<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 19, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Commonwealth Bancorp, Inc. The meeting will be held at the Plymouth Country
Club, located at Plymouth and Belvoir Roads, Norristown, Pennsylvania on
Tuesday, April 20, 1999 at 9:00 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,
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) 313-1600
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 20, 1999
----------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Commonwealth Bancorp, Inc. (the "Company") will be held at the
Plymouth Country Club, located at Plymouth and Belvoir Roads, Norristown,
Pennsylvania on Tuesday, April 20, 1999 at 9:00 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 adopt the Directors' Stock Retainer Plan, pursuant to which
directors will receive their annual retainer fees in Common Stock
rather than cash;
(3) 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, 1999; and
(4) 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 5, 1999 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
Patrick J. Ward
President, Chief Operating
Officer and Secretary
Norristown, Pennsylvania
March 19, 1999
- --------------------------------------------------------------------------------
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 20, 1999
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 Plymouth Country Club, located at Plymouth and Belvoir Roads, Norristown,
Pennsylvania on Tuesday, April 20, 1999 at 9:00 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 19, 1999.
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.
VOTING
Only stockholders of record of the Company at the close of business on
March 5, 1999 ("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 approximately 14,383,478 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 cast at the Annual Meeting is required for approval
of the proposals to adopt the Directors' Stock Retainer Plan and 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 no effect on the voting for the election of directors or the proposals to
adopt the Directors' Stock Retainer Plan and to ratify the appointment of the
Company's independent auditors. 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
<PAGE> 5
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."
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.
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 2002
<TABLE>
<CAPTION>
Position with the Company and
Principal Occupation Director
Name Age During the Past Five Years Since(1)
---- --- -------------------------- --------
<S> <C> <C> <C>
Joseph E. Colen, Jr. 60 Director; Chairman of Machined Metals Co., Inc., 1983
President of Jennings International Co. and
President of Oak-Corson Realty Co.
Michael T. Kennedy 44 Director; Chairman, President and Chief 1997
Executive Officer of Radnor Holdings Corporation
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE NOMINEES FOR
DIRECTOR.
2
<PAGE> 6
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WITH TERMS EXPIRING IN 2000
<TABLE>
<CAPTION>
Position with the Company and
Principal Occupation Director
Name Age During the Past Five Years Since(1)
---- --- -------------------------- --------
<S> <C> <C> <C>
Charles H. Meacham 53 Chairman, President and Chief Executive Officer 1988
of the Company and the Bank
Harry P. Mirabile 64 Director; Retired, previously Secretary and 1990
Treasurer of Mirabile Beverage Company
Joanne Harmelin 54 Director; President and Chief Executive Officer 1998
of Harmelin and Associates, Inc.
</TABLE>
DIRECTORS WITH TERMS EXPIRING IN 2001
<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. 60 Director; President and Chief Executive Officer 1990
of Valley Forge Financial Group, Inc.
Nicholas Sclufer 79 Director; Senior Partner of Penton Company 1970
</TABLE>
- ---------------
(1) Includes service as a director of the Bank.
3
<PAGE> 7
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 ten meetings of the
Board of Directors of the Company held during 1998. No director attended fewer
than 75% of the total number of meetings of the Board of Directors held during
1998 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.
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. Kennedy and Sclufer serve as members of this
committee. The Audit Committee met four times during 1998.
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, Kennedy and Colen serve as members of
this committee. The Executive Committee met once during 1998.
To date, the Company has not established a nominating committee, the
functions of which are performed by the entire Board of Directors.
4
<PAGE> 8
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 43 President, Chief Operating Officer and Secretary
David K. Griest 47 Senior Vice President - Information Services
Charles M. Johnston 43 Senior Vice President and Chief Financial Officer
Peter A. Kehoe 45 Senior Vice President and President of ComNet
Mortgage Services
William J. Monnich 48 Senior Vice President - Community Banking
Brian C. Zwaan 40 Senior Vice President and Senior Lending Officer
</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 and Chief Financial
Officer from July 1992 until December 1996. Prior to joining the Bank in July
1992, he served as Vice President and Controller for the Wholesale Banking Group
and prior thereto the Retail Banking Group of Mellon Bank Corporation in
Pittsburgh, Pennsylvania. In addition, Mr. Ward has served as Secretary of the
Company and the Bank since February 1997.
DAVID K. GRIEST. David K. Griest has served as Senior Vice President -
Information Systems since December 1996. Previously he served as Vice President
of the Computer Systems and Services Department of the Bank. Prior to joining
the Bank in 1989, he was the Vice President of Corporate Information Systems and
Services with Meritor Financial Group.
CHARLES M. JOHNSTON. Charles M. Johnston has served as Senior Vice
President and Chief Financial Officer since December 1996. From 1994 until 1996,
Mr. Johnston served as Chief Financial Officer of TFC Enterprises Inc. in
Norfolk, Virginia. From 1984 until 1994, he held various management positions
with Mellon Bank Corporation, including Treasury Division Manager and Director
of Investor Relations.
PETER A. KEHOE. Mr. Kehoe has served as President and Chief Executive
Officer of ComNet Mortgage Services 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., in Detroit, Michigan.
Prior to that, 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.
WILLIAM J. MONNICH. Mr. Monnich has served as Senior Vice President -
Community Banking since January 1995 and as Vice President - Community Banking
from September 1992 until January 1995. Prior to joining the Bank in September
1992, he served as a Vice President with CoreStates Bank. There, he held a
variety of management positions in the international and retail banking groups.
5
<PAGE> 9
BRIAN C. ZWAAN. Brian C. Zwaan has served as Senior Vice President and
Senior Lending Officer since February 1998. From 1996 until 1998, Mr. Zwaan
served as Chief Financial Officer of Nobel Education Dynamics, Inc. in Media,
Pennsylvania. From 1990 until 1996, he held various management positions with
Summit Bank of Pennsylvania, including Senior Vice President - Commercial
Banking.
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, 1998, all Section 16(a)
filing requirements applicable to its executive officers and directors were
complied with, except that Messrs. Beyer and Zwaan each filed one late report
with respect to transactions in Common Stock during the year.
6
<PAGE> 10
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 5, 1999(1)(2) Common Stock
------------------ ------------------- ------------
<S> <C> <C>
Commonwealth Bancorp, Inc. 1,254,933(3) 8.7%
Employee Stock Ownership
Plan Trust
2 West Lafayette Street
Norristown, Pennsylvania 19401
Directors:
Charles H. Meacham 405,231(4) 2.8
George C. Beyer, Jr. 124,509(5) *
Joseph E. Colen, Jr. 103,455(6)(7) *
Joanne Harmelin 10,796(8) *
Michael T. Kennedy 7,500(9) *
Harry P. Mirabile 127,502(10) *
Nicholas Sclufer 109,227(6)(11) *
Executive Officers:
Patrick J. Ward 141,889(12) 1.0
William J. Monnich 87,017(13) *
Peter A. Kehoe 38,244(14) *
Brian C. Zwaan 26,461(15) *
All directors and 1,289,998(16) 8.7
executive officers as a
group (13 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 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.
7
<PAGE> 11
(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,760,772 shares of Common
Stock held in the Trust were unallocated and 540,696 shares had been
allocated to the accounts of participating employees. Under the terms of
the ESOP, the Trustee will generally vote the allocated shares held in
the ESOP in accordance with the instructions of the participating
employees and will generally vote unallocated shares held in the ESOP 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, subject in each case to the
fiduciary duties of the Trustee and applicable law. 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 by Mr. Meacham's wife, 59,781 shares held on
behalf of Mr. Meacham in the Company's Voluntary Investment Plan ("VIP"),
35,541 shares held in a Management Recognition Plan and Trust of the
Company ("Recognition Plan"), which may be voted by Mr. Meacham pending
vesting and distribution, 5,932 shares allocated to Mr. Meacham pursuant
to the ESOP, 4,116 shares allocated to Mr. Meacham pursuant to an excess
benefit plan, and 206,322 shares which may be acquired upon the exercise
of stock options exercisable within 60 days of the Voting Record Date.
(5) Includes 5,453 shares held jointly with Mr. Beyer's wife, 28,776 shares
held by Mr. Beyer's wife, 30,772 shares held in a partnership in which
Mr. Beyer is the general partner, 15,588 shares held in a personal trust
for the benefit of Mr. Beyer, 8,531 shares held in a Recognition Plan,
which may be voted by Mr. Beyer pending vesting and distribution and
11,846 shares which may be acquired upon the exercise of stock options
exercisable within 60 days of the Voting Record Date.
(6) Includes 8,531 shares held in a Recognition Plan, which may be voted by
the individual pending vesting and distribution and 26,258 shares which
may be acquired upon the exercise of stock options exercisable within 60
days of the Voting Record Date.
(7) Includes 8,828 shares held jointly with Mr. Colen's wife and children and
17,200 shares held in a trust in which Mr. Colen is a co-trustee.
(8) Includes 3,000 shares held in a pension plan in which Ms. Harmelin is a
trustee and beneficiary, and 5,000 shares which may be acquired upon the
exercise of stock options exercisable within 60 days of the voting record
date.
(9) Includes 5,000 shares which may be acquired upon the exercise of stock
options exercisable within 60 days of the voting record date.
(10) Includes 23,155 shares held jointly with Mr. Mirabile's wife, 3,831
shares held by Mr. Mirabile's wife, 8,531 shares held in a Recognition
Plan, which may be voted by Mr. Mirabile pending vesting and
distribution, and 11,846 shares which may be acquired upon the exercise
of stock options exercisable within 60 days of the Voting Record Date.
(11) Includes 10,387 shares held by Mr. Sclufer's wife and 16,618 shares held
by Mr. Sclufer's children.
8
<PAGE> 12
(12) Includes 1,464 shares held jointly with Mr. Ward's wife, 350 shares held
on behalf of Mr. Ward in the VIP, 23,693 shares held in a Recognition
Plan, which may be voted by Mr. Ward pending vesting and distribution,
5,547 shares allocated to him pursuant to the ESOP and 81,956 shares
which may be acquired upon the exercise of stock options exercisable
within 60 days of the Voting Record Date.
(13) Includes 3,096 shares held on behalf of Mr. Monnich in the VIP, 15,140
shares held in a Recognition Plan, which may be voted by Mr. Monnich
pending vesting and distribution, 4,408 shares allocated to him pursuant
to the ESOP and 48,129 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, 337 shares
held on behalf of Mr. Kehoe in the VIP, 11,848 shares held in a
Recognition Plan, which may be voted by Mr. Kehoe pending vesting and
distribution, 1,330 shares allocated to him pursuant to the ESOP and
17,770 shares which may be acquired upon the exercise of stock options
exercisable within 60 days of the Voting Record Date.
(15) Includes 17,000 shares held in a Recognition Plan, which may be voted by
Mr. Zwaan pending vesting and distribution, and 8,000 shares which may be
acquired upon the exercise of stock options exercisable within 60 days of
the Voting Record Date.
(16) Includes 70,930 shares held on behalf of executive officers in the VIP,
161,438 shares held in a Recognition Plan, which may be voted by
directors and executive officers pending vesting and distribution, 25,060
shares allocated to executive officers pursuant to the ESOP and 493,690
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.
9
<PAGE> 13
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information
concerning the compensation awarded to or paid by the Company and 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
Company and its subsidiaries whose total compensation during the year ended
December 31, 1998 exceeded $100,000.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation(4)
------------------------------------------ ------------------------
Other
Name and Annual Stock All Other
Principal Position Year Salary(1) Bonus(2) Compensation(3) Grants(5) Options(6) Compensation(7)
------------------ ---- ------ ----- ------------ ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles H. Meacham 1998 $350,811 $ 0 $ 0 $ 0 5,600 $36,694
Chairman and Chief 1997 337,818 44,744 0 0 5,000 43,021
Executive Officer 1996 322,609 60,272 0 851,474 177,699 58,931
Patrick J. Ward 1998 212,692 0 0 0 0 25,077
President and Chief 1997 195,417 26,488 0 0 0 29,226
Operating Officer 1996 151,130 28,234 0 567,654 98,722 19,860
Peter A. Kehoe(8) 1998 160,206 40,170 0 0 0 25,198
Senior Vice President and 1997 147,838 28,365 16,406 0 0 28,269
President of ComNet 1996 115,058 26,492 0 283,820 44,425 0
Brian C. Zwaan(9) 1998 115,000 25,000 0 339,000 40,000 0
Senior Vice President and
Senior Lending Officer
William J. Monnich 1998 138,830 0 0 0 0 23,314
Senior Vice President- 1997 129,403 13,340 0 0 0 24,793
Community Banking 1996 123,013 22,256 0 283,820 44,425 16,287
</TABLE>
- --------------
(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 or group rating for the year
indicated. For Mr. Zwaan in 1998, consists of bonus paid at time of
initial employment with the Bank.
(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, 1998 did not exceed the lesser of $50,000 or 10% of the
total of annual salary and bonus reported for the individual. For Mr.
Kehoe, consists of reimbursement for taxes relating to relocation and
moving expenses paid in 1997.
(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 a Recognition
Plan, which were deemed to have had the indicated value at the date of
grant, and which had a fair market value at December 31, 1998 of
$921,814, $614,548, $307,266, $295,688 and $307,266 for the grants to
Messrs. Meacham, Ward, Kehoe, Zwaan and Monnich, respectively. The awards
vest 20% per year from the date of grant. With the exception of Mr. Ward,
dividends paid on the restricted Common Stock are held in a Recognition
Plan Trust and paid to the recipient when the restricted stock vests.
Dividends on Mr. Ward's vested and unvested restricted shares are paid
directly to him.
10
<PAGE> 14
(6) Consists of awards of options which are exercisable at the rate of 20%
per year from the date of grant, with the exception of 5,000 options
granted in 1997 to Mr. Meacham, which vested on January 1, 1998, and
5,600 options granted to Mr. Meacham in 1998, which vested on July 1,
1998.
(7) Consists of amounts allocated during the year ended December 31, 1998 on
behalf of Messrs. Meacham, Ward, Kehoe and Monnich pursuant to the ESOP
of $20,335, $20,184, $18,525, and $17,354, respectively. Includes
matching contributions by the Bank in 1998 under the VIP to the accounts
of Messrs. Meacham, Ward, Kehoe and Monnich of $1,875, $512, $1,157 and
$1,002, respectively. Reflects contributions by the Bank in 1998 under
the target benefit pension plan of $4,381, $5,515 and $4,958 to the
accounts of Messrs. Ward, Kehoe and Monnich, respectively. Also reflects
$1,750 paid in lieu of certain insurance benefits in 1998 to Mr. Meacham
and $12,735 allocated in 1998 on behalf of Mr. Meacham pursuant to the
Company's Excess Benefit Plan.
(8) Mr. Kehoe's employment commenced in February 1996.
(9) Mr. Zwaan's employment commenced in February 1998.
DIRECTOR COMPENSATION
BOARD FEES. During the year ended December 31, 1998, each member of the
Board of Directors of the Bank received an annual fee of $12,200 (which includes
$100 per month for health insurance cost reimbursement), plus $900 for each
meeting attended. Board members also received a fee of $500 for each committee
meeting attended during 1998. The Chairman of the Compensation Committee also
received an annual retainer of $1,000. Mr. Kennedy waives all fees in connection
with his service as a member of the Board and as Chairman of the Audit
Committee. Commencing in 1999, annual directors' fees will be paid in shares of
Common Stock in lieu of cash.
DIRECTORS' STOCK OPTION PLANS. The Company has adopted the 1993
Directors' Stock Option Plan (the "1993 Directors Plan") which provides for the
grant of compensatory stock options to non-employee directors. Pursuant to the
1993 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 1993 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 exercise prices relating to the options
granted on January 21, 1994 and January 21, 1995 are $4.81 and $6.49,
respectively. The exercise prices and share amounts have been adjusted for
exchange in the Conversion and Reorganization. The Company has also adopted the
1996 Stock Option Plan, pursuant to which each non-employee director at that
time was granted on December 17, 1996 an option to purchase 29,616 shares of
Common Stock at an exercise price of $14.375, which vests at the rate of 20% per
year from the date of grant. Also, pursuant to the 1996 Stock Option Plan,
Michael T. Kennedy, a non-employee director, was granted an option to purchase
25,000 shares of Common Stock at an exercise price of $21.375 in December 1997,
and Joanne Harmelin, a non-employee director, was granted an option to purchase
25,000 shares of Common Stock as an exercise price of $20.50 in March 1998,
which grants vest at the rate of 20% per year from the date of grant.
RECOGNITION PLAN FOR DIRECTORS. The Company has adopted the 1993
Recognition Plan for Directors ("1993 Directors Recognition Plan") which
provides for the grant of restricted Common Stock to non-employee directors.
Pursuant to the 1993 Directors Recognition Plan, each director of the Bank who
was not an employee of the Bank or any subsidiary was granted 3,043 shares of
restricted stock on January 21, 1994 and 339 shares of restricted stock on
January 21, 1995. The restricted stock granted pursuant to the 1993 Directors
Recognition Plan 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 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.
11
<PAGE> 15
EMPLOYMENT AGREEMENTS
The Bank has entered into employment agreements with each of Messrs.
Meacham, Ward, Kehoe, Johnston, Monnich, Zwaan 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 $337,833, $220,000, $160,618,
$136,467, $135,756, $135,524 and $120,558, respectively. Each such salary may be
increased in the discretion of the Board of Directors of the Bank but 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 whether to renew each employment agreement for an additional
year. 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),
Messrs. Meacham and Ward 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
(one times base salary for the other officers), and Messrs. Meacham and Ward
would be entitled to continued participation in certain employee benefit plans
of the Bank for a period of 24 months (12 months for the other officers), in
each case assuming no Change in Control of the Company (as defined) had occurred
or was contemplated by a written agreement still in effect. If the officer's
employment was wrongly terminated (including a termination by the officer as a
result of certain adverse actions taken with respect to his employment following
a Change in Control) after a Change in Control had occurred or was contemplated
by a written agreement still in effect, then Messrs. Meacham and Ward would be
entitled to a lump sum cash severance amount equal to three times the officer's
highest annual base salary and bonus paid during the prior three years (two
times for the other officers), and Messrs. Meacham and Ward would be entitled to
continued participation in certain employee benefit plans for a period of 36
months (24 months for the officers). The employment agreements with the Bank
provide that in the event any of the payments to be made thereunder or otherwise
upon termination of employment are deemed to constitute "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 minimum amount necessary to result in no portion of the payments and
benefits being non-deductible by the Bank for federal income tax purposes.
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 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.
The Company has also entered into employment agreement with Messrs.
Meacham, Ward and Johnston to serve on terms substantially similar to the
agreement entered into between the executives and the Bank, except as provided
below. The executive's compensation, benefits and expenses are paid by the
Company and the Bank in the same proportion as the time and services actually
expended by the executives on behalf of each company. The agreements with the
Company provide that severance payments to Messrs. Meacham and Ward (a) in the
absence of a Change in Control shall be two times the officer's current base
salary paid by the Company plus fringe benefits for 24 months, and (b) upon a
Change in Control shall be equal to three times that portion of their highest
base salary and bonus paid by the Company during the prior three years, plus
fringe benefits for 36 months and the amounts not able to be paid by the Bank
because of Section 280G of the Code. The amounts payable to Messrs. Meacham and
Ward by the Company in the event of a change in control may constitute
"parachute payments" under Section 280G of the Code, and the amounts payable by
the Company are not subject to reduction as are the amounts payable by the Bank.
In addition, Messrs. Meacham's and Ward's agreements with the Company provide
that the Company shall reimburse them for any resulting excise taxes payable by
them, plus such additional amount as may be necessary to compensate them for
their payment of state and federal income, excise and other employment-related
taxes on the additional payments. Mr. Johnston's employment agreement with the
Company provides that his severance payments and benefits shall be (i) two times
that portion of his highest base salary and bonus paid by the Company during the
prior three years plus fringe benefits for 24 months in the event of a Change in
Control (or one times his current base salary from the Company plus fringe
benefits for 12 months in the absence of a Change in Control), and (ii) reduced
to the extent necessary so that they do not constitute "parachute payments"
under Section 280G of the Code.
12
<PAGE> 16
Although the above described employment agreements could increase the
cost of any acquisition of control of the Company, management of the Company
does not believe that the terms thereof would have a significant anti-takeover
effect.
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, 1998, six of the directors and
executive officers of the Company or the Bank had aggregate loan balances in
excess of $60,000, which amounted to $1.8 million in the aggregate. 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.
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, 1998.
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 Granted Exercise Expiration
Name Granted to Employees(1) Price(2) Date 5% 10%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles H. Meacham 5,600 3.8% $19,875 1/1/08 $69,996 $177,384
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick J. Ward -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Peter A. Kehoe -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Brian C. Zwaan 40,000 27.4 19,500 2/6/08 490,538 1,243,119
- ------------------------------------------------------------------------------------------------------------------------------------
William J. Monnich -- -- -- -- -- --
====================================================================================================================================
</TABLE>
(1) Percentage of options granted to all employees during 1998.
(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 over the ten-year life of the options.
With respect to Mr. Meacham's options, this would represent future stock
prices of $32.37 and $51.55 at compounded rates of return of 5% and 10%,
respectively. With respect to Mr. Zwaan's options, this would represent
future stock prices of $31.76 and $50.58 at compounded rates of return of
5% and 10%, respectively.
13
<PAGE> 17
The following table sets forth certain information concerning exercises
of stock options by the named executive officers during the year ended December
31, 1998 and options held at December 31, 1998
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
==============================================================================================================================
Number of Value of Unexercised
Unexercised Options at
Shares Options at Year End Year End(1)
Acquired on Value ---------------------------------------------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles H. Meacham -- -- 179,948 139,025 $1,201,267 $414,822
- ------------------------------------------------------------------------------------------------------------------------------
Patrick J. Ward -- -- 73,460 67,730 412,176 161,694
- ------------------------------------------------------------------------------------------------------------------------------
Peter A. Kehoe -- -- 17,770 26,655 21,102 31,653
- ------------------------------------------------------------------------------------------------------------------------------
Brian C. Zwaan -- -- - 40,000 - --
- ------------------------------------------------------------------------------------------------------------------------------
William J. Monnich -- -- 39,632 41,694 228,155 172,952
==============================================================================================================================
</TABLE>
(1) Based on a per share market price of $15.5625 at December 31, 1998.
TARGET BENEFIT PLAN
The Bank maintains a target benefit pension plan ("Target Plan") for the
benefit of its employees. The Target Plan is a money purchase plan, established
effective January 1, 1997 in connection with the termination of the Bank's
defined benefit pension plan. Contributions are made by the Bank to the plan
based upon the assumed amount necessary to fund a target benefit, which is
expressed by means of a formula based upon average compensation and years of
service of the participant. The Bank's contribution is based upon the target
benefit and other factors based on the age of the participant. Amounts
contributed by the Bank to the Target Plan for the account of the named
executive officers for 1998 are included in the summary compensation table
above.
VOLUNTARY INVESTMENT PLAN
The Bank maintains a Voluntary Investment Plan ("VIP") for the benefit of
employees. The VIP is a 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 $10,000 in each plan year. Pursuant to the VIP and the trust
agreement entered into between the Bank and the VIP trustee, all funds
contributed are held in a trust fund, which are invested at the direction of the
employee in various alternative investment funds, including a Company Common
Stock fund. A participant's contributions to the VIP, up to a maximum of 3% of
salary, are matched 25% by the Bank. The VIP also contains a profit sharing
component which provides for discretionary contributions by the Bank to eligible
employees. Participant's accounts are credited on a pro rata basis according to
salary levels. Profit sharing contributions vest after five years. Amounts
contributed by the Bank to the VIP for the account of the named executive
officers for 1998 are included in the summary compensation table above.
SUPPLEMENTAL BENEFIT PLANS
The Board of Directors of the Bank has adopted an excess benefit plan
("EBP") and a supplemental executive retirement plan ("SERP") to provide certain
additional retirement benefits to Messrs. Meacham and Ward. The EBP provides
that Messrs. Meacham and Ward shall receive an annual allocation of stock units
representing shares of common stock. The number of stock units allocable to the
executive's benefit each year shall be equal to the difference between the
annual allocation of shares that would have been made to him in the ESOP,
assuming that his compensation was $235,840, the previous limitation under the
Code prior to amendments which reduced such limitation, which is currently
$160,000 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 Messrs. Meacham and Ward shall receive a supplemental retirement
benefit at or after the executive's normal retirement date which is calculated
to produce a deferred retirement benefit payable by the Bank based on final
average earnings, as defined, with certain offsets, and a reduction in the case
of early retirement.
14
<PAGE> 18
COMPENSATION COMMITTEE
Executive compensation philosophy, policies, and programs are the
responsibility of the Compensation and Benefits Committee of the Board of
Directors. During 1998, the members of the committee were Messrs. Colen,
Mirabile and Beyer. No member of the committee is a current or former officer or
employee of the Bank or any of its subsidiaries. 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.
Joanne Harmelin
15
<PAGE> 19
PERFORMANCE GRAPH
The following graph compares the yearly cumulative total return relating
to 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 Nasdaq StockMarket, Inc. Index (for United States companies),
and (ii) the yearly cumulative return on the stocks included in the Nasdaq Stock
Market's 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 NASDAQ CMSB
STOCK MKT FINANCIAL MKT STOCK
- --------- ------------- -----
<S> <C> <C> <C>
100 100 100,000 DEC '93
95,797 98,415 128,667 MAR '94
91,318 104,435 156,776 JUN '94
98,881 107,541 154,174 SEPT '94
97,752 100,237 127,070 DEC '94
106,578 110,238 138,694 MAR '95
121,911 119,392 164,564 JUN '95
136,596 136,075 242,895 SEPT '95
138,256 145,981 237,726 DEC '95
144,699 151,855 241,792 MAR '96
156,508 155,428 235,877 JUN '96
162,052 168,450 242,759 SEPT '96
170,015 187,127 336,179 DEC '96
160,793 195,219 340,550 MAR '97
190,266 227,315 370,270 JUN '97
222,440 265,270 408,598 SEPT '97
208,580 285,867 452,749 DEC '97
244,052 302,937 487,317 MAR '98
251,119 295,174 526,303 JUN '98
227,341 245,236 354,616 SEPT '98
293,209 276,585 360,786 DEC '98
</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, National 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 Common Stock for each share of common stock
of the Bank.
16
<PAGE> 20
PROPOSAL TO ADOPT THE DIRECTORS' STOCK RETAINER PLAN
The Board of Directors of the Company has adopted the Directors' Stock
Retainer Plan (the "Plan") in order to provide that compensation to be paid to
the non-employee directors of the Company and the Bank ("non-employee
directors") shall be paid in shares of Common Stock of the Company in lieu of
cash and thereby increase the proprietary interest of such directors in the
Company as an incentive to contribute to its success.
Directors of the Bank are currently paid an annual retainer of $12,200
(which includes $1,200 for reimbursement of health insurance costs). In
addition, directors of the Bank also receive $900 for each meeting of the Board
attended and $500 for each committee meeting attended. The Chairman of the
Compensation Committee also receives an annual retainer of $1,000. Members of
the Board of Directors of the Company, which is comprised of the same
individuals, do not receive any additional fees for service as directors of the
Company. Prior to 1999, the Bank has paid the annual directors' fee in cash.
However, commencing in 1999, the Company paid annual directors' fees to
non-employee directors in shares of Common Stock. Payments for attendance at
Board and committee meetings as well as fees for service as Chairman of the
Compensation Committee are still paid in cash and will continue to be paid in
cash after adoption of the Plan. The Company has adopted the Plan in order to
continue paying annual directors' fees to non-employee directors in shares of
Common Stock and is submitting the Plan for stockholder approval in order to
satisfy requirements of the Nasdaq Stock Market, Inc., which generally requires
issuers with securities listed on the Nasdaq Stock Market to obtain stockholder
approval of the issuance of securities in connection with, among other things,
option plans or other special remuneration plans for directors, officers or key
employees.
The following description of the Plan is a summary of its terms and is
qualified in its entirety by reference to the Plan, a copy of which is available
upon request to the Secretary of the Company.
Each member of the Board of Directors of the Company and/or the Board of
Directors of the Bank who is not a full-time employee of the Company, the Bank
or any of their subsidiaries and who receives annual directors' fees shall be
participants in the Plan ("Participants"). Directors who are employees of the
Company, the Bank or any subsidiary are not eligible to participate in the Plan.
Currently, Mr. Kennedy waives all fees in connection with his service as a
member of the Board of Directors.
Under the Plan, non-employee directors will receive their annual
compensation for services as directors payable for the year in shares of Common
Stock. Such fees shall be paid in one annual installment on the first business
day of February in each calendar year (the "Payment Date"). The number of shares
of Common Stock to be issued to each Participant each year shall be determined
by dividing the amount of such annual retainer fee (currently $12,200) by the
Fair Market Value of such shares, as defined in the Plan, on the Payment Date.
The term "Fair Market Value" is defined in the Plan to mean the closing sale
price of a share of Common Stock on the date in question (or, if such day is not
a trading day in the U.S. markets, on the nearest preceding trading day), as
reported by the Nasdaq Stock Market or other principal market (or the composite
of the markets, if more than one) or national quotation system in which such
shares are then traded, or if no such closing prices are reported, the mean
between the high bid and low asked prices that day on the principal market or
national quotation system then in use, or if no such quotations are available,
the price furnished by a professional securities dealer making a market in such
shares selected by the Company. No fractional shares of Common Stock will be
issued to Participants under the Plan. The Plan provides that Participants will
be paid cash for fractional shares of Common Stock based upon the Fair Market
Value of such fractional share on the Payment Date.
A total of 50,000 shares of Common Stock has been reserved for issuance
under the Plan, subject to adjustment in the event of certain corporate
transactions, including stock splits, stock dividends and other changes in the
capital of the Company. The Plan provides that shares issued to Participants may
be authorized but unissued shares, treasury shares or shares purchased by the
Company in the open market or from private sources. Shares issued under the Plan
are not restricted and are freely tradeable by Participants subject to
compliance with provisions of the federal securities laws applicable to
transfers and sales of shares of Common Stock by directors generally.
17
<PAGE> 21
On March 1, 1999, the closing sale price of a share of Common Stock as
reported by the Nasdaq Stock Market was $14.9375.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
DIRECTORS' STOCK RETAINER PLAN.
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, 1999, 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 1999.
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 2000, 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 19, 1999. If such
proposal is in compliance with all of the requirements of Rule 14a-8 of the
Exchange Act, 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.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 of the Exchange Act may be
brought before an annual meeting pursuant to the Company's Bylaws, which
provides that business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, or
(b) otherwise properly brought before the meeting by a stockholder. For business
to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof 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
ninety days prior to the anniversary date of the mailing of proxy materials by
the Company in connection with the immediately preceding annual meeting of
stockholders. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting, (b)
the name and address, as they appear on the Company's books, of the stockholder
proposing such business, (c) the class and number of shares of the Company which
are beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. To be timely with respect to the next annual
meeting of stockholders of the Company, a stockholders notice must be received
by the Company no later than December 20, 1999.
18
<PAGE> 22
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1998 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 CHARLES M. JOHNSTON, CHIEF
FINANCIAL OFFICER, 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.
19
<PAGE> 23
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
20, 1999 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 5, 1999 at the Annual Meeting of Stockholders to be held at
the Plymouth Country Club, located at Plymouth and Belvoir Roads, Norristown,
Pennsylvania, on April 20, 1999, at 9:00 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 a three-year term expiring in 2002:
Joseph E. Colen, Jr. and Michael T. Kennedy.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL to adopt the Director's Stock Retainer Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL to ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. 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> 24
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 ADOPT THE DIRECTOR'S STOCK RETAINER PLAN, 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: , 1999
-----------------
--------------------------
--------------------------
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> 25
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 5, 1999 under the VIP upon the
following proposals to be presented at the Annual Meeting of Stockholders of the
Company on April 20, 1999.
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 a three-year term expiring in 2002:
Joseph E. Colen, Jr. and Michael T. Kennedy.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL to adopt the Director's Stock Retainer Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL to ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. 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 OTHER PROPOSALS.
Dated: , 1999
----------------- ---------------------------------
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> 26
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 5, 1999 under the ESOP upon the following
proposals to be presented at the Annual Meeting of Stockholders of the Company
on April 20, 1999.
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 a three-year term expiring in 2002:
Joseph E. Colen, Jr. and Michael T. Kennedy.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL to adopt the Director's Stock Retainer Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL to ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. 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 OTHER
PROPOSALS.
Dated: , 1999
----------------- ----------------------------------
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> 27
COMMONWEALTH BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby instructs the Trustees of the trust created pursuant
to a 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 5,
1999 under a Recognition Plan upon the following proposals to be presented at
the Annual Meeting of Stockholders of the Company on April 20, 1999.
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 a three-year term expiring in 2002:
Joseph E. Colen, Jr. and Michael T. Kennedy.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL to adopt the Director's Stock Retainer Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL to ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. 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 OTHER
PROPOSALS.
Dated: , 1999
----------------- ----------------------------------
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> 28
March 19, 1999
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> 29
March 19, 1998
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> 30
March 19, 1999
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. You 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
