-----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, KluO93zThPkBI3hGbxzEe8M87UQK/3Aen+43aes/IjJGrw0ob2xs7/Kk4RQYbyx+ NG7jIrmGCND1BBS+DQXJ0A== 0000737468-98-000002.txt : 19980319 0000737468-98-000002.hdr.sgml : 19980319 ACCESSION NUMBER: 0000737468-98-000002 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980428 FILED AS OF DATE: 19980318 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WASHINGTON TRUST BANCORP INC CENTRAL INDEX KEY: 0000737468 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 050404671 STATE OF INCORPORATION: RI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-13091 FILM NUMBER: 98568308 BUSINESS ADDRESS: STREET 1: 23 BROAD ST CITY: WESTERLY STATE: RI ZIP: 02891 BUSINESS PHONE: 4013481200 DEF 14A 1 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant |X| Filed by a Party other than the Registrant | | Check the appropriate box: | | Preliminary Proxy Statement | | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |X| Definitive Proxy Statement | | Definitive Additional Materials | | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 Washington Trust Bancorp, Inc. (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement if other than the Registrant) Payment of Filing Fee (Check the appropriate box): |X| No fee required. | | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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: -------------------------------------------------------------------- [GRAPHIC OF REGISTRANT'S LOGO OMITTED] WASHINGTON TRUST BANCORP, INC. 23 Broad Street, Westerly, Rhode Island 02891 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held April 28, 1998 To the Shareholders of WASHINGTON TRUST BANCORP, INC.: NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of WASHINGTON TRUST BANCORP, INC. (the "Corporation"), a Rhode Island corporation, will be held at the Westerly Library, 38 Broad Street, Westerly, Rhode Island on Tuesday, the 28th of April, 1998 at 11:00 a.m. for the purpose of considering and acting upon the following: 1. The election of five directors to serve for terms of three years; 2. The ratification of the selection of independent auditors to audit the Corporation's consolidated financial statements for the year ending December 31, 1998; and 3. Such other business as may properly come before the meeting, or any adjournment thereof. Only shareholders of record at the close of business on March 9, 1998 will be entitled to notice of and to vote at such meeting. The transfer books of the Corporation will not be closed. It is important that your shares be represented and voted whether or not you plan to be present. Therefore, if you do not expect to be present at the meeting, please sign, date, and fill in the enclosed proxy and return it by mail in the enclosed addressed envelope. By order of the Board of Directors, Harvey C. Perry II Harvey C. Perry II Secretary March 18, 1998 WASHINGTON TRUST BANCORP, INC. 23 Broad Street, Westerly, RI 02891 Telephone 401-348-1200 ------------------------------------------------ ANNUAL MEETING OF SHAREHOLDERS To Be Held April 28, 1998 ------------------------------------------------ PROXY STATEMENT The accompanying proxy is solicited by and on behalf of the Board of Directors of Washington Trust Bancorp, Inc. (the "Corporation") for use at the Annual Meeting of Shareholders to be held on April 28, 1998, and any adjournment thereof and may be revoked at any time before it is exercised by submission of another proxy bearing a later date, by attending the meeting and voting in person, or by notifying the Corporation of the revocation in writing to the Secretary, 23 Broad Street, Westerly, Rhode Island 02891. If not revoked, the proxy will be voted at the Annual Meeting in accordance with the instructions indicated on the proxy by the shareholder or, if no instructions are indicated, all shares represented by valid proxies received pursuant to this solicitation (and not revoked before they are voted) will be voted FOR Proposal Nos. 1 and 2 referred to herein. As of March 9, 1998, the record date for determining shareholders entitled to notice of and to vote at the Annual Meeting (the "Record Date"), there were issued and outstanding 6,659,086 shares of common stock, $.0625 par value (the "Common Stock"), of the Corporation. Each share of Common Stock is entitled to one vote per share on all matters to be voted upon at the meeting, with all holders of Common Stock voting as one class. A majority of the outstanding shares of Common Stock entitled to vote, represented in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes will be counted for purposes of determining if a quorum is present. With regard to the election of directors, votes may be cast in favor or withheld. Votes that are withheld will be excluded entirely from the vote and will have no effect. Abstentions may be specified on all proposals other than the election of directors and will be counted as present for purposes of the item on which the abstention is noted. Abstentions on the ratification of the selection of independent auditors will have the same legal effect as a vote against such matters. A broker "non-vote" occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner. Broker non-votes will not be counted for purposes of approving the matters to be acted upon at the Annual Meeting. As a result, broker non-votes will have no effect on the outcome of the election of directors and the ratification of the selection of independent auditors. Management knows of no matters to be brought before the meeting other than those referred to. If any other business should properly come before the meeting, the persons named in the proxy will vote in accordance with their best judgment. The approximate date on which this Proxy Statement and accompanying proxy cards will first be mailed to shareholders is March 18, 1998. PRINCIPAL SHAREHOLDERS The Corporation knows of no person who beneficially owned more than five percent (5%) of the Corporation's outstanding Common Stock as of March 9, 1998. ELECTION OF DIRECTORS The Corporation's Board of Directors is divided into three classes, with each class serving staggered terms of three years, so that only one class is elected in any one year. Notwithstanding such three year terms, the Corporation's By-Laws require any director who reaches his or her seventieth birthday to resign from the Board of Directors as of the next Annual Meeting of Shareholders following such director's seventieth birthday. This year, five directors are to be elected at the Annual Meeting to serve until the 2001 Annual Meeting and until their respective successors are elected and have qualified. There are at present 14 directors; if all of the nominees for director are elected, the Corporation will have 15 directors. Directors are elected by the affirmative vote of the majority of the shares of Common Stock entitled to vote thereon, represented in person or by proxy, at the Annual Meeting when a quorum is present. The nominees for election of directors at the Annual Meeting are Alcino G. Almeida, Katherine W. Hoxsie, Brendan P. O'Donnell, Anthony J. Rose, Jr. and John C. Warren. Each of the nominees for director, other than Mr. Almeida, is presently a director of the Corporation. Mr. Almeida was elected to the Board of Directors of the Corporation's subsidiary, The Washington Trust Company (the "Bank"), on January 15, 1998. Each of the nominees has consented to being named a nominee in this Proxy Statement and has agreed to serve as a director if elected at the Annual Meeting. In the event that any nominee is unable to serve, the persons named in the proxy have discretion to vote for other persons if such other persons are designated by the Board of Directors. The Board of Directors has no reason to believe that any of the nominees will be unavailable for election. NOMINEE AND DIRECTOR INFORMATION
Common Stock Shares Beneficially Owned on March 9, 1998 (2) ------------------------------------- Common Name and Principal Occupation Years as Stock Vested Percent During the Past Five Years Director (1) Age Owned Options Total of Class - ------------------------------------------------------------------------------------------------------------------- Terms Expiring in 2001 (if elected): Alcino G. Almeida 0 65 100 0 100 -% Executive Vice President and General Manager, The Day Publishing Company through 1997, currently retired Katherine W. Hoxsie, CPA 7 49 34,023 21,375 55,398 .83% Vice President, Hoxsie Buick-Pontiac-GMC Truck, Inc. Brendan P. O'Donnell Retired manufacturing executive 16 68 10,428 4,500 14,928 .22% Common Stock Shares Beneficially Owned on March 9, 1998 (2) ------------------------------------- Common Name and Principal Occupation Years as Stock Vested Percent During the Past Five Years Director (1) Age Owned Options Total of Class - ------------------------------------------------------------------------------------------------------------------- Anthony J. Rose, Jr. 26 67 120,910 3,657 124,567 1.87% President, Technical Industries, Inc. (chemicals) John C. Warren 2 52 6,363 22,375 28,738 .43% Chief Executive Officer of the Corporation and the Bank since 1997; President of the Corporation and the Bank since 1996; Chief Operating Officer of the Corporation and the Bank 1996-1997; President and Chief Executive Officer of Sterling Bancshares Corporation 1990-1994, Chairman 1993-1994 Terms Expiring in 1999: Gary P. Bennett 4 56 662 7,031 7,693 .12% Chairman, Chief Executive Officer and Director, Analysis & Technology, Inc. (interactive multimedia training systems, information systems and engineering services) Larry J. Hirsch 4 59 5,978 3,656 9,634 .14% President, Westerly Jewelry Co., Inc. (retailer) Mary E. Kennard, Esq. 4 43 2,024 5,267 7,291 .11% University Counsel and Vice President, The American University; Vice President and General Counsel of the University of Rhode Island 1992-1994 Joseph J. Kirby 26 66 27,721 113,581 141,302 2.09% Retired Chairman of the Board and Chief Executive Officer of the Corporation and the Bank 1996 - 1997; President of the Corporation 1984-1995 Terms Expiring in 2000: Steven J. Crandall 15 45 1,695 4,500 6,195 .09% Vice President, Ashaway Line & Twine Manufacturing Co. (manufacturer of tennis string, fishing line and surgical sutures) Common Stock Shares Beneficially Owned on March 9, 1998 (2) ------------------------------------- Common Name and Principal Occupation Years as Stock Vested Percent During the Past Five Years Director (1) Age Owned Options Total of Class - ------------------------------------------------------------------------------------------------------------------- Richard A. Grills 15 65 86,896 4,500 91,396 1.37% Consultant and retired President, Bradford Dyeing Association, Inc. (textiles) James W. McCormick, Jr. 15 67 21,552 4,500 26,052 .39% Former President, McCormick's, Inc. (retailer) Victor J. Orsinger II 15 51 24,225 4,500 28,725 .43% Partner, Orsinger & Nardone, Attorneys at Law James P. Sullivan, CPA 15 59 4,199 4,500 8,699 .13% Finance Officer, Roman Catholic Diocese of Providence Neil H. Thorp 15 58 19,800 4,500 24,300 .36% President, Thorp & Trainer, Inc. (insurance) In addition to the nominee and director information provided above, the following summarizes the security ownership of certain executive officers of the Corporation and the Bank, who are not also directors of the Corporation: David V. Devault, CPA 11,481 32,723 44,204 .66% Vice President, Treasurer and Chief Financial Officer Harvey C. Perry II 13,282 25,969 39,251 .59% Vice President and Secretary Robert G. Cocks, Jr. 481 23,220 23,701 .35% Senior Vice President - Commercial Lending, of the Bank Louis W. Gingerella, Jr. 196 13,994 14,190 .21% Senior Vice President - Credit Administration, of the Bank Directors and Executive 401,348 330,654 732,002 10.47% Officers as a Group (22 persons) - ------------------ (1) The Corporation was organized in 1984. The years indicated include the period the directors have been members of the Board of the Bank prior to 1984. (2) "Beneficial ownership" means, pursuant to Securities and Exchange Commission ("SEC") regulations, the sole or shared power to vote, or to direct the voting of, a security and/or investment power with respect to a security (i.e., the power to dispose, or to direct the disposition, of a security) and/or the right to acquire such ownership within 60 days.
Committees of the Board of Directors The Corporation's Board of Directors has the following committees: Executive Committee. The Executive Committee met 12 times in 1997 and, when the Board of Directors is not in session, is entitled to exercise all the powers and duties of the Board. Members of the Executive Committee are Directors O'Donnell (Chairperson), Grills, Hoxsie, Kirby, Orsinger, Rose and Warren. Compensation Committee. The Compensation Committee, which met six times in 1997, is responsible for reviewing compensation policies of the Bank and for making recommendations concerning remuneration arrangements for executive officers. Members of the Compensation Committee are Directors Orsinger (Chairperson), Bennett, Grills, Hirsch, Kennard, Kirby and O'Donnell. Audit Committee. The Audit Committee, which met four times in 1997, is responsible for reviewing the adequacy of the Corporation's system of internal controls, its audit program, the performance and findings of its internal audit staff and action to be taken thereon by management, and reports of the independent auditors. Committee members are Directors Hoxsie (Chairperson), Crandall, McCormick and Sullivan. Stock Option Committee. The Stock Option Committee met three times in 1997 and is responsible for the administration of the Corporation's Amended and Restated 1988 Stock Option Plan ("1988 Plan") and 1997 Equity Incentive Plan ("1997 Plan"). Committee members are Directors Bennett (Chairperson), Kennard, O'Donnell and Sullivan. Nominating Committee. The Nominating Committee met once in 1997 and is responsible for reviewing the qualifications of potential nominees for election to the Board of Directors of the Corporation and recommending to the shareholders the election of directors of the Corporation. The Committee members are Directors O'Donnell (Chairperson), Bennett, Hoxsie, Kirby, Orsinger and Rose. Shareholders may make nominations for election as directors at any meeting called for such purpose provided that written notice has been given to the President of the Corporation not less than 14 nor more than 60 days prior to such meeting. Such notice shall set forth the name, age, business address and principal occupation of, and the number of shares of Common Stock beneficially owned by, each nominee. The Corporation's Board of Directors held seven meetings in 1997. In 1997, the Board of Directors of the Bank, the members of which included all of the Corporation's Board members, held 12 meetings in 1997. During 1997, each member of the Corporation's Board attended at least 75% of the aggregate number of meetings of the Corporation's Board, the Bank's Board and the Corporation's Board committees of which such person was a member. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS Directors' Compensation During 1997, for each meeting of the Board of Directors of the Corporation and of the Bank attended, non-employee directors received $250 and $500, respectively. In addition, non-employee directors received $300 for each Corporation and Bank committee meeting attended (committee chairpersons received $500 per meeting). However, directors attending more than one meeting in any one day (excluding meetings of the Board of Directors of the Corporation) were generally paid only for one of such meetings. In addition, non-employee directors received a $9,000 annual retainer which is paid quarterly. The Plan for Deferral of Directors' Fees adopted by the Corporation and the Bank effective March 1, 1988 provides standard arrangements pursuant to which directors may elect to defer all or part of their fees. Deferred fees earn interest and are payable in a lump sum or installments following termination of service as a director or attainment of a certain age. Deferred fees are unfunded obligations of the Bank. The 1997 Plan provides that each director of the Corporation who is not an employee of the Corporation shall automatically be granted a nonqualified option to purchase 1,125 shares of Common Stock as of the date of each Annual Meeting after which such director will continue to serve as a director of the Corporation at an option price equal to the fair market value of the Common Stock on such date and the expiration of which shall be the tenth anniversary thereof. These options are exercisable on and after the date that is one year after the date of grant. In addition, the Board may provide for such other terms and conditions of these options, as shall be set forth in the applicable option agreements, including acceleration of exercise upon a change of control of the Corporation. Executive Compensation The following table shows, for the fiscal years ended December 31, 1997, 1996 and 1995, the compensation of each person who served as Chief Executive Officer and the four most highly compensated executive officers of the Corporation and/or the Bank, other than the Chief Executive Officer, whose total annual salary and bonus exceeded $100,000 for the year ended December 31, 1997 (the "Named Executives"). SUMMARY COMPENSATION TABLE
Long-Term Compensation Annual Compensation Awards ---------------------------------------------------- Number of Securities Name and Principal Underlying All Other Position Year Salary Bonus (3) Options (4) Compensation (5) - -------------------------------------------------------------------------------------------------------------------- Joseph J. Kirby 1997 $103,846 $33,917 1,125 $3,123 Retired Chairman of the 1996 232,000 77,256 18,000 7,698 Board and Chief Executive 1995 220,000 81,400 19,224 7,320 Officer (1) John C. Warren 1997 $220,000 $89,540 31,538 $5,564 President and Chief 1996 153,846 39,600 22,958 -0- Executive Officer (2) David V. Devault 1997 $120,000 $32,700 8,758 $3,966 Vice President, Treasurer 1996 110,000 25,438 5,625 3,650 and Chief Financial Officer 1995 105,000 26,316 9,176 3,494 Harvey C. Perry II 1997 $104,000 $28,340 7,515 $3,437 Vice President and Secretary 1996 98,300 23,346 5,027 3,262 1995 94,300 23,455 4,121 3,138 Robert G. Cocks, Jr. Senior 1997 $91,000 $24,496 4,340 $3,008 Vice President - Commercial 1996 90,000 20,194 3,069 2,986 Lending, 1995 86,000 20,729 3,758 2,861 of the Bank Louis W. Gingerella, Jr. 1997 $87,000 $23,535 4,175 $2,876 Senior Vice President - 1996 83,000 19,194 2,831 2,754 Credit Administration, 1995 75,500 18,684 3,299 2,512 of the Bank - ---------------- (1) Mr. Kirby retired in April 1997. (2) Mr. Warren was President and Chief Operating Officer of the Corporation and the Bank before becoming Chief Executive Officer upon Mr. Kirby's retirement. (3) Bonus amounts represent amounts accrued for the years indicated under the Corporation's Short-Term Incentive Plan for its executive officers and other key employees (the "Incentive Plan"). The Incentive Plan provides for annual payments to participants up to a maximum percentage of base salary, which percentages vary among participants. (4) None of the stock options granted to the Named Executives have tandem stock appreciation rights ("SARs"). The numbers of securities underlying stock options granted to the Named Executives have been adjusted to reflect three-for-two stock splits effected by the Corporation on October 15, 1996 and on November 19, 1997. (5) Under the terms in effect during 1997 of the Bank's tax-qualified 401(k) plan (the "401(k) Plan"), which covers all full-time salaried employees, the Bank matched 50% of each participant's first 2% of voluntary salary contributions and 100% of each participant's next 2% of salary contributions up to a maximum match of 3%.
------------------------------------------- The following table contains information concerning the grant of stock options pursuant to the 1988 Plan and 1997 Plan to the Named Executives during the fiscal year ended December 31, 1997. OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants ------------- --------------- ------------ -------------- Potential Realizable Value at Percent of Assumed Annual Rates of Number of Total Options Stock Price Appreciation Securities Granted to Exercise for Option Term Underlying Employees or Base -------------------------------- Options in Fiscal Price Per Expiration Name Granted (1) Year Share Date 5% 10% - --------------------------------------------------------------------------------------------------------------------- Joseph J. Kirby 1,125 .77% $17.333 5/12/2007 $12,263(2) $31,077(3) John C. Warren 19,038 13.03% $17.333 5/12/2007 $207,528(2) $525,920(3) 12,500 8.56% $27.375 12/15/2007 $215,198(4) $545,357(5) David V. Devault 5,193 3.55% $17.333 5/12/2007 $56,607(2) $143,455(3) 3,565 2.44% $27.375 12/15/2007 $61,374(4) $155,536(5) Harvey C. Perry II 4,500 3.08% $17.333 5/12/2007 $49,053(2) $124,311(3) 3,015 2.06% $27.375 12/15/2007 $51,905(4) $131,540(5) Robert G. Cocks, Jr. 2,625 1.80% $17.333 5/12/2007 $28,614(2) $72,515(3) 1,715 1.17% $27.375 12/15/2007 $29,525(4) $74,823(5) Louis W. Gingerella, Jr. 2,510 1.72% $17.333 5/12/2007 $27,360(2) $69,338(3) 1,665 1.14% $27.375 12/15/2007 $28,664(4) $72,641(5) - ---------------- (1) All options granted to the Named Executives, other than the option granted to Mr. Kirby, were granted in May and December 1997 under the 1988 Plan. These options become exercisable in 25% installments commencing on the date of grant and on each anniversary date thereafter, so long as employment with the Corporation continues. The option granted to Mr. Kirby was granted in May 1997 under the 1997 Plan after Mr. Kirby's retirement, in his capacity as a non-employee director. This option vests one year after the date of the grant. If a change in control were to occur, the options set forth above would become immediately exercisable in full. (2) $17.333 at 5% annually for 10 years = $28.23 (3) $17.333 at 10% annually for 10 years = $44.95 (4) $27.375 at 5% annually for 10 years = $44.59 (5) $27.375 at 10% annually for 10 years = $71.01
------------------------------------------- The following table sets forth information with respect to the Named Executives concerning the exercise of options during the fiscal year ended December 31, 1997 and unexercised options held as of the end of the 1997 fiscal year. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Number of Securities Value of Unexercised Underlying Unexercised In-the-Money Options Options at FY-End (1) at FY-End (1)(2) ----------------------------- ----------------------------- Acquired Value Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable - -------------------------------------------------------------------------------------------------------------------- Joseph J. Kirby 29,793 $354,353 132,631 1,125 $3,498,731 $19,875 John C. Warren 0 $0 19,363 35,133 $349,675 $565,518 David V. Devault 7,160 $85,392 37,960 11,676 $983,378 $200,433 Harvey C. Perry II 4,223 $48,155 30,193 9,182 $789,301 $152,274 Robert G. Cocks, Jr. 0 $0 23,220 5,731 $617,327 $97,951 Louis W. Gingerella, Jr. 3,069 $40,238 13,994 5,373 $349,448 $91,013 - ---------------- (1) There are no SARs attached to the stock options held by the Named Executives. (2) Value based on the fair market value of the Corporation's Common Stock on December 31, 1997 ($35.00) minus the exercise price.
------------------------------------------- The Bank maintains a qualified defined benefit pension plan (the "Pension Plan") for salaried employees of the Corporation and the Bank. The Internal Revenue Code limits the compensation amount used in determining the annual benefits payable from qualified plans to an individual. However, the Supplemental Plan provides for payments by the Bank of certain amounts which employees of the Bank would have received under the Pension Plan in the absence of such limitations in the Internal Revenue Code. Benefits payable under the Supplemental Plan are an unfunded obligation of the Bank. The following table shows the annual benefits payable upon retirement, assuming retirement at age 65 in 1997, under the Pension Plan and the Supplemental Plan as it relates to the Pension Plan. The benefits shown are straight-life annuity amounts not reduced by a joint survivorship benefit, which is available. PENSION PLAN TABLE
Years of Service --------------------------------------------------------------------------------------- Average Annual Pension Compensation 15 20 25 30 35 ----------------------------------------------------------------------------------------------------------------- $100,000 $24,893 $33,190 $41,488 $49,786 $58,083 125,000 31,830 42,440 53,051 63,661 74,271 150,000 38,768 51,690 64,613 77,536 90,851 175,000 45,705 60,940 76,176 91,411 107,039 200,000 52,643 70,190 87,738 105,286 123,226 225,000 59,580 79,440 99,301 119,161 139,414 250,000 66,518 88,690 110,863 133,036 155,601 275,000 73,455 97,940 122,426 146,911 171,789 300,000 80,393 107,190 133,988 160,786 187,976 325,000 87,330 116,440 145,551 174,661 204,164 350,000 94,268 125,690 157,113 188,536 220,351
Annual payments to an employee retiring at age 65 are based on the average highest 36 consecutive months of pension compensation. Pension compensation consists of base salary, plus, in the case of the Named Executives and certain other key employees, payments pursuant to the Incentive Plan. Such amounts are shown in the Salary and Bonus columns of the Summary Compensation Table. The benefit is the sum of (i) 1.2% of pension compensation multiplied by the number of years of service, plus (ii) .65% of pension compensation in excess of the Social Security covered compensation level multiplied by the number of years of service. In 1997, the covered Social Security compensation level was $29,304. The years of service accrued for purposes of the Pension Plan in 1997 for the following Named Executives were: Mr. Kirby, 34 years; Mr. Warren, 1 year; Mr. Devault, 11 years; Mr. Perry, 23 years; Mr. Cocks, 5 years; and Mr. Gingerella, 7 years. ------------------------------------------- The Corporation has entered into Change of Control Agreements (the "Agreements") with each of the Named Executives pursuant to which such officers have agreed to remain employed by the Corporation for a fixed term following a change in control (as defined in the Agreements) and pursuant to which such officers would receive a lump sum payment from the Corporation in the event of their involuntary termination, other than for cause, or a reduction in their salary, title, benefits, staff, perquisites or duties during such fixed term following a change in control. The term of the Agreements and the multiple of the executive's base amount (generally, the executive's annualized includable compensation as defined in Section 280G of the Internal Revenue Code) which constitutes the lump sum payment provided under the Agreements vary for each executive. The term of the Agreement following a change in control and the multiple of base amount for each Named Executive is as follows: Term of the Agreement Multiple of Named Executive After Change in Control Base Amount - -------------------------------------------------------------------------------- John C. Warren 3 years 2.99 David V. Devault 2 years 2.00 Harvey C. Perry II 2 years 2.00 Robert G. Cocks, Jr. 1 year 1.00 Louis W. Gingerella, Jr. 1 year 1.00 Compensation Committee Interlocks and Insider Participation The Compensation Committee makes recommendations concerning remuneration arrangements for senior management of the Corporation and the Bank, subject to the approval of the Board of Directors. From April 1996 through April 1997, the Compensation Committee consisted of Directors O'Donnell (Chairperson), Bennett, Grills, McCormick and Rose. Since April 1997, the Compensation Committee members have been Directors Orsinger (Chairperson), Bennett, Grills, Hirsch, Kennard, Kirby and O'Donnell. Executive officer salary and short-term incentive plan targets for 1997 were approved by the Compensation Committee prior to its change in April 1997. The Stock Option Committee is responsible for the administration of the Corporation's 1988 Plan and the 1997 Plan. The Stock Option Committee members are Directors Bennett (Chairperson), Kennard, O'Donnell and Sullivan. No members of the Compensation Committee or the Stock Option Committee are currently employees of the Corporation or the Bank. Mr. Kirby was Chief Executive Officer of the Corporation and the Bank before his retirement in April 1997. During 1997, the Bank paid approximately $54,866 in legal fees related to collection matters to the law firm of Orsinger & Nardone, of which Mr. Orsinger, the Chairperson of the Compensation Committee, is a partner. COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE JOINT REPORT ON EXECUTIVE COMPENSATION The Compensation Committee administers the executive compensation program of the Corporation under the supervision of the Board of Directors. The success of the Corporation is highly dependent on hiring, developing and training qualified people who feel encouraged to perform for the good of the shareholders, the community, the Corporation and customers. The executive compensation program consists of three elements: base salary, short-term incentive compensation and long-term incentives. Prior to the beginning of the fiscal year, the Compensation Committee and the Stock Option Committee consulted with an independent compensation consultant (the "Consultant") which provided certain information regarding base salary, short-term and long-term incentive practices of comparable companies in the banking industry (the "Compensation Peer Group"). This information was used by those Committees to evaluate, adjust and approve recommendations made by the then Chief Executive Officer and the Chief Operating Officer (collectively the "Chief Executive Officers") for the compensation package for each other executive officer, and to develop and approve the compensation packages of the Chief Executive Officers. The general policy of the Compensation Committee is to attempt to position executive base salary levels in the middle of the range of base level salaries for comparable executives in the Compensation Peer Group, with adjustments to reflect such subjective factors as technical, managerial and human relations skills, problem solving capabilities, and level of accountability. Base Salary. Base salary for all executive officers is determined by the Compensation Committee, subject to approval of the full Board of Directors. Salary levels were recommended for approval by the Compensation Committee for each executive officer's position based on an analysis of compensation level information provided by the Consultant, following the general guidelines outlined above. Generally, the Compensation Committee relied on the recommendations of its Chief Executive Officers in following these guidelines to establish the base salary of the other executive officers for 1997. The base annual salary established by the Compensation Committee for Mr. Kirby, who served as Chairman of the Board and Chief Executive Officer through his retirement in April 1997, and Mr. Warren, who served as President and Chief Operating Officer through Mr. Kirby's retirement and as President and Chief Executive Officer since that date, was $250,000 and $220,000, respectively. The base salary established for Mr. Kirby, an increase of 8% over the prior year, reflected the Compensation Committee's recognition of his long and successful years of service and the important role Mr. Kirby was serving during the transition to Mr. Warren as Chief Executive Officer. The total salary paid to Mr. Kirby in 1997 reflects the proportion of his salary earned prior to his retirement. The base salary established for Mr. Warren, an increase of 37.5% over the prior year, reflected the anticipated elevation of Mr. Warren to Chief Executive Officer during the year. Mr. Warren received no increase in base salary upon becoming Chief Executive Officer. Short-Term Incentive Plan. The Corporation's Short-Term Incentive Plan provides for the payment of additional cash compensation to officers based upon the achievement of target levels of return on equity and, with respect to officers other than the Chief Executive Officers, the achievement of individual objectives established by senior management. The return on equity target levels were established by the Compensation Committee based upon their review of data for the Compensation Peer Group provided by the Consultant and management's expectations and recommendations. The Compensation Committee's policy is to periodically review these performance measures and adjust them as appropriate. The total target payout for each of the Chief Executive Officers in 1997 was 37% of base salary. In 1997, the Corporation's return on equity, as measured against the Compensation Peer Group and the targets established by the Compensation Committee, entitled the executive officers to a payout for 1997 performance of 110% of the return on equity portion of the target payout for each officer. Payouts based on the achievement of individual performance goals were subjectively determined by each participant's supervisor. Long-Term Incentives. As a general rule, the Stock Option Committee has granted stock options to its executive officers on an annual basis. However, as a result of the pending termination of the 1988 Plan, the Corporation made a second grant of options to executive officers under the 1988 Plan in December 1997. This grant is intended to replace the grants that would otherwise have been scheduled for May 1998. The granting of stock options is viewed as a desirable long-term compensation method because it closely links the interest of management with shareholder value and aids in the retention and motivation of executives to improve long-term stock market performance. In fixing the grant of stock options to executive officers, the Stock Option Committee reviewed data for the Compensation Peer Group provided by the Consultant and, for officers other than the Chief Executive Officer, recommendations made by the Chief Executive Officer, which were based on the individual officer's level of responsibility and contribution towards achievement of the Corporation's business plan and objectives. The number of shares subject to options granted in December 1997 were less than the number of options granted earlier in the year, reflecting the increase in the value of the underlying Common Stock during the year. In May and December 1997, the Stock Option Committee granted to Mr. Warren, the Chief Executive Officer, options to purchase 19,038 and 12,500 shares, respectively, with exercise prices of $17.333 and $27.375 per share, respectively. The grants to the Chief Executive Officer were based upon his strong performance in promoting shareholder value as measured both by the Corporation's financial and stock price performance. In May 1997, after Mr. Kirby's retirement, the Stock Option Committee also granted Mr. Kirby an option to purchase 1,125 shares at an exercise price of $17.333 per share, consistent with options granted to other non-employee directors during the year. The foregoing report has been furnished by the Compensation Committee and the Stock Option Committee. Compensation Committee: Stock Option Committee: Victor J. Orsinger II (Chairperson) Gary P. Bennett (Chairperson) Gary P. Bennett Mary E. Kennard, Esq. Richard A. Grills Brendan P. O'Donnell Larry J. Hirsch James P. Sullivan, CPA Mary E. Kennard, Esq. Joseph J. Kirby Brendan P. O'Donnell SHAREHOLDER RETURN PERFORMANCE PRESENTATION Set forth below is a line graph comparing the cumulative total shareholder return on the Corporation's Common Stock against the cumulative total return of The Nasdaq Stock Market (U.S.) and the Keefe, Bruyette & Woods, Inc. ("KBW") Eastern Regional Bank Sub-index for the five years ended December 31, 1997. Comparison of Five Year Cumulative Total Return [The line graph referred to in the preceding paragraph appears in this space in the proxy filed in paper format that will be provided to shareholders. The following table provides the data points necessary to describe this graphic via EDGAR.)
1992 1993 1994 1995 1996 1997 - --------------------------------------------------------------------------------------------------------------------- Washington Trust Bancorp, Inc. $100.00 $147.07 $200.65 $277.34 $457.09 $799.97 The Nasdaq Stock Market (U.S.) $100.00 $114.80 $112.21 $157.80 $195.19 $239.53 KBW Eastern Regional Banks $100.00 $101.43 $86.65 $141.98 $188.38 $294.24 These results assume that the value of Washington Trust Bancorp, Inc. Common Stock and each index was $100 on December 31, 1992. The total return assumes reinvestment of dividends.
INDEBTEDNESS AND OTHER TRANSACTIONS The Bank has had transactions in the ordinary course of business, including borrowings, with certain directors and executive officers of the Corporation and their associates, all of which were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectibility or present other unfavorable features when granted. During 1997, the bank paid legal fees to a law firm of which a director is a partner. See "Compensation Committee Interlocks and Insider Participation." PROPOSAL 2 RATIFICATION OF SELECTION OF AUDITORS The ratification of KPMG Peat Marwick LLP to serve as independent auditors of the Corporation for the current fiscal year ending December 31, 1998 will be submitted to the Annual Meeting. Such ratification requires the affirmative vote of a majority of the shares of Common Stock entitled to vote thereon, represented in person or by proxy, at the Annual Meeting when a quorum is present. Representatives of KPMG Peat Marwick LLP will be present at the Annual Meeting, will have the opportunity to make a statement if they so desire and will be available to answer appropriate questions. Action by shareholders is not required by law in the appointment of independent auditors, but their appointment is submitted by the Board of Directors in order to give the shareholders a voice in the designation of auditors. If the appointment is not ratified by the shareholders, the Board of Directors will reconsider its choice of KPMG Peat Marwick LLP as the Corporation's independent auditors. The Board of Directors recommends that shareholders vote "FOR" this proposal. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Corporation's officers and directors, and persons who own more than 10% of a registered class of the Corporation's equity securities ("Insiders"), to file reports of ownership and changes in ownership with the SEC. Insiders are required by SEC regulations to furnish the Corporation with copies of all Section 16(a) reports they file. Based solely upon a review of the copies of such reports furnished to the Corporation, the Corporation believes that during 1997 all Section 16(a) filing requirements applicable to its Insiders were complied with. SHAREHOLDER PROPOSALS Any shareholder who wishes to submit a proposal for presentation to the 1999 Annual Meeting of Shareholders must submit the proposal to the Corporation, 23 Broad Street, Westerly, Rhode Island 02891, Attention: President, not later than November 18, 1998 for inclusion, if appropriate, in the Corporation's Proxy Statement and the form of proxy relating to the 1999 Annual Meeting. FINANCIAL STATEMENTS The financial statements of the Corporation are contained in the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, which has been provided to the shareholders concurrently herewith. Such report and the financial statements contained therein are not to be considered as a part of this soliciting material. OTHER BUSINESS Management knows of no matters to be brought before the meeting other than those referred to in this Proxy Statement, but if any other business should properly come before the meeting, the persons named in the proxy intend to vote in accordance with their best judgment. INCORPORATION BY REFERENCE To the extent that this Proxy Statement has been or will be specifically incorporated by reference into any filing by the Corporation under the Securities Act of 1933, as amended, or the Exchange Act, the sections of the Proxy Statement entitled "Compensation Committee and Stock Option Committee Joint Report on Executive Compensation" and "Shareholder Return Performance Presentation" shall not be deemed to be so incorporated, unless specifically otherwise provided in any such filing. ANNUAL REPORT ON FORM 10-K Copies of the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 as filed with the Securities and Exchange Commission are available without charge upon written request addressed to David V. Devault, Vice President, Treasurer and Chief Financial Officer, Washington Trust Bancorp, Inc., P.O. Box 512, Westerly, Rhode Island 02891-0512. EXPENSE OF SOLICITATION OF PROXIES The cost of solicitation of proxies, including the cost of reimbursing brokerage houses and other custodians, nominees or fiduciaries for forwarding proxies and Proxy Statements to their principals, will be borne by the Corporation. Solicitation may be made in person or by telephone or telegraph by officers or regular employees of the Corporation, who will not receive additional compensation therefor. In addition, the Corporation has retained Morrow & Co., Inc. to assist in the solicitation of proxies for a fee of $3,500 plus customary expenses. Submitted by order of the Board of Directors, Harvey C. Perry II Harvey C. Perry II Secretary Westerly, Rhode Island March 18, 1998 WASHINGTON TRUST BANCORP, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Joseph J. Kirby, Brendan P. O'Donnell and John C. Warren, or any one of them, attorneys with full power of substitution to each for and in the name of the undersigned, with all powers the undersigned would possess if personally present to vote the Common Stock of the undersigned in Washington Trust Bancorp, Inc. at the Annual Meeting of its shareholders to be held April 28, 1998 or any adjournment thereof. This proxy when properly executed will be voted in the manner directed herein by the shareholder. If no direction is made, this proxy will be voted FOR Proposals Nos. 1 and 2. PLEASE SIGN,DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. (Continued and to be signed on other side) [X] Please mark your votes as indicated The Board of Directors recommends that you instruct the proxies to vote FOR all of the proposals. 1. ELECTION OF DIRECTORS: NOMINEES: Alcino G. Almeida, Katherine W. Hoxsie, Brendan P. O'Donnell, Anthony J. Rose, Jr. and John C. Warren [ ] FOR all nominees (except as indicated) [ ] WITHHOLD AUTHORITY to vote for all nominees (INSTRUCTION: To withhold authority to vote for any individual nominee or nominees write such nominee's or nominees' name(s) in the space provided below.) ----------------------------------------------------------------------------- 2. To ratify the selection of KPMG Peat Marwick LLP as independent auditors of the Corporation for the fiscal year ending December 31, 1998. [ ] FOR [ ] AGAINST [ ] ABSTAIN 3. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournments thereof. PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES. Dated:_____________________________, 1998 _________________________________________ Signature _________________________________________ Signature if held jointly Please sign exactly as name appears. When shares are held in more than one name, including joint tenants, each party should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. This proxy when properly executed will be voted in the manner directed herein by the shareholder. If no direction is made, this proxy will be voted FOR Proposal Nos. 1 and 2. -----END PRIVACY-ENHANCED MESSAGE-----