-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TH0NRcgBgmA+X4IL6Tjds/Hi2jgOgSAohXirX4mSJ1jZhU+fwoqGzPAMz//cSUPq oA9wf4nddfletWB6ARHE6w== 0000712537-97-000005.txt : 19970328 0000712537-97-000005.hdr.sgml : 19970328 ACCESSION NUMBER: 0000712537-97-000005 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970327 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST COMMONWEALTH FINANCIAL CORP /PA/ CENTRAL INDEX KEY: 0000712537 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 241428528 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11138 FILM NUMBER: 97565346 BUSINESS ADDRESS: STREET 1: OLD COURTHOUSE SQUARE STREET 2: 22 N SIXTH ST CITY: INDIANA STATE: PA ZIP: 15701 BUSINESS PHONE: 4123497220 MAIL ADDRESS: STREET 1: 22 NORTH SIXTH STREET STREET 2: P.O. BOS 400 CITY: INDIANA STATE: PA ZIP: 15701 DEF 14A 1 FIRST COMMONWEALTH FINANCIAL CORPORATION Old Courthouse Square, 22 North Sixth Street Indiana, Pennsylvania 15701 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS April 28, 1997 TO THE SHAREHOLDERS: Notice is hereby given that the Annual Meeting of Shareholders of First Commonwealth Financial Corporation (the "Corporation") will be held at the First Commonwealth Financial Corporation Operations Center, 646 Philadelphia Street, Indiana, Pennsylvania on Monday, April 28, 1997, at 3:00 p.m., local time, for the following purposes: 1. To elect six Directors to serve for terms expiring in 2000. 2. To act on such other matters as may properly come before the meeting. Only shareholders of record as of the close of business on March 14, 1997 are entitled to notice of and to vote at the Annual Meeting and any adjournments thereof. The Annual Report to Shareholders for the year ended December 31, 1996, which includes consolidated financial statements of the Corporation, is enclosed. YOU ARE URGED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. IF YOU ATTEND THE MEETING YOU MAY, IF YOU WISH, WITHDRAW YOUR PROXY AND VOTE YOUR SHARES IN PERSON. By Order of the Board of Directors, /S/DAVID R. TOMB, JR. Secretary Indiana, Pennsylvania March 25, 1997 FIRST COMMONWEALTH FINANCIAL CORPORATION Old Courthouse Square, 22 North Sixth Street Indiana, Pennsylvania 15701 PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS April 28, 1997 GENERAL INFORMATION The accompanying proxy is solicited by the Board of Directors of First Commonwealth Financial Corporation (the "Corporation" or "FCFC") in connection with its Annual Meeting of Shareholders to be held on Monday, April 28, 1997, 3:00 p.m., local time, and any adjournments thereof. If the accompanying proxy is duly executed and returned, the shares of Common Stock, par value $1.00 per share (the "Common Stock"), of the Corporation represented thereby will be voted and, where a specification is made by the shareholder as provided therein, will be voted in accordance with that specification. A proxy may be revoked by the person executing it at any time before it has been voted by notice of such revocation to David R. Tomb, Jr., Secretary of the Corporation. The three persons named in the enclosed proxy have been selected by the Board of Directors and will vote shares represented by valid proxies. They have indicated that, unless otherwise specified in the proxy, they intend to vote to elect as Directors the six nominees listed on page 6. The Board of Directors has no reason to believe that any of the nominees will be unable to serve as Directors. In the event, however, of the death or unavailability of any nominee or nominees, the proxy to that extent will be voted for such other person or persons as the Board of Directors may recommend. The Corporation has no knowledge of any other matters to be presented at the meeting. In the event other matters do properly come before the meeting the persons named in the proxy will vote in accordance with their judgment on such matters. The approximate date on which this proxy statement is first to be mailed to the shareholders of the Corporation is March 25, 1997. The cost of the solicitation of proxies will be paid by the Corporation. In addition to the solicitation of proxies by the use of the mails, management and regularly engaged employees of the Corporation may, without additional compensation therefor, solicit proxies on behalf of the Corporation by personal interviews, telephone, telegraph or other means, as appropriate. 1 The Corporation will, upon request, reimburse brokers and others who are only record holders of the Corporation's Common Stock for their reasonable expenses in forwarding proxy material to, and obtaining voting instructions from, the beneficial owners of such stock. As of the close of business on March 14, 1997, there were 22,436,628 shares of Common Stock issued and 22,186,926 shares were outstanding. Three million (3,000,000) shares of Preferred Stock have been authorized; however, none of the preferred shares is outstanding. Only shareholders of record as of the close of business on March 14, 1997 are entitled to receive notice of and to vote at the Annual Meeting. Shareholders are entitled to one vote for each share held on all matters to be considered and acted upon at the Annual Meeting. The Articles of Incorporation of the Corporation do not permit cumulative voting. An affirmative vote of a majority of the shares present and voting at the meeting is required for approval of all items being submitted to the shareholders for their consideration. Abstentions and broker non-votes are each included in the determination of the number of shares present and voting, but are not counted for purposes of determining whether a proposal has been approved. The Corporation conducts business through three banking subsidiaries: (i) First Commonwealth Bank ("FCB") doing business as NBOC Bank ("NBOC"), Deposit Bank ("Deposit"), Central Bank ("Central"), Cenwest Bank ("Cenwest"), First Bank of Leechburg ("Leechburg"), Peoples Bank ("Peoples"), Peoples Bank of Western Pennsylvania ("Peoples of W. PA"), and Unitas Bank ("Unitas"); (ii) Reliable Savings Bank, PaSA, the sole subsidiary of Reliable Financial Corporation ("Reliable"); (iii) and First Commonwealth Trust Company ("FCTC"); through Commonwealth Systems Corporation ("CSC"), a data processing subsidiary; and BSI Financial Services Inc. ("BSI"), a mortgage and loan servicing company. The Corporation also jointly owns Commonwealth Trust Credit Life Insurance Company ("CTCLIC"), a reinsurer of credit life and accident and health insurance. FCB, Reliable and FCTC are herein collectively called the "Subsidiary Banks." COMMON STOCK OWNERSHIP BY MANAGEMENT The Corporation is not aware of any person who, as of March 14, 1997, was the beneficial owner of more than 5% of the Common Stock, except FCTC as more fully described below. The following table sets forth information concerning beneficial ownership by all directors and nominees, by each of the executive officers named in the Summary Compensation Table on page 10 (the "Summary Compensation Table") and by all directors and executive officers as a group. 2
Amount and nature of Percent of Name Beneficial Ownership(1) Class E. H. Brubaker 10,096 (2) * Sumner E. Brumbaugh 132,831 (2) (3) * Edward T. Cote 101,400 (5) * Thomas L. Delaney 29,501 * Clayton C. Dovey, Jr. 23,134 * Ronald C. Geiser 18,873 (3) * Johnston A. Glass 23,201 (3) * A. B. Hallstrom 11,988 (3) * Thomas J. Hanford 24,129 * H. H. Heilman, Jr. 22,000 * David F. Irvin 63,598 * William R. Jarrett 2,978 * David L. Johnson 11,745 (2) * Robert F. Koslow 25,570 (2) (3) * Dale P. Latimer 693,534 (3) (5) (8) 3.12% Joseph E. O'Dell 30,589 (2) (4) * Joseph W. Proske 13,945 (2) (3) * Charles J. Szewczyk 272,307 1.23% Gerard M. Thomchick 25,823 (2) (3) (4) * David R. Tomb, Jr. 315,563 (2) (3) (4) (5) (6) 1.42% E. James Trimarchi 342,724 (2) (3) (4) (5) (6) (7) 1.54% Robert C. Williams 14,281 (3) (9) * All directors and 1,723,295 7.84% executive officers as a group (26 persons) *Less than 1%
(1) Under regulations of the Securities and Exchange Commission, a person who has or shares voting or investment power with respect to a security is considered a beneficial owner of the security. Voting power is the power to vote or direct the voting of shares, and investment power is the power to dispose of or direct the disposition of shares. Unless 3 otherwise indicated in the other footnotes below, each director has sole voting power and sole investment power over the shares indicated opposite his name in the table, and each member of a group has sole voting power and sole investment power over the shares indicated for the group. (2) Does not include the following shares held by spouses, either individually or jointly with other persons, as to which voting and investment power is disclaimed by the director or officer: Mr. Brubaker, 30,030; Mr. Brumbaugh, 132; Mr. Johnson, 914; Mr. Koslow, 2,031; Mr. O'Dell, 1,989; Mr. Proske, 31,530; Mr. Thomchick, 3,104; Mr. Tomb, 264; Mr. Trimarchi, 20,000; and all Directors and executive officers as a group, 89,994. (3) Includes the following shares held jointly with spouses, as to which voting and investment power is shared with the spouse: Mr. Brumbaugh, 15,400; Mr. Geiser, 14,364; Mr. Glass, 12,304; Mr. Hallstrom, 7,737; Mr. Koslow, 10,090; Mr. Latimer, 20,249; Mr. Proske, 1,600; Mr. Thomchick, 2,852; Mr. Tomb, 31,846; Mr. Trimarchi, 8,482; Mr. Williams, 7,420, and all Directors and executive officers as a group 132,344. (4) Includes 16,829 shares held by Atlas Investment Company, of which Messrs. O'Dell, Thomchick, Tomb and Trimarchi are each 25% owners and as to which they share voting and investment power. (5) Includes 101,000 shares owned by Berkshire Securities Corporation. Berkshire is a Pennsylvania corporation organized in 1976 for the purpose of acquiring and holding the securities of Pennsylvania banks. The officers, directors or stockholders of Berkshire include Messrs. Cote, Latimer, Tomb and Trimarchi, each of whom is an officer or director of the Corporation, among others. The shares were acquired by Berkshire when its shares of Dale National Bank (now Cenwest) were converted into shares of the Corporation as a result of the Dale merger in 1985. Each of the foregoing persons may be deemed to share voting and investment power of these shares. (6) Includes 159,438 shares held by County Wide Real Estate, Inc., of which Messrs. Tomb and Trimarchi are each 50% owners and as to which they share voting and investment power. (7) Includes 29,652 shares held by family interests of which Mr. Trimarchi exercises sole voting and investment power. (8) Includes 105,272 shares held by the R&L Development Company Pension & Profit Sharing Plan of which Mr. Latimer is Trustee. 4 (9) Mr. Williams became a member of the Board of Directors on the occasion of the merger of Unitas National Bank into the Corporation in September 1994. As of February 28, 1997, FCTC, acting in a fiduciary capacity for various trusts and estates, including the Corporation Employee Stock Ownership Plan ("ESOP"), and the Corporation 401(k) Retirement Savings and Investment Plan ("401(k) Plan") held an aggregate of 2,021,977 shares of Common Stock (9.1% of the outstanding shares). Of these shares, FCTC had sole voting power with respect to 464,669 shares, shared voting power with respect to 1,557,308 shares, had sole investment power with respect to 445,507 shares and shared investment power with respect to 1,576,470 shares. FCTC votes the shares over which it has voting power and, where voting power is shared, shares are voted by FCTC in consultation with the other persons having voting power. Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's directors and executive officers, and persons who own more than ten percent of a registered class of the Corporation's equity securities, to file with the Securities and Exchange Commission (the "Commission") an initial report of ownership and reports of changes in ownership of Common Stock and other equity securities of the Corporation. Executive officers, directors and greater than ten percent shareholders are required by Commission regulation to furnish the Corporation with copies of all Section 16(a) forms which they file. The Corporation is not aware of any late filings in 1996. In making this disclosure, the Corporation has relied solely on written and oral representa- tions of its directors, executive officers and greater than ten percent shareholders and copies of the reports they have filed with the Commission. ELECTION OF DIRECTORS Article 10 of the By-Laws of the Corporation provides that the number of Directors shall be not less than 3 nor more than 25. The Board of Directors has, in accordance with the By-Laws, fixed the number of directors at 21 (three classes of seven directors each). A successor for the vacancy in the class of directors whose terms expire in 1997 has not been named. As of March 14, 1997, each director and nominee for election as a director of the Corporation owned beneficially the number of shares of Common Stock set forth in the preceding table. The information in the table and the footnotes thereto is based upon data furnished to the Corporation by, or on behalf of, the persons named or referred to in the table. 5 Six directors will be elected at the Annual Meeting to serve for terms of three years expiring with the Annual Meeting of Shareholders in 2000. Each Director elected will continue in office until a successor has been elected. If any nominee is unable to serve, which the Board of Directors has no reason to expect, the persons named in the accompanying proxy intend to vote for the balance of those named and, if they deem it advisable, for a substitute nominee. The names of the nominees for Directors and the names of Directors whose terms of office will continue after the Annual Meeting are listed in the following table. Information about the nominees, each of whom is presently a member of the Board of Directors, and about the other directors whose terms of office will continue after the Annual Meeting, is set forth in the table below. The nominees and other directors have held the positions shown for more than five years unless otherwise indicated.
Principal Occupation or Director Employment; Other Name Since Directorships; Age Nominees for a Term Ending in 2000: E. H. Brubaker 1984 Retired; formerly, Chairman of the Board of Deposit; Age 66 A. B. Hallstrom 1986 Chairman, Hallstrom Construction Inc.; Age 68 Thomas J. Hanford 1984 Private Investor, Director of First United Bancorp "BANCORP"; Age 58 H. H. Heilman, Jr. 1985 Partner, Heilman & McClister (attorneys-at- law); Age 80 Charles J. Szewczyk 1990 (pronounced and sometimes known as Charles J. Sheftic) Chairman of the Board of Peoples; Managing Partner of County Amusement Co. (real estate holdings); Age 68 Robert C. Williams 1994 President of Unitas; Age 53
6
Continuing Directors Whose Terms End in 1998: Thomas L. Delaney 1984 Private Investor; Director of BANCORP; Age 66 Ronald C. Geiser 1985 Retired; formerly President and Director of Cenwest; Age 67 David F. Irvin 1984 Sole Owner, The Irvin/McKelvy Company (sales and engineering for mining and industrial services); Age 78 David L. Johnson 1984 Retired; formerly Vice President and Corporate Secretary, Pennsylvania Manufacturers' Corporation (insurance holding company); Age 67 Robert F. Koslow 1993 Chairman of the Board of Peoples of W. PA; Age 61 Joseph W. Proske 1984 Vice President- Engineering, Stackpole Magnetic Systems, Inc. (manufacturer of magnetic components);Director of CSC; Age 60 E. James Trimarchi 1982 Chairman of the Board of the Corporation; Director of FCB, FCTC, CTCLIC, and New Mexico Banquest Investors Corp. "NMB"; Age 74 Continuing Directors Whose Terms End in 1999: Sumner E. Brumbaugh 1992 Chairman of the Board of Central; President, Brumbaugh Insurance Group; Age 68 Edward T. Cote 1984 Associate, The Wakefield Group (Investment Banking); and Director of NMB; Age 60 Clayton C. Dovey, Jr. 1985 Chairman of the Board of Cenwest; Age 72
7
Continuing Directors Whose Terms End in 1999: (continued) Johnston A. Glass 1986 President and Chief Executive Officer of FCB; Formerly President of NBOC; Director of FCB; Age 47 Dale P. Latimer 1984 President, R & L Development Company (heavy construction); Director of FCB; and NMB; Age 66 Joseph E. O'Dell 1994 President and Chief Executive Officer of the Corporation; Formerly President and Chief Executive Officer of FCB; Director of FCB, FCTC and CSC; Age 51 David R. Tomb, Jr. 1983 Partner, Tomb and Tomb (attorneys-at-law); Senior Vice President, Secretary and Treasurer of the Corporation; Director of FCB, FCTC, CSC and CTCLIC; Age 65
Board Committees During 1996 there were 4 meetings of the Board of Directors of the Corporation. All directors attended at least 75% of the total number of meetings of the Board of Directors of the Corporation and all committees of which they were members except for Messrs. Hallstrom and Delaney. The Board of Directors of the Corporation has established three standing committees: Executive, Audit, and Executive Compensation. The Board has no standing Nominating Committee. When the Board of Directors is not in session, the Executive Committee, which is comprised of Messrs. Trimarchi (Chairman), Tomb (Secretary), Brubaker, Brumbaugh, Delaney, Geiser, Glass, Heilman, Latimer, O'Dell and Szewczyk possesses and exercises all the powers of the Board, except for matters which are required by law to be acted upon by the full Board. The Executive Committee considers major policy matters and makes reports and recommendations to the Board. The Committee met 4 times in 1996. 8 The Audit Committee is comprised of Messrs. Latimer (Chairman), Hallstrom, Irvin, Cote and Proske and reviews the internal auditing procedures and controls of the Corporation and its subsidiaries. The Audit Committee also reviews reports of examinations of the Subsidiary Banks received from state and federal regulators, as well as reports from internal and external auditors. The Audit Committee formally reports to the full Board of Directors its evaluations, conclusions and recommendations with respect to the condition of the Corporation, the Subsidiary Banks, CSC and BSI, and the effectiveness of their policies, practices and controls. The Committee met 4 times in 1996. The Executive Compensation Committee is comprised of Messrs. Cote (Chairman), Johnson, Irvin and Latimer. The Committee met 5 times in 1996. (See Report of the Executive Compensation Committee.) The By-Laws of the Corporation require that any shareholder who intends to nominate or cause to have nominated any candidate for election to the Board of Directors (other than a candidate proposed by the Corporation's then existing Board of Directors) must notify the Secretary of the Corporation in writing not less than 120 days in advance of the date of the Corporation's proxy statement is released to its shareholders in connection with the previous year's annual meeting of shareholders called for the election of directors (for the 1997 meeting of shareholders, such notification must have been received by the Secretary on or before November 19, 1996). Such notification must contain (to the extent known by the notifying shareholder) the name, address, age, principal occupation and number of shares of the Corporation owned by each proposed nominee; the name, residence address and number of shares of the Corporation owned by the notifying shareholder; the total number of shares that, to the knowledge of the notifying shareholder, will be voted for each proposed nominee; a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons pursuant to which the nomination or nominations are to be made by the shareholder; such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated by the Board of Directors; and the written consent of each nominee, signed by such nominee, to serve as a director of the Corporation if so elected. The Board of Directors as a whole would consider nominations submitted by a shareholder if submitted in accordance with the By-Laws and otherwise in time for such consideration. COMPENSATION OF DIRECTORS Directors who currently serve in a management capacity at FCFC or serve in an affiliate management capacity are compensated at the rate of $1,000 per quarterly meeting attended. Other Directors are compensated at the rate of $1,500 per quarterly meeting attended as well as payment of an annual retainer of $10,000. Committee members receive $300 per committee meeting attended. 9 COMPENSATION OF EXECUTIVE OFFICERS The following table sets forth certain information regarding compensation received by the Chief Executive Officer and the remaining four most highly compensated named executive officers of the Corporation.
SUMMARY COMPENSATION TABLE Annual Compensation Long-Term Compensation: Securities Name and All Other Underlying3 Principal Position Year Salary1 Bonus Compensation2 Options/SARs # Joseph E. O'Dell 1996 $343,200 $20,000 $20,091 20,306 President and Chief 1995 324,000 32,000 20,331 -0- Executive Officer of 1994 197,000 19,700 15,472 -0- First Commonwealth Financial Corporation E. James Trimarchi 1996 $341,120 -0- $20,091 15,238 Chairman of the Board 1995 354,000 -0- 21,038 -0- of First Commonwealth 1994 329,500 $20,500 19,481 -0- Financial Corporation Gerard M. Thomchick 1996 $217,750 $12,500 $20,091 12,691 Sr. Executive Vice 1995 205,000 20,000 21,038 -0- President and Chief 1994 174,700 16,960 19,481 -0- Operating Officer of First Commonwealth Financial Corporation Johnston A. Glass 1996 $195,480 $11,243 $20,091 8,302 President and Chief 1995 184,488 33,941 21,038 -0- Executive Officer 1994 169,706 -0- 19,481 -0- of FCB William R. Jarrett 1996 $160,160 $ 9,625 $20,091 6,973 Sr. Vice President 1995 154,000 25,000 8,482 -0- of First Commonwealth 19944 81,570 -0- -0- -0- Financial Corporation
1 Includes compensation for services on boards and committees of the Corporation. 2 Includes the matching and automatic contribution by the Corporation to the individual's account in the Corporation's 401(k) Plan as well as the allocation of shares to the individual's account in the ESOP. 3 Further information on item is provided on page 11. 4 Employment began on 4-15-94. 10 The following tables set forth certain information regarding stock options granted in 1996 to the Chief Executive Officer and the remaining four most highly compensated named executive officers of the Corporation.
STOCK OPTION GRANTS IN FISCAL YEAR 1996 % OF EXERCISE POTENTIAL REALIZED VALUE TOTAL OPTIONS OR AT ASSUMED ANNUAL RATES OPTIONS GRANTED TO BASE PRICE EXPIRATION OF STOCK PRICE APPRECIATION NAME GRANTED EMPLOYEES PER SHARE DATE FOR OPTION TERM 5% 10% Joseph E. O'Dell 20,306 10.41% $18.375 June 3, 2006 $234,655 $594,662 E. James Trimarchi 15,238 7.81 18.375 June 3, 2006 176,089 446,245 Gerard M. Thomchick 12,691 6.51 18.375 June 3, 2006 146,656 371,656 Johnston A. Glass 8,302 4.26 18.375 June 3, 2006 95,937 243,124 William R. Jarrett 6,973 3.57 18.375 June 3, 2006 80,579 204,204
AGGREGATE STOCK OPTION EXERCISES IN FISCAL YEAR 1996 AND FISCAL YEAR-END OPTION VALUES NUMBER OF UNEXERCISED VALUE OF UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS NAME YEAR END AT FISCAL YEAR END Joseph E. O'Dell 20,306 $37,363 E. James Trimarchi 15,238 28,037 Gerard M. Thomchick 12,691 23,351 Johnston A. Glass 8,302 15,276 William R. Jarrett 6,973 12,803
Note: None of the options in this table are currently exercisable. Notwithstanding anything to the contrary set forth in any of the Corporation's previous filings under the Securities Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended, that might incorporate future filings, including this Proxy Statement in whole or in part, the following report and the Performance Graph on page 16 shall not be incorporated by reference into any such filings. 11 REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE TO: Board of Directors The following is a report by the Executive Compensation Committee of the Board of Directors of First Commonwealth Financial Corporation. The objectives of the report are to provide shareholders with an explanation of the overall executive compensation philosophy, strategies, and specific compensation plans. EXECUTIVE COMPENSATION COMMITTEE The Executive Compensation Committee is comprised of four (4) non-employee and independent directors selected from the Board of Directors of First Commonwealth Financial Corporation. The Committee met five times in 1996. The Committee seeks to achieve and maintain a position of "equity" with respect to balancing the interests of the shareholders with those of the executive officers. Throughout 1996, the Executive Compensation Committee followed a formal Executive Compensation Program which is illustrated, in part, by the following performed tasks: 1. Researching peer group compensation activities to ensure both consistency and competitiveness in the composition of the Corporation's executive compensation program. 2. Ongoing refinement, documentation, and administration of the Corporation's compensation system for executives. 3. Evaluating current and proposed components of the Corporation's executive compensation program to ensure consistency with its philosophy on executive compensation. 4. Ensuring that all regulatory requirements pertaining to executive compensation are met. Executive officers of the Corporation may, at the request of the Committee, be present at meetings of the Committee for input and discussion purposes. However, the executive officers have no direct involvement with the decisions of the Executive Compensation Committee, nor do they have a vote on any issues addressed by the Committee. Consultants and other independent advisors may also be utilized by the Committee from time to time in a similar manner. Each meeting of the Executive Compensation Committee is documented in the form of minutes and submitted to the Board of Directors. 12 EXECUTIVE COMPENSATION PHILOSOPHY AND POLICY The written executive compensation philosophy expresses the attitude of the Board of Directors toward such issues as participation, relevant peer comparisons and plan design; as such, it represents an important part of the Executive Compensation Program. The philosophy provides guidance to the deliberations of the Executive Compensation Committee and, within the overall objectives of equity and regulatory compliance, acts as a standard against which plan performance may be measured. The Executive Compensation Program is structured to foster decisions and actions which will have a strong positive impact on the Corporation's long-term performance. For this reason, participation in the programs administered by the Executive Compensation Committee is limited to those executives who have the greatest opportunity to affect the achievements of the Corporation's long-term strategic objectives. As part of the overall Program, the compensation philosophy defines what the organization will pay for the various skills and abilities based upon criteria such as job worth and competitive comparisons. The Executive Compensation Committee has established the following parameters for the pay philosophy under the 1996 Program: 1. An overall program that is not complex and may be readily communicated and easily understood by participants and shareholders. 2. Base salary that is at least at the fiftieth percentile of the competitive rate for the position as defined by selected peer group information. 3. Base salary adjustments which maintain external competitiveness. 4. Performance-based compensation adjustments which are subjective and discretionary on the part of the Executive Compensation Committee. These discretionary adjustments will be made while taking into consideration factors such as performance versus budget and return on shareholder equity. 5. Utilization of IRS "qualified" plans whenever they are in the best interests of both the executive officer and the Corporation. 6. Use of equity-based compensation through the Corporation's 1995 Compensatory Stock Option Plan to provide a long-term incentive for the executive officers of the Corporation to maximize the Corporation's stock price and increase shareholder value. 13 The Executive Compensation Committee utilized several factors to define an appropriate competitive peer group including the type of company from which executive talent might be recruited, a logical geographical region, organizational size and structural complexity, organizational performance, and the ability to identify and make relevant comparisons of executive officer positions in terms of responsibilities and performance. The 1996 peer group was structured utilizing this methodology and philosophy and, in the opinion of the Committee, represents a fair and reasonable standard against which executive pay may be compared. The peer group included Pennsylvania and adjacent states' commercial banks and bank holding companies of asset sizes and characteristics similar to those of the Corporation and its affiliates. EXECUTIVE COMPENSATION PROGRAMS The primary components of the Corporation's Executive Compensation Program are base salaries, base benefits, and participation in the Corporation's Compensatory Stock Option Plan. Base salaries are assessed by taking into account the position, responsibilities, and competitive salary data as generally defined by comparable peer group information from similarly sized banks and bank holding companies within Pennsylvania and adjacent states. Executive officer compensation was set to correspond within the overall range of the peer group data. Program participants are also eligible to partake in the normal benefit programs available to employees of the Corporation and its affiliates. Also, executive officers are included in the Compensatory Stock Option Plan which was approved by the Board of Directors in 1995 and the shareholders in 1996. The Executive Compensation Committee is authorized to grant incentive stock options and non- qualified stock options to key employees of the Corporation and its subsidiaries. These stock options enable the optionees to purchase the Corporation's common stock at its market price on the date of the grant of the option. None of the options granted in 1996 may be exercised prior to their vesting date of June 3, 1999 (except in the limited circumstances of death, disability or change-in-control), nor may they be exercised after their expiration date of June 3, 2006. The Committee uses the granting of such options as a performance-based incentive program that encourages the long-term increase of the Corporation's share price and enhances shareholder value. In addition, executive officers may also participate in the Executive Officer Loan/Stock Purchase Plan which provides for corporate sponsored loans at market rates primarily for the purchase of the Corporation's common stock. 14 CHIEF EXECUTIVE OFFICER COMPENSATION In 1996, Joseph E. O'Dell completed his second year as President and Chief Executive Officer of the Corporation. He received a base salary of $339,200, which was within the peer group's range of compensation for this position. In 1996 he also received a $20,000 cash bonus which was based upon his accomplishments from the preceding year. In 1996 Mr. O'Dell served as President and Chief Executive Officer for both the Corporation and First Commonwealth Bank. Having implemented the Corporation's strategic plan in 1995, "Plan 2000" was now into its second year of defining ongoing refinements to the Corporation. With the most significant structural changes called for under the Plan having occurred in 1995, Mr. O'Dell has spent much of the past year implementing planned refinements and other necessary actions which are consistent with the basic tenets of the Plan. Examples of such actions include the acquisition of BSI for loan servicing activities; the introduction and delivery of new products such as the "American Dream Rewards Savings Account" as well as products specific to the needs of public entities; and a continuation of the expansion of alternative delivery methods such as the ongoing development of services provided by the Convenience Banking Center and the introduction of an external sales force which provides coverage to the individual partner banks. In addition, the "Too Good To Be True" mortgage product, which was introduced in late 1995, continued its successful run in bringing new customers to the organization for the development of long-term relationships. All such actions are to promote the development and servicing of new customer bases and the expansion of existing customer bases. In addition, there were ongoing investments made in the development and implementation of technological systems throughout the organization in order to improve organizational efficiency and effectiveness. In 1996, Mr. O'Dell was an eligible participant in the Corporation's 401(k) Plan and ESOP. As such, he received contributions from the Corporation to both plans in 1996. 1996 EXECUTIVE COMPENSATION ACTIONS In 1996, the Executive Compensation Committee made its first grants under the Stock Option Incentive Plan. The executive officers and other key members of management, including the affiliate and partner bank presidents, were awarded such grants. With the introduction of the first grants, the Affiliate Presidents Incentive Compensation Plan was terminated. In addition, the Committee continued its ongoing gathering and analysis of competitive information from a selected group of Pennsylvania and adjacent states peer banks and holding companies. Submitted by the Executive Compensation Committee: Edward T. Cote, Chairman David F. Irvin David L. Johnson Dale P. Latimer 15 PERFORMANCE GRAPH Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on the Corporation's Common Stock against the cumulative total return of the S&P 500 Index and an Index for Pennsylvania Bank Holding Companies with assets between one and three billion dollars, including F.N.B. Corporation, First Western Bancorp Inc., Fulton Financial Corp., USBANCORP Inc., S&T Bancorp Inc. and Susquehanna Bancshares Inc., for the five years commencing January 1, 1992 and ending December 31, 1996. Cumulative Five Year Total Return First Commonwealth vs. S&P 500 and Peer Group
1991 1992 1993 1994 1995 1996 Peer Group Index 100.00 141.07 171.10 166.56 245.68 282.39 First Commonwealth Financial Corporation 100.00 151.26 180.53 143.51 192.40 206.86 S&P 500 Index 100.00 104.46 111.83 110.11 147.67 177.60
Assumes that the value of the investment in FCFC Common Stock and each index was $100 on January 1, 1992 and that all dividends were reinvested. 16 EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Executive Compensation Committee consists of Messrs. Cote, Johnson, Latimer and Irvin. No member was an officer or employee of the Corporation during 1996 nor has ever been an officer or employee of the Corporation or a subsidiary. Further, during 1996, no executive officer of the Corporation served on a compensation committee (or other board committee performing equivalent functions) or Board of Directors of any entity related to the above named Committee members or of any entity whose executive officers served as a director of the Corporation. INTERESTS OF NOMINEES, DIRECTORS AND OFFICERS IN CERTAIN TRANSACTIONS Mr. Brumbaugh serves as Chairman of the Board of Central Bank pursuant to an employment agreement for a period of 7 years, commencing May 1, 1992 and ending April 30, 1999. The agreement provides that Mr. Brumbaugh shall serve in an executive capacity and shall be the Chairman of the Board of Directors of Central and shall also perform such services for FCFC as from time to time are requested. As compensation to Mr. Brumbaugh for all services rendered to Central and to FCFC as an officer, director or member of any committee of Central or any of FCFC's subsidiaries or affiliates, FCFC has agreed, in addition to director's fees and committee meeting fees, to pay or cause Central to pay to Mr. Brumbaugh a salary at an annual rate of $100,000, which sum shall be adjusted upward at the annual rate of 5%. Should Mr. Brumbaugh retire, thereafter he shall be paid a retirement compensation for the remaining term of the agreement at an annual rate of $50,000, adjusted upwards annually for cost of living at the rate of 5%. Should Mr. Brumbaugh die at any time during the term of the agreement, in lieu of the foregoing payments, FCFC shall pay his wife the sum of $25,000 per year if she is living at the time each payment is made. As a part of the agreement and for a period of ten years thereafter, Mr. Brumbaugh will not engage in any competing business within 10 miles of any of the banking facilities of the Corporation or solicit any of their then-existing customers. Mr. Koslow serves as Chairman of the Board of Peoples of W. PA under an employment agreement with Peoples extending to July 19, 1998. The agreement provides that Mr. Koslow will serve in such executive capacity as may be designated from time to time by the Board of Directors. As compensation to Mr. Koslow, Peoples agrees to pay him a minimum annual salary equal to the annual salary in effect on July 20, 1988, such annual salary to be subject to annual review for possible increase. If Mr. Koslow's employment is terminated other than for cause, he is entitled to be paid for the greater of two years or the remaining term of the agreement, the annual salary and bonus paid to him for the full calendar year immediately preceding the year in which such termination occurs, plus the insurance premiums provided in a split dollar life insurance agreement between Peoples of W. PA and Mr. Koslow. 17 In the event of a change in control such minimum annual salary shall be increased on January 1 of each year thereafter by an amount equal to the percentage increase in the Consumer Price Index for the preceding calendar year. If there is a change of control of Peoples of W. PA and thereafter Mr. Koslow's responsibilities are changed without his consent, Mr. Koslow is entitled to resign within twelve months of such change of control, in which case he is entitled to receive for the greater of three years or the remaining term of the agreement, but not beyond his age 65, the annual salary and bonus paid to him for the full calendar year immediately preceding such resignation, plus the split dollar life insurance premiums. As part of the agreement, Mr. Koslow has agreed that during the term of his employment and for a period of 10 years thereafter, he will not engage in any business in competition with Peoples of W. PA or any of its subsidiaries within 20 miles of any of their banking facilities or solicit any of their then existing customers. In November 1986, Unitas entered into a Supplemental Executive Benefit Agreement with Robert C. Williams, President of Unitas, which provides Mr. Williams with certain benefits in the event of a change in control. Should Mr. Williams employment with Unitas be terminated pursuant to a change in control, Unitas shall make payment to him for services in an amount equal to his last full regular monthly compensation prior to the change in control for a period of 36 months following the change in control. A termination pursuant to a change in control may occur with a merger, consolidation, acquisition, reorganization, sale of assets or significant stock acquisition of Unitas. The compensation payable upon a change in control is unfunded and would be paid out of general assets of Unitas or its successor if they became payable. At the 1996 Annual Meeting, the shareholders approved and ratified the Corporation's Change in Control Agreement Program for the Corporation's executive officers and certain other key employees. Except as described below, all of the agreements are identical in all material respects. If, within one year following the occurrence of a change in control, the employer involuntarily terminates the employment of the executive (other than for cause as defined below), substantially reduces the executive's title, responsibilities, power or authority, reduces the executive's base compensation, assigns duties which are inconsistent with previous duties, or undertakes similar actions, a severance benefit equal to one year's base compensation (payable in twelve monthly installments) will thereupon be payable to the former executive. Health insurance and other principal employee benefits will be continued during that one year period. If the former executive enters into competitive employment during the one year period, severance payments will cease. Cause for termination shall arise if the executive commits a felony resulting in, or intended to result in, monetary harm to the Corporation, its customers, or affiliates, or if the executive intentionally fails to perform his duties for 30 consecutive days following written notice from the Corporation that such duties are not being performed. 18 The agreement with Mr. O'Dell, the President and Chief Executive Officer of the Corporation, provides for severance payments to be made if the employer involuntarily terminates the employment of the executive (other than for cause as defined above), or undertakes similar action as described above, within three years of a change in control (rather than one year as described above for other agreements). Furthermore, Mr. O'Dell's agreement provides a severance benefit equal to three year's compensation (payable in thirty-six monthly installments) with continuation of health insurance and other principal employee benefits during that period. In addition, Mr. O'Dell may also trigger the payment of severance benefits (in the same amount and under the same conditions described above) by voluntarily terminating employment within one year following a change in control. However, the voluntary termination provision will no longer be available once Mr. O'Dell attains normal retirement age under any of the Corporation's regular retirement plans. The agreement with Mr. Thomchick, Senior Executive Vice President of the Corporation, is identical to Mr. O'Dell's agreement in all material respects except that severance payments are triggered only if the involuntary termination of employment or other triggering event occurs within two years of the change in control and the total severance benefit in his case is equal to two years compensation (payable in twenty-four monthly installments). During 1996, David R. Tomb, Jr., attorney-at-law, and the law firm of Tomb and Tomb of which Mr. Tomb is a partner performed legal services for the Corporation, NBOC and CSC. Mr. Tomb is a Director and executive officer of the Corporation. The fees paid for services during 1996 were $70,070. ACCOUNTANTS Grant Thornton LLP was selected by the Board of Directors to serve as the Corporation's independent certified public accountant for its 1996 fiscal year. The Board of Directors also has selected Grant Thornton LLP as the Corporation's independent certified public accountant for the 1997 fiscal year. A representative of Grant Thornton LLP is expected to be present at the Annual Meeting and will have an opportunity to make a statement, if he desires to do so, and to respond to appropriate questions. ANNUAL REPORT A copy of the Corporation's Annual Report for the fiscal year ended December 31, 1996 is enclosed with this Proxy Statement. A COPY OF THE CORPORATION'S FORM 10-K ANNUAL REPORT FOR 1996 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION MAY BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO: DAVID R. TOMB, JR., SECRETARY/TREASURER, BOX 400, INDIANA, PENNSYLVANIA 15701. 19 SHAREHOLDER PROPOSALS Proposals of Corporation shareholders intended to be presented at the 1998 Annual Meeting of Shareholders must be received by the Secretary of the Corporation not later than November 25, 1997 in order to be considered for inclusion in the Corporation's proxy statement for that meeting. 20 APPENDIX (LETTER TO SHAREHOLDERS ATTACHED TO PROXY CARD) Dear Shareholder: It is my pleasure to enclose our 1996 Annual Report which provides you with information about the progress of your corporation. Also enclosed is a Proxy Statement which details information relative to our Annual Meeting. The format of this year's Annual Meeting has been changed from our traditional luncheon meeting. The facilities which Indiana University of Pennsylvania has graciously provided us over the years are, unfortunately, no longer available to us due to a remodeling project on campus. The Annual Meeting this year will, therefore, be a brief business meeting with the only known order of business being the election of directors. Our Annual Shareholders Meeting will convene at 3:00 p.m. on Monday, April 28, 1997, at the FCFC Operations Center located at 646 Philadelphia Street, Indiana, Pennsylvania. Enclosed are two documents relevant to the meeting. * The Proxy Statement - detailing information pertinent to the annual meeting. * The Proxy Card - Please mark, sign, date and return this card in the enclosed envelope. This card should be returned to our transfer agent, The Bank of New York, regardless of whether or not you plan to attend the meeting. You may change your vote if you so desire at any time up until the vote is taken at the meeting. We regret the necessity to discontinue our traditional luncheon meeting at this time. We will, however, continue to review alternative possibilities for our Annual Meeting in future years. Thank you once again for your continued support and confidence in First Commonwealth. Should you have any questions regarding the enclosed material, please call Shareholder Relations at 1-800-331-4107. Sincerely, /S/JOSEPH E. O'DELL President and Chief Executive Officer Detach Proxy Card Here - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1. Election of the following FOR all nominees WITHHOLD AUTHORITY*EXCEPTIONS nominees as Directors to listed below to vote for all serve for terms ending in nominees listed 2000. below Nominees: E. H. Brubaker, A. B. Hallstrom, Thomas J. Hanford, H. H. Heilman, Jr., Charles J. Szewczyk, and Robert C. Williams (INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's name in the space provided below.) *Exceptions Change of Address and or Comments Mark Here Please sign exactly as name appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. For joint accounts each joint owner should sign. If a corporation, please sign in full corporate name by President or other authorized officer, giving your full title as such. If a partnership, please sign in name by authorized person, giving your full title as such. Date:________________________________________, 1997 _____________________________________________ (Seal) Signature _____________________________________________ (Seal) Signature if held jointly Please Sign, Date, and Return the Proxy Promptly Using the Enclosed Envelope Votes must be indicated x (x) in Black or Blue ink. FIRST COMMONWEALTH FINANCIAL CORPORATION Old Courthouse Square, 22 North Sixth Street Indiana, Pennsylvania 15701 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS April 28, 1997 The Annual Meeting of Shareholders of First Commonwealth Financial Corporation will be held at 646 Philadelphia Street, Indiana, PA on Monday, April 28, 1997 at 3:00 p.m., local time, for the following purposes: 1. To elect six Directors to serve for terms expiring in 2000. 2. To act on such other matters as may properly come before the Meeting. Only holders of Common Stock of First Commonwealth Financial Corporation of record at the close of business on March 14, 1997 will be entitled to vote at the meeting or any adjournment thereof. To be sure that your vote is counted, we urge you to complete and sign the proxy/voting instruction card below, detach it from this letter and return it in the postage paid envelope enclosed in this package. The giving of such proxy does not affect your right to vote in person if you attend the meeting. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - FIRST COMMONWEALTH FINANCIAL CORPORATION ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 28, 1997 This Proxy is Solicited on Behalf of the Board of Directors of First Commonwealth Financial Corporation The undersigned shareholder of First Commonwealth Financial Corporation ("the Corporation") hereby appoints John O. Campbell, William A. Mrozowski and Jayne F. Zaffuta, and each of them, as proxies of the undersigned to vote at the Annual Meeting of Shareholders of the Corporation which the undersigned would be entitled to vote if then personally present on the following matters and such other matters as may properly come before the meeting. This proxy when properly executed will be voted in the manner directed herein. If no direction is made, this proxy will be voted FOR Proposal 1. The undersigned hereby revokes all previous proxies for the Annual Meeting of Shareholders, hereby acknowledges receipt of the Notice of Annual Meeting and Proxy Statement furnished therewith and hereby ratifies all that the said proxies may do by virtue hereof. (Continued, and to be signed and dated on the reverse side.) FIRST COMMONWEALTH FINANCIAL CORPORATION P.O. BOX 11003 NEW YORK, NY 10203-0003 -----END PRIVACY-ENHANCED MESSAGE-----