SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the
Securities Exchange Act
of 1934 (Amendment No.)
Filed by the Registrant [x][ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x][ x ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Peoples Bancorp Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of PersonPerson(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x][ x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: _________________________________
(2) Form, Schedule or Registration Statement No.: ___________
(3) Filing Party: ___________________________________________
(4) Date Filed: _________________________________________________________________________________________
March 5, 2004
Dear Peoples Bancorp Shareholder(s):
Enclosed is your Notice of Annual meeting, Proxy Statement and
Revocable Proxy, along with Peoples' Summary Annual Report and Form 10-K. Please
sign the Revocable Proxy and return it in the envelope provided. If you attend
the Annual Meeting, you may withdraw your Proxy at the meeting and vote in
person. Sending your Proxy assures you that your shares will be represented.
Robert E. Evans, Robert W. Price and Paul T. Theisen have been
nominated as Directors for re-election to terms of three years each.
The following is also listed on the Proxy for your vote at this
meeting:
1. To consider and vote on a proposal to adopt amendments to Article THREE
of Peoples' Code of Regulations to designate additional officers to be
elected by the directors and clarify and separate the roles of the
officers.
At this time, we know of no other business to be presented for
Stockholder consideration.
Please take time to review your company's progress, detailed in
Peoples' Summary Annual Report and Form 10-K. We urge you to take advantage of
the many financial services offered by our Bank. Your recommendation of these
services to your associates, friends and neighbors is an excellent way to aid
Peoples Bancorp toward continued progress.
You may access Peoples' home page on the internet at
http://www.peoplesbancorp.com.
Sincerely,
PEOPLES[PEOPLES BANCORP INC.
/S/ RUTH I. OTTO
Ruth I. Otto
Corporate Secretary
Enclosures
LOGO] o 138 Putnam Street o 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 5, 2004
To the Shareholders of Peoples Bancorp Inc.:
Notice is hereby given that the__, 2006
Dear Fellow Shareholders:
The Annual Meeting of Shareholders (the "Annual Meeting") of Peoples
Bancorp Inc. ("Peoples") will be held at 10:30
A.M.00 a.m., local time in Marietta, Ohio,Eastern Daylight Savings
Time, on Thursday, April 8, 2004,13, 2006, in the Ball Room of the Holiday Inn, 701 Pike
Street in Marietta, Ohio (Interstate 77, Ohio exit 1), for the following
purposes:
1. To elect the following directors for terms of three years each:
Nominee Term Expires In
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Robert E. Evans------------------------------------------------------------------
Carl L. Baker, Jr. (for re-election) 2007
Robert2009
George W. PriceBroughton (for re-election) 2007
Paul T. Theisen2009
Wilford D. Dimit (for re-election) 20072009
Richard Ferguson (for re-election) 2009
2. To consider and vote onupon a proposal to approve the Peoples Bancorp
Inc. 2006 Equity Plan.
3. To consider and vote upon a proposal to adopt amendments to Article THREESections
2.06, 2.07, 3.01 and 3.04 of Peoples' Code of Regulations to designate
additional officerswhich would
clarify when a Leadership Director is to be elected by Peoples'
directors as well as the role of the Leadership Director in providing
a bridge between the independent directors and clarify
and separate the roles of the officers.
3.management.
4. To transact any other business which properly comes before the Annual
Meeting or any adjournment.
ShareholdersIf you were a shareholder of record at the close of business on
February 16, 2004,13, 2006, you will be entitled to receive notice of and to vote in person or by proxy at the
Annual Meeting.
You are cordially invited to attend the Annual Meeting. TheYour vote of
each shareholder is
important, whateverregardless of the number of common shares held.you own. Whether or not you
plan to attend the Annual Meeting in person, please sign, date and return your
proxy card promptly in the enclosed envelope.envelope at your earliest convenience.
Peoples' 20032005 Annual Report to Shareholders and Form 10-K for the Year
Ended December 31, 2003,2005 and 2003Peoples' 2005 Summary Annual Report accompany this
notice and proxy statement.
By Order of the Board of Directors,
By: /s/ RUTH I. OTTO
Ruth I. OttoRHONDA L. MEARS
Rhonda L. Mears
Corporate Secretary
PEOPLES BANCORP INC.
138 Putnam Street
P.O. Box 738
Marietta, Ohio 45750-0738
(740) 374-6136
www.peoplesbancorp.com
PROXY STATEMENT ThisFOR ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 13, 2006
GENERAL INFORMATION
We are sending you this proxy statement is being furnished to shareholders of Peoples
Bancorp Inc., an Ohio corporation ("Peoples"), in connection withand the solicitation of proxies byenclosed proxy card
because the Board of Directors of Peoples for useBancorp Inc. ("Peoples") is soliciting
your proxy to vote at the Annual Meeting of Shareholders of Peoples (the "Annual Meeting") called,
to be held on Thursday, April 8, 2004,13, 2006, at 10:00 a.m., Eastern Daylight Savings
Time, or at any adjournment. The Annual Meeting will be held at 10:30 A.M., local time in Marietta, Ohio, in the Ball Room of
the Holiday Inn, 701 Pike Street in Marietta, Ohio (Interstate 77, Ohio exit 1).
This proxy statement and the accompanying proxy card were first sent or givensummarizes information that you will need in order to shareholders on or about March 5, 2004.vote.
Peoples has four wholly-owned subsidiaries, Peoples Bank, National
Association ("Peoples Bank"), Peoples Investment Company, PEBO Capital Trust I
and PEBO Capital Trust II. Peoples Bank also owns an insurance agency
subsidiary, Peoples Insurance Agency, Inc., and an asset management subsidiary.
Peoples Investment Company also owns a capital management subsidiary. APeoples
also established Peoples Bancorp Foundation, Inc., as an independent charitable
foundation to provide financial assistance and grants to local organizations.
Mailing
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We mailed this proxy statement and the accompanying proxy card for useon or
about March __, 2006, to all shareholders entitled to vote their common shares
at the Annual Meeting accompanies thisMeeting. We also sent with the proxy statement.statement Peoples' 2005
Annual Report to Shareholders and Form 10-K for the Year Ended December 31, 2005
(the "2005 Annual Report to Shareholders") and Peoples' 2005 Summary Annual
Report. Additional copies of Peoples' Annual Report on Form 10-K for the fiscal
year ended December 31, 2005, may use their proxy cards if they are unable to attendbe obtained, without charge, upon written
request to: Rhonda L. Mears, Corporate Secretary, 138 Putnam Street, P.O. Box
738, Marietta, Ohio 45750-0738. The Form 10-K is also on file with the
Securities and Exchange Commission (the "SEC") and is available on the SEC's
website at www.sec.gov.
Householding of Annual Meeting Materials
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The SEC has implemented rules regarding the delivery of proxy materials
(i.e., annual reports and proxy statements, proxy statements combined with a
prospectus, or any information statements provided to shareholders) to
households. This method of delivery, often referred to as "householding," would
permit Peoples to send a single annual report and/or a single proxy statement 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. Each
shareholder would continue to receive a separate notice of any 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 may institute householding in personthe future and will notify
registered shareholders affected by householding at that time.
Many broker/dealers and other holders of record have instituted
householding. If your family has one or wish to have theirmore "street name" accounts under which
you beneficially own common shares voted by proxy
even if they do attend the Annual Meeting. Without affecting any vote previously
taken, any shareholder appointing a proxy may revoke it at any time before it is
actually voted by filing with the Secretary of Peoples, atyou may have received
householding information from your broker/dealer, financial institution, or
other nominee in the address set forth
onpast. Please contact the cover pageholder of record directly if you
have questions, require additional copies of this proxy statement, written notice of such revocation; by
executing a later-dated proxy card which is received by Peoples priorPeoples' 2005
Annual Report to theShareholders or Peoples' 2005 Summary Annual Meeting;Report, or if you
wish to revoke your decision to household and thereby receive multiple copies.
You should also contact the holder of record if you wish to institute
householding. These options are the registered shareholder, by attending the
Annual Meeting and giving notice of such revocation in person. Attendanceavailable to you at any time.
VOTING INFORMATION
Who can vote at the Annual Meeting will not, in and of itself, constitute revocation of a previously
appointed proxy.Meeting?
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Only shareholders of record at the close of business on February 16,
2004 (the "Record Date"),13,
2006, are entitled to receive notice of and to vote at the Annual Meeting. At
the close of business on the Record Date, 10,709,081February 13, 2006, there were 10,584,553 common shares were
outstanding and entitled to vote. Each common share entitles the holder to one
vote on each matter to be submitted to shareholdersvoted upon at the Annual Meeting. A quorum for the Annual Meeting is a majority of the common shares
outstanding. There is no
cumulative voting with respect to the election of directors.
Shareholders holdingHow do I vote?
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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 enclosed
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, financial institution or other record holder, 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 the record holder.
The account statement or letter must show that you were the direct or indirect
beneficial owner of the common shares on February 13, 2006, the record date for
voting.
How will my common shares be voted?
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Those common shares represented by properly executed proxy cards that
are received prior to the Annual Meeting and not subsequently revoked will be
voted in accordance with your instructions by your "proxy" (one of 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, your proxy will vote your common shares as recommended by the Board of
Directors, except in the case of broker non-votes where applicable, as follows:
o "FOR" the election as directors of the nominees listed under
"PROPOSAL NUMBER 1: ELECTION OF DIRECTORS";
o "FOR" the approval of the Peoples Bancorp Inc. 2006 Equity Plan
as described in "PROPOSAL NUMBER 2: APPROVAL OF PEOPLES BANCORP
INC. 2006 EQUITY PLAN"; and
o "FOR" the adoption of the proposed amendments to Sections 2.06,
2.07, 3.01 and 3.04 of Peoples' Code of Regulations as described
in "PROPOSAL NUMBER 3: ADOPTION OF AMENDMENTS TO SECTIONS 2.06,
2.07, 3.01 AND 3.04 OF THE CODE OF REGULATIONS."
If any other matters are properly presented for voting at the Annual Meeting,
the persons named as proxies will vote on those matters in accordance with their
best judgment.
May I revoke my proxy?
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Yes. You may change your mind after you send in your proxy card by
following any one of the following three procedures. To revoke your proxy:
o Send in another signed proxy card with a later date, which must be
received by Peoples prior to the Annual Meeting;
o Send written notice revoking your proxy to 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; or
o Attend the Annual Meeting and revoke your proxy in person if your
common shares are held in your name. If your common shares are held in
the name of your broker/dealer, financial institution or other holder
of record and you wish to revoke your proxy in person, you must bring
an account statement or letter from the broker/dealer, financial
institution or other holder of record indicating that you were the
beneficial owner of the common shares on February 13, 2006, the record
date for voting.
Attendance at the Annual Meeting will not, by itself, revoke your proxy.
What is the quorum requirement for the Annual Meeting?
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Under Peoples' Code of Regulations, a quorum is a majority of the
common shares outstanding. Common shares may be present in person or represented
by proxy at the Annual Meeting. Both abstentions and broker non-votes are
counted as present for purposes of determining the presence of a quorum.
Generally, broker non-votes occur when common shares held by a broker/dealer for
a beneficial owner are not voted with respect to a particular proposal because
the broker/dealer has not received voting instructions from the beneficial owner
and the broker/dealer lacks discretionary voting power to vote such common
shares. Broker/dealers have discretionary authority to vote their clients'
common shares on "routine" proposals, such as the uncontested election of
directors, even if they do not receive voting instructions from their clients.
They cannot, however, vote their clients' common shares on other "non-routine"
matters without instructions from their clients.
What if my common shares are held in street name?
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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 themyou by such holder of record. This information will set
forth the procedures you need to be followedfollow in instructing the holder of record how
to vote theyour "street name" common shares and how to revoke previously given
instructions. Peoples will bearIf 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 of preparing and mailing this proxy
statement, the accompanying proxy card and any other related materials, as well
as all other costs incurred in connectionassociated with the solicitation of proxies on
behalf of the Board of Directors. Proxies will be solicited by mail and may be
further solicited, for no additional compensation, by officers, directors or
employees of Peoples and its subsidiaries by further mailing, telephone,
facsimile, or personal contact. Peoples will also pay the standard charges and
expenses of broker/dealers, voting trustees, financial institutions and other
custodians, nominees and fiduciaries, who are record holders ofelectronic access.
What if my common shares not beneficially owned by them, for forwarding such materials to, and obtaining
proxies from,are held through the beneficial owners of common shares entitled to vote at the
Annual Meeting.Peoples Bancorp Inc.
Retirement Savings Plan?
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If a shareholder is a participantyou participate in the Peoples Bancorp Inc. Retirement Savings Plan
and common shares have been allocated to such
individual'syour account in the Retirement Savings
Plan, the shareholder isyou will be entitled to instruct the trustee of the Retirement Savings
Plan how to vote those common shares. These shareholdersIf you are such a participant, you may
receive theiryour proxy cardscard separately. If a
participant givesyou give no voting instructions to the
trustee of the Retirement Savings Plan, the trustee will not vote thosethe common
shares.
The inspectorsshares allocated to your account under the Retirement Savings Plan.
Who pays the cost of electionproxy solicitation?
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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 through a holder of record. Although we are
mailing these proxy materials, directors, officers and employees of Peoples and
our subsidiaries also may solicit proxies by further mailings, telephone,
facsimile or personal contact without receiving any additional compensation for
such solicitations. Peoples will also reimburse our transfer agent,
broker/dealers, voting trustees, financial institutions and other custodians,
nominees and fiduciaries for their reasonable costs in forwarding the proxy
materials to the beneficial shareholders.
What vote is required to approve the proposals presented at the Annual MeetingMeeting?
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Proposal Number 1: Election of Directors
Under Ohio law and Peoples' Code of Regulations, the four nominees for
election as directors in the class whose terms will tabulateexpire in 2009 receiving the
resultsgreatest number of shareholder voting.votes "FOR" election will be elected as directors. Common
shares represented by
properly executed proxies returnedas to Peoples priorwhich the authority to the Annual Meetingvote is withheld will be counted towardfor quorum
purposes but will not affect whether a nominee has received sufficient votes to
be elected.
Proposal Number 2: Approval of Peoples Bancorp Inc. 2006 Equity Plan
The affirmative vote of the establishmentholders of a quorum formajority of the Annual Meeting even
though they are marked "ABSTAIN," "AGAINST" or "FOR ALL EXCEPT" or not at all.
Broker/dealers who hold common shares
in street name may, underthat are voted on the applicable
rulesproposal to approve the Peoples Bancorp Inc. 2006 Equity
Plan is necessary to approve the 2006 Equity Plan. Broker non-votes will not be
treated as votes cast. Abstentions will be treated as votes cast and will have
the effect of a vote "AGAINST" the proposal.
Proposal Number 3: Adoption of Amendments to Sections 2.06, 2.07, 3.01 and
3.04 of the exchange and other self-regulatory organizationsCode of whichRegulations
The affirmative vote of the broker/dealers are members, sign and submit proxies for suchholders of common shares entitling them to
exercise not less than a majority of the voting power of Peoples is required to
adopt the proposed amendments to Sections 2.06, 2.07, 3.01 and may vote such common shares on routine matters such as the election of
directors, but broker/dealers may not vote such common shares on non-routine
matters without specific instructions from the customer who owns such common
shares. Proxies that are signed and submitted by broker/dealers that have not
been voted on certain matters as described in the previous sentence are referred
to as broker non-votes. Broker non-votes count toward the establishment of a
quorum for the Annual Meeting.
The 2003 Annual Report to Shareholders and Form 10-K for the Year Ended
December 31, 2003 (the "2003 Annual Report to Shareholders") and the 2003
Summary Annual Report are being delivered with this proxy statement. Additional
copies3.04 of Peoples'
Annual Report on Form 10-K for the fiscal year ended December
31, 2003 may be obtained, without charge, upon request to Ruth I. Otto, Peoples'
Corporate Secretary, at P.O. Box 738, 138 Putnam Street, Marietta, Ohio
45750-0738.Code of Regulations. The Form 10-K is also on file with the Securities and Exchange
Commission (the "SEC").
DELIVERY OF PROXY MATERIALS
TO HOUSEHOLDS
Annually, Peoples provides each registered shareholder at a shared
address, not previously notified, with a separate noticeeffect of Peoples' intention
to household proxy materials. The record holder notifies beneficial shareholders
(those who hold common shares through a financial institution, broker/dealer or
other record holder) of the householding process. Those registered and
beneficial shareholders who share an address and have not opted-out (as defined
below) of the householding process will receive only one copy of the 2003 Annual
Report to Shareholders, the 2003 Summary Annual Report and this proxy statement.
A separate proxy card and a separate Notice of Annual Meeting of Shareholders
will continue to be included for each shareholder at the shared address.
Registered shareholders who share an address and would like to receive
a separate 2003 Annual Report to Shareholders, a separate 2003 Summary Annual
Report and/abstention or a separate proxy statement (to "opt-out"), or have questions
regardingbroker non-vote is the
householding process, may contactsame as a vote "AGAINST" the Corporate Secretary of
Peoples by calling (740) 374-6136 or by a written request addressed to the
Corporate Secretary of Peoples at P.O. Box 738, 138 Putnam Street, Marietta,
Ohio 45750-0738. Promptly upon request, a separate 2003 Annual Report to
Shareholders, a separate 2003 Summary Annual Report and/or a separate proxy
statement will be sent. By contacting the Corporate Secretary, registered
shareholders sharing an address can also (i) notify Peoples that the registered
shareholders wish to receive separate annual reports and proxy statements in the
future or (ii) request delivery of a single copy of annual reports or proxy
statements in the future if they are receiving multiple copies. Beneficial
shareholders should contact their broker/dealers, financial institution, or
other record holders for specific information on the householding process as it
applies to those beneficial shareholders.proposal.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date,February 13, 2006 (except as
otherwise noted), certain information concerning the beneficial ownership of
common shares by the only personpersons known toby Peoples to be the beneficial owner of
more than 5% of the outstanding common shares:
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class (1)
---------------- -------------------- ------------------------------------
Peoples Bank - Trustee
138 Putnam Street
P.O. Box 738
Marietta, OH 45750 1,072,71945750-0738 1,174,016 (2) 10.02%11.09%
Franklin Resources Inc.
Charles B. Johnson
Rupert H. Johnson, Jr.
Franklin Advisory Services, LLC
One Franklin Parkway
San Mateo, CA 94403-1906 909,947 (3) 8.60%
(1) The percent"Percent of classClass" computation is based on 10,709,08110,584,553 common
shares outstanding and entitled to vote on the Record Date.February 13, 2006.
(2) Includes Peoples Bank's beneficial ownership through Peoples Financial
Advisors, group (formerly known as the Investment and Trust Divisiona division of Peoples Bank)Bank in the following manner: 154,187131,316
common shares with shared investment and sole voting power; 687,705704,400
common shares with shared investment and voting power; 157,665286,214 common
shares with sole voting and investment power; and 73,16252,086 common shares
with sole investment and shared voting power. The officers and
directors of Peoples Bank and Peoples disclaim beneficial ownership of
thesethe common shares beneficially owned by reasonPeoples Bank through Peoples
Financial Advisors.
(3) Based on information contained in a Schedule 13G amendment, dated
February 13, 2006, filed with the SEC on behalf of their positions.
Franklin Resources,
Inc., Charles B. Johnson, Rupert H. Johnson, Jr. and Franklin Advisory
Services, LLC to report beneficial ownership of common shares of
Peoples as of December 31, 2005. These common shares are reported to
be beneficially owned by one or more open or closed-end investment
companies or other managed accounts which are advised by Franklin
Advisory Services, LLC or Franklin Templeton Portfolio Advisors, Inc.,
which are investment adviser subsidiaries of Franklin Resources, Inc.
Such advisory 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 905,647 common shares and sole
investment power as to 908,747 common shares and Franklin Templeton
Portfolio Advisors, Inc. had sole voting (except as previously noted)
and sole investment power as to 1,200 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 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.
The following table sets forth, as of the Record Date,February 13, 2006, certain
information with respect to the common shares beneficially owned by each
current director of Peoples, by each nominee for election as a director of
Peoples, by each executive officer of Peoplesindividual named in the Summary Compensation Table and by
all current executive officers and directors of Peoples as a group:
Amount and Nature of Beneficial Ownership (1)
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Common Shares Which Can Be Acquired Upon
Upon Exercise of Options Currently
Name of Common Shares Exercisable or Will Become ExercisableOptions First Becoming
Beneficial Owner Presently Held WithinExercisable Withing 60 Days Total Percent of Class (2)
---------------- -------------- -------------- ----- ------------------------------- --------------------------------------- --------- --------------------
Carl L. Baker, Jr. 23,219(3) 8,213 31,43225,666 (3) 9,231 34,897 (4)
David B. Baker (5) 12,095(6) 35,025 47,12024,289 (6) 25,139 49,428 (4)
Mark F. Bradley (5) 3,625(7) 12,656 16,2815,304 (7) 26,139 31,443 (4)
George W. Broughton 172,893(8) 7,216 180,109 1.68%173,169 (8) 10,181 183,350 1.73%
Frank L. Christy 79,064(9) 2,633 81,69778,114 (9) 6,098 84,212 (4)
John W. Conlon (5) 22,679 (10) 17,092 39,771 (4)
Wilford D. Dimit 41,852(10) 10,616 52,46847,732 (11) 11,010 58,742 (4)
Robert E. Evans (5) 181,909(11) 51,476 233,385 2.17%
Larry E. Holdren (5) 21,158(12) 15,493 36,651(12) - - - n/a
Richard Ferguson 100 (13) - 100 (4)
Robert W. Price 12,911(13) 1,155 14,06624,517 (14) 4,620 29,137 (4)
Theodore P. Sauber 128,433 (15) 2,310 130,743 1.24%
Carol A. Schneeberger (5) 19,651 (16) 19,051 38,702 (4)
Paul T. Theisen 24,119(14) 14,945 39,064 (4)
Thomas C. Vadakin (15) 16,235(16) 0 16,23525,157 (17) 13,245 38,402 (4)
Joseph H. Wesel 38,532(17) 12,851 51,38339,750 (18) 11,151 50,901 (4)
Thomas J. Wolf 29,410 (19) 2,310 31,720 (4)
Joseph S. Yazombek (5) 29,848(18) 28,025 57,87338,424 (20) 33,042 71,466 (4)
All current directors and
executive officers as a
group (numbering 15)
703,040(19) 247,557 950,597 8.68%
--------------------16) 687,154 (21) 199,646 886,800 8.22%
(1) Unless otherwise noted,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 to the nearest 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"Percent of class"Class" computation is based uponon the sum of (i)
10,709,08110,584,553 common shares outstanding and entitled to vote on the Record
DateFebruary 13, 2006 and (ii) the
number of common shares as to which the named personindividual 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 of the Record Date.after February 13, 2006.
(3) Includes 6,352 common shares held by B & N Coal, Inc., as to which
Mr.Carl L. Baker, Jr. exercises shared voting and investment power. Also
includes 6,943 common shares held by Mr. Baker as Trustee of the
Gilbert Baker Trust, as to which Mr. Baker is Trustee and exercises
sole voting and investment power. Does not include 237250 common shares
accrued to Mr. Baker's account under the Peoples Bancorp Inc. Deferred
Compensation Plan for Directors of Peoples Bancorp Inc. and
Subsidiaries, as to which Mr. Baker has no voting or investment power.
Does not include 32,00615,594 common shares held in the Jewell Baker Trust,
as to which Mr. Baker is a beneficiary but has no voting or investment
power.
(4) Reflects beneficial ownership of less than 1% of the outstanding
common shares of Peoples.shares.
(5) Executive officer of Peoples during the 2005 fiscal year ended
December 31, 2005 (the "2005 fiscal year") and named in the Summary
Compensation Table. Mr.
Evans and Mr.As of January 1, 2006, David B. Baker no longer
serves as an executive officer of Peoples. Mark F. Bradley also serveserves
as Directorsa director of Peoples.
(6) Includes 12,09524,289 common shares held jointly by Mr.David B. Baker andwith his
wife, as to which Mr. Baker exercises shared voting and investment
power.
(7) Does not include 7351,414 common shares accrued to Mr.Mark F. Bradley's
account under the Peoples Bancorp Inc. Deferred Compensation Plan for
Directors of Peoples Bancorp Inc. and Subsidiaries, as to which Mr.
Bradley has no voting or investment power. Includes 3,2914,482 common
shares allocated to the account of Mr. Bradley in the Peoples Bancorp
Inc. Retirement Savings Plan, as to which Mr. Bradley has the power to
direct the voting and investment.
(8) Includes 7,4637,378 common shares held by Mr.George W. Broughton as custodian
for his children, as to which Mr. Broughton has sole voting and
investment power and claims beneficial ownership. Includes 558 common
shares held by Broughton Commercial Properties, LLC, as to which Mr.
Broughton exercises shared voting and investment power. Includes
16,63716,287 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 12,77413,374
common shares held in an IRA account by Peoples Bank as custodian, as
to which Mr. Broughton exercises shared 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 1,1721,236 common shares accrued to Mr. Broughton's account under
the Peoples Bancorp Inc. Deferred Compensation Plan for Directors of
Peoples Bancorp Inc. and Subsidiaries, as to which Mr. Broughton has
no voting or investment power.
(9) Includes 8,6707,020 common shares held in the Frank L. Christy Investment
Agency Account and 70,115 common shares held in the Riverbank
Restaurants Inc. Agency Account at Peoples Bank, as to which Mr.
Christy exercises shared voting and investment power. Also includes
70,115979 common shares held in the
Riverbank Restaurants Inc. Agency Account,an investment account by Mr. Christy, as to
which Mr. Christy exercises sharedsole voting and investment power.
(10) Does not include 10 common shares held of record and beneficially
owned by John W. Conlon's wife, as to which Mr. Conlon has no voting
or investment power and disclaims beneficial ownership. Does not
include 1,422 common shares allocated to the account of Mr. Conlon's
wife in the Peoples Bancorp Inc. Retirement Savings Plan, as to which
Mr. Conlon has no voting or investment power and disclaims beneficial
ownership. Includes 22,6653,285 common shares allocated to the account of
Mr. Conlon in the Peoples Bancorp Inc. Retirement Savings Plan, as to
which Mr. Conlon has the power to direct the voting and investment.
(11) Includes 27,869 shares held jointly by Mr.Wilford D. Dimit with his wife,
as to which Mr. Dimit exercises shared voting and investment power.
Does not include 15,13418,516 common shares accrued to Mr. Dimit's account
under the Peoples Bancorp Inc. Deferred Compensation Plan for
Directors of Peoples Bancorp Inc. and Subsidiaries, as to which Mr.
Dimit has no voting or investment power.
(11)(12) Robert E. Evans served as Chairman of the Board and Chief Executive
Officer of Peoples during the 2005 fiscal year and he is named in the
Summary Compensation Table. Mr. Evans died on June 15, 2005.
(13) Includes 35,395100 common shares allocated to the account of Mr. EvansRichard
Ferguson in the Peoples Bancorp Inc. Retirement Savings Plan,Ferguson Consulting LLC retirement savings plan, as to
which Mr. EvansFerguson has the power to direct the voting and investment.
Does not include 23,204 common shares held of record and owned beneficially by Mr. Evans'
wife, nor 4,200 common shares held jointly by Mr. Evans' wife and their
son, as to which common shares Mr. Evans has no voting or investment
power and disclaims beneficial ownership. Does not include 13,6821,155 common shares accrued to Mr. Evans'Ferguson's account
under the Peoples Bancorp Inc. Deferred Compensation Plan for
Directors of Peoples Bancorp Inc. and Subsidiaries, as to which Mr.
EvansFerguson has no voting or investment power.
(12)(14) Includes 6,264 common shares held jointly by Mr. Holdren and his wife, as
to which Mr. Holdren exercises shared voting and investment power.
Includes 14,894 common shares allocated to the account of Mr. Holdren in
the Peoples Bancorp Inc. Retirement Savings Plan, as to which Mr. Holdren
has the power to direct the voting and investment.
(13) Includes 10,74510,957 common shares held in the Robert W. Price Investment
Account at Peoples Bank, as to which Mr. Price sharesexercises sole
investment and voting power. Does not include 1,8263,032 common shares
accrued to Mr. Price's account under the Peoples Bancorp Inc. Deferred
Compensation Plan for Directors of Peoples Bancorp Inc. and
Subsidiaries, as to which Mr. Price has no voting or investment power.
(14)(15) 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. Includes 64,139 common shares held
in the Theodore P. Sauber Trust Account at Peoples Bank, as to which
Mr. Sauber exercises shared investment and voting power. 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.
(16) Includes 5,914 shares held jointly by Carol A. Schneeberger with her
husband, as to which Ms. Schneeberger exercises shared voting and
investment power. Includes 9,774 common shares allocated to the
account of Ms. Schneeberger in the Peoples Bancorp Inc. Retirement
Savings Plan, as to which Ms. Schneeberger has the power to direct the
voting and investment.
(17) Does not include 5,3005,593 common shares accrued to Mr.Paul T. Theisen's
account under the Peoples Bancorp Inc. Deferred Compensation Plan for
Directors of Peoples Bancorp Inc. and Subsidiaries, as to which Mr.
Theisen has no voting or investment power.
(15) Under Section 2.01 of Peoples' Code of Regulations, Mr. Vadakin is(18) Does not eligible for nomination and re-election as a director. He will retire as
a director upon the expiration of his term at the Annual Meeting.
(16) Includes 15,703include 14,879 common shares held in the Thomas C. VadakinLuada Wesel Estate
Plan Trust Investment Account at Peoples Bank, as to which Mr. Vadakin shares investment and voting
power.
(17) Does not include 16,474 common shares held of record and beneficially
owned by Mr. Wesel's wife, as to which Mr.Joseph H.
Wesel has no voting or investment power and disclaims beneficial
ownership. Does not include 7,2347,633 common shares accrued to Mr. Wesel's
account under the Peoples Bancorp Inc. Deferred Compensation Plan for
Directors of Peoples Bancorp Inc. and Subsidiaries, as to which Mr.
Wesel has no voting or investment power. Does not include 36,93924,313
common shares in the Joseph and Lu Wesel Grandchildren's Trust, as to
which Peoples Bank has sole investment and voting power.
(18)(19) Includes 16,9509,410 common shares held in an investment account by Thomas
J. Wolf, as to which Mr. Wolf exercises sole voting and investment
power.
(20) Includes 24,720 common shares held jointly by Mr.Joseph S. Yazombek and
his wife, as to which Mr. Yazombek exercises shared voting and
investment power. Includes 12,89913,704 common shares allocated to the
account of Mr. Yazombek in the Peoples Bancorp Inc. Retirement Savings
Plan, as to which Mr. Yazombek has the power to direct the voting and
investment.
(19)(21) Includes common shares held jointly by current directors and executive
officers with other persons, as well as 92,31047,414 common shares allocated
to the accounts of all current executive officers of Peoples (and
their respective spouses) in the Peoples Bancorp Inc. Retirement
Savings Plan. See notes (3), (7) through (11) and (5)(13) through (18)(20)
above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that Peoples' directors,
executive officers and greater-than-10% beneficial owners file reports with the
SEC reporting their initial beneficial ownership of common shares and any
subsequent changes in their beneficial ownership. Specific due dates have been
established by the SEC, and Peoples is required to disclose in this proxy
statement any late reports. To Peoples' knowledge, based solely on a review of
reports furnished to Peoples and written representations that no other reports
were required, during the 2005 fiscal year, ended December 31, 2003 (the "2003 fiscal year"), all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%greater-than-10%
beneficial owners of Peoples' common shares under Section 16(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), were complied with, except as
noted below:
1. Donald J. Landers made aexcept:
o Paul T. Theisen filed late filingone Form 4 covering four transactions
related to the same day exercise of his Form 3 on August 26, 2003
to report his becoming chief accounting officer on June 30, 2003options and filed amended Forms 3 on August 27, 2003 and September 12, 2003 to
report the correctionsale of the event date.
2.underlying
common shares (which occurred on February 8, 2005, and were reported
on February 15, 2005); and
o John W. Conlon filed two late Forms 4. Oneone Form 4 reported one option
grantreporting the disposition of
both incentive stock options ("ISOs")common shares held in Mr. Conlon's account in the Peoples Bancorp Inc.
Retirement Savings Plan (which occurred on July 27, 2005, and non-qualified stock
options ("NQSOs") made to him on March 27, 2003 (which was
reported on April 11, 2003),October 7, 2005).
TRANSACTIONS INVOLVING MANAGEMENT
On January 26, 2005, Peoples Bank purchased real estate and the
other reported two option exercises and two
sales of common sharesbuilding located on July 30, 2003 (which were reported on August
5, 2003).
3. Robert E. Evans filed two late Forms 4. One Form 4 reported one option
grant of both ISOs and NQSOs madeit from First Settlement, Inc., a corporation as to him on March 27, 2003 (which was
reported on April 11, 2003), and the other reported one transaction
involving the allocation of deferred compensation occurring on July 1,
2003 (which was reported on July 10, 2003).
4. Mark F. Bradley filed two late Forms 4. One Form 4 reported one option
grant of both ISOs and NQSOs made to him on March 27, 2003 (which was
reported on April 11, 2003), and the other reported one transaction
involving the allocation of deferred compensation occurring on July 1,
2003 (which was reported on July 10, 2003).
5. Each of David B. Baker, Larry E. Holdren, Carol A. Schneeberger and
Joseph S. Yazombek filed one late Form 4 reporting one option grant of
both ISOs and NQSOs made to each executive officer on March 27, 2003
(which was reported on April 11, 2003).
6. Each of Carl L. Baker, Jr., George W. Broughton,which
Wilford D. Dimit, Rex
E. Maiden, Robert W. Price, Paula director of Peoples, is the President and a controlling
shareholder. The real estate is contiguous to the main office of Peoples Bank in
Marietta, Ohio. The purchase price for the real estate and building of $400,000
was determined through an arm's length negotiation and was acquired to add
office space necessary for continual growth of Peoples' operations. From January
26, 2005 through March 31, 2005, Peoples Bank leased to First Settlement, Inc.
space within the building on the first floor on a month-to-month basis for
purposes of continued operation of a restaurant. These lease payments were in
the aggregate amount of $2,000. Mr. Dimit sold the restaurant in April 2005.
These transactions were pre-approved by the Board of Directors of Peoples Bank
and have been approved by the Audit Committee of the Board of Directors of
Peoples.
On September 14, 2005, the Board of Directors appointed David T. TheisenWesel
as an executive officer of Peoples and of Peoples Bank, effective January 1,
2006. David T. Wesel is the son of Joseph H. Wesel, filed
one late Form 4 reporting one transaction involvinga director and Chairman of
the allocationBoard of deferredPeoples. Effective January 1, 2006, David T. Wesel assumed the
positions of Executive Vice President of Peoples and of Peoples Bank and
President of the Peoples Financial Advisors division of Peoples Bank. Prior to
that time, 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
Peoples or Peoples Bank. David T. Wesel received compensation occurring on July 1, 2003 (which was reported on
July 10, 2003).
TRANSACTIONS INVOLVING MANAGEMENTin excess of
$60,000 during the 2005 fiscal year.
Paul T. Theisen is Of Counsel to, and an independent contractor with,
the
law firm of TheisenBrock, A Legal Professional Association, which rendered legal services to
Peoples and itsour subsidiaries during Peoples' 2003the 2005 fiscal year and is expectedcontinues to render
legal services to Peoples and its subsidiaries during Peoples' 2004 fiscal year.our subsidiaries. Since 1998, 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 individually performed legal services for
Peoples or any of our subsidiaries).
During Peoples' 2003the 2005 fiscal year, Peoples Bank entered into banking
transactions, in the ordinary course of business and in compliance with
applicable federal and state laws and regulations, with certain executive
officers and directors of Peoples, with members of their immediate families, and
with corporations foror organizations as to which directors of Peoples serve as
executive officers.officers or beneficially own more than 10% of the equity securities.
It is expected that similar banking transactions will be entered into in the
future. Payments from Peoples Bank to such persons in connection with the
deposit of funds or Peoples Bank's acting in an agency capacity have been made
on substantially the same terms as those prevailing at the time for comparable
transactions with persons not affiliated with Peoples or our subsidiaries. Loans
to such persons have been made on substantially the same terms, including the
interest rate charged and the collateral required, as those prevailing at the
time for comparable transactions with persons not affiliated with Peoples or itsour
subsidiaries. These loans have been subject to, and are presently subject to, no
more than a normal risk of uncollectibility, and present no other unfavorable
features. The aggregate amount of loans to directors and executive officers of
Peoples, and affiliates of these directors and executive officers of Peoples, as
a group at December 31, 2003,2005, was $1,869,242. This
does not include the aggregate amount of $17,620,259 in loans to individuals
acting in the sole capacity as directors or executive officers of subsidiaries
of Peoples, and affiliates of these directors and executive officers.$6,730,937. As of the date of this proxy
statement, all of the loans described in this paragraph arewere performing loans in
accordance with their original terms.
PROPOSAL NUMBER 1:
ELECTION OF DIRECTORS
(Item 1 on Proxy)
Pursuant to Peoples' CodeAs of Regulations,the date of this proxy statement, there were 11 members of the
Board of Directors has
fixed- four directors in the number of directorsclass whose terms expire at 11, divided intothe
Annual Meeting, three classes with regular
three-year staggered terms. Four directors are to be in the class whose terms expire in 2004, (and are to be elected for new terms expiring in 2007)2007 and four in the
class whose terms expire in 2008. The death of Robert E. Evans on June 15, 2005,
and three in the class whose terms expire
in 2006. The election of each class of directors iscreated a separate election.
Rex E. Maiden, who was in the class of directors whose terms expire in
2005, died on January 5, 2004. Under Section 2.01 of Peoples' Code of
Regulations, Thomas C. Vadakin, who is in the class of directors whose terms
expire in 2004, is not eligible for nomination and re-election as a director and
will retire upon the expiration of his term at the Annual Meeting. As a result
of Mr. Maiden's death and Mr. Vadakin's retirement following the annual meeting,
one vacancy will exist in each of the class of directors whose terms expire in
2005 and the class of directors whose terms expire in 2007. The Board of
Directors has not named nominees in this proxy statement for election to the
Board to succeed Messrs. Maiden and Vadakin. The Governance and Nominating
Committee is in the process of identifying and evaluating qualified candidates,
and it is expected that the process will be completed after the Annual Meeting.
Upon the Board's acceptance of recommendations from the Governance and
Nominating Committee, the Board will appoint an additional director to serve for
a term expiring at the Annual Meeting in 2005 and an additional director to
serve for a term expiring at the Annual Meeting in 2007. The proxies cannot be
voted at the Annual Meeting for more than three nominees for election as
directors in the class whose terms expire in 2007. TheHowever, upon
unanimous recommendation by the Governance and Nominating Committee and as
permitted by Section 2.02 of Peoples' Code of Regulations, on February 9, 2006,
the Board of Directors has reviewed, considered and discussed each
director's relationships, either directly or indirectly, with Peoples and its
subsidiaries andfixed the compensation each director receives, directly or
indirectly, from Peoples and its subsidiaries in order to determine whether such
director meetsnumber of directors at 11, reflecting the
current independence requirementsnumber of The NASDAQ Stock Market,
Inc. ("NASDAQ") Corporate Governance Standards, and has determined that the
Board has at least a majority of independentindividuals currently serving as directors. The Board of Directors
has determined that each of the following directors has no financial or personal
ties, either directly or indirectly, with Peoples or its subsidiaries (other
than compensation as a director of Peoples and its subsidiaries, 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; Wilford D. Dimit; Robert W. Price; Paul T. Theisen; and Joseph H.
Wesel.
The Board of Directors proposes that each of the threefour nominees
identified below be re-elected for a new three-year term and until his successor
is duly elected and qualified or until thehis earlier of his resignation, removal from
office or death. The threeGovernance and Nominating Committee recommended each
nominee. The four nominees for election as directors in the class whose terms
expire in 20072009 receiving the greatest number of votes will be elected. Common
shares represented by properly executed and returned proxiesproxy cards will be voted
FORas specified or, if no instructions are given, "FOR" the election of the Board
of Directors' nominees unless
authority to vote for one or more nominees is withheld. Common shares as to
which the authority to vote is withheld will be counted for quorum purposes but
will not be counted toward the election of directors or toward the election of
the individual nominees specified on the form of proxy.nominees.
The following table gives certain information, as of February 13, 2006,
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.
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE ELECTION OF ALL NOMINEES LISTED
BELOW.
Director Nominee
Position(s) Held with Peoples and ItsOur Continuously Forfor Term
Nominee Age Principal Subsidiaries and Principal Occupation(s) Since Expiring In
- ----------------------- --- ------------------------------------------------------ -------------------------------------------------------------- ----- -----------
Robert E. Evans 63 Chairman of the Board since July 2003, and President, 1980 2007
and Chief Executive Officer since 1980, of Peoples;
Chief Executive Officer and Chairman of the Board of
Peoples Bank. (1)
Robert W. Price 40 Operations Manager, Shelly Materials, Inc. Columbus 2000 2007
District, a division of The Shelly Company since
2002. 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 and related
companies.
Paul T. Theisen (2) 73 Attorney-At-Law. Currently active as a mediator and 1980 2007
arbitrator. For more than 40 years, was a
litigator with TheisenBrock, Attorneys at Law
Marietta, Ohio, and has been Of Counsel with that
firm since 1998. (1)
- ---------------------
(1) Also a director of Peoples Bank. Mr. Evans also served as President of
Peoples Bank from 1987 until 2002.
(2) Thomas C. Vadakin and Paul T. Theisen are brothers-in-law.
While it is contemplated that all nominees will stand for re-election, 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 proxy holders reserve 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. The Board of Directors knows of no reason why any of the
nominees named above will be unavailable or unable to serve if elected to the
Board.
The following table gives certain information concerning the current
directors 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.
Director Term
Position(s) Held with Peoples and Its Continuously Expires
Name Age Principal Subsidiaries and Principal Occupation(s) Since In
- ---------------- --- ------------------------------------------------------ ------------ ---------
Carl L. Baker, Jr. 4143 President and CEO,Chief Executive Officer, B & N Coal, Inc., 2000 2009
a mining, reclamation 2000 2006 and construction concern in
Southeasternsoutheastern Ohio; Co-Owner of Sharon Stone Company, a
limestone and slag producer 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, since 2002.
Mark F. Bradley 34 Director of Peoples since February 2003 and Chief Operating 2003 2005
Officer of Peoples since July 2003; Executive Vice President
and Chief Integration Officer of Peoples from April 2002 to
July 2003; President and Chief Operating Officer of Peoples
Bank since 2002; Controller of Peoples and Peoples Bank from
1997 to 2001; Director of Peoples Insurance Agency Inc. from
January 2004 to present. (1)
George W. Broughton 4648 President of GWB Specialty Foods, LLC, an ice cream, frozen 1994 20062009
frozen food, and coffee service distributor; 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; and
President and Controller of George Broughton Family LLC,LLP,
an asset management company, allcompany. All of these entities are
based in Marietta, Ohio. Director of Peoples Bancorp
Foundation Inc. since December 2003. (1)
Wilford D. Dimit 71 President of First Settlement, Inc., Marietta, Ohio, a 1993 2009
corporation operating a retail clothing store for men and
women, a family shoes store, a cosmetic studio and public
alteration shop from July 1983 to November 2004 and a
restaurant from March 1983 to March 2005. (1)
Richard Ferguson 59 Owner of Ferguson Consulting LLC, a Columbus, Ohio based 2004 2009
professional practice that focuses on business
valuations and forensic accounting services;
Certified Public Accountant since 1976 and
Certified Valuation Analyst since 1996.
- ---------------------
(1) Also a director of Peoples Bank.
While it is contemplated that all nominees will stand for re-election,
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 will be unavailable or unable to serve if elected to
the Board.
The following table gives certain information, as of February 13, 2006,
concerning the current directors 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.
Director
Position(s) Held with Peoples and Our Continuously Term
Name Age Principal Subsidiaries and Principal Occupation(s) Since Expiring In
------- --- --------------------------------------------------- ------------ ------------
Mark F. Bradley 36 Chief Executive Officer since May 2005, President since 2003 2008
June 2004, Chief Operating Officer from July 2003 to May 2005,
Director since February 2003, Executive Vice President and
Chief Integration Officer from April 2002 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; Director of Peoples Bancorp Foundation
Inc. since December 2003; President since January 2006 and a
Director since January 2004 of Peoples Insurance Agency, Inc.
(1)
Frank L. Christy 5658 President of Christy & Associates, Inc., a business 1999 20052008
development company located in Marietta, Ohio; President of
Lafayette Center, Inc., owner and operator of a retail
shopping center located in Marietta, Ohio from January 1988 to
December 2005; President of Riverbank Restaurants, Inc.;, owner
and operator of a lodging facility located in Charleston,
West Virginia; Chairman of Caron Products and Services, Inc.,
a manufacturer and distributor of chillers and incubators for
scientific work, located in Marietta, Ohio; and Chairman of
Rossi Pasta Factory,Ltd., a manufacturer and distributor of gourmet
pasta and sauce located in Marietta, Ohio.
Robert W. Price 42 General Manager, Shelly Materials, Inc.
Wilford D. Dimit 69, Findlay District, a 2000 2007
division of The Shelly Company, since 2002. 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 First Settlement,Smith Concrete and related
companies.
Theodore P. Sauber 72 Vice President of T.C.K.S., Inc., a holding company for 2004 2008
McDonald's restaurants in Ohio and West Virginia. Trustee of
Rio Grande University; a member of the Ohio University
Trustees Academy; and past chairman of the Athens (Ohio)
Chamber of Commerce. Director of Peoples Bancorp Foundation
Inc. since December 2003. (1)
Paul T. Theisen 75 Attorney-At-Law. Currently active as a mediator and 1980 2007
arbitrator. For more than 40 years, was a litigator with
TheisenBrock, A Legal Professional Association, Marietta,
Ohio, a 1993 2006
retail clothing store, shoe store and restaurant.has been Of Counsel to, and an independent
contractor with, that firm since 1998. Vice Chairman of the
Board since June 2005, and Leadership Director since December
2005, of Peoples. (1)
Joseph H. Wesel 7476 President of W.D.A., Inc., Marietta, Ohio, a real estate 1980 20052008
holding company; Chairman and Chief Executive Officer of
Marietta Automotive Warehouse, Inc., Marietta, Ohio, an
automotive parts wholesaler, from 1978 until June 2001;
Chairman of the Board from 1991 until July 2003 and since June
2005, Leadership Director from July 2003 to December 2005, and
Vice Chairman sinceof the Board from July 2003 to June 2005, of
Peoples. (1)
Thomas J. Wolf 59 Principal shareholder of six holding companies for 13 2004 2007
McDonald's restaurants in Kentucky and West Virginia; Board
member of each of Our Lady of Bellefonte Hospital in Ashland,
Kentucky, since 2002; the Ashland Alliance (chamber of
commerce for Boyd and Greenup Counties, Kentucky), since 2002;
the Ronald McDonald House in Huntington, West Virginia, since
1998; and the David School based in David, Kentucky, since
1999.
- ----------------------
(1) Also a director of Peoples Bank.
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.
Please see Peoples' Annual Report on Form 10-K for the fiscal year
ended December 31, 2005, for information on Peoples' executive officers.
THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
Independence of Directors
- -------------------------
The rules of the NASDAQ Stock Market (the "NASDAQ Rules") require that
a majority of Peoples' Board of Directors be independent directors. The
definition of independence for purposes of the NASDAQ Rules includes a series of
objective tests, such as the director is not an employee of Peoples or any of
our subsidiaries and has not directly or indirectly engaged in various types of
business dealings with Peoples or any of our subsidiaries and the director does
not have an immediate family member who is employed by Peoples or any of our
subsidiaries as an executive officer. In addition, as further 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 the exercise of independent judgment in carrying
out the responsibilities of a director. In making these determinations, the
Board of Directors has reviewed, considered and discussed each director's
business and personal relationships, both direct or indirect, with Peoples and
our subsidiaries and the compensation and other payments each director and the
immediate family members of each director have, both directly or indirectly,
received from or made to Peoples and our subsidiaries and presently expect to
receive from or make to Peoples and our subsidiaries. Based on that review,
consideration and discussion, the Board of Directors has determined that at
least a majority of its members are independent and that each of the following
directors has no financial or personal ties, either directly or indirectly, with
Peoples or our subsidiaries (other than compensation as a director of Peoples
and our subsidiaries, 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; Robert W. Price; Theodore P.
Sauber; Paul T. Theisen; and Thomas J. Wolf.
While Paul T. Theisen is Of Counsel to, and an independent contractor
with, the law firm of TheisenBrock, 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 individually performed services for Peoples or any of
our subsidiaries), since 1998.
The Board of Directors has determined that Wilford D. Dimit does not
qualify as an independent director under the applicable NASDAQ Rules due to the
transactions between Peoples Bank and First Settlement, Inc. described above in
"TRANSACTIONS INVOLVING MANAGEMENT". The Board of Directors has determined
however, that those transactions do not disqualify Mr. Dimit from being
independent for the purposes of Rule 10A-3 under the Exchange Act, which applies
to directors serving on the Audit Committee.
On September 14, 2005, the Board of Directors appointed David T. Wesel
as an executive officer of Peoples and of 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
no longer qualifies 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. However, the Board of Directors has determined that Joseph T. Wesel
qualified as an independent director prior to January 1, 2006, the date his son
became an executive officer.
Leadership Director and Executive Sessions
- ------------------------------------------
The directors elect a Leadership Director who is responsible for
providing a bridge between the independent directors and Peoples' management.
The Leadership Director presides at all executive sessions of the independent
directors (without management present). The Leadership Director also serves as
the Chairman of the Governance and Nominating Committee of the Board of
Directors. Joseph H. Wesel served as Leadership Director until December 8, 2005.
Paul T. Theisen has served as the Leadership Director since December 8, 2005. In
accordance with applicable NASDAQ Rules, the independent directors were given
the opportunity to meet in executive session at the end of each meeting and at
such other times as the independent directors deemed necessary. The independent
directors met in executive session a total of four times during 2005.
Meetings of the Board and Attendance at Annual Meetings of Shareholders
- -----------------------------------------------------------------------
The Board of Directors held a total of twelve13 meetings during Peoples'
2003the 2005
fiscal year. Each incumbent director attended 75%80% 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 but one of the then incumbent
directors and director nominees, who were also directors at the time, attended
Peoples' last annual meeting of shareholders held on April 10, 2003.14, 2005.
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 that 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,
has served the Board'sneeds of the Board and Peoples' shareholders' needs.shareholders. There is no
screening process, and all shareholder communications that are received by
officers for the Board's
attention of the Board of Directors are forwarded to the
members of the Board.
In view of recently adopted SEC disclosure requirements related to this
issue,Not having found any problems with shareholder communications with
directors under the existing process, the Governance and Nominating Committee
may consider development ofhas not found it necessary to develop more specific procedures. Until any other
procedures are developed and posted on the "Corporate Governance and Code of Ethics and Ethics Hotline"& 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 an individual
director, 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." In addition, communication via Peoples'
website may be used. Correspondence through the investor relations/shareholder
information"Investor Relations -
Shareholder Contacts" 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 and clearly state whether the intended
recipients are all members of the Board of Directors or just certain specified
individual directors. The Corporate Secretary will make copies of all such
communications and circulate them to the appropriate director or directors.
COMMITTEES OF THE BOARDdirectors
without any screening.
Committees of the Board
- -----------------------
The Board of Directors has four standing committees: the Audit
Committee, the Compensation Committee, the Executive Committee, and the
Governance and Nominating Committee.
Audit Committee
- ---------------
The Audit Committee is organized and conducts its business pursuant to
a written charter adopted by the Board of Directors, which is attached to this
proxy statement as Appendix A.Directors. A current copy of the
charter of the Audit Committee is also posted on the "Corporate Governance and Code of Ethics and
Ethics Hotline"& 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 for approval. The Audit
Committee is responsible for:
o overseeing the accounting and financial reporting processes of
Peoples;
o overseeing the audits of the consolidated financial statements of
Peoples;
o appointing, compensating and overseeing the work of the independent
auditorsregistered public accounting firm employed by Peoples for the purpose
of preparing or issuing an audit report or performing related work;
o pre-approving all audit and non-audit services provided by the
independent registered public accounting firm;
o establishing procedures for the receipt, retention and treatment of
complaints received by Peoples regarding accounting, internal
accounting controls or auditing matters; and
o assisting the Board of Directors in the oversight of:
o the performance of Peoples' internal auditors and independent
auditors,registered public accounting firm,
o the independent auditors'registered public accounting firm's
qualifications and independence,independence; and
o Peoples' compliance with ethics policies and legal and regulatory
requirements.
The Audit Committee will also carry out such other responsibilities as
may be delegated to the Audit Committee by the full Board.Board of Directors. The
Audit Committee held sixseven meetings during the 20032005 fiscal year. The Audit
Committee's report relating to the 2005 fiscal year appears on pages 49 through
50.
The members of the Audit Committee areare: Richard Ferguson (Chairman);
Wilford D. Dimit Chairman, and(Vice Chairman); Carl L. Baker, Jr.,; George W. Broughton,Broughton; Frank
L. Christy, Robert W. Price,Christy; Theodore P. Sauber; and Thomas C. Vadakin and Joseph H. Wesel.J. Wolf. Each individual also served
on the Audit Committee throughout the entire 2005 fiscal year. Each member of
the Audit Committee qualifies as independent under the NASDAQ Corporate Governance Standards andfor purposes of Rule 10A-3 promulgated under Section 10A(m)(3) of
the Exchange Act. None of the
membersFurther, each member of the Audit Committee, with the
exception of Wilford D. Dimit, qualifies as an independent director under the
applicable NASDAQ Rules. With respect to Mr. Dimit, current NASDAQ Rules permit,
under exceptional and limited circumstances, one member of the Audit Committee
to be a director who does not meet the independence requirements of the
applicable NASDAQ Rules, if (i) that director meets the criteria of Rule 10A-3
and is an affiliated personnot a current officer or employee of Peoples or any of our subsidiaries
(or a family member of such an officer or employee), and (ii) the Board of
Directors has determined that such director's committee membership is required
by the best interests of Peoples and its subsidiaries othershareholders. The Board of Directors
has made such a determination with regard to Mr. Dimit.
Prior to the transactions between Peoples Bank and First Settlement,
Inc. described above in "TRANSACTIONS INVOLVING MANAGEMENT," Mr. Dimit had
qualified as an independent director under the applicable NASDAQ Rules. However,
the $400,000 purchase price for the real estate and building represented more
than 5% of the consolidated gross revenues of First Settlement, Inc. for the
fiscal year completed prior to the transaction and more than 5% of its
consolidated gross revenues for the fiscal year in his capacitywhich the transaction
occurred. Accordingly, this non-compensatory payment causes Mr. Dimit not to
qualify as independent under the NASDAQ Rules. The Board of Directors has
determined that the continued membership of Mr. Dimit on the Audit Committee is
in the best interests of Peoples and its shareholders due to Mr. Dimit's
experience as Chairman of the Audit Committee from April 1997 to February 2005,
and a member of the Board of Directors of
Peoples (and committees thereof) and, inAudit Committee since January 1993, during which time he has
been instrumental to the case of Messrs. Dimit, Broughton,
Vadakin and Wesel, a memberconduct of the Board of Directors of Peoples Bank (and
committees thereof). None of the membersbusiness of the Audit Committee has received or
accepted, directly or indirectly, any consulting, advisory, or other
compensatory fee from Peoples or any of its subsidiaries other than ordinary
fees and benefits received in his capacity as a director of Peoples (and
committee member) and, in the case of Messrs. Dimit, Broughton, Vadakin and
Wesel, as a director of Peoples Bank (and committee member).Committee.
Each member of the Audit Committee has substantial background and
experience as the chief executive officer or active leader of his respective
business or profession. Collectively, the members have 43 years of service on the Audit
Committee of Peoples and 96 years of service on the Audit Committee of Peoples
Bank.professional interest. Under SEC rules, adopted by the SEC, Peoples is required to
disclose whether it has an "audit committee financial expert" serving on its
Audit Committee. TheWhile the Board of Directors has determined that, while the Board believes that each of
the membersmember of the
Audit Committee is highly qualified to discharge his duties, it is appropriate to disclose that the Board has not designated anyidentified
Richard Ferguson as a particular member of the Audit Committee as qualifying as an
"audit committee financial expert" under the SEC's rules. TheUpon recommendation of
the Governance and Nominating Committee, the Board of Directors has determined
that eachMr. Ferguson's background, knowledge, qualifications and experience,
professional and otherwise, qualify him as an audit committee financial expert.
The Board of Directors has further determined that Mr. Ferguson qualifies as
"financially sophisticated" for purposes of the membersapplicable NASDAQ Rules.
The Board of Directors has also determined that each other 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, all
of which are attributes of an "audit committee financial expert" under the SEC's
rules.
As the Board of Directors, and more specifically the
Governance and Nominating Committee, consider new directors of Peoples, oneNone of the criteria to be strongly considered will bemembers of the financial background and
expertiseAudit Committee is affiliated with Peoples
or any of prospective Board members. It is Peoples' long-term intention to
continue to strengthen the financial expertiseour subsidiaries other than in his capacity as a member of the Board
of Directors throughof Peoples (and committees thereof) and, in the normal coursecase of adding new directors.
Messrs.
Dimit, Broughton, and Sauber, a member of the board of directors of Peoples Bank
(and committees thereof). No member of the Audit Committee has received or
accepted, directly or indirectly, any consulting, advisory, or other
compensatory fee from Peoples or any of our subsidiaries other than ordinary
fees received in his capacity as a director of Peoples (and committee member)
and, in the case of Messrs. Dimit, Broughton, and Sauber, as a director of
Peoples Bank (and committee member).
Compensation Committee
- ----------------------
The Compensation Committee is comprised of five directors who satisfyqualify
as independent directors under the independence requirementsapplicable NASDAQ Rules, outside directors
for purposes of Section 162(m) of the NASDAQ Corporate Governance StandardsInternal Revenue Code, and applicable rules and regulationsnon-employer
directors for purposes of Rule 16b-3 under the SEC: Joseph H. Wesel, Chairman;Exchange Act: Frank L. Christy
(Chairman); Carl L. Baker, Jr.; Frank L. Christy; Wilford D. Dimit;George W. Broughton; Robert W. Price; and Thomas C. Vadakin. Rex E.
MaidenPaul
T. Theisen. Messrs. Baker, Christy and Price also served on the Compensation
Committee throughout the entire 2005 fiscal year. Mr. Broughton was appointed to
the Compensation Committee on August 11, 2005. Mr. Theisen was appointed to the
Compensation Committee on November 10, 2005. Joseph H. Wesel served as a member
of the Compensation Committee during the entire 2005 fiscal year and as the
Chairman until his deathDecember 8, 2005, when he was succeeded in that position by Mr.
Christy. Mr. Wesel qualified as an independent director while he served on the
Compensation Committee. Wilford D. Dimit had served as a member of the
Compensation Committee prior to transactions between First Settlement, Inc. and
Peoples Bank described above in "TRANSACTIONS INVOLVING MANAGEMENT." Although
Mr. Dimit resigned from the Compensation Committee effective February 9, 2005,
he did not participate in the discussions or deliberations of the Compensation
Committee from and after January 5, 2004.26, 2005.
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 and Code of Ethics and Ethics Hotline"& 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 purpose of the Compensation Committee is to review and approve, on
behalf of the Board of Directors, management recommendations regarding all forms
of compensation, including stock-based compensation, to be provided to the
executive officers and directors of Peoples and itsour subsidiaries and all bonus
and stock-basedequity-based compensation, incentives, perquisites, employee benefits,
salary programs and human resources policies and procedures for all employees of
Peoples and itsour subsidiaries. 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 acts as the administrator ofadministers 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") and 2002 Stock Option Plan (the "2002 Plan")
and any other plans requiring Compensation Committee administration and approves
awards as required to comply with applicable securities and tax laws. TheIf the
Peoples Bancorp Inc. 2006 Equity Plan is approved by the shareholders at the
Annual Meeting, the Compensation Committee will also advises the Board on
management succession and development matters.administer that plan. The
Compensation Committee will undertake such other responsibilities as the full
Board of Directors may prescribe.
The Compensation Committee held sixnine meetings during the 20032005 fiscal
year. The Compensation Committee's report on executive compensation appears on
pages 17 through 23.
Executive Committee
- -------------------
The Executive Committee is comprised of the sixfive directors: Mark F. Bradley
Robert E. Evans,(Chairman); Wilford D. Dimit; Robert W. Price,Price; Paul T. Theisen, Thomas C. Vadakin,Theisen; and Joseph H.
Wesel. The Executive Committee is authorized to act in the intervals between
meetings of the directors on matters delegated by the full Board.Board of Directors.
There were no meetings of the Executive Committee during the 20032005 fiscal year.
Governance and Nominating Committee
- -----------------------------------
In 2003, the Board of Directors formally developed a Governance and
Nominating Committee. The members of the Governance and Nominating Committee are
George W. Broughton, Wilford D. Dimit, Robert W. Price,are: Paul T.
Theisen (Chairman); George W. Broughton; Wilford D. Dimit; and Robert W. Price.
Each of these individuals also served on the Governance and Nominating Committee
throughout the entire 2005 fiscal year. Joseph H. Wesel. Mr. Wesel servesserved as the Chairmana member of
the Governance and Nominating Committee.Committee during the entire 2005 fiscal year and
as Chairman until December 8, 2005, when he was succeeded in that position by
Mr. Theisen. The Board of Directors has determined that alleach of the members of
the Governance and Nominating Committee, memberswith the exception of Mr. Dimit,
qualifies as an independent director under applicable NASDAQ Rules. The Board of
Directors has also determined that Mr. Wesel qualified as an independent
director while he served on the Governance and Nominating Committee. Current
NASDAQ Rules permit, under exceptional and limited circumstances, one member of
the Governance and Nominating Committee to be a director who does not meet the current
independence requirements of the applicable NASDAQ Corporate Governance StandardsRules if (i) that director is
not a current officer or employee of Peoples or any of our subsidiaries (or a
family member of such an officer or employee) and applicable rules(ii) the Board of Directors
has determined that such director's committee membership is required by the best
interests of Peoples and regulationsits shareholders. The Board of Directors has made such
a determination with regard to Mr. Dimit due to his experience as a member of
the SEC.Executive Committee since 2004 and a member of the Governance and Nominating
Committee since its inception in 2003.
The Governance and Nominating Committee is organized and conducts its
business pursuant to a written charter adopted by the Board of Directors. The
purposes of the Governance and Nominating Committee are:
o to identify qualified candidates for 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;
o 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;
o to oversee matters of corporate governance, including thean evaluation of
Board performance and processes;
o to review with the Chairman of the Board, or otheranother director
designated by the full Board, 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;
o to recommend the number of members to serve on the Board;Board of Directors;
o to periodically review Peoples' Code of Ethics for Directors, Officers
and Employees and recommend to the full Board changes, as necessary;
and
o 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 and Code of Ethics and Ethics Hotline"& 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 boardBoard of Directors for approval. The Governance and
Nominating Committee held one meetingthree meetings during the 20032005 fiscal year.
NOMINATING PROCEDURESNominating Procedures
- ---------------------
As described above, Peoples has a standing Governance and Nominating
Committee that has the responsibility to identify and recommend 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 itsour subsidiaries or
(ii) serve as an executive officer of Peoples or one of itsour subsidiaries.
However, the qualification onin the proceedingpreceding sentence does not apply to
individuals elected as initial directors of Peoples in 1980. 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. The Governance and Nominating Committee 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 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, giving 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 March 31, 2006. Each nomination must contain the following
information to the extent known by the nominating shareholder:
(a)o the name, age, business address and residence address of each proposed
nominee;
(b)o the principal occupation or employment of each proposed nominee;
(c)o the number of common shares beneficially owned by each proposed
nominee and by the nominating shareholder; and
(d)o any other information required to be disclosed with respect to a
nominee for election as a director under the SEC's proxy rules
promulgated under the Exchange Act.rules.
Each such notificationnomination 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 Peoples' Code of Regulations will not be considered.
Code of Ethics
- --------------
In accordance with applicable NASDAQ Rules and rules of the SEC, the
Board of Directors has adopted the Code of Ethics for Directors, Officers and
Employees of Peoples Bancorp Inc. and its Affiliates, which is available on the
"Corporate Governance & Ethics" page of Peoples' website at
www.peoplesbancorp.com.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Policy
- ------
Peoples' cash compensation package for its executive officers consists
of two components: (i) base salary; and (ii) annual performance-based bonuses.
Peoples also grants stock options to its executive officers as a means to
promote ownership of common shares.
The Compensation Committee meets periodically to reviewis comprised of independent, non-employee
directors and recommend
for approvaloperates under a charter approved by the Board of Directors salaries, bonuses, employment agreementsDirectors. The
Compensation Committee is responsible for the review, approval and
employee benefits plansadministration of the base salary level and annual bonus compensation programs
as well as the stock option program for executive officers. In determining
compensation levels, the Compensation Committee considers: salary and bonus
levels which will attract and retain qualified executives when considered with
the other components of Peoples' compensation structure; specific annual
performance criteria; and rewarding executive officers andfor continuous
improvement in their respective areas which contribute to increases in
shareholder value. The Compensation Committee met nine times during the 2005
fiscal year.
Peoples' philosophy for granting options is based on the principle of
encouraging key employees, including executive officers, of Peoples. The Compensation Committee also supervisesto remain with Peoples
and become owners with a long-term interest in the operation of
Peoples' compensation plans, selectsoverall performance
while incenting those eligible employees who may
participate in each plan (where selection is permitted) and prescribes (where
permitted under the terms of the plan) the terms of any options granted under
any stock option plan of Peoples. In additionindividuals to evaluating the effectiveness
and competitiveness of compensation plans through the use of available peer
data, the Compensation Committee seeks the advice of an outside compensation
consulting firm as needed. On January 8, 2004, the Board of Directors adoptedmanage with a charter that formally outlines the duties of the Compensation Committee. The
Compensation Committee met six times during the 2003 fiscal year.view toward maximizing
long-term shareholder value creation.
Section 162(m) of the Internal Revenue Code of 1986, as amended, 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 officerChief Executive Officer (or
person actingserving in that capacity) at the close of Peoples'the fiscal year and the four
most highly compensated officers of Peoples, other than the chief executive officer,Chief Executive
Officer, at the end of Peoples'the fiscal year. The $1 million compensation deduction
limitation does not apply to "performance-based compensation". Due to the fact
that all executive officers of Peoples receive compensation at levels substantially below
the $1 million deductibility limit, the Compensation Committee does not propose
at this time to present for shareholder approval performance goals such as those
provided in the Performance
Compensation Program ("Program") discussed below.performance compensation program described below under "Annual
Bonuses." The design and administration of Peoples' 1995 Stock Option Plan, 1998 Stock Option Plan, and
2002 Stock Option Plan are intended to comply with Section 162(m) so that any compensation,
which may be received by executive officers of Peoples under those plans, will
qualify as "performance-based". The Compensation Committee will rely, from time
to time, upon the adviceguidance of Peoples' General Counsel regarding the
appropriateness of presenting the Program,performance compensation program, or any
similar non-equity plan, to shareholders.
TheBase Salary
- -----------
Executive officers' base salaries are determined by evaluating the most
recent comparative peer data and the role and responsibilities of their
respective positions. During the latter part of the 2004 fiscal year, the
Compensation Committee operatesengaged the services of Clark Consulting, a compensation
consulting firm, to perform competitive peer analysis of executive compensation.
In conjunction with Peoples, Clark Consulting identified a group of 15 peer
financial institution holding companies based on market capitalization,
geographic location, performance, and similarity in lines of business. The peer
group represents publicly-traded financial institution holding companies with
total asset size from slightly over $900 million to slightly under the principle that$3.5 billion.
This comparative data does not include the compensation paid by all of the
companies that are included in the NASDAQ Bank Stocks Index, which is used for
comparative purposes in the performance graph that appears on page 34. The
information gathered from the analysis was used to determine the competitiveness
of compensation for executive officers should be directlyrelative to other financial institution
holding companies of comparable size and significantly relatedoverall performance. The information
was used to determine the financial performance of Peoples. The2005 compensation philosophy of Peoples
reflects a commitment to rewardfor the executive officers. On
December 9, 2004, the Compensation Committee established base salaries for
executive officers for performance through cash
compensationthe 2005 fiscal year.
Individual salary increases are reviewed annually and through plans designed to enhance the long-term commitment of
officers and employees to Peoples and its subsidiaries. Peoples seeks to attract
and retain quality talent, which is key to the short and long-term success of
Peoples. In order to accomplish this goal, Peoples seeks to pay its executive
officers base salaries that are competitive and generally comparable to the
mid-range of salaries for similar positions of other financial institutions with
similar demographics.
The cash compensation program for executive officers consists of two
elements, a base salary component and an incentive component payable under the
Program. As previously described, the base salary is generally comparable to the
mid-range of salaries for comparable positions of peer financial institutions.
Incentive compensations plans are designed to provide a range of compensation
that is comparable to peers also, but in which payouts vary based upon theon
Peoples' overall performance of Peoples and the executive's attainment of specific
individual business objectives during the preceding year. Specific individual
business objectives for fiscal year 2006 have been established for each
executive officer. The Compensation
Committee reviewed comparative salary data forThese objectives are both quantitative in nature, such as
sales and revenue goals and cost containment; and also qualitative in nature,
such as the executivedevelopment and retention of key staff, assessment and development
of quality products and services, and management effectiveness.
Annual Bonuses
- --------------
Executive officers from
various sources of information including the 2002 SNL Executive Compensation
Review for Banks & Thrifts prepared by SNL Securities for the publicly traded
bank and thrift peer groups with assets between $1 and $5 billion; the 2002 Bank
Compensation Survey as prepared by Crowe, Chizek and Company LLP for Midwestern
banks; the 2002 Bank Cash Compensation Survey as prepared by The Delves Group;
and the 2002 Compensation Survey and Benefits Survey as prepared by the Ohio
Bankers League, the Indiana Bankers Association and the Michigan Bankers
Association. The Compensation Committee approved a base salary increase of 3.45%
for Mr. Evans for 2003 fiscal year to $300,000. The Compensation Committee was
of the opinion the adjustments made were necessary and appropriate to provide
reasonably competitive compensation.
In late 1996, Peoples established the Program in which all employees of
Peoples and its subsidiaries are eligible to participate. The Program is
designed to reward all employees for balanced growth and increased
profitability. The amount ofearn annual bonuses under the
award available for distribution is based upon
Peoples' performance with regard to specified performance goals. In 2003,compensation program. On January 13, 2005, the incentive payout for certain officers, including executive officers, was based
on Peoples' consolidated financial results and individual performance as it
related to certain individual qualitative and quantitative incentive objectives
specifically related to their areas of responsibility and aligned with overall
corporate objectives. The incentive payout for all other employees was equally
based on Peoples' consolidated financial results and an assessment of their
performance based on their individual job requirements. The allocation of the
basesCompensation
Committee established a bonus matrix, for the payout percentage may be adjusted on an annual basis.
In 2003, the corporate performance goals focused equally on earnings
per share, return on average equity,2005 fiscal year, comprised of
three financial components: (i) Earnings Per Share; (ii) Return On Average
Equity; and the non-interest income leverage ratio,(iii) Non-interest Income Leverage Ratio which is a measure of
non-interest income relative to operating non-interest expense. UnderThe weightings
for Earnings Per Share and Return On Average Equity were 45% each and the
Program, current year performanceNon-interest Income Leverage Ratio was compared to the immediately prior year
and rewarded employees for incremental growth in the keyweighted at 10%. The performance goals
previously listed. Enhanced performance in relation toestablished for each of the performance goals
results in higherfinancial components, if attained, make available an
incentive bonuses. During the 2003 fiscal year, minimum
corporatepool of bonus payments.
Annual performance goals were not met resultingestablished for Robert E. Evans, in nohis
capacity at the time as Chairman of the Board and Chief Executive Officer, and
for Mark F. Bradley, in his capacity at the time as President and Chief
Operating Officer, directly related to the above-mentioned financial performance
measurements, all of which are quantitative in nature and designed to promote
shareholder value. The annual bonus was weighted 90% for attainment of these
financial components and 10% for individual performance. These individuals could
receive a maximum payout of 100% of their respective annual base salaries.
Annual 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 2004,nature, such as sales and
revenue goals and cost containment; and also qualitative in nature, such as the
development and retention of key staff, assessment and development of quality
products and services, and management effectiveness. Annual bonuses for
executive officers were weighted with a 75% weighting for attainment of the
2003previously mentioned financial components and the remaining 25% based on the
attainment of specific individual goals. The maximum cash payout which these
individuals could receive was 70% of their respective annual base salaries.
At the end of each fiscal year, the extent to Mr. Evanswhich Peoples' and
individual goals are actually achieved is measured. If all goals are satisfied,
the other executive officers.officer receives a target bonus amount. To the extent goals are
partially met, then only that portion as expressed in the bonus matrix is paid
out. If goals are exceeded, a higher portion of the bonus matrix is paid out up
to the maximum established amount. Executive officers are required to defer 25%
of their incentive compensation for a period of three years and have the option
to defer any remaining incentive compensation until they reach retirement age.
Interest is accrued at 50% of Peoples' long-termreturn on average equity achieved during
the calendar year.
The objective of the performance compensation program consists primarilyis to promote
shareholder value. In that regard, in 2003, the Compensation Committee
implemented a concept of options
granted under Peoples' stock option plans."absolute minimum", whereby if 85% of the Earnings Per
Share financial component minimum, defined as one penny in earnings per share
improvement over the previous fiscal year, is not achieved there will be no
annual bonus payment to executive officers, regardless of the level of
achievement in respect of their individual performance goals. The Compensation
Committee believes
that stock ownership by memberswaived the "absolute minimum" requirement in respect of the 2004
fiscal year, on an exception basis, due to the fact non-recurring charges
related to the repositioning of Peoples' management and stock-basedinvestment portfolio caused 2004
Earnings Per Share to be lower than results from normal operations. The
Compensation Committee believed that individual incentive bonuses should be paid
because many successful results were achieved through normal operations. This
waiver allowed the named executive officers to receive the portion based on the
level of achievement of their individual performance compensation arrangements are important in aligninggoals, but not the interests of
management with those of shareholders, generallyportion
related to Peoples' corporate results.
Incentive bonuses earned for individual performance in the enhancement2005 fiscal
year were determined by the Compensation Committee on February 9, 2006, and
[were paid] [will be paid] to the named executive officers in March 2006 in the
total amount of shareholder value.$236,768. The program will operate in a similar manner for the
2006 fiscal year.
Option Grants
- -------------
Options to purchase common shares are granted withannually to executive
officers. Grants are made to executive officers at an exercise price equal toof 100% of
the fair market value of Peoples'the underlying common shares on the date of grant.
If thereGrants are made with a three-year cliff-vesting requirement in order to more
closely align the benefits to the executive officer with the interests of the
shareholders.
Peoples' philosophy in granting options is noto increase executive
ownership of common shares. Peoples therefore believes that the executive
officers will have an incentive to manage with a view toward maximizing
long-term shareholder value. In determining the total number of options to be
granted annually to all recipients, including executive officers, the
Compensation Committee considers the executive officer's individual performance
as well as the performance of Peoples during the immediately preceding fiscal
year.
The Compensation Committee establishes guidelines for the number of
common shares available for the granting of options to each executive officer
based on: individual job performance; Peoples' financial performance; and
evaluation of competitive peer data for similar grants. These option grants
provide incentive for the creation of shareholder value since the full benefit
of the grant to each executive officer can only be realized with an appreciation
in the fair market valueprice of Peoples' common shares,shares. The Compensation Committee believes the
options are
valueless.granted to executive officers mutually align the interests of the
executive officers with those of the shareholders.
The objective of the stock option program is to promote shareholder
value. In the past several years,that regard, in 2003, the Compensation Committee granted options
based upon its subjective determinationimplemented a
restriction of "absolute minimum", whereby if 85% of the relative current and future
contribution each officer has or may makeEarnings Per Share
minimum (defined as one penny in earnings per share improvement over the
previous fiscal year) for the prior fiscal year is not achieved, there will be
no option grants to executive officers. The Compensation Committee waived the
absolute minimum requirement in respect of the 2004 fiscal year, on an exception
basis, due to the long-term welfarefact non-recurring charges related to the repositioning of
Peoples,
however, beginning in 2002,Peoples' investment portfolio caused 2004 Earnings Per Share to be lower than
results from normal operations. The Compensation Committee believed that
individual option grants should be paid because many successful results were
achieved through normal operations. This waiver allowed the named executive
officers to receive the portion based on the level of achievement of their
individual performance goals, but not the portion related to Peoples' corporate
results.
Stock option grants earned in respect of the 2005 fiscal year were made
by the Compensation Committee to the named executive officers in February 2006
and covered an aggregate of 10,896 common shares. The options were valued using
the market price of a common share of stock on the date of grant.
On August 11, 2005, the Compensation Committee engaged the services of
Clark Consulting, a compensation consulting firm, to perform a review of
Peoples' current deferred compensation plans to ensure compliance with Section
409A of the Internal Review Code. The Compensation Committee intends to
administer these plans to avoid or minimize the effect of Section 409A and, if
necessary, will amend or recommend the amendment of these plans to comply with
Section 409A before December 31, 2006 (or a later date specified by the Internal
Revenue Service).
The Compensation Committee subsequently retained Clark Consulting to
design a new equity plan for implementation in 2006. The proposed Peoples
Bancorp Inc. 2006 Equity Plan is discussed under "PROPOSAL NUMBER 2: APPROVAL OF
PEOPLES BANCORP INC. 2006 EQUITY PLAN" beginning at page 35.
On December 29, 2005, the Compensation Committee approved the
acceleration of the vesting schedule with regard to all unvested options
previously granted to employees of Peoples and our subsidiaries, including
executive officers of Peoples, and subsidiary directors pursuant to Peoples'
various stock option plans. Except for the acceleration of vesting, these
options will continue to be governed by their original terms and conditions. As
a result of the vesting acceleration, options to purchase an aggregate of
161,514 common shares became exercisable as of December 29, 2005. Vesting of
these options was to occur over the next six years, with the majority previously
scheduled to vest in 2006. Included in the options for which vesting was
accelerated were options held by the following individuals who served as
executive officers of Peoples during the 2005 fiscal year:
Name of Individual Aggregate Number of Options Accelerated
------------------ ---------------------------------------
Mark F. Bradley 7,526
David B. Baker 6,711
John W. Conlon 8,227
Larry E. Holdren 8,206
Carol A. Schneeberger 8,017
Joseph S. Yazombek 8,847
As previously reported, effective January 1, 2006, David B. Baker ceased to
serve as an executive officer of Peoples and David T. Wesel became an executive
officer of Peoples.
Executive Officer Perquisites
- -----------------------------
Based on business need, on a case-by-case basis, the Compensation
Committee grants the use of a company-paid automobile and country club
membership to selected executive officers to further business development on
behalf of Peoples. Personal use of such perquisites is either reimbursed to
Peoples or paid by the executive officer.
Other Compensation
- ------------------
The executive officers participate in the Peoples Bancorp Inc.
Retirement Savings Plan on the same criteriabasis as all other employees. Peoples
"matches" certain employee contributions to the cash incentive component previously described, except when usedRetirement Savings Plan. The
matching amounts for the individuals named in the Summary Compensation Table are
included under the caption "All Other Compensation" in that table.
The executive officers also participate in the Peoples Bancorp Inc.
Retirement Plan on the same basis as aall other employees. Annual pension
benefits are payable under the Retirement Plan upon retirement based upon
specified compensation and years of service classifications.
The executive officers are also eligible to participate in the employee
benefit programs maintained by Peoples, including life, medical and dental
insurance plans, on the same terms as all other employees.
Chief Executive Officer's Compensation
- --------------------------------------
The 2005 base salaries for Robert E. Evans and Mark F. Bradley were
determined by evaluating the most recent comparative peer data and the role and
responsibilities of their respective positions. During latter part of recruitment packages. During the 20032004
fiscal year, minimum corporatethe Compensation Committee engaged the services of Clark
Consulting, a compensation consulting firm, to perform competitive peer analysis
of executive compensation. In conjunction with Peoples, Clark Consulting
identified a group of 15 peer financial institution holding companies based on
market capitalization, geographic location, performance, goals were not met and it is expected that no stock option grants will be madesimilarity in lines
of business. The peer group represents publicly-traded financial institution
holding companies with total asset size from slightly over $900 million to
slightly under $3.5 billion. The information gathered from the analysis was used
to determine the competitiveness of compensation for Robert E. Evans and Mark F.
Bradley relative to other financial institution holding companies of comparable
size and overall performance. The information was used to determine the 2005
compensation for both individuals. On December 9, 2004, the Compensation
Committee established base salaries for Robert E. Evans and Mark F. Bradley for
the 20032005 fiscal year.
On May 31, 2005, Robert E. Evans retired and resigned from his position
as Chief Executive Officer and as an employee of each of Peoples and Peoples
Bank. The compensation he received following his retirement is described below
under "Other Compensation to Mr. Evans."
As part of a succession plan announced in February 2005, Mark F.
Bradley, who had served as President and Chief Operating Officer, was named
Chief Executive Officer of both Peoples and Peoples Bank, succeeding Mr. Evans
effective May 31, 2005. In light of his increased job responsibilities as
President and Chief Executive Officer, the Compensation Committee determined
that Mr. Bradley's annualized base salary should be increased from $200,000 to
$225,000 effective June 1, 2005. This placed Mr. Bradley's base salary just
below the median of base salaries of chief executive officers paid by those
financial institution holding companies selected for peer comparison.
The Compensation Committee considered the following factors in
determining the base salary for 2006 for Mr. Bradley in his capacity as Peoples'
President and Chief Executive Officer: Peoples' success in achieving its 2005
fiscal year established financial targets and the median level of compensation
paid to Chief Executive Officer's of financial institution holding companies
selected for peer comparison. Based on these factors, the Compensation Committee
determined on February 9, 2006, Mr. Bradley's base salary should be increased
from $225,000 to $250,000 effective January 1, 2006. This still placed Mr.
Bradley's annual base salary just below the median of base salaries of chief
executive officers paid by those financial institution holding companies
selected for peer comparison.
For the 2005 fiscal year, Mr. Bradley was eligible to earn a cash bonus
under the performance compensation program ranging up to 100% of his base salary
and options up to 140% of base salary based on the attainment of established
performance goals. The options were valued using the market price of a common
share of stock on the date of grant. The Compensation Committee certified that
based on Peoples' and Mr. Bradley's individual performance during the 2005
fiscal year, he earned a bonus under the performance compensation program of
$60,000. Likewise, he also earned options totaling 2,970 common shares. Both the
bonus and options were earned in respect to the 2005 fiscal year. The options
were granted in February 2006. The bonus [was paid] [will be paid] in March
2006. In recognition of Mr. Bradley's role and importance to Peoples' success
and promotion of shareholder value, Peoples provided him with a country club
membership in 2005.
Other Compensation to Mr. Evans
- -------------------------------
On May 31, 2005, Robert E. Evans retired and the other executive
officers.
In order to further enhance Mr. Evans' long-term commitment to Peoples
Bank, Peoples Bank entered in a Deferred Compensation Agreement with him in
1976. Under this Agreement, Mr. Evans agreed to serve Peoples Bankresigned from his position
as Chief Executive Officer and as an employee until he reaches age 65 or untilof each of Peoples and Peoples
Bank. Mr. Evans continued to serve as Chairman of the Board and a non-employee
director of each entity thereafter. On May 31, 2005, the Board of Directors of
Peoples, upon the recommendation of the Compensation Committee, approved the
payment of a monthly fee to Mr. Evans in his earlier retirement, disability or
deathcapacities as Chairman of the Board
of Peoples and agreed not to engage in activities in competition with Peoples Bank. The monthly fee was to be $8,333, effective June 1,
2005. Mr. Evans was to receive no separate compensation for attending meetings
of any committees of either board of directors or for other services provided as
a member of either board. He received a payment of $8,333 on June 15, 2005, for
his services as Chairman of the Board of Peoples and Peoples Bank.
On June 9, 2005, the Board of Directors, upon the recommendation of the
Compensation Committee, approved a Director Retirement Plan for the benefit of
Mr. Evans in recognition of his 35 years of service with the organization and
his direct responsibility for its substantial success and growth. The Director
Retirement Plan was intended to provide Mr. Evans with a monthly benefit for
life, commencing July 1, 2005, and, if she survived him, a reduced monthly
benefit for Mr. Evans' spouse for her life. The monthly benefit to be paid to
Mr. Evans was to increase each year and was to be $1,156 per month for the 2005
calendar year. Similarly, the monthly benefit, payable to Mr. Evans' spouse upon
Mr. Evans' death was to generally increase each year and was $662 per month for
the 2005 calendar year. During 2005, six payments were made to Mr. Evans' spouse
under the plan.
On June 9, 2005, the Board of Directors, upon the recommendation of the
Compensation Committee, also approved the payment of a benefit in the amount of
$145,000 under the deferred compensation agreement, dated November 18, 1976,
between Mr. Evans and The Peoples Banking and Trust Company (now known as
Peoples Bank, National Association), as amended December 26, 1978 and March 22,
1979. The deferred compensation agreement provided for the accrual of $5,000 is automatically accrued tofor
Mr. Evans' account upon the completion of each year of service to Peoples Bank
until he reachesreached normal retirement age.
At various timesage (65). As of May 31, 2005, a total of
$141,667 had been accrued for Mr. Evans' account and the Compensation Committee
and the Board of Directors both felt it was appropriate to credit Mr. Evans'
account with the full $5,000 annual amount in respect of the year of his
retirement. In connection with the benefit payment, the deferred compensation
agreement was terminated effective June 9, 2005.
To the extent that the effect of Mr. Evan's retirement was specifically
addressed under any of the other employee benefit programs in which he
participated at the time of his retirement, those terms continued to apply.
On June 15, 2005, Mr. Evans died.
Change in Control Agreements
- ----------------------------
In 2004, the Compensation Committee engaged the services of Clark
Consulting to explore whether change in control agreements would be appropriate
for executive officers. Based upon a recommendation from Clark Consulting, the
Compensation Committee supported the development and implementation of change in
control agreements for all executive officers to promote shareholder value
should a change in control occur. In August 2004, Peoples entered into change in
control agreements with Robert E. Evans (which expired upon his retirement),
Mark F. Bradley, John W. Conlon, Carol A. Schneeberger, David B. Baker, and
Larry E. Holdren to encourage those executive officers to continue their
employment with Peoples in the past,event Peoples has adopted broad-based employee
benefit plansis acquired by another entity. The
agreements were not undertaken in the belief a change in control was imminent or
expected.
An executive officer's base annual compensation for purposes of his or
her change in control agreement is the average annualized compensation paid by
Peoples which Peoples'was includible in the executive officer's gross income prior to
any deferred arrangements during the most recent five taxable years ending
before the date of the change in control.
Generally, the agreements provide for severance compensation to those
executive officers are permittedif their employment is terminated by Peoples or its
successors for any reason other than cause within six months prior to participateor within
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 a decrease in the executive officer's base annual
compensation without the executive officer's consent; a material reduction in
the importance of the executive officer's job responsibilities without the
executive officer's consent, other than by reason of termination for cause or by
reason of disability, retirement or death; geographical relocation of the
executive officer without executive officer's consent to an office more than 50
miles from the executive officer's current location; or failure by Peoples to
obtain assumption of the agreement by its successor.
Under the agreements, a change in control is deemed to occur in the
event of a change of ownership of Peoples which must be reported to the SEC as a
change of control, including but not limited to the acquisition by any person,
entity, or group of beneficial ownership of 25% or more of Peoples' voting
securities or all or substantially all of the assets of 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 Mr. Conlon, Ms. Schneeberger, Mr. Baker,
and Mr. Holdren, in each case payable within thirty days following the
termination date; (ii) continuing participation in life, medical, and dental
insurance for twelve months substantially in the form and expense to the
executive officer as that received on the same terms as non-executivedate of termination; and (iii) the
executive officer employees who meet applicable
eligibility criteria, subject to legal limitations onentering into a non-compete agreement for twelve months
immediately following the amounts that may be
contributed ordate of termination. In the benefits that may be payable undercase of Mr. Bradley, the
plans.
To enhance the long-term commitmentduration of the officersnon-compete agreement and employeesthe continuing participation in life,
medical, and dental insurance is 15 months immediately following the date of
termination.
During 2005, management changes occurred which impacted those
individuals covered by change in control agreements. On September 14, 2005, it
was announced David B. Baker would no longer serve as an Executive Vice
President of Peoples and its subsidiaries, Peoples establishedBank effective January 1, 2006. The change in
control agreement with David B. Baker was terminated on January 1, 2006. On
September 14, 2005, it was also announced David B. Baker would be succeeded by
David T. Wesel effective January 1, 2006. On December 8, 2005, the Compensation
Committee authorized the execution on behalf of Peoples, Bancorp Inc.
Retirement Savings Plan (the "Peoples 401(k) Plan"). All officerson or about January 3,
2006, of a change in control agreement with David T. Wesel when he became an
executive officer. The terms of David T. Wesel's change in control agreement are
the same as those in the change in control agreements entered into in August
2004 with David B. Baker, John W. Conlon, Larry E. Holdren, and employeesCarol A.
Schneeberger.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
Each of Frank L. Christy, Carl L. Baker, Jr., Robert W. Price and
Joseph H. Wesel served as a member of the Compensation Committee for the entire
2005 fiscal year. Mr. Wesel served as Chairman until December 8, 2005, when he
was succeeded in that position by Frank L. Christy. George W. Broughton joined
the Compensation Committee on August 11, 2005 and Paul T. Theisen joined the
Compensation Committee on November 10, 2005. Wilford D. Dimit served on the
Compensation Committee until his resignation on February 9, 2005. None of the
individuals serving on the Compensation Committee has been an officer or
employee of Peoples or any of our subsidiaries. In addition, no executive
officer of Peoples has served on any board of directors or compensation
committee of any entity that compensates any member of the Compensation
Committee.
David T. Wesel, who is the son of Joseph H. Wesel, was appointed to the
positions of Executive Vice President of Peoples and its subsidiaries mayof Peoples Bank and
President of the Peoples Financial Advisors division of Peoples Bank, effective
January 1, 2006. Prior to that time, he had served as a Vice President of
Peoples Bank and Sales Manager of Peoples Financial Advisors, but was not an
executive officer of Peoples or Peoples Bank. During the 2005 fiscal year, David
T. Wesel received compensation in excess of $60,000.
While Paul T. Theisen is Of Counsel to, and an independent contractor
with, the law firm of TheisenBrock, 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 individually performed services for Peoples or any of
our subsidiaries), since 1998.
On January 26, 2005, Peoples Bank purchased real estate and the
building located on it from First Settlement Inc., a corporation as to which
Wilford D. Dimit is the President and the controlling shareholder. The purchase
price for the real estate and building was $400,000 and was determined through
an arm's length negotiation. From January 26, 2005 through March 31, 2005,
Peoples Bank leased to First Settlement, Inc. space within the building on a
month-to-month basis for purposes of continued operation of a restaurant. These
lease payments were in the aggregate amount of $2,000. Mr. Dimit sold the
restaurant in April 2005. Mr. Dimit resigned from the Compensation Committee
effective February 9, 2005 and did not participate in the Peoples 401(k) Plan, upon
satisfying applicable eligibility criteria. Peoples' matching contributions and
participant contributions may be invested in common shares providing each
participant with motivation toward safe and sound long-term growth of Peoples.
Peoples' matching contributions may vary at the discretiondiscussions or
deliberations of the Compensation Committee from and after January 26, 2005.
Conclusion
- ----------
We have reviewed all components of the compensation of the individuals
named in the Summary Compensation Table, including base salary, annual bonus and
long-term equity compensation in the form of option grants, accumulated realized
and unrealized stock option gains, the dollar value to the individual and cost
to Peoples of all perquisites and other personal benefits and the projected
payout obligations under change in control scenarios. Based on this review, we
find each such individual's total compensation (and, in the case of change in
control scenarios, the potential payouts) in the aggregate to be reasonable and
not excessive. Furthermore, we believe that the compensation paid to all
executive officers is consistent with Peoples' goals and objectives.
Submitted by the Compensation Committee of Peoples' Board of Directors.
The Compensation Committee will continue to monitor compensation issues
to ensure adequate and appropriate compensation of Peoples' executive officers
while creating a mutuality of interest between executive officers and
shareholders through compensation structures that share the rewards and risks of
strategic decision-making.
SUBMITTED BY THE COMPENSATION COMMITTEE OF PEOPLES' BOARD OF DIRECTORS:Directors:
Frank L. Christy (Chairman since December 8, 2005); Joseph H. Wesel Chairman; Frank(member
until December 31, 2005 and Chairman until December 8, 2005); Carl L. Christy; Wilford D. Dimit;Baker,
Jr.; George W. Broughton (member since August 11, 2005); Robert W. Price; and
Thomas C. Vadakin, MembersPaul T. Theisen (member since November 10, 2005).
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY OF CASH AND OTHER COMPENSATIONSummary of Cash and Other Compensation
- --------------------------------------
The following table shows, for the last three fiscal years, the cash
compensation paid by Peoples and itsour subsidiaries, as well as other compensation
paid or accrued for those years, to Robert E. Evans, the Chairman andeach individual who served as Chief
Executive Officer of Peoples during the 2005 fiscal year and the four other most
highly compensated executive officers of Peoples.
Peoples during the 2005 fiscal year.
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
Long Term
Compensation All Other
Salary Awards All Other Compensation
------------------------------------------ ------------- -----------------------
Common---------------------------
Interest on
Common Shares Deferred
Base
Directors' Underlying Incentive
Name and Principal Position Year Base Salary Fees (1)(4) Bonus (2)(5) Options (3)(6) Payment (7) All Other
(4)
- --------------------------- ---- ----------- -------- ---------- --------- ------------ --------------------------- ------------- ----------
Robert E. Evans 2003 $300,000 $16,6002005 $ 147,747 $ 8,333 - 18,187 $2,843 $13,000
President, Chief Executive Officer 2002 $290,000 $17,800 $139,000 11,729 $1,915 $10,272
and- $ 1,231 $ 21,221(8)
Chairman of the Board 2001 $273,160 $15,850 $86,592and 2004 $ 300,000 $ 16,600 $ 24,300 1,238 $ 3,253 $ 23,141
Chief Executive Officer (1) 2003 $ 300,000 $ 16,600 - - $11,800$ 2,843 $ 20,822
Mark F. Bradley 2003 $165,000 $15,7502005 $ 214,583 - 5,797 $969 $8,000$ 60,000 2,970 $ 962 $ 11,546
President and 2004 $ 169,950 $ 16,850 $ 9,007 459 $ 1,109 $ 7,385
Chief Operating Officer 2002 $142,500 - $52,298 2,828 $553 $5,252
2001 $100,000 - $25,000(2) 2003 $ 165,000 $ 15,750 - - $4,223969 $ 8,139
Joseph S. Yazombek 2005 $ 195,000 - $ 47,190 2,388 $ 6,379 $ 11,083(8)
Executive Vice President/ 2004 $ 160,680 - $ 23,299 1,215 $ 4,417 $ 9,474
Chief Lending Officer 2003 $156,000$ 156,000 - - 6,679 $3,860 $7,118- $ 3,860 $ 9,429
John W. Conlon 2005 $ 183,000 - $ 30,378 1,535 $ 2,557 $ 10,524(8)
Chief Financial Officer and Treasurer 2004 $ 153,000 - $ 23,715 1,235 $ 2,483 $ 6,120
2003 $ 150,000 - - - $ 2,170 $ 7,083
Carol A. Schneeberger 2005 $ 160,000 - $ 37,600 1,903 $ 1,734 $ 6,784(8)
Executive Vice President, Operations 2004 $ 151,700 - 2002 $150,000 - $59,700 4,875 $2,310 $6,377
Chief Lending Officer 2001 $145,600 - $41,787$ 15,170 792 $ 1,240 $ 6,068
2003 $ 148,000 - - $6,211- $ 1,083 $ 7,542
David B. Baker 2003 $153,0002005 $ 160,000 - - 5,302 $3,914 $6,885$ 31,520 1,592 $ 5,612 $ 6,400(8)
Executive Vice President 2002 $150,000(3) 2004 $ 156,060 - $48,600 3,086 $2,576 $6,000
2001 $147,040 - $29,120$ 8,739 456 $ 4,480 $ 6,242
2003 $ 153,000 - - $6,269
Larry E. Holdren- $ 3,914 $ 6,120
- ---------------------
(1) Mr. Evans served as Chairman of the Board of Peoples from July 2003 $153,000 - - 6,666 $4,873 $8,000until
June 15, 2005, and as Chief Executive Officer from 1980 until May 31, 2005. He
retired from his position as Chief Executive Officer and as an employee of
Peoples on May 31, 2005, but continued to serve as Chairman of the Board and a
non-employee director until his death on June 15, 2005. Mr. Evans also served as
President of Peoples from 1980 until June 2004.
(2) Mr. Bradley has served as Chief Executive Officer of Peoples since May 31,
2005 and as President since June 2004. He served as Chief Operating Officer from
July 2003 until May 31, 2005 and as Executive Vice President and Chief
Integration Officer from April 2002 $150,000 - $59,550 4,215 $3,284 $5,500
2001 $145,634 - $37,128 - - $6,219
(1) Includesuntil July 2003.
(3) Mr. Baker served as Executive Vice President of Peoples and Peoples Bank
from February 1999 until December 31, 2005 and as President of Peoples Financial
Advisors from February 2000 until December 31, 2005. Effective January 1, 2006,
Mr. Baker assumed a non-executive role as Senior Financial Advisor of Peoples
Financial Advisors.
(4) Represents the aggregate fees received by Mr. Evans (prior to his death) and
Mr. Bradley for services rendered as a director of Peoples and itsour subsidiaries.
(2) All(5) Represents incentive bonuses were earned under the Performance Compensation Program,performance compensation
program, and are reported for the fiscal year for which the incentive bonuses
were earned. Incentive bonuses are traditionally paid during the first quarter
of the following fiscal year; however, executive officers of Peoples are
required to defer 25% of their incentive bonus for a period of three years and
have the option to defer any remaining incentive compensation until they reach
retirement age. The amounts shown include the deferred portion of the incentive
bonus earned by each individual: (a) Mr. Evans - $0 in 2005 and $6,075 in 2004;
(b) Mr. Bradley - $15,000 in 2005 and $2,252 in 2004; (c) Mr. Yazombek - $11,798
in 2005 and $5,825 in 2004; (d) Mr. Conlon - $7,595 in 2005 and $5,929 in 2004;
(e) Ms. Schneeberger - $9,400 in 2005 and $3,793 in 2004; and (f) Mr. Baker -
$7,880 in 2005 and $2,185 in 2004.
(6) Options are reported for the fiscal year for which they were earned. BonusesOptions
are traditionally paidgranted during the first quarter of the following fiscal year.
(3) All numbers have been adjusted for 10% stock dividends issued(7) Represents the amount of interest accrued during the fiscal year on September 12, 2001 and June 28, 2002, and a 5% stock dividend issued
on August 29, 2003. Options shown have been granted in respectthe
cumulative amount of incentive bonus deferred by each individual under the terms
of the prior year's performance. Itperformance compensation program. Interest is anticipated that no optionsaccrued at a rate equal to
50% of Peoples' return on average equity achieved during each calendar year
during the deferral period. As of December 31, 2005, interest in the following
aggregate amounts had been accrued for the benefit of the named individuals and
will be granted topayable in accordance with the terms of the performance compensation
program: (a) Mr. Evans - $7,327; (b) Mr. Bradley - $3,040; (c) Mr. Yazombek -
$14,656; (d) Mr. Conlon - $7,210; (e) Ms. Schneeberger - $4,057; and (f) Mr.
Baker - $14,006. As of December 31, 2005, the following aggregate amounts of
incentive bonus and interest had been accrued for the benefit of the named
executive officers duringindividuals and will be payable in accordance with the 2004terms of the performance
compensation program: (a) Mr. Evans - $0.00; (b) Mr. Bradley - $17,655; (c) Mr.
Yazombek - $117,127; (d) Mr. Conlon - $46,948; (e) Ms. Schneeberger - $31,835;
and (f) Mr. Baker - $103,041.
(8) "All Other" for the 2005 fiscal year in
respect of performance forincludes the 2003 fiscal year.
(4) This number includesfollowing contributions by
Peoples to the Peoples Bancorp Inc. Retirement Savings Plan on behalf of each of
the named executive
officersindividuals to match their pre-tax elective deferral contributions
(included under "Salary"). For: (a) Mr. Evans this number also includes
the amount of $5,000, which was accrued pursuant to the terms of a
Deferred Compensation Agreement between- $7,118; (b) Mr. EvansBradley - $8,400; (c)
Mr. Yazombek - $7,800; (d) Mr. Conlon - $8,400; (e) Ms. Schneeberger - $6,784;
and Peoples. See the
discussion under "Deferred Compensation Agreement".(f) Mr. Baker - $6,400.
GRANT OF OPTIONSFor Mr. Evans, "All Other" also includes for each year the amount of $5,000,
which was accrued, pursuant to the terms of the deferred compensation agreement
between Mr. Evans and Peoples Bank which is described below under "Deferred
Compensation Agreement." On June 9, 2005, the Board of Directors, upon the
recommendation of the Compensation Committee, approved the payment of a benefit
in the amount of $145,000 under the deferred compensation agreement. As of May
31, 2005, a total of $141,667 had been accrued for his account and the
Compensation Committee and the Board of Directors both felt it was appropriate
to credit Mr. Evans' account with the full $5,000 annual amount which would have
otherwise accrued for his account in the year of his retirement. "All Other"
does not include the $145,000 paid to Mr. Evans under the terms of the deferred
compensation agreement. In connection with the benefit payment, the deferred
compensation agreement was terminated effective June 9, 2005. "All Other" does
not include amounts paid to Mr. Evans' spouse under the director retirement plan
for the benefit of Mr. Evans, which is described below under "Director
Retirement Plan."
"All Other" for the 2005 fiscal year also includes earnings in the amount of
$8,184 and $1,022, respectively, for Messrs. Evans and Bradley, accrued during
the 2005 fiscal year on the cumulative amount of directors' fees deferred under
the terms of the Deferred Compensation Plan for Directors of Peoples Bancorp
Inc. and Subsidiaries. These earnings represent dividends credited on common
shares accrued to Messrs. Evans' and Bradley's accounts. These dividends are
converted into a common share equivalent based on the fair market value of a
common share as of the first business day of the following calendar quarter and
during the 2005 fiscal year, an aggregate of 201 common shares and 37 common
shares were accrued, respectively, to Messrs. Evans' and Bradley's accounts. As
of August 9, 2005, an aggregate of 14,860 common shares accrued in Mr. Evans'
account were distributed as a result of his death. As of December 31, 2005, an
aggregate of 1,414 common shares were accrued for Mr. Bradley's account.
"All Other" for the 2005 fiscal year also includes country club dues of $919,
$2,124, $3,283 and $2,124, respectively, for
Messrs. Evans, Bradley, Yazombek and Conlon.
Grant of Options
- ----------------
Options were granted on February 9, 2006, to each of the individuals
named in the Summary Compensation Table (other than Robert E. Evans) based on
the individual's performance during the 2005 fiscal year. The following table
sets forthsummarizes information concerning the individual grants of options made under Peoples' 2002 Stock Option Plan during the 2003 fiscal
year to each
of the named executive officers.individuals in respect of the 2005 fiscal year. Peoples has never
granted stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR Potential Realizable Value
at Assumed Annual Rates(1)
Number of % of Total
of Share Price Appreciation
Common Shares Options Granted forGrant Date
Underlying to Employees Exercise Price Expiration Option Term (2)Present
Name Options Granted (1)(2) in Fiscal Year ($/Share) Date 5% 10%Value (3)(4)
- ---- ---------------------------------- -------------- --------- -------- ------- ------------ ------------
Robert E. Evans 18,187 16.84% $22.324 3/27/2013 $255,335 $647,070- - - - -
Mark F. Bradley 5,797 5.37% $22.324 3/27/2013 $81,387 $206,2502,970 6.96% $28.25 2/9/2016 $22,000
Joseph S. Yazombek 6,679 6.19% $22.324 3/27/2013 $93,769 $237,6302,388 5.60% $28.25 2/9/2016 $18,000
John W. Conlon 1,535 3.60% $28.25 2/9/2016 $11,000
Carol A. Schneeberger 1,903 4.46% $28.25 2/9/2016 $14,000
David B. Baker 5,302 4.91% $22.324 3/27/2013 $74,437 $188,638
Larry E. Holdren 6,666 6.17% $22.324 3/27/2013 $93,587 $237,1681,592 3.73% $28.25 2/9/2016 $12,000
- ----------------------------------------
(1) All numbers have been adjusted for a 5% stock dividend issued on
August 29, 2003.Reflects individual grants of options made to each of the named
executive officers in respect of the 2005 fiscal year.
(2) All options were granted under the 2002 Stock Option Plan, and become
exercisable as to 100% of the common shares on the third anniversary
of the grant date. If employment with Peoples and its subsidiaries is
terminated by reason of death, disability, or retirement in accordance
with the standard retirement policies of Peoples or its subsidiaries,
vesting is accelerated and the option becomes exercisable in full until the earlierfor
a period of 12 months from the date of termination of employment,
orsubject to the stated expiration date of the option. If employment is
voluntarily terminated, only those options exercisable on the date of
termination areremain exercisable until the earlierand may be exercised for a period of 12
months from the date of termination, orsubject to the stated expiration
date of the option. No option may be exercised after the date of
termination if termination is for "cause". In the event of a "change
in control" (as defined in the 2002 Stock Option Plan), the options
will automatically vest and become exercisable in full.
(3) The dollar amounts reflected in this table are the result of
calculations at the 5% and 10% annual appreciation rates set by the
SEC for illustrative purposes, and assume the options are held until
their respective expiration dates. Such dollarDollar amounts are not
intendedreported to forecast future financial performance or possible future
appreciationthe nearest $1,000.
(4) Option values reflect the Black-Scholes model output for options. The
assumptions used in the pricemodel were expected volatility of Peoples' common shares. Shareholders are
therefore cautioned against drawing any conclusions from26.0%,
risk-free rate of 4.37%, dividend yield of 2.61% and expected life of
6.5 years. No adjustments have been made to the appreciation data shown, aside from the fact the optionee will only
realize value from the option grants shown if the pricemodel valuation for
non-transferability or risk of Peoples'
common shares appreciates, which benefits all shareholders
commensurately.forfeiture.
OPTION EXERCISES AND HOLDINGS
Option Exercises and Holdings
- -----------------------------
The following table summarizes information concerning options exercised
during, and unexercised options held as of the end of, the 20032005 fiscal year by
each of the named executive officers.individuals.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES (1)
Number of
Number of Common Shares Underlying Value of Unexercised In-the
Common Shares Unexercised Options In-the-MoneyMoney Options
Underlying at Fiscal Year End (1)Shares at Fiscal Year End (2) at Fiscal Year End (3)
Underlying ------------------------------- ------------------------------
Name Options Value
Name Exercised Realized Exercisable UnExercisableUnexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------ ------------------------------
Robert E. Evans 1,245 $2,922 47,242 49,712 $831,619 $456,83525,000 $209,451 28,621(4) - $163,535 -
Mark F. Bradley 300 $2,677 10,734 16,278 $135,697 $175,194816 $ 8,408 26,139 - $272,491 -
Joseph S. Yazombek 7,000 $146,069 26,103 18,256 $428,701 $178,482- - 33,042 - $312,626 -
John W. Conlon 14,549 $168,308 17,092 - $136,496 -
Carol A. Schneeberger 12,618 $146,480 19,051 - $179,788 -
David B. Baker 1,540 $22,755 33,103 15,090 $576,590 $158,001
Larry E. Holdren 9,765 $192,123 13,571 17,583 $163,938 $174,4833,978 $ 40,821 25,139 - $460,846 -
---------------------
(1) The information included in this table does not reflect the options
granted on February 9, 2006 in respect of the 2005 fiscal year since
these options were not outstanding on December 31, 2005.
(2) These numbers have been adjusted to reflect stock dividends issued by
Peoples since the respective grant dates of the options.
(2)(3) "Value of Unexercised In-the-Money Options at Fiscal Year End" is
based upon the fair market value of Peoples' common shares on December
31, 20032005 ($29.51)28.53) less the exercise price of in-the-money options that were in the
money at the end of the 20032005 fiscal year.
(4) Options granted to Mr. Evans exercisable by the Estate of Robert E.
Evans for a period of 1 year from the date of Mr. Evans' retirement on
May 31, 2005 as permitted under the terms of the 2002 Plan.
PENSIONEquity Compensation Plan Information
- ------------------------------------
Peoples has five equity compensation plans under which common shares
are authorized for issuance to directors, officers or employees in exchange for
goods or services:
o the 1993 Plan;
o the 1995 Plan;
o the 1998 Plan;
o the 2002 Plan; and
o the Deferred Compensation Plan for Directors of Peoples Bancorp Inc.
and Subsidiaries (the "Director Deferred Compensation Plan").
The following table summarizes equity compensation plan information for
these plans as a group as of December 31, 2005. Each of these plans was approved
by the shareholders of Peoples.
EQUITY COMPENSATION PLAN TABLE
Number of common shares
remaining
available for future
Number of common shares issuance under equity
to be issued Weighted-average compensation plans
upon exercise of exercise price of (excluding common shares
outstanding options, outstanding options, reflected in
warrants and rights warrants and rights column (a))
Plan category (a) (b) (c)
- ------------------------- --------------------- --------------------- ---------------------------
Equity compensation plans
approved by shareholders...
531,144 (1) $20.41 (2) 311,731 (3)
Equity compensation plans
not approved by
shareholders............... -- -- --
Total...................... 531,144 $20.41 311,731
---------------------
(1) Includes 18,949 common shares issuable upon exercise of options granted
under the 1993 Plan, 105,045 common shares issuable upon exercise of
options granted under the 1995 Plan, 124,744 common shares issuable upon
exercise of options granted under the 1998 Plan, 227,094 common shares
issuable upon exercise of options granted under the 2002 Plan and 55,312
common shares reflecting common share equivalents attributable to
compensation deferred by directors participating in the Director Deferred
Compensation Plan and accrued to their respective accounts.
(2) Represents the weighted-average exercise price of options outstanding
under the 1993 Plan, the 1995 Plan, the 1998 Plan and the 2002 Plan. The
common shares reflecting common share equivalents attributable to
compensation deferred by directors participating in the Director Deferred
Compensation Plan are not included in this calculation.
(3) Includes 33,423 common shares remaining available for future issuance
under the 1998 Plan, 250,851 common shares remaining available for future
issuance under the 2002 Plan and 27,457 common shares remaining available
for future issuance under the Director Deferred Compensation Plan, in
each case excluding the common shares shown in footnote (1). Other than
the common shares shown in footnote (1), no further common shares were
available for issuance under the 1993 Plan or the 1995 Plan as of
December 31, 2005.
Pension Plan
The following table shows the estimated annual pension benefits payable
upon retirement at age 65 on a lifetime annuity basis under the Peoples Bancorp
Inc. Retirement Plan, a funded, noncontributory pension plan (the "Pension
Plan"), to a covered participant in specified compensation and years of service
classifications.
PENSION PLAN TABLE
Years of Service at Normal Retirement
-------------------------------------
Annualized Average
Monthly Compensation 15 20 25 30 35
-------------------- ------- ------- ------- -------- --------
$125,000 $31,888 $42,517 $53,146 $63,775 $63,775
$150,000 $39,013 $52,017 $65,021 $78,025 $78,025
$175,000 $46,138 $61,517 $76,896 $92,275 $92,275
$200,000 $53,263 $71,017 $88,771 $106,525 $106,525
PENSION PLAN TABLE
Years of Service at Normal Retirement
Annualized Average
Monthly Compensation
-------------------- ----------- ----------- ---------- ---------- -------------
15 20 25 30 35
----------- ----------- ---------- ----------- -------------
$125,000 $31,486 $41,981 $52,476 $ 62,972 $62,972
$150,000 $38,611 $51,481 $64,351 $ 77,222 $77,222
$175,000 $45,736 $60,981 $76,226 $ 91,472 $91,472
$200,000 $52,861 $70,481 $88,101 $105,772 $105,772
$225,000 $55,711 $74,281 $92,851 $111,422 $111,422
and over (1)
---------------------
(1) Applicable provisions of the Internal Revenue Code currently limit the
amount of annual compensation used to determine plan benefits under a
defined benefit pension plan, such as the Pension Plan, and the amount
of plan benefits payable annually under such a plan. The Pension Plan
is operated in compliance with these provisions.
Benefits listed in the Pension Plan Table are not subject to deduction
for Social Security benefits or other amounts and are computed on a lifetime
annuity basis.
Monthly benefits upon normal retirement (age 65) are based upon 40% of
"average monthly compensation" plus 17% of the excess, if any, of "average
monthly compensation" over "covered compensation". For purposes of the Pension
Plan, "average monthly compensation" is based upon the monthly compensation
(including regular salary and wages, overtime pay, bonuses and commissions) of
an employee averaged over the five consecutive credited years of service which
produce the highest monthly average within the last ten years preceding
retirement and "covered compensation" is the average of the 35 years of social
security wage bases prior to social security retirement age. As of the end of
the 20032005 fiscal year, annualized "covered compensation" for Mr. EvansBradley was
$48,492, Mr.
Bradley $86,940,$89,700, Mr. Yazombek $74,136,$75,540, Mr. Conlon $59,772, Ms. Schneeberger $79,512 and
Mr. Baker $61,152, and Mr. Holdren
$63,132. 2003$61,872. 2005 annualized average monthly compensation, to the extent
determinable, for purposes of the Pension Plan, for Mr. EvansBradley was $200,000, Mr.
Bradley $200,000,$229,253,
Mr. Yazombek $164,955,$195,941, Mr. Conlon $213,997, Ms. Schneeberger $79,512 and Mr.
Baker $153,000, and Mr. Holdren
$153,000.$61,872. As of the end of the 20032005 fiscal year, credited years of service
for Mr. EvansBradley were 33, Mr. Bradley 12,14, Mr. Yazombek 20,22, Mr. BakerConlon 23, Ms. Schneeberger 29 and
Mr. Holdren 22.
DEFERRED COMPENSATION AGREEMENTBaker 31.
Deferred Compensation Agreement
- -------------------------------
On November 18, 1976, The Peoples Banking and Trust Company (now known
as Peoples Bank, National Association) entered into a Deferred Compensation
Agreementdeferred compensation
agreement with Mr. Evans.Robert E. Evans, which was subsequently amended on December 26,
1978 and March 22, 1979. Under this Agreement,the deferred compensation agreement, Mr. Evans
agreed to serve Peoples Bank as an employee until he reachesreached age 65 or until his
earlier retirement, disability or death, and agreed not to engage in activities
in competition with Peoples Bank. Under this Agreement, Mr. Evans or his
beneficiaries are entitled to receive specified amounts upon Mr. Evans'
retirement, disability or death, which amounts are payable monthlyThe deferred compensation agreement provided
for ten years
(with interest) or in one lump sum at the election of Peoples Bank. The
principal amount payable to Mr. Evans is based upon the sum of the amounts
accrued for his account during his years of employment with Peoples Bank. During
Peoples' 2003 fiscal year, the amountaccrual of $5,000 was accrued for Mr. Evans'
account pursuant to his Deferred Compensation Agreement and as of December 31,
2003, a total of $135,000 had been accrued for his account. The amount of $5,000
will be accrued for Mr. Evans' account upon the completion of each
year of service to Peoples Bank until he reachesreached normal retirement age.
DIRECTORS' COMPENSATIONage (65). Mr.
Evans retired from his position as Chief Executive Officer and as an employee of
Peoples on May 31, 2005. As of that date, a total of $141,667 had been accrued
for Mr. Evans' account, and the Compensation Committee and the Board of
Directors both felt it was appropriate to credit Mr. Evans' account with the
full $5,000 annual amount in respect of the year of his retirement. On June 9,
2005, the Board of Directors, upon the recommendation of the Compensation
Committee, approved the payment of a benefit in the amount of $145,000 under the
deferred compensation agreement and the agreement was terminated.
Change in Control Arrangements
- ------------------------------
In order to further motivate executive officers to act in the best
interests of the shareholders and to remain competitive in its executive
compensation package, Peoples offered change in control agreements to executive
officers of Peoples and entered into agreements with Robert E. Evans, Mark F.
Bradley, David B. Baker, John W. Conlon, Larry E. Holdren and Carol A.
Schneeberger during early August 2004.
During 2005, management changes occurred which impacted those
individuals covered by change in control agreements. Mr. Evans' change in
control agreement was terminated effective May 31, 2005, concurrent with his
retirement. On September 14, 2005, it was announced Mr. Baker would no longer
serve as an executive officer of Peoples and Peoples Bank, and would be
succeeded by David T. Wesel as an Executive Vice President of Peoples and
Peoples Bank, effective January 1, 2006. The change in control agreement with
Mr. Baker was terminated on January 1, 2006. On December 8, 2005, the
Compensation Committee authorized the execution, on or about January 3, 2006, of
a change in control agreement with Mr. Wesel when he became an executive
officer. The terms of Mr. Wesel's change in control agreement are the same as
those in the change in control agreements entered into in August 2004 with David
B. Baker, John W. Conlon, Larry E. Holdren, and Carol A. Schneeberger.
Each agreement provides that, if the executive officer is terminated by
Peoples or its successors for any reason other than cause (as described below),
or by the executive officer for good reason (as described below), within six
months prior to or within 24 months after a change in control, Peoples will pay
the following benefits:
o As to Mark F. Bradley, Peoples will
o pay to Mr. Bradley, in a lump sum within 30 days following the
termination date, an amount equal to two and one-half (2.5) times
the amount of Mr. Bradley's base annual compensation; and
o provide life, medical and dental insurance substantially in the
form and expense to Mr. Bradley as received prior to the
termination date for a period of 15 months from the date of
termination of employment; and
o As to John W. Conlon, Larry E. Holdren, Carol A. Schneeberger and
David T. Wesel, Peoples will
o pay to the executive officer, in a lump sum within 30 days
following the termination date, an amount equal to two (2) times
the amount of his or her base annual compensation; and
o provide life, medical and dental insurance substantially in the
form and expense to the executive officer as received prior to
the termination date for a period of one year from the date of
termination of employment.
An executive officer's base annual compensation for purposes of his or
her change in control agreement is the average annualized compensation paid by
Peoples which was includible in the executive officer's gross income prior to
any deferred arrangements during the most recent five taxable years ending
before the date of the change in control.
Change in control is defined in the agreements as:
o the acquisition of beneficial ownership of 25% or more of Peoples'
voting securities by a person or entity or group of affiliated persons
or entities;
o the acquisition of all or substantially all of the assets of Peoples
by any person or entity or group of affiliated persons or entities;
o execution of an agreement by Peoples to merge, consolidate or combine
with an unaffiliated entity if the Board of Directors of Peoples
immediately prior to the transaction will constitute less than the
majority of the Board of Directors of the surviving, new or combined
entity or less than 75% of the outstanding voting securities of the
surviving, new or combined entity will be beneficially owned by the
shareholders of Peoples immediately prior to the transaction, and the
agreement is not terminated with or without consummation of the
transaction;
o execution of an agreement by Peoples to transfer all or substantially
all of its assets other than to a wholly-owned subsidiary and the
agreement is not terminated without consummation of the transaction;
or
o a change in the majority of the directors of Peoples to individuals
who were not members of the Board of Directors on the date of each
agreement and were not nominated by a vote of the Board of Directors
which included the affirmative vote of a majority of such members or
other individuals so nominated.
An executive officer will be deemed terminated for cause in the event
of gross negligence or 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.
An executive officer will be deemed to have terminated his or her
employment for good reason if, without the executive officer's consent:
o the executive officer is assigned material duties or responsibilities
inconsistent with the executive officer's positions, or the executive
officer's reporting responsibilities, titles, or offices are reduced
other than by reason of termination for cause or by reason of
disability, retirement or death;
o the executive officer's base salary is reduced;
o the executive officer's benefits under any benefit plans are reduced;
o Peoples failed to obtain the assumption of, or the agreement to
perform, the executive officer's agreement by any successor;
o the executive officer is reassigned to an office location 50 miles or
more form the current office location of the executive officer; or
o the executive officer consents to any relocation and Peoples fails to
pay for all reasonable moving expenses and to indemnify the executive
officer against any loss realized on the sale of the executive
officer's principal residence in connection with any such change of
residence.
If the executive officer receives a change in control benefit, the
executive officer is subject to a non-compete agreement under which the
executive officer is not permitted to engage in the business of banking, or any
other business in which Peoples directly or indirectly engages during the term
of the executive officer's agreement in the geographic market of Peoples on the
termination date. This period of non-competition will be 15 months for Mark F.
Bradley and one year for each of John W. Conlon, Larry E. Holdren, Carol A.
Schneeberger and David T. Wesel.
Executive Officer Perquisites
- -----------------------------
Based on business need, on case-by-case basis, the Compensation
Committee grants the use of a company-paid automobile and country club
membership to selected executive officers to further business development on
behalf of Peoples. Personal use of such perquisites is either reimbursed to
Peoples or paid by the executive officer. The aggregate incremental cost to
Peoples of perquisites and other personal benefits paid to each of the
individuals named in the Summary Compensation Table for each of the three years
presented did not exceed $10,000.
Other Executive Compensation
- ----------------------------
The executive officers participate in the Peoples Bancorp Inc.
Retirement Savings Plan on the same basis as all other employees. Peoples
"matches" certain employee contributions to the Retirement Savings Plan. The
matching amounts for the individuals named in the Summary Compensation Table are
included under the caption "All Other Compensation" in that table.
The executive officers are also eligible to participate in the employee
benefit programs maintained by Peoples, including life, medical and dental
insurance plans, on the same terms as all other employees.
Directors' Compensation
- -----------------------
Fees
Each director of Peoples, receivedother than Mark F. Bradley and Robert E.
Evans, receives a quarterly cash fee. Effective May 1, 2005, the amount of this
quarterly fee was increased from $850 to $1,000 per calendar quarterquarter. In
addition, each director, other than Mark F. Bradley and Robert E. Evans, is
compensated for each meeting of the Peoples Board of Directors attended.
Effective May 1, 2005, this fee was increased from $600 to $1,000 per Board
meeting attended duringattended.
Directors are also compensated for each committee meeting they attend.
Members of the 2003 fiscal year. Each director of Peoples also
serving on a Board committee receivedExecutive Committee and the Governance and Nominating Committee
receive $100 for attending each committee meeting of less than one hour duration, or $15030 minutes attended and
$200 for attending each committee meeting in
excess of one hour.30 minutes or more attended. Effective May 1,
2005, the fee for attending Compensation Committee meetings of 30 minutes or
more increased from $200 to $500 per meeting while the fee for attending
meetings of less than 30 minutes remained at $100 per meeting. The Chairman of
the Compensation Committee receives an additional cash fee of $750 per quarter.
Effective May 1, 2005, the fee for attending Audit Committee meetings of 30
minutes or more increased from $400 to $500 per meeting while the fee for
attending meetings of less than 30 minutes remained at $100 per meeting. The
Chairman of the Audit Committee receives an additional cash fee of $1,250 per
quarter.
Each director of Peoples, other than Mark F. Bradley and Robert E.
Evans and
Mark F. Bradley,(prior to his death), who also served as a director of Peoples Bank
received $600 per calendar quarter and $400 for each regular monthly meeting of
the Peoples Bank board of directors attended during the 20032005 fiscal year. Mr. Evans and Mr.
Bradley received no quarterlycompensation as a director of Peoples Bank. Prior to his
death, Mr. Evans received no compensation as a director of Peoples Bank and $250except
as described in the next paragraph. In addition, each director of Peoples who
also served as a Peoples Bank committee member received $100 for each regularcommittee
meeting of less than 30 minutes attended, or $200 for each committee meeting of
30 minutes or more attended, during the 2005 fiscal year.
On May 31, 2005, the Board of Directors of Peoples, upon the
recommendation of the Compensation Committee, approved the payment of a monthly
fee to Robert E. Evans in his capacities as Chairman of the Board of Peoples and
of Peoples Bank. The monthly fee approved was $8,333, to be effective June 1,
2005. Mr. Evans was to receive no separate compensation for attending meetings
of any committees of either board of directors or for other services provided as
a member of either board. Mr. Evans received $8,333 under this arrangement prior
to his death.
In addition to fees received for service to Peoples as a director, Mr.
Wolf received $150 for each meeting attended.of the Peoples Bank Kentucky/Huntington
Leadership Advisory Board he attended during the 2005 fiscal year.
Directors who travel a distance of fifty miles or more to attend a
board or committee meeting of Peoples or Peoples Bank receive a $50 travel fee.
A single travel fee of $50 is paid for multiple meetings occurring on the same
day. Directors who stay overnight to attend a meeting are reimbursed the actual
cost of overnight accommodations.
The following table summarizes the aggregate amount of the quarterly
fees and meeting fees (including travel fees) paid or payable to each incumbent
director and to Robert E. Evans (prior to his death) for service on the Peoples
Board of Directors and, if applicable, the board of directors of Peoples Bank or
the Peoples Bank Kentucky/Huntington Leadership Advisory Board during the 2005
fiscal year:
Peoples Board Fees Peoples Bank Board Fees
---------------------------------------------- -----------------------------------------
Board and Committee Board and Committee
Name Quarterly Fees (1) Meeting Fees (2) Quarterly Fees Meeting Fees (2)
- ---- ------------------ ------------------- -------------- ----------------
Carl L. Baker, Jr. $ 3,850 $ 17,450 $ - $ -
Mark F. Bradley $ - $ - $ - $ -
George W. Broughton $ 3,850 $ 16,700 $ 2,400 $ 15,900
Frank L. Christy $ 3,850 $ 15,600 $ - $ -
Wilford D. Dimit $ 3,850 $ 14,800 $ 2,400 $ 15,800
Robert E. Evans (3) $ - $ - $ - $ -
Richard Ferguson $ 7,600 $ 14,950 $ - $ -
Robert W. Price $ 3,850 $ 13,250 $ - $ -
Theodore P. Sauber $ 3,850 $ 12,250 $ 2,400 $ 10,950
Paul T. Theisen $ 3,850 $ 13,450 $ 2,400 $ 12,800
Joseph H. Wesel $ 6,100 $ 15,400 $ 2,400 $ 13,700
Thomas J. Wolf $ 3,850 $ 13,700 $ - $ -
--------------------
(1) Includes quarterly fee of $1000 paid to each director, $1250 quarterly
fee paid to the Chairman of the Audit Committee and $750 quarterly fee
paid to the Chairman of the Compensation Committee.
(2) Includes board and committee meeting attendance and travel fees.
(3) Pursuant to an arrangement effective June 1, 2005, Mr. Evans was paid a
monthly fee of $8,33.33 in his capacity as chairman of the Board of
Peoples and of Peoples Bank prior to his death. This amount is not
included in the table.
DIRECTOR DEFERRED COMPENSATION PLAN
Since 1991, Peoples has maintained the Peoples Bancorp Inc.Director Deferred Compensation
Plan for Directors of Peoples Bancorp Inc. and Subsidiaries (the
"Directors' Plan").Plan. Voluntary participation in the Directors'Director Deferred Compensation Plan enables
a director of Peoples, or of one of itsour subsidiaries, to defer all or a part of
his or her directors' fees, including 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 CD interest
rate) and a stock account (credited with(under which common shares of Peoplesare accrued based on the
amount deferred and cashthe fair market value of Peoples' common shares on the date
of deferral and dividends credited on such common shares)shares accrued and converted into a
common share equivalent based on the fair market value of a common share on the
date the dividends are credited). The only right a participant has with respect
to his cash account and/or stock account is to receive distributions upon
retirement from service as a director. Distribution of the deferred fundsamounts is
made in a lump sum or annual installments, at the election of the director,
beginning in the first year in which the person is no longer a director. The
stock account will be paiddistributed only in common shares and the cash account
will be paiddistributed only in cash.
OPTION GRANTS
Pursuant to their respective terms, non-qualifiednonqualified stock options have
been automatically granted on an annual basis to non-employee directors of
Peoples ("Non-Employee
Directors") under Peoples' Amendedthe 1993 Plan, the 1995 Plan, the 1998 Plan and Restated 1993 Stock Option Plan (the
"1993 Plan"), 1995 Stock Option Plan (the "1995 Plan"), and 1998 Stock Option
Plan (the "1998 Plan").the 2002 Plan. No
options have been granted to Non-Employee Directorsnon-employee directors under the 1993 Plan since
April 10, 1997; no options have been granted to
Non-Employee Directors under the 1995 Plan since April 15, 1999; and no options
have been granted to Non-Employee Directorsor under the 1998 Plan
since March 10, 2000. All options wereOptions granted withunder the 1993 Plan, the 1995 Plan, 1998
Plan and the 2002 Plan have an exercise price equal to 100% of the fair market
value of the underlying common shares on the date of grant and a ten-year term.
Under the 1993 Plan, if a Non-Employee Directornon-employee director ceases to be a director
for reasons other than his death, suchhis options may be exercised for a period of
three months, subject to their stated term. If a Non-Employee Directornon-employee director dies, thosehis
options may be exercised for a period of one year following the date of death,
subject to their stated term.
Under the 1995 Plan and the 1998 Plan, if a Non-Employee Directornon-employee director
ceases to be a director for any reason other than his death or for "cause", such"cause," his
options may be exercised in full until the expiration of the term of the
options. However, if the former Non-Employee Directornon-employee director dies prior to the
expiration of the term of his options, those options may only be exercised for a
period of two years following his death, subject to the stated term of the
options. If a Non-Employee Directornon-employee director ceases to be a director for cause, allhis
options will immediately terminate.
Pursuant to the terms of the 2002 Stock Option Plan, (the "2002 Plan"), each individual then serving as
a Non-Employee Directornon-employee director receives an annual grant, on the date of each annual
meeting of shareholders of Peoples, of options to purchase 11551,155 common shares
(as adjusted for the 10% stock dividend issued on June 28, 2002 and the 5% stock
dividend issued on August 29, 2003 and as may be further adjusted for future
changes in the number of outstanding common sharescapitalization of Peoples). All options become 100% exercisable
on the first anniversary of the grant date. Under the 2002 Plan, if a
Non-Employee Directornon-employee director ceases to be a director due to death, disability (with at
least three years service), or retirement (with at least five years of service),
suchhis options immediately vest and may be exercised until the earlier of 12 months
after ceasing to so serve andor the expiration date of the options. If a
Non-Employee Directornon-employee director voluntarily ceases service as a director, only those
options exercisable on the date of termination may be exercised during the
period described in the preceding sentence. If a Non-Employee Directornon-employee director ceases to
be a director for cause, allhis options will terminate immediately.
DIRECTOR RETIREMENT PLAN
On June 9, 2005, the Board of Directors of Peoples, upon the
recommendation of the Compensation Committee, approved a director retirement
plan for the benefit of Robert E. Evans in recognition of his 35 years of
service with the organization and his direct responsibility for its substantial
success and growth. The director retirement plan was intended to provide Mr.
Evans with a monthly benefit for life, commencing July 1, 2005, and, if she
survived him, a reduced monthly benefit for Mr. Evans' spouse for her life. Mr.
Evans passed away before any monthly benefits were paid to him under the
director retirement plan. The monthly benefit to be paid to Mr. Evans' spouse
generally increases each year and was $662 for the 2005 calendar year and will
be $728 for the 2006 calendar year. During 2005, six payments were made to Mr.
Evans' spouse under the plan.
OTHER BENEFITS
The directors are also eligible to participate in the employee benefit
programs maintained by Peoples, including life, medical and dental insurance
plans, on the same terms as all employees.
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in
Peoples' cumulative total shareholder return (as measured by dividing (i) the
sum of (A) the cumulative amount of dividends for the measurement period,
assuming dividend reinvestment, and (B) the difference between the price of
Peoples' common shares at the end and the beginning of the measurement period;
by (ii) the price of Peoples' common shares at the beginning of the measurement
period) against the cumulative return for an index comprised of all domestic
common shares traded on the NASDAQ National Market and the NASDAQ Small Cap
Market ("NASDAQ Stock MarketStocks (U.S. Companies)"), and an index comprised of all
depository institutions (SIC Code #602) and depository institutions holding
companies (SIC Code #671) that are traded on the NASDAQ National Market and the
NASDAQ Small Cap Market ("NASDAQ Bank Stocks") for the five-year period ended
December 31, 2003.
(ACTUAL2005.
[ACTUAL NUMBERS PLOTTED ON A GRAPH)GRAPH]
Peoples NASDAQ STOCKSSTOCK
Year Ended Peoples Bancorp Inc. U.S. Companies(U.S. Companies) NASDAQ Bank Stocks
- ---------- -------------------- -------------------------- ---------------- ------------------
12/31/19982000 $100.00 $100.00 $100.00
12/31/1999 99.23 $185.43 $96.15
12/31/2000 77.79 $111.83 $109.84
12/31/2001 109.78 $88.77 $118.92$141.13 $ 79.32 $108.27
12/31/2002 171.38 $61.37 $121.74$221.61 $ 54.84 $110.84
12/31/2003 212.66 $91.75 $156.62$274.99 $ 81.99 $142.58
12/31/2004 $262.45 $ 89.23 $163.17
12/31/2005 $280.81 $ 91.12 $159.40
Notes:
1. Total return assumes reinvestment of dividends.
2. Fiscal year ending December 31.
3. Return based on $100 invested on December 31, 1998,2000, in Peoples'
common shares, an index for NASDAQ Stock MarketStocks (U. S. Companies), and
an index for NASDAQ Bank Stocks.
PROPOSED AMENDMENTPROPOSAL NUMBER 2:
APPROVAL OF PEOPLES BANCORP INC.
2006 EQUITY PLAN
General
- -------
Upon recommendation by the Compensation Committee, on February 9, 2006,
the Board of Directors adopted the Peoples Bancorp Inc. 2006 Equity Plan (the
"2006 Plan"), subject to approval by the shareholders of Peoples. The 2006 Plan
authorizes the grant or award of (i) Incentive Stock Options; (ii) Nonqualified
Stock Options (and together with Incentive Stock Options, the "Options"); (iii)
stock appreciation rights ("SARs"); (iv) Restricted Stock; (v) Restricted
Performance Stock; (vi) unrestricted Company Stock; and (vii) Performance Units
(collectively, the "Awards").
Peoples currently has options outstanding under the 1993 Plan, the 1995
Plan, the 1998 Plan and the 2002 Plan (collectively, the "Predecessor Plans").
No common shares of Peoples ("Company Stock") are available for grant under the
1993 Plan and the 1995 Plan, which have been exhausted and terminated. As of
February 13, 2006, (i) options covering _________ shares of Company Stock
remained outstanding under the 1993 Plan; (ii) options covering ________ shares
of Company Stock remained outstanding under the 1995 Plan; (iii) options
covering __________ shares of Company Stock remained outstanding under the 1998
Plan; leaving _____ shares of Company Stock available for new awards under the
1998 Plan, and (iv) options covering _____ shares of Company Stock remained
outstanding under the 2002 Plan, leaving _______ shares of Company Stock
available for new awards under the 2002 Plan. All aforementioned options
covering common shares have been adjusted for the 10 % stock dividend issued on
June 28, 2002 and the 5% stock dividend issued on August 29, 2003 and may be
subject to further adjustment for future changes in the capitalization of
Peoples.
The Board of Directors believes it is desirable to continue to have
equity-based awards available to be used to recruit new individuals to become
employees, or advisors or to serve as directors, and for incentive purposes,
where necessary. The 2006 Plan will make shares of Company Stock available for a
variety of awards, allowing Peoples to choose the incentives most appropriate to
individual circumstances and most likely to benefit Peoples and its
shareholders. The 2006 Plan should address the need for equity-based incentive
compensation for a number of years.
The following summary of the material provisions of the 2006 Plan is
qualified in its entirety by reference to the specific provisions of the 2006
Plan, the full text of which is attached to this Proxy Statement as Appendix A.
All capitalized terms which are not defined in this summary are defined in the
2006 Plan.
Purpose
- -------
The purpose of the 2006 Plan is to provide financial incentives for
selected Employees, Advisors and Non-Employee Directors, thereby promoting the
long-term growth and financial success of Peoples by (i) attracting and
retaining Employees, Advisors and Non-Employee Directors of outstanding ability,
(ii) strengthening Peoples' capability to develop, maintain, and direct a
competent management team, (iii) providing an effective means for selected
Employees, Advisors and Non-Employee Directors to acquire and maintain ownership
of Company Stock, (iv) motivating Employees to achieve long-range performance
goals and objectives, and (v) providing incentive compensation opportunities
competitive with peer financial institution holding companies.
Effective Date and Expiration of the 2006 Plan
- ----------------------------------------------
The 2006 Plan will be effective upon its approval by the shareholders
of Peoples. Unless earlier terminated by the Board of Directors, the 2006 Plan
will terminate on the tenth anniversary of its effective date. No Award may be
made pursuant to the 2006 Plan after its termination date, but Awards made prior
to the termination date may extend beyond that date. In addition, no Incentive
Stock Options may be granted after February 8, 2016.
Administration of the 2006 Plan
- -------------------------------
The 2006 Plan is administered by the Compensation Committee (the
"Committee") which has the authority to grant Awards to Employees, Advisors and
Non-Employee Directors who are members of the board of directors of a subsidiary
of Peoples but are not also members of Peoples' Board of Directors ("Subsidiary
Directors"). The Board of Directors has the authority to grant Awards to
Non-Employee Directors who are members of Peoples' Board of Directors ("Company
Directors" and together with the Subsidiary Directors, "Non-Employee
Directors"). The Committee, or the Board of Directors, as the case may be, has
the full power and authority to interpret and administer the 2006 Plan and to
establish and amend rules and regulations for its administration. Any action or
decision by the Board of Directors or the Committee shall be final, binding and
conclusive with respect to the interpretation of the 2006 Plan and any Award
made under it.
More specifically, the Committee or the Board of Directors has the
authority, in its discretion:
o to determine those Employees, Advisors and Non-Employee Directors who
will receive an Award; the timing of Awards; the vesting schedule for
each Award; and the type of Award to be granted, the number of shares
of Company Stock to be subject to each Option and Restricted Stock
Award, the value of each Performance Unit and all other terms and
conditions of any Award;
o to determine and set forth in an award agreement the terms of each
Award, including those terms, restrictions, and provisions necessary
to cause certain Options to qualify as Incentive Stock Options;
o to correct any defect or supply any omission or reconcile any
inconsistency in the 2006 Plan or in any award agreement; and
o to accelerate (i) the date on which any Option or SAR may be
exercised, (ii) the date of termination of the restrictions applicable
to a Restricted Stock Award, or (iii) the end of a performance period
under a Performance Unit Award, if the Committee or the Board of
Directors, as applicable, determines that to do so will be in the best
interests of Peoples and the participants in the 2006 Plan.
All Awards (i) are subject to the terms and conditions of the 2006 Plan and to
such other terms and conditions determined in the sole discretion of the
Committee or Board of Directors, as applicable, (ii) need not be uniform among
all participants who receive an Award, whether or not similarly situated, (iii)
may be granted under two or more provisions of the 2006 Plan, (iv) may be
combined in one award agreement, and (v) may contain any combination of Awards
granted at one time and on more than one occasion to the same Employee, Advisor
or Non-Employee Director.
Eligibility and Participation
- -----------------------------
All Employees, Advisors and Non-Employee Directors are eligible to
participate in the 2006 Plan. For purposes of the 2006 Plan, an "Employee" means
an individual who is a common law employee of Peoples or any of our subsidiaries
and an "Advisor" is an advisor who renders bona fide services to Peoples and/or
one or more of our subsidiaries as an advisory or marketing board member and who
is neither an Employee nor a Non-Employee Director, which services are not
provided in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for
Peoples' securities.
Employees may be granted Incentive Stock Options. Employees, Advisors,
and Non-Employee Directors may be granted Nonqualified Stock Options, SARs,
Restricted Stock, Restricted Performance Stock, unrestricted Company Stock and
Performance Units.
As of the date of this proxy statement, no determination has been made
regarding the identity of the individuals to whom Awards may be granted. Peoples
estimates that approximately _____ of its employees and employees of our current
subsidiaries will be eligible to receive Awards, including the executive
officers of Peoples named in the Summary Compensation Table on page 24. In
addition, following the election of four directors at the Annual Meeting, there
will be 10 Non-Employee Directors eligible to receive Awards as Company
Directors. As of the date of this proxy statement, there were 5 Non-Employee
Directors who qualified as Subsidiary Directors. Peoples is unable to reasonably
estimate the number of Advisors who will be eligible to receive Awards.
The table included under "COMPENSATION OF EXECUTIVE OFFICERS AND
DIRECTORS - Grant of Options" at page ___ shows the options granted under the
2002 Plan to the named individuals during the 2005 fiscal year. During the 2005
fiscal year, options covering an aggregate of _____ shares of Company Stock were
granted to all current executive officers of Peoples as a group; while options
covering an aggregate of _____ shares of Company Stock were granted to all
employees, including all current officers who are not executive officers, as a
group. As discussed under "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS -
Directors' Compensation - Option Grants", pursuant to the terms of the 2002
Plan, each individual then serving as a Company Director receives an annual
grant, on the date of each annual meeting of shareholders of Peoples, of options
to purchase 1,155 shares of Company Stock (as adjusted for the 10% stock
dividend issued on June 28, 2002 and the 5% stock dividend issued on August 29,
2003 and as may be further adjusted for future changes in the capitalization of
Peoples). During the 2005 fiscal year, options covering an aggregate of ______
shares of Company Stock were granted to all current Company Directors who are
not executive officers as a group.
Because Awards will be granted by the Committee to all participants
other than Company Directors, and by the Board of Directors to Company
Directors, based on a subjective determination of the relative current and
future contribution that each individual has made or may make to the long-term
welfare of Peoples and our subsidiaries, past awards under the 1993 Plan, the
1995 Plan, the 1998 Plan and/or the 2002 Plan may not be reflective of future
Awards.
Common Shares Available Under the 2006 Plan
- -------------------------------------------
Subject to certain adjustments as described below under "Adjustments,"
the maximum number of shares of Company Stock that may be issued to participants
as Awards will be equal to 500,000 (the "Share Authorization") and may consist
of (i) shares of Company Stock previously issued and outstanding and reacquired
by Peoples or (ii) authorized but unissued shares of Company Stock not reserved
for any other purpose.
The following shares of Company Stock will not be counted against the
aforementioned Share Authorization:
o the number of shares of Company Stock that are subject to an Option or
any other Award which is equal to the number of shares of Company
Stock tendered by a participant to Peoples in payment of the option
price or exercise price of such Option or other Award, as applicable;
o the shares of Company Stock subject to an Award which for any reason
terminates by expiration, forfeiture, cancellation or otherwise
without having been exercised or paid;
o the shares of Company Stock withheld from any Award to satisfy a
participant's tax withholding obligation or, if applicable, to pay the
option price or exercise price of an Option or any other Award;
o if a SAR is settled in whole or in part by the issuance of shares of
Company Stock, the number of shares of Company Stock which represents
the difference between (a) the number of shares of Company Stock which
remain subject to such SAR on the date of such settlement and (b) the
number of shares of Company Stock actually issued upon settlement of
such SAR; or
o the number of shares of Company Stock subject to an Option which is
equal to the number of shares of Company Stock acquired by Peoples on
the open market using the cash proceeds received by it from the
exercise of such Option; provided, however, that such Company Stock
shall in no event be greater than the number which is determined by
dividing (a) the amount of cash proceeds received by Peoples from the
participant upon the exercise of such Option by (b) the fair market
value of a share of Company Stock on the date of exercise of such
Option.
If the 2006 Plan is approved by Peoples' shareholders at the Annual
Meeting, no further awards will be made under either of the 1998 Plan or the
2002 Plan and awards outstanding under the Predecessor Plans will remain in
effect in accordance with their respective terms.
Limitation on Awards
- --------------------
In addition to the overall Share Authorization under the 2006 Plan, the
maximum number of shares of Company Stock for which Options or SARs may be
granted to any participant in any one fiscal year is 500,000, subject to
adjustment under the terms of the 2006 Plan as described below under
"Adjustment." The maximum aggregate dollar value of, and the maximum number of
shares of Company Stock subject to, Restricted Stock and Performance Units
awarded to any Employee or Advisor with respect to a performance period or
restriction period may not exceed $500,000 and 500,000 (subject to adjustment
under the terms of the 2006 Plan as described below under "Adjustment") for each
fiscal year included in such performance period or restriction period.
Options
- -------
Nonqualified Stock Options may be granted to any participant under the
2006 Plan. However, Incentive Stock Options may be granted only to Employees of
Peoples or of any parent or subsidiary corporation as permitted under the
applicable provisions of the Internal Revenue Code. Additionally, grants of
Incentive Stock Options will be subject to the restrictions and conditions set
forth in the relevant sections of the Internal Revenue Code, including the
$100,000 limitation on Incentive Stock Options first becoming exercisable in a
calendar year and limitations for employees possessing more than 10% of the
total combined voting power of all classes of stock of Peoples or of its parent
or subsidiary corporation.
Options may be granted for terms of up to, but not exceeding, ten years
from the date of grant. Each Option grant is to be evidenced by an award
agreement that specifies whether the Option is intended to be an Incentive Stock
Option or a Nonqualified Stock Option, the exercise price of the Option, the
duration of the Option, the number of shares of Company Stock to which the
Option pertains, the conditions upon which the Option will vest and become
exercisable, and such other provisions as the Committee or the Board of
Directors determines.
The Committee or the Board of Directors, as applicable, will determine
the exercise price of each Option; however, the exercise price must be at least
equal to 100% of the fair market value of the underlying Company Stock as
determined on the grant date. For purposes of the 2006 Plan, the "fair market
value" of a share of Company Stock on a particular date will generally be the
closing price of a share of Company Stock on that particular date on NASDAQ (the
"fair market value"). On February 13, 2006, the fair market value of a share of
Company Stock was $27.94. The Committee or the Board of Directors may not amend,
regrant, or take any action that has the effect of "repricing" an Option under
applicable NASDAQ Rules.
Once an Option vests, the Option may be exercised at any time during
the term of the Option in such manner as specified in the award agreement and
upon proper notice to Peoples as specified in the 2006 Plan, but only if as
provided in the 2006 Plan, a participant is then, and continually (except for
sick leave, military service, or other approved leave of absence) after the
grant of the Option has been, an Employee, Advisor, or Non-Employee Director.
The exercise price of any Option must be paid in full at the time of exercise
(i) in cash; (ii) in previously acquired shares of Company Stock having a fair
market value equal to the exercise price on the date of exercise (or the
immediately preceding date if the date of exercise is not a trading day); (iii)
in a combination of cash and shares; or (iv) by a cashless (broker-assisted)
exercise.
The exercise price must be fully paid before Peoples will issue or
transfer the designated shares of Company Stock. A participant has no
shareholder rights with respect to the shares of Company Stock covered by the
Option grant until the issuance of such shares to the participant.
Notwithstanding the foregoing, the Committee may in its discretion
prescribe additional conditions, restrictions or terms on the vesting of an
Option, including the full or partial attainment of performance goals. After the
Option vests, the Option may be exercised at any time during the term of the
Option, in whole or in installments, as specified in the related award
agreement. Subject to the terms of the 2006 Plan, the duration of each Option
may not be more than ten years from the date of grant.
During the period in which the 2006 Plan remains in effect, the maximum
aggregate number of shares of Company Stock which may be subject to options
granted in any one fiscal year to any one participant will be 500,000, subject
to adjustment as described below under "Adjustments."
Stock Appreciation Rights (SARs)
- --------------------------------
The Committee may award SARs to any participant under the 2006 Plan
other than Company Directors. The Board of Directors has the authority to grant
SARs to Company Directors. A SAR represents the right to receive payment of an
amount equal to (i) the amount by which the fair market value of one share of
Company Stock on the trading day immediately preceding the date of exercise of
the SAR exceeds the exercise price multiplied by (ii) the number of shares of
Company Stock covered by the SAR.
An award of a SAR granted under the 2006 Plan will be subject to the
terms and conditions prescribed by the Committee or the Board of Directors in an
award agreement, which will specify the grant price, the term of the SAR and
such other provisions as the Committee or the Board of Directors determines. The
shares must be valued at their fair market value on the date of exercise. The
Committee may prescribe conditions and limitations on the exercise of any SAR.
At the discretion of the Committee or the Board of Directors, the payment upon
SAR exercise may be made in cash, shares of Company Stock or a combination
thereof, or in any other manner set forth in the award agreement. Each SAR will
expire on a date set by the Committee or the Board of Directors at the time of
the grant. A SAR is exercisable only by written notice to the Chief Financial
Officer of Peoples or the Secretary of the Committee, or his or her designee. To
the extent not previously exercised, all SARs will automatically be exercised on
the last trading day prior to their expiration, so long as the fair market value
of a share of Company Stock exceeds the exercise price, but not if the
participant gives proper and timely notice to the contrary to Peoples.
During the period in which the 2006 Plan remains in effect, the maximum
aggregate number of shares of Company Stock which may be subject to SARs granted
in any one fiscal year to any one participant will be 500,000, subject to
adjustment as described below under "Adjustments."
Restricted Stock and Restricted Performance Stock
- -------------------------------------------------
The Committee may award Restricted Stock and/or Restricted Performance
Stock to any participant under the 2006 Plan other than Company Directors. The
Board of Directors has the authority to grant Restricted Stock and/or Restricted
Performance Stock to Company Directors.
An award of Restricted Stock granted under the 2006 Plan will be
subject to the terms and conditions prescribed by the Committee or the Board of
Directors in an award agreement. Each award agreement will specify the period(s)
of restriction, the number of shares of Common Stock covered by the Restricted
Stock Award, and such other provisions as the Committee or the Board of
Directors determines. Among other things, the Committee or the Board of
Directors may impose different restriction periods for each Restricted Stock
Award or conditions upon the Award including the attainment of performance goals
(making the Award a grant of Restricted Performance Stock).
Unless otherwise determined by the Committee or the Board of Directors
and set forth in a participant's award agreement, the participant will be
entitled to receive dividends during the restriction period, will have the right
to vote such Restricted Stock and will have all other shareholder rights, with
the exception that (i) if any dividends are paid in shares of Company Stock,
those shares will be subject to the same restrictions as the shares of
Restricted Stock with respect to which they were issued, (ii) the participant
will not be entitled to delivery of any stock certificate evidencing the Company
Stock underlying the Restricted Stock Award during the restriction period, (iii)
Peoples will retain custody of the Restricted Stock during the restriction
period, and (iv) a breach of a restriction or a breach of the terms and
conditions established by the Committee or the Board of Directors pursuant to
the Restricted Stock Award will cause a forfeiture of the Restricted Stock
Award.
Under the 2006 Plan, the term "Restricted Performance Stock" means
Company Stock subject to performance goals and grants of Restricted Performance
Stock are subject to the same terms and conditions specified for grants of
Restricted Stock.
During the period in which the 2006 Plan remains in effect, the maximum
aggregate dollar value of, and the maximum number of shares of Company Stock
which may be subject to Restricted Stock or Restricted Performance Stock granted
in any one fiscal year to any one participant will be $500,000 and 500,000
(subject to adjustment as described below under "Adjustment"), respectively.
Unrestricted Company Stock
- --------------------------
The Committee may grant unrestricted Company Stock to any participant
under the 2006 Plan other than Company Directors on such terms and conditions as
the Committee determines, as evidenced by an award agreement. The Board of
Directors has the same authority to grant unrestricted Company Stock to Company
Directors.
Performance Units
- -----------------
The Committee may grant Performance Units to any participant under the
2006 Plan other than Company Directors. The Board of Directors has the same
authority to grant Performance Units to Company Directors.
Each Performance Unit represents the right of a participant to receive
an amount equal to the value of the Performance Unit, established by the
Committee or the Board of Directors at the time the Award is granted. The
Committee or the Board of Directors will determine the maximum dollar value of
each Performance Unit and, in the discretion of the Committee or the Board of
Directors, the measure of a Performance Unit may be equal to the fair market
value of one share of Company Stock.
In each award agreement, the Committee or the Board of Directors will
establish (i) the performance period during which performance will be measured
and (ii) the performance goals for a participant for a particular performance
period based upon various performance measures (described below under "General
Performance Goals"). Further, the Committee or the Board of Directors will set
performance goals in its discretion which will, depending on the extent to which
they are met, determine the value and/or number of Performance Units that will
be paid out to the participant.
After the applicable performance period has ended, the holder of
Performance Units will be entitled to receive payout on the value and number of
Performance Units earned during such performance period to the extent
performance goals have been met. In determining the number of Performance Units
to be granted to any participant, the Committee or the Board of Directors will
take into account the participant's responsibility level, performance,
potential, cash compensation level, other incentive awards, and such other
considerations as it deems appropriate. Awards may be paid in cash or shares of
Company Stock, or any combination thereof, as determined by the Committee or the
Board of Directors. Payment may be made in a lump sum or in installments and
will be subject to such other terms and conditions as will be determined by the
Committee or the Board of Directors.
During the period in which the 2006 Plan remains in effect, the maximum
aggregate dollar value of, and the maximum number of shares of Company Stock
which may be subject to, Performance Units granted in any one fiscal year to any
one participant will be $500,000 and 500,000 (subject to adjustment as described
below under "Adjustment"), respectively.
General Performance Goals
- -------------------------
The performance goals, upon which the payment or vesting of an Award to
any Employee that is intended to qualify as "performance-based compensation"
under Section 162(m) of the Internal Revenue Code may be based, will be limited
to the following performance measures: (i) earnings per share (actual or
targeted growth); (ii) net income after capital costs; (iii) net income (before
or after taxes); (iv) return measures (including, but not limited to, return on
average assets, risk-adjusted return on capital, or return on average equity);
(v) efficiency ratio; (vi) full-time equivalency control; (vii) stock price
(including, but not limited to, growth measures and total shareholder return);
(viii) noninterest income compared to net interest income ratio; (ix) expense
targets; (x) operating efficiency; (xi) economic value added or EVA(R); (xii)
credit quality measures; (xiii) customer satisfaction measures; (xiv) loan
growth; (xv) deposit growth; (xvi) net interest margin; (xvii) fee income; and
(xviii) operating expense. For Awards not intended to comply with Section 162(m)
of the Internal Revenue Code, the Committee or the Board of Directors may
establish performance goals based upon the above enumerated list of performance
measures or upon any other performance the Committee or the Board of Directors
deems appropriate.
In either case, the Committee or the Board of Directors must establish
performance goals in writing for each performance period no later than the
earlier of (i) 90 days after the beginning of the performance period or (ii) the
expiration of 25% of the performance period. Except as otherwise provided in the
2006 Plan or an award agreement, as of the end of each performance period, the
Committee or the Board of Directors must certify in writing the extent to which
a participant has or has not met the participant's performance goal. To the
extent permitted under Section 162(m) of the Internal Revenue Code, if
applicable, the Committee or the Board of Directors may disregard or offset the
effect of any special charges or gains or cumulative effect of an accounting
change in determining the attainment of performance goals.
Additionally, to the extent permitted by the Internal Revenue Code, if
applicable, the Committee or the Board of Directors must make (i) appropriate
adjustments to performance criteria to reflect the effect on any performance
criteria of any stock dividend or stock split affecting Company Stock,
recapitalization, merger, consolidation, combination, spin-off, distribution of
assets to shareholders, exchange of shares or similar corporate change and (ii)
similar adjustments to any portion of performance criteria that is not based on
Company Stock but which is affected by an event having an effect similar to
those just described.
Furthermore, any performance measure in the above enumerated list may
be used to measure performance with respect to solely Peoples and/or a
subsidiary, or relatively between Peoples and/or any subsidiary and one or more
unrelated entities. In addition, the Committee or the Board of Directors can
apply different performance measures (i) to different participants or groups of
participants, and (ii) to results achieved by solely Peoples or any subsidiary,
a combination of the two, or any combination of business units within the two.
Change in Control
- -----------------
Under the 2006 Plan, "change in control" means a change in the
ownership or effective control of Peoples or in the ownership of a substantial
portion of the assets of Peoples (within the meaning of Section 409A of the
Internal Revenue Code).
In the event of a change in control where the surviving entity is not
Peoples and the surviving entity (the "Acquiror") does not honor or substitute
equivalent Awards for outstanding grants of Options, SARs, Restricted Stock,
Restricted Performance Stock, or Performance Units, all such Awards will become
immediately and fully exercisable or in the case of Restricted Stock, become
fully vested and all restrictions will immediately lapse. In the case of
Restricted Performance Stock and Performance Units, all outstanding Awards will
be deemed to have been fully earned at the maximum payout based on target
performance being attained as of the effective date of the change in control.
Additionally, the Board of Directors or its designee may, in its sole
discretion, provide for a cash payment to be made to each participant for the
outstanding Options, Restricted Stock, Restricted Performance Stock, SARs or
Performance Units upon the consummation of the change in control, determined on
the basis of the fair market value that would be received in such change in
control by the holders of Peoples' securities relating to such Awards.
Notwithstanding the foregoing, any Option intended to be an Incentive Stock
Option under Section 422 of the Internal Revenue Code will be adjusted in a
manner to preserve such status.
In the event of a change in control where Peoples is the surviving
entity, or the Acquiror assumes the outstanding Options, SARs, Restricted Stock,
Restricted Performance Stock or Performance Units or substitutes equivalent
equity awards relating to the securities of such Acquiror or its affiliates,
then all such Awards or substitutes will remain outstanding and be governed by
their respective terms and the provisions of the 2006 Plan. In such change in
control scenario:
o if a participant terminates without cause within 24 months following
the change in control, and Peoples is the surviving corporation or the
Acquiror assumes the outstanding Awards, then all of the participant's
outstanding Options, SARs, Restricted Stock, Restricted Performance
Stock, or Performance Units will become immediately and fully
exercisable or, in the case of Restricted Stock, become immediately
and fully vested. In the case of Restricted Performance Stock and
Performance Units, all of the participant's outstanding Awards will be
deemed to have been fully earned at the maximum payout based on target
performance being attained. In the case of outstanding Options or
SARs, the participant may exercise these Options or SARs at any time
within one year after such termination, except that an Option or SAR
will not be exercisable on any date beyond the expiration date of such
Option or SAR or, (i) if the participant is eligible for retirement on
the date of such termination or (ii) dies after such termination, the
exercise of all outstanding Options or SARs must be in accordance with
the 2006 Plan's general termination provisions related to retirement
(as further described below in "Termination"); and
o if a participant is terminated for cause within 24 months following
such change in control and Peoples is the surviving corporation or the
Acquiror assumes the outstanding Awards, then any Options or SARs of
such participant will expire, any non-vested Restricted Stock,
Restricted Performance Stock or Performance Units will be forfeited,
and any rights under such Awards will terminate immediately.
Subject to all of the foregoing conditions, any outstanding Option or
SAR that vests in accordance with a change in control will be governed by the
2006 Plan's general termination provisions (see "Termination" below).
Furthermore, Peoples does not have the power to amend or terminate any provision
regarding change in control if any such amendment or termination would adversely
affect the rights of any participant under the 2006 Plan.
Tax Withholding
- ---------------
Peoples has the power and the right to deduct or withhold, or require a
participant to remit to Peoples, the minimum statutory amount to satisfy
federal, state and local taxes required by law or regulation to be withheld with
respect to any taxable event arising as a result of the 2006 Plan.
With respect to withholding required upon any taxable event arising as
a result of an Award granted under the 2006 Plan, a participant may elect,
subject to the approval of the Committee, to satisfy the withholding
requirement, in whole or in part, by having Peoples withhold shares of Company
Stock having a fair market value on the date the tax is to be determined equal
to the minimum statutory total tax that could be imposed on the transaction. All
such elections will be irrevocable, made in writing and signed by the
participant, and will be subject to any restrictions or limitations that the
Committee or the Board of Directors, in its sole discretion, deems appropriate.
Termination
- -----------
Subject to the 2006 Plan and individual award agreements, the following
summarizes the effect of various termination events on Awards to participants:
o Termination due to death, disability or retirement: All outstanding
Awards will become fully vested and, if applicable, exercisable;
o Termination due to any reason other than death, disability or
retirement: Any unvested or unexercisable Awards on the date of
termination will immediately terminate and be of no further force and
effect;
o Termination for any reason other than death, disability, discharge for
cause, or retirement: Any outstanding Options or SARs may be exercised
at any time within three months after such termination up to the
number of shares of Company Stock covered by such Options or SARs
which are exercisable at the date of such termination; provided,
however, that no Option or SAR will be exercisable on any date beyond
the expiration date of such Option or SAR;
o Termination for cause: Any Options or SARs, whether or not then
exercisable, will expire and any rights thereunder will terminate
immediately, and any non-vested Restricted Stock Awards will
immediately be forfeited and any rights thereunder will terminate;
o Termination due to death: Any Options or SARs then exercisable may be
exercised by the participant's personal representative at any time
before the earlier of (i) one year after the participant's death or
(ii) the expiration date of the Award;
o Termination due to disability or retirement: Any Options or SARs then
exercisable may be exercised by the participant at any time before the
earlier of (i) one year after the date of termination or (ii) the
expiration date of the Award; provided, however, that an Option which
is intended to qualify as an Incentive Stock Option will only be
treated as such to the extent it complies with the requirements of
Section 422 of the Internal Revenue Code;
o Termination due to retirement, but death prior to the exercise of all
of the participant's outstanding Options or SARs: Such Options or SARs
may be exercised by the Participant's personal representative at any
time before the earlier of (i) one year after the participant's death
or (ii) the expiration date of the Award; provided, however, that, an
Option which is intended to qualify as an Incentive Stock Option will
only be treated as such to the extent it complies with the
requirements of Section 422 of the Code;
o Termination at any time during an applicable performance period:
Awards of Performance Units will terminate for all purposes, except as
may otherwise be determined by the Committee or the Board of
Directors; and
o Termination at any time following the end of an applicable performance
period, but prior to full payment: Awards of Performance Units will
terminate.
Adjustments
- -----------
In the event of any reorganization, recapitalization, reclassification,
stock split, stock dividend, distribution, combination of shares, merger,
consolidation, rights offering, or any other changes in the corporate structure
or shares of Peoples, appropriate adjustments may be made by the Committee or
the Board of Directors, as the case may be, (or if Peoples is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation) in the aggregate number and kind of shares subject to the 2006
Plan, and the number and kind of shares and the Option price per share subject
to outstanding Options or which may be issued under outstanding Restricted Stock
Awards or pursuant to unrestricted Company Stock Awards.
Subject to the 2006 Plan, appropriate adjustments may also be made by
the Committee or the Board of Directors, as the case may be, in the terms of any
Awards to reflect such changes and to modify any other terms of outstanding
Awards on an equitable basis. Any such adjustments made by the Committee or the
Board of Directors will be conclusive and binding for all purposes under the
2006 Plan.
Amendment, Suspension, and Termination of the 2006 Plan
- -------------------------------------------------------
The Board of Directors, in its discretion, may suspend or terminate the
2006 Plan or any portion of the 2006 Plan at any time and may amend the 2006
Plan from time to time as needed (i) in order that any Awards thereunder shall
conform to any change in applicable laws or regulations, or (ii) in any respect
deemed by the Board of Directors to be in the best interests of Peoples.
Without shareholder approval, no amendment may: (i) increase the number
of shares of Company Stock which may be issued under the 2006 Plan (except as
provided above in "Adjustments"); (ii) expand the types of awards available to
participants under the 2006 Plan; (iii) materially expand the class of Employees
and/or Advisors eligible to participate in the 2006 Plan; (iv) materially change
the method of determining the exercise price of Options; (v) delete or limit the
provision prohibiting the repricing of Options; or (vi) extend the termination
date of the 2006 Plan. Additionally, to the extent that shareholder approval is
required to satisfy applicable law, regulation or any securities stock exchange,
market or other quotation system on or through which the Company Stock is listed
or traded, such amendment may not be made without the requisite approval.
No termination, amendment or suspension of the 2006 Plan by the Board
of Directors may adversely affect in any material way any outstanding Awards
without the consent of the affected participant. Further, the Committee may
amend or modify any outstanding Options, SARs, Restricted Stock Awards, or
Performance Unit Awards in any manner to the extent that the 2006 Plan has
provided the initial authority to the Committee to grant such Awards as so
modified or amended.
Subject to the above conditions, the Board of Directors can amend the
2006 Plan and any award agreements without any additional consideration to
affected participants to the extent necessary to comply with, or avoid penalties
under, Section 409A of the Internal Revenue Code, even if those amendments
reduce, restrict or eliminate rights granted prior to such amendments.
U.S. Federal Income Tax Consequences
- ------------------------------------
The following is a brief summary of the general U.S. federal income and
employment tax consequences relating to the 2006 Plan. This summary is based on
U.S. federal tax laws and regulations in effect on the date of this proxy
statement and does not purport to be a complete description of the U.S. federal
income or employment tax laws.
SECTION 409A OF THE INTERNAL REVENUE CODE
In 2004, the Internal Revenue Code was amended to add Section 409A,
which creates new rules for amounts deferred under "nonqualified deferred
compensation plans." Section 409A includes a broad definition of nonqualified
deferred compensation plans which may apply to various types of Awards granted
under the 2006 Plan. The proceeds of any grant that is subject to Section 409A
are subject to a 20% excise tax if those proceeds are distributed before the
recipient separates from service or before the occurrence of other specified
events, such as death, disability or a change of control, all as defined in
Section 409A. The Internal Revenue Service (the "IRS") has not finalized
regulations describing the effect of Section 409A on the types of Awards
issuable pursuant to the 2006 Plan. The Committee intends to administer the 2006
Plan to avoid or minimize the effect of Section 409A and, if necessary, will
amend the 2006 Plan to comply with Section 409A before December 31, 2006 (or a
later date specified by the IRS).
INCENTIVE STOCK OPTIONS
Incentive Stock Options are intended to qualify for special treatment
available under Section 422 of the Internal Revenue Code. A participant will not
recognize any income when an Incentive Stock Option is granted or exercised and
Peoples will not receive a deduction at either of those times. Also, Incentive
Stock Options are not subject to employment taxes.
If a participant acquires Company Stock by exercising an Incentive
Stock Option and continues to hold that Company Stock for one year or, if
longer, until the second anniversary of the grant date (each of these periods is
called an "ISO Holding Period"), the amount the participant receives when he or
she disposes of the Company Stock minus the exercise price will be taxable at
long-term capital gain or loss rates (this is referred to as a "qualifying
disposition"), depending on whether the amount the participant receives when he
or she disposes of the Company Stock is larger or smaller than the exercise
price he or she paid. Upon a qualifying disposition, Peoples is not entitled to
a deduction.
If a participant disposes of the Company Stock before the end of either
ISO Holding Period (this is referred to as a "disqualifying disposition"), the
participant will recognize compensation income equal to the excess, if any, of
(1) the fair market value of the Company Stock on the date the Incentive Stock
Option was exercised, or, if less, the amount received on the disposition, over
(2) the exercise price. Peoples will be entitled to a deduction equal to the
income that the participant recognizes. The participant's additional gain will
be taxable at long-term or short-term capital gain rates (depending on whether
he or she held the Company Stock for more than one year).
If a participant uses Company Stock acquired by exercising an Incentive
Stock Option ("Delivered Shares") to pay the exercise price of another Incentive
Stock Option, the participant's payment will be treated as a disqualifying
disposition of the Delivered Shares if the Delivered Shares are used to exercise
an Incentive Stock Options before the end of the ISO Holding Periods of the
Delivered Shares. This type of disposition generally will cause the participant
to recognize ordinary income on the Delivered Shares equal to the difference
between the exercise price of the Delivered Shares and the fair market value of
the Delivered Shares at exercise. Peoples will be entitled to a deduction equal
to the ordinary income that the participant recognizes. If a participant
exercises his or her Incentive Stock Option using (1) Company Stock that was not
purchased pursuant to an Incentive Stock Option or (2) Delivered Shares that
were purchased by exercising an Incentive Stock Option that satisfied the ISO
Holding Periods, the participant generally will not recognize income, gain or
loss in connection with the exercise.
If a participant exercises his or her Incentive Stock Option using only
Delivered Shares to pay the exercise price, the participant's basis in the same
number of new shares of Company Stock will be the same as his or her basis in
the Delivered Shares plus the taxable income, if any, that the participant
recognized on the delivery of the Delivered Shares. Any additional new shares of
Company Stock will have a zero basis.
The rules that generally apply to Incentive Stock Options do not apply
when calculating any alternative minimum tax liability. When an Incentive Stock
Option is exercised, a participant must treat the excess, if any, of the fair
market value of the Company Stock on the date of exercise over the exercise
price as an item of adjustment for purposes of the alternative minimum tax. The
rules affecting the application of the alternative minimum tax are complex and
their effect depends on individual circumstances, including whether a
participant has items of adjustment other than those derived from Incentive
Stock Options.
NONQUALIFIED STOCK OPTIONS
Nonqualified Stock Options do not receive the special tax treatment
afforded to Incentive Stock Options under the Internal Revenue Code, although a
participant will not recognize any income when a Nonqualified Stock Option is
granted and Peoples will not receive a deduction at that time. However, unlike
an Incentive Stock Option, when a Nonqualified Stock Option is exercised, a
participant will recognize ordinary income equal to the excess, if any, of the
fair market value of the Company Stock that the participant purchased on the
date of exercise over the exercise price. Also, unlike an Incentive Stock
Option, this same amount will be subject to employment taxes, including social
security and Medicare taxes. If a participant uses Company Stock or a
combination of Company Stock and cash to pay the exercise price of a
Nonqualified Stock Option, he or she will have ordinary income equal to the
value of the excess of the number of shares of Company Stock that the
participant purchases over the number he or she surrenders, less any cash the
participant uses to pay the exercise price. This same amount will be subject to
employment taxes, including social security and Medicare taxes. When a
Nonqualified Stock Option is exercised, Peoples will be entitled to a deduction
equal to the ordinary income that the participant recognizes.
If the amount a participant receives when he or she disposes of the
Company Stock that he or she acquired by exercising a Nonqualified Stock Option
is larger than the exercise price the participant paid, the excess will be
treated as a long-term or short-term capital gain, depending on whether the
participant held the Company Stock for more than one year after he or she
acquired the Company Stock by exercising the Nonqualified Stock Option. But, if
the amount a participant receives when he or she disposes of the Company Stock
that the participant acquired by exercising a Nonqualified Stock Option is less
than the exercise price he or she paid, the difference will be treated as a
long-term or short-term capital loss, depending on whether the participant held
the Company Stock for more than one year after he or she acquired the Company
Stock by exercising the Nonqualified Stock Option.
SARs
A participant will not recognize any income when a SAR is granted and
Peoples will not receive a deduction at that time. When a SAR is exercised, a
participant will recognize ordinary income equal to the cash and/or fair market
value of the Company Stock the participant received upon exercise. Peoples will
be entitled to a deduction equal to the ordinary income that the participant
recognizes. Also, the same amount will be subject to employment taxes, including
social security and Medicare taxes. If the amount a participant receives when he
or she disposes of any Company Stock acquired upon the exercise of a SAR is
larger than the value of the shares of Company Stock when the SAR was exercised,
the excess will be treated as a long-term or short-term capital gain, depending
on whether the participant held the Company Stock for more than one year after
the SAR was exercised. But, if the amount the participant receives when he or
she disposes of the Company Stock is less than the value of the Company Stock
when the SAR was exercised, the difference will be treated as a long-term or
short-term capital loss, depending on whether the participant held the Company
Stock for more than one year after the SAR was exercised.
RESTRICTED STOCK
Unless a participant makes an election under Section 83(b) of the
Internal Revenue Code, the participant will not recognize taxable income when
Restricted Stock is granted and Peoples will not receive a deduction at that
time. Instead, a participant will recognize ordinary income when the shares of
Restricted Stock vest (i.e., when the participant can no longer lose them) equal
to the fair market value of the Company Stock he or she receives when the
restrictions lapse, less any consideration paid for the Restricted Stock, and
Peoples generally will be entitled to a deduction equal to the income that the
participant recognizes. Also, the same amount will be subject to employment
taxes, including social security and Medicare taxes.
If the amount a participant receives when he or she disposes of these
shares is larger than the value of the shares when the Restricted Stock vested,
the excess will be treated as a long-term or short-term capital gain, depending
on whether the participant held the shares for more than one year after the
Restricted Stock vested. But, if the amount the participant receives when he or
she disposes of these shares is less than the value of the shares when the
Restricted Stock vested, the difference will be treated as a long-term or
short-term capital loss, depending on whether the participant held the shares
for more than one year after the Restricted Stock vested.
If a participant makes a Section 83(b) election, the participant will
recognize ordinary income on the grant date equal to the fair market value of
the shares of Restricted Stock on the grant date, and Peoples will be entitled
to a deduction equal to the income that the participant recognizes at that time.
Also, the same amount will be subject to employment taxes, including social
security and Medicare taxes. However, the participant will not recognize income
when (and if) the restrictions lapse. If a participant earns the shares, any
appreciation between the grant date and the date the participant disposes of the
shares will be treated as a long-term or short-term capital gain, depending on
whether he or she held the shares for more than one year after the grant date.
But, if the amount the participant receives when he or she disposes of these
shares is less than the value of the shares on the grant date, the difference
will be treated as a long-term or short-term capital loss, depending on whether
he or she held the shares for more than one year after the grant date. Also, if
a participant forfeits his or her Restricted Stock, the participant cannot take
a tax deduction in connection with that forfeiture.
RESTRICTED PERFORMANCE STOCK AND PERFORMANCE UNITS
A participant will not recognize taxable income when Peoples grants the
participant Restricted Performance Stock and/or Performance Units and the
Peoples will not receive a deduction at that time. However, if the participant
satisfies the conditions imposed on the Award, he or she will recognize ordinary
income equal to the cash or the fair market value of the Company Stock he or she
receives at the time of delivery. Also, the same amount will be subject to
employment taxes, including social security and Medicare taxes. Peoples
generally will be entitled to a deduction equal to the income that the
participant recognizes.
If the amount a participant receives when he or she disposes of the
Company Stock acquired upon the settlement of a Restricted Performance Stock or
Performance Unit Award is larger than the value of the Company Stock when the
participant received them, the excess will be treated as a long-term or
short-term capital gain, depending on whether the participant held the shares
for more than one year after they were issued. But, if the amount the
participant receives when he or she disposes of these shares is less than the
value of the shares when they were issued, the difference will be treated as a
long-term or short-term capital loss, depending on whether the participant held
the shares for more than one year after they were issued.
UNRESTRICTED COMPANY STOCK
Upon an issuance of unrestricted Company Stock, a participant will
recognize taxable income equal to the fair market value of the shares issued and
Peoples will receive a deduction in the same amount at that time.
ANY U.S. FEDERAL TAX ADVICE CONTAINED IN THE FOREGOING IS NOT INTENDED
OR WRITTEN BY THE PREPARER OF SUCH ADVICE TO BE USED, AND IT CANNOT BE USED BY
THE RECIPIENT, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE
RECIPIENT. THIS DISCLOSURE IS INTENDED TO SATISFY U.S. TREASURY DEPARTMENT
REGULATIONS.
Other Matters
- -------------
The 2006 Plan is intended to comply with Section 162(m) of the Internal
Revenue Code with respect to 2006 Plan Awards granted to Employees who are or
who may become a "covered employee" as defined in Section 162(m). Peoples is
seeking shareholder approval of the 2006 Plan in order to satisfy the
shareholder approval requirements of applicable NASDAQ Rules as well as those
under Section 162(m) of the Internal Revenue Code. If shareholder approval of
the 2006 Plan is not obtained, the 2006 Plan will be null and void.
Recommendation and Vote
- -----------------------
The affirmative vote of the holders of a majority of shares of Company
Stock that are voted on the proposal to approve the 2006 Plan is necessary to
approve the 2006 Plan. Broker non-votes will not be treated as votes cast.
Abstentions will be treated as votes cast and will have the effect of a vote
"AGAINST" the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
APPROVAL OF THE 2006 PLAN.
PROPOSAL NUMBER 3:
ADOPTION OF AMENDMENTS TO SECTIONS 2.06, 2.07, 3.01 AND 3.04
OF THE CODE OF REGULATIONS
TO DESIGNATE ADDITIONAL OFFICERS TO BE ELECTED BY THE DIRECTORS AND
TO CLARIFY AND SEPARATE THE ROLES OF THE OFFICERS
-------------------------------------------------
(Item 2 on Proxy)
PURPOSE OF PROPOSALProposal
- --------
Under Sections 2.06 and 2.07 of Peoples' Code of Regulations as
presently in effect, the Leadership Director is not granted authority to call or
provide notice of meetings of the Board of Directors. Under Section 3.01 of
Peoples' Code of Regulations currently providesas presently in effect, the directors are to elect
a Leadership Director if the Chairman of the Board is the Chief Executive
Officer or the President of Peoples. Section 3.04 of Peoples' Code of
Regulations outlines the duties of the Leadership Director. The Board of
Directors believes that it is important to clarify the role of the Leadership
Director in providing a bridge between Peoples' independent directors and
management when the Chairman of the Board does not qualify as an independent
director, whatever the reason.
The proposed amendments to Sections 2.06 and 2.07 of the Code of
Regulations would permit the Leadership Director to call meetings of Peoples'
directors and provide notice of director meetings. The proposed amendment to
Section 3.01 of the Code of Regulations would provide that if the Chairman of
the Board is the Chief Executive Officer or the President of Peoples or
otherwise does not qualify as an independent director, the directors shall elect
a Leadership Director. The proposed amendment to Section 3.04 of the Code of
Regulations would clarify that the role of the Leadership Director, if any,
would be to:
o preside at all executive sessions of the independent directors of
Peoples and, in the absence of the Chairman of the Board, preside
as chairman of a meeting of the Board of Directors;
o serve as Chairman of the Governance and Nominating Committee of
the Board of Directors; and
o perform such other duties as may be assigned, from time to time,
by the Board of Directors or by the independent directors to the
Leadership Director.
Peoples' Board of Directors has unanimously approved, and recommends
that shareholders adopt, the proposed amendments to Sections 2.06, 2.07, 3.01
and 3.04 of the Code of Regulations to clarify the role of the Leadership
Director.
The text of Section 2.06, as amended, would read as follows:
Section 2.06. Meetings.
A meeting of the directors shall be held immediately
following the adjournment of each annual meeting of
shareholders at which directors are elected, and notice of
such meeting need not be given. The directors shall hold such
other meetings as may from time to time be called, and such
other meetings of directors may be called only by the Chairman
of the Board, the Leadership Director, the President, or any
two directors. All meetings of directors shall be held at the
principal office of the corporation in Marietta or at such
other place within or without the State of Ohio as the
directors may from time to time determine by a resolution.
Meetings of the directors may be held through any
communications equipment if all persons participating can hear
each other and participation in a meeting pursuant to this
provision shall constitute presence at such meeting.
The text of Section 2.07, as amended, would read as follows:
Section 2.07. Notice of Meetings.
Notice of the place, if any, and time of each meeting
of directors for which such notice is required by law, the
Articles, the Regulations or the By-Laws shall be given to
each of the directors by at least one of the following
methods:
(A) In a writing mailed or sent by overnight delivery
service, not less than two days before such meeting
and addressed to the residence or usual place of
business of a director, as such address appears on the
records of the corporation; or
(B) By personal delivery or by telegram, cablegram,
telephone or any other means of communication
authorized by the director, not later than the day
before the date on which such meeting is to be held.
Notice given to a director by any one of the methods
specified in the Regulations shall be sufficient, and the
method of giving notice to all directors need not be uniform.
Notice of any meeting of directors may be given only by the
Chairman of the Board, the Leadership Director, the President
or the Secretary of the corporation. Any such notice need not
specify the purpose or purposes of the meeting. Notice of
adjournment of a meeting of directors need not be given if the
time and place to which it is adjourned are fixed and
announced at such meeting.
The text of Section 3.01, as amended, would read as follows:
Section 3.01. Officers.
The officers of Peoplesthe corporation to be elected by the
directors areshall be a Chairman of the president, the
secretary, the treasurer and, if desired,Board, a Chief Executive
Officer, a President, one or more vice presidentsExecutive Vice Presidents,
one or more Vice Presidents, a Secretary, a Treasurer, and
such other officers and assistant officers as the directors
may from time to time elect. The directors may elect a chairman ofIf the board, who must be a director.
Under Section 3.04 of Peoples' Code of Regulations, the president of Peoples
must also be the chief executive officer.
To better assign management responsibilities, the Board of Directors
needs the flexibility to assign titles to senior management of Peoples that more
accurately describe the separate areas of responsibility assigned.
Proposal
It is proposed that shareholders adopt amendments to Peoples' Code of
Regulations to create the office of chief executive officer and to clarify the
duties of each of the chairman of the board and the president. It is further
proposed that shareholders adopt amendments to Peoples' Code of Regulations to
allow the directors to elect executive vice presidents as well as vice
presidents and to clarify that the executive vice presidents and the vice
presidents will perform the duties and exercise the powers assigned to them by
the Board of Directors, and to permit the Board of Directors to assign certain
leadership responsibilities to a non-executive memberChairman of the Board of Directors
as a leadership director.
Specifically,is
the Board of Directors proposes that Article THREE of
Peoples' Code of Regulations be amended to: (i) delete current Section 3.01 and
replace it in its entirety withChief Executive Officer or the following Section 3.01; (ii) delete current
Sections 3.03, 3.04 and 3.05 and replace them in their entirety with the
following Sections 3.03, 3.04, 3.05, 3.06, 3.07 and 3.08; (iii) add the
following Section 3.11; and (iv) renumber existing Sections 3.06, 3.07 and 3.08
as Sections 3.09, 3.10 and 3.12, respectively.
The text of new Sections 3.01, 3.03, 3.04, 3.05, 3.06, 3.07, 3.08 and
3.11 would read as follows:
Section 3.01. Officers.
-----------------------
The officersPresident of the
corporation to be elected byor otherwise does not qualify as an independent
director, the directors shall beelect a chairman of the board, a chief executive officer, a president, a
leadership director if the chairman of the board is the chief executive
officer or the president, one or more executive vice presidents, one or
more vice presidents, a secretary, a treasurer, and such other officers
and assistant officers as the directors may, from time to time, elect.Leadership Director. Any
person or persons holding the office of chairmanChairman of the board,
leadership director, chief executive officerBoard, Leadership
Director, Chief Executive Officer or presidentPresident must be a
director of the corporation. The other officers of the
corporation may or may not be directors of the corporation.
Officers need not be shareholders of the corporation unless
they are also directors of the corporation, and may be paid
such compensation as the board of directors (or a committee
thereof) may determine. Any two or more offices may be held by
the same person, but no officer shall execute, acknowledge or
verify any instrument in more than one capacity if such
instrument is required by law, the Articles, the Regulations
or the By-Laws to be executed, acknowledged or verified by two
or more officers.
The text of Section 3.03.3.04, as amended, would read as follows:
Section 3.04. Duties of Leadership Director.
If the Chairman of the Board is the Chief Executive
Officer or the President of the corporation or otherwise does
not qualify as an independent director, the directors shall
elect a Leadership Director. The Leadership Director, if any
shall be elected, shall preside at all executive sessions of
the independent directors of the corporation and, in the
absence of the Chairman of the Board.
--------------------------------------------------
TheBoard, shall preside as
chairman of the board shall preside at all meetings of the directors.
Except as otherwise provided by law, the Articles, the Regulations or
resolution of the directors the chairman of the board shall have the
same power as the president to sign all certificates evidencing shares of the corporation. The
chairmanLeadership Director, if any shall be elected, shall serve as
Chairman of the Governance and Nominating Committee of the
board of directors of the corporation (or of the committee of
the board of directors performing similar functions). The
Leadership Director, if any shall be elected, shall perform
such other duties and exercise such other powers as the directors may be
assigned, from time to time, assignby the board of directors or the
independent directors to the chairman of the board.
Section 3.04. Duties of the Leadership Director.
-------------------------------------------------
The board of directors may elect one of its non-executive members to the
position of leadership director to preside at meetings of the board in
executive session when the chairman of the board is also holding an
executive officer position.
Section 3.05. Duties of the Chief Executive Officer.
----------------------------------------------------
The chief executive officer of the corporation shall have, subject to the
control of the directors, general supervisionRecommendation and management over the
business of the corporation and over its officers and employees. Except
as otherwise provided by law, the Articles, the Regulations or resolution
of the directors, the chief executive officer shall have the same power
as the president to sign all deeds, mortgages, bonds, contracts, notes
and other instruments of the corporation. During the absence or
disability of the president, the chief executive officer shall exercise
all of the powers and perform all of the duties of the president except
as otherwise provided by law. The chief executive officer shall preside
at all meetings of the shareholders. The chief executive officer shall
perform such other duties and exercise such other powers as the directors
may, from time to time, assign to the chief executive officer.
Section 3.06. Duties of the President.
--------------------------------------
The president of the corporation shall have, subject to the control of
the directors and, if there be one, the chief executive officer, general
and active supervision and management over the business of the
corporation and over its officers and employees. The president shall be
the principal operating and administrative officer of the corporation. If
there is no chief executive officer, the president shall exercise all of
the powers and perform all of the duties of the chief executive officer.
Except as otherwise provided by law, the Articles, the Regulations or
resolution of the directors, the president shall have the power to sign
all certificates evidencing shares of the corporation and all deeds,
mortgages, bonds, contracts, notes and other instruments of the
corporation. The president shall, in the absence of the chief executive
officer, preside at all meetings of the shareholders. The president shall
perform such other duties and exercise such other powers as the directors
may, from time to time, assign to the president.
Section 3.07. Duties of Executive Vice Presidents.
--------------------------------------------------
The executive vice presidents shall perform such duties and exercise such
powers as the directors may, from time to time, assign to them.
Section 3.08. Duties of Vice Presidents.
----------------------------------------
The vice presidents shall perform such duties and exercise such powers as
the directors may, from time to time, assign to them.
Section 3.11. Other Officers.
------------------------------
Other elected officers shall perform such duties and exercise such powers
as the directors may, from time to time, assign to them under the officer
titles designated.
RECOMMENDATION AND VOTEVote
- -----------------------
The affirmative vote of the holders of common shares entitling them to
exercise not less than a majority of the voting power of Peoples is required to
adopt the proposed amendments to Article THREESections 2.06, 2.07, 3.01 and 3.04 of thePeoples'
Code of Regulations. As of
February 16, 2004, Peoples' executive officers and directors, their respective
associates and Peoples Bank, through Peoples Financial Advisors group, held
common shares representing approximately 16.58% of the voting power of Peoples. The effect of an abstention or a broker non-vote on the proposed
amendments to Article THREE of the Code of Regulations is the
same as a "no"
vote.vote "AGAINST" the proposal. If adopted by the shareholders, the
proposed amendments to Article THREE
wouldSections 2.06, 2.07, 3.01 and 3.04 of the Code of
Regulations will become effective immediately without any additional action.
The BoardTHE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
ADOPTION OF THE PROPOSED AMENDMENTS TO SECTIONS 2.06, 2.07, 3.01 AND 3.04 OF
PEOPLES' CODE OF REGULATIONS.
Common shares represented by properly executed and returned proxy cards
will be voted as specified or, if no instructions are given, except in the case
of Directors recommends that shareholders vote forbroker non-votes, "FOR" the adoption of the proposed amendments to Article THREE of Peoples' Code of
Regulations.
All valid proxies received prior to the Annual Meeting which do not
specify how common shares should be voted (other than proxies which constitute
broker non-votes) will be voted for the adoption of the proposed amendments to
Article THREESections
2.06, 2.07, 3.01 and 3.04 of the Code of Regulations.
SHAREHOLDER PROPOSALS
FOR 20052007 ANNUAL MEETING
Proposals by shareholders intended to be presented at the 20052007 Annual
Meeting of Shareholders must be received by the Corporate Secretary of Peoples
no later than November 5, 2004,__, 2006 to be includedeligible for inclusion in Peoples' proxy,
notice of meeting and proxy statement relating to that meeting. Upon receipt of
a shareholder proposal, Peoples will determine whether or not to include the
proposal in the proxy materials in accordance with applicable rules and
regulations promulgated by the SEC.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 20052007 Annual Meeting of Shareholders, and does not
notify the Corporate Secretary of Peoples of the proposal by January 19, 2005,February __, 2007,
the proxies solicited by the Board of Directors for use at the 20052007 Annual
Meeting may be voted on the proposal, without discussion of the proposal in
Peoples' proxy statement for the 20052007 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 20052007 Annual Meeting must follow the procedures described in "ELECTION OF
DIRECTORS"The Board of
Directors and Committees of the Board - Nominating Procedures".
AUDIT COMMITTEE MATTERS
Audit Committee Report to Shareholders for the
Fiscal Year Ended December 31, 2003
In accordance with the SEC's rules, the Audit Committee has issued the
following report for the 2003 fiscal year:2005
Role of the Audit Committee, Independent AuditorsRegistered
Public Accounting Firm and Management
- ----------------------------------------------------------------
The Audit Committee consists of seven directors who qualify as
independent under the NASDAQ Corporate Governance Standards and Rule 10A-3 under
the Exchange Act, and operates under a
written charter adopted by the Board of Directors. TheUnder its charter, the Audit
Committee appointsis responsible for assisting the independent auditors employed by
Peoples.
The Audit Committee oversees Peoples'Board of Directors in the oversight
of the accounting and financial reporting processes on behalf of Peoples and our
subsidiaries. In particular, the Audit Committee assists the Board of Directors.Directors
in overseeing (i) the integrity of Peoples' financial statements and the
effectiveness of Peoples' systems of internal accounting and financial controls;
(ii) Peoples' compliance with ethics policies and legal and regulatory
requirements; (iii) the qualifications and independence of Peoples' independent
registered public accounting firm; (iv) the performance of Peoples' internal
audit function and independent registered public accounting firm; and (v) the
annual independent audit of Peoples' financial statements. During the 2005
fiscal year, the Audit Committee met seven times, and the Audit Committee
discussed the interim financial and other information contained in each
quarterly earnings announcement and periodic filing with the SEC with management
and the independent registered public accounting firm employed by Peoples prior
to public release. The Audit Committee is responsible for the appointment,
compensation and oversight of the work of the independent registered public
accounting firm employed by Peoples. Ernst & Young LLP ("E&Y") served as the
independent registered public accounting firm for Peoples for the 2005 fiscal
year.
Management has the primary responsibility for preparation, presentation and
integrity of the consolidated financial statements for the appropriateness of
the accounting principles and reporting policies that are used by Peoples and
our subsidiaries and for the accounting and financial reporting processes,
including the establishment and maintenance of adequate systems of disclosure
controls and procedures and internal control over financial reporting for
Peoples. In fulfilling its oversight responsibilities,Management also has the Audit Committee reviewed and
discussed the audited consolidated financial statementsresponsibility for the 2003 fiscal year
with management, including a discussionpreparation of their
report on the establishment and maintenance of, and assessment of the
quality, and not just the
acceptability,effectiveness of, the accounting principles applied, the reasonableness of
significant judgments, and the clarity of disclosures in the consolidatedPeoples' internal control over financial statements.
Ernst & Young LLP ("E&Y") served as independent auditors for Peoples
for the 2003 fiscal year.reporting. E&Y is
responsible for performing an audit of Peoples' consolidated financial
statements in accordance with US GAAP.the standards of the Public Company Accounting
Oversight Board (United States) and issuing its report on the consolidated
financial statements based on such audit, issuing an attestation report on
management's assessment of the effectiveness of Peoples' internal control over
financial reporting, and for reviewing Peoples' unaudited interim financial
statements. The Audit Committee's responsibility is to provide independent,
objective oversight of these processes.
In discharging its oversight responsibilities, the Audit Committee met
with Peoples' management, E&Y and Peoples' internal auditors throughout the
year. The Audit Committee reviewedoften met with E&Y their judgments as toeach of these groups in executive
session. Throughout the quality, not just the
acceptability, of Peoples' accounting principles as applied in its financial
reporting and the other matters required to be discussed withyear, the Audit Committee under generally accepted auditing standards, including Statement on
Auditing Standards No. 61 (Communication With Audit Committees), as modified. In
addition,had full access to management,
E&Y and the internal auditors for Peoples. The Audit Committee discussed withhas received from
E&Y the auditors' independence from
management and Peoples including the matters in the written disclosures required
byand a letter describing all relationships between
E&Y and Peoples and our subsidiaries that might bear on E&Y's independence
consistent with Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), as modified. The Audit Committee consideredmodified; 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 satisfied itself as to be compatible with maintaining E&Y's independence. The Audit Committee also
discussed with management, Peoples' internal auditors and E&Y the overall scopeadequacy and
plans for their respective audits. The Audit Committee met
with the internal auditors and E&Y, with and without management present, to
discuss the resultseffectiveness of their respective audits, their evaluations of Peoples'
system of internal control over financial reporting and related
accounting and financial controls, the overall qualityreview by Peoples' General Counsel of
pending legal matters including incident reports made through the Ethics Hotline
and the internal audit organization, responsibilities, budget and staffing. The
Audit Committee reviewed with both E&Y and the internal auditors their
respective audit plans, internal control evaluation and remediation plans, audit
scope and identification of audit risks.
The Audit Committee discussed and reviewed with E&Y all communications
required by the standards of the Public Company Accounting Oversight Board
(United States), including those described in Statement on Auditing Standards
No. 61 (Communication with Audit Committees) as modified, and by SEC rules, as
well as significant current accounting developments and issues. With and without
management present, the Audit Committee also discussed and reviewed the results
of E&Y's audit of Peoples' consolidated financial statements and management's
assessment of the effectiveness of Peoples' internal control over financial
reporting. Management's Representations andThe Audit Committee Recommendations
- ----------------------------------------------------------------also discussed the results of the internal audit
examinations, with and without management present.
MANAGEMENT'S REPRESENTATIONS AND AUDIT COMMITTEE RECOMMENDATIONS
Management has represented to the Audit Committee that thePeoples' audited
consolidated financial statements as of and for the fiscal year ended December
31, 2003,2005, were prepared in accordance with US GAAP and the Audit Committee has
reviewed and discussed thethose audited consolidated financial statements with
management and the independent auditors. In relianceE&Y. Based on the reviewsAudit Committee's discussions with management
and discussions referredE&Y and the Audit Committee's review of the report of E&Y to above,the Audit
Committee, the Audit Committee recommended to the Board of Directors (and the Board of Directors has approved) that the
audited consolidated financial statements be included in Peoples' Annual Report
on Form 10-K for the fiscal year ended December 31, 2003 to be filed2005, for filing with the
SEC.
SUBMITTED BY THE AUDIT COMMITTEE OF PEOPLES' BOARD OF DIRECTORS:Submitted by the Audit Committee of Peoples' Board of Directors:
Richard Ferguson (Chairman); Wilford D. Dimit Chairman;(Vice Chairman); Carl L. Baker,
Jr.,; George W. Broughton,Broughton; Frank L. Christy, Robert W. Price,Christy; Theodore P. Sauber; and Thomas C. Vadakin, and Joseph H. Wesel,J.
Wolf, Members.
PRE-APPROVAL POLICYPre-Approval Policy
- -------------------
Under applicable SEC rules, the Audit Committee is required to
pre-approve the audit and non-audit services performed by the independent
auditorsregistered public accounting firm in order to assure that they do not impair
the auditors'that firm's independence from Peoples. The SEC's rules specify the types of
non-audit services that an independent auditorregistered public accounting firm may not
provide to its audit client and establish the Audit Committee's responsibility for
administration of the engagement of the independent auditors.registered public accounting
firm. Accordingly, 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 the conditions
pursuant to which services proposed to be performed by the independent
auditorsregistered public accounting firm may be pre-approved.
The purpose of the Pre-Approval Policy is to set forth the procedures
by which the Audit Committee intends to fulfill its responsibilities. It does
not delegate the Audit Committee's responsibilities to pre-approve services
performed by the independent auditorsregistered public accounting firm to management.
Consistent with the SEC's rules, the Pre-Approval Policy provides two
different approaches to pre-approving services. 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"). The combination of these two
approaches in the Pre-Approval Policy results in an effective and efficient
procedure to pre-approve services performed by the independent auditors.registered public
accounting firm. As set forth in the Pre-Approval Policy, unless a type of
service has received general pre-approval, it will require specific pre-approval
by the Audit Committee if it is to be provided by the independent auditors.registered
public accounting firm. Any proposed services exceeding pre-approved cost levels
or budgeted amounts will also require specific pre-approval by the Audit
Committee.
The Audit Committee may delegate either type of pre-approval authority
to one or more of its members. The member 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.
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 considers a different period
and states otherwise. The Audit Committee will annually review and pre-approve
the services that may be provided by the independent auditorsregistered public
accounting firm without obtaining specific pre-approval from the Audit
Committee. The Audit Committee will add to or subtract tofrom the list of general
pre-approved services from time to time, based on subsequent determinations.
All requests or applications for services to be provided by the
independent auditorsregistered public accounting firm that do not require specific
approvalpre-approval by the Audit Committee will be submitted to the Chief Financial
Officer 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 auditors.registered public accounting firm.
Requests or applications to provide services that require specific
approvalpre-approval by the Audit Committee will be submitted to the Audit Committee by
both the independent auditorsregistered 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.
The Audit Committee has designated the head internal auditor of Peoples
to monitor the performance of all services provided by the independent
auditorsregistered public accounting firm and to determine whether such services are in
compliance with the Pre-Approval Policy. The head internal auditor will report
to the Audit Committee on a periodic basis on the results of this monitoring.
Both the head internal auditor and management will immediately report to the
chairmanChairman of the Audit Committee any breach of the Pre-Approval Policy that comes
to the attention of the head internal auditor or any member of management.
The Audit Committee will also review the head internal auditor's annual
internal audit plan to determine that the plan provides for the monitoring of
the independent auditors'registered public accounting firm's services.
SERVICES OF THE INDEPENDENT AUDITOR FOR THE 2003 FISCAL YEAR
In March 2003, upon recommendationServices of the Audit Committee, the Board of
Directors of Peoples appointed the accounting firm of E&Y to serve as
independent auditors of Peoples for the 2003 fiscal year.Independent Registered Public Accounting Firm
- --------------------------------------------------------------
Fees billed for services rendered by E&Y for each of the 20032005 fiscal year and
the 20022004 fiscal year were:
A. Pre-Approved2005 2004
------- ------------
Audit Services
---------------------------
Service
------- Actual 2003 Actual 2002
Fees and Expenses Fees and Expenses
----------------- -----------------
Statutory audits or financial audits for subsidiaries or affiliates of $194,350 $154,445
Peoples' including quarterly reviews, review of Forms 10-Q and 10-K
Services associated with SEC registration statements, periodic reports $7,500 $107,500
and other documents filed with the SEC or other documents issued in
connection with securities offerings (e.g., comfort letters, consents),
and assistance in responding to SEC comment letters
Attestation of management reports on internal controls under FDICIA $17,000 $16,000
Expanded procedures for attestation of management reports on internal $17,060 $0
controls under FDCIA following requirements of Section 404 of the
Sarbanes-Oxley Act of 2002
---------------------- ----------------------
Total $235,910 $277,945
B. Pre-ApprovedFees(1) $ $753,146
Audit-Related Services
-----------------------------------
Service
------- Actual 2003 Actual 2002
Fees and Expenses Fees and Expenses
----------------- -----------------
Due diligence services pertaining to potential business $3,500 $69,000
acquisitions/dispositions
Consultations by Peoples' management as to the accounting or disclosure $9,000 $9,500
treatment of transactions or events and/or the actual or potential impact
of final or proposed rules, standards or interpretations by the SEC,
FASB, or other regulatory or standard-setting bodies
Statutory, subsidiary or equity investee audits incremental to the audit $7,200 $0
of the consolidated financial statements
General assistance with implementation of the requirements of SEC rules $11,000 $0
or listing standards promulgated pursuant to the Sarbanes-Oxley Act of
2002
---------------------- ---------------------
Total $30,700 $78,500
C. Pre-ApprovedFees (2) 19,007
Tax Services
- -----------------------------
Service
- ------- Actual 2003 Actual 2002
Fees and Expenses Fees and Expenses
----------------- -----------------
U.S. federal, state and local tax planning and advice (including tax $35,825 $90,000
services related to private foundation in 2003)
U.S. federal, state and local tax compliance $28,325 $29,850
Assistance with tax audits and appeals before the IRS and similar state, $5,000 $5,500
local and foreign agencies
Tax services related to mergers and acquisitions $18,450 $21,375
Tax advice and assistance regarding statutory, regulatory or $24,360 $0
administrative developments including low income housing and business
owned life insurance tax matters
---------------------- ---------------------
Total $111,960 $146,725
D. Pre-ApprovedFees (3) 127,340
All Other Services
Service
- ------- Actual 2003 Actual 2002
Fees and Expenses Fees and Expenses
----------------- -----------------
Risk management advisory services, e.g. assessment and testing of $0 $74,866
security infrastructure controls, record keeping issues related to
empoloyee benefit plans, etc.
---------------------- ---------------------
Total $0 $74,866
NOTIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
PursuantFees (4) 63,340
------- ------------
Total $ $962,833
======= ============
(1) "Audit Fees" also included internal control testing for compliance with
Section 404 of the Sarbanes-Oxley Act.
(2) "Audit-Related Fees" included services pertaining to due diligence and
statutory and subsidiary audits.
(3) "Tax Fees" included services for tax planning and advice, tax compliance,
assistance with tax audits and appeals and tax services related to mergers
and acquisitions.
(4) "Other Fees" paid in the appointment2004 fiscal year related to treasury and asset
liability risk management services.
None of the services described under Audit-Related Fees, Tax Fees or
All Other Fees above were approved by the Audit Committee pursuant to the waiver
procedure set forth in 17 CFR 210.2-01(c)(7)(i)(C).
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
While Peoples is not currently considering the appointment of any
independent registered public accounting firm other than E&Y, will
serve as independent auditors of Peoplesthe Audit
Committee has not yet made such an appointment for the 20042006 fiscal year. The
Audit Committee intends to appoint an independent registered public accounting
firm as soon as practicable. As previously noted, in March 2003, upon recommendation of the Audit Committee the full Board
of Directorshad
appointed E&Y to serve as the independent auditorsregistered public accounting firm of
Peoples for the 20032005 fiscal year. E&Y has served as Peoples' independent
auditorsauditors/independent registered public accounting firm since 1995. The Board of
Directors expects representatives of E&Y will be present at the Annual Meeting.
They will have the opportunity to make a statement if they desire to do so, and
will be available to respond to appropriate questions.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors knows of
no business tomatter that will be presented for action by the shareholders at the Annual
Meeting other than thatthose 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 at any adjournment, the individuals acting under the
proxies solicited by the Board of Directors will vote and act according to their
best judgments in light of the conditions then prevailing.
It is important that proxiesyour proxy card be votedcompleted and returned
promptly; therefore,
shareholders whopromptly. If you do not expect to attend the Annual Meeting in person, are urged
toplease
fill in, sign and return the enclosed proxy card in the self-addressed envelope
furnished herewith.
By Order of the Board of Directors,
By: /s/ ROBERT E. EVANS
Robert E. EvansMARK F. BRADLEY
Mark F. Bradley
President and Chief Executive Officer
and Chairman of the Board
APPENDIX A
Peoples Bancorp Inc. 2006 Equity Plan
PEOPLES BANCORP INC.
PROXY2006 Equity Plan
THIS PLAN is made this ___ day of_____, 2006, by Peoples Bancorp Inc.,
an Ohio corporation (the "Company").
ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.1 Purpose. The purpose of the Plan is to provide financial incentives for
selected Employees, Advisors and Non-Employee Directors, thereby promoting the
long-term growth and financial success of the Company by (a) attracting and
retaining Employees, Advisors and Non-Employee Directors of outstanding ability,
(b) strengthening the Company's capability to develop, maintain, and direct a
competent management team, (c) providing an effective means for selected
Employees, Advisor and Non-Employee Directors to acquire and maintain ownership
of Company Stock, (d) motivating Employees to achieve long-range Performance
Goals and objectives, and (e) providing incentive compensation opportunities
competitive with peer financial institution holding companies.
1.2 Effective Date and Expiration of Plan. The Plan will be effective upon
its adoption by the Board and approval by affirmative vote of the Shareholders
required under applicable rules and procedures, including those prescribed under
Sections 162(m) and 422 of the Code and applicable NASDAQ rules. Unless earlier
terminated by the Board pursuant to Section 12.2, the Plan shall terminate on
the tenth anniversary of its Effective Date. No Award shall be made pursuant to
the Plan after its termination date, but Awards made prior to the termination
date may extend beyond that date. Notwithstanding the foregoing, no Incentive
Stock Options may be granted more than ten years after the earlier of (a) the
adoption of this Plan by the Board or (b) the Effective Date.
ARTICLE II
DEFINITIONS
The following words and phrases, as used in the Plan, shall have the
meanings set forth in this section. When applying these definitions and any
other word, term or phrase used in this Plan, the form of any word, term or
phrase will include any and all of its other forms.
2.1 Advisors means any advisor who renders bona fide services to the
Company and/or one or more of the Subsidiaries as an advisory or marketing board
member and who is neither an Employee nor a director of the Company or any
Subsidiary; provided that the services rendered are not in connection with the
offer or sale of securities in a capital-raising transaction and do not directly
or indirectly promote or maintain a market for the Company's securities.
2.2 Award means, individually or collectively, any Option, SAR, Restricted
Stock, Restricted Performance Stock, unrestricted Company Stock or Performance
Unit Award.
2.3 Award Agreement means the written agreement between the Company and
each Participant that describes the terms and conditions of each Award. If there
is a conflict between the terms of the Plan and the Award Agreement, the terms
of the Plan will govern.
2.4 Board means the Board of Directors of the Company.
2.5 Cause with respect to any Participant, means: (a) Gross negligence or
gross neglect of duties; or (b) Commission of a felony or of a gross misdemeanor
involving moral turpitude in connection with the Participant's employment or
service, as the case may be, with the Company or any of its Subsidiaries; or (c)
Fraud, disloyalty, dishonesty or willful violation of any law or significant
Company policy committed in connection with the Participant's employment or
provision of services, as the case may be; or (d) Issuance of an order for
removal of the Participant by any agency which regulates the activities of the
Company or any of its Subsidiaries. Any determination of "Cause" under this Plan
shall be made by the Committee in its sole discretion.
2.6 Company means Peoples Bancorp Inc., an Ohio corporation.
2.7 Company Director means a non-employee member of the Board.
2.8 Company Stock means the Company's common shares, without par value per
share.
2.9 Code means the Internal Revenue Code of 1986, as amended or superseded
after the Effective Date, and any applicable rulings or regulations issued
thereunder.
2.10 Committee means the Compensation Committee of the Board or a
subcommittee thereof.
2.11 Disability means: (a) with respect to an Incentive Stock Option,
"disabled" within the meaning of Section 22(e)(3) of the Code; (b) with respect
to any Award subject to Section 409A of the Code, "disabled" as defined under
Section 409A of the Code; and (c) with respect to any Award not described in
subsections (a) and (b) of this Section 2.11, a long-term disability as defined
by the Company's or Subsidiary's group disability insurance plan, or any
successor plan that is applicable to such Participant at the time of his or her
Termination.
2.12 Effective Date means the date on which the Plan is approved by the
Shareholders of the Company, as provided in Section 1.2.
2.13 Employee means any person who, on any applicable date, is a common law
employee of the Company or any Subsidiary. A worker who is classified as other
than a common law employee but who is subsequently reclassified as a common law
employee of the Company or any Subsidiary for any reason and on any basis will
be treated as a common law employee only from the date that reclassification
occurs and will not retroactively be reclassified as an Employee for any purpose
of this Plan.
2.14 Exchange Act means the Securities Exchange Act of 1934, as amended.
2.15 Exercise Price means the amount, if any, that a Participant must pay to
exercise an Award (other than an Option).
2.16 Fair Market Value means, as of any specified date, an amount equal to
the reported closing price on the specified date of a share of Company Stock on
NASDAQ or any other established stock exchange or quotation system on which the
Company Stock is then listed or traded or, if no shares of Company Stock have
been traded on such date, the closing price of a share of Company Stock on
NASDAQ or such other established stock exchange or quotation system as reported
on the first day prior thereto on which shares of Company Stock were so traded.
If the preceding sentence does not apply, Fair Market Value shall be determined
in good faith by the Committee using other reasonable means.
2.17 Fiscal Year means the fiscal year of the Company, which is the 52- or
53-week period ending on December 31.
2.18 Incentive Stock Option means an option within the meaning of Section
422 of the Code.
2.19 Non-Employee Director means either a Company Director or a Subsidiary
Director.
2.20 Nonqualified Stock Option means an option granted under the Plan other
than an Incentive Stock Option.
2.21 Option means either a Nonqualified Stock Option or an Incentive Stock
Option to purchase Company Stock.
2.22 Option Price means the price at which Company Stock may be purchased
under an Option.
2.23 Participant means an Employee, a Advisor or a Non-Employee Director to
whom an Award has been made under the Plan.
2.24 Performance Goals means goals established by the Committee pursuant to
Section 4.5.
2.25 Performance Period means a period of time over which performance is
measured.
2.26 Performance Unit means the unit of measure determined under Article IX
by which is expressed the value of a Performance Unit Award.
2.27 Performance Unit Award means an Award granted under Article IX.
2.28 Personal Representative means the person or persons who, upon the
death, Disability, or incompetency of a Participant, shall have acquired, by
will or by the laws of descent and distribution or by other legal proceedings,
the right to exercise an Option or SAR or the right to any Restricted Stock
Award or Performance Unit Award theretofore granted or made to such Participant.
2.29 Plan means the Peoples Bancorp Inc. 2006 Equity Plan.
2.30 Predecessor Plans means the Peoples Bancorp Inc. 2002 Stock Option
Plan, as amended, the Peoples Bancorp Inc. 1998 Stock Option Plan, the Peoples
Bancorp Inc. 1995 Stock Option Plan and the Amended and Restated Peoples Bancorp
Inc. 1993 Stock Option Plan.
2.31 Restricted Performance Stock means Company Stock subject to Performance
Goals.
2.32 Restricted Stock means Company Stock subject to the terms and
conditions provided in Article VI and including Restricted Performance Stock.
2.33 Restricted Stock Award means an Award granted under Article VI.
2.34 Restriction Period means a period of time determined under Section 6.2
during which Restricted Stock is subject to the terms and conditions provided in
Section 6.3.
2.35 Retirement means any normal or early retirement by a Participant
pursuant to the terms of any pension plan or policy of the Company or any
Subsidiary that is applicable to such Participant at the time of the
Participant's Termination.
2.36 SAR means a stock appreciation right granted under Section 5.7.
2.37 Shareholders mean the shareholders of the Company.
2.38 Subsidiary means a corporation or other entity the majority of the
voting stock of which is owned directly or indirectly by the Company.
2.39 Subsidiary Director means a non-employee member of the board of
directors of a Subsidiary who is not also a Company Director.
2.40 Termination means a "separation from service" as defined under Section
409A of the Code.
ARTICLE III
ADMINISTRATION
3.1 Committee to Administer. The Plan shall be administered by the Committee, in
accordance with its Charter, as adopted from time to time by the Board;
provided, however, that the Board has the authority to grant Awards to Company
Directors.
3.2 Powers of Committee.
(a) The Committee and the Board shall have full power and authority to interpret
and administer the Plan and to establish and amend rules and regulations for its
administration. Any action or decision by the Board or the Committee shall be
final, binding and conclusive with respect to the interpretation of the Plan and
any Award made under it.
(b) Subject to the provisions of the Plan, the Committee or the Board, as the
case may be, shall have authority, in its discretion, to determine those
Employees, Advisors and Non-Employee Directors who shall receive an Award; the
time or times when such Award shall be made; the vesting schedule, if any, for
the Award; and the type of Award to be granted, the number of shares of Company
Stock to be subject to each Option and Restricted Stock Award, the value of each
Performance Unit and all other terms and conditions of any Award.
(c) The Committee or the Board, as the case may be, shall determine and set
forth in an Award Agreement the terms of each Award, including such terms,
restrictions, and provisions as shall be necessary to cause certain Options to
qualify as Incentive Stock Options. The Committee or the Board, as the case may
be, may correct any defect or supply any omission or reconcile any inconsistency
in the Plan or in any Award Agreement, in such manner and to the extent the
Committee or the Board, as appropriate, shall determine in order to carry out
the purposes of the Plan. The Committee or the Board, as the case may be, may,
in its discretion, accelerate (i) the date on which any Option or SAR may be
exercised, (ii) the date of termination of the restrictions applicable to a
Restricted Stock Award, or (iii) the end of a Performance Period under a
Performance Unit Award, if the Committee or the Board, as appropriate,
determines that to do so will be in the best interests of the Company and the
Participants in the Plan.
ARTICLE IV
AWARDS
4.1 Awards. Awards under the Plan shall consist of Incentive Stock Options,
Nonqualified Stock Options, SARs, Restricted Stock, Restricted Performance
Stock, unrestricted Company Stock and Performance Units. All Awards shall be
subject to the terms and conditions of the Plan and to such other terms and
conditions consistent with the Plan as the Committee or the Board, as the case
may be, deems appropriate. Awards under a particular section of the Plan need
not be uniform and Awards under two or more sections may be combined in one
Award Agreement. Any combination of Awards may be granted at one time and on
more than one occasion to the same Employee, Advisor or Non-Employee Director.
Awards of Performance Units and Restricted Performance Stock shall be earned
solely upon attainment of Performance Goals and the Committee shall have no
discretion to increase such Awards.
4.2 Eligibility for Awards. An Award may be made to any Employee or Advisor
selected by the Committee. In making this selection and in determining the form
and amount of the Award, the Committee may give consideration to the functions
and responsibilities of the respective Employee and/or Advisor, his or her
present and potential contributions to the success of the Company or any of its
Subsidiaries, the value of his or her services to the Company or any of its
Subsidiaries, and such other factors deemed relevant by the Committee.
Non-Employee Directors are eligible to receive Awards pursuant to Article VII.
4.3 Shares Available Under the Plan.
(a) The Company Stock to be offered under the Plan pursuant to Options, SARs,
Performance Unit Awards, Restricted Performance Stock and Restricted Stock and
unrestricted Company Stock Awards must be (i) Company Stock previously issued
and outstanding and reacquired by the Company or (ii) authorized but unissued
Company Stock not reserved for any other purpose. Subject to adjustment under
Section 12.2, the number of shares of Company Stock that may be issued pursuant
to Awards under the Plan (the "Section 4.3 Limit") shall not exceed, in the
aggregate, 500,000 shares.
(b) Any shares of Company Stock subject to Restricted Stock or unrestricted
Company Stock Awards shall not exceed 50% of the total shares available under
the Plan and the maximum number of shares of Company Stock that may be issued
subject to Incentive Stock Options is 500,000 subject to adjustment under
Section 12.1. The Section 4.3 Limit shall not have counted against it: (i) the
number of shares of Company Stock subject to an Option or any other Award which
is equal to the number of shares of Company Stock tendered by a Participant to
the Company in payment of the Option Price of such Option or the Exercise Price
of such other Award, as applicable; (ii) shares of Company Stock subject to an
Award which for any reason terminates by expiration, forfeiture, cancellation or
otherwise without having been exercised or paid; (iii) shares of Company Stock
withheld from any Award to satisfy a Participant's tax withholding obligations
or, if applicable, to pay the Option Price of an Option or the Exercise Price of
any other Award; (iv) if a SAR is settled in whole or in part by the issuance of
shares of Company Stock, the number of shares of Company Stock which represents
the difference between (A) the number of shares of Company Stock which remain
subject to such SAR on the date of such settlement and (B) the number of shares
of Company Stock actually issued upon settlement of such SAR; or (v) the number
of shares of Company Stock subject to an Option which is equal to the number of
shares of Common Stock acquired by the Company on the open market using the cash
proceeds received by the Company from the exercise of such Option; provided,
however, that such number of shares of Company Stock shall in no event be
greater than the number which is determined by dividing (A) the amount of cash
proceeds received by the Company from the Participant upon the exercise of such
Option by (B) the Fair Market Value of a share of the Company Stock on the date
of exercise of such Option.
(c) No awards shall be granted under any Predecessor Plan on and after the date
on which the Plan is approved by the Shareholders.
4.4 Limitation on Awards. The maximum aggregate dollar value of, and the
maximum number of shares of Company Stock subject to, Restricted Stock and
Performance Units awarded to any Employee or Advisor with respect to a
Performance Period or Restriction Period may not exceed $500,000 and 500,000
shares of Company Stock for each Fiscal Year included in such Performance Period
or Restriction Period. The maximum number of shares of Common Stock for which
Options or SARs may be granted to any Participant in any one Fiscal Year shall
not exceed 500,000 subject to adjustment under Section 12.1.
4.5 General Performance Goals.
(a) Performance Goals relating to the payment or vesting of an Award that is
intended to qualify as "performance-based compensation" under Section 162(m) of
the Code will be comprised of one or more of the following performance criteria
as the Committee may deem appropriate:
(i) Earnings per share (actual or targeted growth);
(ii) Net income after capital costs;
(iii) Net income (before or after taxes);
(iv) Return measures (including, but not limited to, return on average
assets, risk-adjusted return on capital, or return on average
equity);
(v) Efficiency ratio;
(vi) Full-time equivalency control;
(vii) Stock price (including, but not limited to, growth measures and
total shareholder return);
(viii) Noninterest income compared to net interest income ratio;
(ix) Expense targets;
(x) Operating efficiency;
(xi) EVA(R);
(xii) Credit quality measures;
(xiii) Customer satisfaction measures;
(xiv) Loan growth;
(xv) Deposit growth;
(xvi) Net interest margin;
(xvii) Fee income; and
(xviii) Operating expense.
(b) For any Awards not intended to qualify as "performance-based compensation"
under Section 162(m) of the Code, the Committee may establish Performance Goals
based on the performance criteria listed in Section 4.5(a) or other performance
criteria as it deems appropriate.
(c) Any of the performance criteria listed in Section 4.5(a) may be applied
solely with reference to the Company and/or any Subsidiary or relatively between
the Company and/or any Subsidiary and one or more unrelated entities. In
addition, different performance criteria may be applied to individual
Participants or to groups of Participants and, as specified by the Committee,
may be based on results achieved (i) separately by the Company or any
Subsidiary, (ii) any combination of the Company and the Subsidiaries or (iii)
any combination of business units or divisions of the Company and the
Subsidiaries.
(d) With respect to each Performance Period, the Committee will establish the
Performance Goals in writing no later than the earlier of (i) 90 days after the
beginning of the Performance Period or (ii) expiration of 25 percent of the
Performance Period.
(e) Except as otherwise provided in the Plan or the Award Agreement, as of the
end of each Performance Period, the Committee will certify in writing the extent
to which a Participant has or has not met the Participant's Performance Goal. To
the extent permitted under Section 162(m) of the Code, if applicable, the
Committee may disregard or offset the effect of any special charges or gains or
cumulative effect of a change in accounting in determining the attainment of
Performance Goals.
(f) To the extent permitted under Section 162(m) of the Code, if applicable, the
Committee shall make (i) appropriate adjustments to performance criteria to
reflect the effect on any performance criteria of any stock dividend or stock
split affecting Company Stock, recapitalization, merger, consolidation,
combination, spin-off, distribution of assets to Shareholders, exchange of
shares or similar corporate change and (ii) similar adjustments to any portion
of performance criteria that is not based on Company Stock but which is affected
by an event having an effect similar to those just described.
ARTICLE V
OPTIONS AND STOCK APPRECIATION RIGHTS
5.1 Award of Options. The Committee may, from time to time, and on such
terms and conditions as the Committee may prescribe, award (a) Incentive Stock
Options, subject to Section 5.5, to any eligible Employee of the Company or any
parent or subsidiary corporation (as permitted under Sections 422 and 424 of the
Code) and (b) Nonqualified Stock Options to any Employee or Advisor.
5.2 Period of Option.
(a) An Option granted under the Plan shall be exercisable only in accordance
with the vesting schedule approved by the Committee. The Committee may in its
discretion prescribe additional conditions, restrictions or terms on the vesting
of an Option, including the full or partial attainment of Performance Goals
pursuant to Section 4.5. After the Option vests, the Option may be exercised at
any time during the term of the Option, in whole or in installments, as
specified in the related Award Agreement. Subject to Article X and except as
provided in Section 5.5, the duration of each Option shall not be more than ten
years from the date of grant.
(b) Except as provided in Article X, a Participant may not exercise an Option
unless such Participant is then, and continually (except for sick leave,
military service, or other approved leave of absence) after the grant of the
Option has been, an Employee, Advisor, or Non-Employee Director.
5.3 Award Agreement.
Each Option shall be evidenced by an Award Agreement. The Award Agreement shall
specify whether the Option is intended to be an Incentive Stock Option or a
Nonqualified Stock Option.
5.4 Option Price, Exercise and Payment.
(a) Except as provided in Section 5.5, the Option Price of Company Stock under
each Option shall be determined by the Committee but shall be a price not less
than 100 percent of the Fair Market Value of Company Stock at the date such
Option is granted.
(b) Subject to Section 12.2, the Committee may not (i) amend an Option to reduce
its Option Price, (ii) cancel an Option and regrant an Option with a lower
Option Price than the original Option Price of the cancelled Option, or (iii)
take any other action (whether in the form of an amendment, cancellation or
replacement grant) that has the effect of "repricing" an Option, as defined
under applicable NASDAQ rules or the rules of the established stock exchange or
quotation system on which the Company Stock is then listed or traded.
(c) Vested Options may be exercised from time to time by giving written notice
to the Chief Financial Officer of the Company or the Secretary of the Committee,
or his or her designee, specifying the number of shares to be purchased. The
notice of exercise shall be accompanied by payment in full of the Option Price
in cash or the Option Price may be paid in whole or in part through the transfer
to the Company of shares of Company Stock in accordance with procedures
established by the Committee from time to time. In addition, in accordance with
the rules and procedures established by the Committee for this purpose, an
Option may also be exercised through a cashless exercise procedure involving a
broker or dealer, that affords Participants the opportunity to sell immediately
some or all of the shares underlying the exercised portion of the Option in
order to generate sufficient cash to pay the Option Price and/or to satisfy
withholding tax obligations related to the Option.
(d) In the event such Option Price is paid, in whole or in part, with shares of
Company Stock, the portion of the Option Price so paid shall be equal to the
value, as of the date of exercise of the Option, of such shares. The value of
such shares shall be equal to the number of such shares multiplied by the Fair
Market Value of such shares on the trading day coincident with the date of
exercise of such Option (or the immediately preceding trading day if the date of
exercise is not a trading day). The Company shall not issue or transfer Company
Stock upon exercise of an Option until the Option Price is fully paid.
5.5 Limitations on Incentive Stock Options.
Each provision of the Plan and each Award Agreement relating to an Incentive
Stock Option shall be construed so that each Incentive Stock Option shall be an
incentive stock option as defined in Section 422 of the Code, and any provisions
of the Award Agreement thereof that cannot be so construed shall be disregarded.
No Incentive Stock Option may be granted to any Employee who, at the time of
such grant, owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or of its parent or
subsidiary corporation (as determined under Sections 422 and 424 of the Code),
unless (a) the Option Price for such Incentive Stock Option is at least 110
percent of the Fair Market Value of a share of Company Stock on the date the
Incentive Stock Option is granted and (b) such Incentive Stock Option may not be
exercised more than five years after it is granted. Notwithstanding anything in
the Plan to the contrary, to the extent required by the Code, the exercise of
Incentive Stock Options granted under the Plan shall be subject to the $100,000
calendar year limit as set forth in Section 422 of the Code; provided that, to
the extent any grant exceeds such $100,000 calendar year limit, the portion of
such granted Option shall be deemed a Nonqualified Stock Option in accordance
with Section 422 of the Code.
5.6 Rights and Privileges.
A Participant shall have no rights as a Shareholder with respect to any shares
of Company Stock covered by an Option until the issuance of such shares to the
Participant.
5.7 Award of SARs.
(a) The Committee may, from time to time, and on such terms and conditions as
the Committee may prescribe, award SARs to any Employee and/or Advisor.
(b) A SAR shall represent the right to receive payment of an amount equal to (i)
the amount by which the Fair Market Value of one share of Company Stock on the
trading day immediately preceding the date of exercise of the SAR exceeds the
Exercise Price multiplied by (ii) the number of shares covered by the SAR.
Payment of the amount to which a Participant is entitled upon the exercise of a
SAR shall be made in cash, Company Stock, or partly in cash and partly in
Company Stock at the discretion of the Committee. The shares shall be valued at
their Fair Market Value on the date of exercise.
(c) SARs awarded under the Plan shall be evidenced by an Award Agreement between
the Company and the Participant.
(d) The Committee may prescribe conditions and limitations on the
exercise of any SAR. SARs may be exercised only when the Fair Market Value of a
share of Company Stock exceeds the Exercise Price.
(e) A SAR shall be exercisable only by written notice to the Chief Financial
Officer of the Company or the Secretary of the Committee, or his or her
designee.
(f) To the extent not previously exercised, all SARs shall automatically be
exercised on the last trading day prior to their expiration, so long as the Fair
Market Value of a share of Company Stock exceeds the Exercise Price, unless
prior to such day the holder instructs the Chief Financial Officer or Secretary,
Stock Option Committee otherwise in writing.
(g) Subject to Article X, each SAR shall expire on a date determined by the
Committee at the time of grant.
ARTICLE VI
RESTRICTED STOCK
6.1 Award of Restricted Stock. The Committee may make a Restricted Stock
Award to any Employee and/or Advisor, subject to this Article VI and to such
other terms and conditions as the Committee may prescribe.
6.2 Restriction Period. At the time of making a Restricted Stock Award, the
Committee shall establish the Restriction Period applicable to such Award. The
Committee may establish different Restriction Periods from time to time and each
Restricted Stock Award may have a different Restriction Period, in the
discretion of the Committee. Restriction Periods, when established for a
Restricted Stock Award, shall not be changed except as permitted by Section 6.3.
6.3 Other Terms and Conditions. Company Stock, when awarded pursuant to a
Restricted Stock Award, will be represented in a book entry account in the name
of the Participant who receives the Restricted Stock Award. The Participant
shall be entitled to receive dividends during the Restriction Period and shall
have the right to vote such Restricted Stock and shall have all other
Shareholder rights, with the exception that (i) unless otherwise provided by the
Committee, if any dividends are paid in shares of Company Stock, those shares
will be subject to the same restrictions as the shares of Restricted Stock with
respect to which they were issued, (ii) the Participant will not be entitled to
delivery of any stock certificate evidencing the Company Stock underlying the
Restricted Stock Award during the Restriction Period, (iii) the Company will
retain custody of the Restricted Stock during the Restriction Period, and (iv) a
breach of a restriction or a breach of the terms and conditions established by
the Committee pursuant to the Restricted Stock Award will cause a forfeiture of
the Restricted Stock Award. The Committee may, in addition, prescribe additional
restrictions, terms, or conditions upon or to the Restricted Stock Award
including the attainment of Performance Goals in accordance with Section 4.5.
6.4 Restricted Stock Award Agreement. Each Restricted Stock Award shall be
evidenced by an Award Agreement.
6.5 Payment for Restricted Stock. Restricted Stock Awards may be made by
the Committee under which the Participant shall not be required to make any
payment for the Company Stock or, in the alternative, under which the
Participant, as a condition to the Restricted Stock Award, shall pay all (or any
lesser amount than all) of the Fair Market Value of the Company Stock,
determined as of the date the Restricted Stock Award is made. If the latter,
such purchase price shall be paid in cash as provided in the Award Agreement.
ARTICLE VII
AWARDS FOR NON-EMPLOYEE DIRECTORS
7.1 Awards to Non-Employee Directors. The Board shall determine all Awards
to Company Directors and the Committee shall determine all Awards to Subsidiary
Directors. The Board or the Committee, as the case may be, retains the
discretionary authority to make Awards to Non-Employee Directors and any type of
Award (other than Incentive Stock Options) may be granted to Non-Employee
Directors under this Plan. All such Awards shall be subject to the terms and
conditions of the Plan and to such other terms and conditions consistent with
the Plan as the Board or the Committee, as the case may be, deems appropriate.
7.2 No Right to Continuance as a Director. None of the actions of the
Company in establishing the Plan, the actions taken by the Company, the Board,
or the Committee under the Plan, or the granting of any Award under the Plan
shall be deemed (i) to create any obligation on the part of the Board or the
board of directors of the applicable Subsidiary to nominate any Non-Employee
Director for reelection or (ii) to be evidence of any agreement or
understanding, express or implied, that the Non-Employee Director has a right to
continue as a Non-Employee Director for any period of time or at any particular
rate of compensation.
ARTICLE VIII
UNRESTRICTED COMPANY STOCK AWARDS FOR EMPLOYEES AND/OR ADVISORS
8.1 The Committee may make awards of unrestricted Company Stock to
Employees and/or Advisors on such terms and conditions as the Committee may
prescribe.
ARTICLE IX
AWARD OF PERFORMANCE UNITS
9.1 Award of Performance Units. The Committee may award Performance Units
to any Employee and/or Advisor. Each Performance Unit shall represent the right
of a Participant to receive an amount equal to the value of the Performance
Unit, determined in the manner established by the Committee at the time of
Award.
9.2 Performance Period. At the time of each Performance Unit Award, the
Committee shall establish, with respect to each such Award, a Performance Period
during which performance shall be measured. There may be more than one
Performance Unit Award in existence at any one time, and Performance Periods may
differ.
9.3 Performance Measures. Performance Units shall be awarded to a
Participant and earned contingent upon the attainment of Performance Goals in
accordance with Section 4.5.
9.4 Performance Unit Value. Each Performance Unit shall have a maximum
dollar value established by the Committee at the time of the Award. Performance
Units earned will be determined by the Committee in respect of a Performance
Period in relation to the degree of attainment of Performance Goals. The measure
of a Performance Unit may, in the discretion of the Committee, be equal to the
Fair Market Value of one share of Company Stock.
9.5 Award Criteria. In determining the number of Performance Units to be
granted to any Participant, the Committee shall take into account the
Participant's responsibility level, performance, potential, cash compensation
level, other incentive awards, and such other considerations as it deems
appropriate.
9.6 Payment.
(a) Following the end of the applicable Performance Period, a Participant
holding Performance Units will be entitled to receive payment of an amount, not
exceeding the maximum value of the Performance Units, based on the achievement
of the Performance Goals for such Performance Period, as determined by the
Committee.
(b) Awards may be paid in cash or stock, or any combination thereof, as
determined by the Committee. Payment shall be made in a lump sum or in
installments and shall be subject to such other terms and conditions as shall be
determined by the Committee.
9.7 Performance Unit Award Agreements. Each Performance Unit Award shall
be evidenced by an Award Agreement.
ARTICLE X
GENERAL TERMINATION PROVISIONS
10.1 Termination. Subject to Article XI and unless otherwise specified in
the applicable Award Agreement, the following provisions will govern the
treatment of a Participant's outstanding Awards following a Participant's
Termination.
(a) If the Participant's Termination is due to death, Disability or Retirement,
all of the Participant's outstanding Options, SARs or Restricted Stock Awards
shall become fully vested and, if applicable, exercisable. Upon the
Participant's Termination for any other reason, any Awards that are not vested
and/or exercisable on the date of such Termination will immediately terminate
and be of no further force and effect.
(b) If the Participant Terminates for any reason other than (i) death, (ii)
Disability, (iii) Retirement or (iv) discharge for Cause, such Participant's
outstanding SARs or Options may be exercised at any time within three months
after such Termination, to the extent of the number of shares covered by such
Options or SARs which are exercisable at the date of such Termination; except
that an Option or SAR shall not be exercisable on any date beyond the expiration
date of such Option or SAR.
(c) Upon a Termination for Cause, any Options or SARs held by the Participant
(whether or not then exercisable) shall expire and any rights thereunder shall
terminate immediately. Any non-vested Restricted Stock Awards of such
Participant shall immediately be forfeited and any rights thereunder shall
terminate.
(d) Upon a Termination due to the Participant's death, any SARs or Options that
are then exercisable may be exercised by the Participant's Personal
Representative at any time before the earlier of (i) one year after the
Participant's death or (ii) the expiration date of the Award.
(e) Upon a Termination due to the Participant's Disability or Retirement, any
SARs or Options that are then exercisable may be exercised by the Participant at
any time before the earlier of (i) one year after the date of such Termination
or (ii) the expiration date of the Award; provided, however, that an Option
which is intended to qualify as an Incentive Stock Option will only be treated
as such to the extent it complies with the requirements of Section 422 of the
Code.
(f) If a Participant who Terminates due to Retirement dies prior to exercising
all of his or her outstanding Options or SARs, then such Options or SARs may be
exercised by the Participant's Personal Representative at any time before the
earlier of (i) one year after the Participant's death or (ii) the expiration
date of the Award; provided, however, that, an Option which is intended to
qualify as an Incentive Stock Option will only be treated as such to the extent
it complies with the requirements of Section 422 of the Code.
(g) Subject to Article XI, a Performance Unit Award shall terminate for all
purposes if the Participant Terminates at any time during the applicable
Performance Period, except as may otherwise be determined by the Committee. In
the event that a Participant holding a Performance Unit Terminates following the
end of the applicable Performance Period but prior to full payment according to
the terms of the Performance Unit Award, the Performance Unit Award shall
terminate except when the termination event is due to death, Disability or
Retirement.
ARTICLE XI
CHANGE IN CONTROL OF THE COMPANY
11.1 Contrary Provisions. Notwithstanding anything contained in the Plan to
the contrary, the provisions of this Article XI shall govern and supersede any
inconsistent terms or provisions of the Plan.
11.2 Definitions
(a) Change in Control. For purposes of this Plan, Change in Control shall mean a
change in the ownership or effective control of the Company or in the ownership
of a substantial portion of the assets of the Company within the meaning of
Section 409A of the Code.
11.3 Effect of Change in Control on Certain Awards.
(a) If the Company is not the surviving corporation following a Change in
Control, and the surviving corporation following such Change in Control or the
acquiring corporation (such surviving corporation or acquiring corporation is
hereinafter referred to as the "Acquiror") does not assume the outstanding
Options, SARs, Restricted Stock, Restricted Performance Stock or Performance
Units or does not substitute equivalent equity awards relating to the securities
of such Acquiror or its affiliates for such Awards, then all such Awards shall
become immediately and fully exercisable (or in the case of Restricted Stock,
fully vested and all restrictions will immediately lapse). In the case of
Restricted Performance Stock and Performance Units, the target payout
opportunities under all outstanding Awards of Restricted Performance Stock and
Performance Units shall be deemed to have been fully earned based on targeted
performance being attained as of the effective date of the Change in Control. In
addition, the Board or its designee may, in its sole discretion, provide for a
cash payment to be made to each Participant for the outstanding Options,
Restricted Stock, Restricted Performance Stock, SARs or Performance Units upon
the consummation of the Change in Control, determined on the basis of the fair
market value that would be received in such Change in Control by the holders of
the Company's securities relating to such Awards. Notwithstanding the foregoing,
any Option intended to be an Incentive Stock Option under Section 422 of the
Code shall be adjusted in a manner to preserve such status.
(b) If the Company is the surviving corporation following a Change in Control,
or the Acquiror assumes the outstanding Options, SARs, Restricted Stock,
Restricted Performance Stock or Performance Units or substitutes equivalent
equity awards relating to the securities of such Acquiror or its affiliates for
such Awards, then all such Awards or such substitutes therefor shall remain
outstanding and be governed by their respective terms and the provisions of the
Plan.
(c) If (i) a Participant Terminates without Cause within twenty-four (24)
months following a Change in Control, and (ii) the Company is the surviving
corporation following such Change in Control, or the Acquiror assumes the
outstanding Options, SARs, Restricted Stock, Restricted Performance Stock or
Performance Units or substitutes equivalent equity awards relating to the
securities of such Acquiror or its affiliates for such Awards, then all
outstanding Options, SARs, Restricted Stock, Restricted Performance Stock or
Performance Units shall become immediately and fully exercisable (or in the case
of Restricted Stock, fully vested and all restrictions will immediately lapse).
In the case of Restricted Performance Stock and Performance Units, the target
payout opportunities under all outstanding Awards of Restricted Performance
Stock and Performance Units shall be deemed to have been fully earned based on
targeted performance being attained.
(d) If (i) the employment of a Participant with the Company and its Subsidiaries
is terminated for Cause within twenty-four (24) months following a Change in
Control and (ii) the Company is the surviving corporation following such Change
in Control, or the Acquiror assumes the outstanding Options, SARs, Restricted
Stock, Restricted Performance Stock, or Performance Units or substitutes
equivalent equity awards relating to the securities of such Acquiror or its
affiliates for such Awards, then any Options or SARs of such Participant shall
expire, and any non-vested Restricted Stock, Restricted Performance Stock or
Performance Units shall be forfeited, and any rights under such Awards shall
terminate immediately.
(e) Outstanding Options or SARs which vest in accordance with Section 11.3, may
be exercised by the Participant in accordance with Article X; provided, however,
that a Participant whose Options or SARs become exercisable in accordance with
Section 11.3(c) may exercise such Options or SARs at any time within one year
after such Termination, except that an Option or SAR shall not be exercisable on
any date beyond the expiration date of such Option or SAR.
In the event of a Participant's death after such Termination, the exercise of
Options and SARs shall be treated in the same manner as determined for
retirement in Section 10.1(e).
11.4 Amendment or Termination. This Article XI shall not be amended or
terminated at any time if any such amendment or termination would adversely
affect the rights of any Participant under the Plan.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Adjustments Upon Changes in Stock. In case of any reorganization,
recapitalization, reclassification, stock split, stock dividend, distribution,
combination of shares, merger, consolidation, rights offering, or any other
changes in the corporate structure or shares of the Company, appropriate
adjustments may be made by the Committee or the Board, as the case may be, (or
if the Company is not the surviving corporation in any such transaction, the
board of directors of the surviving corporation) in the aggregate number and
kind of shares subject to the Plan, and the number and kind of shares and the
Option Price per share subject to outstanding Options or which may be issued
under outstanding Restricted Stock Awards or pursuant to unrestricted Company
Stock Awards. Appropriate adjustments may also be made by the Committee or the
Board, as the case may be, in the terms of any Awards under the Plan, subject to
Article XI, to reflect such changes and to modify any other terms of outstanding
Awards on an equitable basis. Any such adjustments made by the Committee or the
Board pursuant to this Section 12.1 shall be conclusive and binding for all
purposes under the Plan.
12.2 Amendment, Suspension, and Termination of Plan.
(a) The Board may suspend or terminate the Plan or any portion thereof at any
time, and may amend the Plan from time to time in such respects as the Board may
deem advisable in order that any Awards thereunder shall conform to any change
in applicable laws or regulations or in any other respect the Board may deem to
be in the best interests of the Company; provided, however, that no such
amendment shall, without approval, (i) except as provided in Section 12.1,
increase the number of shares of Company Stock which may be issued under the
Plan, (ii) expand the types of awards available to Participants under the Plan,
(iii) materially expand the class of employees and/or Advisor eligible to
participate in the Plan, (iv) materially change the method of determining the
Option Price of Options; (v) delete or limit the provision in Section 5.4
prohibiting the repricing of Options; (vi) extend the termination date of the
Plan or (vii) be made to the extent that Shareholder approval is required to
satisfy applicable law, regulation or any securities stock exchange, market or
other quotation system on or through which the Company Stock is listed or
traded. No such amendment, suspension, or termination shall materially adversely
alter or impair any outstanding Options, SARs, shares of Restricted Stock, or
Performance Units without the consent of the Participant affected thereby.
(b) The Committee may amend or modify any outstanding Options, SARs, Restricted
Stock Awards, or Performance Unit Awards in any manner to the extent that the
Committee would have had the authority under the Plan initially to award such
Options, SARs, Restricted Stock Awards, or Performance Unit Awards as so
modified or amended, including without limitation, to change the date or dates
as of which such Options or SARs may be exercised, to remove the restrictions on
shares of Restricted Stock, or to modify the manner in which Performance Units
are determined and paid.
(c) Notwithstanding the foregoing, the Plan and any Award Agreements may be
amended without any additional consideration to affected Participants to the
extent necessary to comply with, or avoid penalties under, Section 409A of the
Code, even if those amendments reduce, restrict or eliminate rights granted
prior to such amendments.
12.3 Nonuniform Determinations. The Committee's (or, if applicable, the
Board's) determinations under the Plan, including without limitation, (a) the
determination of the Employees, Advisor and Non-Employee Directors to receive
Awards, (b) the form, amount, and timing of any Awards, (c) the terms and
provisions of any Awards and (d) the Award Agreements evidencing the same, need
not be uniform and may be made by it selectively among Employees, Advisor and/or
Non-Employee Directors who receive, or who are eligible to receive, Awards under
the Plan, whether or not such Employees, Advisors and/or Non-Employee Directors
are similarly situated.
12.4 General Restriction. Each Award under the Plan shall be subject to the
condition that, if at any time the Committee shall determine that (a) the
listing, registration, or qualification of the shares of Company Stock subject
or related thereto upon NASDAQ or any other established stock exchange, market
or quotation system or under any state or federal law, (b) the consent or
approval of any government or regulatory body, or (c) an agreement by the
Participant with respect thereto, is necessary or desirable, then such Award
shall not become exercisable in whole or in part unless such listing,
registration, qualification, consent, approval, or agreement shall have been
effected or obtained free of any conditions not acceptable to the Committee.
12.5 No Right To Employment. None of the actions of the Company in
establishing the Plan, the actions taken by the Company, the Board or the
Committee under the Plan, or the granting of any Award under the Plan shall be
deemed (a) to create any obligation on the part of the Company or any Subsidiary
to retain any person in the employ of, or continue the provision of services to,
the Company or any Subsidiary, or (b) to be evidence of any agreement or
understanding, express or implied, that the person has a right to continue as an
employee, or advisor for any period of time or at any particular rate of
compensation.
12.6 Governing Law. The provisions of the Plan shall take precedence over
any conflicting provision contained in an Award Agreement. All matters relating
to the Plan or to Awards granted hereunder shall be governed by and construed in
accordance with the laws of the State of Ohio without regard to the principles
of conflict of laws.
12.7 Trust Arrangement. All benefits under the Plan represent an unsecured
promise to pay by the Company. The Plan shall be unfunded and the benefits
hereunder shall be paid only from the general assets of the Company resulting in
the Participants having no greater rights than the Company's general creditors;
provided, however, nothing herein shall prevent or prohibit the Company from
establishing a trust or other arrangement for the purpose of providing for the
payment of the benefits payable under the Plan.
12.8 Indemnification of Board and Committee. Indemnification of the members
of the Board and/or the members of the Committee shall be in accordance with the
Code of Regulations of the Company as amended by the Shareholders from time to
time.
12.9 No Impact on Benefits. Awards are not compensation for purposes of
calculating a Participant's rights under any employee benefit plan that does not
specifically require the inclusion of Awards in calculating benefits.
12.10 Beneficiary Designation. Each Participant may name a beneficiary or
beneficiaries to receive or exercise any vested Award that is unpaid or
unexercised at the Participant's death. Unless otherwise provided in the
beneficiary designation, each designation will revoke all prior designations
made by the same Participant, must be made on a form prescribed by the Committee
and will be effective only when filed in writing with the Committee. If a
Participant has not made an effective beneficiary designation, the deceased
Participant's beneficiary will be the Participant's surviving spouse or, if
none, the deceased Participant's estate. The identity of a Participant's
designated beneficiary will be based only on the information included in the
latest beneficiary designation form completed by the Participant and will not be
inferred from any other evidence.
12.11 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, the
minimum statutory amount to satisfy federal, state and local taxes required by
law or regulation to be withheld with respect to any taxable event arising as a
result of the Plan. With respect to withholding required upon any taxable event
arising as a result of an Award granted hereunder, a Participant may elect,
subject to the approval of the Committee, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold shares of
Company Stock having a Fair Market Value on the date the tax is to be determined
equal to the minimum statutory total tax that could be imposed on the
transaction. All such elections shall be irrevocable, made in writing and signed
by the Participant, and shall be subject to any restrictions or limitations that
the Committee, in its sole discretion, deems appropriate.
PEOPLES BANCORP INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 8, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSThursday, April 13, 2006
10:00 a.m. Eastern Daylight Savings Time
Holiday Inn
701 Pike Street
Marietta, Ohio 45750
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Peoples Bancorp Inc.
[PEOPLES BANCORP LOGO] 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 13, 2006.
The undersigned holder(s) of common shares of Peoples Bancorp Inc. ("Peoples") hereby constitutesas to which you have
voting authority, including those held on your behalf in a trust account, under
Peoples' Dividend Reinvestment Plan or under Peoples' Retirement Savings Plan,
will be voted as you specify on the reverse side.
If no choice is specified, the common shares of Peoples represented by this
proxy card will be voted "FOR" the election of the directors listed in Item 1,
and, appoints Robert E. Evansif permitted by applicable law, "FOR" the proposals in Items 2 and 3.
By signing this proxy card, you revoke all prior proxies and appoint Mark F.
Bradley and Joseph H. Wesel, and each of them the proxy or proxies of the undersigned, with full power of substitution,
in each, to attend the Annual Meeting of Shareholders of Peoples
(the "Annual Meeting") to be held on Thursday, April 8, 2004 in the Ball Room,
Holiday Inn, 701 Pike Street, Marietta, Ohio (Interstate 77, Ohio exit 1) at
10:30 A.M., local time in Marietta, Ohio, and any adjournment thereof, andas your proxies to vote all of theyour common shares of Peoples whichon the undersigned is entitled to
vote at such Annual Meeting or at any adjournment thereof, as follows:
1. To electmatters shown on
the following directors for terms of three years each*
Nominee Term Expires In
Robert E. Evans (for re-election) 2007
Robert W. Price (for re-election) 2007
Paul T. Theisen (for re-election) 2007
[ ] FOR [ ] AGAINST [ ] FOR ALL EXCEPT
*(INSTRUCTION: To withhold authority to vote for any individual
nominee, mark "FOR ALL EXCEPT"reverse side and write the name of that nominee in
the space provided below.)
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2. To adopt amendments to Article THREE of Peoples' Code of Regulations
to designate additional officers to be elected by the directors and
clarify and separate the roles of the officers.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, to the individuals designated to vote this proxy are
authorized to vote uponextent permitted by applicable
law, on any other mattermatters (none known at the time of solicitation of this proxy)
which may properly comescome before the Annual Meeting orand all adjournments.
See reverse for voting instructions.
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The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
1. Election of directors:
01 Carl L. Baker, Jr. 03 Wilford D. Dimit
02 George W. Broughton 04 Richard Ferguson
[ ] Vote FOR all nomiess [ ] Vote WITHHELD
(except as marked) from all nominees
(Instructions: To withhold authority to vote for any adjournment thereof.
WHERE A CHOICE IS INDICATED,--------------------
indicated nominee(s), write the number(s) of the | |
nominee(s) in the box provided to the right.) | |
--------------------
2. To approve the Peoples Bancorp Inc. 2006 Equity Plan.
[ ] For [ ] Against [ ] Abstain
3. To adopt amendments to Sections 2.06, 2.07, 3.01 and 3.04
of Peoples' Code of Regulations which would clarify when
a Leadership Director is to be elected by Peoples'
directors as well as the role of the Leadership Director
in providing a bridge between the independent directors
and management.
[ ] For [ ] Against [ ] Abstain
THE COMMON SHARES REPRESENTED BY THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL
BE VOTED OR NOT VOTED AS SPECIFIED.DIRECTED OR, IF NO CHOICEDIRECTION IS INDICATED, THE COMMON SHARES REPRESENTED BY THIS PROXYGIVEN, WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES LISTED IN ITEM NO. 1 AS DIRECTORS OF PEOPLES AND FOREACH
PROPOSAL, NO. 2. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE ANNUAL
MEETING OR ANY ADJOURNMENT THEREOF OR IF A NOMINEE FOR ELECTION AS A DIRECTOR
NAMED IN THE PROXY STATEMENT IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT
SERVE, THE COMMON SHARES REPRESENTED BY THIS PROXY 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.
All proxies previously given or executed by the undersigned are hereby
revoked. The undersigned acknowledges receipt of the accompanying Notice of
Annual Meeting of Shareholders and a copy of the Proxy Statement for the April
8, 2004 meeting and the Summary Annual Report and Form 10-K of Peoples for the
fiscal year ended December 31, 2003.
Dated: _______________________________________, 2004
-------------------------------------------------
Shareholder
-------------------------------------------------
ShareholderLAW.
Address Change? Mark Box [ ] Indicate changes below:
Date
------------------------------------------
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| |
| |
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Signature(s) in Box
Please sign exactly as your namename(s) appears hereon. When common shares are
registered in two names, both shareholders MUST sign. When signing as executor,
administrator, trustee, guardian, attorney or agent, please give full title as
such. If shareholder is a corporation, please sign in full corporate name by
President or other authorized officer. If shareholder is a partnership or other
entity, please sign that entity's name by authorized person. (Please note any
change of address on this proxy.)
PLEASE FILL IN, DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE
APPENDIX A
Audit Committee Charter to be presented and adopted by the full
Board of Directors on February 12, 2004
CHARTER OF THE AUDIT COMMITTEE
OF THE
BOARD OF DIRECTORS
OF
PEOPLES BANCORP INC.
Purpose:
Acting pursuant to Section 2.10 of the Code of Regulations of Peoples Bancorp
Inc. (the "Company"), the Board of Directors (the "Board") has established an
Audit Committee (the "Committee") whose purpose is to provide assistance to the
Board in fulfilling their oversight responsibility to the shareholders, and
potential shareholders of the Company, the investment community and others
relating to the integrity of the accounting of the Company's financial
statements and accounting and financial reporting processes; the systems of
internal accounting and financial controls; the audits of the financial
statements of the Company; the performance of the Company's internal audit
function and independent auditors; the independent auditors' qualifications and
independence; and the Company's compliance with ethics policies and legal and
regulatory requirements. In so doing, it is the responsibility of the Committee
to maintain free and open communication between the Committee, the independent
auditors, Auditor of the Company (the "Auditor"), General Counsel of the Company
(the "General Counsel"), and management of the Company.
Authority:
In discharging its oversight role, the Committee is empowered and authorized to
investigate any matter brought to its attention or otherwise within the scope of
its duties and responsibilities, with full access to all books, records,
facilities, and personnel of the Company and its subsidiaries; to engage
independent counsel and other advisers as the Committee determines necessary to
carry out its duties and responsibilities; and to demand and receive funding by
the Company for the payment of compensation to the independent auditors engaged
by the Committee for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Company or any of its
subsidiaries; compensation to any advisors employed by the Committee; and
ordinary administrative expenses of the Committee that are necessary or
appropriate in carrying out the Committee's duties and responsibilities.
Membership:
The Committee shall consist of a minimum of three members of the Board of
Directors, each of whom shall be recommended by the Governance and Nominating
Committee and appointed by and serve at the pleasure of the Board. Each member
of the Committee shall be free of any relationship, which, in the opinion of the
Board, may interfere with the exercise of his or her independent judgment in
carrying out the responsibilities of a director of the Company. All Committee
members must:
o satisfy the independence requirements prescribed by the applicable
rules of The Nasdaq Stock Market, Inc. ("Nasdaq");
o meet the independence criteria set forth in Rule 10A-3(b)(1) under the
Securities and Exchange Act of 1934 (the "Exchange Act") in that,
other than in his or her capacity as a member of the Committee, the
Board of Directors, or any other Board Committee, of the Company or of
its subsidiaries, he or she may not accept directly or indirectly any
consulting, advisory, or other compensatory fee from the Company or
its subsidiaries or be an affiliated person of the Company or its
subsidiaries;
o be able to read and understand fundamental financial statements,
including the Company's balance sheet, income statement, and cash flow
statement; and
o not have participated in the preparation of the financial statements
of the Company or any current subsidiary of the Company at any time
during the past three years.
In addition, at least one member of the Committee shall have past employment
experience in finance or accounting, requisite professional certification in
accounting, or any other comparable experience or background, including being or
having been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities, which results in the
individual's financial sophistication.
Duties and Responsibilities:
----------------------------
The primary responsibility of the Committee is to oversee the Company's
accounting and financial reporting processes on behalf of the Board and report
the results of their activities to the Board. While the Committee has the
oversight responsibilities and authority set forth in this Charter, it is not
the duty of the Committee to prepare the Company's financial statements, to plan
or conduct audits or to determine that the Company's financial statements are
complete and accurate and are in accordance with generally accepted accounting
principles. Management is responsible for the preparation, presentation, and
integrity of the Company's financial statements and for the appropriateness of
the accounting principles and reporting policies that are used by the Company
and for the establishment and maintenance of systems of disclosure controls and
procedures and internal control over financial reporting. The independent
auditors are responsible for auditing the Company's financial statements and
issuing an attestation report on management's assessment of the Company's
internal control over financial reporting, for reviewing the Company's unaudited
interim financial statements.
The Committee, in carrying out its responsibilities, believes its policies and
procedures should remain flexible, in order to best react to changing conditions
and circumstances. The Committee should take appropriate actions to set the
overall corporate "tone" for quality financial reporting, sound business risk
practices, and ethical behavior. The following shall be the principal duties and
responsibilities of the audit Committee. These are set forth as a guide with the
understanding that the Committee may supplement them as appropriate.
The Committee shall be directly responsible for the appointment and termination,
compensation, and oversight of the work of the independent auditors, including
resolution of disagreements between management and the auditor regarding
financial reporting. The Committee, pursuant to the Audit and Non-Audit Services
Pre-approval Policy, as adopted from time to time by the Board and the
Committee, shall pre-approve all audit and non-audit services provided by the
independent auditors and shall not engage the independent auditors to perform
the specific non-audit services proscribed by law, rule or regulation,
including, without limitation, the rules and regulations implemented by the
Securities and Exchange Commission (the "SEC") or the Public Company Accounting
Oversight Board.. The Committee may delegate pre-approval authority to a member
of the Committee. The decisions of any Committee member to whom pre-approval
authority is delegated must be presented to the full Committee at its next
scheduled meeting.
The Company must disclose the following in each annual proxy statement and
Annual Report on Form 10-K:
o the Committee's Audit and Non-Audit Services Pre-approval Policy;
o the percentage of total fees paid to the independent auditors where
the de minimus exception in section 2-01(C)(7)(i)(C) of SEC Regulation
S-X to the pre-approval requirements was used; and
o the amounts of "audit fees", "audit-related fees," "tax fees" and "all
other fees" paid by the Company to the independent auditors for each
of the two most recently completed fiscal years.
At least annually, the Committee shall obtain and review separate reports by the
independent auditors and Auditor describing:
o The independent auditors' or Auditor's internal quality control
procedures.
o Any material issues raised by the most recent internal quality control
review, including computerized information systems controls and
security, by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting
one or more independent audits carried out by the independent auditors
or Auditor, and any steps taken to deal with any such issues.
o Any difficulties the independent auditors or Auditor encountered in
the course of their audits, including any restrictions on
the scopeproxy card. If held in joint tenancy, all
persons should sign. Trustees, administrators,
executors, guardians, attorneys, agents etc.,
should include title and authority. Corporations
should provide full name of their work or access to required information.
The Committee shall be responsible for ensuring thatcorporation and
title of authorized officer signing the independent auditors
submit on a periodic basis to the Committee a formal written statement
delineating all relationships between the independent auditors and the Company,
consistent with Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, as modified or supplemented. The Committee
shall also be responsible for actively engaging in a dialogue with the
independent auditors with respect to any disclosed relationships or services
that may impact the objectivity and independence of the independent auditors and
for taking, or recommending that the full Board take, appropriate action to
oversee the independence of the independent auditors.
The Committee shall assure the regular rotation of the lead audit partner and
independent review partner of the independent auditors as required by applicable
laws, rules and regulations. In addition, the committee shall set clear hiring
policies for employees or former employees of the independent auditors that
comply with applicable laws, rules and regulations, including the rules and
regulations of the SEC and Nasdaq.
The Committee shall discuss with the Auditor and the independent auditors
annually, before each audit begins, the overall scope and plans for their
respective audits, including the adequacy of staffing and compensation. Also,
the Committee shall address the coordination of the audit efforts to assure best
completeness of coverage, reduction of redundant efforts, and the effective use
of audit resources.
The Committee shall discuss with management, the Auditor, and the independent
auditors the adequacy and effectiveness of the Company's systems of disclosure
controls and procedures and internal control over financial reporting and
related accounting and financial controls, including the Company's policies and
procedures to assess, monitor, and manage business risk, and legal and ethical
compliance programs as well as assess the steps taken by management or proposed
by management, to minimize such risks. Further the Committee shall consider any
significant findings and recommendations including any management letter or
schedule of unadjusted differences from the Auditor or independent auditors.
The Committee shall receive regular reports from the independent auditors on the
critical accounting policies and practices of the Company, and all alternative
treatments of financial information within generally accepted accounting
principles that have been discussed with management.
The Committee shall review and concur in the appointment, replacement,
reassignment or dismissal of the Auditor, the scope of the internal audit, the
internal audit budget and staffing, internal audit charter and the Auditor's
compliance with the Institute of Auditor Standards for Professional Practice of
Internal Auditing.
The Committee shall review management's assessment of the effectiveness of
internal controls as of the end of the most recent fiscal year and the
independent auditors' attestation report on management's assessment.
Additionally, the Committee shall review with the Chief Executive Officer and
the Chief Financial Officer of the Company the quality of earnings of the
Company.
The Committee shall receive General Counsel's reports of (i) evidence of a
material violation of an applicable United States federal or state securities
law, material breaches of fiduciary duty arising under United States federal or
state law, or a similar material violation of any United States federal or state
law; and (ii) and asserted and unasserted claims and liabilities.
The Committee shall review and reassess this Charter at least annually and
obtain the approval of the Board regarding any recommended changes.
The Committee shall review and evaluate the performance of the independent
auditors and review with the full Board any proposed discharge of the
independent auditors.
The Committee shall perform an evaluation of its performance at least annually
to determine whether the Committee is functioning effectively.
Reporting:
The Committee shall review and discuss earnings press releases, as well as
financial information and earnings guidance provided to analysts and rating
agencies.
The Committee shall review the interim financial statements and the disclosures
to be made under "Management's Discussion and Analysis of Financial Condition
and Results of Operations" with management and the independent auditors prior to
the filing of the Company's Quarterly Report on Form 10-Q. Also, the Committee
shall discuss the results of the quarterly review and any other matters required
to be communicated to the Committee by the independent auditors under generally
accepted auditing standards. The chair of the Committee may represent the entire
Committee for the purposes of this review.
The Committee shall review with management and the independent auditors the
financial statements and disclosures to be made under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" to be included in
the Company's Annual Report on Form 10-K (or the annual report to shareholders
if distributed prior to the filing of Form 10-K), including the independent
auditors' judgment about the quality, not just the acceptability, of accounting
principles as applied in its financial reporting, the consistency of the
Company's, the reasonableness of accounting estimates, and the clarity and
completeness of the disclosures in the financial statements. Also, the Committee
shall discuss the results of the annual audit and any other matters required to
be communicated to the Committee by the independent auditors under generally
accepted auditing standards.
The Committee shall recommend to the Board whether the Company's audited
financial statements should be included in the Annual Report on Form 10-K.
The Committee shall review disclosures made by the Chief Executive Officer and
the Chief Financial Officer of the Company during the certification process in
respect of each Quarterly Report on Form 10-Q and each Annual Report on Form
10-k, about significant deficiencies and material weaknesses in the design or
operation of the Company's internal control over financial reporting and any
fraud that involves management or other employees who have a significant role in
the Company's internal control over financial reporting. The Committee shall
also discuss any changes in the Company's internal control over financial
reporting which occurred during the last fiscal quarter.
The Committee shall prepare the Audit Committee Report to be integrated in the
Company's annual proxy
statement, as required by SEC rules and regulations, as
well as review any other information related to the duties and responsibilities
of the Committee required to be disclosed under applicable laws, rules and
regulations, including the rules and regulations of the SEC and Nasdaq.
Meetings and Minutes:
The Committee shall hold regular meetings at least four times each year each
time the Company proposes to issue a press release with its quarterly or annual
earnings information and such special meetings as the Chair of the Committee or
the Chairman of the Board may direct. The Committee shall be chaired by one of
its members nominated by the Governance and Nominating Committee and appointed
by the Board. All members of the Committee are expected to attend each meeting,
in person or via teleconference or other means of electronic communications
permitted under applicable law and the Company's Amended Articles of
Incorporation and Code of Regulations. The Committee shall maintain written
minutes of its meetings, which minutes shall be filed with the minutes of the
meetings of the Board. The Committee may act by a majority of its members at a
meeting or without a meeting if all members consent to the action in writing or
by any means of electronic transmission permitted under applicable law. At each
regularly scheduled meeting of the Board, the Chair of the Committee shall
provide the Board with a report of the Committee's activities and proceedings.
The Committee may ask members of management, the Auditor, General Counsel, the
independent auditors or others to attend the meetings and provide pertinent
information as necessary.
The Committee shall conduct executive sessions with the independent auditors,
the Chief Executive Officer, the Chief Operating Officer, the Chief Financial
Officer, the Controller, the Auditor, the General Counsel or anyone else as
desired by the Committee.
Code of Ethics and Related Party Transactions:
The Committee shall review with the Auditor and General Counsel legal and
regulatory matters that may have a material impact on the financial statements,
related Company compliance policies, and programs and reports received from
regulators.
The Committee shall periodically review with the Auditor and General Counsel the
Company's Code of Ethics to ensure that it is adequate and up-to-date as well as
review results of the Auditor's and General Counsel's monitoring of compliance
with the Code of Ethics.
The Committee shall establish and review the procedures for the receipt,
retention, and treatment of complaints received by the Company regarding
accounting, internal accounting controls, or auditing matters that may be
submitted by any person, as well as review each such complaint received, its
current status or resolution.
The Committee shall establish and review procedures for the confidential,
anonymous submission by employees of the Company or its subsidiaries of concerns
regarding questionable accounting or audit matters, as well as review each such
submission received, its current status or resolution.
The Committee shall conduct a review and approve each related party transaction
(any transaction required to be disclosed pursuant to Item 404 of SEC Regulation
S-K) for potential conflict of interest situations on an ongoing basis.card.