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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting Material Pursuant to [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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<PAGE>
[SUMMIT BANCORP 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 6, 1998
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of Summit
Bancorp scheduled to be held on Friday, April 17, 1998, 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 seven directors and to
ratify the selection of KPMG Peat Marwick LLP, independent certified public
accountants, to audit the accounts of Summit for 1998. 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 be half of your Board of Directors, thank you for your continued support.
Sincerely,
/s/ T. JOSEPH SEMROD
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T. Joseph Semrod
<PAGE>
[SUMMIT BANCORP LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FRIDAY, APRIL 17, 1998
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 17, 1998 at 10:00 a.m.
for the following purposes:
1. To elect seven Directors.
2. 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, 1998.
3. 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 17, 1998 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 6, 1998
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.
<PAGE>
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 on approximately
March 6, 1998 to shareholders of record as of February 17, 1998. A copy of the
1997 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 proposal 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 $.80 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.
Individuals who hold Common Stock through participation in the Summit
Bancorp Employee Stock Ownership Plan (formerly the Collective Bank Employee
Stock Ownership Plan) (the "ESOP") will receive a separate card for use in
providing voting instructions to the ESOP Trustee. The ESOP Trustee will vote
all allocated shares held by the ESOP in accordance with the instructions
received by participants and will not vote any participant's shares with respect
to which instructions are not received. The ESOP Trustee will vote all
unallocated shares in the ESOP as instructed by the Benefits Committee of
Summit, which consists of four members of Summit senior management.
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 17, 1998 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 177,202,715 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.
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); "SumPA"--Summit Bank
(Bethlehem, PA).
All share numbers and share values have been adjusted to give effect to the
three-for-two stock split which became effective September 24, 1997.
<PAGE>
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 seven Directors in Class III.
Seven Director nominees are standing for election to the Board of Directors
at the 1998 Annual Meeting. Five of the Director nominees are standing for
election to Class II of the Board of Directors, one Director nominee is standing
for election to Class I and one Director nominee is standing for election to
Class III.
The terms of the current Directors in Class II expire at the 1998 Annual
Meeting. Accordingly, the five Director nominees standing for election to Class
II of the Board constitute five of the six current members of Class II and are
to be elected to serve until the 2001 Annual Meeting and until their successors
are elected and qualified. The sole current member of Class II not standing for
election, Mr. Henry S. Patterson II, a Director of the Corporation since 1971,
will be retiring from the Board upon the expiration of his term at the 1998
Annual Meeting in accordance with the Corporation's By-Laws and its policy on
director retirements described under "CORPORATE GOVERNANCE
GUIDELINES--Nominations to Summit's Board."
The Director nominees standing for election to Class I and Class III of the
Board were originally elected to the Board in connection with the August 1, 1997
merger of Collective Bancorp, Inc. ("Collective Bancorp") into Summit. Mr.
Hamilton is currently a member of, and is being nominated for election to, Class
I. Mr. Miller is currently a member of, and is being nominated for election to,
Class III. They are to be elected to serve until, respectively, the 2000 Annual
Meeting and the 1999 Annual Meeting and until their successors are elected and
qualified.
Mr. John R. Howell, Director of Summit since 1988 and Director and Chief
Executive Officer of First Valley and SumPA since 1976, is also expected to
retire from the Board during 1998 (although the term of Class III Directors
extends until the 1999 Annual Meeting) in connection with his normal retirement
from employment with Summit and its subsidiaries.
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. All incumbent Directors attended at least 80% of
the aggregate of Board meetings and meetings of Committees on which each served,
except Mr. Watson who attended 10 of 14 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. Of the twenty current members of the Board of Directors, fifteen are
not employees of Summit or its subsidiaries. After the retirements mentioned
above, fourteen of eighteen Board members will be nonemployee directors. In
addition to attendance at Board meetings (the Board met seven times during 1997)
and Committee meetings as described below (Committees held 19 meetings in 1997),
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.
Eighteen 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 seven standing Board committees which held meetings in 1997 as
follows: the Executive Committee (five meetings), the Audit Committee (four
meetings), the Nominating Committee (one meeting), the Compensation Committee
(four meetings), the Capital and Dividend Committee (one meeting), the Risk
Management Committee (three meetings) and the Acquisition Committee (no
meetings). In addition, the Board formed an ad hoc Pricing Committee in
connection with the issuance of Capital-Trust Pass-Through Securities by Summit
Capital Trust I, a wholly owned subsidiary of the Corporation, which committee
met once in 1997.
2
<PAGE>
CLASS II -- DIRECTOR NOMINEES -- TERM EXPIRING IN 2001
Photo of John G. Collins, 61, Director since 1986. Vice
John G. Chairman of the Board of Summit (since 1986) and SumNJ
Collins (since 1994). Formerly Chairman of the Board (1983-1986),
Director, President and Chief Executive Officer (1982-1986)
of Commercial Bancshares, Inc. Chairman and Trustee of
Independent College Fund of New Jersey. Co-Chair of the
National Conference. Former Chairman of the Board of
Trustees of St. Peter's College. Former Chairman of the New
Jersey Bankers Association. Trustee of Collier Services
Foundation. Chairman of Summit Service Corporation (since
1991). Director of Collier Services, SumNJ (1978-1990,
1994-present) and Collective Bank (since 1997). Member of
the Acquisition Committee.
Photo of Anne Evans Estabrook, 53, Director since 1994. Sole
Anne Evans proprietor (since 1984) of Elberon Development Co. (real
Estabrook estate) and President (since 1983) of David O. Evans, Inc.
(real estate). Chairman and Director of E'town Corporation.
Chair of the National Conference. Trustee of Cornell
University. Formerly Director of Constellation Bancorp
(1985-1994) and National State Bank (1978-1994). Director of
E'town Properties, Inc. and SumNJ (since 1994). Member of
the Audit, Nominating and Capital and Dividend Committees.
Photo of George L. Miles, Jr., 56, Director since 1994.
George L. President and Chief Executive Officer (since 1994) of WQED
Miles, Jr. Pittsburgh, Inc. (television and radio broadcasting and
magazine publishing). Former Executive Vice President and
Chief Operating Officer (1984-1994) of Thirteen/WNET
(television broadcasting). Chairman of the Board of the
Urban League of Pittsburgh. Trustee of the Foundation for
Minority Interests in Media, Inc. Former Chairman of the
Board of Trustees of the Association for America's Public
Television Stations. Director of SumNJ (since 1994). Member
of the Executive, Compensation, Capital and Dividend and
Risk Management Committees.
Photo of Raymond Silverstein, 70, 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. Member of the Acquisition, Executive,
Compensation, Nominating and Capital and Dividend
Committees.
Photo of Orin R. Smith, 62, Director since 1996. Chairman of
Orin R. Smith 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, 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 Audit, Acquisition,
Capital and Dividend and Nominating Committees.
3
<PAGE>
CLASS I -- DIRECTOR NOMINEE -- TERM EXPIRING IN 2000
Photo of Thomas H. Hamilton, 67, Director since 1997. Chairman
Thomas H. and Chief Executive Officer (since 1962) and President
Hamilton (1962-1989; 1994-present) and Director (since 1960) of
Collective Bank. Formerly Chairman and Chief Executive
Officer (1989-1997) and President (1989-1993; 1995-1997) of
Collective Bancorp. Former Director of the Federal Home Loan
Bank of New York. Former member of the Board of Governors of
the New Jersey Savings League.
CLASS III -- DIRECTOR NOMINEE -- TERM EXPIRING IN 1999
Photo of William R. Miller, 70, Director since 1997. Former
William R. Senior Vice President, Manufacturing, (1975-1991) of Lenox
Miller China, Inc. (manufacturer of china and housewares). Formerly
Director (1989-1997) of Collective Bancorp. Director of
Collective Bank (since 1985).
CLASS I -- INCUMBENT DIRECTORS -- TERM EXPIRING IN 2000
Photo of James C. Brady, Jr., 62, Director since 1996. Managing
James C. General Partner (since 1987) of Mill House Associates, L.P.
Brady, Jr. (real estate and securities investment) and formerly
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). Chair of the Risk Management Committee.
Member of the Audit and Acquisition Committees.
Photo of T.J. Dermot Dunphy, 65, Director since 1984. Chairman
T.J. Dermot (since 1996), 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 and Committee for
Economic Development. Director of Public Service Enterprise
Group, Inc. and SumNJ (since 1981). Chair of the Executive
and Compensation Committees. Member of the Acquisition,
Nominating and Risk Management Committees.
4
<PAGE>
Photo of Fred G. Harvey, 69, Director since 1988. Director and
Fred G. Vice President (since 1983) of E & E Corporation
Harvey (engineering consulting services). Former General Manager of
Bethlehem Steel Corporation. Director of the Retired
Employee Benefit Coalition (REBCO), Northampton County Area
Community College Foundation and SumPA (since 1981). Chair
of the Capital and Dividend Committee. Member of the
Executive, Compensation and Risk Management Committees.
Photo of Francis J. Mertz, 60, Director since 1986. Trustee
Francis J. (since 1991) and President (since 1990) of Fairleigh
Mertz 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 Audit,
Nominating and Risk Management Committees.
Photo of T. Joseph Semrod, 61, Director since 1981. Chairman of
T. Joseph the Board and Chief Executive Officer (since 1981) and
Semrod 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. Chair of New Jersey
State Chamber of Commerce. Member of the Executive
Committee.
Photo of Douglas G. Watson, 53, Director since 1996. President,
Douglas G. Chief Executive Officer and Director (since February 1,
Watson 1997) of Novartis Corporation (healthcare, agribusiness and
nutrition products). Formerly President and Chief Executive
Officer (1996-1997) of Ciba-Geigy Corporation
(pharmaceutical products) (predecessor to Novartis
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 Executive, Compensation
and Nominating Committees.
CLASS III -- INCUMBENT DIRECTORS -- TERM EXPIRING IN 1999
Photo of S. Rodgers Benjamin, 71, Director since 1996. Chairman
S. Rodgers of the Board (since 1992) and Chief Executive Officer (since
Benjamin 1962) of Flemington Fur Company (retailer). Formerly
Director (1982-1996) of The Summit Bancorporation and Summit
Bank (predecessor bank to SumNJ). Member of the Acquisition,
Executive, Compensation and Capital and Dividend Committees.
5
<PAGE>
Photo of Robert L. Boyle, 62, Director since 1986.
Robert L. Representative (since 1987) with the William H. Hintelmann
Boyle 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. Director of the New Jersey Lawyer and SumNJ (since
1964). Chair of the Nominating Committee. Member of the
Audit and Capital and Dividend Committees.
Photo of Robert G. Cox, 57, Director since 1996. President
Robert G. (since 1996) of Summit and Director and President (since
Cox 1996) of 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. Member of the Board of Directors of the New
Jersey Business and Industry Association. Trustee of
Centenary College. Director of New Jersey Manufacturers
Insurance Company, New Jersey Reinsurance Co. and SumNJ
(since 1981). Member of the Executive Committee.
Photo of Elinor J. Ferdon, 61, Director since 1984. Volunteer
Elinor J. professional. Director (since 1974), National President
Ferdon (since 1996), former First Vice President (1993-1996) and
former Vice President (1987-1993) of the Girl Scouts of
U.S.A. Trustee 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 of the National Urban League, Inc.
Trustee Emeritus of Fairleigh Dickinson University and
Stoneleigh Burnham School. Director of SumNJ (since 1976).
Chair of the Audit Committee. Member of the Executive,
Compensation and Risk Management Committees.
Photo of John R. Howell, 64, Director since 1988. Vice Chairman
John R. of the Board (since 1988) of Summit. Chairman of the Board
Howell (since 1983) and Director and Chief Executive Officer (since
1976) of First Valley and Chairman of the Board (since
1988), Director (since 1976) and Chief Executive Officer
(1976-1990, 1994-present) of SumPA. Trustee of Moravian
College and Allentown Art Museum. Chairman of the Board of
First Valley Life Insurance Company. Director of Summit
Discount Brokerage Co. Member of the Risk Management
Committee.
Photo of Joseph M. Tabak, 65, Director since 1987. President
Joseph M. and Chief Executive Officer (since 1991) of JPC Enterprises,
Tabak 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 Audit and Nominating Committees.
6
<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 17, 1998. The beneficial owners listed below
hold sole voting and investment power over all shares listed, except as
indicated. To Summit's knowledge, there is no person (as defined in Section
13(d)(3) of the Exchange Act) who beneficially owned five percent or more of the
outstanding voting securities of Summit as of February 17, 1998.
<TABLE>
<CAPTION>
PERCENTAGE
SHARES OF SUMMIT
BENEFICIALLY COMMON
OWNED STOCK
------------ ----------
<S> <C> <C>
S. Rodgers Benjamin ..................................... 131,194 (1)(2) .074%
Robert L. Boyle ......................................... 99,614 (3) .056%
James C. Brady, Jr. ..................................... 325,763 (2)(4) .184%
John G. Collins ......................................... 477,810 (5)(6) .270%
Robert G. Cox ........................................... 587,900 (5)(7) .332%
T.J. Dermot Dunphy ...................................... 113,096 .064%
Anne Evans Estabrook .................................... 52,132 .029%
Elinor J. Ferdon ........................................ 29,052 (8) .016%
Thomas H. Hamilton ...................................... 1,196,203 (9) .675%
Fred G. Harvey .......................................... 4,182 (10) .002%
John R. Howell .......................................... 233,192 (5)(11) .132%
Francis J. Mertz ........................................ 15,790 (12) .009%
George L. Miles, Jr. .................................... 3,607 (13) .002%
William R. Miller ....................................... 22,213 (14) .013%
Stephen H. Paneyko ...................................... 307,623 (5)(15) .174%
Henry S. Patterson II ................................... 24,096 .014%
T. Joseph Semrod ........................................ 1,134,790 (5)(16) .640%
Raymond Silverstein ..................................... 40,291 (17) .023%
Orin R. Smith ........................................... 23,943 (2)(18) .014%
Joseph M. Tabak ......................................... 82,882 .047%
Douglas G. Watson. ...................................... 24,335 (2)(19) .014%
All Directors and executive officers as a group (35) .... 6,383,023 (20) 3.602%
</TABLE>
- -------------
(1) Includes 112,711 shares held by Flemington Fur Company. As Chairman,
CEO and a significant shareholder of Flemington Fur Company, Mr. Benjamin shares
voting and investment powers over such shares.
(2) Includes 1,350 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 18,306 shares held in trusts for which Mr. Boyle serves as
trustee, and 1,488 shares owned by Mr. Boyle's wife and 10,568 shares held by
Mr. Boyle's wife as custodian over which Mr. Boyle disclaims voting and
investment powers.
(4) Includes 69,033 shares held by Mill House Associates, L.P. As Managing
General Partner, Mr. Brady shares voting and investment powers over such shares.
(5) Includes shares which may be acquired immediately or within sixty days
granted under one or more of Summit's Stock Option Plans as follows: Mr.
Collins--281,565 shares, Mr. Cox--356,849 shares, Mr. Howell--63,000 shares, Mr.
Paneyko--24,000 shares, and Mr. Semrod--821,451 shares.
(6) Includes 48,907 shares owned jointly with Mr. Collins' wife over which
Mr. Collins shares voting and investment powers.
(7) Includes 764 shares held by Mr. Cox as custodian for a minor child and
24,526 shares owned by Mr. Cox's wife over which Mr. Cox disclaims voting and
investment powers.
7
<PAGE>
(8) Includes 4,500 shares owned by Mrs. Ferdon's husband over which Mrs.
Ferdon disclaims voting and investment powers.
(9) Includes 67,125 shares held by The Thomas H. Hamilton Foundation, Inc.
As President and Trustee of The Thomas H. Hamilton Foundation, Inc., Mr.
Hamilton has voting and investment powers over such shares.
(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 11,647 shares held by Mr. Howell's wife over which Mr. Howell
disclaims voting and investment powers and 151 shares held by Mr. Howell as
custodian for minor children.
(12) Includes 1,323 shares held by Mr. Mertz as custodian for minor
children, 5,019 shares owned jointly with Mr. Mertz's wife over which Mr. Mertz
shares voting and investment powers, and 249 shares owned by Mr. Mertz's wife
over which Mr. Mertz disclaims voting and investment powers.
(13) Includes 300 shares owned by Mr. Miles' wife over which Mr. Miles
disclaims voting and investment powers.
(14) Includes 5,368 shares which may be acquired by Mr. Miller immediately
pursuant to options granted under The Collective Bancorp Incentive Stock Option
Plan and converted into options to purchase Summit stock.
(15) Includes 1,650 shares owned by Mr. Paneyko's wife, 3,301 shares owned
by a family member living in the same household and 3,165 shares held by Mr.
Paneyko's wife as custodian for minor children over which Mr. Paneyko disclaims
voting and investment powers.
(16) Includes 492 shares held by Mr. Semrod's wife as custodian for a minor
child, 968 shares owned by Mr. Semrod's wife and 981 shares owned by a family
member living in the same household over which Mr. Semrod disclaims voting and
investment powers.
(17) Includes 1,912 shares owned by Mr. Silverstein's wife over which Mr.
Silverstein disclaims voting and investment powers and 968 shares owned by a
partnership in which Mr. Silverstein is a general partner.
(18) Includes 744 shares owned by Mr. Smith's wife over which Mr. Smith
disclaims voting and investment powers.
(19) Includes 22,985 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 355,133 and disclaimed
as to 81,850 of these shares. Includes 2,439,000 shares which may be acquired
within 60 days under all Stock Option Plans.
8
<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.
o 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 and quality of service of the internal and external
auditors, the adequacy of the internal control structure and progress of
the Corporation's compliance program. 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.
o The Risk Management Committee has oversight responsibility for
implementation of the enterprise risk management program of the
Corporation. This program involves the identification of risks, risk
measurement, guidelines for risk tolerance, development of risk controls
and monitoring of risks. The risk elements are credit, market, liquidity,
interest rate, operational, legal, reputational, fiduciary, compliance and
environmental risk.
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.
o 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 issued a comprehensive policy prohibiting 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. 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 first anniversary of the
preceding year's annual meeting (unless such annual meeting is more than 30 days
before or 60 days after such anniversary, in which case such notice must be
delivered not later than the later of 80 days prior to such annual meeting or 10
days after public announcement of the meeting date.) 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 1997, 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 $13,500 and fees for meetings attended ranging
from $500 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 the 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 Control. The definition of
Change in Control for purposes of the Plan is similar to the definition of that
term contained in the Termination Agreements discussed on page 21.
11
<PAGE>
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. Harvey,
Chair of the Capital and Dividend Committee, and Messrs. Benjamin, Miles,
Patterson, Silverstein and Watson.
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: (i)
the unrestricted portion (generally, one-fifth) of each year's incentive stock
award appears in the column titled "(d) Bonus" where it is aggregated with an
executive's incentive cash bonus award, (ii) the restricted portion (generally,
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 (iii) performance stock awarded in a prior year which an executive
officer becomes entitled to receive by virtue of the attainment of the related
performance goal (in some cases subject to certain additional restrictions on
transferability which lapse in annual installments) appears in the column titled
"Payouts--(h) LTIP Payouts". The last column of the Cash Compensation Table,
"(i) 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 contributions paid to the executives' accounts in the
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 1998 to a maximum employer
contribution of $7,200, 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
12
<PAGE>
additional 3% of the employee's base salary. Employees become eligible to
participate in the Savings Plan after one year of service. Approximately 66% of
the 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
either selected by the independent firms which conduct the surveys, or, in some
cases such as the 1997 base salary survey discussed below, by the Company, but
in either case 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. All but one of the 20 companies in the 1997 base
salary survey are in the KBW 50 Index in the "STOCK PERFORMANCE GRAPH" section.
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
comprehensive review of the base salaries of senior management was conducted by
the Compensation Committee in 1997 with the assistance of a nationally
recognized outside compensation specialist. Base salaries were significantly
below peers in many instances and were adjusted upward to competitive levels. A
guideline percentage of 4% was applied to merit salary increases during 1997 and
will be applied to merit salary increases during 1998.
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 awarded to executive officers, the Compensation Committee
evaluated the Company's performance in 1997 using three categories: financial
plan (including earnings growth), comparison to industry peers and corporate
positioning objectives. The Compensation Committee assigns relative weights to
several categories each year which reflect, in its judgment, as of that year,
the relative importance of each category to the long-term prospects of the
Company. In arriving at the bonus paid with respect to 1997, the Compensation
Committee determined that the Company had performed at a level equal to 142.5%
of the performance deemed desirable for payment of the cash bonus guideline and
paid cash bonus amounts to executives having a median of approximately 140.9% of
the cash bonus target for each salary range (but no higher than the maximum and
no lower than the minimum in the guideline range). The Compensation Committee
placed particular significance on the Company's completion of several
acquisitions, attaining financial goals of a return on assets in excess of 1.4%,
a return on equity in excess of 17% and an efficiency ratio better than 52%,
financial performance versus peers, revenue enhancement savings of $11.2 million
and a reduction in non-performing assets of 40% to $99.2 million.
13
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
--------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------------- ------------------------- -----------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
NAME AND COMPEN- STOCK OPTIONS/ PAYOUTS COMPEN-
PRINCIPAL POSITIONS YEAR SALARY($) BONUS($)(1) SATION($)(2) AWARDS($)(3) SARS(#) ($)(3)(4) SATION($)(5)
- ------------------- ---- --------- ----------- ------------ ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
T. Joseph Semrod 1997 $775,000 $1,094,013 $3,330 $1,576,050 129,000 $748,125 $13,067
Chairman of the Board 1996 737,500 731,800 -- 427,200 112,500 164,650 10,676
and CEO of Summit and 1995 707,500 559,300 -- 337,200 97,500 -- 16,785
SumNJ
Robert G. Cox(6) 1997 $517,000 $ 679,225 $2,835 $1,236,900 109,000 $635,906 $10,767
President of Summit 1996 484,167 435,780 -- 363,120 95,625 140,175 8,424
and SumNJ 1995 -- -- -- -- -- -- --
John G. Collins 1997 $392,500 $ 444,513 $1,080 $ 778,050 50,000 $149,625 $ 9,721
Vice Chairman of the 1996 359,000 293,400 -- 213,600 37,500 53,400 7,317
Board of Summit and 1995 326,500 195,100 -- 112,400 33,000 -- 12,866
SumNJ
John R. Howell 1997 $345,000 $ 274,875 $ 518 $ 199,500 -- $ 31,421 $ 9,332
Vice Chairman of the 1996 331,500 231,150 -- 31,150 31,500 30,705 7,324
Board of Summit, 1995 318,500 189,344 -- 52,688 31,500 -- 8,269
Chairman of the Board,
President and CEO
of SumPA
Stephen H. Paneyko 1997 $293,500 $ 203,409 $ 675 $ 145,635 24,000 $ 59,850 $ 7,975
Senior Executive Vice 1996 281,750 182,700 -- 106,800 24,000 33,375 5,976
President/Commercial 1995 270,500 144,319 -- 77,275 24,000 -- 10,444
Banking of Summit
and SumNJ
</TABLE>
- -----------------
(1) Includes value of unrestricted portion 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) Represents dividends on performance stock. 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 Annual
Compensation".
(3) The total number of shares of incentive stock and performance stock awards
still subject to restrictions on transferability held and their aggregate
market value as of December 31, 1997 are as follows: Mr. Semrod: 55,620
shares, $2,940,908; Mr. Cox: 38,208 shares, $2,020,248; Mr. Collins: 18,300
shares, $967,613; Mr. Howell: 4,740 shares, $250,627; Mr. Paneyko: 10,420
shares, $550,958.
The vesting period of the incentive stock and performance stock awards
subject to restrictions on transferability with respect to each of the
three years in the table above were as follows:
1 YEAR 2 YEARS 3 YEARS 4 YEARS
------ ------- ------- -------
T.J. Semrod 1997 10,900 10,900 10,900 10,900
1996 4,710 4,710 4,710 4,710
1995 3,600 3,600 3,600 3,600
R.G. Cox 1997 8,750 8,750 8,750 8,750
1996 4,005 4,005 4,005 4,005
1995 -- -- -- --
J.G. Collins 1997 4,500 4,500 4,500 4,500
1996 2,160 2,160 2,160 2,160
1995 1,200 1,200 1,200 1,200
J.R. Howell 1997 1,000 1,000 1,000 1,000
1996 1,395 345 -- --
1995 1,125 1,125 -- --
S.H. Paneyko 1997 970 970 970 970
1996 1,125 1,125 1,125 1,125
1995 825 825 825 825
Dividends are paid on all shares of restricted stock held by the named
executive officers.
14
<PAGE>
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 subsequent attainment
of one or more objectively verifiable future 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 future satisfaction of performance goals prior to being earned, may contain
restrictions upon transferability after being earned which lapse in annual
increments following the attainment of the performance goals. Incentive stock
awards typically consist of a portion (generally one-fifth of the total award)
which is transferred without restriction to the participant immediately upon
being awarded and a remaining portion (generally four-fifths of the total award)
which contains restrictions on transferability which lapse in annual increments
generally 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 awarded 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 based exclusively on services
rendered in such preceding year and are not further conditioned upon attainment
of performance goals. Pursuant to regulations of the SEC, the unrestricted
portion of an annual incentive stock award is reported as annual compensation in
column (d) of the Summary Compensation Table and the remaining restricted
portion of the award, which is distributed in annual installments 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 1997, the Compensation Committee considered the same
criteria asit did when determining the appropriate cash bonus amounts, with
lesser deviation from target amounts, dueto the long-term nature of stock
incentives. Awards to top executives also took into consideration emerging
industry compensation trends and contributions to enhancement of franchise
value. While typically one-fifth of an
15
<PAGE>
(4) Contains entire performance stock award (made in the year for which listed)
which an executive became entitled to receive (in the year following the
year for which listed) by virtue of the attainment of the performance goal
relating to the year listed. No performance stock awards were made prior to
1996.
(5) Amounts listed under "All Other Compensation" for 1997 include Company
contributions to the 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-$6,333, INS-$6,733; Mr. Cox:
SIP-$6,394, INS-$4,374; Mr. Collins: SIP-$6,400, INS-$3,321; Mr. Howell:
SIP-$6,335, INS-$2,997; Mr. Paneyko: SIP-$5,977, INS-$1,997.
(6) Mr. Cox joined Summit during 1996 in connection with the merger of The
Summit Bancorporation into the Corporation, although compensation
information provided herein with respect to Mr. Cox is given for all of
1996.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(a) (b) (c) (d) (e) (f)
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED(1) FISCAL YEAR ($/SH)(2) DATE PRESENT VALUE ($)(3)
- ---- ---------- ----------- --------- -------- --------------------
<S> <C> <C> <C> <C> <C>
T. Joseph Semrod (CEO) .... 112,500 7% $29.42 2/3/2007 $883,327
Robert G. Cox ............. 95,625 6% $29.42 2/3/2007 750,828
John G. Collins ........... 37,500 2% $29.42 2/3/2007 294,442
John R. Howell ............ 31,500 2% $29.42 2/3/2007 247,331
Stephen H. Paneyko ........ 24,000 1.5% $29.42 2/3/2007 188,443
</TABLE>
- --------------
(1) The stock option grants listed in this table are reported as 1996
compensation on the Summary Compensation Table.
(2) Exercise price equals 100% of the fair market value of a share of Summit
Common Stock on the grant date, which was January 24, 1997 for all options
listed above. All listed options are nonqualified options, become
exercisable one year from the date of grant and terminate upon a
termination of employment, except termination of employment occurring due
to death, disability, retirement or dismissal without cause.
(3) Black-Scholes Option Pricing Model used. The Black-Scholes value, an
estimate based on assumptions about future stock price volatility and
dividend yield, was 26.7% of the stock price on the date of the grant. The
estimated volatility of 18.8% and dividend yield of 3.31% were based on
historical data from the prior three years. The estimated value also
reflects a risk-free rate of return of 6.75% and a 10-year and ten-day
option term.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e) (f) (g)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END(#)(1) AT FY-END($)(1)
SHARES ACQUIRED ----------------------------- ---------------------------
NAME ON EXERCISE(#) VALUE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------ ---------------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T. Joseph Semrod (CEO) .... 142,747 $3,694,098 708,951 129,256 $28,132,402 $3,325,136
Robert G. Cox(2) .......... 0 0 261,224 95,625 9,312,892 2,243,200
John G. Collins ........... 44,700 1,155,992 256,320 37,500 10,188,480 879,686
John R. Howell ............ 204,269 6,287,831 31,500 31,500 930,563 738,936
Stephen H. Paneyko ........ 240,187 7,249,030 0 24,000 0 562,999
</TABLE>
- -----------
(1) Year-end 1997 numbers and values exclude options granted in January 1998,
which are reported as 1997 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 the applicable installment period. Additionally, performance
stock, though awarded on the basis of a performance evaluation that considers
prior year performance, is earned by the executive officer only if the
performance goals established in conjunction with the performance stock award
are satisfied by future performance. Two hundred fifty-six employees
participated in the January 1998 stock awards applicable to services rendered in
1997, receiving an aggregate of 364,300 shares. Included in this aggregate stock
award is 66,900 shares of performance stock awarded to 19 key employees.
Generally, the performance stock award made in January 1998 to an executive
officer represented, as a percent of the entire stock award made to the
executive officer in January 1998, approximately a forty-five percent increase
over the percentage of 1997 stock awards consisting of performance stock awards
made to that executive officer 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 1997, the Compensation Committee considered
the same criteria as it did when determining the appropriate cash bonus amounts,
with lesser deviation from target amounts, due to the long-term nature of stock
incentives. 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 individual and 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
1,420 current employees hold one or more stock options granted with respect to
the current year or to prior years. This amounts to 19% of the full time work
force. With respect to stock options granted in January 1998 for services
rendered in 1997, 1,064 employees received options on 1,903,650 shares. Set
forth in the Summary Compensation Table are the stock option grants made in
January 1998 to the five named executive officers for services rendered in 1997.
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 1997 for services rendered in 1996.
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).
Employees may also invest in Summit Common Stock through the Company's Savings
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 1997, the Compensation Committee
considered in accordance with the practices and procedures described above the
surveys and recommendations of compensation consultants previously cited,
including emerging industry compensation trends and Mr. Semrod's performance in
enhancing the franchise value of the Company, as well as the same criteria
regarding the overall performance of the Company as the Compensation Committee
considered when determining the appropriate cash bonus amounts to pay other
executive officers.
17
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
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) ............ 15,000 12/31/97 0 15,000 15,000
Robert G. Cox ..................... 12,750 12/31/97 0 12,750 12,750
John G. Collins ................... 3,000 12/31/97 0 3,000 3,000
John R. Howell .................... 630 12/31/97 0 630 630
Stephen H. Paneyko ................ 1,200 12/31/97 0 1,200 1,200
</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
1997, excluding extraordinary items and non-recurring charges and
determined according to generally accepted accounting principles. Upon
attainment of the performance goal, the performance stock became fully
vested as to one portion of the award (typically one-fifth, except for Mr.
Howell, whose entire award vested immediately due to his expected 1998
retirement). The remaining portion of the award (typically four-fifths)
became subject to restrictions on transferability which will 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
S. Rodgers Benjamin, Elinor J. Ferdon, Fred G. Harvey, George L. Miles, Jr.,
Henry S. Patterson II, Raymond Silverstein and Douglas G. Watson.
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 Keefe, Bruyette & Woods, Inc.
("KBW") 50 Index, an industry index consisting of 50 money-center and regional
banking companies and (iii) the Standard & Poor's ("S&P") 500 Market Index, a
broad market index covering the stocks of 500 large capitalization companies.
SUMMIT BANCORP.,
KBW 50 INDEX & S&P 500 INDEX
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
GRAPHICAL REPRESENTATION OF DATA TABLE BELOW
(DOLLARS)
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Summit Bancorp ........ 100 101.62 105.88 160.79 204.57 381.54
KBW 50 Index .......... 100 105.54 100.16 160.41 226.92 331.73
S&P 500 Index ......... 100 110.08 111.54 153.45 188.69 251.64
- -------
Assumes $100 invested on January 1, 1993
* 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 1997 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 exception: clerical delays in the Corporate Secretary
Department resulted in a delay in the reporting of a purchase of 232 shares by
Mr. Watson from the required Form 4 filing in June, 1997 to a Form 4 filed in
November, 1997.
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 at the
effective time of the Corporation's merger with The Summit Bancorporation (the
"Effective Time"), which provides for Mr. Cox to serve as the President of SumNJ
for an initial term ending March 1, 1999. The initial term of the Agreement is
automatically extended one additional year on each of the first two anniversary
dates of the agreement unless either party gives at least 180 days advance
notice that such party elects not to so extend the agreement. The first two
anniversary dates were March 1, 1997 and March 1, 1998, respectively, and no
such notice was given. The employment agreement additionally provides for Mr.
Cox to receive (i) a 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 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
20
<PAGE>
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 December 31, 1998 but is
automatically extended each January 1, commencing January 1, 1998, 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 (the
"Severance Plan") to enhance the ability of Summit to retain existing management
and attract new executives when needed, to reward 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 and to reduce legal expense and management time associated with executive
terminations by establishing generally applicable executive severance standards.
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, John R.
Feeney, William J. Healy, Sabry J. Mackoul, Joseph A. Micali, Jr., Richard F.
Ober, Jr., Dennis Porterfield, Alan N. Posencheg and Edmund C. Weiss, Jr. Their
period of participation will expire as of December 15, 1999.
The Severance Plan provides that, in the event a participant's employment
is terminated by the Company, other than for Cause (as defined in the Severance
Plan), death, disability or retirement, or by the participant for Good Reason
(as defined in the Severance Plan) within 6 months of any event alleged to
constitute Good Reason, the participant, upon signing a Release, Covenant Not to
Sue and Non-Disclosure and Non-Solicitation Agreement in the form set forth in
the Severance Plan, is entitled to receive: (i) a lump sum cash payment equal to
two times the highest annual rate of base salary in effect for the participant
during the twelve month period preceding the notice of termination; (ii) a lump
sum cash payment equal to two times the highest annual cash incentive bonus
earned by the participant during the three fiscal years preceding the date of
termination; (iii) two years of employee benefits plans participation and
outplacement services and one year of perquisites or the cash equivalent. All
payments and benefits are reduced pro rata within two years of normal
retirement.
The Severance Plan generally defines "Good Reason" to include: (i) the
assignment of duties which are inconsistent with the participant's then title
and salary grade or a significant reduction in the participant's authority and
responsibility as a senior executive; (ii) the removal of the participant from,
or any failure to reappoint or reelect a participant to, the title of Executive
Vice President or above; (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
an executive office of Summit or a subsidiary located in New Jersey or
Pennsylvania within sixty miles of Corporate Headquarters; (v) the failure to
provide the participant with welfare benefits, perquisites and participation in
all cash and stock bonus and incentive plans of the Company on substantially the
same terms as provided to executives of comparable title and salary grade; or
(vi) notice from the Company that the participant's participation in the
Severance Plan or the participant's Termination Agreement (described below)
would not be renewed.
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
21
<PAGE>
below) of Summit, the officer will not voluntarily leave the employ of the
Company (except upon a normal retirement date) and will continue to perform the
officer's 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, Feeney, Howell, Paneyko, Haggerty, Betsinger, D'Augusta, Healy,
Mackoul, Micali, Ober, Porterfield, Posencheg, 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, 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 the difference between (A) the sum of three times the
officer's base salary at the highest rate in effect during the twelve-month
period preceding the notice of termination, plus three times the highest annual
cash bonus earned by the officer during the three preceding fiscal years, and
(B) the aggregate lump sum cash amounts relating to base salary and bonus
payable to the officer under the Company's Executive Severance Plan in the event
of the termination of his employment; (ii) upon retirement an amount of total
retirement benefits equal to that which the officer would have received from
defined benefit retirement plans of the Company, if the officer's employment had
continued for ten years beyond the termination date or until the officer's
normal retirement date, if earlier. The officer is also entitled to remain an
active participant in all employee welfare benefit plans for a period of 36
months after the date of termination. The Termination Agreements further provide
that in the event any payment or benefit received or to be received by the
officer pursuant to the Termination Agreements or any other plan, arrangement or
agreement of the Company would, in the opinion of independent tax counsel, be
subject to the excise tax imposed by Section 4999 of the Code, the Company shall
pay to the officer an amount that would restore the officer to the same after
tax position as if the excise tax had not been imposed.
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 the earlier (i) the officer's death, disability
or retirement or (ii) the fifth anniversary of the Termination Agreement. The
Termination Agreements provide for automatic renewal on the day following the
fifth anniversary of the date thereof and each annual anniversary thereafter
unless the officer is no longer employed by the Company or a subsidiary of the
Company on such date, the officer has reached normal retirement date or the
Company has given twelve months notice that it will not extend the Termination
Agreement. A "Change in Control" of Summit is defined to include: (i) a Change
of Control required to be reported under the Federal securities laws; (ii) the
acquisition by any person of beneficial ownership of 25% or more of the combined
voting power of Summit's outstanding securities; (iii) a change in the
composition of majority membership of the Board of Directors over any two-year
period; (iv) a change in ownership of Summit such that Summit becomes subject to
the delisting of its Common Stock from the NYSE; (v) the approval by the Board
of the sale of all or substantially all of the assets of Summit; or (vi) 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 or that the stockholders of the
Company own less than 65% of the combined voting power of the resulting entity.
"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) a change in the officer's base location to anywhere other than an
executive office of the Company or a subsidiary located in New Jersey or
Pennsylvania within 25 miles of the officer's office prior to the Change in
Control; (v) the failure to provide the officer with benefits and perquisites
the same as or comparable to those provided in the twelve months 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; (vii) a
termination of employment by the officer for any reason other than disability or
normal retirement within 30 days of the first anniversary of an event
constituting a Change in Control or (viii) notice by the Company that the
officer's participation in the Company's Executive Severance Plan or the
officer's Termination Agreement would not be renewed.
22
<PAGE>
1993 INCENTIVE STOCK AND OPTION PLAN
The terms of Summit's 1993 Incentive Stock and Option Plan provide that
upon any change in control of Summit all unexercisable employee stock options
become immediately exercisable and all stock awards subject to restrictions on
transferability become immediately released from such restrictions. These terms
apply to all employees holding unexercisable stock options and restricted stock
awards, including executive officers. A change in control for purposes of the
stock incentive plans is generally the same as that for the Termination
Agreements.
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 (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:
<TABLE>
<CAPTION>
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
--------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 ................. 36,099 $ 48,132 $ 60,165 $ 72,198 $ 75,000
(84,232)
$150,000 ................. 43,599 58,132 72,665 87,198 90,000
(101,732)
$200,000 ................. 58,599 78,132 97,665 117,198 120,000
(136,732)
$250,000 ................. 73,599 98,132 122,665 147,198 150,000
(171,732)
$300,000 .................. 88,599 118,132 147,665 177,198 180,000
(206,732)
$400,000 .................. 118,599 158,132 197,665 237,198 240,000
(276,732)
$500,000 .................. 148,599 198,132 247,665 297,198 300,000
(346,732)
$800,000 .................. 238,599 318,132 397,665 477,198 480,000
(556,732)
</TABLE>
- -------
(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, 16 years; Mr. Cox, 1 year; Mr. Collins, 11 years; Mr. Paneyko, 15
years.
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 SumNJ), 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
23
<PAGE>
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
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 1997 under the First
Valley formula was $545,000 and under the standard formula was the amount set
forth for 1997 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 two years 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 December 31,
1996, 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.
2. 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 1998.
Representatives of KPMG Peat Marwick LLP, who were also Summit's auditors
for the year 1997, 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.
2.
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
24
<PAGE>
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 1999 Annual Meeting proposals which meet the regulations of the SEC and New
Jersey law and which comply with the Corporation's By-Laws. In order to be
considered for inclusion, proposals must be received on or before November 6,
1998. Proposals should be addressed to the Secretary.
The By-Laws of Summit provide that shareholder proposals which do not
appear in the Proxy Statement may be considered at an annual 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 year's 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 seven Directors. The vote of a majority of shares cast at
the Annual Meeting is necessary 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 6, 1998
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.
25
<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 Keefe, Bruyette & Woods, Inc. ("KBW") 50 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, 1993 and ending December 31, 1997,
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 17, 1998
O The undersigned hereby constitutes and appoints Robert L. Boyle,
T.J. Dermot Dunphy and Elinor J. Ferdon 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
17, 1998, and at any adjournments thereof, on all matters coming before
said meeting.
Election of Directors, Nominees:
John G. Collins, Anne Evans Estabrook, Thomas H. Hamilton, George L.
Miles, Jr., William R. Miller, Raymond Silverstein, Orin R. Smith
You are encouraged to specify your choice by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any box 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]
- --------------------------------------------------------------------------------
1724
[X] Please mark your votes as in this example.
This proxy, when properly executed 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 proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
FOR WITHHELD
1. Election of Directors (See Reverse) [ ] [ ]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification 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 of Summit
N Bancorp. which are held in the undersigned's Plan account at the Annual
S Meeting of Shareholders of SUMMIT BANCORP. to be held on Friday, April 17,
T 1998 at The Hyatt Regency Princeton, 102 Carnegie Center, Route 1 at
R Alexander Road, Princeton, New Jersey, and at any adjournments thereof, as
U designated on the reverse, and in its discretion on such other matters as
C may properly come before the meeting.
T
I
O Election of Directors, Nominees:
N
John G. Collins, Anne Evans Estabrook, Thomas H. Hamilton, George
L. Miles, Jr., William R. Miller, Raymond Silverstein, Orin R. Smith
C
A
R
D
You are encouraged to specify your choices by marking the appropriate boxes on
the reverse side.
[SEE 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 PROPOSALS 1 AND 2.
FOR WITHHELD
1. Election of Directors (See Reverse) [ ] [ ]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of Independent Accountants [ ] [ ] [ ]
- --------------------------------------------------------------------------------
This Card Must Be Signed Exactly As
Your Name Appears Hereon
-----------------------------------
SIGNATURE(S): DATE
<PAGE>
- --------------------------------------------------------------------------------
V SUMMIT BANCORP.
O EMPLOYEE STOCK OWNERSHIP PLAN
T Solicited on Behalf of the Board of Directors
I of SUMMIT BANCORP.
N for the Annual Meeting on April 17, 1998
G
The undersigned hereby directs Chase Manhattan Bank, Trustee of the SUMMIT
I BANCORP. Employee Stock Ownership Plan, to vote all of the shares of Summit
N Bancorp. which are held in the undersigned's Plan account at the Annual
S Meeting of Shareholders of SUMMIT BANCORP. to be held on Friday, April 17,
T 1998 at The Hyatt Regency Princeton, 102 Carnegie Center, Route 1 at
R Alexander Road, Princeton, New Jersey, and at any adjournments thereof, as
U designated on the reverse, and in its discretion on such other matters as
C may properly come before the meeting.
T
I
O Election of Directors, Nominees:
N
John G. Collins, Anne Evans Estabrook, Thomas H. Hamilton, George
L. Miles, Jr., William R. Miller, Raymond Silverstein, Orin R. Smith
C
A
R
D
You are encouraged to specify your choices by marking the appropriate boxes on
the reverse side.
[SEE REVERSE SIDE]
- --------------------------------------------------------------------------------
[X] Please mark your votes as in this example. 4037
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 not vote shares, held in your account.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
FOR WITHHELD
1. Election of Directors (See Reverse) [ ] [ ]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of Independent Accountants [ ] [ ] [ ]
- --------------------------------------------------------------------------------
This Card Must Be Signed Exactly As
Your Name Appears Hereon
-----------------------------------
SIGNATURE(S): DATE
