PEOPLES BANCORP, INC.
134 FRANKLIN CORNER ROAD
LAWRENCEVILLE, NEW JERSEY 08648-0950
(609) 844-3100
April 21, 1998
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders of Peoples
Bancorp, Inc. (the "Company"). The Annual Meeting will be held at the Trenton
Country Club, Sullivan Way, West Trenton, New Jersey, at 10:00 a.m. local time
on May 22, 1998.
The enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted. During the meeting we will also report on the
operations of the Company. Directors and officers of the Company, as well as a
representative of our independent auditors, will be present to respond to any
questions that stockholders may have.
The business to be conducted at the annual meeting includes the election of four
directors and the ratification of the appointment of KPMG Peat Marwick, LLP as
auditors for the Company's 1998 fiscal year.
The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interest of the Company and its
stockholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
Also enclosed for your review is our Annual Report to Stockholders, which
contains detailed information concerning the activities and operating
performance of the Company. On behalf of the Board of Directors, we urge you to
sign, date and return the enclosed proxy card as soon as possible even if you
currently plan to attend the Annual Meeting. This will not prevent you from
voting in person, but will assure that your vote is counted if you are unable to
attend the meeting.
Sincerely,
\s\ Wendell T. Breithaupt
Wendell T. Breithaupt
President and Chief Executive Officer
\s\ John B. Sill, Jr.
John B. Sill, Jr.
Chairman
<PAGE>
PEOPLES BANCORP, INC.
134 FRANKLIN CORNER ROAD
LAWRENCEVILLE, NEW JERSEY 08648-0950
(609) 844-3100
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 22, 1998
Notice is hereby given that the Annual Meeting of Peoples Bancorp, Inc.
(the "Company") will be held at The Trenton Country Club, Sullivan Way, West
Trenton, New Jersey, at 10:00 a.m. local time on May 22, 1998.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of four directors of the Company;
2. The ratification of the appointment of KPMG Peat Marwick, LLP
as auditors for the Company for the fiscal year ending
December 31, 1998; and
such other matters as may properly come before the Meeting, or any adjournments
thereof. The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on April 17, 1998,
are the stockholders entitled to vote at the Meeting, and any adjournments
thereof.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING MAY REVOKE HIS OR
HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE MEETING.
HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN
NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE
PERSONALLY AT THE MEETING.
By Order of the Board of Directors
\s\ Robert C. Hollenbeck
Robert C. Hollenbeck
Corporate Secretary
Lawrenceville, New Jersey
April 21, 1998
<PAGE>
PROXY STATEMENT
PEOPLES BANCORP, INC.
134 Franklin Corner Road
Lawrenceville, New Jersey 08648-0950
(609) 844-3100
ANNUAL MEETING OF STOCKHOLDERS
May 22, 1998
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Peoples Bancorp, Inc. (the
"Company") to be used at the Annual Meeting of Stockholders of the Company (the
"Meeting"), which will be held at The Trenton Country Club, Sullivan Way, West
Trenton, New Jersey, at 10:00 a.m. local time on May 22, 1998, and all
adjournments of the Meeting. The accompanying Notice of Annual Meeting of
Stockholders and this Proxy Statement are first being mailed to stockholders on
or about April 28, 1998.
REVOCATION OF PROXIES
Stockholders who execute proxies in the form solicited hereby retain
the right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon.
Please sign and return your Proxy to the Company in order for your vote to be
counted. Proxies which are signed, but contain no instructions for voting, will
be voted "FOR" the proposals set forth in this Proxy Statement for consideration
at the Meeting.
Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company, Robert C. Hollenbeck, at the address of the Company
shown above, or by filing a duly executed proxy bearing a later date. The
presence at the Meeting of any stockholder who has given a proxy shall not
revoke such proxy unless the stockholder delivers his or her ballot in person at
the Meeting or delivers a written revocation to the Secretary of the Company
prior to the voting of such proxy.
VOTING SECURITIES AND METHOD OF COUNTING VOTES
Holders of record of the Company's common stock, par value $.01 per
share ("Common Stock") as of the close of business on April 17, 1998 (the
"Record Date"), are entitled to one vote for each share then held. As of the
Record Date, there were 36,236,500 shares of Common Stock issued and
outstanding. The presence in person or by proxy of a majority of the outstanding
shares of Common Stock entitled to vote is necessary to constitute a quorum at
the Meeting.
As to the election of Directors, the proxy card being provided by the
Board of Directors enables a stockholder to vote FOR the election of the
nominees proposed by the Board, or to WITHHOLD AUTHORITY to vote for one or more
of the nominees being proposed. Under Delaware law and the Company's Certificate
of Incorporation and Bylaws, directors are elected by a plurality of votes cast,
without regard to either broker non-votes, or proxies as to which authority to
vote for one or more of the nominees being proposed is withheld.
As to the ratification of KPMG Peat Marwick LLP as independent auditors
of the Company, by checking the appropriate box, a stockholder may: (i) vote FOR
the item; (ii) vote AGAINST the item; or (iii) ABSTAIN from
1
<PAGE>
voting on such item. Under the Company's Certificate of Incorporation and
Bylaws, the ratification of this matter shall be determined by a majority of the
votes cast, without regard to broker non-votes, or proxies marked ABSTAIN.
Any other matters that may be brought before the Annual Meeting will be
determined by a majority of the votes cast, without regard to broker non-votes
or any proxies as to which a stockholder abstains.
Proxies solicited hereby will be returned to the Company, and will be
tabulated by an inspector of election designated by the Board of Directors, who
will not be employed by, or a director of, the Company or any of its affiliates.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Persons and groups who beneficially own in excess of 5% of Common Stock
are required to file certain reports with the Securities and Exchange Commission
(the "SEC") regarding such ownership pursuant to the Securities Exchange Act of
1934 (the "Exchange Act"). Based on such reports, as of April 8, 1998 there were
no persons known by the Company to be the beneficial owners of more than 5% of
the outstanding shares of Common Stock.
PROPOSAL I--ELECTION OF DIRECTORS
Directors of the Company are generally elected to serve for a
three-year period and until their respective successors shall have been elected
and shall qualify. Four directors will be elected at the Meeting to serve for
three-year periods and until their successors have been elected and qualified.
The Nominating Committee, consisting of directors Pruitt, Reinhard and Trainer
has nominated Wendell T. Breithaupt, Peter S. Longstreth, Charles E. Stokes,
III, and Miles W. Truesdell, Jr. to serve as directors, each of whom currently
serves on the Board of Directors.
The table below sets forth certain information regarding the Company's
Directors as of April 8, 1998 who will continue in office after the Meeting,
including the terms of office of Board members and executive officers of the
Company, and shares of Common Stock beneficially owned by such persons as of
April 8, 1998. It is intended that the proxies solicited on behalf of the Board
of Directors (other than proxies in which the votes are withheld as to the
nominee) will be voted at the Meeting for the election of the nominees
identified below. If the nominee is unable to serve, the shares represented by
all such proxies will be voted for the election of such substitute as the Board
of Directors may recommend. At this time, the Board of Directors knows of no
reason why the nominee might be unable to serve, if elected. Except as indicated
herein, there are no arrangements or understandings between the nominee and any
other person pursuant to which such nominee was selected.
<TABLE>
<CAPTION>
Shares of
Common Stock
Positions Director Current Term Beneficially Percent
Name Age Held Since (1) to Expire Owned (2)(3)(4) Of Class
---- --- ------------ --------- --------- ----------------- --------
NOMINEE
<S> <C> <C> <C> <C> <C> <C>
Wendell T. Breithaupt 64 Director, President and 1979 1998 472,990 1.3%
Chief Executive Officer
Peter S. Longstreth 53 Director 1992 1998 173,132 *
Charles E. Stokes, III 68 Director 1978 1998 98,528 *
Miles W. Truesdell, Jr. 55 Director 1992 1998 165,802 *
DIRECTORS CONTINUING IN OFFICE
George A. Pruitt 51 Director 1991 1999 77,047 *
George W. Reinhard 66 Director 1983 1999 573,284 1.6
John B. Sill, Jr. 76 Chairman 1977 2000 117,913 *
Raymond E. Trainer 50 Director 1986 1999 220,916 *
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
<S> <C> <C> <C> <C> <C> <C>
Leo J. Bellarmino 49 Executive Vice President N/A N/A 129,445 *
Richard L. Gallaudet 53 Vice President and N/A N/A 76,278 *
Senior Lending Officer
Dean H. Lippincott 45 Vice President N/A N/A 75,770 *
Robert Russo 43 Vice President and N/A N/A 50,074 *
Treasurer
Robert C. Hollenbeck 53 Vice President and N/A N/A 61,693 *
Corporate Secretary
Frank Sanella, Jr. 53 Chief Executive Officer N/A N/A 286 *
TSBusiness Finance
Directors and Executive Officers
as a group (14 persons) 2,293,158 6.2%
</TABLE>
- ------------------------------------
* Less than 1%.
(1) Reflects initial appointment to the Board of Directors of Trenton Savings
Bank FSB (the "Bank").
(2) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. In accordance with Rule 13d-3
under the Exchange Act, a person is deemed to be the beneficial owner for
purposes of this table, of any shares of Common Stock if he has shared
voting or investment power with respect to such security, or has a right to
acquire beneficial ownership at any time within 60 days from the date as to
which beneficial ownership is being determined. As used herein, "voting
power" is the power to vote or direct the voting of shares and "investment
power" is the power to dispose or direct the disposition of shares.
Includes all shares held directly as well as by spouses and minor children,
in trust and other indirect ownership, over which shares the named
individuals effectively exercise sole or shared voting and investment
power.
(3) Shares of Common Stock which are subject to stock options are deemed to be
outstanding for the purpose of computing the percentage of outstanding
Common Stock owned by such person or group but not deemed outstanding for
the purpose of computing the percentage of Common Stock owned by any other
person or group.
(4) Includes the following amounts of unvested shares of restricted stock
awarded under the 1996 Recognition Plan which may be voted by the recipient
pending vesting and distribution: Mr. Sill 7,159 shares; Mr. Breithaupt
31,749 shares; Mr. Longstreth 5,549 shares; Mr. Pruitt 5,878 shares; Mr.
Reinhard 7,159 shares; Mr. Stokes 7,159 shares; Mr. Trainer 7,159 shares;
Mr. Truesdell 5,549 shares; Mr. Gallaudet 3,736 shares; Mr. Lippincott
3,847 shares; Mr. Russo 3,395 shares; and Mr. Hollenbeck 3,055 shares.
Includes the following number of shares of Common Stock underlying options
that are exercisable within 60 days of the date of which beneficial
ownership is being determined: Mr. Sill 47,421 shares; Mr. Breithaupt
284,883 shares; Mr. Longstreth 47,421 shares; Mr. Pruitt 47,421 shares; Mr.
Reinhard 47,421 shares; Mr. Stokes 47,421 shares; Mr. Trainer 47,421
shares; Mr. Truesdell 47,421 shares; Mr. Bellarmino 120,251 shares; Mr.
Gallaudet 33,653 shares; Mr. Russo 27,534 shares; Mr. Lippincott 15,297
shares; and Mr. Hollenbeck 21,416 shares.
The principal occupation during the past five years of each director
and executive officer of the Company is set forth below. All directors have held
their present positions for five years unless otherwise stated.
John B. Sill, Jr. is President of Ivins & Taylor, Inc., funeral
directors located in Trenton, New Jersey.
Wendell T. Breithaupt is President and Chief Executive Officer of the
Bank and the Company and serves also as a Director. He has served as President
of the Bank since 1981 and as Chief Executive Officer since 1982. He has been a
Director of the Bank since 1979. He is a Director, Chairman of the Executive
Committee, and Chairman of the Mercer County Chamber of Commerce. He is a member
of the Mercer County Economic Development Commission and serves as a trustee of
the Drumthwacket Foundation, Inc. and serves as a member of the Banking Advisory
Board of the State of New Jersey. Mr. Breithaupt serves as a director of RSI
Retirement Systems, a New York corporation.
Peter S. Longstreth is Managing Partner of Aegis Property Group, Ltd.,
a real estate development and project management company.
George A. Pruitt is President of Thomas A. Edison State College.
3
<PAGE>
George W. Reinhard is President of Lester Fellows Co., Inc., an
interstate trucking firm.
Charles E. Stokes, III is the retired President of The Home Rubber
Company, which manufactures mechanical rubber goods, hoses, etc.
Raymond E. Trainer is Chairman of General Sullivan Group, which is an
industrial distribution holding company. He also is a director and secretary of
the TRAF Group which owns a medical collection agency.
Miles W. Truesdell, Jr. is a Director and Partner of Truetech Controls,
Inc., which operates as a specialty distributor that services the industrial
market with process control instrumentation.
Executive Officers Who Are Not Directors. Set forth below is a brief
description of the background of each person who serves as an executive officer
and who is not a director of the Company or the Bank. Unless otherwise noted,
all executive officers who are not directors have held their present position
with the Bank for five years.
Leo J. Bellarmino is Executive Vice President, responsible for the
Bank's Human Resources, Marketing, Branch Network, Project Planning, Information
Services, Loan Operations, Staff Services and Corporate Finance. He joined the
Bank in October of 1995 and has 27 years of banking experience. Prior to joining
the Bank, Mr. Bellarmino served as Senior Vice President and Retail Franchise
Manager for CoreStates New Jersey National Bank's 140 branch network. Mr.
Bellarmino also serves as a Director of the non-profit Trenton Roebling
Community Development Corporation.
Richard L. Gallaudet is Vice President and Senior Lending Officer,
responsible for the direct management of all the Bank's lending activities. He
joined the Bank in 1990, prior to which he held a number of management positions
with other banks, including three years of service (1986-1989) as President and
Chief Executive Officer of Cherry Hill National Bank and thirteen years of
service (1973-1986) as a Senior Vice President with MidLantic National
Bank/South (formerly Heritage Bank).
Dean H. Lippincott has been Vice President in charge of the Bank's
Mortgage Department since 1988 and has served the Bank in a number of other
capacities since joining it in 1970. His responsibilities include home mortgage
loan originations. He participates as a member of The West Ward Community
Partnership Corp.
Robert Russo is Vice President and Treasurer, responsible for all bank
operations, financial reporting, and accounting systems. He joined the Bank in
1985 as an Assistant Vice President. He has held other positions in the thrift
industry since 1978.
Robert C. Hollenbeck is Vice President and Corporate Secretary
responsible for investor relations, bank investments, budgeting and corporate
regulatory matters. He joined the Bank in November 1994. He has 28 years of
banking experience including 11 years as Executive Vice President and Director
of New Brunswick Savings Bank and five years as Executive Vice President of
Constellation Bank.
Frank Sannella, Jr. is President and Chief Executive Officer of
TSBusiness Finance Corporation ("TSBF"), the wholly-owned subsidiary of the
Bank. Mr. Sannella previously held several senior management positions including
Executive Vice President and Senior Loan Officer of MidLantic Bank South and 1st
National Bank of Toms River, President of Heritage Commercial Finance Company
and Executive Vice President of Meridian Commercial Finance Corporation.
Board Meetings and Committees of the Board of Directors
Regular meetings of the Board of Directors of the Company and the Bank
are held on at least a monthly basis and special meetings of the Board of
Directors of the Company and the Bank are held from time to time as needed.
4
<PAGE>
There was one meeting of the Company's Board of Directors and 15 meetings of the
Bank's Board of Directors during the year ended on December 31, 1997. During the
year ended December 31, 1997, no Director attended fewer than 75% of the total
number of meetings of the Board of Directors of the Bank and the Company and the
total number of meetings held by all committees of the Board of Directors on
which he served.
The Boards of Directors of the Bank and the Company have established
various committees, including, among others, an Examining (Audit) Committee and
a Compensation Committee of the Bank, and a Nominating Committee of the Company
The Examining (Audit) Committee is a Committee of the Bank that reviews
(i) reports from the internal audit department, (ii) the independent auditors'
reports and results of their examination, prior to review by and with the entire
Board of Directors and (iii) the OTS and Federal Deposit Insurance Corporation
(the "FDIC") and other regulatory reports, prior to review by and with the
entire Board of Directors. Currently, Mr. Truesdell serves as chairman of this
Committee and Messrs. Pruitt, Stokes and Trainer serve as members. The Examining
(Audit) Committee met three times during 1997.
The Compensation Committee is a committee of the Bank that is currently
chaired by Mr. Sill, with Messrs. Longstreth, Pruitt and Trainer as members. Its
members review and approve salaries, promotions and bonuses provided to the
Bank's employees. The Compensation Committee met three times during 1997.
The Company's Nominating Committee is not a standing committee but is
convened as needed with director members appointed by the Chairman. While the
Committee will consider nominees recommended by stockholders, it has not
actively solicited recommendations from stockholders. Nominations by
stockholders must comply with certain procedural and informational requirements
set forth in the Company's Bylaws.
Compensation Committee Interlocks and Insider Participation
During 1997, the Compensation Committee of the Bank was chaired by Mr.
Sill, and Messrs. Longstreth, Pruitt and Trainer served as members. No such
member has ever been an employee of the Company or its subsidiaries, or has been
involved in any transaction with the Company required to be disclosed by the SEC
rules regarding transactions with an affiliate.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee annually reviews the performance of the
Chief Executive Officer and other executive officers and recommends changes to
base compensation as well as the level of bonus, if any, to be awarded. In
determining whether the base salary of the Chief Executive Officer and other
executive officers should be increased, the Bank's Board of Directors takes into
account individual performance, performance of the Bank, the size of the Bank
and the complexity of its operations, and information regarding compensation to
executives performing similar duties for financial institutions in the Bank's
market area.
While the Compensation Committee does not use strict numerical formulas
to determine changes in compensation for the Chief Executive Officer and while
it weighs a variety of different factors in its deliberations, it has emphasized
and will continue to emphasize earnings, profitability, capital position and
income level, and return on average assets as factors in setting the
compensation of the Chief Executive Officer. Other non-quantitative factors
considered by the Bank's Compensation Committee in fiscal 1997 included general
management oversight of the Bank, the quality of communication with the Board of
Directors, and the productivity of employees. Finally, the Compensation
Committee considered the standing of the Bank with customers and the community,
as evidenced by the level of customer/community complaints and compliments.
While each of the quantitative and non-quantitative factors described above was
considered by the Compensation Committee, such factors were not assigned a
specific weight in evaluating the performance of the Chief Executive Officer.
Rather, all factors were considered, and based
5
<PAGE>
upon the effectiveness of such officers in addressing each of the factors, and
the range of compensation paid to officers of peer institutions, the Board of
Directors approved a recommendation of the Compensation Committee for an
increase in the base salary of the Chief Executive Officer, such that the salary
for the year ended December 31, 1997 is as set forth in "--Executive
Compensation." In addition, the Board of Directors approved increases in the
aggregate salary paid to the Bank's executive officers.
Performance Graph
The Common Stock of the Company has traded only since April 9, 1998.
The following graph is presented to illustrate the performance of the common
stock of the Bank ("Bank Common Stock") and the common stock of Peoples Bancorp,
Inc., a federal corporation ("Mid-Tier Common Stock") into which the Bank Common
Stock was converted on a one-for-one basis in July 1997. Following the close of
trading on April 8, 1998, each share of Mid-Tier Common Stock was converted into
3.8243 shares of Common Stock in connection with the mutual to stock conversion
(the "Conversion") of Peoples Bancorp, MHC (the "Mutual Holding Company"), the
Bank's mutual holding company. The graph compares the cumulative total return
including dividends for the period ending on December 31, 1998, for the
following : (a) the Mid-Tier Common Stock, beginning with the sale of Bank
Common Stock in the Bank's stock offering on August 3, 1994, based on the price
at which such stock was sold in the offering and the one-for-one exchange of
Bank Common Stock for Mid-Tier Common Stock, (b) stocks including in the Nasdaq
Bank Index, beginning with the close of trading on August 3, 1995, and (c)
stocks included in the Nasdaq Stock Market-U.S. Index, beginning with the close
of trading on August 3, 1995.
[GRAPHIC OMITTED]
8/3/95 12/95 12/96 12/97
------ ----- ----- -----
Peoples Bancorp, Inc. 100 131 165 474
Nasdaq Bank 100 118 156 263
Nasdaq Stock Market-US 100 108 133 163
6
<PAGE>
Directors Compensation
Fees. During 1997, the Company's directors received no fees for serving
on the Company's Board of Directors or committees of the Company. During 1997,
each member of the Board of Directors of the Bank, except Mr. Breithaupt, was
paid a fee of $650 per Board meeting attended and $500 for attending meetings of
the Executive, Examining (Audit) and Emergency Operations Committees. Directors
attending Loan Committee meetings received $300 per meeting, and directors
attending Benefits and Compensation Committee meetings received $250 per
meeting. The Chairman of the Board received $900 per meeting of the Board of
Directors and Executive Committee, and the Chairman of the Examining (Audit)
Committee received $700 per meeting of the Examining (Audit) Committee. In
addition, non-officer directors other than the Chairman were paid an annual
retainer of $5,650, and the Chairman was paid an annual retainer of $12,650.
1996 Option Plan. During 1996 the Bank and the Mutual Holding Company
adopted the Trenton Savings Bank and Peoples Bancorp, MHC 1996 Stock Option Plan
(the "1996 Option Plan"), which was approved by the Bank's stockholders. Under
the 1996 Option Plan, during 1996 Directors Sill, Stokes, Reinhard, Trainer,
Pruitt, Longstreth and Truesdell each received options to purchase 12,000 shares
of Bank Common Stock with an exercise price of $13.50 per share (i.e., the fair
market value of the Bank Common Stock on the date the option was granted), of
which 4,800 options for each Director vested during 1997, 4,800 options vested
on April 8, 1998, and remaining options are scheduled to vest on April 8, 1999.
During 1997, each such Director received additional options to purchase 3,500
shares of Bank Common Stock with an exercise price of $21.00 per share (i.e.,
the fair market value of the stock on the date of grant), of which 1,400 options
for each director vested in January 1998, 1,400 vested on April 8, 1998, and
remaining options are scheduled to vest on April 8, 1999. The awards become
fully vested upon a director's disability, death, retirement or following
termination of service in connection with a change in control of the Bank. All
options granted under the 1996 Option Plan expire upon the earlier of ten years
following the date of grant or, generally, nine years following the date the
optionee ceases to be a director. In July 1997 each share of Bank Common Stock
was converted into one share of Mid-Tier Common Stock. In the Conversion on
April 8, 1998, each share of Mid-Tier Common Stock was converted into 3.8243
shares of Common Stock, each unexercised option to purchase a share of Mid-Tier
Common Stock was converted into an option to purchase 3.8243 shares of Common
Stock, and the exercise price per share of Common Stock was also adjusted
accordingly.
1996 Recognition Plan. During 1996 the Bank adopted the Trenton Savings
Bank and Peoples Bancorp, MHC 1996 Recognition and Retention Plan (the "1996
Recognition Plan"), which was approved by the Bank's stockholders. During 1996,
9,364 shares of Bank Common Stock were awarded under the 1996 Recognition Plan
to Directors Sill, Stokes, Reinhard and Trainer, 7,491 shares were awarded to
Director Pruitt, and 7,257 shares were awarded to Directors Longstreth and
Truesdell. Such participants vested in 3,746, 2,996, and 2,903 of such shares,
respectively, during 1997, vested in a like amount on April 8, 1998, and are
scheduled to vest in the remaining shares on April 8, 1999. Awards become fully
vested upon a director's disability, death, retirement or following termination
of service in connection with a change in control of the Bank. Unvested shares
of restricted stock are forfeited by a non-employee director upon failure to
seek reelection, failure to be reelected, or resignation from the Board. Prior
to vesting, recipients of awards under the 1996 Recognition Plan receive
dividends and may direct the voting of the shares of restricted stock allocated
to them. In July 1997 each share of Bank Common Stock was converted into one
share of Mid-Tier Common Stock, and in the Conversion on April 8, 1998, each
share of Mid-Tier Common Stock was converted into 3.8243 shares of Common Stock.
7
<PAGE>
Executive Compensation
Summary Compensation Table. The following table sets forth for the
years ended December 31, 1997, 1996 and 1995, certain information as to the
total remuneration paid by the Bank to the Chief Executive Officer and executive
officers whose salary and bonuses exceeded $100,000 in 1997 ("Named Executive
Officers").
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------
Annual Compensation Awards
--------------------------------------- ------------------------
Year Other Restricted Shares All
Name and Ended Annual Com- Stock Underlying LTIP Other
Principal Position (1) Dec. 31 Salary (2) Bonus (3) pensation (4) Awards (5) Options (6) Payouts Compensation (7)
- ---------------------- ------- ---------- --------- ------------- ----------- ------------ ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wendell T. Breithaupt 1997 $196,796 $50,000 -- -- 95,608 -- $ 80,712
President and Chief 1996 187,425 50,000 -- $560,426 298,295 -- 80,712
Executive Officer 1995 178,500 50,000 -- -- -- -- 80,231
Leo J. Bellarmino...... 1997 $140,000 $10,273 -- -- 38,243 -- $ 8,151
Executive Vice 1996 140,000 10,000 -- -- 130,026 -- 1,713
President 1995 25,846 -- -- -- -- -- --
Frank Sannella, Jr..... 1997 $120,000 -- -- -- -- -- $3,333
President and Chief 1996 47,077 -- -- -- -- -- 99
Executive Officer of TSBF
</TABLE>
- ------------------------------------
(1) No other executive officer received salary and bonuses that in the
aggregate exceeded $100,000.
(2) Includes amounts deferred at the election of the named executive officer
pursuant to the Bank's 401(k) Plan.
(3) Includes amounts earned during the year and awarded pursuant to the Bank's
Profit Sharing Plan. Payments pursuant to the Profit Sharing Plan are
reflected in the year earned, rather than the year in which the payment is
received.
(4) The Bank provides certain members of senior management with the use of an
automobile and other personal benefits which have not been included in the
table. The aggregate amount of such other benefits did not exceed the
lesser of $50,000 or 10% of each Named Executive Officer's cash
compensation.
(5) Includes awards of 158,758 shares of restricted Common Stock (as adjusted
to reflect the conversion of each share of Mid-Tier Common Stock into
3.8243 shares of Common Stock) to Mr. Breithaupt, 63,503 shares (as
adjusted) of which vested during the year ended December 31, 1997, 63,503
shares (as adjusted) of which vested on April 8, 1998, and 31,753 shares
(as adjusted) of which are scheduled to vest on April 8, 1999. The value of
the awards is based on the last sale price on the date of the award.
Dividends are paid to the holder of the restricted stock. As of December
31, 1997, the fair market value of the shares of restricted stock held by
Mr. Breithaupt was $1.1 million.
(6) The number of options has been adjusted to reflect the conversion of each
option to purchase a share of Mid-Tier Common Stock into an option to
purchase 3.8243 shares of Common Stock in the Conversion. Of such options
awarded to Mr. Breithaupt and Bellarmino during 1996, 119,318 and 52,010
options, respectively, vested during the year ended December 31, 1997, an
equal amount vested on April 8, 1998, and 59,659 and 26,005 options,
respectively, are scheduled to vest on April 8, 1999. Of such options
awarded to Messrs. Breithaupt and Bellarmino during 1997, 38,243 and 15,297
options, respectively, vested in January 1998, 38,243 and 15,297 options,
respectively, vested on April 8, 1998, and 19,121 and 7,649 options,
respectively, are scheduled to vest on April 8, 1999.
(7) Includes the Bank's contribution to the 401(k) Plan and the Bank's
Supplemental Executive Retirement Plan, and insurance premiums paid by the
Bank on behalf of Named Executive Officers.
8
<PAGE>
Benefit Plans
1996 Stock Option Plan. The Bank's 1996 Option Plan is available to
directors and officers and other employees of the Bank and its affiliates. The
plan is administered by a committee of outside directors. The plan authorizes
the grant of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the "Code"), "non-statutory options," which do
not qualify as incentive stock options, and certain "Limited Rights,"
exercisable only upon a "change in control" as defined in the Plan. The
following table sets forth certain information regarding awards under the 1996
Option Plan and information regarding the shares acquired and the value realized
during 1997 by Named Executive Officers upon exercise of options and the number
of shares underlying options and the value of options held by Named Executive
Officers at December 31, 1997. All information has been adjusted to reflect the
conversion of each option to purchase a share of Mid-Tier Common Stock into an
option to purchase 3.8243 shares of Common Stock in the Conversion.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1997
Potential Realizable Value
at Assumed Annual Rates
Individual Grants of Stock Price
Appreciation for Option
Term
- -----------------------------------------------------------------------------------------------------------------------------
Number of Percent of Total
Securities Options Granted to
Underlying Employees in FY Exercise or Expiration
Name Options 1997 Base Price Date 5% 10%
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Wendell T. Breithaupt 95,608 47.2% $5.49 August 2006 $289,000 $713,000
Leo J. Bellarmino 38,243 18.9% $5.49 August 2006 $116,000 $285,000
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1997 AND
FISCAL YEAR-END OPTION VALUES
Number of Securities
Shares Value Underlying Unexercised Value of Unexercised In-
Name Acquired Realized Options at The-Money Options at
Upon Exercise Fiscal Year-End Fiscal Year-End (1)
---------------------------------------------------------
Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wendell T. Breithaupt 28,327 $108,327 90,992/274,585 $755,428/$2,092,150
Leo J. Bellarmino 7,863 $38,454 44,148/116,259 $366,522/$737,200
</TABLE>
(1) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the shares of Common Stock that
would be received upon exercise, assuming such exercise occurred on
December 31, 1997.
Retirement Plan. The Bank maintains a defined benefit pension plan
("Retirement Plan") for all employees who have attained the age of 21 and have
completed one year of service with the Bank. In general, the Retirement Plan
provides for annual benefits payable monthly upon retirement at age 65 in an
amount equal to 1.65% of the "Average Compensation" of the employee (which is
equal to the average of the total compensation paid to him or her during the 60
consecutive calendar months within the final 120 consecutive calendar months of
service affording the highest average), for each year of service, plus, if
applicable, 0.65% of Average Compensation in excess of an
9
<PAGE>
employee's average social security taxable wage base for each year of the 35
year period ending with the employee's social security retirement age,
multiplied by his or her years of service, not in excess of 25 years.
Under the Retirement Plan, an employee's benefits are unvested prior to
the completion of five years of service and are fully vested after five years of
service. A year of service is any year in which an employee works a minimum of
1,000 hours. The Retirement Plan provides for an early retirement option with
reduced benefits for participants who are age 55 and who have 15 years of
service. The Bank's contribution for the Retirement Plan for 1996 was $188,285,
1995 was $168,308, and for 1994 was $115,000.
The following table illustrates annual pension benefits for retirement
at age 65 under various levels of compensation and years of service. The figures
in the table assume that the Retirement Plan continues in its present form, that
the participants retire at age 65 and that the participants elect a straight
life annuity form of benefit.
Five Year
Average 10 Years of 15 Years of 20 Years of 25 Years of
Compensation Service Service Service Service
- ------------ ------- ------- ------- -------
$ 40,000 $ 7,295 $ 10,942 $ 14,590 $ 18,238
50,000 9,595 14,392 19,190 23,988
60,000 11,895 17,842 23,790 29,738
70,000 14,195 21,292 28,390 35,488
80,000 16,495 24,742 32,990 41,238
90,000 18,795 28,192 37,590 46,988
100,000 21,095 31,642 42,190 52,738
110,000 23,395 35,092 46,790 58,488
120,000 25,695 38,542 51,390 64,238
130,000 27,995 41,992 55,990 69,988
140,000 30,295 45,442 60,590 75,738
150,000 32,595 48,892 65,190 81,488
160,000 34,895 52,342 69,780 87,238
The maximum annual compensation which may be taken into account under
the Code (as adjusted from time to time by the IRS) for calculating
contributions under qualified defined benefit plans is currently $160,000, and
the maximum annual benefit permitted under such plan is currently $125,000. At
December 31, 1997, Mr. Breithaupt had 18 years of service under the Retirement
Plan, and his five-year average compensation was $160,000 (as limited by the tax
law requirements).
Employee Stock Ownership Plan and Trust. In connection with the
Conversion, the Bank established an Employee Stock Ownership Plan and related
trust ("ESOP") for eligible employees. Messrs. Breithaupt and Bellarmino, and
three other employees of the Bank's subsidiaries will not participate in the
ESOP. The ESOP is a tax-qualified plan subject to the requirements of the
Employee Retirement Income Security Act of 1974 ("ERISA") and the Code.
Employees with a 12-month period of employment with the Bank during which they
worked at least 1,000 hours and who have attained age 21 are eligible to
participate. As part of the Conversion, the ESOP borrowed $9.5 million from the
Company and used the funds to purchase 952,233 shares of Common Stock. Shares
purchased by the ESOP will be held in a suspense account for allocation among
participants as the loan is repaid.
Future Stock Benefit Plans. At a meeting of the Company's shareholders
to be held at least six months after the completion of the Conversion, the Board
of Directors intends to submit for shareholder approval a stock option plan for
directors and officers of the Bank and of the Company. If the stock option plan
is adopted within 12 months following the Conversion, options to purchase no
more than 2,380,583 shares may be awarded under the plan, the
10
<PAGE>
exercise price of the options granted under the plan will be equal to the fair
market value of the shares on the date of grant of the stock options, and
options will become exercisable at a rate of 20% at the end of each twelve
months of service with the Bank after the date of grant, subject to early
vesting in the event of death or disability. The Board of Directors has not
determined when the plan will be presented for stockholder vote.
In addition, at a meeting of the Company's shareholders to be held at
least six months after the completion of the Conversion, the Board of Directors
intends to submit a restricted stock plan for shareholder approval. The
restricted stock plan will provide the Bank's directors and officers an
ownership interest in the Company in a manner designed to encourage them to
continue his or her service with the Bank. The Bank will contribute funds to the
restricted stock plan from time to time to enable it to acquire Common Stock
either directly from the Company or in open market purchases. If the stock
option plan is adopted within 12 months following the Conversion, no more than
952,233 shares may be reserved for issuance pursuant to the restricted stock
plan and the shares which are subject to an award would vest at a rate of 20% of
the shares awarded at the end of each full 12 months of service with the Bank
after the date of grant of the award. The Board of Directors has not determined
when the plan will be presented for stockholder vote.
Employment Memoranda. Mr. Breithaupt is a party to a memorandum
relating to compensation authorized by the Board of Directors and executed by
the then members of the Compensation Committee and Mr. Breithaupt dated August
27, 1994. The memorandum provides for employment by Mr. Breithaupt at the Bank
through December 31, 1999, with compensation continued through that date.
Pursuant to that memorandum, provided performance is satisfactory, Mr.
Breithaupt is guaranteed a base salary of at least $170,000 per annum during
this period plus an annual payment, intended to be invested by him to supplement
his retirement income, of $70,000 per annum payable prior to each January 30
following the completion of each year of service or, at his option, in monthly
installments. In addition, the memorandum also contemplates eligibility for an
annual bonus of up to $50,000 depending on obtaining strategic and operational
goals. Bonuses, if earned and awarded, are to be paid no later than ninety days
following conclusion of each fiscal year during this period.
Indebtedness of Management
All loans made by the Bank to the Bank's directors, executive officers,
and members of such persons' families were made in the ordinary course of
business, 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 factors. All such loans comply with federal
regulations relating to loans to such persons.
PROPOSAL II--RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has approved the engagement of
KPMG Peat Marwick, LLP to be the Company's auditors for the year ending December
31, 1998, subject to the ratification of the engagement by the Company's
stockholders. At the Meeting, the stockholders will consider and vote on the
ratification of the engagement of KPMG Peat Marwick, LLP for the Company's
fiscal year ending December 31, 1998. A representative of KPMG Peat Marwick, LLP
is expected to attend the Meeting to respond to appropriate questions and to
make a statement if he so desires.
In order to ratify the selection of KPMG Peat Marwick, LLP as the
auditors, the proposal must receive at least a majority of the votes cast,
either in person or by proxy, in favor of such ratification.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF KPMG
PEAT MARWICK, LLP AS AUDITORS FOR THE 1998 FISCAL YEAR.
11
<PAGE>
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Bank's executive office, 134
Franklin Corner Road, Lawrenceville, New Jersey 08648-0950, no later than
December 28, 1998. Any such proposals shall be subject to the requirements of
the proxy rules adopted under the Exchange Act.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in the Proxy Statement. However,
if any matters should properly come before the Meeting, it is intended that
holders of the proxies will act in accordance with their best judgment.
MISCELLANEOUS
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company or the Bank may solicit
proxies personally or by telegraph or telephone without additional compensation.
The Annual Report to Stockholders has been mailed to all stockholders of record
as of the close of business on the Record Date. Any stockholder who has not
received a copy of such Report may obtain a copy by writing the Company. Such
Report is not to be treated as a part of the proxy solicitation material nor as
having been incorporated herein by reference.
A COPY OF THE COMPANY'S REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1997, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE
UPON WRITTEN REQUEST TO ROBERT C. HOLLENBECK, CORPORATE SECRETARY, PEOPLES
BANCORP, INC., 134 FRANKLIN CORNER ROAD, LAWRENCEVILLE, NEW JERSEY 08648-0950.
BY ORDER OF THE BOARD OF DIRECTORS
\s\ Robert C. Hollenbeck
Robert C. Hollenbeck
Corporate Secretary
Lawrenceville, New Jersey
April 21, 1998
12
<PAGE>
PEOPLES BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
May 22, 1998
The undersigned hereby appoints the proxy committee of the Board of
Directors, with full powers of substitution to act as attorney and proxy for the
undersigned, and to vote all shares of Common Stock of Peoples Bancorp, Inc.
which the undersigned is entitled to vote, at the Annual Meeting of
Stockholders, to be held at the Trenton Country Club, Sullivan Way, West
Trenton, New Jersey, on May 22, 1998 at 10:00 a.m. New Jersey time, and at any
and all adjournments thereof, as indicated on the reverse side.
PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE-PAID ENVELOPE.
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy will be voted FOR each of the proposals
listed. If any other business is presented at the meeting, this proxy will be
voted by those named in this proxy in their best judgment.
This proxy is solicited by the Board of Directors.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
1. The election as directors of all VOTE FOR ALL
nominees listed below (except as FOR WITHHELD EXCEPT
marked to the contrary below) --- -------- ------
/_/ /_/ /_/
Wendell T. Breithaupt
Peter S. Longstreth
Charles E. Stokes, III
Miles W. Truesdell, Jr.
INSTRUCTION: To withhold your vote for any individual nominee, mark "For
All Except" and write the name of the nominee(s) in the space provided
below.
2. The ratification of the appointment FOR AGAINST ABSTAIN
of KPMG Peat Marwick, LLP as auditors --- ------- -------
for the fiscal year ending December 31, 1998. /_/ /_/ /_/
Should the undersigned be present and elect to vote at the Meeting or at any
adjournment thereof and after notification to the Secretary of the Company at
the Meeting of the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated and of no further
force and effect. This proxy may also be revoked by sending written notice to
the Secretary of the Company at the address set forth on the Notice of Annual
Meeting of Stockholders, or by the filing of a later proxy prior to a vote being
taken on a particular proposal at the Meeting.
The undersigned acknowledges receipt from Peoples Bancorp, Inc. prior to the
execution of this proxy of notice of the Meeting, a proxy statement dated April
21, 1998, and audited financial statements.
Dated: _________________, 1998 Check Box if You Plan
/_/ to Attend Annual Meeting
- ------------------------------- --------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------- --------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
