SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting Material Pursuant to [ss]240.14a-11(v) or [ss]240.14a-12
SUMMIT BANCORP
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(Name of Registrant as Specified In Its Charter)
SUMMIT BANCORP
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(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)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[PASTE UP SUMMIT LOGO]
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543-2066
T. Joseph Semrod
Chairman of the Board and
Chief Executive Officer
March 4, 1997
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of Summit
Bancorp scheduled to be held on Friday, April 18, 1997, at 10:00 a.m. at The
Hyatt Regency Princeton, 102 Carnegie Center, Route 1 at Alexander Road,
Princeton, New Jersey. Your Board of Directors and senior management look
forward to personally greeting those shareholders able to attend.
At the meeting, shareholders will be asked to elect six directors, to approve an
increase in Summit's authorized common stock and to ratify the selection of KPMG
Peat Marwick LLP, independent certified public accountants, to audit the
accounts of Summit for 1997. We will also report to you on Summit's current
operations and outlook. Members of the Board and management will be available to
respond to any questions you may have.
Regardless of the number of shares you own, it is important that they be
represented and voted at the meeting. Please sign, date and mail the enclosed
proxy in the return envelope provided. Your prompt cooperation is appreciated.
On behalf of your Board of Directors, thank you for your continued support.
Sincerely,
/s/ T. JOSEPH SEMROD
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[SUMMIT LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FRIDAY, APRIL 18, 1997
TO OUR SHAREHOLDERS:
The Annual Meeting of the shareholders of Summit Bancorp. is scheduled to
be held at The Hyatt Regency Princeton, 102 Carnegie Center, Route 1 at
Alexander Road, Princeton, New Jersey, on Friday, April 18, 1997 at 10:00 a.m.
for the following purposes:
1. To elect six Directors.
2. To approve an amendment to the Restated Certificate of Incorporation
of Summit Bancorp. increasing authorized Common Stock from 130 to 260
million shares.
3. To ratify the selection of KPMG Peat Marwick LLP, independent
certified public accountants, to audit the consolidated financial
statements of Summit Bancorp. and its subsidiaries for the year ending
December 31, 1997.
4. To transact such other business as may properly come before the
meeting and any adjournment thereof.
The Board of Directors by resolution has fixed the close of business on
February 20, 1997 as the record date and hour for the determination of
shareholders entitled to notice of, and to vote at, the Annual Meeting and at
any adjournment thereof.
It is important that your shares be represented and voted at the Annual
Meeting. Whether or not you plan to attend, please sign, date and promptly mail
the enclosed white Proxy. Please act today.
By order of the Board of Directors
RICHARD F. OBER, JR.
Secretary
March 4, 1997
PLEASE SIGN, DATE AND PROMPTLY MAIL THE ENCLOSED WHITE PROXY IN THE
POSTAGE-PAID ENVELOPE PROVIDED. IF YOU PLAN ON ATTENDING THE ANNUAL MEETING
PLEASE SO INDICATE ON YOUR PROXY.
IMPORTANT NOTICE: ALL SHAREHOLDERS PLANNING TO ATTEND THE ANNUAL MEETING
SHOULD REFER TO THE BACK COVER FOR DIRECTIONS TO THE ANNUAL MEETING SITE AND FOR
IMPORTANT INFORMATION REGARDING PROCEDURES FOR ADMITTANCE TO THE ANNUAL MEETING.
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PROXY STATEMENT
The mailing address of the corporate headquarters of Summit Bancorp.
("Summit" or the "Corporation") is P.O. Box 2066, Princeton, New Jersey
08543-2066, and the telephone number is (609) 987-3200.
This Proxy Statement and the enclosed proxy are being sent to shareholders
on approximately March 4, 1997. A copy of the 1996 Annual Report to
Shareholders, including financial statements, is enclosed.
The following information is furnished in connection with a solicitation of
proxies by the Board of Directors for the Annual Meeting. Except for matters
described in this Proxy Statement, the Board of Directors does not know of any
matter that will or may be presented at the Annual Meeting. With respect to any
proposals that may be presented at the Annual Meeting not currently known to the
Board of Directors, the persons named as proxies intend to vote the shares they
represent in accordance with their judgment.
A white proxy card is enclosed. Your vote is important and you are
encouraged to return it by mail today. Each proxy submitted will be voted as
directed; however, if not otherwise specified, proxies solicited by the Board of
Directors will be voted FOR the Director nominees named herein and FOR the
second and third proposals set forth in the Notice of Annual Meeting of
Shareholders and this Proxy Statement.
If a shareholder is participating in Summit's Dividend Reinvestment and
Stock Purchase Plan (the "Dividend Reinvestment Plan"), the shareholder will
receive a single proxy covering both the shares of Summit common stock, par
value $1.20 per share (the "Common Stock"), held by the shareholder in
certificate form and the shares of Common Stock held in the shareholder's
Dividend Reinvestment Plan account by the Dividend Reinvestment Plan
Administrator. If a proxy is not returned, shares of Common Stock represented by
the proxy, including any held under the Dividend Reinvestment Plan, will not be
voted.
Individuals who hold Common Stock through participation in Summit's Savings
Incentive Plan (the "Savings Plan") will receive a separate card for use in
providing voting instructions to the Savings Plan's Trustee. Full shares held by
the Savings Plan will be voted by the Trustee in accordance with instructions
received from participants. Full shares held by the Savings Plan for which no
voting instructions are received will be voted by the Trustee in a manner deemed
to be in the best interests of the beneficial owners of such shares.
A proxy may be revoked by the person giving the proxy at any time prior to
the close of voting. Prior to the Annual Meeting a proxy may be revoked by
filing with the Secretary of Summit a written revocation or a duly executed
proxy bearing a later date. During the Annual Meeting a proxy may be revoked by
filing a written revocation or a duly executed proxy bearing a later date with
the secretary of the Annual Meeting prior to the close of voting. Any
shareholder of record may attend the Annual Meeting and vote in person, whether
or not a proxy has previously been given.
The close of business of Summit on February 20, 1997 has been fixed by the
Board of Directors as the record date and hour for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. On that
date, there were 94,145,972 shares of Common Stock issued and outstanding, and
there were no other voting securities of Summit outstanding. Each share of
Common Stock is entitled to one vote at the Annual Meeting.
In a Report on Schedule 13G for the year ended December 31, 1996 filed with
the Securities and Exchange Commission under the Securities Exchange Act of 1934
("Exchange Act") by Delaware Management Holdings, Inc. ("Delaware Management"),
2005 Market Street, Philadelphia, Pennsylvania 19103, an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940, Delaware
Management reported ownership of 7,005,426 shares of Summit Common Stock on
behalf of the several investment companies registered under Section 8 of the
Investment Company Act of 1940 known collectively as the Delaware Group of Funds
(the "Delaware Group"), representing 7.4% of the shares of Summit Common Stock
outstanding on February 20, 1997. Delaware Management reported it held sole
voting power over 503,270 of such shares, shared voting power over zero of such
shares, sole investment power over 6,718,886 of such shares and shared
investment power over 286,426 of such shares. The foregoing information is
furnished in reliance upon the information contained in the Report on Schedule
13G referred to above. To Summit's knowledge, there is no other person (as
defined in Section 13(d)(3) of the Exchange Act) who beneficially owns five
percent or more of the outstanding voting securities of Summit as of February
20, 1997.
The following companies are subsidiaries of Summit and are sometimes
referred to by means of the listed abbreviations: First Valley--First Valley
Corporation, SumNJ--Summit Bank (Hackensack, NJ) and SumPA--Summit Bank
(Bethlehem, PA).
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1. ELECTION OF DIRECTORS
The Restated Certificate of Incorporation of Summit contains a provision
adopted by a vote of the shareholders which divides the Summit Board of
Directors into three classes, with each class of Directors serving a staggered
term of three years. Each class of Directors must consist, as nearly as
possible, of one third of the number of Directors constituting the entire Board
of Directors. Presently there are seven Directors in Class I, six Directors in
Class II and six Directors in Class III. The terms of the Directors in Class I
expire at the 1997 Annual Meeting. Accordingly, at the 1997 Annual Meeting,
Class I Directors are to be elected to serve until the 2000 Annual Meeting and
until their successors are elected and qualified. Six of seven current Class I
Directors have been nominated for reelection to Class I. Mr. Sayles, former
Chairman of The Summit Bancorporation and currently a Class I director, will be
retiring from the Board upon the expiration of his term at the 1997 Annual
Meeting in accordance with the Corporation's merger agreement with The Summit
Bancorporation. Set forth below, with respect to the nominees for election as
Directors and the continuing members of the Board, are their names, ages, the
year in which each first became a Director, their principal occupations during
the past ten years and other positions. Each Director nominee is at present
available for election as a member of the Board. If for any reason a Director
nominee becomes unavailable for election, the proxies solicited by the Board of
Directors will be voted for a substitute Director nominee selected by the Board
of Directors or, at its option, the Board of Directors may reduce the number of
Directors constituting the entire Board. Director nominees attended at least 80%
of the aggregate of Board meetings and meetings of Committees on which each
served, except Mr. Watson who attended 9 of 13 such meetings.
In accordance with the long-standing practice of Summit's Board of
Directors, more than two-thirds of the members of Summit's Board are nonemployee
directors. Currently, of the nineteen members of the Board of Directors, fifteen
are not employees of Summit or its subsidiaries. In addition to attendance at
Board meetings (the Board met eight times during 1996) and Committee and
Subcommittees meetings as described below (Committees and Subcommittees held 25
meetings in 1996), Directors discharge their responsibilities throughout the
year by personal meetings and frequent telephone contact with Summit's executive
officers and others regarding the business and affairs of Summit and its
subsidiaries. Sixteen directors additionally serve on one or more of the Boards
of Directors of Summit's bank and nonbank subsidiaries.
To permit the Board of Summit to more efficiently discharge its duties,
Summit has six standing Board committees which held meetings in 1996 as follows:
the Executive Committee (seven meetings), the Audit Committee (seven meetings),
the Nominating Committee (two meetings), the Compensation Committee (five
meetings), the Capital and Dividend Committee (one meeting) and the Acquisition
Committee (two meetings, with its Pricing Subcommittee meeting once).
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CLASS I -- DIRECTOR NOMINEES -- TERM EXPIRING IN 2000
Photo of James C. Brady, Jr., 61, Director since March 1, 1996.
James C. Managing General Partner (since 1987) of Mill House
Brady, Jr. Associates, L.P. (real estate and securities investment) and
Director (1972-1987) of predecessor Brady Security and
Realty Corp. Formerly Chairman of the Board (1990-1993) and
Vice Chairman of the Board (1978-1990) of Somerset Trust
Company (predecessor bank to SumNJ). Formerly Director
(1989-1996) of The Summit Bancorporation. Chairman of the
Boys' and Girls' Club of Newark Life Camp, Inc. Director of
SumNJ (since 1989). Member of the Executive, Compensation
and Capital and Dividend Committees.
Photo of T.J. Dermot Dunphy, 64, Director since 1984. Chairman
T.J. Dermot (since 1996) and Director and Chief Executive Officer (since
Dunphy 1971) and former President (1971-1996) of Sealed Air
Corporation (protective packaging products and systems).
Trustee of the Partnership for New Jersey. Sponsor, "I Have
A Dream" Program, Paterson, New Jersey. Director of Public
Service Enterprise Group, Inc. and SumNJ (since 1981). Chair
of the Executive and Compensation Committees. Member of the
Acquisition and Nominating Committees.
Photo of Fred G. Harvey, 68, Director since 1988. Director and
Fred G. Harvey Vice President (since 1983) of E & E Corporation
(engineering consulting services). General Manager
(1977-1983) of Bethlehem Steel Corporation. Director of the
Retired Employee Benefit Coalition (REBCO) and SumPA (since
1981). Chair of the Capital and Dividend Committee. Member
of the Audit and Nominating Committees.
Photo of Francis J. Mertz, 59, Director since 1986. Trustee
Francis J. Mertz (since 1991) and President (since 1990) of Fairleigh
Dickinson University. Trustee of the St. James Foundation
and Independent College Fund of New Jersey. Director of
Liberty Science Center and Hall of Technology, Association
of Independent Colleges and Universities in New Jersey,
National Association of Independent Colleges and
Universities and SumNJ (since 1973). Member of the
Executive, Compensation, Audit and Capital and Dividend
Committees.
Photo of T. Joseph Semrod, 60, Director since 1981. Chairman of
T. Joseph Semrod the Board and Chief Executive Officer (since 1981) and
former President (1981-1996) of Summit. Chairman of the
Board (since 1981), Chief Executive Officer (since 1994) and
former President (1994-1996) of SumNJ. Former Director of
Federal Reserve Bank of New York. Trustee and former
Chairman of The Partnership for New Jersey and the
International Financial Conference. Vice-Chairman of New
Jersey State Chamber of Commerce. Member of the Executive
Committee.
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Photo of Douglas G. Watson, 52, Director since March 1, 1996.
Douglas G. Vice Chairman, President and Chief Executive Officer (since
Watson February 1, 1997) of Novaris Corporation (healthcare,
agribusiness and nutrition products). Formerly President and
Chief Executive Officer (1996-1997) of Ciba-Geigy
Corporation (pharmaceutical products) (predecessor to
Novaris Corporation) and former President (1986-1996) of the
Pharmaceuticals Division, Ciba-Geigy Corporation. Formerly
Director of The Summit Bancorporation (1988-1996) and Summit
Bank (predecessor bank to SumNJ) (1986-1996). Director of
Engelhard Corporation. Member of the Audit and Nominating
Committees.
CLASS II -- INCUMBENT DIRECTORS -- TERM EXPIRING IN 1998
Photo of John G. Collins, 60, Director since 1986. Vice Chairman
John G. Collins of the Board of Summit (since 1986) and SumNJ (since 1994).
Formerly Chairman of the Board (1983-1986), Director,
President and Chief Executive Officer (1982-1986) of
Commercial Bancshares, Inc. Trustee and former Chairman of
the Board of Trustees of St. Peter's College. Chairman of
Summit Service Corporation. Director of Collier Services and
SumNJ (1978-1990, 1994-present). Trustee of Independent
College Fund of New Jersey and Collier Services Foundation.
Former Chairman of the New Jersey Bankers Association.
Member of the Capital and Dividend Committee.
Photo of Anne Evans Estabrook, 52, Director since 1994. Sole
Anne Evans proprietor (since 1984) of Elberon Development Co. (real
Estabrook estate), President (since 1983) of David O. Evans, Inc.
(real estate) and Director (since 1985) and Vice President
(since 1987) of E'town Corporation (parent company of
regulated water utility and real estate company). Former
Director of Constellation Bancorp (1985-1994) and of
National State Bank (1978-1994). Director of E'town
Properties, Inc. (since 1987) and SumNJ (since 1994).
Trustee of Cornell University. Member of the Executive,
Compensation, Nominating and Capital and Dividend
Committees.
Photo of George L. Miles, Jr, 55, Director since 1994. President
George L. and Chief Executive Officer (since 1994) of WQED Pittsburgh,
Miles, Jr. Inc. (television and radio broadcasting and magazine
publishing). Formerly Executive Vice President and Chief
Operating Officer (1984-1994) of Thirteen/WNET (television
broadcasting). Chairman of the Board of Trustees of the
Association for America's Public Television Stations.
Trustee of Fairleigh Dickinson University. Trustee of
Foundation for Minority Interests in Media, Inc. Director of
SumNJ (since 1994). Member of the Audit, Acquisition and
Nominating Committees.
Photo of Henry S. Patterson II, 74, Director since 1971.
S. Patterson II Director and President (since 1985) of E'town Corporation
(parent company of regulated water utility and real estate
company). Director (since 1959) and former President
(1973-1986) of Elizabethtown Water Company. Former Chairman
and Commissioner of the State of New Jersey Commission of
Investigation. Former Mayor of Princeton Borough, New
Jersey. Director of Mount Holly Water Company, SumNJ (since
1967) and Summit Discount Brokerage Co. (since 1983). Member
of the Executive, Compensation, Audit, Capital and Dividend
and Acquisition Committees.
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Photo of Raymond Silverstein, 69, Director since 1991.
Raymond Consultant (since 1989) and former Principal (1949-1989) of
Silverstein Alloy, Silverstein, Shapiro, Adams, Mulford & Co., P.C.
(certified public accountants). Director (1970-1975,
1980-present) of SumNJ. Formerly Chairman of the Board
(1987-1994) of United Jersey Bank/South, N.A. (predecessor
bank to SumNJ) Former Chairman of the Board of Kennedy
Health Care Foundation. Former Trustee of John F. Kennedy
Hospital and William Likoff Cardiovascular Institute of
Hahneman University. Chair of the Nominating Committee.
Member of the Capital and Dividend and Acquisition
Committees.
Photo of Orin R. Smith, 61, Director since March 1, 1996.
Orin R. Smith Chairman of the Board (since 1995), Director (since 1981)
and Chief Executive Officer (since 1984) of Engelhard
Corporation (specialty chemical products, engineered
materials and industrial commodities management). Formerly
Director (1984-1996) of The Summit Bancorporation. Director
of Ingersoll-Rand Company, The Lousiana Land and Exploration
Company, Minorco, The Perkin-Elmer Corporation, Vulcan
Materials Company and SumNJ (since 1981). First Vice
Chairman of Centenary College. Trustee of Plimoth
Plantation. Member of the Executive, Compensation and
Acquisition Committees.
CLASS III -- INCUMBENT DIRECTORS -- TERM EXPIRING IN 1999
Photo of S. Rodgers Benjamin, 70, Director since March 1, 1996.
S. Rodgers Chairman of the Board (since 1992) and Chief Executive
Benjamin Officer (since 1962) of Flemington Fur Co., Inc. (retailer).
Formerly Director (1982-1996) of The Summit Bancorporation
and Summit Bank (predecessor bank to SumNJ). Member of the
Audit and Capital and Dividend Committees.
Photo of Robert L. Boyle, 61, Director since 1986.
Robert L. Boyle Representative (since 1987) with the William H. Hintelmann
Firm (realty and insurance) and Publisher Emeritus (since
1978) of The Dispatch (newspaper). Regent Emeritus of St.
Peter's College. Member of the State of New Jersey Supreme
Court Disciplinary Oversight Committee. Trustee of Oceanic
Free Library Association and Parents Support Group of New
Jersey and Director of SumNJ (since 1964). Member of the
Executive, Compensation, Audit and Acquisition Committees.
Photo of Robert G. Cox, 56, Director since 1996. President
Robert G. Cox (since 1996) of Summit and SumNJ. Formerly Director
(1981-1996), President (1987-1996) and Chief Executive
Officer (1994-1996) of The Summit Bancorporation. Formerly
Chairman of the Board (1994-1996), President (1980-1996) and
Chief Executive Officer (1983-1996) of Summit Bank
(predecessor bank to SumNJ). Former Chairman of the New
Jersey Bankers Association. Director of New Jersey
Manufacturers Insurance Company and SumNJ (since 1981).
Member of the Executive and Acquisition Committees.
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Photo of Elinor J. Ferdon, 60, Director since 1984. Volunteer
Elinor J. Ferdon professional. Director (since 1974), National President
(since 1996), Former First Vice President (1993-1996) and
former Vice President (1987-1993) of the Girl Scouts of
U.S.A. Trustee and President (since 1991) of World
Foundation for Girl Guides and Girl Scouts, Inc. Vice Chair
of Liberty Science Center and Hall of Technology. Member of
the Board of Governors of United Way of America. Trustee
Emeritus of Fairleigh Dickinson University. Chair, Trustee
Emeriti of Stoneleigh Burnham School. Director of SumNJ
(since 1976). Chair of the Audit Committee. Member of the
Executive, Compensation and Capital and Dividend Committees.
Photo of John R. Howell, 63, Director since 1988. Vice Chairman
John R. Howell of the Board (since 1988) of Summit. Chairman of the Board
(since 1983) and Director and Chief Executive Officer (since
1976) of First Valley, Chairman of the Board (since 1988),
Director (since 1976) and Chief Executive Officer
(1976-1990, 1994-present) of SumPA. Trustee of Moravian
College and the Allentown Art Museum. Chairman of the Board
of First Valley Life Insurance Company. Director of Summit
Discount Brokerage Co. Member of the Acquisition Committee.
Photo of Joseph M. Tabak, 64, Director since 1987. President and
Josephn M. Tabak Chief Executive Officer (since 1991) of JPC Enterprises,
Inc. (distributor of paper and plastic disposable products).
Former Chairman (1988-1989) and former President (1971-1988)
of Bunzl Distribution USA, Inc., Northeastern Division and
predecessor Jersey Paper Company (distributor of paper and
plastic disposable products). Trustee of St. Peter's
Hospital Foundation and Highland Park Conservative Temple.
Director of SumNJ (since 1981). Chair of the Acquisition
Committee. Member of the Executive, Compensation and
Nominating Committees.
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<PAGE>
BENEFICIAL OWNERSHIP OF SUMMIT COMMON STOCK
BY DIRECTORS AND EXECUTIVE OFFICERS
Set forth below are the number of shares of Summit Common Stock
beneficially owned by each Director of Summit, by each executive officer listed
in the Summary Compensation Table and by all Directors and executive officers of
Summit as a group as of February 20, 1997. The beneficial owners listed below
hold sole voting and investment power over all shares listed, except as
indicated.
PERCENTAGE
SHARES OF SUMMIT
BENEFICIALLY COMMON
OWNED STOCK
------------ ----------
S. Rodgers Benjamin ............................. 87,463(1)(2) .093%
Robert L. Boyle ................................. 73,429(3) .078%
James C. Brady, Jr. ............................. 306,554(2)(4) .326%
John G. Collins ................................. 306,320(5)(6) .325%
Robert G. Cox ................................... 303,163(7)(8) .322%
T.J. Dermot Dunphy .............................. 74,665 .079%
Anne Evans Estabrook ............................ 34,755 .037%
Elinor J. Ferdon ................................ 17,697(9) .019%
Fred G. Harvey .................................. 2,697(10) .003%
John R. Howell .................................. 252,862(5)(11) .269%
Francis J. Mertz ................................ 10,623(12) .011%
George L. Miles, Jr. ............................ 2,405(13) .003%
Stephen H. Paneyko .............................. 245,896(5)(14) .261%
Henry S. Patterson II ........................... 15,874 .017%
Thomas D. Sayles, Jr. ........................... 175,131(15) .186%
T. Joseph Semrod ................................ 701,388(5)(16) .745%
Raymond Silverstein ............................. 26,792(17) .028%
Orin R. Smith ................................... 15,962(2)(18) .017%
Joseph M. Tabak ................................. 55,182 .059%
Douglas G. Watson. .............................. 15,253(2)(19) .016%
All Directors and executive officers
as a group (32) ............................... 3,782,903(20) 4.018%
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(1) Includes 75,141 shares held by Flemington Fur Co., Inc. of which Mr.
Benjamin is Chairman, CEO and a significant shareholder. Mr. Benjamin disclaims
voting and investment powers over such shares.
(2) Includes 900 shares which may be acquired within 60 days pursuant to
options granted under The Summit Bancorporation 1995 Director Stock Option
Plan and converted into options to purchase Summit Common Stock.
(3) Includes 16,272 shares held in trusts for which Mr. Boyle serves as
trustee, and 959 shares owned by Mr. Boyle's wife and 10,100 shares held by Mr.
Boyle's wife as custodian over which Mr. Boyle disclaims voting and investment
powers.
(4) Includes 46,022 shares held by Mill House Associates, L.P. As Managing
General Partner Mr. Brady shares voting and investment control over such shares.
(5) Includes shares which may be acquired immediately or within sixty days
under one or more of Summit's Stock Option Plans as follows: Mr.
Collins--200,680 shares, Mr. Howell--157,180 shares, Mr. Paneyko--158,825
shares, and Mr. Semrod--562,214 shares.
(6) Includes 15,000 shares owned jointly with Mr. Collins' wife over which
Mr. Collins shares voting and investment powers.
(7) Includes 174,150 shares which may be acquired by Mr. Cox immediately
pursuant to options granted under The Summit Bancorporation Stock Incentive Plan
and converted into options to purchase Summit Common Stock.
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(8) Includes 952 shares held by Mr. Cox as custodian for minor children and
16,351 shares owned by Mr. Cox's wife over which Mr. Cox disclaims voting and
investment powers.
(9) Includes 3,000 shares owned by Mrs. Ferdon's husband over which Mrs.
Ferdon disclaims voting and investment powers.
(10) Mr. Harvey owns all of these shares jointly with his wife and shares
voting and investment powers with respect to these shares.
(11) Includes 7,765 shares held by Mr. Howell's wife over which Mr. Howell
disclaims voting and investment powers and 101 shares held by Mr. Howell as
custodian for minor children.
(12) Includes 854 shares held by Mr. Mertz as custodian for minor children,
3,487 shares owned jointly with Mr. Mertz's wife over which Mr. Mertz shares
voting and investment powers, and 165 shares owned by Mr. Mertz's wife over
which Mr. Mertz disclaims voting and investment powers.
(13) Includes 200 shares owned by Mr. Miles' wife over which Mr. Miles
disclaims voting and investment powers.
(14) Includes 1,100 shares owned by Mr. Paneyko's wife, 2,201 shares owned
by a family member living in the same household and 1,780 shares held by Mr.
Paneyko's wife as custodian for minor children over which Mr. Paneyko disclaims
voting and investment powers.
(15) Includes 4,201 shares held by Mr. Sayles' wife over which Mr. Sayles
disclaims voting and investment powers.
(16) Includes 305 shares held by Mr. Semrod's wife as custodian for a minor
child, 479 shares owned by Mr. Semrod's wife and 1,620 shares owned by a family
member living in the same household over which Mr. Semrod disclaims voting and
investment powers.
(17) Includes 1,275 shares owned by Mr. Silverstein's wife over which Mr.
Silverstein disclaims voting and investment powers and 624 shares owned by a
partnership in which Mr. Silverstein is a general partner.
(18) Includes 496 shares owned by Mr. Smith's wife over which Mr. Smith
disclaims voting and investment powers.
(19) Includes 14,353 shares owned jointly with Mr. Watson's wife over which
Mr. Watson shares voting and investment powers.
(20) Voting and investment powers are shared as to 188,286 and disclaimed
as to 60,885 of these shares. Includes 1,933,878 shares which may be acquired
within 60 days under all Stock Option Plans.
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<PAGE>
CORPORATE GOVERNANCE GUIDELINES
The Board of Directors has adopted the Corporate Governance Guidelines set
forth below for the management of the Corporation.
DUTIES OF DIRECTORS.
o The business and affairs of the Corporation shall be managed by its
officers under the direction of the Board of Directors.
o Each director owes a fiduciary duty of loyalty to the Corporation. Each
director owes a fiduciary duty of care and diligence to the Corporation.
o Each director, in discharging the director's duties to the Corporation and
in determining what the director reasonably believes to be in the best
interest of the Corporation, may, in addition to considering the effects of
any action on shareholders, consider the effects on the Corporation's
employees, suppliers, creditors, customers, the communities it serves, and
the long term as well as the short-term interests of the Corporation and
its shareholders.
o Each director should represent all shareholder interests.
o It is desirable that each outside director serves on the board of one of
the Corporation's subsidiaries.
DIRECTOR QUALIFICATIONS AND BOARD STRUCTURE.
o Not less than two-thirds of the directors shall be outside directors, i.e.,
persons not (i) currently employees of the Corporation, (ii) former
executive officers of the Corporation, or (iii) professional advisors,
consultants or counsel receiving material compensation for services to the
Corporation.
o Each director must own at least 1,000 shares of common stock of the
Corporation.
o A director may not be elected to a new term after reaching age 73.
o Inside directors must retire from the Board upon retirement from full-time
employment with the Corporation.
o A director whose personal circumstances change significantly (such as
retirement, a change in employment, or circumstances which compromise the
director's ability to serve the Corporation) shall offer to resign from the
Board, subject to the Board's discretion to accept or reject the offer of
resignation in the best interests of the Corporation.
o Depth and breadth of business and civic experience in leadership positions,
ties to the Corporation's markets, and diversity of Board membership are
criteria considered in reviewing nominees for the Board. The Corporation's
By-Laws provide for shareholder nominations in accordance with specified
procedures. Shareholders may also informally submit names to the Nominating
Committee.
o The Board has determined not to set a limit on the maximum time an
individual may serve as director or adopt policies on an ideal size for the
Board or whether or not the positions of Chairman and Chief Executive
Officer should be separate, in order to be free to make the choices which
seem best for the Corporation at any particular time.
COMMITTEE STRUCTURE AND RESPONSIBILITIES.
o All Committee appointments shall be made by the Board. Outside directors
normally serve on at least two Committees.
o Committees shall regularly report their activities to the full Board.
o The Chair of the Executive Committee is an officer of the Corporation under
its By-Laws and shall be an outside director. The Chair of each other
Committee shall be an outside director.
o The Compensation, Audit and Nominating Committees shall consist solely of
outside directors. A majority of members of all other Committees shall be
outside directors.
o The Executive Committee shall exercise the powers of the Board of Directors
between meetings of the Board to the extent permitted by law. The Executive
Committee shall be responsible for planning management succession.
9
<PAGE>
o The Compensation Committee recommends to the Board employment, promotion
and remuneration arrangements for executive officers and directors. The
Compensation Committee shall approve all executive incentive plans and
grants thereunder. A portion of executive compensation shall be based on
the performance of the Corporation and its business units. The Compensation
Committee shall review the performance and salary of the Chief Executive
Officer and senior executives annually. The Board shall meet annually in
executive session with the Chief Executive Officer to discuss the
recommendations of the Compensation Committee. The Compensation Committee
shall also review the compensation of the outside directors annually.
Inside directors shall not receive additional compensation for service as
directors.
o The Audit Committee shall recommend the engagement and discharge of
independent Certified Public Accountants, review their annual audit plan
and the results of their auditing activities, and consider the range of
audit and non-audit fees. It shall also review the general audit plan,
scope and results of the Corporation's procedures for internal auditing,
the independence of the internal and external auditors, and the adequacy of
the internal control structure. The reports of examination of the
Corporation and its subsidiaries by state and federal bank regulatory
examiners shall be reviewed by the Audit Committee. The Audit Committee
shall meet periodically in executive session with the independent Certified
Public Accountants. It shall have authority to employ independent legal
counsel.
o The Nominating Committee considers the appropriate size and makeup of the
Board, and will seek nominees to fulfill the Corporation's qualifications
and criteria for directors when it deems additions to the Board to be
desirable. It will consider nominations from shareholders. The Nominating
Committee shall review the performance of incumbent directors whose terms
expire prior to their renomination.
o The Capital and Dividend Committee and the Board shall review the
Corporation's dividend policy and capital program at least annually.
o The Acquisition Committee reviews acquisition strategy and reviews and
recommends to the Board proposals for significant acquisitions.
BOARD FUNCTIONS.
o Financial and investment results of the Corporation generally will be
reported to the Board at each regularly scheduled meeting.
o The Board will annually review and approve the operating and capital plans
(budgets).
o Management shall periodically prepare an updated strategic plan for the
Corporation, which shall be presented to the Board for its consultation,
advice and approval.
o The Annual Report to Shareholders, SEC Form 10-K, and the Proxy Statement
shall be reviewed by the Board.
GENERAL POLICIES.
o The Board encourages active efforts to seek diversity among employees. The
Board believes that the Corporation and its subsidiaries should be good
corporate citizens and serve the convenience and needs of their
communities.
o The Board has a strong policy against trading on inside information.
o Board members have complete access to executive officers of the
Corporation. Senior executives regularly attend portions of the Board
Meetings to make presentations and respond to questions. The Board
encourages presentations from officers other than senior executives who
have expertise and future potential.
o The Board believes that individual directors other than the Chairman of the
Executive Committee should not communicate on CORPORATE ISSUES with the
press, investors or employee groups without approval of the Board or
Executive Committee or at the request of management.
o These corporate governance guidelines have been approved by the Board and
may be amended by the Board as it deems appropriate.
10
<PAGE>
NOMINATIONS TO SUMMIT'S BOARD
The Nominating Committee will consider nominees recommended by
shareholders. Nominations, including biographical information and a statement by
the nominee that he or she is willing to serve if nominated, should be submitted
to the Secretary by October 1 for consideration for proposal at the next annual
meeting. Summit By-Laws state that a nominee must own 1,000 shares of Summit
Common Stock and be under the age of 73. Various state and federal laws prohibit
officers and directors of certain public utility holding companies and
competitors of Summit from serving on Summit's Board. A further standing
resolution of the Board states that employees of Summit and its subsidiaries and
affiliates who serve on the Board must retire from the Board when they reach
normal retirement age under the Summit Retirement Plan (currently 65) or upon
any earlier retirement or termination of full-time employment with Summit and
its subsidiaries and affiliates. Details may be obtained from the Secretary.
The By-Laws of Summit provide that nominations for the election of
directors may be made at an annual meeting by any shareholder entitled to vote
at the annual meeting but only if written notice of such intent, sent either by
personal delivery or by United States mail, is received by the Secretary of
Summit not later than 80 days in advance of the annual meeting. The notice must
set forth: (a) the name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated, (b) a representation
that such holder is a holder of record of shares of Summit entitled to vote at
the annual meeting and intends to appear in person or by proxy at the annual
meeting to nominate the person or persons specified in the notice, (c) a
description of all arrangements or understandings between such holder 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 such holder, (d) such
other information regarding each nominee proposed by such holder as would have
been required to be included in a proxy statement filed pursuant to the proxy
rules of the SEC had each nominee been nominated, or intended to be nominated,
by the Board of Directors and (e) the consent of each nominee to serve as a
director of Summit if so elected and a representation by such nominee that such
person, at the time of notification satisfies, and, on the date of the Annual
Meeting and thereafter during the continuation of directorship, will satisfy the
qualifications for service as a director as set forth in Section 13 of Article
III of the By-Laws. The By-Laws also provide that the chairman of the annual
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure.
REMUNERATION OF OUTSIDE DIRECTORS
Outside Directors, i.e., Directors who are not employees of Summit or one
of its subsidiaries, currently receive an annual retainer of $20,000 and $1,000
for each Board, Committee and Subcommittee meeting attended. In 1996, Mr.
Dunphy, Chair of the Executive and Compensation Committees, received an
additional $10,000 annual retainer and Mrs. Ferdon, Chair of the Audit
Committee, received an additional $5,000 annual retainer. Outside Directors who
serve as directors of subsidiaries also receive fees from such subsidiaries,
which vary in amount, with annual retainers for membership on bank subsidiary
boards ranging from $6,000 to $12,000 and fees for meetings attended ranging
from $200 to $750. An outside Director may elect to defer payment of fees from
Summit and its bank subsidiaries until reaching a stated age or until conclusion
of service as a Director, with interest on deferred sums payable at the rate
paid by SumNJ for IRA and Keogh Accounts.
A retirement plan for individuals who are outside Directors of Summit on
the date their service as a Summit Director ends, provides that outside
Directors with five or more years of service as a Summit Director (a "Vested
Director") are entitled to receive annually, for ten years or the number of
years served as a Director, whichever is less, commencing upon the Vested
Director's attainment of age 65 and retirement from the Summit Board or upon the
Vested Director's disability, payments equal to the highest annual retainer rate
in effect at any time for service as a Summit Director during the two-year
period immediately preceding the Vested Director's date of retirement or, if
earlier, date of death or disability. The plan further provides that, in the
event a Vested Director dies before receiving all benefits to which he or she is
entitled, the Vested Director's surviving spouse is entitled to receive all
benefits not received by the deceased Vested Director, commencing upon such
Vested Director's death. Upon a Change in Control of Summit the plan provides
that each Director then sitting on the Summit Board, notwithstanding that length
of time served as a Director, becomes entitled to receive annually, for ten
years or twice the number of years served as a Director, whichever is less,
payments equal to the higher of (i) the Director's annual retainer at the time
of the Director's termination of Board service, or (ii) the highest annual
retainer in effect at any time during the two-year period immediately preceding
the Change in Control, commencing on the latest to occur of (a) the termination
of the Director's Board service, (b) attainment of age 65 or (c) any date
designated by the Director prior to the Change in
11
<PAGE>
Control. The definition of Change in Control for purposes of the Plan parallels
the definition of that term contained in the Termination Agreements discussed on
page 22.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed
exclusively of Directors who are not, and have not been, officers or employees
of Summit or any of its subsidiaries (collectively, the "Company"). It is
presently chaired by Mr. Dunphy, who also serves as Chair of the Executive
Committee, and includes Mrs. Ferdon, Chair of the Audit Committee, Mr. Tabak,
Chair of the Acquisition Committee, Mrs. Estabrook and Messrs. Boyle Brady,
Mertz, Patterson and Smith.
Summit's executive compensation program is a coordinated and balanced
program consisting of:
o Salary and benefits;
o Incentive cash compensation;
o Stock option program; and
o Long-term performance stock program
A number of elements are taken into account in determining an executive
compensation program including company size and performance, management
philosophy, stock market price volatility, industry practices, company culture
and organizational structure. A balance must be achieved among:
o Aligning the executives' goals with the shareholders' goals of
stock appreciation and yield;
o The Company's goals of attracting, retaining and motivating the
best possible executives in a cost-effective way; and
o The executives' goals of maximizing the amount and certainty of
compensation as well as security of position.
The elements of the executive compensation program fulfill different
purposes:
o The incentive cash feature stresses the importance of achieving
specific goals each year.
o The stock option and stock award programs are intended to provide
a long-term incentive to build the Company's profits. They also
serve as a strong motivator, a capital accumulation opportunity
and a retention mechanism. Stock awards are also tax deductible
by the Company in most cases without incurring any cash outlay.
By increasing the shareholdings of executives, the stock programs
align the goals of Summit executives with those of Summit
shareholders. These programs are submitted to the shareholders
for approval prior to their implementation.
The present mix of the Summit executive compensation program is competitive
with peers in cash bonus and above the median in long-term stock-related
compensation. The Compensation Committee believes that this mix provides an
appropriate balance to maximize long-term shareholder interests. A
stock-weighted compensation program represents more risk to the executive
because the compensation decreases if the Company's stock price declines.
However, there is potentially more reward if the stock does appreciate,
reflecting the increasing reward to the shareholders.
The principal components of the compensation program can be seen in the
Summary Compensation Table on page 14 under the following column headings: "(c)
Salary", "(d) Bonus", "(f) Restricted Stock Awards","(g) Securities Underlying
Options/SARs" and "(h) LTIP Payouts". Reporting of awards under the long-term
performance stock program is split among three of the foregoing headings: the
unrestricted portion (one-fifth) of each year's incentive stock award (the
unrestricted portion) appears in the column titled "(d) Bonus" where it is
aggregated with an executive's incentive cash bonus award, the restricted
portion (four-fifths) of each year's incentive stock award appears under the
general caption "Long Term Compensation" in the column titled "(f) Restricted
Stock Awards" and performance stock awarded in a previous year which an
executive officer becomes entitled to receive by virtue of the attainment of a
performance goal (in some cases subject to certain additional
12
<PAGE>
restrictions on transferability) appears in the column titled "Payouts--(h) LTIP
Payouts". The last column of the Cash Compensation Table, "(h) All Other
Compensation", aggregates the remaining miscellaneous forms of compensation,
including term life insurance premiums paid on behalf of the executives under
the Company life insurance program applicable to all employees and the employer
matching contribution paid to the executive's accounts in the Employee Savings
Plan, a profit sharing and retirement plan established under Section 401(k) of
the Internal Revenue Code of 1986 (the "Code"), pursuant to which the Company
matches, subject currently with respect to 1997 to a maximum employer
contribution of $4,800, 100% of voluntary contributions by an employee up to the
first 3% of the employee's base salary and 50% of voluntary contributions by an
employee for up to an additional 2% of the employee's base salary. All employees
are eligible to participate in the Employee Savings Plan after one year of
service. Approximately 56% of the Employee Savings Plan's assets are invested in
Summit Common Stock, further aligning the employees" interests with those of the
shareholders.
The Compensation Committee periodically utilizes surveys and advice
provided by outside compensation consultants in arriving at and making
adjustments to the total compensation package appropriate for the executive
officers of the Company. The surveys considered by the Compensation Committee
for this purpose are primarily peer industry surveys but cross-industry surveys
are also reviewed. The peer companies included in the peer industry surveys are
selected by the independent firms which conduct the surveys and consist of the
commercial banks and bank holding companies operating primarily in the United
States which are, generally, in the same asset size group as the Company. In
1995 the Compensation Committee concluded a comprehensive review of the
executive compensation program with the assistance of a nationally recognized
outside compensation specialist. While the principal conclusion of the review
was the desirability of broadening middle management participation in the cash
bonus and long-term performance stock programs, the review also demonstrated the
desirability of shifting executive officer awards under the stock award program
from exclusive reliance on incentive stock awards to a blending of incentive
stock and performance stock awards.
Salary. Base salaries for executive officers, when initially set, are
generally dependent upon peer industry salaries paid for comparable positions
(as reflected in peer industry salary surveys) and correlate generally to the
size of the organization. The responsibilities to be undertaken and the
experience level of the particular executive officer are also taken into
consideration when setting a salary. The Compensation Committee seeks to
maintain average executive officer salaries near peer industry medians. With
respect to increases in base salaries, the overall general performance of the
Company for a given year, as well as trends in the economy and the banking
industry, are taken into account in arriving at a percentage increase which is
applied Company-wide as a guideline to the merit salary increases of all
employees, including executive officers. Deviations from the guideline
percentage are permitted in cases of exceptionally superior or inferior
performance and to correct significant variances from marketplace salaries. A
guideline percentage of 4% was applied to general salary increases during 1996
and will be applied to general salary increases during 1997.
Cash Bonus. Cash bonuses are awarded pursuant to the Incentive Plan, a
short-term plan adopted in 1982. The Incentive Plan provides for awards of cash
bonuses to key officers of the Company at the conclusion of a fiscal year based
on the Company's performance in relation to goals set for the Company at the
beginning of the year, the Company's performance compared to peers, and the
individual contributions of the officers involved and their profit centers. The
aggregate amount of bonuses may not exceed 50% of aggregate participants'
salaries and no bonuses will normally be paid when the after-tax income of the
Company is less than 7% of average capital for the year, subject to the right of
the Compensation Committee to make exceptions when deemed warranted.
The Compensation Committee periodically uses surveys and recommendations
provided by outside compensation consultants to establish percentages of base
salary representing a cash bonus guideline for executive officers and ranges for
permissible deviations above and below that guideline. In determining the amount
of cash bonus to award executive officers for a particular year, the
Compensation Committee evaluates the Company's performance (as a percentage of
the performance deemed desirable by the Compensation Committee) for that year
using five evaluation categories and pays a cash bonus equal to the rating
percentage times the cash bonus guideline (but no higher than the maximum and no
lower than the minimum in the guideline range). The five evaluation categories
are: financial and strategic plans, earnings growth rate, financial performance
compared to industry peers in the Company's geographic region, financial
performance as measured by selected long term financial performance
13
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ ----------------------- --------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
NAME AND COMPEN- STOCK OPTIONS/ PAYOUTS COMPEN-
PRINCIPAL POSITIONS YEAR SALARY($) BONUS($)(1) SATION($)(2) AWARDS($)(3) SARS(#) ($)(4) SATION($)(5)
- ------------------- ---- --------- ----------- ------------ ------------ -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
T. Joseph Semrod 1996 $737,500 $731,800 -- $427,200 75,000 $164,650 $10,676
Chairman of the Board 1995 707,500 559,300 -- 337,200 65,000 -- 16,785
and CEO of Summit and 1994 673,750 414,400 -- 237,600 58,000 -- 14,602
SumNJ
Robert G. Cox(6) 1996 $484,167 $435,780 -- $363,120 63,750 $140,175 $ 8,424
Director and President 1995 -- -- -- -- -- -- --
of Summit and 1994 -- -- -- -- -- -- --
SumNJ
John G. Collins 1996 $359,000 $293,400 -- $213,600 25,000 $ 53,400 $ 7,317
Vice Chairman of the 1995 326,500 195,100 -- 112,400 22,000 -- 12,866
Board of Summit and 1994 311,850 154,355 -- 57,420 20,000 -- 10,899
SumNJ
John R. Howell 1996 $331,500 $231,150 -- $ 31,150 21,000 $ 30,705 $ 7,324
Vice Chairman of the 1995 318,500 189,344 -- 52,688 21,000 -- 8,269
Board of Summit, 1994 305,250 150,855 -- 57,420 20,000 -- 10,779
Chairman of the Board,
President and CEO
of SumPA
Stephen H. Paneyko 1996 $281,750 $182,700 -- $106,800 16,000 $ 33,375 $ 5,976
Senior Executive Vice 1995 270,500 144,319 -- 77,275 16,000 -- 10,444
President/Commercial 1994 259,150 118,638 -- 44,550 16,000 -- 8,610
Banking of Summit
and SumNJ
</TABLE>
- ----------
(1) Includes value of unrestricted one-fifth of incentive stock award and any
cash bonus, both of which are paid in the fiscal year following the fiscal
year for which they are reported.
(2) Perquisites and other personal benefits, securities or property paid during
the indicated fiscal year did not exceed, with respect to any named
executive officer, the lesser of $50,000 or 10% of the annual salary and
bonus reported in the table for that individual, and are therefore excluded
from "Other Compensation".
(3) The total number of shares of restricted stock (restricted portion of
incentive stock awards) held and their aggregate market value as of December
31, 1996 are as follows: Mr. Semrod: 24,504 shares, $1,072,050; Mr. Cox:
8,136 shares, $355,950; Mr. Collins: 6,760 shares, $295,750; Mr. Howell:
5,060 shares, $221,375; Mr. Paneyko: 5,130 shares, $224,438.
The portion of each incentive stock award subject to restrictions on
transferability, indicated in shares, which were made subject to such
restrictions for less than three years were as follows:
VESTING PERIOD
----------------------------------------------------
1994 1995 1996
---------------- ---------------- ----------------
NAME 1 YEAR 2 YEARS 1 YEAR 2 YEARS 1 YEAR 2 YEARS
---- ------ ------- ------ ------- ------ -------
T.J. Semrod 2,400 2,400 2,400 2,400 2,400 2,400
R.G. Cox -- -- -- -- 2,040 2,040
J.G. Collins 580 580 800 800 1,200 1,200
J.R. Howell 580 580 750 750 700 0
S.H. Paneyko 450 450 550 550 600 600
Dividends are paid on all shares of restricted stock (incentive stock) held by
the named executive officers.
14
<PAGE>
ratios and restructuring and positioning objectives. The Compensation Committee
assigns relative weights to these categories each year which reflect, in its
judgment, as of that year, the relative importance of each category to the
long-term financial prospects of the Company. In arriving at the bonus paid with
respect to 1996, the Compensation Committee determined that the Company had
performed at a level equal to 137% of the performance deemed desirable for
payment of the cash bonus guideline and paid cash bonus amounts having a median
at approximately 134% of the cash bonus guideline. With respect to 1996, the
Compensation Committee placed particular significance on the Company's
completion of four acquisitions and agreement on a fifth, the ability of the
Company to attain a return on assets in excess of its goal of 1.4%, a return on
equity in excess of its goal of 17%, an efficiency ratio better than its goal of
52%, and a reduction in non-performing assets to $186 million, the realization
of $78 million in merger savings as projected, revenue enhancement ideas of
$11.8 million and a 12.5% dividend increase.
Stock Bonus and Long Term Compensation. To encourage growth in shareholder
value, the Compensation Committee believes that senior executives who are in a
position to make a substantial contribution to the long-term success of the
Company should have a significant stake in the Company and its ongoing success.
An equity position in the business focuses attention on managing the Company as
an owner. To encourage growth in shareholder value, the stock component of the
executive compensation program includes a long-term performance stock program
and a stock option program. These stock-based programs are designed to mature
and grow in value over time and for that reason represent compensation which is
attributable to service over a period of time.
The Long-Term Performance Stock Program is designed to reward executives
who meet predetermined performance standards and retain the executives by paying
out stock over a period of time. The program consists of: (i) performance stock
awards, which are (x) awards made with respect to services rendered in the prior
fiscal year following the attainment of Company, division and personal
performance standards but which are earned only upon the attainment of one or
more objectively verifiable performance goals, (y) fixed with respect to the
number of shares underlying the award at the time the performance goals are set,
and (z) intended to qualify for the performance based exemption (the
"Performance Based Exemption") under Section 162(m) of the Code; and (ii)
incentive stock awards, which are awards made with respect to services rendered
in the prior fiscal year following the attainment of Company, division and
personal performance standards but which are not intended to qualify for the
Performance Based Exemption. Performance stock awards, in addition to requiring
the satisfaction of performance goals, may contain restrictions upon
transferability which lapse in annual increments following the attainment of the
performance goals. Incentive stock awards typically consist of a portion
(one-fifth of the total award, unless the retirement of a participant is
expected within less than four years following the award) which is transferred
without restriction to the participant immediately upon being awarded and a
remaining portion (four-fifths of the total award, unless the retirement of a
participant is expected within less than four years following the award) which
contains restrictions on transferability which lapse generally in annual
increments over the four years following the award, provided the executive
remains in the employ of the Company during that time. Performance stock awards
are reported in the Summary Compensation Table under column (h) as LTIP (long
term incentive plan) Payouts in the year a particular performance stock award is
made (and the year to which the related performance goal pertains), although
Compensation Committee certification of performance goal attainment does not
occur, and distribution of award shares does not commence, until the year
following the year the award is made. By contrast, incentive stock awards are
reported in the Summary Compensation Table in the year preceding the year the
award is made because incentive stock awards are made based on services rendered
in such preceding year and are not further conditioned upon attainment of
performance goals. Pursuant to regulations of the SEC, one-fifth of an annual
incentive stock award, the unrestricted portion, is generally reported as annual
compensation in column (d) of the Summary Compensation Table and the remaining
four-fifths, the restricted portion which is distributed as restrictions on
transferability lapse, generally in four equal annual installments, is reported
as long-term compensation in column (f) of the Summary Compensation Table.
The Compensation Committee periodically utilizes surveys and
recommendations provided by outside compensation consultants to establish a
long-term performance stock program guideline and ranges for permissible
deviations above and below this guideline. Following the end of a fiscal year
and based on the foregoing, the Chief Executive Officer determines an
appropriate stock award recommendation for each executive officer. The
Compensation Committee then weighs as it deems appropriate the performance of
each executive officer and the evaluation and recommendation of the Chief
Executive Officer and makes incentive stock and performance stock awards after
taking into account the overall performance of the Company or one or more
elements thereof or such other factors as the Compensation Committee considers
relevant. When determining appropriate stock awards to make with respect to
services rendered in 1996, the Compensation Committee placed particular
significance on the Company's ability to exceed return-on-asset,
return-on-equity and efficiency ratio goals, as it did when determining
appropriate cash bonus amounts and, as discussed below, appropriate option
grants. While typically one-fifth of an
15
<PAGE>
(4) Contains entire performance stock award (made in the year for which listed)
which executive became entitled to receive (in the year following the year
for which listed) by virtue of the attainment of a performance goal
relating to the year listed. A portion of each award was distributed
immediately while a remaining portion of each award was subject to
restrictions on transferability which lapse in equal annual increments
provided the executive remains employed by the Company. The portion of each
award subject to restrictions on transferability which lapse in less than
three years are as follows:
VESTING PERIOD
---------------
1996
---------------
NAME 1 YEAR 2 YEARS
---- ------ -------
T.J. Semrod 740 740
R.G. Cox 630 630
J.G. Collins 240 240
J.R. Howell 230 230
S.H. Paneyko 150 150
No performance stock awards were made prior to 1996.
(5) Amounts listed under "All Other Compensation" for 1996 include Company
contributions to the Employee Savings Plan ("SIP") and the dollar value of
insurance premiums paid with respect to term life insurance (INS) for the
named executive officers as follows: Mr. Semrod: SIP-$4,500, INS-$6,176;
Mr. Cox: SIP-$6,750, INS-$1,674; Mr. Collins: SIP-$4,500, INS-$2,817; Mr.
Howell: SIP-$4,500, INS-$2,824; Mr. Paneyko: SIP-$4,575, INS-$1,401.
(6) Mr. Cox joined Summit in 1996 in connection with the merger of The Summit
Bancorporation into the Corporation.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ALTERNATIVE TO
(F) AND (G):
GRANT DATE VALUE
----------------
(A) (B) (C) (D) (E) (F)
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED(1) FISCAL YEAR ($/SH)(2) DATE PRESENT VALUE($)(3)
- ---- ---------- ----------- --------- ---- -------------------
<S> <C> <C> <C> <C> <C>
T. Joseph Semrod (CEO) .. 65,000 9% $35.00 1/31/2006 $643,642
Robert G. Cox ........... 55,170 7% $39.03 2/20/2006 609,206
John G. Collins ......... 22,000 3% $35.00 1/31/2006 217,848
John R. Howell .......... 21,000 3% $35.00 1/31/2006 207,946
Stephen H. Paneyko ...... 16,000 2% $35.00 1/31/2006 158,435
</TABLE>
- ----------
(1) The stock option grants listed in this table are reported as 1995
compensation on the Summary Compensation Table.
(2) Exercise price equals 100% of the fair market value of a share of Summit
Common Stock on the grant date, which was January 21, 1996 for all options
listed above except those of Mr. Cox, for which the grant date is February
20, 1996. All listed options are nonqualified options, become exercisable
one year from the date of grant and terminate upon a termination of
employment, except termination of employment occurring due to death,
disability, retirement or dismissal without cause.
(3) Black-Scholes Option Pricing Model used. The Black-Scholes value, an
estimate based on assumptions about future stock price volatility and
dividend yield, was 28.3% of the stock price on the date of the grant. The
estimated volatility of 21.9% and dividend yield of 3.01% were based on
historical data from the prior three years. The estimated value also
reflects a risk-free rate of return of 6% and a 10-year option term.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END(#)(1) AT FY-END($)(1)
SHARES ACQUIRED --------------------------- --------------------------
NAME ON EXERCISE(#) VALUE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T. Joseph Semrod (CEO) .... 0 $ 0 497,894 81,076 $12,602,168 $972,232
Robert G. Cox(2) .......... 37,474 794,009 118,980 55,170 2,858,598 260,524
John G. Collins ........... 5,000 92,188 178,680 22,000 4,493,414 192,500
John R. Howell ............ 50,000 1,366,471 156,180 21,000 3,379,537 183,750
Stephen H. Paneyko ........ 2,868 49,563 144,125 16,000 3,604,441 140,000
</TABLE>
- ----------
(1) Year-end 1996 numbers and values exclude options granted in January 1997,
which are reported as 1996 compensation on the Summary Compensation Table.
(2) Includes options granted by The Summit Bancorporation prior to its merger
with Summit in 1996, which options were converted in the merger into
options to purchase Summit Common Stock.
16
<PAGE>
incentive stock award constitutes immediate compensation to the executive
officer, the balance of an incentive stock award is typically received in four
annual installments but only if the executive officer remains in the employ of
the Company during that time. Additionally, performance stock, though awarded on
the basis of a performance evaluation that considers prior year performance, is
received by the executive officer only if the performance goals established in
conjunction with the performance stock award are satisfied by future
performance. One hundred twenty-one employees participated in the January 1997
stock awards applicable to services rendered in 1996, receiving an aggregate of
140,975 shares. Included in this aggregate stock award is 29,295 shares of
performance stock awarded to 21 key employees. The performance stock award made
in January 1997 represents, as a percent of all stock awards made in January
1997, more than a twofold increase over the percentage of 1996 stock awards
represented by 1996 performance stock awards and reflects the Compensation
Committee's shift from exclusive reliance on incentive stock to a blending of
incentive stock and performance stock in the long-term performance stock program
(discussed earlier in connection with the comprehensive review of executive
compensation conducted by the Committee in 1995).
Stock options are a performance-motivating incentive because they have no
value unless the Company's stock price increases. Surveys and recommendations
provided by outside compensation consultants are periodically used by the
Compensation Committee to establish stock option guidelines (determined in
number of options), and ranges of permissible deviations above and below those
guidelines, for each salary level of officer at Summit and each of its
subsidiaries. The Compensation Committee, on a subjective basis and entirely
within its discretion, then evaluates the overall financial performance of the
Company, or any element thereof, and determines whether to grant options in
accordance with the stock option program guidelines or amounts greater than or
less than the guidelines. When determining appropriate option grants to make
with respect to services rendered in 1996, the Compensation Committee again
placed particular significance on the Company's ability to exceed
return-on-asset, return-on-equity and efficiency ratio goals, as it did when
determining appropriate cash bonus amounts and stock awards. The Compensation
Committee does not generally consider currently outstanding and previously
granted options when making grants. The Compensation Committee does not consider
the aggregate size of current grants when making individual grants, but the 1993
Incentive Stock and Option Plan contains a specific aggregate annual grant
limitation. It is intended that stock options qualify for the Performance Based
Exemption.
The stock option program is designed with a broad scope to align the
interests of a large number of employees with shareholder interests. A total of
949 current employees hold one or more stock options granted with respect to the
current year or to prior years. This amounts to 15% of the full time work force.
With respect to stock options granted in January 1997 for services rendered in
1996, 770 employees received options on 1,061,100 shares. Set forth in the
Summary Compensation Table are the stock option grants made in January 1997 to
the five named executive officers for services rendered in 1996. The table
titled "Option Grants in Last Fiscal Year" sets forth (pursuant to SEC
requirements) the stock option grants made to the five named executive officers
in 1996 for services rendered in 1995.
To further encourage employee ownership of Summit Common Stock, the Company
offers a payroll deduction plan which facilitates employee purchases of Summit
Common Stock through the Dividend Reinvestment Plan (at a fair market value
determined in accordance with the terms of the Dividend Reinvestment Plan).
Chief Executive Officer. In general, Mr. Semrod's compensation is
determined in the same manner as that of other senior executives, as described
above. In determining Mr. Semrod's cash bonus, stock option grant and incentive
stock and performance stock award for 1996, the Compensation Committee
considered in accordance with the practices and procedures described above the
surveys and recommendations of compensation consultants previously cited, Mr.
Semrod's performance and the overall performance of the Company, placing
particular significance as with other compensation decisions made with respect
to services rendered in 1996 on the Company's ability to exceed return-on-asset,
return-on-equity and efficiency ratio goals.
17
<PAGE>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE BASED PLANS
---------------------------------
PERFORMANCE OR
OTHER PERIOD UNTIL
NUMBER OF MATURITIES OR THRESHOLD TARGET MAXIMUM
NAME SHARES AWARDED PAYOUT(1) (#) (#) (#)
- ---- -------------- ------------------- --------- ------ --------
<S> <C> <C> <C> <C> <C>
T. Joseph Semrod (CEO) 3,700 12/31/96 0 3,700 3,700
Robert G. Cox 3,150 12/31/96 0 3,150 3,150
John G. Collins 1,200 12/31/96 0 1,200 1,200
John R. Howell 690 12/31/96 0 690 690
Stephen H. Paneyko 750 12/31/96 0 750 750
</TABLE>
- ----------
(1) Award of performance stock was subject to attainment of performance goal
based upon the Company's return on assets for the fourth quarter of fiscal
1996, excluding extraordinary items and non-recurring charges and according
to GAAP. Upon attainment of the performance goal, the performance stock
became fully vested as to one portion-fifth of the award (typically
one-fifth). The remaining portion of the award (typically four-fifths) is
subject to restrictions on transferability which lapse in equal annual
installments.
Compliance with Section 162(m) of the Code. With certain exemptions,
including compensation qualifying for the Performance Based Exemption, Section
162(m) of the Code denies a deduction to publicly held corporations for
compensation paid to certain executive officers in excess of $1 million for each
such executive for a taxable year. At its 1996 Annual Meeting of Shareholders,
the Company proposed and shareholders approved amendments to the Summit Bancorp.
1993 Incentive Stock and Option Plan intended to qualify options and performance
stock granted pursuant thereto for the Performance Based Exemption.
Respectfully submitted,
T.J. Dermot Dunphy, Chairman
Robert L. Boyle, James C. Brady, Jr., Anne Evans Estabrook, Elinor J. Ferdon,
Francis J. Mertz, Henry S. Patterson II, Orin R. Smith and Joseph M. Tabak
18
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is the five year Cumulative Total Return stock performance
graph for (i) Summit Common Stock, (ii) the Media General ("MG") Mid-Atlantic
Bank Group Index, an industry index encompassing virtually all publicly traded
banking companies in New York, New Jersey, Pennsylvania, Delaware, Maryland and
the District of Columbia (141 companies), (iii) the New York Stock Exchange
("NYSE") Market Value Index, a broad market index covering all stocks listed on
the NYSE, (iv) the Keefe, Bruyette & Woods, Inc. ("KBW") 50 Index, an industry
index consisting of 50 money-center and regional banking companies and (v) the
Standard & Poor's ("S&P") 500 Market Index, a broad market index covering the
stocks of 500 large capitalization companies.
The Company has selected a industry index and a broad market index for this
years Stock Performance Graph which are different from those used in last years
Stock Performance Graph. The Company is replacing the MG Mid-Atlantic Bank Group
Index, the industry index used in last years Stock Performance Graph, with the
KBW 50 Index, and is replacing the NYSE Market Value Index, the broad market
index used in last years Stock Performance Graph, with the S&P 500 Market Index.
The Company believes that the new indexes are more widely used by peer issuers
and therefor provide for greater comparability between the Company and peer
issuers. In accordance with SEC regulations, the following Stock Performance
Graph includes a comparison of the five year Cumulative Total Return for Summit
Common Stock with that of both the new indexes and the indexes used in last
years Stock Performance Graph.
SUMMIT BANCORP., MG MID-ATLANTIC BANK GROUP INDEX,
NYSE MARKET VALUE INDEX, KBW 50 INDEX & S&P 500 INDEX
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
GRAPHICAL REPRESENTATION OF DATA TABLE BELOW
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
(DOLLARS)
Summit Bancorp $100 172.92 175.71 183.08 278.04 353.75
MG Mid-Atlantic $100 125.23 155.57 147.70 224.28 317.65
NYSE Index $100 104.70 118.88 116.57 151.15 182.08
KBW 50 Index $100 127.42 134.48 127.62 204.41 289.15
S&P 500 Index $100 107.64 118.50 120.06 165.18 203.11
- ----------
Assumes $100 invested on January 1, 1992
* Total Return assumes reinvestment of dividends
19
<PAGE>
ADDITIONAL INFORMATION REGARDING DIRECTORS AND OFFICERS
Some executive officers, Directors and nominees for election as Director of
Summit and their associates have deposit accounts with one or more of Summit's
bank subsidiaries and may also have transactions with one or more subsidiaries,
including loans, in the ordinary course of business. All loans in excess of
$60,000 to executive officers and Directors and their associates were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not involve more than the normal risk of collectibility or present other
unfavorable features.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Summit's executive officers and
directors, and any persons owning ten percent or more of a registered class of
Summit's equity securities, to file initial statements of beneficial ownership
(Form 3), statements of changes in beneficial ownership (Form 4) and annual
statements of beneficial ownership (Form 5) with the SEC and the NYSE. Persons
filing such statements are required by SEC regulation to furnish the Company
with copies of all such beneficial ownership statements filed under Section
16(a) of the Exchange Act.
Based solely on its review of the copies of beneficial ownership statements
received by it, or written representations from certain reporting persons that
no beneficial ownership statements were required for those persons, Summit
believes that during 1996 all beneficial ownership statements under Section
16(a) of the Exchange Act which were required to be filed by executive officers
and directors of Summit in their personal capacities were filed in a timely
manner, with the following exceptions: the reporting of the redemption on
December 15, 1996 of 300 shares and 1,000 shares of Summit's Adjustable Rate
Cumulative Preferred Stock, Series B ($50 stated value) owned, respectively, by
Mr. Boyle and Mr. Tabak was delayed from the required Form 4 filing in January
1997 to a Form 5 filed in February 1997 and the reporting of the acquisition on
March 1, 1996 of 147 shares and 2,114 shares of Summit Common Stock by,
respectively, Mr. Mertz and Mr. Tabak in connection with the merger of The
Summit Bancorporation into Summit Bancorp. and the conversion of Summit
Bancorporation common stock into Summit Common Stock was delayed from the
required Form 4 filings in April 1996 to, in the case of Mr. Mertz, a Form 5
filed in February 1997 and, in the case of Mr. Tabak, the required Form 4 filed
two days late.
CERTAIN INFORMATION AS TO EXECUTIVE OFFICERS
EMPLOYMENT AGREEMENTS
Summit entered into an employment contract with Mr. Semrod when he joined
Summit in 1981. This contract renews annually for a one-year term, unless the
contract is terminated for cause or due to disability or death, or notice of
nonrenewal is given 120 days prior to its April 2d anniversary date. No notice
of nonrenewal has been given. The contract provided for a minimum base salary of
$200,000 per annum, subject to periodic review to reflect the impact of
inflation, performance, and competitive compensation levels. Mr. Semrod's
contract also provides for a cash bonus formula; however, since the
establishment in 1982 of the Incentive Plan which provides for bonuses to key
employees of Summit and its subsidiaries, Mr. Semrod's bonus has been calculated
and paid under that Plan rather than under the contractual formula.
Summit entered into an employment agreement with Robert G. Cox, providing
for Mr. Cox to serve, commencing at the effective time of the Summit/UJB Merger
(the "Effective Time"), as the President of Summit and UJBank (after UJBank's
anticipated merger with SumBank under the name Summit Bank), for an initial term
of three years; provided, however, on the first and second anniversary dates of
the employment agreement, the term of the employment agreement shall be extended
automatically for one additional year unless not later than 180 days prior to
such anniversary date, either party shall have given written notice to the other
of its or his election not to extend the term of the employment agreement. The
employment agreement additionally provides for Mr. Cox to receive (i) base
salary of not less than $500,000, (ii) an annual bonus at least equal to the
highest annual bonus received by him during any of three calendar years
preceding the Effective Time, (iii) incentive, savings and retirement plan
benefits which in the aggregate are equal to those received by peer executives
of Summit, or, if more favorable, the most favorable incentive, savings and
retirement plan benefits received by him in the 180 days preceding the Effective
Time,(iv) health and welfare plan benefits which in the aggregate are equal to
those received by peer executives of Summit, or, if more favorable, the most
favorable health and welfare plan benefits received by him in the 180 days
preceding
20
<PAGE>
the Effective Time, and (v) other customary fringe benefits received by peer
executives of Summit, or, if more favorable, the most favorable of the fringe
benefits received by him in the 180 days preceding the Effective Time. In the
employment agreement Mr. Cox agreed that for a period of one year following any
termination of the employment agreement he will not accept employment with any
national or state bank or thrift institution or affiliate thereof at a place of
employment within 25 miles of any branch location of Summit or any of its
subsidiaries. The employment agreement also provides for Summit to assume the
obligations of the former Summit Bancorporation under the change of control
agreement between the former Summit Bancorporation and Mr. Cox. The change of
control agreement provides for Mr. Cox to receive certain benefits and a
severance payment in the event his employment is terminated following a change
of control or a potential change of control as those terms are defined in the
agreements (the "Change of Control Events") equal to three times the highest
salary and bonus received by him in the 36 months preceding the change of
control. The agreement also provides for reimbursement of a portion of the
excise taxes payable (if any) as a result of receipt by Mr. Cox of payments and
benefits as a result of a termination after a Change of Control Event. The term
of the change of control agreement extends through January 11, 1999 but is
automatically extended each January 1, commencing January 1, 1999, for an
additional one year unless either party gives the other party six months advance
written notice of termination. In the event of a change of control the agreement
remains in effect for not less than 36 months following the change of control.
In no event does the agreement extend beyond Mr. Cox's 65th birthday.
EXECUTIVE SEVERANCE PLAN
In 1986 the Summit Board adopted the Summit Executive Severance Plan for
the purposes of enhancing the ability of Summit to retain existing management
and attract new executives and rewarding key executives for their service to the
Company with reasonable compensation in the event of a termination of their
employment under any of the circumstances set forth in the Plan. Key executives
of the Company are eligible to be selected as Plan participants. The Summit
Board has selected the following executive officers to be Plan participants: T.
Joseph Semrod, John G. Collins, John R. Howell, Stephen H. Paneyko, John R.
Haggerty, Larry L. Betsinger, Alfred M. D'Augusta, William J. Healy, Sabry J.
Mackoul, Richard F. Ober, Jr., Dennis Porterfield, Alan N. Posencheg, Gary F.
Simmerman and Edmund C. Weiss, Jr. Their period of participation will expire as
of December 15,1999.
The Plan provides that, in the event a participant's employment is
terminated by the Company, other than for Cause (as defined below), death,
disability or retirement, or by the participant for Good Reason (as defined
below), the participant is entitled, for a period of not less than 18 months and
not more than 24 months, or, if earlier, until the participant's death,
disability or retirement, to receive payments based upon the highest rate of
base salary in effect for the participant during the 12-month period preceding
the notice of termination and to remain an active participant in all employee
benefit plans available to employees generally. The participant is also entitled
to receive a pro rated annual bonus for the year in which terminated, and to
continue receiving perquisites for 12 months. The salary and employee benefit
plans continuation period would be 24 months for Mr. Semrod and 18 months for
all other current participants.
For purposes of the Plan, "Cause" is defined to mean any of the following:
(i) the willful commission of an act that causes or that probably will cause
substantial economic damage to the Company or substantial injury to its business
reputation; (ii) the commission of an act of fraud in the performance of the
participant's duties; (iii) a continuing willful failure to perform the duties
of the participant's position with the Company or (iv) the order of a bank
regulatory agency or court requiring the termination of the participant's
employment. Willfulness is defined to be an act or failure to act done not in
good faith and without reasonable belief that the action or omission was in the
best interests of the Company.
"Good Reason" for purposes of the Plan is defined to mean any of the
following: (i) the assignment of duties which are inconsistent with, or the
failure to assign duties which are consistent with, the participant's then
current title and salary grade; (ii) removal of the participant from, or any
failure to reappoint or reelect the participant to the highest title held by him
or her during the previous six-month period; (iii) a reduction in the
participant's salary or the failure to grant increases in the participant's
salary comparable to those granted executives of the Company of comparable
title, salary grade and performance ratings; (iv) locating the participant's
office anywhere other than at Summit's (or a subsidiary's) principal executive
offices and (v) the failure by the Company to provide welfare benefits and
perquisites substantially the same as or comparable to those presently provided
to the participant.
In the event a participant becomes entitled to the benefits described above
and the participant subsequently obtains other employment, the participant's
entitlement to the above described benefits ceases and the participant
21
<PAGE>
becomes entitled to receive instead a lump sum payment equal to 50% of
remaining base salary that would otherwise have been payable to the participant.
TERMINATION AGREEMENTS
The Board of Directors has approved Termination Agreements with certain
executive officers of Summit for the purposes of enhancing the ability of Summit
to retain existing management and attract new executives and of rewarding key
executives for their service to the Company with reasonable compensation in the
event their employment is terminated as provided in the Termination Agreements.
In the Termination Agreements, each officer has agreed that in the event any
person or entity takes certain steps designed to effect a Change in Control (as
defined below) of Summit, he will continue to perform his regular duties and
services for the Company until such person or entity has abandoned or terminated
efforts to effect a Change in Control or until a Change in Control has occurred.
The following executive officers are currently parties to Termination Agreements
with Summit: Messrs. Semrod, Collins, Howell, Paneyko, Haggerty, Betsinger,
D'Augusta, Healy, Mackoul, Ober, Porterfield, Posencheg, Simmerman and Weiss.
The Termination Agreements provide that if, within three years after a Change in
Control of Summit, the officer's employment with the Company is terminated by
the Company, other than for Cause (as defined below), death, disability or
retirement, or by the officer for Good Reason (as defined below), the officer is
entitled to receive (i) a lump sum cash payment equal to one year's base salary
at his highest rate in effect during the 12 month period preceding the notice of
termination (not to exceed 2.99 times the average of the officer's annual
compensation payable for the five years immediately preceding the Change in
Control), and (ii) upon retirement an amount of total retirement benefits equal
to that which the officer would have received from retirement plans of, or
employment contracts with, the Company if his employment had continued for three
years beyond his termination date or until his retirement, if earlier, and his
rights were fully vested. The amount by which retirement benefits payable under
the Termination Agreements exceeds the amount of retirement benefits otherwise
payable to the officers represents an unfunded obligation of the Company for
which no amounts have been set aside. A Termination Agreement terminates if the
officer voluntarily ends his employment during any period when no effort to
effect a Change in Control of Summit is then in progress.
To come within the terms of the Termination Agreements the Change in
Control of Summit must occur, or efforts designed to lead to a Change in Control
of Summit must commence, before January 11, 1999. A "Change in Control" of
Summit is defined to mean: (i) the acquisition by any person of beneficial
ownership of 33-1/3% or more of the combined voting power of Summit's
outstanding securities; (ii) a change in the composition of majority membership
of the Board of Directors over any two-year period; (iii) a change in ownership
of Summit such that Summit becomes subject to the delisting of its Common Stock
from the NYSE; (iv) the approval by the Board of the sale of all or
substantially all of the assets of Summit; (v) the approval by the Board of any
merger, consolidation, issuance of securities or purchase of assets, the result
of which would be the occurrence of any event described in clause (i), (ii) or
(iii) above.
The definition of "Cause" for purposes of the Termination Agreements
parallels the definition of that term in the Executive Severance Plan described
above. "Good Reason", for purposes of the Termination Agreements, is defined to
mean: (i) the assignment of duties which are materially different or require
substantially more business travel than duties prior to the Change in Control or
which represent a significant reduction in authority and responsibility; (ii)
removal from, or failure to reappoint or reelect the officer to the highest
office held in the six months prior to the Change in Control; (iii) a reduction
in the officer's salary or the failure to grant increases in salary comparable
to those granted officers of comparable title, salary grade and performance
ratings; (iv) the relocation of Summit's principal executive offices outside New
Jersey, a change in the officer's base location to anywhere other than the
Company's principal executive offices or the failure to pay reasonable
relocation expenses where the officer has agreed to a relocation; (v) the
failure to provide the officer with benefits and perquisites the same as or
comparable to those received prior to the Change in Control or (vi) the failure
of Summit to obtain the express written assumption of a Termination Agreement by
any successor to Summit.
PENSION PLANS
Summit maintains a noncontributory pension plan, qualified as a "defined
benefit" pension plan under the Code, which applies to salaried employees,
including executive officers, of Summit and its subsidiaries (the "Basic Plan").
Due to certain benefit restrictions placed on the Basic Plan by the Code, Summit
also maintains a retirement restoration plan and a supplemental retirement plan
applicable to all salaried employees covered by the Basic Plan
22
<PAGE>
(the "Supplemental Plans"). The following table sets forth the estimated total
annual pension benefits payable under the Basic Plan and the Supplemental Plans
at normal retirement (age 65) at the Years of Credited Service and salary levels
indicated:
PENSION PLAN TABLE
ANNUAL BENEFIT FOR YEARS OF CREDITED
HIGHEST AVERAGE YEARLY SERVICE INDICATED (A) (B)
BASE SALARY OF -----------------------------------------------------
CONSECUTIVE 60 MONTHS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
--------------------- -------- -------- -------- -------- --------
$125,000 ............ $ 36,181 $ 48,242 $ 60,802 $ 72,363 $ 75,000
(84,423)
$150,000 ............ 43,681 58,242 72,802 87,363 90,000
(101,923)
$200,000 ............ 58,681 78,242 97,802 117,363 120,000
(136,923)
$250,000 ............ 73,681 98,242 122,802 147,363 150,000
(171,923)
$300,000 ............ 88,681 118,242 147,802 177,363 180,000
(206,923)
$400,000 ............ 118,681 158,242 197,802 237,363 240,000
(276,923)
$450,000 ............ 133,681 178,242 222,802 267,363 270,000
(311,923)
$500,000 ............ 148,681 198,242 247,802 297,363 300,000
(346,923)
$600,000 ............ 178,681 238,242 297,802 357,363 360,000
(416,923)
$700,000 ............ 208,681 278,242 347,802 417,363 420,000
(486,923)
$800,000 ............ 238,681 318,242 397,802 477,363 480,000
(556,923)
- ----------
(a) Years of Credited Service are defined by the plan as years of full-time
employment after the employee has attained age 21.
(b) Amounts in parentheses ( ) are amounts payable where the 60% limit of the
Basic Plan does not apply.
Covered compensation, except as described below with respect to Mr. Howell,
includes only base salary and is identical to amounts reported in the Summary
Compensation Table under the column titled "(c) Salary." The benefits listed in
the Pension Plan Table are not subject to offsets for Social Security or other
benefits received by retirees. The listed benefits are those payable if the
straight life annuity method of distribution is chosen. Years of Credited
Service under the Basic Plan for the executive officers listed in the Summary
compensation Table, except as described below for Mr. Howell, are as follows:
Mr. Semrod, 15 years; Mr. Collins, 10 years; Mr. Paneyko, 13 years. Mr. Cox's
participation in the Basic Plan commerced January 1, 1997.
Mr. Semrod's employment contract provides for supplemental retirement
benefits calculated in accordance with the formula of the Basic Plan, but
without regard to the benefit limitations imposed by the Code and the Basic
Plan, and credits Mr. Semrod with years of service commencing February 1, 1963
(an additional 19 years).
Employees and former employees who formerly worked for United Jersey
Bank/Commercial Trust (a predecessor bank to United Jersey Bank), including Mr.
Collins, are covered for service before August 1, 1988 (January 1, 1987 in the
case of Mr. Collins) by a defined benefit, noncontributory pension plan which
provides for benefits lower than those described above for the Basic Plan of
Summit. Mr. Collins has 16 Years of Credited Service under this plan. Such
employees are covered by the Basic Plan and Supplemental Plans for service on
and after August 1, 1988 (January 1, 1987 in the case of Mr. Collins).
Employees and former employees of First Valley and its subsidiaries,
including Mr. Howell, are covered for service before January 1, 1996 by a
formula contained in the former pension plan of First Valley which remained
23
<PAGE>
applicable to such periods of service following the merger of the former First
Valley pension plan into the Basic Plan. The First Valley formula provides
for benefits lower than the standard formula for the Basic Plan at specified
levels of Years of Credited Service and Average Salary, but the First Valley
formula determines benefits on the basis of a compensation component which
includes, in its 60-month averaging, payments of bonus as well as salary in a
given year. Salary for a given year in the averaging period is the salary
reported for the given year in the Summary Compensation Table at the column
titled "(c) Salary" while the cash bonus is reported, but not separately listed,
at the prior year in the column titled "(d) Bonus" of the Summary Compensation
Table. (The difference in reporting years for salary and bonus results from
Summit's general practice of awarding bonuses each January for services rendered
the prior calendar year. Summit's method of reporting compensation in the
Summary Compensation Table is intended to comply with the Federal securities
laws while benefit calculations must comply with benefit plan terms as well as
Federal laws applicable to employee benefit plans). Employees and former
employees of First Valley are covered by the Basic Plan's standard formula for
service on and after January 1, 1996. Mr. Howell's covered compensation for 1996
under the First Valley formula was $494,500 and under the standard formula was
the amount set forth for 1996 in the Summary Compensation Table in the column
titled "(c) Salary." Mr. Howell has 20 Years of Credited Service under the First
Valley formula and one year of Credited Service under the standard formula of
the Basic Plan.
Employees and former employees who formerly worked for The Summit
Bancorporation (a predecessor to Summit Bancorp.), including Mr. Cox and John R.
Feeney, are covered for service before January 1, 1997 by a defined benefit,
noncontributory pension plan ("Bancorporation Plan") which provides for
benefits, in general, marginally lower than those described above for the Basic
Plan; however, the compensation component of the formula used to determine
benefits under the Bancorporation Plan, unlike the Basic Plan, uses the highest
average salary over a consecutive 36-month period. Mr. Cox has 23 years of
Credited Service under the Bancorporation Plan. Such employees and former
employees are covered by the Basic Plan and Supplemental Plans for service on
and after January 1, 1997.
Certain former officers of The Summit Bancorporation, including Messrs. Cox
and Feeney, are covered by a supplemental executive retirement plan ("SERP")
maintained by The Summit Bancorporation prior to its merger with Summit and
assumed by Summit in that merger. The SERP provides for payment of retirement
benefits calculated in accordance with the benefit formula of the Bancorporation
Plan but which otherwise cannot be paid by a qualified pension plan under terms
of the Code. The SERP was terminated for periods of service after March 1, 1996,
the effective date of the merger of The Summit Bancorporation into Summit, and
provides, among other things, for persons who were participants in the SERP on
March 1, 1996 (because the merger constituted a "change of control" under the
SERP on that date) to be credited with years of service under the SERP through
age 65, regardless of their age on March 1, 1996 or at the time of their
retirement.
Employees of Summit should refer to the more detailed Summary Plan
Descriptions available to them.
3. PROPOSED AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED COMMON STOCK
The Restated Certificate of Incorporation of Summit currently authorizes
the issuance of up to 130,000,000 shares of Common Stock, par value of $1.20 per
share. At February 28, 1997 there were 94,145,972 shares of Common Stock issued
and outstanding, approximately 4,300,000 shares reserved for issuance in
connection with the acquisition of B.M.J. Financial Corp., 686,397 shares
reserved for issuance under the Dividend Reinvestment Plan and 8,744,842 shares
reserved for issuance under Summit's various employee benefit plans, leaving
approximately 26,400,000 shares unissued and unreserved. In the event Summit
were in the future to acquire banking institutions approximately equal in size
to the aggregate size of banking institutions acquired by Summit in 1996, which
resulted in the issuance of approximately 35,400,000 shares of Common Stock, the
number of shares currently unissued and unreserved would be exhausted. Although
there are no immediate plans for issuance of the additional Common Stock that
would be authorized by approval of this proposal, the additional Common Stock
would be available for stock splits and stock dividends, for acquisitions, for
sale to raise new equity capital, for reserves in connection with employee
benefit plans, for reserves in connection with the issuance of convertible debt
or convertible preferred stock issues or for other corporate purposes deemed to
be in the best interests of Summit and its shareholders. The Board of Directors
therefore recommends to the shareholders that they approve the amendment to the
Restated Certificate of Incorporation of Summit which would increase authorized
Common Stock from 130,000,000 to 260,000,000 shares to give Summit the ability
to take prompt advantage of market conditions and avoid the expense and delay,
and
24
<PAGE>
possible loss of opportunity, that could result if a need for additional
authorized Common Stock arose but a special meeting of shareholders first had to
be held to authorize the issuance of the stock.
The first paragraph of Article 3 of the Restated Certificate of
Incorporation of Summit would be amended by deleting the material in brackets
([ ]) below and adding the material in boldface.
3. The total number of shares of capital stock authorized and which may be
issued by this Corporation is TWO HUNDRED SIXTY-FOUR MILLION (264,000,000)
[One Hundred Thirty-Four Million (134,000,000)] shares, of which TWO
HUNDRED SIXTY MILLION (260,000,000) [One Hundred Thirty Million
(130,000,000)] shares of One and 20/100 Dollars ($1.20) par value each
shall be designated as Common Stock, and of which Four Million (4,000,000)
shares without par value shall be designated as Preferred Stock. All or any
part of such authorized Common Stock and Preferred Stock may be issued by
the Corporation from time to time and for such consideration as may be
determined upon and fixed by the Board of Directors as provided by law.
Under New Jersey law the Board of Directors has authority to set the terms
and conditions of issuance of the proposed additional Common Stock. Holders of
shares of Common Stock are not entitled to cumulative voting rights or to
preemptive or preferential rights to subscribe for or purchase any part of any
new or additional issue of Common Stock. The Board may issue any authorized and
unissued Common Stock without further shareholder vote, unless required for a
particular transaction by applicable law or rules of the NYSE. NYSE rules
presently require shareholder consent in connection with any transaction or
series of related transactions, other than a public offering for cash, (i) if
the Common Stock (including securities convertible into or exercisable for
Common Stock) has or will have upon issuance, voting power equal to or in excess
of 20% of the voting power outstanding before the issuance of such Common Stock;
(ii) if the number of shares of Common Stock to be issued is or will be equal to
or in excess of 20% of the number of shares outstanding before the issuance of
the Common Stock; or (iii) if the issuance would result in a change in control
of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL NO.
2.
3. SELECTION OF AUDITORS
The Board of Directors recommends that the shareholders ratify the
selection of KPMG Peat Marwick LLP, independent certified public accountants, to
audit the accounts of Summit for 1997.
Representatives of KPMG Peat Marwick LLP, who were also Summit's auditors
for the year 1996, are expected to be present at the Annual Meeting. They will
have the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL NO.
3.
OTHER MATTERS
SOLICITATION OF PROXIES
Proxies may be solicited by mail, telephone, telegram, facsimile
transmission or other electronic methods and personal meetings and interviews.
Certain executive officers and managerial and administrative employees of Summit
and its subsidiaries may solicit proxies on behalf of Summit, for which such
officers and employees will receive no additional compensation other than
reimbursement for actual expense incurred in connection therewith. Summit has
retained Morrow & Co., Inc. to assist in the solicitation of proxies for a fee
of $7,000, plus reasonable out-of-pocket expenses. Summit will also reimburse
brokers or other persons holding shares in their names or in the names of their
nominees for their reasonable out-of-pocket expenses in forwarding proxies and
proxy material to the beneficial owners of such shares. Summit will bear all of
the expenses incurred in connection with this solicitation.
SHAREHOLDER PROPOSALS
The Board of Directors will consider and include in the Proxy Statement for
the 1998 Annual Meeting proposals which meet the regulations of the SEC and New
Jersey law and which comply with the Company's By-Laws. In order to be
considered for inclusion, proposals must be received on or before November 4,
1997. Proposals should be addressed to the Secretary.
25
<PAGE>
The By-Laws of Summit provide that shareholder proposals which do not
appear in the Proxy Statement may be considered at a meeting of shareholders
only if written notice of the proposal is received by the Secretary of Summit
not less than 80 and not more than 100 days before the anniversary of the
preceding years annual meeting provided, however, that, if the date of the
annual meeting is more than 30 days before or more than 60 days after such
anniversary date, the notice of a shareholder proposal, to be timely, must be
received by the Secretary not later than the close of business on the later of
the 80th day prior to such annual meeting or the tenth day following the day on
which public announcement of the meeting date is first made. Any such notice of
a shareholder proposal by a shareholder to the Secretary of Summit must be
accompanied by (a) the name and address of the shareholder who intends to
present the proposal for a vote, (b) a representation that such shareholder is a
holder of record of shares entitled to vote at the meeting, (c) a description of
all agreements, arrangements or understandings between such shareholder and any
other shareholder relating to the proposal to be voted on and any financial
contractual interest of such shareholder in the outcome of such vote and (d)
such other information regarding the proposal to be voted on and the shareholder
intending to present the proposal for a vote as would be required to be included
in a proxy statement soliciting the vote of shareholders in respect of such
proposal pursuant to the proxy rules of the SEC.
The vote of a plurality of the shares cast at the Annual Meeting is
necessary to elect the six Directors. The vote of a majority of shares cast at
the Annual Meeting is necessary to approve the proposed amendment to the
Restated Certificate of Incorporation of Summit Bancorp. increasing the
authorized Common Stock and to ratify the selection of independent certified
public accountants. For purposes of determining the number of votes cast with
respect to a matter, only those cast "for" or "against" are included.
Abstentions on the proxy card will not be counted "for" or "against" for
purposes of determining the number of votes cast with respect to a matter but
will be counted as present for quorum purposes. "Broker non-votes" specified on
proxies returned by brokers holding shares for beneficial owners will be treated
as present for quorum purposes but also will not be counted as votes "for" or
"against" for purposes of determining the number of votes cast.
We urge you to sign, date and mail the white proxy enclosed with this
mailing, in the postage-paid envelope provided, as promptly as possible.
We sincerely hope that you will attend the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
T. JOSEPH SEMROD
Chairman of the Board and
Chief Executive Officer
Dated: March 4, 1997
IT IS IMPORTANT THAT YOUR SHARES ARE VOTED AT THE ANNUAL MEETING.
SHAREHOLDERS ARE URGED TO PROMPTLY SIGN, DATE AND MAIL THE WHITE PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. PLEASE ACT TODAY.
26
<PAGE>
[MAP WITH DIRECTIONS]
NOTICE
ADMITTANCE TO THE ANNUAL MEETING
In order to accommodate our shareholders, admission to the Annual Meeting
must be limited to shareholders, proxies, press and meeting staff. Two Welcome
Desks will be set up to greet meeting attendees. If you hold stock in your own
name, please proceed to the RECORD HOLDER Welcome Desk when you arrive. If you
hold stock through a bank, broker or otherwise, please proceed to the STREET
NAME Welcome Desk and please be prepared to furnish an account statement from
your bank or broker, a copy of a proxy card mailed to you, or other proof of
ownership of Summit Common Stock. PERSONS WITHOUT SUCH PROOF WILL NOT BE SEATED
UNTIL THE MEETING STAFF DETERMINES THERE IS ADEQUATE SEATING FOR ALL ATTENDEES
AND MAY BE DENIED ADMITTANCE ALTOGETHER.
Attendees should at all times wear the official name tag provided by the
Welcome Desks in order that the meeting staff may readily identify attendees
admitted to the meeting in accordance with the procedures administered by the
Welcome Desks. If you own stock in your own name and plan to attend the Annual
Meeting, please mark the appropriate box on the proxy card. If you wish to
attend the Annual Meeting but will not be submitting a proxy card with the
appropriate box marked, please notify Summit at the following address as soon as
possible: Corporate Secretary, ATTN: Annual Meeting Admissions, Summit Bancorp.,
301 Carnegie Center, PO. Box 2066, Princeton, NJ 08543-2066. Doing this will
allow us to prepare your official name tag in advance and eliminate unnecessary
delays upon your arrival at the Annual Meeting.
<PAGE>
APPENDIX
(Pursuant to Rule 304 of Regulation S-T)
1. Page 19 contains a description in tabular form of a graph entitled
"Stock Performance Graph" which represents the comparison of the cumulative
total return on the Company's Common Stock against the cumulative total return
of the Media General ("MG") Mid-Atlantic Bank Group Index, an industry index,
the New York Stock Exchange ("NYSE") Market Value Index, a broad market index,
The Keefe, Bruyette & Woods, Inc. ("KBW") 500 Index, an industry index, and the
Standard & Poors ("S&P) 500 Market Index, a broad market index for the period of
five years commencing January 1, 1992 and ending December 31, 1996, which graph
is contained in the paper format of this Proxy Statement being sent to
Stockholders.
<PAGE>
- --------------------------------------------------------------------------------
P SUMMIT BANCORP.
Proxy Solicited on Behalf of the Board of Directors
R of Summit Bancorp for the Annual Meeting on April 18, 1997
O The undersigned hereby constitutes and appoints T.J. Dermot Dunphy, Elinor
J. Ferdon and Henry S. Patterson II, and each of them, the undersigned's
X true and lawful agents and proxies with full power of substitution in each,
to represent the undersigned at the Annual Meeting of Shareholders of
Y SUMMIT BANCORP. to be held at The Hyatt Regency Princeton, 102 Carnegie
Center, Route 1 at Alexander Road, Princeton, New Jersey on Friday, April
18, 1997, and at any adjournments thereof, on all matters coming before
said meeting.
Election of Directors, Nominees:
James C. Brady, Jr., T.J. Dermot Dunphy, Fred G. Harvey,
Francis J. Mertz, T. Joseph Semrod and Douglas G. Watson
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. However, the Proxies cannot vote
your shares unless you sign and return this card.
[SEE REVERSE SIDE]
[X] Please mark your votes as in this example.
This proxy, when properly signed and timely returned, will be voted in the
manner you direct. If no direction is made, this proxy will be voted FOR the
election of the listed Director nominees and FOR proposals 2 and 3.
The Board of Directors recommends a vote FOR 1, 2 and 3.
FOR WITHHELD
1. Election of Directors (See Reverse) [ ] [ ]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
2. Approval of an amendment to the Restated Certificate
of Incorporation of Summit Bancorp increasing authorized
Common Stock from 130 to 260 million shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- --------------------------------------------------------
FOR AGAINST ABSTAIN
3. Approval of Independent Accountants [ ] [ ] [ ]
- --------------------------------------------------------
[ ] Please mark this box if you plan to attend the Annual Meeting.
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
Please date and sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- --------------------------------------------------------
- --------------------------------------------------------
SIGNATURE(S) DATE
<PAGE>
- --------------------------------------------------------------------------------
V SUMMIT BANCORP.
O SAVINGS INCENTIVE PLAN
T Solicited on Behalf of the Board of Directors
I of SUMMIT BANCORP.
N for the Annual Meeting on April 18, 1997
G
The undersigned hereby directs Summit Bank, Trustee of the SUMMIT
I BANCORP. Savings Incentive Plan, to vote all of the shares which are
N held in the undersigned's Plan accounts at the Annual Meeting of
S Shareholders of SUMMIT BANCORP., to be held on Friday, April 18, 1997
T at The Hyatt Regency Princeton, 102 Carnegie Center, Route 1 at Alexander
R Road, Princeton, New Jersey, and at any adjournments thereof, as designated
U on the reverse, and in its discretion on such other matters as may properly
C come before the meeting.
T
I
O Election of Directors, Nominees:
N
James C. Brady, Jr., T.J. Dermot Dunphy, Fred G. Harvey,
Francis J. Mertz, T. Joseph Semrod and Douglas G. Watson
C
A
R
D
You are encouraged to specify your choices by marking the appropriate boxes on
the reverse side.
[X] Please mark your votes as in this example. 4036
This card, when properly executed, will be voted in the manner you direct.
If this card is not timely returned or properly executed, or if no direction is
made, the Trustee will vote shares held in your account in the manner deemed by
the Trustee to be in Plan participants' best interests.
The Board of Directors recommends a vote FOR 1, 2 and 3.
FOR WITHHELD
1. Election of Directors (See Reverse) [ ] [ ]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
2. Approval of an amendment to the Restated Certificate
of Incorporation of Summit Bancorp increasing authorized
Common Stock from 130 to 260 million shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- --------------------------------------------------------
FOR AGAINST ABSTAIN
3. Approval of Independent Accountants [ ] [ ] [ ]
- --------------------------------------------------------
This Card Must Be Signed Exactly As
Your Name Appears Hereon
-----------------------------------
SIGNATURE DATE
