DATE: Saturday, September 13, 1997          TAG: 9709130322

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY TOM SHEAN, STAFF WRITER 

                                            LENGTH:   56 lines

BANK OFFICERS WIN BIG IN JEFFERSON MERGER

Fifteen officers of Jefferson Bankshares Inc. will collect lump-sum payments ranging from $260,000 to $1.7 million to stay with Wachovia Corp. when the two companies merge this fall, Wachovia said in a filing with the Securities and Exchange Commission.

Jefferson, the Charlottesville-based parent of Jefferson National Bank, agreed in June to a merger offer from Wachovia worth almost $600 million.

In a filing with the SEC earlier this week, Wachovia said it will pay an average of $600,000 to the 15 officers at Jefferson.

Acquiring companies routinely offer hefty compensation packages to hold onto key officers of the companies they are buying.

Wachovia also said it signed an employment agreement with Jefferson's chief executive, O. Kenton McCartney, that includes a base annual salary of $310,000; restricted shares of Wachovia stock worth $471,000; and options to buy additional Wachovia shares.

As part of his five-year agreement, McCartney also will receive retirement benefits valued at $1.26 million, Wachovia said in the filing.

Wachovia said it will offer five-year employment agreements to five other Jefferson executives, to be chosen after the merger.

Jefferson has $2.2 billion of assets and 96 branches in Virginia, including 14 in Hampton Roads. Wachovia, the 20th-largest banking company in the country, has assets of $48.5 billion and 451 offices. Its only Virginia branch is in downtown Norfolk.

Jefferson's shareholders are scheduled to vote on the merger at a meeting in Charlottesville Oct. 22. By Virginia law, the merger must be approved by two-thirds of the company's common shares.

The Wachovia-Jefferson combination was approved by the Federal Reserve last month but still must be reviewed by Virginia's State Corporation Commission.

Wachovia said it expects to complete the transaction by the end of October and to convert Jefferson's branches into Wachovia branches next spring.

In the recent filing with the SEC, Jefferson recounted the board discussions leading up to its merger negotiations with Wachovia last June.

To prosper, a bank of Jefferson's size would have to embark on an aggressive expansion drive and invest heavily in new technology, the board determined.

After deciding that the company could generate greater value to shareholders by being acquired, Jefferson's board authorized McCartney to meet with three possible merger partners, including Wachovia.

The search for an acquirer was narrowed to Wachovia, and executives of the two companies quickly worked out the terms of a merger in early June.

Jefferson said it will pay the investment banking firm Goldman, Sachs & Co. $4.1 million, plus expenses, for its advisory services and work on the merger.

Since announcing the agreement to acquire Jefferson, Wachovia has lined up two other merger partners. One is with Central Fidelity Banks Inc., whose Richmond-based bank has $10.7 billon of assets and 248 branches. The other merger agreement is with 1st United Bancorp of Boca Raton, Fla., which has $821 million of assets and 33 branches. KEYWORDS: EXECUTIVE COMPENSATION

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