UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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F.N.B. Corporation

(Name of Registrant as Specified in its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Dear Shareholder:

 

We will hold our Annual Meeting of Shareholders at 3:30 p.m., Eastern Daylight Time, on Wednesday, May 18, 2011, at the F.N.B. Technology Center Board Room located at 4140 East State Street, Hermitage, Pennsylvania 16148.

 

At our Annual Meeting, our shareholders will act on the following matters: (i) election of fourteen director nominees named in the accompanying proxy statement to our Board of Directors; (ii) approval of an advisory (non-binding) resolution regarding the 2010 compensation of our named executive officers; (iii) an advisory vote on the frequency at which we should conduct an advisory (non-binding) vote of the shareholders regarding the compensation of our named executive officers; (iv) ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm; (v) approval and adoption of the Amended 2007 F.N.B. Corporation Incentive Compensation Plan; and (vi) any other matter that is presented at our Annual Meeting in compliance with our bylaws.

 

Your vote is important regardless of how many shares of F.N.B. stock you own. If you hold stock in more than one account or name, you will receive a proxy card for each.

 

Whether or not you plan to attend our Annual Meeting, please complete, sign, date and promptly return the enclosed proxy card in the postage-paid envelope we have provided to insure that your shares are represented at our Annual Meeting. Alternatively, you may vote via the Internet or by telephone by following the instructions on your proxy card. By voting now, you will assure that your vote is counted even if you are unable to attend our Annual Meeting.

 

Please indicate on the card whether you plan to attend our Annual Meeting. If you attend and wish to vote in person, you may withdraw your proxy at that time.

 

As always, our directors, management and staff thank you for your continued interest in and support of F.N.B.

 

Stephen J. Gurgovits
Chief Executive Officer

 

March 30, 2011

 

 

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

 

 

Notice is hereby given that F.N.B. Corporation will hold its 2011 Annual Meeting of Shareholders at 3:30 p.m., Eastern Daylight Time, on Wednesday, May 18, 2011, at the F.N.B. Technology Center Board Room located at 4140 East State Street, Hermitage, Pennsylvania 16148. At our Annual Meeting, our shareholders will vote on the following proposals:

 

 

Only shareholders of record as of the close of business on March 9, 2011, are entitled to notice of and to vote at our Annual Meeting.

 

It is important that your shares be represented and voted at our Annual Meeting. Please complete, sign, date and return the enclosed proxy card in the postage-paid envelope provided or vote via the Internet or by telephone, whether or not you expect to attend our Annual Meeting in person.

 

We have included our 2010 annual report to shareholders with this notice and accompanying proxy statement.

 

BY ORDER OF OUR BOARD OF DIRECTORS,

 

David B. Mogle, Corporate Secretary

 

March 30, 2011

Hermitage, Pennsylvania

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 18, 2011.

 

THE F.N.B. CORPORATION PROXY STATEMENT AND 2010 ANNUAL REPORT TO SHAREHOLDERS ARE AVAILABLE AT http://www.cfpproxy.com/5710.

 

 

 

TABLE OF CONTENTS

 

 

 

 

One F.N.B. Boulevard
Hermitage, PA 16148

 

 

Our proxy statement contains information relative to our Annual Meeting of Shareholders to be held on Wednesday, May 18, 2011, beginning at 3:30 p.m., Eastern Daylight Time at the F.N.B. Technology Center Board Room at 4140 East State Street, Hermitage, Pennsylvania 16148 (our “Annual Meeting”). This proxy statement also relates to any adjournment or postponement of our Annual Meeting. We commenced the mailing of our proxy statement and the accompanying proxy card to our shareholders of record as of March 9, 2011. We will bear all of the costs of preparing and mailing our proxy material to our shareholders. We will, upon request, reimburse brokers, nominees, fiduciaries, custodians and other record holders for their reasonable expenses in forwarding our proxy materials to beneficial owners.

 

We use the following terms in this proxy statement:

 

 

What will our shareholders vote on at our Annual Meeting?

 

Our shareholders will act upon the following proposals at our Annual Meeting:

 

 

Who is entitled to vote at our meeting?

 

Our Board has set March 9, 2011, as the record date for our Annual Meeting. Only holders of our common stock of record at the close of business on the record date are entitled to receive notice of and to vote at our Annual Meeting and any adjournment or postponement of our Annual Meeting. F.N.B. shareholders who plan to attend our Annual Meeting may obtain driving directions to the meeting location by contacting our shareholder relations representative, Jennifer Atkins, at (888) 981-6000.

 

What are the Board’s voting recommendations?

 

The Board recommends that you vote your shares:

 

 

What vote is required to approve each matter?

 

Action by the shareholders on each of the proposals presented at our Annual Meeting requires the presence of a quorum at our Annual Meeting, in person or by proxy. Refer to the discussion in our proxy statement under the question, “What is a quorum?”

 

Under Proposal 1, our directors are elected by a plurality of the votes cast in person or by proxy at our Annual Meeting. The fourteen persons nominated for election as a director in accordance with our bylaws who receive the highest number of “For” votes cast by our shareholders at the Annual Meeting will be elected as directors for one year terms. If you properly submit your proxy card and mark “Withhold” authority for any individual nominee or all of the nominees, the proxies will not vote your shares for the nominee or nominees as to which you so indicate, but we will count your shares as present in determining whether a quorum exists. Similarly, broker non-votes will not be counted as votes cast, but we will count those shares as present for purposes of determining whether a quorum exists. Our Articles of Incorporation and bylaws do not authorize cumulative voting in the election of directors.

 

For Proposals 2, 4 and 5, the affirmative vote of a majority of the votes cast for each Proposal at the Annual Meeting is required for approval of these Proposals. For Proposals 2 and 5 abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of this vote. For Proposal 4 abstentions will not be counted as votes cast and will have no effect on the result of this vote.

 

For Proposal 3, which is the non-binding, advisory vote regarding the frequency of voting by the F.N.B. shareholders on the compensation of our named executive officers, the shareholders may vote their shares in favor of the frequency recommended by our Board (every three years) or other preferred frequency (i.e., every one, two or three years) they would recommend to the Corporation, or abstain from voting. The frequency that receives the highest number of votes will be deemed to be the choice of the shareholders.

 

For purposes of Proposals 1, 2, 3 and 5, broker non-votes will not be counted as votes cast. This means that the broker or bank which holds your shares of F.N.B. stock may not vote your shares regarding these proposals unless you instruct your broker or bank how you want your shares to be voted.

What are the voting rights of our shareholders?

 

The only class of our securities that is outstanding and entitled to vote at our Annual Meeting is our common stock. As of the March 9, 2011, record date, we had 120,019,306 shares of our common stock outstanding and entitled to one vote per share with respect to each matter to be voted on at our Annual Meeting.

 

How do I vote?

 

You can vote either in person at our Annual Meeting or by proxy whether or not you attend our Annual Meeting. When you or your authorized attorney-in-fact grants us your proxy, you authorize us to vote your shares of our common stock in the manner you specify on your proxy card. Giving a proxy allows your shares to be voted at our Annual Meeting even if you do not attend the Annual Meeting in person. If your shares are in an account at a bank or brokerage firm (that is, in “street name”), you will receive a separate instruction card from your bank or brokerage firm with information about how to give voting instructions.

 

If you hold your shares directly, to vote by proxy you must do one of the following:

 

 

If you hold your F.N.B. shares in an account at a bank or brokerage firm, and you want to vote in person at our Annual Meeting, you will need to obtain a signed proxy card from the brokerage firm or the bank that holds your F.N.B. stock. If your F.N.B. stock is registered in the name of a bank or brokerage firm, you also may be eligible to vote your shares electronically via the Internet or by telephone. Many banks and brokerage firms participate in the Broadridge Financial Solutions, Inc. (“Broadridge”) online program. This program provides eligible shareholders who receive a paper copy of this proxy statement the opportunity to vote via the Internet or by telephone. If your bank or brokerage firm is participating in Broadridge’s program, your proxy card will contain instructions for voting through Broadridge’s online program. If your proxy card does not reference Internet or telephone information, please complete and return the proxy card in the enclosed self-addressed, postage-paid envelope.

 

Who can attend our Annual Meeting?

 

All shareholders as of the close of business on March 9, 2011, (the record date) or their duly appointed proxies may attend our Annual Meeting. Even if you currently plan to attend our Annual Meeting, we recommend that you vote by any of the applicable methods described above so that your vote will be counted at our Annual Meeting if you later decide not to attend our Annual Meeting.

 

If your shares are held in “street name” by your bank or brokerage firm, you will need to bring a copy of a brokerage statement reflecting your ownership of F.N.B. stock as of March 9, 2011, and check in at the registration desk at our Annual Meeting.

 

What is a quorum?

 

The presence at our Annual Meeting, in person or by proxy, of the holders of a majority of our outstanding shares of common stock on the record date will constitute a quorum, permitting the conduct of business at our Annual Meeting. If you return a properly completed proxy card, vote via the Internet, vote by telephone or vote in person at our Annual Meeting, you will be considered present for purposes of establishing a quorum. Proxies received, but marked as abstentions, proxies that withhold authority and broker non-votes will be included in the calculation of the number of shares considered to be present for purposes of determining a quorum.

Can I change my vote after I have voted?

 

You may revoke your proxy and change your vote at any time before we count your vote at our Annual Meeting. You may change your vote by signing and returning a new proxy card, voting via the Internet or by telephone with a later date, or by attending the Annual Meeting and voting in person. Only your latest instruction will be counted. However, your attendance at our Annual Meeting will not automatically revoke your proxy unless you vote again at our Annual Meeting or specifically request that your prior proxy be revoked by delivering a written notice of revocation prior to our Annual Meeting to our Corporate Secretary at F.N.B. Corporation, One F.N.B. Boulevard, Hermitage, Pennsylvania 16148.

 

How do I vote if my shares are held in “street name”?

 

If you hold your shares in “street name” in an account at a bank or brokerage firm, we generally cannot mail our proxy materials directly to you. Instead, your bank or brokerage firm will forward our proxy materials to you and tell you how to give them instructions for voting your F.N.B. shares.

 

How do I vote my 401(k) Plan shares?

 

If you participate in the F.N.B. Corporation Progress Savings 401(k) Plan (“401(k) Plan”), you may vote the number of shares of common stock credited to your account as of the record date. You may vote by instructing FNTC, the trustee of our 401(k) Plan, pursuant to the proxy card being mailed with this proxy statement to plan participants. The trustee will vote your shares in accordance with your duly executed proxy card, provided that the trustee receives it by 3:00 a.m., Eastern Daylight Time, on Friday, May 13, 2011.

 

If you do not return your proxy card, your shares credited to your 401(k) Plan account will be voted by the trustee in the same proportion that it votes the shares for which it did timely receive proxy cards.

 

You may also revoke a previously given proxy card until 3:00 a.m., Eastern Daylight Time, on Friday, May 13, 2011, by filing with the trustee either a written notice of revocation or a properly completed and signed proxy card or Internet or telephone vote having a later date.

 

How will we conduct the business of our Annual Meeting?

 

Our bylaws govern the organization and conduct of business at our shareholder meetings. Our bylaws specify that our Board Chairman shall preside at our shareholder meetings. Our Board Chairman, Mr. William B. Campbell, will serve as Chair of our Annual Meeting and call the meeting to order. As Chair of our Annual Meeting, Board Chairman Campbell will determine, in his discretion, the order of the business to be conducted at our Annual Meeting and the procedure for our Annual Meeting. Board Chairman Campbell will announce the opening and closing for the polls for each matter on which our shareholders will vote at our Annual Meeting.

 

Who can answer my questions?

 

Should you have questions concerning these proxy materials or our Annual Meeting or should you wish to request additional copies of this proxy statement or proxy card, you may contact Mr. David B. Mogle who is our Corporate Secretary at (888) 981-6000.

 

How can I avoid receiving more than one set of proxy materials in future years?

 

If two or more registered shareholders live in your household or if a registered shareholder maintains two or more shareholder accounts, you may have received more than one set of our proxy materials. We have made a delivery method for proxy materials called “householding” available to our shareholders. If you consent to “householding,” only one annual report and one proxy statement will be delivered to your address; however, a separate proxy card will be delivered for each account. Please refer to the section titled, Other Matters — “Householding” of Proxy Materials at the end of this proxy statement for more information regarding “householding.”

Is my vote confidential?

 

We process proxy instructions, ballots and voting tabulations that identify individual shareholders in a manner that protects your voting privacy. We will not disclose your vote either within the Company or to third parties, except:

 

 

Occasionally, shareholders provide written comments on their proxy cards. In our discretion, we may forward your comments to our management or the Board.

 

Where can I find the voting results of the Annual Meeting?

 

We will announce the preliminary voting results at our Annual Meeting. The judges of election will tally the final voting results and we will include the final voting results in a Form 8-K, which we will file with the Securities and Exchange Commission (“SEC”) by May 24, 2011.

 

Who is paying for the cost of this proxy solicitation?

 

The Company is paying the costs of the solicitation of proxies. The Company has retained Regan & Associates, Inc. to assist in obtaining proxies by mail, facsimile or email from registered holders, brokerage firms, bank nominees and other institutions for the Annual Meeting. The estimated cost of such services is $24,000 including out-of-pocket expenses. Regan & Associates, Inc. may be contacted at (800) 737-3426.

 

The Company will also reimburse brokerage firms and other persons representing beneficial owners of shares held in “street name” for their reasonable costs associated with:

 

 

In addition to soliciting proxies by mail, certain of our directors, officers and regular employees, without additional compensation, may solicit proxies on our behalf personally or by telephone, facsimile or email.

 

General Information Regarding Director Nominees

 

Our Board determines the number of directors to nominate for election each year. The F.N.B. bylaws provide that our Board shall consist of not fewer than five nor more than 25 persons, the exact number to be determined from time to time by the Board.

 

Acting on the recommendation of the Nominating and Corporate Governance Committee, our Board fixed the number of directors as of the Annual Meeting date at 14.

 

Directors

 

The Board, acting on the recommendation of the Nominating and Corporate Governance Committee, has nominated the persons identified on the table below titled, Nominees for Election at Our Annual Meeting, and each nominee is discussed in detail on pages 7 to 12 of this proxy statement, for election as directors. Each of the Company’s nominees will hold office for a one-year term until the next annual meeting of shareholders and the election and qualification of his or her successors. All of our nominees are currently directors.

 

Relevant biographical information concerning the nominees for election at F.N.B.’s Annual Meeting is described under Directors in this proxy statement.

 

Our bylaws do not permit cumulative voting in the election of directors.

DIRECTORS

 

 

OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE FOURTEEN NOMINEES IDENTIFIED IN THE ABOVE TABLE AS OUR BOARD OF DIRECTORS’ CANDIDATES FOR ELECTION AS DIRECTORS (PROPOSAL 1 ON THE PROXY CARD).

 

Each of our director nominees has consented to being named in this proxy statement and to serve if elected. In the event one or more of our director nominees is unable or unwilling to serve as a director for any reason or should any nominee be unavailable for election by reason of death or other unexpected occurrence, we may vote the enclosed proxy, to the extent permitted by applicable law, with discretionary authority in connection with the nomination by our Board of any substitute nominee.

 

Proxies submitted to us, unless indicated to the contrary, will be voted “For” the election of Messrs. Campbell, Ekker, Gingerich, Goldstein, Gurgovits, Malone, Martz, Radcliffe, Rooney, Rose, Sheetz, Strimbu, Wahl and Ms. Hickton with terms expiring at our 2012 Annual Meeting and upon election and qualification of their respective successors.

 

Relevant biographical information concerning our directors and each nominee for election at our Annual Meeting, including a brief discussion of the specific experience, qualifications, attributes or skills that led to our Board’s conclusion regarding each director nominee’s qualification to serve on our Board in light of our business and structure.

 

William B. Campbell was elected Chairman of our Company in 2009 and has been a director of F.N.B. since it commenced operations in 1975. Mr. Campbell also serves on our Executive, Nominating and Corporate Governance (formerly chaired this Committee) and Succession Committees (formerly chaired this Committee) and was formerly the Board’s Lead Director. Mr. Campbell has been a director of FNBPA since 1973 and is Chairman of FNBPA’s Building Committee and serves on FNBPA’s Executive and Loan Committees. Mr. Campbell served on the boards of Southwest Banks, Inc. (bank holding company, Naples, Florida) and its subsidiary, First National Bank of Naples, from 1997 to 2003 and served on that company’s executive committee. Mr. Campbell’s successful professional career included his ownership of Shenango Steel Erectors, Inc., and service as a partner in Campbell-Kirila Realty (developed and leased commercial property). After more than 30 years of developing high level executive experience in the manufacturing, steel, commercial development and construction industries,

Mr. Campbell retired in 1992. During his career, Mr. Campbell also served in leadership capacities on a number of regional and national trade associations representing the steel, construction and manufacturing industries. Mr. Campbell’s numerous business contacts across various industries offers the Corporation’s affiliates a significant source of business opportunities. Mr. Campbell served 14 years as director of the Shenango Valley Industrial Development Authority in Sharon, Pennsylvania and served on the Board of Trustees of Westminster College located in New Wilmington, Pennsylvania. Mr. Campbell’s expertise, when coupled with FNBPA’s core commercial lending business, makes him a valuable member of our Board. Mr. Campbell’s background provides him with the decision-making experience, knowledge of best corporate practices and strategies and understanding of Board responsibilities to help him as Chairman to lead the Board as a cohesive and effective team. Mr. Campbell’s work experience in the steel, construction and manufacturing industries as well as his extensive experience in commercial real estate development, and his lengthy experience on the Boards of F.N.B. and its various affiliates, qualify him to serve as a member of our Board and our Executive, Nominating and Corporate Governance, and Succession Committees.

 

Henry M. Ekker was named director in 1994 and serves on our Nominating and Corporate Governance Committee. Mr. Ekker has been an FNBPA Director since 1988 and is a member of FNBPA’s Community Reinvestment Act Committee. Mr. Ekker is a partner in the law firm of Ekker, Kuster, McConnell and Epstein, LLP, located in Sharon, Pennsylvania. The focus of Mr. Ekker’s legal practice is mergers and acquisitions, corporate law and structuring, business combinations, estate and tax planning and elder law. Mr. Ekker also has previously served as General Counsel for First Federal Savings & Loan Association and Protected Home Mutual Life Insurance Company as well as many private corporations and partnerships. Mr. Ekker’s legal and financial background enables him to offer the Board and the Nominating and Corporate Governance Committee an understanding of potential legal and regulatory issues that impact our Corporation. Mr. Ekker’s experience as a lawyer and his grasp of the legal issues underlying corporate governance matters, commercial transactions, mergers and fiduciary issues, coupled with his long-term service on the F.N.B. and affiliate Boards of Directors, qualify him as a member of our Board and our Nominating and Corporate Governance Committee.

 

Philip E. Gingerich has been on our Board since 2008 and is a member of our Risk Committee. Mr. Gingerich was a director of Omega Financial Corporation (bank holding company, State College, Pennsylvania) from 1994 until 2008. Mr. Gingerich, a retired member of the Appraisal Institute, was a real estate appraiser and broker for over 30 years until he retired from his business in 2003, and served as a consultant until 2006. Mr. Gingerich’s clients included financial institutions, the U.S. government, state and local governments and agencies, public utility companies, corporations and private individuals. Mr. Gingerich has an extensive real estate appraisal expertise, including the appraisal of shopping centers, apartments, office, industrial, commercial and medical buildings, motels, restaurants, golf courses, farms, single and multi-family housing, development and recreational land. Mr. Gingerich was recognized as an expert real estate appraiser by the Commonwealth of Pennsylvania’s Bureau of Professional and Occupational Affairs, the Department of Transportation, and the federal government. Mr. Gingerich’s substantial real estate appraisal and broker experience provides him a solid foundation from which to advise our Corporation with respect to its core bank lending activities because such critical judgments rely upon the proper valuation of real estate. Mr. Gingerich’s broad and extensive real estate experience (especially in geographic areas where FNBPA’s borrowers are located), his experience as an investor and instructor, and his long tenure as a director in the financial services industry, qualify him for service as a member of our Board and a member of our Risk Committee.

 

Robert B. Goldstein joined our Board in 2003, is a member of our Executive and Succession Committees, and is Chairman of our Compensation Committee. Since 2007, Mr. Goldstein has been a principal of CapGen Financial Advisors LLC, (New York, New York), which is a national fund manager that specializes in investing in financial institutions. In connection with Mr. Goldstein’s activities as a fund manager and financial advisor, Mr. Goldstein has assumed oversight roles on the boards of the following financial institutions: (i) The BANKshares, Inc. in Winterpark, Florida since 2006 (board and audit committee chair and member of subsidiary bank board, BankFIRST; (ii) Seacoast Banking Corp., Stuart, Florida since 2009 (chair of nominating and governance committee and member of subsidiary bank board, Seacoast National Bank); (iii) Palmetto Bancshares, Inc, Greenville, South Carolina since 2010 (and member of subsidiary bank board, Palmetto Bank); (iv) Hampton Roads Bankshares, Norfolk, Virginia since 2010; and (v) Glencoe Capital LLC, Chicago, Illinois since 2010. Mr. Goldstein’s other prior high-level executive and director experience includes positions at Bay View Capital Corporation (chairman and former chief executive officer,

2001-present); Great Lakes Bancorp, Buffalo, New York (director and chairman of executive committee, 2005-2006); Hudson United Bank located in Philadelphia, Pennsylvania (president); Regent Bancshares Corp. located in Philadelphia, Pennsylvania (president and chief executive officer and chairman of the board of its wholly owned subsidiary, Regent National Bank); as well as numerous other executive and director positions with financial institutions during his 46 years in the financial services industry. Mr. Goldstein’s extensive experience with financial institutions provides him a valuable perspective regarding oversight of management, interests of shareholders, risk assessment, business judgment and executive compensation and incentive arrangements. In addition, Mr. Goldstein’s knowledgeable experience in helping to turn around troubled financial institutions and his experience with investors in these situations gives him a solid foundation from which to advise our Company with respect to improving profitability and loan workouts. Mr. Goldstein’s substantial financial, banking, corporate, executive and operational experience, particularly at financial institutions and bank holding companies, in addition to his prior board experience qualify him to serve on our Board, our Executive and Succession Committees, and as Chair of our Compensation Committee.

 

Stephen J. Gurgovits has been a director since 1981 serves on our Succession Committee and is Chairman of our Executive Committee. Mr. Gurgovits is Chairman of the FNBPA Board and has been an FNBPA director since 1981. He is also Chairman of FNBPA’s Executive Committee and a member of its Building Committee. Mr. Gurgovits has also been employed by the Corporation and its subsidiary, FNBPA, for over 49 years and serves as the Corporation’s Chief Executive Officer. During his career with the Corporation and FNBPA, Mr. Gurgovits has served in various retail, commercial banking and executive capacities. Under Mr. Gurgovits’ leadership as Chief Executive Officer, the Corporation has grown from approximately $4 billion in asset size in 2004 to its current size of almost $9.6 billion. In addition, Mr. Gurgovits’ leadership responsibilities include oversight of the Corporation’s financial, strategic and business plans and leadership of our acquisition and divestiture strategies. Mr. Gurgovits’ leadership experience includes his service as the chairman of the Pennsylvania Bankers Association (“PBA”) (2003-2004), a director of the American Bankers Association (“ABA”) (2005-2008) and a member of the American Bankers Council. In leading the PBA and ABA, Mr. Gurgovits gained invaluable experience working with national and state policymakers, legislators and regulators for the purpose of vigorously advocating that the laws, rules and decisions serve the competitive interests of banks and other financial institutions. Mr. Gurgovits’ leadership positions with the PBA and the ABA are indicative of his reputation in the financial institutions industry. This experience, coupled with his Board and executive leadership experience with F.N.B. make him an integral component of our Board. Mr. Gurgovits obtained a post-graduate degree from the University of Wisconsin’s Graduate School of Banking. In addition, Mr. Gurgovits is a recognized leader in regional economic development and currently serves or previously served on the boards of various educational, developmental and health care organizations, including Penn-Northwest Development and Sharon Regional Health System. Mr. Gurgovits authored a business primer book, “Financing Small Business.” Our Board has determined that Mr. Gurgovits’ lengthy and significant experience with F.N.B. and its affiliates over the past 49 years, including his operational, financial, executive and industry leadership roles, unequivocally qualify him for service as our Chief Executive Officer and as a member of our Board and Succession Committee and as Chair of our Executive Committee.

 

Dawne S. Hickton has served on our Corporation’s Board since 2006, and is a member of our Compensation, Nominating and Corporate Governance and Executive Committees. Ms. Hickton is the vice chairman, president and chief executive officer of RTI International Metals, Inc. based in Pittsburgh, Pennsylvania (“RTI”), (titanium company). Prior to becoming RTI’s president and chief executive officer, Ms. Hickton was that company’s chief administrative officer and her responsibilities included oversight and management of its accounting, treasury, tax, business information systems, personnel and legal functions. Ms. Hickton has played a significant role in RTI’s success in the titanium industry due to her executive leadership skills, and strategic and organization-building skills. Also, prior to her tenure with RTI, Ms. Hickton was employed as an in-house counsel with another public company, USX Corporation (steel company located in Pittsburgh, Pennsylvania). With her broad-based board and executive experience, coupled with her organizational skills, administrative expertise, and legal background, Ms. Hickton is qualified to continue as a member of our Board and our Compensation, Nominating and Corporate Governance and Executive Committees.

 

David J. Malone has been a director since 2005 and is a member of our Audit, Succession and Compensation Committees. Mr. Malone is the president and chief executive officer of Gateway Financial Group, Inc. (“Gateway Financial”), a financial services firm located in Pittsburgh, Pennsylvania that specializes in administering and designing insurance portfolios for high net worth persons and businesses. Prior to Mr. Malone’s appointment as

president and chief executive officer of Gateway Financial, he served as that company’s chief financial officer. By reason of Mr. Malone’s executive experience with Gateway Financial, he has accumulated substantial leadership and financial experience. His executive and financial experience has helped him become knowledgeable in analyzing and performing financial strategic planning, which in turn, enhances his value to our Board and our Audit and Compensation Committees. Mr. Malone was a former member of the Northside Deposit Bank board (Pittsburgh, Pennsylvania), and a member of that bank’s audit and executive committees. In addition, during his career, Mr. Malone has been extensively involved in civic and community organizations whose principal mission is to improve business, educational and cultural opportunities in Western Pennsylvania. Mr. Malone’s experience in the financial sector, his prior board experiences along with his demonstrated community involvement qualify him for our Board and specifically, for our Audit and Compensation Committees.

 

D. Stephen Martz has been a director since 2008, is serving on our Executive and Audit Committees and he is Chairman of our Risk and Succession Committees. Mr. Martz has been a member of FNBPA’s board since 2008 and is a member of FNBPA’s Loan and Risk Committees. Before his retirement in 2002, Mr. Martz spent more than 45 years in the banking and financial services industry and more significantly, he spent more than 25 years in multiple director and executive roles with banks and financial institutions. Mr. Martz’s high level executive and director experience includes positions at Omega Financial Corporation (bank holding company, State College, Pennsylvania) (director, president and chief operating officer); Hollidaysburg Trust Company (chairman, president and chief executive officer); and Penn Central Corporation (bank holding company) (director, president and chief executive officer). Mr. Martz is chairman of the board of Nason Hospital (over 400 employees) located in Roaring Spring, Pennsylvania. Mr. Martz has been a member of that hospital’s board for over 32 years. In addition, Mr. Martz serves as a trustee of Lycoming College in Williamsport, Pennsylvania and for over 26 years has been chair of that college’s investment and nominating committees. Mr. Martz has been a key participant in the Lycoming College leadership team responsible for the success of the growth of the college’s endowment fund. We believe that Mr. Martz’s executive experience, his long career in the banking industry and his lengthy board service in the health care and educational sectors, has prepared him to advise our Board and our Executive, Audit, Risk and Succession Committees on the broad array of complex financial, operational, risk, regulatory and business challenges F.N.B. and its affiliates face.

 

Peter Mortensen has been a member of our Board since our formation in 1974 and is a member of our Risk Committee. Mr. Mortensen will retire from the Board effective as of the date of our Annual Meeting. Mr. Mortensen served as our Chairman from 1988 to 2007. During his 45 years of employment with us, Mr. Mortensen’s executive experience included positions as Chief Executive Officer and President of the Corporation’s principal banking subsidiary, FNBPA (1972-1987); Chairman of the Corporation (1988-2007) and our Executive Committee (1996-2009); and Chairman of FNBPA (1988-2004). Also, Mr. Mortensen served in various leadership positions with state and national trade associations such as a director of the ABA, president of the PBA, member of American Bankers Council and member of the Financial Services Roundtable. In these positions, Mr. Mortensen had significant involvement in a number of important state and federal policy issues which impacted the financial institutions industry. Our Board has determined that Mr. Mortensen’s longstanding relationship with F.N.B. over the past 54 years, including executive, operational and financial roles and his director and Board leadership positions, qualify him to be a member of our Board and Risk Committee.

 

Harry F. Radcliffe has been a director of the Corporation since 2002, is a member of our Executive Committee and Chairman of our Audit Committee. Mr. Radcliffe has been an investment manager since 1995 during which time he has counseled and advised corporate and individual clients, helping them analyze financial and economic risks and perform investment and financial strategic planning. From 2000 to 2002, Mr. Radcliffe served on the board of Promistar Financial Corporation (bank holding company, Johnstown, Pennsylvania) and was a member of that company’s audit committee. Mr. Radcliffe’s other high-level executive and director experience included serving as a director, president and chief executive officer of First Home Bancorp (1993-1995) and First South Bancorp (1989-1993). Mr. Radcliffe’s executive leadership skills first became evident at 26 years of age when he was appointed president of a savings and loan company in Western Pennsylvania, and in the succeeding years when he served as a young executive and director with various financial institutions, including First Fidelity Bank, Essex Savings and Loan Association, Hawthorne Savings Bank and Home Savings Bank. During his tenure at these financial institutions, he was instrumental in assisting each company raise capital in initial public offerings.

Mr. Radcliffe qualifies for our Board, its Executive Committee and as Chairman of our Audit Committee based on his extensive executive and board experience, financial and investment expertise, and his thorough understanding of internal controls, accounting principles, business combinations, public company compliance requirements and the bank regulatory compliance framework.

 

Arthur J. Rooney, II was first elected to our Board in 2006 and is a member of our Nominating and Corporate Governance Committee. Mr. Rooney has been a co-owner, a director since 1989 and the president of the Pittsburgh Steelers Sports, Inc. which owns the Pittsburgh Steelers football team franchise. Mr. Rooney has been an attorney for more than 29 years; including his current “of counsel” position with the Pittsburgh-based law firm of Buchanan Ingersoll & Rooney, P.C. (“BIR”) and his former position with the law firm of Klett, Rooney, Lieber & Schorling, P.C., which merged into BIR in 2006. Before becoming president of the Pittsburgh Steelers Sports, Inc., he also served as general counsel to the organization. During his tenure with the Pittsburgh Steelers Sports, Inc., Mr. Rooney was principally responsible for the design, development and financing plan for the Steelers’ home stadium, Heinz Field. Further, Mr. Rooney is a member of the Board of NFL Films, the NFL Super Bowl Site Committee and the NFL Management Council. His executive capacity with the Pittsburgh Steelers Sports, Inc., and his involvement in significant NFL matters, coupled with his diverse legal experience, demonstrates Mr. Rooney’s requisite experience to help our Board strategically address complex operational and financial challenges. Mr. Rooney’s director, executive, legal and operational experience qualify him to serve on our Board and on our Nominating and Corporate Governance Committee.

 

John W. Rose has served on our Board since 2003 and is a member of our Executive, Compensation and Succession Committees and Chairman of our Nominating and Corporate Governance Committee. Mr. Rose is a principal of CapGen Financial Advisors LLC, located in New York, New York, a national fund manager specializing in bank, thrift and finance company turnaround investments. Mr. Rose is also the president of McAllen Capital Partners, located in Hermitage, Pennsylvania, a financial advisory firm that invests in banks, thrifts and financial companies. In connection with Mr. Rose’s activities as a fund manager and financial advisor, Mr. Rose has assumed an oversight role on the boards of the following financial institutions: First Chicago Bancorp; Jacksonville Bancorp; PacWest Bancorp, Los Angeles, California; and White River Capital Corp., San Diego, California. Over his 37-year career, Mr. Rose has been involved in banking in various capacities including, most significantly, as a director, executive, consultant and investor. Most importantly, from the Board’s perspective, Mr. Rose has served on the boards of over 25 separate banks or bank holding companies. Our Board believes that Mr. Rose’s background provides him with a unique understanding of industry best practices and strategies and enables him to contribute significantly to our Board in connection with its general corporate decision-making, fulfillment of its fiduciary obligations and assessment of business opportunities and risks. The diversity of Mr. Rose’s experience on financial institution boards provides him extensive experience working with directors and overseeing management, which we believe benefits us, its shareholders and our Board. Further, our Board believes that Mr. Rose’s diverse and extensive experience with various financial institutions across the country provides him a broader perspective and thereby enables him to identify and assist us with emerging industry trends and risks. Another benefit of having Mr. Rose on our Board is that in view of the Corporation’s history and strategy of growth through acquisitions, his experience and knowledge as an investor is a valuable asset to the Corporation when it considers acquisition opportunities. We believe Mr. Rose’s extensive experience with financial institutions qualifies him to serve on our Board and our Executive, Compensation and Succession Committees, and as Chairman of our Nominating and Corporate Governance Committee.

 

Stanton R. Sheetz joined our Board in 2008 and serves on our Risk Committee. From 1994 to 2008, Mr. Sheetz was a director of Omega Financial Corporation (bank holding company, State College, Pennsylvania). Mr. Sheetz is co-owner and chief executive officer of Sheetz, Inc., which owns and operates a chain of approximately 400 convenience stores and employs over 13,000 employees in the Mid-Atlantic states (over a six-state area). Sheetz, Inc. is listed in the Forbes top 100 list of privately held companies in America. As chief executive officer of that company, Mr. Sheetz is responsible for product management and development, retail and commercial sales and services, vendor relationships, pricing, operational support and service enhancement. We believe that Mr. Sheetz’s broad executive, financial and retail experience, including analyzing risk and performing financial and business strategic planning make him an important member of our Board and the Risk Committee. During his career as an executive in the convenience store industry, Mr. Sheetz has held senior positions which have entailed important decision-making skills with respect to supply,

corporate development, logistics and marketing. In addition, Mr. Sheetz’s substantive experience overseeing multiple retail stores under the one brand is particularly relevant to our business model, organizational structure and corporate branding strategy, whereby we operate various branches and offices in multiple locations. Prior to his appointment as chief executive officer of Sheetz, Inc., Mr. Sheetz served in various executive and finance capacities with that company. Mr. Sheetz also has an MBA degree from Pace University in New York City. Based on Mr. Sheetz’s executive experience and prior board experience and his leadership of a complex retail company that operates in a number of states, he is well-qualified to serve on our Board and our Risk Committee.

 

William J. Strimbu has been a member of our Board since 1995 and he serves on our Audit and Risk Committees. Mr. Strimbu has also been an FNBPA director since 1995 and is Chairman of FNBPA’s Loan Committee and a member of FNBPA’s Executive Committee. Mr. Strimbu is president of Nick Strimbu, Inc., a trucking company with common carrier authority. Mr. Strimbu’s responsibilities with Nick Strimbu, Inc., include strategic, financial and business planning and negotiations with customers, vendors and the Teamsters Union. He manages and responds to a myriad of financial and operational challenges faced by a company in a highly competitive and rapidly changing industry. He also manages a real estate holding company and serves on the executive team of an economic development company. Mr. Strimbu has been a member of the board of directors of a regional community foundation since 1994, and has assisted the foundation’s management in growing the endowment, as well as financial oversight of approximately 400 individual funds. He has been a director since 1997 of Sharon Regional Health System, a regional health care facility that employs over 1,800 professionals. Mr. Strimbu serves on Sharon Regional Health System’s executive, compensation, finance and pension, and audit committees and is that company’s assistant treasurer. He is also involved in numerous charitable organizations as well as various regional and national trade groups in the trucking industry. Mr. Strimbu’s executive and leadership experience in regional transportation, health care and philanthropic entities provides him a valuable perspective from which to contribute to our Board. We believe that Mr. Strimbu’s executive, operational, economic development, philanthropic and financial experience qualifies him to serve as a member of our Board and our Audit and Risk Committees.

 

Earl K. Wahl, Jr. has been a member of our Board since 2002 and is a member of our Nominating and Corporate Governance and Succession Committees. In 2009, Mr. Wahl divested his interest in J.E.D. Corporation, an environmental consulting firm that he had owned and operated since 1989. Over the past 36 years, Mr. Wahl has served in an executive capacity and owned and operated various businesses involving mining, drilling, industrial contracting, restaurant, municipal water and environmental services. Mr. Wahl also has served for over 26 years on the boards of various financial institutions. Mr. Wahl’s experience with a wide range of diverse businesses, including financial institutions, gives him relevant skills in working with our Board and overseeing our Corporation’s management. Mr. Wahl’s experience as an owner and operator of various companies provides our Board and management with a valuable perspective on environmental issues, risk management, shareholder value and customer relationships. Mr. Wahl’s executive experience with and ownership and operation of various businesses qualify him to serve on our Board and on our Nominating and Corporate Governance and Succession Committees.

 

The following table sets forth certain information as of the March 9, 2011, record date with respect to beneficial ownership of our common stock by (i) each Director and Nominee; (ii) each Named Executive Officer listed in the table entitled Summary Compensation Table under the section of this proxy statement entitled Executive Compensation and Other Proxy Disclosure; and (iii) all Directors and Executive Officers as a group. As of the record date, we had 120,019,306 shares of common stock issued and outstanding. Unless otherwise indicated, all persons named as beneficial owners of the Company’s common stock have sole voting power and sole investment power with respect to the shares indicated as beneficially owned.

 

 

 

 

The table below lists the name of each Executive Officer in the Summary Compensation Table together with his position with the Company and his age. The table below does not include this information for Stephen J. Gurgovits whose information is in the section of this proxy statement entitled Biographical Information Concerning Directors and Nominees.

 

 

Vincent J. Calabrese, who became Chief Financial Officer in 2009, joined the Company in 2007. Prior to becoming Chief Financial Officer of the Company in 2009, Mr. Calabrese was the Corporate Controller from 2007 to 2009. Prior to joining the Company, Mr. Calabrese was Senior Vice President, Controller and Chief Accounting Officer of People’s Bank, Connecticut from 2003 to 2007. During his tenure at People’s Bank, Mr. Calabrese’s principal responsibilities at that bank included financial planning and reporting, accounting policies, general accounting operations and investor relations.

 

Vincent J. Delie, Jr. became President of the Company and Chief Executive Officer of FNBPA in January 2011. Mr. Delie had been an Executive Vice President and Chief Revenue Officer from 2009 through 2010. Mr. Delie joined the Company in 2005. Mr. Delie had been President of FNBPA from 2009 through 2010. From 2008 to 2009 Mr. Delie was Senior Executive Vice President of FNBPA and President of the Banking Group and was Regional President and Chief Executive Officer of the FNBPA Pittsburgh Market Area from 2005 to 2008. Prior to joining the Company, Mr. Delie was Executive Vice President of Corporate Banking for National City Bank from December 2003 through September 2005.

 

Brian F. Lilly became Vice Chairman of the Company in January 2011 and has been the Chief Operating Officer since 2009. Mr. Lilly joined the Company in 2003. Prior to becoming Chief Operating Officer, Mr. Lilly was Executive Vice President from 2009 until 2011 and the Chief Financial Officer of the Company from 2003 until 2009.

 

Gary L. Guerrieri, who is an Executive Vice President and Chief Credit Officer of FNBPA, joined FNBPA in 2002. Mr. Guerrieri has been FNBPA’s Chief Credit Officer since 2005 and in that role Mr. Guerrieri has oversight of credit administration and policy as it relates to FNBPA’s loan portfolio and special assets area.

 

The Board oversees the Company’s Chief Executive Officer (the “CEO”) and other senior management in the competent and ethical operation of the Company on a day-to-day basis and ensures that our officers are serving the long-term interests of the shareholders. We expect each director to take a proactive and focused approach to his or her position, and to assist in setting standards to ensure that the Company is committed to business success through the maintenance of high standards of responsibility and ethics. Our Corporate Governance Guidelines outline the key practices and procedures that our Board follows. Our Corporate Governance Guidelines are available on our website at www.fnbcorporation.com under the tab, “Corporate Structure,” and then clicking on the heading, “Corporate Governance.”

Our Board met 11 times in 2010. Each director attended at least 75% of the aggregate number of meetings of the Board and the respective committees on which such director served. We expect the members of our Board to attend our Annual Meeting as a matter of policy.

 

Our Board has a standing Executive Committee, Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee (“Nominating Committee”), Risk Committee and Succession Committee (“Standing Committees”). The Board has determined that the Chairs of each of the Standing Committees and each of the members of the Standing Committees are independent under the applicable New York Stock Exchange (“NYSE”) standards and SEC rules except for Mr. Gurgovits by virtue of his position as Company CEO. We identify the members and chairs of our Board Standing Committees in the table below.

 

 

 

 

The Executive Committee, consistent with Florida law and our bylaws, assists the Board by offering an efficient means of considering significant matters and issues including in the intervals between regular meetings of our Board. The Executive Committee met six times in 2010.

 

The Audit Committee is responsible primarily for selecting and overseeing the services performed by our independent registered public accounting firm and internal audit department, evaluating our accounting policies and system of internal controls and reviewing significant financial transactions and compliance matters. The Audit Committee met 11 times during 2010. The Board has determined that each member of the Audit Committee, Messrs. Malone, Martz, Radcliffe and Strimbu, qualifies as being “financially literate” and as an “audit committee financial expert” as defined by the SEC. Each Audit Committee member also meets the additional criteria for independence of audit committee members set forth under the SEC rules, NYSE listing standards and applicable federal bank regulatory requirements. We refer you to the Report of Audit Committee in this proxy statement.

 

The Compensation Committee (also referred to as the “Committee” in the Executive Compensation and Other Proxy Disclosure discussion of this proxy statement) is responsible primarily for reviewing the compensation arrangements for our executive officers, including the CEO, administering our equity compensation plans and reviewing the compensation of the Board. For a description of the Compensation Committee’s processes and procedures, including the roles of our executive officers and independent compensation consultants in the

Compensation Committee’s decision-making process, we refer you to Executive Compensation and Other Proxy Disclosure elsewhere in this proxy statement. The Compensation Committee met ten times in 2010. The F.N.B. Board has affirmatively determined that each of the following Compensation Committee members qualify as “outside directors” for purposes of Section 162(m) of the United States Tax Code: Robert Goldstein, Dawne Hickton and David Malone.

 

The Nominating Committee assists in the development of standards concerning the qualifications of the Board members and composition of the Company’s and its affiliates’ boards, recommends director candidates to stand for election to our Board and director appointments to the boards of our affiliates, and seeks to promote our best interests and its shareholders through implementation of prudent and sound corporate governance principles and practices. We refer you to Corporate Governance elsewhere in this proxy statement. The Nominating Committee met six times in 2010.

 

The Risk Committee’s principal responsibilities are to assist the Board in reviewing and overseeing information regarding the Company’s management of its enterprise-wide risk program, including establishing acceptable risk tolerance levels for the Company and reporting this information to the Board. The Risk Committee met six times in 2010.

 

The Succession Committee plans for the succession to the position of the Company’s CEO in the event of an anticipated or unanticipated vacancy. The Succession Committee met six times in 2010.

 

The Audit Committee, Compensation Committee and the Nominating Committee responsibilities are described more fully in, and these Committees operate under, written charters adopted by the Board. You may review these charters on our website at www.fnbcorporation.com under the tab “Corporate Structure” by clicking on the heading, “Corporate Governance.”

 

The Company has a Code of Conduct that applies to all of the Company’s Directors and employees, including its principal executive officer, principal financial officer and principal accounting officer, and the Board. You may view a copy of our Code of Conduct on our website at www.fnbcorporation.com under the tab “Corporate Structure,” by clicking on “Corporate Governance.” The Company will disclose any changes in or waivers from its Code of Conduct by posting such information on its website or by filing a Form 8-K.

 

As a financial institution, the Board recognizes that the Corporation takes on a certain amount of risk in every business decision, transaction and activity. The Corporation’s Board and management have identified five major categories of risk: credit risk, market risk, liquidity risk, operational risk and compliance risk. In its oversight role of the Corporation’s risk management, the Board is mindful that risk management is not about eliminating risk, but rather is about identifying and accepting risks and then effectively managing them so as to optimize total shareholder value.

 

The Corporation supports its risk management process through a governance structure involving its Board and senior management. The Board’s Risk Committee helps insure that business decisions in the organization are executed within our desired risk profile. The Risk Committee has the following critical responsibilities: (i) identification, assessment and monitoring of enterprise-wide risk across the Corporation and its subsidiaries and affiliates; (ii) development of support and oversight to the Corporation’s businesses; and (iii) identification and implementation of risk management best practices.

 

In addition, the Corporation’s principal subsidiary, FNBPA, has a Risk Management Committee comprised of senior management. The purpose of this committee is to provide day-to-day oversight to specific areas of risk with respect to the level of risk and risk management structure. The FNBPA Risk Management Committee reports on a regular basis to the Corporation’s Risk Committee regarding the enterprise risk profile of the Corporation and other relevant risk management issues. Further, the Corporation’s audit function performs an independent assessment of the Company’s internal control environment and plays an integral role in testing the operation of internal control systems and reporting findings to management and the Corporation’s Audit Committee. Both the Corporation’s

Risk Committee and Audit Committee regularly report on risk-related matters to the Corporation’s Board. In addition, both the Corporation’s Risk Committee and FNBPA’s Risk Management Committee regularly assess the Corporation’s enterprise-wide risk profile and provide guidance on actions needed to address key and emerging risk issues.

 

The Board believes that the Company’s enterprise-wide risk management process is effective since it includes the following material components: (i) enables the Board to assess the quality of the information it receives; (ii) enables the Board to understand the businesses of F.N.B., its affiliates and its subsidiaries and the risks that they face; (iii) enables the Board to oversee and assess how senior management evaluates risk; and (iv) enables the Board to assess appropriately the quality of the Company’s enterprise-wide risk management process.

 

We have developed and operate under corporate governance principles and practices which are designed to maximize long-term shareholder return, align the interests of our Board and management with those of our shareholders and promote the highest ethical conduct among our directors, management and employees.

 

Highlights of portions of our Corporate Governance Guidelines, as well as some of our corporate governance policies, practices, procedures and related matters are as follows:

 

 

 

We encourage you to visit the “Corporate Structure” page of our corporate website at www.fnbcorporation.com for additional information about our Board, its committees, our Corporate Governance Guidelines, our Code of Ethics, our Code of Conduct and our Audit, Nominating and Compensation Committee Charters. We also include additional information on these topics in other sections of this proxy statement.

 

Background.  As a company that has securities listed on the NYSE, a majority of members of our Board must be independent. Under the NYSE’s corporate governance standards, no director qualifies as independent unless our Board affirmatively determines that the director has no “material relationship” with F.N.B. The fact that a director or member of a director’s immediate family may have a material relationship with F.N.B directly, or as a partner, owner, shareholder, or officer of an organization that has a relationship with F.N.B., will not necessarily preclude such director from being nominated for election to our Board.

 

The New York Stock Exchange’s bright-line independence tests.  The NYSE established director independence requirements in order to increase the quality of Board oversight at listed companies and to lessen the possibility that damaging conflicts of interests will influence Board decisions. The NYSE bright-line independence tests each describe a specific set of circumstances that would cause a director not to be independent from our management. The NYSE’s corporate governance standards do not define every relationship that will be considered material for purposes of determining a director’s independence from our management.

 

F.N.B. categorical standards of director independence.  In addition to the NYSE bright-line independence standards, F.N.B. has adopted categorical independence standards. The categorical independence standards define certain ordinary course of business transactions and other relationships that F.N.B.’s Board has concluded would not cause a director to cease to be independent. A summary of F.N.B.’s categorical standards is as follows:

 

 

Also, our Corporate Governance Guidelines require that our Board “broadly consider all relevant facts and circumstances” especially in situations not covered by the NYSE bright-line independence standards or our categorical independence standards.

 

As required by the NYSE’s corporate governance rules, we would disclose in this proxy statement any director relationships with us that would not be consistent with either the NYSE bright-line independence standards or our categorical independence standards.

 

On February 16, 2011, our Board, with the assistance of the Nominating Committee, conducted an evaluation of director independence, based on the director independence standards set forth in the Company’s Corporate Governance Guidelines, the NYSE corporate governance standards and applicable SEC rules and regulations. In connection with this review, our Board evaluated banking, commercial, business, investment, legal, charitable, consulting, familial or other relationships with each director, that director’s immediate family member and their related business interests and us and our affiliates, including those relationships described under the caption Related Persons Transactions, in this proxy statement.

 

As a result of this evaluation, our Board affirmatively determined that each of Messrs. Campbell, Ekker, Gingerich, Goldstein, Martz, Malone, Mortensen, Radcliffe, Rooney, Rose, Sheetz, Strimbu and Wahl and Ms. Hickton is an independent director under our director independence standards, the NYSE independence standards and the applicable SEC rules and regulations. To our knowledge, the aggregate grants, donations and contributions made by us or our affiliates to any non-profit organization for which one of our directors served as an officer or director did not exceed the greater of $1,000,000 or 2% of such organization’s consolidated gross revenues in 2010.

 

Our Board affirmatively determined that Mr. Gurgovits is not independent under the NYSE corporate governance standards and F.N.B.’s categorical director independence standards because he is the principal executive officer of the Company.

 

None of our Audit Committee members serve on more than two other public company audit committees.

 

There are no family relationships among the executive officers and directors of the Company.

 

Our policy is that our Board holds at least one executive session per year attended exclusively by outside independent members of the Board; who are not members of our executive management. Our independent Chairman presides at each executive session meeting. Our Board conducted six executive sessions in 2010, of which two were attended exclusively by independent and non-management directors.

 

Shareholders or other interested parties may send communications to our Board, independent directors as a group, Board Chairman, any committee Chairmen, and/or any individual director by addressing such communications to the Board, c/o Corporate Secretary, F.N.B. Corporation, One F.N.B. Boulevard, Hermitage, Pennsylvania 16148. The Corporate Secretary, or his designee, will promptly forward all such communications submitted and addressed in this manner to the members of our Board or any designated individual director or directors, as the case may be. Our Corporate Secretary will forward all shareholder communications with the Board or individual directors without prior screening by the Corporate Secretary or any other employee.

 

Section 16(a) of the Securities Exchange Act of 1934 (“Exchange Act”) requires our executive officers and directors, as well as persons who own 10% or more of our common stock, to file reports of their ownership of our

securities, as well as statements of changes in such ownership, with the SEC. To our knowledge, based solely on a review of copies of the reports filed on behalf of our directors and executive officers and written representations received from our executive officers and directors (we do not have any shareholders who own 10% or more of our common stock), no other reports were required, and based on our review of the statements of ownership changes filed by our executive officers and directors with the SEC during 2010, we believe that except for one delinquent Form 4 filing by each of Messrs. Rose and Sheetz, attributable to the fact that their respective brokers failed to make a timely report of the transactions, all such filings required during 2010 were made on a timely basis.

 

We are not aware of any shareholder who was the beneficial owner of more than 5% of our outstanding common stock as of December 31, 2010, except for the entities identified in the table below:

 

 

 

 

We have adopted a written policy formalizing the manner in which we review a proposed transaction involving the Company and any of our directors, any director nominees, any executive officers, any 5% or greater shareholder or any immediate family member of the foregoing (“related persons”) because of the possibility of a conflict of interest. A copy of this “Policy with Respect to Related Person Transactions” is posted on our website at www.fnbcorporation.com under the tab “Corporate Structure,” and may be accessed by clicking on the heading “Corporate Governance.” Under our policy, all proposed related person transactions involving amounts in excess of $120,000 must receive the prior approval of the Nominating Committee of our Board before we can take part in the transaction and if such transaction continues for more than one year the Nominating Committee and Board must annually approve the transaction.

 

In 2010, some of our directors and executive officers and their associates were customers of, and had transactions with, one or more of the Company’s subsidiaries in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with unaffiliated persons. We expect similar transactions to take place in the future. In 2010, each of the Company directors and Named Executive Officers (“NEOs”) had loans or loan commitments with our subsidiary bank, FNBPA, which were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not affiliated with us, and these loans did not involve more than the normal risk of collectability nor did they present other unfavorable features. We determined that these loans and loan commitments were performing in accordance with their contractual terms. In addition, our wealth management affiliate, FNTC, acts as fiduciary under various employee benefit plans of and acts as investment manager to certain customers whose officers and/or directors may also be directors of our Company. We entered into these fiduciary arrangements in the ordinary course on terms substantially similar to those entered into with customers who do not have any affiliation with us.

 

Mr. Rooney is a co-owner of, and an executive officer of Pittsburgh Steelers Sports, Inc., which is a related interest of PSSI Stadium Corp., to whom FNBPA paid approximately $110,000 in 2010 in connection with a Heinz Field Suite Licensing Agreement pursuant to which FNBPA entertains clients at sporting and entertainment events. Also, in 2010, F.N.B. affiliates paid approximately $95,000 to Sheetz, Inc. in connection with fuel for fleet, courier and business related travel by the affiliates’ employees. Mr. Sheetz is a co-owner and the CEO of Sheetz, Inc. FNBPA leases the premises for a branch facility from an immediate family member of Mr. Sheetz and paid that family member approximately $114,000 in 2010 in connection with this lease. We effected the transactions with Mr. Rooney’s and Mr. Sheetz’s related interests in the ordinary course of business on substantially the same terms as those prevailing for comparable transactions with unaffiliated persons.

 

There are no family relationships as defined in the SEC and the NYSE rules between any of our executive officers or directors and any other executive officer or director. However, Director Rose’s step-son and nephew are employees of F.N.B. affiliates and each of them receives compensation in accordance with F.N.B.’s policies and practices. Mr. Rose’s step-son and nephew were paid less than $120,000 in total compensation in 2010 and participated in our compensation and incentive plans or arrangements on the same basis as other similarly situated employees.

 

Stephen J. Gurgovits, Jr., President of our subsidiary, F.N.B. Capital, is the son of Stephen J. Gurgovits, Sr., our CEO. In 2010, Mr. Gurgovits, Jr. received a base salary of $168,708; car allowance of $6,000; and referral and incentive fees of $1,817. Mr. Gurgovits, Jr.’s compensation is paid in accordance with applicable policies and practices of the Company and commensurate with peers possessing similar executive responsibilities.

 

Family members employed by F.N.B. or its affiliates may receive reimbursement for relocation expenses or referral or incentive fee payments and such payments are made in accordance with our standard policies.

 

Lastly, Sandra Gurgovits, who is the wife of the F.N.B. CEO, is a licensed realtor with Northwood Realty Services which is not affiliated with our Company. From time to time, employees of the Company or its affiliates who are provided relocation allowances under the Company’s relocation policy in connection with their move to or from our headquarters may engage Ms. Gurgovits. As compensation for her services as a real estate agent, Ms. Gurgovits receives commission payments for these services in the ordinary course of business in accordance with Northwood Realty Services’ standard commission schedules.

 

The members of the Compensation Committee (“Committee”) during 2010 were Mr. Goldstein as Chairman, Ms. Hickton and Messrs. Malone, and Rose. Neither we nor FNBPA has ever employed any member of the Committee other than Mr. Rose. No such member has, during our last fiscal year, any relationship with us requiring disclosure under Item 404 of Regulation S-K or under the Compensation Committee Interlocks disclosure requirements of Item 407(e)(4) of Regulation S-K. We have determined that each Committee member is independent under the NYSE corporate governance standards, and are non-employees under the meaning of Rule 16b-3 under the Exchange Act; however, since Mr. Rose is not an “outside director” for purposes of Section 162(m) of the Internal Revenue Code (“Code”) he does not vote on compensation related matters. Our Board has delegated to the Committee the responsibility of setting the compensation of our directors, CEO, Chief Financial Officer (“CFO”) and Section 16 officers. The Committee met ten times in 2010. A copy of the Compensation Committee charter is available at our website www.fnbcorporation.com under the tab, “Corporate Structure,” and then clicking on the heading “Corporate Governance”.

 

Authority and Responsibilities

 

The Committee administers our executive compensation programs, including the oversight of executive compensation policies and decisions, administration of the annual cash incentive award plan applicable to executive officers and our equity incentive plan. The Committee administers and interprets our qualified and non-qualified benefit plans, establishes guidelines, approves participants in the non-qualified plans, approves grants and awards, and exercises other power and authority required and permitted under the plans and its charter. The Committee also reviews and approves executive officer, including CEO, compensation, including, as applicable, salary, short-term incentive and long-term incentive compensation levels, perquisites and equity compensation. The Committee Charter reflects its responsibilities. The Committee reviews its Charter annually and recommends any proposed changes to the Board.

 

Delegation

 

From time to time, the Committee may delegate authority to fulfill various functions of administering the Company’s plans to our employees. Currently, it delegates administration of our qualified plans to the Pension Committee, a committee of our senior officers that have the appropriate expertise, experience and background in handling defined benefit and defined contribution plans.

 

Independent Compensation Consultants

 

The Committee engaged Mercer (US) Inc. (“Mercer”) and Pearl Meyer & Partners (“PMP”) to assist it in evaluating our compensation practices and to provide advice and ongoing recommendations regarding CEO, NEO and director compensation that are consistent with our business goals and pay philosophy. Mercer provided advice from January 2010 through May 2010, at which time PMP commenced providing services to us. Mercer and PMP provided market information and analysis as background to decisions regarding total compensation, including base salary and short and long-term incentives, for the CEO, NEOs and other senior officers and directors. Neither Mercer nor PMP is affiliated with us nor did they or their affiliates, provide any other services or perform other work for us in 2010.

 

Mercer and PMP reported directly to the Chairman of the Committee. In performance of their duties, Mercer and PMP interacted with our CEO, CFO, Director of Human Resources, Corporate Counsel and other employees. In addition, Mercer and PMP communicated with, took direction from, and regularly interacted with the Chairman of the Committee and other members of the Committee in addition to attending Committee meetings on an as needed basis.

 

This section discusses the material factors involved in our decisions regarding the compensation of the NEOs (as defined in the discussion under the caption, Summary Compensation Table, of this proxy statement) during

2010. The specific amounts paid or payable to the NEOs are included in the tables and narrative under the title, Summary Compensation Table, of this proxy statement. The following discussion cross-references the specific tabular and narrative disclosures where appropriate.

 

We seek to link the interest of shareholders and management in creating long-term shareholder value through our compensation program. We believe we will accomplish this objective and attract and retain highly motivated and talented employees by linking compensation to individual performance, and short and long-term performance. We believe our compensation program must consider the knowledge, experience and expertise of our executives, and competitive pressures in the industry. We designed the program to result in an increase in total compensation when we perform above our targets and a decrease in total compensation when our performance falls below our target. We do not anticipate our compensation program will reward unnecessary risk taking.

 

Overview

 

We have divided executive compensation into five broad categories: (i) base salary, (ii) short-term annual incentive compensation, (iii) long-term incentive compensation, (iv) retirement and post-employment benefits and (v) other benefits and perquisites. We use incentive programs to reward our NEOs based upon our performance. Overall, the awards under the plans are designed to vary with position and level of responsibility reflecting the principle that the total compensation opportunity should increase with position and responsibility while, at the same time, putting a greater percentage of each NEO’s compensation “at risk” based on our performance.

 

Benchmarks

 

We desire our compensation programs to be competitive in the marketplace. Thus, for purposes of 2010 compensation, we compared ourself against commercial banks with assets in the $4 billion to $16 billion range located in the Mid-Atlantic and Midwest Regions (“Peer Group”)^* that includes the following financial institutions:

 

 

For purposes of comparing base salary, annual incentives, and long-term compensation, the Committee conducts a review of its benchmarks throughout the year, with assistance from its compensation consultant, using a variety of methods such as direct analysis of proxy statements of companies in the Peer Group, as well as a review of compilation of survey data of companies of a similar size published by several independent consulting firms and customized compensation surveys performed by independent consulting firms. At the time of setting base salary and making short and long-term compensation awards, there were the 22 organizations noted above in the Peer Group. Since at the time we set the Peer Group in 2010, our asset size was materially the same as 2009, we used the same asset size to determine the companies in the Peer Group. The number of companies in the Peer Group slightly decreased in 2010 due to some companies no longer meeting the criteria to be included in the Peer Group. We believe the group is diverse and provides the necessary depth to be meaningful in setting salary and incentive goals. Overall, the Committee’s intention is

 

 

 * The Mid-Atlantic region includes Delaware, Maryland, New Jersey, New York, Pennsylvania, Virginia and West Virginia. The Midwest region includes Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.

 † First Niagara Financial Group acquired Harleysville National Corporation in April 2010.

to have base compensation be near the fiftieth percentile (50%) of compensation paid by similar sized competitors for comparable positions, with an annual bonus and long-term incentive opportunity such that, if an NEO realizes the incentives, at the maximum level, his or her total compensation will be above the median and in the third quartile.

 

The various components of the NEOs’ total compensation are detailed below.

 

Base Salary

 

 

We provide base salary to all salaried employees, including the NEOs, in order to provide them with a degree of financial certainty. Competitive base salaries further our compensation program objectives by allowing us to attract and retain talented employees by providing a fixed portion of compensation upon which all employees can rely. Base salary is the only fixed portion of our NEOs’ compensation.

 

 

Year-to-year, the Committee determines adjustments to each NEO’s base salary based upon an assessment of his or her performance versus job responsibilities, including the impact of such performance on our financial results. We target base salary for NEOs at the median of the Peer Group. We review base salary annually and adjust it as the Committee deems appropriate. In certain cases, the Committee increases base salary in order to raise the NEO’s annual salary to reflect more closely the annual salaries of comparably performing Peer Group executives.

 

The Committee reviewed Mr. Gurgovits’ compensation in March 2010, at the same time it considered the compensation of all of our Section 16 officers. The Committee considered our compensation philosophy, Mr. Gurgovits’ 2009 compensation, retirement benefits, experience in the industry, service with us and the consulting agreement we entered into with Mr. Gurgovits in June 2008 and our positive corporate results. Based upon these factors, the Committee increased Mr. Gurgovits’ annual base salary 3% from $750,000^‡ to $772,500.

 

The Committee reviewed the annual salaries of our other NEOs in March 2010 and provided merit increases effective April 2010. The Committee reviewed each NEO’s salary to determine if it was consistent with our compensation philosophy. The Committee reviewed whether each of our NEOs was above or below the market median for base salary. The Committee determined that the base salaries of Messrs. Delie and Lilly were near the market median. Thus, the Committee raised their annual base salaries 3% from $360,000 to $370,800. The Committee determined that the base salaries of both Messrs. Calabrese and Guerrieri were more than 10% below the median. Therefore, the Committee determined it appropriate to provide an increase of approximately 6% in base compensation to each in order to adjust their base salaries to more closely approximate the market median. After his promotion to CFO, in July 2009 we increased Mr. Calabrese’s base salary to $260,016.

 

In January 2011, we promoted Messrs. Delie and Lilly. In conjunction with their promotions the Committee increased their salaries, Mr. Delie from $370,800 to $450,000 and Mr. Lilly from $370,800 to $410,000. The Committee believed these salaries approximated the market median, reflected current market conditions and are consistent with our pay philosophy.

 

 

An NEO’s base salary is a reference point for the executive’s annual incentive opportunities. The Committee determines the level at which each NEO participates in the annual executive incentive compensation program (“EIC Plan”) under the 2007 Incentive Plan (“2007 Plan”). This level is typically expressed as a percentage amount. For example, if an NEO participates in the EIC Plan at the 40% level, it means that the

 

 

 ‡ Mr. Gurgovits retired on January 3, 2009, and returned as interim CEO in February, 2009. Therefore, the amount reflected as Base Salary in the Summary Compensation Table for 2009 does not include salary from his retirement date through February 2009. At that time, the Committee set his Base Salary as interim CEO at $660,000. In June 2009, Mr. Gurgovits returned to the role of CEO. Effective July 1, 2009, the Committee increased his base salary from $660,000 per year as interim CEO to $750,000.

NEO’s target incentive opportunity is the NEO’s base salary multiplied by 40%. In addition, prior to 2007, base salary was the only component of compensation in the formula used to calculate an NEO’s pension benefit accrual under the Company’s Pension Plan. An NEO may also defer a portion of his or her base salary and bonus into the Company’s 401(k) Plan.

 

Annual Incentive Awards

 

The EIC Plan provides additional compensation to NEOs based on our achievement of certain financial objectives. The EIC Plan is open to each NEO and all other salaried personnel selected by the Committee based on the recommendation of our CEO.

 

 

We believe that a significant amount of compensation should be contingent on our performance. Increasing our earnings per share and total shareholder return are important to both us and our shareholders. By paying a portion of the NEOs’ total compensation in variable, incentive pay, we expect to drive our annual performance while increasing long-term shareholder value. Our objective is to reward our NEOs for the creation and protection of shareholder value. Annual incentive compensation is one form of such reward.

 

 

Philosophy

 

We target short-term, annual incentive compensation of the CEO and the other NEOs such that their compensation is tied directly to our performance. We measure our annual performance against a target net income goal set by the Board. Additionally, the Committee has discretion to consider unusual factors and their resulting effect on our performance, i.e. significant merger and acquisition transactions, unusual investment gains or losses, corporate and balance sheet restructuring, significant asset sales and other items it deems appropriate in determining whether we met our target goal. We acknowledge that rules cannot be written that appropriately consider all outcomes in a 12 month measurement period. Therefore, the Committee also gives consideration to peer comparisons, the prevailing economic environment and activities that create and protect longer term shareholder value. The Committee has the discretion to determine all annual bonuses for the CEO and other NEOs.

 

Calculation

 

We have targeted annual incentive compensation to vary significantly based upon performance against the annual target net income goal such that there is “upside” and “downside” potential based on our actual performance. The EIC Plan provides for an increase or decrease from target if our performance deviates from plan by 1% to 10%. For each 1% we achieve above our net income goal, the annual incentive compensation opportunity is increased by 10%. For example, if we exceed our net income goal by 2%, then an NEO’s annual incentive bonus opportunity increases 20% from his target bonus amount. In 2010, in order for the NEOs to achieve maximum payout, which is two times each NEO’s target percentage, we needed to achieve 110% of our planned net income goal. The EIC Plan also provides for a decrease in each NEO’s incentive opportunity for performance below target. For each 1% our performance is below our net income goal, the annual incentive compensation pool is reduced by 5%. For example, if we fall short of our net income goal by 2%, then an NEO’s annual incentive bonus payment opportunity decreases 10% from his or her target bonus amount.

 

We establish a target pool amount that is a product of the annual salaries of the participants multiplied by the participants’ target payout levels (“Target Pool”). The target bonuses for the CEO and the other NEOs range from 40% to 60% of base pay. In 2010, if we had not achieved 90% of the target goal, the plan allowed for an incentive pool equal to 25% of the Target Pool for potential payout to the CEO, the other NEOs or other senior officers at the discretion of the Committee.

 

We have slightly modified the EIC Plan in 2011 in an effort to further reduce unnecessary or excessive risk. First, we eliminated the incentive pool. Additionally, we have also added additional performance measures. In 2011, we will provide annual incentive compensation based upon our annual net income as set forth above and we will measure our revenue growth and efficiency ratio versus targets set by the Committee.

2010 Awards

 

In 2010, after adjustments for unusual items, we earned $74.7 million, 105% of the target net income goal. The Committee deemed it appropriate to adjust the net income results by approximately $1.5 million due to merger costs and an unanticipated reduction in revenue due to regulatory changes. Correspondingly, the Committee thought it appropriate to reduce our actual performance by approximately $6.9 million that was contributed to net income as a result of our freezing future accruals under our defined benefit plan. Based on our results, the formula under our EIC Plan provided for each NEO to receive 150% of his or her target award amount. Based upon our strong results versus our net income goal and strong results versus our Peer Group, the Committee determined it appropriate to apply the formula and provide each NEO an annual incentive bonus of 150% of the NEO’s target as more particularly reflected in the Summary Compensation Table.

 

 

As noted above under the Base Salary discussion, annual incentive compensation is directly related to base compensation. Additionally, any cash bonus paid to the NEOs and all other participants in the defined benefit plan, is also used in calculating each participant’s retirement benefit. Effective in 2011, there will not be any additional accruals for any participant in the defined benefit plan. An NEO may also defer a portion of his or her bonus into the Company’s 401(k) Plan.

 

Long-Term Awards

 

We awarded service-based and performance-based restricted stock awards to our NEOs under our 2007 Plan as more particularly stated in the Grants of Plan-Based Awards table. The restricted stock awards reward NEOs based on the Company’s achievement of certain financial objectives and assists us in the retention of our key executives. The 2007 Plan is open to each NEO and all other salaried personnel selected by our CEO and the Committee for participation.

 

 

The Committee believes providing performance and service-based restricted stock awards is an effective means to increase long-term stock ownership by NEOs, and rewards management for creating long-term shareholder value. At the same time, placing a significant portion of an executive’s compensation in stock helps mitigate excessive risk taking by focusing executives on long-term performance that aligns with shareholder interest. Based upon various factors, including our commitment to our shareholders to be a value oriented, high-dividend paying company, we currently do not award stock options. We believe continuing our compensation practice of relying on granting equity-based awards as restricted stock and restricted stock units will best align our shareholders’ interests with our long-term financial performance goals and objectives, and thus will be mutually beneficial.

 

 

We establish a target award level for each NEO based upon the officer’s level of responsibility, and set the levels such that the award amount increases as the officer’s level of responsibility in the organization increases. At the time of granting the awards, the Committee sets the award amount for each participant level in a manner designed to provide competitive long-term compensation. We split the award into two components, one-third as a service-based award that vests in full at the end of three years (“Service-Based Awards”) and two-thirds as a performance-based award that vests in full at the end of four years, provided we meet certain performance requirements set forth in the awards (“Performance Awards”). We believe this allocation of equity awards is appropriate since the Service-Based Awards reward NEOs for loyalty to us, encourages stock ownership and helps us retain our key executives. The Performance Awards help drive our performance while creating shareholder value by linking the shareholders’ interests and the NEOs’ interests in long-term success. The Service-Based Awards were granted in restricted stock and the Performance Awards in restricted stock units. Both are subject to forfeiture if the NEO terminates employment, other than as a result of retirement, death or disability, before the cliff vesting date.

The Committee used survey data from Mercer in order to position the target long-term incentive compensation such that an award when realized by the NEO at target, as a percent of salary, would approximate the market median.

 

Our performance-based restricted stock unit awards are designed to align management’s long- term incentive compensation with our annual total shareholder return objective. In order to qualify for vesting of the awards we granted in 2010, each NEO must remain continuously employed by us from the date of the award to the vesting date, and our return on average tangible equity during the performance period must equal or exceed the 25^th percentile performance of peer financial institutions. The number of performance-based restricted stock units that may vest is then contingent upon our achievement of certain earnings per share growth levels relative to the earnings per share growth during the performance period of peer financial institutions that at the time we granted the awards were in the Mid-Atlantic and Midwest region and had assets between $4 billion and $20 billion (LTIP Performance Group)^§. By using a larger asset size range and thereby increasing the number of financial institutions within the LTIP Performance Group, as compared to the Peer Group for our EIC Plan, we seek to reduce potential volatility that may result when peer financial institutions are acquired during the four year performance period and therefore, are unavailable for measurement comparison purposes. Furthermore, we expect the larger LTIP Performance Group will provide a more meaningful comparison due to anticipated growth in our asset size over the award performance period. We target earnings per share growth in the 50^thpercentile of the LTIP Performance Group, with threshold performance at the 25^th percentile and a maximum payout for performance above the 75^th percentile.

 

 

Long-term incentive compensation earned by the NEOs is a component of total compensation and is benchmarked against survey data provided by our compensation consultant and our Company’s Peer Group. It does not impact any other component of the NEOs’ compensation or benefits. However, the program is designed to increase the NEOs’ overall compensation such that achievement of the performance goals will result in increased compensation.

 

Management Stock Ownership Policy

 

We maintain a Management Stock Ownership Policy that requires the CEO, the NEOs and all other participants in the long-term incentive plan, the 2007 Plan, and any successor plan to have varying levels of stock ownership based upon the officer’s participation level in the plan. We amended the policy in 2011 to increase the amount of shares required to be held by each of the participants in the plan. Additionally, we amended the policy to allow participants to hold the lesser of a specific share amount or to hold shares equal to a specific dollar threshold that is a multiple of the participant’s salary. We believe that the policy further aligns management and shareholder interests. Under our policy, acceptable forms of stock ownership includes:

 

 

 

 § The financial institutions included the following: Capitol Bancorp Limited, CapitalSource, Chemical Financial Corporation, Citizens Republic Bancorp, Commerce Bancshares Inc., Community Bank System Inc., 1^st Source Bank, First Commonwealth Financial Corporation, First Financial Bancorp, First Merchants Corporation, FirstMerit Bank, First Midwest Bancorp Inc., Fulton Financial Corp, Heartland Financial USA, Inc., MB Financial Bank, NBT Bancorp, Inc., National Penn Bancshares, Inc., Old National Bancorp, Park National Bank, PrivateBancorp, Inc., S&T Bancorp, Signature Bank, Susquehanna Bancshares, Inc., TCF Financial Corporation, Taylor Capital Group, UMB Financial Corporation, United Bankshares, Inc., Valley National Bancorp, WesBanco, Inc., Wilmington Trust, and Wintrust Financial, Inc.

 

Specific ownership guidelines for the NEOs are as follows:

 

 

We annually review progress toward achieving the ownership guidelines. Our NEOs are required to reach the stock ownership guidelines within 5 years after the later of any of the following events: a participant commencing participation in the long-term incentive portion of the 2007 Plan; a participant being promoted to a higher participation level; or us increasing a participant’s ownership requirement. If an NEO does not hold the required share amount, the NEO will receive any future incentive awards as stock, in lieu of cash, that must be held until the participant reaches the required ownership level. All of our NEOs meet the required stock ownership levels based on prior policies and are within the time period allotted to achieve the level required under our new stock ownership guidelines.

 

Retirement and Other Post-Employment Benefits

 

All salaried employees hired before January 1, 2008, except employees of First National Insurance Agency, LLC (“FNIA”) participated in our defined benefit pension plan, the Retirement Income Plan (“RIP”), through December 31, 2010. In 2010, we froze each participant’s accrued benefit amount, effective December 31, 2010, and ceased future accruals. All employees are eligible to participate in a 401(k) retirement savings plan.

 

 

In general, we have designed our retirement plans to provide NEOs and other employees with financial security after retirement. The Company’s defined benefit pension plan, the RIP, offers benefits to employees that are more particularly detailed in the narrative accompanying the Pension Benefits table. Additionally, we provide matching contributions and an automatic contribution under the 401(k) Plan, for all employees, including the NEOs. However, due to Code limits on the amount of compensation that may be recognized for tax-qualified retirement plans, certain NEOs were unable to make the full amount of contributions to the 401(k) Plan and the amount of their total pay that is included in the calculation of their pension benefit is limited. Therefore, we offered the F.N.B. Corporation ERISA Excess Retirement Plan and the F.N.B. Corporation Lost Match Plan to allow any affected employee to receive the full benefit intended by the qualified retirement plans. In 2010, we amended these plans consistent with the amendments to the RIP.

 

In addition to those plans, we previously provided to some senior executives, including Messrs. Gurgovits, Lilly and Guerrieri, a supplemental executive retirement plan, called the Basic Retirement Plan (“BRP”), which is designed to supplement the benefits provided by the RIP and the ERISA Excess Retirement Plan. The purpose of the BRP was to insure a minimum level of retirement income for the NEOs and other senior officers who participated in the plan. We closed the BRP to new participants and ceased future accruals for all participants, effective December 31, 2008. We believe post-retirement compensation is necessary to attract and retain talented executives and that our post-retirement benefits are competitive in the industry and provide NEOs appropriate retirement benefits.

 

We provide severance and change in control payments through employment contracts that provide additional security for our NEOs. We determined that the continued retention of the services of the NEOs on a long-term basis fosters stability of senior management through retention of well-qualified officers. The Potential Payments Upon Termination or Change in Control tables and accompanying narrative detail the NEOs’ employment contracts.

 

 

The RIP benefit is determined by a precise formula set forth in the plan document and explained in the narrative accompanying the Pension Benefits table. The ERISA Excess Lost Match Plan and ERISA Excess Retirement Plan benefit formulas are based upon the specific opportunity or amount lost by the participant due to Code limits and are

more fully detailed in the Pension Benefits table and narrative. The benefit under the BRP is a monthly benefit equal to a target benefit percentage based on years of service at retirement and a designated tier as determined by the Committee and detailed in the narrative accompanying the Pension Benefits table. We do not grant extra years of credited service under any of our qualified or non-qualified plans. The termination and change in control benefits for NEOs were set by contract and are described more fully in the Potential Payments Upon Termination and Change in Control tables and in the narrative accompanying the Summary Compensation Table.

 

 

Retirement benefits are directly linked to the amount of the NEO’s total pay, which includes base salary and annual incentive compensation. Similarly, while the NEO’s termination benefits are determined under their respective employment agreements, generally, termination benefits are a product of base compensation and in the case of Messrs. Delie and Lilly, their annual bonus, if any.

 

Other Benefits and Perquisites

 

The NEOs participate in a wide array of benefit plans that are generally available to all employees of the Company, including the RIP^** and the 401(k) Plan. Benefits primarily consist of participation in the Company’s defined benefit, defined contribution and health and welfare benefit plans. In addition, some of the NEOs receive perquisites in the form of club membership dues, a company car and other perquisites more particularly detailed as part of the Summary Compensation Table and accompanying narrative. We provide club membership dues to certain NEOs in order to provide them with the ability to entertain customers, potential customers and various business contacts, which is an integral part of our industry. Similarly, we provide certain NEOs a company car for purposes of appropriate transportation for entertainment of customers, vendors and business contacts and traveling between our facilities. These perquisites are detailed in the Summary Compensation Table. In 2010, the Committee made a policy that we would not include tax gross-ups in any new or amended employment agreements.

 

As set forth in the narrative accompanying the Potential Payments Upon Termination or Change in Control table, Mr. Gurgovits has entered into a post-employment consulting agreement with the Company. Mr. Gurgovits will also receive deferred compensation under the Non-Qualified Deferred Compensation Agreement as more particularly detailed in the narrative accompanying the Pension Benefits table.

 

Section 162(m) of the Code limits the deductibility of the compensation in excess of one million dollars paid to the CEO, CFO and the three most highly compensated executive officers other than the CEO and CFO, unless such compensation qualifies as “performance-based compensation.” We intend for Performance Awards of restricted stock and restricted stock units and annual incentive compensation granted under our 2007 Plan to meet the performance-based compensation exception to the annual one million dollar limitation. While we are cognizant of the tax deduction limitations applicable to our compensation program for NEOs, we may set compensation levels outside the deduction limitations if we deem the amount of compensation appropriate.

 

In addition, Section 409A of the Code provides for a punitive tax on executives with respect to various features of deferred compensation arrangements. We have made the appropriate changes to our non-qualified retirement plans and employment agreements to help ensure there are no adverse effects on us or our executive officers as a result of Section 409A. We do not expect these changes to have a material tax or financial effect on us.

 

As discussed above, we have calculated and discussed with the Committee the tax impact to us and the executives of each of its cash and equity compensation awards and agreements. We also calculate and monitor the accounting expense related to equity-based compensation using the guidance of ASC (Accounting Standards Codification) Topic 718, Compensation — Stock Compensation.

 

 

 **  As noted in the Retirement and Other Post-Employment Benefits section, the RIP is closed to employees hired after December 31, 2007, and, effective December 31, 2010, we froze benefits for all participants.

 

The Compensation Committee of the Board has reviewed and discussed the matters contained under the title Compensation Discussion and Analysis, of this proxy statement with the Company’s management and, based on such review and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement. Portions of this proxy statement, including the Compensation Discussion and Analysis, have been incorporated by reference into the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended December 31, 2010.

 

Respectfully submitted,

 

Robert B. Goldstein, Chairman

Dawne S. Hickton

David J. Malone

John W. Rose

 

The following table shows the total compensation paid or earned by the Company’s CEO, CFO and the three most highly paid executive officers other than the CEO and CFO (each, an NEO and together, the NEOs) for services rendered in all capacities to us and our subsidiaries for our fiscal year ended December 31, 2010:

 

 

 

 

 

All restricted stock earns cash dividends that are reinvested into additional shares of our common stock under the F.N.B. Corporation Dividend Reinvestment and Direct Stock Purchase Plan (“DRP”). These reinvested shares are subject to the same restrictions and vesting schedule as the underlying restricted stock. The amount for Mr. Gurgovits also includes stock awards valued at $20,174 for service as a director in 2010 that vested immediately upon grant. (See narrative under Executive Directors in the section discussing Director Compensation.)

 

 

The following table reflects the items included in the All Other Compensation column of the Summary Compensation Table shown above.

 

 

 

 

The NEOs receive various perquisites provided by or paid for by us pursuant to our policies or individual agreements with the executive. SEC rules require disclosure of the perquisites and other personal benefits, securities or property for an NEO unless the amount of that type of compensation is less than $10,000 in the aggregate.

 

The following table reflects the perquisites included in the All Other Compensation column of the Summary Compensation Table shown above:

 

 

 

 

The foregoing Summary Compensation Table and its sub-tables do not include certain fringe benefits generally made available on a non-discriminatory basis to all of our salaried employees such as group health insurance, dental insurance, vision insurance, life insurance, accidental death and dismemberment insurance and long-term disability insurance, which we consider to be ordinary and incidental business costs and expenses.

 

In 2010, the Committee made a policy decision that we will not provide tax gross-ups in any new or amended employment agreements. As noted below, Mr. Delie is the only NEO that entered into an amendment to his employment agreement. It does not contain a tax gross-up.

 

Mr. Gurgovits entered into an Amended and Restated Employment Agreement dated June 18, 2008, that expired when Mr. Gurgovits retired as of January 2, 2009. Effective February 11, 2009, Mr. Gurgovits recommenced service as CEO; however, he does not have an employment agreement.

 

Mr. Calabrese serves as our CFO and entered into his employment agreement with FNBPA on March 21, 2007, when the Board appointed him as our Principal Accounting Officer. The initial term of the agreement was for two years, and automatically extends for a one year period on each anniversary of its commencement date unless sooner terminated. We or Mr. Calabrese may terminate the automatic renewal of the agreement by providing the other with 60 days advance written notice of non-renewal. Mr. Calabrese’s contract runs through March 2012. Under the terms of the agreement, Mr. Calabrese receives a base salary that may be increased from time to time as determined by the Board. Additionally, Mr. Calabrese is eligible to participate in our annual incentive compensation and bonus plans at the discretion of the Committee. Mr. Calabrese’s target award level for annual incentive compensation is 40% of base salary with the possibility of achieving a bonus between 0% and 80% of base salary based upon our performance. The severance and change in control provisions of Mr. Calabrese’s employment agreement are described in the narrative accompanying the Potential Payments Upon Termination or Change in Control tables.

Mr. Delie is President of the Company and entered into his employment agreement with us and FNBPA on December 15, 2010. Mr. Delie’s contract has an initial term of three years and, unless sooner terminated, automatically extends for one year on the anniversary of the commencement date. Either party may terminate the automatic renewal provision by providing the other party with 30 days advance written notice of non-renewal prior to the anniversary of the commencement date. Currently, Mr. Delie’s employment agreement runs through December 2013. Under the terms of the agreement, Mr. Delie is entitled to receive a base salary that may be increased from time to time as determined by the Board. Additionally, Mr. Delie is eligible to participate in our annual incentive compensation and bonus plans at the discretion of the Committee. Mr. Delie’s target award level for annual incentive compensation is 50% of his base salary. Mr. Delie has the possibility of achieving a bonus between 0% and 100% of his base salary. The severance and change in control provisions of Mr. Delie’s employment agreement are described under Potential Payments Upon Termination or Change in Control.

 

Mr. Lilly serves as our Vice Chairman and Chief Operating Officer. Mr. Lilly’s employment agreement is dated October 17, 2007, and had an initial term of two years. Unless sooner terminated, the agreement automatically extends for one year on each anniversary of the commencement date. Either party may terminate the automatic renewal provision by providing the other party with 60 days advance written notice of non-renewal. Currently, Mr. Lilly’s employment agreement runs through October 2012. Under the terms of the agreement, Mr. Lilly is entitled to receive a base salary that may be increased from time to time as determined by the Board. Additionally, Mr. Lilly is eligible to participate in our annual incentive compensation and bonus plans at the discretion of the Committee. Mr. Lilly’s target award level for annual incentive compensation is 50% of his base salary with the possibility of achieving a bonus between 0% and 100% of base salary based upon our performance. The severance and change in control provisions of Mr. Lilly’s employment agreement are described under Potential Payments Upon Termination or Change in Control.

 

Mr. Guerrieri is an Executive Vice President of FNBPA. He entered into an employment contract with FNBPA on January 25, 2002. Mr. Guerrieri’s contract had an initial term of two years and automatically extends for a one year period on the anniversary of its commencement date, unless either party terminates the contract sooner. Either we or Mr. Guerrieri may terminate the automatic renewal of the agreement by providing the other 60 days advance written notice of non-renewal. Mr. Guerrieri’s contract runs through January 2013. Under the terms of the agreement, Mr. Guerrieri receives a base salary, as reflected in the Summary Compensation Table that may be increased from time to time as determined by us. Mr. Guerrieri is also eligible to participate in our annual incentive compensation and bonus plans at the Committee’s discretion. Mr. Guerrieri’s target award level for annual incentive compensation is 40% of his base salary. Thus, he has the possibility of achieving a bonus between 0% and 80% of his base salary. The severance and change in control provisions of Mr. Guerrieri’s employment agreement are described in the narrative accompanying the Potential Payments Upon Termination or Change in Control tables. In December 2008, Mr. Guerrieri signed an amendment to his contract in order to insure compliance with Code Section 409A.

 

The following table sets forth grants of plan-based awards to the NEOs for 2010:

 

 

 

 

Participants who terminate service prior to year end are not eligible for annual incentive compensation under the program. In the event of death, disability or retirement (i.e., age 55 with five years of service) during the year or before we make payment of the annual incentive award amount, the Committee may approve a discretionary pro-rata award. The program provides for payment in the case of a change in control as more particularly detailed in the Potential Payments Upon Termination or Change in Control tables.

 

The NEO has full voting rights with respect to the restricted shares. In addition, the NEO has full cash and stock dividend rights with respect to the restricted shares; provided that (i) all such dividends shall be credited to the NEO’s account in the DRP and, in the case of cash dividends, used to purchase shares pursuant to the DRP; and (ii) all shares credited to the NEO’s account as a result of such cash or stock dividends shall be subject to the same restrictions and risk of forfeiture as the underlying restricted shares. In 2010, we issued Performance Awards in the form of restricted stock units. The units earn dividend equivalents and are subject to the same restrictions and

vesting schedule as the underlying restricted stock units. The program allows for accelerated or pro-rated vesting of the stock units in the case of death, disability, retirement, or change in control as more particularly detailed in the Potential Payments Upon Termination or Change in Control tables.

 

There are 2,531,576 shares remaining, available for awards under the 2007 Plan, which represent 2.2% of our outstanding shares of common stock.

 

The following table sets forth certain information summarizing the outstanding equity awards of each NEO as of December 31, 2010.

 

 

 

 

 

 

 

The following table contains information concerning the aggregate option exercises and the vesting of restricted stock by the NEOs in 2010.

 

 

 

 

The following table contains information concerning the pension benefits for each NEO as of December 31, 2010:

 

 

 

 

The following is a summary of our qualified and non-qualified plans mentioned in the Pension Benefits table:

 

The RIP is a traditional defined benefit plan qualified under the Code and subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). In 2010, we froze the plan such that the participants will not receive any future accruals after December 31, 2010. Until 2008, the RIP was available to all salaried employees, except FNIA employees. In 2007, we closed the RIP to employees who commenced employment with us or our affiliates on or after January 1, 2008. The RIP provides for benefit payments in the form of a lifetime annuity with five years guaranteed and provides the participant with the ability to select from several choices for the form of the annuity. The election that the participant chooses may affect the amount of the annual benefit as reflected in the Pension Benefits table. Effective January 1, 2007, we amended the plan such that the benefit is calculated in two pieces. First, for the period worked by a participant prior to January 1, 2007, (“Pre-2007 Benefit”) the annual annuity benefit is payable without reduction to participants with five years of service who retire after age 62 and is calculated by multiplying each participant’s final average base salary by 1.2% plus, if appropriate, 0.5% of the participant’s final average base salary that is in excess of covered compensation (as defined in Section 401(1)(5)(E) of the Code), with the sum being multiplied by the participant’s years of credited service, not to exceed 25 years including service through December 31, 2006. A participant’s final average base salary is calculated using the highest 60 consecutive months of base salary, not including incentive compensation, within the last 120 months of the participant’s service with us or our affiliates prior to January 1, 2007. The Pre-2007 Benefit is frozen as of December 31, 2006. Beginning in 2007, each participant’s benefit is calculated by adding the Pre-2007 Benefit to

the benefit determined under the post-2007 formula detailed below. For 2007 through 2010 (“Post-2007 Benefit”), each participant’s annual retirement benefit will be calculated by taking the participant’s total pay earned from January 1, 2007, through December 31, 2010, and multiplying it by 1%. The benefit earned after 2007 is payable without reduction to participants who retire on or after age 65. The RIP provides for cliff vesting after five years of employment. Mr. Gurgovits is eligible to retire immediately and receive an unreduced benefit since he is over age 65. The RIP provides for an early commencement reduction factor that decreases as the participant’s age approaches the normal retirement age of 62 for the Pre-2007 Benefit and 65 for the Post-2007 Benefit. The early reduction factor is multiplied by the participant’s benefit as determined by the RIP to arrive at the reduced benefit.

 

The Excess Plan is a non-qualified plan under ERISA and is available to all participants of the RIP. Because Mr. Gurgovits retired in 2009, he commenced receiving benefits in August 2009, and continues to receive a monthly payment under the plan. Due to his additional service, we will re-calculate and adjust his benefit, if appropriate, after he retires. The Excess Plan provides retirement benefits equal to the difference, if any, between the maximum benefit allowable under the Code and the amount that would be provided under the RIP formula if the Code did not impose limits on the amount of compensation included for purposes of calculating a qualified plan benefit. The Excess Plan provides the full amount of benefit that would have been paid under the formula of the RIP but for the Code limits, reduced by the amount of benefit that is actually provided by the RIP. The participant’s rights to benefits under the Excess Plan cliff vest at 100% if the participant terminates service due to death, after a “change in control” (as defined in the Excess Plan), or upon retirement on or after reaching age 55 with five years of service. Benefits are payable either in an annuity or lump sum depending upon the reason for termination, with payments commencing the first day of the month following six months after the participant separates from service. In 2010, we amended the plan to cease all future accruals as of December 31, 2010.

 

The BRP is a separate supplemental executive retirement benefit plan, applicable to some of our NEOs who were designated by the Committee. Effective December 31, 2008, we amended the BRP such that there have not been any new participants in the plan and no additional accruals for existing participants. Officers participating in the BRP receive a benefit based on a target benefit percentage that is based on the officer’s years of service at retirement. The target percentages are based upon the tier assigned to the participant by the Committee. The tier percentages are as follows: Tier 1, 3.00% for each of the first ten years of employment, plus 1.50% for the next ten years of employment, plus 0.75% for the next ten years of employment; Tier 2, 3.50% for each of the first ten years of employment, plus 2.00% for the next ten years of employment, plus 0.75% for the next ten years of employment. Prior to 2005, there was also a CEO Tier that provided the following target percentages: 4.00% for each of the first ten years of employment, plus 2.50% for the next ten years of employment, plus 1.00% for the next five years of employment. Mr. Gurgovits participated in the BRP at this level.

 

When a participant retires, the benefit under the BRP is a monthly benefit equal to the participant’s aggregate target benefit percentage multiplied by the participant’s highest average monthly cash compensation including bonuses during five consecutive calendar years within the last ten calendar years of employment before 2009. This monthly benefit is reduced by the monthly benefit the participant receives from the Social Security Administration, the RIP, the Excess Plan, and the annuity equivalent of the automatic contributions to the 401(k) and Lost Match Plans that are provided to all participants who remain employed on December 31st of the applicable year or retired during the year.

 

The participant’s rights to benefits under the BRP vest at 100% if the participant terminates service due to death, disability, after a “change in control” (as defined in the BRP), or normal retirement (age 65). The BRP contains a provision for reducing the basic benefit if the participant retires prior to normal retirement but on or after early retirement (age 55 with five years of service). A participant forfeits benefits in the event the participant’s employment is terminated for cause or a participant terminated employment prior to early retirement.

 

Since Mr. Gurgovits retired in 2009, he commenced benefits in August 2009, and continues to receive payments. Due to his additional service, we will re-calculate and adjust his benefit, if appropriate, after he retires.

In addition to the above referenced plans, the Pension Benefits table shows an accumulated benefit for Mr. Gurgovits under a non-qualified deferred compensation agreement. Our Board and the board of directors of FNBPA entered into a Deferred Compensation Agreement with Mr. Gurgovits on January 1, 1986. The Deferred Compensation Agreement provides for payments of annual deferred benefits for a period of ten years commencing upon the occurrence of: (i) retirement from us or FNBPA upon reaching the age of 62; (ii) complete and total disability; or (iii) the death of Mr. Gurgovits in the event such death occurs prior to retirement. During 2005, Mr. Gurgovits, intending to delay his retirement until age 65, elected to defer payments for an additional three years. On December 31, 2008, we and Mr. Gurgovits signed an amendment to the deferred compensation agreement to provide that any payments that would be made under the agreement after December 31, 2008, shall not begin to be paid until January 1, 2014, and beginning January 1, 2014, such benefits shall be paid on a monthly basis over a nine and one-half year period.

 

The following table contains information concerning the non-qualified deferred compensation plan account balances for each NEO for 2010. All contributions are under the ERISA Excess Lost Match Plan or a predecessor plan, as described below.