SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-12
PARK NATIONAL CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PARK NATIONAL CORPORATION
50 North Third Street
Post Office Box 3500
Newark, Ohio 43058-3500
(740) 349-8451
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 19, 2004
To the Shareholders of
Park National Corporation: March 12, 2004
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Park National Corporation ("Park") will be held at the
offices of The Park National Bank, 50 North Third Street, Newark, Ohio, on April
19, 2004, at 2:00 p.m., local time in Newark, Ohio, for the following purposes:
1. To elect four directors to serve for terms of three years
each.
2. To consider and vote upon a proposal to approve the Park
National Corporation Stock Plan for Non-Employee Directors of
Park National Corporation and Subsidiaries.
3. To transact any other business which properly comes before the
Annual Meeting and any adjournment thereof.
Only shareholders of record at the close of business on February 23,
2004, will be entitled to receive notice of and to vote at the Annual Meeting
and any adjournment.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. THE VOTE OF
EACH SHAREHOLDER IS IMPORTANT, WHATEVER THE NUMBER OF COMMON SHARES HELD.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID,
RETURN-ADDRESSED ENVELOPE. SHOULD YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE
YOUR PROXY AND VOTE IN PERSON IF YOU ARE A REGISTERED SHAREHOLDER. ATTENDANCE AT
THE ANNUAL MEETING WILL NOT, IN AND OF ITSELF, CONSTITUTE REVOCATION OF YOUR
PROXY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
NOMINEES LISTED IN ITEM NO. 1 OF THE PROXY CARD AS DIRECTORS OF PARK AND FOR THE
PROPOSAL TO APPROVE THE PARK NATIONAL CORPORATION STOCK PLAN FOR NON-EMPLOYEE
DIRECTORS OF PARK NATIONAL CORPORATION AND SUBSIDIARIES.
By Order of the Board of Directors,
/s/ David L. Trautman
David L. Trautman, Secretary
PARK NATIONAL CORPORATION
50 NORTH THIRD STREET
POST OFFICE BOX 3500
NEWARK, OHIO 43058-3500
(740) 349-8451
PROXY STATEMENT
This proxy statement and the accompanying proxy card are being sent or
given to shareholders of Park National Corporation ("Park") on or about March
12, 2004, in connection with the solicitation of proxies by the Board of
Directors of Park for use at the Annual Meeting of Shareholders (the "Annual
Meeting") called to be held on Monday, April 19, 2004, or any adjournment
thereof. The Annual Meeting will be held at 2:00 p.m., local time in Newark,
Ohio, at the offices of The Park National Bank, 50 North Third Street, Newark,
Ohio.
A proxy card for use at the Annual Meeting accompanies this proxy
statement. You may ensure your representation by completing, signing, dating and
promptly returning the enclosed proxy card in the envelope provided. Without
affecting any vote previously taken, you may revoke your proxy at any time
before it is actually voted at the Annual Meeting by giving written notice of
revocation to the Secretary of Park, at the address shown on the cover page of
this proxy statement; by executing and returning a later-dated proxy card which
is received by Park prior to the Annual Meeting; or, if you are the registered
shareholder, by attending the Annual Meeting and giving notice of revocation in
person. ATTENDANCE AT THE ANNUAL MEETING WILL NOT, IN AND OF ITSELF, CONSTITUTE
REVOCATION OF A PROXY.
Shareholders holding common shares in "street name" with a broker,
financial institution or other holder of record may be eligible to appoint their
proxy electronically via the Internet or telephonically. Such shareholders
should review the information provided to them by the holder of record. This
information will describe the procedures to be followed in instructing the
holder of record how to vote the "street name" common shares and how to revoke
previously given instructions.
Only shareholders of record at the close of business on February 23,
2004, are entitled to receive notice of and to vote at the Annual Meeting and
any adjournment. At the close of business on the record date, 13,765,320 common
shares were outstanding and entitled to vote. Each common share entitles the
holder thereof to one vote on each matter to be submitted to the shareholders at
the Annual Meeting. A quorum for the Annual Meeting is a majority of the
outstanding common shares.
If written notice is given by any shareholder to the President, a Vice
President or the Secretary of Park before 2:00 p.m. on April 17, 2004, that the
shareholder desires cumulative voting for the election of directors, and if an
announcement of the giving of that notice is made upon the convening of the
Annual Meeting by the chairman or the secretary of the meeting or by or on
behalf of the shareholder giving the notice, you will have the right to cumulate
your voting power in voting for directors. If cumulative voting is invoked, you
will have votes equal to the number of directors to be elected, multiplied by
the number of common shares owned by you, and will be entitled to distribute
your votes among the candidates as you see fit. If cumulative voting is
requested as described above, the enclosed proxy card would grant discretionary
authority to the proxy holders named in the proxy card to cumulate votes and to
distribute the votes among the candidates.
Park will bear the costs of preparing, printing and mailing this proxy
statement, the accompanying proxy card and any other related materials, as well
as all other costs incurred in connection with the solicitation of proxies on
behalf of the Park Board of Directors. Proxies will be solicited by mail and may
be further solicited, for no additional compensation, by officers, directors or
employees of Park and its subsidiaries by further mailing, telephone, facsimile
or personal contact. Park will also pay the standard charges and expenses of
brokers, voting trustees, financial institutions and other custodians, nominees
and fiduciaries, who are record holders of common shares not beneficially owned
by them, for forwarding materials to and obtaining proxies from the beneficial
owners of common shares entitled to vote at the Annual Meeting.
If you are a participant in the Park National Corporation Employees
Stock Ownership Plan (formerly the Park National Corporation Employees Voluntary
Salary Deferral Plan and Trust) (the "Park ESOP") and common shares have been
allocated to your account in the Park ESOP, you will be entitled to instruct the
trustee of the Park ESOP how to vote those common shares and you may receive
your proxy card separately. If no instructions are given by you to the trustee
of the Park ESOP, the trustee will vote the common shares allocated to your ESOP
account pro rata in accordance with the instructions received from other
participants in the Park ESOP who have voted.
The inspectors of election appointed for the Annual Meeting will
tabulate the results of shareholder voting. Common shares represented by
properly executed proxies returned to Park prior to the Annual Meeting will be
counted toward the establishment of a quorum for the Annual Meeting even though
they are marked "ABSTAIN," "AGAINST," "WITHHOLD AUTHORITY" or "FOR ALL EXCEPT"
or not at all. Brokers who hold common shares in street name may, under the
applicable rules of the exchange and other self-regulatory organizations of
which the brokers are members, sign and submit proxies for such common shares
and may vote such common shares on routine matters such as the election of
directors. However, brokers who hold common shares in street name may not vote
such common shares on non-routine matters, including proposals to approve
equity-based compensation plans, without specific instructions from the customer
who owns the common shares. Proxies that are signed and submitted by brokers
that have not been voted on certain matters as described in the previous
sentence are referred to as broker non-votes. Broker non-votes count toward the
establishment of a quorum for the Annual Meeting.
The Annual Report to Shareholders for the fiscal year ended December
31, 2003 (the "2003 fiscal year") is being delivered with this proxy statement.
PRINCIPAL SHAREHOLDERS OF PARK
The following table furnishes information regarding the beneficial
ownership of common shares, as of February 23, 2004, for each of the current
directors, each of the nominees for re-election as a director, each of the
individuals named in the Summary Compensation Table beginning on page 25, all
current directors and executive officers as a group and each person known by
Park to beneficially own more than 5% of the outstanding common shares.
2
)
Amount and Nature of Beneficial Ownership (1)
---------------------------------------------
Common Shares
Which Can Be
Acquired Upon
Exercise of
Currently
Exercisable
Options or Options
Name of Beneficial Becoming Percent
Owner or Number Common Shares Exercisable of Class
of Persons in Group (1) Presently Held Within 60 Days Total (2)
----------------------- -------------- -------------- ----- ------
Trust departments of bank 2,146,458(3) 0 2,146,458 15.6%
subsidiaries of Park
c/o The Park National
Bank, Trust Department
50 North Third Street
Newark, OH 43055 (3)
Maureen Buchwald 4,382(4) 1,303 5,685 (5)
James J. Cullers 7,236(6) 651 7,887 (5)
C. Daniel DeLawder (7) 96,147(8) 4,967 101,114 (5)
Harry O. Egger (7) 41,098(9) 0 41,098 (5)
R. William Geyer 6,212(10) 0 6,212 (5)
Howard E. LeFevre 78,096(11) 0 78,096 (5)
William T. McConnell 195,826(12) 0 195,826 1.4%
John J. O'Neill 159,511(13) 0 159,511 1.2%
William A. Phillips 10,489(14) 0 10,489 (5)
J. Gilbert Reese 434,436(15) 0 434,436 3.2%
Rick R. Taylor 2,553(16) 0 2,553 (5)
John W. Kozak (7) 21,366(17) 5,477 26,843 (5)
David L. Trautman (7) 40,025(18) 5,442 45,467 (5)
Leon Zazworsky 6,527 0 6,527 (5)
All current executive
officers and directors as a
group (14 persons) 1,089,927(19) 17,840 1,107,767 8.0%
------------------------
(1) Unless otherwise noted, the beneficial owner has sole voting
and investment power with respect to all of the common shares reflected in the
table. All fractional common shares have been rounded down to the nearest whole
common share. The mailing address of each of the current executive officers and
directors of Park is 50 North Third Street, Post Office Box 3500, Newark, Ohio
43058-3500.
(2) The percent of class is based on 13,765,320 common shares
outstanding and entitled to vote on February 23, 2004, and the number of common
shares, if any, as to which the named person or group has the right to acquire
beneficial ownership upon the exercise of options which are currently
exercisable or will become exercisable within 60 days after February 23, 2004.
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(3) The trust departments of certain bank subsidiaries of Park, as
the fiduciaries of various agency, trust and estate accounts, hold an aggregate
of 2,146,458 common shares. The trust departments of The Park National Bank
("Park National Bank") and the Fairfield National Division of Park National Bank
hold an aggregate of 1,596,696 common shares (11.6% of the outstanding common
shares), including 30,008 common shares with no voting or investment power;
489,042 common shares with investment but no voting power; 267,074 common shares
with voting but no investment power; and 810,572 common shares with voting and
investment power. The trust department of Century National Bank holds 25,340
common shares (0.2% of the outstanding common shares), including 758 common
shares with no voting or investment power; 2,364 common shares with voting but
no investment power; and 22,218 common shares with voting and investment power.
The trust department of The First-Knox National Bank of Mount Vernon
("First-Knox National Bank") holds 155,874 common shares (1.1% of the
outstanding common shares), including 58,163 common shares with no voting or
investment power; 4,377 shares with voting but no investment power; and 93,334
common shares with voting and investment power. The trust department of The
Richland Trust Company ("Richland Trust Company") holds 12,190 common shares
(0.1% of the outstanding common shares), including 571 common shares with voting
but no investment power; and 11,619 common shares with voting and investment
power. The trust departments of The Security National Bank and Trust Co.
("Security National Bank") and the Unity National Division of Security National
Bank hold an aggregate of 346,400 common shares (2.5% of the outstanding common
shares), including 55,634 common shares with no voting or investment power;
18,862 common shares with investment but no voting power; 53,399 common shares
with voting but no investment power; and 218,505 common shares with voting and
investment power. The trust department of Second National Bank holds 9,958
common shares (0.1% of the outstanding common shares), including 3,517 common
shares with voting but no investment power; and 6,441 common shares with voting
and investment power. The officers and directors of each bank subsidiary and of
Park disclaim beneficial ownership of the common shares beneficially owned by
the trust department of each bank subsidiary.
(4) The number shown includes 2,000 common shares held jointly by
Mrs. Buchwald and her husband, as to which she shares voting and investment
power.
(5) Represents ownership of less than 1% of the outstanding common
shares.
(6) The number shown includes 674 common shares held by Mr.
Cullers' wife as to which she has sole voting and investment power; 4,058 common
shares held in a profit sharing trust with the trust department of First-Knox
National Bank as to which the trust department of First-Knox National Bank has
voting power and Mr. Cullers has investment power; 179 common shares held by Mr.
Cullers as custodian for his grandchildren; and 96 common shares held by Mr.
Cullers' wife as custodian for their grandchildren as to which she has sole
voting and investment power.
(7) Individual named in Summary Compensation Table. Messrs.
DeLawder and Egger also serve as directors of Park.
(8) The number shown includes 39,665 common shares held by the
wife of Mr. DeLawder as to which she has sole voting and investment power; and
8,242 common shares held for the account of Mr. DeLawder in the Park ESOP. The
number shown does not include common shares held by the adult son of Mr.
DeLawder as to which Mr. DeLawder has no voting or investment power.
(9) The number shown includes 16,669 common shares held by the
wife of Mr. Egger as to which she has sole voting and investment power; 5,252
common shares held for the account of Mr. Egger in the Park ESOP; 550 common
shares held in an IRA account by Advest as custodian for Mr. Egger; and 544
common shares held in an IRA account by Advest as custodian for the wife of Mr.
Egger.
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(10) The number shown includes 613 common shares held by the wife
of Mr. Geyer as to which she has sole voting and investment power; and an
aggregate of 3,335 common shares held in two individual retirement accounts for
which the trust department of Century National Bank serves as trustee and has
investment power subject to the approval of Mr. Geyer and voting power.
(11) The number shown includes 48,619 common shares held in a
grantor trust created by Mr. LeFevre for which Park National Bank's trust
department serves as trustee and has investment power subject to the approval of
Mr. LeFevre and voting power; 10,500 common shares held in a custodial account
with the trust department of Park National Bank for Freight Service, Inc. as to
which Mr. LeFevre has investment power and the trust department of Park National
Bank has voting power; 5,000 common shares held in a custodial account with the
trust department of Park National Bank for Truck One, Inc. as to which Mr.
LeFevre has investment power and the trust department of Park National Bank has
voting power; and 13,977 common shares held in a custodial account with the
trust department of Park National Bank for The LeFevre Foundation as to which
Mr. LeFevre has investment power and the trust department of Park National Bank
has voting power.
(12) The number shown includes 70,444 common shares held by the
wife of Mr. McConnell as to which she has sole voting and investment power;
16,170 common shares held in an inter vivos irrevocable trust established by Mr.
McConnell as to which Park National Bank's trust department serves as trustee
and has voting and investment power; and 4,882 common shares held for the
account of Mr. McConnell in the Park ESOP. The number shown also includes 1,100
common shares held by The McConnell Foundation, an Ohio not for profit
corporation as to which Mr. McConnell, his wife, his two adult children and one
other individual serve as trustees. Mr. McConnell shares voting and investment
power as to these 1,100 common shares with the other four trustees but disclaims
beneficial ownership with respect to them.
(13) The number shown includes 144,802 common shares held by
O'Neill Investments LLC, an Ohio limited liability company as to which Mr.
O'Neill is one of two managing members as well as a non-managing member. Mr.
O'Neill shares voting and investment power with respect to these common shares
with his adult son, the other managing member.
(14) The number shown includes 1,631 common shares held for the
account of Mr. Phillips in the Park ESOP; 1,420 common shares held in an
individual retirement account for which the trust department of Century National
Bank serves as trustee and has voting and investment power; and 3,675 common
shares held by the wife of Mr. Phillips as to which she has sole voting and
investment power.
(15) The number shown includes 53,676 common shares held by the
wife of Mr. Reese as to which she has sole voting and investment power; and
1,500 common shares held in a grantor trust created by Mr. Reese for which the
trust department of Park National Bank serves as trustee and as to which Mr.
Reese has voting and investment power. The number shown does not include 21,000
common shares held by the trust department of Park National Bank for The Gilbert
Reese Family Foundation, an Ohio not for profit corporation managed by Mr.
Reese's wife and two adult children. Mr. Reese has no voting or investment power
with respect to the common shares held for The Gilbert Reese Family Foundation
and disclaims beneficial ownership of these 21,000 common shares. The trust
department of Park National Bank has voting power but no investment power as to
these 21,000 common shares.
(16) The number shown includes 2,553 common shares held in a
managing agency with the trust department of Richland Trust Company as to which
the trust department has voting and investment power.
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(17) The number shown includes 2,196 common shares held for the
account of Mr. Kozak in the Park ESOP. The number shown does not include common
shares held by the adult children of Mr. Kozak as to which he has no voting or
investment power.
(18) The number shown includes 12,600 common shares held by the
wife of Mr. Trautman as to which she has sole voting and investment power; 783
common shares held in a rollover plan as to which the wife of Mr. Trautman has
sole voting and investment power; and 4,434 common shares held for the account
of Mr. Trautman in the Park ESOP.
(19) See Notes (4), (6) and (8) through (18) above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To Park's knowledge, based solely on a review of the forms furnished to
Park and written representations that no other forms were required, during the
2003 fiscal year, all filing requirements applicable to officers, directors and
greater than 10% beneficial owners of Park under Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), were complied with,
except Leon Zazworsky filed late one Form 4 reporting one purchase of common
shares on December 19, 2003.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY)
There are currently twelve individuals serving as members of the Board
of Directors - four in the class whose terms expire at the Annual Meeting, four
in the class whose terms expire in 2005 and four in the class whose terms expire
in 2006. Leon Zazworsky was elected as a director of Park on November 17, 2003.
He had been recommended to the Board of Directors by Park's Chairman of the
Board, Park's President and Chief Executive Officer and several of the
non-management directors. Dominick C. Fanello, who had served as a director of
Park since 1990, retired as a director of Park effective December 22, 2003. As
permitted under Section 2.02 of Park's Regulations, the Board of Directors has
fixed the number of directors at twelve, reflecting the number currently
serving.
The Board of Directors has reviewed, considered and discussed each
director's relationships, either directly or indirectly, with Park and its
subsidiaries and the compensation each director receives, directly or
indirectly, from Park and its subsidiaries in order to determine whether such
director meets the independence requirements of Sections 121A and 802 of the
American Stock Exchange LLC ("AMEX") Company Guide as currently in effect and
has determined that the Board has at least a majority of independent directors.
The Board of Directors has determined that each of Maureen Buchwald, James J.
Cullers, Howard E. LeFevre, John J. O'Neill, J. Gilbert Reese, Rick R. Taylor
and Leon Zazworsky has no financial or personal ties, either directly or
indirectly, with Park or its subsidiaries (other than compensation as a director
of Park and its subsidiaries, banking relationships in the ordinary course of
business with one or more of Park's bank subsidiaries and ownership of common
shares of Park as described in this proxy statement and, in the case of Messrs.
Cullers and Reese, compensation to their respective law firms in an amount which
represents less than $200,000 of each law firm's consolidated gross revenues)
and thus qualifies as independent for purposes of Sections 121A and 802 of the
AMEX Company Guide. C. Daniel DeLawder, Harry O. Egger, R. William Geyer,
William T. McConnell and William A. Phillips do not qualify as independent
directors.
The Board of Directors proposes that each of the four nominees
identified below be re-elected for a new term of three years. Each individual
elected as a director at the Annual Meeting will hold office for a term of three
years and until his or her successor is elected and qualified, or until his or
her earlier resignation,
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removal from office or death. Common shares represented by properly executed and
returned proxy cards will be voted FOR the election of the Board of Directors'
nominees unless authority to vote for one or more nominees is withheld. If a
nominee who would otherwise receive the required number of votes becomes
unavailable or unable to serve as a director, the individuals designated as
proxy holders reserve full discretion to vote the common shares represented by
the proxies they hold for the election of the remaining nominees and for the
election of any substitute nominee designated by the Board of Directors. The
Board of Directors has no reason to believe that the nominees named below will
not serve if re-elected.
The following information, as of February 23, 2004, concerning the age,
principal occupation, other affiliations and business experience of each nominee
for re-election as a director has been furnished to Park by each director.
Unless otherwise indicated, each individual has had his or her principal
occupation for more than five years.
Position(s) Held
with Park and its Director of Park
Principal Subsidiaries Continuously Nominee For
Nominee Age and Principal Occupation(s) Since Term Expiring In
------- --- --------------------------- ----- ----------------
Maureen Buchwald 72 Owner and Operator of Glen Hill 1997 2007
Orchards, Ltd., Mount Vernon, Ohio,
(apple orchards); Vice President of
Administration and Secretary of Ariel
Corporation (manufacturer of
reciprocating compressors) for more than
20 years prior to her retirement in 1997;
Director of First-Knox National Bank
since 1988
J. Gilbert Reese 78 Senior Partner in Reese, Pyle, Drake & 1987 2007
Meyer, P.L.L., Attorneys at Law, Newark,
Ohio; Chairman Emeritus of the Board of
First Federal Savings and Loan
Association of Newark, Newark, Ohio;
Director of Park National Bank since 1965
Rick R. Taylor 56 President of Jay Industries, Inc., 1998 2007
Mansfield, Ohio (plastic and metal parts
manufacturer); President of Longview
Steel, Mansfield, Ohio (steel
wholesaler); Director of The Gorman-Rupp
Company; Director of Richland Trust
Company since 1995
7
Position(s) Held
with Park and its Director of Park
Principal Subsidiaries Continuously Nominee For
Nominee Age and Principal Occupation(s) Since Term Expiring In
------- --- --------------------------- ----- ----------------
Leon Zazworsky 55 President of Mid State Systems, Inc., 2003 2007
Hebron, Ohio, and of Mid State
Warehouses, Inc., Newark, Ohio
(transportation, warehousing and
distribution); Director of Park National
Bank since 1991
The following information, as of February 23, 2004, concerning the
age, principal occupation, other affiliations and business experience of the
continuing directors of Park has been furnished to Park by each director. Unless
otherwise indicated, each individual has had his principal occupation for more
than five years.
Position(s) Held
with Park and its Director of Park
Principal Subsidiaries Continuously
Name Age and Principal Occupation(s) Since Term Expires In
---- --- --------------------------- ----- ---------------
C. Daniel DeLawder 54 Chief Executive Officer since 1999, and 1994 2005
President since 1994, of Park; Chief
Executive Officer since January 1999,
President since 1993, Executive Vice
President from 1992 to 1993, and Director
since 1992, of Park National Bank;
Chairman of Advisory Board since 1989,
and President from 1985 to 1992, of the
Fairfield National Division of Park
National Bank; Director of Richland Trust
Company since 1997; Director of Second
National Bank since 2000
Harry O. Egger 64 Vice Chairman of the Board of Park since 2001 2005
March 2001; Chairman of the Board since
1997, Chief Executive Officer from 1997
to March 2003, President from 1981 to
1997, and Director since 1977, of
Security National Bank; Chairman of the
Board, President and Chief Executive
Officer of Security Banc Corporation
from 1997 to March 2001 (1)
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Position(s) Held
with Park and its Director of Park
Principal Subsidiaries Continuously
Name Age and Principal Occupation(s) Since Term Expires In
---- --- --------------------------- ----- ---------------
Howard E. LeFevre 96 Chairman of the Board and Chief 1987 2005
Executive Officer of each of Truck One,
Inc. and Fleet Service, Inc., Newark,
Ohio (leasing and warehousing); Owner
and Director of Freight Service, Inc.,
Newark, Ohio (leasing and warehousing);
Director of Park National Bank since 1956
John J. O'Neill 83 Chairman/Director of Southgate 1987 2005
Corporation, Newark, Ohio (real estate
development and management); Director of
Park National Bank since 1964
James J. Cullers 73 Of counsel since 2002 and prior thereto 1997 2006
Senior Partner, of Zelkowitz, Barry &
Cullers, Attorneys at Law, Mount Vernon,
Ohio; Director of First-Knox National
Bank since 1977
R. William Geyer 72 Partner in Kincaid, Taylor & Geyer, 1992 2006
Attorneys at Law, Zanesville, Ohio;
Director of Century National Bank since
1989
William T. McConnell 70 Chairman of the Board since 1994, Chief 1986 2006
Executive Officer from 1986 to 1999, and
President from 1986 to 1994, of Park;
Chairman of the Board since 1993, Chief
Executive Officer from 1983 to 1999,
President from 1979 to 1993, and
Director since 1977, of Park National
Bank
William A. Phillips 71 Chairman of the Board since 1986, Chief 1990 2006
Executive Officer from 1986 to 1998, and
Director since 1971, of Century National
Bank
-----------------
(1) In connection with the merger of Security Banc Corporation, an Ohio
bank holding company ("Security"), into Park effective March 23, 2001, Mr. Egger
became Vice Chairman of the Board and a
9
director of Park as contemplated under the Agreement and Plan of Merger, dated
as of November 20, 2000, between Security and Park (the "Security Merger
Agreement").
There are no family relationships among any of the directors, nominees
for re-election as directors and executive officers of Park.
RECOMMENDATION AND VOTE
Under Ohio law and Park's Regulations, the four nominees receiving the
greatest number of votes will be elected.
Common shares represented by properly executed and returned proxy cards
will be voted FOR the election of the Board of Directors' nominees named above
unless authority to vote for one or more nominees is withheld. Shareholders may
withhold authority to vote for the entire slate as nominated or, by writing the
name of one or more nominees on the line provided on the proxy card, withhold
the authority to vote for one or more nominees. Common shares as to which the
authority to vote is withheld and broker non-votes will be counted for quorum
purposes but will not be counted toward the election of directors, or toward the
election of the individual nominees specified on the proxy card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RE-ELECTION OF THE
NOMINEES NAMED ABOVE.
MEETINGS OF AND COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board of Directors held four meetings during the 2003 fiscal year.
Each incumbent director attended 75% or more of the aggregate of the number of
meetings held by the Board of Directors and the number of meetings held by the
Board committees on which he or she served, in each case during the period such
director served in the 2003 fiscal year, except for Rick R. Taylor who attended
57%.
Park encourages all incumbent directors and director nominees to attend
each annual meeting of shareholders. Eleven of the incumbent directors attended
Park's last annual meeting of shareholders held on April 21, 2003.
Although Park has not to date developed formal processes by which
shareholders may communicate directly with directors, it believes that the
informal process, in which any communication sent to the Board of Directors,
either generally or in care of the President and Chief Executive Officer, the
Secretary or another officer of Park, is forwarded to all members of the Board,
has served the needs of the Board and Park's shareholders. There is no screening
process in respect of shareholder communications. All shareholder communications
that are received by officers of Park for the Board's attention are forwarded to
the Board.
In view of recently adopted SEC disclosure requirements related to this
issue, Park's Board of Directors, or one of the Board committees, may consider
the development of more specific procedures related to shareholder
communications with the Board. Until other procedures are developed and posted
on the "Corporate Governance" page of Park's website at
www.parknationalcorp.com, any communication to the Board may be mailed to the
Board, in care of Park's Secretary, at the executive offices of Park, 50 North
Third Street, Post Office Box 3500, Newark, Ohio 43058-3500. The mailing
envelope must contain a clear notation indicating that the enclosed letter is a
"Shareholder-Board Communication" or "Shareholder-Director Communication." All
shareholder communications must identify the author as a shareholder and clearly
state whether the intended recipients are all members of the Board of Directors
or just certain specified individual directors. Park's Secretary will make
copies of all shareholder communications and circulate them to the appropriate
director or directors.
10
COMMITTEES OF THE BOARD
During the 2003 fiscal year, the Board of Directors had three standing
committees which held regularly scheduled meetings: the Audit Committee, the
Executive Committee and the Investment Committee. On January 20, 2004, pursuant
to the authority granted to the Board of Directors in Section 2.10 of Park's
Regulations, the Board created, and adopted charters for, two additional
committees: the Compensation Committee and the Nominating Committee. The members
of each of these newly-created committees were appointed by the Board at its
January 20, 2004 meeting. During the 2004 fiscal year, the Compensation
Committee and the Nominating Committee will hold regularly scheduled or special
meetings at which their respective members will be expected to be present.
Neither the Compensation Committee nor the Nominating Committee conducted any
business or held any meetings during the 2003 fiscal year.
AUDIT COMMITTEE
The Board of Directors has an Audit Committee comprised of Maureen
Buchwald (Chair), Howard E. LeFevre and Leon Zazworsky (since November 17,
2003). R. William Geyer and James J. Cullers also served as members of the Audit
Committee during the 2003 fiscal year until November 17, 2003. The Audit
Committee met five times during the 2003 fiscal year.
The Board of Directors has determined that each of Ms. Buchwald and
Messrs. LeFevre and Zazworsky qualified as an independent director under Section
121A of the AMEX Company Guide as in effect prior to December 1, 2003, and
qualifies as an independent director under Sections 121B and 803 of the AMEX
Company Guide as currently in effect and Rule 10A-3 promulgated under Section
10A(m)(3) of the Exchange Act. The Board of Directors has also determined that
Mr. Cullers qualified as an independent director under Section 121A of the AMEX
Company Guide as in effect while he served on the Audit Committee. Mr. Geyer is
a partner in the law firm of Kincaid, Taylor & Geyer which renders legal
services to Century National Bank. Approximately 84% of the legal services
rendered by Mr. Geyer's firm to Century National Bank during the 2003 fiscal
year involved performing title examinations in connection with residential
mortgage loans. Due to very low interest rates throughout the 2003 fiscal year,
residential mortgage loan volume at Century National Bank and Park's other
affiliate banks were at record volumes. Accordingly, the fees paid by Century
National Bank during the 2003 fiscal year to the law firm of Kincaid, Taylor &
Geyer were $363,933, representing more than 5% of the law firm's consolidated
gross revenues for its last full fiscal year. Although Mr. Geyer did not satisfy
the independence standards set forth in Section 121A of the AMEX Company Guide
as in effect while he served on the Audit Committee (from January 1, 2003
through November 17, 2003), the Board of Directors determined and confirmed that
the membership of Mr. Geyer on the Audit Committee was in the best interests of
Park and its shareholders due to Mr. Geyer's experience as Chairman of the Audit
Committee since April 1998, and a member of the Audit Committee since 1992,
during which time he was instrumental to the conduct of business by the Audit
Committee.
The Board of Directors has determined that Maureen Buchwald qualifies
as an "audit committee financial expert" for purposes of Item 401(h) of SEC
Regulation S-K, by virtue of her service as Vice President of Administration and
Secretary of Ariel Corporation for more than 20 years prior to her retirement in
1997. In her capacity as Vice President of Administration, Ms. Buchwald oversaw
the accounting functions of Ariel Corporation. In addition to Ms. Buchwald's
qualification as an "audit committee financial expert", Park's Board of
Directors strongly believes that each of the members of its Audit Committee is
highly qualified to discharge the member's duties on behalf of Park and its
subsidiaries and satisfies the financial literacy requirement of Section 121B of
the AMEX Company Guide as currently in effect.
The Audit Committee is organized and conducts its business pursuant to
a written charter adopted by the Board of Directors (the "Audit Committee
Charter"), which is attached to this proxy statement as
11
Appendix A. A current copy of the Audit Committee Charter is also posted on the
"Corporate Governance" page of Park's website at www.parknationalcorp.com. At
least annually, the Audit Committee reviews and reassesses the adequacy of the
Audit Committee Charter and recommends any proposed changes to the full Board
for approval. The Audit Committee is responsible for:
- overseeing the accounting and financial reporting processes of
Park;
- overseeing the audits of the consolidated financial statements
of Park;
- appointing, compensating and overseeing the independent
auditors employed by Park for the purpose of preparing or
issuing an audit report or performing related work;
- instituting procedures for the receipt, retention and
treatment of complaints received by Park regarding accounting,
internal accounting controls or auditing matters; and
- assisting the Board of Directors in the oversight of:
- the internal control over financial reporting;
- the performance of Park's independent auditors and
Park's internal audit function;
- the independent auditors' qualifications and
independence; and
- the legal compliance and ethics programs established
by management and the full Board.
In addition, the Audit Committee reviews and pre-approves all audit services and
permitted non-audit services provided by the independent auditors to Park or any
of its subsidiaries and ensures that the independent auditors are not engaged to
perform the specific non-audit services prohibited by law, rule or regulation.
The Audit Committee will also carry out any other responsibilities delegated to
the Audit Committee by the full Board. The Audit Committee's report relating to
the 2003 fiscal year begins at page 36.
EXECUTIVE COMMITTEE
The Board of Directors has an Executive Committee comprised of C.
Daniel DeLawder, Harry O. Egger, Howard E. LeFevre, William T. McConnell
(Chair), John J. O'Neill and J. Gilbert Reese. The Executive Committee may
exercise, to the fullest extent permitted by law and not delegated to another
committee of the Board, all of the powers and authority granted to the Board.
The Executive Committee reviews and approves large loans as well as major
capital expenditures proposed to be made by Park's bank subsidiaries. During the
2003 fiscal year, the Executive Committee also performed the functions of a
compensation committee. In that regard, the Executive Committee reviewed and
recommended for approval by the Board of Directors compensation and benefit
plans for officers of Park, supervised the operation of Park's compensation
plans and selected, where selection was required, those eligible employees who
participated in each plan. The Executive Committee met ten times during the 2003
fiscal year. The report of the Executive Committee and the Compensation
Committee on executive compensation for the 2003 fiscal year begins at page 21.
12
INVESTMENT COMMITTEE
The Board of Directors has an Investment Committee comprised of C.
Daniel DeLawder (Chair), Harry O. Egger, William T. McConnell, John J. O'Neill
and Rick R. Taylor. The Investment Committee reviews the activity in the
investment portfolio of Park and its subsidiary banks, monitors compliance with
Park's investment policy and assists management with the development of
investment strategies. The Investment Committee met three times during the 2003
fiscal year.
COMPENSATION COMMITTEE
On January 20, 2004, the Board of Directors created the Compensation
Committee and appointed Howard E. LeFevre, John J. O'Neill and J. Gilbert Reese
(Chair) as members. Although the Compensation Committee did not meet during the
2003 fiscal year, it met twice during February of 2004 in order to determine the
amounts to be paid in respect of the 2003 fiscal year under Park's incentive
compensation plan. The report of the Executive Committee and the Compensation
Committee on executive compensation for the 2003 fiscal year begins at page 21.
The Board of Directors has determined that each member of the
Compensation Committee satisfies the independence requirements of Sections 121A
and 805 of the AMEX Company Guide as currently in effect. The Compensation
Committee is organized and conducts its business pursuant to a written charter
adopted by the Board of Directors (the "Compensation Committee Charter.") A
current copy of the Compensation Committee Charter is posted on the "Corporate
Governance" page of Park's website at www.parknationalcorp.com. The Compensation
Committee will periodically review and reassess the adequacy of the Compensation
Committee Charter and recommend any proposed changes to the full Board for
approval.
The Compensation Committee's primary responsibilities include:
- reviewing with management and approving the general
compensation policy for the executive officers of Park and
those other employees of Park and its subsidiaries which the
full Board directs;
- evaluating the performance of Park's executive officers in
light of goals and objectives approved by the Compensation
Committee and determining those executive officers'
compensation based on that evaluation;
- administering Park's equity-based plans and approving awards
as required to comply with applicable securities and tax laws,
rules and regulations;
- overseeing the preparation of the report on executive
compensation for inclusion in the annual proxy statement; and
- reviewing and making recommendations to the full Board with
respect to incentive compensation plans and equity-based plans
in accordance with applicable laws, rules and regulations.
In addition, the Compensation Committee will review Park's organizational
structure and succession plans for Park's executive officers with the full Board
as needed. The Compensation Committee will also carry out any other
responsibilities delegated to the Compensation Committee by the full Board.
13
NOMINATING COMMITTEE
On January 20, 2004, the Board of Directors created the Nominating
Committee and appointed Howard E. LeFevre, John J. O'Neill and J. Gilbert Reese
as members. As of the date of this proxy statement, no chairman of the
Nominating Committee had been named. The Board of Directors has determined that
each member of the Nominating Committee satisfies the independence requirements
of Sections 121A and 804 of the AMEX Company Guide as currently in effect and
the applicable rules and regulations of the SEC. The Nominating Committee is
organized and will conduct its business pursuant to a written charter adopted by
the Board of Directors (the "Nominating Committee Charter"). A current copy of
the Nominating Committee Charter is posted on the "Corporate Governance" page of
Park's website at www.parknationalcorp.com. The Nominating Committee will
periodically review and reassess the adequacy of the Nominating Committee
Charter and recommend any proposed changes to the full Board for approval.
The primary purpose of the Nominating Committee is to identify
qualified candidates for election, nomination or appointment to the Board of
Directors and to recommend to the full Board a slate of director nominees for
each annual meeting of the shareholders of Park or as vacancies occur between
annual meetings of the shareholders. In addition, the Nominating Committee will
provide oversight on matters surrounding the composition and operation of the
Board, including the evaluation of Board performance and processes, and make
recommendations to the full Board in the areas of Board committee selection,
including Board committee chairpersons and committee rotation practices. The
Nominating Committee will also carry out any other responsibilities delegated to
the Nominating Committee by the full Board.
NOMINATING PROCEDURES
As described above, Park's Board of Directors created the Nominating
Committee on January 20, 2004. As of the date of this proxy statement, the
Nominating Committee had not yet met. Accordingly, as it had in the past, the
full Board of Directors selected the nominees for re-election as directors at
Park's Annual Meeting. As detailed in the Nominating Committee Charter, the
Nominating Committee will have the responsibility in the future to identify and
recommend individuals qualified to become directors. To be eligible for election
as a director, an individual must be a shareholder of Park.
The Nominating Committee will take into account many factors when
considering candidates for the Board of Directors to ensure that the Board is
comprised of directors with a variety of experiences and backgrounds, each of
whom has high-level managerial experience and represents the interests of Park's
shareholders as a whole rather than those of special interest groups. The
Nominating Committee may consider those factors it deems appropriate when
evaluating candidates, including judgment, skill, diversity, strength of
character, experience with businesses and organizations comparable in size and
scope to Park, experience as an executive of or adviser to a publicly traded or
private company, experience and skill relative to other Board members, and any
additional specialized knowledge or experience. Depending on the current needs
of the Board, certain factors may be weighed more or less heavily by the
Nominating Committee.
In considering candidates for the Board, the Nominating Committee will
evaluate the entirety of each candidate's credentials. Other than the
requirement that a candidate be a Park shareholder, there are no specific
minimum qualifications that must be met by a Nominating Committee-recommended
nominee. However, the Nominating Committee does believe that all members of the
Board should have the highest character and integrity; a reputation for working
constructively with others; sufficient time to devote to Board matters; and no
conflict of interest that would interfere with performance as a director.
The Nominating Committee will consider candidates for the Board from
any reasonable source, including shareholder recommendations. The Nominating
Committee will not evaluate candidates differently
14
based on who has given the recommendation. The Nominating Committee has the
authority under the Nominating Committee Charter to hire and pay a fee to
consultants or search firms to assist in the process of identifying and
evaluating candidates. No such consultants or search firms have been used by the
Nominating Committee or the full Board to date and, accordingly, no fees have
been paid to consultants or search firms.
Shareholders may recommend director candidates to the Nominating
Committee for consideration by writing to the Secretary of Park at the executive
offices of Park, 50 North Third Street, Post Office Box 3500, Newark, Ohio
43058-3500. The recommendation must give the candidate's name, age, business
address, residence address, principal occupation and number of Park common
shares beneficially owned. The recommendation should also describe the
qualifications, attributes, skills or other qualities of the recommended
director candidate. A written statement from the candidate consenting to be
named as a director candidate and, if nominated and elected, to serve as a
director should accompany any such recommendation.
Shareholders who wish to nominate an individual for election as a
director at an annual meeting of the shareholders of Park must comply with
Park's Regulations regarding shareholder nominations. Shareholder nominations
must be made in writing and delivered or mailed to the President of Park not
less than 14 days nor more than 50 days prior to any meeting of shareholders
called for the election of directors. However, if less than 21 days' notice of
the meeting is given to the shareholders, the nomination must be mailed or
delivered to Park's President not later than the close of business on the
seventh day following the day on which the notice of the meeting was mailed to
the shareholders. Each shareholder nomination must contain the following
information to the extent known by the nominating shareholder: (a) the name and
address of each proposed nominee; (b) the principal occupation of each proposed
nominee; (c) the total number of Park common shares that will be voted for each
proposed nominee; (d) the name and residence address of the nominating
shareholder; and (e) the number of Park common shares beneficially owned by the
nominating shareholder. Nominations for the 2004 Annual Meeting must be received
by April 5, 2004. Nominations not made in accordance with Park's Regulations
will be disregarded.
COMPENSATION OF DIRECTORS
At the April 21, 2003 meeting of Park's Board of Directors, the Board
modified the fees paid to directors. Each director of Park who is not an
employee of Park or one of its subsidiaries (a "non-employee director")
currently receives as fees an annual retainer in the form of 120 common shares
(increased from 100 common shares in 2002), $750 for each meeting of the Board
of Directors of Park attended and $300 for each meeting of a committee of the
Board of Directors attended (increased from $250). If the date of a meeting of
the Board of Directors is changed from that provided for by resolution of the
Board of Directors and a non-employee director is unable to attend the
rescheduled meeting, he or she receives $750 as though he or she had attended
the meeting.
On October 9, 2003, the SEC approved the amendment of Section 711 of
the AMEX Company Guide requiring shareholder approval for the establishment of
(and material amendment to) an equity compensation arrangement pursuant to which
options or stock may be acquired by officers, directors, employees or
consultants, subject to specified limited exceptions. Accordingly, the Board of
Directors is proposing the Park National Corporation Stock Plan for Non-Employee
Directors of Park National Corporation and Subsidiaries (the "Directors' Stock
Plan") for consideration and approval by the shareholders at the Annual Meeting.
If the Directors' Stock Plan is approved by the shareholders, the non-employee
directors of Park and its subsidiaries will continue to receive their annual
retainer for service as a director in the form of common shares. The proposal to
approve the Directors' Stock Plan is discussed under "PROPOSAL TO APPROVE PARK
NATIONAL CORPORATION STOCK PLAN FOR NON-
15
EMPLOYEE DIRECTORS OF PARK NATIONAL CORPORATION AND SUBSIDIARIES," beginning at
page 17. If the Directors' Plan is not approved by the shareholders, in the
future, the annual retainer for service as a member of the Park Board of
Directors will be paid in the form of cash instead of common shares.
Each non-employee director of Park also serves on the board of
directors of one of Park's bank subsidiaries, and receives an annual retainer in
the form of 60 common shares (increased from 50 common shares in 2002) and, in
some cases, a specified amount of cash for such service as well as fees for
attendance at meetings of the board of directors of the appropriate Park bank
subsidiary (and committees of that board). The following table summarizes the
aggregate amount of fees paid in cash to each incumbent non-employee director of
Park for service on the board of directors of the Park bank subsidiary (and
committees of that board) on which he or she served during the 2003 fiscal year:
Aggregate Aggregate
Park Subsidiary Park Subsidiary
Name Fees Name Fees
---- ---- ---- ----
Maureen Buchwald $ 6,800 John J. O'Neill $ 5,200
James J. Cullers $ 6,600 J. Gilbert Reese $ 5,150
Harry O. Egger $ 5,100 Rick R. Taylor $ 4,200
R. William Geyer $ 6,425 Leon Zazworsky $ 8,650
Howard E. LeFevre $ 5,800
In addition, Dominick C. Fanello, who retired as a director of Park effective
December 22, 2003, received an aggregate amount of $3,650 for attendance at
meetings of the board of directors of Richland Bank (and committees of that
board) held during the 2003 fiscal year.
Messrs. DeLawder, McConnell and Phillips receive no compensation for
serving as members of the Board of Directors of Park or of any subsidiary of
Park since they are employee directors. As of March 31, 2003, Mr. Egger became a
non-employee director of both Park and Security National Bank following his
retirement as Chief Executive Officer of Security National Bank.
The Park bank subsidiaries maintain split-dollar life insurance
policies on behalf of those Park directors who are not executive officers of
Park or one of its subsidiaries (other than Mr. Egger), in their respective
capacities as directors of a Park bank subsidiary. The Park bank subsidiary for
which such an individual also serves as a director will receive proceeds under
the policy in an amount equal to the premiums paid up to the date of death plus
earnings accrued in respect of the policy since the inception of the policy. The
director has the right to designate the beneficiary to whom his or her share of
the proceeds under the policy ($100,000) is to be paid. A director becomes fully
vested under his or her policy after three years of service.
Park National Bank maintains split-dollar life insurance policies on
behalf of Messrs. McConnell and DeLawder, in their respective capacities as
executive officers of Park National Bank. Park National Bank will receive
proceeds under the policy in an amount equal to the premiums paid up to the date
of death plus earnings accrued in respect of the policy since the inception of
the policy. Each of Messrs. McConnell and DeLawder has the right to designate
the beneficiary to whom his share of the proceeds under the policy
(approximately two times his highest annual total compensation during his
employment with Park National Bank) is to be paid. Each policy remains in effect
following the covered individual's retirement as long as specified conditions
are satisfied.
16
Security National Bank maintains a split-dollar life insurance policy
on behalf of Mr. Egger. Security National Bank will receive proceeds under the
policy in an amount equal to the premiums paid up to the date of death plus
earnings accrued in respect of the policy since the inception of the policy. Mr.
Egger has the right to designate the beneficiary to whom his share of the
proceeds under the policy (approximately three and one-half times his highest
annual total compensation during his employment with Security National Bank) is
to be paid. Mr. Egger's policy remained in effect following his retirement on
March 31, 2003.
PROPOSAL TO APPROVE PARK NATIONAL CORPORATION
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
OF PARK NATIONAL CORPORATION AND SUBSIDIARIES
(ITEM 2 ON PROXY)
INTRODUCTION
Each non-employee director of Park or one of its bank subsidiaries (or
non-employee member of the advisory board of a division of a bank subsidiary)
has in the past received his or her annual retainer in the form of Park common
shares. The respective boards of directors and advisory boards believe that
their non-employee members have a greater proprietary interest in the growth and
performance of Park and its subsidiaries through their receipt of a designated
number of common shares each year as their annual retainer instead of cash.
Under amended Section 711 of the AMEX Company Guide, Park's
shareholders must approve the establishment of (and material amendment to) any
equity compensation arrangement pursuant to which common shares may be acquired
by directors, officers or employees of Park and its subsidiaries. Accordingly,
the Board of Directors of Park is proposing the Directors' Stock Plan for
consideration and approval by the shareholders at the Annual Meeting. Under the
terms of the Directors' Stock Plan, non-employee members of the boards of
directors of Park and its subsidiaries (and non-employee members of the advisory
board of a division of a subsidiary) will receive as an annual retainer each
year the same number of Park common shares as they received in respect of the
2003 fiscal year.
GENERAL
The purpose of the Directors' Stock Plan is to foster the long-term
financial success of Park and its subsidiaries by attracting and retaining the
services of outstanding non-employee directors and non-employee advisory board
members upon whose judgment, interest and special efforts the successful conduct
of the business of Park and its subsidiaries depends.
Subject to adjustment as described below, there will be a maximum of
100,000 common shares available for issuance under the Directors' Stock Plan.
The Board of Directors of Park believes it is desirable to continue to
pay the annual retainer of non-employee directors and non-employee advisory
board members in the form of common shares in an effort to encourage the highest
level of participation by these individuals and to maintain or increase their
proprietary interest in the growth and performance of Park and its subsidiaries.
It is the Board of Directors' belief that the Directors' Stock Plan will address
the need for common shares to pay annual retainers for a number of years.
Common shares subject to the Directors' Stock Plan may be either common
shares currently held by Park or common shares subsequently acquired by Park and
held in treasury, including common shares
17
purchased in the open market or in private transactions. Park will not newly
issue any common shares under the Directors' Stock Plan.
The aggregate number of common shares issuable in respect of any fiscal
year will depend on the number of individuals then serving as non-employee
directors of Park and its subsidiaries and as non-employee advisory board
members. As of the date of this proxy statement, there were nine non-employee
directors of Park, a total of 58 non-employee directors of Park's subsidiaries
and a total of 15 non-employee advisory board members (including one individual
who serves as both a non-employee director of one of Park's bank subsidiaries
and a member of the advisory board of a division of that bank subsidiary).
The following table summarizes the number of common shares received as
their annual retainer for the 2003 fiscal year by: (i) Harry O. Egger, the only
individual named in the Summary Compensation Table who received an annual
retainer, in Mr. Egger's capacity as a director of Park and Security National
Bank; (ii) all current directors of Park who are not executive officers as a
group (in their respective capacities as directors of Park and one of its
subsidiaries); (iii) each nominee for re-election as a non-employee director (in
such nominee's capacity as a director of Park and one of its subsidiaries); and
(iv) all other non-employee directors of Park's subsidiaries and non-employee
advisory board members as a group. No individual serving as an executive officer
of Park or any of its subsidiaries (other than Mr. Egger), and no individual
serving as an employee of Park or any of its subsidiaries, received any annual
retainer for his or her service on the board of directors of Park and/or one of
its subsidiaries or on an advisory board.
Number of Common Shares
Received as Annual Retainer
Names and Position for 2003 Fiscal Year
------------------ ---------------------------
Harry O. Egger, Vice Chairman of the
Board of Park and Chairman of the Board
and former Chief Executive Officer of
Security National Bank..................................... 180
All current directors of Park who
are not executive officers as a group...................... 1,320
Nominees for election as non-
employee directors of Park:
Maureen Buchwald....................................... 180
J. Gilbert Reese....................................... 180
Rick R. Taylor......................................... 180
Leon Zazworsky......................................... 60(1)
All other non-employee directors of Park's
subsidiaries and non-employee advisory
board members as a group................................... 4,200(2)
-------------------
(1) Mr. Zazworsky did not receive an annual retainer for service
as a director of Park during the 2003 fiscal year since he was appointed after
the annual retainer was paid.
18
(2) Dominick C. Fanello received 180 common shares as the annual
retainer for his service on the boards of directors of Park and Richland Trust
Company during the 2003 fiscal year. Since Mr. Fanello retired effective
December 22, 2003, these common shares are included in the number for "all other
non-employee directors of Park's subsidiaries and non-employee advisory board
members as a group."
The following is a brief summary of the material features of the
Directors' Stock Plan. This summary is qualified in its entirety by reference to
the full text of the Directors' Stock Plan, a copy of which is attached to this
proxy statement as Appendix B.
SUMMARY OF OPERATION OF THE DIRECTORS' STOCK PLAN
ADMINISTRATION OF THE DIRECTORS' STOCK PLAN
The Directors' Stock Plan will be administered by Park's Board of
Directors. The Board is authorized to interpret the Directors' Stock Plan and to
make all determinations necessary or advisable for its administration. Each of
Park's President and Chief Executive Officer, Chief Financial Officer, and
Secretary is authorized to implement the Directors' Stock Plan and take
ministerial actions in connection with that implementation.
AWARD OF COMMON SHARES REPRESENTING ANNUAL RETAINER
On the date of the regular meeting of the Park Board of Directors held
during the fourth fiscal quarter of each fiscal year of Park:
- each individual then serving as a non-employee director of
Park will be awarded 120 common shares, representing the
annual retainer payable to such individual for that fiscal
year;
- each individual then serving as a non-employee director of a
subsidiary of Park will be awarded 60 common shares,
representing the annual retainer payable to such individual
for that fiscal year; and
- each individual then serving as a non-employee member of the
advisory board for a division of a Park subsidiary will be
awarded 60 common shares, representing the annual retainer
payable to such individual for that fiscal year.
If a stock split or a stock dividend of 10% or more affecting the common shares
of Park is declared in any fiscal year, the number of common shares to be
awarded to a non-employee director or non-employee advisory board member for
that fiscal year will be increased proportionately.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
If there is a stock dividend or stock split of 10% or more,
recapitalization (including payment of an extraordinary dividend), merger,
consolidation, combination, spin-off, distribution of assets to shareholders,
exchange of shares or other similar corporate change affecting Park's common
shares, the Park Board of Directors will appropriately adjust the aggregate
number of common shares available for award under the Directors' Stock Plan.
19
AMENDMENT AND TERMINATION OF THE DIRECTORS' STOCK PLAN
The Park Board of Directors may terminate or suspend the Directors'
Stock Plan at any time. The Board of Directors may also amend the Directors'
Stock Plan without shareholder approval except as required to satisfy the
requirements of Rule 16b-3 under the Exchange Act, applicable requirements of
AMEX or any other applicable laws, rules or regulations.
By its terms, the Directors' Stock Plan will terminate on the day
preceding the tenth anniversary of the date the Directors' Stock Plan is
approved by Park's shareholders.
FEDERAL INCOME TAX CONSEQUENCES
The following summary of the federal income tax consequences of the
award of common shares under the Directors' Stock Plan is intended to reflect
the current provisions of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), and applicable Treasury Regulations. This summary is
not intended to be a complete statement of applicable law, nor does it address
state or local tax laws or regulations.
Common shares awarded under the Directors' Stock Plan will be fully
taxable to the recipient as income when received and the taxable amount will be
equal to the fair market value of the common shares on the award date. Park or
one of its subsidiaries will be entitled to deduct as compensation the amount
included in the recipient's gross income.
RECOMMENDATION AND VOTE
Shareholder approval of the Directors' Stock Plan will require a
majority of the votes cast on the proposal. The effect of an abstention is the
same as a "no" vote. Broker non-votes will not be counted in determining the
number of common shares necessary for approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
DIRECTORS' STOCK PLAN. If the Directors' Stock Plan is not approved by the
shareholders, in the future, the annual retainer for service as a non-employee
member of the board of directors of Park or one of its bank subsidiaries or as a
non-employee advisory board member will be paid in the form of cash instead of
common shares.
All valid proxies received prior to the Annual Meeting which do not
specify how common shares should be voted (other than proxies which constitute
broker non-votes) will be voted FOR the approval of the Directors' Stock Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the 2003 fiscal year, the Executive Committee of Park's Board of
Directors also performed the functions of a compensation committee. William T.
McConnell, who is Chairman of the Board of Park and of Park National Bank,
serves as a member of the Executive Committee. C. Daniel DeLawder, who is Chief
Executive Officer and President of Park and of Park National Bank, also serves
as a member of the Executive Committee. Harry O. Egger, who is Vice Chairman of
the Board of Park and Chairman of the Board of Security National Bank (and was
Chief Executive Officer of Security National Bank until March 31, 2003), serves
as a member of the Executive Committee as well.
20
Mr. DeLawder sits on the boards of directors of Truck One, Inc. and
Fleet Service, Inc., neither of which has a separate compensation committee.
Howard E. LeFevre, Chairman of the Board and Chief Executive Officer of each of
Truck One, Inc. and Fleet Service, Inc., serves as a member of each of the
Executive Committee and the Compensation Committee of Park's Board of Directors.
Mr. McConnell sits on the board of directors of Freight Service, Inc.,
which has no separate compensation committee. Howard E. LeFevre is the owner and
a member of the board of directors of Freight Service, Inc.
J. Gilbert Reese, who is senior partner in the law firm of Reese, Pyle,
Drake & Meyer, P.L.L., which rendered legal services to Park National Bank
during the 2003 fiscal year and continues to do so, is a member of each of the
Executive Committee and the Compensation Committee of Park's Board of Directors.
REPORT OF THE EXECUTIVE COMMITTEE
AND THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
OVERALL PHILOSOPHY AND ADMINISTRATION
The executive officers of Park receive no compensation directly from
Park. Instead, William T. McConnell, C. Daniel DeLawder, David L. Trautman and
John W. Kozak are paid by Park National Bank for services rendered in their
capacities as executive officers of Park and Park National Bank. Until his
retirement on March 31, 2003, Harry O. Egger was paid by Security National Bank
for services rendered in his capacity as an executive officer of Park and
Security National Bank.
The Board of Directors of Park has a six-member Executive Committee,
comprised of four non-employee directors (reflecting Mr. Egger's retirement) and
Messrs. McConnell and DeLawder. Prior to the creation of the Compensation
Committee on January 20, 2004, one function of the Executive Committee was to
review and recommend officer compensation levels and Park benefit plans and to
forecast future personnel needs of Park. During the 2003 fiscal year, no
decisions of the Executive Committee were modified or rejected in any material
way by the boards of directors of Park National Bank, Security National Bank or
Park. In addition, Messrs. McConnell, DeLawder and Egger (prior to his
retirement) did not vote on any matters with respect to their own compensation.
Following the creation of the Compensation Committee, the Compensation
Committee (which is comprised of three independent directors) assumed
responsibility for the administration of Park's incentive compensation plan and,
at meetings held in February of 2004, determined the amounts of incentive
compensation to be paid for the 2003 fiscal year. Beginning with the 2004 fiscal
year, the Compensation Committee will also be responsible for evaluating the
performance of Park's executive officers and determining the compensation of
those executive officers as well as administering Park's equity-based
compensation plans.
Park's compensation philosophy reflects a commitment to pay for
performance. The compensation program for all officers, including executive
officers, consists of three primary elements - a base salary component, an
incentive compensation component and a stock option component. The combination
of base salary and incentive compensation is designed to tie compensation levels
to overall performance by Park and its subsidiaries as well as the individual
performance of the executive officers. Park's cash compensation philosophy
reflects the belief that a significant part of total executive cash
21
compensation should be "at risk" in the form of incentive compensation based on
the performance of Park and its subsidiaries. The ratio of the incentive
compensation to total cash compensation for the 2003 fiscal year was 65.7% for
Mr. DeLawder, 40.7% for Mr. Egger, 65.6% for Mr. Trautman and 61.5% for Mr.
Kozak. Mr. McConnell does not participate in the incentive compensation plan.
Park believes that it is also important to provide compensation which
serves to incentivize long-term corporate financial performance. In that regard,
the Board of Directors of Park adopted, and the shareholders of Park approved,
the Park National Corporation 1995 Incentive Stock Option Plan (as amended, the
"1995 Plan"). Under the 1995 Plan, officers and other key employees of Park and
its subsidiaries have been selected by the Executive Committee (and beginning in
2004, will be selected by the Compensation Committee) to receive incentive stock
options ("ISOs"). Each ISO has an exercise price equal to 100% of the fair
market value of Park's common shares on the date of grant. If there is no
appreciation in the market value of the common shares, the ISOs will be
valueless. Thus, in contrast to the base salary and incentive components of
compensation, option grants are tied directly to the price performance of the
common shares of Park. At the time of exercise of an ISO (other than an exercise
following death, disability or normal retirement), the optionee must enter into
an agreement with Park providing that the common shares acquired upon exercise
may not be sold or otherwise disposed of to any person other than Park for a
period of five years after the exercise date. This creates a further shared
interest by the optionees and the shareholders of Park in the price performance
of the common shares.
Section 162(m) of the Internal Revenue Code prohibits a publicly-held
corporation, such as Park, from claiming a deduction on its federal income tax
return for compensation in excess of $1,000,000 paid for a given year to the
chief executive officer and the four other most highly compensated officers of
the corporation, other than the chief executive officer, serving at the end of
the corporation's fiscal year. The $1,000,000 compensation deduction limitation
does not apply to "performance-based compensation." None of Park's executive
officers received more than $1,000,000 of compensation from Park and its
subsidiaries for the 2003 fiscal year.
Park does not have a policy that requires all compensation payable in
2003 and thereafter to the covered executive officers to be deductible under
Section 162(m). Park has not attempted to revise the incentive compensation plan
or the 1995 Plan to satisfy the "performance-based compensation" exceptions but
may consider doing so in the future if compensation paid thereunder would
otherwise not be deductible under Section 162(m) and such provisions would not
distort or discourage the existing incentives for performance that enhance the
value of Park and its subsidiaries. In all cases, however, Park will continue to
carefully consider the net cost and value to Park of its compensation policies.
BASE SALARY
The base salaries for the 2003 fiscal year reported in this proxy
statement for Messrs. DeLawder, Egger, Trautman and Kozak were approved by the
Executive Committee in December 2002. The actual base salary received by each of
Park's executive officers was based upon a subjective evaluation of the
individual's responsibilities and contributions and Park's strong 2002 financial
results. While these factors have a general influence on the determination of
the amount of base salary to be paid to each executive officer, no specific
weighting is given to any of these factors and the relevance of each factor
varies from individual to individual. The Executive Committee subjectively
evaluated the individual responsibilities and contributions of each executive
officer when determining salary levels for the 2003 fiscal year but believed
that primary reliance should be placed on the incentive compensation plan for
compensation adjustments from year to year.
22
INCENTIVE COMPENSATION
Since the creation of the Compensation Committee on January 20, 2004,
the Compensation Committee has administered Park's incentive compensation plan
which enables the officers of Park National Bank (the Park National Division,
the Fairfield National Division and the Consolidated Computer Center Division),
Richland Trust Company, Century National Bank, First-Knox National Bank (the
First-Knox National Division and the Farmers and Savings Division), Second
National Bank, United Bank, N.A., Security National Bank (the Security National
Division and the Unity National Division), The Citizens National Bank of Urbana
("Citizens National Bank"), Scope Leasing, Inc. and Guardian Financial Services
Company (collectively, "Park's Principal Subsidiaries") to share in any
above-average return on equity (net income divided by average equity) which Park
and its subsidiaries on a consolidated basis may generate during a fiscal year.
In the 2003 fiscal year, all officers of Park's Principal Subsidiaries were
eligible to participate in the incentive compensation plan. Mr. McConnell
elected not to participate in the incentive compensation plan in the 2003 fiscal
year as he had also done in the 2002 and 2001 fiscal years.
Above-average return on equity is defined as the amount by which the
net income to average equity ratio of Park and its subsidiaries on a
consolidated basis exceeds the median net income to average equity ratio of all
U.S. bank holding companies of similar asset size ($3 billion to $10 billion). A
formula determines the amount, if any, by which Park's return on equity ratio
exceeds the median return on equity ratio of these peer bank holding companies.
Twenty percent (20%) of that amount on a before-tax equivalent basis is
available for incentive compensation. If Park's return on equity ratio is equal
to or less than that of the peer group, no incentive compensation will be
available with respect to that year. The President and Chief Executive Officer
of Park and Park National Bank has historically received a fixed percentage of
the amount available for incentive compensation as determined by the Board of
Directors. Although Park's return on equity ratio for the 2003 fiscal year
exceeded the median return on equity ratio of its peer bank holding companies,
Mr. DeLawder recommended to the Compensation Committee that, because of the very
modest increase in net income earned by Park in the 2003 fiscal year, the fixed
percentage available for the President and Chief Executive Officer be waived.
Mr. DeLawder also recommended that he receive incentive compensation in an
amount no greater than that paid to him in respect of the 2002 fiscal year. The
Compensation Committee concurred with Mr. DeLawder's recommendations and
determined to pay him the same amount of incentive compensation in respect of
the 2003 fiscal year as he had received for the prior year -- $609,730. After
deducting that amount, the remaining amount was distributed to the officers of
Park's Principal Subsidiaries on the basis of their respective contributions to
Park's meeting its short-term and long-term financial goals during the 2003
fiscal year, which contributions were subjectively determined by the Chairman of
the Board and the President and Chief Executive Officer of Park and approved by
the Compensation Committee of the Board of Directors. Recommendations of the
presidents of Park's Principal Subsidiaries were considered when determining
incentive compensation amounts for officers of those subsidiaries. The payment
of the incentive compensation amounts for the 2003 fiscal year will be made
during the first quarter of the 2004 fiscal year.
STOCK OPTIONS
During the 2003 fiscal year, the Executive Committee administered the
1995 Plan and approved the grant of original options covering an aggregate of
145,111 common shares to 463 key employees of Park and its subsidiaries. None of
the executive officers were granted original options.
When an ISO is exercised, the optionee is automatically granted a new
reload option covering the same number of common shares as were the subject of
the exercise. However, an optionee:
23
- may not be granted reload options in any one year of the term
of the original option as established on the grant date of the
original option covering, with respect to all reload options
granted in that one year, more than the number of common
shares which were subject to the original option on the grant
date of the original option; and
- will be granted a reload option covering only that number of
common shares which will allow the reload options and any
other outstanding ISOs granted to the optionee under the 1995
Plan to qualify as ISOs under Section 422 of the Internal
Revenue Code.
During the 2003 fiscal year, reload options covering an aggregate of 25,484
common shares, including the grant made to Mr. Kozak described in the "GRANTS OF
OPTIONS" table, were granted as a result of the exercise of ISOs.
Each ISO (whether an original option or a reload option) has been
granted with an exercise price equal to the fair market value of the common
shares on the date of grant and a vesting schedule determined by the Executive
Committee to allow the ISOs to qualify as such under Section 422 of the Internal
Revenue Code.
OTHER COMPENSATION
Park's officers and the officers and employees of Park's Principal
Subsidiaries are encouraged individually and collectively to maintain a
significant long-term stock ownership position in Park. This has been fostered
not only through the grant of ISOs under the 1995 Plan, but also by the Park
ESOP.
The Park ESOP is an "employee stock ownership plan" within the meaning
of Section 4975(e)(7) of the Internal Revenue Code. Employee salary deferral
contributions to the Park ESOP, employer matching contributions and employer
discretionary contributions to the Park ESOP are made substantially in the form
of Park common shares. Participants in the Park ESOP have the opportunity to
instruct the trustee of the Park ESOP as to how to vote the Park common shares
held for their benefit under the Park ESOP. Each of Messrs. McConnell, DeLawder,
Trautman and Kozak participates in the Park ESOP. Mr. Egger participated in the
Park ESOP until his retirement.
The Executive Committee adopted the Park National Corporation
Supplemental Executive Retirement Plan or "SERP" in December 1996. The SERP
currently benefits 31 officers of Park and its subsidiaries, including Messrs.
McConnell, DeLawder and Kozak. Mr. Egger has not participated in the SERP but
has been provided with supplemental retirement benefits under the terms of his
employment agreement with Security National Bank. Mr. Trautman does not
participate in the SERP. The SERP is a non-qualified benefit plan designed to
restore benefits lost due to limitations under the Internal Revenue Code on the
amount of compensation covered by and the benefits payable under a defined
benefit plan such as the Park National Corporation Defined Benefit Pension Plan.
Park has purchased life insurance contracts to fund the SERP. The SERP is
designed to provide a monthly retirement benefit of approximately $5,000,
$10,500 and $500 for Messrs. McConnell, DeLawder and Kozak, respectively. These
additional benefits are not guaranteed and are dependent upon the earnings from
the related life
24
insurance contracts compared to the average yield on three-month Treasury bills.
The SERP also provides a life insurance benefit for officers of Park and its
subsidiaries participating in the SERP who die before age 86.
SUBMITTED BY THE EXECUTIVE COMMITTEE SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS: OF THE BOARD OF DIRECTORS:
William T. McConnell (Chair) J. Gilbert Reese (Chair)
C. Daniel DeLawder Howard E. LeFevre
Harry O. Egger John J. O'Neill
Howard E. LeFevre
John J. O'Neill
J. Gilbert Reese
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF CASH AND OTHER COMPENSATION
The following table shows, for the last three fiscal years, the cash
compensation paid by Park and its subsidiaries, as well as other compensation
paid or accrued for those years, to or for the account of each individual who
served as an executive officer of Park during the 2003 fiscal year. Dollar
amounts have been rounded down to the nearest whole dollar.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
--------------
Awards
--------------
Annual Compensation Common Shares
Name and Principal Position ------------------------- Underlying All Other
During 2003 Fiscal Year Year Salary ($) Bonus ($)(1) Options (#)(2) Compensation ($)
----------------------- ---- --------- ------------ -------------- ----------------
C. Daniel DeLawder 2003 $318,750 $ 609,730 0 $ 9,436(3)
President and Chief Executive 2002 $318,751 $ 609,730 1,130 $ 8,408
Officer of Park and Park National 2001 $350,025 $ 535,802 2,279 $ 8,563
Bank
Harry O. Egger 2003 $109,243(5) $ 75,000 0 $124,664(6)
Vice Chairman of the Board of Park 2002 $202,500(7) $ 284,000 1,085 $ 8,902
and Chairman of the Board and 2001 $403,300(7) $ 49,620(7) 705 $ 8,286
Chief Executive Officer of Security
National Bank (4)
David L. Trautman 2003 $210,577 $ 401,716 0 $ 6,295(3)
Secretary of Park and Executive 2002 $162,500 $ 213,769 1,111 $ 5,771
Vice President of Park National 2001 $140,005 $ 163,892 1,740 $ 5,724
Bank (8)
25
Long Term
Compensation
--------------
Awards
--------------
Annual Compensation Common Shares
Name and Principal Position ------------------------- Underlying All Other
During 2003 Fiscal Year Year Salary ($) Bonus ($)(1) Options (#)(2) Compensation ($)
----------------------- ---- --------- ------------ -------------- ----------------
John W. Kozak 2003 $139,423 $ 223,000 538 $ 6,445(3)
Chief Financial Officer of Park 2002 $125,000 $ 165,000 1,085 $ 5,858
and Senior Vice President 2001 $182,000 $ 154,714 1,100 $ 5,560
and Chief Financial Officer
of Park National Bank (9)
--------------------
(1) All amounts reported were earned under Park's incentive
compensation plan.
(2) These numbers represent ISOs granted under the 1995 Plan. See
table under "GRANTS OF OPTIONS" for more detailed information on these ISOs.
(3) "All Other Compensation" for 2003 for Messrs. DeLawder,
Trautman and Kozak includes (a) the amounts of $1,940, $295 and $430,
respectively, representing the amount of the premium deemed to have been paid on
behalf of each executive officer under the split-dollar life insurance policy
maintained on his behalf by Park National Bank, under which his beneficiary will
receive proceeds of approximately two times the executive officer's highest
annual total compensation during his employment with Park National Bank; (b) the
amount of $6,000 representing the contribution to the Park ESOP on each of their
behalf to match 2003 pre-tax elective deferral contributions (included under
"Salary") made by each executive officer under the Park ESOP; and (c) the
amounts of $1,496, $0 and $15, respectively, representing the amount of the
premium deemed to have been paid on behalf of each executive officer who
participated in the SERP under the life insurance contract which funds that
executive officer's account under the SERP.
(4) In connection with the merger of Security into Park, effective
March 23, 2001, Mr. Egger became Vice Chairman of the Board of Park. He was not
an executive officer of Park prior to that date. Mr. Egger retired from his
position as Chief Executive Officer of Security National Bank on March 31, 2003.
(5) "Salary" for 2003 for Mr. Egger includes, in addition to his
base salary, (a) the amount of $21,240 representing the market value (as of the
date of receipt) of the 180 common shares received by Mr. Egger as the annual
retainer for his service on the boards of directors of Park and Security
National Bank and (b) the aggregate amount of $10,000 received as fees for
attendance at meetings of the boards of directors of Park and Security National
Bank (and committees of those boards).
(6) "All Other Compensation" for 2003 for Mr. Egger includes (a)
the amount of $3,674 representing the amount of premium deemed to have been paid
on his behalf under the split-dollar life insurance policy maintained on his
behalf by Security National Bank, under which his beneficiary will receive
proceeds of approximately three and one-half times his highest annual total
compensation during his employment with Security National Bank; (b) the amount
of $6,000 representing the contribution to the Park ESOP on his behalf to match
2003 pre-tax elective deferral contributions (included under "Salary") made by
Mr. Egger to the Park ESOP; and (c) the amount of $114,990 paid to Mr. Egger as
the annual supplemental retirement benefit contemplated under the terms of his
employment agreement with Security National Bank as described in "EMPLOYMENT
AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS."
26
(7) Following the merger of Security into Park, the determination
was made to equalize the treatment of the salary and incentive compensation
payable to the officers of the former subsidiaries of Security - Security
National Bank (both the Security National Division and the Unity National
Division) and Citizens National Bank - with the treatment of the salary and
incentive compensation payable to the officers of the other subsidiaries of
Park, so that a greater percentage of the total cash compensation of each
officer of a former Security subsidiary would be "at risk" in the form of an
incentive opportunity under the Park incentive compensation plan and a lesser
amount payable in the form of base salary. As a result, Mr. Egger participated
in the Park incentive compensation plan and was paid incentive compensation in
the amount of $249,620 thereunder in 2002 in respect of Park's 2001 fiscal year,
but his salary for 2002 was commensurately reduced from $403,000 to $202,500.
Mr. Egger had received no incentive compensation from Security for the 2001
fiscal year. Park believes that the number shown in the table as incentive
compensation for Mr. Egger for 2001 more accurately reflects Mr. Egger's
compensation for 2001 in that $200,000 of the incentive compensation paid for
the 2001 fiscal year served to offset the reduction in his base salary for 2002
as a result of the equalizing of treatment of all officers of Park and its
subsidiaries.
(8) Mr. Trautman was elected Secretary and became an executive
officer of Park on July 22, 2002. He had been elected Executive Vice President
of Park National Bank on February 1, 2002. From May 1997 until February 1, 2002,
Mr. Trautman served as President and Chief Executive Officer of First-Knox
National Bank.
(9) Mr. Kozak became an executive officer of Park on July 22,
2002.
GRANTS OF OPTIONS
The following table summarizes information concerning individual grants
of options made during the 2003 fiscal year to each of the individuals named in
the Summary Compensation Table. Park has never granted stock appreciation
rights.
OPTION GRANTS IN LAST FISCAL YEAR
% of Total
Original
Options or of Potential Realizable
Total Reload Value at Assumed
Number of Options, as Annual Rates of Share
Common Shares Appropriate, Price Appreciation
Underlying Granted to Exercise for Option Term (1)
Options Employees in Price Expiration --------------------
Name Granted (#) Fiscal Year ($/Share) Date 5% ($) 10%($)
---- ----------- ----------- --------- ---- --------------------
C. Daniel DeLawder 0 -- -- -- -- --
Harry O. Egger 0 -- -- -- -- --
David L. Trautman 0 -- -- -- -- --
John W. Kozak 538(2)(3) 2.11% $ 102.40 5/9/08 $ 15,225 $33,630
-----------------
27
(1) The dollar amounts reflected in this table are the result of
calculations at the 5% and 10% annual appreciation rates set by the SEC for
illustrative purposes, and assume the options are held until their respective
expiration dates. The dollar amounts are rounded down to the nearest whole
dollar. The dollar amounts are not intended to forecast future financial
performance or possible future appreciation in the price of Park's common
shares. Shareholders are therefore cautioned against drawing any conclusions
from the appreciation data shown, aside from the fact that optionees will only
realize value from the option grants shown if the price of Park's common shares
appreciates, which benefits all Park shareholders commensurately.
(2) This ISO was granted under the 1995 Plan as a reload option
and was fully exercisable as of the grant date (May 9, 2003).
(3) Upon the exercise of an ISO, the optionee will automatically
be granted a new reload option covering the same number of common shares as were
the subject of the exercise; however, an optionee (a) may not be granted reload
options in any one year of the term of the original option as established on the
grant date of the original option covering, with respect to all reload options
granted in that one year, more than the number of common shares which were
subject to the original option on the grant date of the original option; and (b)
will be granted a reload option covering only that number of common shares which
will allow the reload option and any other outstanding ISOs granted to the
optionee under the 1995 Plan to qualify as ISOs under Section 422 of the
Internal Revenue Code. If an ISO is exercised on or after the optionee's
termination of employment, no reload options will be granted in connection with
the exercise. If an optionee's employment is terminated due to his retirement,
his ISOs may thereafter be exercised in full for a period of three months,
subject to the stated term of the ISOs. If an optionee's employment terminates
due to his death or long-term disability, his ISOs may thereafter be exercised
in full for a period of one year, subject to the stated term of the ISOs. If an
optionee's employment is terminated for any other reason, his ISOs are
forfeited. The ISOs become fully vested upon the occurrence of a "change in
control" as defined in the 1995 Plan.
OPTION EXERCISES AND HOLDINGS
The following table summarizes information concerning options exercised
during, and unexercised options held as of the end of, the 2003 fiscal year by
each of the individuals named in the Summary Compensation Table. Dollar amounts
have been rounded down to the nearest whole dollar.
28
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Common Shares Value of Unexercised
Underlying Unexercised In-the-Money
Number of Options at Options at Fiscal
Common Shares Fiscal Year-End (#) Year-End($)(1)
Underlying Options Value --------------------------- ---------------------------
Name Exercised (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------- ------------ ----------- ------------- ----------- -------------
C. Daniel DeLawder 1,050 $ 4,966 4,967(2) 0 $118,823 --
Harry O. Egger 0 -- 0 0 -- --
David L. Trautman 1,067 $ 5,046 5,442(2) 0 $120,961 --
John W. Kozak 1,076 $ 14,881 5,477(2) 0 $124,862 --
----------------------
(1) "Value of Unexercised In-the-Money Options at Fiscal Year-End"
is based upon the fair market value of the common shares on December 31, 2003,
the last trading day of the 2003 fiscal year ($113.15), less the exercise price
of each individual's in-the-money options at the end of the 2003 fiscal year;
and has been rounded to the nearest whole dollar.
(2) These numbers reflect ISOs granted under Park's 1995 Plan and
have been adjusted to reflect the 5% share dividend distributed by Park on
December 15, 1999.
EQUITY COMPENSATION PLAN INFORMATION
Park has one compensation plan (excluding plans assumed by Park in
mergers) under which common shares of Park are authorized for issuance to
officers or employees of Park and its subsidiaries in exchange for consideration
in the form of goods or services - the 1995 Plan. The 1995 Plan and amendments
thereto have been approved by Park's shareholders. In addition, as previously
discussed on pages 15 and 16 and described further below, on November 5, 2003,
each non-employee director of Park or one of its bank subsidiaries and each
non-employee member of the advisory board of a division of a bank subsidiary
received a specified number of common shares of Park as an annual retainer. This
arrangement had not been approved by the shareholders. In compliance with
Section 711 of the AMEX Company Guide, the Board of Directors is proposing the
Directors' Stock Plan for consideration and approval by the shareholders at the
Annual Meeting. If the Directors' Stock Plan is approved by the shareholders,
each non-employee director of Park or one of its bank subsidiaries and each
non-employee advisory board member will continue to receive a specified number
of common shares of Park as an annual retainer.
The following table shows for the 1995 Plan, the number of common
shares issuable upon exercise of options outstanding at December 31, 2003, the
weighted-average exercise price of those options and the number of common shares
remaining available for future issuance at December 31, 2003, excluding common
shares issuable upon exercise of outstanding options. The table does not include
common shares subject to outstanding options granted under equity compensation
plans assumed by Park in mergers. Footnote (1) to the table sets forth the total
number of common shares issuable upon exercise of options granted under plans
assumed in mergers and outstanding at December 31, 2003, and the
weighted-average exercise price of those options. Park cannot grant additional
options under the assumed plans.
29
Number of common
shares remaining
available for future
Number of common issuance under equity
shares to be issued Weighted-average compensation plans
upon exercise of exercise price of (excluding common
outstanding options, outstanding options, shares reflected in
warrants and rights warrants and rights column (a))
Plan category (a) (b) (c)
------------- -------------------- -------------------- ---------------------
Equity compensation
plans approved by
shareholders.....................
560,993 $93.22 471,937
Equity compensation plans
not approved by
shareholders..................... (1) (1) (2)
Total............................ 560,993 $93.22 471,937
---------------------------
(1) The table does not include information for equity compensation plans
assumed by Park in mergers. A total of 29,575 common shares were
issuable upon exercise of options granted under plans assumed in
mergers and outstanding at December 31, 2003, including 25,145 common
shares issuable upon exercise of options granted under plans assumed by
Park in the merger with Security effective March 23, 2001 and 4,430
common shares issuable upon exercise of options granted under plans
assumed by Park in the merger with First-Knox Banc Corp. effective May
5, 1997. The weighted-average exercise price of all options granted
under plans assumed in mergers and outstanding at December 31, 2003,
was $98.56. Park cannot grant additional options under these assumed
plans.
(2) The boards of directors of Park and each of its bank subsidiaries as
well as the members of each advisory board for a division of a bank
subsidiary, determined that each of the non-employee directors or
non-employee advisory board members, as appropriate, was to receive the
annual retainer for service as a board member during the 2003 fiscal
year in the form of Park common shares. Each non-employee director of
Park received an annual retainer in the form of 120 Park common shares.
Each non-employee director of one of Park's bank subsidiaries received
an annual retainer in the form of 60 Park common shares. Each
non-employee advisory board member received an annual retainer in the
form of 60 Park common shares. These common shares were awarded on
November 5, 2003. The aggregate number of common shares issued reflects
the number of individuals then serving as non-employee directors of
Park and its bank subsidiaries and as non-employee advisory board
members. On November 5, 2003, there were nine non-employee directors of
Park, a total of 66 non-employee directors of Park's bank subsidiaries
and non-employee advisory board members and one individual serving as
both a non-employee director of a bank subsidiary and a non-employee
advisory board member, each of whom received common shares of Park as
an annual retainer. An aggregate of 5,700 common shares were awarded.
The Board of Directors is submitting the Directors' Stock Plan to the
shareholders for approval at the Annual Meeting. For a detailed
description of the proposed Directors' Stock Plan, see the discussion
under "PROPOSAL TO APPROVE THE PARK
30
NATIONAL CORPORATION STOCK PLAN FOR NON-EMPLOYEE DIRECTORS OF PARK
NATIONAL CORPORATION AND SUBSIDIARIES," beginning at page 17. If the
Directors' Stock Plan is not approved by the shareholders, in the
future, the annual retainer for service as a non-employee member of the
board of directors of Park or one of its bank subsidiaries or as a
non-employee advisory board member will be paid in the form of cash
instead of common shares.
PENSION PLAN; SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
PENSION PLAN
The following table shows the estimated annual pension benefits
(rounded to the nearest $100) payable to a covered participant upon normal
retirement after January 1, 2004 under the Park National Corporation Defined
Benefit Pension Plan (the "Park pension plan"). Benefits from the Park pension
plan are payable in monthly installments for the life of the participant with
120 monthly payments guaranteed. Normal retirement is the earlier of the
attainment of age 70 1/2 or the attainment of age 65 and the completion of five
years of credited service.
PENSION PLAN TABLE
Estimated Annual Pension Benefits (rounded to nearest $100)(1)
Based on Years of Credited Service Indicated
--------------------------------------------
Annualized Years of Credited Service
Average Monthly ----------------------------------------------------------------------------------
Compensation 10 15 20 25 30 35 or more
----------------- ------- ------- ------- ------- ------- ----------
$ 100,000 $11,600 $17,400 $23,200 $29,000 $32,200 $37,600
125,000 14,500 21,800 29,000 36,300 41,900 48,800
150,000 17,400 26,100 34,800 43,500 51,500 60,100
175,000 20,400 30,600 40,800 51,000 61,200 71,300
200,000 23,600 35,400 47,200 59,000 70,800 82,600
225,000 and up 24,200 36,400 48,500 60,600 72,700 84,800
-----------------
(1) Applicable provisions of the Internal Revenue Code currently
limit the amount of annual compensation used to determine plan benefits under a
defined benefit pension plan, such as the Park pension plan, and the amount of
plan benefits payable annually under such a plan. The Park pension plan is
operated in compliance with these provisions.
The "annualized average monthly compensation" shown above is the annual
equivalent of an average of monthly rates of total compensation (salary and
bonus, including elective deferral contributions). The benefits shown above are
based on the sum of the highest five consecutive and complete annual total
compensation during the ten years preceding retirement, divided by sixty. The
benefits shown in the table will not be reduced by Social Security or other
amounts received by a participant. A participant will be fully vested in the
participant's benefits under the Park pension plan upon the completion of five
years of credited service.
The 2004 monthly rate of total compensation used to determine benefits
is limited to $17,083.33, which is the equivalent of an annual total
compensation of $205,000. Total compensation in excess of this amount will not
be taken into account for benefit calculation purposes. Similarly, years of
credited service in excess of 35 years will not be taken into account for
benefit calculation purposes.
31
The Park pension plan covers employees of Park's Principal Subsidiaries
who have attained age 21 and completed one year of credited service.
The table shown above does not take into account certain additional
minimum benefits. Specifically, the employees of certain of Park's bank
subsidiaries, including Mr. Egger as an employee of Security National Bank,
participated in pension plans maintained for their benefit prior to the bank's
being acquired by Park and the merger of the pension plan into the Park pension
plan. Benefits provided by the Park pension plan cannot be less than the sum of
the benefit provided under the merged pension plan and the benefit earned under
the Park pension plan based on years of credited service since the date of
merger of the two plans.
The projected "annualized average monthly compensation" as of January
1, 2004 was at least $205,000 for each of Messrs. McConnell, DeLawder, Trautman
and Kozak. Messrs. McConnell, DeLawder, Trautman and Kozak had approximately 43,
32, 20 and 23 years of credited service, respectively, under the Park pension
plan as of January 1, 2004.
As of his retirement on March 31, 2003, Mr. Egger's "annualized average
monthly compensation" was $486,500. Mr. Egger had 26 years of credited service
when the pension plan which had been maintained by Security was merged into the
Park pension plan on June 30, 2001. As contemplated by the Security Merger
Agreement, Mr. Egger was credited with 26 years of service for purposes of
eligibility and vesting (but not for benefit accrual purposes) under the Park
pension plan and as of the date of his retirement, had 28 years of credited
service for purposes of eligibility and vesting and 1 1/2 years of credited
service for benefit accrual purposes under the Park pension plan. Since his
retirement, Mr. Egger has received and will continue to receive a monthly
pension benefit of $6,318.86.
SERP
Park adopted the SERP in December 1996. The SERP currently benefits 31
officers of Park and its subsidiaries, including Messrs. McConnell, DeLawder and
Kozak. Mr. Egger has not participated in the SERP but has been provided with
supplemental retirement benefits under the terms of his employment agreement
with Security National Bank. Mr. Trautman does not participate in the SERP. The
SERP is a non-qualified benefit plan designed to restore benefits lost due to
limitations under the Internal Revenue Code on the amount of compensation
covered by and the benefits payable under a defined benefit plan. Park has
purchased life insurance contracts to fund the SERP. The SERP is designed to
provide a monthly retirement benefit of approximately $5,000, $10,500 and $500
for Messrs. McConnell, DeLawder and Kozak, respectively. These additional
benefits are not guaranteed and are dependent upon the earnings from the related
life insurance contracts compared to the average yield on three-month Treasury
bills. The SERP also provides a life insurance benefit for officers of Park and
its subsidiaries participating in the SERP who die before age 86.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Until his retirement on March 31, 2003, Harry O. Egger was party to an
employment agreement with Security National Bank which Park agreed to honor
under the terms of the Security Merger Agreement. Under the terms of the
employment agreement, Mr. Egger will receive an annual supplemental retirement
benefit in the amount of $153,320, payable for the remainder of his life. In
addition, Security National Bank maintains a split-dollar life insurance policy
on behalf of Mr. Egger as described under "COMPENSATION OF DIRECTORS."
Park National Bank maintains split-dollar life insurance policies on
behalf of Messrs. McConnell, DeLawder, Trautman and Kozak, in their respective
capacities as executive officers. Park National Bank
32
will receive proceeds under the policy in an amount equal to the premiums paid
up to the date of death plus earnings accrued in respect of the policy since the
inception of the policy. Each of Messrs. McConnell, DeLawder, Trautman and Kozak
has the right to designate the beneficiary to whom his share of the proceeds
under the policy (approximately two times his highest annual total compensation
during his employment with Park National Bank) is to be paid. Each policy
remains in effect following the covered individual's retirement as long as
specified conditions are satisfied.
TRANSACTIONS INVOLVING MANAGEMENT
J. Gilbert Reese, a director of Park, is senior partner in the law firm
of Reese, Pyle, Drake & Meyer, P.L.L. which rendered legal services to Park
National Bank during the 2003 fiscal year and continues to do so.
R. William Geyer, a director of Park, is a partner in the law firm of
Kincaid, Taylor & Geyer which rendered legal services to Century National Bank
during the 2003 fiscal year and continues to do so. Kincaid, Taylor & Geyer
received an aggregate of $363,933 in fees for the legal services rendered during
the 2003 fiscal year.
James J. Cullers, a director of Park, is of counsel to the law firm of
Zelkowitz, Barry & Cullers which rendered legal services to First-Knox National
Bank during the 2003 fiscal year and continues to do so.
During the 2003 fiscal year, directors and executive officers of Park,
members of their immediate families and corporations or organizations with which
they are associated were involved with banking transactions with Park National
Bank (both the Park National Division and the Fairfield National Division),
Richland Trust Company, Century National Bank, First-Knox National Bank (both
the First-Knox National Division and the Farmers and Savings Division), Second
National Bank, United Bank, Security National Bank (both the Security National
Division and the Unity National Division) and Citizens National Bank in the
ordinary course of their respective businesses and in compliance with applicable
federal and state laws and regulations. It is expected that similar banking
transactions will be entered into in the future. Loans to these persons have
been made on substantially the same terms, including the interest rate charged
and collateral required, as those prevailing at the time for comparable
transactions with persons not affiliated with Park or its subsidiaries. These
loans have been subject to and are presently subject to no more than a normal
risk of uncollectibility and present no other unfavorable features. At December
31, 2003, the aggregate amount of loans to the fourteen individuals then serving
as directors and executive officers of Park and their associates as a group was
approximately $33,914,000. In addition, at December 31, 2003, loans to the
individuals then serving as directors and executive officers of Park's
subsidiaries, who were not also directors or executive officers of Park, totaled
approximately $60,627,000. As of the date of this proxy statement, all of the
loans described in this paragraph were performing in accordance with their
original terms.
PERFORMANCE GRAPH
The following line graph compares the monthly percentage change in the
cumulative total shareholder return on the Park common shares with an index for
the AMEX Stock Market (US Companies) comprised of all domestic common shares
traded on AMEX and an index for Nasdaq Bank Stocks comprised of all depository
institutions (SIC Code #6020-6029) and holding and other investment companies
(SIC Code # 6710-6719) that are traded on The NASDAQ National Market and The
NASDAQ SmallCap Market ("Nasdaq Bank Stocks"), for the five-year period from
December 31, 1998 to December 31, 2003 (the last
33
trading day for the 2003 fiscal year). The "Nasdaq Bank Stocks" index is
comprised of stocks of banks and other depository institutions and their holding
companies, a number of which Park considers to be within its peer group. The
"AMEX Financial Stocks" index includes the stocks of banks, thrifts, finance
companies and securities broker-dealers. Park believes that the Nasdaq Bank
Stocks index is, therefore, the most appropriate industry index available to
compare to the cumulative total return on the Park common shares. However, since
the Park common shares are traded on AMEX, Park is using the AMEX Stock Market
(US Companies) index as the broad equity market index for comparative purposes.
[Remainder of page intentionally left blank;
performance graph is located on following page.]
34
Comparison of Five - Year Cumulative Total Shareholder Returns
[Performance Graph for Park National Corporation]
LEGEND
Cumulative Total Shareholder
Symbol Returns Index for : 12/1998 12/1999 12/2000 12/2001 12/2002 12/2003
------ ------------------------------ ------- ------- ------- ------- ------- -------
__________ [square] Park National Corporation 100.0 100.3 96.5 103.1 113.5 134.1
___ __ ___ [star] AMEX Stock Market (US Companies) 100.0 131.9 122.4 113.9 93.1 126.0
---------- [triangle] Nasdaq Bank Stocks 100.0 96.2 109.8 118.9 121.7 156.6
SIC 6020 - 6029, 6710 - 6719 US & Foreign
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. Each index is reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 12/31/1998.
35
AUDIT COMMITTEE MATTERS
REPORT OF THE AUDIT COMMITTEE FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003
In accordance with the SEC's regulations, the Audit Committee has
issued the following report:
ROLE OF THE AUDIT COMMITTEE, INDEPENDENT AUDITORS AND MANAGEMENT
As of the date of this proxy statement, the Audit Committee consists of
three directors who qualify as independent under the applicable sections of the
AMEX Company Guide and Rule 10A-3 under the Exchange Act. In addition, two other
individuals served as members of the Audit Committee during the 2003 fiscal year
-- James J. Cullers (from January 1, 2003 to November 17, 2003) and R. William
Geyer, who also served as Chair of the Audit Committee (from January 1, 2003 to
November 17, 2003).
The Audit Committee operates under the Audit Committee Charter adopted
by the Board of Directors. The Audit Committee is responsible for the
appointment and oversight of the independent auditors employed by Park. In
accordance with the Audit Committee Charter, the Audit Committee oversees Park's
accounting and financial reporting processes and the annual independent audit of
Park's consolidated financial statements on behalf of the Board of Directors.
Management of Park has the primary responsibility for the consolidated financial
statements and the accounting and financial reporting processes, including the
establishment and maintenance of adequate internal control over financial
reporting for Park. Ernst & Young LLP ("E & Y"), who served as Park's
independent auditors for the 2003 fiscal year, is responsible for performing an
audit of Park's consolidated financial statements in accordance with auditing
standards generally accepted in the United States, and issuing their report
thereon.
During the 2003 fiscal year, the Audit Committee met five times. In
addition, the Chair of the Audit Committee, on behalf of the Audit Committee,
met quarterly with Park's senior financial management and E & Y and discussed
Park's interim financial information prior to public release.
In fulfilling its oversight responsibilities, the Audit Committee
obtained from E & Y a formal written statement describing all relationships
between E & Y and Park and its subsidiaries that might bear on E & Y's
independence consistent with Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as modified. The Audit Committee
discussed with E & Y any relationships that may impact E & Y's objectivity and
independence and the Audit Committee satisfied itself as to E & Y's
independence.
The Audit Committee discussed with Park's internal auditors and E & Y
the overall scope and plans for their respective audits. The Audit Committee met
with the internal auditors and E & Y, with and without management present, to
discuss the results of their respective audits, their evaluations of Park's
system of internal control over financial reporting and the overall quality of
Park's financial reporting. In addition, the Audit Committee reviewed and
discussed with E & Y all matters required by auditing standards generally
accepted in the United States, including those described in Statement on
Auditing Standards No. 61, Communication with Audit Committees, as modified.
MANAGEMENT'S REPRESENTATIONS AND AUDIT COMMITTEE RECOMMENDATIONS
Management has represented to the Audit Committee that Park's audited
consolidated financial statements as of and for the year ended December 31,
2003, were prepared in accordance with accounting principles generally accepted
in the United States and the Audit Committee has reviewed and discussed the
36
audited consolidated financial statements with management and E & Y. Based on
the Audit Committee's discussions with management and E & Y and its review of
the report of E & Y to the Audit Committee, the Audit Committee recommended to
the Board of Directors (and the Board approved) that Park's audited consolidated
financial statements be included in Park's Annual Report on Form 10-K for the
fiscal year ended December 31, 2003 to be filed with the SEC.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS:
Maureen Buchwald (Chair) Howard E. LeFevre Leon Zazworsky
PRE-APPROVAL OF SERVICES PERFORMED BY INDEPENDENT AUDITORS
Under applicable SEC rules, the Audit Committee is required to
pre-approve the audit and non-audit services performed by the independent
auditors in order to ensure that they do not impair the auditors' independence
from Park. The SEC's rules specify the types of non-audit services that an
independent auditor may not provide to its audit client and establish the Audit
Committee's responsibility for administration of the engagement of the
independent auditors.
Consistent with the SEC's rules, the Audit Committee Charter requires
that the Audit Committee review and pre-approve all audit services and permitted
non-audit services provided by the independent auditors to Park or any of its
subsidiaries. The Audit Committee may delegate pre-approval authority to a
member of the Audit Committee and if it does, the decisions of that member must
be presented to the full Audit Committee at its next scheduled meeting.
All requests or applications for services to be provided by the
independent auditors must be submitted to the Audit Committee by both the
independent auditors and the Chief Financial Officer, and must include a joint
statement as to whether, in their view, the request or application is consistent
with the SEC's rules on auditor independence.
FEES OF INDEPENDENT AUDITORS
On November 18, 2002, upon the recommendation of the Audit Committee,
the Board of Directors of Park appointed the accounting firm of E & Y to serve
as the independent auditors of Park for the 2003 fiscal year. Fees billed for
services rendered by E & Y for each of the 2003 fiscal year and the 2002 fiscal
year were as follows:
AUDIT FEES
The aggregate audit fees billed by E & Y for the 2003 fiscal year and
the 2002 fiscal year were $148,000 and $145,250, respectively. These amounts
include fees for professional services rendered by E & Y in connection with the
audit of Park's annual consolidated financial statements and reviews of the
consolidated financial statements included in Park's Quarterly Reports on Form
10-Q. The audit fees for the 2002 fiscal year also include fees for accounting
services in connection with Park's filing of a registration statement.
AUDIT-RELATED FEES
The aggregate audit-related fees billed by E & Y for each of the 2003
fiscal year and the 2002 fiscal year were $13,000. The fees under this category
relate to the audits of the Park pension plan and the Park ESOP.
37
TAX FEES
The aggregate tax fees billed by E & Y for the 2003 fiscal year and the
2002 fiscal year were $186 and $29,700, respectively. Tax fees relate to tax
compliance and consulting services.
ALL OTHER FEES
The aggregate fees for all other services rendered by E & Y for the
2002 fiscal year were $31,500. These other fees were for services related to
network security consulting. During the 2003 fiscal year, E&Y did not render any
services other than those described above under "AUDIT FEES," "AUDIT-RELATED
FEES" and "TAX FEES."
All of the services rendered by E&Y to Park and its subsidiaries during
the 2003 fiscal year had been pre-approved by the Audit Committee.
NOTIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On January 20, 2004, the Audit Committee appointed E & Y to serve as
the independent auditors of Park for the 2004 fiscal year. As previously noted,
on November 18, 2002, upon the recommendation of the Audit Committee, the full
Board of Directors appointed E & Y to serve as the independent auditors of Park
for the 2003 fiscal year. E & Y has served as Park's independent auditors since
July 1994. Representatives of E & Y are expected to be present at the Annual
Meeting, will be given the opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
Proposals by shareholders intended to be presented at the 2005 Annual
Meeting of Shareholders must be received by the Secretary of Park no later than
November 12, 2004, to be eligible for inclusion in Park's proxy, notice of
meeting and proxy statement relating to the 2005 Annual Meeting. Upon receipt of
a shareholder proposal, Park will determine whether or not to include the
proposal in the proxy materials in accordance with the applicable rules and
regulations of the SEC.
The SEC has promulgated rules relating to the exercise of discretionary
voting authority under proxies solicited by the Board of Directors. If a
shareholder intends to present a proposal at the 2005 Annual Meeting of
Shareholders and does not notify the Secretary of Park of the proposal by
January 26, 2005, the proxies solicited by the Board of Directors for use at the
2005 Annual Meeting will be entitled to use their discretionary voting authority
should the proposal then be raised, without any discussion of the matter in
Park's proxy statement for the 2005 Annual Meeting.
In each case, written notice must be given to Park's Secretary, whose
name and address are:
David L. Trautman, Secretary
50 North Third Street
Post Office Box 3500
Newark, Ohio 43058-3500
38
Shareholders desiring to nominate candidates for election as directors
at the 2005 Annual Meeting must follow the procedures described in "ELECTION OF
DIRECTORS -- NOMINATING PROCEDURES."
DELIVERY OF PROXY MATERIALS
TO HOUSEHOLDS
Periodically, Park provides each registered shareholder at a shared
address, not previously notified, with a separate notice of Park's intention to
household proxy materials. Only one copy of Park's proxy statement for the
Annual Meeting and Annual Report to Shareholders for the 2003 fiscal year is
being delivered to previously notified multiple registered shareholders who
share an address unless Park has received contrary instructions from one or more
of the shareholders. A separate proxy card and a separate Notice of Annual
Meeting of Shareholders is being included for each account at the shared
address.
Registered shareholders who share an address and would like to receive
a separate Annual Report to Shareholders for the 2003 fiscal year and/or a
separate proxy statement for the Annual Meeting delivered to them, or have
questions regarding the householding process, may contact Park's transfer agent
and registrar First-Knox National Bank by calling 1-800-837-5266, ext. 5208, or
forwarding a written request addressed to First-Knox National Bank, Attention
Debbie Daniels, P.O. Box 1270, One South Main Street, Mount Vernon, Ohio
43050-1270. Promptly upon request, additional copies of the Annual Report to
Shareholders for the 2003 fiscal year and/or a separate proxy statement for the
Annual Meeting will be sent. By contacting First-Knox National Bank, registered
shareholders sharing an address can also (i) notify Park that the registered
shareholders wish to receive separate annual reports to shareholders and/or
proxy statements in the future or (ii) request delivery of a single copy of
annual reports to shareholders or proxy statements in the future if registered
shareholders at the shared address are receiving multiple copies.
Beneficial shareholders, who hold Park common shares through a broker,
financial institution or other record holder, should contact their broker,
financial institution or other record holder for specific information on the
householding process as it applies to their accounts.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors knows of
no matter that will be presented for action at the Annual Meeting other than
those discussed in this proxy statement. If any other matter requiring a vote of
the shareholders is properly presented at the Annual Meeting, the persons acting
under the proxies solicited by the Board of Directors will vote and act
according to their best judgments in light of the conditions then prevailing.
It is important that your proxy card be completed and returned
promptly. If you do not expect to attend the Annual Meeting in person, please
fill in, sign and return the enclosed proxy card in the self-addressed envelope
furnished herewith.
By Order of the Board of Directors,
/s/ David L. Trautman
David L. Trautman, Secretary
March 12, 2004
39
APPENDIX A
PARK NATIONAL CORPORATION
AUDIT COMMITTEE CHARTER
APPENDIX A
PARK NATIONAL CORPORATION
AUDIT COMMITTEE CHARTER
(ADOPTED APRIL 17, 2000; REVISED JANUARY 20, 2004)
ORGANIZATION
This charter governs the operations of the Audit Committee of the Board of
Directors of Park National Corporation (the "Company"). The Audit Committee
shall review and reassess the adequacy of this charter at least annually and
obtain the approval of the Board of Directors for any amendments to this
charter.
The Audit Committee shall serve at the pleasure of the Board of Directors of the
Company. The Audit Committee shall consist of at least three members of the
Board of Directors, each of whom shall be appointed by the Board. Each member of
the Audit Committee shall satisfy the independence standards specified in
Section 121A and any other applicable sections of the American Stock Exchange
("AMEX") Company Guide or other corporate governance requirements of AMEX, Rule
10A-3 under the Securities Exchange Act of 1934 (the "Exchange Act") and any
other applicable laws, rules and regulations. All Audit Committee members shall
be financially literate and able to read and understand fundamental financial
statements, including a balance sheet, income statement and cash flow statement.
At least one member of the Audit Committee shall have financial sophistication
as determined in accordance with the applicable corporate governance
requirements of AMEX.
The Audit Committee shall meet at least four times annually and may convene more
frequently as circumstances dictate. The Audit Committee shall be chaired by one
of its members appointed by the Board of Directors. The Audit Committee may
designate its own Secretary who may be a non-committee member. Minutes of
meetings of the Audit Committee shall be prepared. A majority of the Audit
Committee members shall constitute a quorum for the transaction of business. The
Audit Committee may have in attendance at its meetings such members of
management, the internal auditors and the independent auditors or others as the
Audit Committee may deem necessary or desirable to provide the information the
Audit Committee needs to carry out its duties and responsibilities. The Audit
Committee shall report regularly to the Board of Directors about meetings of the
Audit Committee.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling their oversight responsibility to the shareholders and potential
shareholders of the Company, the investment community, and others relating to
the Company's financial statements and accounting and financial reporting
processes, the internal control over financial reporting, the internal audit
function, the annual independent audit of the Company's financial statements,
and the legal compliance and ethics programs as established by management and
the Board. In so doing, it is the responsibility of the Audit Committee to
maintain
A-1
free and open communication between the Audit Committee, the independent
auditors, the internal auditors and management of the Company. In discharging
its oversight role, the Audit Committee is empowered to investigate any matter
brought to its attention or otherwise within the scope of its duties and
responsibilities with full access to all books, records, facilities, the
independent auditors, and personnel of the Company and its subsidiaries and the
power to retain outside counsel and other advisors as the Audit Committee
determines necessary to assist the Audit Committee in carrying out its duties
and responsibilities. The Company shall provide for appropriate funding, as
determined by the Audit Committee, in its capacity as a committee of the Board
of Directors, for payment of (a) compensation to the independent auditors
engaged by the Audit Committee for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services for the Company or
any of its subsidiaries, (b) compensation to any advisors employed by the Audit
Committee and (c) ordinary administrative expenses of the Audit Committee that
are necessary or appropriate in carrying out its duties and responsibilities.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the Audit Committee is to oversee the Company's
accounting and financial reporting processes on behalf of the Board of Directors
and report the results of its activities to the Board. The Company's management
is responsible for preparing the Company's financial statements and for
maintaining systems of disclosure controls and procedures and internal control
over financial reporting. The independent auditors are responsible for auditing
the Company's financial statements and issuing an attestation report on the
assessment by the Company's management of the Company's internal control over
financial reporting. The Audit Committee in carrying out its duties and
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances. The Audit
Committee should take the appropriate actions to set the overall corporate
"tone" for quality financial reporting, sound business risk practices, and
ethical behavior.
The following shall be the principal recurring processes of the Audit Committee
in carrying out its oversight responsibility. The processes are set forth as a
guide with the understanding that the Audit Committee may supplement them as
appropriate in light of changing business, legislative, regulatory, legal or
other conditions. The Audit Committee shall also carry out such other duties and
responsibilities delegated to it by the Board of Directors from time to time
that are related to the purpose of the Audit Committee.
- The Audit Committee shall be responsible for ensuring that the
independent auditors submit on a periodic basis to the Audit
Committee a formal written statement delineating all
relationships between the independent auditors and the
Company, consistent with Independence Standards Board Standard
1, as such standard may be modified or supplemented. The Audit
Committee shall also be responsible for actively engaging in a
dialogue with the independent auditors with
A-2
respect to any disclosed relationships or services that may
impact the objectivity and independence of the independent
auditors and for taking, or recommending that the full Board
of Directors take, appropriate action to oversee the
independence of the independent auditors.
- The Audit Committee shall be directly responsible for the
appointment, compensation, retention and oversight of the work
of the independent auditors engaged (including resolution of
disagreements between management and the independent auditors
regarding financial reporting) for the purpose of preparing or
issuing an audit report or performing other audit, review or
attest services for the Company or any of its subsidiaries,
and the independent auditors must report directly to the Audit
Committee.
- The Audit Committee shall review and pre-approve all audit
services and permitted non-audit services provided by the
independent auditors to the Company or any of its subsidiaries
and shall not engage the independent auditors to perform the
specific non-audit services prohibited by law, rule or
regulation. The Audit Committee may delegate pre-approval
authority to a member of the Audit Committee. The decisions of
any Audit Committee member to whom pre-approval authority is
delegated must be presented to the full Audit Committee at its
next scheduled meeting. The Audit Committee may establish
pre-approval policies and procedures, in compliance with the
rules and criteria established by the Securities and Exchange
Commission (the "SEC"). Such pre-approval policies and
procedures must be detailed as to the particular services to
be provided, insure that the Audit Committee knows what
services it is being asked to pre-approve and not include any
delegation to management of the Audit Committee's
responsibilities under applicable laws, rule and regulations
to pre-approve all services provided by the independent
auditors. Approval of a non-audit service to be performed by
the independent auditors and, if applicable, the pre-approval
policies and procedures established by the Audit Committee
shall be disclosed as required under applicable SEC rules in
the Company's Annual Report on Form 10-K and annual proxy
statement.
- The Audit Committee shall discuss with the internal auditors
and the independent auditors annually, before each audit
begins, the overall scope and plans for their respective
audits including the adequacy of staffing and compensation.
Also, the Audit Committee shall discuss with management, the
internal auditors and the independent auditors the adequacy
and effectiveness of the Company's systems of disclosure
controls and procedures and internal control over financial
reporting and related accounting and financial controls,
including the Company's systems to monitor and manage business
risk, and legal and ethical compliance programs. Further, the
Audit Committee shall meet separately with the internal
auditors and the independent auditors, with and/or without
management present, to discuss the results of their
examinations. The Audit Committee shall review management's
assessment of the effectiveness of the Company's internal
control over financial reporting as of the end of the
Company's most recent fiscal year and the independent
auditors' attestation report on management's assessment.
A-3
- The Audit Committee shall review the interim financial
statements and the disclosures to be made under management's
discussion and analysis of financial condition and results of
operations with management and the independent auditors prior
to the filing of the Company's Quarterly Report on Form 10-Q.
Also, the Audit Committee shall discuss the results of the
quarterly review and any other matters required to be
communicated to the Audit Committee by the independent
auditors under generally accepted auditing standards,
including Statement on Auditing Standard No. 100, as that
standard may be modified or supplemented. The Audit Committee
shall review and discuss earnings press releases, as well as
any other financial information in an 8-K filing. The chair of
the Audit Committee may represent the entire Audit Committee
for the purposes of these reviews.
- The Audit Committee shall review with management and the
independent auditors the financial statements and the
disclosures under management's discussion and analysis of
financial condition and results of operations to be included
in the Company's Annual Report on Form 10-K (or the annual
report to shareholders if distributed prior to the filing of
Form 10-K), including the independent auditors' judgment about
the quality, not just the acceptability, of the Company's
accounting principles as applied in its financial reporting,
the consistency of the Company's accounting policies and their
application, the reasonableness of accounting estimates, the
clarity and completeness of the Company's financial
statements, including related disclosures, and any other
matters required to be discussed with the independent auditors
by Statement on Auditing Standards Nos. 61, 89 and 90, as
those standards may be modified or supplemented. Also, the
Audit Committee shall discuss the results of the annual audit
and any other matters required to be communicated to the Audit
Committee by the independent auditors under generally accepted
auditing standards and other applicable laws, rules and
regulations, including: (a) all critical accounting policies
and practices to be used; (b) all alternative treatments
within generally accepted accounting principles for policies
and practices related to material items that have been
discussed with management of the Company, including
ramifications of the use of such alternative disclosures and
treatments and the treatment preferred by the independent
auditors; and (c) other material written communications
between the independent auditors and the management of the
Company, such as any management letter or schedule of
unadjusted differences. The Audit Committee shall recommend to
the Board of Directors whether the Company's audited financial
statements should be included in the Annual Report on Form
10-K .
- The Audit Committee shall review disclosures made by the
principal executive officer and the principal financial
officer of the Company during the certification process in
respect of each Quarterly Report on Form 10-Q and each Annual
Report on Form 10-K, about significant deficiencies and
material weaknesses in the design or operation of internal
control over financial reporting and any fraud that involves
management or other employees who have a significant role in
the
A-4
Company's internal control over financial reporting. The Audit
Committee shall also discuss any changes in the Company's
internal control over financial reporting which occurred
during the last fiscal quarter.
- The Audit Committee shall discuss with management the
Company's processes regarding compliance with applicable laws,
rules and regulations and communication of and compliance with
the Company's Code of Business Conduct and Ethics (the "Code
of Ethics"). The Audit Committee shall have the authority to
investigate any alleged violation of the Code of Ethics by any
of the officers or directors of the Company or its
subsidiaries. In the event that the Audit Committee determines
that a violation of the Code of Ethics has occurred, the Audit
Committee shall be authorized to take any action it deems
appropriate. If the violation involves an executive officer or
director of the Company, the Audit Committee shall notify the
Company's Board of Directors.
- The Audit Committee shall receive attorneys' reports of
evidence of a material violation of an applicable United
States federal or state securities law, a material breach of
fiduciary duty arising under United States federal or state
law, or a similar material violation of any United States
federal or state law.
- The Audit Committee shall institute procedures for the
receipt, retention, and treatment of complaints received by
the Company regarding accounting, internal accounting
controls, or auditing matters, and the confidential, anonymous
submission by employees of the Company and its subsidiaries of
concerns regarding questionable accounting or auditing
matters.
- The Audit Committee shall review and oversee procedures
designed to identify "related party" transactions that are
material to the Company's financial statements or otherwise
require disclosure under applicable laws and rules adopted by
the SEC or AMEX. The Audit Committee shall have the authority
to approve any such "related party" transactions.
- The Audit Committee shall prepare the Audit Committee report
to be integrated in the Company's annual proxy statement, as
required by SEC rules as well as review any other information
related to the duties and responsibilities of the Audit
Committee required to be disclosed under applicable laws,
rules and regulations, including the rules of the SEC and the
AMEX corporate governance requirements.
DISCLAIMER
While the Audit Committee has the duties, responsibilities and powers
set forth in this charter, it is not the duty or responsibility of the Audit
Committee to plan or conduct audits or to determine that the Company's financial
statements are complete and accurate and are in accordance with generally
accepted accounting principles. Those are the duty and responsibility of
management and the independent auditors.
A-5
APPENDIX B
PARK NATIONAL CORPORATION STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS OF PARK
NATIONAL CORPORATION AND SUBSIDIARIES
APPENDIX B
PARK NATIONAL CORPORATION
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS OF
PARK NATIONAL CORPORATION AND SUBSIDIARIES
1. PURPOSE
The purpose of the Park National Corporation Stock Plan for
Non-Employee Directors of Park National Corporation and Subsidiaries (the
"Plan") is to promote the interests of Park National Corporation (the "Company")
and its shareholders by allowing the Company and its subsidiaries to attract and
retain the services of outstanding non-employee directors and non-employee
advisory board members upon whose judgment, interest and special efforts the
successful conduct of the business of the Company and the subsidiaries of the
Company (each, a "Subsidiary") is largely dependent and to encourage the highest
level of participation by such directors and advisory board members. The Plan is
expected to contribute to the attainment of these objectives by increasing the
proprietary interest of the non-employee directors of the Company and the
Subsidiaries, and of the non-employee members of the advisory boards of
divisions of those Subsidiaries which have more than one division, in the growth
and performance of the Company by awarding to such directors and advisory board
members common shares, without par value (the "Shares"), of the Company
representing the annual retainer payable to such directors and advisory board
members for service on the appropriate boards of directors and advisory boards
for each fiscal year of the Company (the "Annual Retainer").
2. ADMINISTRATION
The Plan shall be administered by the Company's Board of Directors (the
"Board"). Subject to the provisions of the Plan, the Board shall be authorized
to interpret the Plan; to establish, amend and rescind any rules and regulations
relating to the Plan; and to make all determinations necessary or advisable for
the administration of the Plan. The determinations of the Board in the
administration of the Plan, as described herein, shall be final and conclusive.
Each of the President and Chief Executive Officer, the Chief Financial Officer
and the Secretary of the Company shall be authorized to implement the Plan in
accordance with its terms and to take such actions of a ministerial nature as
shall be necessary to effectuate the intent and purposes of the Plan. The
validity, construction and effect of the Plan and any rules and regulations
relating to the Plan shall be determined in accordance with the laws of the
State of Ohio.
3. ELIGIBILITY
The class of individuals eligible to receive awards of Shares
representing their Annual Retainer under the Plan, shall be (a) the directors of
the Company who are not employees of the Company or any Subsidiary ("Eligible
Company Directors"); (b) the directors of any one or more of the Subsidiaries
who are not employees of the Company or any Subsidiary (the "Eligible Subsidiary
Directors"); and (c) the members of any one or more of the advisory boards for
B-1
divisions of those Subsidiaries which have more than one division, who are not
employees of the Company or any Subsidiary (the "Eligible Advisory Board
Members").
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 6 below, the maximum
number of Shares that may be awarded to Eligible Company Directors, Eligible
Subsidiary Directors and Eligible Advisory Board Members under the Plan shall be
100,000 Shares. The Shares to be delivered under the Plan may consist of either
Shares currently held or Shares subsequently acquired by the Company and held in
treasury, including Shares purchased in the open market or in private
transactions.
5. AWARD OF SHARES REPRESENTING ANNUAL RETAINER
(a) On the date of the regular meeting of the Company's Board held
during the fourth fiscal quarter of each fiscal year of the Company, beginning
after the Effective Date, each individual then serving as an Eligible Company
Director shall be awarded 120 Shares of the Company, representing the Annual
Retainer payable to such Eligible Company Director for service as a director of
the Company for such fiscal year. In the event a stock split or a stock dividend
of 10% or more affecting the Shares is declared in any fiscal year of the
Company, the number of Shares to be awarded to the Eligible Company Directors
representing the Annual Retainer for service as a director of the Company for
such fiscal year shall be increased proportionately.
(b) On the date of the regular meeting of the Company's Board held
during the fourth fiscal quarter of each fiscal year of the Company, beginning
after the Effective Date, each individual then serving as an Eligible Subsidiary
Director shall be awarded 60 Shares of the Company in respect of each board of
directors of a Subsidiary on which the Eligible Subsidiary Director is then
serving, representing the Annual Retainer payable to such Eligible Subsidiary
Director for service as a director of each such Subsidiary for such fiscal year.
In the event a stock split or a stock dividend of 10% or more affecting the
Shares is declared in any fiscal year of the Company, the number of Shares to be
awarded to the Eligible Subsidiary Directors representing the Annual Retainer
for service as a director of a Subsidiary for such fiscal year shall be
increased proportionately.
(c) On the date of the regular meeting of the Company's Board held
during the fourth fiscal quarter of each fiscal year of the Company, beginning
after the Effective Date, each individual then serving as an Eligible Advisory
Board Member shall be awarded 60 Shares of the Company in respect of each
advisory board for a division of a Subsidiary on which the Eligible Advisory
Board Member is then serving, representing the Annual Retainer payable to such
Eligible Advisory Board Member for service as an advisory board member for each
such division of a Subsidiary for such fiscal year. In the event a stock split
or a stock dividend of 10% or more affecting the Shares is declared in any
fiscal year of the Company, the number of Shares to be awarded to the Eligible
Advisory Board Members representing the Annual Retainer for service as an
advisory board member for a division of a Subsidiary for such fiscal year shall
be increased proportionately.
B-2
6. ADJUSTMENT AND CHANGES IN SHARES
If, after the Effective Date, there is a stock dividend or a stock
split of 10% or more, recapitalization (including payment of an extraordinary
dividend), merger, consolidation, combination, spin-off, distribution of assets
to shareholders, exchange of shares, or other similar corporate change affecting
the Shares, the Board shall appropriately adjust the aggregate number of Shares
available for award under the Plan and any other factors or terms affecting the
number of Shares to be awarded under the Plan pursuant to Section 5 above.
7. PLAN AMENDMENT AND TERMINATION
The Board may terminate, suspend or amend the Plan at any time without
shareholder approval except to the extent that shareholder approval is required
to satisfy applicable requirements imposed by (a) Rule 16b-3 under the
Securities Exchange Act of 1934, or any successor rule or regulation; (b) the
rules of any securities exchange, market or other quotation system on or through
which the Shares are then listed or traded; or (c) any other applicable laws,
rules or regulations.
8. APPLICABLE LAW AND REGISTRATION
The award of Shares under the Plan shall be subject to all applicable
laws, rules and regulations, and to all required approvals of any governmental
agencies or national securities exchange, market or other quotation system.
Also, no Shares shall be issued under the Plan unless the Company is satisfied
that such issuance will comply with applicable federal and state securities
laws, rules and regulations. Certificates for Shares awarded under the Plan may
be subject to such stop transfer orders and other restrictions as the Board may
deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any securities exchange or other recognized
market or quotation system on or through which the Shares are then listed or
traded, or any applicable federal or state securities law. The Board may cause a
legend or legends to be placed on any certificates for Shares awarded under the
Plan to make appropriate reference to restrictions within the scope of this
Section 8.
9. EFFECTIVE DATE AND DURATION OF PLAN
The Plan shall become effective on the date of the approval of the Plan
by the Company's shareholders ("Effective Date"). Subject to the provisions of
Section 7 above, the Plan shall terminate on the day preceding the tenth
anniversary of the Effective Date unless the Plan is extended or terminated at
an earlier date by the shareholders of the Company or is terminated by
exhaustion of the Shares available for issuance under the Plan.
B-3
REVOCABLE PROXY
PARK NATIONAL CORPORATION
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 19, 2004
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned holder(s) of common shares of Park National Corporation, an Ohio
corporation (the "Company"), hereby constitutes and appoints Howard E. LeFevre
and John J. O'Neill, and each of them, the lawful agents and proxies of the
undersigned, with full power of substitution in each, to attend the Annual
Meeting of Shareholders of the Company (the "Annual Meeting") to be held on
April 19, 2004, at the offices of The Park National Bank, 50 North Third Street,
Newark, Ohio, at 2:00 p.m., local time in Newark, Ohio, and any adjournment
thereof, and to vote all of the common shares of the Company which the
undersigned is entitled to vote at such Annual Meeting or at any adjournment
thereof, as follows:
Please be sure to sign and date this [DATE]
proxy card in the boxes below and
to the right:
WITHHOLD FOR ALL
1. TO ELECT AS DIRECTORS OF THE FOR AUTHORITY EXCEPT
COMPANY ALL OF THE [ ] [ ] [ ]
NOMINEES LISTED BELOW TO
SERVE FOR TERMS OF THREE
YEARS EACH (EXCEPT AS
MARKED TO THE CONTRARY).*
MAUREEN BUCHWALD RICK R. TAYLOR
J. GILBERT REESE LEON ZAZWORSKY
*INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.
_______________________________________________________________________________
2. TO APPROVE THE PARK NATIONAL CORPORATION STOCK PLAN FOR NON-EMPLOYEE
DIRECTORS OF PARK NATIONAL CORPORATION AND SUBSIDIARIES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE UNDERSIGNED SHAREHOLDER(S) AUTHORIZE THE INDIVIDUALS DESIGNATED TO VOTE THIS
PROXY, TO VOTE, IN THEIR DISCRETION, ON ANY OTHER BUSINESS (NONE KNOWN AT THE
TIME OF SOLICITATION OF THIS PROXY) WHICH PROPERLY COMES BEFORE THE ANNUAL
MEETING OR ANY ADJOURNMENT THEREOF.
ALL PROXIES PREVIOUSLY GIVEN OR EXECUTED BY THE UNDERSIGNED ARE HEREBY REVOKED.
Receipt is acknowledged of the accompanying Notice of Annual Meeting of
Shareholders and a copy of the Proxy Statement for the April 19, 2004 meeting
and the Annual Report to Shareholders for the fiscal year ended December 31,
2003.
SHAREHOLDER CO-HOLDER (IF ANY)
SIGN TO RIGHT SIGN TO RIGHT
_______________________________________________________________________________
Detach above card, sign, date and mail in postage-paid envelope provided.
PARK NATIONAL CORPORATION
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM NO. 1 AS DIRECTORS OF THE
COMPANY AND FOR THE PROPOSAL IN ITEM NO. 2. WHERE A CHOICE IS INDICATED, THE
COMMON SHARES REPRESENTED BY THE ABOVE PROXY CARD, WHEN PROPERLY EXECUTED, WILL
BE VOTED OR NOT VOTED AS SPECIFIED. IF NO CHOICE IS INDICATED, THE COMMON SHARES
REPRESENTED BY THE ABOVE PROXY CARD WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED IN ITEM NO. 1 AS DIRECTORS OF THE COMPANY AND, IF PERMITTED BY
APPLICABLE LAW, FOR THE PROPOSAL IN ITEM NO. 2. IF ANY OTHER MATTERS ARE
PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR IF A NOMINEE
FOR ELECTION AS A DIRECTOR NAMED IN THE PROXY STATEMENT IS UNABLE TO SERVE OR
FOR GOOD CAUSE WILL NOT SERVE, THE COMMON SHARES REPRESENTED BY THE ABOVE PROXY
CARD WILL BE VOTED IN THE DISCRETION OF THE INDIVIDUALS DESIGNATED TO VOTE THIS
PROXY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON SUCH MATTERS OR FOR SUCH
SUBSTITUTE NOMINEE(S) AS THE DIRECTORS MAY RECOMMEND.
Please sign exactly as your name appears hereon. If common shares are
registered in two names, both shareholders must sign. When signing as Executor,
Administrator, Trustee, Guardian, Attorney or Agent, please give full title as
such. If shareholder is a corporation, please sign in full corporate name by
President or other authorized officer. If shareholder is a partnership or other
entity, please sign that entity's name by authorized person. (Please note any
change of address on this proxy card).
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PARK NATIONAL CORPORATION.
PLEASE ACT PROMPTLY - SIGN, DATE AND MAIL YOUR PROXY CARD TODAY