<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[X ] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Commonwealth Bancorp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
------------------------------------------------------
(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:
----------------------------------------------------
<PAGE> 2
[COMMONWEALTH BANCORP LETTERHEAD]
March 25, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Commonwealth Bancorp, Inc. The meeting will be held at The People's Light &
Theater Company, located at 39 Conestoga Road, Malvern, Pennsylvania on
Thursday, April 24, 1997 at 10:00 a.m., Eastern Time. The matters to be
considered by stockholders at the Annual Meeting are described in the
accompanying materials.
It is very important that your shares be voted at the Annual Meeting
regardless of the number you own or whether you are able to attend the meeting
in person. We urge you to mark, sign, and date your proxy card today and
return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Your continued support of and interest in Commonwealth Bancorp, Inc. is
sincerely appreciated.
Sincerely,
/s/ CHARLES H. MEACHAM
---------------------------
Charles H. Meacham
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
COMMONWEALTH BANCORP, INC.
COMMONWEALTH BANK PLAZA
2 WEST LAFAYETTE STREET
NORRISTOWN, PENNSYLVANIA 19401
(610) 251-1600
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 24, 1997
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Commonwealth Bancorp, Inc. (the "Company") will be held at The
People's Light & Theater Company, located at 39 Conestoga Road, Malvern,
Pennsylvania on Thursday, April 24, 1997 at 10:00 a. m., Eastern Time, for the
following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
(1) To elect two (2) directors for a three-year term and until
their successors are elected and qualified;
(2) To ratify the appointment by the Board of Directors of Arthur
Andersen LLP as the Company's independent auditors for the year ending December
31, 1997; and
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof. Management is not aware of any other
such business.
The Board of Directors has fixed March 13, 1997 as the voting record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting and at any adjournment thereof. Only those stockholders of
record as of the close of business on that date will be entitled to vote at the
Annual Meeting or at any such adjournment.
By Order of the Board of Directors
/s/ PATRICK J. WARD
---------------------------
Patrick J. Ward
President, Chief Operating
Officer and Secretary
Norristown, Pennsylvania
March 25, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN
TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY
VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE> 4
COMMONWEALTH BANCORP, INC.
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 24, 1997
This Proxy Statement is furnished to holders of common stock, $.10 par
value per share ("Common Stock"), of Commonwealth Bancorp, Inc. (the
"Company"), a Pennsylvania corporation which acquired all the outstanding stock
of Commonwealth Bank (the "Bank") in connection with the conversion of
Commonwealth Mutual Holding Company and the reorganization of the Bank to the
stock holding company form of organization in June, 1996 (the "Conversion and
Reorganization"). Proxies are being solicited on behalf of the Board of
Directors of the Company to be used at the Annual Meeting of Stockholders
("Annual Meeting") to be held at The People's Light & Theater Company, located
at 39 Conestoga Road, Malvern, Pennsylvania on Thursday, April 24, 1997 at
10:00 a.m., Eastern Time, and at any adjournment thereof for the purposes set
forth in the Notice of Annual Meeting of Stockholders. This Proxy Statement is
first being mailed to stockholders on or about March 25, 1997.
The proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for the matters described below and, upon the
transaction of such other business as may properly come before the meeting, in
accordance with the best judgment of the persons appointed as proxies. Any
stockholder giving a proxy has the power to revoke it at any time before it is
exercised by (i) filing with the Secretary of the Company written notice
thereof (Patrick J. Ward, President, Chief Operating Officer and Secretary,
Commonwealth Bancorp, Inc., 2 West Lafayette Street, Norristown, Pennsylvania
19401); (ii) submitting a duly-executed proxy bearing a later date; or (iii)
appearing at the Annual Meeting and giving the Secretary notice of his or her
intention to vote in person. Proxies solicited hereby may be exercised only at
the Annual Meeting and any adjournment thereof and will not be used for any
other meeting.
<PAGE> 5
2
VOTING
Only stockholders of record of the Company at the close of business on
March 13, 1997 ("Voting Record Date") are entitled to notice of and to vote at
the Annual Meeting and at any adjournment thereof. On the Voting Record Date,
there were 17,171,270 shares of Common Stock issued and outstanding and the
Company had no other class of equity securities outstanding. Each share of
Common Stock is entitled to one vote at the Annual Meeting on all matters
properly presented at the Annual Meeting.
The presence in person or by proxy of at least a majority of the issued
and outstanding shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. Directors will be elected by a
plurality of the votes cast at the Annual Meeting. The affirmative vote of a
majority of the total votes eligible to be cast at the Annual Meeting is
required for approval of the proposal to ratify the appointment of the
Company's independent auditors.
Abstentions will be counted for purposes of determining the presence of
a quorum at the Annual Meeting. Because of the required votes, abstentions
will have the same effect as a vote against the proposal to ratify the
appointment of the Company's independent auditors, but will not be counted as
votes cast for the election of directors and, thus, will have no effect on the
voting for the election of directors. Under rules applicable to
broker-dealers, all of the proposals for consideration at the Annual Meeting
are considered "discretionary" items upon which brokerage firms may vote in
their discretion on behalf of their client if such clients have not furnished
voting instructions. Thus, there are no proposals to be considered at the
Annual Meeting which are considered "non-discretionary" and for which there
will be "broker non-votes."
<PAGE> 6
3
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR, DIRECTORS
WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide that the Board of
Directors of the Company shall be divided into three classes which are as equal
in number as possible, and that the members of each class are to be elected for
a term of three years and until their successors are elected and qualified.
One class of directors is to be elected annually and stockholders are not
permitted to cumulate their votes for the election of directors.
No nominee for director is related to any other director or executive
officer of the Company by blood, marriage or adoption, and all nominees
currently serve as directors of the Company.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If any person named as nominee should be unable or unwilling to stand
for election at the time of the Annual Meeting, the proxies will nominate and
vote for any replacement nominee or nominees recommended by the Board of
Directors. At this time, the Board of Directors knows of no reason why any of
the nominees listed below may not be able to serve as a director if elected.
<PAGE> 7
4
The following tables present information concerning the nominees for
director and each director whose term continues, including his tenure as a
director of the Company.
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2000
<TABLE>
<CAPTION>
Position with the Company
and Principal Occupation Director
Name Age During Since (1)
---- --- the Past Five Years --------
---------------------------
<S> <C> <C> <C>
Charles H. Meacham 51 Chairman, President and 1988
Chief Executive Officer of the
Company and the Bank
Harry P. Mirabile 62 Director; Retired, previously 1990
Secretary and Treasurer of
Mirabile Beverage Company
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE NOMINEES
FOR DIRECTOR.
<PAGE> 8
5
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WITH TERMS EXPIRING IN 1998
<TABLE>
<CAPTION>
Position with the Company and
Principal Occupation Director
Name Age During the Past Five Years Since(1)
---- --- -------------------------- ---------
<S> <C> <C> <C>
George C. Beyer, Jr. 58 Director; President and 1990
Chief Executive Officer
of Valley Forge Financial
Group, Inc.
William B. Haines, Jr. 71 Director; Retired, previously 1980
President of McFarland and
Haines Insurance Agency
Nicholas Sclufer 77 Director; Senior Partner 1970
of Penton Company
</TABLE>
DIRECTORS WITH TERMS EXPIRING IN 1999
<TABLE>
<CAPTION>
Position with the Company and
Principal Occupation During the Director
Name Age Past Five Years Since(1)
---- --- -------------------------------- --------
<S> <C> <C> <C>
Joseph E. Colen, Jr. 58 Director; Chairman of 1983
Machined Metals Co., Inc.,
President of Jennings
International Co. and Oak-Corson Realty
Co.
Matthew T. Welde 70 Director; Retired, previously 1977
Chairman, President and Chief
Executive Officer of the Bank
</TABLE>
- -----------------
(1) Includes service as a director of the Bank.
<PAGE> 9
6
STOCKHOLDER NOMINATIONS
Article III, Section 3.12 of the Company's Bylaws governs nominations
for election to the Board and requires all such nominations, other than those
made by the Board, to be made at a meeting of stockholders called for the
election of directors, and only by a stockholder who has complied with the
notice provisions in that section. Stockholder nominations must be made
pursuant to timely notice in writing to the Secretary of the Company. To be
timely, a stockholder's notice must be delivered to, or mailed and received at,
the principal executive offices of the Company not later than (i) with respect
to an election to be held at an annual meeting of stockholders, 90 days prior
to the anniversary date of the mailing of proxy materials by the Company for
the immediately preceding annual meeting, and (ii) with respect to an election
to be held at a special meeting of stockholders for the election of directors,
the close of business on the tenth day following the date on which notice of
such meeting is first given to stockholders.
Each written notice of a stockholder nomination shall set forth: (a)
the name and address of the stockholder who intends to make the nomination and
of the person or persons to be nominated; (b) a representation that the
stockholder is a holder of record of stock of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission; and (e) the consent of each nominee
to serve as a director of the Company if so elected. The presiding officer of
the meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedures. The Company did not receive any
nominations from stockholders for the Annual Meeting.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Regular meetings of the Board of Directors of the Company and the Bank
are typically held on a monthly basis and special meetings of the Board of
Directors are held from time-to-time as needed. There were 12 meetings of the
Board of Directors of the Company held during 1996. No director attended fewer
than 75% of the total number of meetings of the Board of Directors held during
1996 and the total number of meetings held by all committees of the Board on
which the director served during such year.
The Board of Directors of the Company has established various
committees, including Executive and Audit Committees.
<PAGE> 10
7
The Audit Committee reviews the records and affairs of the Company to
determine its financial condition, reviews with management and the independent
auditors the systems of internal control, and monitors the Company's adherence
in accounting and financial reporting to generally accepted accounting
principles. Currently, Messrs. Welde, Haines and Sclufer serve as members of
this committee. The Audit Committee met four times during 1996.
The Executive Committee is authorized to act with the same authority as
the Board of Directors between meetings of the Board, except that mortgage loan
approvals in excess of certain limits must be approved by the Board of
Directors. Currently, Messrs. Meacham, Welde and Colen serve as members of
this committee. The Executive Committee met five times during 1996.
To date, the Company has not established a nominating committee, the
functions of which are performed by the entire Board of Directors.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth certain information with respect to the
executive officers of the Company and the Bank who are not directors.
<TABLE>
<CAPTION>
Name Age Positions(s)
-------------- ----------------- --------------------------------------------
<S> <C> <C>
Patrick J. Ward 41 President, Chief Operating Officer and
Secretary
William J. Monnich 47 Senior Vice President - Community
Banking Division
Peter A. Kehoe 44 Senior Vice President and President
of ComNet Mortgage Services Division
Charles M. Johnston 41 Senior Vice President and Chief Financial Officer
David K. Griest 45 Senior Vice President - Information Services
</TABLE>
Set forth below is a brief description of the background of each
executive officer of the Company and the Bank who is not a director for at
least the last five years.
PATRICK J. WARD. Mr. Ward has served as President and Chief Operating
Officer since December 1996 and as Senior Vice President - Finance Division and
Chief Financial Officer
<PAGE> 11
8
of the Bank from July 1992 until December 1996. Previously he served as
Controller and Vice President for the Wholesale Banking Group and prior thereto
the Retail Banking Group of Mellon Bank, Pittsburgh, Pennsylvania. In
addition, Mr. Ward has served as Secretary of the Company and the Bank since
February 1997.
WILLIAM J. MONNICH. Mr. Monnich has served as Senior Vice President -
Community Banking Division of the Bank since January 1995. Previously he
served as the Vice President of the Consumer Banking Department. Prior to
joining the Bank in September 1992, he was a Vice President at CoreStates Bank.
There, he held a variety of management positions in the international and
retail banking groups.
PETER A. KEHOE. Mr. Kehoe has served as President and Chief Executive
Officer of ComNet since February 1996. From 1990 until 1995 Mr. Kehoe served
as senior vice president, national production, for Comerica Mortgage, a wholly
owned subsidiary of Comerica, Inc., a bank holding company with operations in
Michigan, Illinois, Florida and Texas. Previously, he served as senior vice
president, production, for Traveler's Mortgage Services, Inc., located in
Cherry Hill, New Jersey, and as senior vice president, secondary marketing, for
Metmor Financial, located in Los Angeles, California.
CHARLES M. JOHNSTON. Charles M. Johnston joined the Bank in December
1996 as Senior Vice President - Chief Financial Officer. From June 1994 until
joining the Bank, Mr. Johnston served as the Chief Financial Officer of TFC
Enterprises Inc. in Norfolk, Virginia. Prior to joining TFC in June 1994, he
held various management positions with the Mellon Bank Corporation, including
Treasury Division Manager and Director of Investor Relations.
DAVID K. GRIEST. David K. Griest has served as Senior Vice President -
Information Systems Division since December 1996. Previously he served as Vice
President of the Computer Systems and Services Departments. Prior to joining
the Bank in 1989, he was the Vice President of Corporate Information Systems
and Services at Meritor Financial Group.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended ("1934
Act"), requires the Company's executive officers and directors, and persons who
own more than 10% of the Common Stock to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and the Nasdaq Stock
Market. Officers, directors and greater than 10% stockholders are required by
regulation to furnish the Company with copies of all Section 16(a) forms they
file. The Company knows of no person who owns 10% or more of the Common Stock.
Based solely on review of the copies of such forms furnished to the Company,
the Company believes that during the year ended December 31, 1996, all Section
16(a) filing requirements applicable to its executive officers and directors
were complied with, except that Mr. Mirabile filed a late report with respect
to nine transactions to purchase Common Stock during the year.
<PAGE> 12
9
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock as of the Voting Record Date, and certain other information with respect
to (i) the only person or entity, including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), who or which was known to the Company to be the beneficial owner of more
than 5% of the issued and outstanding Common Stock on the Voting Record Date,
(ii) each director of the Company, (iii) certain executive officers of the
Company, and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group March 13, 1997(1)(2) Common Stock
-------------------- -------------------- ------------
<S> <C> <C>
Commonwealth Bancorp, Inc. 1,301,468(3) 7.6%
Employee Stock Ownership
Plan Trust
70 Valley Stream Parkway
Malvern, Pennsylvania 19355
Directors:
Charles H. Meacham 283,668(4) 1.6
George C. Beyer, Jr. 111,435(5)(6) *
Joseph E. Colen, Jr. 83,613(6)(7) *
William B. Haines, Jr. 44,635(6)(8) *
Harry P. Mirabile 108,946(6)(9) *
Nicholas Sclufer 96,718(6)(10) *
Matthew T. Welde 69,434(11) *
Executive Officers:
Patrick J. Ward 93,117(12) *
William J. Monnich 50,732(13) *
Peter A. Kehoe 20,847(14) *
All directors and 1,030,963(15) 6.0
executive officers as a
group (12 persons)
</TABLE>
- -----------------
* Represents less than 1% of the outstanding Common Stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of Common Stock are deemed to be
beneficially owned by a person if he or she directly or indirectly has or
shares (i) voting power, which includes the power
<PAGE> 13
10
to vote or to direct the voting of the shares, or (ii) investment power,
which includes the power to dispose or to direct the disposition of the
shares. Unless otherwise indicated, the named beneficial owner has sole
voting and dispositive power with respect to the shares.
(2) Under applicable regulations, a person is deemed to have beneficial
ownership of any shares of Common Stock which may be acquired within 60
days of the Voting Record Date pursuant to the exercise of outstanding
stock options. Shares of Common Stock which are subject to stock options
are deemed to be outstanding for the purpose of computing the percentage
of outstanding Common Stock owned by such person or group but not deemed
outstanding for the purpose of computing the percentage of Common Stock
owned by any other person or group.
(3) The Commonwealth Bancorp, Inc. Employee Stock Ownership Plan Trust
("Trust") was established pursuant to the Commonwealth Bancorp, Inc.
Employee Stock Ownership Plan ("ESOP") by an agreement between the
Company and PNC Bank, National Association, which acts as trustee of the
plan ("Trustee"). As of the Voting Record Date, 907,599 shares of Common
Stock held in the Trust were unallocated and 330,824 shares had been
allocated to the accounts of participating employees. Under the terms of
the ESOP, the Trustee must vote the allocated shares held in the ESOP in
accordance with the instructions of the participating employees.
Unallocated shares held in the ESOP will be voted by the Trustee in the
same proportion for and against proposals to stockholders as the ESOP
participants and beneficiaries actually vote shares of Common Stock
allocated to their individual accounts. Any allocated shares which
either abstain on the proposal or are not voted will be disregarded in
determining the percentage of stock voted for and against each proposal
by the participants and beneficiaries.
(4) Includes 44,742 shares held jointly with Mr. Meacham's wife, 57,740
shares held on behalf of Mr. Meacham in the Company's Voluntary
Investment Plan ("VIP"), 82,218 shares held in a Management Recognition
Plan and Trust of the Company ("MRP"), which may be voted by him pending
vesting and distribution, 4,376 shares allocated to Mr. Meacham pursuant
to the ESOP and 83,099 shares which may be acquired upon the exercise of
stock options exercisable within 60 days of the Voting Record Date.
(5) Includes 5,297 shares held jointly with Mr. Beyer's wife, 28,329 shares
held by Mr. Beyer's wife, 30,331 shares held in a partnership which Mr.
Beyer is the general partner, and 15,140 shares held in a personal trust
for the benefit of Mr. Beyer.
(6) Includes 15,526 shares held in the MRP, which may be voted by the
individual pending vesting and distribution and 14,412 shares which may
be acquired upon the exercise of stock options exercisable within 60 days
of the Voting Record Date.
<PAGE> 14
11
(7) Includes 8,828 shares held jointly with Mr. Colen's wife and children and
10,000 shares held in a trust which Mr. Colen is trustee.
(8) Includes 12,739 shares held jointly with Mr. Haines' wife.
(9) Includes 23,155 shares held jointly with Mr. Mirabile's wife and 3,000
shares held by Mr. Mirabile's wife.
(10) Includes 27,005 shares held jointly with Mr. Sclufer's wife and children.
(11) Includes 34,627 shares held jointly with Mr. Welde's wife, 18,366 shares
held in the MRP, which may be voted by Mr. Welde pending vesting and
distribution and 14,412 shares which may be acquired upon the exercise of
stock options exercisable within 60 days of the Voting Record Date.
(12) Includes 1,464 shares held jointly with Mr. Ward's wife, 188 shares held
on behalf of Mr. Ward in the VIP, 48,246 shares held in the MRP, which
may be voted by Mr. Ward pending vesting and distribution, 3,992 shares
allocated to him pursuant to the ESOP and 25,481 shares which may be
acquired upon the exercise of stock options exercisable within 60 days of
the Voting Record Date.
(13) Includes 179 shares held on behalf of Mr. Monnich in the VIP, 30,397
shares held in the MRP, which may be voted by Mr. Monnich pending vesting
and distribution, 3,145 shares allocated to him pursuant to the ESOP and
13,373 shares which may be acquired upon the exercise of stock options
exercisable within 60 days of the Voting Record Date.
(14) Includes 100 shares held in custody for Mr. Kehoe's children, 19,744
shares held in the MRP, which may be voted by Mr. Kehoe pending vesting
and distribution, and 1,003 shares allocated to him pursuant to the ESOP.
(15) Includes 64,545 shares held on behalf of executive officers in the VIP,
316,880 shares held in the MRP, which may be voted by directors and
executive officers pending vesting and distribution, 15,162 shares
allocated to executive officers pursuant to the ESOP and 214,283 shares
which may be acquired by executive officers and directors upon the
exercise of stock options exercisable within 60 days of the Voting Record
Date.
<PAGE> 15
12
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information
concerning the compensation awarded to or paid by the Bank for services
rendered in all capacities during the past three years to the Chief Executive
Officer and the most highly compensated executive officers of the Bank and its
subsidiaries whose total compensation during the year ended December 31, 1996
exceeded $100,000.
<PAGE> 16
13
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation(4)
---------------------------- -----------------------------
Other
Name and Annual All Other
Principal Position Year Salary(1) Bonus(2) Compensation(3) Stock Grants(5) Options(6) Compensation(7)
------------------ ---- ------ ----- ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles H. Meacham 1996 $322,615 $60,272 $ 0 $851,474 177,699 $63,620
Chairman and Chief 1995 307,400 63,530 0 0 0 18,830
Executive Officer 1994 285,000 92,037 0 276,610 130,675 10,528
Patrick J. Ward 1996 151,130 28,234 0 567,654 98,722 19,620
President and Chief 1995 146,160 27,928 0 0 0 15,570
Operating Officer 1994 126,000 34,827 0 105,380 42,468 7,428
Robert M. Lambert(8) 1996 130,231 17,884 0 0 0 19,003
Senior Vice President and 1995 128,750 24,602 0 0 0 16,498
Chief Information Officer 1994 125,000 34,550 0 105,380 42,468 9,332
William J. Monnich 1996 123,013 22,256 0 283,820 44,425 16,095
Senior Vice President, 1995 116,336 22,744 0 79,210 32,704 13,320
Community Banking Division 1994 85,684 20,030 0 9,330 9,764 5,049
Peter A. Kehoe(9) 1996 115,058 26,482 0 283,820 44,425 15,045
Senior Vice President and
President of ComNet
</TABLE>
<PAGE> 17
14
- ---------------------
(1) Includes amounts deferred by the named executive officer pursuant to the
VIP, a non-contributory defined contribution plan which is intended to
qualify under Section 401(k) of the Code and pursuant to which employees
may defer up to 10% of their compensation.
(2) Consists of bonuses paid under the Bank's Management Incentive
Compensation Plan which awards are based on a combination of the Bank's
financial performance and an individual's or group rating for the year
indicated.
(3) Does not include amounts attributable to miscellaneous benefits received
by executive officers, including the use of Bank-owned automobiles. In
the opinion of management of the Bank the costs to the Bank of providing
such benefits to any individual executive officer during the year ended
December 31, 1996 did not exceed the lesser of $50,000 or 10% of the
total of annual salary and bonus reported for the individual.
(4) All amounts have been adjusted for the exchange of Common Stock for
common stock of the Bank in the Conversion and Reorganization.
(5) Represents the grant of restricted Common Stock pursuant to the MRP,
which were deemed to have had the indicated value at the date of grant,
and which had a fair market value of $861,975, $328,380, $328,380,
$29,070 and $-0- for the grants in 1994 to Messrs. Meacham, Ward,
Lambert, Monnich and Kehoe, respectively, at December 31, 1996, a
market value of $246,825 for the grant in 1995 to Mr. Monnich at December
31, 1996, and a market value of $888,495, $592,335, $-0-, $296,160 and
$296,160 for the grants in 1996 to Messrs. Meacham, Ward, Lambert,
Monnich and Kehoe, respectively, at December 31, 1996. The awards vest
20% a year from the date of grant.
(6) Consists of awards of options which are exercisable at the rate of 20% a
year from the date of grant.
(7) Consists of amounts allocated during the year ended December 31, 1996 on
behalf of Messrs. Meacham, Ward, Lambert, Monnich, and Kehoe pursuant to
the ESOP of $19,620, $19,620, $17,040, $16,095 and $15,045, respectively,
amounts paid in lieu of insurance benefits or premiums previously paid to
officers of the Bank of $1,685, $-0-, $1,963, $-0- and $-0-,
respectively, and $42,315 allocated on behalf of Mr. Meacham pursuant to
the Company's Excess Benefit Plan.
(8) Mr. Lambert retired effective December 31, 1996.
(9) Mr. Kehoe's employment commenced in February 1996.
<PAGE> 18
15
DIRECTOR COMPENSATION
BOARD FEES. During the year ended December 31, 1996, each member of the
Board of Directors of the Bank received an annual fee of $10,000, plus $900 for
each meeting attended. Board members also received a fee of $500 for each
committee meeting attended during 1996. In addition, each Board member
received $100 per month for health insurance cost reimbursement.
DIRECTORS' STOCK OPTION PLANS. The Company has adopted the 1993
Directors' Stock Option Plan (the "Directors' Plan") which provides for the
grant of compensatory stock options to non-employee directors. Pursuant to the
Directors' Plan, each director of the Bank who was not an employee of the Bank
or any subsidiary was granted a compensatory stock option to purchase 12,970
shares of Common Stock on January 21, 1994 and an option to purchase 1,442
shares of Common Stock on January 21, 1995. Options granted pursuant to the
Directors' Plan have an exercise price equal to the fair market value of a
share of Common Stock on the date of grant and are vested and exercisable six
months from the date of grant. The share amounts have been adjusted for the
exchange in the Conversion and Reorganization. The Company has also adopted
the 1996 Stock Option Plan, pursuant to which each non-employee director was
granted on December 17, 1996 an option to purchase 29,616 shares of Common
Stock at an exercise price of $14.375, which vest at the rate of 20% per year
from the date of grant.
RECOGNITION PLAN FOR DIRECTORS. The Company has adopted the Recognition
Plan for Directors which provides for the grant of restricted Common Stock to
non-employee directors. Pursuant to the Recognition Plan for Directors, each
director of the Bank who was not an employee of the Bank or any subsidiary was
granted 3,044 shares of restricted stock on January 21, 1994 (except that Mr.
Welde was granted 9,131 shares) and 339 shares of restricted stock on January
21, 1995 (except that Mr. Welde was granted 1,016 shares). The restricted stock
granted pursuant to the Recognition Plan for Directors vests 20% per year from
the date of grant. The share amounts have been adjusted for the exchange in
the Conversion and Reorganization. The Company has also adopted the 1996
Recognition and Retention Plan, pursuant to which each non-employee director
was granted on December 17, 1996 14,130 shares of restricted Common Stock,
which vest at the rate of 20% per year from the date of grant.
EMPLOYMENT AGREEMENTS
The Bank has entered into employment agreements with each of Messrs.
Meacham, Ward, Johnston, Monnich, Kehoe and Griest pursuant to which the Bank
agreed to employ these persons in their respective positions for a term of
three years with a current base salary of $337,818, $195,000 $125,000,
$127,000, $145,000 and $112,000, respectively. Each such salary may be
increased in the discretion of the Board of Directors of the Bank and
<PAGE> 19
16
any such salary, as it may be increased from time to time, may not be decreased
during the term of the employment agreement without the prior written consent
of the affected officer. On an annual basis, the Board of Directors of the Bank
considers renewal of each employment agreement for an additional year, and the
term of an employment agreement shall be extended for an additional one-year
period unless the Bank or the officer elects, not less than 30 days prior to
the annual anniversary date, not to extend the employment term. Each employment
agreement is terminable with or without cause by the Bank. The employment
agreements between the Bank and the officers provide that in the event of a
wrongful termination of employment (including a voluntary termination by the
officer as a result of the Bank's material breach of the agreement or as a
result of certain adverse actions which are taken with respect to his or her
employment following a Change in Control of the Bank, as defined) the officer
would be entitled to an amount of cash severance which is equal to two times
the officer's base salary as of the date of termination, and the officer would
be entitled to continued participation in certain employee benefit plans of the
Bank for a specified time, provided that in the event that there had been a
Change in Control of the Bank prior to the wrongful termination of the
officer's employment, or there existed certain specified events which could
lead to a Change in Control of the Bank, the cash severance would amount to
either two or three times the officer's average annual compensation, including
bonuses, during the preceding five years and continued participation in certain
employee benefit plans of the Bank. Each employment agreement provides that in
the event that any of the payments to be made thereunder or otherwise upon
termination of employment are deemed to constitute "excess parachute payments"
within the meaning of Section 280G of the Code, then such payments and benefits
received thereunder shall be reduced, in the manner determined by the officer,
by the amount, if any, which is the minimum necessary to result in no portion
of the payments and benefits being non-deductible by the Bank for federal
income tax purposes. Excess parachute payments generally are payments in excess
of three times the base amount, which is defined to mean the recipient's
average annual compensation from the employer includable in the recipient's
gross income during the most recent five taxable years ending before the date
on which a change in control of the employer occurred. Recipients of excess
parachute payments are subject to a 20% excise tax on the amount by which such
payments exceed the base amount, in addition to regular income taxes, and
payments in excess of the base amount are not deductible by the employer as
compensation expense for federal income tax purposes.
<PAGE> 20
17
STOCK OPTIONS
The following table sets forth certain information concerning grants of
stock options awarded to the named executive officers during the year ended
December 31, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
===============================================================================================================================
Potential Realizable Value
at Assumed Annual Rates
Individual Grants of Stock Price Appreciation
for Option Term(3)
- ------------------------------------------------------------------------------------------------------------------------------
Options % of Total Options Exercise Expiration
Name Granted Granted to Employees(1) Price(2) Date 5% 10%
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles H. Meacham 177,699 23.2% $14.375 12/17/06 $1,606,463 $4,071,093
- -------------------------------------------------------------------------------------------------------------------------------
Patrick J. Ward 98,722 12.9 $14.375 12/17/06 892,482 2,261,726
- -------------------------------------------------------------------------------------------------------------------------------
Robert M. Lambert -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
William J. Monnich 44,425 5.8 $14.375 12/17/06 401,618 1,017,779
- -------------------------------------------------------------------------------------------------------------------------------
Peter A. Kehoe 44,425 5.8 $14.375 12/17/06 401,618 1,017,779
===============================================================================================================================
</TABLE>
(1) Percentage of options granted to all employees during 1996.
(2) In all cases the exercise price was based on the fair market value of a
share of Common Stock on the date of grant.
(3) Assumes compounded rates of return for the remaining life of the options
and future stock prices of $23.42 and $37.29 at compounded rates of
return of 5% and 10%, respectively.
The following table sets forth certain information concerning exercises
of stock options by the named executive officers during the year ended December
31, 1996 and options held at December 31, 1996
<TABLE>
<CAPTION>
=============================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
- -----------------------------------------------------------------------------------------------------------------------------
Number of Value of
Shares Unexercised Unexercised
Acquired on Value Options at Year End Options at
Name Exercise Realized Year End(1)
--------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles H. Meacham -- -- 89,089 219,273 $907,919 $534,701
- -----------------------------------------------------------------------------------------------------------------------------
Patrick J. Ward -- -- 25,481 115,709 259,651 234,799
- -----------------------------------------------------------------------------------------------------------------------------
Robert M. Lambert -- -- 42,468 -- 432,749 --
- -----------------------------------------------------------------------------------------------------------------------------
William J. Monnich -- -- 13,373 67,953 118,341 236,709
- -----------------------------------------------------------------------------------------------------------------------------
Peter A. Kehoe -- -- -- 44,425 -- 27,766
=============================================================================================================================
</TABLE>
(1) Based on a per share market price of $15.00 at December 31, 1996.
<PAGE> 21
18
PENSION PLAN
The following table sets forth estimated annual benefits payable upon
retirement at age 65 to the named executive officers under the Bank's defined
benefit pension plan ("Pension Plan") based upon various levels of compensation
and years of service.
<TABLE>
<CAPTION>
Years of Service
Remuneration ---------------------------------------------------------------------------
------------
15 20 25 30 35
------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C>
$125,000 $34,688 $46,250 $ 57,313 $ 69,375 $ 72,500
150,000 42,188 56,250 70,313 84,375 88,125
175,000 49,688 66,250 82,313 99,375 103,750
200,000 57,188 76,250 95,313 114,375 119,375
225,000 64,688 86,250 107,313 129,375 135,000
250,000 72,188 96,250 120,313 144,375 150,625
300,000 87,188 116,250 145,313 174,375 181,875
</TABLE>
The indicated amounts in the above table assume that participants elect a
straight life annuity form of benefit.
Benefits are generally payable under the Pension Plan upon retirement at
age 65 based upon an average of an employee's five highest consecutive annual
amounts of compensation, excluding bonuses, commissions, overtime pay and other
compensation, and excluding taxable fringe benefit amounts, during the last ten
years prior to retirement. Such amounts are within 10% of the total
compensation and bonus reported for the named individuals in the Summary
Compensation Table above.
The maximum annual compensation which may be taken into account under the
Internal Revenue Code (as adjusted from time to time by the Internal Revenue
Service) for calculating contributions under qualified defined benefit plans
currently is $150,000 and the maximum annual benefit permitted under such plans
currently is $118,800.
At December 31, 1996, Messrs. Meacham, Ward, Lambert, Monnich and Kehoe
had 22, four, ten, four and one years of credited service, respectively, under
the Pension Plan.
VOLUNTARY INVESTMENT PLAN
The Bank maintains a Voluntary Investment Plan ("VIP") for the benefit
of employees. The VIP is a non-contributory defined contribution plan which is
intended to qualify under Section 401(k) of the Code. Participants may
contribute to the VIP by salary reduction up to 15% (10% for highly compensated
employees) of annual compensation for the year. Such contributions defer the
employee's earnings up to a maximum of $9,240 in each plan year. The Bank does
not contribute to the VIP. Pursuant to the VIP and the trust agreement entered
into between the Bank and the VIP trustee, all funds contributed
<PAGE> 22
19
are held in a trust fund, which are invested at the direction of the employee
in four separate funds; a certificate of deposit fund, a mutual stock fund, a
GNMA fund, or a Common Stock fund.
EMPLOYEE STOCK OWNERSHIP PLAN
The Company has established an Employee Stock Ownership Plan ("ESOP")
for employees age 21 or older who have at least one year of credited service
with the Bank. The ESOP is funded by the Company's contributions made in cash
(which primarily will be invested in Common Stock) or Common Stock. Benefits
may be paid either in shares of Common Stock or in cash.
In June 1996, the ESOP borrowed $9.3 million from the Company to
purchase 789,722 shares of Common Stock in the Conversion and Reorganization
and to repay the balance of the loan from an unaffiliated lender used to
purchase shares of common stock of the Bank in the Bank's initial public
offering in January 1994. The Company makes scheduled discretionary cash
contributions to the ESOP sufficient to amortize the principal and interest on
the loan, which has a maturity of ten years. The Company may, in any plan
year, make additional discretionary contributions for the benefit of plan
participants in either cash or shares of Common Stock, which may be acquired
through the purchase of outstanding shares in the market or from individual
stockholders, upon the original issuance of additional shares by the Company or
upon the sale of treasury shares by the Company. Such purchases, if made, would
be funded through additional borrowings by the ESOP or additional contributions
from the Company. The timing, amount and manner of future contributions to the
ESOP will be affected by various factors, including prevailing regulatory
policies, the requirements of applicable laws and regulations and market
conditions.
Generally accepted accounting principles require that any borrowing by
the ESOP be reflected as a liability on the Company's statement of financial
condition. In addition, shares purchased with borrowed funds will, to the
extent of the borrowings, be excluded from stockholders' equity, representing
unearned compensation to employees for future services not yet performed.
Consequently, to the extent of the ESOP purchases of already issued shares in
the open market, the Company's consolidated liabilities will increase to the
extent of the ESOP's borrowings, and total and per share stockholders' equity
will be reduced to reflect such borrowings. To the extent of the ESOP
purchases of newly-issued shares from the Company, total stockholders' equity
would neither increase nor decrease, but per share stockholders' equity and per
share net income would decrease because of the increase in the number of
outstanding shares. In either case, as the borrowings used to fund ESOP
purchases are repaid, total stockholders' equity will correspondingly increase.
Shares purchased by the ESOP with the proceeds of the loan are held in
a loan suspense account and released on a pro rata basis as debt service
payments are made. Discretionary contributions to the ESOP and shares released
from the suspense account will be allocated among participants on the basis of
compensation. Forfeitures will be
<PAGE> 23
20
reallocated among remaining participating employees and may reduce any amount
the Company might otherwise have contributed to the ESOP. Benefits may be
payable upon retirement, early retirement, disability or separation from
service. The Company's contributions to the ESOP are not fixed, so benefits
payable under the ESOP cannot be estimated.
A Committee appointed by the Board of Directors of the Company
administers the ESOP ("ESOP Committee") and an unaffiliated financial
institution has been appointed to act as trustee of the related trust. The
ESOP Committee may instruct the trustee regarding investment of funds
contributed to the ESOP. Under the ESOP, the trustee must vote all allocated
shares held in the ESOP in accordance with the instructions of the
participating employees, and allocated shares for which employees do not give
instructions will be voted in the same ratio on any matter as to those shares
for which instructions are given. Unallocated shares held in the ESOP will be
voted by the ESOP trustee after considering the recommendation of the ESOP
Committee.
The ESOP is subject to the requirements of ERISA and the regulations
of the IRS and the Department of Labor thereunder.
SUPPLEMENTAL BENEFIT PLANS
The Board of Directors of the Bank has authorized an excess benefit
plan ("EBP") and a supplemental executive retirement plan ("SERP") to provide
certain additional retirement benefits to Mr. Meacham. The EBP provides that
Mr. Meacham shall receive an annual allocation of stock units representing
shares of common stock of the Bank. The number of stock units allocable to his
benefit each year shall be equal to the difference between the annual
allocation of shares that would have been made to him in the Bank's ESOP,
assuming that his compensation was $235,840, the previous limitation under the
Code prior to amendments which reduced such limitation to $150,000 as set forth
in Section 401(a)(17) of the Code, minus the number of shares actually
allocated to his ESOP account in a particular year. The SERP provides that Mr.
Meacham shall receive a supplemental retirement benefit at or after his normal
retirement date which is calculated to produce a total retirement benefit
payable by the Bank equal to 50% of his final average earnings, as defined,
with certain offsets, and a reduction in the case of early retirement. For
purposes of the SERP, Mr. Meacham's final average earnings means the average
of his highest annual compensation received during any five of the current and
preceding ten calendar years, with certain adjustments and exclusions.
COMPENSATION COMMITTEE
Executive compensation philosophy, policies, and programs are the
responsibility of the Compensation and Benefits Committee of the Board of
Directors. During 1996, the members of the committee were Messrs. Colen,
Mirabile and Beyer. No members of the committee is a current or former officer
or employee of the Bank or any of its subsidiaries.
<PAGE> 24
21
The report of the committee with respect to compensation for the Chief
Executive Officer and all other executive officers is set forth below.
REPORT OF THE COMPENSATION COMMITTEE
The members recognize that Commonwealth must attract, retain and
motivate the best people to achieve its business objectives. To do so, it must
compensate its executives fairly and competitively in the markets in which it
competes. The competitive market for executives is primarily, banks of a
similar asset size located in Pennsylvania and southern New Jersey; and
secondarily, public banks of a similar asset size located in the northeastern
quadrant of the United States.
The current compensation program permits recognition of individual
contribution, business unit results, and overall corporate results. Currently,
executive compensation comprises base salary, short-term incentives, and stock
grants from the initial public offering.
BASE SALARY. The Compensation and Benefits Committee establishes base
salaries for executives of Commonwealth by conducting an annual review
utilizing salary survey data provided by an external compensation consultant.
It is the intention of the Committee to pay base salaries at, or
slightly below, the average salary paid by competitive banks.
INCENTIVE PLAN. The incentive portion of the executives' total
compensation program is tied to the achievement of specific individual and
group corporate results. Because it is the committee's intention to link a
significant portion of executive pay to changes in shareholder value the annual
incentive bonus will include annual financial measures that are highly
correlated to market indicators, such as Net Income, Earnings per Share, Cash
Flow, and/or Return on Equity. Also, the Committee's intention is to offset
conservative base salaries with significant upside potential via annual
incentives (and stock plans) to provide for above average total remuneration in
years when Commonwealth has outstanding performance.
In addition, the Committee recognizes the importance of high level of
customer satisfaction as an indicator of sustained performance and therefore
the payout of the executives' incentives is tied to the achievement of customer
satisfaction indicators.
TAX DEDUCTIBILITY. At this point, and for the foreseeable future,
Commonwealth does not anticipate problems with tax deductibility of executive
compensation. If, in the future, this becomes a concern, the Compensation and
Benefits Committee will revisit the issue.
Joseph E. Colen, Jr.
Harry P. Mirabile
George C. Beyer, Jr.
<PAGE> 25
22
PERFORMANCE GRAPH
The following graph compares the yearly cumulative total return on the
Common Stock since the Bank's initial public offering of the Common Stock in
January 1994 with (i) the yearly cumulative total return on the stocks included
in the National Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") Stock Market Index (for United States companies), and (ii) the
yearly cumulative return on the stocks included in the NASDAQ Financial Stock
Index. All of these cumulative returns are computed assuming the reinvestment
of dividends at the frequency with which dividends were paid during the
applicable years.
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET NASDAQ FINANCIAL STOCKS CMSB STOCK
------------------- ----------------------- ----------
<S> <C> <C> <C>
Dec-93 100.000 100.000 100.000
Mar-94 95.794 98.415 128.667
Jun-94 91.316 104.435 156.776
Sep-94 98.876 107.542 154.174
Dec-94 97.748 100.237 127.070
Mar-95 106.561 110.241 138.694
Jun-95 121.887 119.396 164.564
Sep-95 136.568 136.049 242.895
Dec-95 138.235 145.953 237.726
Mar-96 144.692 151.846 241.792
Jun-96 156.502 155.446 235.877
Sep-96 162.075 168.613 242.759
Dec-96 170.040 187.127 336.179
</TABLE>
Graph represents $100 invested in the Bank's initial public offering
of Common Stock issued on January 21, 1994 at $4.81 per share. The Common
Stock commenced trading on the NASDAQ Stock Market on January 24, 1994 at $7.52
per share. Stock prices have been adjusted to reflect the June 1996 conversion
of 2.0775 shares of Company Common Stock for each share of Bank Stock.
<PAGE> 26
23
INDEBTEDNESS OF MANAGEMENT
In accordance with applicable federal laws and regulations, the Bank
used to offer mortgage loans to its directors, officers and full-time employees
for the financing of their primary residences and certain other loans. Except
for interest rates and fees, these loans generally were made on substantially
the same terms as those prevailing at the time for comparable transactions with
non-affiliated persons. It is the belief of management that these loans
neither involve more than the normal risk of collectibility nor present other
unfavorable features.
As a result of the application of Section 22(h) of the Federal Reserve
Act to savings associations, effective August 1989, any credit extended by a
savings association, such as the Bank to its executive officers, directors and,
to the extent otherwise permitted, principal stockholder(s), or any related
interest of the foregoing, must be (i) on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions by the savings association with non-affiliated parties
and (ii) not involve more than the normal risk of repayment or present other
unfavorable features. As of December 31, 1996, five of the directors and
executive officers of the Company or the Bank had aggregate loan balances in
excess of $60,000, which amounted to $700,421 in the aggregate, or
approximately less than 1% of the Bank's retained earnings as of such date.
All such loans were made by the Bank in the ordinary course of business and
were not made with favorable terms nor did they involve more than the normal
risk of collectibility.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Arthur Andersen
LLP independent certified public accountants, to perform the audit of the
Company's financial statements for the year ending December 31, 1997, and
further directed that the selection of auditors be submitted for ratification
by the stockholders at the Annual Meeting.
The Company has been advised by Arthur Andersen LLP that neither that
firm nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between independent
certified public accountants and clients. Arthur Andersen LLP will have one or
more representatives at the Annual Meeting who will have an opportunity to make
a statement, if they so desire, and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR 1997.
<PAGE> 27
24
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which is scheduled to be held in April 1998, must be received at
the principal executive offices of the Company, 2 West Lafayette Street,
Norristown, Pennsylvania 19401, Attention: Patrick J. Ward, President, Chief
Operating Officer and Secretary, no later than November 25, 1997. If such
proposal is in compliance with all applicable requirements, it will be included
in the proxy statement and set forth on the form of proxy issued for such
annual meeting of stockholders. It is urged that any such proposals be sent
certified mail, return receipt requested.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year
ended December 31, 1996 accompanies this Proxy Statement. Such annual report
is not part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE 1934
ACT. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO JAMES T. THOMAS, VICE
PRESIDENT AND CONTROLLER, COMMONWEALTH BANCORP, INC., 2 WEST LAFAYETTE STREET,
NORRISTOWN, PENNSYLVANIA. THE FORM 10-K IS NOT PART OF THE PROXY SOLICITATION
MATERIALS.
OTHER MATTERS
Management is not aware of any business to come before the Annual
Meeting other than the matters described above in this Proxy Statement.
However, if any other matters should properly come before the meeting, it is
intended that the proxies solicited hereby will be voted with respect to those
other matters in accordance with the judgment of the persons voting the
proxies.
The cost of the solicitation of proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
<PAGE> 28
REVOCABLE PROXY
COMMONWEALTH BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
COMMONWEALTH BANCORP, INC. FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON APRIL 24, 1997 AND AT ANY ADJOURNMENT THEREOF.
The undersigned hereby appoints the Board of Directors of Commonwealth
Bancorp, Inc. (the "Company") as proxies, each with power to appoint his
substitute, and hereby authorizes them to represent and vote, as designated
below, all the shares of Common Stock of the Company held of record by the
undersigned on March 13, 1997 at the Annual Meeting of Stockholders to be held
at The People's Light & Theater Company, located at 39 Conestoga Road, Malvern,
Pennsylvania, on April 24, 1997, at 10:00 a.m., Eastern Time, and any
adjournment thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below
Nominees for three-year term expiring in 2000:
Charles H. Meacham and Harry P. Mirabile.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL to ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(CONTINUED ON REVERSE SIDE)
<PAGE> 29
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THE SHARES OF THE
COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF NOT OTHERWISE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE BOARD OF DIRECTOR'S NOMINEES
FOR DIRECTOR, FOR THE PROPOSAL TO RATIFY THE AUDITORS AND OTHERWISE AT THE
DISCRETION OF THE PROXIES. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE
TIME IT IS VOTED AT THE ANNUAL MEETING.
Dated: , 1997
-------------------------
---------------------------------------------
---------------------------------------------
Signatures
PLEASE SIGN THIS PROXY EXACTLY AS YOUR NAMES(S) APPEAR(S) ON THIS PROXY. WHEN
SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE GIVE TITLE. WHEN SHARES ARE HELD
JOINTLY, ONLY ONE HOLDER NEED SIGN.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE> 30
COMMONWEALTH BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby instructs the Trustee of the trust created pursuant
to the Voluntary Investment Plan ("VIP") of Commonwealth Savings Bank to vote
the shares of Common Stock of Commonwealth Bancorp, Inc. (the "Company") which
were allocated to my account as of March 13, 1997 under the VIP upon the
following proposals to be presented at the Annual Meeting of Stockholders of
the Company on April 24, 1997.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below
Nominees for three-year term expiring in 2000:
Charles H. Meacham and Harry P. Mirabile.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL to ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In its discretion, the Trustee is authorized to vote upon such other
business as may properly come before the meeting.
SUCH VOTES ARE HEREBY SOLICITED BY THE BOARD OF DIRECTORS. THE COMPANY'S
BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE ELECTION OF THE BOARD'S NOMINEES
FOR DIRECTOR AND FOR THE PROPOSAL TO RATIFY THE AUDITORS FOR 1997.
Dated: , 1997
--------------------
---------------------------------------------
Signature
If you return this card properly signed but do not
otherwise specify, shares will be voted FOR the
proposals specified above. If you do not return this
card, shares will not be voted.
<PAGE> 31
COMMONWEALTH BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby instructs the Trustee of the trust created pursuant
to the Employee Stock Ownership Plan ("ESOP") of Commonwealth Bancorp, Inc.
(the "Company") to vote the shares of Common Stock of the Company which were
allocated to my account as of March 13, 1997 under the ESOP upon the following
proposals to be presented at the Annual Meeting of Stockholders of the Company
on April 24, 1997.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below
Nominees for three-year term expiring in 2000:
Charles H. Meacham and Harry P. Mirabile.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL to ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In its discretion, the Trustee is authorized to vote upon such other
business as may properly come before the meeting.
SUCH VOTES ARE HEREBY SOLICITED BY THE BOARD OF DIRECTORS. THE COMPANY'S
BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE ELECTION OF THE BOARD'S NOMINEES
FOR DIRECTOR AND FOR THE PROPOSAL TO RATIFY THE AUDITORS FOR 1997.
Dated: , 1997
--------------------
-----------------------------------
Signature
If you return this card properly signed but do not
otherwise specify, shares will be voted FOR the
proposals specified above. If you do not return this
card, shares will be voted by the Trustee in the same
manner as the allocated shares under the ESOP have
voted.
<PAGE> 32
COMMONWEALTH BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby instructs the Trustees of the trust created pursuant
to the Recognition Plan of Commonwealth Bancorp, Inc. (the "Company") to vote
the shares of Common Stock of the Company which were granted to me as of March
13, 1997 under the Recognition Plan upon the following proposals to be
presented at the Annual Meeting of Stockholders of the Company on April 24,
1997.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below
Nominees for three-year term expiring in 2000:
Charles H. Meacham and Harry P. Mirabile.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL to ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In its discretion, the Trustee is authorized to vote upon such other
business as may properly come before the meeting.
SUCH VOTES ARE HEREBY SOLICITED BY THE BOARD OF DIRECTORS. THE COMPANY'S
BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE ELECTION OF THE BOARD'S NOMINEES
FOR DIRECTOR AND FOR THE PROPOSAL TO RATIFY THE AUDITORS FOR 1997.
Dated: , 1997
--------------------
-----------------------------------
Signature
If you return this card properly signed but do not
otherwise specify, shares will be voted FOR the
proposals specified above. If you do not return this
card, shares will be voted by the Trustees of the
Recognition Plans as directed by the plan
administrators in their discretion.
<PAGE> 33
March 25, 1997
To: Participants in the Commonwealth Voluntary Investment Plan
As described in the attached materials, your proxy as a stockholder of
the Company is being solicited in connection with the proposals to be
considered at the Company's upcoming Annual Meeting of Stockholders. We hope
you will take advantage of the opportunity to direct the manner in which shares
of Common Stock of the Company allocated to your account under the Voluntary
Investment Plan ("VIP") will be voted.
Enclosed with this letter is the Proxy Statement, which describes the
matters to be voted upon, a voting instruction ballot, which will permit you to
vote the shares allocated to your account, and a return envelope. After you
have reviewed the Proxy Statement, we urge you to vote your shares held
pursuant to the VIP by marking, dating, signing and returning the enclosed
voting instruction ballot to the plan administrators in the accompanying
envelope.
We urge each of you to vote, as a means of participating in the
governance of the affairs of the Company. If your voting instructions for the
VIP are not received, the shares allocated to your account pursuant to this
plan will not be voted. While I hope that you will vote in the manner
recommended by the Board of Directors, the most important thing is that you
vote in whatever manner you deem appropriate. Please take a moment to do so.
Please note that the enclosed material relates only to those shares
which have been allocated to your account under the VIP. Your will receive
other voting material for those shares owned by you individually and not under
the VIP.
Sincerely,
Charles H. Meacham
Chairman and Chief
Executive Officer
<PAGE> 34
March 25, 1997
To: Participants in the Commonwealth Recognition Plans
As described in the attached materials, your proxy as a stockholder of
the Company is being solicited in connection with the proposals to be
considered at the Company's upcoming Annual Meeting of Stockholders. We hope
you will take advantage of the opportunity to direct the manner in which shares
of Common Stock of the Company granted to you under the Management Recognition
Plan for Officers, the Management Recognition Plan for Directors or the 1996
Recognition and Retention Plan (each a "Recognition Plan" or together the
"Recognition Plans") will be voted.
Enclosed with this letter is the Proxy Statement, which describes the
matters to be voted upon, a voting instruction ballot, which will permit you to
vote the shares granted to you, and a return envelope. After you have reviewed
the Proxy Statement, we urge you to vote your shares held pursuant to a
Recognition Plan by marking, dating, signing and returning the enclosed voting
instruction ballot to the plan administrators in the accompanying envelope.
We urge each of you to vote, as a means of participating in the
governance of the affairs of the Company. If your voting instructions for a
Recognition Plan are not received, the shares awarded to you pursuant to the
plan will be voted by the Trustees of the Recognition Plans as directed by the
Plan Administrators in their discretion. While I hope that you will vote in
the manner recommended by the Board of Directors, the most important thing is
that you vote in whatever manner you deem appropriate. Please take a moment to
do so.
Please note that the enclosed material relates only to those shares
which have been granted to you under a Recognition Plan. You will receive
other voting material for those shares owned by you individually and not under
the Recognition Plans.
Sincerely,
Charles H. Meacham
Chairman and Chief
Executive Officer
<PAGE> 35
March 25, 1997
To: Participants in the Commonwealth Bancorp, Inc. Employee Stock Ownership
Plan
As described in the attached materials, your proxy as a stockholder of
the Company is being solicited in connection with the proposals to be
considered at the Company's upcoming Annual Meeting of Stockholders. We hope
you will take advantage of the opportunity to direct the manner in which shares
of Common Stock of the Company allocated to your account under the Employee
Stock Ownership Plan ("ESOP") will be voted.
Enclosed with this letter is the Proxy Statement, which describes the
matters to be voted upon, a voting instruction ballot, which will permit you to
vote the shares allocated to your account, and a return envelope. After you
have reviewed the Proxy Statement, we urge you to vote your shares held
pursuant to the ESOP by marking, dating, signing and returning the enclosed
voting instruction ballot to the plan administrators in the accompanying
envelope.
We urge each of you to vote, as a means of participating in the
governance of the affairs of the Company. If your voting instructions for the
ESOP are not received, the shares allocated to your account will be voted in
the same proportion as the allocated shares under the ESOP have been voted.
While I hope that you will vote in the manner recommended by the Board of
Directors, the most important thing is that you vote in whatever manner you
deem appropriate. Please take a moment to do so.
Please note that the enclosed material relates only to those shares
which have been allocated to your account under the ESOP. Your will receive
other voting material for those shares owned by you individually and not under
the ESOP.
Sincerely,
Charles H. Meacham
Chairman and Chief
Executive Officer
