SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by
a Party other than the Registrant o
Check the
appropriate box:
o Preliminary
Proxy Statement
o
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
x
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material under § 240.14a-12
Peoples 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.
o
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:
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(3)
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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):
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(4) Proposed
maximum aggregate value of transaction:
(5) Total
fee paid:
o Fee paid previously
with preliminary materials.
o 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:
Peoples
Bancorp Inc. · 138
Putnam Street · P.O.
Box 738
Marietta,
OH 45750-0738
Telephone:
(740) 374-6136
www.peoplesbancorp.com
March 27,
2009
Dear
Fellow Shareholders:
Enclosed
you will find the following items pertaining to the Annual Meeting of Peoples
Bancorp Inc.’s Shareholders to be held at 10:00 a.m. on Thursday, April 23, 2009
at the Holiday Inn in Marietta, Ohio:
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·
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Notice
of Annual Meeting of Shareholders.
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·
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Peoples
Bancorp Inc.’s 2009 Annual Report to Shareholders, which includes the
Annual Report on Form 10-K for the Fiscal Year Ended December 31,
2008.
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·
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Proxy
Card.
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·
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Return
Envelope.
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The proxy card solicits your vote on
following: (1) the election of four directors; (2) the ratification of Peoples’
independent registered public accounting firm for the fiscal year ending
December 31, 2009; (3) a non-binding advisory vote on Peoples’ executive
compensation; and (4) other business which properly comes before the Annual
Meeting.
It is
important that your proxy card be signed, dated, and returned promptly in the
enclosed envelope.
I hope that you will consider attending
our annual meeting. We continue to be active in our pursuit of
strategies that enhance long-term shareholder value in these difficult economic
times. On behalf of our directors and staff, thank you for your
continued support.
Sincerely,
Mark F. Bradley
President and Chief Executive Officer
Peoples Bancorp (w/logo)® is a
federally registered service mark of Peoples Bancorp Inc.
Peoples
Bancorp Inc. · 138
Putnam Street · P.O.
Box 738
Marietta,
OH 45750-0738
Telephone:
(740) 374-6136
www.peoplesbancorp.com
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
PEOPLES
BANCORP INC.
Marietta,
Ohio
March
27, 2009
Dear
Fellow Shareholders:
The
Annual Meeting of Shareholders (the “Annual Meeting”) of Peoples Bancorp Inc.
(“Peoples”) will be held at 10:00 a.m., Eastern Daylight Saving Time, on
Thursday, April 23, 2009, in the Ball Room of the Holiday Inn, 701 Pike Street
in Marietta, Ohio (Interstate 77, Ohio exit 1), for the following
purposes:
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1.
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To
elect the following directors for terms of three years
each:
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Nominee
Term
Will Expire In
Carl L. Baker,
Jr. (for
re-election) 2012
George W.
Broughton (for
re-election) 2012
Wilford D.
Dimit (for
re-election) 2012
Richard
Ferguson (for
re-election) 2012
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2.
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To
ratify the appointment of Ernst & Young LLP as Peoples’ independent
registered public accounting firm for the fiscal year ending December 31,
2009.
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3.
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To
approve, in a non-binding advisory vote, Peoples’ executive compensation
disclosed in the accompanying proxy statement;
and
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4.
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To
transact any other business which properly comes before the Annual Meeting
or any adjournment thereof.
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If you
were a holder of record of common shares of Peoples at the close of business on
February 23, 2009, you will be entitled to vote in person or by proxy at the
Annual Meeting.
You are
cordially invited to attend the Annual Meeting. Your vote is
important, regardless of the number of common shares you own. Whether
or not you plan to attend the Annual Meeting in person, please complete, sign,
date and return your proxy card in the enclosed envelope at your earliest
convenience.
Peoples’
2008 Annual Report to Shareholders, which includes the Annual Report on Form
10-K for the fiscal year ended December 31, 2008, accompanies this notice and
proxy statement.
By Order of the Board of Directors,
Rhonda L. Mears
Corporate Secretary
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To obtain directions to attend
the Annual Meeting and vote in person,
please call Investor
Relations at
740-374-6136.
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Table
of Contents
PROXY
STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLERS
To
Be Held April 23, 2009
i
Table
of Contents
ii
PEOPLES
BANCORP INC.
138
Putnam Street
P.O.
Box 738
Marietta,
Ohio 45750-0738
(740)
374-6136
www.peoplesbancorp.com
PROXY
STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
To
Be Held April 23, 2009
We are
sending this proxy statement and the accompanying proxy card to you because the
Board of Directors of Peoples Bancorp Inc. (“Peoples”) is soliciting your proxy
to vote at the Annual Meeting of Shareholders, to be held on Thursday, April 23,
2009, at 10:00 a.m., Eastern Daylight Saving Time (the “Annual Meeting”),
or at any adjournment thereof. The Annual Meeting will be held in the
Ball Room of the Holiday Inn, 701 Pike Street in Marietta, Ohio (Interstate 77,
Ohio exit 1). This proxy statement summarizes the information
that you will need in order to vote.
Peoples
has three wholly-owned subsidiaries, Peoples Bank, National Association
(“Peoples Bank”), Peoples Investment Company and PEBO Capital Trust
I. Peoples Bank also owns an insurance agency subsidiary, Peoples
Insurance Agency, Inc., and an asset management subsidiary, PBNA,
L.L.C. Peoples Investment Company also owns a capital management
subsidiary, Peoples Capital Corporation. In 2003, Peoples established
Peoples Bancorp Foundation, Inc., as an independent charitable foundation to
provide financial assistance and grants to local organizations within Peoples’
market area.
We mailed
this proxy statement and the accompanying proxy card on or about March 27, 2009
to all shareholders entitled to vote their common shares at the Annual
Meeting. The common shares are the only shares of Peoples’ capital
stock entitled to vote at the Annual Meeting. We also sent with this
proxy statement, Peoples’ 2008 Annual Report to Shareholders, which includes the
Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (the
“2008 Annual Report”). Additional copies of the 2008 Annual
Report may be obtained, without charge, by sending a written request
to: Rhonda L. Mears, Corporate Secretary, 138 Putnam Street, P.O.
Box 738,
Marietta, Ohio 45750-0738. Peoples’ Annual Report
on Form 10-K for the fiscal year ended December 31, 2008 is posted in the
“Company Information SEC Filings Updated” section of the “Investors Relations”
page of Peoples’ website at www.peoplesbancorp.com and is also on file with the
Securities and Exchange Commission (the “SEC”) and available on the SEC’s
website at www.sec.gov.
FOR
2010 ANNUAL MEETING
Proposals
by shareholders intended to be presented at the 2010 Annual Meeting of
Shareholders (the “2010 Annual Meeting”) must be received by the Corporate
Secretary of Peoples no later than November 27, 2009, to be eligible for
inclusion in Peoples’ proxy, notice of meeting, proxy statement and Notice of
Internet Availability of Proxy Materials relating to the 2010 Annual
Meeting. Peoples will not be required to include in its proxy, a
notice of meeting, proxy statement or Notice of Internet Availability of Proxy
Materials, a shareholder proposal that is received after that date or that
otherwise fails to meet the requirements for shareholder proposals established
by applicable SEC rules.
The SEC
has promulgated rules relating to the exercise of discretionary voting authority
under proxies solicited by the Board of Directors. If a shareholder
intends to present a proposal at the 2010 Annual Meeting without inclusion of
that proposal in Peoples’ proxy materials, and does not notify the Corporate
Secretary of Peoples of the proposal by February 10, 2010, the proxies solicited
by the Board of Directors for use at the 2010 Annual Meeting will confer
discretionary authority to vote on the proposal should it then be raised at the
2010 Annual Meeting.
In each
case, written notice must be given to Peoples’ Corporate Secretary, at the
following address: Peoples Bancorp Inc., 138 Putnam Street, P.O. Box
738, Marietta, Ohio 45750-0738.
Shareholders
desiring to nominate candidates for election as directors at the 2010 Annual
Meeting must follow the procedures described in the section captioned “NOMINATING
PROCEDURES.”
Who can vote at the Annual Meeting?
Only
holders of common shares of record at the close of business on February 23, 2009
are entitled to receive notice of and to vote at the Annual
Meeting. At the close of business on February 23, 2009, there were
10,439,168 common shares outstanding and entitled to vote. The common
shares are the only shares of Peoples’ capital stock entitled to vote at the
Annual Meeting.
Each
common share entitles the holder thereof to one vote on each matter to be voted
upon at the Annual Meeting. There is no cumulative voting with
respect to the election of directors.
Whether
or not you plan to attend the Annual Meeting, we urge you to vote in advance by
proxy. To do so, you may complete, sign and date the accompanying
proxy card and return it in the envelope provided.
If you
plan to attend the Annual Meeting and vote in person, we will give you a ballot
when you arrive. If your common shares are held in the name of your
broker/dealer, your financial institution or another record holder (i.e., held
in “street name”), you must bring an account statement or letter from that
broker/dealer, financial institution or other holder of record authorizing you
to vote on behalf of such record holder. The account statement or
letter must show that you were the direct or indirect beneficial owner of the
common shares (i.e., you retained the right to make voting and/or investment
decisions with respect to the common shares) on February 23, 2009, the record
date for voting at the Annual Meeting.
How do I vote if my common shares are held in “street
name”?
If you
hold your common shares in “street name” with a broker/dealer, financial
institution or other holder of record, you should review the information
provided to you by such record holder. This information will set
forth the procedures you need to follow in instructing the record holder how to
vote your “street name” common shares and how to revoke previously given
instructions. If you hold your common shares in “street name,” you
may be eligible to appoint your proxy electronically via the Internet or
telephonically and may incur costs associated with the electronic access or
telephone usage.
If you
hold your common shares in “street name” and wish to attend the Annual Meeting
and vote in person, you must bring an account statement or letter from your
broker, financial institution or other nominee authorizing you to vote on behalf
of such nominee. The account statement or letter must show that you
were the direct or indirect beneficial owner of the common shares on February
23, 2009, the record date for voting at the Annual Meeting.
How
do I vote if my common shares are held through
the Peoples Bancorp Inc. Retirement Savings Plan?
If you
participate in the Peoples Bancorp Inc. Retirement Savings Plan (the “Retirement
Savings Plan”), you will be entitled to instruct the trustee of the Retirement
Savings Plan how to vote common shares that have been allocated to your
account. If you are such a participant, you will receive a separate
proxy card for common shares allocated to your account in the Retirement Savings
Plan. If you do not provide voting instructions to the trustee of the
Retirement Savings Plan, the trustee will not vote the common shares allocated
to your account.
How
will my common shares be voted?
Those
common shares represented by a properly executed proxy card that is received
prior to the Annual Meeting and not subsequently revoked will be voted in
accordance with your instructions by your “proxies” (the individuals named on
your proxy card). If you submit a valid proxy card prior to the
Annual Meeting, but do not complete the voting instructions on the proxy card,
to the extent permitted by applicable law, your proxy will vote your common
shares as recommended by the Board of Directors, as follows:
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·
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“FOR” the election as
directors of the nominees listed on page 10 under “PROPOSAL NUMBER
1: ELECTION OF
DIRECTORS”;
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·
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“FOR” the ratification
of the appointment of Ernst & Young LLP (“E&Y”) as
Peoples’ independent registered public accounting firm for the fiscal year
ending December 31, 2009; and
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·
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“FOR” the approval, in a
non-binding advisory vote, of Peoples’ executive compensation described in
the proxy statement.
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No
appraisal or dissenters’ rights exist for any action proposed to be
taken at the Annual Meeting. If
any other matters are properly presented for voting at the Annual Meeting, the
persons named as proxies on the accompanying proxy card will vote on those
matters, to the extent permitted by applicable law, in accordance with their
best judgment.
How do I change or revoke my proxy?
Shareholders
who submit proxies retain the right to revoke them at any time before they are
exercised. Unless revoked, the common shares represented by such
proxies will be voted at the Annual Meeting and any adjournment
thereof. You may revoke your proxy at any time before it is actually
exercised at the Annual Meeting by:
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·
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filing
a written notice of revocation with the Corporate Secretary of Peoples at
138 Putnam Street, P.O. Box 738, Marietta, Ohio 45750-0738, which must be
received prior to the Annual
Meeting;
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·
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executing
and returning a later-dated proxy card, which must be received prior to
the Annual Meeting; or
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·
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attending
the Annual Meeting and giving notice of revocation in
person.
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Attendance at the Annual Meeting will
not, by itself, revoke your proxy.
The last-dated proxy you submit (by
any means) will supersede any previously submitted proxy. If you hold
your common shares in “street name” and instructed your broker, financial
institution or other nominee to vote your common shares and you would like to
revoke or change your vote, then you must follow the instructions received from
your nominee to change your vote.
If
I vote in advance, can I still attend the Annual
Meeting?
Yes. You
are encouraged to vote promptly, by returning your signed proxy card by mail, so
that your common shares will be represented at the Annual
Meeting. However, appointing a proxy does not affect your right to
attend the Annual Meeting and vote your common shares in person.
What
constitutes a quorum and how many votes are
required for adoption of the proposals?
Under
Peoples’ Code of Regulations, a quorum is a majority of the voting shares
outstanding and entitled to vote at the Annual Meeting. The common
shares are the only shares of Peoples’ capital stock entitled to vote at the
Annual Meeting. Common shares may be present in person or represented
by proxy at the Annual Meeting. Both abstentions and broker non-votes
are counted as being present for purposes of determining the presence of a
quorum. There were 10,439,168 Peoples common shares outstanding and
entitled to vote on February 23, 2009, the record date. A majority of
the outstanding common shares, or 5,219,585 common shares, present in person or
represented by proxy, will constitute a quorum. A quorum must exist
to conduct business at the Annual Meeting.
If a
proposal is routine, a broker holding common shares for a beneficial owner in
street name may vote on the proposal without receiving instructions from the
beneficial owner. If a proposal is non-routine, a broker may vote on
the proposal only if the beneficial owner has provided voting
instructions. A “broker non-vote” occurs when a broker holding common
shares for a beneficial owner is unable to vote on a proposal because the
proposal is non-routine and the beneficial owner does not provide any voting
instructions.
Each of
(i) the uncontested election of directors, (ii) the ratification of the
appointment of Peoples’ independent registered public accounting firm and (iii)
the non-binding advisory vote on executive compensation, is a routine
item.
The
following sets forth the votes required, and the impact of abstentions and
broker non-votes, if any, on the three proposals:
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Item
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Vote
Required
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Impact
of Abstentions and
Broker
Non-Votes,
if any
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||
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Election
of Directors
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Under
Ohio law and Peoples’ Code of Regulations, the four nominees for election
as directors receiving the greatest number of votes “FOR” their election will
be elected as directors in the class whose terms will expire in
2012.
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· Common
shares as to which the authority to vote is withheld will be counted for
quorum purposes but will affect whether a nominee has received sufficient
votes to be elected.
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Ratification
of Independent Registered Public Accounting Firm
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The
affirmative vote of a majority of the common shares represented at the
Annual Meeting, in person or by proxy, and entitled to vote on the
proposal, is required to ratify the appointment of Ernst & Young LLP
as Peoples’ independent registered public accounting firm for the fiscal
year ending December 31, 2009.
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· Abstention
has the same effect as a vote “AGAINST” the
proposal.
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||
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Approval,
in Non-Binding Advisory Vote of Executive Compensation
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The
affirmative vote of a majority of the common shares represented at the
Annual Meeting, in person or by proxy, and entitled to vote on the
proposal, is required to approve, in a non-binding advisory vote, Peoples’
executive compensation disclosed in this proxy statement.
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· Abstention
has the same effect as a vote “AGAINST” the
proposal.
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Peoples’
policy is to keep confidential proxy cards, ballots and voting tabulations that
identify individual shareholders. However, exceptions to this policy
may be necessary in some instances to comply with legal requirements and, in the
case of any contested proxy solicitation, to verify the validity of proxies
presented by any person and the results of the voting. Inspectors of
election and any employees associated with processing proxy cards or ballots and
tabulating the vote must acknowledge their responsibility to comply with this
policy of confidentiality.
Who
pays the cost of proxy solicitation?
Peoples
will pay the costs of soliciting proxies on behalf of the Board of Directors
other than the Internet access and telephone usage charges if a proxy is
appointed electronically or telephonically through a broker/dealer, financial
institution or other holder of record. Although we are soliciting
proxies by mailing these proxy materials to the holders of our common shares,
the directors, officers and employees of Peoples and our subsidiaries also may
solicit proxies by further mailings, telephone, electronic mail, facsimile or
personal contact without receiving any additional compensation for such
solicitations. Peoples will also reimburse its transfer agent,
broker/dealers, voting trustees, financial institutions and other custodians,
nominees and fiduciaries for their costs in forwarding the proxy materials to
the beneficial shareholders.
NOTICE
REGARDING INTERNET AVAILABILITY OF PROXY
MATERIALS
Important Notice Regarding
the Availability of Proxy Materials for the Annual Meeting of Shareholders of
Peoples Bancorp Inc. to Be Held on April 23, 2009: This proxy
statement, a sample of the form of proxy card to be sent to shareholders by
Peoples and Peoples’ 2008 Annual Report to Shareholders are available at
www.peoplesbancorp.com by selecting the “Peoples Bancorp Inc. Proxy Materials”
link.
To obtain
directions to attend the Annual Meeting and vote in person, please call Investor
Relations at 740-374-6136.
PARTICIPATION IN CAPITAL PURCHASE PROGRAM
ENACTED
AS PART OF TROUBLED ASSETS RELIEF PROGRAM
On
January 30, 2009, Peoples completed the sale to the United States Department of
the Treasury (the “U.S. Treasury”) of $39.0 million of newly-issued Peoples
non-voting preferred shares as part of the U.S. Treasury’s Capital Purchase
Program (the “Capital Purchase Program”) enacted as part of the Troubled Assets
Relief Program (“TARP”) established by the Emergency Economic Stabilization Act
of 2008 (“EESA”). To finalize Peoples’ participation in the Capital
Purchase Program, Peoples and the U.S. Treasury entered into a Letter Agreement,
dated January 30, 2009 (the “Letter Agreement”), including the related
Securities Purchase Agreement – Standard Terms attached thereto (the “Securities
Purchase Agreement” and together with the Letter Agreement, the “UST
Agreement”). Pursuant to the UST Agreement, Peoples issued and sold
to the U.S. Treasury (i) 39,000 of Peoples’ Fixed Rate Cumulative Perpetual
Preferred Shares, Series A, each without par value and having a liquidation
preference of $1,000 per share (the “Series A Preferred Shares”), and
(ii) a warrant (the “Warrant”) to purchase 313,505 Peoples common shares,
at an exercise price of $18.66 per share (subject to certain anti-dilution and
other adjustments), for an aggregate purchase price of $39.0 million in
cash. The Warrant has a ten-year term.
In the
Securities Purchase Agreement, Peoples adopted the U.S. Treasury’s standards for
executive compensation and corporate governance for the period during which the
U.S. Treasury owns any securities acquired from Peoples pursuant to the
Securities Purchase Agreement or upon exercise of the Warrant. These
standards generally apply to our executive officers – Mark F. Bradley, Peoples’
President and Chief Executive Officer; Edward G. Sloane, Peoples’ Executive Vice
President, Chief Financial Officer and Treasurer; Carol A.
Schneeberger, Peoples Executive Vice President, Operations; Joseph S. Yazombek,
Peoples’ Executive Vice President and Chief Lending Officer; Deborah K. Hill,
Peoples’ Executive Vice President, Consumer and Business Financial Services; and
David T. Wesel, Peoples’ Executive Vice President for Investment and
Insurance.
The
American Recovery and Reinvestment Act of 2009 (the “ARRA”) passed by Congress
and signed by the President on February 17, 2009 retroactively amends the
executive compensation provisions applicable to participants in the Capital
Purchase Program. The ARRA executive compensation standards remain in
effect during the period in which any obligation arising from financial
assistance provided under TARP remains outstanding (the “ARRA Covered Period”),
excluding any period during which the U.S. Treasury holds only the Warrant to
purchase Peoples’ common shares. The ARRA executive compensation
standards apply to Peoples’ Senior Executive Officers (as defined in the
ARRA).
The ARRA
executive compensation standards include: (i) prohibitions on payment or
accrual of bonuses, retention awards and other incentive compensation, other
than payments pursuant to written employment agreements entered into on or
before February 11, 2009 or grants of restricted stock that do not fully
vest during the ARRA Covered Period and do not have a value which exceeds
one-third of an employee’s total annual compensation; (ii) prohibitions on
payments to certain employees for a departure from Peoples, except for payments
for services performed or benefits accrued; (iii) recovery (“clawback”) of
bonuses, retention awards and incentive compensation if the payment was based on
materially inaccurate statements of earnings, revenues, gains or other criteria;
(iv) prohibition on compensation plans that encourage manipulation of
reported earnings; (v) retroactive review of bonuses, retention awards and
other compensation previously paid to Senior Executive Officers and the next 20
most highly-compensated employees if found by the U.S. Treasury to be
inconsistent with the purposes of TARP or otherwise contrary to public interest;
(vi) requiring the establishment of a company-wide policy regarding
“excessive or luxury expenditures”; and (vii) requiring the inclusion in
proxy statements for annual shareholder meetings of a non-binding “Say on Pay”
shareholder vote on the compensation of executives.
There is
no stated effective date for the ARRA’s executive compensation
standards. The U.S. Treasury is directed to issue regulations to
implement these standards and the SEC is to issue regulations related to the
“Say on Pay” requirements. As a result, although the ARRA purports to
retroactively amend EESA and the regulations issued by the U.S. Treasury
thereunder, it is unclear the extent to which the various substantive provisions
of the ARRA apply to Peoples.
The
Securities Purchase Agreement requires Peoples to comply with the executive
compensation provisions applicable to participants in the Capital Purchase
Program, as those standards were in effect on January 30, 2009 (the “Closing
Date” as defined in the Securities Purchase Agreement). The U.S.
Treasury may unilaterally amend the Securities Purchase Agreement to comply with
changes in applicable federal statutes. As of the date of this proxy
statement, the U.S. Treasury had not exercised its authority to unilaterally
amend the Securities Purchase Agreement to impose the ARRA executive
compensation standards on Peoples. In addition, the ARRA executive
compensation standards require that the U.S. Treasury and the SEC issue a number
of regulations describing how the standards are to be implemented. As
of the date of this proxy statement, neither the U.S. Treasury nor the SEC had
yet issued any such regulations.
Peoples
will carefully review the ARRA executive compensation standards and any U.S.
Treasury and/or SEC regulations, once issued. To the extent that
(i) the U.S. Treasury amends the Securities Purchase Agreement to make
these standards applicable, (ii) the U.S. Treasury and/or the SEC issues
regulations describing how Peoples is to comply with these standards or
(iii) Peoples determines that these standards apply, Peoples will work with
its Senior Executive Officers and other affected employees to take such steps as
it deems necessary to comply with the standards and adopt administrative and
other procedures consistent with the foregoing.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following table sets forth, as of February 23, 2009 (except as otherwise noted),
certain information concerning the beneficial ownership of common shares by the
only entities known by Peoples to be the beneficial owner of more than 5% of
Peoples’ outstanding common shares:
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Name
and Address of
Beneficial
Owner
|
Amount
and Nature of
Beneficial
Ownership
|
Percent of
Class (1)
|
|
Peoples
Bank – Trustee
138
Putnam Street
P.O.
Box 738
Marietta,
OH 45750-0738
|
1,014,455
(2)
|
9.72%
|
|
Franklin
Resources, Inc.
Charles
B. Johnson
Rupert
H. Johnson, Jr.
Franklin
Advisory Services, LLC
One
Franklin Parkway
San
Mateo, CA 94403-1906
|
867,823
(3)
|
8.31%
|
|
Dimensional
Fund Advisors LP
Palisades
West, Building One
6300
Bee Cave Road
Austin,
TX 78746
|
809,653
(4)
|
7.76%
|
|
(1)
|
The
“Percent of Class” computation is based on 10,439,168 common shares
outstanding and entitled to vote on February 23,
2009.
|
|
(2)
|
Includes
Peoples Bank’s beneficial ownership through Peoples Financial Advisors, a
division of Peoples Bank, in the following manner: 137,343
common shares with shared investment and sole voting power; 724,346 common
shares with shared investment and shared voting power; 142,227 common
shares with sole voting and sole investment power; and 10,539 common
shares with sole investment and shared voting power. The
officers and directors of Peoples Bank and Peoples disclaim beneficial
ownership of the common shares beneficially owned by Peoples Bank through
Peoples Financial Advisors.
|
|
(3)
|
Based
on information contained in a Schedule 13G amendment, dated January 28,
2009, filed with the SEC on February 9, 2009 on behalf of Franklin
Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr., and Franklin
Advisory Services, LLC to report their beneficial ownership of common
shares of Peoples as of December 31, 2008. These common shares
are reported to be beneficially owned by one or more open or closed-end
investment companies or other managed accounts that are investment
management clients of investment managers that are direct and indirect
subsidiaries of Franklin Resources, Inc., including Franklin Advisory
Services, LLC and Franklin Templeton Portfolio Advisors, Inc., which are
investment adviser subsidiaries of Franklin Resources, Inc. The
investment management contracts generally grant to the respective
investment adviser subsidiary all voting and/or investment power over the
common shares owned by the advisory clients. However, the
Schedule 13G amendment reports that, to the extent that the underlying
client under a managed account investment management arrangement advised
by Franklin Templeton Portfolio Advisors, Inc. has retained voting power
over any common shares, Franklin Templeton Portfolio Advisors, Inc.
disclaims any power to vote or direct the vote of such common
shares. The Schedule 13G amendment reports that Franklin
Advisory Services, LLC had sole voting power as to 853,823 common shares
(8.18% of the outstanding common shares) and sole investment power as to
866,623 common shares (8.30% of the outstanding common shares) and that
Franklin Templeton Portfolio Advisors, Inc. had sole voting (except as
previously noted) and sole investment power as to 1,200 common shares
(.0001% of the outstanding common shares). For purposes of the
reporting requirements of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), Charles B. Johnson and Rupert H. Johnson, Jr. are
reported to be the principal stockholders of Franklin Resources, Inc., and
together with Franklin Resources, Inc., each may be deemed to be, for
purposes of Rule 13d-3 under the Exchange Act, the beneficial owner of the
common shares held by persons and entities advised by the investment
adviser subsidiaries of Franklin Resources, Inc. However, each
of Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr.,
Franklin Advisory Services, LLC and Franklin Templeton Portfolio Advisors,
Inc. expressly disclaimed any pecuniary interest (direct financial
interest) or beneficial ownership in any of the common shares covered by
the Schedule 13G amendment and they believe they are not a “group” within
the meaning of Rule 13d-5 under the Exchange
Act.
|
|
(4)
|
Based
on information contained in a Schedule 13G amendment, dated February 9,
2009, filed with the SEC on February 9, 2009 on behalf of Dimensional Fund
Advisors LP to report its beneficial ownership of common shares of Peoples
as of December 31, 2008. The Schedule 13G amendment reported
that Dimensional Fund Advisors LP had sole voting power as to 789,594
common shares and sole investment power as to 809,653 common shares, all
of which were held in portfolios of four registered investment companies
to which Dimensional Fund Advisors LP furnishes investment advice and of
certain other commingled group trusts and separate accounts for which
Dimensional Fund Advisors LP serves as investment manager. The
common shares reported were owned by the investment companies, trusts and
accounts. Dimensional Fund Advisors LP disclaimed beneficial
ownership of the reported common
shares.
|
The
following table sets forth, as of February 23, 2009, certain information with
respect to the common shares beneficially owned by each current director of
Peoples (including each nominee for re-election as a director of Peoples), by
each individual named in the Summary Compensation Table for 2008 and by all
current executive officers and directors of Peoples as a group:
|
Amount
and Nature of Beneficial Ownership (1)
|
|||||||
|
Name
of
Beneficial
Owner
|
Common
Shares
Presently
Held
|
Common
Shares Which Can
Be
Acquired Upon Exercise of
Options
Currently Exercisable
or
Options First Becoming
Exercisable Within 60
Days
|
Total
|
Percent of
Class (2)
|
|||
|
Carl
L. Baker, Jr.
|
86,642
|
(3)
|
7,984
|
94,626
|
(4)
|
||
|
Mark
F. Bradley (5)
|
9,956
|
(6)
|
24,822
|
34,778
|
(4)
|
||
|
George
W. Broughton
|
180,959
|
(7)
|
4,665
|
185,624
|
1.78%
|
||
|
Frank
L. Christy
|
81,965
|
(8)
|
6,932
|
88,897
|
(4)
|
||
|
Wilford
D. Dimit
|
56,563
|
(9)
|
8,386
|
64,949
|
(4)
|
||
|
Richard
Ferguson
|
720
|
(10)
|
2,355
|
3,075
|
(4)
|
||
|
Deborah
K. Hill (5)
|
1,619
|
0
|
1,619
|
(4)
|
|||
|
David
L. Mead
|
3,100
|
(11)
|
600
|
3,700
|
(4)
|
||
|
Robert
W. Price
|
15,880
|
(12)
|
5,820
|
21,700
|
(4)
|
||
|
Theodore
P. Sauber
|
130,188
|
(13)
|
2,355
|
132,543
|
1.27%
|
||
|
Carol
A. Schneeberger (5)
|
32,235
|
(14)
|
18,554
|
50,789
|
(4)
|
||
|
Edward
G. Sloane (5)
|
2,791
|
(15)
|
0
|
2,791
|
(4)
|
||
|
Paul
T. Theisen
|
24,225
|
(16)
|
7,550
|
31,775
|
(4)
|
||
|
David
T. Wesel (5)
|
5,632
|
(17)
|
3,609
|
9,241
|
(4)
|
||
|
Joseph
H. Wesel
|
37,926
|
(18)
|
5,820
|
43,746
|
(4)
|
||
|
Thomas
J. Wolf
|
25,600
|
(19)
|
3,510
|
29,110
|
(4)
|
||
|
Joseph
S. Yazombek (5)
|
43,073
|
(20)
|
26,656
|
69,729
|
(4)
|
||
|
All
current directors and
executive
officers as a
group
(numbering 17)
|
739,074
|
(21)
|
129,618
|
868,692
|
8.22%
|
||
|
(1)
|
Unless
otherwise indicated in the footnotes to this table, the beneficial owner
has sole voting and investment power with respect to all of the common
shares reflected in the table. All fractional common shares
have been rounded down to the whole common share. The mailing
address of each of the current executive officers and directors of Peoples
is 138 Putnam Street, P.O. Box 738, Marietta, Ohio
45750-0738.
|
|
(2)
|
The
“Percent of Class” computation is based on the sum of (i) 10,439,168
common shares outstanding and entitled to vote on February 23, 2009 and
(ii) the number of common shares, if any, as to which the named individual
or group has the right to acquire beneficial ownership upon the exercise
of options which are currently exercisable or will first become
exercisable within 60 days after February 23,
2009.
|
|
(3)
|
Includes
5,777 common shares held in an investment account by Carl L. Baker, Jr.,
as to which Mr. Baker exercises sole voting and investment
power. Includes 8,352 common shares held by B & N Coal, Inc., as
to which Mr. Baker exercises shared voting and investment
power. Also includes (i) 8,943 common shares held by Mr. Baker
as Trustee of the Gilbert Baker Trust, as to which Mr. Baker exercises
sole voting and investment power; (ii) 44,924 common shares held by Mr.
Baker as Trustee of the Jewell Baker Trust, as to which Mr. Baker
exercises sole voting and investment power; (iii) 5,005 common shares held
by Mr. Baker as Trustee of the Mary Baker Trust, as to which Mr. Baker
exercises sole voting and investment power; and (iv) 2,000 common shares
held by Mr. Baker as Trustee of Baker Investments LLC, as to which Mr.
Baker exercises sole voting and investment power. Does not include
277 common shares accrued to Mr. Baker’s account under the Peoples Bancorp
Inc. Second Amended and Restated Deferred Compensation Plan for
Directors of Peoples Bancorp Inc. and Subsidiaries (the “Deferred
Compensation Plan for Directors”), as to which Mr. Baker has no voting or
investment power.
|
|
(4)
|
Reflects
beneficial ownership of less than 1% of the outstanding common
shares.
|
|
(5)
|
Executive
officer of Peoples during the fiscal year ended December 31, 2008 (the
“2008 fiscal year”) and named in the Summary Compensation
Table. Mark F. Bradley also serves as a director of
Peoples.
|
|
(6)
|
Does
not include 1,568 common shares accrued to Mark F. Bradley’s account under
the Deferred Compensation Plan for Directors, as to which Mr. Bradley has
no voting or investment power. Includes 6,878 common shares
allocated to the account of Mr. Bradley in the Retirement Savings Plan, as
to which Mr. Bradley has the power to direct the voting and
investment.
|
|
(7)
|
Includes
5,135 common shares held by George W. Broughton as custodian for his
children, as to which Mr. Broughton has sole voting and investment
power. Includes 2,000 common shares held by George Broughton
Family Limited Partnership, as to which Mr. Broughton exercises sole
voting and investment power. Includes 558 common shares held by
Broughton Commercial Properties, LLC, as to which Mr. Broughton exercises
sole voting and investment power. Includes 17,004 common shares
held by Mr. Broughton as Trustee of the George W. Broughton and Nancy R.
Broughton Retained Annuity Trust, as to which Mr. Broughton has shared
voting and investment power. Includes 13,374 common shares held
in an IRA account by Peoples Bank as custodian, as to which Mr. Broughton
exercises sole voting and investment power. Does not include
16,333 common shares held of record and beneficially owned by Mr.
Broughton’s wife, as to which Mr. Broughton has no voting or investment
power and disclaims beneficial ownership. Does not include
1,370 common shares accrued to Mr. Broughton’s account under the Deferred
Compensation Plan for Directors, as to which Mr. Broughton has no voting
or investment power. As of February 23, 2009, 558 common shares
held by Broughton Commercial Properties, LLC and 9,306 common shares held
by Mr. Broughton had been pledged as
security.
|
|
(8)
|
Includes
70,115 common shares held in the Riverbank Restaurants Inc. Agency Account
at Peoples Bank, as to which Frank L. Christy exercises shared voting and
investment power with Peoples Bank. Also includes 979 common
shares held in an investment account by Mr. Christy, as to which Mr.
Christy exercises sole voting and investment power. Also
includes 10,271 common shares held by Mr. Christy as Co-Trustee of the F.
Leonard Christy Trust Investment Account at Peoples Bank, as to which Mr.
Christy exercises shared voting and investment
power.
|
|
(9)
|
Includes
24,153 common shares held in the Wilford D. Dimit Trust Investment Account
at Peoples Bank, as to which Mr. Dimit exercises shared voting and
investment power with Peoples Bank. Also includes 31,100 common
shares held in the Marjorie E. Dimit Trust Investment Account at Peoples
Bank, as to which Wilford D. Dimit exercises shared voting and investment
power with Peoples Bank. Does not include 25,581 common shares
accrued to Mr. Dimit’s account under the Deferred Compensation Plan for
Directors, as to which Mr. Dimit has no voting or investment
power.
|
|
(10)
|
Includes
103 common shares allocated to the account of Richard Ferguson in the
Ferguson Consulting, LLC retirement savings plan, as to which Mr. Ferguson
has the power to direct the voting and investment. Does not
include 4,721 common shares accrued to Mr. Ferguson’s account under the
Deferred Compensation Plan for Directors, as to which Mr. Ferguson has no
voting or investment power.
|
|
(11)
|
Includes
2,500 common shares held in an investment account by David L. Mead, as to
which Mr. Mead exercises sole voting and investment power. Does not
include 2,419 common shares accrued to Mr. Mead’s account under the
Deferred Compensation Plan for Directors, as to which Mr. Mead has no
voting or investment power.
|
|
(12)
|
Includes
11,167 common shares held in the Robert W. Price Investment Account, as to
which Mr. Price exercises sole investment and voting
power. Does not include 6,345 common shares accrued to Mr.
Price’s account under the Deferred Compensation Plan for Directors, as to
which Mr. Price has no voting or investment
power.
|
|
(13)
|
Includes
56,173 common shares held in the Carol J. Sauber Trust Account at Peoples
Bank, as to which Theodore P. Sauber exercises shared investment and
voting power with Peoples Bank. Includes 65,594 common shares
held in the Theodore P. Sauber Trust Account at Peoples Bank, as to which
Mr. Sauber exercises shared investment and voting power with Peoples
Bank. Includes 8,121 common shares held in an IRA account by
Peoples Bank as custodian, as to which Mr. Sauber exercises shared
investment and voting power with Peoples
Bank.
|
|
(14)
|
Includes
8,452 common shares held jointly by Carol A. Schneeberger with her
husband, as to which Ms. Schneeberger exercises shared voting and
investment power. Includes 13,123 common shares allocated to the
account of Ms. Schneeberger in the Retirement Savings Plan, as to which
Ms. Schneeberger has the power to direct the voting and
investment. Includes 3,751 common shares held by David
Radcliff, the father of Ms. Schneeberger. Mr. Radcliff has
granted to Ms. Schneeberger, pursuant to a power of attorney, voting and
investment powers with respect to these 3,751 common shares; however, Ms.
Schneeberger disclaims beneficial ownership as to
them.
|
|
(15)
|
Includes
1,132 common shares allocated to the account of Mr. Sloane in the
Retirement Savings Plan, as to which Mr. Sloane has the power to direct
the voting and investment.
|
|
(16)
|
Does
not include 6,199 common shares accrued to Paul T. Theisen’s account under
the Deferred Compensation Plan for Directors, as to which Mr. Theisen has
no voting or investment power.
|
|
(17)
|
Includes
2,789 common shares held jointly by David T. Wesel with his wife, as to
which Mr. Wesel exercises shared voting and investment
power. Includes 2,040 common shares held by Mr. Wesel as
custodian for his children.
|
|
(18)
|
Does
not include 14,879 common shares held in the Luada Wesel Estate Plan Trust
Investment Account at Peoples Bank, as to which: (i) Joseph H. Wesel has
no voting or investment power and disclaims beneficial ownership and (ii)
Peoples Bank shares voting and investment power with Luada
Wesel. Does not include 8,461 common shares accrued to Mr.
Wesel’s account under the Deferred Compensation Plan for Directors, as to
which Mr. Wesel has no voting or investment power. Does not
include 15,986 common shares in the Joseph and Lu Wesel Grandchildren’s
Trust, as to which Peoples Bank has sole investment and voting
power.
|
|
(19)
|
As
of February 23, 2009, 20,000 common shares held by Mr. Wolf had been
pledged as security.
|
|
(20)
|
Includes
26,506 common shares held jointly by Joseph S. Yazombek and with his wife,
as to which Mr. Yazombek exercises shared voting and investment
power. Includes 15,726 common shares allocated to the account
of Mr. Yazombek in the Retirement Savings Plan, as to which Mr. Yazombek
has the power to direct the voting and
investment.
|
|
(21)
|
Includes
common shares held jointly by current directors and executive officers
with other persons, as well as 36,928 common shares allocated to the
accounts of the executive officers of Peoples in the Retirement Savings
Plan. See notes (3) and (6) through (20)
above.
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section
16(a) of the Exchange Act requires that Peoples’ directors and executive
officers, and any persons beneficially holding more than 10 percent of Peoples’
outstanding common shares, file statements with the SEC reporting their initial
beneficial ownership of common shares and any subsequent changes in their
beneficial ownership. Peoples is required to disclose in this proxy
statement any late statements, if any statements are not filed within the time
periods mandated by the SEC. Based solely on Peoples’ review of (i)
Section 16(a) statements filed on behalf of these persons for their transactions
during Peoples’ 2008 fiscal year and (ii) written representations received from
these persons that no other Section 16(a) statements were required to be filed
by them for transactions during Peoples’ 2008 fiscal year, Peoples believes that
all Section 16(a) filing requirements applicable to Peoples’ executive officers
and directors, and persons holding more than 10 percent of peoples’ outstanding
common shares, were complied with, except:
|
·
|
Frank
L. Christy filed late one Form 4 reporting the disposition of common
shares by Mr. Christy as Co-Trustee of the F. Leonard Christy Trust in a
total of 12 transactions (which occurred on March 12, 2008 and was
reported on May 7, 2008).
|
|
·
|
Carl
L. Baker, Jr. reported late on a Form 4 the acquisition of common shares
through dividend reinvestment (which occurred on April 2, 2007 and was
reported on February 25, 2008).
|
|
·
|
The
following directors and executive officers reported late on a Form 4 the
acquisition of common shares through an award of restricted shares on
February 20, 2008, which was reported on February 25, 2008 or on February
26, 2008: George W. Broughton, Carl L. Baker, Jr., Mark F.
Bradley, Frank L. Christy, Wilford D. Dimit, Richard Ferguson, David L.
Mead, Robert W. Price, Theodore P. Sauber, Carol A. Schneeberger, Paul T.
Theisen, David T. Wesel, Joseph H. Wesel, Thomas J. Wolf, and Joseph S.
Yazombek.
|
|
·
|
Edward
G. Sloane filed late one Form 4 reporting
the disposition of common shares which were withheld to pay the tax
liability associated with the vesting of restricted shares on December 2,
2008, which form 4 was filed on January 6,
2009.
|
TRANSACTIONS WITH RELATED PERSONS
During
the 2008 fiscal year, Peoples Bank entered into lending relationships with
certain executive officers and directors of Peoples, with members of their
immediate families and with corporations or organizations as to which directors
of Peoples serve as executive officers or beneficially own more than 10% of the
equity securities. All such loans (i) were made in the ordinary
course of business, (ii) were made on substantially the same terms, including
interest rates charged and collateral required, as those prevailing at the time
for comparable loans with persons not related to Peoples or Peoples Bank, and
(iii) did not involve more than the normal risk of collectibility or present
other unfavorable features to Peoples or Peoples Bank.
The above
loans were subject to Peoples Bank’s written policies, procedures and standard
underwriting criteria applicable to loans generally, and were made in accordance
with Federal Reserve Regulation O requiring prior approval of the loan by the
Board of Directors of Peoples Bank.
Effective
January 1, 2006, David T. Wesel, the son of Joseph H. Wesel, a director of
Peoples, assumed the positions of Executive Vice President of Peoples and of
Peoples Bank, as well as President of Peoples Financial Advisors, a division of
Peoples Bank. Effective March 1, 2009, David T. Wesel also assumed
the position of President of Peoples Insurance Agency, Inc., and his title at
Peoples was changed to Executive Vice President for Investment and Insurance
Services. Prior to January 1, 2006, David T. Wesel had served as Vice
President of Peoples Bank and Sales Manager of Peoples Financial Advisors, but
was not an executive officer of either Peoples or Peoples Bank. David
T. Wesel’s compensation for the 2008 fiscal year is reported in the section
captioned “EXECUTIVE
COMPENSATION.” Joseph H. Wesel does not serve as a member of
Peoples’ Compensation Committee and was not involved in setting the compensation
for David T. Wesel.
The Audit
Committee is responsible, under the terms of its charter, for reviewing and
overseeing procedures designed to identify related person transactions that are
material to Peoples’ consolidated financial statements or otherwise require
disclosure under applicable rules adopted by the SEC, including those
transactions required to be disclosed under Item 404 of SEC Regulation
S-K. All such transactions must be approved by the Audit
Committee. Further, under the terms of its charter, the Audit
Committee is responsible for reviewing and overseeing all actions and
transactions which involve the personal interest of a director or executive
officer of Peoples and determining in advance whether any such action or
transaction represents a potential conflict of interest.
ELECTION
OF DIRECTORS
As of the
date of this proxy statement, there were 12 members of the Board of Directors –
four directors in the class whose terms expire at the Annual Meeting, four in
the class whose terms expire in 2010 and four in the class whose terms expire in
2011. Proxies cannot be voted at the Annual Meeting for more than
four nominees.
The Board
of Directors proposes that each of the four nominees identified below be
re-elected for a new three-year term and until his successor is duly elected and
qualified or until his earlier resignation, removal from office or
death. The Governance and Nominating Committee recommended each
nominee for re-election. The four nominees for election as directors
receiving the greatest number of votes will be elected to serve in the class
whose terms expire in 2012. Common shares represented by properly
executed and returned proxy cards will be voted as specified or, if no
instructions are given, “FOR” the election of the
Board of Directors’ nominees.
The
following table gives certain information, as of the date of this proxy
statement, concerning each nominee for re-election as a director of
Peoples. Unless otherwise indicated, each individual has had the same
principal occupation for more than five years.
Recommendation and Vote
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS
VOTE “FOR” THE ELECTION OF ALL NOMINEES LISTED BELOW.
|
Nominee
|
Age
|
Position(s)
Held with Peoples and Its
Principal Subsidiaries
and Principal Occupation(s)
|
Director
Continuously
Since
|
Nominee
For
Term
Expiring
In
|
|
Carl
L. Baker, Jr.
|
46
|
President
and Chief Executive Officer, B & N Coal, Inc., a mining, reclamation
and construction concern, located in southeastern Ohio. Co-Owner of Sharon
Stone Company, a limestone and slag producer, located in Noble and
Washington Counties, Ohio. Owner of Dexter Hardwoods, Inc., a hardwood
sawmill, located in Noble County, Ohio. Partner in Belpre Sand
& Gravel Company, a sand and gravel operation, located in Little
Hocking, Washington County, Ohio.
|
2000
|
2012
|
|
George
W. Broughton
|
51
|
Owner
and President of GWB Specialty Foods, LLC, an ice cream, frozen food, and
coffee service distributor. Owner and President of Broughton Commercial
Properties, LLC, a commercial properties rental company. Chairman of
Broughton Foundation, a nonprofit charitable foundation, and Broughton
Park, a park facility owned by the Broughton Foundation and made available
to the public. President and Controller of George Broughton Family LLP, an
asset management company. Owner and President of GWB Oil & Gas LLC, an
independent oil and gas producing company. All of these entities are based
in Marietta, Ohio. A Director of Peoples Bancorp Foundation, Inc. since
December 2003. (1)
|
1994
|
2012
|
|
Wilford
D. Dimit
|
74
|
Former
President of First Settlement, Inc., a Marietta, Ohio corporation
operating a retail clothing store for men and women, a family shoes store,
a cosmetic studio, a public alteration shop and a
restaurant. In March 2005, the businesses were sold or closed
and Mr. Dimit retired. (1)
|
1993
|
2012
|
|
Richard
Ferguson
|
62
|
Owner
of Ferguson Consulting, LLC, a Columbus, Ohio based professional practice
that focuses on business valuations and forensic accounting
services. Certified Public Accountant since 1976 and Certified
Valuation Analyst since 1996. Mr. Ferguson has served as
Chairman of the Board of Peoples since July 2008.
|
2004
|
2012
|
|
(1)
|
Also
a director of Peoples Bank.
|
While it
is contemplated that all nominees will stand for re-election at the annual
meeting, if one or more nominees at the time of the Annual Meeting should be
unavailable or unable to serve as a candidate for re-election as a director, the
individuals designated as proxies on the proxy card will have full discretion to
vote the common shares represented by the proxies they hold for the election of
the remaining nominees and for the election of any substitute nominee or
nominees designated by the Board of Directors following recommendation by the
Governance and Nominating Committee. The Board of Directors knows of
no reason why any of the nominees named above would be unavailable or unable to
serve if elected to the Board.
The
following table gives certain information, as of the date of this proxy
statement, concerning the current directors of Peoples who will continue to
serve after the Annual Meeting. Unless otherwise indicated, each
individual has had the same principal occupation for more than five
years.
|
Name
|
Age
|
Position(s)
Held with Peoples and Its
Principal Subsidiaries
and Principal Occupation(s)
|
Director
Continuously
Since
|
Term
Expiring
In
|
|
Mark
F. Bradley
|
39
|
Chief
Executive Officer since May 2005, President since June 2004, a Director
since February 2003, Chief Operating Officer from July 2003 to May 2005,
Executive Vice President and Chief Integration Officer from February 2001
to July 2003, and Controller from 1997 to 2001, of Peoples. Chief
Executive Officer since May 2005, President since 2002, Chief Operating
Officer from 2002 to May 2005, and Controller from 1997 to 2001, of
Peoples Bank. Chairman, President and a Director of Peoples Bancorp
Foundation, Inc. since December 2003. President from January 2006 to
February 2009 and a Director since January 2004 of Peoples Insurance
Agency, Inc. (1)
|
2003
|
2011
|
|
Frank
L. Christy
|
61
|
President
of Christy & Associates, Inc., a business development company located
in Marietta, Ohio. Chairman of Caron Products and Services, Inc., a
manufacturer and distributor of chillers and incubators for scientific
work, located in Marietta, Ohio. Chairman of Rossi Pasta Ltd., a
manufacturer and distributor of gourmet pasta and sauce, located in
Marietta, Ohio. (2)
|
1999
|
2011
|
|
David
L. Mead
|
53
|
Vice
President for Business Affairs, Otterbein College, located in Westerville,
Ohio, since September 2006. Associate Professor of Finance, Marietta
College, located in Marietta, Ohio, from August 2004 to September 2006.
Chief Financial Officer and Treasurer of First Place Financial Corp,
headquartered in Warren, Ohio, from December 2002 to June
2004. Treasurer of First Place Bank from May 2002 to December
2002. (1)
|
2006
|
2010
|
|
Robert
W. Price
|
45
|
Private
Investor. From 2002 until February 6, 2008, General Manager, Findley, Ohio
District, Shelly Materials, Inc., a division of The Shelly
Company. The Shelly Company is an asphalt and construction
materials company headquartered in Thornville, Ohio, and a wholly-owned
subsidiary of Oldcastle Materials Group, a division of CRH,
plc. Formerly President of Smith Concrete, a concrete company
located in Marietta, Ohio, and related companies.
|
2000
|
2010
|
|
Name
|
Age
|
Position(s)
Held with Peoples and Its
Principal Subsidiaries
and Principal Occupation(s)
|
Director
Continuously
Since
|
Term
Expiring
In
|
|
Theodore
P. Sauber
|
75
|
Vice
President of T.C.K.S., Inc., a holding company for McDonald’s Restaurants
in Ohio and West Virginia. A member of the Ohio University
Trustees Academy. A member of Service Corps of Retired Executives (SCORE)
of Athens (Ohio). A Director of Peoples Bancorp Foundation, Inc. since
December 2003. Retired Trustee of Rio Grande University.
(1)
|
2004
|
2011
|
|
Paul
T. Theisen
|
78
|
Attorney-At-Law,
retired. For more than 40 years, was a litigator with
TheisenBrock, A Legal Professional Association (“TheisenBrock”), located
in Marietta, Ohio, and was Of Counsel to, and an independent contractor
with, that firm. Vice Chairman of the Board since June 2005,
and Leadership Director from December 2005 to July 2008, of Peoples
Bancorp Inc. Chairman of the Board of Peoples Bank since June 2005.
(1)
|
1980
|
2010
|
|
Joseph
H. Wesel
|
79
|
President
of W.D.A., Inc., a real estate holding company, located in Marietta, Ohio.
Chairman and Chief Executive Officer of Marietta Automotive Warehouse,
Inc., an automotive parts wholesaler, located in Marietta, Ohio, from 1978
until December 2007. Chairman of the Board from 1991 until July 2003 and
since June 2005, Leadership Director from July 2003 to December 2005 and
Vice Chairman of the Board from July 2003 to June 2005, of Peoples.
(1)
|
1980
|
2011
|
|
Thomas
J. Wolf
|
62
|
President
of seven holding companies for 13 McDonald’s Restaurants in Kentucky and
West Virginia. Chairman of the Board for Fifth Avenue Broadcasting Co.,
Inc., a holding company for four radio stations in Huntington, West
Virginia. Board member of Our Lady of Bellefonte Hospital in Ashland,
Kentucky, from 2002 to 2008. Board member of the Ronald McDonald House in
Huntington, West Virginia, since 1998.
|
2004
|
2010
|
|
(1)
|
Also
a director of Peoples Bank.
|
|
(2)
|
On
March 10, 2009, Peoples received notification from Frank L. Christy that
Mr. Christy intends to resign at some point in the future from the Peoples
Board of Directors. Mr. Christy, who has been a member of the
Peoples Board of Directors since 1999, cited the extensive travel and
meeting commitments associated with his personal business pursuits, and
not any disagreements with Peoples, as the basis for his
decision. Mr. Christy is expected to continue to serve as a
director in the short term and has communicated that he is flexible as to
the timing of his departure from the Board of
Directors.
|
Other
than the father-son relationship between Joseph H. Wesel, a director of Peoples,
and David T. Wesel, an executive officer of Peoples, there are no family
relationships among any of the directors, nominees for election as directors and
executive officers of Peoples.
The Following are the executive
officers of Peoples, all of whom are elected annually and serve at the pleasure
of the Board of Directors of Peoples. This table lists each executive
officer’s age as of the date of this proxy statement as well as the positions
presently held by each executive officer with Peoples and our principal
subsidiaries and each executive officer’s individual business
experience.
|
Name
|
Age
|
Position
|
||
|
Mark
F. Bradley
|
39
|
President
and Chief Executive Officer
|
||
|
Deborah
K. Hill
|
44
|
Executive
Vice President, Consumer and Business Financial
Services
|
||
|
Carol
A. Schneeberger
|
52
|
Executive
Vice President, Operations
|
||
|
Edward
G. Sloane
|
48
|
Executive
Vice President, Chief Financial Officer and Treasurer
|
||
|
David
T. Wesel
|
47
|
Executive
Vice President, Investment and Insurance Services
|
||
|
Joseph
S. Yazombek
|
55
|
Executive
Vice President, Chief Lending
Officer
|
Mr.
Bradley has been Chief Executive Officer of Peoples since May 2005 and President
of Peoples since June 2004. Mr. Bradley also has been Chief Executive
Officer of Peoples Bank since May 2005 and President since July
2002. Prior thereto, Mr. Bradley served as Chief Operating Officer of
Peoples from July 2003 to May 2005, and Executive Vice President and Chief
Integration Officer from February 2001 to July 2003. He also served
as Chief Operating Officer of Peoples Bank from July 2002 to May
2005. Between 1997 and 2001, Mr. Bradley served as Controller of
Peoples and Peoples Bank. Mr. Bradley joined Peoples in
1991. In January 2006, Mr. Bradley was appointed President of Peoples
Insurance, and served in that capacity until March 2009. Mr. Bradley
remains a Director of Peoples Insurance. Mr. Bradley has been a
director of Peoples since 2003 and Peoples Bank since 2002.
Ms. Hill
joined Peoples in September 2007 when she was appointed Executive Vice
President, Consumer and Business Financial Services of both Peoples and Peoples
Bank. Prior to joining Peoples, Ms. Hill served as Senior Vice
President and Regional Manager of U.S. Bank’s Wisconsin/Chicago region from 1994
to August 2007.
Ms.
Schneeberger, a Certified Public Accountant, serves as Executive Vice President,
Operations of Peoples and Peoples Bank, positions she has held since April 1999
and February 2000, and she has served as Cashier of Peoples Bank since March
2000. From April 2007 to May 2008, Ms. Schneeberger served as interim
Chief Financial Officer and Treasurer of both Peoples and Peoples
Bank. From October 1988 to April 1999, Ms. Schneeberger was Vice
President/Operations of Peoples. Prior thereto, she was Auditor of
Peoples from August 1987 to October 1988 and Auditor of Peoples Bank from
January 1986 to October 1988. Ms. Schneeberger joined Peoples Bank in
1977.
Mr.
Sloane, a Certified Public Accountant, joined Peoples in May 2008 when he was
appointed as Executive Vice President, Chief Financial Officer and Treasurer of
Peoples and Peoples Bank. Prior to joining Peoples, Mr. Sloane served
as Senior Vice President of Strategic Planning and Analysis for WesBanco, Inc.,
a West Virginia bank holding company located in Wheeling, West Virginia, from
2006 to 2008. From 1991 to 2006, Mr. Sloane served as Controller of
WesBanco, Inc. He has over 25 years of experience in the financial
services industry in various roles of increasing responsibility in the
accounting, finance, mergers and acquisitions, asset/liability management and
strategic planning areas.
Mr. Wesel
became Executive Vice President of Peoples in January 2006. Mr. Wesel
was also appointed as President of Peoples Bank’s Peoples Financial Advisors
division in January 2006. Effective March 1, 2009, Mr. Wesel also
assumed the position of President of Peoples Insurance Agency, Inc., and was
named Executive Vice President for Investment and Insurance
Services. Mr. Wesel served as Sales Manager of Peoples Financial
Advisors from February 2004 to December 2005. Prior to joining
Peoples, Mr. Wesel had over 20 years experience in senior management and sales
administration, including two years experience from September 2002 to February
2004 with Parker Hunter, a regional brokerage firm. Mr. Wesel is the
son of Joseph H. Wesel, a director of Peoples and Peoples Bank.
Mr.
Yazombek was appointed Executive Vice President/Chief Lending Officer of Peoples
in January 2000. Mr. Yazombek has also held the position of Executive
Vice President and Chief Lending Officer of Peoples Bank since October
1998. He was an Executive Vice President of Peoples Bank’s Consumer
and Mortgage Lending areas from May 1996 to October 1998, where he also directly
managed Peoples Bank’s collections efforts. Mr. Yazombek joined
Peoples Bank in 1983 and served as a real estate lender until May
1996.
COMMITTEES
OF THE BOARD
The rules
of the NASDAQ Stock Market LLC (the “NASDAQ Rules”) require that a majority of
Peoples’ Board of Directors be independent directors. The definition
of an independent director for purposes of the NASDAQ Rules includes a series of
objective criteria, which Peoples’ Board of Directors has used in determining
whether its members are independent.
In
addition to considering the objective criteria, as required by the NASDAQ Rules,
the Board of Directors has made a subjective determination as to each
independent director that no relationships exist which, in the opinion of the
Board, would interfere with such individual’s exercise of independent judgment
in carrying out the responsibilities of a director. In making these
independence determinations, the Board of Directors has reviewed, considered and
discussed each director’s business and personal relationships, both direct and
indirect, with Peoples and our subsidiaries and the compensation and other
payments each director and such director’s immediate family members have, both
directly and indirectly, received from or made to Peoples and our subsidiaries
and presently expect to receive from or make to Peoples and its
subsidiaries. Based on that review, consideration and discussion, the
Board of Directors has determined that at least a majority of its members
qualify as independent directors. The Board of Directors has further
determined that each of the following directors has no financial or personal
ties, either directly or indirectly, with Peoples or our subsidiaries (other
than compensation received in the individual’s capacity as a director of Peoples
and our subsidiaries, non-preferential banking relationships in the ordinary
course of business with Peoples Bank and ownership of common shares of Peoples
as described in this proxy statement) and thus qualifies as independent: Carl L.
Baker, Jr.; George W. Broughton; Frank L. Christy; Richard Ferguson;
Wilford D. Dimit; David L. Mead; Robert W. Price; Theodore P.
Sauber; Paul T. Theisen; and Thomas J. Wolf.
Paul T.
Theisen was Of Counsel to, and an independent contractor with, the law firm of
TheisenBrock until December 2008. Mr. Theisen has not been a partner,
controlling shareholder or executive officer or otherwise been related to or
held any interest in TheisenBrock, other than as Of Counsel and an independent
contractor (and has not personally performed legal services for Peoples or any
of its subsidiaries), since 1998. TheisenBrock performed legal
services for Peoples and our subsidiaries during the 2008 fiscal
year.
Mark F.
Bradley does not qualify as an independent director because he currently serves
as an executive officer of Peoples.
On
September 14, 2005, the Board of Directors appointed David T. Wesel as an
executive officer of Peoples and Peoples Bank, effective January 1,
2006. Joseph H. Wesel is the father of David T. Wesel. The
Board of Directors has determined that, due to his relationship to David T.
Wesel, Joseph H. Wesel does not qualify as an independent director either under
the applicable NASDAQ Rules or for purposes of Rule 16b-3 under the Exchange Act
or Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Internal Revenue Code”), each of which applies to directors serving on the
Compensation Committee.
Leadership Director and Executive
Sessions
In the
event that the Chairman of the Board of Directors does not qualify as an
independent director because he is the Chief Executive Officer or the President
of Peoples or for some other reason does not qualify, the Board of Directors
elects a Leadership Director from among its members who is an independent
director to preside over the proceedings of all executive sessions of the
independent directors (without management present) and to perform the other
duties required by Section 3.04 of Peoples’ Code of Regulations. The
Leadership Director also serves as the Chairman of the Governance and Nominating
Committee. Paul T. Theisen served as the Leadership Director from
December 8, 2005 to July 1, 2008 when Richard Ferguson, an independent director,
became Chairman of the Board.
In
accordance with applicable NASDAQ Rules, the independent directors were given
the opportunity to meet in executive session at the end of each Board of
Directors meeting and at such other times as the independent directors deemed
necessary.
Meetings of the Board and Attendance at Annual
Meetings of Shareholders
The Board
of Directors held a total of 14 meetings during the 2008 fiscal
year. Each incumbent director attended 78% or more of the aggregate
of the total number of meetings held by the Board of Directors and the total
number of meetings held by all committees of the Board of Directors on which he
served, in each case during his period of service.
Peoples
encourages all incumbent directors and director nominees to attend each annual
meeting of shareholders. All of the directors attended Peoples’ last
annual meeting of shareholders held on April 10, 2008.
The Board
of Directors has a standing Audit Committee, a standing Compensation Committee,
a standing Executive Committee, and a standing Governance and
Nominating Committee.
The Audit
Committee was established in accordance with Section 3(a)(58)(A) of the Exchange
Act and conducts its business pursuant to a written charter adopted by the Board
of Directors. A current copy of the charter of the Audit Committee is
posted on the “Corporate Governance & Ethics” page of Peoples’ website
at www.peoplesbancorp.com. At least annually, the Audit Committee
reviews and reassesses the adequacy of its charter and recommends any proposed
changes to the full Board of Directors as necessary to reflect changes in
regulatory requirements, authoritative guidance and evolving
practices. Among other duties set forth in its charter, the Audit
Committee is responsible for:
|
·
|
overseeing
the accounting and financial reporting processes of
Peoples;
|
|
·
|
overseeing
the audits of the consolidated financial statements of
Peoples;
|
|
·
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appointing,
terminating, compensating and overseeing the work of Peoples’ independent
registered public accounting firm, including resolving any disagreements
between management and the independent registered public accounting firm
regarding financial reporting;
|
|
·
|
pre-approving
all audit and non-audit services provided by the independent registered
public accounting firm;
|
|
·
|
discussing
with management, the internal auditors and the independent registered
public accounting firm the adequacy and effectiveness of the accounting
and financial controls of Peoples;
|
|
·
|
reviewing
and concurring in the appointment, replacement, reassignment or dismissal
of the internal auditor, the scope of the internal audit and the operation
and performance of the internal
auditor;
|
|
·
|
reviewing
and approving all related party transactions (any transaction required to
be reported pursuant to Item 404 of SEC Regulation S-K) for potential
conflict of interest situations;
|
|
·
|
reviewing
Peoples’ earnings press releases, financial information and earnings
guidance and financial statements and related disclosures in Peoples’
periodic reports;
|
|
·
|
setting
hiring policies for employees or former employees of the independent
registered public accounting firm;
|
|
·
|
establishing
procedures for the receipt, retention and treatment of complaints received
by Peoples regarding accounting, internal accounting controls or auditing
matters;
|
|
·
|
assisting
the Board of Directors in the oversight
of:
|
|
·
|
the
performance of Peoples’ independent registered public accounting
firm,
|
|
·
|
the
independent registered public accounting firm’s qualifications and
independence; and
|
|
·
|
Peoples’
compliance with ethics policies and legal and regulatory requirements;
and
|
|
·
|
other
responsibilities as may be delegated to the Audit Committee by the full
Board of Directors.
|
The Audit
Committee held six meetings during the 2008 fiscal year. The “AUDIT COMMITTEE REPORT FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2008” appears beginning on page
49.
The Audit
Committee is currently comprised of Richard Ferguson (Chairman), Carl L. Baker,
Jr., George W. Broughton, David L. Mead, Theodore P. Sauber and Thomas J.
Wolf. Messrs. Ferguson, Baker, Broughton, Sauber and Wolf served as
members of the Audit Committee during the entire 2008 fiscal
year. Mr. Mead was appointed to the Audit Committee on June 12,
2008. The Board of Directors has determined that each of the members
of the Audit Committee qualifies as an independent director for purposes of Rule
10A-3 under the Exchange Act and under the applicable NASDAQ Rules.
The Board
of Directors has concluded that each member of the Audit Committee is capable of
(i) understanding accounting principles generally accepted in the United States
(“US GAAP”) and financial statements, (ii) assessing the general application of
US GAAP in connection with the accounting for estimates, accruals and reserves,
(iii) analyzing and evaluating Peoples’ consolidated financial statements, (iv)
understanding internal control over financial reporting, and (v) understanding
audit committee functions. Based upon his background, knowledge,
qualifications, experience and profession, the Board of Directors has determined
that each of Richard Ferguson and David L. Mead qualifies as an “audit committee
financial expert” under the SEC’s rules, and as “financially sophisticated” for
purposes of the applicable NASDAQ Rules.
The
Compensation Committee is comprised of six directors who qualify as (i)
“independent directors” under the applicable NASDAQ Rules, (ii) “outside
directors” for purposes of Section 162(m) of the Internal Revenue Code and (iii)
“non-employee directors” for purposes of Rule 16b-3 under the Exchange
Act. The members of the Compensation Committee are: Frank
L. Christy, Chairman; Carl L. Baker, Jr.; George W. Broughton; David L. Mead;
Robert W. Price; and Paul T. Theisen, each of whom served on the Compensation
Committee throughout the entire 2008 fiscal year.
The
Compensation Committee is organized and conducts its business pursuant to a
written charter adopted by the Board of Directors. A current copy of
the charter of the Compensation Committee is posted on the “Corporate Governance
& Ethics” page of Peoples’ website at www.peoplesbancorp.com. The
Compensation Committee periodically reviews and reassesses the adequacy of its
charter and recommends any proposed changes to the full Board of Directors for
approval.
The
Compensation Committee held seven (7) meetings during 2008. Its
Chairman determines the agenda for the meetings of the Compensation Committee
with the assistance of Peoples’ Executive Vice President, Operations who also
serves as the Secretary to the Compensation Committee. During the
2008 fiscal year, the Compensation Committee reviewed and approved on behalf of
the Board of Directors, management recommendations regarding all forms of
compensation provided to the executive officers and directors of Peoples and its
subsidiaries. Additionally, the Compensation Committee reviewed and
approved all equity-based compensation, cash incentives, perquisites, employee
benefits, salary programs, and human resources policies and procedures for
employees of Peoples and its subsidiaries. The Compensation Committee
also reviewed and approved the 2008 goals and objectives relevant to the
compensation of Peoples’ executive officers, and recommended the corporate
performance goals to the Board of Directors, which were subsequently approved by
the Board of Directors. The Compensation Committee evaluated the
executive officers’ performance in light of those goals and objectives and
determined the compensation earned by each executive officer based on that
evaluation. Leadership and management succession plans were also
reviewed and discussed during 2008.
The
primary function of the Compensation Committee is to review and approve, on
behalf of the Board of Directors, management recommendations regarding all forms
of compensation to be provided to the executive officers and directors of
Peoples and its subsidiaries, including bonuses, equity-based compensation, cash
incentives, perquisites, employee benefits and salary programs. In
carrying out this function, the Compensation Committee is responsible for
reviewing and approving goals and objectives relevant to the compensation of
Peoples’ executive officers and other officers designated by the Board of
Directors, evaluating such officers’ performance in light of those goals and
objectives and determining compensation based on that evaluation. The
Compensation Committee administers Peoples’ Amended and Restated 1993 Stock
Option Plan (the “1993 Plan”), 1995 Stock Option Plan (the “1995 Plan”), 1998
Stock Option Plan (the “1998 Plan”), 2002 Stock Option Plan (the “2002
Plan”), Amended and Restated 2006 Equity Plan (the “2006 Plan”), and
Amended and Restated Incentive Award Plan (the “Incentive Plan”), and approves
grants of awards under these plans in compliance with applicable securities and
tax laws. The Compensation Committee also undertakes such other
responsibilities as the full Board of Directors may from time to time
prescribe.
On
February 17, 2009, the American Recovery and Reinvestment Act of 2009 (“ARRA”)
was signed into law. ARRA executive compensation standards require
that Peoples establish a compensation committee consisting solely of independent
directors for the purpose of reviewing employee compensation
plans. This compensation committee is required to meet at least
semiannually to discuss and evaluate employee compensation plans in light
of an assessment of any risk posed to Peoples from such plans. As of
March 17, 2009, the Treasury had not amended the Securities Purchase
Agreement to require that Peoples comply with this requirement or issued
regulations describing how Peoples is to implement this
requirement. To the extent that the Treasury amends the Securities
Purchase Agreement to require that Peoples comply with this requirement and/or
issues such regulations, Peoples will take such steps as are necessary to comply
with this requirement, including the evaluation of the composition of the
existing Compensation Committee to determine whether it is consistent with the
requirements of the ARRA.
The
Compensation Committee is required to make certain certifications in connection
with Peoples’ participation in the Treasury’s Capital Purchase
Program. The certifications in the form required by the regulations
issued by the Treasury in October 2008 are included in the section captioned
“COMPENSATION COMMITTEE REPORT.”
The “COMPENSATION DISCUSSION AND
ANALYSIS” regarding executive compensation appears beginning on page 20,
and the “COMPENSATION COMMITTEE
REPORT” appears beginning on page 33.
The
Executive Committee is comprised of six directors: Mark F. Bradley, Chairman;
Wilford D. Dimit; Richard Ferguson; Robert W. Price; Paul T. Theisen; and Joseph
H. Wesel. Messrs. Bradley, Dimit, Price, Theisen and Wesel served as
members of the Executive Committee throughout the 2008 fiscal
year. Mr. Ferguson was appointed to the Executive Committee on June
12, 2008. The Executive Committee is authorized to act in the
intervals between meetings of the directors on matters delegated to the
Executive Committee by the full Board of Directors. There were no
meetings of the Executive Committee held during the 2008 fiscal
year.
The
members of the Governance and Nominating Committee are: Paul T.
Theisen, Chairman; George W. Broughton; and Robert W. Price, each of whom served
on the Governance and Nominating Committee throughout the entire 2008 fiscal
year. The Board of Directors has determined that each of the members
of the Governance and Nominating Committee qualifies as an independent director
under applicable NASDAQ Rules.
The
Governance and Nominating Committee is organized and conducts its business
pursuant to a written charter adopted by the Board of Directors. The
primary responsibilities of the Governance and Nominating Committee
are:
|
·
|
to
establish and articulate qualifications, desired background and selection
criteria for members of the Board of Directors consistent with the
eligibility requirements set forth in Peoples’ Code of
Regulations;
|
|
·
|
to
identify qualified candidates for election (including re-election),
nomination or appointment to the Board of Directors and recommend to the
full Board a slate of director nominees for each annual meeting of the
shareholders of Peoples or as vacancies
occur;
|
|
·
|
to
make recommendations to the full Board of Directors and the Chairman of
the Board regarding assignment and rotation of members and chairs of
committees of the Board;
|
|
·
|
to
oversee matters of corporate governance, including an evaluation of Board
performance and processes;
|
|
·
|
to
review with the Chairman of the Board, or another director designated by
the full Board of Directors, issues involving potential conflicts of
interest and/or any change of status of directors pursuant to applicable
law and the applicable provisions of Peoples’ Code of Ethics for
Directors, Officers and Employees or Peoples’ Code of
Regulations;
|
|
·
|
to
recommend the number of individuals to serve on the Board of
Directors;
|
|
·
|
to
periodically review Peoples’ Code of Ethics for Directors, Officers and
Employees and recommend to the full Board of Directors changes thereto, as
necessary; and
|
|
·
|
to
undertake such other responsibilities as may be referred to the Governance
and Nominating Committee by the full Board of Directors or the Chairman of
the Board.
|
The
charter of the Governance and Nominating Committee is posted on the “Corporate
Governance & Ethics” page of Peoples’ website at
www.peoplesbancorp.com. The Governance and Nominating Committee
periodically reviews and reassesses the adequacy of its charter and recommends
any proposed changes to the full Board of Directors for approval. The
Governance and Nominating Committee held two meetings during the 2008 fiscal
year.
As
described above, Peoples has a standing Governance and Nominating Committee that
has the responsibility to identify and recommend to the full Board of Directors
individuals qualified to become directors. Each candidate must
satisfy the eligibility requirements set forth in Peoples’ Code of
Regulations. To be eligible for election as a director, an individual
must be a shareholder of Peoples. In addition, the individual must
either (i) serve as chief executive officer or in another position of active
leadership with a business or professional interest located within the
geographic area served by Peoples and our subsidiaries or (ii) serve as an
executive officer of Peoples or one of Peoples’
subsidiaries. However, the qualification in the preceding sentence
does not apply to individuals elected as initial directors. An
individual will not be eligible for nomination and re-election as a director
after five years has passed since the individual ceased to hold the executive or
leadership position satisfying the eligibility requirement. This
five-year limitation does not apply, however, to an individual who retires from
service as the Chairman of the Board or the Chief Executive Officer of
Peoples.
When
considering potential candidates for the Board of Directors, the Governance and
Nominating Committee strives to assure that the composition of the Board, as
well as its practices and operation, contribute to value creation and to the
effective representation of Peoples’ shareholders. The Governance and
Nominating Committee may consider those factors it deems appropriate in
evaluating director candidates, including judgment, skill, diversity, strength
of character, experience with businesses and organizations comparable in size or
scope to Peoples, experience and skill relative to other Board members and
specialized knowledge or experience. Depending upon the current needs
of the Board of Directors, certain factors may be weighed more or less heavily
by the Governance and Nominating Committee.
In
considering candidates for the Board of Directors, the Governance and Nominating
Committee evaluates the entirety of each candidate’s credentials and, other than
the eligibility requirements set forth in Peoples’ Code of Regulations, does not
have any specific minimum qualifications that must be met by a Governance and
Nominating Committee-recommended nominee. However, the Governance and
Nominating Committee does believe that all members of the Board should have the
highest character and integrity, a reputation for working constructively with
others, sufficient time to devote to Board matters and no conflict of interest
that would interfere with performance as a director.
The
Governance and Nominating Committee considers candidates for the Board of
Directors from any reasonable source, including shareholder recommendations, and
does not evaluate candidates differently based on who has made the
recommendation. The Governance and Nominating Committee has the
authority under its charter to hire and pay a fee to consultants or search firms
to assist in the process of identifying and evaluating director
candidates. No such consultants or search firms have been used to
date and, accordingly, no fees have been paid to consultants or search
firms.
Shareholders
may recommend director candidates for consideration by the Governance and
Nominating Committee by writing to the Corporate Secretary of Peoples at
Peoples’ executive offices in Marietta, Ohio. Such recommendation
should provide the candidate’s name, age, business address, residence address,
principal occupation or employment and number of common shares beneficially
owned. The recommendation should also describe the qualifications,
attributes, skills or other qualities of the recommended director
candidate. A written statement from the candidate consenting to be
named as a director candidate and, if nominated and elected, to serve as a
director should accompany any such recommendation.
Shareholders
who wish to nominate an individual for election as a director at an annual
meeting of the shareholders of Peoples must comply with Peoples’ Code of
Regulations regarding shareholder nominations. Shareholder
nominations must be made in writing and delivered or mailed to the Corporate
Secretary of Peoples not less than 14 days nor more than 50 days prior to any
meeting of shareholders called for the election of
directors. However, if less than 21 days’ notice of the meeting is
given to the shareholders, the nomination must be mailed or delivered to the
Corporate Secretary not later than the close of business on the seventh day
following the day on which the notice of the meeting was mailed to the
shareholders. Nominations for the Annual Meeting must be received by
April 9, 2009. Each nomination must contain the following information
to the extent known by the nominating shareholder:
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the
name, age, business address and residence address of each proposed
nominee;
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the
principal occupation or employment of each proposed
nominee;
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the
number of shares of capital stock of Peoples beneficially owned by each
proposed nominee and by the nominating shareholder;
and
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·
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any
other information required to be disclosed with respect to a nominee for
election as a director under the SEC’s proxy
rules.
|
Each
nomination must be accompanied by the written consent of the proposed nominee to
serve as a director of Peoples if elected. Nominations not made in
accordance with the above requirements and Peoples’ Code of Regulations will not
be considered.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF
DIRECTORS
Although
Peoples has not to date developed formal processes by which shareholders may
communicate directly with directors, it believes the informal process, in which
any communication sent to the Board of Directors either generally or in care of
the Chief Executive Officer, the Corporate Secretary or another corporate
officer is forwarded to all members of the Board or specified individual
directors, as appropriate, has served the needs of the Board and Peoples’
shareholders. There is no screening process, and all shareholder communications
that are received by its officers for the attention of the Board of Directors
are forwarded to the members of the Board.
Having
found no problems with shareholder communications to directors under the
existing process described above, the Governance and Nominating Committee has
not found it necessary to develop more specific procedures. Until other
procedures are developed and posted on the “Corporate Governance &
Ethics” page of Peoples’ website at www.peoplesbancorp.com, any communication to
the Board of Directors or to individual directors may be mailed to the Board or
one or more individual directors, in care of Peoples’ Corporate Secretary, at
Peoples’ headquarters in Marietta, Ohio. The mailing envelope must contain a
clear notation indicating that the enclosed letter is a “Shareholder-Board
Communication” or “Shareholder-Director Communication,” as
appropriate. In addition, shareholders may utilize Peoples’ website
to communicate with the Board or individual directors. Correspondence
through the “Investor Relations - Shareholder Information” page of the website
is also directed to the Corporate Secretary. All such communications,
whether via mail or the website, must identify the author as a shareholder of
Peoples and clearly state whether the intended recipients are all members of the
Board of Directors or certain specified individual directors. The
Corporate Secretary will make copies of all such communications and circulate
them to the appropriate director or directors without any
screening. Correspondence marked “personal and confidential” will be
delivered to the intended recipient(s) without opening.
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
of Compensation Program
The
Compensation Committee of the Board of Directors (for the purpose of this
discussion and analysis, the “Committee”) has responsibility for establishing,
implementing, and continually monitoring adherence with Peoples’ compensation
philosophy. The Committee ensures that the total compensation paid
during 2008 to the individuals included in the “SUMMARY COMPENSATION TABLE FOR
2008” on page 34 (referred to collectively as the “executive officers”),
is reasonable, competitive and aligned with the best interests of the
shareholders. We believe all employees should be rewarded for
executing on goals designed to create long-term shareholder value.
The goal
of the compensation program for the executive officers is the same as our goal
for operating Peoples: to create long-term value for our
shareholders. Toward this goal, we have designed and implemented a
compensation program for the executive officers to (1) reward them for sustained
financial and operating performance and leadership excellence, (2) align their
interests with those of the shareholders, (3) attract talent, and (4) encourage
strong performers to remain with Peoples for long and productive
careers. The elements of our compensation program consist of salary,
annual cash incentive, equity-based incentive compensation, retirement and other
benefits, and perquisites and other personal benefits. We combine the
compensation elements for each executive officer in a manner we believe
optimizes the executive officer’s contribution to Peoples and the
shareholders.
Because
satisfactory levels of performance were not achieved in 2008, Peoples’ executive
officers did not receive payouts on any performance-based compensation
plans. The Compensation Committee believes this illustrates the fact
that Peoples’ compensation program for its executive officers continues to be
aligned with the interest of the shareholders.
On January 30, 2009, Peoples completed
the sale of $39 million of newly-issued Peoples non-voting preferred shares as
part of the TARP Capital Purchase Program established by the United States
Department of the Treasury (“Treasury”) under the Emergency Economic
Stabilization Act of 2008 (“EESA”). To finalize Peoples’
participation in the Capital Purchase Program, Peoples and the Treasury entered
into a Letter Agreement, dated January 30, 2009 (the “Letter Agreement”),
including the related Securities Purchase Agreement – Standard Terms attached
thereto (the “Securities Purchase Agreement”). In the Securities
Purchase Agreement, Peoples adopted the Treasury’s standards for executive
compensation for the period during which the Treasury owns any securities
acquired from Peoples pursuant to the Securities Purchase Agreement or upon
exercise of the related Warrant to purchase 313,505 common shares of
Peoples. The Treasury may unilaterally amend the Securities Purchase
Agreement to comply with applicable Federal statutes. In connection
with Peoples’ participation in the Capital Purchase Program, Mr. Bradley, Mr.
Sloane, Ms. Hill, Ms. Schneeberger, Mr. Wesel and Mr. Yazombek entered into
letter agreements that modify all compensation and benefit plans in which the
executive officers participate to the extent necessary to comply with the
executive compensation limitations under EESA. The modifications
prohibit Peoples from making any golden parachute payment, subject
any bonus and/or incentive compensation paid to recovery by Peoples if the
payments were based on materially inaccurate financial statements or any other
materially inaccurate performance metric criteria and require the Committee to
review Peoples’ incentive compensation programs with senior risk officers to
ensure that the programs do not encourage executive officers to take unnecessary
or excessive risks that threaten the value of Peoples. For purposes
of the Securities Purchase Agreement’s prohibitions, a “golden parachute” is
defined as any payment to an executive officer upon the executive officer’s
involuntary termination of employment or in connection with any bankruptcy
filing, insolvency or receivership of Peoples (an “applicable severance from
employment”) that equals or exceeds three times the executive officer’s average
annual salary over the five-year period preceding the applicable severance from
employment. These letter agreements expire when the Treasury no
longer holds a debt or equity position in Peoples.
Peoples’
compensation program adheres to the original requirements of EESA set forth in
the Securities Purchase Agreement and the Treasury regulations in effect at that
time. On February 17, 2009, the ARRA was signed into
law. The ARRA retroactively amends the executive compensation
provisions applicable to participants in the Capital Purchase
Program. The ARRA executive compensation standards are to remain in
effect during the period in which any obligation arising from financial
assistance provided under TARP remains outstanding, excluding any period during
which the Treasury holds only the Warrant to purchase Peoples common shares (the
“Covered Period”). The ARRA executive compensation standards apply to
Peoples’ Senior Executive Officers (as defined in the ARRA) as well as other
employees. There is no stated effective date for the ARRA’s executive
compensation standards. The Treasury is directed to issue regulations
to implement these standards. As a result, although the ARRA purports
to retroactively amend EESA and the regulations issued by the Treasury
thereunder, it is unclear the extent to which the ARRA applies to
Peoples. The new executive compensation standards to be implemented
under AARA have not been incorporated into this discussion and analysis as
Peoples waits for the Treasury to issue regulations which will implement these
new standards. Peoples will carefully review the ARRA executive
compensation standards and any Treasury regulations, once issued. To
the extent that the Treasury amends the Securities Purchase Agreement to make
these standards applicable, the Treasury issues regulations describing how
Peoples is to comply with these standards, or Peoples determines these standards
apply, Peoples will work with its Senior Executive Officers and other affected
employees to take such steps as it deems necessary to comply with the standards
and adopt administrative and other procedures consistent with the
foregoing.
Compensation Philosophy and Objectives
The
compensation philosophy of the Committee is to design and implement a
compensation program that serves to retain, recruit, and develop talented
financial services personnel and management. In addition, we seek to
award compensation based on the individual’s contribution to the overall
improved performance of Peoples.
While the
Committee oversees the compensation of all officers and employees, a primary
focus of the Committee is the compensation for Peoples’ executive officers and
senior officers. The intent is to reward all employees for continuous
improvement and industry-leading best practices, but specifically, to set up
compensation plans for executive officers and senior officers to reward those
employees for enhancing shareholder value. The compensation
philosophy covers the direct forms of compensation including base salary, annual
cash incentives and any form of equity-based compensation. The
compensation philosophy statement is a tool that the Board of Directors and
management use to ensure that compensation programs are developed that are both
competitive with respect to officer compensation and reasonable within the
marketplace.
|
·
|
Base
Salary: Base salaries are to be competitive with the
market median of Peoples’ peer group. Based upon individual
circumstances, actual base salary levels may be higher or lower than the
market median.
|
|
·
|
Total Cash
Compensation: Total cash compensation is base salary
plus an annual cash incentive. The objective is for total cash
compensation to be consistent with the market median of Peoples’ peer
group for achieving targeted performance and at or above the 75th
percentile of Peoples’ peer group for achieving higher
performance.
|
|
·
|
Total Direct
Compensation: Peoples utilizes long-term equity-based
incentives for compensation purposes, typically in the form of
equity-based awards for executive officers and senior officers in
leadership capacities or other key positions. The objective is
to grant equity-based awards only after performance goals have been
achieved, and then, there is additional time-based vesting of the awards
to enhance employee retention. Total direct compensation is
total cash compensation plus the fair value of equity-based
awards. The goal for total direct compensation is that the
total direct compensation ranking for each executive officer, compared to
the total direct compensation of the similarly situated officers of
members of Peoples’ peer group, will reflect the similar percentile as
Peoples’ performance compared to that of Peoples’ peer
group. For example, if targeted performance is achieved both at
the individual and corporate level, it is expected that each executive
officer’s total direct compensation will approximate the market median of
similarly situated officers of members of Peoples’ peer
group.
|
No
specific formula is used to determine the allocation between performance-based
compensation, which includes annual cash incentive and the long-term
equity-based incentives, and fixed compensation or base
salaries. However, a significant portion of total direct compensation
that could be earned at target levels of performance emphasizes Peoples’ focus
on pay-for-performance. At target levels of performance, 57% of the
President and Chief Executive Officer’s total direct compensation and 35% of the
other executive officers’ total direct compensation will be in the form of
performance-based compensation.
Role of Executive
Officers in Compensation Decisions
The
Committee makes all compensation decisions related to the executive officers of
Peoples and recommends to the Board of Directors any equity-based award grants
for the non-employee directors. Annually, the President and Chief
Executive Officer of Peoples reviews the performance of each executive officer
(excluding his own) by comparing the results achieved to Compensation
Committee-approved goals as well as the overall performance of Peoples as
compared to Board-approved corporate performance goals. This data,
along with average salary data for a similarly situated officer derived from the
most recent proxy statements of Peoples’ Peer Group, are the bases for his
recommendations to the Committee with respect to the compensation of the other
executive officers, including base salary adjustments, and payout potential
percentages for the annual cash incentive payments and equity-based
awards. The Committee considers the President and Chief Executive
Officer’s recommendations, and uses its own discretion in making the final
compensation decisions with respect to the executive officers, which may differ
from the recommendations of the President and Chief Executive
Officer. Additionally, the President and Chief Executive Officer
prepares a summary of his performance against his performance goals for the
Committee and provides a recommendation to the Committee regarding his personal
base salary that reflects his desire to maintain internal pay equity between the
President and Chief Executive Officer and the other executive
officers. The Committee considers the recommendation of the President
and Chief Executive Officer, and uses its own discretion in making the ultimate
compensation decision with respect to the President and Chief Executive Officer,
which may differ (and has differed) from the recommendation of the President and
Chief Executive Officer. The Committee also seeks input from other
members of the Board of Directors regarding the performance of the President and
Chief Executive Officer in determining any base salary adjustment and the rating
of his individual performance which, when combined with the corporate
performance relative to goal, determines his annual cash incentive payment and
equity-based awards.
Setting Executive Compensation
The
Committee has the sole authority to engage the services of any compensation
consultant or advisor. In order to ensure that Peoples provides total
direct compensation that is performance-based and competitive with its
geographic peers and the financial services industry in general, from time to
time, the Committee has engaged Amalfi Consulting, LLC (formerly the
Compensation Group of Clark Consulting) (“Amalfi Consulting”), a compensation
and benefits consultant serving the financial services
industry. Amalfi Consulting provides market intelligence on industry
compensation trends along with its views on specific compensation programs on an
as-needed basis, with the oversight of the Committee. All work completed
by Amalfi Consulting is reported to the Committee. Communications
between the Committee and Amalfi Consulting occur through (1) direct
conversations between the Chairman of the Committee and Amalfi Consulting, (2)
communications between the President and Chief Executive Officer and/or the
Secretary of the Compensation Committee, and Amalfi Consulting, and (3)
participation by Amalfi Consulting in Compensation Committee meetings, including
executive sessions without the presence of executive
management. Other services provided by Amalfi Consulting during 2008
included the review of specified portions of the proxy materials and guidance on
compliance with Internal Revenue Code Section 409A. Amalfi Consulting
also provided information regarding market trends for setting corporate
performance goals for 2009 in the current turbulent economic
times. Amalfi Consulting has not provided any services to Peoples
other than those described herein. The total amount of fees paid to
Amalfi Consulting for services to the Committee in 2008 was
$9,952. At the request of the Committee, an Amalfi Consulting
representative attended one Committee meeting in 2008.
In 2006,
the Committee, with the assistance of Amalfi Consulting, identified a group of
peer financial institution holding companies based on market capitalization,
geographic location, performance, and similarity in financial products offered
for the purpose of comparing Peoples’ compensation programs. Each
year, the Committee reviews the group and makes changes to ensure the peer group
members continue to display the aforementioned characteristics. For
the 2008 fiscal year, this peer group was comprised of the following 12
publicly-traded financial institution holding companies with total asset sizes
ranging from $1.0 billion to $5.1 billion and located in similar markets and/or
geographic areas to Peoples in the states of Ohio, West Virginia, Pennsylvania,
Kentucky, and New York:
|
Peer
Group Member
|
Location
|
Total
Assets
($
Billions)
|
Ticker
|
|
WesBanco,
Inc.
|
Wheeling,
WV
|
$5.1
|
WSBC
|
|
S&T
Bancorp, Inc.
|
Indiana,
PA
|
$4.5
|
STBA
|
|
Republic
Bancorp, Inc.
|
Louisville,
KY
|
$3.0
|
RBCAA
|
|
First
Place Financial Corp.
|
Warren,
OH
|
$3.4
|
FPFC
|
|
Community
Trust Bancorp, Inc.
|
Pikeville,
KY
|
$2.9
|
CTBI
|
|
United
Community Financial Corp.
|
Youngstown,
OH
|
$2.8
|
UCFC
|
|
Tompkins
Financial Corporation
|
Ithaca,
NY
|
$2.7
|
TMP
|
|
City
Holding Company
|
Charleston,
WV
|
$2.5
|
CHCO
|
|
Farmers
Capital Bank Corporation
|
Frankfurt,
KY
|
$2.2
|
FFKT
|
|
First
Defiance Financial Corp.
|
Defiance,
OH
|
$
2.0
|
FDEF
|
|
S.Y. Bancorp,
Inc.
|
Louisville,
KY
|
$1.7
|
SYBT
|
|
Camco
Financial Corporation
|
Cambridge,
OH
|
$1.0
|
CAFI
|
This
12-member group is referred to in this discussion and analysis as the “Peer
Group.” The Committee reviewed the Peer Group on March 3, 2008 and
determined it was appropriate to remove United Bankshares, Inc. (UBSI) and Park
National Corporation (PRK) from the Peer Group for 2008 because each company’s
respective total assets exceeded the targeted range for the Peer
Group. The Committee uses Peer Group data to analyze the overall
competitiveness of Peoples’ executive officers’ compensation relative to our
compensation philosophy and objectives by comparing (1) the relative ranking of
each executive officer’s base salary and total direct compensation for
threshold, target and maximum levels of performance to the salary and total
direct compensation for similarly situated officers of members of the Peer
Group’s threshold, target and maximum levels of performance and (2) the level of
performance achieved by Peoples compared to the Peer Group as measured by
earnings per share growth and other standard performance measures used by the
financial services industry.
2008 Executive Compensation Components
For 2008,
the principal components of compensation for the executive officers
were:
|
·
|
Base
salary;
|
|
·
|
Annual
cash incentive;
|
|
·
|
Long-term
equity-based incentive
compensation;
|
|
·
|
Retirement
and other benefits; and
|
|
·
|
Perquisites
and other personal benefits.
|
The
Committee has determined that base salaries for the executive officers should be
competitive with the market median of similarly situated officers of members of
the Peer Group. Depending on individual job performance, the actual
base salary for a particular executive officer may be higher or lower than the
market median salary for the similarly situated Peer Group executive officer
(typically in the range of the 40th to 60th percentile of the Peer
Group). Individual executive officer salary increases are reviewed
annually by the Committee and are based on (1) the individual’s overall
contribution to Peoples’ performance, (2) the executive officer’s attainment of
specific individual business objectives during the preceding year, (3)
adjustments, if such changes occur, in the overall responsibilities of the
individual, and (4) changes in the Consumer Price Index. Every two to
three years, the Committee engages a compensation consultant to prepare an
evaluation of the most recent comparative Peer Group data. The most
recent evaluation was completed in December 2007 by Amalfi Consulting and was
used as the basis for 2008 base salaries for Peoples’ executive
officers.
Specific
individual business objectives for 2008 were approved for each executive officer
by the Committee on March 3, 2008. The individual business objectives
were designed to complement Peoples’ corporate goals for 2008, which were
approved by the Board of Directors on February 14, 2008. The
individual business objectives were both quantitative in nature, such as
achieving sales and revenue goals and cost containment, and qualitative in
nature, such as the development, management and retention of key staff and the
assessment and development of quality products and services. These
objectives are designed to grow core earnings, which will, in turn, promote the
long-term interests of Peoples’ shareholders.
Typically,
the Committee gathers and analyzes compensation and financial results for
companies in the Peer Group for the most recent year to determine the overall
competitiveness of the base salaries of Peoples’ current executive officers when
compared to those of the Peer Group officers. In its review of Peer
Group 2007 financial data, the Committee determined that Peoples’ financial
performance was comparable to or better than the median performance of the Peer
Group for return on average assets and efficiency ratio. In other key
performance indicators – such as return on average equity, return on average
tangible equity, earnings per common share growth – Peoples underperformed the
median performance of the Peer Group.
|
Return
on
Average
Assets
2007
|
Return
on
Average
Equity
2007
|
Return
on
Average
Tangible
Equity
2007
|
EPS
Growth
Rate
2007
|
EPS
Growth
Rate
3
Year
|
Efficiency
Ratio
2007
(*)
|
|
|
Peer
Group – Average
|
1.07%
|
10.85%
|
13.94%
|
-11.12%
|
-18.63%
|
60.86%
|
|
Peer
Group – 25th
Percentile
|
0.83%
|
8.34%
|
11.36%
|
-13.78%
|
-1.17%
|
66.50%
|
|
Peer
Group – 50th
Percentile
|
1.00%
|
10.44%
|
15.97%
|
-5.27%
|
3.14%
|
62.04%
|
|
Peer
Group – 75th
Percentile
|
1.34%
|
14.72%
|
17.46%
|
2.44%
|
4.80%
|
56.31%
|
|
Peoples
Bancorp Inc.
|
0.98%
|
9.21%
|
14.94%
|
-13.43%
|
0.58%
|
57.07%
|
(*) A
lower number reflects better performance.
In
addition, the Committee considered Peoples’ financial performance in
2008. Due to Peoples’ 2008 financial performance and Peoples’
compensation philosophy and objectives, the Committee did not adjust the base
salaries of Peoples’ current executive officers for 2009, except for the base
salary of David T. Wesel, as described below. The Compensation
Committee determined that, with the exception of Mr. Wesel, adjustments to
current executive officer base salaries were not appropriate due to the fact
Peoples’ overall performance did not improve, nor were adjustments in the best
interests of Peoples and its shareholders.
On
February 26, 2009, the Committee approved an increase in Mr. Wesel’s base salary
in 2009 to $180,000, effective March 1, 2009, as he assumed increased
responsibilities in the role of President of Peoples Insurance Agency, Inc., in
addition to his previous roles of Executive Vice President of Peoples and
President of Peoples Financial Advisors, a division of Peoples
Bank. Mr. Wesel remains an Executive Vice President of
Peoples.
As a
result of the aforementioned evaluation, the annual base salary for the other
executive officers remained unchanged for 2009 as follows: Mr.
Bradley: $280,000; Ms. Schneeberger: $190,000; Ms.
Hill: $182,000; Mr. Sloane: $196,000; and Mr.
Yazombek: $220,000.
Executive
officers are eligible to earn an annual cash incentive under the Incentive
Plan. The Incentive Plan was developed to reward performance by
providing increasing percentages of cash awards for increasing levels of
performance and, conversely, to not pay cash incentives if performance goals are
not met. The Incentive Plan is designed to motivate and reward the
executive officers for their contributions to business goals that we believe
drive our earnings and create shareholder value.
There
are three levels of incentive awards under the Incentive Plan: threshold, target
and maximum. Achieving threshold performance results in no payout to
the executive officers. The target incentive award reflects the
expected results for the year and is designed to result in total cash
compensation (base salary and annul cash incentive) for each officer at the
market median of similarly situated officers of the Peer Group for achieving
targeted performance. If exceptional performance is achieved, the
maximum incentive award level is paid and is designed to result in total cash
compensation at or above the 75th percentile of the Peer Group
officers.
On
February 14, 2008, the Board of Directors established the corporate cash
incentive financial goals for 2008, which were comprised of three financial
components: (i) Earnings Per Common Share; (ii) Return On Average Equity; and
(iii) Efficiency Ratio. These financial measurements were selected
because the Board believed such measurements demonstrate the overall operating
performance of Peoples and are widely recognized as industry benchmarks for
operating performance, with improvements in these ratios being indicators of
enhanced operating performance, which translates into increased shareholder
value. The weightings applied to the Earnings Per Common Share and
Return On Average Equity components were 45% each, which reflect results
achieved for shareholders. The Efficiency Ratio was weighted at 10%
as it measures the productivity of the organization and gives indications as to
its operating effectiveness. The weightings were determined based on
their respective impact on long-term shareholder value.
The Board
of Directors set the corporate financial goals for 2008 as shown in the table
below. Performance results for 2008 are also shown.
|
Weighting
|
Threshold
|
Target
|
Maximum
|
2008
Results
|
|
|
Earnings
Per Common Share
|
45%
|
$1.96
|
$2.05
|
$2.13
|
$0.72
|
|
Return
on Average Equity
|
45%
|
10.15%
|
10.50%
|
10.75%
|
3.67%
|
|
Efficiency
Ratio (*)
|
10%
|
59.50%
|
58.50%
|
57.50%
|
56.30%
|
(*) A
lower number reflects better performance.
The levels of achievement designated as threshold, target and maximum were
established based on (1) Peoples’ actual performance in 2007 and (2) projected
operating growth taking into account the outlook for the financial services
industry for 2008 and overall economic conditions.
If the
corporate target performance goals were achieved, Mr. Bradley, as Peoples’
President and Chief Executive Officer, had the potential to earn a payout of up
to 50% of his annual base salary; whereas, each of the other executive officers
had the potential to earn a payout of up to 35% of his or her annual base
salary. However, if the financial performance was at threshold or
lower but greater than an absolute minimum level of corporate performance as
described below, there would have been no payout based on corporate results,
although each executive officer would still be eligible for an incentive payout
based on his or her individual performance. Payout to the executive
officers for achieving threshold performance or below in any given corporate or
individual performance measure is 0% for the given performance
measure.
Annual
individual performance goals for Mr. Bradley, in his capacity as President and
Chief Executive Officer, included his effectiveness in strategic planning and
implementation of long-range plans, identification of key management personnel,
and other leadership-based factors designed to promote shareholder
value. Mr. Bradley’s annual cash incentive was weighted 90% for
attainment of the corporate financial goals and 10% for individual performance
goals, as determined by the Committee with input from the entire Board of
Directors. The maximum cash payout Mr. Bradley could have received
under the Incentive Plan for 2008 performance was 100% of his annual base
salary.
Annual
individual performance goals were also established for each other executive
officer, the nature of which differed depending upon the officer’s job
responsibilities. Goals were both quantitative in nature, such as
business unit revenue and net income goals, loan portfolio growth, net loan
charge-off results and levels of nonperforming loans, and qualitative in nature,
such as the development, management and retention of key staff and the
assessment and development of quality products and services. Annual
cash incentives for these other executive officers were weighted 75% or 90%,
depending on the nature of the position held, for the attainment of the
corporate financial goals and the remaining 10% or 25% based on the attainment
of specific individual performance goals. A weighting of 25% was
assigned when the individual performance goals were primarily quantitative in
nature and a weighting of 10% was assigned when the individual performance goals
were primarily qualitative, and therefore more subjective, in
nature. The maximum cash payout which these individuals could have
received under the Incentive Plan for 2008 performance was 70% of his or her
respective annual base salary.
The
Committee also has in place an absolute minimum level of corporate performance,
which was defined in 2008 as $1.67, or 85% of Peoples’ threshold Earnings Per
Common Share goal of $1.96. Since Peoples did not achieve absolute
minimum earnings per share, no executive officer was eligible for a year-end
cash incentive payout even though the maximum level of performance relative to
the Efficiency Ratio was exceeded. Additionally, since the absolute
minimum performance requirement was not satisfied, no cash incentive was earned
for individual performance, even though individual executive officers achieved
levels of performance relative to their individual performance goals, although
the Committee, solely at their discretion, could have granted individual cash
incentives if the executive officer’s individual contribution warranted such
payment.
If
Peoples’ 2008 earnings per share had been between absolute minimum and
threshold, then no cash incentives would have been earned from the Earnings Per
Common Share or the Return on Average Equity components as the threshold levels
of performance for these financial goals were not achieved, although cash
incentives and long-term equity incentives would have been earned for corporate
results relative to the Efficiency Ratio as the maximum level of performance for
this corporate performance goal was exceeded. Each executive officer
would also have been eligible to earn cash incentives and long-term equity
incentives based on his/her individual achievements relative to his/her
individual performance goals. (Additionally, an executive officer who
is not employed as of the payout date is not eligible to receive the cash
incentive payment.)
The
Committee retains the right to exercise discretion in the awarding of cash
incentives absent the attainment of performance goals, or to increase or reduce
the size of the payout of cash incentives under the Incentive
Plan. The Committee did not exercise discretion to make any cash
incentive awards to the executive officers for 2008 corporate and individual
performance.
Payout
percentages for the various levels of performance are reviewed by the Committee
on an annual basis and have not been changed since calendar year
2004. However, for 2009, the Committee has determined the percentage
of base salary for achieving maximum performance will be limited to 75% of the
previous maximum payout percentage for each executive officer to reflect the
reduced earnings potential for Peoples as a result of challenging economic
times. The Board of Directors approves corporate performance goals on
an annual basis. Cash incentive awards are paid after results for the
performance goals are determined.
At the
end of each year, the extent to which Peoples’ financial performance goals and
the individual performance goals have been achieved is measured by the
Committee. A summary of the relative weightings of corporate and
individual goals, the total cash incentive payout potential and the actual
payouts earned for 2008 performance are shown below.
ANNUAL
CASH INCENTIVE COMPENSATION
|
Named
Executive
Officer
|
Corporate
Weighting
|
Individual
Weighting
|
Total
Maximum Incentive Payout Potential (*)
|
2008
Total
Actual Incentive Payout (*)
|
2008
Annual Cash Incentive Earned
|
|
Mark
F. Bradley
|
90%
|
10%
|
100%
|
0.0%
|
$0
|
|
Edward
G. Sloane, Jr.
|
90%
|
10%
|
70%
|
0.0%
|
$0
|
|
Carol
A. Schneeberger
|
90%
|
10%
|
70%
|
0.0%
|
$0
|
|
Joseph
S. Yazombek
|
75%
|
25%
|
70%
|
0.0%
|
$0
|
|
Deborah
K. Hill
|
75%
|
25%
|
70%
|
0.0%
|
$0
|
|
David
T. Wesel
|
75%
|
25%
|
70%
|
0.0%
|
$0
|
(*) Payout
calculated as a percentage of base salary.
Executive
officers are required to defer 25% of any annual cash incentives earned under
the terms of the Incentive Plan. If the executive officer terminates
his or her employment for any reason other than death, disability or retirement
prior to the end of the three-year deferral period, the deferred portion of the
annual cash incentive is forfeited. This mandatory deferral is
another way to promote retention of key executive officers, as the executive
officers must remain with Peoples until the required deferral period lapses or
they forfeit that portion of their incentive payout. Once the
mandatory deferral period has lapsed, executive officers may either take a cash
distribution or further defer receipt of the cash incentive, as discussed in the
following paragraph, based on an election made under the terms of the Incentive
Plan prior to the year the cash incentive was earned, until they retire or their
employment is terminated. Interest on the deferred compensation is
accrued at a rate equal to 50% of Peoples’ Return on Average Equity achieved
during each calendar year throughout the deferral period. This
mandatory deferral further links the long-term economic interests of the
executive officers with those of Peoples and its shareholders.
In
addition to the mandatory 25% deferral, the executive officers also have the
option to (1) defer any remaining annual cash incentive compensation to be paid
to them and (2) further defer the mandatory amount after the original three-year
period has lapsed until they retire or until their employment with Peoples is
terminated. The amount an executive officer elects to voluntarily
defer is chosen by the executive officer prior to the beginning of the calendar
year in which the cash incentive compensation is earned. Interest on
the deferred compensation is accrued at a rate equal to 50% of Peoples’ Return
on Average Equity achieved during each calendar year throughout the deferral
period. This voluntary deferral further links the long-term economic
interests of the executive officers with those of Peoples and its
shareholders.
On
February 26, 2009, the Board of Directors established the 2009 corporate cash
incentive performance goals for Peoples’ executive officers. The
Board adopted a “balanced scorecard” approach which is comprised of the
following components and their corresponding weightings: (i) Earnings
Per Common Share (25% weighting); (ii) Non-Performing Assets as a Percent of
Loans and Other Real Estate Owned (20% weighting); (iii) Revenue Growth (10%
weighting); (iv) Deposit Growth (10% weighting); (v) Client Service Score (5%
weighting); and (vi) a Discretionary Measure (30% weighting). The
Discretionary Measure is unique to each executive officer and consists of
quantitative measures such as business unit revenue and net income goals,
loan portfolio growth, net loan charge-off results, levels of nonperforming
loans, and expense reduction; and qualitative measures, such as the development,
management and retention of key staff, the assessment and development of quality
products and services and other strategic initiatives. These measures
reflect results achieved for shareholders while ensuring this compensation
arrangement does not encourage unnecessary and excessive risk-taking that could
threaten the value of the institution by reducing the focus on earnings as
emphasized by the weighting in prior years of Earnings Per Share and Return on
Average Equity performance objectives. The absolute minimum level of
corporate performance remains in effect for 2009, but the Compensation Committee
retains the ability to award cash incentive compensation based on results
achieved by the individual executive officer if the absolute minimum level of
performance is not achieved.
The ARRA
executive compensation standards prohibit Peoples from paying or accruing any
bonus, retention award or incentive compensation to the five most
highly-compensated employees during the Covered Period. To the extent
that the Treasury issues regulations and amends the Securities Purchase
Agreement to make this prohibition applicable to these payments, Peoples will
take such steps as necessary to comply with the prohibition.
Long-Term Equity-Based Incentive
Compensation
The
Committee believes that equity-based compensation and ownership ensures that the
executive officers have a continuing stake in the long-term success of
Peoples. The Committee believes that the interests of our
shareholders are best served when a significant percentage of the executive
officers’ compensation is comprised of equity-based incentives that appreciate
in value contingent upon an increase in the price of our common shares while
balancing undue risk. It is the Committee’s intent to grant
equity-based awards to our executive officers in such amounts as may be required
to accomplish our compensation philosophy and objectives.
Executive
officers are eligible to earn long-term equity-based incentives under Peoples’
equity-based compensation plan. Like the Incentive Plan, the
Committee administers Peoples’ 2006 Plan to reward increasing levels of
performance, and conversely, to not grant awards if performance goals are not
met. There are three possible levels of equity-based incentive awards
under our equity-based compensation plan: threshold, target and
maximum. Achieving threshold performance results in no award to the
executive officers. The target incentive award reflects Peoples’
expected results for the year and is designed to result in total direct
compensation (total cash compensation and equity-based awards) at the market
median of similarly situated officers of members of the Peer
Group. If exceptional performance is achieved, the maximum level is
awarded and is designed to result in total direct compensation at or above the
75th percentile of the Peer Group officers. Awards are granted on an
annual basis, if earned, and feature a time-based vesting period, which the
Committee believes will focus the executive officers on Peoples’ long-term
performance improvement and increased shareholder value.
During
2005, the Committee engaged Amalfi Consulting to review the competitiveness of
Peoples’ equity-based compensation plans. As a result of that review,
the Committee designed the 2006 Plan to provide more competitive incentive
compensation opportunities to our executive officers. The
2006 Plan, which was approved by shareholders at the 2006 annual
meeting, allows different forms of long-term equity-based awards to be granted
for compensation purposes, including restricted stock and stock appreciation
rights to be settled in common shares (SARs), both of which were not available
under Peoples’ previous long-term equity-based incentive plans. The
Committee has chosen these types of awards to avoid higher levels of dilution
created by other equity awards such as incentive stock options. Fewer
restricted shares are required to award to an executive officer a similar
economic value as compared to stock options or SARs. Additionally,
SARs when settled in common shares place fewer common shares in the market as
the appreciated value is used to calculate the number of common shares issued
when the SARs are exercised instead of a number of common shares equal to the
original number of options granted. Additionally, the Committee
believes restricted shares immediately tie the executive officers to the same
risk and reward potential as shareholders while SARs settled in common shares
create value for the executive officers only if the share price appreciates,
which will serve to focus executive officers on creating value for themselves
and other shareholders. Restricted shares and SARs to be settled in
common shares enable the executive officers to hold the equity earned as they
are not required to invest cash to acquire the underlying common
shares.
The
objective is to grant equity-based awards to our executive officers only after
pre-established performance goals are achieved. To enhance retention
of the executive officers and to ensure that current and subsequent business
decisions are aligned with the long-term interests of the shareholders, a
three-year vesting requirement must be met. However, the Committee
has the authority to accelerate the vesting period when it believes such action
would be in the best interests of Peoples and its shareholders. The
Committee did not exercise this authority in 2008. The Committee
believes that the 2006 Plan has strengthened Peoples’
ability to attract, develop and retain talented executive officers, upon whom
our success is dependent, as well as promoting closer alignment with the
long-term performance goals of Peoples and the long-term interests of the
shareholders.
To
determine the competitiveness of equity-based award grants, the Committee
established a goal for total direct compensation (total cash compensation plus
equity-based awards) to be at the market median of similarly situated officers
of members of the Peer Group for achieving targeted corporate performance and at
or above the 75th percentile of similarly situated officers of members of the
Peer Group for achieving higher performance results.
In
determining the total number of equity-based awards to be granted annually to
each executive officer, the Committee considers the executive officer’s
individual performance as well as the performance of Peoples during the
immediately preceding year. The criteria for granting equity-based
awards use the same corporate and individual performance measures used for
determining annual cash incentive awards under the Incentive Plan, thereby
maximizing attention on these goals.
On
February 14, 2008, the Board of Directors established the equity-based incentive
awards financial goals for 2008, which were comprised of three financial
components: (i) Earnings Per Common Share; (ii) Return On Average Equity; and
(iii) Efficiency Ratio. These financial measurements are identical to
those selected for the cash incentive awards and were selected because the Board
believes they demonstrate the overall operating performance of Peoples, are
widely recognized as industry benchmarks for operating performance and
improvements in these ratios are indicators of enhanced operating performance
which translates into increased shareholder value. The weightings
applied to the Earnings Per Common Share and Return On Average Equity components
were 45% each, which reflect results achieved for shareholders. The
Efficiency Ratio was weighted at 10% as it measures the productivity of the
organization and gives indications as to its operating
effectiveness. The weightings were determined based on their
respective impact on long-term shareholder value.
The Board
of Directors set the corporate financial goals for 2008 as shown in the table
below. Performance results for 2008 are also shown.
|
Weighting
|
Threshold
|
Target
|
Maximum
|
2008
Results
|
|
|
Earnings
Per Common Share
|
45%
|
$1.96
|
$2.05
|
$2.13
|
$0.72
|
|
Return
on Average Equity
|
45%
|
10.15%
|
10.50%
|
10.75%
|
3.67%
|
|
Efficiency
Ratio (*)
|
10%
|
59.50%
|
58.50%
|
57.50%
|
56.30%
|
(*) A
lower number reflects better performance.
If the
target corporate performance goals were achieved, Mr. Bradley, as Peoples’
President and Chief Executive Officer, had the potential to earn an equity-based
award with an economic value of up to 25% of his annual base salary, and the
other executive officers had the potential to earn equity-based awards with an
economic value of up to 20% of their respective annual base
salaries. The maximum economic value of equity-based awards Mr.
Bradley could have earned for 2008 was 50% of his annual base salary, and the
maximum economic value of equity-based awards available to the other executive
officers was 40% of their respective annual base salaries. The
economic value of equity-based awards to the executive officers for achieving
threshold performance or below in any given corporate or individual performance
measure is 0% for the given performance measure.
The
Committee also has in place an absolute minimum level of corporate performance,
which was defined in 2008 as $1.67 or 85% of Peoples’ threshold Earnings Per
Common Share goal of $1.96. Since Peoples did not achieve absolute
minimum earnings per share, no executive officer was eligible for a year-end
incentive payout in the form of an equity-based award for either corporate or
individual performance, although the Committee, solely at their discretion,
could have granted long-term equity-based incentives if the executive’s
individual contribution warranted such awards. If Peoples’ 2008
earnings per share had been between absolute minimum and threshold, then no
long-term equity incentives would have been awarded from the Earnings Per Common
Share or the Return on Average Equity components as the threshold levels of
performance for these financial goals were not achieved, although long-term
equity incentives would have been earned for corporate results relative to the
Efficiency Ratio as the maximum level of performance for this corporate
performance goal was exceeded. Each executive officer would also have
been eligible to earn cash incentives and long-term equity incentives based on
their individual achievements relative to their individual performance
goals. (Additionally, an executive officer who is not employed as of
the payout date is not eligible to receive the cash incentive
payment.)
The
Committee retains the right to exercise discretion in awarding equity-based
compensation absent the attainment of performance goals, or to increase or
reduce the size of any such award. The Committee did not exercise
discretion to grant equity-based awards to the executive officers in 2009 for
2008 corporate and individual performance.
Equity-based
award percentages for the various levels of performance are reviewed by the
Committee on an annual basis and generally do not change from year to
year. These award percentages did not change from 2007 to 2008;
however, for 2009, the Committee has determined the percentage of base salary
for achieving maximum performance will be limited to 75% of the previous maximum
payout percentage for each executive officer to reflect the reduced earnings
potential for Peoples as a result of challenging economic times. The
Board of Directors approves corporate performance goals on an annual
basis. Equity-based awards are granted after results for the
performance goals are determined.
Equity-based
awards in the form of SARs settled in Peoples’ common shares have an exercise
price of 100% of the fair market value of the underlying common shares on the
date of grant. The Committee’s philosophy in granting equity-based
awards is to promote retention through a three-year vesting period and to
provide an opportunity for executive officers to own Peoples’ common
shares. This in turn aligns the long-term interests of the executive
officers with those of Peoples’ shareholders and provides the executive officers
with an added incentive to manage Peoples with a view toward maximizing
long-term shareholder value.
Equity-based
awards are granted with an economic value based on The NASDAQ Global Select
Market’s closing price of Peoples’ common shares on the date of the
grant. The Committee approves equity-based grants to the executive
officers and other officers. In the absence of a scheduled Committee
meeting, the Board of Directors approves equity-based grants to executive
officers and other officers. This situation occasionally occurs when
awards to a single individual are granted as part of a recruitment
package. The grant date is the date of the approval by the Committee
or the Board of Directors or the first future date after which all material
information has been publicly disclosed, whichever is later, and is tied to
Peoples’ trading windows. In the event of equity-based grants for new
hires, the date of grant is the first business date of the month following the
new employee’s date of hire.
Award
economic values are calculated as a percentage of salary and are based on the
achievement of pre-established performance goals as discussed
above. Fifty percent of the economic value is awarded in restricted
shares, using the closing price of Peoples’ common shares on a specific grant
date. The remaining 50% of the economic value is awarded in SARs to
be settled in common shares, using the Black-Scholes value of the SARs as of the
award date. The restriction period for the restricted shares is three
years from the grant date. The SARs have a term of 10 years and are
exercisable at the end of the vesting period, which is three years from the
grant date.
LONG-TERM
EQUITY-BASED INCENTIVE COMPENSATION
|
Named
Executive Officer
|
Corporate
Weighting
|
Individual
Weighting
|
Total
Maximum
Economic
Value
of
Potential
Equity
Award
(*)
|
Total
Economic
Value
of
Equity
Award
(*)
|
2008
Restricted
Shares
Award (number of
common
shares)
Granted
|
2008
SARs to
be
Settled in Common
Shares
Awards (number of
common
shares)
Granted
|
|
Mark
F. Bradley
|
90%
|
10%
|
50%
|
0.0%
|
0
|
0
|
|
Edward
G. Sloane, Jr.
|
90%
|
10%
|
40%
|
0.0%
|
0
|
0
|
|
Carol
A. Schneeberger
|
90%
|
10%
|
40%
|
0.0%
|
0
|
0
|
|
Joseph
S. Yazombek
|
75%
|
25%
|
40%
|
0.0%
|
0
|
0
|
|
Deborah
K. Hill
|
75%
|
25%
|
40%
|
0.0%
|
0
|
0
|
|
David
T. Wesel
|
75%
|
25%
|
40%
|
0.0%
|
0
|
0
|
(*) Payout calculated as a percentage of base
salary.
Since
absolute minimum performance was not achieved during 2008, the Committee did not
award equity-based grants to the executive officers in 2009 for 2008
performance.
The
Committee or the Board of Directors has the authority to accelerate the date on
which the SARs may be exercised, or the date of the termination of the
restrictions applicable to a restricted share award, if the Committee or the
Board of Directors determines that to do so would be in the best interests of
Peoples. Neither the Committee nor the Board of Directors exercised
that authority during 2008.
On
February 26, 2009, the Board of Directors established the 2009 corporate equity
incentive performance goals for Peoples’ executive officers. The
Board adopted a “balanced scorecard” approach which is comprised of the
following components and corresponding weightings: (i) Earnings Per
Common Share (25% weighting); (ii) Non-Performing Assets as a Percent of Loans
and Other Real Estate Owned (20% weighting); (iii) Revenue Growth (10%
weighting); (iv) Deposit Growth (10% weighting); (v) Client Service Score (5%
weighting); and (vi) a Discretionary Measure (30% weighting). The
Discretionary Measure is unique to each executive officer and consists of
quantitative measures such as business unit revenue and net income goals,
loan portfolio growth, net loan charge-off results, levels of nonperforming
loans, and expense reduction, and qualitative measures, such as the development,
management and retention of key staff, the assessment and development of quality
products and services and other strategic initiatives. These measures
reflect results achieved for shareholders while ensuring this compensation
arrangement does not encourage unnecessary and excessive risk-taking that could
threaten the value of the institution by reducing the focus on earnings as
emphasized by the weighting in prior years of Earnings Per Share and Return on
Average Equity performance objectives. The absolute minimum level of
corporate performance remains in effect for 2009, but the Compensation Committee
retains the ability to award long-term equity-based incentive compensation based
on results achieved by the individual executive officer if the absolute minimum
level of performance is not achieved.
The ARRA
executive compensation standards prohibit Peoples from paying or accruing any
bonus, retention or incentive compensation to certain employees during the
Covered Period. Peoples believes that this prohibition, if
applicable, may prevent Peoples from issuing restricted shares and SARs under
the terms contemplated by the performance goals established on February 26,
2009. To the extent that the Treasury amends the Securities Purchase
Agreement to make this prohibition application, the Treasury issues regulations
describing how Peoples is to comply with this prohibition or Peoples determines
this prohibition applies, Peoples will work with its affected employees to take
such steps as Peoples deems necessary to comply with the prohibition and adopt
administrative and other procedures consistent with the foregoing.
Retirement and Other Benefits
The
executive officers participate in certain benefit programs available to all
other employees of Peoples, subject to the same eligibility requirements as all
employees, including participation in (1) the Peoples Bancorp Inc. Retirement
Plan and Trust (the “Retirement Plan”), (2) the Peoples Bancorp Inc. Retirement
Savings Plan (“Peoples 401(k) Plan”), (3) the Peoples Bancorp Group Term Life
Insurance Plan and (4) the medical and dental insurance plans provided by
Peoples.
The
Retirement Plan has a different benefit calculation for those individuals
employed by Peoples before January 1, 2003 and those employed by Peoples on
January 1, 2003 and thereafter. Messrs. Bradley and Yazombek and Ms.
Schneeberger were employed by Peoples prior to January 1, 2003; whereas, Messrs.
Sloane and Wesel and Ms. Hill were employed by Peoples after January 1,
2003. Compensation used to calculate the amount of pension payable
under the Retirement Plan includes base salary, incentive pay, overtime pay,
bonuses, and any pre-tax savings under the Peoples’ 401(k) Plan as well as
Peoples’ Internal Revenue Code Section 125 plan. Benefit distribution
options are identical for both groups as well as the vesting requirement in
order to be eligible for a pension benefit under the Retirement
Plan.
For those
executive officers employed by Peoples before January 1, 2003, normal retirement
occurs at age 65. The pension benefit is calculated as
follows:
|
(a)
|
Forty
percent (40%) of the executive officer’s average compensation (annual
compensation comprised of base salary, bonus, and cash incentive payments
during the highest five consecutive years out of the last ten years of
service), plus
|
|
(b)
|
Seventeen
percent (17%) of the excess of the executive officer’s average
compensation in excess of his/her Social Security covered
compensation;
|
|
(c)
|
Such
sum of (a) and (b) is multiplied by the total years of service with
Peoples up to a maximum of 30.
|
For those
executive officers employed by Peoples before January 1, 2003, early retirement
can occur at age 50 if the executive officer has at least 10 years of service
with Peoples. The pension benefit is calculated as
follows:
|
(a)
|
Forty
percent (40%) of the executive officer’s average compensation (annual
compensation during the highest five consecutive years out of the last ten
years of service), plus
|
|
(b)
|
Seventeen
percent (17%) of the excess of the executive officer’s average
compensation in excess of his/her Social Security covered
compensation;
|
|
(c)
|
Such
sum of (a) and (b) is multiplied by the total years of service with
Peoples up to a maximum of 30 and reduced by one-fifteenth for each of the
first five years and one-thirtieth for each of the next ten years by which
the executive’s early retirement date precedes the normal retirement
date.
|
For those
executive officers employed by Peoples on or after January 1, 2003, normal
retirement occurs at age 65. The pension benefit is calculated as
follows:
|
(a)
|
The
Cash Balance Account (as such term is defined in the Retirement Plan) at
the end of the prior plan year,
plus
|
|
(b)
|
Interest
to the earlier of the end of the prior plan year or the end of the month
containing the executive officer’s termination of employment on the Cash
Balance Account as of the end of the prior plan year based on the one-year
constant maturity rate for the December preceding the determination year
plus 50 basis points, plus
|
|
(c)
|
An
annual accrual equal to 2% of compensation for the plan year provided the
executive officer earned a year of service during the plan
year.
|
For those
executive officers employed by Peoples on or after January 1, 2003, early
retirement can occur at age 50 if the executive officer has at least 10 years of
service with Peoples. The pension benefit is calculated as
follows:
|
(a)
|
The
Cash Balance Account at the end of the prior plan year,
plus
|
|
(b)
|
Interest
to the earlier of the end of the prior plan year or the end of the month
containing the executive officer’s termination of employment on the Cash
Balance Account as of the end of the prior plan year based on the one-year
constant maturity rate for the December preceding the determination year
plus 50 basis points, plus
|
|
(c)
|
An
annual accrual equal to 2% of compensation for the plan year provided the
executive officer earned a year of service during the plan
year;
|
|
(d)
|
The
benefit is reduced as follows:
|
Ages Reduction
60 –
65
6.66% per year
50 –
60 3.33%
per year
None
of the executive officers participate in multiple defined benefit retirement
plans. Under the terms of the Retirement Plan, the executive officers
are not granted extra years of credited service.
The
executive officers are also eligible to participate in Peoples’ 401(k) Plan, on
the same basis as other employees. Peoples matches 100% of the first
3% of an employee’s contribution and then matches 50% of the next 2% that the
employee contributes, the sum of which equals the maximum match of
4%.
Additionally,
the executive officers participate in the Peoples Bancorp Group Term Life
Insurance Plan on the same basis as other employees. Peoples pays the
premiums for all associates under this plan. In the event an
executive officer dies, his or her beneficiary will be paid an amount equal to
two times the executive officer’s base salary at the time of death, up to a
limit of $600,000.
The
executive officers are also eligible to participate in the medical and dental
insurance plans provided by Peoples. These individuals participate on
the same basis as other employees. The plans are contributory and
both the employees and Peoples pay for the cost of the health insurance
premiums.
Perquisites and Other Personal Benefits
The
Committee periodically reviews the level of perquisites and other personal
benefits provided to the executive officers. Consistent with its
overall compensation program, the Committee believes the perquisites and other
personal benefits provided to the executive officers are reasonable and
necessary to attract and retain employees for key positions to promote the
long-term interests of our shareholders.
On
January 12, 2006, the Committee adopted an Executive Health Program for the
executive officers. The Executive Health Program provides an
opportunity for each executive officer to participate in a comprehensive medical
screening annually at the expense of Peoples. Participation in this
program is voluntary. The objective of the Executive Health Program
is the early identification of potential health problems and the prompt, expert
treatment of any medical problems detected, which could negatively impact
Peoples’ financial performance or current management succession
plans.
Based on
business need, on a case-by-case basis, the Committee grants the use of a
company-paid automobile and/or country club membership to selected executive
officers to further business development on behalf of Peoples and its
shareholders. Personal use of a company-paid automobile is reported
as income to the executive officer. Expenses relating to personal use
of the country club amenities are either reimbursed to Peoples or paid by the
executive officer.
The ARRA
executive compensation standards require that Peoples’ directors adopt a
company-wide policy regarding expenditures identified by the Treasury as
excessive or luxury. To the extent that the Treasury amends the
Securities Purchase Agreement to make this requirement applicable, the Treasury
issues regulations detailing the scope of this requirement or Peoples determines
that the requirement is applicable, Peoples’ directors will develop a policy
relating to excessive or luxury expenditures consistent with the regulations the
Treasury may issue, which may limit Peoples’ ability to provide the personal
benefits described above.
Peoples
has entered into change in control agreements with all of the executive
officers. The change in control agreements are designed to motivate
executive officers to act in the best interests of shareholders and to promote
stability and continuity of the services of the executive officers during a
change in control. The change in control agreements are “double
trigger” agreements that provide severance payments to an executive officer only
if Peoples or its successor terminates the executive officer’s employment
without “cause” or the executive officer terminates his or her employment with
“good reason” after the change in control. The Committee chose the
“double trigger” to forego extra costs to Peoples or its successor if the
executive officer continues in the same or similar role after the change in
control while still motivating the executive officer to act in the best
interests of the shareholders by providing for the executive officer even if he
or she would not have the same or similar role after the change in
control. Additional information regarding the definition of a change
in control, the description of the additional event(s) that must occur in order
for an executive officer to receive severance compensation
following a change in control, and applicable payments under such agreements for
the executive officers is provided under the section captioned “OTHER POTENTIAL POST EMPLOYMENT
PAYMENTS” on page 42. The Securities Purchase Agreement
prohibits Peoples from making any golden parachute payments to its executive
officers. Payments under the change in control agreements to
executive officers may be considered to be golden parachute
payments.
Compensation Arrangements for Recently Hired Executive
Officers
On
February 22, 2008, Ms. Hill received a one-time bonus payment of
$30,000. This payment was part of her compensation package which was
approved by the Board of Directors, in absence of a meeting of the Committee, on
August 9, 2007.
On May 8,
2008, the Board of Directors, in absence of a meeting of the Committee, approved
Mr. Sloane’s (1) base salary as $196,000; (2) receiving the greater of a cash
incentive in the amount of $30,000 or the amount earned as part of Peoples’
Incentive Plan for 2008 performance, payable in February 2009; (3) a grant of
2,000 restricted shares on June 2, 2008, with restrictions that are to lapse and
the restricted shares to become fully vested as to: (a) 1,000 restricted shares
on December 2, 2008; and (b) 1,000 restricted shares on December 2, 2009; and
(4) a change in control agreement, effective as of May 21, 2008, with the same
terms as the change in control agreements Peoples has entered into with Deborah
K. Hill, Carol A. Schneeberger, David T. Wesel and Joseph S.
Yazombek. This compensation package was designed to provide Mr.
Sloane with competitive total cash compensation, to align his interests with
those of the shareholders through the equity-based awards, and to motivate Mr.
Sloane to act in the best interests of shareholders and to promote stability and
continuity of his services during a change in control.
Tax and Accounting Implications
Deductibility of Executive
Compensation
Section
162(m) of the Internal Revenue Code prohibits Peoples from claiming a deduction
on its federal income tax return for compensation in excess of $1 million paid
for a given fiscal year to the chief executive officer (or person acting in that
capacity) and the four most highly- compensated officers of Peoples, other than
the chief executive officer, serving at the end of Peoples’ fiscal
year. The $1 million compensation deduction limitation does not apply
to “performance-based compensation.” The 2006 Plan complies with
Section 162(m) so that any compensation, which may be received by executive
officers of Peoples under this plan, will qualify as
“performance-based.” Performance goals were included in the 2006
Plan, which was approved by Peoples’ shareholders on April 13,
2006.
The
Securities Purchase Agreement requires that Peoples comply with the provisions
of Section 162(m)(5) of the Internal Revenue Code. This provision
prohibits Peoples from claiming a deduction on its federal income tax return for
compensation in excess of $500,000 paid for a given year to its chief executive
officer, its chief financial officer or one of the three most highly-compensated
executive officers (other than the chief executive officer and the chief
financial officer) whose compensation is required to be disclosed under the
applicable SEC Rules. There is no exception to this prohibition for
“performance-based compensation.” None of Peoples’ executive officers
received more than $500,000 of compensation for 2008.
Non-Qualified Deferred Compensation
Section
409A of the Internal Revenue Code imposes additional taxes, interest and
penalties on nonqualified deferred compensation arrangements that do not satisfy
its requirements. Peoples believes that it is administering its
non-qualified deferred compensation arrangements in accordance with the
requirements of Section 409A and has amended its non-qualified
deferred compensation arrangements, including the change in control arrangements
with its executive officers, to comply with the final regulations issued under
Section 409A of the Internal Revenue Code. Peoples has not realized
any material changes to its compensation program as a result of compliance with
Section 409A.
Accounting for Equity-Based
Compensation
Compensation
costs for stock options, restricted stock awards and stock appreciation rights
are measured at the fair value of these awards on their grant
date. Compensation expense is recognized over the required service
period, generally the vesting period for stock options and stock appreciation
rights and the restriction period for restricted stock
awards. Compensation expense for awards granted to employees who are
eligible for retirement is recognized to the date the employee is first eligible
to retire.
Peoples
has no equity or security ownership requirements or guidelines for executive
officers and no policies regarding hedging the economic risk of any ownership of
Peoples common shares. Notwithstanding the foregoing, Peoples does
believe it is important that executive officers own common shares as evidenced
by equity-based awards granted to executive officers through Peoples’ long-term
equity-based incentive plan.
Summary
The
Committee believes that the best measure of whether the executive compensation
program is achieving its intended goals is to look at the long-term performance
of Peoples. Because satisfactory levels of performance were not
achieved in 2008, Peoples’ executive officers did not receive payouts on any
performance-based plans. In light of these results, the Committee
believes Peoples’ compensation program for its executive officers continues to
be aligned with the interests of the shareholders. The program is
part of a fully-integrated, performance-based system that provides a balanced
and stable foundation for strong and effective leadership into the future and
ensures alignment with long-term shareholder interests.
In view
of the current economic and financial environment, the Committee has reviewed
the design and operation of Peoples’ incentive compensation arrangements with
Peoples’ senior risk officers. This review included the performance
goals required to be achieved for threshold, target and maximum levels of cash
and equity-based incentive payments, along with the corresponding payout
potentials. The Committee has determined that these arrangements do
not provide Peoples’ executives with the incentive to engage in business
activities or other behavior that would threaten the value of Peoples or the
investments of its shareholders.
COMPENSATION COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis required by Item 402(b) of SEC Regulation S-K with management and,
based on such review and discussion, the Compensation Committee recommended to
the Board of Directors that the Compensation Discussion and Analysis be included
in this Proxy Statement and incorporated by reference into Peoples’ Annual
Report on Form 10-K for the fiscal year ended December 31, 2008.
The
Compensation Committee certifies that it has reviewed with Peoples’ senior risk
officers the incentive compensation arrangements with the executive officers of
Peoples (each of whom may be deemed a “senior executive officer” for purposes of
Section 111(b)(3) of EESA) and has made reasonable efforts to ensure that such
arrangements do not encourage the executive officers of Peoples to take
unnecessary and excessive risks that threaten the value of Peoples.
Submitted
by the Compensation Committee of Peoples’ Board of Directors:
Frank L.
Christy, Chairman; Carl L. Baker, Jr.; George W. Broughton; David L. Mead;
Robert W. Price; and Paul T. Theisen.
SUMMARY COMPENSATION TABLE FOR 2008
The table
below summarizes the total compensation paid or earned by each of the executive
officers for the fiscal years ended December 31, 2008, 2007, and
2006. Peoples has not entered into any employment agreements with any
of the executive officers. When setting the total compensation for
each of the executive officers, the Compensation Committee reviews a tally sheet
that shows the executive officer’s current compensation, including equity and
non-equity based compensation.
|
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan Compensation
|
Change
in Pension Value and Non-Qualified Deferred Compensation
Earnings
|
All
Other Compensation
|
Total
|
|
(6)
|
(7)
|
(8)
|
(9)
|
(10)
|
|||||
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|
Mark
F. Bradley President and
Chief
Executive
Officer
|
2008
2007
2006
|
$280,000
$255,000
$250,000
|
-
-
-
|
$5,101
$2,896
-
|
$9,933
$7,725
$4,426
|
-
$38,250
$56,750
|
$19,445
$1,270
$12,722
|
$13,175
$15,969
$11,793
|
$327,654
$321,110
$335,691
|
|
Edward
G. Sloane, Jr. (1) Chief Financial
Officer,
Treasurer
and Executive Vice President
|
2008
|
$120,364
|
$30,000 (4)
|
$30,862
|
-
|
-
|
-
|
$21,712
|
$202,938
|
|
Carol A. Schneeberger (2)
Executive
Vice President,
Operations;
Former
Chief Financial
Officer
and Treasurer
|
2008
2007
2006
|
$190,000
$169,002
$164,800
|
-
-
-
|
$59,900
$7,839
-
|
$6,424
$7,831
$13,951
|
-
$22,477
$27,522
|
$58,279
-
$27,714
|
$13,696
$8,509
$11,262
|
$328,299
$215,658
$245,249
|
|
Joseph
S. Yazombek
Executive
Vice President,
Chief
Lending Officer
|
2008
2007
2006
|
$220,000
$206,012
$200,850
|
-
-
-
|
$9,175
$12,051
-
|
$9,170
$12,055
$17.505
|
-
$31.932
$42,114
|
$73,573
$7,654
$35,330
|
$14,807
$11,142
$13,658
|
$326,725
$280,846
$309,457
|
|
Deborah
K. Hill (3) Executive
Vice President,
Consumer
and Business Financial Services
|
2008
2007
|
$182,000
$60,667
|
$30,000
(5)
|
$30,135
$16,881
|
$4,436
$1,109
|
-
-
|
-
-
|
$10,127
$15,469
|
$256,698
$94,126
|
|
David
T. Wesel Executive Vice
President
|
2008
2007
2006
|
$168,000
$157,500
$150,000
|
-
-
-
|
$4,496
$2,212
-
|
$6,419
$4,136
$1,764
|
-
$35,910
$38,100
|
$4,260
$3,929
$3,473
|
$11,105
$10,278
$13,840
|
$194,280
$213,965
$207,177
|
|
(1)
|
Mr.
Sloane became Executive Vice President, Chief Financial Officer and
Treasurer on May 21, 2008. Prior to that date, he was not
employed by Peoples or any of its
subsidiaries.
|
|
(2)
|
Ms.
Schneeberger was named interim Chief Financial Officer and Treasurer in
addition to her duties as Executive Vice President, Operations effective
April 10, 2007. She relinquished the duties of interim Chief
Financial Officer and Treasurer on May 20,
2008.
|
|
(3)
|
Ms.
Hill became Peoples’ Executive Vice President, Consumer and Business
Financial Services, on September 4, 2007. Prior to that date,
she was not employed by Peoples or any of its
subsidiaries.
|
|
(4)
|
On
February 20, 2009, Mr. Sloane was paid a bonus in the amount of $30,000,
which represented the minimum cash incentive he had been guaranteed upon
joining Peoples.
|
|
(5)
|
Ms.
Hill was paid a $30,000 employment sign-on bonus on February 22,
2008.
|
|
(6)
|
The
amounts in column (e) reflect the dollar amount recognized for financial
statement reporting purposes for 2008 and 2007, for awards of restricted
shares pursuant to Peoples’ 2006 Plan. These amounts excluded
the impact of estimated forfeitures related to service-based vesting
conditions, as required by the SEC. Assumptions used in the
calculation of these amounts are included in the “Notes to the
Consolidated Financial Statements, Note 17. Stock-Based
Compensation” on pages 82 through 85 of Peoples’ Annual Report on Form
10-K for the Fiscal Year Ended December 31, 2008. The entire
amount of expense was recognized in 2008 and 2007 for awards of restricted
shares made in 2008 and 2007, respectively, to Mr. Yazombek and Ms.
Schneeberger as they had reached retirement eligibility (50 years of age
or older and 10 years of service with Peoples) as of the grant date, since
the restriction on transfer of the restricted shares lapses upon
retirement. Expense for Messrs. Bradley, Sloane and Wesel and
Ms. Hill is recognized over the vesting period assigned to the awards of
restricted shares made in 2008 and
2007.
|
|
(7)
|
The
amounts in column (f) reflect the dollar amount recognized for financial
statement reporting purposes for 2008, 2007 and 2006, for awards pursuant
to Peoples’ 2002 Plan and Peoples’ 2006 Plan. These amounts
exclude the impact of estimated forfeitures related to service-based
vesting conditions, as required by the SEC. Assumptions used in
the calculation of these amounts are included in the “Notes to the
Consolidated Financial Statements, Note 17. Stock-Based Compensation” on
pages 82 through 85 of Peoples’ Annual Report on Form 10-K for the fiscal
year ended December 31, 2008. The entire amount of expense was
recognized (a) in 2006 for stock options granted in 2006 and (b) in 2007
and 2008 for SAR awards to be settled in common shares made in 2007 and
2008 respectively, in the case of each of Mr. Yazombek and Ms.
Schneeberger as they had reached retirement eligibility (50 years of age
or older and 10 years of service with Peoples) as of the grant date, since
vesting of stock options and SARs to be settled in common shares
accelerates upon retirement. Expense for Messrs. Bradley and
Wesel and Ms. Hill is recognized over the respective vesting periods
assigned to the stock options and SAR awards to be settled in common
shares. Vesting for all then unvested stock options was
accelerated on December 31, 2005; therefore, all expense reported for 2006
is related to the stock options granted in 2006, all expense reported for
2007 is related to stock options granted in 2006 except as noted above for
Mr. Yazombek and Ms. Schneeberger, and SARs to be settled in common shares
granted in 2007, and all expense reported for 2008 is related to stock
options granted in 2006 except as noted above for Mr. Yazombek and Ms.
Schneeberger, and SAR to be settled in common shares granted in 2007
except as noted above for Mr. Yazombek and Ms. Schneeberger, and
2008.
|
|
(8)
|
The
amounts in column (g) represent cash incentives earned under the Incentive
Plan, and are reported for the fiscal year with respect to which the cash
incentives were earned. Executive officers did not earn a cash
incentive under the Incentive Plan for 2008 fiscal year
performance. Executive officers are required to defer 25% of
their cash incentive for a period of three years and have the option to
defer any of the remaining cash incentive until they retire or their
employment is terminated. The amounts shown for 2007 include
the following deferred portion of the cash incentive earned by each
executive officer: (a) Mr. Bradley - $9,562; (b) Ms. Schneeberger -
$5,619; (c) Mr. Yazombek - $31,932; and (d) Mr. Wesel -
$12,568. The non-deferred portions of the cash incentives
earned for the 2007 fiscal year performance were paid February 22,
2008. The amounts shown for 2006 include the following deferred
portion of the cash incentive earned by each executive officer: (a) Mr.
Bradley - $14,187; (b) Ms. Schneeberger - $6,880; and (c) Mr. Yazombek -
$42,114. The non-deferred portions of the cash incentives
earned for the 2006 fiscal year performance were paid February 23,
2007.
|
|
(9)
|
Amounts
in column (h) represent the increase in the actuarial present value of the
executive officer’s accumulated benefits under Peoples’ pension plan (the
Retirement Plan) determined using assumptions consistent with those used
in Peoples’ consolidated financial statements and include amounts that the
executive officer may not be entitled to receive because such amounts are
not vested. The amounts shown do not include the decline in the
actuarial present value of the accumulated benefit under Peoples’ pension
plan in 2007 for: (a) Mr. Bradley - $1,894 and (b) Ms. Schneeberger -
$5,598. Mr. Bradley’s amount also includes $1,359 for 2008,
$1,270 for 2007 and $1,163 for 2006 which represents dividends credited in
that year on the cumulative amount of directors’ fees deferred in prior
years under the terms of the Second Amended and Restated Deferred
Compensation Plan for Directors of Peoples Bancorp Inc. and
Subsidiaries. Mr. Bradley has not been paid a fee for his
services as a director of Peoples and Peoples Bank since December 31,
2004. No amount is included in column (h) for the amount of
interest accrued on the cumulative amount of cash incentives deferred by
each executive officer under the terms of the Incentive Plan since the
rate earned was not above-market or
preferential.
|
|
(10)
|
All
other compensation for each executive officer in 2008 includes: (a) Mr.
Bradley - 401(k) Plan company match, dividends on restricted shares, and
country club membership; (b) Mr. Sloane – relocation expense in the amount
of $14,740, 401(k) Plan company match, dividends on restricted shares, and
country club membership; (c) Ms. Schneeberger - 401(k) Plan company match,
Executive Health Program, dividends on restricted shares, and expenses
associated with a weekend vacation related to Peoples’ appreciation to Ms.
Schneeberger for serving as interim Chief Financial Officer and Treasurer
from April 2007 to May 2008 (represents the incremental cost to Peoples of
weekend vacation); (d) Mr. Yazombek - 401(k) Plan company match, personal
use of company provided vehicle, country club membership and Executive
Health Program; (e) Ms. Hill - 401(k) Plan company match, personal use of
company provided vehicle and dividends on restricted shares; and (f) Mr.
Wesel - 401(k) Plan company match, country club membership and dividends
on restricted shares. All other compensation for
each executive officer for 2007 includes: (a) Mr. Bradley - 401(k) Plan
company match, country club membership, Executive Health Program, and
dividends on restricted shares; (b) Ms. Schneeberger - 401(k) Plan company
match and dividends on restricted shares; (c) Mr. Yazombek - 401(k) Plan
company match, country club membership, and dividends on restricted
shares; (d) Ms. Hill – relocation expense in the amount of $12,873, 401(k)
company match and personal use of company provided vehicle; and (e) Mr.
Wesel - 401(k) Plan company match, country club membership and dividends
on restricted shares. All other compensation for each executive
officers in 2006 includes: (a) Mr. Bradley - 401(k) Plan company match and
country club membership; (b) Ms. Schneeberger - 401(k) Plan company match
and Executive Health Program; (c) Mr. Yazombek - 401(k) Plan company
match, personal use of company provided vehicle, country club membership
and Executive Health Program: and (d) Mr. Wesel - 401(k) Plan company
match, country club membership and Executive Health
Program.
|
GRANTS OF PLAN-BASED AWARDS FOR 2008
|
Name
|
Grant
Date
|
Approval
Date
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan
Awards
(4)
|
Estimated
Future Payouts Under Equity Incentive Plan Awards
(5)
|
All
Other Stock Awards: Number of Shares of Stock or Units (#)
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
or Base Price of Option Awards ($/Share)
|
Grant
Date Fair Value of Stock and Option Awards
|
||||
|
Threshold
|
Target
|
Maximum
|
Threshold
|
Target
|
Maximum
|
(6)
|
(7)
|
|||||
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
(l)
|
(m)
|
|
Mark
F. Bradley
|
-
|
-
|
$0
|
$140,000
|
$280,000
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
$0
|
$70,000
|
$140,000
|
-
|
-
|
-
|
-
|
|
|
2/20/2008
|
2/14/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,734
|
$23.77
|
$9,561
|
|
|
2/20/2008
|
214/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
402
|
-
|
-
|
$9,556
|
|
|
Edward
G. Sloane (1)
|
-
|
-
|
$0
|
$42,127
|
$84,255
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
$0
|
$24,073
|
$48,146
|
-
|
-
|
-
|
-
|
|
|
6/2/2008
|
5/8/2008
|
2,000
|
-
|
-
|
$23,430
|
|||||||
|
Carol
A.
|
-
|
-
|
$0
|
$66,500
|
$133,000
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Schneeberger
(2)
|
-
|
-
|
-
|
-
|
-
|
$0
|
$38,000
|
$76,000
|
-
|
-
|
-
|
-
|
|
2/20/2008
|
2/14/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,165
|
$23.77
|
$6,424
|
|
|
2/20/2008
|
214/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
2,520
|
-
|
-
|
$59,900
|
|
|
Joseph
S. Yazombek
|
-
|
-
|
$0
|
$77,000
|
$154,000
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
$0
|
$44,000
|
$88,000
|
-
|
-
|
-
|
-
|
|
|
2/20/2008
|
2/14/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,633
|
$23.77
|
$9,170
|
|
|
2/20/2008
|
214/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
386
|
-
|
-
|
$9,175
|
|
|
Deborah
K. Hill (3)
|
-
|
-
|
$0
|
$63,700
|
$127,400
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
$0
|
$36,400
|
$72,800
|
-
|
-
|
-
|
-
|
|
|
David
T. Wesel
|
-
|
-
|
$0
|
$58,800
|
$117,600
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
$0
|
$33,600
|
$67,200
|
-
|
-
|
-
|
-
|
|
|
2/20/2008
|
2/14/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,857
|
$23.77
|
$10,219
|
|
|
2/20/2008
|
214/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
431
|
-
|
-
|
$10,245
|
|
|
(1)
|
Mr.
Sloane became Executive Vice President, Chief Financial Officer and
Treasurer on May 21, 2008.
|
|
(2)
|
Ms.
Schneeberger was named interim Chief Financial Officer and Treasurer in
addition to her duties as Executive Vice President, Operations effective
April 10, 2007. She relinquished the duties of interim Chief
Financial Officer and Treasurer on May 20,
2008.
|
|
(3)
|
Ms.
Hill became Peoples’ Executive Vice President, Consumer and Business
Financial Services, on September 4,
2007.
|
|
(4)
|
Cash
incentive potential available for payment through the Incentive Plan if
the indicated level of performance was achieved for the 2008 fiscal
year. Refer to the discussion under the caption “Annual Cash Incentives”
on page 24 of the “COMPENSATION DISCUSSION AND
ANALYSIS” for additional information regarding the Incentive
Plan.
|
|
(5)
|
Economic
value of equity grants available for award through the 2006 Plan if the
indicated level of performance was achieved for the 2008 fiscal
year. Equity-based incentive awards are denominated in dollars,
rather than number of common shares. As a result, the target
and maximum amounts are shown in “dollars” rather than the “number of
common shares.” At the time of payout, the economic value of
the actual award earned is translated into awards of restricted shares and
SARs to be settled in common shares made under Peoples’ 2006
Plan. Fifty percent of the economic value is awarded in
restricted shares, using the closing price of Peoples’ common shares on
the grant date. The remaining 50% of the economic value is
awarded in SARs to be settled in common shares, using the Black-Scholes
value of the SARs as of the award date. Refer to the discussion
under the caption “Long-Term Equity-Based
Incentive Compensation” on page 27 of the “COMPENSATION DISCUSSION AND
ANALYSIS” for additional information regarding grants of
equity-based awards.
|
|
(6)
|
Number
of restricted shares granted through the 2006 Plan on February 14, 2008,
based upon corporate and individual performance for the 2007 fiscal
year. The restriction on the transfer of restricted shares
lapses on the third anniversary of the grant date. In addition,
discretionary awards of restricted shares were granted through the 2006
Plan to Mr. Sloane and Ms. Schneeberger as follows: (a) Mr.
Sloane was granted 2,000 restricted shares as a result of his employment
with Peoples as to which the restrictions lapsed with respect
to 1,000 restricted shares on December 2, 2008, and will lapse with
respect to 1,000 restricted shares on December 2, 2009; and (b)
Ms. Schneeberger was granted 2,250 restricted shares as recognition of the
additional responsibilities Ms. Schneeberger assumed during her interim
service as Chief Financial Officer and Treasurer as to which
the restrictions lapsed with respect to 1,125
restricted shares on August 20, 2008, and lapsed
with respect to 1,125 restricted shares on February 20, 2009. The
executive officer has the right to vote the common shares underlying the
restricted shares and is entitled to receive dividends paid with respect
to the underlying common shares; however, if any dividends are paid in
common shares of Peoples, those common shares will be subject to the same
restrictions on transfer as the restricted shares with respect to which
they were issued. Refer to the discussion under the caption
“Long-Term Equity-Based
Incentive Compensation” on page 27 of the “COMPENSATION DISCUSSION AND
ANALYSIS” for additional information regarding awards of restricted
shares.
|
|
(7)
|
Number
of SARs to be settled in common shares granted through the 2006 Plan on
February 14, 2008. The SARs have a term of 10 years and become
exercisable at the end of the vesting period, which is three years from
the grant date. Refer to the discussion under the caption
“Long-Term Equity-Based
Incentive Compensation” on page 27 of the “COMPENSATION DISCUSSION AND
ANALYSIS” for additional information regarding awards of SARs to be
settled in common shares.
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
2008
The
following table provides information relating to the option/SAR awards and stock
awards held by the executive officers at the end of the 2008 fiscal
year. Each grant is shown separately for each executive
officer. The market value of the stock awards is based on the closing
price of Peoples’ common shares as reported on the NASDAQ Global Select Market
on December 31, 2008, which was $19.13.
|
Option
Awards
|
Stock
Awards
|
|||||||||
|
Name
|
Grant
Date
|
Number
of Securities Underlying Unexercised Options/
SARs
|
Number
of Securities Underlying Unexercised Options/
SARs
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options/
SARs
|
Option/
SAR
Exercise Price
|
Option/
SAR
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested
|
Market
Value of Shares or Units of Stock That Have Not Vested
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested
|
|
(#)
|
(#)
|
(#)
|
($)
|
(#)
|
($)
|
(#)
|
($)
|
|||
|
Exercisable
|
Unexercisable
|
|||||||||
|
(1)
|
(2)
|
(2)
|
||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
|
Mark
F. Bradley
|
4/1/1999
|
7,687
|
-
|
-
|
$14.92
|
4/1/2009
|
-
|
-
|
-
|
-
|
|
4/27/2000
|
5,082
|
-
|
-
|
$13.58
|
4/27/2010
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
1,563
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
1,264
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
3,707
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
2,090
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
2/10/2005
|
459
|
-
|
-
|
$27.38
|
2/10/2015
|
-
|
-
|
-
|
-
|
|
|
2/9/2006
|
-
|
2,970
(3)
|
-
|
$28.25
|
2/9/2016
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
1,707
(4)
|
-
|
$29.25
|
2/13/2017
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
-
|
-
|
-
|
-
|
487
(6)
|
$9,316
|
-
|
-
|
|
|
2/20/2008
|
-
|
-
|
-
|
-
|
-
|
402
(7)
|
$7,690
|
-
|
-
|
|
|
2/20/2008
|
-
|
1,734
(5)
|
-
|
$23.77
|
2/20/2018
|
-
|
-
|
-
|
-
|
|
|
Edward
G.
Sloane
|
6/2/2008
|
-
|
-
|
-
|
-
|
-
|
1,000
(8)
|
$19,130
|
-
|
-
|
|
Carol
A. Schneeberger
|
4/1/1999
|
1,443
|
-
|
-
|
$14.92
|
4/1/2009
|
-
|
-
|
-
|
-
|
|
4/27/2000
|
4,765
|
-
|
-
|
$13.58
|
4/27/2010
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
1,654
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
1,963
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
3,755
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
2,279
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
2/10/2005
|
792
|
-
|
-
|
$27.38
|
2/10/2015
|
-
|
-
|
-
|
-
|
|
|
2/9/2006
|
-
|
1,903
(3)
|
-
|
$28.25
|
2/9/2016
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
938
(4)
|
-
|
$29.25
|
2/13/2017
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
-
|
-
|
-
|
-
|
268
(6)
|
$5,127
|
-
|
-
|
|
|
2/20/2008
|
-
|
-
|
-
|
-
|
-
|
270
(7)
|
$5,165
|
-
|
-
|
|
|
2/20/2008
|
-
|
-
|
-
|
-
|
-
|
1,125
(9)
|
$21,521
|
|||
|
2/20/2008
|
-
|
1,165
(5)
|
$23.77
|
2/20/2018
|
-
|
-
|
-
|
-
|
||
38
|
Option
Awards
|
Stock
Awards
|
|||||||||
|
Name
|
Grant
Date
|
Number
of Securities Underlying Unexercised Options/
SARs
|
Number
of Securities Underlying Unexercised Options/
SARs
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options/
SARs
|
Option/
SAR
Exercise Price
|
Option/
SAR
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested
|
Market
Value of Shares or Units of Stock That Have Not Vested
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested
|
|
(#)
|
(#)
|
(#)
|
($)
|
(#)
|
($)
|
(#)
|
($)
|
|||
|
Exercisable
|
Unexercisable
|
|||||||||
|
(1)
|
(2)
|
(2)
|
||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
|
Joseph
S.
Yazombek
|
4/1/1999
|
7,687
|
-
|
-
|
$14.92
|
4/1/2009
|
-
|
-
|
-
|
-
|
|
4/27/2000
|
3,812
|
-
|
-
|
$13.58
|
4/27/2010
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
1,928
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
2,947
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
3,900
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
2,779
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
2/10/2005
|
1,215
|
-
|
-
|
$27.38
|
2/10/2015
|
-
|
-
|
-
|
-
|
|
|
2/9/2006
|
-
|
2,388
(3)
|
-
|
$28.25
|
2/9/2016
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
1,444
(4)
|
-
|
$29.25
|
2/13/2017
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
-
|
-
|
-
|
-
|
412
(6)
|
$7,882
|
-
|
-
|
|
|
2/20/2008
|
-
|
-
|
-
|
-
|
-
|
386
(7)
|
$7,384
|
-
|
-
|
|
|
2/20/2008
|
-
|
1,663
(5)
|
-
|
$23.77
|
2/20/2018
|
-
|
-
|
-
|
-
|
|
|
Deborah
K.
Hill
|
10/1/2007
|
-
|
-
|
-
|
-
|
-
|
1,000 (10)
|
$19,130
|
-
|
-
|
|
10/1/2007
|
-
|
3,000
|
-
|
$27.99
|
10/1/2017
|
-
|
-
|
-
|
-
|
|
|
David
T. Wesel
|
2/16/2004
|
2,000
|
-
|
-
|
$28.25
|
2/16/2014
|
-
|
-
|
-
|
-
|
|
2/10/2005
|
425
|
-
|
-
|
$27.38
|
2/10/2015
|
-
|
-
|
-
|
-
|
|
|
2/9/2006
|
-
|
1,184
(3)
|
-
|
$28.25
|
2/9/2016
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
1,303
(4)
|
-
|
$29.25
|
2/13/2017
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
-
|
-
|
-
|
-
|
372
(6)
|
$7,116
|
-
|
-
|
|
|
2/20/2008
|
-
|
-
|
-
|
-
|
-
|
431
(7)
|
$8.245
|
-
|
-
|
|
|
2/20/2008
|
-
|
1,857
(5)
|
-
|
$23.77
|
2/20/2018
|
-
|
-
|
-
|
-
|
|
(1)
|
Stock
options were granted to the executive officers in years prior to
2006. Vesting was accelerated on all then unvested stock
options as of December 31, 2005.
|
|
(2)
|
The
amount in these columns would represent the actual SAR and restricted
share awards approved by the Compensation Committee in the 2009 fiscal
year, with respect to corporate and individual performance for the 2008
fiscal year. They would be considered “unearned” as they were
not granted until after the end of the 2008 fiscal year. No
awards were granted in the 2009 fiscal year with respect to corporate and
individual performance for the 2008 fiscal year. See the
“Estimated Future Payouts Under Equity Incentive Plan Awards” columns in
the “Grants of Plan-Based Awards for 2008” table for information regarding
the range of economic values that had been possible for these
awards.
|
|
(3)
|
Stock
options were granted on February 9, 2006 under Peoples’ 2002 Plan and
vested on February 9, 2009.
|
|
(4)
|
SARs
to be settled in common shares were approved by the Compensation Committee
on February 8, 2007 and granted under Peoples’ 2006 Plan on February 13,
2007, and will vest on February 13,
2010.
|
|
(5)
|
SARs
to be settled in common shares were approved by the Compensation Committee
on February 14, 2008 and granted under Peoples’ 2006 Plan on February 20,
2008, and will vest on February 20,
2011.
|
|
(6)
|
Restricted
shares were approved by the Compensation Committee on February 8, 2007 and
granted under Peoples’ 2006 Plan on February 13, 2007, and will vest on
February 13, 2010.
|
|
(7)
|
Restricted
shares were approved by the Compensation Committee on February 14, 2008
and granted under Peoples’ 2006 Plan on February 20, 2008, and will vest
on February 20, 2011.
|
|
(8)
|
Restricted
shares were approved by the Compensation Committee on May 8, 2008 and
granted under Peoples’ 2006 Plan on June 2, 2008, and will vest on
December 2, 2009.
|
|
(9)
|
Restricted
shares were approved by the Compensation Committee on February 14, 2008
and granted under Peoples’ 2006 Plan on February 20, 2008, and will vest
on February 20, 2009.
|
|
(10)
|
Restricted
shares were approved by the Board of Directors on August 9, 2007, in
absence of a meeting of the Compensation Committee, and will vest on April
1, 2009.
|
OPTION EXERCISES AND STOCK VESTED FOR 2008
The
following table provides information for the executive officers relating to
stock options exercised, including the number of common shares acquired upon
exercise and the value realized, and the restricted shares that vested,
including the number of common shares acquired upon vesting and the value
realized. The values shown below are before payment of any applicable
withholding tax.
|
Option
Awards
|
Stock
Awards
|
|||
|
Name
|
Number
of
Common
Shares
Acquired
on
Exercise
|
Valued
Realized on Exercise
|
Number
of Shares Acquired on
Vesting
|
Value
Realized
on Vesting
|
|
(#)
|
($)
|
(#)
|
($)
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
Mark
F. Bradley
|
1,537
|
$4,794
|
-
|
-
|
|
Edward
G. Sloane
|
-
|
-
|
1,000
|
$15,750
|
|
Carol
A. Schneeberger
|
800
|
$5,444
|
1,125
|
$22,894
|
|
Joseph
S. Yazombek
|
-
|
-
|
-
|
-
|
|
Deborah
K. Hill
|
-
|
-
|
1,000
|
$25,750
|
|
David
T. Wesel
|
-
|
-
|
-
|
-
|
PENSION BENEFITS FOR 2008
The table
below shows the actuarial present value of accumulated benefits payable to each
of the executive officers, including the number of years of service credited to
each executive officer, under the Retirement Plan determined using interest rate
and mortality rate assumptions consistent with those used in Peoples’ Notes to
the Consolidated Financial Statements, Note 13. Employee Benefit Plans on pages
77 through 79 of Peoples’ Annual Report on Form 10-K for the fiscal year ended
December 31, 2008. Information regarding the Retirement Plan can be
found in the discussion under the caption “Retirement and Other Benefits”
on page 30 of the “COMPENSATION
DISCUSSION AND ANALYSIS.”
|
Name
|
Plan
Name
|
Number
of
Years
of
Credited
Service
|
Present
Value of Accumulated
Benefit
|
Payments
During Last Fiscal Year
|
|
(#)
|
($)
|
($)
|
||
|
(2)
|
||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
Mark
F. Bradley
|
Retirement
Plan
|
17
|
$74,208
|
-
|
|
Edward
G. Sloane
|
Retirement
Plan
|
0
|
-
|
-
|
|
Carol
A. Schneeberger (1)
|
Retirement
Plan
|
31
|
$325,925
|
-
|
|
Joseph
S. Yazombek (1)
|
Retirement
Plan
|
25
|
$343,085
|
-
|
40
|
Name
|
Plan
Name
|
Number
of
Years
of
Credited
Service
|
Present
Value of Accumulated
Benefit
|
Payments
During Last Fiscal Year
|
|
(#)
|
($)
|
($)
|
||
|
(2)
|
||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
Deborah
K. Hill
|
Retirement
Plan
|
0
|
-
|
-
|
|
David
T. Wesel
|
Retirement
Plan
|
5
|
$15,486
|
-
|
|
(1)
|
Mr.
Yazombek and Ms. Schneeberger had reached retirement eligibility (50 years
of age or older and 10 years of service with Peoples) as of December 31,
2008.
|
|
(2)
|
Years
of credited service are equal to the actual years of service, if the
executive officer works 1,000 hours in a calendar year. Mr.
Sloane and Ms. Hill became plan participants on January 1,
2009.
|
NON-QUALIFIED DEFERRED COMPENSATION FOR
2008
The
following table provides information regarding cash incentives earned under the
Incentive Plan but deferred in accordance with the terms of that
Plan. Information regarding deferrals of cash incentives earned under
the Incentive Plan can be found in the discussion under the caption “Annual Cash Incentives” on
page 26 of the “COMPENSATION
DISCUSSION AND ANALYSIS.” No cash incentive payments were made
for 2008 fiscal year performance.
|
Name
|
Executive
Contributions
in
Last Fiscal
Year
|
Registrant
Contributions
in
Last Fiscal
Year
|
Aggregate
Earnings
in
Last
Fiscal
Year
|
Aggregate
Withdrawals/ Distributions
|
Aggregate
Balance
at Last
Fiscal
Year-End
|
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
|
(1)
|
(2)
|
(3)
|
(4)
|
||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|
Mark
F. Bradley
|
-
|
-
|
$807
|
$2,647
|
$41,680
|
|
Edward
G. Sloane
|
-
|
-
|
-
|
-
|
-
|
|
Carol
A. Schneeberger
|
$4,433
|
-
|
$802
|
$4,433
|
$41,696
|
|
Joseph
S. Yazombek
|
$6,809
|
-
|
$5,055
|
$6,809
|
$262,380
|
|
Deborah
K. Hill
|
-
|
-
|
-
|
-
|
-
|
|
David
T. Wesel
|
-
|
-
|
$615
|
-
|
$32,983
|
|
(1)
|
Amounts
in column (b) represent any accumulated balance of mandatory deferrals
awarded for performance for the 2004 fiscal year and voluntarily further
deferred by the executive officer at the end of the original three-year
deferral period.
|
|
(2)
|
Amounts
in column (d) represent the aggregate earnings on the accumulated
mandatory and voluntary deferrals of cash incentives for each of the
executive officers. Interest is accrued at a rate equal to 50%
of Peoples’ Return on Average Equity achieved during each calendar year
throughout the deferral period. The accrual rate for 2008 was
1.995%. None of these amounts are included in the Summary
Compensation Table since the rate earned was not above-market or
preferential.
|
|
(3)
|
Amounts
in column (e) represent the aggregate withdrawals or distributions for
each executive officer of amounts deferred in accordance with terms of the
Incentive Plan, which also includes the accumulated balance voluntarily
re-deferred by the executive officer at the end of the mandatory
three-year deferral period. Amounts voluntarily re-deferred by
the executive officer include (1) Mr. Yazombek - $6,809 and (b) Ms.
Schneeberger - $4,433.
|
|
(4)
|
Of
the amount reported in column (f) for each executive officer, the
following amount was reported in the Summary Compensation Table included
in Peoples’ 2008 Proxy Statement for the 2008 Annual Meeting of
Shareholders and are reported within the amount shown in the Non-Equity
Incentive Plan Compensation column for 2007: (a) Mr. Bradley - $9,562; (b)
Ms. Schneeberger - $5,619; (c) Mr. Yazombek - $31,932; and (d) Mr. Wesel -
$12,568, and in the Summary Compensation Table included in Peoples’ 2007
Proxy Statement for the 2007 Annual Meeting of Shareholders for
2006: (a) Mr. Bradley - $14,187; (b) Ms. Schneeberger - $6,880;
and (c) Mr. Yazombek - $42,114. These amounts are also reported
in the “SUMMARY
COMPENSATION TABLE FOR 2008” on page 34 within the amount shown in
the Non-Equity Incentive Plan Compensation column for 2007 and
2006.
|
OTHER POTENTIAL POST EMPLOYMENT PAYMENTS
The
amount of compensation payable to each executive officer upon voluntary
termination, early retirement, normal retirement, involuntary not-for-cause
termination, for cause termination, termination following a change of control
and termination in the event of disability or death of the executive officer is
described below.
In the
event of the retirement, disability or death of a executive officer, or a change
in control of Peoples, the vesting period is accelerated with regard to the
mandatory deferrals of the cash incentives earned under the Incentive Plan and
unvested outstanding equity-based awards.
Payments Made Upon Termination
Regardless
of the manner in which a executive officer’s employment terminates, including
termination for cause with the exception below, he or she is entitled to receive
amounts earned during his or her term of employment. These amounts
are not included in the table below. Such amounts would
include:
|
·
|
cash
incentives earned under the Incentive Plan during the fiscal year in which
termination occurs less the mandatory deferral amount, if he or she is
employed as of the payment date;
|
|
·
|
all
vested equity-based awards earned through the long-term equity-based
incentive compensation programs;
|
|
·
|
all
cash incentives voluntarily deferred under the Incentive
Plan;
|
|
·
|
the
balance of the executive officer’s Retirement Savings Plan (Peoples 401(k)
Plan) account;
|
|
·
|
pay
for unused paid time off (except in the case of termination for cause);
and
|
|
·
|
amounts
accrued and vested through the Retirement Plan (Peoples’ pension
plan).
|
Payments Made Upon Retirement
In the
event of the retirement of an executive officer, in addition to the items
identified above, he or she would receive the following benefits:
|
·
|
all
previously unvested equity-based awards would vest;
and
|
|
·
|
all
previously unvested mandatory deferrals under the Incentive Plan would
vest.
|
Payments Made Upon Death or Disability
In the
event of the death or disability of an executive officer, in addition to the
benefits listed under the headings “Payments Made Upon
Termination” and “Payments
Made Upon Retirement” above,
the executive officer will also receive benefits under Peoples’ disability plan
or payments under Peoples’ life insurance plan, as appropriate.
Payments Made Upon a Change in Control
Peoples
has entered into amended and restated change in control agreements with all of
the executive officers. Under these agreements, a change in control
occurs when one or more of the following events take place:
|
|
●
|
a
“person” or “group” (as defined in Section 409A of the Internal Revenue
Code) acquires ownership of shares of Peoples that, together with shares
held by such person or group, constitutes more than 50% of the total fair
market value or total voting power of the shares of
Peoples;
|
|
|
●
|
any
person or group acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or group)
ownership of shares of Peoples possessing 35% or more of the total voting
power of the shares of Peoples;
|
|
|
●
|
a
majority of the members of Peoples’ Board of Directors is replaced during
any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of Peoples’ Board of Directors prior
to the date that such appointments or elections are made;
or
|
|
|
●
|
any
person or group acquires (or has acquired) during the 12-month period
ending on the date of the most recent acquisition by such person or group,
assets from Peoples that have a total gross fair market value equal to or
more than 40% of the total gross fair market value of all of the assets of
Peoples immediately prior to such acquisition or
acquisitions.
|
Generally,
the agreements provide for severance compensation to the executive officers if
their employment is terminated by Peoples or its successor for any reason other
than cause (defined as gross negligence or gross neglect of duties; commission
of a felony or a gross misdemeanor involving moral turpitude; fraud, disloyalty,
dishonesty or willful violation of any law or significant policy of Peoples; or
issuance of an order by the banking regulators of Peoples for removal of the
executive officer) within six months prior to or 24 months after a defined
change in control occurs. In addition, compensation will be paid if
the executive officer voluntarily terminates employment during the same periods
because of: (1) the
assignment to the executive officer of any material duties or responsibilities
inconsistent with the executive officer’s positions, or a change in the
executive officer’s reporting responsibilities, titles, or offices, or any
removal of the executive officer from or any failure to re-elect the executive
officer to any of such positions, except in connection with the executive
officer’s termination of employment for cause, disability, retirement, or as a
result of the executive officer’s death; (2) a reduction in the
executive officer’s base salary; (3) the taking of any action by Peoples which
would adversely affect the executive officer’s participation in or materially
reduce the executive officer’s benefits under any benefit plans; (4) any failure
of the Peoples to obtain the assumption of the agreement by any successor as
contemplated in Section 3.9 hereof; or (5) geographic relocation of the
executive officer to an office location more than 50 miles from the executive
officer's current location without the executive officer's consent or without
reimbursement of reasonable moving expenses incurred by the executive officer
relating to a change of the executive officer’s principal residence in
connection with relocation.
The
executive officer’s base annual compensation for purpose of his or her
respective agreement is calculated as the average annualized compensation paid
by Peoples, prior to any deferred arrangements, during the most recent five
taxable years ending before the date of the change in control, subject to
certain adjustments in the event that Section 280G of the Internal Revenue Code
is triggered. For executive officers that have worked for Peoples for
less than five years, the average annualized compensation paid by Peoples is
calculated for the number of years employed by Peoples.
Under the
agreements, severance provisions include: (i) a lump sum cash payment of two and
one half times base annual compensation for Mr. Bradley and two times base
annual compensation for Mses. Hill and Schneeberger, and Messrs. Sloane,
Yazombek, and Wesel, in each case payable within 30 days following the executive
officer’s termination date with such payment delayed until the first business
day of the seventh month following the executive officer’s terminate date if the
executive officer is a “specified employee” for purposes of Section 409(A) of
the Internal Revenue Code; (ii) continuing participation in life, medical, and
dental insurance for 12 months substantially in the form and expense to the
executive officer as that received on the date of termination; (iii) the
executive officer agreeing not to disclose to others any confidential
information; and (iv) the executive officer entering into a non-compete
agreement for 12 months immediately following the date of
termination. In the case of Mr. Bradley, the duration of the
non-compete agreement and continuing participation in life, medical and dental
insurance is 15 months immediately following the date of
termination. The non-compete agreement prohibits the executive
officer from directly or indirectly engaging in any business in which Peoples
directly or indirectly engages within Peoples’ geographic market.
The
Securities Purchase Agreement prohibits Peoples from making any golden parachute
payments to its executive officers. Payments under the amended and
restated change in control agreements to executive officers may be considered to
be golden parachute payments. Peoples and each executive officer
entered into a letter agreement in which the executive officer agreed to amend
the compensation and benefits plans of Peoples in which the executive officer
participates, including the amended and restated change in control agreements,
to the extent necessary to give effect to this prohibition.
In
addition, the ARRA executive compensation standards prohibit any payment by
Peoples to its Senior Executive Officers (as defined in ARRA) and the next five
most highly-compensated employees during the Covered Period upon such employees’
departure from Peoples. Peoples believes that this prohibition, if
applicable, would prevent it from making payments to the executive officers
under their respective amended and restated change in control agreements as
currently in effect. To the extent that the U.S. Treasury amends the
Securities Purchase Agreement to make this prohibition applicable, the U.S.
Treasury issues regulations describing how Peoples is to comply with this
prohibition or Peoples determines this prohibition applies, Peoples will work
with its affected employees to take such steps as Peoples deems necessary to
comply with this prohibition and adopt administrative and other procedures
consistent with the foregoing.
The
following table summarizes payments which would have been made to the executive
officers if a termination event occurred on December 31, 2008. Actual
amounts to be paid out can only be determined at the time of an executive
officer’s separation from Peoples.
|
Payable
Upon
Termination
|
Voluntary
Termination
|
Early
Retirement
|
Normal
Retirement
|
Involuntary
Not
for
Cause
Termination
|
For
Cause Termination
|
CIC
Involuntary
or
Good
Reason
Termination
|
Death
or Disability
|
|
(1)
|
|||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
Mark
F. Bradley
|
|||||||
|
2.5 times Base Annual
Compensation (2)
|
-
|
-
|
-
|
-
|
-
|
$558,279
|
-
|
|
Welfare(2)
(3)
|
-
|
-
|
-
|
-
|
-
|
$12,747
|
-
|
|
Deferrals
under Incentive Award Plan
|
-
|
-
|
$24,770
|
-
|
-
|
$24,770
|
$24,770
|
|
Intrinsic Value of Unvested
Stock Options & SARs (4)
|
-
|
-
|
$0
|
-
|
-
|
$0
|
$0
|
|
Value
of Unvested Restricted Shares
|
-
|
-
|
$17,007
|
-
|
-
|
$17,007
|
$17,007
|
|
Total:
|
$0
|
$0
|
$41,777
|
$0
|
$0
|
$612,803
|
$41,777
|
|
Edward
G. Sloane
|
|||||||
|
2 times Base Annual
Compensation (2)
|
-
|
-
|
-
|
-
|
-
|
$392,000
|
-
|
|
Welfare (2)
(3)
|
-
|
-
|
-
|
-
|
-
|
$5,895
|
-
|
|
Deferrals
under Incentive Award Plan
|
-
|
-
|
$0
|
-
|
-
|
$0
|
$0
|
|
Intrinsic Value of Unvested
Stock Options & SARs (4)
|
-
|
-
|
$0
|
-
|
-
|
$0
|
$0
|
|
Value
of Unvested Restricted Shares
|
-
|
-
|
$19,130
|
-
|
-
|
$19,130
|
$19,130
|
|
Total:
|
$0
|
$0
|
$19,130
|
$0
|
$0
|
$417,025
|
$19,130
|
|
Carol
A. Schneeberger
|
|||||||
|
2 times Base Annual
Compensation (2)
|
-
|
-
|
-
|
-
|
-
|
$403,924
|
-
|
|
Welfare (2)
(3)
|
-
|
-
|
-
|
-
|
-
|
$4,338
|
-
|
|
Deferrals
under Incentive Award Plan
|
-
|
$13,012
|
$13,012
|
-
|
-
|
$13,012
|
$13,012
|
|
Intrinsic Value of Unvested
Stock Options & SARs (4)
|
-
|
$0
|
$0
|
-
|
-
|
$0
|
$0
|
|
Value
of Unvested Restricted Shares
|
-
|
$10,292
|
$10,292
|
-
|
-
|
$10,292
|
$10,292
|
|
Total:
|
$0
|
$23,304
|
$23,304
|
$0
|
$0
|
$431,565
|
$23,304
|
|
Joseph
S. Yazombek
|
|||||||
|
2 times Base Annual
Compensation (2)
|
-
|
-
|
-
|
-
|
-
|
$403,582
|
-
|
|
Welfare (2)
(3)
|
-
|
-
|
-
|
-
|
-
|
$1,111
|
-
|
|
Deferrals
under Incentive Award Plan
|
-
|
$19,284
|
$19,284
|
-
|
-
|
$19,284
|
$19,284
|
|
Intrinsic Value of Unvested
Stock Options & SARs (4)
|
-
|
$0
|
$0
|
-
|
-
|
$0
|
$0
|
|
Value
of Unvested Restricted Shares
|
-
|
$15,266
|
$15,266
|
-
|
-
|
$15,266
|
$15,266
|
|
Total:
|
$0
|
$34,550
|
$34,550
|
$0
|
$0
|
$439,243
|
$34,550
|
|
Payable
Upon
Termination
|
Voluntary
Termination
|
Early
Retirement
|
Normal
Retirement
|
Involuntary
Not
for
Cause
Termination
|
For
Cause Termination
|
CIC
Involuntary
or
Good
Reason
Termination
|
Death
or Disability
|
|
(1)
|
|||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
Deborah
K. Hill
|
|||||||
|
2 times Base Annual
Compensation (2)
|
-
|
-
|
-
|
-
|
-
|
$346,812
|
-
|
|
Welfare (2)
(3)
|
-
|
-
|
-
|
-
|
-
|
$2,785
|
-
|
|
Deferrals
under Incentive Award Plan
|
-
|
-
|
$0
|
-
|
-
|
$0
|
$0
|
|
Intrinsic Value of Unvested
Stock Options & SARs (4)
|
-
|
-
|
$0
|
-
|
-
|
$0
|
$0
|
|
Value
of Unvested Restricted Shares
|
-
|
-
|
$19,130
|
-
|
-
|
$19,130
|
$19,130
|
|
Total:
|
$0
|
$0
|
$19,130
|
$0
|
$0
|
$368,727
|
$19,130
|
|
David
T. Wesel
|
|||||||
|
2 times Base Annual
Compensation (2)
|
-
|
-
|
-
|
-
|
-
|
$239,643
|
-
|
|
Welfare (2)
(3)
|
-
|
-
|
-
|
-
|
-
|
$9,793
|
-
|
|
Deferrals
under Incentive Award Plan
|
-
|
-
|
$19,232
|
-
|
-
|
$19,232
|
$19,232
|
|
Intrinsic Value of Unvested
Stock Options & SARs (4)
|
-
|
-
|
$0
|
-
|
-
|
$0
|
$0
|
|
Value
of Unvested Restricted Shares
|
-
|
-
|
$15,361
|
-
|
-
|
$15,361
|
$15,361
|
|
Total:
|
$0
|
$0
|
$34,593
|
$0
|
$0
|
$284,029
|
$34,593
|
|
(1)
|
Mr.
Yazombek and Ms. Schneeberger were eligible to receive the unvested
mandatory deferral balance earned through the Incentive Plan, to exercise
all unvested stock options and SARs and to have the restrictions on
transfer of their unvested restricted shares lapse, if they elected to
retire as of December 31, 2008, as they had reached retirement eligibility
(50 years of age or older and had at least 10 years of service with
Peoples as of December 31, 2008). Vesting of the unvested
mandatory deferral balance and unvested stock options and SARs, and
lapsing of the restrictions on transfer applicable to restricted shares
accelerate upon retirement.
|
|
(2)
|
The
ARRA executive compensation standards prohibit Peoples from making any
payments to senior executive officers for departure from Peoples for any
reason during the Covered Period, except payments for services rendered or
benefits accrued. To the extent that the Treasury issues
regulations and/or amends the Securities Purchase Agreement to make this
prohibition applicable to payments which may be made under the amended and
restated change in control agreements, Peoples will take such steps as are
necessary to comply with the
prohibition.
|
|
(3)
|
Under
the terms of the amended and restated change in control agreements, the
executive officer continues to participate in life, medical, and dental
insurance during the term of his or her non-compete agreement (15 months
for Mr. Bradley and 12 months for the other executive
officers).
|
|
(4)
|
Stock
options and SARs do not currently have intrinsic value because the grant
price is greater than the closing market price on December 31, 2008 of
Peoples’ common shares ($19.13).
|
Peoples
uses a combination of cash and equity-based compensation to attract and retain
qualified directors to serve on the Board of Directors. Director
compensation elements are designed to:
|
·
|
Ensure
alignment with long-term shareholder
interests;
|
|
·
|
Ensure
Peoples can attract and retain outstanding director
candidates;
|
|
·
|
Recognize
the substantial time commitments necessary to oversee the affairs of
Peoples; and
|
|
·
|
Support
the independence of thought and action expected of
directors.
|
Cash Compensation Paid to Board
Members
In
determining the overall competitiveness of director compensation, the
Compensation Committee reviewed director compensation data from the Peer Group
described in the “COMPENSATION
DISCUSSION AND ANALYSIS.”
The cash
compensation paid to Board members did not change in 2008. Peoples’
directors, other than Mark F. Bradley, receive a quarterly cash fee of $1,500
for their services. In addition, directors, other than Mark F.
Bradley, receive compensation of $1,250 for each meeting of the Board of
Directors attended. The Compensation Committee believes these fees
are necessary to maintain the caliber of directors necessary to promote
long-term shareholder value.
Directors
are also compensated for each committee meeting they attend. Upon
review of Peer Group data for “per meeting fees”, the Committee recommended the
following changes to committee fees, which were approved by the Board and became
effective June 12, 2008: (1) elimination of tying the fee amount to
the duration of a committee meeting; (2) increase in the fees paid to members of
the Executive Committee and the Governance and Nominating Committee from $200 to
$300 for each committee meeting attended; and (3) increase in the fees paid to
members of the Compensation Committee and the Audit Committee from $500 to $600
for each committee meeting attended. In addition to the per meeting
fees, the Chairman of the Compensation Committee receives a cash fee of $750 per
quarter. The fee is comparative with the Peer Group average and
remained unchanged. Likewise, the Chairman of the Audit Committee
receives an additional cash fee of $1,250 per quarter, the amount of which is
comparative with the Peer Group average. The Compensation Committee
believes that the additional quarterly fees are appropriate and commensurate
with the overall level of responsibility and accountability of each
Chairman. Likewise, the fees are necessary to attract and retain
Committee Chairmen with the talents and skills the Compensation Committee
believes necessary to promote shareholder value.
Each
director of Peoples, other than Mark F. Bradley, who also serves as a director
of Peoples Bank receives $600 per quarter and $500 for each regular bi-monthly
meeting attended. Additionally, each director of Peoples who also
serves as a Peoples Bank committee member receives $300 for each committee
meeting attended.
Mark F.
Bradley received no compensation as a director of Peoples or Peoples Bank during
2008 and continues to receive none in either capacity.
Thomas J.
Wolf also received and continues to receive $150 for each meeting of the Peoples
Bank Kentucky/Huntington Leadership Advisory Board he attends, in addition to
the previously-mentioned fees for his service as a director of
Peoples.
Directors
who travel a distance of 50 miles or more to attend a Board or committee meeting
of Peoples or Peoples Bank receive a $150 travel fee. A single travel
fee of $150 is paid for multiple meetings occurring on the same
day. Directors who stay overnight to attend a meeting are reimbursed
for the actual cost of their overnight accommodations. Peoples
believes these fees are reasonable and partially offset travel expenses incurred
by some of the directors living outside the Marietta, Ohio area, where Board of
Directors and committee meetings are typically held.
In years
prior to 2005, Mark F. Bradley was paid a fee as an employee
director. Mark F. Bradley elected to defer the fees paid to him under
the Second Amended and Restated Deferred Compensation Plan for Directors of
Peoples Bancorp Inc. and Subsidiaries (the “Deferred Compensation Plan for
Directors”) to be invested in common shares of Peoples. Under the
Deferred Compensation Plan for Directors, dividends are credited on common
shares allocated. The dividends are converted into a Peoples’ common
share equivalent based on the fair market value of a common share on the first
day of each calendar quarter.
The full
Board of Directors approves all equity-based awards made to non-employee
directors of Peoples while the Compensation Committee approves all equity-based
awards made to non-employee directors of Peoples’ subsidiaries. The
grant date for equity-based awards made to non-employee directors of Peoples is
the date of the approval by the Board, the date of election or appointment, or
the third business day following the date on which all material information has
been publicly disclosed, whichever is later. The grant date for the
equity-based awards made to the non-employee directors of Peoples
Bank (only, and not also of Peoples) is the date of the approval by the
Compensation Committee, the date of election or appointment, or the third
business day following the date on which all material information has been
publicly disclosed, whichever is later. The grant price is the
closing price of Peoples’ common shares on The NASDAQ Global Select Market on
the grant date.
On
February 14, 2008, the Board of Directors of Peoples approved the grant of 300
restricted shares to each of the non-employee directors, if still a director, on
February 20, 2008. The non-employee directors who received the
restricted share grant were: Carl L. Baker, Jr.; George W. Broughton; Frank L.
Christy; Wilford D. Dimit; Richard Ferguson; David L. Mead; Robert W. Price;
Theodore P. Sauber; Paul T. Theisen; Joseph H. Wesel; and Thomas J.
Wolf. On the same day, the Board of Directors of Peoples also granted
150 restricted shares of Peoples to those non-employee directors of Peoples Bank
who were not also directors of Peoples. The restrictions on the
restricted shares lapsed after a period of six months (i.e., on August 20,
2008).
The
Compensation Committee has not recommended, and the Board of Directors has not
made, any grants of restricted shares to non-employee directors since the
February 20, 2008, grant. In addition, the Board of Directors has
decided to not award any equity grants to directors in 2009 in consideration of
2008 financial performance and the decline in Peoples’ stock price.
The
following summarizes the effect of various termination of service events on the
restricted shares granted to the non-employee directors:
|
·
|
Termination of service
as a director of Peoples due to death, disability, or
retirement: The restrictions on the restricted shares
lapse and the restricted shares become fully vested on the termination
date.
|
|
·
|
Termination of service
as a director of Peoples for cause or any reason other than retirement,
death or disability: Any non-vested restricted shares
are forfeited on the termination
date.
|
Deferred Compensation Plan for Directors
Since
1991, Peoples has maintained the Deferred Compensation Plan for
Directors. Voluntary participation in the Deferred Compensation Plan
for Directors allows a non-employee director of Peoples, or one of its
subsidiaries, to defer all or part of his or her director’s fees, including the
Federal income tax thereon. Since January 2, 1998, directors have
been permitted to allocate their deferrals between a cash account (earning
interest equal to Peoples Bank’s three-year certificate of deposit interest
rate) and a stock account (under which common shares of Peoples are allocated at
fair market value on the first business day of each calendar quarter on (1) the
amount deferred and (2) subsequent cash dividends on the common shares
previously credited to the account). The only right a participant in
the Deferred Compensation Plan for Directors has with respect to his or her cash
account and/or stock account is to receive distributions upon termination of
service as a director. Distribution of the deferred amounts is made
in a lump sum or annual installments, at the election of the director beginning,
(1) on the first business day of the calendar month following the date of the
director's termination of service due to resignation, retirement, death or
otherwise for the portion of the account, if any, that was earned and vested
before January 1, 2005, and any additions attributable to such portion of the
account; and (2) on the first business day of the calendar month following the
earlier of the directors' death or separation from service as a director for the
remaining portion of the account in the first year in which the person is
no longer a director. The stock account is distributed in common
shares of Peoples or in cash and the cash account is distributed only in
cash.
The
non-employee directors are also eligible to participate in selected employee
benefit programs maintained by Peoples. These include medical and
dental insurance plans and Group Term Life Insurance. During 2008,
Mr. Theisen participated in Peoples’ medical and dental insurance plans pursuant
to the terms of a 1998 agreement in which Peoples agreed to pay his medical and
dental insurance premiums, which includes the individual and company
contributions, as long as he remains a director. The non-employee
directors automatically receive a group term life insurance benefit, the
premiums for which are paid by Peoples. The maximum benefit is
$50,000 for directors age 65 or younger. The maximum benefit
decreases by a percentage for each year beyond age 65 until it reaches a maximum
payout of $5,000 at age 90.
DIRECTOR COMPENSATION FOR 2008
|
Name
|
Fees
Earned
or
Paid
in
Cash
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive
Plan Compensation
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation Earnings
|
All
Other Compensation
|
Total
|
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
|||
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
Carl
L. Baker, Jr.
|
$31,100
|
$7,131
|
-
|
-
|
$240
|
$531
|
$39,002
|
|
Mark
F. Bradley (1)
|
-
|
-
|
-
|
-
|
$1,359
|
-
|
$1,359
|
|
George
W. Broughton
|
$51,200
|
$7,131
|
-
|
-
|
$1,188
|
$531
|
$60,050
|
|
Frank
L. Christy
|
$27,900
|
$7,131
|
-
|
-
|
-
|
$531
|
$35,562
|
|
Wilford
D. Dimit
|
$42,600
|
$7,131
|
-
|
-
|
$20,605
|
$455
|
$70,791
|
|
Richard
Ferguson
|
$32,800
|
$7,131
|
-
|
-
|
$2,945
|
$531
|
$43,407
|
|
David
L. Mead
|
$44,300
|
$7,131
|
-
|
-
|
$1,296
|
$531
|
$53,258
|
|
Robert
W. Price
|
$24,400
|
$7,131
|
-
|
-
|
$4,583
|
$531
|
$36,645
|
|
Theodore
P. Sauber
|
$41,850
|
$7,131
|
-
|
-
|
-
|
$531
|
$49,436
|
|
Paul
T. Theisen
|
$44,350
|
$7,131
|
-
|
-
|
$5,375
|
$16,738
|
$73,594
|
|
Joseph
H. Wesel
|
$41,800
|
$7,131
|
-
|
-
|
$8,315
|
$443
|
$57,689
|
|
Thomas
J. Wolf
|
$27,700
|
$7,131
|
-
|
-
|
-
|
$531
|
$35,362
|
|
(1)
|
Mark
F. Bradley, an executive officer and member of the Board of Directors of
both Peoples and Peoples Bank, receives no director
compensation.
|
|
(2)
|
Amounts
in column (b) represent the aggregate quarterly and meeting fees
(including travel fees paid or payable to each
director). Included in these amounts are voluntary elective
deferrals of fees made pursuant to the Deferred Compensation Plan for
Directors. Deferrals of these fees for 2008 were: (a) Wilford
D. Dimit -$42,600; (b) Richard Ferguson - $31,200; (c) David L. Mead -
$21,600; and (d) Robert W. Price -$23,450. All other amounts
representing quarterly and meeting fees for 2008 were paid in
cash. Messrs. Broughton, Dimit, Mead, Sauber, Theisen, and
Wesel are non-employees directors of both Peoples and Peoples Bank and are
compensated through retainer fees, board meeting attendance fees and
committee attendance fees, as appropriate, for their service to both
boards.
|
|
(3)
|
The
amounts in column (c) reflect the dollar amount recognized for financial
statement reporting purposes for 2008, in accordance with FAS 123(R) of
awards of restricted shares pursuant to Peoples’ 2006
Plan. These amounts exclude the impact of estimated forfeitures
related to service-based vesting conditions, as required by SEC
rules. The amounts shown in column (c) also represent the grant
date fair value of the restricted share awards calculated in accordance
with FAS 123(R). Assumptions used in the calculation of these
amounts are included in the “Notes to the Consolidated Financial
Statements, Note 17. Stock-Based Compensation” on pages 82 through 85 of
Peoples’ Annual Report on Form 10-K for the fiscal year ended December 31,
2008. All non-employee directors were awarded 300 restricted
shares on February 20, 2008, and the restrictions on the restricted shares
lapsed on August 20, 2008. Each of the non-employee directors
held 300 restricted shares which were still subject to transfer
restrictions as of December 31,
2008.
|
|
(4)
|
The
aggregate number of common shares underlying non-qualified stock options
outstanding at December 31, 2008 for each non-employee director
were: (a) Carl L. Baker, Jr. – 7,984; (b) George W. Broughton – 4,665; (c)
Frank L. Christy – 7,298; (d) Wilford D. Dimit – 8,386; (e) Richard
Ferguson – 2,355; (f) David L. Mead – 600; (g) Robert W. Price – 5,820;
(h) Theodore P. Sauber – 2,355; (i) Paul T. Theisen – 7,550; (j) Joseph H.
Wesel – 5,820; and (k) Thomas J. Wolf – 3,510. All of these
outstanding non-qualified stock options had vested prior to January 1,
2008.
|
|
(5)
|
The
amounts in column (f) represent 2008 earnings on each of the director’s
deferred fees. For 2008, Mark F. Bradley’s earnings represents
dividends credited on the cumulative amount of director’s fees deferred in
prior years under the terms of the Deferred Compensation Plan for
Directors. Mark F. Bradley has not been paid a fee for his
services as a director of Peoples or of Peoples Bank since December 31,
2004.
|
|
(6)
|
The
amounts in column (g) represent $270 in dividends paid on 300 restricted
shares awarded on February 13, 2007 and scheduled to vest on August 13,
2010, $135 in dividends paid on 300 restricted shares awarded on February
20, 2008, as to which restrictions lapsed on August 20, 2008, and the
amount of Peoples’ 2008 annual payment of premiums for group term life
insurance for all directors except Paul T. Theisen, who also participated
in Peoples’ medical and dental insurance plan. Paul T.
Theisen’s group term life insurance premium was $38 and his medical and
dental premium was $16,295.
|
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Each of
Carl L. Baker, Jr., George W. Broughton, Frank L. Christy, David L. Mead, Robert
W. Price, and Paul T. Theisen served as a member of the Compensation Committee
of Peoples’ Board of Directors for the entire 2008 fiscal year and continues to
serve as a member. None of the individuals serving on the
Compensation Committee has been an officer or employee of Peoples or any of our
subsidiaries. During the 2008 fiscal year, Peoples Bank entered into
lending relationships with certain members of the Compensation Committee, with
members of their respective families and with corporations and organizations as
to which they serve as executive officers or beneficially own more than 10% of
the equity securities. All such loans (i) were made in the ordinary
course of business, (ii) were made on substantially the same terms, including
interest rates charged and collateral required, as those prevailing at the time
for comparable loans with persons not related to Peoples or Peoples Bank, and
(iii) did not involve more than the normal risk of collectibility or present
other unfavorable features to Peoples or Peoples Bank. During the
2008 fiscal year, no executive officer of Peoples has served on the board of
directors or compensation committee (or other committee serving an equivalent
function) of any other entity, one of whose executive officers served on
Peoples’ Board of Directors or Compensation Committee.
Paul T.
Theisen was Of Counsel to, and an independent contractor with, the law firm of
TheisenBrock until December 2008. Mr. Theisen has not been a partner,
controlling shareholder or executive officer or otherwise been related to or
held any interest in TheisenBrock, other than as Of Counsel and an independent
contractor (and has not personally performed legal services for Peoples or any
of its subsidiaries), since 1998. TheisenBrock performed legal
services for Peoples and our subsidiaries during the 2008 fiscal
year.
AUDIT
COMMITTEE REPORT
FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2008
Management
has represented to the Audit Committee that Peoples’ audited consolidated
financial statements as of and for the fiscal year ended December 31, 2008,
were prepared in accordance with US GAAP and the Audit Committee has reviewed
and discussed the audited consolidated financial statements with
management.
In
addition, the Audit Committee has discussed and reviewed with Ernst & Young
LLP (“E&Y”), Peoples’ independent registered public accounting firm, all
communications and other matters required to be discussed by auditing standards
generally accepted in the United States, including those described in Statement
on Auditing Standards No. 61, Communication with Audit Committees, as amended,
as adopted by the Public Company Accounting Oversight Board in Rule 3200T, and
by SEC rules, as well as significant current accounting developments and
issues. The Audit Committee has also reviewed and discussed the
audited consolidated financial statements as of and for the fiscal year ended
December 31, 2008, with E&Y.
The Audit
Committee has received from E&Y the written disclosures and the letter
required by applicable requirements of the Public Company Accounting Oversight
Board regarding E&Y’s communications with the Audit Committee concerning
independence, and has discussed with E&Y the independence of
E&Y. The Audit Committee has discussed with E&Y any
relationships with or services to Peoples or our subsidiaries that may impact
E&Y’s independence and objectivity, including the non-audit services
rendered by E&Y, and has satisfied itself as to E&Y’s
independence.
Based on
the Audit Committee’s reviews and discussions with management and E&Y, and
the Audit Committee’s review of the report of E&Y to the Audit Committee,
the Audit Committee recommended to the Board of Directors that Peoples’ audited
consolidated financial statements be included in Peoples’ Annual Report on
Form 10-K for the fiscal year ended December 31, 2008 for filing with
the SEC.
Submitted
by the Audit Committee of Peoples’ Board of Directors:
Richard
Ferguson, Chairman; Carl L. Baker, Jr.; George W. Broughton; David L. Mead;
Theodore P. Sauber; and Thomas J. Wolf.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
On March
2, 2009, the Audit Committee appointed E&Y as Peoples’ independent
registered public accounting firm for the fiscal year ending December 31,
2009. E&Y has served as Peoples’ independent auditors/independent
registered public accounting firm since 1995.
Fees
Fees for
services rendered by E&Y for each of the 2008 fiscal year and the 2007
fiscal year were:
|
2008
|
2007
|
||
|
Audit
Fees (1)
|
$591,300
|
$558134
|
|
|
Audit-Related
Fees (2)
|
37,500
|
17,650
|
|
|
Tax
Fees (3)
|
48,400
|
117,210
|
|
|
Total
|
$677,200
|
$692,994
|
|
____________________
|
(1)
|
Audit
Fees pertain to professional services rendered in connection with the
audit of Peoples’ annual financial statements and review of financial
statements included in Peoples’ Quarterly Reports on Form 10-Q, as well as
internal control testing for compliance with Section 404 of the
Sarbanes-Oxley Act of 2002.
|
|
(2)
|
Audit-Related
Fees pertain to services rendered in connection with statutory audits and
accounting consultation.
|
|
(3)
|
Tax
Fees pertain to services rendered for tax planning and advice, tax
compliance, and assistance with tax audits and
appeals.
|
E&Y
did not render any other services during the 2008 fiscal year or the 2007 fiscal
year. All of the services described under “Audit-Related Fees” or
“Tax Fees” above were pre-approved by the Audit Committee.
The Audit
Committee has adopted, and the Board of Directors has ratified, an Audit and
Non-Audit Services Pre-Approval Policy (the “Pre-Approval Policy”), which sets
forth the procedures and conditions pursuant to which services proposed to be
performed by the independent registered public accounting firm may be
pre-approved. Proposed services may either be pre-approved without
consideration of specific case-by-case services by the Audit Committee (“general
pre-approval”), or require the specific pre-approval of the Audit Committee
(“specific pre-approval”). Appendices to the Pre-Approval Policy
describe the Audit, Audit-Related, Tax and All Other services that have the
general pre-approval of the Audit Committee. The term of any general
pre-approval is 12 months from the date of pre-approval, unless the Audit
Committee states otherwise. The Audit Committee will annually review
and pre-approve the services that may be provided by the independent registered
public accounting firm without obtaining specific pre-approval from the Audit
Committee. The Audit Committee will add to or subtract from the list
of general pre-approved services from time to time, based on subsequent
determinations.
The
Pre-Approval Policy does not delegate to management the Audit Committee’s
responsibilities to pre-approve services performed by the independent registered
public accounting firm. The Audit Committee, however, may delegate
pre-approval authority to one or more of its members. The member(s)
to whom such authority is delegated must report, for informational purposes
only, any pre-approval decisions to the Audit Committee at its next scheduled
meeting.
All
requests or applications for services to be provided by the independent
registered public accounting firm will be submitted to the Chief Financial
Officer of Peoples, and must include a detailed description of the services to
be rendered. The Chief Financial Officer will determine whether such
services are included within the list of services that have received the general
pre-approval of the Audit Committee. The Audit Committee will be
informed on a timely basis of any such services rendered by the independent
registered public accounting firm. Services that require specific
pre-approval by the Audit Committee will be submitted to the Audit Committee by
both the independent registered public accounting firm and the Chief Financial
Officer, and must include a joint statement as to whether, in their view, the
request or application is consistent with the SEC’s rules on auditor
independence. Any proposed services exceeding pre-approved cost
levels or budgeted amounts will also require specific pre-approval by the Audit
Committee.
The Audit
Committee has designated the Auditor of Peoples, as head of the Internal Audit
Department (the “Auditor”), to monitor the performance of all services provided
by the independent registered public accounting firm and to determine whether
such services are in compliance with the Pre-Approval Policy. The
Auditor reports to the Audit Committee on a periodic basis as to the results of
this monitoring. Both the Auditor and management are to immediately
report to the Chairman of the Audit Committee any breach of the Pre-Approval
Policy that comes to the attention of the Auditor or any member of
management.
The Audit
Committee also reviews the Auditor’s annual internal audit plan to determine
whether the plan provides for adequate monitoring of the independent registered
public accounting firm’s services.
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit
Committee of Peoples’ Board of Directors has appointed E&Y to serve as
Peoples’ independent registered public accounting firm for the fiscal year
ending December 31, 2009, and recommends that Peoples’ shareholders vote for the
ratification of that appointment. E&Y audited Peoples’
consolidated financial statements as of and for the fiscal year ended December
31, 2008 and the effectiveness of Peoples’ internal control over financial
reporting as of December 31, 2008. Representatives of E&Y are
expected to be present at the Annual Meeting and will be given the opportunity
to make a statement if they so desire and to respond to appropriate
questions.
The
appointment of Peoples’ independent registered public accounting firm is made
annually by the Audit Committee. Peoples has determined to submit the
appointment of the independent registered public accounting firm to the
shareholders for ratification because of such firm’s role in reviewing the
quality and integrity of Peoples’ consolidated financial statements and internal
control over financial reporting. Before appointing E&Y, the Audit
Committee carefully considered that firm’s qualifications as Peoples’
independent registered public accounting firm and the audit scope.
Recommendation and Vote
THE
AUDIT COMMITTEE AND THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND THAT PEOPLES’
SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF
E&Y.
The
affirmative vote of a majority of the common shares represented at the Annual
Meeting, in person or by proxy, and entitled to vote on the proposal, is
required to ratify the appointment of E&Y as Peoples’ independent registered
public accounting firm for the fiscal year ending December 31, 2009. The
effect of an abstention is the same as a vote “AGAINST.” Even if the
appointment of E&Y is ratified by the shareholders, the Audit Committee, in
its discretion, could decide to terminate the engagement of E&Y and to
engage another firm if the Audit Committee determines such action necessary or
desirable. If the appointment of E&Y is not ratified, the Audit
Committee will reconsider (but may decide to maintain) the
appointment.
NON-BINDING
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The ARRA,
more commonly known as the economic stimulus package, was signed into law on
February 17, 2009. In addition to a wide variety of programs
intended to stimulate the economy, the ARRA imposes significant new requirements
for and restrictions relating to the compensation arrangements of financial
institutions that received government funds through TARP, including institutions
like Peoples that participated in the Capital Purchase Program prior to the
ARRA. These restrictions apply through the ARRA Covered
Period.
One of
the new requirements is that any proxy for a meeting of shareholders at which
directors are to be elected, which is held during the ARRA Covered Period,
permit a non-binding advisory vote by the shareholders on the compensation of
the executives of the TARP participant, as described in the participant’s proxy
statement. This is commonly referred to as a “Say-on-Pay”
proposal.
As a
shareholder, you are being provided with the opportunity to endorse or not
endorse Peoples’ executive pay program and policies through the following
resolution:
“RESOLVED, that the shareholders
approve the compensation of Peoples’ executives, as described in the
COMPENSATION DISCUSSION AND ANALYSIS and the tabular and accompanying narrative
disclosure contained on pages 20 – 45 in this proxy
statement.”
Because
your vote is advisory, it will not be binding upon the Board of Directors,
overrule any decision made by the Board of Directors, or create or imply any
additional fiduciary duty by the Board of Directors. The Compensation
Committee may, however, take into account the outcome of the vote when
considering future executive compensation arrangements.
We
believe that Peoples’ compensation policies and procedures are reasonable in
comparison to both to Peoples’ peer bank holding companies and to Peoples’
performance during 2008. We also believe that Peoples’ compensation
program aligns with the interests of our shareholders in the long-term value of
Peoples as well as the components that drive long-term value.
Recommendation and Vote
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL
NUMBER 3 – NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION
The
affirmative vote of a majority of the common shares represented at the Annual
Meeting, in person or by proxy, and entitled to vote on the proposal is required
to approve, in a non-binding advisory vote, Peoples’ executive compensation
disclosed in this proxy statement. The effect of an abstention is the
same as a vote “AGAINST” the
proposal.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
The SEC
has implemented rules regarding the delivery of proxy materials to
households. This method of delivery, often referred to as
“householding,” would permit Peoples to send a single annual report, proxy
statement or Notice of Internet Availability of Proxy Materials, as applicable,
to any household at which two or more different shareholders reside if Peoples
reasonably believes such shareholders are members of the same family or
otherwise share the same address or that one shareholder has multiple
accounts. In each case, the shareholder(s) must consent to the
householding process, and may at any time request that Peoples promptly deliver
to such shareholder(s) a separate copy of the proxy materials subject to
householding. Each shareholder would continue to receive a separate
notice of meeting of shareholders and proxy card. The householding
procedure is intended to reduce the volume of duplicate information shareholders
receive and reduce Peoples’ expenses. Peoples does not currently
practice householding, but may institute householding in the future and will
notify registered shareholders affected by householding at that
time.
Many
broker/dealers, financial institutions and other holders of record have
instituted householding. If your family has one or more “street name”
accounts under which you beneficially own common shares of Peoples, you may have
received householding information from your broker/dealer, financial institution
or other record holder in the past. Please contact the record holder
directly if you have questions, require additional copies of this proxy
statement or Peoples’ 2008 Annual Report or if you wish to revoke your decision
to household and thereby receive multiple copies of proxy
materials. You should also contact the record holder if you wish to
institute householding.
As of the
date of this proxy statement, the Board of Directors knows of no matter that
will be presented for action by the shareholders at the Annual Meeting other
than those matters discussed in this proxy statement. However, if any
other matter requiring a vote of the shareholders is properly presented at the
Annual Meeting or any adjournment thereof, the individuals acting under the
proxies solicited by the Board of Directors will vote and act according to their
best judgment in light of the conditions then prevailing, to the extent
permitted under applicable law.
It is
important that your proxy card be completed, signed and returned
promptly. If you do not expect to attend the Annual Meeting in
person, please complete, sign and return the accompanying proxy card in the
self-addressed envelope furnished herewith.
By Order of the Board of Directors,
Mark F. Bradley
President
and Chief Executive Officer
Peoples Bancorp (w/logo)® is a
federally registered service mark of Peoples Bancorp Inc.
PEOPLES
BANCORP INC.
ANNUAL
MEETING OF SHAREHOLDERS
Thursday,
April 23, 2009
10:00
a.m., Eastern Daylight Saving Time
Holiday
Inn
701
Pike Street
Marietta,
Ohio 45750
|
|
Peoples
Bancorp Inc.
P.O.
Box 738
Marietta,
Ohio 45750
|
proxy
|
This
proxy is solicited by the Board of Directors for use at the Annual Meeting of
Shareholders to be held on April 23, 2009.
The
common shares of Peoples Bancorp Inc. (“Peoples”) as to which you have voting
authority, including those held on your behalf in a trust account, under
Peoples’ Dividend Reinvestment and Stock Purchase Plan or under Peoples Bancorp
Inc. Retirement Savings Plan, will be voted as you specify on the reverse side
of this proxy card.
If
no choice is specified, the common shares of Peoples represented by this proxy
card will be voted, if permitted by applicable law, “FOR” the election of the
director nominees listed in Item No. 1, “FOR” the Proposal in Item No. 2 and
“FOR” the Proposal in Item No. 3.
By
signing this proxy card, you revoke all prior proxies to vote the common shares
of Peoples you are entitled to vote at the Annual Meeting of Shareholders and
appoint Mark F. Bradley and Richard Ferguson, and each of them with full power
of substitution, as your proxies to attend the Annual Meeting of Shareholders
and vote your common shares of Peoples on the matters shown on the reverse side
and in their discretion, to the extent permitted by applicable law, on any other
matters (none known at the time of solicitation of this proxy) which may
properly come before the Annual Meeting of Shareholders and all adjournments
thereof.
Peoples
Bancorp (w/logo)® is a federally registered service mark of Peoples Bancorp
Inc.
See
reverse for voting instructions.
00065046
TO
VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS
BELOW,
SIMPLY
SIGN, DATE, AND RETURN THIS PROXY CARD.
The
Board of Directors Recommends a Vote “FOR” All Director Nominees Listed in Item
No. 1,
“FOR”
the Proposal in Item No. 2 and “FOR” the Proposal in Item No. 3.
1. Election of
directors for
a 01 Carl L. Baker,
Jr.
03 Wilford D.
Dimit □Vote
FOR all
nominees □Vote
WITHHELD
three-year term expiring in
2012: 02 George W.
Broughton 04 Richard
Ferguson
(except as
marked)
from all
nominees
(Instructions:
To withhold authority to vote for any indicated nominee,
write
the number(s) of the nominee(s) in the box provided to the right.)
|
2.
|
Ratification
of the appointment of Ernst & Young LLP as Peoples’
independent
|
|
registered
public accounting firm for the fiscal year ending December 31,
2009.
|
□
|
For
|
□
|
Against
|
□
|
Abstain
|
|
3.
|
Approval,
in a non-binding advisory vote, of Peoples’ executive
compensation
|
|
disclosed
in the Proxy Statement for the Annual Meeting of
Shareholders.
|
□
|
For
|
□
|
Against
|
□
|
Abstain
|
THE
COMMON SHARES REPRESENTED BY THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE
VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR THE ELECTION OF
ALL DIRECTOR NOMINEES LISTED IN ITEM NO. 1, FOR THE PROPOSAL IN
ITEM NO. 2 AND FOR THE PROPOSAL IN
ITEM NO. 3. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE
ANNUAL MEETING OF SHAREHOLDERS OR ANY ADJOURNMENT THEREOF OR IF A NOMINEE FOR
ELECTION AS A DIRECTOR NAMED IN THE PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE COMMON
SHARES REPRESENTED BY THIS PROXY CARD WILL BE VOTED IN THE DISCRETION OF THE
INDIVIDUALS DESIGNATED TO VOTE THIS PROXY, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ON SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEE(S) AS THE DIRECTORS MAY
RECOMMEND.
Address Change? Mark Box □ Indicate changes
below:
Date _____________________________________
Signature(s) in Box
Please sign exactly as your name(s) appears on the proxy card.
If held in joint tenancy, all persons must sign. Trustees,
administrators,
executors, guardians, attorneys, agents, etc.,
must include title and
authority. Corporations must provide full
name of corporation and title of authorized officer signing the
proxy
card.