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. )
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
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
Fulton Financial Corporation
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(Name of Registrant as
Specified In Its Charter)
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(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.
[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:
____________________________________________________________________________________
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:
P.O.
Box 4887
One
Penn Square
Lancaster, Pennsylvania 17604
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FRIDAY, APRIL 30, 2010 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 will be held on Friday, April 30,
2010, 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. To elect ten (10) directors to serve for one-year terms; | ||
| 2. | EXECUTIVE COMPENSATION. A non-binding resolution to approve the compensation of the named executive officers; | ||
| 3. | RATIFY KPMG LLP AS INDEPENDENT AUDITOR. To ratify the appointment of KPMG LLP as Fulton Financial Corporation’s Independent Auditor for the fiscal year ending December 31, 2010; and | ||
| 4. | OTHER BUSINESS. To consider 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 March 1, 2010, shall be
entitled to be given notice of, and to vote at, the meeting. Please note that Fulton’s 2010 meeting is being held at a different
location than last year’s meeting. Public parking is available in downtown
Lancaster. Light refreshments will be available starting at 9:00 a.m., and the
business meeting will start promptly at 10:00 a.m.
It is requested that
you promptly execute the enclosed Proxy and return it in the enclosed postpaid
envelope. Alternatively, you may vote by telephone or electronically through the
Internet by following the instructions on the proxy card. You are cordially invited to attend the meeting, but please RSVP that you
will attend. See the enclosed Annual Meeting Invitation and Reservation Form for
more information and to RSVP if you are going to attend the meeting in person.
Your Proxy is revocable
and may be withdrawn at any time before it is voted at the meeting.
A copy of the Annual
Report on Form 10-K of Fulton Financial Corporation is also enclosed.
| Sincerely, | |
 |
|
| George R. Barr, Jr. | |
| Secretary |
Enclosures
March 26, 2010
March 26, 2010
PROXY STATEMENT
Dated and To Be Mailed on or about: March 26, 2010
P.O. Box 4887, One Penn Square
Lancaster, Pennsylvania 17604
(717) 291-2411
ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON APRIL 30, 2010 AT 10:00 A.M.
Fulton Financial
Corporation, a Pennsylvania business corporation and registered financial
holding company (also herein referred to as “Fulton” or the “Corporation”), 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 and today owns the
following depository banks: Delaware National Bank, FNB Bank, N.A., Fulton Bank
N.A., Lafayette Ambassador Bank, Skylands Community Bank, Swineford National
Bank, The Bank and The Columbia Bank. In 2009, Fulton Bank changed its charter
to become a national bank and changed its formal name to Fulton Bank, National
Association.
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 certain 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).
The annual meeting of
the shareholders of Fulton (“Annual Meeting”) will be held on Friday, April 30, 2010, 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, but in order for Fulton to plan and
prepare for the proper number of shareholders, please RSVP and confirm
that you will attend by completing and returning the enclosed postcard which is
part of the Annual Meeting Invitation and Reservation Form 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 available
parking locations, please consult the Lancaster Parking Authority web site at
www.lancasterparkingauthority.com
or consult the information on the Annual Meeting Invitation and Reservation
Form. Each shareholder may be asked to present valid picture identification,
such as a driver’s license, and some proof of share ownership. Large bags,
cameras, recording devices and other electronic devices will not be permitted at
the meeting.
This Proxy Statement
relates to Fulton’s twenty-eighth Annual Meeting of the shareholders. Attendance
at the Annual Meeting will be limited to shareholders of record at the close of
business on March 1, 2010 (the “Record Date”), their authorized representatives
and guests of Fulton.
Only those
shareholders of record as of the Record Date shall be entitled to receive notice
of, and to vote at, the Annual Meeting.
1
The shareholders will
be asked to consider and vote upon the following matters at the meeting: (i) to
elect ten (10) directors to serve for one-year terms; (ii) a non-binding
resolution to approve the compensation of the named executive officers; (iii) to
ratify the appointment of KPMG LLP as Fulton’s independent auditor; and (iv) to
consider and vote upon such other business as may be properly brought before the
Annual Meeting and any adjournments thereof.
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 Friday, April 30, 2010, and any adjournments 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 Fulton’s directors,
officers and employees, who will not receive any additional compensation for
such solicitation activities.
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. 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 meeting. The costs of such services are estimated at $7,500 for the proxy
solicitation fee, plus reasonable research, distribution and mailing costs.
The execution and
return of the enclosed proxy will not affect a shareholder's 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 of Fulton, at any time before the proxy is voted at the
Annual Meeting. Unless revoked, any proxy given pursuant to this solicitation
will be voted at the meeting 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 ten (10) nominees
identified in this Proxy Statement, FOR a non-binding resolution to approve the
compensation of the named executive officers, and FOR the ratification of the appointment of KPMG
LLP as Fulton’s independent auditor for the fiscal year ending December 31,
2010. 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
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).
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 shareholder's 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”), formerly known as the Fulton Financial
Corporation Profit Sharing Plan, will be voted by Fulton Financial Advisors, a
division of Fulton Bank (“FFA”) 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 FFA to
vote, participants’ voting instructions must be received by April 24, 2010.
Shares held in the Fulton Financial Common Stock Fund with respect to which no
voting instructions are received by April 24, 2010, will be
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voted by FFA
FOR the election of the ten (10) nominees
identified in this Proxy Statement, FOR a non-binding resolution to approve the
compensation of the named executive officers, and FOR the ratification of the appointment of KPMG
LLP as Fulton’s independent auditor for the fiscal year ending December 31,
2010.
If you hold your
shares in street name with a bank or broker it is important that you cast your
vote if you want it to count in the election of directors (Item 1 of this Proxy
Statement). In the past, if you held your shares in street name and you did not
indicate how you wanted your shares voted in the election of directors, your
bank or broker was allowed to vote those shares on your behalf in the election
of directors as they felt appropriate. Recent changes in regulation, however, no
longer permit your bank or broker to vote your shares in the election of
directors on a discretionary basis. Thus, 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 Item 2 of this Proxy
Statement, no votes will be cast on your behalf. Your bank or broker will,
however, continue to have discretion to vote any uninstructed shares on the
ratification of the appointment of the Company's independent registered public
accounting firm (Item 3 of this Proxy Statement) and other matters that your
bank or broker considers routine. If you are a registered shareholder of record
who holds stock in certificates or book entry with Fulton’s 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.
Accordingly, we
encourage you to vote your shares before the meeting either by returning your
proxy by mail, voting by telephone or voting via the Internet so that your
shares will be represented and voted at the meeting if you cannot attend in
person.
At the close of
business on the Record Date, Fulton had 176,467,834 shares of common stock
outstanding and entitled to vote. There is no other class of common stock
outstanding. As of the Record Date, 2,843,815 shares of Fulton common stock were
held by FFA, as sole fiduciary. The shares held by FFA as sole fiduciary
represent, in the aggregate, approximately 1.61 percent of the total shares
outstanding and unless directed otherwise will be voted FOR the election of the ten (10) nominees
identified in this Proxy Statement, FOR a non-binding resolution to approve the
compensation of the named executive officers, and FOR the ratification of the appointment of KPMG
LLP as Fulton’s independent auditor for the fiscal year ending December 31,
2010.
A majority of the
outstanding common stock present in person or by proxy 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 as casting a vote or abstaining. Likewise, the judge
of election will treat shares of common stock represented by broker non-votes
1 as present for
purposes of determining a quorum, but broker non-votes will not be counted for
any proposal.
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 Fulton’s Articles of Incorporation or
Bylaws.
In the case of the
election of directors, the ten (10) candidates receiving the highest number of
votes cast at the Annual Meeting shall be elected to the Board of Directors for
terms of one year. The affirmative
____________________
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.
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vote of a majority of
the common shares represented and voting at the Annual Meeting is required for
approval of the non-binding resolution to approve the compensation of the named
executive officers and ratification of Fulton’s independent auditor. Abstentions
and broker non-votes will be counted as shares that are present at the meeting,
but will not be counted as votes cast on the election of directors, the
non-binding resolution to approve the compensation of the named executive
officers, or for the ratification of Fulton’s independent auditor. Abstentions
and broker non-votes will have no effect on the director election, the
non-binding resolution concerning executive compensation or the ratification of
Fulton’s 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 five percent of the outstanding common stock of Fulton, except those
listed on page 13 under “Security Ownership of Directors, Nominees, Management
and Certain Beneficial Owners.”
The Board of
Directors recommends that the shareholders vote FOR the election of the ten (10) nominees identified in this Proxy Statement
to serve for one-year terms, FOR the non-binding resolution to approve the compensation of the named
executive officers, and FOR ratification of the appointment of KPMG LLP as Fulton’s independent
auditor for the fiscal year ending December 31, 2010.
Shareholder proposals
intended to be considered for inclusion in Fulton’s proxy statement and proxy
for the 2011 Annual Meeting must be received at the principal executive offices
of Fulton at One Penn Square, Lancaster, Pennsylvania no later than November 26,
2010. Any shareholder proposal not received at Fulton’s principal executive
offices by February 9, 2011, which is 45 calendar days before the one year
anniversary of the date Fulton released the previous year’s annual meeting proxy
statement to shareholders, will be considered untimely and, if presented at the
2011 Annual Meeting, the proxy holders will be able to exercise discretionary
authority to vote on any such proposal to the extent authorized by Rule 14a-4(c)
under the Securities Exchange Act of 1934, as amended. All shareholder proposals
must comply with Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, as well as Fulton’s Bylaws.
Generally, 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 shareholder’s intention to continue to
hold the stock through the date of the 2011 Annual Meeting. The shareholder, or
a qualified representative, must attend the 2011 Annual Meeting in person to
present the proposal. The shareholder must continue to hold the shareholder’s
stock through the date of the 2011 Annual Meeting.
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.
4
Fulton has had a
written Code of Conduct (“Code”) for over two decades that governs the conduct
of its directors, officers and employees. The Code was revised in 2004 to comply
with the requirements of the Sarbanes-Oxley Act of 2002 and NASDAQ listing
standards, and Fulton provides the Code to each director, officer and employee.
In 2006, Fulton updated the Code to include a new process for filing anonymous
complaints and to make other minor changes. Fulton last updated the Code in 2008
to include a hotline number and make other minor changes. A current copy of the
Code 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 is also posted and available on Fulton's website at
www.fult.com.
Fulton has adopted
Corporate Governance Guidelines (“Governance Guidelines”) that include
guidelines and Fulton’s policy regarding the following topics: (1) board size;
(2) director qualifications; (3) service on other boards and director change in
status; (4) meeting attendance and review of meeting materials; (5) director
access to management and independent advisors; (6) designation of lead director;
(7) executive sessions; (8) CEO evaluation and succession planning; (9) board
and committee evaluations; (10) stock ownership guidelines; (11) communications
by interested parties; (12) board and committee minutes; (13) codes of conduct;
and (14) disclosure and update of the Governance Guidelines. A current copy of
the 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 current Governance Guidelines are also posted
and available on Fulton's website at www.fult.com.
The Bylaws of Fulton
provide that the Board of Directors shall consist of not less than two nor more
than thirty-five persons and that the Board of Directors shall determine the
number of directors. Pursuant to Fulton’s Bylaws, as amended, beginning with the
2009 Annual Meeting, nominees elected to the Board of Directors are elected for
one-year terms. Subject to Fulton's retirement provisions, directors elected
prior to the 2009 Annual Meeting were permitted to serve the remainder of their
elected term, even if greater than one year. Beginning in 2011 all nominees will
be elected for a one-year term.
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.
Fulton’s Bylaws limit
the age of director nominees, and no person shall 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. There is also a
mandatory retirement provision in the Bylaws, which states that the office of a
director shall be considered vacant at the Annual Meeting next following the
director’s seventy-second (72) birthday. In addition, Fulton has adopted a
Voluntary Resignation Policy for Non-Management Directors that generally
requires a director to tender his or her resignation when the director’s
effectiveness as a member of the Board may be substantially impaired.
Circumstances that trigger this provision include, but are not limited to: a
director failing to attend at least 62.5% of meetings without a valid excuse;
and, unless such an event is promptly cured to the satisfaction of Fulton, any
extension of credit by any of Fulton’s affiliate 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 or more days past due, or restructured; b)
assigned a risk rating of “substandard” or less; or c) not in material
compliance
5
with Federal Reserve
Regulation O (12 CFR 215). While the Fulton policy sets forth events which might
cause a director to tender his or her resignation, it also directs Fulton’s
Board of Directors to consider carefully, on a case-by-case basis, whether or
not Fulton should accept such a resignation.
Section 3 of Article
II of the Bylaws of Fulton requires shareholder nominations 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
Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act
of 1934, as amended (or any successor provision thereto). 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 not subject to any
greater or different standard of review by Fulton’s Board of Directors or its
Nominating and Corporate Governance Committee.
In considering any
individual nominated for board membership, including those nominated by a
shareholder, Fulton considers a variety of factors, including whether the
candidate is recommended by executive management, the individual’s professional
and personal qualifications, including business experience, education and
community and charitable activities, and the individual’s 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 on 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
and gender, in considering individual candidates. Fulton’s Governance Guidelines
provide that Fulton’s 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,
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 Fulton’s 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 Fulton’s continuing
directors and nominees is described under Continuing Director and Nominee
Biographical Information below.
6
For the 2010 Annual
Meeting, the Board of Directors has fixed the number of directors at fourteen
(14). There are four (4) continuing directors whose terms of office will expire
at the 2011 Annual Meeting. Pursuant to Fulton’s Bylaws, as amended, beginning
with the 2009 Annual Meeting, nominees to the Board of Directors shall be
elected for one-year terms. Subject to Fulton's retirement provisions, directors
elected prior to the 2009 Annual Meeting were permitted to serve the remainder
of their elected term, even if greater than one year. The Board of Directors has
nominated the following ten (10) persons for election to the Board of Directors
for a term of one year:
2010 Director Nominees
| Jeffrey G. Albertson | Donald M. Bowman, Jr. | Dana A. Chryst | ||
| Craig A. Dally | Rufus A. Fulton, Jr. | George W. Hodges | ||
| Willem Kooyker | John O. Shirk | R. Scott Smith, Jr. | ||
|
E. Philip
Wenger
|
Each of the above
nominees is presently a director of Fulton. 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 2010 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 of Fulton 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.
The ten (10)
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.
The Board of
Directors recommends that the shareholders vote FOR the election of the ten (10) nominees identified in this Proxy Statement
to serve for one-year terms.
Information
concerning the experience, qualifications, attributes or skills of the ten (10)
persons nominated by Fulton for election to the Board of Directors of Fulton at
the 2010 Annual Meeting and concerning the other continuing directors 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. At its January 2010 meeting, the Board of Directors
determined that eleven (11) of Fulton’s current fourteen (14) directors are
independent, as defined in the applicable NASDAQ listing standards.
Specifically, the Board of Directors found that Directors Bowman, Bond, Chryst,
Dally, Freer, Fulton, Hodges, Kooyker, Lesher, Shirk and Stewart 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
7
of independent
judgment. In addition, members of the Audit Committee of the Board of Directors
meet the more stringent requirements for independence under the NASDAQ listing
standards, and the rules and regulations of the SEC for service on the Audit
Committee. The Board of Directors considered the relationships and other
arrangements, if any, of each director when director independence was reviewed,
including Fulton’s relationships with the law firms with which Directors Dally
and Shirk were affiliated in 2009. The other types of relationships and
transactions that were reviewed are more fully described in “Related Person
Transactions with Directors and Executive Officers” on page 47.
Continuing Director and Nominee Biographical
Information
Several of the
directors joined Fulton’s Board as a result of mergers, or were directors when
the Corporation was formed in 1982. The following biographical information,
experience and qualifications below represent each continuing director’s or
nominee's background, experience, qualifications, attributes or skills that led
Fulton to conclude that these persons should serve as a director of Fulton.
 |
JEFFREY G. ALBERTSON, age 69.
-
Director of Fulton since 1996 and a Nominee for election at the Annual
Meeting.
- Director of The Bank since 1989. -
Admitted and licensed to practice law in New Jersey and the Federal
District Court in 1966 and Partner of the Albertson Law Office.
-
Recipient of the 2002 New Jersey Lawyer of the Year Award.
-
New Jersey Bar Association Trustee from 1979 to 1985. Mr. Albertson also
served on the New Jersey Bar Association Judicial and Prosecutorial
Appointments Committee and Supreme Court Ethics Committee.
-
General Counsel (1982 - 1990) to the Eastern Pennsylvania-Southern New
Jersey Delaware Valley Regional Planning Commission, a bi-state planning
transportation agency.
-
Community service includes several terms on the Underwood-Memorial
Foundation Board, Councilman for the Borough of Woodbury Heights (1969 to 1973),
Solicitor for the Gloucester County municipalities of Franklin Township,
Woodbury Heights, Mantua Township and Monroe Township.
Mr.
Albertson’s broad legal experience in business transactions, particularly
in lending, real estate, and state and local law, as well as his knowledge
of the southern New Jersey market, adds valuable outside experience to
Fulton’s Board of Directors. He has extensive knowledge of Fulton through
his tenure of more than ten years on its Board of
Directors.
|
|
 |
JOHN M. BOND, JR. (Independent Director), age
66.
-
Director of Fulton since 2006 with current term expiring in 2011.
- Director of The Columbia Bank since 1988. -
Director of the Federal Home Loan Bank of Atlanta 2005 to
present.
-
Director Columbia Bancorp (NASDAQ:CBMD) from 1987 to 2006 when Columbia
Bancorp merged with Fulton.
-
Retired as Chief Executive Officer of The Columbia Bank in 2006. Former
Chairman of the Maryland Bankers Association 2001 to 2002. Trustee Goucher
College 1997 to present.
- Admitted and licensed to practice law in New York. Mr.
Bond offers Fulton’s 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.
|
 |
DONALD M. BOWMAN,
JR. (Independent Director),
age 71.
- Director of Fulton since 1994 and a Nominee for election at the Annual Meeting. - Director of Hagerstown Trust Company from 1981 until it was combined with The Columbia Bank in 2009, Director of The Columbia Bank and a member of the Hagerstown Trust Advisory Board. - Business Entrepreneur and Partner in Bowman Group which includes D.M. Bowman, Inc. (a transportation and logistics firm), Bowman Development Corporation (a commercial real estate development company with assets in five states), Bowman Sales and Equipment (a storage and office trailer leasing enterprise) and Bowman Hospitality and Convenience (a hotel and restaurant business). - Board Member of Antietam Healthcare Foundation 2003 to present and Board Member of Maryland Theatre 2006 to present. In addition, Mr. Bowman has served a total of 12 years (not consecutive) as a member of the Washington County Economic Development Commission, and was honored as 2009 Washington County Business Person of the Year. As a result of numerous years
as a successful entrepreneur in a wide array of business ventures, Mr.
Bowman provides Fulton’s Board of Directors with a business person’s
perspective and extensive knowledge of what is required for a business to
be successful in both good and bad times. In addition, Mr. Bowman also
provides an extensive knowledge of Fulton’s markets in western Maryland,
southern Pennsylvania, eastern West Virginia, and northwestern Virginia,
as well as valuable knowledge of Fulton through his tenure of more than
fifteen years on its Board of Directors.
|
|
 |
DANA A.
CHRYST (Independent
Director), age 50.
- Director of Fulton since 2008 and a Nominee for election at the Annual Meeting. - Director of Fulton Bank since 2003. - Chief Executive Officer and owner of The Jay Group (a marketing fulfillment company). - Director of Lancaster General Hospital 2007 to present, Lancaster General Health 2004 to present. - Director of Hershey Entertainment & Resorts Company 2006 to present. - An active community member, Ms. Chryst has been the recipient of several prestigious awards including the 2009 Women’s Business Enterprise Star by the Women’s Business Enterprise Council and 2008 Volunteer of the Year by the American Heart Association. She is also the recipient of the Central Penn Business Journal's “25 Women of Influence 2010” award. As
the Chief Executive Officer of a marketing fulfillment company, Ms. Chryst
offers the Board of Directors her expertise in the areas of marketing,
human resources, distribution, business processes and finance. In
addition, she has extensive knowledge of Fulton’s south central and
southeastern Pennsylvania
markets.
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 |
CRAIG A.
DALLY (Independent
Director), age 53.
- Director of Fulton since 2000 and a Nominee for election at the Annual Meeting. - Director of Lafayette Ambassador Bank since 1990. - Judge, Third Judicial District of Pennsylvania, 2010 to present. - Admitted and licensed to practice law in Pennsylvania and New Jersey. - Former partner of Pierce & Dally, LLP (law firm). - Served as a member of the Pennsylvania House of Representatives, District 138, from 1996 to 2010 and former Director of the Pennsylvania Higher Education Assistance Agency 2007 to 2010. - Director of Nazareth Area YMCA, 1993 to present; Moravian Hall Square Retirement Community, 2006 to present; and Two Rivers Health and Wellness Foundation, 2003 to present. Mr. Dally brings unique
knowledge and expertise to Fulton’s Board of Directors that he gained as a
founding director of Lafayette Ambassador Bank, a member of the
Pennsylvania House of Representatives, a Director of the Pennsylvania
Higher Education Assistance Agency, a law firm partner and his leadership
role in various philanthropic endeavors in the Lehigh
Valley.
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9
 |
PATRICK J. FREER
(Independent Director), age
60.
- Director of Fulton since 1996 with current term expiring in 2011. - Director of Lebanon Valley Farmers Bank, formerly known as Farmers Trust Bank, from 1980 until it was combined with Fulton Bank in 2007. - President, Strickler Insurance Agency, Inc. (insurance broker) and a Certified Insurance Counselor. - Board member of Lebanon County Christian Ministries 2001 to present, American Cancer Society Lebanon Unit 2007 to present and Lebanon Valley Sertoma Club 1976 to present. - Past president of Lebanon County Christian Ministries and Lebanon Valley Sertoma Club. 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 ten years on its Board of Directors and as
a bank director since 1980. Mr. Freer has long been an active member in
his community helping with numerous capital campaigns and community
projects.
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 |
RUFUS A. FULTON,
JR. (Independent Director),
age 69.
- Director of Fulton since 1984 and a Nominee for election at the Annual Meeting. - Retired Chairman of the Board and Chief Executive Officer of Fulton. - Director of The Aerospace Corp. 2006 to present (research and development for the aerospace industry), Burnham Holdings, Inc. 2000 to present (manufacturer of boilers, furnaces, radiators and air conditioning systems), High Real Estate Group 2007 to present (real estate), Lebanon Seaboard Corporation 2008 to present (chemicals and fertilizers) and Highmark, Inc. 2005 to present (health insurance). - Former Director Federal Reserve Bank of Philadelphia 1999 to 2001 and Federal Advisory Council to the Federal Reserve Board, Washington, DC from 2002 to 2005. - Director of The Boys’ and Girls’ Club of Lancaster 1973 to present, Franklin & Marshall College Leadership Council 1994 to present and Lancaster Police Foundation 2006 to present. Mr.
Fulton brings to all Board of Director and Committee discussions and
deliberations broad knowledge of the financial services industry, as well
as valuable knowledge of Fulton through his long tenure of more than
twenty five years on the Board of Directors, his service as the former
Chairman and CEO of Fulton from 1999 until 2005 and other management
positions with Fulton. In addition, Mr. Fulton has prior and current board
service on a number of corporate boards and several community
organizations.
|
|
 |
GEORGE W.
HODGES (Independent
Director), age 59.
- Director of Fulton since 2001 and a Nominee for election at the Annual Meeting. - Former Director of Drovers & Mechanics Bank until it was merged into Fulton Bank in 2001. - Director York Water Company 2000 to present (NASDAQ:YORW). - Director of The Wolf Organization, Inc. from 2008 to present (regional distributor of kitchen and bath products and specialty building products), Director of Burnham Holdings, Inc. (manufacturer of boilers, furnaces, radiators and air conditioning systems), and has served on the boards of various for profit, non-profit and community organizations. - Mr. Hodges, now retired, 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. 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. His extensive business experience, financial expertise, and
background are also invaluable for Fulton’s Audit Committee where he
serves as Chairman and as a Financial Expert, as defined by the SEC
regulations.
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10
 |
WILLEM
KOOYKER (Independent
Director), age 67.
- Director of Fulton since 2005 and a Nominee for election at the Annual Meeting. - Director of Somerset Valley Bank until it was combined with Skylands Community Bank in 2007. - Chairman and Chief Executive Officer, Blenheim Capital Management, LLC (investment management company). - Former Board Member and Co-Founder of Derivatives Portfolio Management 1993 to 2005. - Board Member of National Mentoring Partnership 1993 to present and in 2009 was named Chairman. Mr. Kooyker has served as director and trustee for a variety of industry and philanthropic organizations. He is a member of the advisory board of The Oliver Scholars Program (New York, NY), which mentors African-American and Latino children and their families. He also is a council member of the Woodrow Wilson International Center for Scholars, which engages in the study of national and world affairs. Mr. Kooyker has significant
business, finance, trading and investment experience that enables him to
serve on Fulton’s Audit Committee as a Financial Expert, as defined by the
SEC regulations. He also brings experience with a focus on currencies,
stocks, financials and the commodity markets to the Fulton Board of
Directors.
|
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 |
DONALD W. LESHER,
JR. (Independent Director),
age 65.
- Director of Fulton since 1998 with current term expiring in 2011. - Director of Lebanon Valley National Bank from 1978 until it was merged into Lebanon Valley Farmers Bank in 1998, then a Director of Lebanon Valley Farmers Bank until it was combined with Fulton Bank in 2007. - Retired President, Lesher Mack Sales and Service (truck dealership). - During his career Mr. Lesher has supported and served as a board member of various non-profit and community organizations. He is not currently serving on any non-profit or community boards, but his prior service included being a director of the YMCA Lebanon Valley, Community Chest – United Way of Lebanon County, Lebanon Lancaster Boy Scout Board, Good Samaritan Hospital and Lebanon County Christian Ministries. Mr. Lesher provides Fulton with valuable perspectives in finance, industrial real estate and business operations as a retired private business owner and operator in the truck sales and transportation fields. He also adds valuable knowledge of Fulton through his tenure of more than ten years on its Board of Directors. |
|
 |
JOHN O.
SHIRK (Independent
Director), age 66.
- Director of Fulton since 1983 and a Nominee for election at the Annual Meeting. - Director of Fulton Bank since 1983. - Of Counsel 2007 to present and Managing Partner from 1983 to 1993, Barley Snyder LLC (law firm). - Director of Eastern Insurance Holdings, Inc. (NASDAQ: EIHI) 1987 to present and has been or continues to be a director of various service, manufacturing, construction and non-profit organizations. As a practicing attorney and a
former partner of a multi-disciplinary law firm, Mr. Shirk has extensive
experience in mergers and acquisitions, corporate finance, advanced
corporate planning, structuring corporations, partnerships, limited
liability companies and other business entities, real estate development
and finance, business and construction contracts and contract disputes. He
has also served as general counsel for Franklin & Marshall College for
many years, has extensive experience on other boards and has valuable
knowledge of Fulton through his tenure of more than twenty five years on
its Board of Directors.
|
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11
 |
R. SCOTT SMITH,
JR., age 63.
- Director of Fulton since 2001 and a Nominee for election at the Annual Meeting. - Chairman of the Board and Chief Executive Officer, Fulton Financial Corporation. - Director of Fulton Bank from 1993 to 2002. - Director of the American Bankers Association 2006 to 2009 - Member of the Federal Advisory Council to the Federal Reserve Board, Washington, DC from 2008 to present. - Employed by Fulton since 1978 and worked in financial services since 1969. Mr. Smith’s various management
roles with Fulton during his thirty two years of service and leadership
capabilities give him a broad understanding of the financial services
industry, Fulton’s operations, corporate governance matters and the
leadership experience qualifying him to serve on the Fulton Board of
Directors.
|
|
 |
GARY A.
STEWART (Independent
Director), age 62.
- Director of Fulton since 2001 with current term expiring in 2011. - Partner, Stewart Associates (real estate developer), Director of Stewart Companies (manufacturing holding company), President of Aspen Equity Group LLC (real estate) and has served on the boards of various for profit, non-profit and community organizations. - Former Director of York Bank & Trust Company from 1981 to 1998. - Former Director of Drovers & Mechanics Bank until it was merged into Fulton Bank in 2001. Mr. Stewart has relevant business experience and bank board service qualifying him for service as a member of the Board of Directors that includes insight and extensive experience in real estate acquisition, development, finance and management. |
|
 |
E. PHILIP
WENGER, age 52.
- Director of Fulton since March 2009 and a Nominee for election at the Annual Meeting. - President and Chief Operating Officer of Fulton Financial Corporation. - Director of Fulton Bank from 2003 to 2009. - Employed by Fulton in a number of positions since 1979, including a variety of management positions. 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. Prior to his appointment as Fulton’s President and Chief Operating Officer, he was the Chairman and Chief Executive Officer of Fulton Bank. |
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12
The following table sets forth the
number of shares of common stock beneficially owned as of the Record Date by
each director, nominee for director and the named executive officers, Messrs.
Smith, Wenger, Nugent, Shreiner and Hill (the “Executives” or “Senior
Management” and individually the “Executive”). 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
five percent of the outstanding common stock of Fulton. Unless otherwise
indicated in a footnote, shares shown as beneficially owned by each nominee,
continuing director or the Executives are held either (i) individually by the
person, (ii) individually by the person's spouse or children living in the same
household, (iii) jointly with the person's spouse or children living in the same
household, or (iv) in the name of a bank, broker or nominee for the account of
the person, person’s spouse, or the person’s children living in the same
household. The directors, nominees and the Executives of Fulton, as a group,
owned of record and beneficially 5,071,642 (1) shares of Fulton
common stock, representing 2.84 percent 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 (1)(2)(3) | Class | |||||
| Jeffrey G. Albertson | Nominee for Director | 238,341 | (4) | * | ||||
| John M. Bond, Jr. | Director | 533,007 | (5) | * | ||||
| Donald M. Bowman, Jr. | Nominee for Director | 1,049,868 | (6) | * | ||||
| Dana A. Chryst | Nominee for Director | 5,651 | * | |||||
| Craig A. Dally | Nominee for Director | 173,475 | (7) | * | ||||
| Patrick J. Freer | Director | 75,266 | (8) | * | ||||
| Rufus A. Fulton, Jr. | Nominee for Director | 266,295 | (9) | * | ||||
| Craig H. Hill | Senior Executive Vice President | 188,661 | (10) | * | ||||
| George W. Hodges | Nominee for Director | 14,878 | * | |||||
| Willem Kooyker | Nominee for Director | 302,701 | (11) | * | ||||
| Donald W. Lesher, Jr. | Director | 153,509 | (12) | * | ||||
| Charles J. Nugent | Senior Executive Vice President and Chief | 486,515 | (13) | * | ||||
| Financial Officer | ||||||||
| John O. Shirk | Nominee for Director | 84,179 | (14) | * | ||||
| James E. Shreiner | Senior Executive Vice President | 342,848 | (15) | * | ||||
| R. Scott Smith, Jr. | Chairman of the Board, Chief Executive | 598,910 | (16) | * | ||||
| Officer and Nominee for Director, | ||||||||
| Gary A. Stewart | Director | 245,749 | (17) | * | ||||
| E. Philip Wenger | President, Chief Operating Officer and | 311,789 | (18) | * | ||||
| Nominee for Director | ||||||||
| Total Ownership | Directors and Executives as a Group | 5,071,642 | 2.84 | % | ||||
| (17 Persons) | ||||||||
| Other Principal Holders | ||||||||
| BlackRock, Inc. | N/A | 10,807,623 | (19) | 6.13 | % | |||
| 40 East 52nd Street | ||||||||
| New York, NY 10022 | ||||||||
13
Footnotes
(1) Includes
1,492,279 shares issuable upon the exercise of vested stock options and 84,145
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.
(2) As of the Record
Date, none of the listed individuals had pledged Fulton stock except for Mr.
Bowman, who has pledged 974,119 shares in connection with lines of credit at
other financial institutions and Mr. Stewart, who has pledged 134,755 shares in
connection with a collateral account with his broker related to a line of credit
with the same broker.
(3) Fulton has
established a stock ownership guideline for Fulton directors and certain
officers. Targeted ownership for Directors is $50,000 in fair market value of
Fulton common stock. For executive officers, the targeted stock ownership
differs by position. The Chief Executive Officer must acquire shares with a fair
market value of 2 times his base salary, the President and the Chief Financial
Officer must acquire shares with a fair market value of 1.5 times their
respective base salary, and certain other officers must acquire shares with a
fair market value of 1 times their base salary. Achievement of these stock
ownership guidelines is determined annually based on the closing price of Fulton
stock on December 31. As of December 31, 2009, all Executives and all Directors,
except for Ms. Chryst, have satisfied the stock ownership guidelines and
Director Chryst has until June 2012 to satisfy the ownership guidelines.
(4) Mr. Albertson's
ownership includes 11,317 shares held in an IRA and 126,505 shares held jointly
with his spouse. Also includes 11,555 shares held solely by his spouse and 940
shares in his spouse's IRA.
(5) Mr. Bond's
ownership includes 164,657 shares which may be acquired pursuant to the exercise
of vested stock options and 136,723 shares held solely by his
spouse.
(6) Mr. Bowman's
ownership includes 9,478 shares held in an IRA, 166,114 shares held jointly with
his spouse, 35,781 shares held solely by his spouse, 9,479 shares in his
spouse's IRA and 287,428 shares held by Bowman Sales & Equipment, Inc.
(7) Mr. Dally's
ownership includes 11,213 shares held in an IRA, 2,365 shares held jointly with
his spouse and 20,387 shares held as custodian for his children.
(8) Mr. Freer's
ownership includes 74,975 shares held jointly with his spouse and 291 shares
held solely by his spouse.
(9) Mr. Fulton's
ownership includes 8,232 shares held solely by his spouse. Mr. Fulton disclaims
any beneficial ownership in the 8,232 shares held by his spouse. Also includes
65,099 shares held in Fulton's 401(k) Plan.
(10) Mr. Hill's
ownership includes 3,299 shares held jointly with his spouse. Also includes
32,953 shares held in Fulton’s 401(k) Plan, 13,113 shares of unvested restricted
stock and 139,295 shares which may be acquired pursuant to the exercise of
vested stock options.
(11) Mr. Kooyker's
ownership includes 194,911 shares held jointly with his spouse and 107,790
shares held in trusts for his children.
(12) Mr. Lesher's
ownership includes 10,597 shares held in an IRA, 45,099 shares held jointly with
his spouse and 5,426 shares held solely by his spouse.
(13) Mr. Nugent's
ownership includes 54,728 shares held solely by his spouse. Also includes 29,260
shares held in Fulton’s 401(k) Plan, 19,670 shares of unvested restricted stock,
11,394 shares held in an IRA and 342,950 shares which may be acquired pursuant
to the exercise of vested stock options.
(14) Mr. Shirk's
ownership includes 17,131 shares held solely by his spouse and 3,000 shares held
by Tipararee, LLC. Also includes 35,900 shares held in a Trust Under Will, for
which Mr. Shirk is Co-Trustee.
(15) Mr. Shreiner's
ownership includes 105,840 shares held jointly with his spouse, 13,113 shares of
unvested restricted stock and 223,894 shares which may be acquired pursuant to
the exercise of vested stock options.
(16) Mr. Smith's
ownership includes 25,135 shares of unvested restricted stock, 21,397 shares
held in Fulton's 401(k) Plan and 404,605 shares which may be acquired pursuant
to the exercise of vested stock options.
(17) Mr. Stewart's
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 these shares beyond his pro rata interest in the Stewart
Foundation.
(18) Mr. Wenger's
ownership includes 37,287 shares held jointly with his spouse, 13,113 shares of
unvested restricted stock, 41,516 shares held in Fulton's 401(k) Plan and
216,878 shares which may be acquired pursuant to the exercise of vested stock
options. Also includes 2,514 shares held in Fulton's 401(k) Plan for his spouse
and 480 shares held as custodian for his children.
(19) This information
is based solely on a Schedule 13G filed with the SEC on January 29, 2010 by
BlackRock, Inc., which reported sole voting power and sole dispositive power as
to 10,807,623 shares as of December 31, 2009.
14
The following persons are the named
executive officers of Fulton included in this proxy statement:
| Name | Age | Office Held and Term of Office | ||
| R. Scott Smith, Jr. | 63 |
Chairman of the
Board and Chief Executive Officer of Fulton Financial Corporation since
December 2008; Chairman of the Board, President and Chief Executive
Officer of Fulton Financial Corporation from January 2006 to December
2008; President and Chief Operating Officer of Fulton Financial
Corporation from 2001 to 2005; and Executive Vice President of Fulton
Financial Corporation and Chairman, President and Chief Executive
Officer of Fulton Bank from 1998 to 2001.
|
||
| E. Philip Wenger | 52 |
President and
Chief Operating Officer of Fulton Financial Corporation since December
2008; Senior Executive Vice President of Fulton Financial Corporation from
January 2006 to December 2008 and Chairman of Fulton Bank from October
2006 to February 2009; Chief Executive Officer of Fulton Bank from January
2006 to October 2006; President and Chief Operating Officer of Fulton Bank
from 2003 to 2006; and Senior Executive Vice President of the Lancaster,
York and Chester County Divisions of Fulton Bank from 2001 to
2003.
|
||
| Charles J. Nugent | 61 |
Senior
Executive Vice President and Chief Financial Officer of Fulton Financial
Corporation since January 2001; and Executive Vice President and Chief
Financial Officer of Fulton Financial Corporation from 1992 to 2001.
Director of the Federal Home Loan Bank of Pittsburgh since January
2010.
|
||
| James E. Shreiner | 60 |
Senior
Executive Vice President of Fulton Financial Corporation since January
2006; and Executive Vice President of Fulton Financial Corporation and
Executive Vice President of Fulton Bank from 2000 to
2005.
|
||
| Craig H. Hill | 55 |
Senior
Executive Vice President of Fulton Financial Corporation since January
2006 and Executive Vice President/Director of Human Resources from 1999
through 2005.
|
||
15
Executive
Summary
Fulton’s overall executive compensation
program is designed to enable Fulton to achieve its compensation objectives, as
discussed below. Under Fulton’s executive compensation structure, the mix of
base salary, incentive bonus and equity compensation varies depending upon the
Executive’s position. Fulton believes that the compensation of its Executives,
the level of management having the greatest ability to influence Fulton’s
performance, should have a significant portion of compensation that is
performance-based, while lower levels of management should receive a greater
portion of their compensation in base salary.
Fulton believes that it needs to offer
competitive compensation in order to recruit, motivate and retain qualified
officers and employees, and that Executive compensation should reflect Fulton's
overall performance and the contribution of its Executives to that performance.
Taking into consideration the variable compensation bonus plan that was
introduced in 2006 for the Executives and other officers (the “Variable Plan”)
and the 2004 Stock Option and Compensation Plan (the “2004 Stock Plan”), and
based on a review of Executives’ base salaries, Fulton believes that its
compensation program is competitive and well balanced between cash, non-cash and
incentive elements and that the base salaries of the Executives are appropriate
based on their level of experience, positions, responsibilities and recent
performance. Fulton’s compensation program also includes employment agreements
entered into with its Executives that are designed to provide reasonable
severance benefits in specified circumstances. For 2009 and 2010, the Board of
Directors determined the compensation for the Executives, after receiving
recommendations from the Human Resources Committee (“HR Committee”). The
recommendations of the HR Committee were based upon external salary comparisons
of selected peer institutions and an evaluation of the individual performance of
each Executive. Fulton’s Executive compensation program is based, to a
significant degree, on peer information, as discussed in “Use of Peer Groups” on
page 21, and on the recommendations of the HR Committee’s compensation
consultant.
In December 2008 Fulton became a participant
in the Capital Purchase Program (“CPP”) which was authorized under the Emergency
Economic Stabilization Act of 2008. Fulton and the Executives are subject to the
executive compensation provisions of the Emergency Economic Stabilization Act of
2008, as amended by the American Recovery and Reinvestment Act of 2009 (“EESA”),
and the interim final rule (the “Treasury Rules”) 1 of the United States
Department of the Treasury (the “Treasury”). These provisions of EESA and the
Treasury Rules have affected Fulton’s compensation programs for the Executives
and other officers in 2009 and 2010, and are discussed in more detail below.
Compensation
Philosophy
Objectives. Fulton’s executive compensation philosophy and
program 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
measures2 which it believes correlate to consistent
long-term shareholder value and increasing profitability, without compromising
Fulton’s conservative company culture and overall risk profile.
____________________
1 On June 15, 2009, Treasury issued an interim final
rule, promulgated pursuant to its authority under EESA, to provide guidance and
standards on the executive compensation and corporate governance provisions
associated with CPP participation.
2 See discussion of scorecards in the Variable Plan section beginning on page 23. Key financial measures for Executives include, but are not limited to, five-year average total shareholder return and earnings per share growth.
2 See discussion of scorecards in the Variable Plan section beginning on page 23. Key financial measures for Executives include, but are not limited to, five-year average total shareholder return and earnings per share growth.
16
•
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’ contributions to the
achievement by Fulton of its financial and non-financial goals and to
differentiate rewards to 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
setting its overall compensation package at a competitive level 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 pays competitive base salaries in
line with the market median at comparable peer companies. Base salaries are set
to reflect job responsibilities, individual experience and
tenure.
• Annual Performance Awards - Annual incentives are designed to motivate
performance and focus the attention of the Executives on the achievement of
business goals. Fulton believes that earnings per share (“EPS”) growth relative
to its peers is a critical measure for future success. Although Fulton believes
in paying near the median in total cash compensation for expected performance,
annual performance awards provide the Executives with the opportunity to earn
cash compensation above the median for superior performance under the Variable
Plan.
• Equity Awards - Fulton believes in providing long-term
incentives in the form of equity in order to focus the Executives on delivering
long-term performance and shareholder value. The long-term incentive program is
designed to provide the Executives with a long-term wealth-building opportunity,
while balancing potential market volatility and risk. Fulton believes in equity
award levels that are fair and market competitive, but not
excessive.
• 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 - Consistent with its conservative culture,
Fulton believes in providing the Executives and other officers basic perquisites
that are necessary for conducting Fulton’s business.
HR Committee Membership and
Role
Each member of the HR Committee
qualifies as an independent director under the NASDAQ listing standards. The HR
Committee is currently comprised of five independent directors, including the HR
Committee Chair, all of whom are elected annually by Fulton’s Board of
Directors. There are no interlocking relationships, as defined in the
regulations of the Securities and Exchange Commission (“SEC”), involving members
of the HR Committee. For a further discussion on director independence, see the
“Information about Nominees, Continuing Directors and Independence Standards”
section on page 7 of this proxy statement.
Prior to September 2009, the
Executive Compensation Committee of the Board of Directors, whose members were
independent under the NASDAQ listing standards, handled executive compensation
matters and the Human Resources Committee oversaw other compensation matters.
Fulton decided to consolidate the two board committees into the HR Committee.
For clarity, all executive compensation actions discussed in the Compensation
Discussion and Analysis are referenced as being made by the HR
Committee.
17
Pursuant to its charter, which is
available on Fulton’s 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 Fulton’s equity and other compensation plans and to take such other
actions, within the scope of its charter, as the HR Committee deems necessary
and appropriate. The HR Committee relies upon such performance data, statistical
information and other data regarding executive compensation programs, including
information provided by Fulton’s Human Resources Department, Fulton’s 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 Fulton’s
expense, such independent counsel and other advisors or experts, as it deems
necessary or appropriate to carry out its duties.
Management assists the HR Committee in
recommending agenda items for these meetings and by gathering and producing
information for HR Committee meetings. As requested, the Chief Executive Officer
(“CEO”) and other Executives participate in HR Committee meetings to provide
background information, compensation recommendations, 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 CEO’s self-assessment. The CEO reviews the
self-assessment forms prepared by the other Executives. In addition, Mr. Wenger,
as Fulton’s President, also reviews the self-assessment forms prepared by
Messrs. Shreiner and Hill. The CEO discusses these reviews with the HR Committee
and shares his comments and recommendations with respect to the performance of
the other Executives. Separately, Mr. Wenger also discusses the self-assessment
forms prepared by Messrs. Shreiner and Hill with the HR Committee. The
Executives are not present for the HR Committee’s discussions, deliberations and
decisions with respect to their individual compensation. The Board of Directors
makes all final determinations regarding the compensation of the Executives,
after receiving a recommendation by the HR Committee.
The Fulton Executive compensation process
consists of establishing targeted overall compensation for each Executive and
then allocating that compensation among base salary, 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. Consistent
with Fulton’s 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 the peer group companies;
consulting with outside advisors and experts; considering the complexity, scope
and responsibilities of the individual’s 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 Lancaster, Pennsylvania.
For 2009, the HR Committee reviewed the
amounts payable under each individual element of compensation, as well as in the
aggregate, for each Executive and concluded that the compensation paid to each
Executive was appropriate. However, due to the severity of the economic downturn
and its impact on financial institutions, Fulton decided to cease base salary
merit pay increases throughout the Corporation, including the Executives, from
March 1, 2009 through February 28, 2010. The Executives did not receive
incentive pay in 2009, but did receive restricted stock awards. As in prior
years, the HR Committee reviewed the Executives’ 2009 performance, their base
salary and other elements of compensation in the first quarter of 2010. The
current base salary amounts for the Executives in 2010 are listed in footnote 1
of the “Summary Compensation Table” on page 33.
Emergency Economic
Stabilization Act of 2008 and Regulations
In the fall of 2008, Fulton decided to
participate in the CPP authorized under EESA, and on December 23, 2008, Fulton
entered into an agreement with the Treasury to sell 376,500 shares of Fulton's
Fixed Rate Cumulative Perpetual Preferred Stock, Series A, having a liquidation
amount per share of $1,000, for total
18
proceeds of $376.5
million (“CPP Funds”). As a condition to the closing of the CPP transaction,
each Executive executed a waiver voluntarily waiving any claims against the
Treasury or Fulton for any changes required to be made to such Executive's
compensation or benefits in order to comply with the regulation issued by the
Treasury under the EESA as published in the Federal Register on October 20, 2008
and acknowledging that the regulation may require modification of the
compensation, bonus, incentive and other benefit plans, arrangements and
policies and agreements (including so-called “Golden Parachute” provisions as
defined by EESA and in Section 280G of the Internal Revenue Code) as they relate
to the period during which Treasury holds any equity or debt securities of
Fulton acquired through the CPP. In 2008, the Executives also entered into a
letter agreement with Fulton amending the compensation and benefit plans with
respect to such Executive, during the period that Treasury owns any debt or
equity securities of Fulton acquired pursuant to the CPP transaction, as
necessary to comply with Section 111(b) of the EESA (the “CPP Letter
Agreements”). The CPP Letter Agreements require, among other things, that
Executive bonus and incentive compensation be subject to recovery or “clawback”
by Fulton if it is determined that the payments were based on materially
inaccurate financial statements or any other materially inaccurate performance
metric criteria, and also prohibit Golden Parachute payments to the Executives.
The CPP Letter Agreements make the Executives ineligible to receive compensation
under any financial performance plan that the HR Committee determines includes
incentives for the Executive to take unnecessary and excessive risks that
threaten the value of Fulton.
The American Recovery and Reinvestment Act of
2009 was signed into law by President Obama on February 17, 2009. This
legislation amended EESA and contains expansive restrictions on executive
compensation for CPP participating financial institutions such as Fulton. The
Treasury Rules apply to any period in which any obligation arising from
financial assistance authorized by EESA remains outstanding (the “TARP
Assistance Period”). 1 Significant provisions of the Treasury Rules
impacting executive compensation include:
• a prohibition on making Golden Parachute and
other severance benefit payments to the Executives and to any of the next five
most highly compensated employees of Fulton, as determined by their annual
compensation, upon their departure from employment during the TARP Assistance
Period;
• a prohibition on paying or accruing any bonus,
retention award or incentive compensation to the Executives and to the next ten
most highly compensated employees of Fulton, as determined by their annual
compensation, during the TARP Assistance Period, except for the payment of
long-term restricted stock that does not fully vest during the TARP Assistance
Period and that has a value not greater than one-third of the total amount of
the annual compensation of the employee receiving the stock;
• a prohibition on making tax gross up payments
to the Executives and any of the next twenty most highly compensated employees
of Fulton, as determined by their annual compensation, during the TARP
Assistance Period; and
• a requirement to seek shareholder input,
through a non-binding shareholder vote to approve the compensation of the
Executives during the TARP Assistance Period. 2
The Treasury Rules also require CPP
participants to establish a board compensation committee that must, at least
semi-annually, discuss, evaluate, and review each employee compensation plan to
assess any risk posed to the company from the compensation plans, adopt a
company-wide policy regarding “excessive” or “luxury” expenditures, and annually
file a written certification of the company’s CEO and CFO as to the company’s
compliance with the applicable requirements of Section 111 of EESA. In September
2009, Fulton
____________________
1 The Treasury Rules specifically exclude any
warrants to purchase the common stock of Fulton that the Treasury may hold.
2 In accordance with the EESA, the Board of Directors has authorized a non-binding shareholder vote to approve the compensation for the named executive officers to be included in this proxy statement for the 2010 Annual Meeting. See “A Non-Binding Resolution to Approve the Compensation of the Named Executive Officers” on page 44.
2 In accordance with the EESA, the Board of Directors has authorized a non-binding shareholder vote to approve the compensation for the named executive officers to be included in this proxy statement for the 2010 Annual Meeting. See “A Non-Binding Resolution to Approve the Compensation of the Named Executive Officers” on page 44.
19
adopted Fulton’s
Expenditure Policy Related to Participation in Capital Purchase Program
(“Expenditure Policy”) and posted it at www.fult.com as required by the
legislation. The required certifications were included as Exhibits
99.1 and 99.2 to Fulton’s Form 10-K for year ended
December 31, 2009.
In 2009, the HR Committee conducted two
separate risk evaluations of the compensation plans in which the Executives
participate. The first evaluation was performed in January 2009 after Fulton
became a CPP participant. This initial review was based on the original EESA
requirements. The HR Committee’s January 2009 evaluation had three distinct
phases: first, discussing with Fulton’s senior risk officer the significant
risks that could threaten the value of Fulton and the controls in place to
mitigate those risks; second, identifying whether there are features of the
incentive compensation plans that could induce the Executives to take such
risks; and third, the taking of any necessary actions to limit the features of
Fulton’s compensation plans that encourage the Executives to take unnecessary
and excessive risks that could threaten the value of Fulton. In this regard, the
HR Committee’s discussion with Fulton’s senior risk officer provided the HR
Committee with a more complete understanding of the material risks that the
Corporation currently faces and the risk management controls it undertakes to
manage those risks. Following its evaluation of these plans, the HR Committee
concluded that the plans did not encourage the Executives to take unnecessary
and excessive risks that threaten the value of Fulton.
The HR Committee’s second evaluation was
completed in the fourth quarter of 2009 as required by the Treasury Rules issued
in June 2009. In October 2009, the HR Committee hired McLagan, an independent
compensation consultant and subsidiary of Aon, to conduct an assessment of all
of Fulton’s compensation plans in order to identify and evaluate plan aspects,
structure and features that could encourage unnecessary and excessive risk
taking that threatens the value of Fulton.1 In addition to the review by McLagan of the
Fulton compensation plans, the HR Committee’s second evaluation also included a
risk discussion with Fulton’s senior risk officer, and the taking of any
necessary action to modify plan features that were found to encourage the taking
of unnecessary and excessive risks that could threaten the value of Fulton. The
primary plans reviewed for the Executives and other employees included the
Variable Plan and the 2004 Stock Plan, as well as plans in which the Executives
do not participate, including the Investment & Brokerage Plan, Brokerage
Trust Sales Plan, Brokerage New Hire Bonus Plan, Trust Sales Plan, Relationship
Management & Portfolio Management Plan, Branch Staff Referral Plan, Mortgage
Production Plan, Account Manager Sales Plan, Business Development Sales
Compensation Plan and minor compensation plans such as the President’s Award
Plan and the Holiday Bonus Plan. In a report to the HR Committee,
representatives of McLagan discussed the process and scope of the review
performed and their basis for concluding that Fulton’s compensation plans do not
encourage the Executives to take unnecessary and excessive risks or encourage
the manipulation of earnings to enhance the compensation of employees. Based on
the review and findings of McLagan, and its discussions with the McLagan
representatives and Fulton’s Senior Risk Officer, the HR Committee concluded in
its second risk evaluation that Fulton’s compensation plans do not encourage the
participants to take unnecessary and excessive risks that threaten the value of
Fulton and that Fulton’s compensation plans do not encourage the manipulation of
earnings to enhance the compensation of employees.
Awards to
Executives
Fulton operates in a highly complex business
environment and competes with many well-established financial services
businesses. The annual cash-based incentive component of the Executive
compensation plan involves plan awards under the Variable Plan that are payable
if pre-established corporate and individual performance objectives are achieved.
Fulton’s equity compensation plan, the 2004 Stock Plan, also has an award
trigger based on Fulton’s performance relative to its peers that is discussed
under the “Variable Plan” section below. The HR Committee believes that the
Variable Plan and the 2004 Stock Plan further Fulton’s business plan and ensure
that the interests of the Executives, both short-term and long-term, are aligned
with the interests of Fulton’s shareholders. The Variable Plan aligns these
interests by offering each Executive the opportunity to earn an annual incentive
cash bonus upon achieving both an established corporate performance
____________________
1 McLagan also
evaluated how the different plans support Fulton’s business objectives and align
with industry market practices.
20
goal and certain
specific individual performance goals, and the 2004 Stock Plan aligns these
interests by offering the Executive the opportunity to earn longer term
compensation through stock options and restricted stock.
In March 2010, the HR Committee determined
that the Executives were eligible to receive an award under the Variable Plan
for 2009 performance because the threshold trigger in 2009 was achieved. As a
result of Fulton meeting the threshold trigger for 2009 of having EPS growth in
the top two-thirds of the Performance Peer Group and the Executives achieving
certain individual and corporate goals, an award was granted to the Executives
for 2009 performance subject to the restrictions imposed by the Treasury Rules.
While the 2004 Stock Plan permits the longer term compensation awards to the
Executives to be paid in the form of stock options or restricted stock, the
restrictions imposed by the Treasury Rules limited the form of 2009 Executive
awards to only restricted stock. Details of the Executives’ 2009 Variable Plan
cash awards and 2004 Stock Plan restricted stock awards can be found in the
“Summary Compensation Table” on page 33 and in the “Variable Plan” and “Options
and Restricted Shares” sections below.
Use of
Consultants
The HR Committee retained and used two
different compensation consultants during 2009. The Hay Group has been retained
by the HR Committee at various times from 2005 to 2009 to review and directly
report to the HR Committee on certain aspects of Executive and director
compensation. In general, the Hay Group was instructed and directed to compare
Fulton’s current compensation practices with its peers and, based on that
comparison, to recommend changes in Fulton’s compensation practices that were
consistent with Fulton’s compensation philosophy and objectives as described
above. During 2009, the Hay Group performed a compensation market analysis
related to Fulton’s Executives and recommended certain compensation increases
for the Executives. It also performed a retirement benefit market analysis. As
described under the “Emergency Economic Stabilization Act of 2008” section
above, McLagan was retained by the HR Committee in 2009 to review Fulton’s
compensation plans for the Executives and other employees and assist the HR
Committee in determining the risks posed by these plans to Fulton and how to
mitigate these risks.
Fulton does not have a policy that limits the
other services that an executive compensation consultant can perform. Fulton has
not engaged the Hay Group for any other projects except for those directed by
the HR Committee and which were limited to engagements involving the
compensation of the Executives, compensation of Fulton’s directors and
engagements limited to consulting on broad-based plans that do not discriminate
in scope, terms or operation in favor of the Executives or directors, and that
are generally available to all salaried employees. McLagan was only retained
during 2009 for the compensation plan risk review required by EESA and the
Treasury Rules. For both the Hay Group and McLagan, specific instructions and
directions given to the consultant and fees to be paid were generally outlined
in individual engagement letters with respect to the scope and performance of
their respective duties under each project. The total fees paid in 2009 to the
Hay Group for additional services did not exceed the $120,000 SEC disclosure
threshold. McLagan performed no additional services for Fulton.
Use of Peer
Groups
Beginning in 2006, the HR Committee has used
two different peer groups of bank holding companies for purposes of making a
comparative analysis of compensation of Fulton and its peers. The first peer
group includes bank holding companies that are members of the peer group used by
Fulton for purposes of the Performance Graph showing the total return
performance for the last five years on page 15 of the Fulton Annual Report on
Form 10-K for the fiscal year ended December 31, 2009 (the “Performance Peer
Group”). The Performance Peer Group is used to determine the annual option and
restricted stock equity awards as discussed below, and to determine whether the
performance threshold for the Variable Plan has been achieved. The Performance
Peer Group includes bank holding companies that, at the time of selection in
2004, were generally comparable to Fulton in terms of asset size, although they
were not necessarily comparable in terms of financial performance.
21
For the evaluation of the base salary and
other elements of compensation of the Executives, the Hay Group, in 2006,
assisted the HR Committee in the development of a second, smaller peer group
(the “Comparator Peer Group”). This second peer group consists of a number of
the members of the Performance Peer Group plus one other bank holding company.
The Comparator Peer Group members were selected because they generally were,
based on 2006 data gathered by the Hay Group, similar to Fulton in asset size,
operating in the same geographic markets, comparable to Fulton in areas such as
lines of business, or in competition with Fulton for executive talent or
customers. The Comparator Peer Group, as a group, had a median total asset size
of $16 billion based on the Hay Group’s 2006 data. When a peer group member
announces that it is being acquired, Fulton has historically deleted the company
from the Performance Peer Group and Comparator Peer Group. In 2009, Fulton
removed The Colonial BancGroup, Inc. (“CNB”) from both peer groups after CNB
filed a Chapter 11 Bankruptcy petition following the appointment by the Alabama
State Banking Department of the Federal Deposit Insurance Corporation as
receiver of Colonial Bank, CNB's wholly owned bank subsidiary and primary asset.
The members of the Performance Peer Group and
the Comparator Peer Group as of December 31, 2009 were:
Fulton Peer Group
Table
| Peer Group Member (Stock Symbol) | Performance | Comparator |
| Associated Bancorp (ASBC) | X | X |
| BancorpSouth, Inc. (BXS) | X | |
| Bank of Hawaii Corporation (BOH) | X | |
| BOK Financial Corporation (BOKF) | X | X |
| Citizens Republic Bancorp, Inc. (CRBC) | X | |
| City National Corporation (CYN) | X | |
| Commerce Bancshares, Inc. (CBSH) | X | X |
| Cullen/Frost Bankers, Inc. (CFR) | X | |
| First Citizens BancShares, Inc. (FCNCA) | X | X |
| First Midwest Bancorp, Inc. (FMBI) | X | |
| First Merit Corporation (FMER) | X | X |
| International Bancshares Corporation (IBOC) | X | |
| Old National Bancorp (ONB) | X | |
| The South Financial Group, Inc. (TSFG) | X | X |
| Susquehanna Bancshares, Inc. (SUSQ) | X | X |
| TCF Financial Corporation (TCB) | X | X |
| Trustmark Corporation (TRMK) | X | |
| UMB Financial Corporation (UMBF) | X | |
| United Bankshares, Inc. (UBSI) | X | X |
| Valley National Bancorp (VLY) | X | X |
| Webster Financial Corp. (WBS) | X | |
| Whitney Holding Corporation (WTNY) | X | |
| Wilmington Trust Corporation (WL) | X | X |
Elements of Executive
Compensation
Fulton’s Executive compensation
program currently provides a mix of base salary, cash incentive and equity based
plans, as well as retirement benefits, health plans and other benefits as
follows:
Base Salary. Base salary is a critical element of
executive compensation because it provides the Executives with a consistent
level of monthly income. Fulton seeks to provide the Executives with a level of
cash compensation in the form of base salary appropriate for the person’s
position, experience, responsibilities,
22
and performance.
Generally, Fulton, consistent with its compensation philosophy, seeks to set
base salary for the Executives in line with the market median. As in prior
years, in 2009, the HR Committee retained the Hay Group for a review of the
annual base pay of the Executives to insure that the Corporation was offering
competitive pay. This market analysis review compared each Executive’s level of
compensation to similar executives in the Comparator Peer Group discussed above.
The methodology utilized by the Hay Group also considered salary data from its
financial services database.
In making recommendations to the Board of
Directors regarding the appropriate levels of executive compensation for 2009
and 2010, the HR Committee considered each Executive’s level of achievement of
his individual performance factors established under the Variable Plan. In
setting the base salaries of the Executives, the HR Committee also received a
recommendation from the Hay Group which considered compensation paid by members
of the Comparator Peer Group to peer officers with similar job content and
responsibilities to the Executives. While Fulton froze base salary merit pay
increases from March 1, 2009 until February 28, 2010, in March 2010 the HR
Committee considered changes to the base salary of the Executives after the
merit pay freeze expired for all Fulton employees. Based on Comparator Peer
Group information and base salary increase recommendations presented by the Hay
Group from general market survey data, the HR Committee reviewed each
Executive’s base salary, and base salaries were increased and set for 2010 after
the approval of the Board of Directors, effective April 1, 2010, for Messrs.
Smith, Wenger, Nugent, Shreiner and Hill at $813,586, $435,625, $505,735,
$335,175, and $232,675, respectively.
With regard to the compensation paid to Mr.
Smith, the HR Committee considered his performance level based on a scorecard
that includes the attainment of performance goals, results of management
decisions made by Mr. Smith, earnings of Fulton during the previous year and
other factors, such as the HR Committee members’ perspective of his overall
performance. With regard to the compensation paid to the other Executives, the
HR Committee considered information provided by Mr. Smith for Messrs. Wenger and
Nugent, and by Mr. Wenger for Messrs. Shreiner and Hill, which included an
assessment of each Executive’s level of individual performance, attainment of
performance goals, contribution to the organization and salary history during
the past four years, as well as the HR Committee’s own perceptions of the
performance of each Executive.
Variable Compensation
Plan. The HR
Committee believes that annual performance-based incentive bonuses are valuable
in recognizing and rewarding individual achievement, and, by focusing more on
performance pay opportunities for the Executives, it can more closely align
Fulton’s compensation program with shareholder interests. On May 30, 2006,
Fulton’s Board of Directors approved, with the recommendation of the HR
Committee, a cash incentive compensation structure, the Variable Plan. Prior to
the approval of the Variable Plan in 2006, the HR Committee and the Board of
Directors, with the assistance of and recommendations from the Hay Group,
discussed the use of various performance threshold measures. Fulton’s Variable
Plan is designed so that no incentive bonus is paid unless Fulton achieves the
predetermined EPS performance threshold metric compared to the Performance Peer
Group.1 For 2006, a threshold performance target was
established that required Fulton’s 2006 EPS growth to be in the top two-thirds
of the Performance Peer Group in order for the Executives to be eligible for a
payment under the Variable Plan. The HR Committee viewed this performance target
as a reachable target, but not a target which guarantees payment of an incentive
bonus. The HR Committee used the same threshold performance target in 2007, 2008
and 2009. In future years, however, a different threshold performance target may
be used. The threshold performance target was achieved in 2006 and 2009 but not
in 2007 and 2008.
Under the Variable Plan, if the
predetermined EPS threshold for prior year performance is achieved, each
Executive is eligible to receive a cash bonus equal to a percentage of base
salary, with the possibility of achieving a higher amount for superior
individual and company performance, up to a pre-set maximum. These payouts are
substantially based on the results of each Executive’s individual scorecard of
critical performance factors that are tailored to his position and job
responsibilities. Generally, performance factors that are more
____________________
1 The Performance
Peer Group was selected because it represents a broad, national cross section of
companies similar in size to Fulton.
23
directly aligned with
the interests of shareholders are given greater weight. Based upon the
recommendation of the Hay Group and a market review when the Variable Plan was
approved originally, the HR Committee determined that the award amounts payable
to the each Executive should be a percentage of the Executive’s base salary. For
Mr. Smith, the 2009 threshold, target and maximum award percentages were 25%,
50% and 100% and for the other Executives, the 2009 threshold, target and
maximum award percentages were 17.5%, 35% and 60%. The actual award percentage
for each Executive is determined by the Executive’s individual scorecard
results, as well as the HR Committee’s assessment of each Executive’s individual
performance and overall contribution to Fulton for the award
period.
The HR Committee understands that stock price
performance is subject to a variety of factors. Recognizing that many of these
factors are outside Fulton’s control, the HR Committee selected the EPS
performance metric because it believes it best promotes Fulton’s fundamental
business objectives and strategy. At its March 15, 2010 meeting, because
Fulton’s 2009 EPS was in the top two-thirds of the Performance Peer Group, the
HR Committee determined that Fulton had achieved the threshold performance
target.
Since the threshold performance
metric for 2009 was achieved, the Executives were eligible to receive an award
under the Variable Plan. The following is a summary of the critical performance
factors on the individual scorecards for the Executives, plus the methodology
used in determining the scorecard performance of the Executives.
Mr. Smith’s 2009 scorecard contained four
critical performance factors, with each factor weighted according to importance.
The first factor was Superior Financial
Performance that included
five equally weighted sub-categories: Earnings per Share growth vs. Peers;
Five-year Average Total Shareholder Return vs. Peers; Net Interest Income Growth
vs. Peers; Growth in Core Deposits vs. Peers; and Growth in Loans vs. Peers. The
second factor was Superior Operating
Efficiency that included
the following equally weighted subcategories: Net Charge Offs to Average Loans;
Investment Portfolio Performance; and Regulatory Compliance. The third factor
was Superior Customer
Satisfaction that included
Customer Service Management and a Fulton Partners measurement. 1 The fourth
performance factor was Superior Employee
Engagement that included
the following equally weighted subcategories: Management Succession; Corporate
Diversity; Corporate Reward Strategy; Employee Morale/Strategic People
Initiatives; and Community Involvement.
In the first performance factor of financial
performance, Mr. Smith’s result was to be determined objectively by Fulton’s
quartile ranking in its Performance Peer Group for each subcategory. The last
three factors involved both objective and subjective measurements. For the
objectively measured performance categories, Mr. Smith, depending upon Fulton’s
quartile ranking among its peers, could receive a rating of “Excellent Results”
(1st Quartile and a numerical score of “4”), “What is expected” (2nd Quartile
and a numerical score of “3”), “Making Progress” (3rd Quartile and a numerical
score of “2”), or “Below Expectations” (4th Quartile and a numerical score of
“1”). The HR Committee, based on its subjective determination, uses the same
four rankings for determining Mr. Smith’s achievement of the other performance
factors. The weighting given to each of the performance factors for Mr. Smith
appears in the chart below.
The scorecards for each of the other
Executives were similar to Mr. Smith’s scorecard. As shown in the chart below,
each of the Executives had similar critical performance factors. However, each
Executive’s scorecard was tailored to his specific position and corresponding
job responsibilities through different weights given to each Executive’s
performance factors and by the specific subcategories included in each
Executive’s performance factors.
Although several subcategories of each
Executive’s performance factors were similar, there were some differences. For
example, Mr. Wenger’s Superior Financial
Performance factor
included a subcategory of Net Income Growth compared to Fulton's Budget as well
as Peers. Mr. Nugent’s Superior Operating Efficiency factor included subcategories for Credit
Rating, Interest Rate Risk, Total Risk-Based Capital, Tax
____________________
1 Fulton Partners
measurement is related to the collection of fee income by certain business
units.
24
Position, Liquidity
and Funding, Efficiency Ratio, and Expense Control for certain departments. For
Mr. Shreiner, the Superior Operating
Efficiency included Lean
Process Improvement, Charge Offs and other items. Finally, Mr. Hill’s
Superior Employee
Engagement factors
included a Corporate Reward Strategy, Retention Results, Community Involvement
and other items.
For all of the Executives, the methodology
used to determine scorecard performance criteria was to design performance
measurement parameters for each factor so each Executive’s actual performance
could be measured, for the most part, based on specific objective measurements.
However, some subcategories required a subjective measure. For 2010, the HR
Committee amended the Executives’ scorecards to make risk management a separate,
stand-alone critical performance factor with a minimum weighting of 25%, as
recommended by McLagan during their risk review of the Fulton compensation
plans. The following is a tabular summary of the critical performance factors
and the weights assigned to each Executive’s 2009 Variable Plan scorecards.
| 2009 Variable Plan Scorecard for Executives | Smith | Wenger | Nugent | Shreiner | Hill |
| Critical Performance Factors | Weight | Weight | Weight | Weight | Weight |
|
50% | 50% | 50% | 40% | 40% |
|
20% | 15% | 30% | 35% | 15% |
|
15% | 25% | 5% | 15% | 15% |
|
15% | 10% | 15% | 10% | 30% |
At its March 15, 2010 meeting, the HR
Committee reviewed the overall 2009 performance and scorecard results for each
Executive. The HR Committee determined that all of the Executives achieved a
level of performance in 2009 to qualify for a cash reward at or above their
target established under the Variable Plan. In addition to the scorecard results
and information provided on individual critical performance factors for each
Executive, in determining the Variable Plan award percentages for each
Executive, the HR Committee also recognized the successful efforts of the
Executives in maintaining Fulton’s financial stability and navigating it through
perhaps the most severe economic downturn since the Great Depression, as well as
the Executives’ successful execution of a strategy to position Fulton for growth
as the economy improves and Fulton’s improved financial performance during 2009.
Based on its consideration of these various factors, the HR Committee approved
an award percentage of 57%, 36%, 39%, 35% and 36% for Messrs Smith, Wenger,
Nugent, Shreiner and Hill, respectively.
The dollar amount of each individual Executive
award is calculated as a percentage of the Executive’s base salary on the award
percentage approved for each Executive by the HR Committee. Messrs. Smith,
Wenger, Nugent, Shreiner and Hill were eligible to receive Variable Plan awards
of $452,433, $153,000, $192,426, $114,450 and $81,720, respectively for 2009
performance based on the award percentages to each Executive. However, because
of its participation in the CPP, the Treasury Rules prohibit Fulton from paying
the Executives (as well as the next ten most highly compensated employees) 100%
of their respective Variable Plan awards. Approximately 55% of the awards, which
relates to performance after June 15, 2009, has been forfeited due to the
Treasury Rules. Although the Treasury Rules do permit Fulton to accrue a portion
of each individual’s Variable Plan award for the period of his performance from
January 1, 2009 to June 15, 2009, or approximately 45% of the 2009 Variable Plan
award each earned for 2009, the Treasury Rules do not permit Fulton to pay this
reduced Variable Plan award to the Executives until such time as Fulton has
repaid the CPP Funds or the Executive is no longer prohibited from receiving the
award. Accordingly, Messrs. Smith, Wenger, Nugent, Shreiner and Hill earned a
reduced Variable Plan award of $203,595, $68,850, $86,592, $51,503 and $36,774,
respectively. These 2009 prorated award amounts are reflected in each of the
Executive’s 2009 compensation in the “Summary Compensation Table” on page 33;
however, the Executives will not receive these reduced Variable Plan awards
until after Fulton has repaid the CPP Funds or the Executive is no longer
prohibited from receiving the award.
25
Options and Restricted
Shares. Fulton
believes equity-based compensation aligns the interests of the Executives and
other eligible officers with those of Fulton’s shareholders, and encourages them
to “think like owners.” Pursuant to the 2004 Stock Plan approved by the Board of
Directors on October 21, 2003, and by shareholders at the 2004 Annual Meeting,
Fulton is authorized to award incentive stock options, non-qualified stock
options and restricted stock to key employees of Fulton, its affiliate banks and
its other subsidiaries. Stock options and, more recently, a combination of stock
options and restricted stock have been the traditional award type for Fulton.
However, in 2009, the Treasury Rules permitted Fulton to only award restricted
stock to the Executives and the next ten most highly compensated and eligible
employees. Stock options awarded in years prior to 2009 enable the recipients to
purchase common stock at the fair market value of the common stock on the
designated grant date. The 2004 Stock Plan provides that the total number of
shares available for grant in any calendar year in the form of stock options or
restricted stock is to be determined based on the performance of Fulton,
measured in terms of total shareholder return for the immediately preceding
five-year period relative to the Performance Peer Group. This process for
determining the number of shares available for grant in a particular year is
outlined in Section 5.04 of the 2004 Stock Plan, as follows:
The number of Shares available for Awards in
any calendar year shall be determined depending upon the performance of the
Corporation measured in terms of Total Shareholder Return (“TSR”) relative to a
Peer Group, determined at the sole discretion of the HR Committee, for the
five-year period immediately preceding the grant of the Award. The number of
Shares available for Awards shall be determined in accordance with the following
schedule:
| Company’s TSR Ranking among the | Percent of Total Outstanding Shares | |
| Peer Group | Available for Awards | |
| for Prior Five-Year Period | for Plan Year | |
| Top Quartile | 1.00% | |
| Second Quartile | 0.75% | |
| Third Quartile | 0.50% | |
| Fourth Quartile | At the Discretion of the HR Committee | |
| but limited to no more than 0.50% |
For 2009, the individual awards of restricted
shares made to the Executives and the next ten most highly compensated and
eligible employees, as well as the other eligible officers of Fulton that
received either stock options and restricted stock or stock options only, were
determined by the Board of Directors based on recommendations of the HR
Committee and management. The HR Committee did not establish specific target
levels for individual performance or corporate profitability for these equity
awards. The number of options or restricted shares awarded to each Executive is
primarily at the discretion of the HR Committee. The Hay Group reviewed and
recommended the 2009 award methodology to the HR Committee, and generally the
2009 Executive awards were approximately the same percentage of all the equity
awards available in 2009 based on grant value as compared to equity awards in
2008. Factors that the HR Committee considers in determining the number of
options or restricted shares to be awarded to each Executive include the CEO’s
recommendations for the other Executives, previous stock option and restricted
stock awards to each Executive, Fulton’s performance and each Executive’s
achievement of individual goals in their scorecard. In 2009, Fulton granted a
total of 709,710 stock options and restricted shares, with 73,210 restricted
shares granted to the Executives and the remaining 484,619 stock options and
151,881 restricted shares granted to other Fulton employees. 1
In July 2009 Messrs. Smith, Wenger, Nugent,
Shreiner and Hill received 21,550, 11,243, 16,865, 11,243 and 11,243 restricted
shares, respectively, and these shares accrue and reinvest dividends. The
Treasury Rules limited the value of the restricted stock award each Executive
and the next ten most highly compensated and eligible employees could receive
for 2009 performance, to no more than one-third of their annual
____________________
1 Restricted shares
listed are as of December 31, 2009 and include any accrued reinvested dividends.
26
compensation, as
defined in the Treasury Rules. Consistent with the Treasury Rules’ prohibition
of vesting restricted stock until CPP Funds are repaid, the 2009 restricted
stock awards cannot not fully vest until the later of three years after the date
of the award or the date vesting is permitted under the Treasury Rules. The
values of these restricted share awards are reflected in each of the Executive’s
2009 compensation in the “Summary Compensation Table” on page 33.
Fulton believes that equity awards are an
appropriate means of compensating the Executives and other officers based on the
performance of Fulton, because equity compensation awards have enabled Fulton to
retain key management employees and recruit effectively for qualified outside
candidates. Fulton also believes that, through its broad-based 2004 Stock Plan,
the economic interests of its key officers, including the Executives, are more
closely aligned to those of the shareholders.
Under the 2004 Stock Plan, an option recipient
who retires at age fifty-five or older with five or more years of consecutive
employment may exercise his or her currently exercisable stock options for up to
two years from the retirement date (but not beyond the date when the option
would otherwise expire). For option or restricted stock recipients who retire at
age sixty or older with ten or more years of consecutive employment as defined
in the 2004 Stock Plan, unexercisable stock options become exercisable and
unvested restricted stock grants become vested on the retirement date.
Restricted shares awarded to the Executives in 2009 are subject to the
restrictions of the Treasury Rules and are subject to a minimum two-year service
requirement to vest upon retirement. Such retirees are able to exercise their
options for up to two years from their retirement date (but not beyond the date
when the option would otherwise expire). Upon a change in control, as defined in
the 2004 Stock Plan, options not previously exercisable become exercisable and
unvested restricted stock vests. Generally under the 2004 Stock Plan
unexercisable stock options become exercisable and unvested restricted stock
grants vest upon the death or disability of the Executive.
Performance Shares. Fulton has the ability to issue options and
restricted shares under the 2004 Stock Plan with performance criteria determined
by the HR Committee (“Performance Shares”). The Hay Group was retained during
2008 to consult with Fulton on the design of Performance Share awards.
Performance Shares were not awarded in 2009, but the HR Committee has discussed
awarding Performance Shares in the future to the Executives and other Fulton
employees to further link Executive compensation and the overall performance of
Fulton on both a short-term and long-term basis.
Employee Stock Purchase
Plan. The ESPP was
designed to advance the interests of Fulton and its shareholders by encouraging
Fulton’s employees and the employees of its affiliate 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. No Executive currently
participates in the ESPP.
Defined Contribution Plan – 401(k)
Plan. Fulton
maintains a qualified defined contribution plan (the “Profit Sharing Plan”).
Through December 31, 2007, employer contributions were based on a formula
providing for an amount not to exceed 15% of each eligible employee’s annual
salary (10% for employees hired subsequent to January 1, 1996). All of the
Executives participate in the Profit Sharing Plan. Prior to 2007, participants
were 100% cliff vested after five years of eligible service. Because of changes
in laws and regulations, the Profit Sharing Plan was amended, effective January
1, 2007, to provide for vesting of all participants on a graded vesting schedule
resulting in 25% vesting after two years, 50% vesting after three years, 75%
vesting after four years and 100% vesting after five years of eligible service.
In addition, the Profit Sharing Plan includes a 401(k) feature, which allows
employees to defer a portion of their pre-tax salary on an annual basis, with no
employer match prior to 2008. Employee contributions under this feature are 100%
vested.
Effective January 1, 2008, the Profit Sharing
Plan was re-named the Fulton Financial Corporation 401(k) Retirement Plan and
was amended to provide for employer matching contributions that satisfy a
non-discrimination “safe-harbor” available to 401(k) retirement plans. This
safe-harbor employer matching
27
contribution will be
equal to 100% of each dollar a participant elects to contribute to the 401(k)
Plan, but the amount of contributions that will be matched by Fulton will be
limited to 5% of eligible plan compensation. In addition, certain employees are
eligible for an employer profit sharing contribution under the 401(k) Plan,
which for 2008 was equal to 5% of a participant’s eligible compensation.
Eligibility for this profit sharing contribution is limited to (1) employees
hired prior to July 1, 2007, by a Fulton entity that was a 401(k) Plan employer
as of June 30, 2007, and who were not excluded from participation under the
401(k) Plan prior to January 1, 2008, because of participation under another
qualified retirement plan of their employer, and who further have attained age
21 and completed one year of service for eligibility purposes, and (2) employees
who were active participants as of December 31, 2007, in the Fulton Financial
Affiliates’ Defined Benefit Pension Plan (the “Affiliates’ Pension Plan”), and
who, as of such date, ceased accruing additional benefits because of an
amendment to the Affiliates’ Pension Plan freezing additional
accruals.
Deferred Compensation
Agreements. Fulton’s 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 select 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
select group of senior managers, including the Executives, for the purpose of
crediting them with full contributions each year equal to the contributions they
would have otherwise been eligible to receive under the Fulton 401(k) Plan, if
not for the Internal Revenue Code limits on the amount of compensation that can
be taken into account under a tax-qualified retirement plan. Fulton’s deferred
compensation contributions for the Executives in 2009 are stated in footnote 7
of the “Summary Compensation Table” on page 33. Effective January 1, 2006, the
deferred compensation plan accounts of each participant were held and invested
under the Fulton Nonqualified Deferred Compensation Benefits Trust with FFA
serving as the 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.
Due to changes made effective January 1, 2008
to the underlying 401(k) Plan, it was necessary to make certain conforming
changes to the design of the Deferred Compensation Plan and the Supplemental
Executive Retirement Plan Agreements. The Deferred Compensation Plan was amended
primarily for the purpose of enabling a participant to receive the employer
matching contribution that would have been available under the 401(k) Plan but
for the Internal Revenue Code limit on compensation that can be taken into
account for the purposes of the employee matching contribution. The Supplemental
Executive Retirement Plan Agreements were amended primarily to reflect the
changes made to the Fulton employer contribution levels in the 401(k)
Plan.
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 acquired in different merger transactions over time, and any
such acquired plans were continued only for the plan participants. However, none
of the Executives participate in the Affiliates’ Pension Plan.
Survivors’ Benefit Life
Insurance and Other Death Benefits. Officers of Fulton and certain of its bank
subsidiaries, who had been employed by Fulton for at least five years as of
April 1, 1992, are eligible to participate in a survivors' benefit program. This
program provides the employee's spouse, in the event of the employee's death
prior to retirement, with an annual income equal to the lesser of $25,000 or
twenty-five percent of the employee's final annual salary. This benefit is paid
from the date of death until the employee's sixty-fifth birthday subject to a
minimum of ten annual payments having been made. Messrs. Smith, Wenger, Shreiner
and Hill participate in this program because each was hired before April 1,
1992. Mr. Nugent was hired after April 1, 1992 and is not eligible for this
benefit. The estates of the participating Executives are also eligible for a two
times base salary payment (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 Executive’s retirement, the post
retirement benefit payable upon the individual’s death is reduced to
$5,000.
28
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, their 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.
Retiree Benefit
Payments. Fulton
does not provide post retirement medical, dental and vision benefits to full
time employees of Fulton and its affiliates who were hired or joined Fulton as a
result of a merger after December 31, 1997. Employees who were hired or joined
prior to January 1, 1998, and who retire on or after the attainment of age
sixty-five with at least ten years of full time service, are eligible for post
retirement benefits. Post retirement benefits include health insurance coverage
plus death benefits. The level of coverage and the cost to the retiree depends
on the retiree’s date of retirement and completed years of full time service
after attainment of age forty. As a result of their length of service with
Fulton, the Executives are eligible to receive these post retirement benefits at
an annual cost to the Executive similar to other employees with the same years
of service.
Other Executive
Benefits. Fulton
provides the Executives with perquisites and other personal benefits that the HR
Committee believes are necessary for conducting business, reasonable and
consistent with the overall compensation program for the CEO and the other
Executives. The 2009 amounts are included in the All Other Income column of the
“Summary Compensation Table” on page 33 of this proxy statement. 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 Executives are provided with company owned
automobiles, club memberships and other executive benefits consistent with their
office and position. Fulton does not have a direct or indirect interest in any
corporate aircraft. 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 spousal travel for the Executive. Fulton also
includes spousal travel and personal vehicle use as part of the Executive’s
reported W-2 income. These items are not “grossed up” by Fulton, and the
Executive pays all income taxes on these executive benefit amounts. These
payments are also subject to the Fulton Expenditure Policy mandated by the
Treasury Rules to prohibit excessive or luxury expenditures or expenditures that
are not related to its business operations.
Employment
Agreements
Fulton believes that a company should provide
reasonable severance benefits to employees. These severance arrangements are
intended to provide the Executives and other 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, these severance benefits reflect the
fact that it may be difficult for them to find comparable employment within a
reasonable period of time. For most employees, Fulton has a policy that in
general provides for severance benefits to be paid upon a layoff or position
elimination. The levels of these benefits for the Executives in the change of
control context are discussed below under “Termination Without Cause or for Good
Reason - Upon or After a Change in Control.”
On May 30, 2006, Fulton’s Board of Directors
approved, with the recommendation of the HR Committee and the Hay Group, a form
of employment agreement to be used for Fulton’s current and future senior
executive officers, including its CEO, President, Chief Financial Officer and
Senior Executive Vice Presidents (the “Employment Agreements”). Each Executive’s
Employment Agreement commenced when the agreement was executed, does not have a
specific term of years and continues until terminated. The Employment Agreements
provide that the Executive is to receive a base salary, which is set annually,
and is entitled to participate in Fulton’s incentive bonus programs as in effect
from time to time. The Executive also is entitled to participate in Fulton’s
retirement plans, welfare benefit plans and other benefit programs.
29
In their Employment Agreements,
Messrs. Smith and Nugent have agreed to restrictions on the sharing of
confidential information as well as non-competition and non-solicitation
covenants for two years. The Employment Agreements with Messrs. Wenger, Shreiner
and Hill contain restrictions on the sharing of confidential information as well
as non-competition and non-solicitation covenants for one year. The
non-competition and non-solicitation covenants will not apply if the Executive
leaves for good reason or if the Executive’s employment is terminated without
cause, as defined in the Employment Agreements, and further discussed in the
“Potential Payments Upon Termination” section on page 39.
Effective November 12, 2008, the Employment
Agreements were amended and restated solely for the purpose of bringing them
into compliance with Internal Revenue Code Section 409A. In addition, as a
result of Fulton’s CPP participation, the Executives each executed CPP Letter
Agreements effective December 23, 2008, which require, among other things, that
all Executive bonus and incentive compensation be subject to recovery or
“clawback” by Fulton if it is determined that the payments were based on
materially inaccurate financial statements or any other materially inaccurate
performance metric criteria. The CPP Letter Agreements also prohibit certain
severance payments to the Executives as described above. The tables and
narratives under “Potential Payments Upon Termination” on page 39 set forth the
potential post termination benefits payable to the Executives under their
Employment Agreements, in a lump sum or over a period of time, with any known
CPP limitations included, upon certain termination events assuming that the
Executive’s employment was terminated as of December 31, 2009. To comply with
the Treasury Rules, the Executives and other highly compensated employees, as
defined in the Treasury Rules, executed supplemental letter agreements to insure
compliance with EESA and the Treasury Rules. The form of the supplemental letter
agreement that the Executives signed was filed on a current report on Form 8-K
that Fulton filed with the SEC on December 24, 2009.
Other
Elements
162(m) and Tax
Consequences. Although Fulton takes into account deductibility of compensation, tax
deductibility is not a primary objective of its compensation programs. Section
162(m) of the Internal Revenue 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. As a result of Fulton’s CPP
participation, this limit is further reduced to $500,000 by the Treasury Rules.
409A Changes.
Section 409A of the Internal
Revenue 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.
With respect to the Executives, in particular, the deferred compensation
agreements and the Employment Agreements and other agreements summarized above
have been amended and restated as of November 12, 2008 for Section 409A
compliance.
Discussion of Option Grant
Timing. Fulton does not
have a formal policy as to when options are granted during the year. However,
the HR Committee and Board of Directors historically have met in June of each
year to consider and award options to the Executives and other officers. Fulton
does not back date options or grant them retroactively, and does not coordinate
option grants with the release of positive or negative corporate news. The 2004
Stock 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 2004
Stock Plan, option prices are determined based on the average of the high and
low trading price on the grant date. Historically, Fulton has granted options on
or about July 1, as opposed to the date of the June meeting when action is taken
by the HR Committee and Board of Directors to grant each award.
30
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 adopted
Corporate Governance Guidelines that included a formal share ownership guideline
for directors and the Executives. Each director is encouraged to own at least
$50,000 of Fulton common stock within three years of becoming a director. A
similar guideline exists for the Executives, with a recommended amount of share
ownership calculated as a portion of, or multiple of, the Executive’s base
salary depending upon position. Compliance with the stock ownership guidelines
is reviewed 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 shares beneficially owned and included on the
individual’s Form 4’s 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 guidelines regardless of changes in base salary or stock
price, as long as he or she retains the same number of shares or a higher
amount.
Senior Management
Succession. The
topic of senior management succession is discussed and reviewed from time to
time at Fulton. At the December 2009 HR Committee meeting, senior officers in
Fulton’s Human Resources department discussed and reviewed the succession
planning processes used by management to identify successors for each Executive
at Fulton, middle management at Fulton, senior management at each of Fulton’s
bank subsidiaries, and within each division for those banks with
divisions.
The HR Committee reviewed and
discussed the Compensation Discussion and Analysis with management at their
March 1, 2010 and March 15, 2010 meetings and, based on the review and
discussions, the HR Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis above be included with or incorporated in
Fulton's Annual Report on Form 10-K for the year ended December 31, 2009, and
the 2010 annual proxy statement, as applicable.
As described above in the Compensation
Discussion and Analysis section, during 2009, the HR Committee, with the
assistance of McLagan, reviewed Fulton’s compensation policies and practices for
all employees, including the Executives, and determined that the compensation
programs in which the Executives participate are not designed in a way that
would encourage them to take unnecessary and excessive risks, and that our
compensation programs, in general, are not structured in a way that poses
unnecessary risks and do not encourage the manipulation of reported earnings to
enhance any employee’s compensation.
In performing its risk review of Fulton’s
compensation plans, McLagan provided specific comments to the HR Committee with
regard to the Variable Plan and the 2004 Stock Plan, as well as plans across
several business lines, including commercial and retail banking, mortgage, trust
and brokerage. The specific plans were: Investment & Brokerage Plan,
Brokerage Trust Sales Plan, Brokerage New Hire Bonus Plan, Trust Sales Plan,
Relationship Management & Portfolio Management Plan, Branch Staff Referral
Plan, Mortgage Production Plan, Account Manager Sales Plan, Business Development
Sales Compensation Plan and minor compensation plans such as the President’s
Award Plan and the Holiday Bonus Plan.
Following its review of Fulton’s compensation
plans, McLagan reported to the HR Committee that: Fulton’s plans do not
encourage excessive risk taking beyond Fulton’s ability to effectively identify
and manage risk; Fulton’s plans, from a design standpoint, are compatible with
effective controls and risk management; Fulton’s plans are supported by strong
corporate governance, including active and effective oversight by Fulton’s Board
of Directors and committees; Fulton does not have groups of employees who
subject Fulton to material amounts of risk; and, Fulton is generally not engaged
in complex activities that are more typical of larger, more complex banking
organizations.
31
McLagan did recommend that the HR Committee
take two actions as part of their compensation risk evaluation required by the
Treasury Rules. One was to ensure that the control functions used by Fulton to
confirm and approve compensation awards are sufficiently independent from line
of business managers. The other was to include in the 2010 scorecards for the
Executives a separate Risk Management performance factor with a minimum
weighting of 25%. The HR Committee has adopted both
recommendations.
In performing its compensation risk
evaluation, the HR Committee also met with the senior risk officer regarding the
material risks facing Fulton, and talked with human resources personnel about
the compensation plans. In addition, the HR Committee considered that the
Treasury Rules limit the Executive’s 2009 annual cash incentive awards and 2009
equity awards, that each Executive’s incentive compensation is subject to
forfeiture if it is determined that the payments were based on materially
inaccurate financial statements or any other materially inaccurate performance
metric criteria, and that awards to the Executives under the Variable Plan and
2004 Stock Plan must be approved by the HR Committee and the Board of Directors.
Based on the foregoing, the HR Committee
concluded that the compensation plans in which the Executives participate do not
encourage them to engage in unnecessary and excessive risks that threaten the
value of Fulton, that Fulton’s employee compensation programs are not structured
in a way that poses unnecessary risks and do not encourage the manipulation of
reported earnings to enhance the compensation of any employee, and that Fulton’s
compensation policies and practices do not create risks that are reasonably
likely to have a material adverse effect on Fulton.
Accordingly, the HR Committee certifies that:
(1) in 2009 it has reviewed with the senior risk officer the Fulton Executive
compensation plans and has made all reasonable efforts to ensure that these
plans do not encourage Fulton’s Executives to take unnecessary and excessive
risks that threaten the value of Fulton; (2) it has reviewed with the senior
risk officer the employee compensation plans and has made all reasonable efforts
to limit any unnecessary risks these plans pose to the Fulton; and (3) it has
reviewed the employee compensation plans to eliminate any features of these
plans that would encourage the manipulation of reported earnings of Fulton to
enhance the compensation of any employee.
Human Resources Committee
Patrick J. Freer,
Chair
Dana A. Chryst
Craig A. Dally
George W. Hodges
Donald W. Lesher, Jr.
Dana A. Chryst
Craig A. Dally
George W. Hodges
Donald W. Lesher, Jr.
32
| Name and Principal | Year | Salary 1 | Bonus 2 | Stock | Option | Non-Equity | Change in | All Other | Total |
| Position | Awards 3 | Awards 4 | Incentive | Pension | Compensa- | ||||
| Plan | Value and | tion 7 | |||||||
| Compensa- | Non- | ||||||||
| tion 5 | qualified | ||||||||
| Deferred | |||||||||
| Compen- | |||||||||
| sation | |||||||||
| Earnings 6 | |||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||
| R. Scott Smith, Jr. | 2009 | 793,742 | 0 | 113,569 | 0 | 203,595 | 0 | 106,700 | 1,217,606 |
| Chairman and Chief | 2008 | 786,697 | 0 | 32,546 | 17,859 | 0 | 0 | 104,945 | 942,047 |
| Executive Officer of | 2007 | 763,213 | 0 | 0 | 81,880 | 0 | 0 | 133,718 | 978,811 |
| Fulton Financial | |||||||||
| Corporation | |||||||||
| E. Philip Wenger | 2009 | 425,000 | 0 | 59,251 | 0 | 68,850 | 0 | 72,098 | 625,199 |
| President and Chief | 2008 | 369,231 | 0 | 16,980 | 9,318 | 0 | 0 | 66,768 | 462,297 |
| Operating Officer of | 2007 | 350,000 | 0 | 0 | 42,720 | 0 | 0 | 79,729 | 472,449 |
| Fulton Financial | |||||||||
| Corporation | |||||||||
| Charles J. Nugent | 2009 | 493,400 | 0 | 88,879 | 0 | 86,592 | 0 | 74,517 | 743,388 |
| Senior Executive Vice | 2008 | 489,939 | 0 | 25,471 | 13,977 | 0 | 0 | 74,758 | 604,145 |
| President and Chief | 2007 | 478,400 | 0 | 0 | 64,080 | 0 | 0 | 95,655 | 638,135 |
| Financial Officer of | |||||||||
| Fulton Financial | |||||||||
| Corporation | |||||||||
| James E. Shreiner | 2009 | 327,000 | 0 | 59,251 | 0 | 51,503 | 0 | 55,080 | 492,834 |
| Senior Executive Vice | 2008 | 322,154 | 0 | 16,980 | 9,318 | 0 | 0 | 49,677 | 398,129 |
| President of Fulton | 2007 | 306,000 | 0 | 0 | 42,720 | 0 | 0 | 57,625 | 406,345 |
| Financial Corporation - | |||||||||
| Administrative Services | |||||||||
| Craig H. Hill 8 | 2009 | 227,000 | 0 | 59,251 | 0 | 36,774 | 0 | 39,932 | 362,957 |
| Senior Executive Vice | 2008 | 222,777 | 0 | 16,980 | 9,318 | 0 | 0 | 47,711 | 296,786 |
| President of Fulton | 2007 | - | - | - | - | - | - | - | - |
| Financial Corporation | |||||||||
____________________
1 Represents the
2007, 2008 and 2009 base salary amounts earned for each of the Executives named
in this table. On March 15, 2010 the HR Committee made base salary adjustments
effective April 1, 2010 and Fulton set the annual base salaries for Messrs.
Smith, Wenger, Nugent, Shreiner and Hill at $813,586, $435,625, $505,735,
$335,175 and $232,675, respectively.
2 The HR Committee did not award any bonus payments in 2007, 2008 or 2009 to the Executives.
3 Amounts represent the grant date fair values of the restricted stock awards. There were no restricted stock awards in 2007. There were no forfeitures of restricted stock during 2007, 2008 and 2009 by any of the Executives. The per-share fair value of shares awarded in 2008 and 2009 was $9.965 and $5.27, respectively, which is equal to the average of the high and low trading prices of Fulton stock on July 1, 2008 and July 1, 2009, the date the shares were awarded. The number of 2008 restricted stock shares awarded to Messrs. Smith, Wenger, Nugent, Shreiner and Hill was 3,266, 1,704, 2,556, 1,704 and 1,704, respectively. The number of 2009 restricted stock shares awarded to Messrs. Smith, Wenger, Nugent, Shreiner and Hill was 21,550, 11,243, 16,865, 11,243 and 11,243, respectively.
4 Amounts represent the grant date fair values of the options. The per-option fair value of options granted in 2007 and 2008 was $1.78 and $0.905, respectively. A discussion of the significant assumptions used to determine these fair values can be found in Note M “Stock-Based Compensation Plans and Shareholders’ Equity,” which starts on page 84 in the Notes to Consolidated Financial Statements, located in the Fulton Financial Corporation Annual Report on Form 10-K for the year ended December 31, 2009. The number of 2007 options granted to Messrs. Smith, Wenger, Nugent and Shreiner was 46,000, 24,000, 36,000 and 24,000, respectively. The number of 2008 options granted to
2 The HR Committee did not award any bonus payments in 2007, 2008 or 2009 to the Executives.
3 Amounts represent the grant date fair values of the restricted stock awards. There were no restricted stock awards in 2007. There were no forfeitures of restricted stock during 2007, 2008 and 2009 by any of the Executives. The per-share fair value of shares awarded in 2008 and 2009 was $9.965 and $5.27, respectively, which is equal to the average of the high and low trading prices of Fulton stock on July 1, 2008 and July 1, 2009, the date the shares were awarded. The number of 2008 restricted stock shares awarded to Messrs. Smith, Wenger, Nugent, Shreiner and Hill was 3,266, 1,704, 2,556, 1,704 and 1,704, respectively. The number of 2009 restricted stock shares awarded to Messrs. Smith, Wenger, Nugent, Shreiner and Hill was 21,550, 11,243, 16,865, 11,243 and 11,243, respectively.
4 Amounts represent the grant date fair values of the options. The per-option fair value of options granted in 2007 and 2008 was $1.78 and $0.905, respectively. A discussion of the significant assumptions used to determine these fair values can be found in Note M “Stock-Based Compensation Plans and Shareholders’ Equity,” which starts on page 84 in the Notes to Consolidated Financial Statements, located in the Fulton Financial Corporation Annual Report on Form 10-K for the year ended December 31, 2009. The number of 2007 options granted to Messrs. Smith, Wenger, Nugent and Shreiner was 46,000, 24,000, 36,000 and 24,000, respectively. The number of 2008 options granted to
33
|
Messrs. Smith,
Wenger, Nugent, Shreiner and Hill was 19,734, 10,296, 15,444, 10,296 and
10,296, respectively. There were no option awards in 2009 because the
Treasury Rules prohibited Fulton from making any option awards to the
Executives. There were no forfeitures of options during 2007, 2008 and
2009 by any of the Executives.
5 Amounts listed for 2009 are prorated awards approved by the HR Committee on March 15, 2010 for 2009 performance pursuant to Fulton’s Variable Plan. The Executive awards were for performance at or above target amounts under the Variable Plan. The initial awards for Messrs. Smith, Wenger, Nugent, Shreiner and Hill were $452,433, $153,000, $192,426, $114,450 and $81,720, respectively. However, the 2009 awards were reduced by approximately 55% to reflect the portion of the 2009 performance period occurring after June 15, 2009 as required by the Treasury Rules. These amounts will be accrued but not paid by Fulton and the Executives will not receive these Variable Plan awards until after Fulton has repaid the CPP Funds or until the Executive is no longer prohibited from receiving the award, as described under “Emergency Economic Stabilization Act of 2008 and Regulations” on page 18. No Non-Equity Incentive Plan Compensation cash payments were paid to the Executives for 2007 and 2008 because Fulton did not achieve its 2007 and 2008 performance thresholds established for the Variable Plan. 6 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 2007, 2008 and 2009. 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 39. The rate of return for an individual participant’s account is based on the performance of the various standard investment options selected by each participant. 7 All Other Compensation includes Fulton’s 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 and certain travel expenses where spouses traveled with the executives and attended Fulton events. Amounts are subject to the Treasury Rules and Fulton’s Expenditure Policy. The methodology 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. For 2009, amounts for vehicles include the cost of related items attributed to the company provided vehicle including depreciation, gasoline, maintenance and an insurance premium estimate of $903 for each vehicle on Fulton’s corporate auto policy. The “Other Perquisites” column includes spousal travel, employee service awards paid to all employees for achieving certain years of service and other small benefits that individually are less than ten percent of all perquisites received by the Executive. The breakdown and total of all other compensation for each Executive for 2007, 2008 and 2009 is shown in the table below: |
| Name | Year | Qualified | Nonqualified | Club | Use of | Other | Total All |
| Retirement | Retirement | Memberships | Company | Perquisites | Other | ||
| Plan Company | Plan Company | Provided | Compensation | ||||
| Contribution | Contribution | Automobiles | |||||
| ($) | ($) | ($) | ($) | ($) | ($) | ||
| R. Scott Smith, Jr. | 2009 | 24,500 | 54,874 | 12,026 | 14,888 | 412 | 106,700 |
| 2008 | 23,000 | 55,713 | 11,206 | 11,324 | 3,702 | 104,945 | |
| 2007 | 33,750 | 80,732 | 10,562 | 7,158 | 1,516 | 133,718 | |
| E. Philip Wenger | 2009 | 24,500 | 18,000 | 14,685 | 14,585 | 328 | 72,098 |
| 2008 | 23,000 | 13,923 | 14,178 | 14,911 | 756 | 66,768 | |
| 2007 | 33,750 | 18,750 | 14,090 | 12,001 | 1,138 | 79,729 | |
| Charles J. Nugent | 2009 | 24,500 | 24,840 | 13,101 | 11,634 | 442 | 74,517 |
| 2008 | 23,000 | 25,994 | 12,358 | 10,239 | 3,167 | 74,758 | |
| 2007 | 33,750 | 38,010 | 11,096 | 12,583 | 216 | 95,655 | |
| James E. Shreiner | 2009 | 24,500 | 8,200 | 9,552 | 12,828 | 0 | 55,080 |
| 2008 | 23,000 | 9,215 | 9,128 | 7,910 | 424 | 49,677 | |
| 2007 | 33,750 | 12,150 | 8,251 | 3,016 | 458 | 57,625 | |
| Craig H. Hill | 2009 | 22,700 | 0 | 13,101 | 4,065 | 66 | 39,932 |
| 2008 | 19,623 | 0 | 12,303 | 14,248 | 1,537 | 47,711 | |
| 2007 | - | - | - | - | - | - |
8 In 2008, Mr. Hill replaced Mr. Richard J.
Ashby, Jr. in this Proxy Statement as a named executive officer. Mr. Ashby
retired as an executive officer of Fulton effective March 28, 2008. Only 2008
and 2009 data is provided for Mr. Hill.
34
| Name | Grant | Approval | Estimated Future or Possible | Estimated Future or | All Other | All Other | Exercise | Closing | Grant | ||||
| Date1 | Date2 | Payouts Under Non-Equity | Possible Payouts Under | Stock | Option | or Base | Price on | Date Fair | |||||
| Incentive Plan Awards3 | Equity Incentive Plan | Awards: | Awards: | Price of | Grant | Value of | |||||||
| Awards | Number | Number of | Option | Date6 | Stock and | ||||||||
| Thresh- | Target | Maxi- | Thresh- | Target | Maxi- | of Shares | Securities | Awards | Option | ||||
| old | mum | old | mum | of Stock | Underlying | Awards 7 | |||||||
| or Units 4 | Options5 | ||||||||||||
| ($) | ($) | ($) | (#) | (#) | (#) | (#) | (#) | ($/Sh) | ($/Sh) | ($) | |||
| R. Scott Smith, Jr. | 7/1/2009 | 6/16/2009 | - | - | - | - | - | - | 21,550 | - | - | 5.28 | 113,569 |
| R. Scott Smith, Jr. | - | 3/15/2010 | 198,436 | 396,871 | 793,742 | - | - | - | - | - | - | - | - |
| E. Philip Wenger | 7/1/2009 | 6/16/2009 | - | - | - | - | - | - | 11,243 | - | - | 5.28 | 59,251 |
| E. Philip Wenger | - | 3/15/2010 | 65,625 | 131,250 | 225,000 | - | - | - | - | - | - | - | - |
| Charles J. Nugent | 7/1/2009 | 6/16/2009 | - | - | - | - | - | - | 16,865 | - | - | 5.28 | 88,879 |
| Charles J. Nugent | - | 3/15/2010 | 86,345 | 172,690 | 296,040 | - | - | - | - | - | - | - | - |
| James E. Shreiner | 7/1/2009 | 6/16/2009 | - | - | - | - | - | - | 11,243 | - | - | 5.28 | 59,251 |
| James E. Shreiner | - | 3/15/2010 | 57,225 | 114,450 | 196,200 | - | - | - | - | - | - | - | - |
| Craig H. Hill. | 7/1/2009 | 6/16/2009 | - | - | - | - | - | - | 11,243 | - | - | 5.28 | 59,251 |
| Craig H. Hill. | - | 3/15/2010 | 39,725 | 79,450 | 136,200 | - | - | - | - | - | - | - | - |
____________________
1 Grants to the Executives in this table include
a July 1, 2009 restricted stock award and a Variable Plan award for 2009
performance.
2 Fulton approved the 2008 restricted stock awards at the June 2009 HR Committee and Board meetings, with a future grant date of July 1, 2009. The low trading, high trading, closing, and average of high/low trading prices of Fulton stock on June 16, 2009 were $5.29, $5.42, $5.30 and $5.355, respectively.
3 The Executives were eligible to receive a cash bonus award for 2009 under the Variable Plan that is discussed on page 23. The HR Committee determined at its March 15, 2010 meeting that Fulton achieved the 2009 performance threshold established for the Variable Plan and the Executives achieved certain goals as discussed on page 25, therefore, Non-Equity Incentive Plan Compensation was awarded based on award percentages determined by the HR Committee. However, the Treasury Rules required a reduction of the Variable Plan awards by approximately 55% and the award amounts and details are further described in note 5 in the Summary Compensation Table on page 33.
4 Restricted shares awarded pursuant to the 2004 Stock Plan on July 1, 2009 shall vest upon the later to occur of: (i) a cliff vesting three years after the date of the grant; or (ii) such time as, and to the extent that, Fulton and the Executive have satisfied all the applicable requirements for partial or full vesting provided by EESA and the Treasury Rules, which includes repayment of CPP Funds.
5 The Executive did not receive any options for 2009 performance.
6 Closing price of Fulton stock was $5.30 on the June 16, 2009 approval date.
7 Statement 123R Fair Value of restricted shares awarded for 2009 performance based on the July 1, 2009 fair value per share value was $5.27. There can be no assurance that the Executives will realize the amounts listed in the future.
2 Fulton approved the 2008 restricted stock awards at the June 2009 HR Committee and Board meetings, with a future grant date of July 1, 2009. The low trading, high trading, closing, and average of high/low trading prices of Fulton stock on June 16, 2009 were $5.29, $5.42, $5.30 and $5.355, respectively.
3 The Executives were eligible to receive a cash bonus award for 2009 under the Variable Plan that is discussed on page 23. The HR Committee determined at its March 15, 2010 meeting that Fulton achieved the 2009 performance threshold established for the Variable Plan and the Executives achieved certain goals as discussed on page 25, therefore, Non-Equity Incentive Plan Compensation was awarded based on award percentages determined by the HR Committee. However, the Treasury Rules required a reduction of the Variable Plan awards by approximately 55% and the award amounts and details are further described in note 5 in the Summary Compensation Table on page 33.
4 Restricted shares awarded pursuant to the 2004 Stock Plan on July 1, 2009 shall vest upon the later to occur of: (i) a cliff vesting three years after the date of the grant; or (ii) such time as, and to the extent that, Fulton and the Executive have satisfied all the applicable requirements for partial or full vesting provided by EESA and the Treasury Rules, which includes repayment of CPP Funds.
5 The Executive did not receive any options for 2009 performance.
6 Closing price of Fulton stock was $5.30 on the June 16, 2009 approval date.
7 Statement 123R Fair Value of restricted shares awarded for 2009 performance based on the July 1, 2009 fair value per share value was $5.27. There can be no assurance that the Executives will realize the amounts listed in the future.
35
| Option Awards1 | Stock Awards 2 | ||||||||
| Name | Number | Number of | Equity | Option | Option | Number of | Market | Equity | Equity |
| of | Securities | Incentive | Exercise | Expiration | Shares or | Value of | Incentive | Incentive | |
| Securities | Underlying | Plan Awards: | Price | Date | Units of | Shares or | Plan | Plan Awards: | |
| Underlying | Unexercised | Number of | ($) | Stock That | Units of | Awards: | Market or | ||
| Unexercised | Options | Securities | Have Not | Stock That | Number of | Payout Value | |||
| Options | (#) | Underlying | Vested | Have Not | Unearned | of Unearned | |||
| (#) | Unexercisable | Unexercised | (#) | Vested | Shares, | Shares, Units | |||
| Exercisable | 3 | Unearned | 4 | ($) | Units or | or Other | |||
| Options | 5 | Other | Rights That | ||||||
| (#) | Rights That | Have Not | |||||||
| Have Not | Vested | ||||||||
| Vested | ($) | ||||||||
| (#) | |||||||||
| R. Scott Smith, Jr. | 30,580 | 0 | 0 | 10.38 | 6/30/2010 | - | - | - | - |
| R. Scott Smith, Jr. | 41,603 | 0 | 0 | 11.32 | 6/30/2011 | - | - | - | - |
| R. Scott Smith, Jr. | 41,530 | 0 | 0 | 13.35 | 6/30/2012 | - | - | - | - |
| R. Scott Smith, Jr. | 41,344 | 0 | 0 | 14.44 | 6/30/2013 | - | - | - | - |
| R. Scott Smith, Jr. | 72,189 | 0 | 0 | 15.38 | 6/30/2014 | - | - | - | - |
| R. Scott Smith, Jr. | 65,625 | 0 | 0 | 17.12 | 6/30/2015 | - | - | - | - |
| R. Scott Smith, Jr. | 46,000 | 0 | 0 | 15.89 | 6/30/2016 | - | - | - | - |
| R. Scott Smith, Jr. | 0 | 46,000 | 0 | 14.415 | 6/30/2017 | - | - | - | - |
| R. Scott Smith, Jr. | 6,578 | 13,156 | 0 | 9.965 | 6/30/2018 | - | - | - | - |
| R. Scott Smith, Jr. | - | - | - | - | - | 25,054 | 218,471 | 0 | 0 |
| E. Philip Wenger | 13,295 | 0 | 0 | 10.38 | 6/30/2010 | - | - | - | - |
| E. Philip Wenger | 18,090 | 0 | 0 | 11.32 | 6/30/2011 | - | - | - | - |
| E. Philip Wenger | 19,898 | 0 | 0 | 13.35 | 6/30/2012 | - | - | - | - |
| E. Philip Wenger | 20,673 | 0 | 0 | 14.44 | 6/30/2013 | - | - | - | - |
| E. Philip Wenger | 45,939 | 0 | 0 | 15.38 | 6/30/2014 | - | - | - | - |
| 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 | 0 | 24,000 | 0 | 14.415 | 6/30/2017 | - | - | - | - |
| E. Philip Wenger | 3,432 | 6,864 | 0 | 9.965 | 6/30/2018 | - | - | - | - |
| E. Philip Wenger | - | - | - | - | - | 13,071 | 113,979 | 0 | 0 |
| Charles J. Nugent | 28,679 | 0 | 0 | 10.38 | 6/30/2010 | - | - | - | - |
| Charles J. Nugent | 35,815 | 0 | 0 | 11.32 | 6/30/2011 | - | - | - | - |
| Charles J. Nugent | 35,742 | 0 | 0 | 13.35 | 6/30/2012 | - | - | - | - |
| Charles J. Nugent | 35,832 | 0 | 0 | 14.44 | 6/30/2013 | - | - | - | - |
| Charles J. Nugent | 63,001 | 0 | 0 | 15.38 | 6/30/2014 | - | - | - | - |
| Charles J. Nugent | 56,437 | 0 | 0 | 17.12 | 6/30/2015 | - | - | - | - |
| Charles J. Nugent | 36,000 | 0 | 0 | 15.89 | 6/30/2016 | - | - | - | - |
| Charles J. Nugent | 0 | 36,000 | 0 | 14.415 | 6/30/2017 | - | - | - | - |
| Charles J. Nugent | 5,148 | 10,296 | 0 | 9.965 | 6/30/2018 | - | - | - | - |
36
| Charles J. Nugent | - | - | - | - | - | 19,607 | 170,973 | 0 | 0 |
| James E. Shreiner | 16,333 | 0 | 0 | 10.38 | 6/30/2010 | - | - | - | - |
| James E. Shreiner | 20,260 | 0 | 0 | 11.32 | 6/30/2011 | - | - | - | - |
| James E. Shreiner | 21,706 | 0 | 0 | 13.35 | 6/30/2012 | - | - | - | - |
| James E. Shreiner | 20,673 | 0 | 0 | 14.44 | 6/30/2013 | - | - | - | - |
| James E. Shreiner | 45,939 | 0 | 0 | 15.38 | 6/30/2014 | - | - | - | - |
| 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 | 0 | 24,000 | 0 | 14.415 | 6/30/2017 | - | - | - | - |
| James E. Shreiner | 3,432 | 6,864 | 0 | 9.965 | 6/30/2018 | - | - | - | - |
| James E. Shreiner | - | - | - | - | - | 13,071 | 113,979 | 0 | 0 |
| Craig H. Hill | 9,497 | 0 | 0 | 10.38 | 6/30/2010 | - | - | - | - |
| Craig H. Hill | 11,758 | 0 | 0 | 11.32 | 6/30/2011 | - | - | - | - |
| Craig H. Hill | 9,407 | 0 | 0 | 13.35 | 6/30/2012 | - | - | - | - |
| Craig H. Hill | 9,648 | 0 | 0 | 14.44 | 6/30/2013 | - | - | - | - |
| Craig H. Hill | 19,689 | 0 | 0 | 15.38 | 6/30/2014 | - | - | - | - |
| Craig H. Hill | 21,000 | 0 | 0 | 17.12 | 6/30/2015 | - | - | - | - |
| Craig H. Hill | 24,000 | 0 | 0 | 15.89 | 6/30/2016 | - | - | - | - |
| Craig H. Hill | 0 | 24,000 | 0 | 14.415 | 6/30/2017 | - | - | - | - |
| Craig H. Hill | 3,432 | 6,864 | 0 | 9.965 | 6/30/2018 | - | - | - | - |
| Craig H. Hill | - | - | - | - | - | 13,071 | 113,979 | 0 | 0 |
____________________
1 The number of securities underlying the
options and the option exercise price has been adjusted for stock dividends and
stock splits, if any, that have occurred since the option grant date.
2 Restricted stock awards listed were granted July 1, 2008 and July 1, 2009. Pursuant to the 2004 Stock Plan, dividends paid by Fulton on restricted stock awards are reinvested and subject to the same restrictions of the original award. Therefore, the number of securities underlying the restricted stock awards has been adjusted as of December 31, 2009 for dividends that have occurred since the grant date. As of December 31, 2009, the July 1, 2008 awards to Messrs. Smith, Wenger, Nugent, Shreiner and Hill were 3,417, 1,783, 2,674, 1,783 and 1,783, respectively, and the July 1, 2009 awards to Messrs. Smith, Wenger, Nugent, Shreiner and Hill were 21,637, 11,288, 16,933, 11,288 and 11,288, respectively.
3 Options with an expiration date of June 30, 2017 will vest July 1, 2010, and options with an expiration date of June 30, 2018 vest as follows: one third on July 1, 2009, one third on July 1, 2010 and the remaining options will vest on July 1, 2011.
4 The 2008 restricted stock awards will cliff vest on of July 1, 2011 and the 2009 restricted stock awards are subject to the requirements and limitations contained in EESA and the Treasury Rules and shall vest upon the later to occur of: (i) a cliff vesting on July 1, 2012; or (ii) such time as, and to the extent that, Fulton and the reporting person have satisfied all the applicable requirements for partial or full vesting provided by EESA and the Treasury Rules.
5 Market value of restricted shares is based on the December 31, 2009 closing price of $8.72.
2 Restricted stock awards listed were granted July 1, 2008 and July 1, 2009. Pursuant to the 2004 Stock Plan, dividends paid by Fulton on restricted stock awards are reinvested and subject to the same restrictions of the original award. Therefore, the number of securities underlying the restricted stock awards has been adjusted as of December 31, 2009 for dividends that have occurred since the grant date. As of December 31, 2009, the July 1, 2008 awards to Messrs. Smith, Wenger, Nugent, Shreiner and Hill were 3,417, 1,783, 2,674, 1,783 and 1,783, respectively, and the July 1, 2009 awards to Messrs. Smith, Wenger, Nugent, Shreiner and Hill were 21,637, 11,288, 16,933, 11,288 and 11,288, respectively.
3 Options with an expiration date of June 30, 2017 will vest July 1, 2010, and options with an expiration date of June 30, 2018 vest as follows: one third on July 1, 2009, one third on July 1, 2010 and the remaining options will vest on July 1, 2011.
4 The 2008 restricted stock awards will cliff vest on of July 1, 2011 and the 2009 restricted stock awards are subject to the requirements and limitations contained in EESA and the Treasury Rules and shall vest upon the later to occur of: (i) a cliff vesting on July 1, 2012; or (ii) such time as, and to the extent that, Fulton and the reporting person have satisfied all the applicable requirements for partial or full vesting provided by EESA and the Treasury Rules.
5 Market value of restricted shares is based on the December 31, 2009 closing price of $8.72.
37
| Option Awards | Stock Awards | |||
| Name | Number of | Value Realized | Number of | Value Realized |
| Shares | on Exercise | Shares | on Vesting | |
| Acquired | Acquired | |||
| on Exercise | on Vesting | |||
| (#) | ($) | (#) | ($) | |
| R. Scott Smith, Jr. | 0 | 0 | 0 | 0 |
| E. Philip Wenger | 0 | 0 | 0 | 0 |
| Charles J. Nugent | 0 | 0 | 0 | 0 |
| James E. Shreiner | 0 | 0 | 0 | 0 |
| Craig H. Hill | 0 | 0 | 0 | 0 |
____________________
1 The Executives did not exercise any options or
receive any stock as the result of vesting during 2009.
| Name | Plan Name | Number of Years | Present | Payments During |
| Credited Service | Value of Accumulated | Last Fiscal Year | ||
| Benefit | ||||
| (#) | ($) | ($) | ||
| R. Scott Smith, Jr. | NA | - | - | - |
| E. Philip Wenger | NA | - | - | - |
| Charles J. Nugent | NA | - | - | - |
| James E. Shreiner | NA | - | - | - |
| Craig H. Hill | NA | - | - | - |
____________________
1 In 2009, none of the Executives participated
in or had an account balance in any qualified or nonqualified defined benefit
plans sponsored by Fulton or any Fulton affiliate bank.
38
| Name | Executive | Registrant | Aggregate Earnings | Aggregate | Aggregate Balance |
| Contributions in Last | Contributions in Last | in Last FY 2 | Withdrawals/ | at Last FYE 3 | |
| FY | FY 1 | Distributions | |||
| ($) | ($) | ($) | ($) | ($) | |
| R. Scott Smith, Jr. | 27,437 | 54,874 | 152,921 | 0 | 736,898 |
| E. Philip Wenger | 9,000 | 18,000 | 9,494 | 0 | 103,798 |
| Charles J. Nugent | 12,420 | 24,840 | 52,438 | 0 | 341,645 |
| James E. Shreiner | 4,100 | 8,200 | 18,847 | 0 | 69,190 |
| Craig H. Hill4 | 0 | 0 | 0 | 0 | 0 |
____________________
1 Fulton’s
contributions toward nonqualified deferred compensation for each of the
Executives are listed in this column. See the table contained in footnote 7 of
the Summary Compensation Table on page 33. 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. 2009 contributions were credited to each of the Executive’s
accounts in January 2010.
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 2009, the available investment funds included Goldman Sachs Fin'l Institutional Money Market Fund #474 (FSMXX), Goldman Sachs Fin'l Square Government Fund #465 (FGTXX), Goldman Sachs Core Fixed Income Institutional (GSFIX), Federated Total Return Bond Fund (FTRBX), Vanguard Windsor II - Admiral Shares (VWNAX), T. Rowe Price Growth Stock (PRGFX), Vanguard 500 Index Fund (VFINX), Goldman Sachs Growth Opportunities I (GGOIX), Vanguard Small Cap Index Blend (NAESX), Fidelity Adv Small Cap I (FSCIX) and Fidelity Adv Diversified International I (FDVIX). 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 is included on page 28 and 29.
3 Balances include the 2009 contributions made by Fulton and credited to the Executives’ accounts in January 2010.
4 Mr. Hill did not have a Nonqualified Deferred Compensation account in 2009.
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 2009, the available investment funds included Goldman Sachs Fin'l Institutional Money Market Fund #474 (FSMXX), Goldman Sachs Fin'l Square Government Fund #465 (FGTXX), Goldman Sachs Core Fixed Income Institutional (GSFIX), Federated Total Return Bond Fund (FTRBX), Vanguard Windsor II - Admiral Shares (VWNAX), T. Rowe Price Growth Stock (PRGFX), Vanguard 500 Index Fund (VFINX), Goldman Sachs Growth Opportunities I (GGOIX), Vanguard Small Cap Index Blend (NAESX), Fidelity Adv Small Cap I (FSCIX) and Fidelity Adv Diversified International I (FDVIX). 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 is included on page 28 and 29.
3 Balances include the 2009 contributions made by Fulton and credited to the Executives’ accounts in January 2010.
4 Mr. Hill did not have a Nonqualified Deferred Compensation account in 2009.
The following is a summary with respect to
potential payment to the Executives under their respective Employment Agreements
upon certain termination events and assumptions as of December 31, 2009. These
arrangements, the elements of compensation and the Employment Agreements are
also discussed in the Compensation Discussion and Analysis above. Certain
payments to the Executives upon termination are limited by the Treasury Rules as
discussed in more detail in the section titled “Emergency Economic Stabilization
Act of 2008 and Regulations” on page 18.
Voluntary
Termination. In the
event an Executive's employment is voluntarily terminated by the Executive other
than for “Good Reason,” Fulton’s obligations are limited to the payment of the
Executive's base salary through the effective date of the Executive's
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. Good Reason
is defined in the Employment Agreements to include a breach by Fulton of its
material obligations without remedy, a significant change in the Executive’s
authority, duties, compensation or benefits, or a relocation of the Executive
outside a certain distance from where he previously was based.
Termination For
Cause. If an
Executive's 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. Cause 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 Executive’s duties, intentional refusal by the Executive to
perform duties, or conduct that brings public discredit on or injures the
reputation of the Corporation.
39
Termination Without Cause or for Good Reason -
Before a Change in Control. If an Executive terminates the Executive’s employment for Good Reason or
his employment is terminated by Fulton “Without Cause,” defined in the
Employment Agreement to include any reason other than for 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 Messrs. Smith and Nugent, the specified period of time is two years.
For the other Executives, that period is one year. After a termination Without
Cause or for Good Reason, 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 for such plan at Fulton’s cost plus a gross up for any taxes
applicable thereto.
However, assuming that each Executive's
employment was terminated Without Cause or for Good Reason as of December 31,
2009, the Executives would have not received any severance payments under their
Employment Agreements as described above because the CPP Letter Agreements
signed by the Executives in 2008 and the supplemental letter agreements signed
by the Executives in 2009 prohibit the above described severance payments in
accordance with the Treasury Rules during the period Fulton remains a
participant in CPP.
Termination Without Cause or for Good Reason -
Upon or After a Change in Control. The Executives and other employees have built
Fulton into the successful enterprise that 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 the recommendations and review of typical
Change in Control provisions offered by peers performed by the Hay Group in
2006, Fulton believes that the potential Change in Control benefits it offers
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 fifty percent 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 Fulton during any period of twelve
consecutive months such that a majority of the Board is replaced by directors
whose appointment was not endorsed by a majority of the Board before such
appointment or election, the acquisition by any person or group of persons
acting in concert during any twelve month period of thirty percent or more of
the total voting power of the stock of Fulton or of forty percent or more of the
total assets (on a gross fair value basis) of Fulton. If, during the period
beginning ninety days before a Change in Control and ending two 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 a
multiple of the sum of the Executive’s: (i) annual base salary immediately
before the Change in Control; and (ii) the highest annual cash bonus or other
incentive compensation awarded over the prior three years. The Executive also is
entitled to receive: (i) an amount equal to that portion of Fulton’s 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 employee benefits to the same extent
provided to employees generally for the multiple period. The HR Committee set
the Change in Control payment multiple at three years in the Employment
Agreements for Messrs. Smith and Nugent because this was the multiple used in
their prior severance agreements. For Messrs. Wenger, Shreiner and Hill, the HR
Committee set the multiple at two years.
The Employment Agreements provide that, in the
event any payment or distribution by Fulton to or for the benefit of an
Executive would be subject to excise tax as a Golden Parachute, the Executive
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 an accounting firm, and Fulton is responsible for the
accounting firm's fees and expenses. The Hay Group advised the HR Committee that
this “gross up provision”
40
has become a typical
provision in such agreements. In keeping with Fulton’s objectives to offer a
competitive contract, this provision was included in the Employment Agreements
for all of the Executives. Generally, the 2004 Stock Plan provides for vesting
of restricted shares upon a Change in Control, disability or death of an
Executive.
However, assuming that, as of December 31,
2009, each Executive’s employment was terminated upon or after a Change in
Control, Without Cause or for Good Reason, the Executives would have not
received any severance payments under their Employment Agreements described
above because the CPP Letter Agreements signed by the Executives in 2008 and the
supplemental letter agreements signed by the Executives in 2009 prohibit the
above described severance payments in accordance with the Treasury Rules during
the period Fulton remains a participant in CPP.
Retirement. In the event an Executive terminates his
employment due to retirement upon attaining age sixty-five, Fulton is obligated
to pay the Executive's base salary through the effective date of the Executive's
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 and retired December 31, 2009, each would have received a lump sum
payment of $25 for each year of service, a payment made to all retiring
employees, plus each would have received retiree health benefits, as a
supplement to the Executives’ Medicare benefits at sixty-five, at an annual
estimated cost to Fulton of approximately $1,500.
In the event an Executive terminates
employment due to retirement upon attaining age sixty, and the Executive has ten
or more years of consecutive service with Fulton, subject to the Treasury Rules,
unvested options and restricted shares awarded under Fulton’s option plans would
automatically vest as a result of the Executive’s retirement. Assuming that all
the Executives attained the age of sixty and retired December 31, 2009, their
individual unvested options would not have had any value because they have
option exercise prices above the $8.72 closing price of Fulton common stock on
December 31, 2009. However, the Executives would have two years from the date of
retirement to exercise the options in accordance with the terms of the awards.
The value of the restricted shares that would vest upon retirement is shown in
the “Outstanding Equity Awards at Fiscal Year-End Table” on page 36, subject to
the Treasury Rules.
Disability. Following an Executive's “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 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 month salary continuation
period, for as long as the Executive continues to be disabled, Fulton will
continue to pay the Executive at least 60% of the base salary until the earlier
of the Executive’s death or December 31 of the calendar year in which the
Executive attains age sixty-five. 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 survivor's income benefit. Assuming that each Executive was disabled as of
December 31, 2009, that the Treasury Rules did not limit these payments and the
Disability lasted 18 months, each Executive would have received the following
disability benefits:
41
| Name | Salary | Disability Payments | Estimated Health | Value of Restricted | Total Disability | |
| First Six Months | for 12 Months | Benefits for 18 | Stock Vesting | Payment to | ||
| Months | Executive | |||||
| ($) | ($) | ($) | ($) | ($) | ||
| R. Scott Smith, Jr. | 396,871 | 476,245 | 18,000 | 218,471 | 1,109,587 | |
| E. Philip Wenger | 212,500 | 255,000 | 18,000 | 113,979 | 599,479 | |
| Charles J. Nugent | 246,700 | 296,040 | 18,000 | 170,973 | 731,713 | |
| James E. Shreiner | 163,500 | 196,200 | 18,000 | 113,979 | 491,679 | |
| Craig H. Hill | 113,500 | 136,200 | 18,000 | 113,979 | 381,679 | |
Death. In the event of a termination of employment
as a result of an Executive's death, the Executive's dependents, beneficiaries
or estate, as the case may be, would receive such survivor's income and other
benefits as they may be entitled to under the terms of Fulton’s benefit
programs, which includes the minimum $25,000 per year Survivors Benefit Life
Insurance for ten years and the twice base salary amount plus tax under the
Death Benefit Agreement described above. Mr. Nugent is not eligible to receive
the Survivors Benefit Life Insurance Payment because he was hired after the plan
eligibility date, but assuming that each Executive died as of December 31, 2009
and that the Treasury Rules did not limit these payments, each of the
Executive’s estates or beneficiaries would have received the following payments
and benefits:
| Name | Survivors Benefit | Death Benefit | Estimated Death | Value of Restricted | Total Payment to | |||
| Life Insurance | Agreement | Benefit Tax Gross | Stock Vesting | Executive’s Estate | ||||
| Payment | Payment | Up | Upon Death | |||||
| ($) | ($) | ($) | ($) | ($) | ||||
| R. Scott Smith, Jr. | 250,000 | 1,587,484 | 1,081,453 | 218,471 | 3,137,408 | |||
| E. Philip Wenger | 250,000 | 850,000 | 579,052 | 113,979 | 1,793,031 | |||
| Charles J. Nugent | 0 | 986,800 | 672,245 | 170,973 | 1,830,018 | |||
| James E. Shreiner | 250,000 | 654,000 | 445,529 | 113,979 | 1,463,508 | |||
| Craig H. Hill | 250,000 | 454,000 | 309,282 | 113,979 | 1,127,261 | |||
Each member of the Board of Directors of
Fulton is 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 or one of its affiliate banks or subsidiaries. Thus, Messrs.
Smith and Wenger did not receive any director fees in 2009 for serving as a
member of the Board of Directors. Non-employee directors receive a quarterly
retainer of $8,750. Non-employee directors are also paid a fee of $2,000 for
each Board of Directors meeting attended and $1,000 for each committee meeting
attended on non-board meeting day, except where the committee meeting is held
the day before a Board meeting attended by the director. Directors are paid
$2,000 for any special Board of Directors meeting attended. The chairperson of
the Audit Committee is paid a quarterly fee of $2,500, and the chairpersons of
the Executive Committee and the HR Committee are paid a quarterly fee of $625.
Directors are also paid $1,000 for attendance at Fulton sponsored educational
seminars, but these seminars are not included for purposes of calculating
director attendance rates since they are a voluntary activity. Fulton also
reimburses directors for certain expenses incurred in the performance of their
service as directors of Fulton. Certain directors have elected to participate in
the Fulton Deferred Compensation Plan, under which a director may elect not to
receive the normal director's fees when earned, but instead, to receive them,
together with interest, in a lump sum or in installments over a period of up to
twenty (20) years following retirement. The only current non-management Fulton
directors who have previously established accounts to defer fees or had balances
from prior years during 2009 are Directors Albertson, Bond and Chryst. Certain
Fulton directors also serve on the boards of various Fulton subsidiary banks, or
other Fulton affiliate
42
boards, and the
directors are compensated with a retainer, meeting fees or both a retainer and
meeting fees for their service on each of the individual boards.
| Name 1 | Fees | Stock | Option | Non-Equity | Change in Pension | All Other | Total | |
| Earned or | Awards | Awards | Incentive Plan | Value and | Compensation 2 | |||
| Paid in | Compensation | Nonqualified | ||||||
| Cash | Deferred | |||||||
| Compensation | ||||||||
| Earnings | ||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||
| Jeffrey G. Albertson | 55,000 | 0 | 0 | 0 | 0 | 10,0003 | 65,000 | |
| John M. Bond | 52,000 | 0 | 0 4 | 0 | 0 | 10,0005 | 62,000 | |
| Donald M. Bowman, Jr. | 55,000 | 0 | 0 | 0 | 0 | 8,5006 | 63,500 | |
| Dana A. Chryst | 53,000 | 0 | 0 | 0 | 0 | 12,0007 | 65,000 | |
| Craig A. Dally | 52,000 | 0 | 0 | 0 | 0 | 10,0008 | 62,000 | |
| Patrick J. Freer | 60,500 | 0 | 0 | 0 | 0 | 0 | 60,500 | |
| Rufus A. Fulton Jr. | 52,000 | 0 | 0 | 0 | 0 | 16,4189 | 68,418 | |
| George W. Hodges | 68,000 | 0 | 0 | 0 | 0 | 0 | 68,000 | |
| Carolyn R. Holleran 10 | 53,000 | 0 | 0 | 0 | 0 | 6,00011 | 59,000 | |
| Willem Kooyker | 51,000 | 0 | 0 | 0 | 0 | 0 | 51,000 | |
| Donald W. Lesher Jr. | 60,500 | 0 | 0 | 0 | 0 | 0 | 60,500 | |
| Abraham S. Opatut 12 | 24,500 | 0 | 0 | 0 | 0 | 6,33313 | 30,833 | |
| John O. Shirk | 56,000 | 0 | 0 | 0 | 0 | 12,00014 | 68,000 | |
| Gary A. Stewart | 58,000 | 0 | 0 | 0 | 0 | 0 | 58,000 | |
____________________
1 Directors listed
represent all the non-management directors of Fulton during 2009. Mr. Smith and
Mr. Wenger, who were compensated as officers of Fulton, did not receive any
additional compensation for their service as a director of Fulton.
2 Unless otherwise noted, excludes perquisites and other personal benefits with an aggregate value of less than $10,000. Fulton’s 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.
3 Represents the annual retainer fee Mr. Albertson received for service on the Board of Directors of The Bank.
4 Fulton directors did not receive options as part of their 2009 compensation; however, as of December 31, 2009, Mr. Bond had 164,657 options exercisable that previously were awarded to him by Columbia Bancorp, which was acquired by Fulton in February 2006.
5 Represents the annual retainer fee Mr. Bond received for service as a director of The Columbia Bank.
6 Represents the annual retainer fee Mr. Bowman received for service on the Board of Directors of Hagerstown Trust Company and The Columbia Bank.
7 Represents the annual retainer fee Ms. Chryst received for service on the Board of Directors of Fulton Bank.
8 Represents the annual retainer fee Mr. Dally received for service on the Board of Directors of Lafayette Ambassador Bank.
9 Includes $11,666 for club fees, $2,340 office use and $2,599 for other perquisites that are individually less that ten percent of the total perquisites received by Mr. Fulton in 2009.
10 Mrs. Holleran retired as a director of Fulton effective December 31, 2009.
11 Represents the annual retainer fee Mrs. Holleran received for service on the Regional Board of the Fulton Bank Great Valley Division.
12 Mr. Opatut resigned as a director of Fulton effective June 16, 2009.
13 Represents a prorated $10,000 annual retainer fee Mr. Opatut received for service on the Board of Directors of The Bank plus additional fees for service as Chairman of the First Washington Division Board.
14 Represents the annual retainer fee Mr. Shirk received for service on the Board of Directors of Fulton Bank.
2 Unless otherwise noted, excludes perquisites and other personal benefits with an aggregate value of less than $10,000. Fulton’s 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.
3 Represents the annual retainer fee Mr. Albertson received for service on the Board of Directors of The Bank.
4 Fulton directors did not receive options as part of their 2009 compensation; however, as of December 31, 2009, Mr. Bond had 164,657 options exercisable that previously were awarded to him by Columbia Bancorp, which was acquired by Fulton in February 2006.
5 Represents the annual retainer fee Mr. Bond received for service as a director of The Columbia Bank.
6 Represents the annual retainer fee Mr. Bowman received for service on the Board of Directors of Hagerstown Trust Company and The Columbia Bank.
7 Represents the annual retainer fee Ms. Chryst received for service on the Board of Directors of Fulton Bank.
8 Represents the annual retainer fee Mr. Dally received for service on the Board of Directors of Lafayette Ambassador Bank.
9 Includes $11,666 for club fees, $2,340 office use and $2,599 for other perquisites that are individually less that ten percent of the total perquisites received by Mr. Fulton in 2009.
10 Mrs. Holleran retired as a director of Fulton effective December 31, 2009.
11 Represents the annual retainer fee Mrs. Holleran received for service on the Regional Board of the Fulton Bank Great Valley Division.
12 Mr. Opatut resigned as a director of Fulton effective June 16, 2009.
13 Represents a prorated $10,000 annual retainer fee Mr. Opatut received for service on the Board of Directors of The Bank plus additional fees for service as Chairman of the First Washington Division Board.
14 Represents the annual retainer fee Mr. Shirk received for service on the Board of Directors of Fulton Bank.
43
Fulton, in conjunction with its participation
in the CPP, and as required by EESA and the Treasury Rules, is providing its
shareholders with the opportunity to vote on an advisory (non-binding)
resolution at this year’s Annual Meeting to approve Fulton’s 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 stockholders the opportunity to
endorse or not endorse Fulton’s Executive pay program. Because the stockholder
vote is not binding, the outcome of the vote may not be construed as overruling
any decision by Fulton’s Board of Directors or HR Committee regarding executive
compensation.
As further described in the “Compensation
Discussion and Analysis” section of this proxy statement starting on page 16
Fulton’s executive compensation philosophy and program are intended to achieve
three objectives: align interests of the Executives with shareholder interests;
link more of the Executives’ pay to performance; and attract, motivate and
retain executive talent. Fulton’s Executive compensation program currently
provides 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 recommends that shareholders, in a
non-binding proposal, vote “FOR” the following resolution:
“RESOLVED that the shareholders approve the compensation of the named
executive officers, as disclosed in this proxy statement, including the
Compensation Discussion and Analysis, the Compensation Tables and any related
material contained in the Proxy Statement.”
Approval of the non-binding resolution to
approve 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, Fulton’s HR Committee 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 the HR Committee might take
if shareholders do not approve this advisory proposal.
The Board of Directors recommends
that the shareholders vote FOR the non-binding resolution to approve the
compensation of the named executive officers.
44
The Board of
Directors of Fulton has a standing Audit Committee, Executive Committee, HR
Committee, Nominating and Corporate Governance Committee and Risk Management
Committee. The following table represents the membership on each Fulton
committee as of the date of this proxy statement:
| Audit | Executive | Human | Nominating and | Risk | |
| Resources | Corporate | Management | |||
| Governance | |||||
| Jeffrey G. Albertson | Member | ||||
| John M. Bond, Jr.* | Member | ||||
| Donald M. Bowman, Jr.* | Member | Member | |||
| Dana A. Chryst* | Member | Chair | |||
| Craig A. Dally* | Member | Vice Chair | |||
| Patrick J. Freer* | Member | Member | Chair | ||
| Rufus A. Fulton, Jr.* | Chair | ||||
| George W. Hodges ** | Chair | Chair | Member | ||
| Willem Kooyker ** | Member | Member | Vice Chair | ||
| Donald W. Lesher, Jr.* | Vice Chair | Member | |||
| John O. Shirk* | Vice Chair | Member | |||
| R. Scott Smith, Jr. | Member | *** | |||
| Gary A. Stewart* | Member | Member | |||
| E. Philip Wenger | Member | *** |
| * Independent Director | ** Independent Director and Audit Committee Financial Expert | *** Ex-officio member per bylaws |
In March 2004, the Executive Compensation
Committee was formed. In September 2009, Fulton merged the Executive
Compensation Committee and its Human Resources Committee, and the new committee
is called the Human Resources Committee (previously defined as “HR Committee”)
and its membership consists only of independent directors. More information
regarding the HR Committee can be found in the “Compensation Discussion and
Analysis” on page 16 There are no interlocking relationships, as defined in
regulations of the SEC, involving members of the HR Committee. Certain directors
may have indirect relationships described in “Related Person Transactions with
Directors and Executive Officers” on page 47. The HR Committee is responsible
for, among other things, recommending the compensation and equity awards for
Senior Management to the Board of Directors, administration of Fulton’s ESPP,
Fulton’s 401(k) Plan and 401(k) plans for affiliate banks, approving employment
agreements for non-executive officers of Fulton and fulfilling other broad-based
human resources duties. The HR Committee is also responsible for the Expenditure
Policy, which was adopted in September 2009 to prohibit excessive or luxury
expenditures or expenditures that are not related to its business operations.
The HR Committee, and the Executive Compensation Committee that was merged into
the HR Committee, met a combined total of thirteen times in 2009. The HR
Committee is governed by a formal charter, which was last amended in October
2009, and which is available on Fulton’s website at www.fult.com.
All members of the Audit Committee meet
the experience and independence requirements of the NASDAQ listing standards,
and the rules and regulations of the SEC. Directors Hodges and Kooyker were
determined to qualify, and agreed to serve, as the Audit Committee's “financial
experts” as defined by the SEC regulations. The Audit Committee met twelve times
during the year. The Audit Committee is governed by a formal charter, which was
last amended in December 2009, and which is available on Fulton’s website at
www.fult.com. The Audit Committee's pre-approval policy and procedure for audit
and non-audit services is set forth in its charter. The functions of the Audit
Committee include, among other things: sole authority to
45
appoint or replace
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 periodic reports from the
loan review function; reviewing and approving related person transactions;
establishing procedures and handling complaints concerning accounting, internal
accounting controls, or auditing matters and certain risk management matters as
outlined in the Audit Committee Charter.
All the members of the Nominating
and Corporate Governance Committee meet the independence requirements of the
NASDAQ listing standards, as amended. The Nominating and Corporate Governance
Committee met seven times during the year. The Nominating and Corporate
Governance Committee is responsible for, among other things, recommending to the
Board of Directors the nominees for election to the Board of Directors and to
assist the Board of Directors with Corporate Governance matters including, but
not limited to, the review and approval of all additions, deletions or changes
to Fulton’s Code of Conduct, Governance Guidelines, stock ownership guidelines
and the responsibility for guidelines and procedures to be used by directors for
board evaluations in monitoring and evaluating the performance of the Board of
Directors and Committees. The Nominating and Corporate Governance Committee
operates pursuant to its charter, which was last amended in June 2009 and is
available on Fulton’s website at www.fult.com.
The Executive Committee met once during the
year. 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.
For a portion of 2009 and in prior
years, Fulton maintained a Trust Committee which met five times during the year.
The Trust Committee was responsible for consulting with management of FFA, and
overseeing all trust, investment, insurance and related financial services which
Fulton offered, directly or indirectly, through FFA. Fulton’s Trust Committee
was terminated in September 2009 and Fulton Bank formed a Trust Committee to
assume the oversight of the trust, investment, insurance and related financial
services offered through FFA.
In September 2009, Fulton created a Risk
Management Committee that met three times during the year. The Risk Management
Committee is responsible for providing oversight of the risk management function
of the Corporation, including its policies, procedures and practices relating to
management of credit risk, market risk, liquidity risk, operational risk,
compliance risk and fiduciary risk.
There were nine meetings of the
Board of Directors of Fulton and forty-one meetings of the standing committees
of the Board of Directors of Fulton during 2009. No director attended fewer than
75% of the aggregate number of meetings of the Board of Directors and of the
board committees on which he or she served in 2009.
Prior to the formation of Fulton’s
Risk Management Committee described above, Fulton’s Board and Audit Committee
received periodic reports on different risk related topics from Mr. Shreiner,
who serves as Fulton’s chief risk officer, and other members of management in an
effort to manage Fulton’s risks. These risks generally included credit risk,
market risk, liquidity risk, operational risk, compliance risk and fiduciary
risk. Although Fulton’s Risk Management Committee is primarily responsible for
overseeing the management of Fulton’s risks today, the Board continues to
regularly review information regarding Fulton’s credit, liquidity and
operations, as well as the risks associated with each. In addition, the HR
Committee is responsible for overseeing the management of risks relating to all
of Fulton’s compensation plans. The Audit Committee oversees management of
financial risks and the Nominating and Corporate Governance Committee manages
risks associated with the independence of the Board of Directors, potential
conflicts of interest and governance
46
matters. While each
of Fulton’s committees are responsible for evaluating certain risks, Fulton’s
Risk Management 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.
Director
Hodges currently serves as Fulton’s Lead Director and is the independent chair
of the Executive Committee. The Board has made a determination that this
structure with a Lead Director and a combined Chairman/CEO is appropriate for
Fulton. Pursuant to the Governance Guidelines, the Board shall designate by
resolution for a term of at least a year and publicly disclose in the Fulton
proxy statement the independent non-management director who will lead the
non-employee directors’ executive sessions and preside at all meetings of the
Board 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; 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.
The
leadership structure of Fulton combines the positions of Chairman and Chief
Executive Officer. Fulton’s Board believes that the Lead Director acts as a
counterbalancing feature to the combined Chairman and Chief Executive Officer
similar to many public companies. This structure also permits the Chief
Executive Officer to manage the Corporation’s daily operations and provides a
single voice for the Corporation when needed. Separation of these roles is not
necessary because Fulton has a substantial majority of independent directors to
provide appropriate oversight at Board meetings and executive sessions. In
addition, Fulton’s HR Committee, Nominating and Corporate Governance Committee
and Audit Committee are comprised solely of independent
directors.
The independent directors of the
Fulton Board of Directors met three times in executive session in 2009. The
Chair of the Executive Committee, who also served as the Lead Director,
conducted these executive sessions of the independent directors of the
board.
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 has a
material interest adverse to Fulton.
Fulton’s Governance Guidelines
provide that attendance in person is expected at the Annual Meeting unless
attendance of the individual members of the Board of Directors is excused.
Fulton held its 2009 Annual Meeting, which began at 10:00 a.m. on April 29,
2009, and all but one director, who was excused, attended the 2009 Annual
Meeting.
Financial Products and
Services. Some of
the directors and executive officers of Fulton and the companies with which they
are associated were customers of, and/or had banking transactions with, Fulton’s
subsidiaries during 2009. These transactions included deposit accounts, trust
relationships and loans in the ordinary course of business with 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
47
collectability or
present other unfavorable features. It is anticipated that similar transactions
will be entered into in the future. By using Fulton’s products and services,
directors and officers have the opportunity to become familiar with the wide
array of products and services offered by Fulton’s subsidiaries to customers.
Other Transactions. Applicable SEC regulations require Fulton to
disclose transactions with certain related persons where the 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 person’s position as a director of the other entity and/or
arises only from the ownership by such person in the other entity if that
ownership is under ten percent, excluding partnerships. Amounts paid to entities
in which a related person does not have a material interest are not required to
be disclosed.
Some of the directors of Fulton are members of
law firms which provided legal services to Fulton or its subsidiaries in 2009
and in prior years. It is expected that these firms will continue to provide
services to Fulton or its subsidiaries in the future. The Albertson Law Office,
West Deptford, New Jersey, has provided legal services to subsidiaries of Fulton
for several years. Director Albertson is a partner with more than a ten percent
interest in the law firm. In 2009, Fulton paid the Albertson Law Office a total
of $251,027, which included $218,617 in legal fees paid by Fulton, $13,770 in
legal fees paid by Fulton customers related to loan transactions and $18,640 in
expense reimbursements for such services.
In 2009, bank subsidiaries of Fulton paid
annual rent of $98,294 and related expenses of $14,880 for a branch office to
The Bowman Group, LLP, and annual rent of $108,000 and related expenses of
$21,569 for a branch office to Bowman 2000 LLC. Director Donald M. Bowman, Jr.
is a limited partner in The Bowman Group, LLP and is the manager of Bowman 2000
LLC.
Fulton considered the above related person
transactions with Directors Albertson and Bowman and other related person
transactions of other Directors that do not require specific disclosure, when it
made the determinations that eleven of Fulton’s fourteen nominees and continuing
directors are independent in accordance with the NASDAQ listing standards. See
“Information about Nominees, Continuing Directors and Independence Standards” on
page 7 for more information.
Family
Relationships.
There are no family relationships among any of the directors and Senior
Management of Fulton. However, family relationships do exist among Senior
Management and some of the approximately 3,560 employees of Fulton and its
subsidiaries. These employees participate in compensation, benefit and incentive
plans on the same basis as other similarly situated employees. SEC regulations
require disclosure of any transaction with a related person where the amount
involved exceeds $120,000. In fiscal year 2009, the only immediate family member
of Senior Management who was compensated in excess of that amount was Mr. Craig
A. Roda, the brother-in-law of Mr. Wenger. In 2009, Mr. Roda received annual
compensation consisting of base salary and other compensation totaling $323,462,
plus other benefits received on the same basis as other similarly situated
employees. Effective February 1, 2009, Mr. Roda became Chairman and Chief
Executive Officer of Fulton Bank and Senior Executive Vice President of
Community Banking for Fulton. In January 2006, Mr. Roda became President and
Chief Operating Officer of Fulton Bank, and in October 2006 he became the
President and Chief Executive Officer of Fulton Bank. He has been employed by
Fulton in various positions since 1979.
Related Person Transaction
Policy and Procedures. Fulton does not have a separate policy specific to related person
transactions. Under Fulton’s Code of Conduct (“Code”), however, employees and
directors are expected to recognize and avoid those situations where personal or
financial interests or relationships might influence, or appear to influence,
the judgment of the employee or director on matters affecting Fulton. The Code
also requires thoughtful attention to the problem of conflicts and the exercise
of the highest degree of good judgment. Under the Code, directors must provide
reasonable notice to Senior Management of all new or changed business
activities, related person relationships and board directorships.
48
In addition, Fulton and its
affiliate banks are subject to Federal Reserve 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 affiliate bank follows 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 affiliate banks are examined periodically by different bank regulators
for compliance with Regulation O. Internal controls exist within Fulton and its
affiliate banks to ensure that compliance with Regulation O is maintained on an
ongoing basis.
In accordance with Fulton's Audit
Committee Charter and NASDAQ listing standards, the Audit Committee is charged
with the responsibility to review the terms of and approve related person
transactions. This responsibility includes reviewing an annual report regarding
the related person transactions with each director and Executive during the
prior year, if any. At a meeting in February 2010, the Audit Committee reviewed
all existing related person transactions involving Fulton’s directors and
Executives. The Audit Committee concluded that the loans and other banking
services to the directors and 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 conducted a review of all other related person
transactions for any potential conflict of interest situations with the
directors of Fulton and the Executives, and concluded that there were no
conflicts present, and ratified and approved all the transactions reviewed.
Section 16(a) of the Securities
Exchange Act of 1934, as amended, requires Fulton’s Executives, the principal
accounting officer, directors, and any persons owning 10% or more of Fulton’s
common stock, to file 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 with the SEC 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 filing of such statements require that
“late filings” of such statements be disclosed in our proxy statement. Based
solely on Fulton’s review of Forms 3 and 4 and amendments thereto furnished to
Fulton during the 2009 fiscal year, including Forms 5 and amendments thereto
furnished to Fulton, and on written representations from Fulton’s directors,
Executives and other officers that no Form 4 or Form 5 for any “late filing” was
required to be filed by such persons, Fulton believes that all such statements were timely filed in 2009, except
for the acquisition of 688.694 shares by Director Freer as a result of a
broker’s reinvestment of dividends, and reported in a Form 4 on June 9, 2009,
and the sale of 0.7997 and 0.3169 shares by Director Bowman as a result of
fractional shares sold without his prior knowledge by a broker on December 18,
2009 with a transfer of accounts, and reported in a Form 4 on January 22,
2010.
Pursuant to its charter, the
Nominating and Corporate Governance Committee is responsible to review and
recommend to the Board guidelines and procedures to be used by directors in
monitoring and evaluating the performance of the Board of Directors and
Committees. The Board of Directors and certain committees conduct an annual
self-evaluation of its performance. In an effort to improve board, committee and
individual director performance, all of the members of the Board of Directors
and members of certain committees were asked to complete a board and committee
evaluation questionnaires in the fourth quarter of 2009. The results were
compiled at the direction of the Corporate Secretary and presented to the
Nominating and Corporate Governance Committee in December 2009. The Nominating
and Corporate Governance Committee reported the results to the Board of
Directors at its January 2010 regular meeting.
49
For the year ended December 31, 2009 and
December 31, 2008, Fulton engaged KPMG LLP (“KPMG”), independent registered
public accountants, to audit Fulton's financial statements. The fees incurred
for services rendered by KPMG for the years ended December 31, 2009 and 2008 are
summarized in the following table.
| 2009 | 2008 | ||||
| Audit Fees – Annual Audit and Quarterly Reviews (1) | $ | 1,248,000 | $ | 1,527,000 | |
| Audit Fees – Issuance of Comfort Letters and Consents | 0 | 7,800 | |||
| Audit Fees Subtotal | 1,248,000 | 1,534,800 | |||
| Audit Related Fees | 15,600 | 10,400 | |||
| All Other Fees (2) | 68,301 | 65,574 | |||
| TOTAL | $ | 1,331,901 | $ | 1,610,774 | |
(1) Amounts presented for 2009 are based upon the audit engagement
letter. Final billings for 2009 may differ.
(2) All Other Fees were for services rendered to the trust division
(primarily for a SAS 70 report on the processing of transactions by the
retirement services area).
The appointment of KPMG for the fiscal year
ended December 31, 2010 was approved by the Audit Committee of the Board of
Directors of Fulton at a meeting on February 25, 2010. Representatives of KPMG
are expected to be present at the 2010 Annual Meeting with the opportunity to
make a statement and to 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 2009 and 2008 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 2009 and 2008 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 Securities Exchange Act of
1934. 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 2009 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
Securities and Exchange Commission. 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.
50
Fulton’s Audit Committee has selected the firm
of KPMG to continue as Fulton’s independent auditor for the fiscal year ending
December 31, 2010. 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 the 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 Fulton’s independent auditor for
the fiscal year ending December 31, 2010. If Fulton’s shareholders at the 2010
Annual Meeting do not approve this proposal, the Audit Committee will reconsider
its selection of KPMG, but no determination has been made as to what action 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 2009. Representatives of KPMG 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.
The Board of Directors recommends
that shareholders vote FOR ratification of the appointment of KPMG LLP
as Fulton’s independent auditor for the fiscal year ending December 31,
2010.
51
A copy of the Annual Report of Fulton on Form 10-K as filed with the
Securities and Exchange Commission, including financial statements, is available
without charge to shareholders upon written request addressed to the Corporate
Secretary, Fulton Financial Corporation, P.O. Box 4887, Lancaster, Pennsylvania
17604.
The Fulton Annual Report on Form 10-K for year ended December 31, 2009
and proxy statement are posted and available on Fulton's 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, Fulton’s Expenditure Policy and Fulton’s Corporate Governance
Guidelines, are also posted and available on Fulton's website at www.fult.com.
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 the 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, 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 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.
The Board of Directors of Fulton knows of no
matters other than those discussed in this Proxy Statement which will be
presented at the 2010 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 | |
 |
|
|
R. SCOTT SMITH,
JR.
Chairman of the Board and Chief Executive Officer |
Lancaster, Pennsylvania
March 26, 2010
March 26, 2010
52
March 1, 2010
To the Board of
Directors of Fulton Financial Corporation:
We have reviewed and discussed with management
Fulton Financial Corporation’s audited financial statements as of, and for the
year ended, December 31, 2009.
We have discussed with representatives of KPMG
LLP, Fulton Financial Corporation’s independent auditor, the matters required to
be discussed by the Statement on Auditing Standards No. 114, The Auditor's Communication with Those Charged with
Governance, as amended, by
the Auditing Standards Board of the American Institute of Certified Public
Accountants.
We have received and reviewed the written
disclosures and the letter from the independent auditor required by the Public
Company Accounting Oversight Board (“PCAOB”) Ethics and Independence Rule 3526,
Communication with Audit Committees Concerning
Independence, as amended,
by the PCAOB, and have discussed with the auditor the auditor's
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 the Corporation’s Annual Report on Form 10-K
for the year ended December 31, 2009.
George W. Hodges,
Chair and Financial Expert
Donald W. Lesher, Jr., Vice Chair
Patrick J. Freer
Willem Kooyker, Financial Expert
Donald W. Lesher, Jr., Vice Chair
Patrick J. Freer
Willem Kooyker, Financial Expert
53
 |
|
ATTN: SHAREHOLDER SERVICES
PO 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: | |||
|
KEEP THIS PORTION
FOR YOUR RECORDS
|
|||
| DETACH AND RETURN THIS PORTION ONLY | |||
|
THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND
DATED.
|
|||
| For
All |
Withhold All |
For
All Except |
To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | |||||||||||
|
The Board of Directors recommends that you vote FOR the
following:
|
o |
o |
o |
|||||||||||
| 1. |
Election of
Directors
Nominees |
|
||||||||||||
| 01 | Jeffrey G. Albertson | 02 | Donald M. Bowman, Jr. | 03 | Dana A. Chryst | 04 | Craig A. Dally | 05 | Rufus A. Fulton, Jr. |
| 06 | George W. Hodges | 07 | Willem Kooyker | 08 | John O. Shirk | 09 | R. Scott Smith, Jr. | 10 | E. Philip Wenger |
| The Board of Directors recommends you vote FOR the following proposal(s): | For | Against | Abstain | ||
| 2. |
THE BOARD OF DIRECTORS RECOMMENDS A
"FOR" VOTE FOR THE NON-BINDING RESOLUTION TO APPROVE THE COMPENSATION OF
THE NAMED EXECUTIVE OFFICERS.
|
o | o | o | |
| 3. | THE BOARD OF DIRECTORS RECOMMENDS A "FOR" VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP, AS FULTON FINANCIAL CORPORATION'S INDEPENDENT AUDITOR FOR FISCAL YEAR ENDING 12/31/10. | o | o | o | |
| NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | |||||
| For address change/comments, mark
here. (see reverse for instructions) |
o | ||||||
| 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 | ||||
Meeting Time,
Date and Location
The meeting will be held at 10:00 a.m. on April 30, 2010 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.
The meeting will be held at 10:00 a.m. on April 30, 2010 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.
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, Meeting Invitation, Shareholder Letter is/are available at www.proxyvote.com. |
The proxy appoints Samuel H. Jones, Jr.,
Arthur M. Peters, Jr. and Kenneth E. Shenenberger, 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 March 1, 2010, and
(ii) which the signer is otherwise entitled to vote at the Annual Meeting of
Shareholders to be held on Friday, April 30, 2010, at
10:00 a.m., at the Lancaster
Marriott at Penn Square, 25 South Queen Street, Lancaster, Pennsylvania, or any
adjournment thereof, on all matters properly coming before the Annual Meeting,
including but not limited to the matters set forth on the reverse
side.
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 Executive Compensation, and FOR the appointment of KPMG LLP, as Independent
Auditor.
Please use the Internet or touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
on April 29,
2010, which is the deadline to
vote your shares.
Address
change/comments:
(If you noted any
Address Changes and/or Comments above, please mark corresponding box on the
reverse side.)
(If
you noted any address changes/comments above, please mark corresponding box on
reverse side.)
| |
|
ATTN: SHAREHOLDER SERVICES
PO 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: | |||
|
KEEP THIS PORTION
FOR YOUR RECORDS
|
|||
| DETACH AND RETURN THIS PORTION ONLY | |||
|
THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND
DATED.
|
|||
| For
All |
Withhold All |
For
All Except |
To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | |||||||||||
|
The Board of Directors recommends that you vote FOR the
following:
|
o |
o |
o |
|||||||||||
| 1. |
Election of
Directors
Nominees |
|
||||||||||||
| 01 | Jeffrey G. Albertson | 02 | Donald M. Bowman, Jr. | 03 | Dana A. Chryst | 04 | Craig A. Dally | 05 | Rufus A. Fulton, Jr. |
| 06 | George W. Hodges | 07 | Willem Kooyker | 08 | John O. Shirk | 09 | R. Scott Smith, Jr. | 10 | E. Philip Wenger |
| The Board of Directors recommends you vote FOR the following proposal(s): | For | Against | Abstain | ||
| 2. |
THE BOARD OF DIRECTORS RECOMMENDS A
"FOR" VOTE FOR THE NON-BINDING RESOLUTION TO APPROVE THE COMPENSATION OF
THE NAMED EXECUTIVE OFFICERS.
|
o | o | o | |
| 3. | THE BOARD OF DIRECTORS RECOMMENDS A "FOR" VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP, AS FULTON FINANCIAL CORPORATION'S INDEPENDENT AUDITOR FOR FISCAL YEAR ENDING 12/31/10. | o | o | o | |
| NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | |||||
| For address change/comments, mark
here. (see reverse for instructions) |
o | ||||||
| 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 | ||||
Meeting Time,
Date and Location
The meeting will be held at 10:00 a.m. on April 30, 2010 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.
The meeting will be held at 10:00 a.m. on April 30, 2010 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.
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, Meeting Invitation, Shareholder Letter is/are available at www.proxyvote.com. |
For
the shares of Fulton Financial Corporation Common Stock issued to or held for
the account of the undersigned ("Plan Participant") under employee plans and
voting rights attached to such shares (any of such plans, a "Voting Plan"), the
Plan Participant hereby directs the respective fiduciary ("Plan Trustee") of
each applicable Voting Plan to vote all shares of Fulton Financial Corporation
Common Stock in the Plan Participant's name and/or account under such Voting
Plan held in the account as of March 1, 2010 in accordance with the instructions
given herein, at the Annual Meeting, to be held on Friday, April 30, 2010, at 10:00
a.m., at the Lancaster Marriott at Penn Square, 25 South Queen Street,
Lancaster, Pennsylvania, or any adjournments or postponements thereof, on all
matters properly coming before the Annual Meeting, including but not limited to
the matters set forth on the reverse side.
This
proxy, when properly delivered, will be voted by the Plan Trustee in the manner
directed by the Plan Participant. If no direction is made, shares held in the
Voting Plan will be voted FOR
the Election of Directors, FOR Executive Compensation,
and FOR the appointment
of KPMG LLP, as Independent Auditor.
Please
use the Internet or touch-tone telephone to transmit your voting instructions up
until 11:59 P.M. Eastern Time on April 24, 2010, which is the
deadline to vote your shares.
Address
change/comments:
(If you noted any
Address Changes and/or Comments above, please mark corresponding box on the
reverse side.)
(If
you noted any address changes/comments above, please mark corresponding box on
reverse side.)