determinable, assuming that
the applicable target levels of performance have been attained. The table
assumes the target award of Performance Shares based on $12.36 per share price
and the number of Performance Shares outstanding as of December 31,
2014.
7 Cash amounts
listed are two (2) times 2014 base salary and highest Annual Cash Incentive
Awards paid for the last three (3) years for each Executive. The Cash amount for
Mr. Roda has been reduced by $50,182 pursuant to the terms of his Employment
Agreements to the extent required to avoid a federal excise tax imposition
pursuant to the regulations promulgated under Section 280G of the Tax Code.
Equity amount is the value of all in the money stock options and restricted
stock as of December 31, 2014. Perquisites/Benefits include $10,000 for
outplacement services, $1,000 per month during the severance period for the
value of health and benefit expenses paid by Fulton, $20,000 per year for club
memberships, vehicle and other expenses paid by Fulton for the severance period
attributed to each Executive.
8 Amount listed
under Pension/NQDC represents the aggregate dollar value of Fultons
contributions to the 401(k) Plan and other retirement benefits as a result of
this termination event.
9 Only Mr.
Wenger is eligible to receive tax reimbursement for any excise tax imposed for
this termination event pursuant to his Employment Agreement. The amounts under
Tax Reimbursements were calculated as of December 31, 2014.
10
Termination Due to
Retirement: In the event an
Executive terminates his employment due to retirement upon attaining age
sixty-five (65), Fulton is obligated to pay the Executives base salary through
the effective date of the Executives retirement, together with any applicable
expense reimbursements and all accrued and unpaid benefits and vested benefits
in accordance with the applicable employee benefit plans. Fulton would have no
further obligation under the Employment Agreement; however, assuming that each
Executive attained the age of sixty-five (65) and retired as of December 31,
2014, each would have received a lump sum payment of $25 for each year of
service as of December 31, 2014; a payment made to all retiring
employees.
In the event an Executive
terminates employment due to retirement upon attaining age sixty (60), and the
Executive has ten (10) or more years of consecutive service with Fulton,
unvested stock options and restricted shares awarded under Fultons plans would
automatically vest. Pursuant to the 2013 Plan, the Performance Shares do not
automatically vest upon retirement, but subject to review by the HR Committee,
performance continues to be measured and the shares may vest based on the
original vesting schedule according to the performance level actually achieved,
and are not included. Assuming that all the Executives attained the age of sixty
(60) with at least ten (10) years of service and retired as of December 31,
2014, their stock options were valued at the $12.36 closing price of Fulton
common stock on December 31, 2014. The Executives would have two (2) years from
the date of retirement to exercise their stock options in accordance with the
terms of their awards.
11 Equity amount
is the value of all in the money stock options and restricted stock as of
December 31, 2014.
12 Mr. Shreiner
retired as an Executive of Fulton effective on December 31, 2014, and other
termination events are not provided as a result.
50
Table of Contents
13
Termination Due to
Disability: Following an
Executives Disability, defined in the Employment Agreements to be a medically
determinable physical or medical impairment that is expected to result in death
or to last for at least twelve (12) months, and that either renders the
Executive unable to engage in any substantial gainful activity or qualifies the
Executive for benefits under a Fulton disability plan, the employment of the
Executive would terminate automatically, in which event Fulton is not thereafter
obligated to make any further payments under the Employment Agreement, other
than amounts (including salary, expense reimbursement, etc.) accrued as of the
date of such termination, plus an amount equal to at least six months base
salary in effect immediately prior to the date of the Disability. After this six
(6) month salary continuation period, for as long as the Executive continues to
be disabled, the Executive will continue to receive at least 60% of the
Executives base salary until the earlier of the Executives death or December
31 of the calendar year in which the Executive attains age sixty-five (65). To
the extent it does not duplicate benefits already being provided, an Executive
will also receive those benefits customarily provided by Fulton to disabled
former employees, which benefits shall include, but are not limited to, life,
medical, health, accident insurance and a survivors income benefit.
14 Cash amount
for all the Executives is six (6) months at full salary, then 60% of salary for
next twelve (12) months. Perquisites/Benefits include a monthly estimate of
$1,000 for the value of health and benefit expenses paid by Fulton for 18
months. Equity amount is the value of all in the money stock options,
Performance Share and restricted stock as of December 31, 2014. In the event an
Executive terminates employment due to disability, unvested options, Performance
Shares and restricted shares awarded under Fultons option plans would
automatically vest. Equity for each Executive were valued at the $12.36 closing
price of Fulton common stock on December 31, 2014. The Executives would have one
(1) year from the date of disability to exercise their stock options in
accordance with the terms of their awards.
15
Termination Due to
Death: In the event of a
termination of employment as a result of an Executives death, the Executives
dependents, beneficiaries or estate, as the case may be, would receive such
survivors income and other benefits as they may be entitled to under the terms
of Fultons benefit programs, which includes the Survivors Benefit Life
Insurance and twice base salary amount plus taxes due as a result of the payment
under the Death Benefit Agreement described on page 36.
16 Equity amount
is the value of all in the money stock options, Performance Share and
restricted stock as of December 31, 2014. In the event an Executive terminates
employment due to death, unvested options, Performance Shares and restricted
shares awarded under Fultons option plans would automatically vest. Equity for
each Executive were valued at the $12.36 closing price of Fulton common stock on
December 31, 2014. The Executives estate would have one (1) year from the date
of death exercise their stock options in accordance with the terms of their
awards.
51
Table of Contents
NON-BINDING SAY-ON-PAY
RESOLUTION TO APPROVE THE COMPENSATION
OF THE NAMED EXECUTIVE OFFICERS
PROPOSAL TWO
Pursuant to the Dodd-Frank
Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, Fulton
is providing its shareholders with the opportunity to vote on an advisory
(non-binding) resolution at the 2015 Annual Meeting to approve Fultons
executive compensation as described in the Compensation Discussion and Analysis,
the tabular disclosures of the Named Executive Officers compensation
(Compensation Tables), and other related information in this Proxy Statement.
This proposal, commonly known as a Say-on-Pay Proposal, gives shareholders the
opportunity to endorse or not endorse Fultons Executive pay program. At
Fultons 2014 Annual Meeting, Fulton presented a similar proposal to its
shareholders and, approximately 96% of the shareholders who cast a vote on this
issue voted in favor of, and approved, Fultons 2014 Say-on-Pay proposal. The HR
Committee considered the number of votes cast in favor of Fultons 2014
Say-on-Pay proposal to be a positive endorsement of Fultons current pay
programs and practices. Fulton will continue to monitor the level of support for
each Say-on-Pay proposal. However, because the shareholder vote is not binding,
the outcome of the 2015 vote, or any future vote, may not be construed as
overruling any decision by Fultons Board of Directors or HR Committee regarding
executive compensation.
In 2011, Fulton submitted
to shareholders a non-binding proposal, asking shareholders whether Fulton
should submit its Say-on-Pay proposal to shareholders every one (1), two (2) or
three (3) years. This type of proposal is commonly known as a Say-When-on-Pay
proposal. The shareholders approved Fultons recommendation that the Say-on-Pay
proposal should be submitted to shareholders on an annual basis. Although Fulton
believes that having an annual Say-on-Pay vote is appropriate for 2015, Fultons
HR Committee and Board of Directors will continue to evaluate the frequency of
the non-binding Say-on-Pay proposal and might recommend that shareholders
approve a different frequency in the future. Under current SEC rules, publicly
traded companies are required, no less frequently than once every six (6) years,
to provide for a separate shareholder Say-When-on-Pay advisory vote in proxy
statements for annual meetings to determine whether the Say-on-Pay vote will
occur every one (1), two (2) or three (3) years. Fulton anticipates submitting a
new Say-When-on-Pay proposal to shareholders on or before Fultons Annual
Meeting of Shareholders in 2017.
As further described in the
Compensation Discussion and Analysis section of this Proxy Statement, starting
on page 23, Fultons executive compensation philosophy and program are intended
to achieve three (3) objectives: (i) align interests of the Executives with
shareholder interests; (ii) link the Executives pay to performance; and (iii)
attract, motivate and retain executive talent. Fultons Executive compensation
program currently includes a mix of base salary, incentive bonus, equity-based
plans, retirement plans, health plans and other benefits. Fulton believes that
its compensation program, policies and procedures are reasonable and appropriate
and compare favorably with the compensation programs, policies and procedures of
its peers.
The Board of Directors
recommends that shareholders, in a non-binding proposal, vote FOR the
following resolution:
RESOLVED, that the
compensation paid to Fultons Named Executive Officers, as disclosed in this
Proxy Statement pursuant to Item 402 of SEC Regulation S-K, including the
Compensation Discussion and Analysis, the Compensation Tables and any related
material contained in this Proxy Statement, is hereby APPROVED.
Approval of the non-binding
resolution regarding the compensation of the Named Executive Officers would
require that the number of votes cast in favor of the proposal exceed the number
of votes cast against it. Abstentions and broker non-votes will not be counted
as votes cast and, therefore, will not affect the determination as to whether
the proposal is approved.
Because your vote is
advisory, it will not be binding upon Fulton. However, Fultons HR Committee and
Board of Directors will take into account the outcome of the vote when
considering future Executive compensation arrangements, but no determination has
been made as to what action, if any, the HR Committee or Board of Directors
might take if shareholders do not approve this advisory proposal.
Recommendation of the
Board of Directors
The Board of Directors
recommends that the shareholders vote FOR the non-binding resolution to approve
the compensation of the Named Executive Officers.
52
Table of Contents
RELATIONSHIP WITH
INDEPENDENT PUBLIC ACCOUNTANTS
For the years ended
December 31, 2014 and December 31, 2013, Fulton engaged KPMG LLP (KPMG),
independent registered public accountants, to audit Fultons financial
statements. The fees incurred for services rendered by KPMG for the years ended
December 31, 2014 and 2013 are summarized in the following table:
|
2014 |
|
2013 |
Audit Fees Annual Audit and Quarterly Reviews
(1) |
$ |
1,456,000 |
|
$ |
1,809,500 |
Audit Fees Issuance of Comfort Letters and
Consents |
|
338,000 |
|
|
26,000 |
Audit Fees Statutory Audit |
|
42,000 |
|
|
46,640 |
|
Audit Fees
Subtotal |
|
1,836,000 |
|
|
1,882,140 |
|
Audit Related Fees (2) |
|
95,900 |
|
|
106,020 |
Tax
Fees (3) |
|
105,590 |
|
|
78,560 |
All
Other Fees (4) |
|
1,738,020 |
|
|
82,150 |
|
TOTAL |
$ |
3,775,510 |
|
$ |
2,148,870 |
____________________
(1) Amounts
presented for 2014 are based upon the audit engagement letter and additional
fees paid. Final billings for 2014 may differ.
(2) Fees paid
for a required agreed-upon procedures report related to student lending and
audits of financial statements of certain employee benefits plans.
(3) Includes
fees rendered in connection with tax services relating to Federal and state tax
matters and the Foreign Account Tax Compliance Act (FATCA).
(4) 2014 fees
paid for data validation related to BSA/AML. 2013 fees paid related to a review
of merger and acquisition and risk assessment processes.
The appointment of KPMG for
the fiscal year ended December 31, 2015 was approved by the Audit Committee of
the Board of Directors of Fulton at a meeting on February 23, 2015.
Representatives of KPMG are expected to be present at the 2015 Annual Meeting
with the opportunity to make a statement and will be available to respond to
appropriate questions.
The Audit Committee has
carefully considered whether the provision of the non-audit services described
above, which were performed by KPMG in 2014 and 2013, would be incompatible with
maintaining the independence of KPMG in performing its audit services and has
determined that, in its judgment, the independence of KPMG has not been
compromised.
All fees paid to KPMG in
2014 and 2013 were pre-approved by the Audit Committee. The Audit Committee
pre-approves all auditing and permitted non-auditing services, including the
fees and terms thereof, to be performed by its independent auditor, subject to
the de minimus exceptions for non-auditing services permitted by the Exchange
Act. However, these types of services are approved prior to completion of the
services. The Audit Committee may form and delegate authority to subcommittees
consisting of one or more members, when appropriate, including the authority to
grant pre-approvals of audit and permitted non-audit services. Any decisions of
such subcommittees to grant pre-approvals are presented to the full Audit
Committee for ratification at its next scheduled meeting.
Based on its review and
discussion of the audited 2014 financial statements of Fulton with management
and KPMG, the Audit Committee recommended to the Board of Directors that the
financial statements be included in the Annual Report on Form 10-K for filing
with the SEC. A copy of the report of the Audit Committee of its findings that
resulted from its financial reporting oversight responsibilities is attached as
Exhibit A.
53
Table of Contents
RATIFICATION OF
INDEPENDENT AUDITOR PROPOSAL THREE
Fultons Audit Committee
has selected the firm of KPMG to continue as Fultons independent auditor for
the fiscal year ending December 31, 2015. Although shareholder approval of the
selection of KPMG is not required by law, the Board of Directors believes that
it is advisable to give shareholders an opportunity to ratify this selection as
is a common practice with other publicly traded companies. Assuming the presence
of a quorum at the Annual Meeting, the affirmative vote of the majority of the
votes cast is required to ratify the appointment of KPMG as Fultons independent
auditor for the fiscal year ending December 31, 2015. If Fultons shareholders
do not approve this proposal at the 2015 Annual Meeting, the Audit Committee
will consider the results of the shareholder vote on this proposal when
selecting an independent auditor for 2015, but no determination has been made as
to what action, if any, the Audit Committee would take if shareholders do not
ratify the appointment of KPMG.
KPMG has conducted the
audit of the financial statements of Fulton and its subsidiaries for the years
ended December 31, 2002 through 2014. Representatives of KPMG who are expected
to be present at the meeting, will be given an opportunity to make a statement
if they desire to do so, and will be available to answer appropriate questions
from shareholders.
Recommendation of the
Board of Directors
The Board of Directors
recommends that shareholders vote FOR ratification of the appointment of KPMG
LLP as Fultons independent auditor for the fiscal year ending December 31,
2015.
54
Table of Contents
ADDITIONAL
INFORMATION
A copy of Fultons
Annual Report on Form 10-K as filed with the SEC, including financial
statements, is available without charge to shareholders upon written request
addressed to the Corporate Secretary, Fulton Financial Corporation, P.O. Box
4887, One Penn Square, Lancaster, Pennsylvania 17604.
The Fulton Annual Report
on Form 10-K for year-ended December 31, 2014 and this Proxy Statement are
posted and available on Fultons website at www.fult.com. Copies of the
current governance documents and future updates, including but not limited to
the Fulton Code of Conduct, Audit Committee Charter, HR Committee Charter,
Nominating and Corporate Governance Committee Charter, Risk Committee Charter
and Fultons Corporate Governance Guidelines, are also posted and available on
Fultons website at www.fult.com. The contents of our website are not
incorporate into this Proxy Statement by provision of this link, or other links
in this Proxy Statement.
Only one Proxy Statement is
being delivered to multiple security holders sharing an address unless Fulton
has received contrary instructions from one or more of the security holders.
Fulton will promptly deliver, upon written or oral request, a separate copy of
this Proxy Statement to a security holder at a shared address to which a single
copy of the document was delivered. Such a request should be made to the
Corporate Secretary, Fulton Financial Corporation, P.O. Box 4887, One Penn
Square, Lancaster, Pennsylvania 17604, (717) 291-2411. Requests to receive a
separate mailing for future Proxy Statements or to limit multiple copies to the
same address should be made orally or in writing to the Corporate Secretary at
the foregoing address or phone number.
If you would like to reduce
the costs incurred by Fulton in mailing proxy material, you can consent to
receiving future Proxy Statements, proxy cards and annual reports electronically
via e-mail or the Internet. To sign up for electronic delivery, please go to
www.proxyvote.com and have your proxy card in hand when you access the
website, then follow the instructions at www.proxyvote.com to obtain your
records and to create an electronic voting instruction form. Follow the
instructions for voting by Internet and, when prompted, indicate that you agree
to receive or access shareholder communications electronically in future years.
OTHER
MATTERS
The Board of Directors of
Fulton knows of no matters other than those discussed in this Proxy Statement,
which will be presented at the 2015 Annual Meeting. However, if any other
matters are properly brought before the meeting, any proxy given pursuant to
this solicitation will be voted in accordance with the recommendations of the
Board of Directors of Fulton.
|
BY ORDER OF THE BOARD
OF DIRECTORS |
|
|
|
|
|
|
|
E.
PHILIP WENGER |
|
Chairman of the Board, |
|
Chief Executive Officer and President |
Lancaster,
Pennsylvania |
|
March 24, 2015 |
|
55
Table of Contents
EXHIBIT A
REPORT OF AUDIT
COMMITTEE
February 23,
2015
To the Board of Directors
of Fulton Financial Corporation:
We have reviewed and
discussed with management Fulton Financial Corporations audited financial
statements as of, and for the year ended, December 31, 2014.
We have discussed with
representatives of KPMG LLP, Fulton Financial Corporations independent auditor,
the matters required to be discussed by Auditing Standard No. 16,
Communications with Audit
Committees issued by the Public
Company Accounting Oversight Board (PCAOB).
We have received and
reviewed the written disclosures and the letter from the independent auditor
required by the PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning
Independence, as amended, by the
PCAOB, and has discussed with the auditor the auditors independence.
Based on the reviews and
discussions referred to above, we recommend to the Board of Directors that the
financial statements referred to above be included in Fulton Financial
Corporations Annual Report on Form 10-K for the year ended December 31,
2014.
John M. Bond, Jr.,
Chair
George W. Hodges, Vice Chair
Denise L. Devine
Albert Morrison
III
Ernest J. Waters
A-1
Table of Contents
ATTN: SHAREHOLDER SERVICES
P.O. BOX 4887
ONE
PENN SQUARE
LANCASTER, PA 17604
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to
transmit your voting instructions and for electronic delivery of information up
until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting
instruction form.
ELECTRONIC DELIVERY OF
FUTURE PROXY MATERIALS
If you
would like to reduce the costs incurred by our company in mailing proxy
materials, you can consent to receiving all future proxy statements, proxy cards
and annual reports electronically via e-mail or the Internet. To sign up for
electronic delivery, please follow the instructions above to vote using the
Internet and, when prompted, indicate that you agree to receive or access proxy
materials electronically in future years.
VOTE BY PHONE -
1-800-690-6903
Use any
touch-tone telephone to transmit your voting instructions up until 11:59 p.m.
Eastern Time the day before the cut-off date or meeting date. Have your proxy
card in hand when you call and then follow the instructions.
VOTE BY
MAIL
Mark, sign and date your
proxy card and return it in the postage-paid envelope we have provided or return
it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
|
|
M85414-P59548 |
|
KEEP THIS PORTION FOR YOUR
RECORDS |
|
|
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED
AND DATED. |
|
|
|
FULTON FINANCIAL CORPORATION |
|
|
|
|
|
The Board of Directors recommends you vote FOR the
following proposals: |
|
1. |
Election
of Directors |
|
|
|
|
|
|
|
|
|
Nominees: |
For |
Against |
Abstain |
|
|
|
|
|
|
1a. |
John M.
Bond, Jr. |
☐ |
☐ |
☐ |
|
|
|
|
|
|
|
1b. |
Lisa
Crutchfield |
☐ |
☐ |
☐ |
|
|
|
|
|
|
|
1c. |
Denise
L. Devine |
☐ |
☐ |
☐ |
|
|
|
|
|
|
|
1d. |
Patrick
J. Freer |
☐ |
☐ |
☐ |
|
|
|
|
|
|
|
1e. |
George
W. Hodges |
☐ |
☐ |
☐ |
|
|
|
|
|
|
|
1f. |
Albert
Morrison III |
☐ |
☐ |
☐ |
|
|
|
|
|
|
|
1g. |
James R.
Moxley III |
☐ |
☐ |
☐ |
|
|
|
|
|
|
|
1h. |
R. Scott
Smith, Jr. |
☐ |
☐ |
☐ |
|
|
|
|
|
|
|
1i. |
Gary A.
Stewart |
☐ |
☐ |
☐ |
|
|
|
|
|
|
|
1j. |
Ernest
J. Waters |
☐ |
☐ |
☐ |
|
|
|
|
|
|
|
1k. |
E. Philip Wenger |
☐ |
☐ |
☐ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For |
Against |
Abstain |
|
|
|
|
|
|
2. |
NON-BINDING SAY-ON-PAY RESOLUTION TO APPROVE THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS. |
|
☐ |
☐ |
☐ |
|
3. |
TO RATIFY THE APPOINTMENT OF KPMG LLP, AS FULTON FINANCIAL CORPORATIONS INDEPENDENT AUDITOR FOR FISCAL YEAR ENDING 12/31/2015. |
|
☐ |
☐ |
☐ |
|
|
|
|
|
|
|
|
|
|
|
|
For address changes
and/or comments, please check this box and write them on the back where
indicated. |
|
|
|
☐ |
Please sign exactly
as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate or partnership
name by authorized officer. |
|
|
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN
WITHIN BOX] |
Date |
|
|
Signature (Joint
Owners) |
Date |
Table of Contents
Meeting Time, Date and
Location
The meeting will be
held at 10:00 a.m. on Tuesday, May 5, 2015 at the Lancaster Marriott at Penn
Square, 25 South Queen Street, Lancaster, Pennsylvania. Light refreshments will
be available starting at 9:00 a.m., and the business meeting will start promptly
at 10:00 a.m.
RSVP
If you will be attending the meeting, please
complete the enclosed Annual Meeting Invitation and Reservation
Form.
Important Notice
Regarding the Availability of Proxy Materials for the Annual Meeting:
The Combined Document and
Meeting Invitation are available at www.proxyvote.com.
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS OF
FULTON FINANCIAL
CORPORATION
This proxy appoints Samuel
H. Jones, Jr., Kenneth E. Shenenberger, John R. Merva, or any one of them acting
in the absence of the other proxies, with full power of substitution, to
represent and vote, as designated on the reverse side, all of the Fulton
Financial Corporation Common Stock: (i) held of record by the signer on February
27, 2015 and (ii) which the signer is otherwise entitled to vote, and, in their
discretion, to vote upon such other business as may be properly brought before
the Annual Meeting of Shareholders to be held on Tuesday, May 5, 2015, at 10:00
a.m., at the Lancaster Marriott at Penn Square, 25 South Queen St., Lancaster,
PA, or any adjournment thereof.
This proxy, when properly delivered, will be voted in the manner directed by the shareholder(s). If no direction is made, this proxy will be voted
FOR the Election of Directors, FOR the Say-on-Pay proposal, and FOR the ratification of the appointment of KPMG LLP.
If shares of Fulton
Financial Corporation Common Stock are issued to or held for the account of the
person(s) signing on the reverse side (Plan Participant) under employee plans
and voting rights attached to such shares (any such plans, an Employee Plan),
the Plan Participant hereby directs the respective fiduciary (Plan Trustee) of
each applicable Employee Plan to vote all shares of Fulton Financial Corporation
Common Stock in the Plan Participants name and/or account under such Employee
Plan held in the account as of February 27, 2015 in accordance with the
instructions given herein, and, in its discretion, to vote upon such other
business as may be properly brought before the Annual Meeting, to be held on
Tuesday, May 5, 2015, at 10:00 a.m., at the Lancaster Marriott at Penn Square,
25 South Queen St., Lancaster, PA, or any adjournments or postponements
thereof.
Employee Plan shares, when
this proxy is properly delivered, will be voted by the Plan Trustee in the
manner directed by the Plan Participant.
Please use the Internet or
touch-tone telephone to transmit your voting instructions up until 11:59 p.m.
Eastern Time on May 4, 2015, which is the deadline to vote the shares through
the use of the Internet or telephone. Voting instructions for Employee Plan
shares made through the Internet or telephone must be received by 11:59 p.m.
Eastern Time on April 30, 2015.
|
Address
Changes/Comments: |
|
|
|
|
|
|
|
|
|
|
(If you noted any Address
Changes/Comments above, please mark corresponding box on the reverse
side.)
Fulton Financial (NASDAQ:FULT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Fulton Financial (NASDAQ:FULT)
Historical Stock Chart
From Sep 2023 to Sep 2024