UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 under ss. 240.14a-12
PENNSYLVANIA COMMERCE BANCORP, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(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):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PENNSYLVANIA COMMERCE BANCORP, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: May 19, 2000
Time: 9:00 a.m.
Place: Radisson Penn Harris Hotel and Convention Center
1150 Camp Hill Bypass
Camp Hill, Pennsylvania 17011
Matters to be voted on:
1. Election of Directors. Election of eight (8) directors to serve until
the 2001 annual meeting.
2. 2001 Directors Stock Option Plan. Approval of our 2001 Directors Stock
Option Plan.
3. Other Business. Any other business properly brought before the
shareholders at the meeting.
You can vote your shares of common stock if our records show that you
owned the shares at the close of business on April 3, 2000 (the "Record Date").
Your vote at the annual meeting is very important to us. Please vote your shares
of common stock by completing the enclosed proxy card and returning it to us in
the enclosed prepaid envelope. This proxy will not be used if you are present at
the meeting and desire to vote in person.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ JAMES T. GIBSON
JAMES T. GIBSON
President
Camp Hill, Pennsylvania
April 20, 2000
<PAGE>
PENNSYLVANIA COMMERCE BANCORP, INC.
PROXY STATEMENT
April 20, 2000
GENERAL INFORMATION
This proxy statement has information about the annual meeting of
shareholders of Pennsylvania Commerce Bancorp, Inc. ("Commerce"). The management
of Commerce and Commerce Bank/Harrisburg, N.A. (the "Bank") prepared this proxy
statement for the board of directors. We first mailed this proxy statement and
the enclosed proxy card to shareholders on or about April 20, 2000.
We will pay the costs of preparing, printing and mailing the proxy and all
related materials. In addition to sending you these materials, some of our
employees may contact you by telephone, by mail or in person.
Our executive offices are located at 100 Senate Avenue, Camp Hill,
Pennsylvania 17011, and our telephone number is (717) 975-5630. Our mailing
address is P. O. Box 8599, Camp Hill, Pennsylvania 17001-8599.
Shareholder Proposals for the 2001 Annual Meeting of Shareholders
If you want to include a shareholder proposal in the proxy statement for
the 2001 annual meeting, you must deliver the proposal to Mark A. Zody at our
executive offices by December 15, 2000.
If the date of our next annual meeting is advanced or delayed by more than
30 days from May 18, 2001, we will promptly inform you of the change of the
annual meeting and the date by which shareholder proposals must be received.
VOTING
Who can vote?
You can vote your shares of common stock if our records show that you
owned the shares at the close of business on April 3, 2000 (the "Record Date").
A total of 1,648,744 shares of common stock were outstanding on the Record Date
and can vote at the annual meeting. You get one vote for each share of common
stock. The enclosed proxy card shows the number of shares you can vote. We will
hold the annual meeting if the holders of a majority of the shares of the common
stock entitled to vote either sign and return their proxy cards or attend the
meeting in person.
As of the Record Date, management of Commerce beneficially owned a total
of 866,760 shares of Commerce common stock.
As of the Record Date, there were 40,000 shares of Series A Non-Cumulative
Preferred Stock ("Preferred Stock") outstanding. Holders of Preferred Stock can
not vote at the annual meeting.
1
<PAGE>
How do I vote by proxy?
Follow the instructions on the enclosed proxy card to vote on each
proposal to be considered at the annual meeting. Sign and date the proxy card
and mail it back to us in the enclosed prepaid envelope. The proxyholders named
on the proxy card will vote your shares as you instruct. If you sign and return
the proxy card but do not vote on a proposal, the proxyholders will vote for you
on that proposal. Unless you instruct otherwise, the proxyholders will vote for
the election of each of the eight director nominees and for each of the other
proposals to be considered at the meeting.
What vote is required?
All matters to be voted on at the annual meeting, including election of
directors, must be approved by the holders of a majority of the shares of common
stock entitled to vote.
What if other matters come up at the annual meeting?
The matters described in this proxy statement are the only matters we know
will be voted on at the meeting. If other matters are properly presented at the
annual meeting, the proxyholders named in the enclosed proxy card will vote your
shares as they see fit.
How are votes counted?
Our judges of election will manually count all votes which are cast in
person or by proxy at the annual meeting.
Voting is an important right of shareholders. If you abstain or otherwise
fail to cast a vote on any matter, the abstention or failure is not a vote and
will not be counted.
Can I change my vote after I return my proxy card?
Yes. At any time before the vote on a proposal, you can change your vote
either by:
* giving Commerce's secretary a written notice revoking your proxy card; or
* signing, dating and returning to us a new proxy card.
We will honor the proxy card with the latest date.
Can I vote in person at the annual meeting?
Yes. We encourage you to complete and return the proxy card to ensure
that your vote is counted. However, you may attend the meeting and vote in
person whether or not you have previously returned a proxy card.
2
<PAGE>
ELECTION OF DIRECTORS OF COMMERCE
The Bylaws of Commerce provide as follows:
* the board of directors may, from time to time, fix the number of
directors;
* the board will consist of not less than five nor more than 25
directors; and
* directors will be elected for a one-year term.
At the annual meeting, we will nominate the eight persons named in this
proxy statement as directors. Although we don't know of any reason why any of
these nominees might not be able to serve, we will propose a substitute nominee
if any nominee is not available for election.
Shareholders also can nominate persons to be directors. If you want to
nominate someone, you must deliver or mail a notice to the Chairman of the Board
of Commerce not less than 45 days prior to the date of the annual meeting. Your
notice must state your name and residence address and the number of shares of
Commerce which you own. Your notice must also contain the following information
on each proposed nominee:
* the name, address and age of the nominee;
* the principal occupation of the nominee;
* the number of shares of Commerce common stock owned by the
nominee; and
* the total number of shares that, to your knowledge, will be voted
for the nominee.
If you do not follow this procedure, the Chairman of the meeting will
disregard your nominations and the judges of election will disregard any votes
cast for your nominees.
The proxyholders named in the proxy card intend to vote for the election
of the eight persons listed as director nominees to serve until the 2001 annual
meeting. Unless you indicate otherwise, your proxy will be voted in favor of the
election of those nominees. Each nominee is currently a director of Commerce and
the Bank.
The following table shows the name and age of each nominee and the current
directors in each class. The table also shows the following information on each
nominee and director:
* business experience, including principal occupation for the past
five years;
* the period during which he or she has served as a director of
Commerce; and
* the number and percentage of outstanding shares of common stock
of Commerce which he or she beneficially owned as of the Record
Date.
3
<PAGE>
<TABLE>
<CAPTION>
Business Experience
Including Principal Amount and Percentage
Occupation Nature of of
for the Director Beneficial Outstanding
Name and Age Past Five Years Since Ownership 1 Stock Owned
- ------------ ---------------------- ----- --------- -----------
<S> <C> <C> <C> <C>
Gary L. Nalbandian Chairman of Pennsylvania 1985 177,890 2 10.34%
Age 57 Commerce Bancorp, Inc.,
and Commerce
Bank/Harrisburg, N.A.,
Co-Owner of Commercial
Industrial Realty Co. (CIR)
Camp Hill, PA
Vernon W. Hill, II 3 Vice Chairman of 1985 240,104 4 14.47%
Age 54 Pennsylvania Commerce
Bancorp, Inc. and
of Commerce Bank/Harrisburg,
N.A., Chairman of the Board/
President of Commerce
Bancorp, Inc.
Cherry Hill, NJ
Douglas S. Gelder Owner, DSG Development, 1987 16,804 5 1.01%
Age 50 Hershey, PA and Partner,
Luttrell & Associates,
Hershey, PA
Alan R. Hassman Owner/Operator of 1985 96,581 6 5.81%
Age 60 ARH, Inc.
Harrisburg, PA
Howell C. Mette Attorney-at-Law, 1985 44,107 7 2.65%
Age 72 Mette, Evans & Woodside
Harrisburg, PA
Michael A. Serluco Owner, Consolidated 1985 61,058 7 3.67%
Age 59 Properties
Wormleysburg, PA
Samir J. Srouji, M.D. Physician-Surgeon 1985 55,083 8 3.32%
Age 63 Plastic Surgery, P.C.
Camp Hill, PA
James T. Gibson President/CEO of 1988 70,311 9 4.12%
Age 44 Pennsylvania Commerce
Bancorp, Inc.
and Commerce
Bank/Harrisburg, N.A.
4
<PAGE>
<FN>
1 The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission. Accordingly, they
may include securities owned by or for, among others, the wife and/or minor
children of the individual and any other relative who has the same home as
such individual, as well as other securities as to which the individual has
or shares voting or investment power or has the right to acquire under
outstanding stock options within 60 days after April 3, 2000. Shares
subject to outstanding stock options which an individual has the right to
acquire within 60 days after April 3, 2000 are deemed to be outstanding for
the purpose of computing the percentage of outstanding securities of the
class of stock owned by such individual or any group including such
individual only. Beneficial ownership may be disclaimed as to certain of
the securities.
2 Includes 30,022 shares held by Mr. Nalbandian's individually directed
participant account in the CIR Profit Sharing Trust with respect to which
Mr. Nalbandian has sole voting power, 8,859 shares held by Mr. Nalbandian
as co-trustee of the CIR Profit Sharing Trust with respect to which he
shares voting power, 7,293 shares held in trust by Mr. Nalbandian or
Dorothy Nalbandian for the benefit of Mr. Nalbandian's children and 250
shares owned by Mr. Nalbandian's wife, Jaimie Nalbandian. Also includes
72,278 currently exercisable Incentive Stock Options.
3 In addition to his capacity with Pennsylvania Commerce Bancorp, Inc. and
the Bank, Mr. Hill is a founder of Commerce Bank, N.A., a national bank
located in Cherry Hill, New Jersey. He has served as Chairman of the Board
and/or President of Commerce Bank, N.A. since 1973 and Chairman of the
Board and President of Commerce Bancorp, Inc., a bank holding company which
owns 100% of Commerce Bank, N.A. since 1983.
4 Includes 150,885 shares owned by Commerce Bancorp, Inc., of which Mr. Hill
is the Chairman of the Board and President. This figure also includes
10,634 shares owned by J. V. Properties, a partnership in which Mr. Hill is
one of two partners, 10,634 shares owned by S. J. Dining, a corporation in
which Mr. Hill is one of two shareholders, 8,271 shares owned by InterArch,
a corporation owned by Mr. Hill's wife, and 2,362 shares owned by Mr.
Hill's wife, Shirley Hill. Also includes 10,413 currently exercisable
Director Stock Options.
5 Includes 9,005 currently exercisable Director Stock Options.
6 Includes 22,773 shares owned by Mr. Hassman's wife, Gloria Hassman, and
8,938 shares held in trust by Mr. Hassman, as Trustee, for the benefit of
his children. Also includes 13,297 currently exercisable Director Stock
Options.
7 Includes 13,297 currently exercisable Director Stock Options.
8 Includes 6,590 shares owned by Dr. Srouji's wife, Gillian Srouji, and
10,196 shares held by Dr. Srouji's self-directed participant account in the
Plastic Surgery P.C. Profit Sharing Plan. Also includes 12,271 currently
exercisable Director Stock Options.
9 Includes 59,755 currently exercisable Incentive Stock Options.
</FN>
</TABLE>
5
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table shows the name, address, amount and nature of
beneficial ownership and percent of class of outstanding Commerce common stock
of each person who we know beneficially owns more than 5% of Commerce's common
stock (as of April 3, 2000).
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Outstanding Stock
Gary L. Nalbandian 1 177,890 10.34%
Vernon W. Hill, II 2 240,104 14.47%
Commerce Bancorp, Inc. 150,885 3 9.15%
Alan R. Hassman 4 96,581 5.81%
- ------------------
1 See footnote 2 on previous page.
2 See footnote 4 on previous page.
3 These shares are also reported as beneficially owned by Vernon W.
Hill, II.
4 See footnote 6 on previous page.
The following are all shares owned beneficially by all directors and
executive officers as a group:
Amount and Nature of
Beneficial Ownership
Title of Class Direct Indirect Percent of Class
Common Stock and 640,961 225,799 45.42%
Exercisable Stock
Options
Series A Non-Cumulative 0 40,000 100%
Preferred Stock
Directors' Compensation
Each Commerce director received an annual fee of $1,000 plus a monthly fee
of $800 for each regular monthly meeting of the board of directors he or she
attended in 1999. The annual fee will be the same for 2000 and the meeting fee
will be $1,000. Each director who is an active member of the Audit, Real Estate
and/or Personnel Committee also receives $100 for each committee meeting he or
she attends.
Additionally, Gary L. Nalbandian received a salary of $95,000 in 1999 for
service as Chairman of the Board. Mr. Nalbandian also participated in Commerce's
Retirement Savings Plan (which is a 401K Salary Reduction Plan) and was covered
by Commerce's Medical Health Insurance Plan.
6
<PAGE>
1990 Stock Option Plan for Non-Employee Directors
In 1990, the shareholders of Commerce adopted the 1990 Director's Stock
Option Plan.
A total of 147,744 shares are subject to the plan. Pursuant to the plan,
we grant to each director an option to acquire 1,477 shares (as adjusted for
stock dividends and splits) on January 15 of each year. The option price is
generally the fair market value of the shares at the time we grant the option.
Options are not transferable other than by will or laws of descent and
distribution. A director can exercise the option only while a director of
Commerce or within three months after he or she stops serving as a director. If
a director dies within the option period, the director's estate may exercise the
option within three months of his or her death.
A director cannot exercise an option before the earlier of (i) one year
from the date the we grant the option, or (ii) a "change in control" of Commerce
(as defined in the plan) occurs. Options expire ten years after the date of
grant.
The number of shares subject to options and the option price will be
appropriately adjusted if the number of issued shares is decreased or increased
by changes in par value, a combination, stock dividend and the like.
Committees of the Board of Directors
The Board of Directors of Commerce has established four (4) committees:
* the Audit Committee;
* the Personnel Committee;
* the Real Estate Committee; and
* the Executive Committee.
We do not have a nomination committee but provide for the nomination of
directors as described under "ELECTION OF DIRECTORS OF COMMERCE" on page 3 of
this proxy statement.
The board of directors met twelve (12) times during 1999. With the
exception of Mr. Vernon W. Hill, II, no director attended fewer than 75% of the
total number of meetings of the board and committees on which he or she served.
Mr. Hill attended 47% of the meetings of the board and committees on which he
served.
Audit Committee
Members: Howell C. Mette Alan R. Hassman
Samir J. Srouji Douglas S. Gelder
Meetings: 4
Functions:
* Recommend to the board the hiring of the outside auditors;
* Review the audit of the books and financial statements of
Commerce and the Bank;
* Review and make recommendations to the board regarding the
internal auditor's report and the certified public accountants'
audit report; and
* Review examination reports by banking regulators.
7
<PAGE>
Personnel Committee
Members: Howell C. Mette Alan R. Hassman
Vernon W. Hill, II Michael A. Serluco
Meetings: 1
Functions: Review all personnel policies, including compensation of
all employees.
Real Estate Committee
Members: Gary L. Nalbandian James T. Gibson
Samir J. Srouji Douglas S. Gelder
Meetings: 1
Functions:
* Review and approve certified real estate appraisers (residential
and commercial) retained by Commerce and the Bank; and
* Review and approve all potential branch site locations.
Executive Committee
Members: Howell C. Mette Vernon W. Hill, II
Gary L. Nalbandian James T. Gibson
Michael A. Serluco
Meetings: 2
Functions: Act between regular board meetings to approve loans.
Transactions with Officers and Directors
During 1999, the Bank had and expects to have in the future banking
transactions in the ordinary course of business with directors, officers, and
principal shareholders (and their associates) of Commerce, on the same terms,
including interest rates and collateral on loans as those prevailing at the same
time for comparable transactions with others. Management believes that these
loans present no more than the normal risk of collectibility or other
unfavorable features. The loans to these persons and companies amounted to less
than 3% of total loans outstanding at December 31, 1999.
As was previously indicated, Commerce Bancorp, Inc. ("Bancorp"), owns
9.15% of Commerce's common stock and 100% of Commerce's Series A preferred
stock. Bancorp, through its subsidiary, Commerce Bank, N.A., a national bank
located in Cherry Hill, New Jersey, provides various services to the Bank
including:
* maintaining the branch LAN network;
* loan review services;
* MAC/VISA card production;
* data processing; and
* advertising support.
8
<PAGE>
The Bank also pays insurance premiums and commissions to a subsidiary of
Bancorp.
The Bank paid approximately $344,000 to Bancorp for services provided
during 1999. Additionally, the Bank routinely sells loan participations to
Commerce Bank, N.A. and at December 31, 1999, approximately $8.6 million of
these participations were outstanding.
Vernon W. Hill, II, a director and 14.47% beneficial shareholder of
Commerce, is Chairman of the Board of Bancorp. In 1999, the Bank paid $16,000 to
a business owned by Mr. Hill's spouse for interior design services. Also in
1999, this business received commissions of approximately $21,000 on furniture
and facility purchases made directly by Commerce. The Bank leases land for one
of its branches from a limited partnership in which Mr. Hill is a 20% limited
partner. The Bank paid $50,000 on the land lease for 1999.
Howell C. Mette, a director and 2.65% beneficial shareholder of Commerce,
is a partner in the law firm of Mette, Evans and Woodside, which Commerce
retained during 1999, and intends to retain during 2000. The law firm received
professional fees totaling $149,000 in 1999.
The Bank leases land for a billboard from Michael A. Serluco, a
director and 3.67% beneficial shareholder of Commerce. The Bank paid $24,000 on
the lease during 1999.
The Bank paid commissions of $65,000 in 1999 for real estate services
to a company owned by Gary L. Nalbandian, the Chairman of the Board of Commerce
and a 10.34% beneficial shareholder.
MANAGEMENT
Executive Officers
The following table shows name, age, position and the beneficial ownership
of common stock of Commerce of each executive officer of Commerce (determined in
accordance with the rules and regulations of the SEC). Share information is
stated as of April 3, 2000:
<TABLE>
<CAPTION>
Percent
Amount and Nature of of
Name and Age Title Beneficial Ownership 1 Outstanding Stock
------------ ----- -------------------- -----------------
<S> <C> <C> <C>
James T. Gibson President 70,311 4.26%
Age 44 and Chief
Executive
Officer of
Commerce and
the Bank
Mark A. Zody Executive 27,377 1.63%
Age 36 Vice President
& CFO of
Commerce and
the Bank
Rory G. Ritrievi Executive - -
Age 36 Vice President of
Commerce and the
Bank
Paul N. Lackey Senior Vice 269 .01%
Age 59 President of the
Bank
<FN>
1 Includes currently exercisable options to acquire shares of Commerce.
</FN>
</TABLE>
9
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table is a summary of certain information concerning the
compensation during the last three fiscal years awarded or paid to, or earned by
Commerce's chief executive officer and each of Commerce's other three most
highly compensated executive officers during Commerce's last fiscal year.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
Stock
Other Underlying
Annual Stock All Other
Name and Compen- Option Compen-
Principal Position Year Salary Bonus sation 1 Grant2 sation 3
<S> <C> <C> <C> <C> <C> <C>
James T. Gibson 1999 $200,000 $25,000 - 7,350 $24,257
President & CEO 1998 175,000 30,000 - 6,615 23,028
of Commerce and 1997 152,000 20,000 - 6,945 21,690
the Bank
Mark A. Zody 1999 $ 90,000 $13,000 - 3,675 $ 5,537
Executive Vice 1998 82,000 12,000 - 3,858 5,456
President & CFO 1997 75,000 13,000 - 4,051 5,331
of Commerce
and the Bank
Rory G. Ritrievi 1999 $140,000 4 $20,000 5 - - -
Executive Vice 1998 - - - - -
President of 1997 - - - - -
Commerce and
the Bank
Paul N. Lackey 1999 $104,000 $ 2,500 - 2,625 $ 817
Senior Vice 1998 100,000 2,000 - 882 -
President of 1997 - - - - -
the Bank
<FN>
1 The total amount of personal benefits provided by Commerce for any
executive officer did not exceed the lesser of (i) $50,000 or (ii) 10% of
the salary and bonus of the officer for any of the years referenced. This
does not include benefits that are available to all salaried officers,
directors and employees on a non-discriminatory basis.
2 Adjusted to reflect the 5% common stock dividend paid on February 18, 2000.
3 Includes (a) life insurance premiums for (i) Mr. Gibson - $7,085 in 1999,
$7,056 in 1998 and $7,034 in 1997 and (ii) Mr. Zody - $2,343 in 1999,
$2,343 in 1998 and $2,658 in 1997; (b) long-term disability premiums for
(i) Mr. Gibson - $4,172 in 1999, $4,172 in 1998 and $4,172 in 1997 and (ii)
Mr. Zody - $1,618 in 1999, $1,563 in 1998 and $1,492 in 1997; and (c)
contributions by Commerce to the 401(k) Retirement Savings Plan for (i) Mr.
Gibson - $2,400 in 1999, $2,400 in 1998 and $2,284 in 1997; (ii) Mr. Zody -
$1,576 in 1999, $1,550 in 1998 and $1,181 in 1997; and (iii) Mr. Lackey -
$817 in 1999.
10
<PAGE>
4 Mr. Ritrievi began employment with Commerce on November 22, 1999. This
figure represents his annualized salary.
5 Mr. Ritrievi was paid a $20,000 signing bonus in 1999.
</FN>
</TABLE>
Employee Stock Options
In 1996, Commerce shareholders adopted the 1996 Employee Stock Option
Plan. The plan replaced the 1986 Incentive Stock Option Plan which expired
December 31, 1995. We reserved 243,390 shares of common stock for issuance under
the plan. The plan will expire on December 31, 2005. The plan allows us to grant
incentive stock options (ISO's) and nonqualified stock options (NQSO's). The
board of directors will fix the option price for options granted under the plan.
The option price for ISOs will not be less than the fair market value of the
stock at the date of grant. The option price for NQSOs may be less than 100% of
the fair market value of the stock at the date of grant. Options are generally
exercisable one year after the date of grant subject to the vesting schedule
outlined below, and expire ten years after the date of grant. For purposes of
this proxy statement, these employee stock options are sometimes referred to as
options or ESOs.
Optionees may exercise options only to the extent the options are vested.
Options vest based either on years of service or upon the period of time the
options have been issued, whichever is faster. The vesting schedule is as
follows:
Years of Service:
* up to three (3) years of service - 25% vested;
* more than three (3) but less that six (6) years of service - 50% vested;
* more than six (6) years but less than eight (8) years of service - 75%
vested; and
* more than eight (8) years of service - 100% vested.
Period of time after grant:
* more than one (1) year but less than two (2) years - 25% vested;
* more than two (2) years but less than three (3) years - 50% vested;
* more than three (3) years but less than four (4) years - 75% vested; and
* more than four (4) years - 100% vested.
The plan requires that we adjust the number of shares subject to options
and of the option price to reflect changes in the number of outstanding shares
caused by events such as stock dividends and splits.
Stock Option Grants
The following table shows:
* the number of stock options granted to executive officers in 1999;
* the percentage which the executive's options bears in relation to the total
options granted to all employees during the year;
* the option price;
* the expiration of the option; and
* the potential realizable value of the options assuming certain rates of
stock appreciation:
11
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE STOCK OPTION GRANTS
IN FISCAL YEAR 1999
Number of % of Total
Securities Options Exercise
Underlying Granted to or Base Grant
Options Employees in Price Date
Name Granted 1 Fiscal Year ($/Sh)1 Expiration Date Value 2
<S> <C> <C> <C> <C> <C> <C>
James T. Gibson 7,350 13.38% $22.14 11-21-2009 $78,944
Mark A. Zody 3,675 6.69 22.14 11-21-2009 39,472
Rory G. Ritrievi 0 - - - -
Paul N. Lackey 2,625 4.78 22.14 11-21-2009 25,194
<FN>
1 Adjusted to reflect the 5% common stock dividend paid on February 18, 2000.
2 We used the Black-Scholes option pricing model to estimate the grant date
present value of the options. We are not endorsing the accuracy of this
model. All stock option valuation models, including the Black-Scholes
model, require a prediction about future stock prices. The assumptions used
in calculating the values shown above were expected volatility of .241, a
risk-free rate of return of 6.00%, weighted-average expected life of ten
years and no cash dividends. The real value of the options will depend upon
the actual performance of Commerce common stock during the applicable
period.
</FN>
</TABLE>
Stock Option Exercises
The following table shows:
* all options exercised by each executive officer of Commerce during 1999;
* the number of shares acquired on exercise;
* the value realized by the executive officer upon exercise; and
* the number of exercisable and un-exercisable options outstanding for each
executive officer, and the value of those options, as of December 31, 1999:
12
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Acquired Options at Options at
Name on Exercise Value Realized 1 End Year 1999 2 End Year 1999 3
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
James T. Gibson 2,954 $48,823 59,755 7,350 $593,265 $ 0
Mark A. Zody 926 16,487 25,209 3,675 209,951 0
Rory G. Ritrievi - - - - - -
Paul N. Lackey - - 220 3,287 - -
<FN>
1 Represents the number of shares acquired upon exercise multiplied by the
difference between the fair market value of Commerce's common stock on the
date of exercise less the exercise price paid by the executive officer.
2 Exercisable ESO's are fully vested. ESO's to vest in the future are
reported as unexercisable.
3 The dollar values were calculated by determining the difference between the
closing trading price of Commerce Common Stock at December 31, 1999, which
was $20.95 per share (adjusted for the 5% common stock dividend paid on
February 18, 2000), and the option price of each ESO as of December 31,
1999.
</FN>
</TABLE>
REPORT OF THE PERSONNEL COMMITTEE
Only outside non-employee directors serve on the Personnel Committee. The
Personnel Committee reviews, and submits to the full board of directors for
approval, management's recommendations regarding officers and other employees
compensation.
We seek to attract and retain superior talent, reward performance and
align the interests of our executive officers with the long-term interests of
our shareholders. Our executive officers receive compensation packages
consisting of base salary, annual performance bonus, annual stock option grants
and various employee benefits including contributions under Commerce's 401(k)
Retirement Savings Plan. The Personnel Committee bases its recommendations for
compensation on objective factors and its subjective evaluation of the
individual's performance.
The Personnel Committee sets base salary levels for our executive officers
to be competitive with those offered by a peer group of institutions similar to
Commerce. In reviewing base salaries, the Personnel committee also considers
individual experience and performance.
We award annual performance bonuses to provide direct cash incentives to
executive officers and other key employees. In evaluating Commerce's financial
performance, the Personnel Committee considers budgets set by the board as well
as the performance of a peer group of institutions similar to Commerce.
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<PAGE>
We award stock options to encourage officers and other key employees to
remain employed with Commerce by providing them with a long term interest in
Commerce's overall performance. In granting stock options, the Personnel
Committee considers prior stock option grants, the executive's level of
compensation and the executive's past contributions to Commerce.
James T. Gibson, President and CEO of Commerce and the Bank, received a
base salary of $200,000 in 1999. Mr. Gibson also received a performance bonus of
$25,000.
You can see more information about the compensation paid to Commerce's
executive officers in the Summary Compensation Table on page 10 of this proxy
statement.
PERSONNEL COMMITTEE
Alan R. Hassman
Howell C. Mette
Vernon W. Hill, II
Michael A. Serluco
Personnel Committee Interlocks and Insider Participation
Howell C. Mette is a partner in the firm of Mette, Evans and Woodside
which we retained during 1999 and which we intend to retain during 2000.
Vernon W. Hill, II is Chairman of the Board and President of Commerce
Bancorp, Inc. which provides various services to Commerce.
Michael A. Serluco owns a company which leased land to the Bank in 1999
for a billboard owned.
You can see more information about these transaction under "Transactions
with Officers and Directors on page 8 of this proxy statement.
Financial Performance
The following graph shows the yearly percentage change in Commerce's
cumulative total shareholder return on its common stock from December 31, 1994
to December 31, 1999 compared with the cumulative total return of a NASDAQ
Regional Peer Bank Index and the NASDAQ Composite Market Index.
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<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Pennsylvania Commerce Bancorp, NASDAQ Regional Peer Bank Index, NASDAQ
Composite Market Index Year-End 1995 to Year-End 1999
[GRAPHIC OMITTED]
NASDAQ Bank Index NASDAQ Composite Index COBH
1994 100 100 100
1995 144.81 139.92 114.21
1996 182.69 171.69 190.53
1997 298.85 208.83 281.97
1998 263.68 291.6 301.28
1999 242.63 541.16 244.26
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our directors and executive officers must file reports with the SEC
indicating:
* the number of shares of Commerce common stock they beneficially own; and
* changes in their beneficial ownership.
To the best of our knowledge, our directors and executive officers filed
all required reports in 1999.
APPROVAL OF DIRECTORS STOCK OPTION PLAN
At the annual meeting, you will be asked to vote to approve the 2001
Directors Stock Option Plan. We recommend that you vote for it. A copy of the
plan is attached to this proxy statement as Appendix "A."
Vote Required
If a majority of the shares of common stock entitled to vote at the
meeting are voted for the plan, the plan will be approved.
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<PAGE>
Summary of the Plan
Here is a summary of the significant terms of the plan approved by the
Board of Directors:
<TABLE>
<CAPTION>
<S> <C>
Total Number of
Shares Covered......................... 100,000
Administration............................. The Personnel Committee or another committee designated by
the board will administer the plan.
Eligible Persons........................... Non-employee directors of Commerce.
Exercise Price............................. Generally the fair market value of Commerce's common stock
on the date we grant the option.
Terms of Options........................... Generally 10 years, but could be a shorter period.
Vesting of Options......................... Options granted under the plan generally will not be
subject to vesting schedules. The holder of an option may
exercise the option one (1) year after the date of grant.
Exercise of Options........................ The holder of an option can pay the exercise price of the
option in cash, or at the board's or the committee's
discretion, with Commerce common stock (valued at the
closing price of the common stock on the exercise date) or
a combination of cash and Commerce stock.
Transferability............................ Options are not transferable except by will or by intestate
succession.
Acceleration of
Vesting Options.......................... If a Change of Control of Commerce (as defined in the plan)
occurs, the options will vest immediately and become
exercisable in full unless we determine otherwise.
Term of Plan............................... The Plan will expire on December 31, 2010, unless we
terminate it earlier.
</TABLE>
Federal Income Tax Consequences to Option-Holders
Options granted under the plan will be non-qualified stock options. An
option-holder generally will not recognize any taxable income when we grant the
option. When the option-holder exercises the option, he or she will recognize
ordinary income for tax purposes equal to the excess of the fair market value of
the shares over the exercise price. When the option-holder resells the stock, he
or she will recognize capital gain or loss equal to any difference between the
sale price and the exercise price to the extent not recognized as
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<PAGE>
ordinary income as provided above. We are entitled to take a deduction in the
amount of ordinary income recognized by the option-holder.
This is only a summary of the federal income tax consequences of the grant
and exercise of options under the plan. It is not a complete statement of all
tax consequences. In particular, we have not discussed the income tax laws of
any municipality, state, or foreign country where an optionee resides.
OTHER BUSINESS
At the date of mailing of this proxy statement, we are not aware of any
business to be presented at the annual meeting other than the proposals
discussed above. If other proposals are properly brought before the meeting, any
proxies returned to us will be voted as the proxyholders see fit.
INDEPENDENT AUDITORS
Our independent auditors during 1999 were Beard & Company, Inc., 320 East
Market Street, Harrisburg, PA 17101. Based upon the recommendation of the Audit
Committee, the board of directors has selected Beard & Company, Inc. to be our
independent auditors for 2000. We expect a representative of Beard & Company,
Inc. to attend the annual meeting, to have the opportunity to make a statement,
if he or she so desires, and to be available to respond to appropriate
questions.
FORM 10-K ANNUAL REPORT
You can obtain a copy of the Commerce Form 10-K Annual Report for the year
ended December 31, 1999 at no charge by writing to:
Deborah Miller, Shareholder Relations
Pennsylvania Commerce Bancorp, Inc.
P.O. Box 8599
Camp Hill, PA 17001-8599
RETURN OF PROXY
You should sign, date and return the enclosed proxy card as soon as
possible whether or not you plan to attend the meeting in person. If you do
attend the meeting, you may then withdraw your proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JAMES T. GIBSON
JAMES T. GIBSON
President
Camp Hill, Pennsylvania
April 20, 2000
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<PAGE>
APPENDIX "A"
2001 DIRECTORS STOCK OPTION PLAN
PENNSYLVANIA COMMERCE BANCORP, INC.
1. Purpose of Plan
The purpose of this Plan is to enable Pennsylvania Commerce Bancorp, Inc.
(hereinafter referred to as the "Company") to continue to attract and retain
nonemployee Directors with outstanding abilities by making it possible for them
to purchase shares of the Company's Common Stock on terms which will give them a
direct and continuing interest in the future success of the Company's business.
2. Definitions
"Company" means Pennsylvania Commerce Bancorp, Inc., a Pennsylvania
business corporation.
"Committee of the Board" means a committee established by the Board
consisting of three or more members of the Board. The Personnel Committee may be
this committee.
"Director" means a Director of the Company who is not regularly employed
on a salary basis by the Company or its subsidiary, Commerce Bank/Harrisburg,
N.A.
"Shares" means shares of Common Stock of the Company.
"Board" means the Board of Directors of the Company.
"Optionee" means a person to whom an option has been granted under this
Plan which has not expired or been fully exercised or surrendered.
3. Limits on Options
The total number of shares for which options may be granted under this
Plan shall not exceed in the aggregate 100,000 shares. This number shall be
appropriately adjusted if the number of issued shares shall be increased or
reduced by change in par value, combination, or split-up, reclassification,
distribution of a dividend payable in stock, or the like. The number of shares
previously optioned and not theretofore delivered and the option prices therefor
shall likewise be appropriately adjusted whenever the number of issued shares
shall be increased or reduced by any such procedure after the date or dates on
which such shares were optioned. Shares covered by options which have expired or
which have been surrendered may again be optioned under this Plan.
4. Adjustment of Options
The number of shares optioned from time to time to individual Optionees
under the Plan, and the option prices therefor, shall be appropriately adjusted
to reflect any changes in par value, combination, split-up, reclassification,
distribution of dividend payable in stock, or the like.
A-1
<PAGE>
5. Granting of Options
The Board, or if the Board so determines, the Committee of the Board, is
authorized to grant options to Directors pursuant to this Plan during the
calendar year 2001 and in any calendar year thereafter to December 31, 2010, but
not thereafter. The number of shares, if any, optioned in each year, the
Directors to whom options are granted, and the number of shares optioned to each
Director selected shall be wholly within the discretion of the Board or the
Committee of the Board. If the Board acts, however, it shall do so only upon the
advice and recommendation of the Committee of the Board upon all matters
relating to the granting of options and the administration of this Plan,
including determination of the rights and obligations of the Optionees. Any
options granted in a given year shall be granted on January 15 of that year.
6. Terms of Stock Options
The terms of stock options granted under this Plan shall be as follows:
(a) The option price shall be fixed by the Board or the Committee
of the Board but shall in no event be less than 100% of the fair market
value of the shares subject to the option on the date the option is
granted. The fair market value of the shares shall be the average of the
high and low sale prices of the Common Stock as reported on the NASDAQ
Small Cap Market System on the trading day immediately preceding the date
of grant or the closest preceding date if there are no high and low sale
prices available on that date. If there are no high and low sale prices
available for the Common Stock for the 30 trading days preceding the
applicable grant date, then the Board of Directors shall make a
determination of the option price on the basis of information which it
determines best reflects current fair market value.
(b) Options shall not be transferable otherwise than by will or by
the laws of descent and distribution. No option shall be subject, in whole
or in part, to attachment, execution or levy of any kind.
(c) Each option shall expire and all rights thereunder shall end
ten (10) years after the date on which it was granted, subject in all
cases to earlier expiration as provided in paragraphs (d), (e) and (f) of
this Section 6 in the event a Director ceases to serve as such or dies.
(d) During the lifetime of an Optionee, his/her option shall be
exercisable only by him/her and only while a Director of the Company or
within that period of time after he/she otherwise ceases so to serve as
determined by the Board of Directors (but in any event not later than the
end of the period specified in paragraph (c) of this, Section 6).
(e) If an Optionee dies within a period during which his/her
option could have been exercised by him, his/her option may be exercised
within three months after his/her death (but not later than the end of the
period specified in paragraph (c) of this Section 6) by those entitled
under his/her will or the laws of descent and distribution, but only if
and to the extent the option was exercisable by him/her immediately prior
to his/her death.
(f) If Optionee is removed as a Director for any of the reasons
specified in Section 1726(b) of the Pennsylvania Business Corporation Law
of 1988, all options theretofore granted
A-2
<PAGE>
to the Optionee preceding such removal shall be forfeited by Optionee and
rendered unexercisable.
(g) Subject to the foregoing terms and to such additional or
different terms regarding the exercise of the options as the Board or the
Committee of the Board may fix at the time of grant, options may be
exercised in whole or in part from time to time.
7. Exercise of Options
No option granted under this Plan may be exercised before the first to
occur of (i) one year from the date of option grant, or (ii) a Change in Control
of the Company. Thereafter, options may be exercised in whole, or from time to
time in part, for up to the total number of shares then subject to the option,
less the number of shares previously purchased by exercise of the option.
8. Change in Control
For the purposes of this Agreement, a Change in Control with respect to
any Optionee shall be deemed to have occurred when any of the following events
shall have occurred without the prior written consent of such Optionee:
(a) A change in identity of at least four (4) members of the Board
of Directors or the addition of four (4) or more new members to the Board
of Directors, or any combination of the foregoing, within any two (2)
consecutive calendar year periods.
(b) A person or group acting in concert as described in Section
13(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") proposes to hold or acquire beneficial ownership within the meaning
of Rule 13(d)(3) promulgated under the Exchange Act of a number of voting
shares of the Company which constitutes either more than 50%, of the
shares which voted in the election of Directors of the Company at the
Shareholder's Meeting immediately preceding such determination, or (ii)
more than 50% of the Company's outstanding voting shares. The term
"proposes to hold or acquire"shall mean the right of a person or group to
acquire or merge (whether such right is exercisable immediately or only
after the passage of time, or upon the receipt of such regulatory
approvals as are required by applicable law) pursuant to an agreement,
arrangement or understanding (whether or not in writing) or upon the
exercise or conversion of rights, exchange rights, warrants or options, or
otherwise.
(c) A person or group acting in concert as described in Section
13(d)(2) of the Exchange Act has commenced a tender or exchange offer with
respect to the voting shares of the Company or securities convertible or
exchangeable into voting shares of the Company.
(d) A person or group acting in concert as described in Section
13(d)(2) of the Exchange Act has the right to vote shares of the Company
pursuant to any agreement, arrangement or understanding (whether or not in
writing), either (i) more than 50% of the shares which voted in the
election of Directors of the Company at the Shareholder's Meeting
immediately preceding such determination, or (ii) more than 50% of the
Company's outstanding voting shares; provided, however, that such person
or group acting in concert, shall not be deemed to have acquired such
shares if the agreement, arrangement or understanding to vote such
securities rises solely from a revocable proxy given in response to a
Proxy Solicitation by management of the Company in connection with the
Annual Meeting of the Shareholders of the Company.
A-3
<PAGE>
9. Reorganization of the Company
In the event that the Company is succeeded by another corporation or
Company in a reorganization, merger, consolidation, acquisition of property or
stock, separation or liquidation, the successor corporation or Company shall
assume the outstanding options granted under this Plan or shall substitute new
options for them.
10. Delivery of Shares
No shares shall be delivered upon the exercise of an option until the
option price has been paid in full in cash or, at the discretion of the Board or
the Committee of the Board, in whole or in part in the Company's Common Stock
owned by the Optionee valued at fair market value on the date of exercise. If
required by the Board, no shares will be delivered upon the exercise of an
option until the Optionee has given the Company a satisfactory written statement
that he/she is purchasing the shares for investment and not with a view to the
sale or distribution of any such shares.
11. Administration
The Board or the Committee of the Board may make such rules and
regulations and establish such procedures as it deems appropriate for the
administration of this Plan. In the event of a disagreement as to the
interpretation of this Plan or any amendment thereto or any rule, regulation or
procedure thereunder or as to any right or obligation arising from or related to
this Plan, the decision of the Board or the Committee of the Board (excluding,
however, the Director(s) affected by such dispute or disagreement) shall be
final and binding upon all persons in interest, including the Company and its
shareholders.
12. Reservation of Shares
Shares delivered upon the exercise of an option shall, in the discretion
of the Board or the Committee of the Board, be either shares heretofore or
hereafter authorized and then unissued, or previously issued shares heretofore
or hereafter acquired through purchase in the open market or otherwise, or some
of each. The Company shall be under no obligation to reserve or to retain in its
treasury any particular number of shares at any time, and no particular shares,
whether unissued or held as treasury shares, shall be identified as those
optioned under this Plan.
13. Amendment of Plan
The Board may amend this Plan from time to time as it deems desirable.
14. Termination of the Plan
The Board may, in its discretion, terminate this Plan at any time prior to
December 31, 2010, but no such termination shall deprive Optionees of their
rights under their options.
15. Effective Date
This Plan shall become effective on January 1, 2001, and options hereunder
may be granted at any time on or after that date.
A-4
<PAGE>
PROXY
PENNSYLVANIA COMMERCE BANCORP, INC.
100 Senate Avenue
Camp Hill, PA 17011
Telephone: (717) 975-5630
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF PENNSYLVANIA COMMERCE BANCORP, INC.
The undersigned hereby appoints Alan R. Hassman and Douglas S. Gelder as
Proxies, each with the power to appoint his substitute, and authorizes them to
represent and vote, as designated below, all the shares of common stock of
Pennsylvania Commerce Bancorp, Inc. held of record by the undersigned on April
3, 2000 at the Annual Meeting of Shareholders to be held on May 19, 2000.
1. ELECTION OF DIRECTORS:
For all Nominees Listed Below [ ] Withhold Authority [ ]
(except as indicated below)
Gary L. Nalbandian, Vernon W. Hill, II, Douglas S. Gelder, Alan R. Hassman,
Michael A. Serluco, Howell C. Mette, Samir J. Srouji, M.D., James T. Gibson
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
write that nominee's name(s) in the space immediately below.
-----------------------------------------------------------
(see reverse side)
PLEASE SIGN ON REVERSE SIDE
<PAGE>
2. TO APPROVE OUR 2001 DIRECTORS STOCK OPTION PLAN.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. OTHER BUSINESS:
Take action on other business which may properly come before the meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
The shares represented by this proxy will be voted as specified. If no
specification or direction is made, they will be voted for the election of the
directors, for the 2001 Directors Stock Option Plan and for any other business
in accordance with the recommendations of management. This proxy may be revoked
prior to its exercise.
Dated this day of ,2000 (SEAL)
-------------------------------------------
Signature
(SEAL)
-------------------------------------------
Signature
When shares are held by joint tenants, both
should sign. If signing as attorney,
executor, administrator, trustee, guardian,
custodian, corporate official or in any
other fiduciary or representative capacity,
please give your full title as such.
Please sign your name exactly as it appears on this proxy, and mark, date and
return this proxy as soon as possible in the enclosed envelope. No postage is
necessary if mailed in the United States in the enclosed self-addressed
envelope.
