SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14 (a) of the
Securities
Exchange Act of 1934 (Amendment No. )
Filed
by
the
Registrant
[ x ]
Filed
by
a Party other than the
Registrant [
]
Check
the
appropriate box:
[ ] Preliminary
Proxy Statement
[ ] Confidential,
for Use of the Commission Only (as permitted
by
Rule 14a-6(e)(2))
[
x ]
Definitive Proxy Statement
[ ] Definitive
Additional Materials
[ ] Soliciting
Material under Section 240.14a-12
Peoples
Bancorp Inc.
---------------------------------------------------------
(Name
of
Registrant as Specified in its Charter)
-----------------------------------------------------------------------------------
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
[
x
] No fee required.
[ ]
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title
of each class of securities to which transaction applies:
--------------------------------------------------------------------------
(2) Aggregate
number of securities to which transaction applies:
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(3) 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: ____________________________________________
Peoples
Bancorp Inc. · 138
Putnam Street · P.O.
Box 738
Marietta,
OH 45750-0738
Telephone:
(740) 374-6136
www.peoplesbancorp.com
March
14,
2008
Dear
Fellow Shareholders:
Enclosed
you will find the following items pertaining to the Annual Meeting of Peoples
Bancorp Inc.’s Shareholders to be held at 10:00 a.m. on Thursday, April 10, 2008
at the Holiday Inn in Marietta, Ohio:
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·
|
Notice
of Annual Meeting of Shareholders.
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|
·
|
Peoples
Bancorp Inc.’s 2007 Annual Report to Shareholders, which includes the
Annual Report on Form 10-K for the Fiscal Year Ended December 31,
2007.
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·
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Proxy
Card.
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·
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Return
Envelope.
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The
proxy card solicits your vote on
the election of four directors. It is important that your proxy card be signed,
dated, and returned promptly in the enclosed envelope.
I
hope that you will consider attending
our annual meeting. We continue to be active in our pursuit of
enhanced shareholder value. On behalf of our directors and staff,
thank you for your continued support.
Sincerely,
Mark F. Bradley
President
and Chief Executive Officer
Peoples
Bancorp Inc. · 138
Putnam Street · P.O.
Box 738
Marietta,
OH 45750-0738
Telephone:
(740) 374-6136
www.peoplesbancorp.com
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
PEOPLES
BANCORP INC.
Marietta,
Ohio
March
14, 2008
Dear
Fellow Shareholders:
TheAnnual
Meeting of Shareholders (the
“Annual Meeting”) of Peoples Bancorp Inc. (“Peoples”) will be held at 10:00
a.m., Eastern Daylight Savings Time, on Thursday, April 10, 2008, in the Ball
Room of the Holiday Inn, 701 Pike Street in Marietta, Ohio (Interstate 77,
Ohio
exit 1), for the following purposes:
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1.
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To
elect the following directors for terms of three years
each:
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Nominee
Term Expires In
Mark
F. Bradley (for
re-election)
2011
Frank
L. Christy (for
re-election)
2011
Theodore
P.
Sauber
(for
re-election)
2011
Joseph
H.
Wesel
(for
re-election)
2011
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2.
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To
transact any other business which properly comes before the Annual
Meeting
or any adjournment thereof.
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If
you were a shareholder of record at
the close of business on February 11, 2008, you will be entitled to vote in
person or by proxy at the Annual Meeting.
You
are cordially invited to attend the
Annual Meeting. Your vote is important, regardless of the number of
common shares you own. Whether or not you plan to attend the Annual
Meeting in person, please complete, sign, date and return your proxy card in
the
enclosed envelope at your earliest convenience.
Peoples’
2007
Annual Report to
Shareholders, which includes the Annual Report on Form 10-K for the Fiscal
Year
Ended December 31, 2007, accompanies this notice and proxy
statement.
By
Order of the Board
of Directors,
Rhonda
L.
Mears
Corporate
Secretary
PROXY
STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLERS
To
Be Held April 10, 2008
PEOPLES
BANCORP INC.
138
Putnam Street
P.O.
Box 738
Marietta,
Ohio 45750-0738
(740)
374-6136
www.peoplesbancorp.com
PROXY
STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
To
Be Held April 10, 2008
We
are sending you this proxy statement
and the accompanying proxy card because the Board of Directors of Peoples
Bancorp Inc. (“Peoples”) is soliciting your proxy to vote at the Annual Meeting
of Shareholders, to be held on Thursday, April 10, 2008, at 10:00 a.m.,
Eastern Daylight Savings Time (the “Annual Meeting”), or at any adjournment
thereof. The Annual Meeting will be held in the Ball Room of the
Holiday Inn, 701 Pike
Streetin Marietta,
Ohio(Interstate
77, Ohioexit 1). This
proxy
statement summarizes the information that you will need in order to
vote.
Peoples
has three wholly-owned
subsidiaries, Peoples Bank, National Association (“Peoples Bank”), Peoples
Investment Company and PEBO Capital Trust I. Peoples Bank also owns
an insurance agency subsidiary, Peoples Insurance Agency, Inc., and two asset
management subsidiaries, PBNA, L.L.C. and Peoples Loan Services,
Inc. Peoples Investment Company also owns a capital management
subsidiary, Peoples Capital Corporation. In 2003, Peoples established
Peoples Bancorp Foundation, Inc., as an independent charitable foundation to
provide financial assistance and grants to local organizations within Peoples’
market area.
We
mailed this proxy statement and the
accompanying proxy card on or about March 14, 2008 to all shareholders entitled
to vote their common shares at the Annual Meeting. We also sent with
this proxy statement, Peoples’ 2007 Annual Report to Shareholders, which
includes the Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 2007 (the “2007 Annual Report”). Additional
copies of
the 2007 Annual Report may be obtained, without charge, upon written request
to: Rhonda L. Mears, Corporate Secretary, 138 Putnam
Street, P.O. Box 738,
Marietta,
Ohio 45750-0738. Peoples’
Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2007 is posted
in the “Company Information SEC Filings Updated” section of the “Investors
Relations” page of Peoples’ website at www.peoplesbancorp.comand
is also on file
with the Securities and Exchange Commission (the “SEC”) and available on the
SEC’s website at www.sec.gov.
FOR
2009 ANNUAL MEETING
Proposals
by shareholders intended to be
presented at the 2009 Annual Meeting of Shareholders (the “2009 Annual Meeting”)
must be received by the Corporate Secretary of Peoples no later than
November 14, 2008 to
be
eligible for
inclusionin Peoples’ proxy
materials relating to the 2009 Annual Meeting. Peoples will not be required
to include
in its proxy materials a shareholder proposal that is received after that date
or that otherwise fails to meet the requirements for shareholder proposals
established by applicable SEC rules.
The
SEC has promulgated rules relating
to the exercise of discretionary voting authority under proxies solicited by
the
Board of Directors. If a shareholder intends to present a proposal at
the 2009 Annual Meeting without inclusion of that proposal in Peoples’ proxy
materials, and does not notify the Corporate Secretary of Peoples of the
proposal by January 28,
2009, the proxies solicited by the Board of Directors for use at the 2009 Annual
Meeting will confer discretionary authority to vote on the proposal should
it
then be raised at the 2009 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 2009 Annual Meeting must follow
the
procedures described in “NOMINATING
PROCEDURES.”
Who
can vote at the Annual Meeting?
Only
shareholders of record at the close
of business on February 11, 2008 are entitled to receive notice of and to vote
at the Annual Meeting. At the close of businesson
February 11, 2008, there were
10,382,530 common shares outstanding and entitled to vote. Each
common share entitles the holder thereof to one vote on each matter to be voted
upon at the Annual Meeting. There is no cumulative voting with
respect to the election of directors.
How
do I vote?
Whether
or not you plan to attend the
Annual Meeting, we urge you to vote in advance by proxy. To do so,
you may complete, sign and date the accompanying proxy card and return it in
the
envelope provided.
If
you plan to attend the Annual Meeting
and vote in person, we will give you a ballot when you arrive. If
your common shares are held in the name of your broker/dealer, your financial
institution or another record holder (i.e., held in “street name”), you must
bring an account statement or letter from that broker/dealer, financial
institution or other holder of record authorizing you to vote on behalf of
such
record holder. The account statement or letter must show that you
were the direct or indirect beneficial owner of the common shares (i.e., you
retained the right to make voting and/or investment decisions with respect
to
the common shares) on February 11, 2008, the record date for voting at the
Annual Meeting.
How
will my common shares be voted?
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 “proxies” (the individuals named on your proxy card). If you
submit a valid proxy card prior to the Annual Meeting but do not complete the
voting instructions on the proxy card, the persons named as proxies will vote
your common shares as recommended by the Board of Directors, as follows:
“FOR”
the election as directors
of the nominees listed on page 8 under “PROPOSAL
NUMBER
1: ELECTION OF DIRECTORS.”
If
any other matters are properly
presented for voting at the Annual Meeting, the persons named as proxies on
the
accompanying proxy card will vote on those matters, to the extent permitted
by
applicable law, in accordance with their best judgment.
May
I revoke my proxy?
Yes. You
may change your mind
after you send in your proxy card by complying with any one of the following
three procedures. To revoke your proxy:
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·
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Send
in another signed proxy card with a later date, which must be received
by
Peoples prior to the Annual
Meeting;
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·
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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
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·
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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, your financial institution or another
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 direct or
indirect
beneficial owner of the common shares on February 11, 2008, the record
date for voting at the Annual
Meeting.
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Attendance
at the Annual Meeting will not, by itself, revoke your proxy.
What
is the quorum requirement for the Annual
Meeting?
Under
Peoples’ Code of Regulations, a
quorum is a majority of the holders of common shares outstanding and entitled
to
vote. Common shares may be present in person or represented by proxy
at the Annual Meeting. Both abstentions and broker non-votes are
counted as being present for purposes of determining the presence of a
quorum. 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”?
If
you hold your common shares in
“street name” with a broker/dealer, financial institution or other holder of
record, you should review the information provided to you by such record
holder. This information will set forth the procedures you need to
follow in instructing the record holder how to vote your “street name” common
shares and how to revoke previously given instructions. If you hold
your common shares in “street name,” you may be eligible to appoint your proxy
electronically via the Internet or telephone and may incur costs associated
with
the electronic access or telephone usage.
What
if my common shares are held through the
Peoples Bancorp Inc. Retirement Savings Plan?
If
you participate in the Peoples
Bancorp Inc. Retirement Savings Plan (the “Retirement Savings Plan”), you will
be entitled to instruct the trustee of the Retirement Savings Plan how to vote
common shares that have been allocated to your account. If you are
such a participant, you will receive a separate proxy card for common shares
allocated to your account in the Retirement Savings Plan. If you do
not provide voting instructions to the trustee of the Retirement Savings Plan,
the trustee will not vote the common shares allocated to your
account.
Who
pays the cost of proxy solicitation?
Peoples
will pay the costs of soliciting
proxies on behalf of the Board of Directors other than the Internet access
and
telephone usage charges if a proxy is appointed electronically or telephonically
through a broker/dealer, financial institution or other holder of
record. Although we are soliciting proxies by mailing these proxy
materials, directors, officers and employees of Peoples and its subsidiaries
also may solicit proxies by further mailings, telephone, electronic, facsimile
or personal contact without receiving any additional compensation for such
solicitations. Peoples will also reimburse its transfer agent,
broker/dealers, voting trustees, financial institutions and other custodians,
nominees and fiduciaries for their costs in forwarding the proxy materials
to
the beneficial shareholders.
What
vote is required to approve the proposal presented at the
Annual Meeting?
Under
Ohiolaw
and Peoples’ Code of Regulations,
the four nominees for election as directors in the class whose terms will expire
in 2011 receiving the greatest number of votes “FOR”
their
election will be elected as
directors. Common shares as to which the authority to vote is
withheld will be counted for quorum purposes but will not be counted in
determining whether a nominee has received sufficient votes to be
elected.
BENEFICIAL
OWNERS AND MANAGEMENT
The
following table sets forth, as of
February 11, 2008 (exceptas
otherwise noted), certain information
concerning the beneficial ownershipof
commonshares
by the only entities known by
Peoples to be the beneficial owner of more than 5% of Peoples’ outstanding
common shares:
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Name
and Address of
Beneficial
Owner
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Amount
and Nature of
Beneficial
Ownership
|
Percent
of
Class (1)
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|
Peoples
Bank – Trustee
138
Putnam Street
P.O.
Box 738
Marietta,
OH 45750-0738
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1,033,648
(2)
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9.96%
|
|
Franklin
Resources, Inc.
Charles
B. Johnson
Rupert
H. Johnson, Jr.
Franklin
Advisory Services, LLC
One
Franklin Parkway
San
Mateo, CA 94403-1906
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976,047
(3)
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9.40%
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Dimensional
Fund Advisors LP
1299
Ocean Avenue
Santa
Monica, CA 90401
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804,257
(4)
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7.75%
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(1)
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The
“Percent of Class” computation is based on 10,382,530 common shares
outstanding and entitled to vote on February 11,
2008.
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(2)
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Includes
Peoples Bank’s beneficial ownership through Peoples Financial Advisors, a
division of Peoples Bank, in the following manner: 141,851
common shares with shared investment and sole voting power; 696,173
common
shares with shared investment and shared voting power; 185,086 common
shares with sole voting and sole investment power; and 10,538 common
shares with sole investment and shared voting power. The
officers and directors of Peoples Bank and Peoples disclaim beneficial
ownership of the common shares beneficially owned by Peoples Bank
through
Peoples Financial Advisors.
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(3)
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Based
on information contained in a Schedule 13G amendment, dated January
24,
2008, filed with the SEC on February 4, 2008 on behalf of Franklin
Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr., and
Franklin
Advisory Services, LLC to report their beneficial ownership of common
shares of Peoples as of December 31, 2007. These common shares
are reported to be beneficially owned by one or more open or closed-end
investment companies or other managed accounts that are investment
management clients of investment managers that are direct and indirect
subsidiaries of Franklin Resources, Inc., including Franklin Advisory
Services, LLC and Franklin Templeton Portfolio Advisors, Inc., which
are
investment adviser subsidiaries of Franklin Resources, Inc. The
investment management contracts generally grant to the respective
investment adviser subsidiary all voting and/or investment power
over the
common shares owned by the advisory clients. However, the
Schedule 13G amendment reports that, to the extent that the underlying
client under a managed account investment management arrangement
advised
by Franklin Templeton Portfolio Advisors, Inc. has retained voting
power
over any common shares, Franklin Templeton Portfolio Advisors, Inc.
disclaims any power to vote or direct the vote of such common
shares. The Schedule 13G amendment reports that Franklin
Advisory Services, LLC had sole voting power as to 962,047 common
shares
and sole investment power as to 974,847 common shares and that Franklin
Templeton Portfolio Advisors, Inc. had sole voting (except as previously
noted) and sole investment power as to 1,200 common shares. For
purposes of the reporting requirements of the Securities Exchange
Act of
1934, as amended (the “Exchange Act”), Charles B. Johnson and Rupert H.
Johnson, Jr. are reported to be the principal stockholders of Franklin
Resources, Inc., and together with Franklin Resources, Inc., each
may be
deemed to be, for purposes of Rule 13d-3 under the Exchange Act,
the
beneficial owner of the common shares held by persons and entities
advised
by the investment adviser subsidiaries of Franklin Resources,
Inc. However, each of Franklin Resources, Inc., Charles B.
Johnson, Rupert H. Johnson, Jr., Franklin Advisory Services, LLC
and
Franklin Templeton Portfolio Advisors, Inc. expressly disclaimed
any
pecuniary interest (direct financial interest) or beneficial ownership
in
any of the common shares covered by the Schedule 13G amendment and
they
believe they are not a “group” within the meaning of Rule 13d-5 under the
Exchange Act.
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(4)
|
Based
on information contained in a Schedule 13G amendment, dated February
6,
2008, filed with the SEC on February 6, 2008 on behalf of Dimensional
Fund
Advisors LP to report its beneficial ownership of common shares of
Peoples
as of December 31, 2007. The Schedule 13G amendment reported
that Dimensional Fund Advisors LP had sole voting and investment
power as
to 804,257 common shares, all of which were held in portfolios of
four
registered investment companies to which Dimensional Fund Advisors
LP
furnishes investment advice and of certain other commingled group
trusts
and separate accounts for which Dimensional Fund Advisors LP serves
as
investment manager. The common shares reported were owned by
the investment companies, trusts and accounts. Dimensional Fund
Advisors LP disclaimed beneficial ownership of the reported common
shares.
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The
following table sets forth, as of
February 11, 2008, certain information with respect to the common shares
beneficially owned by each current director of Peoples (including each nominee
for re-election as a director of Peoples), by each individual named in the
Summary Compensation Table and by all current executive officers and directors
of Peoples as a group:
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Amount
and Nature of Beneficial Ownership (1)
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|||||||
|
Name
of
Beneficial
Owner
|
Common
Shares Presently
Held
|
Common
Shares Which Can Be Acquired Upon Exercise of Options Currently
Exercisable or Options First BecomingExercisable
Within 60
Days
|
Total
|
Percent
of Class (2)
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|||
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Carl
L. Baker, Jr.
|
81,337
|
(3)
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7,984
|
89,321
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(4)
|
||
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Mark
F. Bradley (5)
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8,054
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(6)
|
23,389
|
31,443
|
(4)
|
||
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George
W. Broughton
|
177,861
|
(7)
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4,665
|
182,526
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1.76%
|
||
|
Frank
L. Christy
|
85,397
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(8)
|
7,298
|
92,695
|
(4)
|
||
|
Wilford
D. Dimit
|
53,155
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(9)
|
10,116
|
63,271
|
(4)
|
||
|
Richard
Ferguson
|
403
|
(10)
|
2,355
|
2,758
|
(4)
|
||
|
Larry
E. Holdren (5)
|
22,828
|
(11)
|
23,785
|
46,613
|
(4)
|
||
|
Donald
J. Landers (5)
|
180
|
0
|
180
|
(4)
|
|||
|
David
L. Mead
|
2,300
|
(12)
|
600
|
2,900
|
(4)
|
||
|
Robert
W. Price
|
14,916
|
(13)
|
5,820
|
20,736
|
(4)
|
||
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Theodore
P. Sauber
|
129,888
|
(14)
|
2,355
|
132,243
|
1.27%
|
||
|
Carol
A. Schneeberger (5)
|
23,181
|
(15)
|
17,451
|
40,632
|
(4)
|
||
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Paul
T. Theisen
|
23,925
|
(16)
|
9,280
|
33,205
|
(4)
|
||
|
David
T. Wesel (5)
|
4,901
|
(17)
|
2,425
|
7,326
|
(4)
|
||
|
Joseph
H. Wesel
|
40,126
|
(18)
|
7,550
|
47,676
|
(4)
|
||
|
Thomas
J. Wolf
|
20,300
|
(19)
|
3,510
|
23,810
|
(4)
|
||
|
Joseph
S. Yazombek (5)
|
41,251
|
(20)
|
24,268
|
65,519
|
(4)
|
||
|
All
current directors and
executive
officers as a
group
(numbering 16)
|
708,995
|
(21)
|
129,066
|
838,061
|
7.97%
|
||
|
(1)
|
Unless
otherwise indicated in the footnotes to this table, the beneficial
owner
has sole voting and investment power with respect to all of the common
shares reflected in the table. All fractional common shares
have been rounded down to the whole common share. The mailing
address of each of the current executive officers and directors of
Peoples
is 138 Putnam Street, P.O. Box 738, Marietta, Ohio
45750-0738.
|
|
(2)
|
The
“Percent of Class” computation is based on the sum of (i) 10,382,530
common shares outstanding and entitled to vote on February 11, 2008
and
(ii) the number of common shares, if any, as to which the named individual
or group has the right to acquire beneficial ownership upon the exercise
of options which are currently exercisable or will first become
exercisable within 60 days after February 11,
2008.
|
|
(3)
|
Includes
5,777 common shares held in an investment account by Carl L. Baker,
Jr.,
as to which Mr. Baker exercises sole voting and investment power. Includes 8,352
common
shares held by B & N Coal, Inc., as to which Mr. Baker exercises
shared voting and investment power. Also includes (i) 8,943
common shares held by Mr. Baker as Trustee of the Gilbert Baker Trust,
as
to which Mr. Baker exercises sole voting and investment power, (ii)
44,924
common shares held by Mr. Baker as Trustee of the Jewell Baker Trust,
as
to which Mr. Baker exercises sole voting and investment power, and
(iii)
2,000 common shares held by Mr. Baker as Trustee of Baker Investments
LLC,
as to which Mr. Baker exercises sole voting and investment power. Does not include
265
common shares accrued to Mr. Baker’s account under the Peoples Bancorp
Inc. Deferred Compensation Plan for Directors of Peoples Bancorp
Inc. and
Subsidiaries (the “Deferred Compensation Plan for Directors”), as to which
Mr. Baker has no voting or investment
power.
|
|
(4)
|
Reflects
beneficial ownership of less than 1% of the outstanding common
shares.
|
|
(5)
|
Executive
officer of Peoples during the fiscal year ended December 31, 2007
(the
“2007 fiscal year”) and named in the Summary Compensation
Table. Mark F. Bradley also serves as a director of
Peoples. Effective April 9, 2007, Donald J. Landers resigned as
Chief Financial Officer and Treasurer of
Peoples.
|
|
(6)
|
Does
not include 1,502 common shares accrued to Mark F. Bradley’s account under
the Deferred Compensation Plan for Directors, as to which Mr. Bradley
has
no voting or investment power. Includes 5,756 common shares
allocated to the account of Mr. Bradley in the Retirement Savings
Plan, as
to which Mr. Bradley has the power to direct the voting and
investment.
|
|
(7)
|
Includes
5,054 common shares held by George W. Broughton as custodian for
his
children, as to which Mr. Broughton has sole voting and investment
power. Includes 558 common shares held by Broughton Commercial
Properties, LLC, as to which Mr. Broughton exercises sole voting
and
investment power. Includes 16,287 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 13,374 common shares held in an IRA
account by Peoples Bank as custodian, as to which Mr. Broughton exercises
sole voting and investment power. Does not include 16,333
common shares held of record and beneficially owned by Mr. Broughton’s
wife, as to which Mr. Broughton has no voting or investment power
and
disclaims beneficial ownership. Does not include 1,313 common
shares accrued to Mr. Broughton’s account under the Deferred Compensation
Plan for Directors, as to which Mr. Broughton has no voting or investment
power. As of February 11, 2008, 558 common shares held by
Broughton Commercial Properties, LLC and 21,802 common shares held
by Mr.
Broughton had been pledged as
security.
|
|
(8)
|
Includes
70,115 common shares held in the Riverbank Restaurants Inc. Agency
Account
at Peoples Bank, as to which Frank L. Christy exercises shared voting
and
investment power with Peoples Bank. Also includes 979 common
shares held in an investment account by Mr. Christy, as to which
Mr.
Christy exercises sole voting and investment power. Also
includes 14,003 common shares held by Mr. Christy as Co-Trustee of
the F.
Leonard Christy Trust, as to which Mr. Christy exercises shared voting
and
investment power.
|
|
(9)
|
Includes
21,907 common shares held in the Wilford D. Dimit Trust Investment
Account
at Peoples Bank, as to which Mr. Dimit exercises shared voting and
investment power with Peoples Bank. Also includes 31,248 common
shares held in the Marjorie E. Dimit Trust Investment Account at
Peoples
Bank, as to which Wilford D. Dimit exercises shared voting and investment
power with Peoples Bank. Does not include 22,519 common shares
accrued to Mr. Dimit’s account under the Deferred Compensation Plan for
Directors, as to which Mr. Dimit has no voting or investment
power.
|
|
(10)
|
Includes
103 common shares allocated to the account of Richard Ferguson in
the
Ferguson Consulting, LLC retirement savings plan, as to which Mr.
Ferguson
has the power to direct the voting and investment. Does not
include 3,071 common shares accrued to Mr. Ferguson’s account under the
Deferred Compensation Plan for Directors, as to which Mr. Ferguson
has no
voting or investment power.
|
|
(11)
|
Includes
8,918 common shares held jointly by Larry E. Holdren with his wife,
as to
which Mr. Holdren exercises shared voting and investment
power. Includes 13,688 common shares allocated to the account
of Mr. Holdren in the Retirement Savings Plan, as to which Mr. Holdren
has
the power to direct the voting and
investment.
|
|
(12)
|
Includes
2,000 common shares held in an investment account by David L. Mead,
as to
which Mr. Mead exercises sole voting and investment power. Does not include
1,310 common shares accrued to Mr. Mead’s account under the Deferred
Compensation Plan for Directors, as to which Mr. Mead has no voting
or
investment power.
|
|
(13)
|
Includes
11,158 common shares held in the Robert W. Price Investment Account,
as to
which Mr. Price exercises sole investment and voting
power. Does not include 4,969 common shares accrued to Mr.
Price’s account under the Deferred Compensation Plan for Directors, as
to
which Mr. Price has no voting or investment
power.
|
|
(14)
|
Includes
56,173 common shares held in the Carol J. Sauber Trust Account at
Peoples
Bank, as to which Theodore P. Sauber exercises shared investment
and
voting power with Peoples Bank. Includes 65,594 common shares
held in the Theodore P. Sauber Trust Account at Peoples Bank, as
to which
Mr. Sauber exercises shared investment and voting power with Peoples
Bank.
Includes 8,121 common shares held in an IRA account by Peoples Bank
as
custodian, as to which Mr. Sauber exercises shared investment and
voting
power with Peoples Bank.
|
|
(15)
|
Includes
7,593 common shares held jointly by Carol A. Schneeberger with her
husband, as to which Ms. Schneeberger exercises shared voting and
investment power. Includes 11,320
common shares allocated to the account of Ms. Schneeberger in the
Retirement Savings Plan, as to which Ms. Schneeberger has the power
to
direct the voting and investment.
|
|
(16)
|
Does
not include 5,940 common shares accrued to Paul T. Theisen’s account under
the Deferred Compensation Plan for Directors, as to which Mr. Theisen
has
no voting or investment power.
|
|
(17)
|
Includes
1,840 common shares held by David T. Wesel as custodian for his
children.
|
|
(18)
|
Does
not include 14,879 common shares held in the Luada Wesel Estate Plan
Trust
Investment Account at Peoples Bank, as to which: (i) Joseph H. Wesel
has
no voting or investment power and disclaims beneficial ownership
and (ii)
Peoples Bank shares voting and investment power with Luada
Wesel. Does not include 8,107 common shares accrued to Mr.
Wesel’s account under the Deferred Compensation Plan for Directors, as
to
which Mr. Wesel has no voting or investment power. Does not
include 21,986 common shares in the Joseph and Lu Wesel Grandchildren’s
Trust, as to which Peoples Bank has sole investment and voting
power.
|
|
(19)
|
As
of February 11, 2008, 20,000 common shares held by Mr. Wolf had been
pledged as security.
|
|
(20)
|
Includes
26,269 common shares held jointly by Joseph S. Yazombek and with
his wife,
as to which Mr. Yazombek exercises shared voting and investment
power. Includes 14,564 common shares allocated to the account
of Mr. Yazombek in the Retirement Savings Plan, as to which Mr. Yazombek
has the power to direct the voting and
investment.
|
|
(21)
|
Includes
common shares held jointly by current directors and executive officers
with other persons, as well as 31,640 common shares allocated to
the
accounts of all current executive officers of Peoples in the Retirement
Savings Plan. See notes (3), (6) through (10) and (12) though
(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 for filing the reports required by
Section 16(a) of the Exchange Act 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 2007
fiscal year, all Section 16(a) filing requirements applicable to Peoples’
executive officers, directors and greater-than-10% beneficial owners were
complied with, except:
|
·
|
Frank
L. Christy filed late one Form 4 reporting the disposition of common
shares, occurring in four separate transactions, by Mr. Christy as
Co-Trustee of the Helen G. Christy Trust and the F. Leonard Christy
Trust
(which occurred from January 9, 2007 to January 10, 2007) all of
which
were reported on February 26, 2007.
|
|
·
|
Wilford
D. Dimit reported late in his Form 5 for the 2007 fiscal year the
private
purchase of common shares (which occurred on August 7, 2007, and
was
reported on February 14, 2008).
|
|
·
|
Robert
W. Price reported late in his Form 5 for the 2007 fiscal year the
private
purchase of common shares (which occurred on November 21, 2007, and
was
reported on February 14, 2008).
|
TRANSACTIONS
WITH RELATED PERSONS
During
the 2007 fiscal year, Peoples
Bank entered into lending relationships with certain executive officers and
directors of Peoples, with members of their immediate families and with
corporations or organizations as to which directors of Peoples serve as
executive officers or beneficially own more than 10% of the equity
securities. All such loans (i) were made in the ordinary course of
business, (ii) were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable loans
with
persons not related to Peoples or Peoples Bank, and (iii) did not involve more
than the normal risk of collectibility or present other unfavorable features
to
Peoples or Peoples Bank.
The
above loans were subject to Peoples
Bank’s written policies, procedures and standard underwriting criteria
applicable to loans generally, and were made in accordance with Federal Reserve
Regulation O requiring prior approval of the Board of Directors of Peoples
Bank.
Effective
January 1, 2006, David T.
Wesel, son of Joseph H. Wesel, director and Chairman of the Board of Peoples,
assumed the positions of Executive Vice President of Peoples and of Peoples
Bank, as well as President of Peoples Financial Advisors, a division of Peoples
Bank. 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 either Peoples or Peoples Bank. David T. Wesel’s
compensation for the 2007 fiscal year is reported in “EXECUTIVE
COMPENSATION.” Joseph H. Wesel does
not
serve as a member of Peoples’ Compensation Committee and was not involved in
setting the compensation for David T. Wesel.
The
Audit Committee is responsible,
under the terms of its charter, for reviewing and overseeing procedures designed
to identify related person transactions that are material to Peoples’
consolidated financial statements or otherwise require disclosure under
applicable rules adopted by the SEC, including those transactions required
to be
disclosed under Item 404 of SEC Regulation S-K. All such transactions
must be approved by the Audit Committee. Further, under the terms of its
charter, the Audit Committee is responsible for reviewing and overseeing all
actions and transactions which involve the personal interest of a director
or
executive officer of Peoples and determining in advance whether any such action
or transaction represents a potential conflict of interest.
ELECTION
OF DIRECTORS
As
of the date of this proxy statement,
there were 12 members of the Board of Directors – four directors in the class
whose terms expire at the Annual Meeting, four in the class whose terms expire
in 2009 and four in the class whose terms expire in 2010.
The
Board of Directors proposes that
each of the four nominees identified below be re-elected for a new three-year
term and until his successor is duly elected and qualified or until his earlier
resignation, removal from office or death. The Governance and Nominating
Committee recommended each nominee for re-election. The four nominees for
election as directors in the class whose terms expire in 2011 receiving the
greatest number of votes will be elected. Common shares represented
by properly executed and returnedproxy
cards will be voted as specified
or, if no instructions are given, “FOR”the
election of the Board of Directors’
nominees.
The
following table gives certaininformation,
as of the date of this
proxy statement, concerning each nominee for re-election as a director of
Peoples. Unless otherwise indicated, each individual has had the same
principal occupation for more than five years.
SHAREHOLDERS
VOTE “FOR” THE ELECTION
OF ALL NOMINEES LISTED BELOW.
|
Nominee
|
Age
|
Position(s)
Held with Peoples and Its
Principal
Subsidiaries
and Principal Occupation(s)
|
Director
Continuously
Since
|
Nominee
For
Term
Expiring
In
|
|
Mark
F. Bradley
|
38
|
Chief
Executive Officer since May 2005, President since June 2004, Chief
Operating Officer from July 2003 to May 2005, a Director since February
2003, Executive Vice President and Chief Integration Officer from
February
2001 to July 2003, and Controller from 1997 to 2001, of Peoples.
Chief
Executive Officer since May 2005, President since 2002, Chief Operating
Officer from 2002 to May 2005, and Controller from 1997 to 2001,
of
Peoples Bank. Chairman, President and a Director of Peoples Bancorp
Foundation, Inc. since December 2003. President since January 2006
and a
Director since January 2004 of Peoples Insurance Agency, Inc.
(1)
|
2003
|
2011
|
|
Frank
L. Christy
|
60
|
President
of Christy & Associates, Inc., a business development company located
in Marietta, Ohio. Chairman of Caron Products and Services, Inc.,
a
manufacturer and distributor of chillers and incubators for scientific
work, located in Marietta, Ohio. Chairman of Rossi Pasta Ltd., a
manufacturer and distributor of gourmet pasta and sauce, located
in
Marietta, Ohio.
|
1999
|
2011
|
|
Theodore
P. Sauber
|
74
|
Vice
President of T.C.K.S., Inc., a holding company for McDonald’s restaurants
in Ohio and West Virginia. A member of the Ohio University
Trustees Academy. A member of Service Corps of Retired Executives
(SCORE)
of Athens (Ohio). A Director of Peoples Bancorp Foundation, Inc.
since
December 2003. Retired Trustee of Rio Grande University.
(1)
|
2004
|
2011
|
|
Joseph
H. Wesel
|
78
|
President
of W.D.A., Inc., a real estate holding company, located in Marietta,
Ohio.
Chairman and Chief Executive Officer of Marietta Automotive Warehouse,
Inc., an automotive parts wholesaler, located in Marietta, Ohio,
from 1978
until December 2007. Chairman of the Board from 1991 until July 2003
and
since June 2005, Leadership Director from July 2003 to December 2005
and
Vice Chairman of the Board from July 2003 to June 2005, of Peoples.
(1)
|
1980
|
2011
|
|
(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 would be unavailable or unable to serve if elected to
the
Board.
The
following table gives certain
information,
as of the date of this proxy
statement, concerning the current directors at Peoples who will continue to
serve after the Annual Meeting. Unless otherwise indicated, each
individual has had the same principal occupation for more than five
years.
|
Name
|
Age
|
Position(s)
Held with Peoples and Its
Principal
Subsidiaries
and Principal Occupation(s)
|
Director
Continuously
Since
|
Term
Expiring
In
|
|
Carl
L. Baker, Jr.
|
45
|
President
and Chief Executive Officer, B & N Coal, Inc., a mining, reclamation
and construction concern, located in southeastern Ohio. Co-Owner
of Sharon
Stone Company, a limestone and slag producer, located in Noble and
Washington Counties, Ohio. Owner of Dexter Hardwoods, Inc., a hardwood
sawmill, located in Noble County, Ohio. Partner in Belpre Sand
& Gravel Company, a sand and gravel operation, located in Little
Hocking, Washington County, Ohio,
|
2000
|
2009
|
|
George
W. Broughton
|
50
|
Owner
and President of GWB Specialty Foods, LLC, an ice cream, frozen food,
and
coffee service distributor. Owner and President of Broughton Commercial
Properties, LLC, a commercial properties rental company. Chairman
of
Broughton Foundation, a nonprofit charitable foundation, and Broughton
Park, a park facility owned by the Broughton Foundation and made
available
to the public. President and Controller of George Broughton Family
LLP, an
asset management company. Owner and President of GWB Oil & Gas LLC, an
independent oil and gas producing company. All of these entities
are based
in Marietta, Ohio. A Director of Peoples Bancorp Foundation, Inc.
since
December 2003. (1)
|
1994
|
2009
|
|
Wilford
D. Dimit
|
73
|
Former
President of First Settlement, Inc., a Marietta, Ohio corporation
operating a retail clothing store for men and women, a family shoes
store,
a cosmetic studio, a public alteration shop and a
restaurant. In March 2005, the businesses were sold or closed
and Mr. Dimit retired. (1)
|
1993
|
2009
|
|
Richard
Ferguson
|
61
|
Owner
of Ferguson Consulting, LLC, a Columbus, Ohio based professional
practice
that focuses on business valuations and forensic accounting
services. Certified Public Accountant since 1976 and Certified
Valuation Analyst since 1996.
|
2004
|
2009
|
|
David
L. Mead
|
52
|
Vice
President for Business Affairs, Otterbein College, located in Westerville,
Ohio, since September 2006. Associate Professor of Finance, Marietta
College, located in Marietta, Ohio, from August 2004 to September
2006.
Chief Financial Officer and Treasurer of First Place Financial Corp,
headquartered in Warren, Ohio, from December 2002 to June
2004. Treasurer of First Place Bank from May 2002 to December
2002. (1)
|
2006
|
2010
|
|
Name
|
Age
|
Position(s)
Held with Peoples and Its
Principal
Subsidiaries
and Principal Occupation(s)
|
Director
Continuously
Since
|
Term
Expiring
In
|
|
Robert
W. Price
|
44
|
Private
Investor. From 2002 until
February 6, 2008, General Manager, Findley, Ohio District, Shelly
Materials, Inc., a division of The Shelly Company. The Shelly
Company is an asphalt and construction materials company headquartered
in
Thornville, Ohio, and a wholly-owned subsidiary of Oldcastle Materials
Group, a division of CRH, plc. Formerly President of
Smith Concrete, a concrete company located in Marietta, Ohio, and
related
companies.
|
2000
|
2010
|
|
Paul
T. Theisen
|
77
|
Attorney-At-Law. Currently
active as a mediator and arbitrator. For more than 40 years,
was a litigator with TheisenBrock, A Legal Professional Association
(“TheisenBrock”), located in Marietta, Ohio, and 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)
|
1980
|
2010
|
|
Thomas
J. Wolf
|
61
|
President
of seven holding companies for 13 McDonald’s restaurants in Kentucky and
West Virginia. Chairman of the Board for Fifth Avenue Broadcasting
Co.,
Inc., a holding company for four radio stations in Huntington, WV.
Board
member of Our Lady of Bellefonte Hospital in Ashland, Kentucky, since
2002
and the Ronald McDonald House in Huntington, West Virginia, since
1998.
|
2004
|
2010
|
|
(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 “EXECUTIVE
OFFICERS
OF THE REGISTRANT”beginning
on page 19 in Part I of Peoples’ Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 2007 for information regarding Peoples’ executive
officers.
COMMITTEES
OF THE BOARD
The
rules of the NASDAQ Global Select
Market (the “NASDAQ Rules”) require that a majority of Peoples’ Board of
Directors be independent directors. The definition of an independent
director for purposes of the NASDAQ Rules includes a series of objective
criteria, which Peoples’ Board of Directors has used in determining whether its
members are independent.
In
addition to considering the objective
criteria, as required by the NASDAQ Rules, the Board of Directors has made
a
subjective determination as to each independent director that no relationships
exist which, in the opinion of the Board, would interfere with such individual’s
exercise of independent judgment in carrying out the responsibilities of a
director. In making these independence determinations, the Board of
Directors has reviewed, considered and discussed each director’s business and
personal relationships, both direct and indirect, with Peoples and its
subsidiaries and the compensation and other payments each director and such
director’s immediate family members have, both directly and indirectly, received
from or made to Peoples and its subsidiaries and presently expect to receive
from or make to Peoples and its subsidiaries. Based on that review,
consideration and discussion, the Board of Directors has determined that at
least a majority of its members qualify as independent directors. The
Board of Directors has further determined that each of the following directors
has no financial or personal ties, either directly or indirectly, with Peoples
or its subsidiaries (other than compensation received in the individual’s
capacity as a director of Peoples and its subsidiaries, non-preferential banking
relationships in the ordinary course of business with Peoples Bank and ownership
of common shares of Peoples as described in this proxy statement) and thus
qualifies as independent: Carl L. Baker, Jr.; George W. Broughton;
Frank L. Christy; Richard Ferguson; David L. Mead; 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 personally performed legal
services for Peoples or any of its subsidiaries), since
1998. TheisenBrock performed legal services for Peoples and its
subsidiaries during the 2007 fiscal year.
Mark
F. Bradley does not qualify as an
independent director because he currently serves as an executive officer of
Peoples.
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, a director of Peoples, was
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 growth of
Peoples’ operations. 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 transactions
and more than 5% of its consolidated gross revenues for the year in which the
transaction occurred. 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. 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. First Settlement, Inc. sold its
restaurant operations in April 2005.
The
Board of Directors has determined
that Wilford D. Dimit does not qualify as an independent director under
applicable NASDAQ Rules due to the transaction between Peoples Bank and First
Settlement, Inc. described above and will not qualify as an independent director
under applicable NASDAQ Rules until January 1, 2009. The Board of
Directors has determined, however, that those transactions do not disqualify
Mr.
Dimit from being independent for purposes of Rule 10A-3 under the Exchange
Act. Mr. Dimit resigned as a member of the Audit Committee effective
December 14, 2006 and the Governance and Nominating Committee effective January
25, 2007. The Board of Directors expects that Mr. Dimit’s committee
seats will remain vacant until January 1, 2009, after the period of time during
which applicable NASDAQ Rules prohibit his being deemed independent, will have
expired.
On
September 14, 2005, the Board of
Directors appointed David T. Wesel as an executive officer of Peoples and
Peoples Bank, effective January 1, 2006. Joseph H. Wesel is the
father of DavidT.
Wesel. The Board of
Directors has determined that, due to his relationship to David T. Wesel, Joseph
H. Wesel does not qualify as an independent director either under the applicable
NASDAQ Rules or for purposes of Rule 16b-3 under the Exchange Act or Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue
Code”), each of which applies to directors serving on the Compensation
Committee.
Leadership
Director and Executive Sessions
In
the
event that the Chairman of the Board of Directors does not qualify as an
independent director because he is the Chief Executive Officer or the President
of Peoples or for some other reason does not qualify, the Board of Directors
elects a Leadership Director from among its members who is an independent
director to preside over the proceedings of all executive sessions of the
independent directors (without management present) and to perform the other
duties required by Section 3.04 of the Code of Regulations. The
Leadership Director also serves as the Chairman of the Governance and Nominating
Committee. 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 Board of Directors meeting and at such other times
as
the independent directors deemed necessary.
Meetings
of the Board and Attendance at Annual
Meetings of Shareholders
The
Board of Directors held a total of
13 meetings during the 2007 fiscal year. Each incumbent director
attended 87% or more of the aggregate of the total numberof
meetings held by the Board of
Directors and the total number of meetings held by all committees of the Board
of Directors on which he served, in each case during his period of
service.
Peoples
encourages all incumbent
directors and director nominees to attend each annual meeting of
shareholders. All of the directors attended Peoples’ last annual
meeting of shareholders held on April 12, 2007.
Committees
of the Board
The
Board of Directors has fourstanding
committees: the Audit
Committee, the Compensation Committee, the Executive Committee, and the
Governance and Nominating Committee.
The
Audit Committee was established in
accordance with Section 3(a)(58)(A) of the Exchange Act and conducts its
business pursuant to a written charter adopted by the Board of
Directors. A current copy of the charter of the Audit Committee is
posted on the “Corporate Governance & Ethics” page of Peoples’ website
at www.peoplesbancorp.com. At least annually, the Audit Committee
reviews and reassesses the adequacy of its charter and recommends any proposed
changes to the full Board of Directors as necessary to reflect changes in
regulatory requirements, authoritative guidance and evolving
practices. Among other duties set forth in its charter, the Audit
Committee is responsible for:
|
·
|
overseeing
the accounting and financial reporting processes of
Peoples;
|
|
·
|
overseeing
the audits of the consolidated financial statements of
Peoples;
|
|
·
|
appointing,
terminating, compensating and overseeing the work of Peoples’ independent
registered public accounting firm, including resolving any disagreements
between management and the independent registered public accounting
firm
regarding financial reporting;
|
|
·
|
pre-approving
all audit and non-audit services provided by the independent registered
public accounting firm;
|
|
·
|
discussing
with management, the internal auditors and the independent registered
public accounting firm the adequacy and effectiveness of the accounting
and financial controls of Peoples;
|
|
·
|
reviewing
and concurring in the appointment, replacement, reassignment or dismissal
of the internal auditor, the scope of the internal audit and the
operation
and performance of the internal
auditor;
|
|
·
|
reviewing
and approving all related party transactions (any transaction required
to
be reported pursuant to Item 404 of SEC Regulation S-K) for potential
conflict of interest situations;
|
|
·
|
reviewing
Peoples’ earnings press releases, financial information and earnings
guidance and financial statements and related disclosures in Peoples’
periodic reports;
|
|
·
|
setting
hiring policies for employees or former employees of the independent
registered public accounting firm;
|
|
·
|
establishing
procedures for the receipt, retention and treatment of complaints
received
by Peoples regarding accounting, internal accounting controls or
auditing
matters;
|
|
·
|
assisting
the Board of Directors in the oversight
of:
|
|
·
|
the
performance of Peoples’ independent registered public accounting
firm,
|
|
·
|
the
independent registered public accounting firm’s qualifications and
independence; and
|
|
·
|
Peoples’
compliance with ethics policies and legal and regulatory requirements;
and
|
|
·
|
other
responsibilities as may be delegated to the Audit Committee by the
full
Board of Directors.
|
The
Audit Committee held five meetings
during the 2007 fiscal year. The “AUDIT
COMMITTEE
REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007”appears beginning on
page
42.
The
members of the Audit Committee are:
Richard Ferguson, Chairman; Carl L. Baker, Jr.; George W. Broughton;
Theodore P. Sauber; and Thomas J. Wolf, each of whom served on the Audit
Committee throughout the entire 2007 fiscal year. The Board of
Directors has determined that each of the members of the Audit Committee
qualifies as an independent director for purposes of Rule 10A-3 under the
Exchange Act and under the applicable NASDAQ Rules.
The
Board of Directors has concluded
that each member of the Audit Committee is capable of (i) understanding
accounting principles generally accepted in the United States (“US GAAP”) and
financial statements, (ii) assessing the general application of US GAAP in
connection with the accounting for estimates, accruals and reserves, (iii)
analyzing and evaluating Peoples’ consolidated financial statements, (iv)
understanding internal control over financial reporting, and (v) understanding
audit committee functions. Based upon his background, knowledge,
qualifications, experience and profession, the Board of Directors has determined
that Richard Ferguson qualifies as an “audit committee financial expert” under
the SEC’s rules, and as “financially sophisticated” for purposes of the
applicable NASDAQ Rules.
The
Compensation Committee is comprised
of six directors who qualify as (i) “independent directors” under the applicable
NASDAQ Rules, (ii) “outside directors” under Section 162(m) of the Internal
Revenue Code and (iii) “non-employee directors” under Rule 16b-3 under the
Exchange Act. The members of the Compensation Committee
are: Frank L. Christy, Chairman; Carl L. Baker, Jr.; George W.
Broughton; David L. Mead; Robert W. Price; and Paul T.
Theisen.
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 & Code of Ethics” page of
Peoples’ website at www.peoplesbancorp.com. The Compensation
Committee periodically reviews and reassesses the adequacy of its charter and
recommends any proposed changes to the full Board of Directors for
approval.
The
Compensation Committee held 11
meetings during 2007. The agenda for the meetings of the Compensation
Committee is determined by its Chairman with the assistance of Peoples’ Chief
Financial Officer, Treasurer and Executive Vice President, Operations who also
serves as the Secretary of the Compensation Committee. During the
2007 year, the Compensation Committee reviewed and approved on behalf of the
Board of Directors, management recommendations regarding all forms of
compensation provided to the executive officers and directors of Peoples and
its
subsidiaries. Additionally, the Compensation Committee reviewed and
approved all equity-based compensation, cash incentives, perquisites, employee
benefits, salary programs, and human resources policies and procedures for
employees of Peoples and its subsidiaries. The Compensation Committee
also reviewed and approved the 2007 goals and objectives relevant to the
compensation of Peoples’ named executive officers. The Compensation
Committee evaluated the named executive officers’ performance in light of those
goals and objectives and determined the compensation earned by each executive
officer based on that evaluation. Leadership and management
succession plans were also reviewed and discussed during
2007.
The
primary function of the Compensation
Committee is to review and approve, on behalf of the Board of Directors,
management recommendations regarding all forms of compensation to be provided
to
the executive officers and directors of Peoples and its subsidiaries, including
bonuses, equity-based compensation, incentives, perquisites, employee benefits
and salary programs. In carrying out this function, the Compensation
Committee is responsible for reviewing and approving goals and objectives
relevant to the compensation of Peoples’ executive officers and other officers
designated by the Board of Directors, evaluating such officers’ performance in
light of those goals and objectives and determining compensation based on that
evaluation. The Compensation Committee administers Peoples’ Amended
and Restated 1993 Stock Option Plan (the “1993 Plan”), 1995 Stock Option Plan
(the “1995 Plan”), 1998 Stock Option Plan (the “1998 Plan”), 2002 Stock Option
Plan (the “2002 Plan”) and 2006 Equity Plan (the “2006 Plan”) and approves
grants of awards under these plans in compliance with applicable securities
and
tax laws. The Compensation Committee also undertakes such other
responsibilities as the full Board of Directors may from time to time
prescribe.
The
“COMPENSATION
DISCUSSION AND ANALYSIS”regarding executive compensation
appears
beginning on page 17, and the “COMPENSATION
COMMITTEE REPORT”appears
beginning on page 27.
The
Executive Committee is comprised of
five directors: Mark F. Bradley, Chairman; Wilford D. Dimit; Robert W. Price;
Paul T. Theisen; and Joseph H. Wesel. The Executive Committee is
authorized to act in the intervals between meetings of the directors on matters
delegated to the Executive Committee by the full Board of
Directors. There was one meeting of the Executive Committee held
during the 2007 fiscal year.
The
members of the Governance and
Nominating Committee are: Paul T. Theisen, Chairman; George W.
Broughton; and Robert W. Price, each of whom served on the Governance and
Nominating Committee throughout the entire 2007 fiscal year. Wilford D. Dimit
was also a member of the Governance and Nominating Committee until his
resignation from that Committee effective January 25, 2007. The Board
of Directors has determined that each of the members of the Governance and
Nominating Committee qualifies as an independent director under applicable
NASDAQ Rules. Mr. Dimit had served on the Governance and Nominating
Committee pursuant to a provision in the applicable NASDAQ Rules which permits,
under exceptional and limited circumstances, one member of the Governance and
Nominating Committee to be a director who does not meet the independence
requirements of the applicable NASDAQ Rules if (i) that director is not a
current officer or employee of Peoples or any of its 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 shareholders. The Board of Directors
made such a determination with regard to Mr. Dimit due to his experience as
a
member of the Executive Committee since 2004 and a member of the Governance
and
Nominating Committee since its inception in 2003. A member of the
Governance and Nominating Committee
appointed under this exception
may not serve longer than two years. Consequently,
the Board of Directors
expects that Mr. Dimit’s committee seat will remain vacant until January 1,
2009, at which time Mr. Dimit will no longer be disqualified as an independent
director under the look-back provisions of the applicable NASDAQ Rules due
to
the transactions described above under the caption “Independence
of
Directors”and it is
expected that Mr. Dimit will be re-appointed to the Governance and Nominating
Committee.
The
Governance and Nominating Committee
is organized and conducts its business pursuant to a written charter adopted
by
the Board of Directors. The primary responsibilities of the
Governance and Nominating Committee are:
|
·
|
to
establish and articulate qualifications, desired background and selection
criteria for members of the Board of Directors consistent with the
eligibility requirements set forth in Peoples’ Code of
Regulations;
|
|
·
|
to
identify qualified candidates for election (including re-election),
nomination or appointment to the Board of Directors and recommend
to the
full Board a slate of director nominees for each annual meeting of
the
shareholders of Peoples or as vacancies
occur;
|
|
·
|
to
make recommendations to the full Board of Directors and the Chairman
of
the Board regarding assignment and rotation of members and chairs
of
committees of the Board;
|
|
·
|
to
oversee matters of corporate governance, including an evaluation
of Board
performance and processes;
|
|
·
|
to
review with the Chairman of the Board, or another director designated
by
the full Board, issues involving potential conflicts of interest
and/or
any change of status of directors pursuant to applicable law and
the
applicable provisions of Peoples’ Code of Ethics for Directors, Officers
and Employees or Peoples’ Code of
Regulations;
|
|
·
|
to
recommend the number of individuals to serve on the Board of
Directors;
|
|
·
|
to
periodically review Peoples’ Code of Ethics for Directors, Officers and
Employees and recommend to the full Board changes thereto, as necessary;
and
|
|
·
|
to
undertake such other responsibilities as may be referred to the Governance
and Nominating Committee by the full Board of Directors or the Chairman
of
the Board.
|
The
charter of the Governance and
Nominating Committee is posted on the “Corporate Governance & Ethics”
page of Peoples’ website at www.peoplesbancorp.com. The Governance
and Nominating Committee periodically reviews and reassesses the adequacy of
its
charter and recommends any proposed changes to the full Board of Directors
for
approval. The Governance and Nominating Committee held one meeting
during the 2007 fiscal year.
As
described above, Peoples has a
standing Governance and Nominating Committee that has the responsibility to
identify and recommend to the full Board of Directors individuals qualified
to
become directors. Each candidate must satisfy the eligibility
requirements set forth in Peoples’ Code of Regulations. To be
eligible for election as a director, an individual must be a shareholder of
Peoples. In addition, the individual must either (i) serve as chief
executive officer or in another position of active leadership with a business
or
professional interest located within the geographic area served by Peoples
and
its subsidiaries or (ii) serve as an executive officer of Peoples or one of
Peoples’ subsidiaries. However, the qualification in the preceding
sentence does not apply to individuals elected as initial
directors. An individual will not be eligible for nomination and
re-election as a director after five years has passed since the individual
ceased to hold the executive or leadership position satisfying the eligibility
requirement. This five-year limitation does not apply, however, to an
individual who retires from service as the Chairman of the Board or the Chief
Executive Officer of Peoples.
When
considering potential candidates
for the Board of Directors, the Governance and Nominating Committee strives
to
assure that the composition of the Board, as well as its practices and
operation, contribute to value creation and to the effective representation
of
Peoples’ shareholders. The Governance and Nominating Committee may
consider those factors it deems appropriate in evaluating director candidates,
including judgment, skill, diversity, strength of character, experience with
businesses and organizations comparable in size or scope to Peoples, experience
and skill relative to other Board members and specialized knowledge or
experience. Depending upon the current needs of the Board of
Directors, certain factors may be weighed more or less heavily by the Governance
and Nominating Committee.
In
considering candidates for the Board
of Directors, the Governance and Nominating Committee evaluates the entirety
of
each candidate’s credentials and, other than the eligibility requirements set
forth in Peoples’ Code of Regulations, does not have any specific minimum
qualifications that must be met by a Governance and Nominating
Committee-recommended nominee. However, the Governance and Nominating
Committee does believe that all members of the Board should have the highest
character and integrity, a reputation for working constructively with others,
sufficient time to devote to Board matters and no conflict of interest that
would interfere with performance as a director.
The
Governance and Nominating Committee
considers candidates for the Board of Directors from any reasonable source,
including shareholder recommendations, and does not evaluate candidates
differently based on who has made the recommendation. The Governance
and Nominating Committee has the authority under its charter to hire and pay
a
fee to consultants or search firms to assist in the process of identifying
and
evaluating director candidates. No such consultants or search firms
have been used to date and, accordingly, no fees have been paid to consultants
or search firms.
Shareholders
may recommend director
candidates for consideration by the Governance and Nominating Committee by
writing to the Corporate Secretary of Peoples at Peoples’ executive offices in
Marietta,
Ohio. Such
recommendation should
provide the candidate’s name, age, business address, residence address,
principal occupation or employment and number of common shares beneficially
owned. The recommendation should also describe the qualifications,
attributes, skills or other qualities of the recommended director
candidate. A written statement from the candidate consenting to be
named as a director candidate and, if nominated and elected, to serve as a
director should accompany any such recommendation.
Shareholders
who wish to nominate an
individual for election as a director at an annual meeting of the shareholders
of Peoples must comply with Peoples’ Code of Regulations regarding shareholder
nominations. Shareholder nominations must be made in writing and
delivered or mailed to the Corporate Secretary of Peoples not less than 14
days
nor more than 50 days prior to any meeting of shareholders called for the
election of directors. However, if less than 21 days’ notice of the
meeting is given to the shareholders, the nomination must be mailed or delivered
to the Corporate Secretary not later than the close of business on the seventh
day following the day on which the notice of the meeting was mailed to the
shareholders. Nominations for the Annual Meeting must be received by
March 26, 2008. Each nomination must contain the following
information to the extent known by the nominating
shareholder:
|
·
|
the
name, age, business address and residence address of each proposed
nominee;
|
|
·
|
the
principal occupation or employment of each proposed
nominee;
|
|
·
|
the
number of common shares beneficially owned by each proposed nominee
and by
the nominating shareholder; and
|
|
·
|
any
other information required to be disclosed with respect to a nominee
for
election as a director under the SEC’s proxy
rules.
|
Each
nomination must be accompanied by
the written consent of the proposed nominee to serve as a director of Peoples
if
elected. Nominations not made in accordance with the above
requirements and Peoples’ Code of Regulations will not be
considered.
Although
Peoples has not to date
developed formal processes by which shareholders may communicate directly with
directors, it believes the informal process, in which any communication sent
to
the Board of Directors either generally or in care of the Chief Executive
Officer, the Corporate Secretary or another corporate officer is forwarded
to
all members of the Board or specified individual directors, as appropriate,
has
served the needs of the Board and Peoples’ shareholders. There is no screening
process, and all shareholder communications that are received by its officers
for the attention of the Board of Directors are forwarded to the members of
the
Board.
Having
found no problems with
shareholder communications to directors under the existing process described
above, the Governance and Nominating Committee has not found it necessary to
develop more specific procedures. Until other procedures are developed and
posted on the “Corporate Governance & Ethics” page of Peoples’ website
at www.peoplesbancorp.com, any communication to the Board of Directors or to
individual directors may be mailed to the Board or one or more individual
directors, in care of Peoples’ Corporate Secretary, at Peoples’ headquarters in
Marietta,
Ohio.
The mailing envelope must contain a
clear notation indicating that the enclosed letter is a “Shareholder-Board
Communication” or “Shareholder-Director Communication,” as
appropriate. In addition, shareholders may utilize Peoples’ website
to communicate with the Board or individual directors. Correspondence
through the “Investor Relations - Shareholder Information” page of the website
is also directed to the Corporate Secretary. All such communications,
whether via mail or the website, must identify the author as a shareholder
of
Peoples and clearly state whether the intended recipients are all members of
the
Board of Directors or certain specified individual directors. The
Corporate Secretary will make copies of all such communications and circulate
them to the appropriate director or directors without any
screening.
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
of Compensation Program
The
Compensation Committee of the Board
of Directors (for the purpose of this discussion and analysis, the “Committee”)
has responsibility for establishing, implementing, and continually monitoring
adherence with Peoples’ compensation philosophy. The Committee
ensures that the total compensation paid during 2007 to the individuals included
in the “SUMMARY
COMPENSATION
TABLE FOR 2007”on
page 28 (referred to collectively as
the “named executive officers”), is reasonable, competitive and aligned with the
best interests of the shareholders. We believe all employees should
be rewarded for executing on goals designed to create long-term shareholder
value.
The
goal of the compensation program for
the named executive officers is the same as our goal for operating Peoples
– to
create long-term value for our shareholders. Toward this goal, we
have designed and implemented a compensation program for the named executive
officers to (1) reward them for sustained financial and operating performance
and leadership excellence, (2) align their interests with those of the
shareholders and (3) encourage strong performers to remain with Peoples for
long
and productive careers. The elements of our compensation program
consist of salary, annual cash incentive, equity-based incentive compensation,
retirement and other benefits, and perquisites and other personal
benefits. We combine the compensation elements for each named
executive officer in a manner we believe optimizes the named executive officer’s
contribution to Peoples and the shareholders.
Compensation
Philosophy and
Objectives
The
compensation philosophy of the
Committee is to design and implement a compensation program that serves to
retain, recruit, and develop talented financial services personnel and
management. In addition, we seek to award compensation based on the
individual’s contribution to the overall improved performance of
Peoples.
While
the Committee oversees the
compensation of all officers and employees, a primary focus of the Committee
is
the compensation for Peoples’ executives and senior officers. The
intent is to reward all employees for continuous improvement and industry
leading best practices, but specifically, to set up compensation plans for
executives and senior officers to reward those employees for enhancing
shareholder value. The compensation philosophy covers the direct
forms of compensation including base salary, annual cash incentives and any
form
of equity-based compensation. The compensation philosophy statement
is a tool that the Board of Directors and management use to ensure that
compensation programs are developed that are both competitive with respect
to
officer compensation and reasonable within the marketplace.
|
·
|
Base
Salary: Base salaries are to be competitive with the market
median of Peoples’ peer group. Based upon individual
circumstances, actual base salary levels may be higher or lower than
the
market median.
|
|
·
|
Total
Cash Compensation: Total cash compensation is base salary plus
an annual cash incentive. The objective is for total cash
compensation to be consistent with the market median of Peoples'
peer
group for achieving targeted performance and at or above the 75th
percentile of Peoples' peer group for achieving higher
performance.
|
|
·
|
Total
Direct Compensation: Peoples utilizes long-term equity-based
incentives for compensation purposes, typically in the form of
equity-based awards for executives and senior officers in leadership
capacities or other key positions. The objective is to grant
equity-based awards only after performance goals have been achieved,
and
then, there is additional time-based vesting of the awards to enhance
employee retention. Total direct compensation is total cash
compensation plus equity-based awards. The goal for total
direct compensation is that the annualized total direct compensation
will
be at the market median of Peoples' peer group for achieving targeted
performance and at or above the 75th percentile of Peoples' peer
group for
achieving higher performance.
|
Role
of Executive Officers in Compensation
Decisions
The
Committee makes all compensation
decisions related to the named executive officers of Peoples and approves
equity-based award grants for the non-employee directors. Annually,
the President and Chief Executive Officer reviews the performance of each
executive officer (excluding his own) by comparing the results achieved to
established goals as well as the overall performance of Peoples as compared
to
Board approved corporate performance goals. This data, along with
salary data derived from Peoples’ peer group, are the bases for his
recommendations to the Committee with respect to the compensation of the other
executive officers, including base salary adjustments, annual cash incentive
payments, and equity-based awards. The Committee considers the
President and Chief Executive Officer’s recommendations, and uses its own
discretion in making the final compensation decisions with respect to the named
executive officers, which may differ from the recommendations of the President
and Chief Executive Officer. Additionally, the President and Chief
Executive Officer prepares a summary of his performance for the Committee and
provides a recommendation to the Committee regarding his personal base salary
that reflects his desire to maintain internal pay equity between the President
and Chief Executive Officer and other executive officers. The
Committee considers his recommendation, and uses its own discretion in making
the ultimate compensation decision with respect to the President and Chief
Executive Officer, which may differ (and has differed) from the recommendation
of the President and Chief Executive Officer. The Committee also
seeks input from other members of the Board of Directors regarding the
performance of the President and Chief Executive Officer in determining his
base
salary adjustment, annual cash incentive payment and equity-based awards.
The
Committee has the sole authority to
engage the services of any compensation consultant or advisor. In
order to ensure that Peoples provides total compensation that is
performance-based and competitive with its geographic peers and the financial
services industry in general, from time to time, the Committee has used the
services of Amalfi
Consulting, LLC (formerly the Compensation Group of Clark
Consulting)(“Amalfi
Consulting”), a compensation and benefits consultant serving the financial
services industry. Amalfi Consulting provides market intelligence on
compensation trends along with its views on specific compensation programs,
with
the oversight of the Committee. Other services provided by Amalfi
Consulting during 2007 included the review of proxy materials and guidance
on
compliance with Internal Revenue Code Section 409A. The total amount of fees
paid to Amalfi Consulting for services to the Committee in 2007 was
$31,000. At the request of the Committee, an Amalfi Consulting
representative attended two (2) Committee meetings in 2007.
The
Committee, with the assistance of
Amalfi Consulting, identified a group of 14 peer financial institution holding
companies based on market capitalization, geographic location, performance,
and
similarity in financial products offered for the purpose of comparing Peoples’
compensation programs. For the fiscal 2007 year, this peer group was
comprised of the following 14 publicly-traded financial institution holding
companies with total asset sizes ranging from $1.0 billion to $8.0 billion
and
located in similar markets and/or geographic areas to Peoples in the states
of
Ohio,
West
Virginia, Pennsylvania,
Kentucky,
and New York:
|
Peer
Group Member
|
Location
|
Total
Assets
($
Billions)
|
Ticker
|
|
United
Bankshares, Inc.
|
Charleston,
WV
|
$8.0
|
UBSI
|
|
Park
National Corporation
|
Newark,
OH
|
$6.5
|
PRK
|
|
WesBanco,
Inc.
|
Wheeling,
WV
|
$5.4
|
WSBC
|
|
S&T
Bancorp, Inc.
|
Indiana,
PA
|
$3.3
|
STBA
|
|
Republic
Bancorp, Inc.
|
Louisville,
KY
|
$3.2
|
RBCAA
|
|
First
Place Financial Corp.
|
Warren,
OH
|
$3.2
|
FPFC
|
|
Community
Trust Bancorp,
Inc.
|
Pikeville,
KY
|
$2.9
|
CTBI
|
|
United
Community Financial Corp.
|
Youngstown,
OH
|
$2.8
|
UCFC
|
|
City
Holding Company
|
Charleston,
WV
|
$2.5
|
CHCO
|
|
Tompkins
Financial Corporation
|
Ithaca,
NY
|
$2.4
|
TMP
|
|
Farmers
Capital Bank Corporation
|
Frankfurt,
KY
|
$2.1
|
FFKT
|
|
First
Defiance Financial Corp.
|
Defiance,
OH
|
$1.6
|
FDEF
|
|
S.Y. Bancorp,
Inc.
|
Louisville,
KY
|
$1.4
|
SYBT
|
|
Camco
Financial
Corporation
|
Cambridge,
OH
|
$1.0
|
CAFI
|
This
14 member group is referred to in
this discussion and analysis as the “Peer Group.” The Committee
reviewed the Peer Group on February 8, 2007 and determined it was appropriate
to
add United Bankshares, Inc. (UBSI) to the Peer Group for 2007. The
Committee uses Peer Group data to analyze the overall competitiveness of
Peoples’ named executive officers’ compensation relative to our compensation
philosophy and objectives.
For
2007, the principal components of
compensation for the named executive officers were:
|
·
|
Base
salary;
|
|
·
|
Annual
cash incentive;
|
|
·
|
Long-term
equity-based incentive
compensation;
|
|
·
|
Retirement
and other benefits; and
|
|
·
|
Perquisites
and other personal benefits.
|
The
Committee has determined that base
salaries for the executive officers should be competitive with the market median
of the Peer Group. Depending on individual job performance, the
actual base salary for a particular named executive officer may be higher or
lower than the market median (typically in the range of the 40th to 60th
percentile). Individual executive officer salary increases are
reviewed annually by the Committee and are based on (1) the individual’s overall
contribution to Peoples’ performance, (2) the executive officer’s attainment of
specific individual business objectives during the preceding year and (3) an
evaluation of the most recent comparative Peer Group data supplied by Amalfi
Consulting, with adjustments for individual performance.
Specific
individual business objectives
for 2007 were approved for each executive officer by the Committee on March
8,
2007. The individual business objectives were designed to
complement People’s corporate goals for 2007, which were approved by the Board
of Directors on February 8, 2007. The individual business objectives were both
quantitative in nature, such as achieving sales and revenue goals and cost
containment, and qualitative in nature, such as the development, management
and
retention of key staff and the assessment and development of quality products
and services. These objectives are designed to grow core earnings
which will, in turn, promote the long-term interests of Peoples’
shareholders.
Beginning
in mid-2007, and
continuing in recent months, the Committee gathered and analyzed compensation
and financial results for
companies in the Peer Group for the year ended December
31,
2006. The Committee engaged the services of Amalfi Consulting, to
assist in determining the overall competitiveness of the base salaries of
Peoples’current
executive officers when compared
to those of the Peer
Group. In
its review of Peer Group financial
data, the Committee
determined
that
Peoples’financial
performance was comparable
to
or
better than the median performance of
the Peer
Group
in several key performance
indicators, primarily
return
on average
assets, return
on average equity,return
on average tangible equity,
earnings per share growth,and efficiency
ratio.
|
Return
on Average
Assets
2006
|
Return
on Average Equity
2006
|
Return
on Average Tangible Equity
2006
|
EPS
Growth
Rate
2006
|
EPS
Growth
Rate
3
Year
|
Efficiency
Ratio
2006
|
|
|
Peer
Group –
Average
|
1.22%
|
12.67%
|
15.64%
|
-1.00%
|
12.44%
|
58.76%
|
|
Peer
Group – 25thPercentile
|
0.93%
|
9.52%
|
12.93%
|
-5.84%
|
2.45%
|
62.78%
|
|
Peer
Group – 50thPercentile
|
1.14%
|
12.92%
|
16.01%
|
0.99%
|
12.15%
|
60.01%
|
|
Peer
Group – 75thPercentile
|
1.56%
|
15.28%
|
18.37%
|
5.61%
|
20.57%
|
55.79%
|
|
Peoples
Bancorp
Inc.
|
1.15%
|
11.33%
|
18.88%
|
0.68%
|
28.76%
|
57.49%
|
After
evaluating the base salaries paid to Peoples’ executive officers against the
Peer Group base salary data, Peoples’ financial performance, and Peoples’
compensation philosophy and objectives, the Committee concluded that the base
salaries of Peoples’ current executive officers were below the market median of
the Peer Group. In making its determinations with respect to base
salary adjustments, the Committee also considered the individual job performance
of each named executive officer, including his or her responsibilities and
contribution to Peoples’ overall performance. In an effort to improve
Peoples’ ability to retain and attract executive officer talent, the
Compensation Committee determined that adjustments to current executive officer
base salaries were appropriate, and in the best interests of Peoples and its
shareholders. The Committee also determined that the base salary to
be paid to Larry E. Holdren, Peoples’ Executive Vice President – Business and
Corporate Development, who ceased to serve in an executive officer capacity
as
of September 4, 2007, should be adjusted to reflect the change in his
responsibilities. The Committee did not adjust the base salary of
Deborah K. Hill, Peoples’ Executive Vice President, Consumer and Business
Financial Services, who joined Peoples and Peoples Bank on September 4,
2007. On August 9, 2007, the Board, in absence of a meeting of the
Committee, approved Ms. Hill’s (1) base salary as $182,000; (2) a deferred
employment sign-on bonus in the amount of $30,000, payable in February 2008
and
contingent upon her employment at that time of payment; (3) a grant of 2,000
restricted shares on October 1, 2007, with restrictions that will lapse and
the
restricted shares will become fully vested as to: (a) 1,000 restricted shares
on
April 1, 2008; and (b) 1,000 restricted shares on April 1, 2009; (4) a grant
of
3,000 stock appreciation rights to be settled in common shares with an exercise
price of $27.99, a term of 10 years and exercisable at the end of the vesting
period, which is three years from the grant date; and (5) a Change in Control
Agreement, effective as of September 4, 2007, with the same terms as the change
in control agreements Peoples has entered into with Carol A. Schneeberger,
David
T. Wesel and Joseph S. Yazombek. Ms. Hill did not participate
in the
Incentive Award Plan and the equity-based long-term incentive plan for fiscal
year 2007, but she will be
eligible to participate in
these plans for fiscal year 2008.
As
a result of the aforementioned
evaluation, on February 14,
2008, the Committee approved base salary changes, retroactive to January 1,
2008, as follows: Mr. Bradley -
$280,000; Ms. Schneeberger - $190,000; Mr. Yazombek - $220,000; Mr. Wesel -
$168,000; and Mr. Holdren - $120,000.
Executive
officers are eligible to earn
an annual cash incentive under the Incentive Award Plan. The
Incentive Award Plan was developed to reward performance by providing increasing
percentages of cash awards for increasing levels of performance and, conversely,
to not pay cash incentives if performance goals are not met. The
Incentive Award Plan is designed to motivate and reward the named executive
officers for their contributions to business goals that we believe drive our
earnings and create shareholder value. There are three levels of
incentive awards under the Incentive Award Plan: threshold, target
and maximum. Achieving threshold performance results in no payout to
the executives. The target incentive award reflects the expected
results for the year and is designed to result in total cash compensation (base
salary and annul cash incentive) at the market median of the Peer Group for
achieving targeted performance. If exceptional performance is
achieved, the maximum incentive award level is paid and is designed to result
in
total cash compensation at or above the 75th percentile of the Peer
Group.
On
February 8, 2007, the Board of
Directors established the corporate cash incentive financial goals for 2007,
which were comprised of three financial components: (i) Earnings Per Share;
(ii)
Return On Average Equity; and (iii) Efficiency Ratio. These financial
measurements were selected because the Board believes they demonstrate the
overall operating performance of Peoples and are widely recognized as industry
benchmarks for operating performance and improvements in these ratios are
indicators of enhanced operating performance which translates into increased
shareholder value. The weightings applied to the Earnings Per Share
and Return On Average Equity components were 45% each, which reflect results
achieved for shareholders. The Efficiency Ratio was weighted at 10%
as it measures the productivity of the organization and gives indications as
to
its operating effectiveness. The weightings were determined based on
their respective impact on long-term shareholder value.
The
Board of Directors set the corporate
financial goals for 2007 as shown in the table below. Performance
results for 2007 are also shown.
|
Weighting
|
Threshold
|
Target
|
Maximum
|
2007
Results
|
|
|
Earnings
Per Share
|
45%
|
$2.01
|
$2.11
|
$2.21
|
$1.74
|
|
Return
on Average Equity
|
45%
|
10.74%
|
11.30%
|
12.94%
|
9.21%
|
|
Efficiency
Ratio
|
10%
|
58.06%
|
57.61%
|
57.13%
|
57.07%
|
The
levels of achievement designated as
threshold, target and maximum were established based on (1) the prior year’s
actual performance and (2) projected operating growth taking into account the
outlook for the financial services industry in the coming year and overall
economic conditions.
If
the corporate
target performance goals were achieved, Mr. Bradley had the potential to earn
a
payout of up to 50% of his annual base salary; whereas, each of the other
executive officers had the potential to earn a payout of up to 35% of his or
her
annual base salary. However, if the financial performance was at
threshold or lower, there would have been no payout based on corporate results,
although each executive officer might still be eligible for an incentive payout
based on his or her individual performance at the discretion of the
Committee. Payout to the named executive officers for achieving
threshold performance or below in any given corporate or individual performance
measure is 0% for the given performance measure.
Annual
individual performance goals for
Mr. Bradley, in his capacity as President and Chief Executive Officer, included
his effectiveness in strategic thinking and implementation of long-range plans,
identification of key management personnel, and other leadership-based factors
designed to promote shareholder value. The annual cash incentive was
weighted 90% for attainment of the corporate financial goals and 10% for
individual performance goals, as determined by the Committee with input from
the
entire Board of Directors. The maximum cash payout Mr. Bradley could
have received under the Incentive Award Plan for 2007 performance was 100%
of
his annual base salary.
Annual
individual performance goals were
also established for each other executive officer, the nature of which differed
depending upon the officer’s job responsibilities. Goals were both
quantitative in nature, such as sales and revenue goals and cost containment,
and qualitative in nature, such as the development, management and retention
of
key staff and the assessment and development of quality products and
services. Annual cash incentives for these other executive officers
were weighted 75% to 90%, depending on the nature of the position held, for
the
attainment of the corporate financial goals and the remaining 10% to 25% based
on the attainment of specific individual performance goals. The
maximum cash payout which these individuals could have received under the
Incentive Award Plan for 2007 performance was 70% of his or her respective
annual base salary.
The
Committee also has in place an
absolute minimum level of corporate performance, which was defined in 2007
as
85% of Peoples’ threshold earnings per share goal of $ $2.01, or
$1.71. If Peoples did not achieve absolute minimum earnings per
share, each executive officer would not have been eligible for a year-end cash
incentive payout based on the achievement of the
financial goals for
either corporate or individual
performance, although the Committee could have granted individual cash
incentives if the executive officer’s individual contribution warranted such
payment. The absolute minimum performance requirement of $1.71 in
earnings per share was exceeded in 2007; therefore, executives received cash
incentive awards based on achieving the maximum level of performance relative
to
the efficiency ratio. No cash incentive was earned for Earnings Per
Share or Return on Average Equity components as the threshold levels of
corporate performance for these financial goals were not achieved. If
Peoples’ earnings per share were between absolute minimum and threshold, then no
incentives would have been earned from corporate results but each executive
officer would have been eligible to earn cash incentives and long-term equity
incentives based on individual contribution to enhanced shareholder
value. Additionally, an executive who is not employed as of the
payout date is not eligible to receive the cash incentive
payment. Accordingly, Mr. Landers did not receive a cash incentive
payment for 2007 as he resigned as of April 9, 2007.
The
Committee retains the right to
exercise discretion in the awarding of cash incentives absent the attainment
of
performance goals, or to increase or reduce the size of the payout of cash
incentives under the Incentive Award Plan. The Committee did not
exercise discretion with respect to the cash incentives awarded to the named
executive officers in February 2008 for 2007 corporate and individual
performance.
Payout
percentages for the various
levels of performance are reviewed by the Committee on an annual basis and
have
not been changed since calendar year 2004. The Board of Directors
approves corporate performance goals on an annual basis. Cash
incentive awards are paid after results for the performance goals are
determined.
At
the end of each year, the extent to
which Peoples’ financial performance goals and the individual performance goals
are achieved is measured by the Committee. Cash incentives earned for
corporate and individual performance in 2007 were approved by the Committee
on
February 14, 2008 and, to the extent not deferred as described below, paid
on
February 22, 2008. A summary of the relative weightings of corporate
and individual goals, the total cash incentive payout potential and the actual
payouts earned for 2007 performance are shown below.
ANNUAL
CASH INCENTIVE COMPENSATION
|
Named
Executive
Officer
|
Corporate
Weighting
|
Individual
Weighting
|
Total
Maximum Incentive Payout Potential
(*)
|
2007
Total
Actual Incentive
Payout
(*)
|
2007
Annual
Cash
Incentive
Earned
|
|
Mark
F. Bradley
|
90%
|
10%
|
100%
|
15.0%
|
$38,250
|
|
Carol
A. Schneeberger
|
90%
|
10%
|
70%
|
13.3%
|
$22,477
|
|
Joseph
S. Yazombek
|
75%
|
25%
|
70%
|
15.5%
|
$31,932
|
|
David
T. Wesel
|
75%
|
25%
|
70%
|
22.8%
|
$35,910
|
|
Larry
E. Holdren
|
100%
|
N/A
|
70%
|
7.0%
|
$11,345
|
(*) Payout calculated as a percentage of base salary.
Executive
officers are required to defer
25% of any annual cash incentives earned under the terms of the Incentive Award
Plan. If the executive officer terminates his or her employment for
any reason other than death, disability or retirement prior to the end of the
three-year deferral period, the deferred portion of the annual cash incentive
is
forfeited. This mandatory deferral is another way to promote
retention of key executives, as the executives must remain with Peoples until
the required deferral period lapses or they forfeit that portion of their
incentive payout. Once the mandatory deferral period has lapsed,
executive officers may either take a cash distribution or further defer receipt
of the cash incentive, as discussed in the following paragraph, based on an
election made under the terms of the Incentive Award Plan prior to the year
the
cash incentive was earned, until they retire or their employment is
terminated.
In
addition to the mandatory 25%
deferral, the executive officers also have the option to (1) defer any remaining
annual cash incentive compensation to be paid to them and (2) further defer
the
mandatory amount after the original three-year period has lapsed until they
retire or until their employment with Peoples is terminated. The
amount an executive officer elects to voluntarily defer is chosen by the
executive officer prior to the beginning of the calendar year in which the
cash
incentive compensation is earned. Interest on the deferred
compensation is accrued at a rate equal to 50% of Peoples’ Return on Average
Equity achieved during each calendar year throughout the deferral
period. This voluntary deferral further links the long-term economic
interests of the named executive officers with those of Peoples and its
shareholders.
On
February 14, 2008, the Board of
Directors established the corporate cash incentive financial goals for 2008,
which are comprised of the same three financial components as used for 2007:
(i)
Earnings Per Share; (ii) Return On Average Equity; and (iii) Efficiency
Ratio. The weightings applied to the Earnings Per Share and Return On
Average Equity components for 2008 will be 45% each. These measures
reflect results achieved for shareholders. The Efficiency Ratio will
be weighted at 10% as it measures the productivity of the organization and
gives
indications as to its operating effectiveness. The weightings were
determined based on their respective impact on long-term shareholder
value. The 2008 target corporate financial goal for Earnings Per
Share is $2.05.
Long-Term
Equity-Based
Incentive Compensation
The
Committee believes that equity-based
compensation and ownership ensures that the named executive officers have a
continuing stake in the long-term success of Peoples. The Committee
believes that the interests of our shareholders are best served when a
significant percentage of the named executive officers’ compensation is
comprised of equity-based incentives that appreciate in value contingent upon
an
increase in the price of our common shares. It is the Committee’s
intent to grant equity-based awards to our named executive officers in such
amounts as may be required to accomplish our compensation philosophy and
objectives.
Executive
officers are eligible to earn
long-term equity-based incentives under Peoples’ equity-based compensation
plan. Like the Incentive Award Plan (our annual cash incentive plan),
the Committee administers Peoples’ 2006 Equity Plan to reward increasing levels
of performance, and conversely, to not grant awards if performance goals are
not
met. There are three possible levels of equity-based incentive awards
under our equity-based compensation plan: threshold, target and
maximum. Achieving threshold performance results in no award to the
executives. The target incentive award reflects Peoples’ expected
results for the year and is designed to result in total direct compensation
(total cash compensation and equity-based awards) at the market median of the
Peer Group. If exceptional performance is achieved, the maximum level
is awarded and is designed to result in total direct compensation at or above
the 75th percentile of the Peer Group. Awards are granted on an
annual basis, if earned, and feature a time-based vesting period, which the
Committee believes will focus the executive officers on Peoples’ long-term
performance improvement and increased shareholder value.
During
2005, the Committee engaged
Amalfi Consulting to review the competitiveness of Peoples’ equity-based
compensation plans. As a result of that review, the Committee
designed the 2006 Equity Plan to provide new, more competitive incentive
compensation opportunities to our executive officers. The 2006 Equity
Plan, which was approved by shareholders at the 2006 annual meeting,
allows different forms of long-term equity-based awards to be granted for
compensation purposes, including restricted stock and stock appreciation rights
to be settled in common shares (SARs), both of which were not available under
Peoples’ previous long-term equity-based incentive plans. The
Committee has chosen these types of awards to avoid higher levels of dilution
created by other equity awards such as incentive stock options. Fewer
restricted shares are required to award an executive similar economic value
as
stock options or SARs. Additionally, SARs when settled in common
shares place fewer shares in the market as the appreciated value is used to
calculate the number of shares issued when the SARs are exercised instead of
a
number of shares equal to the original number of options
granted. Additionally, the Committee believes restricted shares
immediately tie the executive to the same risk and reward potential as
shareholders while SARs settled in common shares create value for the executives
only if the share price appreciates, which will serve to focus executives on
creating value for themselves and other shareholders. Restricted
shares and SARs to be settled in common shares enable the executive officer
to
hold the equity earned as they are not required to invest cash to acquire the
shares.
The
objective is to grant equity-based
awards to our executive officers only after pre-established performance goals
are achieved. To enhance retention of the named executive officers
and to ensure that current and subsequent business decisions are aligned with
the long-term interests of the shareholders, a three-year vesting requirement
must be met. However, the Committee has the authority to accelerate
the vesting period when it believes such action would be in the best interests
of Peoples and its shareholders. The Committee did not exercise this
authority in 2007. The Committee believes that the 2006 Equity Plan
strengthens Peoples’ ability to attract, develop, and retain talented
executives, upon whom our success is dependent, as well as promotes closer
alignment with the long-term performance goals of Peoples and the long-term
interests of the shareholders.
To
determine the competitiveness of
equity-based award grants, the Committee established a goal for total direct
compensation (total cash compensation plus equity-based awards) to be at the
market median of the Peer Group for achieving targeted corporate performance
and
at or above the 75th percentile of the Peer Group for achieving higher
performance results.
In
determining the total number of
equity-based awards to be granted annually to each executive officer, the
Committee considers the executive officer’s individual performance as well as
the performance of Peoples during the immediately preceding year. The
criteria for granting equity-based awards use the same corporate and individual
performance measures used for determining annual cash incentive awards under
the
Incentive Award Plan, thereby maximizing attention on these
goals.
On
February 8, 2007, the Board of
Directors established the equity-based incentive awards financial goals for
2007, which were comprised of three financial components: (i) Earnings Per
Share; (ii) Return On Average Equity; and (iii) Efficiency
Ratio. These financial measurements are identical to those selected
for the cash incentive awards and were selected because the Board believes
they
demonstrate the overall operating performance of Peoples and are widely
recognized as industry benchmarks for operating performance and improvements
in
these ratios are indicators of enhanced operating performance which translates
into increased shareholder value. The weightings applied to the Earnings Per
Share and Return On Average Equity components were 45% each, which reflect
results achieved for shareholders. The Efficiency Ratio was weighted
at 10% as it measures the productivity of the organization and gives indications
as to its operating effectiveness. The weightings were determined
based on their respective impact on long-term shareholder
value.
The
Board of Directors set
the corporate financial goals for 2007 as shown in the table
below. Performance results for 2007 are also
shown.
|
Weighting
|
Threshold
|
Target
|
Maximum
|
2007
Results
|
|
|
Earnings
Per Share
|
45%
|
$2.01
|
$2.11
|
$2.21
|
$1.74
|
|
Return
on Average Equity
|
45%
|
10.74%
|
11.30%
|
12.94%
|
9.21%
|
|
Efficiency
Ratio
|
10%
|
58.06%
|
57.61%
|
57.13%
|
57.07%
|
If
the target corporate performance
goals were achieved, Mr. Bradley had the potential to earn an equity-based
award
with an economic value of up to 25% of his annual base salary, and the other
executive officers had the potential to earn equity-based awards with an
economic value of up to 20% of their respective annual base
salaries. The maximum economic value of equity-based awards Mr.
Bradley could have earned for 2007 was 50% of his annual base salary, and the
maximum economic value of equity-based awards available to the other executive
officers was 40% of their respective annual base salaries. The
economic value of equity-based awards to the named executive officers for
achieving threshold performance or below in any given corporate or individual
performance measure is 0% for the given performance measure.
The
Committee also has in place an
absolute minimum level of corporate performance, which was defined in 2007
as
85% of Peoples’ threshold earnings per share goal of $2.01, or
$1.71. If Peoples did not achieve absolute minimum earnings per
share, each executive officer would not have been eligible for a year-end
incentive payout in the form of an equity-based award for either corporate
or
individual performance, although the Committee could have granted long-term
equity-based incentives if the executive’s individual contribution warranted
such awards. The absolute minimum performance requirement of $1.71 in
earnings per share was exceeded in 2007; therefore, executives received equity
awards based on achieving the maximum level of performance relative to the
efficiency ratio. No equity-based award was earned for Earnings Per
Share or Return on Average Equity components as the threshold levels of
corporate performance for these financial goals were not achieved. If
Peoples’ earnings per share were between absolute minimum and threshold, then no
incentives would have been earned from corporate results but each executive
officer would have been eligible to earn long-term equity-based incentives
based
on individual contribution to enhanced shareholder value.
The
Committee retains the right to
exercise discretion in awarding equity-based compensation absent the attainment
of performance goals, or to increase or reduce the size of any such
award. Except as described in the following paragraph, the Committee
did not exercise discretion with respect to equity-based awards granted to
the
named executive officers in 2008 for 2007 corporate and individual
performance.
On
February 14, 2008, the Committee
exercised discretion in awarding equity-based compensation as it approved the
grant to Carol A. Schneeberger of 2,250 restricted shares on February 20,
2008. The restricted
shares
were granted in recognition of the
additional responsibilities Ms. Schneeberger has assumed since she became Chief
Financial Officer and Treasurer (on an interim basis) on April 10,
2007. The restrictions on Ms. Schneeberger’s
restricted
shares
will lapse and the restricted
shares
will become fully vested as
to: (a) 1,125 restricted
shares
on August 20, 2008; and (b) 1,125
restricted
shares
on February 20,
2009.
Equity-based
award percentages for the
various levels of performance are reviewed by the Committee on an annual basis
and generally do not change from year to year. These award
percentages did not change from 2006 to 2007 and will not change in
2008. The Board of Directors approves corporate performance goals on
an annual basis. Equity-based awards are granted after results for
the performance goals are determined.
Equity-based
awards in the form of SARs
settled in Peoples’ common shares have an exercise price of 100% of the fair
market value of the underlying common shares on the date of
grant. The Committee’s philosophy in granting equity-based awards is
to promote retention through a three-year vesting period and to provide an
opportunity for executive ownership of Peoples’ common shares. This
in turn aligns the long-term interests of the executive officers with those
of
Peoples’ shareholders and provides the executive officers with an added
incentive to manage Peoples with a view toward maximizing long-term shareholder
value.
Equity-based
awards are granted with an
economic value based on The
NASDAQ Global Select Market’s closing price of Peoples’ common
shares on the date of the grant. The Committee approves equity-based
grants to the executive officers and other officers. In the absence
of a scheduled Committee meeting, the Board of Directors approves equity-based
grants to executive officers and other officers. This situation
occasionally occurs when awards to a single individual are granted as part
of a
recruitment package. The grant date is the date of the approval by
the Committee or the Board of Directors or the first future date after which
all
material information has been publicly disclosed, whichever is later, and is
tied to Peoples’ trading windows. In the event of equity-based grants
for new hires, the date of grant is the first business date of the month
following the new employee’s date of hire.
Equity-based
grants earned for corporate
and individual performance in 2007 were approved by the Committee on February
14, 2008, with a grant date of February 20, 2008. Award economic
values were calculated as a percentage of salary and were based on the
achievement of pre-established performance goals. Fifty percent of
the economic value was awarded in restricted shares, using the closing price
of
Peoples’ common shares on February 20, 2008. The remaining 50% of the
economic value was awarded in SARs to be settled in common shares, using the
Black-Scholes value of the SARs as of the award date. The restriction
period for the restricted shares is three years from the grant
date. The SARs have a term of 10 years and are exercisable at the end
of the vesting period, which is three years from the grant
date.
LONG-TERM
EQUITY-BASED INCENTIVE COMPENSATION
|
Named
Executive
Officer
|
Corporate
Weighting
|
Individual
Weighting
|
Total
Maximum Economic Value of Potential Equity
Award
(*)
|
Total
Economic Value of Equity
Award
(*)
|
2007
Restricted
Shares Award (number of common
shares)
Granted
as of Close of Business February 20, 2008
|
2007
SARs to be Settled in Common
Shares
Awards (number of common
shares)
Granted as of Close of Business February 20, 2008
|
|
Mark
F. Bradley
|
90%
|
10%
|
50%
|
7.5%
|
402
|
1,734
|
|
Carol
A. Schneeberger
|
90%
|
10%
|
40%
|
7.6%
|
270
|
1,165
|
|
Joseph
S. Yazombek
|
75%
|
25%
|
40%
|
8.9%
|
386
|
1,663
|
|
David
T. Wesel
|
75%
|
25%
|
40%
|
13.0%
|
431
|
1,857
|
|
Larry
E. Holdren
|
100%
|
N/A
|
40%
|
4.0%
|
136
|
588
|
(*)
Payout calculated as a
percentage of base salary.
The
Committee or the Board of Directors
has the authority to accelerate the date on which the SARs may be exercised,
or
the date of the termination of the restrictions applicable to a restricted
share
award, if the Committee or the Board of Directors determines that to do so
would
be in the best interests of Peoples. Neither the Committee nor the
Board of Directors exercised that authority during 2007. The
Committee believes the program will operate in the same manner for
2008. The 2008 target corporate financial goal for Earnings Per Share
is $2.05.
The
named executive officers participate
in certain benefit programs available to all other employees of Peoples, subject
to the same eligibility requirements as all employees, including participation
in (1) the Peoples Bancorp Inc. Retirement Plan and Trust (the “Retirement
Plan”), (2) the Peoples Bancorp Inc. Retirement Savings Plan, (3) the Peoples
Bancorp Group Term Life Insurance Plan and (4) the medical and dental insurance
plans provided by Peoples.
The
Retirement Plan has a different
benefit calculation for those individuals employed by Peoples before January
1,
2003 and those employed by Peoples on January 1, 2003 and thereafter. Messrs.
Bradley, Holdren, and Yazombek and Ms. Schneeberger were employed by Peoples
prior to January 1, 2003; whereas, Mr. Wesel was employed by Peoples after
January 1, 2003. Compensation used to calculate the amount of pension
payable under the Retirement Plan includes base salary, incentive pay, overtime
pay, bonuses, and any pre-tax savings under the Retirement Savings Plan (Peoples
401(k) Plan) as well as Peoples’ Internal Revenue Code Section 125
plan. Benefit distribution options are identical for both groups as
well as the vesting requirement in order to be eligible for a pension benefit
under the Retirement Plan.
For
those named executive officers
employed by Peoples before January 1, 2003, normal retirement occurs at age
65. The pension benefit is calculated as follows:
|
(a)
|
Forty
percent (40%) of the named executive officer’s average compensation
(annual compensation during the highest five consecutive years out
of the
last ten years of service), plus
|
|
(b)
|
Seventeen
percent (17%) of the excess of the named executive officer’s average
compensation in excess of his/her Social Security covered
compensation;
|
|
(c)
|
Such
sum of (a) and (b) is multiplied by the total years of service with
Peoples up to a maximum of 30.
|
For
those named executive officers
employed by Peoples before January 1, 2003, early retirement can occur at age
50
if the executive officer has at least 10 years of service with
Peoples. The pension benefit is calculated as
follows:
|
(a)
|
Forty
percent (40%) of the named executive officer’s average compensation
(annual compensation during the highest five consecutive years out
of the
last ten years of service), plus
|
|
(b)
|
Seventeen
percent (17%) of the excess of the named executive officer’s average
compensation in excess of his/her Social Security covered
compensation;
|
|
(c)
|
Such
sum of (a) and (b) is multiplied by the total years of service with
Peoples up to a maximum of 30 and reduced by one-fifteenth for each
of the
first five years and one-thirtieth for each of the next ten years
by which
the executive’s early retirement date precedes the normal retirement
date.
|
For
those named executive officers
employed by Peoples on or after January 1, 2003, normal retirement occurs at
age
65. The pension benefit is calculated as follows:
|
(a)
|
The
Cash Balance Account (as such term is defined in the Retirement Plan)
at
the end of the prior plan year,
plus
|
|
(b)
|
Interest
to the earlier of the end of the prior plan year or the end of the
month
containing the named executive officer’s termination of
employment on the Cash Balance Account as of the end of the prior
plan
year based on the one-year constant maturity rate for the December
preceding the determination year plus 50 basis points,
plus
|
|
(c)
|
An
annual accrual equal to 2% of compensation for the plan year provided
the
named executive officer earned a year of service during the plan
year.
|
For
those named executive officers
employed by Peoples on or after January 1, 2003, early retirement can occur
at
age 50 if the named executive officer has at least 10 years of service with
Peoples. The pension benefit is calculated as
follows:
|
(a)
|
The
Cash Balance Account at the end of the prior plan year,
plus
|
|
(b)
|
Interest
to the earlier of the end of the prior plan year or the end of the
month
containing the executive officer’s termination of employment on the Cash
Balance Account as of the end of the prior plan year based on the
one-year
constant maturity rate for the December preceding the determination
year
plus 50 basis points, plus
|
|
(c)
|
An
annual accrual equal to 2% of compensation for the plan year provided
the
named executive officer earned a year of service during the plan
year;
|
|
(d)
|
The
benefit is reduced as follows:
|
Ages
Reduction
60
–
65
6.66% per year
50
–
60
3.33% per year
None
of the named executive
officers participate in multiple defined benefit retirement
plans. Under the terms of the Retirement Plan, the named executive
officers are not granted extra years of credited service.
The
named executive officers are also
eligible to participate in the Peoples Bancorp Inc. Retirement Savings Plan
(Peoples’ 401(k) Plan), on the same basis as other employees. Peoples
matches 100% of the first 3% of the employee’s contribution and then matches 50%
of the next 2% that the employee contributes, the sum of which equals the
maximum match of 4%.
Additionally,
the named executive
officers participate in the Peoples Bancorp Group Term Life Insurance Plan
on
the same basis as other employees. Peoples pays the premiums for all
associates under this plan. In the event a named executive officer
dies, his or her beneficiary will be paid an amount equal to two times the
executive officer’s base salary at the time of death, up to a limit of
$600,000.
The
named executive officers are also
eligible to participate in the medical and dental insurance plans provided
by
Peoples. These individuals participate on the same basis as other
employees. The plans are contributory and both the employees and
Peoples pay for the cost of the health insurance premiums.
Perquisites
and Other Personal Benefits
The
Committee periodically reviews the
level of perquisites and other personal benefits provided to the named executive
officers. Consistent with its overall compensation program, the
Committee believes the perquisites and other personal benefits provided to
the
named executive officers are reasonable and necessary to attract and retain
employees for key positions to promote the long-term interests of our
shareholders.
On
January 12, 2006, the Committee
adopted an Executive Health Program for the executive officers. The
Executive Health Program provides an opportunity for each named executive
officer to participate in a comprehensive medical screening annually at the
expense of Peoples. Participation in this program is
voluntary. The objective of the Executive Health Program is the early
identification of potential health problems and the prompt, expert treatment
of
any medical problems detected, which could negatively impact Peoples’ financial
performance or current management succession plans.
Based
on business need, on a
case-by-case basis, the Committee grants the use of a company-paid automobile
and/or country club membership to selected named executive officers to further
business development on behalf of Peoples and its
shareholders. Personal use of a company-paid automobile is reported
as income to the named executive officer. Expenses relating to
personal use of the country club amenities are either reimbursed to Peoples
or
paid by the named executive officer.
Peoples
has entered into Change in
Control Agreements with all of the named executive officers. The
Change in Control Agreements are designed to motivate executive officers to
act
in the best interests of shareholders and to promote stability and continuity
of
the services of the executive officers during a change in
control. The Change in Control Agreements are “double trigger”
agreements that provide severance payments to an executive only if Peoples
or
its successor terminates the executive’s employment without “cause” or the
executive terminates his or her employment with “good reason” after the change
in control. The Committee chose the “double trigger” to forego extra
costs to Peoples or its successor if the executive continues in the same or
similar role after the change in control while still motivating the executive
to
act in the best interests of the shareholders by providing for the executive
even if he or she would not have the same or similar role after the change
in
control. Additional information regarding the definition of a change
in control, the description of the additional event(s) that must occur in order
for the executive to receive severance compensation following a change in
control, and applicable payments under such agreements for the named executive
officers is provided under the heading of “OTHER
POTENTIAL POST
EMPLOYMENT PAYMENTS”on
page 36.
Deductibility
of Executive Compensation
Section
162(m) of the Internal Revenue
Code prohibits Peoples from claiming a deduction on its federal income tax
return for compensation in excess of $1 million paid for a given fiscal year
to
the chief executive officer (or person acting in that capacity) and the four
most highly compensated officers of Peoples, other than the chief executive
officer, at the end of Peoples’ fiscal year. The $1 million
compensation deduction limitation does not apply to “performance-based
compensation.” The 2006 Equity Plan complies with Section 162(m) so
that any compensation, which may be received by executive officers of Peoples
under this plan, will qualify as “performance-based.” Performance
goals were included in the 2006 Equity Plan, which was approved by Peoples’
shareholders on April 13, 2006. All named executive officers of
Peoples receive compensation at levels substantially below the $1 million
deductibility limit.
Non-qualified
Deferred
Compensation
As
required by the Internal Revenue
Service, all corporations need to be in operational compliance at the present
time and in documentary compliance by year-end 2008 with Internal Revenue Code
Section 409A. Peoples is operating under the tenants of Section 409A
presently and is scheduled to have all documents amended to comply with this
Internal Revenue Code Section by the end of 2008. When Peoples’ plan
documents and individual agreements are modified to comply with Section 409A,
such documents will be filed through Peoples normal SEC disclosure
process. Peoples has not realized any material changes to its
compensation program as a result of compliance with Section
409A.
Accounting
for Equity-Based
Compensation
Beginning
on January 1, 2006, Peoples
began accounting for equity-based grants in accordance with the requirements
of
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 123 (revised 2004), “Share-Based Payment” (FAS 123(R)).
The
Committee believes that the best
measure of whether the executive compensation program is achieving its intended
goals is to look at the long-term performance of Peoples. That
performance, including financial performance, operational excellence, and
shareholder returns, has been good relative to Peoples Peer Group. In
light of these results, the Committee believes Peoples’ compensation program for
its named executive officers continues to serve the interests of the
shareholders well. The program is part of a fully integrated,
performance-based system that provides a balanced and stable foundation for
strong and effective leadership into the future and ensures alignment with
long-term shareholder interests.
The
Compensation Committee has reviewed
and discussed the Compensation Discussion and Analysis required by Item 402(b)
of SEC Regulation S-K with management and based on such review and discussion,
the Compensation Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this Proxy Statement and
incorporated by reference into Peoples’ Annual Report on Form 10-K for the
Fiscal Year Ended December 31, 2007.
Submitted
by the Compensation Committee of Peoples’ Board of Directors:
Frank
L.
Christy, Chairman; Carl L. Baker, Jr.; George W. Broughton; David L. Mead;
Robert W. Price; and Paul T. Theisen
The
table below summarizes the total
compensation paid or earned by each of the named executive officers for the
fiscal years ended December 31, 2007 and 2006. Peoples has not
entered into any employment agreements with any of the named executive
officers. When setting the total compensation for each of the named
executive officers, the Compensation Committee reviews a tally sheet that shows
the named executive officer’s current compensation, including equity and
non-equity based compensation.
|
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan Compensation
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
|
All
Other Compensation
|
Total
|
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
|||||
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|
Mark
F. Bradley
|
2007
|
$255,000
|
-
|
$2,896
|
$7,725
|
$38,250
|
$1,270
|
$15,969
|
$321,110
|
|
President
and Chief Executive Officer
|
2006
|
$250,000
|
-
|
-
|
$4,426
|
$56,750
|
$12,722
|
$11,793
|
$335,691
|
|
Donald
J. Landers (1)
|
2007
|
$65,539
|
-
$25,000
(3)
|
$1,142
|
$1,505
|
-
|
-
|
$106,657
|
$174,843
|
|
Former
Chief Financial Officer and Treasurer
|
2006
|
$143,975
|
-
|
$1,380
|
$19,581
|
$3,409
|
-
|
$193,345
|
|
|
Carol
A. Schneeberger (2)
|
2007
|
$169,002
|
-
|
$7,839
|
$7,831
|
$22,477
|
-
|
$8,509
|
$215,658
|
|
Chief
Financial Officer, Treasurer and Executive Vice President of
Operations
|
2006
|
$164,800
|
-
|
-
|
$13,950
|
$27,522
|
$27,714
|
$11,262
|
$245,248
|
|
Joseph
S. Yazombek
|
2007
|
$206,012
|
-
-
|
$12,051
|
$12,055
|
$31,932
|
$7,654
|
$11,142
|
$280,846
|
|
Executive
Vice President, Chief Lending Officer
|
2006
|
$200,850
|
-
|
$17,505
|
$42,114
|
$35,330
|
$13,658
|
$309,457
|
|
|
Larry
E. Holdren
|
2007
|
$162,080
|
-
|
$6,406
|
$6,403
|
$11,345
|
$28,273
|
$7,077
|
$221,584
|
|
Executive
Vice President, Business and Corporate Development
|
2006
|
$162,080
|
-
|
-
|
$11,172
|
$22,367
|
$55,297
|
$13,036
|
$263,952
|
|
David
T. Wesel
|
2007
|
$157,500
|
-
|
$2,212
|
$4,136
|
$35,910
|
$3,929
|
$10,278
|
$213,965
|
|
Executive
Vice President
|
2006
|
$150,000
|
-
|
-
|
$1,764
|
$38,100
|
$3,473
|
$13,840
|
$207,177
|
|
(1)
|
Mr.
Landers resigned his position of Chief Financial Officer and Treasurer
on
April 9, 2007.
|
|
(2)
|
Ms.
Schneeberger was named interim Chief Financial Officer and Treasurer
in
addition to her duties as Executive Vice President of Operations
on April
9, 2007.
|
|
(3)
|
Mr.
Landers was paid a $25,000 deferred employment sign-on bonus on June
30,
2006.
|
|
(4)
|
The
amounts in column (e) reflect the dollar amount recognized for financial
statement reporting purposes for 2007, in accordance with FAS 123(R)
for
awards of restricted shares pursuant to Peoples’ 2006 Equity Plan. These
amounts excluded the impact of estimated forfeitures related to
service-based vesting conditions, as required by the
SEC. Assumptions used in the calculation of these amounts are
included in the “Notes To
The Consolidated Financial Statements, Note 16, Stock-Based Compensation”
on pages 76 through 79 of Peoples’ Annual Report on Form 10-K for the
Fiscal Year Ended December 31, 2007. The entire amount
of FAS 123(R) expense was recognized in 2007 for awards of restricted
shares made in 2007 to Messrs. Yazombek and Holdren and Ms. Schneeberger
as they had reached retirement eligibility (50 years of age or older
and
10 years of service with Peoples) as of the grant date, since the
restriction on transfer of the restricted shares lapses upon
retirement. FAS 123(R) expense for Messrs. Bradley, Landers,
and Wesel is spread over the three-year vesting period assigned to
the
awards of restricted shares made in 2007. Mr. Landers forfeited
192 unvested restricted shares upon his voluntary resignation on
April 9,
2007.
|
|
(5)
|
The
amounts in column (f) reflect the dollar amount recognized for financial
statement reporting purposes for 2006 and 2007, in accordance with
FAS
123(R) for awards pursuant to Peoples’ 2002 Stock Option Plan and Peoples’
2006 Equity Plan. These amounts excluded the impact of estimated
forfeitures related to service-based vesting conditions, as required
by
the SEC. Assumptions used in the calculation of these amounts
are included in the “Notes To The Consolidated
Financial Statements, Note 16, Stock-Based Compensation” on pages 76
through 79 of Peoples’ Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 2007. The entire amount of FAS 123(R)
expense was recognized (a) in 2006 for stock options granted in 2006
and
(b) in 2007 for SARs to be settled in common shares awards made in
2007,
in the case of each Messrs. Yazombek and Holdren and Ms. Schneeberger
as
they had reached retirement eligibility (50 years of age or older
and 10
years of service with Peoples) as of the grant date, since vesting
of
stock options and SARs to be settled in common shares accelerates
upon
retirement. FAS 123(R) expense for Messrs. Bradley, Landers,
and Wesel is spread over the three-year vesting period assigned to
the
stock options and SARs to be settled in common shares
awards. Vesting for all then unvested stock options was
accelerated on December 31, 2005; therefore, all FAS 123(R) expense
reported for 2006 is related to the stock options granted in 2006
and all
FAS 123(R) expense reported for 2007 is related to stock options
granted
in 2006 and SARs to be settled in common shares granted in
2007. Mr. Landers forfeited 1,485 unvested incentive stock
options and 673 unvested SARs upon his voluntary resignation on April
9,
2007.
|
|
(6)
|
The
amounts in column (g) represent cash incentives earned under the
Incentive
Award Plan, and are reported for the fiscal year with respect to
which the
cash incentives were earned. Mr. Landers did not earn a cash incentive
under the Incentive Award Plan for the 2007 fiscal year since he
resigned
prior to the end of the fiscal year. Executive officers are
required to defer 25% of their cash incentive for a period of three
years
and have the option to defer any of the remaining cash incentive
until
they retire or their employment is terminated. The amounts shown
for 2007
include the following deferred portion of the cash incentive earned
by
each named executive officer: (a) Mr. Bradley - $9,562; (b) Ms.
Schneeberger - $5,619; (c) Mr. Yazombek - $31,932; (d) Mr. Holdren
-
$5,673; and (e) Mr. Wesel - $12,568. The non-deferred portions
of the cash incentives earned for 2007 fiscal year performance were
paid
February 22, 2008. The amounts shown for 2006 include the
following deferred portion of the cash incentive earned by each named
executive officer: (a) Mr. Bradley - $14,187; (b) Mr. Landers - $4,895;
(c) Mr. Yazombek - $42,114; (d) Ms. Schneeberger - $6,880; and (e)
Mr.
Holdren - $11,184. The non-deferred portions of the cash incentives
earned
for 2006 fiscal year performance were paid February 23,
2007.
|
|
(7)
|
Amounts
in column (h) represent the actuarial increase in the present value
of the
named executive officer’s benefits under Peoples’ pension plan (the
Retirement Plan) determined using assumptions consistent with those
used
in Peoples’ consolidated financial statements and include amounts that the
named executive officer may not be entitled to receive because such
amounts are not vested. The amounts shown do not include the
decline in the actuarial present value of the accumulated benefit
under
Peoples’ pension plan in 2007 for: (a) Mr. Bradley - $1,894; (b) Mr.
Landers - $9,284; and (c) Ms. Schneeberger - $5,598. Mr.
Bradley’s amount also includes $1,163 for 2006 and $1,270 for 2007 which
represents dividends credited in that year on the cumulative amount
of
directors’ fees deferred in prior years under the terms of the Deferred
Compensation Plan for Directors of Peoples Bancorp Inc. and
Subsidiaries. Mr. Bradley has not been paid a fee for his
services as a director of Peoples and Peoples Bank since December
31,
2004. No amount is included in column (h) for the amount of
interest accrued on the cumulative amount of cash incentives deferred
by
each named executive officer under the terms of the Incentive Award
Plan
since the rate earned was not above-market or
preferential.
|
|
(8)
|
All
other compensation for each named executive officer for 2007 includes:
(a)
Mr. Bradley - 401(k) company match, country club membership, Executive
Health Program, and dividends on restricted shares; (b) Mr. Landers
-
resigned April 9, 2007, and entered into a Resignation and Severance
Agreement, under which Mr. Landers received the following severance
benefits: (i) severance pay equal to $88,751.28, representing six
months
of his base salary in effect immediately prior to April 9, 2007,
in one
lump-sum (less applicable withholdings and taxes); (ii) Peoples paid
Mr.
Landers’ COBRA healthcare and dental premiums for coverage through April
30, 2008; and (iii) dividends on restricted shares; (c) Ms. Schneeberger
-
401(k) company match and dividends on restricted shares; (d) Mr.
Yazombek
- 401(k) company match, country club membership, and dividends on
restricted shares; (e) Mr. Holdren - 401(k) company match and dividends
on
restricted shares; and (f) Mr. Wesel - 401(k) company match,
country club membership and dividends on restricted
shares. All other
compensation for each named executive officers in 2006 includes:
(a) Mr. Bradley
- 401(k) company
match and country club membership; (b) Mr. Landers - $25,000 deferred
employment sign-on bonus paid on June 30, 2006; (c) Ms. Schneeberger
-
401(k) company match and Executive Health Program; (d) Mr. Yazombek
-
401(k) company match, personal use of company provided vehicle, country
club membership and Executive Health Program; (e) Mr. Holdren
-
401(k) company match, personal
use of company provided vehicle and Executive Health Program; and
(f) Mr.
Wesel - 401(k) company match, country club membership and Executive
Health
Program.
|
GRANTS
OF PLAN-BASED AWARDS FOR 2007
|
Name
|
Grant
Date
|
Approval
Date
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
(3)
|
Estimated
Future Payouts Under Equity Incentive Plan Awards
(4)
|
All
Other Stock Awards: Number of Shares of Stock or Units (#)
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
or Base Price of Option Awards ($/Share)
|
Grant
Date Fair Value of Stock and Option Awards
|
||||
|
Threshold
|
Target
|
Maximum
|
Threshold
|
Target
|
Maximum
|
(5)
|
(6)
|
|||||
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
(l)
|
(m)
|
|
Mark
F. Bradley
|
-
|
-
|
$0
|
$127,500
|
$255,000
|
-
|
-
|
-
|
-
|
-
|
-
|
--
|
|
-
|
-
|
-
|
-
|
-
|
$0
|
$63,750
|
$127,500
|
|||||
|
2/13/2007
|
2/8/2007
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,707
|
$29.25
|
$14,251
|
|
|
2/13/2007
|
2/8/2007
|
-
|
-
|
-
|
-
|
-
|
-
|
487
|
-
|
-
|
$14,245
|
|
|
Donald
J. Landers (1)
|
2/13/2007
|
2/8/2007
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
673
|
$29.25
|
$5,618
|
|
2/13/2007
|
2/8/2007
|
-
|
-
|
-
|
-
|
-
|
-
|
192
|
-
|
-
|
$5,616
|
|
|
Carol
A. Schneeberger (2)
|
-
|
-
|
$0
|
$59,151
|
$118,302
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
$0
|
$33,800
|
$67,601
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
2/8/2007
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
938
|
$29.25
|
$7,831
|
|
|
2/13/2007
|
2/8/2007
|
-
|
-
|
-
|
-
|
-
|
-
|
268
|
-
|
-
|
$7,839
|
|
|
Joseph
S. Yazombek
|
-
|
-
|
$0
|
$72,104
|
$144,208
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
$0
|
$41,202
|
$82,405
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
2/8/2007
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,444
|
$29.25
|
$12,055
|
|
|
2/13/2007
|
2/8/2007
|
-
|
-
|
-
|
-
|
-
|
-
|
412
|
-
|
-
|
$12,501
|
|
|
Larry
E. Holdren
|
-
|
-
|
$0
|
$56,728
|
$113,455
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
$0
|
$32,416
|
$64,832
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
2/8/2007
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
767
|
$29.25
|
$6,403
|
|
|
2/13/2007
|
2/8/2007
|
-
|
-
|
-
|
-
|
-
|
-
|
219
|
-
|
-
|
$6,406
|
|
|
David
T. Wesel
|
-
|
-
|
$0
|
$55,125
|
$110,250
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
$0
|
$31,500
|
$63,000
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
2/8/2007
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,303
|
$29.25
|
$10,878
|
|
|
2/13/2007
|
2/8/2007
|
-
|
-
|
-
|
-
|
-
|
-
|
372
|
-
|
-
|
$10,881
|
|
|
(1)
|
Donald
J. Landers resigned as Chief Financial Officer and Treasurer effective
April 9, 2007. All awards shown in this table were forfeited
upon resignation as they were unvested at the time of his voluntary
resignation.
|
|
(2)
|
Ms.
Schneeberger was named interim Chief Financial Officer and Treasurer
effective April 9, 2007.
|
|
(3)
|
Cash
incentive potential available for payment through the Incentive Award
Plan
if the indicated level of performance was achieved for the 2007 fiscal
year. Refer to the “Annual Cash Incentives”
section on page 20 of the “COMPENSATION DISCUSSION
AND
ANALYSIS” for additional information regarding the Incentive Award
Plan.
|
|
(4)
|
Economic
value of equity grants available for award through the 2006 Equity
Plan if
the indicated level of performance was achieved for the 2007 fiscal
year. Equity-based incentive awards are denominated in dollars,
rather than number of common shares. As a result, the target
and maximum amounts are shown in “dollars” rather than the “number of
common shares.” At the time of payout, the economic value of
the actual award earned is translated into awards of restricted shares
and
SARs to be settled in common shares made under Peoples’ 2006 Equity
Plan. Fifty percent of the economic value is awarded in
restricted shares, using the closing price of Peoples’ common shares on
the grant date. The remaining 50% of the economic value is
awarded in SARs to be settled in common shares, using the Black-Scholes
value of the SARs as of the award date. Refer to the “Long-Term Equity-Based
Incentive Compensation” section on page 22 of the “COMPENSATION
DISCUSSION AND
ANALYSIS” for additional information regarding awards of
equity-based grants.
|
|
(5)
|
Number
of restricted shares granted through the 2006 Equity Plan on February
13,
2007, based upon corporate and individual performance for the 2006
fiscal
year. The restriction on transfer of restricted shares lapses
on the third anniversary of the grant date. The named executive
officer has the right to vote the common shares underlying the restricted
shares and is entitled to receive dividends paid with respect to
the
underlying common shares; however, if any dividends are paid in common
shares of Peoples, those common shares will be subject to the same
restrictions on transfer as the restricted shares with respect to
which
they were issued. Refer to the “Long-Term Equity-Based
Incentive Compensation” section on page 22 of the “COMPENSATION
DISCUSSION AND
ANALYSIS” for additional information regarding awards of restricted
shares.
|
|
(6)
|
Number
of SARs to be settled in common shares granted through the 2006 Equity
Plan on February 13, 2007. The SARs have a term of 10 years and
become exercisable at the end of the vesting period, which is three
years
from the grant date. Refer to the “Long-Term Equity-Based
Incentive Compensation” section on page 22 of the “COMPENSATION
DISCUSSION AND
ANALYSIS” for additional information regarding SARs to be settled
in common shares.
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
2007
The
following table provides information relating to the option/SAR awards and
stock
awards held by the named executive officers at the end of the 2007 fiscal
year. Each grant is shown separately for each named executive
officer. The market value of the stock awards is based on the closing
price of Peoples’ common shares as reported on the NASDAQ Global Select Market
on December 31, 2007, which was $24.89. Donald J. Landers resigned as
Chief Financial Officer and Treasurer effective April 9, 2007. He did
not have any outstanding equity awards as of December 31, 2007; therefore,
he is
not shown in the table.
|
Option
Awards
|
Stock
Awards
|
|||||||||
|
Name
|
Grant
Date
|
Number
of Securities Underlying Unexercised Options/
SARs
|
Number
of Securities Underlying Unexercised Options/
SARs
|
Equity
Incentive
Plan
Awards:
Number of Securities Underlying Unexercised Unearned Options/
SARs
|
Option/ SAR Exercise Price | Option/ SAR Expiration Date |
Number
of
Shares
or
Units
of
Stock That
Have
Not
Vested
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
|
Equity
Incentive Plan Awards:
Number
of
Unearned
Shares, Units or
Other Rights
That
Have
Not
Vested
|
Equity
Incentive Plan Awards:
Market or Payout Value of Unearned Shares, Units, or Other Rights
That
Have
Not
Vested
|
|
(#)
|
(#)
|
(#)
|
($)
|
(#)
|
($)
|
(#)
|
($)
|
|||
|
Exercisable
|
Unexercisable
|
|||||||||
|
(1)
|
(2)
|
(2)
|
(3)
|
|||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
|
Mark
F.
Bradley
|
7/23/1998
|
1,537
|
-
|
-
|
$18.70
|
7/23/2008
|
-
|
-
|
-
|
-
|
|
4/1/1999
|
7,687
|
-
|
-
|
$14.92
|
4/1/2009
|
-
|
-
|
-
|
-
|
|
|
4/27/2000
|
5,082
|
-
|
-
|
$13.58
|
4/27/2010
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
1,563
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
1,264
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
3,707
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
2,090
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
2/10/2005
|
459
|
-
|
-
|
$27.38
|
2/10/2015
|
-
|
-
|
-
|
-
|
|
|
2/9/2006
|
-
|
2,970
(4)
|
-
|
$28.25
|
2/9/2016
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
1,707
(5)
|
-
|
$29.25
|
2/13/2017
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
-
|
-
|
-
|
-
|
487
(7)
|
$12,121
|
-
|
-
|
|
|
2/20/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
402
(8)
|
$9,556
|
|
|
2/20/2008
|
-
|
-
|
1,734
(6)
|
$23.77
|
2/20/2018
|
-
|
-
|
-
|
-
|
|
|
Option
Awards
|
Stock
Awards
|
|||||||||
|
Name
|
Grant
Date
|
Number
of Securities Underlying Unexercised Options/
SARs
|
Number
of Securities Underlying Unexercised Options/
SARs
|
Equity
Incentive
Plan
Awards: Number of Securities Underlying Unexercised Unearned
Options/
SARs
|
Option/ SAR Exercise Price | Option/ SAR Expiration Date |
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
|
Equity
Incentive Plan Awards:
Number
of
Unearned
Shares, Units or Other
Rights
That
Have
Not
Vested
|
Equity
Incentive Plan Awards:
Market or Payout Value of Unearned Shares, Units, or Other Rights
That
Have
Not
Vested
|
|
(#)
|
(#)
|
(#)
|
($)
|
(#)
|
($)
|
(#)
|
($)
|
|||
|
Exercisable
|
Unexercisable
|
|||||||||
|
(1)
|
(2)
|
(2)
|
(3)
|
|||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
|
Carol
A.
Schneeberger
|
4/1/1999
|
2,243
|
-
|
-
|
$14.92
|
4/1/2009
|
-
|
-
|
-
|
-
|
|
4/27/2000
|
4,765
|
-
|
-
|
$13.58
|
4/27/2010
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
1,654
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
1,963
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
3,755
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
2,279
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
2/10/2005
|
792
|
-
|
-
|
$27.38
|
2/10/2015
|
-
|
-
|
-
|
-
|
|
|
2/9/2006
|
-
|
1,903
(4)
|
-
|
$28.25
|
2/9/2016
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
938
(5)
|
-
|
$29.25
|
2/13/2017
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
-
|
-
|
-
|
-
|
268
(7)
|
$6,671
|
-
|
-
|
|
|
2/20/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
270
(8)
|
$6,418
|
|
|
2/20/2008
|
-
|
-
|
1,165
(6)
|
$23.77
|
2/20/2018
|
-
|
-
|
-
|
-
|
|
|
Joseph
S.
Yazombek
|
4/1/1999
|
7,687
|
-
|
-
|
$14.92
|
4/1/2009
|
-
|
-
|
-
|
-
|
|
4/27/2000
|
3,812
|
-
|
-
|
$13.58
|
4/27/2010
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
1,928
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
2,947
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
3,900
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
2,779
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
2/10/2005
|
1,215
|
-
|
-
|
$27.38
|
2/10/2015
|
-
|
-
|
-
|
-
|
|
|
2/9/2006
|
-
|
2,388
(4)
|
-
|
$28.25
|
2/9/2016
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
1,444
(5)
|
-
|
$29.25
|
2/13/2017
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
-
|
-
|
-
|
-
|
412
(7)
|
$10,255
|
-
|
-
|
|
|
2/20/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
386
(8)
|
$9,175
|
|
|
2/20/2008
|
-
|
-
|
1,663
(6)
|
$23.77
|
2/20/2018
|
-
|
-
|
-
|
-
|
|
Option
Awards
|
Stock
Awards
|
|||||||||
|
Name
|
Grant
Date
|
Number
of Securities Underlying Unexercised Options/
SARs
|
Number
of Securities Underlying Unexercised Options/
SARs
|
Equity
Incentive
Plan
Awards:
Number of Securities Underlying Unexercised Unearned Options/
SARs
|
Option/ SAR Exercise Price | Option/ SAR Expiration Date |
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
|
Equity
Incentive Plan Awards:
Number
of
Unearned Shares, Units or
Other Rights
That
Have
Not
Vested
|
Equity
Incentive Plan Awards:
Market
or
Payout Value of Unearned
Shares, Units, or Other Rights
That
Have
Not
Vested
|
|
(#)
|
(#)
|
(#)
|
($)
|
(#)
|
($)
|
(#)
|
($)
|
|||
|
Exercisable
|
Unexercisable
|
|||||||||
|
(1)
|
(2)
|
(2)
|
(3)
|
|||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
|
Larry
E.
Holdren
|
7/23/1998
|
818
|
-
|
-
|
$18.70
|
7/23/2008
|
-
|
-
|
-
|
-
|
|
4/1/1999
|
7,687
|
-
|
-
|
$14.92
|
4/1/2009
|
-
|
-
|
-
|
-
|
|
|
4/27/2000
|
3,812
|
-
|
-
|
$13.58
|
4/27/2010
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
1,928
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
5/9/2002
|
2,287
|
-
|
-
|
$23.59
|
5/9/2012
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
3,900
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
3/27/2003
|
2,766
|
-
|
-
|
$22.32
|
3/27/2013
|
-
|
-
|
-
|
-
|
|
|
2/10/2005
|
587
|
-
|
-
|
$27.38
|
2/10/2015
|
-
|
-
|
-
|
-
|
|
|
2/9/2006
|
-
|
1,524
(4)
|
-
|
$28.25
|
2/9/2016
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
767
(5)
|
-
|
$29.25
|
2/13/2017
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
-
|
-
|
-
|
-
|
219
(7)
|
$5,451
|
-
|
-
|
|
|
2/20/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
136
(8)
|
$3,233
|
|
|
2/20/2008
|
-
|
-
|
588
(6)
|
$23.77
|
2/20/2018
|
-
|
-
|
-
|
-
|
|
|
David
T.
Wesel
|
2/16/2004
|
2,000
|
-
|
-
|
$28.25
|
2/16/2014
|
-
|
-
|
-
|
-
|
|
2/10/2005
|
425
|
-
|
-
|
$27.38
|
2/10/2015
|
-
|
-
|
-
|
-
|
|
|
2/9/2006
|
-
|
1,184
(4)
|
-
|
$28.25
|
2/9/2016
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
1,303
(5)
|
-
|
$29.25
|
2/13/2017
|
-
|
-
|
-
|
-
|
|
|
2/13/2007
|
-
|
-
|
-
|
-
|
-
|
372
(7)
|
$9,259
|
-
|
-
|
|
|
2/20/2008
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
431
(8)
|
$10,245
|
|
|
2/20/2008
|
-
|
-
|
1,857
(6)
|
$23.77
|
2/20/2018
|
-
|
-
|
-
|
-
|
|
(1)
|
Stock
options were granted to the named executive officers in years prior
to
2006. Vesting was accelerated on all then unvested stock
options as of December 31, 2005.
|
|
(2)
|
The
amount in these columns represents the actual SAR and restricted
share
awards approved by the Compensation Committee on February 14, 2008
and
granted to each named executive officer on February 20, 2008, with
respect
to corporate and individual performance for the 2007 fiscal
year. They are considered “unearned” as they were not granted
until after the end of the 2007 fiscal year. See the “Estimated
Future Payouts Under Equity Incentive Plan Awards” columns in the “Grants
of Plan-Based Awards for 2007” table for information regarding the range
of economic values that was possible for these
awards.
|
|
(3)
|
The
market values indicated in this column are based on the closing price
of
Peoples’ common shares as reported on the NASDAQ Global Select Market on
December 31, 2007 ($24.89), not the market value of the award on
the date
of grant (February 20, 2008).
|
|
(4)
|
Stock
options were granted on February 9, 2006 under Peoples’ 2002 Stock Option
Plan and will vest on February 9,
2009.
|
|
(5)
|
SARs
to be settled in common shares were approved by the Compensation
Committee
on February 8, 2007 and granted on February 13, 2007, and will vest
on
February 13, 2010.
|
|
(6)
|
SARs
to be settled in common shares were approved by the Compensation
Committee
on February 14, 2008 and granted on February 20, 2008, and will vest
on
February 20, 2011.
|
|
(7)
|
Restricted
shares were approved by the Compensation Committee on February 8,
2007 and
granted on February 13, 2007, and will vest on February 13,
2010.
|
|
(8)
|
Restricted
shares were approved by the Compensation Committee on February 14,
2008
and granted on February 20, 2008, and will vest on February 20,
2011.
|
OPTION
EXERCISES AND STOCK VESTED FOR 2007
The
following table provides information
for the named executive officers relating to stock options exercised during
the
2007 fiscal year, including the number of common shares acquired upon exercise
and the value realized. The values shown below are before payment of
any applicable withholding tax. None of the restricted shares held by
the named executive officers vested during the 2007 fiscal
year.
|
Option
Awards
|
Stock
Awards
|
|||
|
Name
|
Number
of
Common
Shares Acquired on
Exercise
|
Valued
Realized
on
Exercise
|
Number
of Shares
Acquired
on
Vesting
|
Value
Realized on
Vesting
|
|
(#)
|
($)
|
(#)
|
($)
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
Mark
F. Bradley
|
1,440
|
$11,437
|
-
|
-
|
|
Donald
J. Landers
|
2,100
|
$5,361
|
-
|
-
|
|
Carol
A. Schneeberger
|
600
|
$6,801
|
-
|
-
|
|
Joseph
S. Yazombek
|
8,774
|
$60,649
|
-
|
-
|
|
Larry
E. Holdren
|
7,956
|
$46,336
|
-
|
-
|
|
David
T. Wesel
|
-
|
-
|
-
|
-
|
PENSION
BENEFITS FOR 2007
The
table below shows the actuarial
present value of accumulated benefits payable to each of the named executive
officers, including the number of years of service credited to each named
executive officer, under the Retirement Plan determined using interest rate
and
mortality rate assumptions consistent with those used in Peoples’ consolidated
financial statements. Information regarding the Retirement Plan can
be found in the “Retirement
and Other
Benefits”
section
onpage
25 of the “COMPENSATION
DISCUSSION AND ANALYSIS.”
|
Name
|
Plan
Name
|
Number
of
Years
of
Credited
Service
|
Present
Value of Accumulated
Benefit
|
Payments
During Last Fiscal
Year
|
|
|
|
(#)
|
($)
|
($)
|
|
(3)
|
||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
Mark
F. Bradley
|
Retirement
Plan
|
16
|
$56,122
|
-
|
|
Donald
J. Landers (1)
|
Retirement
Plan
|
N/A
|
-
|
-
|
|
Carol
A. Schneeberger (2)
|
Retirement
Plan
|
30
|
$267,016
|
-
|
|
Joseph
S. Yazombek (2)
|
Retirement
Plan
|
24
|
$269,512
|
-
|
|
Larry
E. Holdren (2)
|
Retirement
Plan
|
25
|
$499,512
|
-
|
|
David
T. Wesel
|
Retirement
Plan
|
4
|
$11,226
|
-
|
|
(1)
|
Mr.
Landers resigned as Chief Financial Officer and Treasurer effective
April
9, 2007, and, accordingly, did not participate in or have accumulated
benefits under the Retirement Plan as of December 31,
2007.
|
|
(2)
|
Messrs.
Yazombek and Holdren and Ms. Schneeberger had reached retirement
eligibility (50 years of age or older and 10 years of service with
Peoples) as of December 31, 2007.
|
|
(3)
|
Years
of credited service are equal to the actual years of service by the
named
executive officer to Peoples.
|
NON-QUALIFIED
DEFERRED COMPENSATION FOR
2007
The
following table provides information
regarding cash incentives earned under the Incentive Award Plan but deferred
in
accordance with the terms of that Plan. Information regarding
deferrals of cash incentives earned under the Incentive Award Plan can be found
in the “Annual
Cash
Incentives” section on page
20 of the “COMPENSATION
DISCUSSION AND ANALYSIS.” The table does not include
any cash incentives earned under the Incentive Award Plan for 2007 fiscal year
performance but deferred in accordance with the terms of such Plan since those
deferrals occurred after the end of the 2007 fiscal year.
|
Name
|
Executive
Contributions
in
Last Fiscal
Year
|
Registrant
Contributions
in
Last Fiscal
Year
|
Aggregate
Earnings in
Last
Fiscal
Year
|
Aggregate
Withdrawals/ Distributions
|
Aggregate
Balance
at Last
Fiscal
Year-End
|
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|
Mark
F. Bradley
|
-
|
$14,187
|
$1,404
|
-
|
$33,958
|
|
Donald
J. Landers
|
-
|
$4,895
|
$386
|
$9,593
(6)
|
-
|
|
Carol
A. Schneeberger
|
-
|
$6,880
|
$1,509
|
-
|
$35,274
|
|
Joseph
S. Yazombek
|
$31,586
|
$10,529
|
$9,653
|
-
|
$225,392
|
|
Larry
E. Holdren
|
$5,592
|
$5,592
|
$7,143
|
-
|
$163,884
|
|
David
T. Wesel
|
$9,525
|
$9,525
|
$750
|
-
|
$19,800
|
|
(1)
|
Amounts
in column (b) represent the voluntary elective deferral by the named
executive officer in 2007 of a portion of his cash incentive earned
for
2006 fiscal year performance plus any accumulated balance of mandatory
deferrals voluntarily further deferred by the named executive officer
at
the end of the original three-year deferral period. No
mandatory deferral period lapsed in 2007 as no cash incentives were
awarded to executive officers in 2004 for 2003 fiscal year
performance.
|
|
(2)
|
Amounts
in column (c) represent the mandatory 25% deferral in 2007 for each
of the
named executive officers of the cash incentive earned for 2006 fiscal
year
performance. These amounts are reported in the “SUMMARY COMPENSATION
TABLE FOR
2007” on page 28 within the amount shown in the Non-Equity
Incentive Plan Compensation column for Mr. Bradley, Mr. Landers,
Ms.
Schneeberger, Mr. Yazombek, Mr. Holdren and Mr.
Wesel.
|
|
(3)
|
Amounts
in column (d) represent the aggregate earnings on the accumulated
mandatory and voluntary deferrals of cash incentives for each of
the named
executive officers. None of these amounts are included in the
Summary Compensation Table since the rate earned was not above-market
or
preferential.
|
|
(4)
|
Amounts
in column (e) represent the aggregate withdrawals or distributions
for
each named executive officer of amounts deferred in accordance with
terms
of the Incentive Award Plan, which also includes the accumulated
balance
voluntarily re-deferred by the named executive officer at the end
of the
mandatory three-year deferral period. No mandatory deferrals
vested in 2007.
|
|
(5)
|
Of
the amount reported in column (f) for each named executive officer,
the
following amount was reported in the Summary Compensation Table included
in Peoples’ 2007 Proxy Statement for the 2007 Annual Meeting of
Shareholders and are reported within the amount shown in the Non-Equity
Incentive Plan Compensation column for 2006: (a) Mr. Bradley - $14,187;
(b) Mr. Landers - $4,895; (c) Ms. Schneeberger - $6,880; (d) Mr.
Yazombek
- $42, 114; and (e) Mr. Holdren - $11,184. This amount is also
reported in the “SUMMARY
COMPENSATION TABLE FOR 2007” on page 28 within the amount shown in
the Non-Equity Incentive Plan Compensation column for 2006. Mr.
Wesel was not a named executive officer in the 2007 Proxy Statement,
but
is included in this Proxy Statement. The amount included in his
2006 earnings, as included in this Proxy Statement, is
$19,050.
|
|
(6)
|
Mr.
Landers forfeited his unvested balance due to his voluntary resignation
on
April 9, 2007.
|
OTHER
POTENTIAL POST EMPLOYMENT PAYMENTS
The
amount of compensation payable to
each named executive officer upon voluntary termination, early retirement,
involuntary not-for-cause termination, termination following a change of control
and termination in the event of disability or death of the named executive
officer is described below.
In
the event of the retirement,
disability, or death of a named executive officer or a change in control of
Peoples, the vesting period is accelerated with regard to the mandatory
deferrals of the cash incentives earned under the Incentive Award Plan and
unvested outstanding equity-based awards.
Payments
Made Upon Termination
Regardless
of the manner in which a
named executive officer’s employment terminates, he or she is entitled to
receive amounts earned during his or her term of employment. These
amounts are not included in the table below. Such amounts would
include:
|
·
|
cash
incentives earned under the Incentive Award Plan during the fiscal
year in
which termination occurs less the mandatory deferral amount, if he
or she
is employed as of the payment date;
|
|
·
|
all
vested equity-based awards earned through the long-term equity-based
incentive compensation programs;
|
|
·
|
all
cash incentives voluntarily deferred under the Incentive Award
Plan;
|
|
·
|
the
balance of the named executive officer’s Retirement Savings Plan (Peoples
401(k) Plan) account;
|
|
·
|
pay
for unused paid time off; and
|
|
·
|
amounts
accrued and vested through the Retirement Plan (Peoples’ pension
plan).
|
In
the event of the retirement of a
named executive officer, in addition to the items identified above, he or she
would receive the following benefits:
|
·
|
all
previously unvested equity-based awards would vest;
and
|
|
·
|
all
previously unvested mandatory deferrals under the Incentive Award
Plan
would vest.
|
In
the event of the death or disability
of a named executive officer, in addition to the benefits listed under the
headings “Payments
Made Upon
Termination”and
“Payments
Made Upon Retirement” above,
the named executive officer will
also receive benefits under Peoples’ disability plan or payments under Peoples’
life insurance plan, as appropriate.
The
Compensation Committee engaged the
services of Amalfi Consulting to explore whether change in control agreements
would be appropriate for the named executive officers of
Peoples. Based upon a recommendation from Amalfi Consulting, the
Compensation Committee supported the development and offering of change in
control agreements for all named executive officers to promote shareholder
value
and ensure an orderly, effective transition should a change in control of
Peoples occur.
The
agreements were not undertaken in
the belief a change in control was imminent or expected. Peoples has
entered into change in control agreements with all of the named executive
officers. Mr. Landers’ change in control agreement terminated upon
his voluntary resignation on April 9, 2007. Under the agreements, a
change in control occurs when one or more of the following events take
place:
|
(a)
|
Any
person or entity or group of affiliated persons or entities (other
than
Peoples) becomes a beneficial owner, directly or indirectly, of 25%
or
more of Peoples’ voting securities or all or substantially all of the
assets of Peoples;
|
|
(b)
|
Peoples
enters into a definitive agreement which contemplates the merger,
consolidation or combination of Peoples with an unaffiliated entity
in
which at least one of the following is to occur: (i) the Board of
Directors of Peoples, immediately prior to such merger, consolidation
or
combination will constitute less than a majority of the board of
directors
of the surviving, new or combined entity; or (ii) 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 such merger, consolidation or combination, unless the agreement
is terminated without consummation of the
transaction;
|
|
(c)
|
Peoples
enters into a definitive agreement which contemplates the transfer
of all
or substantially all of Peoples’ assets, other than to a wholly-owned
subsidiary, unless the agreement is terminated without consummation
of the
transaction;
|
|
(d)
|
A
majority of the members of the Board of Directors of Peoples are
persons
who: (i) were not members of the Board on the date of the applicable
change in control agreement (“current members”); (ii) were not nominated
by a vote of such Board which included the affirmative vote of a
majority
of the current members on such Board at the time of their nomination
(“future designees”); and (iii) were not nominated by a vote of such Board
which included the affirmative votes of a majority of the current
members
and future designees, taken as a group, on such Board at the time
of their
nomination.
|
Generally,
the
agreements provide for severance compensation to those named executive officers
if their employment is terminated by Peoples or its successor for any reason
other than cause (defined as 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
named executive officer) within six months prior to or 24 months after a defined
change in control occurs. In addition, compensation will be paid if
the named executive officer voluntarily terminates employment during the same
periods because of: (1) a decrease in the named executive officer’s base annual
compensation without the named executive officer’s consent; (2) a material
reduction in the importance of the named executive officer’s job
responsibilities without the named executive officer’s consent, other than by
reason of termination for cause or by reason of disability, retirement, or
death; (3) geographical relocation of the named executive officer without the
named executive officer’s consent to an office more than 50 miles from the named
executive officer’s current location; or (4) failure by Peoples to obtain
assumption of the agreement by its successor.
The
named executive officer’s base
annual compensation for purpose of his or her respective change in control
agreement is calculated as the average annualized compensation paid by Peoples,
prior to any deferred arrangements, during the most recent five taxable years
ending before the date of the change in control, subject to certain adjustments
in the event that Section 280G of the Internal Revenue Code is
triggered.. For named executive officers that have worked for Peoples
for less than five years, the average annualized compensation paid by Peoples
is
calculated for the number of years employed by Peoples.
Under
the agreements, severance
provisions include: (i) a lump sum cash payment of two and one half times base
annual compensation for Mr. Bradley; two times base annual
compensation for Ms. Schneeberger, Mr. Yazombek, and Mr. Wesel; and one times
base annual compensation for Mr. Holdren in each case payable within 30 days
following the named executive officer’s termination date; (ii) continuing
participation in life, medical, and dental insurance for 12 months substantially
in the form and expense to the named executive officer as that received on
the
date of termination; (iii) the named executive officer agreeing not to disclose
to others any confidential information; and (iv) the named executive officer
entering into a non-compete agreement for 12 months immediately following the
date of termination. In the case of Mr. Bradley, the duration of the
non-compete agreement and continuing participation in life, medical and dental
insurance is 15 months immediately following the date of
termination. In the case of Mr. Holdren, the duration of the
non-compete agreement and continuing participation in life, medical and dental
insurance is six months immediately following the date of
termination. The non-compete agreement prohibits the executive
officer from directly or indirectly engaging in any business in which Peoples
directly or indirectly engages within Peoples’ geographic
market.
The
following table summarizes payments
which would have been made to the named executive officers if a termination
event occurred on December 31, 2007. Actual amounts to be paid out
can only be determined at the time of a named executive officer’s separation
from Peoples.
|
Upon
Termination
|
Voluntary
Termination
|
Early
Retirement
|
Normal
Retirement
|
Involuntary
Not
for
Cause
Termination
|
For
Cause Termination
|
CIC
Involuntary
or
Good
Reason
Termination
|
Death
or Disability
|
|
(1)
|
|||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
Mark
F. Bradley
|
|||||||
|
2.5
times Base Annual Compensation
|
-
|
-
|
-
|
-
|
-
|
$488,154
|
-
|
|
Welfare
(2)
|
-
|
-
|
-
|
-
|
-
|
$15,211
|
-
|
|
Deferrals
under Incentive Award Plan
|
-
|
-
|
$33,958
|
-
|
-
|
$33,958
|
$33,958
|
|
Intrinsic
Value of Unvested Stock Options & SARs (4)
|
-
|
-
|
$0
|
-
|
-
|
$0
|
$0
|
|
Value
of Unvested Restricted Shares
|
-
|
-
|
$12,121
|
-
|
-
|
$12,121
|
$12,121
|
|
Total:
|
$0
|
$0
|
$46,079
|
$0
|
$0
|
$549,444
|
$46,079
|
|
Donald
J. Landers (3)
|
|
Carol
A. Schneeberger
|
|||||||
|
2
times Base Annual Compensation
|
-
|
-
|
-
|
-
|
-
|
$397,065
|
-
|
|
Welfare
(2)
|
-
|
-
|
-
|
-
|
-
|
$2,062
|
-
|
|
Deferrals
under Incentive Award Plan
|
-
|
$21,974
|
$21,974
|
-
|
-
|
$21,974
|
$21,974
|
|
Intrinsic
Value of Unvested Stock Options & SARs (4)
|
-
|
$0
|
$0
|
-
|
-
|
$0
|
$0
|
|
Value
of Unvested Restricted Shares
|
-
|
$6,671
|
$6,671
|
-
|
-
|
$6,671
|
$6,671
|
|
Total:
|
$0
|
$28,645
|
$28,645
|
$0
|
$0
|
$427,772
|
$28,645
|
|
Joseph
S. Yazombek (5)
|
|||||||
|
2
times Base Annual Compensation
|
-
|
-
|
-
|
-
|
-
|
$365,304
|
-
|
|
Welfare
(2)
|
-
|
-
|
-
|
-
|
-
|
$945
|
-
|
|
Deferrals
under Incentive Award Plan
|
-
|
$30,792
|
$30,792
|
-
|
-
|
$30,792
|
$30,792
|
|
Intrinsic
Value of Unvested Stock Options & SARs (4)
|
-
|
$0
|
$0
|
-
|
-
|
$0
|
$0
|
|
Value
of Unvested Restricted Shares
|
-
|
$10,255
|
$10,255
|
-
|
-
|
$10,255
|
$10,255
|
|
Total:
|
$0
|
$41,046
|
$41,046
|
$0
|
$0
|
$407,295
|
$41,046
|
|
Larry
E. Holdren (6)
|
|||||||
|
1
time Base Annual Compensation
|
-
|
-
|
-
|
-
|
-
|
$211,561
|
-
|
|
Welfare
(2)
|
-
|
-
|
-
|
-
|
-
|
$11,093
|
-
|
|
Deferrals
under Incentive Award Plan
|
-
|
$17,408
|
$17,408
|
-
|
-
|
$17,408
|
$17,408
|
|
Intrinsic
Value of Unvested Stock Options & SARs (4)
|
-
|
$0
|
$0
|
-
|
-
|
$0
|
$0
|
|
Value
of Unvested Restricted Shares
|
-
|
$5,451
|
$5,451
|
-
|
-
|
$5,451
|
$5,451
|
|
Total:
|
$0
|
$22,858
|
$22,858
|
$0
|
$0
|
$245,512
|
$22,858
|
|
David
T. Wesel
|
|||||||
|
2
times Base Annual Compensation
|
-
|
-
|
-
|
-
|
-
|
$214,965
|
-
|
|
Welfare
(2)
|
-
|
-
|
-
|
-
|
-
|
$11,677
|
-
|
|
Deferrals
under Incentive Award Plan
|
-
|
-
|
$9,900
|
-
|
-
|
$9,900
|
$9,900
|
|
Intrinsic
Value of Unvested Stock Options & SARs (4)
|
-
|
$0
|
$0
|
$0
|
|||
|
Value
of Unvested Restricted Shares
|
-
|
-
|
$9,259
|
-
|
-
|
$9,259
|
$9,259
|
|
Total:
|
$0
|
$0
|
$19,159
|
$0
|
$0
|
$245,801
|
$19,159
|
|
(1)
|
Messrs.
Yazombek and Holdren, and Ms. Schneeberger were eligible to receive
the
unvested mandatory deferral balance of cash incentives earned under
the
Incentive Award Plan, to exercise all unvested stock options and
SARs to
be settled in common shares, and to have the restrictions on their
restricted shares lapse, if they elected to retire as of December
31,
2007, as they had reached retirement eligibility (50 years of age
or older
and at least 10 years of service with Peoples as of December 31,
2007). Vesting of the mandatory deferral balance of cash
incentives earned under the Incentive Award Plan and unvested stock
options, SARs, and restricted shares accelerate upon
retirement.
|
|
(2)
|
Under
the terms of the change in control agreements, the named executive
officer
continues to participate in life, medical, and dental insurance during
the
term of his or her non-compete agreement with the same benefit level
available prior to termination. The named executive officers
will not participate in Peoples’ disability plan after
termination.
|
|
(3)
|
Mr.
Landers resigned as Chief Financial Officer and Treasurer on April
9, 2007
and entered into a Resignation and Severance Agreement, under which
Mr.
Landers received the following severance benefits: (i) severance
pay equal
to $88,751.28, representing six months of his base salary in effect
immediately prior to April 9, 2007, in one lump-sum (less applicable
withholdings and taxes); and (ii) Peoples paid Mr. Landers’ COBRA
healthcare and dental premiums for coverage through April 30,
2008.
|
|
(4)
|
Stock
options and SARs to be settled in common shares which were not vested
as
of December 31, 2007, had no intrinsic value because the grant price
of
these awards was greater than the closing price of Peoples’ common shares
as reported on the NASDAQ Global Select Market on December 31,
2007.
|
|
(5)
|
Peoples
entered into a change in control agreement with Mr. Yazombek on February
20, 2008. For purposes of the information included in this
table, the change in control agreement is treated as though it had
been in
effect on December 31, 2007.
|
|
(6)
|
On
February 14, 2008, the terms of Mr. Holdren’s change in control agreement
were amended from (i) a lump sum cash payment equal to two times
his base
annual compensation to a lump sum payment equal to his base annual
compensation, (ii) a non-compete period of 12 months to a period
of six
months, and (iii) participation in life, medical, and dental insurance
for
a period of 12 months to a period of six months. For purposes
of the information included in this table, the amended change in
control
agreement is treated as though it had been in effect on December
31,
2007.
|
Peoples
uses a combination of cash and
equity-based compensation to attract and retain qualified directors to serve
on
the Board of Directors. Director compensation elements are designed
to:
|
·
|
Ensure
alignment with long-term
shareholder interests;
|
|
·
|
Ensure
Peoples can attract and
retain outstanding director
candidates;
|
|
·
|
Recognize
the substantial time
commitments necessary to oversee the affairs of Peoples;
and
|
|
·
|
Support
the independence of
thought and action expected of
directors.
|
In
determining the overall
competitiveness of director compensation, the Compensation Committee reviewed
director compensation data from the Peer Group described in the “COMPENSATION
DISCUSSION AND ANALYSIS.”
The
cash compensation paid to Board
members did not change in 2007. Peoples’ directors, other than Mark
F. Bradley, receive a quarterly cash fee for their
services. Effective May 1, 2006, the amount of this quarterly fee was
increased from $1,000 to $1,500 per quarter. In addition, directors,
other than Mark F. Bradley, are compensated for each meeting of the Board of
Directors attended. Effective May 1, 2006, this fee was increased
from $1,000 to $1,250 per Board meeting attended. The fees were
increased to bring them in line with the Peer Group average and the Compensation
Committee believes are necessary to maintain the caliber of directors necessary
to promote long-term shareholder value.
Directors
are also compensated for each
committee meeting they attend. Members of the Executive Committee and
the Governance and Nominating Committee received during 2007 and continue to
receive $100 for each committee meeting attended lasting less than 30 minutes
and $200 for each committee meeting attended of 30 minutes or
more. Directors were paid during 2007 and continue to be paid $500
per meeting for attending Compensation Committee meetings of 30 minutes or
longer while the fee for attending meetings of less than 30 minutes is $100
per
meeting. The fee for attending Audit Committee meetings of 30 minutes
or longer was in 2007 and remains $500 per meeting and $100 per meeting attended
if the meeting lasts less than 30 minutes.
The
Chairman of the Compensation
Committee receives an additional cash fee of $750 per quarter. The
fee is competitive with the Peer Group average and remained
unchanged. Likewise, the Chairman of the Audit Committee receives an
additional cash fee of $1,250 per quarter that is competitively in line with
the
Peer Group average. The Compensation Committee believes that the
additional quarterly fees are appropriate and commensurate with the overall
level of responsibility and accountability of each
Chairman. Likewise, the fees are necessary to attract and retain
Committee Chairmen with the talents and skills the Compensation Committee
believes necessary to promote shareholder value.
Each
director of Peoples, other than
Mark F. Bradley, who also serves as a director of Peoples Bank receives $600
per
quarter and $500 for each regular bi-monthly meeting
attended. Additionally, each director of Peoples who also serves as a
Peoples Bank committee member receives $100 for each committee meeting attended
of less than 30 minutes and $200 for each committee meeting attended of 30
minutes or more.
Mark
F. Bradley received no compensation
as a director of Peoples or Peoples Bank during 2007 and continues to receive
none in this capacity.
Thomas
J. Wolf also received and
continues to receive $150 for each meeting of the Peoples Bank Kentucky/
Huntington Leadership Advisory Board
he attends, in addition to the previously mentioned fees for his service to
Peoples.
Directors
who travel a distance of 50
miles or more to attend a Board or committee meeting of Peoples or Peoples
Bank
receive a $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 for the actual cost of their
overnight accommodations. Peoples believes these fees are reasonable
and partially offset travel expenses incurred by some of the directors living
outside the Marietta, Ohio area, where Board of Directors and committee meetings
are typically held.
In
years prior to 2005, Mark F. Bradley
was paid a fee as an employee director. Mark F. Bradley elected to
defer the fees paid to him under the Deferred Compensation Plan for Directors
of
Peoples Bancorp Inc. and Subsidiaries (the “Deferred Compensation Plan for
Directors”) to be invested in common shares of Peoples. Under the
Deferred Compensation Plan for Directors, dividends are credited on common
shares allocated. The dividends are converted into a Peoples’ common
share equivalent based on the fair market value of a common share on a fixed
quarterly cycle.
The
full Board of Directors approves all
equity-based awards made to non-employee directors of Peoples while the
Compensation Committee approves all equity-based awards made to non-employee
directors of Peoples’ subsidiaries. The grant date for equity-based
awards made to non-employee directors of Peoples is the date of the approval
by
the Board, the date of election or appointment, or after the third business
day
following the date on which all material information has been publicly
disclosed, whichever is later. The grant date for the equity-based
awards made to the non-employee directors of Peoples Bank (only, and
not also of Peoples) is the date of the approval by the Compensation Committee,
the date of election or appointment, or after the third business day following
the date on which all material information has been publicly disclosed,
whichever is later. The grant price is the closing price on the grant
date of Peoples’ common shares on The NASDAQ Global Select
Market.
On
February 8, 2007, the Board of
Directors of Peoples approved the grant of 300 restricted shares to each of
the
non-employee directors, if still a director, on February 13,
2007. The non-employee directors who received the restricted share
grant were: Carl L. Baker, Jr.; George W. Broughton; Frank L. Christy; Wilford
D. Dimit; Richard Ferguson; David L. Mead; Robert W. Price; Theodore P. Sauber;
Paul T. Theisen; Joseph H. Wesel; and Thomas J. Wolf. On the same
day, the Board of Directors of Peoples also granted 150 restricted shares of
Peoples to those non-employee directors of Peoples Bank who were not also
directors of Peoples. The restrictions on the restricted shares lapse
after a period of six months (i.e., on August 13, 2007).
The
following summarizes the effect of
various termination of service events on the restricted shares granted to the
non-employee directors:
|
·
|
Termination
of service as a director of Peoples due to death, disability, or
retirement: The restrictions
on
the restricted shares will lapse and the restricted shares will become
fully vested on the termination
date.
|
|
·
|
Termination
of service as a director of Peoples for cause or any reason other
than
retirement, death or disability: Any non-vested
restricted shares will be forfeited on the termination
date.
|
Since
1991, Peoples has maintained the
Deferred Compensation Plan for Directors. Voluntary participation in
the Deferred Compensation Plan for Directors allows a non-employee director
of
Peoples, or one of its subsidiaries, to defer all or part of his or her
director’s
fees, including the federal income tax
thereon. Since January 2, 1998, directors have been permitted to
allocate their deferrals between a cash account (earning interest equal to
Peoples Bank’s
three-year CD interest rate) and a
stock account (under which common shares of Peoples are allocatedat
fair market value on a fixed
quarterly
cycle based on (1) the
amount deferred and (2) subsequent cash dividends
on the
common shares previously credited to the account). The only right a
participant in the Deferred Compensation Plan for Directors has with respect
to
his or her cash account and/or stock account is to receive distributions upon
retirement as a director. Distribution of the deferred amounts 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 is distributed only in common shares of
Peoples and the cash account is distributed only in cash.
The
non-employee directors are also
eligible to participate in selected employee benefit programs maintained by
Peoples. These include medical and dental insurance plans and Group
Term Life Insurance. The non-employee directors pay the same premiums
for the medical and dental insurance as do employees who participate in such
plans. During 2007, Mr. Theisen participated in the medical and
dental insurance plans. The non-employee directors automatically
receive a group term life insurance benefit, the premiums for which are paid
by
Peoples. The maximum benefit is $50,000 for directors age 65 or
younger. The maximum benefit decreases by a percentage for each year
beyond age 65 until it reaches a maximum payout of $5,000.
|
Name
|
Fees
Earned
or
Paid
in
Cash
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive
Plan Compensation
|
Change
in Pension Value and
Nonqualified
Deferred Compensation Earnings
|
All
Other Compensation
|
Total
|
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
|||
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
Carl
L. Baker, Jr.
|
$29,450
|
$8,775
|
-
|
-
|
$224
|
$192
|
$38,641
|
|
Mark
F. Bradley (1)
|
-
|
-
|
-
|
-
|
$1,270
|
-
|
$1,270
|
|
George
W. Broughton
|
$48,750
|
$8,775
|
-
|
-
|
$1,110
|
$192
|
$58,827
|
|
Frank
L. Christy
|
$27,850
|
$8,775
|
-
|
-
|
-
|
$192
|
$36,817
|
|
Wilford
D. Dimit
|
$37,250
|
$8,775
|
-
|
-
|
$18,002
|
$116
|
$64,143
|
|
Richard
Ferguson
|
$29,350
|
$8,775
|
-
|
-
|
$1,778
|
$192
|
$40,095
|
|
David
L. Mead
|
$42,550
|
$8,775
|
-
|
-
|
$521
|
$192
|
$52,038
|
|
Robert
W. Price
|
$25,900
|
$8,775
|
-
|
-
|
$3,465
|
$192
|
$38,332
|
|
Theodore
P. Sauber
|
$37,500
|
$8,775
|
-
|
-
|
-
|
$116
|
$46,391
|
|
Paul
T. Theisen
|
$42,050
|
$8,775
|
-
|
-
|
$5,023
|
$15,806
|
$71,654
|
|
Joseph
H. Wesel
|
$39,050
|
$8,775
|
-
|
-
|
$6,855
|
$104
|
$54,784
|
|
Thomas
J. Wolf
|
$23,100
|
$8,775
|
-
|
-
|
-
|
$192
|
$32,067
|
|
(1)
|
Mark
F. Bradley, an executive officer and member of the Board of Directors
of
both Peoples and Peoples Bank, receives no director
compensation.
|
|
(2)
|
Amounts
in column (b) represent the aggregate quarterly and meeting fees
(including travel fees paid or payable to each
director). Included in these amounts are voluntary elective
deferrals of fees pursuant to the Deferred Compensation Plan for
Directors. Deferrals of these fees for 2007 were: (a) Wilford
D. Dimit -$37,250; (b) Richard Ferguson -$29,350; (c) David L. Mead
-
$21,275; and (d) Robert W. Price -$25,900. All other amounts
representing quarterly and meeting fees for 2007 were paid in
cash.
|
|
(3)
|
The
amounts in column (c) reflect the dollar amount recognized for financial
statement reporting purposes for 2007, in accordance with FAS 123(R)
of
awards of restricted shares pursuant to Peoples’ 2006 Equity
Plan. These amounts exclude the impact of estimated forfeitures
related to service-based vesting conditions, as required by SEC
rules. The amounts shown in column (c) also represent the grant
date fair value of the restricted share awards calculated in accordance
with FAS 123(R). Assumptions used in the calculation of these
amounts are included in the “Notes To The Consolidated
Financial Statements, Note 16, Stock-Based Compensation on pages
76
through 79 of Peoples’ Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 2007.” All non-employee directors
were awarded 300 restricted shares on February 13, 2007, and the
restrictions of the restricted shares lapsed on August 13,
2007. None of the non-employee directors held restricted shares
which were still subject to transfer restrictions as of December
31,
2007.
|
|
(4)
|
The
aggregate number of common shares underlying non-qualified stock
options
outstanding at December 31, 2007 for each non-employee director
were: (a) Carl L. Baker, Jr. – 7,984; (b) George W. Broughton – 4,665; (c)
Frank L. Christy – 7,298; (d) Wilford D. Dimit –10,116; (e) Richard
Ferguson – 2,355; (f) David L. Mead – 600; (g) Robert W. Price – 5,820;
(h) Theodore P. Sauber – 2,355; (i) Paul T. Theisen – 9,280; (j) Joseph H.
Wesel – 7,550; and (k) Thomas J. Wolf – 3,510. All of these outstanding
options were vested at December 31, 2007 and had been vested prior
to
January 1, 2007.
|
|
(5)
|
The
amounts in column (f) represent 2007 earnings on each of the director’s
deferred fees. For 2007 Mark F. Bradley’s earnings represents
dividends credited on the cumulative amount of director’s fees deferred in
prior years under the terms of the Deferred Compensation Plan for
Directors. Mark F. Bradley has not been paid a fee for his
services as a director of Peoples and Peoples Bank since December
31,
2004.
|
|
(6)
|
The
amounts in column (g) represent $66 in dividends paid on 300 restricted
shares awarded on February 13, 2007 and vested on August 13, 2007,
and the
amount of Peoples’ 2007 annual contribution of premiums for group term
life insurance for all directors except Paul T. Theisen, who also
participated in Peoples’ medical and dental insurance
plan. Paul T. Theisen’s group term life insurance premium was
$38 and his medical and dental premium was
$15,702.
|
Each
of Carl L. Baker, Jr., George W.
Broughton, Frank L. Christy, David L. Mead, Robert W. Price, and Paul T. Theisen
served as a member of the Compensation Committee of Peoples’ Board of Directors
for the entire 2007 fiscal year and continues to serve as a
member. None of the individuals serving on the Compensation Committee
has been an officer or employee of Peoples or any of its
subsidiaries. During the 2007 fiscal year, Peoples Bank entered into
lending relationships with certain members of the Compensation Committee, with
members of their respective families and with corporations and organizations
as
to which they serve as executive officers or beneficially own more than 10%
of
the equity securities. All such loans (i) were made in the ordinary
course of business, (ii) were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
loans with persons not related to Peoples or Peoples Bank, and (iii) did not
involve more than the normal risk of collectibility or present other unfavorable
features to Peoples or Peoples Bank. During the 2007 fiscal year, no
executive officer of Peoples has served on the board of directors or
compensation committee (or other committee serving an equivalent function)
of
any other entity, one of whose executive officers served on Peoples’ Board of
Directors or Compensation Committee.
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 legal services for Peoples or any of its subsidiaries), since
1998. TheisenBrock performed legal services for Peoples and its
subsidiaries during the 2007 fiscal year.
FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2007
Management
has represented to the Audit
Committee that Peoples’ audited consolidated financial statements as of and for
the fiscal year ended December 31, 2007, were prepared in accordance with
US GAAP and the Audit Committee has reviewed and discussed the audited
consolidated financial statements with management.
In
addition, the Audit Committee
discussed and reviewed with Ernst & Young LLP (“E&Y”), Peoples’
independent registered public accounting firm, all communications and other
matters required to be discussed by the standards of the Public Company
Accounting Oversight Board (United States), including those described in the
Statement on Auditing Standards No. 61, as amended, as adopted by the Public
Company Accounting Oversight Board in Rule 3200T, and by SEC rules, as well
as
significant current accounting developments and issues. The Audit
Committee has also reviewed and discussed the audited consolidated financial
statements with E&Y.
The
Audit Committee has received from
E&Y the written disclosures and a letter describing all relationships
between E&Y and Peoples and its subsidiaries that might bear on E&Y’s
independence consistent with Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as adopted by the Public
Company Accounting Oversight Board in Rule 3600T. The Audit Committee
has discussed with E&Y any relationships with or services to Peoples or its
subsidiaries that may impact E&Y’s independence and objectivity, including
the non-audit services rendered by E&Y, and has satisfied itself as to
E&Y’s independence.
Based
on the Audit Committee’s
discussions with management and E&Y, and the Audit Committee’s review of the
report of E&Y to the Audit Committee, the Audit Committee recommended to the
Board of Directors that Peoples’ audited consolidated financial statements be
included in Peoples’ Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 2007 for filing with the SEC.
Submitted
by the Audit Committee of Peoples’ Board of Directors:
Richard
Ferguson, Chairman; Carl L. Baker, Jr.; George W. Broughton; Theodore P. Sauber;
and Thomas J. Wolf.
On
February 27, 2008, the Audit
Committee appointed E&Y as Peoples’ independent registered public accounting
firm for the 2008 fiscal year. E&Y has served as Peoples’
independent auditors/independent
registered public
accounting firmsince
1995. The Board of Directors expects that 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.
Fees
for services rendered by E&Y
for each of the 2007 fiscal year and the 2006 fiscal year
were:
|
2007
|
2006
|
||
|
Audit
Fees (1)
|
$558,134
|
$615,494
|
|
|
Audit-Related
Fees (2)
|
17,650
|
23,551
|
|
|
Tax
Fees (3)
|
117,210
|
61,883
|
|
|
Total
|
$692,994
|
$700,928
|
____________________
|
(1)
|
Audit
Fees pertain to professional services rendered in connection with
the
audit of Peoples’ annual financial statements and review of financial
statements included in Peoples’ Quarterly Reports on Form 10-Q, as well as
internal control testing for compliance with Section 404 of the
Sarbanes-Oxley Act of 2002.
|
|
(2)
|
Audit-Related
Fees pertain to services rendered in connection with statutory audits
and
accounting consultation.
|
|
(3)
|
Tax
Fees pertain to services rendered for tax planning and advice, tax
compliance, and assistance with tax audits and
appeals.
|
E&Y
did not render any other
services during the 2007 fiscal year or the 2006 fiscal year. All of
the services described under “Audit-Related Fees” or “Tax Fees” above were
pre-approved by the Audit Committee.
The
Audit Committee has adopted, and the
Board of Directors has ratified, an Audit and Non-Audit Services Pre-Approval
Policy (the “Pre-Approval Policy”), which sets forth the procedures and
conditions pursuant to which services proposed to be performed by the
independent registered public accounting firm may be
pre-approved. Proposed services may either be pre-approved without
consideration of specific case-by-case services by the Audit Committee (“general
pre-approval”), or require the specific pre-approval of the Audit Committee
(“specific pre-approval”). Appendices to the Pre-Approval Policy
describe the Audit, Audit-Related, Tax and All Other services that have the
general pre-approval of the Audit Committee. The term of any general
pre-approval is 12 months from the date of pre-approval, unless the Audit
Committee states otherwise. The Audit Committee will annually review
and pre-approve the services that may be provided by the independent registered
public accounting firm without obtaining specific pre-approval from the Audit
Committee. The Audit Committee will add to or subtract from the list of general
pre-approved services from time to time, based on subsequent
determinations.
The
Pre-Approval Policy does not
delegate to management the Audit Committee’s responsibilities to pre-approve
services performed by the independent registered public accounting
firm. The Audit Committee, however, may delegate pre-approval
authority to one or more of its members. The member(s) to whom such
authority is delegated must report, for informational purposes only, any
pre-approval decisions to the Audit Committee at its next scheduled
meeting.
All
requests or applications for
services to be provided by the independent registered public accounting firm
will be submitted to the Chief Financial Officer of Peoples, and must include
a
detailed description of the services to be rendered. The Chief
Financial Officer will determine whether such services are included within
the
list of services that have received the general pre-approval of the Audit
Committee. The Audit Committee will be informed on a timely basis of
any such services rendered by the independent registered public accounting
firm. Services that require specific pre-approval by the Audit
Committee will be submitted to the Audit Committee by both the independent
registered public accounting firm and the Chief Financial Officer, and must
include a joint statement as to whether, in their view, the request or
application is consistent with the SEC’s rules on auditor
independence. Any proposed services exceeding pre-approved cost
levels or budgeted amounts will also require specific pre-approval by the Audit
Committee.
The
Audit Committee has designated the
Auditor of Peoples, as head of the Internal Audit Department (the “Auditor”), to
monitor the performance of all services provided by the independent registered
public accounting firm and to determine whether such services are in compliance
with the Pre-Approval Policy. The Auditor reports to the Audit
Committee on a periodic basis as to the results of this
monitoring. Both the Auditor and management are to immediately report
to the Chairman of the Audit Committee any breach of the Pre-Approval Policy
that comes to the attention of the Auditor or any member of
management.
The
Audit Committee also reviews the
Auditor’s annual internal audit plan to determine whether the plan provides for
adequate monitoring of the independent registered public accounting firm’s
services.
The
SEC has implemented rules regarding
the delivery of proxy materials to households. This method of
delivery, often referred to as “householding,” would permit Peoples to send a
single annual report, proxy statement or Notice of Internet Availability of
Proxy Materials, as applicable, to any household at which two or more different
shareholders reside if Peoples reasonably believes such shareholders are members
of the same family or otherwise share the same address or that one shareholder
has multiple accounts. In each case, the shareholder(s) must consent
to the householding process, and may at any time request that Peoples promptly
deliver to such shareholder(s) a separate copy of the proxy materials subject
to
householding. Each shareholder would continue to receive a separate
notice of meeting of shareholders and proxy card. The householding
procedure is intended to reduce the volume of duplicate information shareholders
receive and reduce Peoples’ expenses. Peoples does not currently
practice householding, but may institute householding in the future and will
notify registered shareholders affected by householding at that
time.
Many
broker/dealers, financial
institutions and other holders of record have instituted
householding. If your family has one or more “street name” accounts
under which you beneficially own common shares of Peoples, you may have received
householding information from your broker/dealer, financial institution or
other
record holder in the past. Please contact the record holder directly
if you have questions, require additional copies of this proxy statement or
Peoples’ 2007 Annual Report or if you wish to revoke your decision to household
and thereby receive multiple copies of proxy materials. You should
also contact the record holder if you wish to institute
householding.
As
of the date of this proxy statement,
the Board of Directors knows of no matter that willbe
presented for action by the
shareholders at the Annual Meeting other than those mattersdiscussed
in this proxy
statement. However, if any other matter requiring a vote of the
shareholders is properly presented at the Annual Meeting or any adjournment
thereof, the individuals acting under the proxies solicited by the Board of
Directors will vote and act according to their best judgment in light of the
conditions then prevailing, to the extent permitted under applicable
law.
It
is important that your proxy cardbe
completed,
signed and returned
promptly. If
youdo not expect to attend
the Annual Meeting in person, pleasecomplete,
sign and return the
accompanying proxy card in the self-addressed envelope furnished
herewith.
By
Order of the Board
of Directors,
Mark
F.
Bradley
President
and Chief
Executive Officer
45
Peoples
Bancorp (w/logo) ® is
a federally
registered service mark of Peoples Bancorp
Inc.
PEOPLES
BANCORP INC.
ANNUAL
MEETING OF SHAREHOLDERS
Thursday,
April 10, 2008
10:00
a.m. Eastern Daylight Savings Time
Holiday
Inn
701
Pike Street
Marietta,
Ohio 45750
Peoples
Bancorp Inc.
P.O.
Box 738
Marietta,
Ohio 45750
proxy
This
proxy is solicited by the Board of Directors for use at the Annual Meeting
of
Shareholders to be held on April 10, 2008.
The
common shares of Peoples Bancorp Inc. (“Peoples”) as to which you have voting
authority, including those held on your behalf in a trust account, under
Peoples’ Dividend Reinvestment Plan or under Peoples’ Retirement Savings Plan,
will be voted as you specify on the reverse side of this proxy
card.
If
no choice is specified, the common shares of Peoples represented by this
proxy
card will be voted “FOR” the election of the director nominees listed in Item
1.
By
signing this proxy card, you revoke all prior proxies to vote the common
shares
of Peoples you are entitled to vote at the Annual Meeting of Shareholders
and
appoint Mark F. Bradley and Joseph H. Wesel, and each of them with full
power of
substitution, as your proxies to attend the Annual Meeting of Shareholders
and
vote your common shares of Peoples on the matter shown on the reverse side
and
in their discretion, to the extent permitted by applicable law, on any
other
matters (none known at the time of solicitation of this proxy) which may
properly come before the Annual Meeting of Shareholders and all adjournments
thereof.
Peoples
Bancorp (w/logo)® is
a federally
registered service mark of Peoples Bancorp Inc.
See
reverse for voting instructions.
Please
detach here
The
Board of Directors Recommends a Vote FOR All Director Nominees Listed in
Item
1.
|
1. Election
of directors
for
a three-year term
expiring
in 2011:
|
01 Mark
F. Bradley
02 Frank
L. Christy
|
03 Theodore
P. Sauber
04 Joseph
H. Wesel
|
£
Vote
FOR
all
nominees
(except
as marked)
|
£
Vote
WITHHELD
from
all nominees
|
|
(Instructions:
To withhold authority to vote for any individual nominee(s),
write
the number(s) of the nominee(s) in the box provided to the
right.)
|
THE
COMMON SHARES REPRESENTED BY THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL
BE
VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR THE
ELECTION OF
ALL DIRECTOR NOMINEES LISTED IN ITEM 1. IF ANY OTHER MATTERS ARE PROPERLY
BROUGHT BEFORE THE ANNUAL MEETING OF SHAREHOLDERS OR ANY ADJOURNMENT THEREOF
OR
IF A NOMINEE FOR ELECTION AS A DIRECTOR NAMED IN THE PROXY STATEMENT FOR
THE
ANNUAL MEETING OF SHAREHOLDERS IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL
NOT
SERVE, THE COMMON SHARES REPRESENTED BY THIS PROXY CARD WILL BE VOTED IN
THE
DISCRETION OF THE INDIVIDUALS DESIGNATED TO VOTE THIS PROXY, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ON SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEE(S)
AS THE DIRECTORS MAY RECOMMEND.
Address
Change? Mark Box £
and indicate changes below:
Date
|
|
Signature(s)
in Box
Please
sign exactly as your name(s) appears on the
proxy card. If held in
joint
tenancy, all persons must sign. Trustees, administrators, executors,
guardians,
attorneys, agents, etc., must include
title and authority. Corporations
must provide full name of corporation and title of authorized officer signing
the
proxy
card.