SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.)
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Wilmington Trust Corporation
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[WILMINGTON TRUST LOGO]
ANNUAL MEETING -- APRIL 21, 2005
March 10, 2005
Dear Shareholders:
You are invited to attend our 2005 Annual Meeting on Thursday, April 21, 2005,
at 10:00 a.m. at the Wilmington Trust Plaza, Mezzanine Level, 301 West Eleventh
Street, Wilmington, Delaware.
The enclosed Notice of Annual Meeting and Proxy Statement provide information
about the governance of our Company and describe the various matters to be acted
upon during the meeting. In addition, there will be a report on the state of our
Company's business and an opportunity for you to express your views on subjects
related to our operations.
The Annual Meeting gives us an opportunity to review the actions our Company is
taking to achieve our mission of maximizing shareholder value. We appreciate
your ownership of Wilmington Trust, and I hope you will be able to join us on
April 21 for our Annual Meeting.
Sincerely,
/s/ Ted T. Cecala
Ted T. Cecala,
Chairman of the Board and Chief Executive Officer
[WILMINGTON TRUST LOGO]
March 10, 2005
To the Holders of Common Stock of
Wilmington Trust Corporation
NOTICE OF ANNUAL MEETING
The Annual Meeting of Stockholders of Wilmington Trust Corporation will be held
on Thursday, April 21, 2005 at 10:00 a.m. local time, at the Wilmington Trust
Plaza, Mezzanine Level, 301 West Eleventh Street, Wilmington, Delaware. The
meeting will be held to consider and act upon the election of directors, the
approval of our 2005 Long-Term Incentive Plan, and other business that may
properly come before the meeting.
Holders of record of our common stock at the close of business on February 22,
2005, are entitled to vote at the meeting.
This notice and the accompanying proxy materials are sent to you by order of the
Board of Directors.
/s/ Michael A. DeGregorio
Michael A. DiGregorio,
Secretary
2005 ANNUAL SHAREHOLDERS' MEETING
PROXY STATEMENT
General Information......................................... 1
Board of Directors.......................................... 3
Governance of the Company.............................. 3
Summary of Corporate Governance Principles........... 3
Committees of the Board.............................. 7
Committee Membership................................. 8
Audit Matters.......................................... 9
Directors' Compensation................................ 10
Proposals You May Vote On................................... 11
Proposal One -- Election of Directors.................. 11
Nominee Biographies.................................. 11
Executive Officers Who are Not Directors............. 12
Ownership of Wilmington Trust Stock.................. 14
Board Compensation Committee Report on Executive
Compensation........................................ 15
Compensation Committee Interlocks and Insider
Participation....................................... 17
Summary Compensation Table........................... 18
Option Grant Table................................... 19
Option Exercises and Year-End Value Table............ 20
Long-Term Incentive Plans -- Awards in Last Fiscal
Year................................................ 21
Change in Control Agreements......................... 21
Retirement Benefits.................................. 22
Stock Performance Graph.............................. 24
Section 16(a) Beneficial Ownership Reporting
Compliance.......................................... 24
Transactions with Management......................... 24
Availability of Form 10-K............................ 25
Proposal Two -- Approval of the 2005 Long-Term
Incentive Plan........................................ 25
Independent Registered Public Accounting Firm Services
Policy.................................................... Exhibit A
2005 Long-Term Incentive Plan............................... Exhibit B
GENERAL INFORMATION
The enclosed proxy material is being sent at the request of our Board of
Directors to encourage you to vote your shares at our Annual Shareholders'
Meeting (the "Annual Meeting") to be held on April 21, 2005. This proxy
statement contains information on matters that will be presented at the Annual
Meeting and is provided to assist you in voting your shares.
Our Annual Report to Shareholders for 2004, containing management's discussion
and analysis of financial condition and results of operations of our Company,
its audited financial statements, and this Proxy Statement are distributed
together beginning on or about March 18, 2005.
WHO MAY VOTE
All holders of our common stock as of the close of business on February 22, 2005
(the "Record Date"), are entitled to vote at the Annual Meeting. Each share of
stock is entitled to one vote. As of the record date, 67,488,491 shares of our
common stock were outstanding. A plurality of the shares voted in person or by
proxy is required to elect directors. A majority of the shares voted in person
or by proxy is required to approve the other proposal described in this proxy
statement. Abstentions and broker non-votes are not counted in the vote.
HOW TO VOTE
Even if you plan to attend the meeting, we encourage you to vote by proxy. You
may vote by proxy by returning the enclosed proxy card (signed and dated) in the
envelope provided.
You also may vote by telephone or by using the Internet. Please refer to the
instructions on your proxy card.
When you vote by proxy, your shares will be voted according to your
instructions. If you sign your proxy card or otherwise give your proxy but do
not specify how you want your shares to be voted, they will be voted as the
Board of Directors recommends. You can change or revoke your proxy at any time
before the polls close at the Annual Meeting by:
-- Notifying the Company's Secretary;
-- Voting in person; or
-- Returning a later-dated proxy card.
You also can change or revoke your proxy at any time before 12:00 p.m., April
20, 2005 by telephone or by using the Internet. Please refer to the instructions
on your proxy card.
If you are a present or former staff member and participate in our Thrift
Savings Plan, you will receive a voting instruction card for shares you hold in
that plan. The plan trustee will vote according to the instructions on your
proxy.
PROXY STATEMENT PROPOSALS
Proposals other than to elect directors may be submitted by the Board of
Directors or shareholders to be included in our proxy statement. To be
considered for inclusion in the proxy statement for our 2006 Annual
Shareholders' Meeting, shareholder proposals must be received in writing by the
Company's Secretary no later than November 21, 2005. Those proposals must
include a brief description of the business to be brought before the meeting,
the shareholder's name and address, the number and class of shares the
shareholder holds, and any material interest the shareholder has in that
business.
SHAREHOLDER NOMINATIONS FOR ELECTION OF DIRECTORS
The Nominating and Corporate Governance Committee recommends nominees to the
Board of Directors for election as directors at the annual meeting. That
committee will consider nominations submitted by shareholders of record for our
2006 Annual Shareholders' Meeting and received by the Company's Secretary by
February 20, 2006. Nominations must include the information required under
"Proxy Statement Proposals" above as well as the nominee's name and address, a
representation that the shareholder is a recordholder of the Company's stock or
holds the Company's stock through a broker and intends to appear in person or by
proxy at the 2006
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Annual Meeting to nominate a person, information regarding the nominee that
would be required to be included in the Company's proxy statement, a description
of any arrangement or understanding between the shareholder and that nominee,
and the written consent of the nominee to serve as a director if elected.
PROXIES
Your completed proxy card instructs David R. Gibson, the Company's Executive
Vice President and Chief Financial Officer, and Michael A. DiGregorio, the
Company's Senior Vice President, Secretary, and General Counsel, to vote as
instructed the shares of our stock for which they receive proxies. In addition,
your signed proxy card gives them direction to vote on any other matter properly
brought before the Annual Meeting.
SOLICITATION OF PROXIES
The Company will pay its costs relating to the solicitation of proxies. We have
retained Morrow and Co., Inc. to assist in soliciting proxies at an estimated
cost of $6,000 plus reasonable expenses. Proxies may be solicited by officers,
directors, and staff members of the Company personally, by mail, by telephone,
or by other electronic means. The Company will also reimburse brokers,
custodians, nominees, and fiduciaries for reasonable expenses in forwarding
proxy materials to beneficial owners of our stock.
SECRECY IN VOTING
As a matter of policy, we hold confidential proxies, ballots, and voting
tabulations that identify individual shareholders. These documents are available
for examination only by Wells Fargo Bank, N.A., our tabulation agents. The
identity of the vote of any shareholder is not disclosed except as may be
necessary to meet legal requirements.
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Board of Directors
Governance of the Company
SUMMARY OF CORPORATE GOVERNANCE PRINCIPLES
This summary of the Company's corporate governance principles describes certain
of our Board's corporate governance practices. These practices assist our Board
in carrying out its responsibilities effectively. The Board reviews these
Guidelines periodically and may modify them as appropriate.
The Board
Responsibility
The Board has responsibility for broad corporate policy and overall performance
of the Company through oversight of management to enhance the Company's
long-term value for our shareholders.
Role
In addition to the general oversight of management and the Company's business
performance, the Board provides input and perspective in evaluating alternative
strategic initiatives; reviews and, where appropriate, approves fundamental
financial and business strategies and major corporate actions; ensures processes
are in place to maintain the integrity of the executive management team;
evaluates our executive management team; and assists in succession planning for
key executive positions.
Duties
Our directors are expected to expend sufficient time, energy, and attention to
assure diligent performance of their responsibilities. Directors will attend
meetings of the Board and its committees on which they serve, review materials
distributed in advance of the meetings, and make themselves available for
periodic updates and briefings with management.
Leadership
The positions of Chairman of the Board and Chief Executive Officer are held by
Mr. Cecala.
Independence
The Nominating and Corporate Governance Committee as well as the Board at least
annually review relationships that directors have with the Company to determine
whether there are any material relationships that would preclude a director from
being independent. A candidate is not independent if:
-- The candidate or any member of his or her immediate family is a
current or past executive officer of the Company;
-- The candidate or any member of his or her immediate family has been
employed by the present or former internal or independent registered
public accounting firm of the Company within the last three years;
-- The candidate has served as a consultant to the Company within the
last three years;
-- Any of the Company's executive officers has served on the
Compensation Committee of the company by which the candidate is
employed within the last three years;
-- Loans to the candidate and his or her affiliates exceed fifty percent
(50%) of the loan-to-one borrower limit of Wilmington Trust Company,
the Company's principal banking subsidiary ("WTC");
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-- The candidate or any member of his or her immediate family received
more than $100,000 in direct compensation, other than directors'
fees, from the Company within any of the last three years;
-- The Company's total payments to or from a firm that employs the
candidate or for which his or her immediate family member is an
executive officer exceeded the greater of $1 million or 2% of the
firm's gross revenues within any of the last three years; or
-- The Company's contributions to a charitable organization that employs
the candidate exceeded $200,000 within any of the last three years.
Under these standards, Mss. Burger and Krug and Messrs. Collins, Crompton,
Elliott, Mears, Miller, Mobley, Roselle, Sharp, Sweeney, and Tunnell are
independent.
In addition, no member of the Audit Committee or his or her immediate family may
have received any consulting, advisory, or other compensatory fee, other than
directors' fees, from the Company in its most recent fiscal year.
Qualifications
Directors are selected for their integrity and character, sound, independent
judgment, breadth of experience, insight and knowledge, and business acumen.
Leadership skills, business experience, and diversity are among the relevant
criteria, which may vary over time depending on the Board's needs. The
Nominating and Corporate Governance Committee considers candidates with these
qualifications for recommendation to the full Board for approval.
The Board does not limit the number of other public company boards on which a
director may serve.
In general, no director may stand for reelection to the Board after reaching age
69. The Board may in unusual circumstances ask a director to stand for
reelection after the prescribed retirement date. A staff member director who has
served as the Chief Executive Officer retires from the Board when retiring from
employment with the Company.
Orientation and Continuing Education
New directors are provided an orientation process to become familiar with the
Company and its strategic plans and businesses, significant financial matters,
core values and ethics, compliance programs, corporate governance practices, and
other key policies and practices, through a review of background materials and
meetings with senior executives. On a periodic basis, the Board is provided with
continuing education relevant to its duties and responsibilities.
Compensation
The Board believes that compensation for outside directors should be
competitive. Our common stock is a key component, with payment of a portion of
director compensation in the form of our stock and/or phantom stock units.
Directors also receive stock options from the Company from time to time. The
Compensation Committee reviews the level and form of director compensation
periodically and, if appropriate, proposes changes for the Board's
consideration.
Attendance at Annual Shareholders' Meeting
Twelve of our directors attended last year's annual shareholders' meeting.
Annual Self-Evaluation
The Board and each of the Audit, Compensation, and Nominating and Corporate
Governance Committees makes an annual self-evaluation of its performance, with a
particular focus on overall effectiveness.
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Access to Management and Advisors
Directors have access to the Company's management, and are encouraged to visit
the Company's facilities. The Board and its committees may retain outside legal,
financial, or other advisors.
Interaction with the Investment Community, Media, and Others
The Board believes that management generally should speak for the Company and
recommends that directors refer inquiries to the Company.
Board Meetings
Selection of Agenda Items
The Chairman of the Board prepares the initial draft of the agenda for Board
meetings. This is provided to the directors at least one month prior to the
Board meeting, and they are encouraged to suggest items for inclusion on the
agenda and may raise subjects not specifically on the agenda.
Attendance of Senior Executives
The Board welcomes regular attendance of the Company's senior executives at
Board meetings to participate in discussions. Presentation of matters to be
considered by the Board are generally made by the responsible executives and
their staff.
Executive Sessions
Board meetings regularly include an executive session of all non-management
directors. The chair of the Nominating and Corporate Governance Committee leads
these executive sessions. Interested parties may communicate directly with the
chair of the Nominating and Corporate Governance Committee as well as the
Company's other independent directors at www.ethicspoint.com. All such
communications are provided to the Company's senior management and Audit
Committee; those addressed to individual directors or the Board generally will
be provided directly to those directors.
Leadership Assessment
Succession Planning
The Board has responsibility for selecting the Chief Executive Officer and
assisting in planning for succession of members of the Company's executive
management team. To assist the Board, the Chief Executive Officer periodically
provides the Board with an assessment of certain of the Company's senior
executives and their potential to succeed to the position of Chief Executive
Officer. The Chief Executive Officer also provides the Board with an assessment
of potential successors to other key positions within the Company.
Evaluation and Compensation of the Chief Executive Officer
Through an annual process, outside directors evaluate the Chief Executive
Officer's performance and the Compensation Committee sets his compensation.
Stock Ownership Guidelines
Each of our directors is required to own 4,000 shares of our stock, and each of
our senior officers is required to own a number of shares of our stock with a
value equal to a multiple of his or her base salary, depending on the officer's
level, within four years after first becoming a director or senior officer.
These Stock Ownership Guidelines are posted on our Website at
www.wilmingtontrust.com under "About Us."
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Code of Conduct and Ethics
The Company has adopted a Code of Conduct and Ethics for all of its directors
and staff members, including its executive officers. This Code is posted on our
Website at www.wilmingtontrust.com under "About Us," and is available in print
to any shareholder who requests it. The Company will post changes to and waivers
of any provisions of the Code of Conduct and Ethics applicable to these
directors and executive officers on its Website promptly.
The full text of our corporate governance principles is posted on our Website at
www.wilmingtontrust.com under "About Us," and is available in print to any
shareholder who requests it.
6
COMMITTEES OF THE BOARD
AUDIT COMMITTEE Responsibilities include:
-- Monitoring the quality and integrity of
the Company's accounting policies,
financial statements, disclosure
practices, and compliance with legal and
regulatory requirements
-- Overseeing the independence and
performance of the Company's internal
auditor and independent registered public
accounting firm
-- Reviewing reports of governmental
agencies
All members of the Audit Committee are
independent directors. See the Audit Committee
Report on page 9.
COMPENSATION COMMITTEE Responsibilities include:
-- Providing counsel and making
recommendations to the Chairman of the
Board and the full Board of Directors
with respect to the performance of the
Chairman of the Board and Chief Executive
Officer
-- Advising on compensation, including
salaries and employee benefits
-- Administering the Company's Executive
Incentive Plan, stock purchase and stock
option plans, and the Directors' Deferred
Fee Plan
All members of the Compensation Committee are
independent directors. See the Board
Compensation Committee Report on Executive
Compensation on pages 15 to 17.
NOMINATING AND CORPORATE Responsibilities include:
GOVERNANCE
COMMITTEE -- Recommending candidates for membership on
the Board of Directors and its committees
-- Overseeing matters of corporate
governance
-- Overseeing succession planning for the
Company's executive management
-- Addressing significant shareholder
relations issues
All members of the Nominating and Corporate
Governance Committee are independent directors.
Each of these committees' charters is posted on
our Website at www.wilmingtontrust.com under
"About Us," and is available in print to any
shareholder who requests it.
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COMMITTEE MEMBERSHIP
The following chart provides information about Board committee membership and
the number of meetings that each committee held in 2004.
NOMINATING AND
CORPORATE
NAME AUDIT COMPENSATION GOVERNANCE
---- ----- ------------ --------------
Carolyn S. Burger X* X X
Ted T. Cecala
Richard R. Collins X
Charles S. Crompton Jr. X X**
R. Keith Elliott X X** X
Robert V. A. Harra Jr.
Gailen Krug***
Rex L. Mears X
Hugh E. Miller X** X*
Stacey J. Mobley X
David P. Roselle X* X
H. Rodney Sharp III X X**
Thomas P. Sweeney X**
Robert W. Tunnell Jr.
Number of meetings in 2004 10 3 4
* Chairperson
** Committee member through April 2004, when the Board's committees were
reappointed.
*** Appointed to the Board of Directors in December 2004.
Directors fulfill their responsibilities not only by attending Board and
committee meetings, but also by communicating with the Chairman of the Board and
Chief Executive Officer and other members of management relative to matters of
mutual interest and concern to the Company. In 2004, seven meetings of the Board
of Directors were held. No director attended less than 75% of the meetings of
the Board and the committees on which he or she served in 2004.
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AUDIT MATTERS
Audit Committee Report
The Audit Committee provides the following report with respect to the Company's
audited financial statements for the fiscal year ended December 31, 2004:
-- The Audit Committee has reviewed and discussed with management the
Company's fiscal 2004 audited financial statements;
-- The Audit Committee has discussed with the Company's independent registered
public accounting firm, KPMG LLP, the matters required to be discussed by
Statement on Auditing Standards No. 61 and Staff Accounting Bulletin No.
99;
-- The Audit Committee has received the written disclosures and letter from
KPMG required by Independence Standards Board No. 1, relating to the
auditors' independence from the Company and its related entities, and has
discussed with the auditors their independence from the Company; and
-- Based on the review and discussions referred to above, the Audit Committee
has recommended to the Board of Directors that the fiscal 2004 audited
financial statements be included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2004.
Submitted by the Audit Committee of the Company's Board of Directors:
Carolyn S. Burger, Chair
Richard R. Collins
Charles S. Crompton Jr.
R. Keith Elliott
Rex L. Mears
All of the Committee's members are independent of the Company and are
financially literate, and at least one member of the Committee has financial
management expertise. In addition, the Company's Board of Directors has
determined that each of Ms. Burger and Mr. Elliott qualify as audit committee
financial experts for purposes of the Securities and Exchange Commission's
rules. However, as those rules provide, neither of those individuals is thereby
deemed to be an "expert" for any purpose under the securities laws or has any
duty, obligation, or liability greater than the duties, obligations, and
liabilities he or she would have as a member of the Audit Committee and the
Board of Directors in the absence of that designation. In addition, the
designation of those individuals as audit committee financial experts does not
affect the duties, obligations, or liabilities of any other member of the Audit
Committee or the Board of Directors.
While the Audit Committee oversees the Company's financial reporting process for
the Board of Directors consistent with that Committee's charter, the Company's
management has primary responsibility for this process and for the preparation
of the Company's consolidated financial statements in accordance with U.S.
generally accepted accounting principles. The responsibility for the
completeness and accuracy of the Company's financial statements rests with its
management. In addition, our independent registered public accounting firm and
not the Audit Committee is responsible for auditing those financial statements.
None of the Committee's members is a certified public accountant, and each
member of the Committee is entitled to rely on the integrity of persons and
organizations within and outside the Company from which he or she receives
information and the accuracy of the financial and other information provided to
the Committee.
The Audit Committee or the Chair of the Audit Committee pre-approves audit,
review, and attest engagements and permissible non-audit services the Company's
independent registered public accounting firm provides, or those services are
performed in accordance with pre-approval policies and procedures the Audit
Committee has established.
The Company's policies with respect to the approval and pre-approval of services
the independent registered public accounting firm provides are reflected in the
Independent Registered Public Accounting Firm Services Policy the Audit
Committee has adopted and which is attached to this proxy statement as part of
Exhibit A.
Audit, Audit-Related, Tax, and All Other Fees
The following table represents fees for professional services rendered by KPMG
for the audit of the Company's annual consolidated financial
9
statements in 2004 and fees for other services rendered by KPMG in 2004 and
2003:
2004 2003
---------- --------
Audit fees(1) $2,348,390 $646,546
Audit-related fees(2) $ 380,895 $381,962
Tax fees(3) $ 24,960 $ 46,332
All other fees $ -- $ --
---------- --------
(1) Audit fees for 2004 included approximately $1.3 million for compliance with
Section 404 of the Sarbanes-Oxley Act. The Company also spent approximately
$600,000 in consulting expense for other third parties in 2004 and 30,000
hours of staff time in connection with its Section 404 compliance efforts.
(2) Audit-related fees for 2004 consisted principally of: audits of financial
statements of employee benefit plans, common trust funds, and the Company's
broker-dealer and other subsidiaries; and accounting consultation regarding
potential acquisitions.
(3) Tax fees for 2004 consisted of tax consulting and advice in connection with
potential acquisitions; review of federal and state tax returns; and advice
related to international and state tax issues.
The Audit Committee has considered whether the provision of the foregoing audit,
audit-related, and tax services is compatible with maintaining KPMG's
independence, and believes that it is.
Independence and Audit Committee Charter
Each member of the Audit Committee is "independent" under the definition of
independence contained in the New York Stock Exchange's current listing
standards. The Board of Directors has adopted a written Audit Committee Charter.
Representatives of KPMG are expected to be present at our Annual Meeting, will
have an opportunity to make a statement if they desire to do so, and are
expected to be available to respond to appropriate questions.
DIRECTORS' COMPENSATION
The Company paid its outside directors an annual retainer of $15,000 and a
$2,000 fee for each Board meeting they attended in 2004. It also paid them a
$1,200 fee for each committee meeting they attended. The Chairpersons of the
Compensation Committee and the Nominating and Corporate Governance Committee
receive an additional $2,500 annually; the Chairperson of the Audit Committee
receives an additional $5,000 annually. A total of seven Board meetings and 17
committee meetings were held in 2004. The annual retainer will increase to
$20,000 beginning in 2005.
Directors receive the first half of their annual retainer in the Company's
common stock. Each director may elect to receive the second half of the annual
retainer either in cash or the Company's common stock. Directors can elect each
year to defer receipt of the cash and/or stock portion of their directors' fees
until they are no longer a director.
If a director elects to defer receipt of any cash portion of his or her
directors' fees, he or she may elect to earn a yield on the deferred portion
based on (1) yields WTC pays on certain of its deposit products and/or (2)
changes in the price of the Company's common stock, together with dividends on
that stock. If a director elects to defer receipt of any stock portion of his or
her director's fees, the deferred portion will accrue dividends until paid.
Under the 2002 Long-Term Incentive Plan, which was approved by shareholders,
directors also are entitled to receive stock options. Twenty-three thousand five
hundred nonstatutory stock options have been granted to each outside director
except for Ms. Krug; five thousand nonstatutory stock options have been granted
to Ms. Krug. Options in respect of 717,981 shares remain available for grant
under that plan.
Directors who are also officers of the Company do not receive any fees or other
compensation for service on any committee.
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PROPOSALS YOU MAY VOTE ON
PROPOSAL ONE -- ELECTION OF DIRECTORS
There are four nominees in the Company's Class of 2008 for election as directors
this year. Detailed information on each is provided below. Each class of
directors is elected for a three-year term. If any director is unable to stand
for re-election, your Board may reduce its size or designate a substitute.
If a substitute is designated, proxies voting on the original director candidate
will be cast for the substituted candidate.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THESE DIRECTORS.
NOMINEE BIOGRAPHIES
CLASS OF 2008
VOTING IS FOR THIS CLASS
Carolyn S. Burger, Age 64
Director since 1991
Ms. Burger was a principal in CB Associates, Inc., a consulting firm
specializing in legislation, technology deployment for senior executives, and
executive coaching, from 1996 through 2002. She served as President and Chief
Executive Officer of Bell Atlantic -- Delaware, Inc. from 1991 to 1996. Ms.
Burger also is a director of PJM Interconnection, L.L.C.
Robert V. A. Harra Jr., Age 55
Director since 1996
Mr. Harra has served as a director, President, and Chief Operating Officer of
the Company since 1996.
Rex L. Mears, Age 63
Director since 1992
Mr. Mears has served as President of Ray S. Mears and Sons, Inc., a farming
corporation, since 1967.
Robert W. Tunnell Jr., Age 50
Director since 1992
Mr. Tunnell became managing partner of Tunnell Companies, an owner and developer
of real estate, in 1981.
The following individuals currently serve as directors in the two other classes.
Their terms will end at the annual shareholders' meetings in 2006 and 2007,
respectively
CLASS OF 2006 -- ONE YEAR TERM REMAINING
THIS CLASS WAS ELECTED AT THE 2003 ANNUAL SHAREHOLDERS' MEETING
Ted T. Cecala, Age 55
Director since 1996
Mr. Cecala became a director, Chairman of the Board, and Chief Executive Officer
of the Company and WTC in 1996. Mr. Cecala also serves as a member of the Board
of Managers of each of Cramer Rosenthal McGlynn, LLC, Roxbury Capital
Management, LLC, and Balentine Delaware Holding Company, LLC.
Richard R. Collins, Age 68
Director since 1989
Mr. Collins became Chairman of Collins, Inc., a consulting firm for various
insurance industry associations and financial and non-financial companies
focusing on international expansion, in 1993. He previously served as Chief
Executive Officer and Chief Operating Officer of American Life Insurance Company
from 1981 to 1992.
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Hugh E. Miller, Age 69
Director since 1982
Mr. Miller retired as Vice Chairman of ICI Americas in 1990. He served with its
parent, Imperial Chemical Industries PLC, for 20 years until 1990, including in
management positions in Europe and the United States. Mr. Miller also serves as
Chairman of the Board of MGI PHARMA, Inc.
David P. Roselle, Age 65
Director since 1991
Mr. Roselle has served as President of the University of Delaware since 1990.
Thomas P. Sweeney, Age 68
Director since 1983
Mr. Sweeney has served as a member of the law firm of Richards, Layton & Finger,
P.A. since 1967.
CLASS OF 2007 -- TWO YEAR TERM REMAINING
THIS CLASS WAS ELECTED AT THE 2004 ANNUAL SHAREHOLDERS' MEETING
Charles S. Crompton Jr., Age 68
Director since 1982
Mr. Crompton is of counsel in the law firm of Potter, Anderson & Corroon since
January 2000. He previously served as a partner in that firm from 1966 to 1999.
R. Keith Elliott, Age 62
Director since 1997
Mr. Elliott is retired Chairman and Chief Executive Officer of Hercules
Incorporated. From 1991 through April 2000, he served the company as Chairman
and Chief Executive Officer, President and Chief Executive Officer, President
and Chief Operating Officer, and Executive Vice President and Chief Financial
Officer. He is a lead director of Checkpoint Systems, Inc. and a director of The
Institute for Defense Analyses.
Gailen Krug, Age 50
Director since 2004
Ms. Krug has served as Chief Investment Officer and Vice President of Waycrosse,
Inc., a private investment company that oversees two globally diversified
portfolios of financial assets, since 1999.
Stacey J. Mobley, Age 58
Director since 1991
Mr. Mobley has served as Senior Vice President, General Counsel, and Chief
Administrative Officer of E.I. du Pont de Nemours and Company since 2000.
H. Rodney Sharp III, Age 69
Director since 1998
Mr. Sharp served in several management positions at E.I. du Pont de Nemours and
Company from 1961 to 1991, and retired from that company in 1991. He is a
director of that company.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following contains information about the Company's executive officers who
are not directors.
Howard K. Cohen, Age 56
Executive officer since 1992
Mr. Cohen became an Executive Vice President of the Company and of WTC in 2002.
He previously served as a Senior Vice President of the Company since 2001 and as
a Senior Vice President of WTC in its Corporate Client Services Department since
1992. He is scheduled to retire from the Company on March 31, 2005.
Michael A. DiGregorio, Age 58
Executive officer since 2003
Mr. DiGregorio became a Senior Vice President, Secretary, and General Counsel of
the Company and of WTC in 2003. He previously served as Vice President and
Secretary of the Company from 2001 to 2003 and as Vice President of WTC from
1991 to 2003.
12
William J. Farrell II, Age 46
Executive officer since March 2005
Mr. Farrell became an Executive Vice President of the Corporation and WTC in
2002. In March 2005, he assumed oversight of WTC's Corporate Client Services
Department. He previously oversaw all areas of WTC's Trust Operation and Systems
Development and Information Technology Departments since 1998.
David R. Gibson, Age 47
Executive officer since 1992
Mr. Gibson became an Executive Vice President and Chief Financial Officer of the
Company and of WTC in 2002. He previously served as Senior Vice President and
Chief Financial Officer of the Company since 1997 and of WTC since 1996.
Gerald F. Sopp, Age 48
Executive officer since 2003
Mr. Sopp became Vice President and Controller of the Company in 2000.
Previously, he served as Vice President and Controller of the Clarks Companies,
NA from 1993 to 2000.
Rodney P. Wood, Age 44
Executive officer since 1999
Mr. Wood became an Executive Vice President of the Company and WTC in 2002. He
previously served as a Senior Vice President of the Company since 2001 and as a
Senior Vice President of WTC in its Wealth Advisory Services Department since
1999.
13
OWNERSHIP OF WILMINGTON TRUST STOCK
The following table includes shares in the Company beneficially owned by each
director and nominee, each executive officer named in the Summary Compensation
Table on page 18, and by all directors and executive officers as a group as of
December 31, 2004.
Under rules of the Securities and Exchange Commission, "beneficial ownership"
includes shares for which an individual, directly or indirectly, has or shares
voting or investment power, whether or not the shares are held for the
individual's benefit.
Phantom
Name of Percent of Stock
Beneficial Owner Amount and Nature of Beneficial Ownership Total Class Units(5)
---------------- ------------------------------------------ --------- ---------- --------
(Number Voting and/or
of Shares) Investment Right to
Direct(1) Power(2) Acquire(4)
----------- -------------- -----------
C. S. Burger 5,506 0 8,000 13,506
T. T. Cecala 300,326 0 467,380 767,706 1.13%
H. K. Cohen 21,688 345 88,000 110,033
R. R. Collins 7,170 5,286 8,000 20,456
C. S. Crompton Jr. 7,441 9,000 8,000 24,441 8,989
R. K. Elliott 5,396 0 8,000 13,396 2,601
D. R. Gibson 47,799 90 104,070 151,959
R.V.A. Harra Jr. 297,724 565 281,648 579,937
G. Krug 0 0 0 0
R. L. Mears 205 10,345 8,000 18,550
H. E. Miller 3,494 11,600 8,000 23,094 8,663
S. J. Mobley 4,949 0 8,000 12,949 4,764
D. P. Roselle 8,342 0 8,000 16,342
H. R. Sharp III 6,012 2,111,680(3) 8,000 2,125,692 3.15%
T. P. Sweeney 0 20,249 8,000 28,249 7,558
R. W. Tunnell Jr. 72,828 332,493 8,000 413,321
R. P. Wood 10,457 3,278 104,666 118,401
Directors, Nominees,
and Executive
Officers as a Group
(19 persons) 806,605 2,506,731 1,154,264 4,467,600 6.62%
======= ========= ========= ========= ====
(1) This column includes stock held by directors and executive officers or
certain members of their immediate families.
(2) This column includes stock for which directors or executive officers are
deemed to have sole or shared voting power.
(3) Since he may be deemed in his capacity as trustee of a non-profit entity to
have voting and/or investment power directly or indirectly, of 2,111,680 shares
that entity holds, Mr. Sharp is listed as the beneficial owner of those shares.
(4) This column includes shares which directors or executive officers have the
right to acquire within 60 days after December 31, 2004.
14
(5) These phantom stock units were acquired in lieu of directors' fees. Their
value is based on the market price of our common stock, together with dividends
on that stock. The units can be redeemed only for cash following termination of
the individual's service as a director, and do not have voting rights.
BOARD COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
General
We award compensation to executive officers to assure that we can continue to be
able to attract, motivate, and retain executives of outstanding abilities. To
achieve this, we provide compensation for executive officers at levels broadly
comparable to those earned by executive officers at institutions with comparable
characteristics and financial performance. In compensating our executive
officers, we compare the Company's growth in net income to the corresponding
performance of those institutions, the performance of the executive's area of
responsibility against business plan objectives that have been established for
that area, and his or her leadership and contribution to the Company's financial
goals.
Our executive compensation program also rewards our executive officers for their
long-term strategic management to enhance shareholder value. We do this by
providing executive officers with ownership interests in the Company through
restricted stock and stock options. Since the ultimate value of the stock made
available through these awards depends on the Company's success, restricted
stock and stock options provide executive officers with continuing incentives
long after the award is granted.
The key elements of our compensation program for executive officers are base
salary, the Executive Incentive Plan (including restricted stock that may be
awarded under that plan), and the Company's long-term incentive plans. The
Compensation Committee's policies with respect to each of these elements,
including the basis for the compensation awarded to Mr. Cecala, are discussed
below. The Compensation Committee takes into account the full compensation
package the Company provides each individual, including pension, insurance, and
other benefits, in addition to the programs described below. In reviewing the
performance of the Company's executive officers other than Mr. Cecala, the
Compensation Committee takes his views into account.
Base Salaries
We determine base salaries for each executive officer by evaluating his or her
responsibilities and performance and experience in rendering that performance.
We also consider the competitive market for executive talent, and compare
salaries we pay our executive officers to those paid to executive officers at
comparable institutions.
The Company typically adjusts executive officers' salaries annually to take into
account its and the individual's performance, as well as any changes in the
executive officer's responsibilities during the year. We also consider the
financial results of the business department over which the executive officer
has responsibility and his or her leadership and contribution to the Company's
financial goals.
Executive Incentive Plan
We adopted and the Company's shareholders approved our 2004 Executive Incentive
Plan (the "Incentive Plan") to provide the opportunity for key executives to
earn cash and stock awards that recognize and reward the achievement of
corporate performance goals. The Chief Executive Officer, the President, and
other officers the Compensation Committee designates from time to time
participate in the Incentive Plan. For 2004, seven officers participated in the
Plan.
The Compensation Committee can establish one or more quantitative or qualitative
performance goals or other criteria as the basis for awarding executives bonuses
under that plan. Under the Incentive Plan, the Company is able to deduct
compensation paid to executive officers a portion of whose compensation would be
subject to Section 162(m) of the Internal Revenue Code ("Section 162(m)
Participants"). For Section 162(m) Participants whose bonuses we want to be able
to deduct, the performance goals are based on any combination the Compensation
Committee selects of income, net income, growth in income or net income,
earnings per share, growth in earnings per share, cash flow measures, return on
15
equity, return on assets, return on investment, loan loss reserves, market
share, fees, growth in fees, assets, growth in assets, stockholder return, stock
price, achievement of balance sheet or income statement objectives, expenses,
reduction in expenses, chargeoffs, nonperforming assets, market share, and
overhead ratio. Those goals may be company-wide or on a departmental,
divisional, regional, or individual basis. Any goal may be measured in absolute
terms, by reference to internal performance targets, or as compared to another
company or companies.
In evaluating business line performance for purposes of making awards under the
Incentive Plan, the Compensation Committee considers, among other factors, the
percentage growth in net income for the Company's banking and fee-based
businesses compared to peer institutions of the Company and the Company's
performance against various components of the Company's business plan. The
percentage growth in net income of the Company's banking business ranked seventh
among the performance of a company-constructed 13 member banking-oriented peer
group that includes Associated Bank-Corp, BOK Financial Corporation, City
National Corporation, Commerce Bancorp, Inc., Commerce Bancshares, Inc., Compass
Bancshares, Inc., FirstMerit Corporation, Fulton Financial Corporation, Hibernia
Corporation, Mercantile Bankshares Corporation, Valley National Bancorp, and
Zions Bancorporation. The percentage growth in net income of the Company's
fee-based businesses ranked eighth among the performance of a
company-constructed eight member peer group of fee-oriented banks that includes
The Bank of New York Company, Inc., Boston Private Financial Holdings, Inc.,
Bryn Mawr Bank Corporation, Investors Financial Services Corp., Mellon Financial
Corporation, Northern Trust Corporation, and the PNC Financial Services Group,
Inc. (all institutions in the banking-oriented peer group and the fee-oriented
peer group are hereinafter collectively referred to as the "Peer Group"). For
2004, payments under this plan to the seven officers who participated in the
plan aggregated $1,415,221 compared to $2,215,103 for the ten officers who
participated in the plan's predecessor in 2003.
A portion of awards granted under the Incentive Plan typically is made in the
form of restricted stock. Restricted stock awards generally vest over three
years at the rate of one-third of the award each year, and are subject to
forfeiture prior to vesting. Any value that accrues to our officers from
restricted stock is based entirely on our stock performance, and bears a direct
relationship to the value our shareholders realize.
Long-Term Incentive Plan
Under the Company's 2002 Long-Term Incentive Plan, which shareholders have
approved, cash-based and stock-based awards may be made. Stock options granted
under that plan have an exercise price equal to the last sale price of our stock
on the date of grant, typically vest in between one to three years, and have
terms of up to ten years. In granting stock options, we do not consider the
number of options an executive officer received previously, but we do consider
changes in the executive officer's duties and responsibilities during the year.
We do not employ any formula in awarding options. That plan is terminating on
April 17, 2005, and our 2005 Long-Term Incentive Plan is being submitted to our
shareholders for approval as described at pages 25 through 28 of this proxy
statement.
All stock options are granted with exercise prices equal to the fair market
value of the Company's stock on the date they are granted. Accordingly, any
value that accrues to our officers from stock options is based entirely on our
stock performance, and bears a direct relationship to the value our shareholders
realize.
Compensation of Chief Executive Officer
In establishing Mr. Cecala's compensation, the Compensation Committee considered
the same basic factors as those described above for all members of the Company's
executive management, including especially:
-- The Company's performance against its business plan and the Peer Group in
the percentage growth in net income;
-- The base salaries, annual bonuses, and stock option awards paid to top
executives at institutions with comparable characteristics and financial
performance; and
-- The development under the Company's strategic planning process to expand
significantly and profitably the geographic outreach of its fee-based
businesses.
16
Submitted by the Compensation Committee of the Company's Board of Directors:
David P. Roselle, Chair
Carolyn S. Burger
Hugh E. Miller
Stacey J. Mobley
H. Rodney Sharp III
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code (the "Code") and the regulations
thereunder (collectively, "Section 162(m)") prohibits companies from deducting
compensation paid to certain executive officers in excess of $1 million unless
that compensation is "performance-based." Compensation attributable to the
Company's stock options is performance-based, and the Incentive Plan is designed
so that compensation attributable to awards under that plan can qualify as
"performance-based."
The Compensation Committee believes it is unlikely that the Company paid any
amounts in respect of 2004 that will result in our loss of a federal income tax
deduction under Section 162(m).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee's members are David P. Roselle (Chair), Carolyn S.
Burger, Huge E. Miller, Stacey J. Mobley, and H. Rodney Sharp III. No member of
the Compensation Committee is a current or past officer or employee of the
Company. No executive officer of the Company serves as a member of the
compensation committee or Board of Directors of any other
company whose members include an individual who also serves on our Board of
Directors or the Compensation Committee.
Ms. Burger and Mr. Sharp are indebted to WTC on the same terms and conditions as
those for comparable transactions with others.
17
SUMMARY COMPENSATION TABLE
The following table shows information about compensation the Company awarded
over the last three years to its chief executive officer and its four other most
highly compensated executive officers (the "Named Executive Officers").
Long-Term
Annual Compensation Compensation Awards
-----------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (f) (i)
(e) Restricted (g) (h)
Other Annual Stock Securities LTIP
Name and Salary Bonus Compensation Awards Underlying Payouts All Other
Principal Position Year ($) ($)(1) ($) ($)(2) Options(3) ($) Compensation(4)
------------------ ---- ------ ------ ------------ ---------- ---------- ------- ---------------
Ted T. Cecala, 2004 $ 588,154 $ 467,301 -- $138,010 90,000 -- $ 8,340
Chairman of the Board and 2003 $ 567,769 $ 480,036 -- 0 90,000 -- $ 8,280
Chief Executive Officer 2002 $ 550,000 $ 625,240 -- 0 90,000 -- $ 7,780
Robert V.A. Harra, Jr., 2004 $ 423,731 $ 367,698 -- $ 90,321 40,000 -- $ 8,430
President and Chief 2003 $ 410,000 $ 314,162 -- 0 40,000 -- $ 6,307
Operating Officer 2002 $ 410,000 $ 396,388 -- 0 40,000 -- $ 5,985
Rodney P. Wood, 2004 $ 337,115 $ 291,805 -- $ 92,052 30,000 -- $ 8,099
Executive Vice 2003 $ 317,308 $ 320,182 -- 0 30,000 -- $ 7,410
President 2002 $ 283,115 $ 252,574 -- 0 26,000 -- $ 7,438
Howard K. Cohen, 2004 $ 238,077 $ 172,224 -- $ 38,604 20,000 -- $ 7,640
Executive Vice 2003 $ 228,077 $ 134,276 -- 0 20,000 -- $ 7,140
President 2002 $ 214,346 $ 156,105 -- 0 10,000 -- $ 6,971
David R. Gibson, 2004 $ 223,269 $ 129,007 -- $ 33,988 20,000 -- $ 7,608
Executive Vice 2003 $ 214,365 $ 118,221 -- 0 20,000 -- $ 7,303
and Chief Financial 2002 $ 206,087 $ 156,913 -- 0 15,000 -- $ 6,911
Officer
Total Salary, Bonus, and
All Other Compensation 2004 $1,810,346 $1,428,035 $40,117
for Named Executive 2003 $1,737,519 $1,366,877 $36,440
Officers(5) 2002 $1,663,404 $1,694,491 $35,103
(1) Includes awards made under the Incentive Plan (described on pages 15 and 16
above) and, for 2002, our Profit-Sharing Bonus Plan (the "Profit-Sharing Bonus
Plan") in respect of services performed during the year. The Profit-Sharing
Bonus Plan was terminated in 2003.
(2) As required by the Securities and Exchange Commission's rules, the dollar
amounts in this column are based on the closing price of our stock on the date
of grant while the dollar amounts in this footnote are based on the closing
price of our stock at December 31, 2004. At December 31, 2004, Mr. Cecala owned
3,727 shares of restricted stock with a value of $134,731, Mr. Harra owned 2,439
shares of restricted stock with a value of $88,170, Mr. Wood owned 2,486 shares
of restricted stock with a value of $89,869, Mr. Cohen owned 1,042 shares of
restricted stock with a value of $37,668, and Mr. Gibson owned 918 shares of
restricted stock with a value of $33,186. One-third of these shares vests each
year following the grant, and dividends are payable on the shares prior to
vesting.
These restricted shares were issued in lieu of 20% of the cash bonus otherwise
payable to the Named Executive Officers in 2004. Since it is in the form of
restricted stock, this portion of each executive's bonus is subject to
forfeiture prior to vesting.
(3) The number of options granted reflect the 100% stock dividend the Company
paid on June 17, 2002.
(4) Represents: (a) the Company's contributions to its 401-k Thrift Savings Plan
for Mr. Cecala of $6,060 in 2004, $6,000 in 2003, and $5,500 in 2002; Mr. Harra
of $6,150 in 2004, $4,027 in 2003, and $3,705 in 2002; Mr. Wood of $6,150 in
2004, $6,000 in 2003, and $5,500 in 2002; Mr. Cohen of $6,500 in 2004, $6,000 in
2003, and $5,500 in 2002; and Mr. Gibson of $6,150 in 2004, $6,000 in 2003, and
$5,500 in 2002; and (b) premiums the Company paid for term life insurance for
each of Messrs. Cecala and
18
Harra of $2,280 in each of 2004, 2003, and 2002; Mr. Wood of $1,949 in 2004,
$1,410 in 2003, and $1,938 in 2002; Mr. Cohen of $1,140 in each of 2004 and 2003
and $1,471 in 2002; and Mr. Gibson of $1,458 in 2004, $1,303 in 2003, and $1,411
in 2002.
(5) The numbers in this line for 2002 include salary, bonus, and other
compensation paid to Robert A. Matarese and Robert J. Christian, who were
executive officers in those years, but do not include those for Mr. Cohen or Mr.
Gibson.
No named Executive Officer received perquisites in 2004 valued at more than
$6,000.
OPTION GRANT TABLE
The following table presents additional information about the option awards in
the Summary Compensation Table for 2004. (1)
Option Grants in Last Fiscal Year
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Individual Grants Appreciation for Option Term(2)
--------------------------- ---------------------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of Percent of
Securities Total Options
Underlying Granted To All Exercise Or
Options Employees in Base Price Expiration
Name Granted Fiscal Year ($/Share) Date 5%($) 10%($)
---- ---------- -------------- ----------- ---------- ----- ------
Ted T. Cecala 90,000 9.1% $37.02 2/24/2014 $2,095,351 $5,310,031
Robert V. A. Harra 40,000 4.0% $37.02 2/24/2014 931,267 2,360,014
Rodney P. Wood 30,000 3.0% $37.02 2/24/2014 698,450 1,770,010
Howard K. Cohen 20,000 2.0% $37.02 2/24/2014 465,634 1,180,007
David R. Gibson 20,000 2.0% $37.02 2/24/2014 465,634 1,180,007
(1) These options vest three years after grant, expire ten years after
grant, and may be terminated earlier (a) at the termination of the officer's
employment if his or her employment ceases for any reason other than retirement,
death, or disability or (b) upon the earlier of (1) the end of the option's term
or (2) three years after the officer's death, retirement, or disability.
(2) These values are computed on a pre-tax basis.
19
OPTION EXERCISES AND YEAR-END VALUE TABLE
The table below presents information about (1) options exercised during 2004 by
the Named Executive Officers and (2) the amount and value of unexercised options
as of December 31, 2004.
Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year-End Option Value
(a) (b) (c) (d) (e)
Shares Shares Underlying Value of Unexercised
Acquired Unexercised Options at In-the-Money Options at
on Exercise Value Realized Fiscal Year End(#) Fiscal Year End($)(2)
Name (Number)(1) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- -------------- ------------------------- -------------------------
Ted T. Cecala 6,000 $155,550 467,380/180,000 $4,966,615/$741,600
Robert V. A. Harra 13,600 $342,516 281,648/80,000 $3,688,309/$329,600
Rodney P. Wood 6,268 $ 30,372 104,666/60,000 $ 780,793/$247,200
Howard K. Cohen 11,090 $217,218 88,000/40,000 $ 816,695/$164,800
David R. Gibson 9,000 $178,798 102,638/40,000 $1,014,137/$164,800
(1) Value realized reflects the difference between the market value of the
Company's stock on the date the option was exercised and the exercise price,
multiplied by the number of shares acquired upon exercise.
(2) These values are computed on a pre-tax basis, and reflect the
difference between the last sale price of the Company's stock on December 31,
2004, and the exercise price of each option the Named Executive Officer holds,
or the total amount by which the officer's options were "in the money" at that
date.
20
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
The following table presents additional information about the restricted stock
granted to the Named Executive Officers in 2004 reflected in the Summary
Compensation Table. This restricted stock was received in lieu of 20% of the
cash bonus otherwise payable to the Named Executive Officers in 2004. Since it
is in the form of restricted stock, this portion of each executive's bonus is
subject to forfeiture prior to vesting.
Estimated Future Payouts under
Non-Stock Price-Based Plans
-------------------------------
(a) (b) (d) (e) (f)
Number of (c)
Shares, Units, Performance or Other
or Other Period Until Maturation Threshold Target Maximum
Name Rights(#) or Payout(1) ($ or #) ($ or #) ($ or #)
----------------------------------------------------------------------------------------------------------
Ted T. Cecala 3,727 2/25/2005 N/A N/A N/A
2/25/2006
2/25/2007
Robert V.A. Harra Jr. 2,439 2/25/2005 N/A N/A N/A
2/25/2006
2/25/2007
Rodney P. Wood 2,486 2/25/2005 N/A N/A N/A
2/25/2006
2/25/2007
Howard K. Cohen 1,042 2/25/2005 N/A N/A N/A
2/25/2006
2/25/2007
David R. Gibson 918 2/25/2005 N/A N/A N/A
2/25/2006
2/25/2007
CHANGE IN CONTROL AGREEMENTS
The Company has entered into change in control agreements with eight of its
officers. These provide severance pay and continuation of certain benefits if a
"Change in Control" occurs. To receive benefits under the agreements, an
officer's employment must be terminated involuntarily, either actually or
constructively, without cause within two years after a Change in Control.
In general, the agreements deem a "Change in Control" to have occurred if any of
the following happens:
-- The Company or WTC consolidates or merges with a third party;
-- The Company or WTC transfers substantially all assets to a third party
or completely liquidates or dissolves;
-- A third party acquires any combination of beneficial ownership of and
voting proxies for more that 15% of the Company's or WTC's voting
stock or the ability to control the election of the Company's
directors or its management or policies;
-- The persons serving as the Company's directors on February 29, 1996,
and those replacements or additions subsequently nominated by that
Board or by persons nominated by them, are no longer at least a
majority of the Company's Board; or
-- A regulatory agency determines that a change in control of the Company
has occurred.
Under these agreements, the officer is entitled to severance pay in a lump sum
of 115% times three years' of the officer's (1) highest base salary in
21
the 12 months preceding the termination of his or her employment and (2) bonus
and incentive payments for the preceding calendar year, all discounted to
present value. In addition, the officer generally would receive medical, life,
disability, and health-and-accident benefits at the Company's expense for three
years.
RETIREMENT BENEFITS
The table below shows the estimated annual retirement benefits payable to a
covered participant based on the final average pay formulas of the Company's
Pension Plan and Supplemental Executive Retirement Plan (the "SERP").
PENSION TABLE(1) Annual Retirement Benefits with Years of Service Indicated on
Average December 31, 2004(1)
Annual ---------------------------------------------------------------
Earnings 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
-------- -------- -------- -------- -------- -------- --------
$ 200,000 $34,244 $42,725 $51,205 $59,686 $68,166 $ 76,647
400,000 120,000 160,000 200,000 240,000 240,000 240,000
600,000 180,000 240,000 300,000 360,000 360,000 360,000
800,000 240,000 320,000 400,000 480,000 480,000 480,000
1,000,000 300,000 400,000 500,000 600,000 600,000 600,000
1,200,000 360,000 480,000 600,000 720,000 720,000 720,000
1,400,000 420,000 560,000 700,000 840,000 840,000 840,000
1,600,000 480,000 640,000 800,000 960,000 960,000 960,000
----------------------------------
(1) The table above reflects annual retirement benefits with years of
service indicated on December 31, 2004. The benefits listed in the table are not
subject to deduction of Social Security or other offset amounts. The Social
Security-covered compensation level and the primary insurance amount are based
on reaching age 65 on December 31, 2004.
The Company provides retirement benefits for staff members, including executive
officers. The normal retirement benefit for executive officers is the sum of
benefits provided by the Pension Plan and the SERP. The normal annual retirement
benefit from the Pension Plan is the greater of:
(a) 1.5% of the officer's average annual earnings for the five-year period
ending December 31, 1993, multiplied by years of service as of December 31,
1993; or
(b) (1) 1.5% of the officer's average annual earnings for the five-year period
ending December 31, 1987, less 1.25% of the Social Security Primary
Insurance Amount (the "PIA") as of December 31, 1987, all multiplied by
years of service as of December 31, 1987; plus (2) 1.0% of the officer's
earnings during 1988 up to one-half of the 1988 Social Security taxable wage
base, plus 1.8% of earnings during 1988 in excess of one-half of the Social
Security taxable wage base; plus (3) for each year after 1988, 1.25% of the
officer's earnings in that year up to one-half of the Social Security
taxable wage base for that year (the "SSTWB"), plus 1.6% of earnings during
that year in excess of one-half of the SSTWB.
For purposes of determining amounts to which participants are entitled under the
Pension Plan, for years before 1994, earnings include base salary and amounts
paid under the Profit-Sharing Bonus Plan, but do not include incentive payments.
For years after 1993, earnings also include incentive payments. The normal form
of pension provided under the Pension Plan is a 50% joint and survivor benefit.
For purposes of determining benefit accruals under the Pension Plan, annual
earnings
22
were limited to $205,000 through December 31, 2004.
The normal monthly retirement benefit from the SERP is 60% of the officer's
average monthly earnings for the 60-month period ending with his or her
retirement date, multiplied by a fraction the numerator of which is the
officer's years of credited service at retirement and the denominator of which
is 30. All such amounts are reduced by benefits payable from the Pension Plan.
For purposes of determining amounts to which participants are entitled under the
SERP, average monthly earnings include base salary and amounts paid under the
profit-sharing bonus plan and executive incentive plans. The SERP pays a monthly
pension, beginning at the same time the officer begins to receive his or her
Pension Plan benefit, in the form of a single life annuity or a 50% joint and
survivor annuity. Benefits under the SERP begin to vest after five years'
participation in the plan at the rate of one-fifteenth per year, but accelerate
and vest in full (a) upon reaching 55 with ten years participation or (b) in the
event of a "Change in Control" as that term is defined in the change in control
agreements discussed on pages 21 and 22.
The estimated years of credited service under the Pension Plan and SERP through
December 31, 2004, for each of the Named Executive Officers are: Mr.
Cecala - 25.2 years; Mr. Harra - 31.6 years; Mr. Wood - 5.5 years; Mr. Cohen -
21.6 years; and Mr. Gibson - 21.7 years.
23
STOCK PERFORMANCE GRAPH
The line graph below compares cumulative total stockholder return (1) over the
past five years for the Company's common stock with (a) all companies in the
Standard and Poor's 500 Index and (b) institutions in the Keefe, Bruyette &
Woods 50 Bank Index.(2)
[Stock Performance Graph]
12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
Wilmington Trust Corporation $ 100 $ 133.16 $ 140.18 $ 144.88 $ 170.42 $ 176.43
Keefe, Bruyette & Woods, 50 Bank Index $ 100 $ 120.06 $ 115.12 $ 107.01 $ 143.42 $ 157.84
S&P 500 Index $ 100 $ 90.89 $ 80.14 $ 62.47 $ 80.35 $ 89.07
NOTES TO STOCK PERFORMANCE GRAPH
(1) Cumulative total stockholder return includes appreciation in stock price
and assumes the reinvestment of dividends.
The graph reflects appreciation in stock price assuming an initial
investment of $100 at the close of business on December 31, 1999. The table
below the graph reflects the graph's data points.
(2) The Keefe, Bruyette & Woods 50 Bank Index is a
market-capitalization-weighted bank stock index that includes all money
center banks and most major regional banks, and is meant to be
representative of the stock price performance of large banks throughout the
United States.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's directors
and executive officers and certain others to file reports of their ownership of
our stock with the SEC and the New York Stock Exchange.
After reviewing copies of those forms it has received and written
representations, the Company believes that all required filings were made on a
timely basis.
TRANSACTIONS WITH MANAGEMENT
Certain of the Company's subsidiaries have banking transactions in the ordinary
course of business with directors, officers, and their associates on the same
terms, including interest rates and collateral on loans, as those prevailing at
the time for comparable transactions with others and that do not involve more
than the normal risk or collectibility or present other unfavorable features.
During 2004, the firm of Richards, Layton & Finger, P.A., of which Thomas P.
Sweeney, a
24
director of the Company, is a member, rendered legal services to the Company.
AVAILABILITY OF FORM 10-K
THE COMPANY WILL FILE WITH THE SEC AN ANNUAL REPORT ON FORM 10-K FOR 2004. THE
COMPANY WILL PROVIDE A COPY OF THAT REPORT ON WRITTEN REQUEST WITHOUT CHARGE TO
ANY PERSON WHOSE PROXY IT IS SOLICITING. PLEASE ADDRESS YOUR REQUEST TO ELLEN J.
ROBERTS, VICE PRESIDENT, INVESTOR RELATIONS, WILMINGTON TRUST CORPORATION,
RODNEY SQUARE NORTH, 1100 NORTH MARKET STREET, WILMINGTON, DELAWARE 19890.
PROPOSAL TWO - APPROVAL OF THE
2005 LONG-TERM INCENTIVE PLAN
Your Board of Directors adopted the 2005 Long-Term Incentive Plan on February
24, 2005. Under that plan, we can award both cash-based and stock-based awards.
In addition, non-employee directors will receive payment of the first half, and
may elect to receive payment of the second half, of their annual retainers in
our common stock.
The 2005 Long-Term Incentive Plan's primary purpose is to assist the Corporation
in attracting and retaining highly competent officers, other key staff members,
directors, and advisory board members of the Corporation and its subsidiaries
and affiliates. The plan will act as an incentive in motivating key officers,
staff members, and directors to achieve our long-term business objectives, while
providing the flexibility to tailor individual awards to meet changing business
and tax strategies.
Our shareholders approved our 2002 Long-Term Incentive Plan on April 18, 2002.
Awards in respect of 717,981 shares remain available for grant under the 2002
plan. Your Board recommends that shareholders approve the 2005 Long-Term
Incentive Plan as a successor to that plan. The provisions of the 2005 plan are
similar in many respects to the provisions of the 2002 plan. The 2005 plan is
summarized below. That summary is qualified by reference to the 2005 plan, which
is attached to this proxy statement as Exhibit B.
We are seeking shareholder approval of the 2005 Long-Term Incentive Plan in part
to preserve our ability to deduct compensation paid to executive officers under
the plan. Shareholder approval of the plan is a condition to our ability to
grant awards under the plan.
General Provisions
Duration of the 2005 Long-Term Incentive Plan; Share Authorization
The 2005 Long-Term Incentive Plan will remain effective until the third
anniversary after shareholders approve it, unless the Board of Directors
terminates it earlier. The maximum number of shares with respect to which awards
may be granted under the plan is 4,000,000 shares. We may not (1) grant any
person options or other awards in respect of more than 300,000 shares in any
year during the plan's term, (2) re-price options or other awards under the plan
after they have been granted, nor (3) grant awards other than options in respect
of more than a total of 300,000 shares during the plan's term. The amount of
awards payable to participants under the 2005 Long-Term Incentive Plan cannot be
predicted with accuracy because those awards are contingent on the selection by
the Compensation Committee or the Select Committee (consisting of either or both
of our two employee directors) (the "Select Committee") (the Compensation
Committee and the Select Committee are sometimes referred to as the "Committee")
of participants from time to time and determining the size of awards. The shares
to be issued under the plan will be authorized but unissued shares or issued
shares that we have re-acquired and hold in treasury.
Shares covered by any unexercised portions of terminated options, shares
forfeited by participants, and shares subject to any awards a participant
otherwise surrenders without receiving any payment or other benefit may again be
subject to new awards under the plan. If a participant pays the purchase price
of an option in whole or part by delivering our shares, the number of shares
issuable in connection with the exercise of
25
the option will not again be available for awards under the plan. Shares used to
measure the amount payable to a participant in respect of an earned performance
award will not again be available for awards. Shares issued in payment of
performance awards that are denominated in cash amounts are not again available
for awards.
Long-Term Incentive Plan Participants
The Committee will administer the 2005 Long-Term Incentive Plan and select
persons eligible to receive awards under the plan. In addition, non-employee
directors will receive payment of the first half, and may elect to receive
payment of the second half, of their annual retainers in shares of our stock.
Twelve non-employee directors, the 15 members of the advisory boards of our
banking subsidiaries, and all staff members of the Corporation and its
subsidiaries and affiliates currently are eligible for consideration to
participate in the plan.
Awards Available Under Long-Term Incentive Plan
The Committee may grant awards under the 2005 Long-Term Incentive Plan in the
form of stock options, performance awards, and other stock-based and cash-based
awards. Awards under the plan may be granted alone or in combination with other
awards.
Stock Options
The Committee may grant stock options meeting the requirements of Section 422 of
the Code ("Incentive Stock Options") and stock options that do not meet those
requirements ("Nonstatutory Stock Options"). The Committee will determine the
term of each option, but no option will be exercisable more than ten years after
grant. The Committee also may impose restrictions on exercise. The exercise
price for options must at least equal 100% of the fair market value of our
common stock on the date of grant. The exercise price is payable in cash or, if
the Committee permits in the award agreement, in shares of our stock or other
property, by reducing the number of shares issuable on the option's exercise, or
by cashless exercise with an optionee's broker.
Options and other awards granted under the plan are not transferable except by
will or the laws of descent and distribution or, in certain circumstances,
pursuant to a qualified domestic relations order. If a participant's employment
terminates due to death, disability, or retirement, unexercised options
previously granted under the plan that have vested may be exercised by the
participant or his or her beneficiary, as the case may be, until the earlier of
the option's expiration or three years after the termination of the
participant's employment. In addition, in the case of a participant's
retirement, options that have not previously vested will, at the optionee's
election, vest immediately. If a participant's employment terminates for other
reasons, unexercised options previously granted under the plan generally
terminate on that termination.
Performance Awards
The Committee also may grant performance awards under the plan. These awards are
earned by recipients if specified performance targets the Committee sets are
met. The awards may be paid in cash or shares of our stock. The performance
targets can be based on financial performance criteria, such as net income or
earnings per share, individual performance criteria, or a combination of both.
The amount of the award can be a fixed dollar amount or a payment based on the
increase in the value of our common stock over a specified award period. When
circumstances occur that cause the performance targets to be an inappropriate
measure of achievement, the Committee may adjust the targets. The Committee will
determine the appropriate award period for each performance award.
A participant has no right to receive a performance award on the termination of
his or her employment before the end of a performance award period, except in
the case of death, disability, or retirement. If a participant's employment
terminates due to death, disability, or retirement before the end of a
performance award period, the Committee may award the participant or his or her
beneficiary, as the case may be, a pro rata portion of the performance award.
Other Stock-Based Awards
The Committee may grant any other type of award valued in whole or in part by
reference to the value of our common stock. The Committee
26
will determine the terms and conditions of any such awards.
Retainers for Non-Employee Directors
While the 2005 Long-Term Incentive Plan is in effect, each non-employee director
will receive payment of the first half, and may elect to receive payment of the
second half, of his or her annual retainer in shares of our common stock. Before
the time when the annual retainer is earned, each director will be required to
elect the form of payment of the second half of his or her annual retainer. If
no election is made, the second half of the annual retainer will automatically
be paid in cash.
For the portion of the annual retainer payable in shares of our stock, we will
issue shares having a fair market value equal to the fees payable. We will pay
cash in lieu of any fractional shares.
The awards payable to non-employee directors under the plan in respect of their
annual retainers cannot be determined because those awards are contingent on the
amount of the annual retainer and the election each director makes each year
regarding the second half of his or her annual retainer.
Section 162(m)
If the Compensation Committee desires to structure any award under the plan so
that the compensation payable thereunder will qualify as "performance based"
under Section 162(m), it may establish objective performance goals as the basis
for that award. Those performance goals will be based on any combination the
Compensation Committee selects of income, net income, growth in income or net
income, earnings per share, growth in earnings per share, cash flow measures,
return on equity, return on assets, return on investment, loan loss reserves,
market share, fees, growth in fees, assets, growth in assets, stockholder
return, stock price, achievement of balance sheet or income statement
objectives, expenses, reduction in expenses, chargeoffs, nonperforming assets,
market share, and overhead ratio. Those goals may be company-wide or on a
departmental, divisional, regional, or individual basis. Any goal may be
measured in absolute terms, by reference to internal performance targets, or as
compared to another company or companies, and may be measured by the change in
that performance target compared to a previous period. The goals may be
different each year, and will be established with respect to a particular year
by the latest date permitted by Section 162(m).
Change in Control
Upon a change in control of Wilmington Trust, all options under the 2005
Long-Term Incentive Plan will become exercisable immediately, and all
performance targets for performance awards will be deemed to have been met. A
change in control for purposes of the plan has the same meaning as for the
change in control agreements described on pages 21 and 22 of this proxy
statement.
Termination, Amendment, and ERISA Status
The Board may amend or terminate the 2005 Long-Term Incentive Plan, and the
Committee may amend or alter awards. No action may impair a participant's rights
under any award granted previously without the participant's consent. The Board
may not make any amendment to the plan without shareholder approval if that
amendment would require shareholder approval under the Code or other applicable
law.
The 2005 Long-Term Incentive Plan is not subject to ERISA.
Antidilution Provisions
The number of shares of our stock authorized to be issued under the 2005
Long-Term Incentive Plan and subject to outstanding awards, the purchase or
exercise price, and the number of shares that may be granted to any recipient
may be adjusted to prevent dilution or enlargement of rights in the event of any
stock dividend, reorganization, reclassification, recapitalization, stock split,
combination, merger, consolidation, or other relevant change in our
capitalization.
Certain Federal Income Tax Consequences
The following is a brief summary of the principal federal income tax
consequences of awards under the 2005 Long-Term Incentive Plan. This summary is
not intended to be exhaustive. It does not describe state, local, or foreign tax
consequences.
27
Incentive Stock Options
A participant in the 2005 Long-Term Incentive Plan generally is not subject to
federal income tax either at the time of grant or at the time an Incentive Stock
Option is exercised. However, upon exercise, the difference between the fair
market value of the shares underlying the option and the exercise price is
includable in the participant's alternative minimum taxable income. If a
participant does not dispose of shares acquired upon exercise of an Incentive
Stock Option within one year after receipt of those shares (and within two years
after the date the option is granted), he or she will be taxed only on the sale
of those shares, and that tax will be at the capital gains rate.
We will not receive any tax deduction on exercise of an Incentive Stock Option
or, if the holding requirements are met, on the sale of the shares underlying
that option. If a disqualifying disposition occurs (e.g., one of the holding
requirements mentioned above is not met), the participant will be treated as
receiving compensation subject to ordinary income tax in the year of the
disqualifying disposition. We will be entitled to a deduction equal to the
amount the participant includes in income. The tax generally will be imposed on
the difference between the fair market value of the shares at the time of
exercise and the exercise price or, if less, the gain the participant realized
on the sale. Any appreciation in value after exercise will be taxed as capital
gain and not result in any deduction by us.
Nonstatutory Stock Options
There are no federal income tax consequences to a participant at the time we
grant a Nonstatutory Stock Option. On exercise of the option, the participant
must pay tax at ordinary income rates on an amount equal to the difference
between the exercise price and the fair market value of the underlying shares on
the date of exercise. We will receive a commensurate tax deduction at the time
of exercise. Any appreciation in value after exercise will be taxed as capital
gain and not result in any deduction by us.
Performance and Other Stock-Based Awards
The grant of performance awards is not a taxable event for federal income tax
purposes at grant. A participant will be required to pay ordinary income tax
when the award vests in an amount equal to the amount of cash and the value of
any shares included in the distribution. In some circumstances, a participant
may be able to file a "Section 83(b) election" and accelerate his or her
ordinary income tax liability. We will have a commensurate tax deduction.
Annual Retainers
Non-employee directors will recognize ordinary income equal to the fair market
value of the shares of our stock they receive in payment of their annual
retainers. We will be entitled to a deduction in the same amount.
Vote Required
The affirmative vote of the holders of a majority of the shares of stock issued
and outstanding on the Record Date is required to approve this proposal.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE 2005 LONG-TERM INCENTIVE PLAN.
28
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM SERVICES POLICY
The Audit Committee of the Board of Directors of Wilmington Trust Corporation
and its subsidiaries (collectively, the "Company") reviews regularly all
services provided to the Company by its independent registered public accounting
firm (the "Auditor"). In light of recent public concerns regarding non-audit
services provided to companies by their Auditor and requirements imposed by the
Sarbanes-Oxley Act, the Securities and Exchange Commission, and the New York
Stock Exchange, the Audit Committee of the Company's Board of Directors has
adopted the following policy regarding services provided by the Auditor.
The Audit Committee has agreed that the following services may be procured from
the Auditor without further prior approval of the Audit Committee:
1. Annual consolidated and subsidiary financial statement audits, including
reviews of unaudited quarterly consolidated financial statements and
procedures developed in response to new or pending pronouncements by
governing authorities, such as the Public Company Accounting Oversight
Board, the Financial Accounting Standards Board, the American Institute of
Certified Public Accountants, the Securities and Exchange Commission, or the
New York Stock Exchange;
2. Statement of Auditing Standards No. 70 Report of the Company's Corporate
Retirement and Custody Services Division;
3. Annual financial statements audits of the Company's defined benefit, defined
contribution and other employee benefit plans, and common and short-term
trust funds;
4. Review of audits of the Company's affiliates;
5. Tax compliance assistance in preparing the Company's federal and state
income tax returns;
6. Tax planning research;
7. Reports on the effectiveness of internal controls required by FDICIA and/or
the Sarbanes-Oxley Act; and
8. Consents and comfort letters required for the Company's filings under the
1933 Securities Act and the 1934 Securities and Exchange Act.
All such services provided by the Auditor shall be reported to the Audit
Committee at its next meeting. It is the intent of the Audit Committee to adhere
to these listed services being provided by the Auditor. However, the Audit
Committee is willing to consider a recommendation by the Company's management as
to a specific service if management believes that the provision of such services
would not compromise the Auditor's independence.
Any engagement of the Auditor for the performance of "consulting services" other
than the services listed above shall be reviewed by the Audit Committee prior to
engagement. Situations requiring urgency may be authorized by the Committee
Chair. In no circumstance will the Auditor be engaged to provide services
prohibited by the Sarbanes-Oxley Act or its implementing regulations, including
financial information systems design and implementation, or to prepare personal
tax returns of any of the Company's executive officers.
EXHIBIT A
WILMINGTON TRUST CORPORATION
2005 LONG-TERM INCENTIVE PLAN
1. Purpose. The 2005 Long-Term Incentive Plan (the "Plan") of Wilmington Trust
Corporation ("Wilmington Trust") is designed to encourage and facilitate
ownership of stock by, and provide additional incentive compensation based
on appreciation of that stock to, key staff members and directors and
advisory board members of Wilmington Trust and other entities to whom Awards
are granted by the Corporation's Compensation Committee, consisting solely
of non-employee directors; the Corporation's Select Committee, consisting of
either or both of its two staff member directors; or any other committee of
the Corporation's Board of Directors that the Board may appoint from time to
time to administer the Plan (all such committees are hereinafter sometimes
collectively referred to as the "Committee"). Wilmington Trust hopes thereby
to provide a potential proprietary interest as additional incentive for the
efforts of those individuals in promoting Wilmington Trust's continued
growth and the success of its business. The Plan also will aid Wilmington
Trust in attracting and retaining professional and managerial personnel.
2. Administration. The Plan shall be administered by the Committee. The
Compensation Committee shall have sole authority to grant Awards to a
Participant who is, at the Date of Grant of the Award, either a "covered
employee" as defined in Section 162(m) or subject to Section 16 of the
Exchange Act. The Compensation Committee also shall have authority to grant
Awards to other Participants. The Select Committee shall have authority to
grant Awards to Participants who are not, at the Date of Grant of the Award,
either "covered employees" as defined in Section 162(m) or subject to
Section 16 of the Exchange Act.
The Committee shall have the power and authority to administer the Plan in
accordance with this Section 2. Wilmington Trust's Board may appoint members
of the Committee from time to time in substitution for those members who
previously were appointed and may fill vacancies in the Committee, however
caused. The Committee shall have exclusive and final authority in each
determination, interpretation, or other action affecting the Plan and the
Participants. The Committee shall have the sole and absolute discretion to
interpret the Plan, establish and modify administrative rules for the Plan,
select persons to whom Awards may be granted, determine the terms and
provisions of Award Agreements (which need not be identical), determine all
claims for benefits hereunder, impose conditions and restrictions on Awards
it determines to be appropriate, and take steps in connection with the Plan
and Awards it deems necessary or advisable. In the event of a conflict
between determinations made by the Compensation Committee and the Select
Committee, the determination of the Compensation Committee shall control.
A majority of the Compensation Committee's members shall constitute a quorum
thereof, and action by a majority of a quorum shall constitute action by the
Compensation Committee. Compensation Committee members may participate in
meetings by conference telephone or other similar communications equipment
by means of which all members participating in the meeting can hear each
other. Any decision or determination reduced to writing and signed by all of
the Compensation Committee's members shall be as effective as if that action
had been taken by a vote at a meeting of the Committee duly called and held.
3. The Shares. The Committee shall not authorize issuance of more than a total
of 4,000,000 shares hereunder, except as otherwise provided in Section 9(i)
below. These may either be authorized and unissued shares or previously
issued shares Wilmington Trust has reacquired. The shares covered by any
unexercised portions of terminated Options granted under Section 5 and
shares subject to any Awards the Participant
EXHIBIT B
otherwise surrenders without receiving any payment or other benefit may
again be subject to new Awards hereunder. If a Participant pays the purchase
price of an Option or tax liability associated with that exercise in whole
or part by delivering Wilmington Trust Stock, the number of shares issuable
in connection with the Option's exercise shall not again be available for
the grant of Awards. Shares used to measure the amount payable to a
Participant in respect of Performance Awards or Other Awards shall not again
be available for the grant of Awards. Shares issued in payment of
Performance Awards denominated in cash amounts shall not again be available
for the grant of Awards.
4. Participation. The Committee shall designate Participants from time to time
in its sole and absolute discretion. Those Participants may include
officers, other key staff members, and directors and advisory board members
of, and consultants to, Wilmington Trust or its subsidiaries or affiliates.
In making those designations, the Committee may take into account the nature
of the services the officers, key staff members, directors, advisory board
members, and consultants render, their present and potential contributions
to Wilmington Trust, and other factors the Committee deems relevant in its
sole and absolute discretion.
If the Committee designates a Participant to receive an Award in any year,
it need not designate that person to receive an Award in any other year. In
addition, if the Committee designates a Participant to receive an Award
under one portion hereof, it need not include that Participant under any
other portion hereof. The Committee may grant more than one type of Award to
a Participant at one time or at different times.
5. Options.
a. Grant of Options. The Committee shall designate the form of Options and
additional terms and conditions not inconsistent with the Plan. The
Committee may grant Options either alone or in addition to other Awards. The
terms and conditions of Option Awards need not be the same with respect to
each Participant. The Committee may grant to Participants one or more
incentive stock options ("Incentive Stock Options") that meet the
requirements of Section 422 of the Code, stock options that do not meet
those requirements ("Nonstatutory Stock Options"), or both. To the extent
any Option does not qualify as an Incentive Stock Option, whether because of
its provisions, the time or manner of its exercise, or otherwise, that
Option or the portion thereof that does not so qualify shall constitute a
separate Nonstatutory Stock Option.
b. Incentive Stock Options. Each provision hereof and in any Award Agreement
the Committee designates as an Incentive Stock Option shall be interpreted
to entitle the holder to the tax treatment afforded by Section 422 of the
Code, except in connection with the exercise of Options: (1) following a
Participant's Termination of Employment; (2) in accordance with the
Committee's specific determination with the consent of the affected
Participant; or (3) to the extent Section 9 would cause an Option to no
longer be entitled to that treatment. If any provision herein or the Award
Agreement is held not to comply with requirements necessary to entitle that
Option to that tax treatment, then except as otherwise provided in the
preceding sentence: (x) that provision shall be deemed to have contained
from the outset the language necessary to entitle the Option to that tax
treatment; and (y) all other provisions herein and in that Award Agreement
shall remain in full force and effect. Except as otherwise specified in the
first sentence of this Section 5(b), if any Award Agreement covering an
Option the Committee designates to be an Incentive Stock Option does not
explicitly include any term required to entitle that Option to that tax
treatment, all those terms shall be deemed implicit in the designation of
that Option, and that Option shall be deemed to have been granted subject to
all of those terms.
c. Option Price. The Committee shall determine the per share exercise price
of each Option. That price shall be at least the greater of (1) the par
value per share of Wilmington Trust Stock and (2) 100% of the last sale
price of Wilmington Trust Stock on the Date of Grant.
2
d. Option Term. The Committee shall fix the term of each Option, but no
Option shall be exercisable more than ten years after the date the Committee
grants it.
e. Exercisability. The Committee may at the time of grant determine
performance targets, waiting periods, exercise dates, and other restrictions
on exercise and designate those in the Award Agreement.
f. Method of Exercise. Subject to any waiting periods that may apply under
Section 5(e) above, a Participant may exercise Options in whole or in part
at any time during the period of time, if any, set forth in the Award
Agreement during which that Option or portion thereof is exercisable by
giving Wilmington Trust written notice specifying the number of shares to be
purchased. The Participant must accompany that notice by payment in full of
the purchase price in a form the Committee may accept. If the Committee
determines in its sole discretion at or after grant, a Participant also may
make payment in full or in part in the form of shares of Wilmington Trust
Stock already owned and/or in the form of shares otherwise issuable upon
exercise of the Option. In either case, the value of that stock shall be
based on the Market Value Per Share of Wilmington Trust Stock tendered on
the date the Option is exercised. Notwithstanding the foregoing, the right
to pay the purchase price of an Incentive Stock Option in the form of
already-owned shares or shares otherwise issuable upon exercise of the
Option may be authorized only at the time of grant. No shares shall be
issued until payment therefor has been made as provided herein, except as
otherwise provided herein. In general, a Participant shall have the right to
dividends and other rights of a shareholder with respect to Wilmington Trust
Stock subject to the Option only when certificates for shares of that stock
are issued to the Participant.
g. Acceleration or Extension of Exercise Time. The Committee may, in its
sole and absolute discretion, on or after the Date of Grant, permit shares
subject to any Option to become exercisable or be purchased before that
Option would otherwise become exercisable under the Award Agreement. In
addition, the Committee may, in its sole and absolute discretion, on or
after the Date of Grant, permit any Option granted hereunder to be exercised
after its expiration date, subject to the limitation in Section 5(d) above.
h. Termination of Employment. Unless the Committee provides otherwise in an
Award Agreement or after granting an Option, if the employment of a
Participant who has received an Option terminates on other than: (1) the
Participant's Normal Retirement Date; (2) the Participant's Other Retirement
Date; (3) the Participant's death; or (4) the Participant's Disability, all
Options previously granted to that Participant but not exercised before that
Termination of Employment shall expire as of that date.
i. Death, Disability, or Retirement of a Participant. If a Participant dies
while employed by the employer he or she was employed with when he or she
was last granted Options, an Option theretofore granted to that Participant
shall not be exercisable after the earlier of the expiration of that Option
or three years after the date of that Participant's death, and only (1) by
the person or persons to whom the Participant's rights under that Option
passed under the Participant's will or by the laws of descent and
distribution and (2) if and to the extent the Participant was entitled to
exercise that Option at the date of his or her death.
If a Participant's employment with the employer he or she was employed with
when he or she was last granted Options terminates due to Disability or on
the Participant's Normal Retirement Date or Other Retirement Date, an Option
theretofore granted to that Participant shall not be exercisable after the
earlier of the expiration date of the Option or three years after the date
of the Disability or retirement. If the Participant has died before then, an
Option theretofore granted to that Participant shall be exercisable (1) only
by the person or persons to whom the Participant's rights under the Option
passed under the Participant's will or by the laws of descent and
distribution and (2) if and to the extent the Participant was entitled to
exercise that Option on the date of his or her death.
3
6. Performance Awards.
a. Grant of Performance Awards. The Committee also may grant awards payable
in cash or shares or a combination of both at the end of a specified
performance period ("Performance Awards") hereunder. These shall consist of
the right to receive payment measured by (1) a specified number of shares at
the end of an Award Period, (2) the Market Value Per Share of a specified
number of shares at the end of an Award Period, (3) the increase in the
Market Value Per Share of a specified number of shares during an Award
Period, or (4) a fixed cash amount payable at the end of an Award Period,
contingent on the extent to which certain pre-determined performance targets
are met during the Award Period. The Committee shall determine the
Participants, if any, to whom Performance Awards are awarded, the number of
Performance Awards awarded to any Participant, the duration of the Award
Period during which any Performance Award will be vested, and other terms
and conditions of Performance Awards.
b. Performance Targets. The Committee may establish performance targets for
Performance Awards in its sole and absolute discretion. These may include
individual performance standards or specified levels of revenues from
operations, earnings per share, return on shareholders' equity, and/or other
goals related to the performance of Wilmington Trust or any of its
subsidiaries or affiliates. The Committee may, in its sole and absolute
discretion, in circumstances in which events or transactions occur to cause
the established performance targets to be an inappropriate measure of
achievement, change the performance targets for any Award Period before the
final determination of a Performance Award.
c. Earned Performance Awards. In granting a Performance Award, the Committee
may prescribe a formula to determine the percentage of the Performance Award
to be earned based upon the degree performance targets are attained. The
degree of attainment of performance targets shall be determined as of the
last day of the Award Period.
d. Payment of Earned Performance Awards. Wilmington Trust shall pay earned
Performance Awards granted under Section 6(a)(2) or 6(a)(3) above in cash or
shares based on the Market Value Per Share of Wilmington Trust Stock on the
last day of an Award Period, or a combination of cash and shares, at the
Committee's sole and absolute discretion. Wilmington Trust shall normally
make payment as soon as practicable after an Award Period. However, the
Committee may permit deferral of payment of all or a portion of a
Performance Award payable in cash upon a Participant's request made on a
timely basis in accordance with rules the Committee prescribes. Those
deferred amounts may earn interest for the Participant under the conditions
of a separate agreement the Committee approves and the Participant executes.
In its sole and absolute discretion, the Committee may define in the Award
Agreement other conditions on paying earned Performance Awards it deems
desirable to carry out the purposes hereof.
e. Termination of Employment. Unless the Committee provides otherwise in the
Award Agreement or as otherwise provided below, in the case of a
Participant's Termination of Employment before the end of an Award Period,
the Participant will not be entitled to any Performance Award.
f. Disability, Death, or Retirement. Unless the Committee provides otherwise
in the Award Agreement or after the grant of a Performance Award, if a
Participant's Disability Date or the date of a Participant's Termination of
Employment due to death or retirement on or after his or her Normal
Retirement Date or Other Retirement Date occurs before the end of an Award
Period, the Participant or the Participant's share of his or her Award in
accordance with Section 6(g) below.
g. Pro-Rata Payment. The amount of any payment Wilmington Trust makes to a
Participant or that Participant's Beneficiary under circumstances described
in Section 6(f) above shall be determined by multiplying the amount of the
Performance Award that would have been earned, determined at the end of the
Performance Award Period, if that
4
Participant's employment had not been terminated, by a fraction, the
numerator of which is the number of whole months the Participant was
employed during the Award Period and the denominator of which is the total
number of months in the Award Period. That payment shall be made as soon as
practicable after the end of that Award Period, and shall relate to
attainment of the applicable performance targets over the entire Award
Period.
h. Other Events. Notwithstanding anything to the contrary contained in this
Section 6, the Committee may, in its sole and absolute discretion, determine
to pay all or any portion of a Performance Award to a Participant who has
terminated employment before the end of an Award Period under certain
circumstances, including a material change in circumstances arising after
the date the Performance Award is granted, and subject to terms and
conditions the Committee deems appropriate.
7. Other Stock-Based Awards.
a. Grant of Other Awards. The Committee may grant other Awards under this
Section 7 ("Other Awards"), valued in whole or in part by reference to, or
otherwise based on, shares of Wilmington Trust Stock. Subject to the
provisions hereof, the Committee shall have the sole and absolute discretion
to determine the persons to whom and the time or times at which those Awards
are made, the number of shares to be granted pursuant thereto, if any, and
all other conditions of those Awards. Any Other Award shall be confirmed by
an Award Agreement. The Award Agreement shall contain provisions the
Committee determines necessary or appropriate to carry out the intent hereof
with respect to the Award.
b. Terms of Other Awards. In addition to the terms and conditions specified
in the Award Agreement, Other Awards made under this Section 7 shall be
subject to the following:
(1) Any shares subject to Other Awards may not be sold, assigned,
transferred, pledged, or otherwise encumbered before the date on which
those shares are issued or, if later, the date on which any applicable
restriction, performance, or deferral period lapses;
(2) If specified in the Award Agreement, the recipient of an Other Award
shall be entitled to receive, currently or on a deferred basis,
dividends or dividend equivalents with respect to the shares covered by
that Award, and the Committee may, in its sole and absolute discretion,
provide in the Award Agreement that those amounts be reinvested in
additional shares;
(3) The Award Agreement shall contain provisions dealing with the
disposition of the Award in the event of the Participant's Termination
of Employment before the exercise, realization, or payment of the Award.
The Committee may, in its sole and absolute discretion, waive any of the
restrictions imposed with respect to any Other Award; and
(4) Shares issued as a bonus pursuant to this Section 7 shall be issued for
the consideration the Committee determines is appropriate, in its sole
and absolute discretion, but rights to purchase shares shall be priced
at at least 100% of the Market Value Per Share on the date the Other
Award is granted.
8. Annual Retainer.
a. Payment of Annual Retainer. During the term hereof, each non-employee
director of each company the Compensation Committee designates to
participate in this Section 8 shall be paid the first half of his or her
Annual Retainer in Wilmington Trust Stock. Each director also may elect to
receive the second half of his or her Annual Retainer in cash or Wilmington
Trust Stock, or a combination of both. The Compensation Committee shall
establish rules with respect to electing the form of payment provided for in
the preceding sentence to facilitate compliance with Rule 16b-3. The number
of shares to be issued to a non-employee director who receives shares
pursuant to this Section 8(a) shall be the dollar amount of the portion of
the Annual Retainer payable in shares divided by the Market Value Per Share
of a share of Wilmington Trust Stock on the business day immediately
preceding the date that installment of the Annual Retainer is otherwise paid
to that company's directors.
5
Wilmington Trust shall not be required to issue fractional shares. Whenever
under this Section 8 a fractional share would otherwise be required to be
issued, Wilmington Trust shall pay an amount in lieu thereof in cash based
upon the Market Value Per Share of that fractional share.
b. Deferral of Payment of Annual Retainer.
(1) Subject to timing rules as the Committee may establish, a director may
irrevocably elect to defer receipt of all or any number of the shares of
stock representing the Annual Retainer and receive a credit under his or
her Stock Unit Account of an equivalent number of Stock Units. Any such
deferral election must be made in a time period the Committee may
designate from time to time.
(2) A director's Stock Unit Account shall be credited with a number of Stock
Units equal in value to the amount of any cash dividends or stock
distributions that would be payable with respect to those Stock Units if
those Stock Units had been outstanding shares of Wilmington Trust Stock
("dividend equivalents"). The number of Stock Units credited with
respect to cash dividends shall be determined by dividing the amount of
cash dividends that would be payable by the Fair Market Value of
Wilmington Trust Stock as of the date those cash dividends would be
payable.
(3) The Stock Units in a director's Stock Unit Account shall be distributed,
or commence to be distributed, to the Participant only in the form of
Wilmington Trust Stock (with fractional shares being payable in cash)
upon that director's termination of service as a director in a lump sum
payment or in periodic payments over time in accordance with procedures
the Committee may establish. A director shall be entitled to receive a
distribution of one share of Wilmington Trust Stock for each Stock Unit
credited to his or her Stock Unit Account and cash equal to the Fair
Market Value of any fractional Stock Unit credited to his or her Stock
Unit Account.
9. Terms Applicable to All Awards Granted under the Plan.
a. Effect of Change in Control. Upon a Change in Control:
(1) Any and all Options shall become exercisable immediately; and
(2) The target values attainable under all Performance Awards and Other
Awards shall be deemed to have been fully earned for the entire Award
Period as of the effective date of the Change in Control.
b. Limitations.
(1) No person may be granted Awards in respect of more than 300,000 shares
in any calendar year during the term hereof;
(2) No Options or other Awards can be re-priced after they have been
granted; and
(3) No Awards other than Options can be made hereunder in respect of more
than a total of 300,000 shares of Wilmington Trust Stock during the
Plan's term.
c. Plan Provisions Control Award Terms. The terms of the Plan govern all
Awards granted hereunder. The Committee shall not have the power to grant a
Participant any Award that is contrary to any provision hereof. If any
provision of an Award conflicts with the Plan as it is constituted on the
date the Award is granted, the terms of the Plan shall control. Except as
provided in Sections 6(b) and 9(i) of the Plan, or unless the Committee
provides otherwise in its sole and absolute discretion in the Award
Agreement, the terms of any Award granted hereunder may not be changed after
the date it is granted to materially decrease the value of the Award without
the express written approval of the holder thereof. No person shall have any
rights with respect to any Award until Wilmington Trust and the Participant
have executed and delivered an Award Agreement or the Participant has
received a written acknowledgement from Wilmington Trust that constitutes an
Award Agreement.
d. Limitations on Transfer. A Participant may not transfer or assign his or
her rights or interests with respect to Awards except by
6
will, the laws of descent and distribution, or, in certain circumstances,
pursuant to a qualified domestic relations order, as defined by the Code,
Title I of ERISA, or the rules thereunder. Except as otherwise specifically
provided herein, a Participant's Beneficiary may exercise the Participant's
rights only to the extent they were exercisable hereunder at the date of the
Participant's death and are otherwise currently exercisable.
e. Taxes. If the Committee deems it necessary or desirable, Wilmington Trust
shall be entitled to withhold (or secure payment from a Participant in lieu
of withholding) the amount of any withholding or other tax required by law
to be withheld or that Wilmington Trust pays (1) with respect to any amount
payable and/or shares issuable under that Participant's Award, (2) with
respect to any income recognized upon the lapse of restrictions applicable
to an Award, or (3) upon a disqualifying disposition of shares received upon
the exercise of any Incentive Stock Option. Wilmington Trust may defer
payment or issuance of the cash or shares upon the grant, exercise, or
vesting of an Award unless indemnified to its satisfaction against any
liability for that tax. The Committee or its delegate shall determine the
amount of that withholding or tax payment. The Participant shall make that
payment at the time the Committee determines. In each Award Agreement, the
Committee shall prescribe one or more methods by which the Participant may
satisfy his or her tax withholding obligation. This may include the
Participant's paying Wilmington Trust cash or shares of Wilmington Trust
Stock or Wilmington Trust's withholding from the Award, at the appropriate
time, a number of shares sufficient to satisfy those tax withholding
requirements, based on the Market Value Per Share of those shares. In its
sole and absolute discretion, the Committee may establish rules and
procedures relating to any withholding methods it deems necessary or
appropriate. These may include rules and procedures relating to elections by
Participants who are subject to Section 16 of the Exchange Act to have
shares withheld from an Award to meet those withholding obligations.
f. Awards Not Includable for Benefit Purposes. Income a Participant
recognizes pursuant to the provisions hereof shall not be included in
determining benefits under any employee pension benefit plan, as that term
is defined in Section 3(2) of ERISA, group insurance, or other benefit plan
applicable to the Participant that the Participant's employer maintains,
except if those plans or the Committee provide otherwise.
g. Compliance with Rule 16b-3 and Section 162(m).
(1) If the Compensation Committee desires to structure any Award so that the
compensation payable thereunder will qualify as "performance based"
under Section 162(m), the Compensation Committee may establish objective
performance goals as the basis for that Award. Those performance goals
will be based on any combination the Compensation Committee selects of
income, net income, growth in income or net income, earnings per share,
growth in earnings per share, cash flow measures, return on equity,
return on assets, return on investment, loan loss reserves, market
share, fees, growth in fees, assets, growth in assets, stockholder
return, stock price, achievement of balance sheet or income statement
objectives, expenses, reduction in expenses, chargeoffs, nonperforming
assets, market share, and overhead ratio. Those goals may be
company-wide or on a departmental, divisional, regional, or individual
basis. Any goal may be measured in absolute terms, by reference to
internal performance targets, or as compared to another company or
companies, and may be measured by the change in that performance target
compared to a previous period. The goals may be different each year, and
will be established with respect to a particular year by the latest date
permitted by Section 162(m). No payment under such an Award will be made
under the plan to a Section 162(m) Participant unless the
pre-established performance goals are met or exceeded.
7
(2) It is intended that the Plan be applied and administered in compliance
with Rule 16b-3 and Section 162(m). If any provision of the Plan would
be in violation of Section 162(m) if applied as written, that provision
shall not have effect as written and shall be given effect so as to
comply with Section 162(m) as the Compensation Committee determines in
its sole and absolute discretion. Wilmington Trust's Board of Directors
is authorized to amend the Plan, and the Compensation Committee is
authorized to make any such modifications to Award Agreements, to comply
with Rule 16b-3 and Section 162(m), as they may be amended from time to
time, and to make any other amendments or modifications deemed necessary
or appropriate to better accomplish the purposes of the Plan in light of
any amendments to Rule 16b-3 or Section 162(m). Notwithstanding the
foregoing, Wilmington Trust's Board of Directors may amend the Plan so
that it (or certain of its provisions) no longer comply with either or
both of Rule 16b-3 or Section 162(m) if the Board concludes that
compliance is no longer desired. The Compensation Committee may grant
Awards that do not comply with Rule 16b-3 and/or Section 162(m) if it
determines, in its sole and absolute discretion, that it is in
Wilmington Trust's interest to do so.
h. Amendment and Termination.
(1) Wilmington Trust's Board of Directors shall have complete power and
authority to amend the Plan at any time it deems it necessary or
appropriate. However, those directors shall not, without the affirmative
approval of Wilmington Trust's shareholders, make any amendment that
requires shareholder approval under Rule 16b-3, the Code, or any other
applicable law or rule of any exchange on which Wilmington Trust's
shares are listed unless the directors determine that compliance with
Rule 16b-3, the Code, or those laws or rules is no longer desired. No
termination or amendment hereof may, without the consent of the
Participant to whom any Award has been granted, adversely affect the
right of that individual under that Award. However, the Committee may
make provision in the Award Agreement for amendments it deems
appropriate in its sole and absolute discretion.
(2) Wilmington Trust's Board of Directors may terminate the Plan at any
time. No Award shall be granted hereunder after that termination.
However, that termination shall not have any other effect. Any Award
outstanding at the termination hereof may be exercised or amended after
that termination at any time before the expiration of that Award to the
same extent that that Award would have been exercisable or could have
been amended if the Plan had not terminated.
i. Changes in Wilmington Trust's Capital Structure. The existence of
outstanding Awards shall not affect the right of Wilmington Trust or its
shareholders to make or authorize any and all adjustments,
recapitalizations, reclassifications, reorganizations, and other changes in
Wilmington Trust's capital structure, Wilmington Trust's business, any
merger or consolidation of Wilmington Trust, any issue of bonds, debentures,
or preferred stock, Wilmington Trust's liquidation or dissolution, any sale
or transfer of all or any part of Wilmington Trust's assets or business, or
any other corporate act or proceeding, whether of a similar nature or
otherwise.
The number and kind of shares subject to outstanding Awards, the purchase or
exercise price of those Awards, the number and kind of shares available for
Awards subsequently granted, and the limitation in Section 9(b) hereof shall
be adjusted appropriately to reflect any stock dividend, stock split,
combination or exchange of shares, merger, consolidation, or other change in
capitalization with a similar substantive effect on the Plan or Awards
granted hereunder. The Committee shall have the power and sole and absolute
discretion to determine the nature and amount of the adjustment to be made
in each case. However, in no event shall any adjustment be made under the
provisions of this Section 9(i) to any outstanding Award if an adjustment
8
has been made or will be made to the shares of Wilmington Trust Stock
awarded to a Participant in that person's capacity as a shareholder.
If Wilmington Trust is merged or consolidated with another entity and
Wilmington Trust is not the surviving entity, or if Wilmington Trust is
liquidated or sells or otherwise disposes of all or substantially all of its
assets to another entity while unexercised Awards remain outstanding, then
(1) subject to the provisions of Section 9(i)(2) below, after the effective
date of that merger, consolidation, liquidation, or sale, each holder of an
outstanding Award shall be entitled to receive, upon exercise of that Award
in lieu of shares, other stock or securities as the holders of shares of
Wilmington Trust Stock received in the merger, consolidation, liquidation,
or sale; and (2) the Committee may cancel all outstanding Awards as of the
effective date of that merger, consolidation, liquidation, or sale, provided
that (x) notice of that cancellation has been given to each holder of an
Award and (y) in addition to any rights he or she may have under Section
9(a) above, each holder of an Award shall have the right to exercise that
Award in full, without regard to any limitations set forth in or imposed
pursuant to Section 5, 6, or 7 above, during a 30-day period preceding the
effective date of the merger, consolidation, liquidation, or sale. The
exercise and/or vesting of any Award that was permissible solely because of
this Section 9(i)(2)(y) shall be conditioned on consummation of the merger,
consolidation, liquidation, or sale. Any Awards not exercised as of the date
of the merger, consolidation, liquidation, or sale shall terminate as of
that date.
If Wilmington Trust is consolidated or merged with another entity under
circumstances in which Wilmington Trust is the surviving entity, and its
outstanding shares are converted into shares of a third entity, a condition
to the merger or consolidation shall be that the third entity succeed to
Wilmington Trust's rights and obligations hereunder, and that the Plan be
administered by a committee of the Board of that entity.
Comparable rights shall accrue to each Participant in the event of
successive reorganizations, mergers, consolidations, or other transactions
similar to those described above.
Except as expressly provided herein, Wilmington Trust's issuance of shares
or any other securities for cash, property, labor, or services, either upon
direct sale, the exercise of rights or warrants to subscribe therefor, or
conversion of shares or obligations of Wilmington Trust convertible into
shares or other securities shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number, class, or price of shares
then subject to Awards outstanding.
After any reorganization, merger, or consolidation in which Wilmington Trust
or one of its subsidiaries or affiliates is a surviving entity, the
Committee may grant substituted Awards replacing old options or other awards
granted under a plan of another party to the reorganization, merger, or
consolidation whose stock subject to the old options or awards may no longer
be issued following that reorganization, merger, or consolidation. The
Committee shall determine the foregoing adjustments and the manner in which
the foregoing provisions are applied in its sole and absolute discretion.
Any of those adjustments may provide for eliminating any fractional shares
of Wilmington Trust Stock that might otherwise become subject to any Options
or other Awards.
j. Period of Approval and Term of Plan. The Plan shall be submitted to
Wilmington Trust's shareholders at their annual meeting scheduled to be held
on April 21, 2005 or any adjournment or postponement thereof. The Plan shall
be adopted and become effective only when approved by Wilmington Trust's
shareholders. Awards may be granted hereunder at any time up to and
including April 30, 2008, at which time the Plan will terminate, except with
respect to Awards then outstanding. Those shall remain in effect until their
exercise, expiration, or termination in accordance herewith.
k. Compliance with Law and Approval of Regulatory Bodies. No Award shall be
exercisable, and no shares shall be delivered
9
hereunder, except in compliance with all applicable federal and state laws
and regulations, the rules of the New York Stock Exchange, and all other
stock exchanges on which Wilmington Trust Stock is listed. Any certificate
evidencing shares issued hereunder may bear legends the Committee deems
advisable to ensure compliance with federal and state laws and regulations.
No Award shall be exercisable, and no shares shall be delivered hereunder,
until Wilmington Trust has obtained consent or approval from federal and
state regulatory bodies that have jurisdiction over matters as the Committee
deems advisable.
If a Participant's Beneficiary exercises an Award, the Committee may require
reasonable evidence regarding the ownership of the Award and consents,
rulings, or determinations from taxing authorities the Committee deems
advisable.
l. No Right of Employment. Neither the adoption of the Plan nor its
operation, nor any document describing or referring to the Plan or any part
hereof, shall confer upon any Participant any right to continue in the
employ of the Participant's employer, nor in any other way affect the
employer's right or power to terminate the Participant's employment at any
time, to the same extent as might have been done if the Plan had not been
adopted.
m. Use of Proceeds. Funds Wilmington Trust receives on the exercise of
Awards shall be used for its general corporate purposes.
n. Severability. Whenever possible, each provision hereof and of every Award
granted hereunder shall be interpreted in a manner as to be effective and
valid under applicable law. If any provision hereof or of any Award granted
hereunder is held to be prohibited by or invalid under applicable law, then
(1) that provision shall be deemed amended to accomplish the provision's
objectives as originally written to the fullest extent permitted by law and
(2) all other provisions hereof and of every other Award granted hereunder
shall remain in full force and effect.
o. Construction of the Plan. The place of administration of the Plan shall
be in Delaware, and the validity, construction, interpretation,
administration, and effect hereof, its rules and regulations, and rights
relating hereto shall be determined solely in accordance with Delaware law,
other than the conflict of law provisions of those laws, and except as that
law is superseded by federal law.
p. Interpretation of the Plan. Headings are given to the sections hereof
solely as a convenience for reference. Those headings and the numbering and
paragraphing hereof shall not be deemed in any way material or relevant to
the construction of any provision hereof. The use of a singular shall also
include within its meaning the plural, and vice versa, where appropriate.
q. No Strict Construction. No rule of strict construction shall be implied
against Wilmington Trust, the Committee, or any other person interpreting
any term of the Plan, any Award granted under the Plan, or any rule or
procedure the Committee establishes.
r. Costs and Expenses. Wilmington Trust shall bear all costs and expenses
incurred in administering the Plan.
s. Unfunded Plan. The Plan shall be unfunded. Wilmington Trust shall not be
required to establish any special or separate fund or otherwise segregate
assets to assure payment of any Award.
t. Surrender of Awards. Any Award granted to a Participant may be
surrendered to Wilmington Trust for cancellation on terms the Committee and
the Participant approve.
10. Definitions. For purposes of the Plan, capitalized terms not otherwise
defined herein have the following meanings:
a. "Annual Retainer" means the payment(s) the Board of Directors of each
company the Compensation Committee designates to participate in Section 8
determines from time to time to be the annual retainer payable each year to
each non-employee director thereof.
b. "Award" means (1) any grant to a Participant of any one or a combination
of Incentive Stock Options, Nonstatutory Stock Options, Performance Awards,
or Other Awards or (2) shares of Wilmington
10
Trust Stock received with respect to an Annual Retainer pursuant to Section
8.
c. "Award Agreement" means a written agreement between Wilmington Trust and
a Participant or a written acknowledgement from Wilmington Trust
specifically setting forth the terms and conditions of an Award granted to a
Participant under the Plan.
d. "Award Period" means, with respect to an Award, the period of time, if
any, set forth in the Award Agreement during which specified performance
goals must be achieved or other conditions set forth in the Award Agreement
must be satisfied.
e. "Beneficiary" means an individual, trust, or estate who or that, by will
or the laws of descent and distribution, succeeds to a Participant's rights
and obligations under the Plan and an Award Agreement upon the Participant's
death.
f. "Cause" means, with respect to a Participant who is a staff member of
Wilmington Trust or one of its subsidiaries or affiliates or who is a
consultant, termination for, as the Committee determines in its sole and
absolute discretion, the Participant's personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses), or a final
cease-and-desist order.
g. "Change in Control" means any of the events described below, directly or
indirectly or in one or more series of transactions. However, the Committee
may, in its sole and absolute discretion, specify in any Award Agreement a
more restrictive definition of Change in Control. In that event, the
definition of Change in Control set forth in that Award Agreement shall
apply to the Award granted thereunder:
(1) Approval by Wilmington Trust Company's ("WTC's") or Wilmington Trust's
shareholders of a consolidation or merger of WTC or Wilmington Trust
with any Third Party, unless WTC or Wilmington Trust is the entity
surviving that merger or consolidation;
(2) Approval by WTC's or Wilmington Trust's shareholders of a transfer of
all or substantially all of the assets of WTC or Wilmington Trust to a
Third Party or of a complete liquidation or dissolution of WTC or
Wilmington Trust;
(3) Any person, entity, or group that is a Third Party, without prior
approval of WTC's or Wilmington Trust's Board of Directors, by itself or
through one or more persons or entities:
(a) Acquires beneficial ownership of 15% or more of any class of WTC's
or Wilmington Trust's Voting Stock;
(b) Acquires irrevocable proxies representing 15% or more of any class
of WTC's or Wilmington Trust's Voting Stock;
(c) Acquires any combination of beneficial ownership of Voting Stock
and irrevocable proxies representing 15% or more of any class of
WTC's or Wilmington Trust's Voting Stock;
(d) Acquires the ability to control in any manner the election of a
majority of WTC's or Wilmington Trust's directors; or
(e) Acquires the ability to directly or indirectly exercise a
controlling influence over the management or policies of WTC or
Wilmington Trust;
(4) Any election occurs of persons to Wilmington Trust's Board of Directors
that causes a majority of that Board of Directors to consist of persons
other than (a) persons who were members of that Board of Directors on
February 29, 1996 (the "Effective Date") and/or (b) persons who were
nominated for election as members of that Board of Directors by
Wilmington Trust's Board of Directors (or a committee thereof) at a time
when the majority of that Board of Directors (or that committee)
consisted of persons who were members of Wilmington Trust's Board of
Directors on the Effective Date. However, any person nominated for
election by Wilmington
11
Trust's Board of Directors (or a committee thereof), a majority of whom
are persons described in clauses (a) and/or (b), or are persons who
were themselves nominated by that Board of Directors (or a committee
thereof), shall be deemed for this purpose to have been nominated by a
Board of Directors composed of persons described in clause (a) above.
A Change in Control shall not include any of the events described above
if they (x) occur in connection with the appointment of a receiver or
conservator for WTC or Wilmington Trust, provision of assistance under
Section 13(c) of the Federal Deposit Insurance Act (the "FDI Act"),
the approval of a supervisory merger, a determination that WTC is in
default as defined in Section 3(x) of the FDI Act, insolvent, or in an
unsafe or unsound condition to transact business, or, with respect
to any Participant, the suspension, removal, and/or temporary or
permanent prohibition by a regulatory agency of that Participant from
participating in WTC's or Wilmington Trust's business or (y) are the
result of a Third Party inadvertently acquiring beneficial ownership or
irrevocable proxies or a combination of both for 15% or more of any
class of WTC's or Wilmington Trust's voting stock, and that Third Party
as promptly as practicable thereafter divests itself of the beneficial
ownership or irrevocable proxies for a sufficient number of shares so
that the Third Party no longer has beneficial ownership or irrevocable
proxies or a combination of both for 15% or more of any class of WTC's
or Wilmington Trust's Voting Stock.
h. "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto. References to a section of the Code shall
include that section and any comparable section or sections of any future
legislation that amends, supplements, or supersedes that section.
i. "Date of Grant" means the date designated by the Plan or the Committee as
the date as of which an Award is granted. The Date of Grant shall not be
earlier than the date on which the Committee approves the granting of the
Award.
j. "Disability" means any physical or mental injury or disease of a
permanent nature that renders a Participant incapable of meeting the
requirements of the employment or other work the Participant performed
immediately before that disability commenced. The Committee shall make the
determination of whether a Participant is disabled and when the Participant
becomes disabled in its sole and absolute discretion.
k. "Disability Date" means the date which is six months after the date on
which a Participant is first absent from active employment or work due to a
Disability.
l. "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
m. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
n. "Market Value Per Share" of a share of Wilmington Trust Stock means, as
of any date, the last sale price of a share of Wilmington Trust Stock on
that date on the principal national securities exchange on which Wilmington
Trust Stock is then traded. If Wilmington Trust Stock is not then traded on
a national securities exchange, "Market Value Per Share" shall mean the last
sale price or, if none, the average of the bid and asked prices of
Wilmington Trust Stock on that date as reported on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ"). However, if
there were no sales reported as of that date, the Market Value Per Share
shall be computed as of the last date preceding that date on which a sale
was reported. If any such exchange or quotation system is closed on any day
on which the Market Value Per Share is to be determined, the Market Value
Per Share shall be determined as of the first date immediately preceding
that date on which that exchange or quotation system was open for trading.
o. "Normal Retirement Date" means the date on which a Participant terminates
active employment with the employer he or she was
12
employed with when he or she was last granted Awards on or after attaining
age 65, but does not include termination for Cause.
p. "Option" means any option to purchase Wilmington Trust stock the
Committee grants to a Participant under Section 5.
q. "Other Retirement Date" means a date, on or after a Participant attains
age 55 but earlier than the Participant's Normal Retirement Date, that the
Committee in its sole and absolute discretion specifically approves and
designates in writing to be the date upon which a Participant retires for
purposes hereof, but does not include termination for Cause.
r. "Participant" means any staff member, director (including, without
limitation, a director who receives some or all of an Annual Retainer in
shares of Wilmington Trust Stock), or advisory board member of or consultant
to Wilmington Trust or any of its subsidiaries or affiliates whom the
Committee selects to receive Options, Performance Awards, or Other Awards.
s. "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under Section 16 of
the Exchange Act and any successor rule.
t. "SEC" means the Securities and Exchange Commission.
u. "Section 162(m)" means Section 162(m) of the Code and its regulations.
v. "Section 162(m) Participant" means a Participant a portion of whose
compensation would be subject to Section 162(m) and that Wilmington Trust
desires to deduct.
w. "Stock Unit" means a unit of value, equal at any relevant time to the
Fair Market Value of a share of Wilmington Trust Stock, established by the
Committee as a means of measuring the value of a director's Stock Unit
Account.
x. "Stock Unit Account" means the bookkeeping account maintained by the
Committee or its delegate on behalf of each Participant who is credited with
Stock Units and divided equivalents thereon pursuant to Section 8(b).
y. "Subsidiary" means a company more than 50% of the equity interests of
which Wilmington Trust beneficially owns, directly or indirectly.
z. "Termination of Employment" means, with respect to a staff member
Participant, the voluntary or involuntary termination of the Participant's
employment with Wilmington Trust or any of its subsidiaries or affiliates
for any reason (including, without limitation, death, Disability,
retirement, or as the result of the sale or other divestiture of the
Participant's employer or any similar transaction in which the Participant's
employer ceases to be Wilmington Trust or one of its subsidiaries or
affiliates). With respect to a consultant, Termination of Employment means
termination of the Participant's services as a consultant to Wilmington
Trust or one of its subsidiaries or affiliates.
aa. "Third Party" includes a person or entity or a group of persons or
entities acting in concert not wholly-owned by Wilmington Trust or WTC,
directly or indirectly.
bb. "Voting Stock" means the classes of stock of Wilmington Trust or WTC
entitled to vote generally in the election of directors of Wilmington Trust
or WTC, as the case may be.
cc. "Wilmington Trust Stock" means Wilmington Trust's common stock, par
value $1 per share.
13
WILMINGTON TRUST CORPORATION
ANNUAL SHAREHOLDERS' MEETING
(WILMINGTON TRUST LARGE LOGO)
THURSDAY, APRIL 21, 2005
10:00 A.M.
WILMINGTON
TRUST WILMINGTON TRUST PLAZA
MEZZANINE LEVEL
301 WEST ELEVENTH STREET
WILMINGTON, DELAWARE
(WILMINGTON TRUST LOGO) WILMINGTON TRUST CORPORATION
WILMINGTON RODNEY SQUARE NORTH
TRUST 1100 NORTH MARKET STREET
WILMINGTON, DE 19890-0001 PROXY
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON APRIL 21, 2005.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify on the reverse side.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.
By signing the proxy or voting by telephone or the Internet, you revoke all
prior proxies and appoint David R. Gibson and Michael A. DiGregorio, and each of
them, acting in the absence of the other, with full power of substitution, to
vote your shares on the matters shown on the reverse side and any other matters
which may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
COMPANY #
To Our Shareholders,
You are cordially invited to attend our Annual Shareholders' Meeting, to be held
at the Wilmington Trust Plaza, Mezzanine Level, 301 West Eleventh Street,
Wilmington, Delaware, at 10:00 A.M. on Thursday, April 21, 2005.
At the Annual Meeting, we will review our performance and answer any questions
you may have. The enclosed proxy statement provides you with more details about
items that will be addressed at the Annual Meeting. After reviewing the proxy
statement, please sign, date, and indicate your vote for the items listed on the
proxy card below and return it in the enclosed, postage-paid envelope whether or
not you plan to attend the Annual Meeting.
Thank you for your prompt response.
Sincerely,
Ted T. Cecala
Chairman and Chief Executive Officer
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED, AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-560-1965
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 12:00 p.m. (CT) on April 20, 2005.
o Please have your proxy card and the last four digits of your Social
Security Number or Tax Identification Number available. Follow the simple
instructions the voice provides you.
VOTE BY INTERNET -- HTTP://WWW.EPROXY.COM/WL/
o Use the Internet to vote your proxy 24 hours a day, 7 days a week, until
12:00 p.m. (CT) on April 20, 2005.
o Please have your proxy card and the last four digits of your Social
Security Number or Tax Identification Number available. Follow the simple
instructions to obtain your records and create an electronic ballot.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Wilmington Trust Corporation, c/o Shareowner
Services(TM), P.O. Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY TELEPHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
Wilmington Trust Corporation Rodney Square North 1100 North Market Street
Wilmington, DE 19890-0001
V Please detach here V
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. Election of directors: 01 Carolyn S. Burger 03 Rex L. Mears
02 Robert V. A. Harra Jr. 04 Robert W. Tunnell Jr.
[ ] Vote FOR [ ] Vote WITHHELD
all nominees, except from all nominees
as indicated below
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDICATED NOMINEE, WRITE THE NUMBER(S) OF THE NOMINEE(S)
IN THE BOX PROVIDED TO THE RIGHT.) ____________________
2. Approval of 2005 [ ] For [ ] Against [ ] Abstain
Long-Term Incentive Plan.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ] Indicate changes below: Date _______________
________________________________________________________________
Signature(s) in Box
Please sign exactly as your name(s) appears on your proxy
card. If held in joint tenancy, all persons must sign. Trustees,
administrators, etc., should include title and authority.
Corporations should provide full name of corporation and title
of authorized officer signing the proxy.