<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
CITY NATIONAL CORPORATION
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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</TABLE>
<PAGE>
CITY NATIONAL CORPORATION
CITY NATIONAL CENTER
400 NORTH ROXBURY DRIVE
BEVERLY HILLS, CALIFORNIA 90210
(310) 888-6000
March 21, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of City National Corporation, which will be held at 4:30 p.m. on Wednesday,
April 26, 2000, at City National Center, 400 North Roxbury Drive, Beverly Hills,
California.
The Notice of Annual Meeting and Proxy Statement accompanying this letter
describe the business to be transacted at the annual meeting.
WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING OR NOT, WE URGE YOU TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE PAID ENVELOPE PROVIDED,
SO THAT AS MANY SHARES AS POSSIBLE MAY BE REPRESENTED AT THE ANNUAL MEETING.
The vote of every stockholder is important, and your cooperation in
returning your executed proxy promptly will be appreciated. Each proxy is
revocable and will not affect your right to vote in person if you attend the
annual meeting.
We appreciate your continuing support and look forward to seeing you at the
annual meeting.
Sincerely,
<TABLE>
<S> <C>
/s/ BRAM GOLDSMITH /s/ RUSSELL GOLDSMITH
BRAM GOLDSMITH RUSSELL GOLDSMITH
CHAIRMAN OF THE BOARD VICE CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
</TABLE>
<PAGE>
CITY NATIONAL CORPORATION
CITY NATIONAL CENTER
400 NORTH ROXBURY DRIVE
BEVERLY HILLS, CALIFORNIA 90210
(310) 888-6000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 2000
TO THE STOCKHOLDERS:
City National Corporation will hold its Annual Meeting of Stockholders at
City National Center, 400 North Roxbury Drive, Beverly Hills, California on
Wednesday, April 26, 2000, at 4:30 p.m.
At the annual meeting, we will consider the following proposals:
1. ELECTION OF DIRECTORS. The election of directors to hold office for
three years, or until their respective successors have been elected and
qualified; and
2. OTHER BUSINESS. The transaction of such other business as may
properly come before the annual meeting or any postponement or adjournment
of the annual meeting.
The Board of Directors has fixed the close of business on March 14, 2000 as
the record date for determining stockholders entitled to notice of and to vote
at the annual meeting or any postponement or adjournment of the annual meeting.
By Order of the Board of Directors
BARBARA S. POLSKY
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
Beverly Hills, California
March 21, 2000
<PAGE>
CITY NATIONAL CORPORATION
CITY NATIONAL CENTER
400 NORTH ROXBURY DRIVE
BEVERLY HILLS, CALIFORNIA 90210
(310) 888-6000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING............. 1
ELECTION OF DIRECTORS....................................... 3
BOARD OF DIRECTORS COMMITTEES............................... 5
PRINCIPAL HOLDERS OF COMMON STOCK........................... 6
SECURITY OWNERSHIP OF MANAGEMENT............................ 7
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS............ 9
Summary Compensation Table................................ 9
Employment Contracts, Change of Control Agreements and
Termination Arrangements................................ 10
Stock Option Plans........................................ 13
OPTION GRANTS IN LAST FISCAL YEAR....................... 13
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION
VALUES................................................. 13
Compensation of Directors................................. 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION............................................. 14
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION AND
DIRECTORS NOMINATING COMMITTEE............................ 15
Overall Philosophy........................................ 15
Chief Executive Officer................................... 16
Other Executive Officers.................................. 16
Statement Regarding Deductibility......................... 17
STOCKHOLDER RETURN GRAPH.................................... 18
CERTAIN TRANSACTIONS........................................ 19
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 20
INDEPENDENT ACCOUNTANTS..................................... 20
STOCKHOLDER PROPOSALS....................................... 20
</TABLE>
<PAGE>
CITY NATIONAL CORPORATION
CITY NATIONAL CENTER
400 NORTH ROXBURY DRIVE
BEVERLY HILLS, CALIFORNIA 90210
(310) 888-6000
ANNUAL MEETING OF STOCKHOLDERS ON APRIL 26, 2000
---------------------
PROXY STATEMENT
---------------------
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
This proxy statement is being provided in connection with City National
Corporation's annual meeting. We are using a question and answer format to
provide more clearly general information about the annual meeting and voting
procedures.
<TABLE>
<C> <C> <S>
1. Q. Why did you send me this proxy statement?
A. We sent you this proxy statement because the Board of
Directors of City National Corporation (the "Corporation")
is soliciting your proxy to vote at the annual meeting.
2. Q. When is this proxy statement being mailed to stockholders?
A. This proxy statement and the accompanying proxy card are
first being mailed to stockholders on or about March 24,
2000.
3. Q. Who is paying for this solicitation?
A. We will pay the cost of preparing, assembling and mailing
the notice of the annual meeting, the proxy statement and
the accompanying proxy card and for the solicitation of
proxies. In addition to solicitation of proxies by mail,
certain directors, officers and employees who will receive
no additional compensation for their services may solicit
proxies in person or by telephone, telegraph or facsimile.
We will pay brokers and others who hold our common stock in
their name for the expenses of forwarding the proxy
materials to their principals.
4. Q. What may I vote on?
A. You are being asked to vote on the election of nominees to
serve on the Corporation's Board of Directors.
5. Q. How does the Board of Directors recommend I vote?
A. The Board of Directors recommends a vote FOR each of the
nominees.
6. Q. Who is entitled to vote?
A. Only stockholders of record at the close of business on
March 14, 2000 (the "Record Date") may vote at the annual
meeting.
7. Q. How many shares can vote?
A. At the close of business on the Record Date, there were
47,428,919 shares of the Corporation's common stock
outstanding. Each stockholder is entitled to one vote for
each share of common stock owned.
</TABLE>
1
<PAGE>
<TABLE>
<C> <C> <S>
8. Q. What is a "quorum"?
A. A majority of the outstanding shares must be present at the
annual meeting, either in person or represented by proxy, to
constitute a "quorum." There must be a quorum for the annual
meeting to be held. If you return a signed proxy card, you
will be counted as being present, even if you abstain from
voting.
9. Q. How are matters approved or disapproved?
A. The four nominees for election as a director who receive the
highest number of affirmative votes will be elected.
10. Q. How do I vote?
A. You may vote by signing and dating each proxy card you
receive and returning it in the enclosed postage paid
envelope. If you mark the proxy card to show how you wish to
vote, your shares will be voted as you direct. If you return
a signed proxy card but do not mark the proxy card to show
how you wish to vote, your shares will be voted FOR each of
the Board of Directors' nominees for election as directors.
You may revoke your proxy at any time before it is voted at
the annual meeting by:
(i) notifying our Secretary at the address shown above;
(ii) attending the annual meeting and voting in person; or
(iii) submitting a later dated proxy card.
11. Q. How do I vote my shares if they are held in the name of my
broker, sometimes referred to as being held "in street
name"?
A. If your shares are held by your broker, you should receive a
form from your broker seeking instructions on how your
shares should be voted. If you do not give instructions to
your broker, your broker will vote your shares at its
discretion on your behalf.
12. Q. How will voting on any other business be conducted?
A. We do not know of any business to be considered at the
annual meeting other than the election of directors
described in this proxy statement. Because we were not
notified of any other business to be presented at the annual
meeting on or before February 2, 2000, if any other business
is presented at the annual meeting, your designated proxy
will vote on such matter at her discretion. Any matter other
than the election of directors must receive affirmative
votes from at least a majority of the shares voting in order
to be approved.
13. Q. Who can attend the annual meeting?
A. Stockholders of record at the close of business on
March 14, 2000 may attend the annual meeting. If you hold
your shares through a broker and would like to attend the
annual meeting, please write to the Corporation's Secretary
at the address shown above or e-mail
[email protected], identifying yourself as a
beneficial owner of the Corporation's common stock, and we
will add your name to the guest list.
14. Q. How do I get more information about the Corporation?
A. With this proxy statement, we are also sending you our 1999
Summary Annual Report and our Annual Report for the year
ended December 31, 1999, which includes our financial
statements. If you did not receive them, we will send them
to you without charge. The Annual Report includes a list of
exhibits filed with the Securities and Exchange Commission,
but does not include the exhibits. If you wish to receive
copies of the exhibits, we will send them to you upon
payment of our expenses for doing so. Please write to:
Stephen McAvoy
City National Bank
City National Center
400 North Roxbury Drive
Beverly Hills, California 90210
You may also send your request by facsimile to
(213) 347-2645 or by e-mail to [email protected].
Additional information about the Corporation is also
available on the internet at http:\\www.cnb.com.
</TABLE>
2
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors of the Corporation currently consists of twelve
members who are divided into three classes. Directors are elected for terms
ending at the third annual meeting following the directors' election. At the
annual meeting, four nominees will be elected to serve as Class I directors. The
term of office of the four current Class I directors will expire upon election
and qualification of their successors.
The nominees recommended by the Board of Directors for election as directors
(all of whom are currently directors) are set forth below. If one or more of
such nominees unexpectedly becomes unavailable to serve as a director, the
proxies may be voted for one or more substitute nominees selected by the Board
of Directors or the authorized number of directors may be reduced. If the
authorized number of directors is reduced for any reason, the proxies will be
voted for the election of the remaining nominees named in this proxy statement.
To the best of the Corporation's knowledge, all nominees are and will be
available to serve as directors.
Nominations for the election of directors may be made by a stockholder
entitled to vote for the election of directors by submitting a notice in
writing, delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than 60 days prior to the first
anniversary of the date of the last meeting of the stockholders of the
Corporation called for the election of directors. The notice must include
(i) the name, age, business address and, if known, the residence address of the
nominee, (ii) the principal occupation or employment of the nominee, (iii) the
number of shares of stock of the Corporation beneficially owned by the nominee
and (iv) such other information that would be required by federal securities
laws and regulations for an individual nominated by the Board of Directors. The
Corporation did not receive any such nominations for the annual meeting.
Each of the current directors is also a director of City National Bank (the
"Bank"), a wholly owned subsidiary of the Corporation.
The nominees for election as Class I directors, and the Class II and
Class III directors who will continue in office after the annual meeting until
the expiration of their respective terms, and information about them as of
March 21, 2000, are as follows:
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
<TABLE>
<CAPTION>
DIRECTOR DIRECTOR OF
PRINCIPAL OCCUPATION OF BANK CORPORATION
NAME AGE AND OTHER DIRECTORSHIPS SINCE SINCE
---- -------- ----------------------- -------- -----------
<S> <C> <C> <C> <C>
George H. Benter, Jr. 58 President, City National Corporation since 1992 1993
1993; President and Chief Operating Officer,
City National Bank since 1992; Director, The
Wet Seal, Inc.
Stuart D. Buchalter 62 Of Counsel, Buchalter, Nemer, Fields & Younger, 1981 1981
a Professional Corporation, law firm;
Principal, East-West Capital, a venture capital
investment firm; Chief Executive Officer until
January 1995, Chairman of the Board until June
1995, The Art Stores, art materials retailer;
Director, e4L, Inc., Faroudja, Inc., Earl
Scheib, Inc. and Warnaco Group, Inc.
Ezunial Burts 53 President, Los Angeles Area Chamber of Commerce 1998 1998
since 1997; Executive Director/General Manager,
Port of Los Angeles, 1984 to 1997
Andrea L. Van de Kamp 56 Chairman, West Coast Operations, Sotheby's, 1994 1994
auction house, since 1996, prior thereto Senior
Vice President, West Coast Operations,
Sotheby's; Director, Jenny Craig, Inc. and The
Walt Disney Company
</TABLE>
3
<PAGE>
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
DIRECTOR DIRECTOR OF
PRINCIPAL OCCUPATION OF BANK CORPORATION
NAME AGE AND OTHER DIRECTORSHIPS SINCE SINCE
---- -------- ----------------------- -------- -----------
<S> <C> <C> <C> <C>
CLASS II DIRECTORS
Russell Goldsmith(1) 50 Vice Chairman and Chief Executive Officer, 1978 1979
City National Corporation since October 1995;
Chairman of the Board and Chief Executive
Officer, City National Bank since October
1995; President, Goldsmith Entertainment
Company, production and media company, 1994
to 1995; Consultant, Spelling Entertainment
Group, Inc., television and home video
company, 1994 to 1995; Chairman of the Board
and Chief Executive Officer, Republic
Pictures Corporation, entertainment company,
until 1994
Barry M. Meyer 56 Chairman and Chief Executive Officer of 1997 1997
Warner Bros., motion picture and television
production and distribution company, since
October 1999, prior thereto Executive Vice
President and Chief Operating Officer, Warner
Bros.
Michael L. Meyer 61 Chief Executive Officer, Michael L. Meyer 1999 1999
Company, real estate consulting and
investment company, since October 1999;
Senior Vice President and Chief Financial
Officer, Advantage 4, real estate
telecommunication company, since October
1999; Managing Partner, Orange County, Ernst
& Young LLP Real Estate Group, 1974 to 1998
Edward Sanders 77 Principal, Sanders, Barnet, Goldman, Simons & 1985 1985
Mosk, a Professional Corporation, law firm
CLASS III DIRECTORS
Richard L. Bloch 70 President, Pinon Farm, Inc., equestrian 1974 1979
training facility
Bram Goldsmith(1) 77 Chief Executive Officer until October 1995 1964 1969
and Chairman of the Board, City National
Corporation; Chairman of the Board and Chief
Executive Officer, City National Bank until
October 1995
Charles E. Rickershauser, Jr. 71 Attorney; Chairman of the Board, PS Group 1982 1982
Holdings, Inc.
Kenneth Ziffren 59 Senior Partner, Ziffren, Brittenham, Branca & 1989 1989
Fischer, law firm; Director, Panavision Inc.
</TABLE>
- --------------------------
(1) Mr. Russell Goldsmith is the son of Mr. Bram Goldsmith.
The Board of Directors held 11 meetings during 1999. All directors attended
at least 75 percent of the meetings held during 1999 by the Board of Directors
and the committees on which they served, except Messrs. Barry M. Meyer and
Charles E. Rickershauser, Jr.
4
<PAGE>
BOARD OF DIRECTORS COMMITTEES
The Board of Directors of the Corporation has, among others, a Compensation
and Directors Nominating Committee and an Audit Committee.
The Compensation and Directors Nominating Committee is composed of
Messrs. Barry M. Meyer (Chairman), Charles E. Rickershauser, Jr. and Edward
Sanders. The Compensation and Directors Nominating Committee acts upon matters
of compensation and selects and recommends to the Board nominees for positions
on the Corporation's Board of Directors. The Compensation and Directors
Nominating Committee of the Bank is composed of the same individuals. The
Committees met jointly four times during 1999.
The Audit Committee is composed of Messrs. Kenneth Ziffren (Chairman),
Richard L. Bloch and Stuart D. Buchalter. The Audit Committee monitors
significant accounting policies, approves services rendered by the Corporation's
independent auditors, reviews audit and management reports and makes
recommendations regarding the appointment of independent auditors and the fees
payable for their services. The Audit Committee also functions as the audit and
examining committee of the Bank. The Committee met 12 times during 1999.
5
<PAGE>
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth information as of December 31, 1999 regarding
the beneficial owners of more than five percent of the outstanding shares of the
Corporation's common stock. To the Corporation's knowledge, based on the absence
of filings which beneficial owners of more than five percent of the outstanding
shares of the Corporation's common stock are required to make with the
Securities and Exchange Commission, there are no other beneficial owners of more
than five percent of the outstanding shares of the Corporation's common stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
----------------------------------------------
NUMBER OF SHARES
-----------------------------------
SOLE SHARED
VOTING AND VOTING AND PERCENT
NAME AND ADDRESS OF INVESTMENT INVESTMENT OF
BENEFICIAL OWNER POWER POWER TOTAL CLASS
- ----------------------------------------------------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C>
Bram Goldsmith Group 6,835,040 15.0%
400 North Roxbury Drive
Beverly Hills, CA 90210..............................
Goldsmith Family Partnership(1).................... -- 2,920,113 2,920,113
Bram and Elaine Goldsmith, -- 3,029,589 3,029,589(2)
Trustees of the Bram and Elaine
Goldsmith Family Trust...........................
Elaine and Bram Goldsmith, -- 567,989 567,989
Trustees of the Elaine
Goldsmith Revocable Trust........................
Bram Goldsmith..................................... -- 63,838 63,838(3)
Goldsmith Family Foundation........................ -- 239,780 239,780(4)
Oak Trust A........................................ 13,731 -- 13,731(5)
</TABLE>
- ------------------------
(1) The Goldsmith Family Partnership is a limited partnership of which the
general partners include the Bram and Elaine Goldsmith Family Trust and the
Russell Goldsmith Trust, of which Mr. Russell Goldsmith is the sole trustee.
The Bram Goldsmith Group disclaims beneficial ownership of the shares held
by the Goldsmith Family Partnership except to the extent of the pecuniary
interest therein of Mr. Bram Goldsmith.
(2) Excludes the 2,920,113 shares identified as being held by the Goldsmith
Family Partnership which the Bram and Elaine Goldsmith Family Trust may be
deemed to beneficially own as a general partner of the Goldsmith Family
Partnership.
(3) Represents Mr. Bram Goldsmith's proportionate interest in shares held in the
City National Corporation Stock Fund under the City National Corporation
Profit Sharing Plan at December 31, 1999.
(4) The Goldsmith Family Foundation is a tax-exempt charitable foundation of
which Mr. Bram Goldsmith is a director. Mr. Bram Goldsmith disclaims
beneficial ownership of these shares.
(5) Represents shares held in a trust for the benefit of a member of the
immediate family of Mr. Bram Goldsmith for which Mr. Bram Goldsmith is the
sole trustee.
6
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The information below sets forth the number of shares of the Corporation's
common stock beneficially owned as of January 31, 2000 by each of the current
directors, including nominees, each of the individuals included in the "Summary
Compensation Table" below and all current directors and executive officers as a
group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
--------------------------------------------------------------
NUMBER OF SHARES
------------------------------------------------
SOLE SHARED
VOTING AND VOTING AND PERCENT
NAME OR NUMBER INVESTMENT INVESTMENT OF
OF PERSONS IN GROUP POWER POWER OPTIONS(1) TOTAL CLASS
- ------------------------------------------- ---------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
George H. Benter, Jr....................... -- 64,827 251,131 315,958 *
Richard L. Bloch........................... -- 224,305 1,000 225,305 *
Stuart D. Buchalter........................ 13,643 -- -- 14,018(2) *
Ezunial Burts.............................. 100 -- 500 600 *
Bram Goldsmith............................. 13,731 6,821,309 -- 6,835,040(3) 15.0%
Russell Goldsmith.......................... 734,441 3,230,611 692,084 4,657,136(4) 10.2%
Barry M. Meyer............................. 2,500 -- -- 2,500 *
Michael L. Meyer........................... 2,000 -- -- 2,000 *
Robert A. Moore............................ 5,875 -- 79,253 85,128 *
Frank P. Pekny............................. 66,119 4,394 147,533 218,046(5) *
Charles E. Rickershauser, Jr............... 14,324 -- -- 14,324 *
Edward Sanders............................. 16,518 1,137 500 18,155 *
Andrea L. Van de Kamp...................... 1,000 2,455 -- 3,455 *
Kenneth Ziffren............................ 4,762 15,786 -- 20,548 *
All Directors and Executive Officers as a
group (18 persons)....................... 946,520 7,216,762 1,238,972 9,402,629(6) 20.6%
</TABLE>
- ------------------------
* Percentage information is omitted for those individuals whose beneficially
owned shares represent less than one percent of the outstanding shares of
the Corporation's common stock.
(1) Represents shares subject to options which are currently exercisable or
which will become exercisable within 60 days after January 31, 2000.
(2) Includes 375 shares owned by Mr. Buchalter's wife individually.
Mr. Buchalter disclaims beneficial ownership of these shares.
(3) Includes (i) 2,920,113 shares owned by the Goldsmith Family Partnership,
(ii) 3,029,589 shares owned by the Bram and Elaine Goldsmith Family Trust,
of which Mr. Bram Goldsmith is a co-trustee (excluding the 2,920,113 shares
owned by the Goldsmith Family Partnership of which the Bram and Elaine
Goldsmith Family Trust is a general partner), (iii) 567,989 shares owned by
the Elaine Goldsmith Revocable Trust, of which Mr. Bram Goldsmith is a
co-trustee, (iv) 239,780 shares owned by the Goldsmith Family Foundation, a
charitable foundation of which Mr. Bram Goldsmith is a director, (v) 63,838
shares representing Mr. Bram Goldsmith's proportionate interest in shares
held in the City National Corporation Stock Fund under the City National
Corporation Profit Sharing Plan at December 31, 1999, the most recent
valuation date, and (vi) 13,731 shares owned by Oak Trust A, of which a
member of the immediate family of Mr. Bram Goldsmith is the beneficiary and
Mr. Bram Goldsmith is the sole trustee. Shares owned by the Goldsmith Family
Partnership and the Goldsmith Family Foundation are also shown as being
beneficially owned by Mr. Russell Goldsmith. Mr. Bram Goldsmith disclaims
beneficial ownership of the shares owned by the Goldsmith Family Partnership
except to the extent of his pecuniary interest therein, and the Goldsmith
Family Foundation.
7
<PAGE>
(4) Includes (i) 2,920,113 shares owned by the Goldsmith Family Partnership,
(ii) 424,293 shares owned by the Russell Goldsmith Trust, of which
Mr. Russell Goldsmith is the sole trustee (excluding the 2,920,113 shares
owned by the Goldsmith Family Partnership of which the Russell Goldsmith
Trust is a general partner), (iii) 310,148 shares owned by other trusts of
which Mr. Russell Goldsmith is the sole trustee, (iv) 239,780 shares owned
by the Goldsmith Family Foundation, a charitable foundation of which
Mr. Russell Goldsmith is a director, (v) 68,495 shares owned by the B.N.
Maltz Foundation, a charitable foundation of which Mr. Russell Goldsmith is
a director, and (vi) 2,223 shares representing Mr. Russell Goldsmith's
proportionate interest in shares held in the City National Corporation Stock
Fund under the City National Corporation Profit Sharing Plan at
December 31, 1999, the most recent valuation date. Shares owned by the
Goldsmith Family Partnership and the Goldsmith Family Foundation are also
shown as being beneficially owned by Mr. Bram Goldsmith. Mr. Russell
Goldsmith disclaims beneficial ownership of the shares owned by the
Goldsmith Family Partnership except to the extent of his pecuniary interest
therein, the Goldsmith Family Foundation and the B.N. Maltz Foundation.
(5) Includes 4,394 shares representing Mr. Pekny's proportionate interest in
shares held in the City National Corporation Stock Fund under the City
National Corporation Profit Sharing Plan at December 31, 1999, the most
recent valuation date.
(6) Includes 11,831 shares representing the proportionate interests of various
executive officers in shares held in the City National Corporation Stock
Fund under the City National Corporation Profit Sharing Plan at
December 31, 1999, the most recent valuation date.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation for services rendered in all
capacities to the Corporation and its subsidiaries earned during the years
indicated by each of the Corporation's Chief Executive Officer and the four
other most highly compensated officers of the Corporation during 1999 (including
officers of the Bank who are deemed executive officers of the Corporation) who
were employed by the Corporation or the Bank at December 31, 1999 (collectively,
the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION(2)
---------------
SECURITIES
ANNUAL COMPENSATION(1) UNDERLYING
------------------------------ OPTIONS ALL OTHER
NAME AND POSITION WITH THE CORPORATION AND THE BANK YEAR SALARY BONUS GRANTED COMPENSATION(3)
- --------------------------------------------------- -------- -------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Russell Goldsmith ............................. 1999 $698,083 $906,188 -- $19,260(4)
Vice Chairman and Chief Executive Officer, City 1998 $570,114 $877,500 447,500 $20,215
National Corporation; Chairman of the Board and 1997 $456,250 $335,000 90,000 $19,428
Chief Executive Officer, City National Bank
Bram Goldsmith ................................ 1999 $540,000 $385,000 -- $79,260(4)
Chairman of the Board, City National Corporation 1998 $540,000 $398,500 -- $20,215
1997 $540,000 $374,220 -- $19,428
George H. Benter, Jr. ......................... 1999 $403,348 $250,000 57,500 $19,260
President, City National Corporation; President 1998 $365,000 $250,000 57,500 $20,159
and Chief Operating Officer, City National Bank 1997 $335,840 $225,000 50,000 $19,428
Frank P. Pekny ................................ 1999 $368,348 $235,000 57,500 $19,260
Executive Vice President and Chief Financial 1998 $334,167 $235,000 57,500 $20,215
Officer/Treasurer, City National Corporation; 1997 $280,000 $225,000 50,000 $19,428
Vice Chairman and Chief Financial Officer, City
National Bank
Robert A. Moore ............................... 1999 $193,750 $ 81,500 10,000 $19,260
Executive Vice President and Chief Credit 1998 $184,583 $ 68,500 12,500 $20,215
Officer, City National Bank 1997 $175,833 $ 65,200 12,500 $19,428
</TABLE>
- ------------------------
(1) There were no perquisites or other personal benefits which, in the
aggregate, exceeded the lesser of $50,000 or 10% of total salary and bonus
for any of the Named Executive Officers.
(2) The Corporation did not award restricted stock or pay out any amounts
pursuant to a long term incentive plan to any of its executive officers
during the periods shown.
(3) Reflects the contribution to the Profit Sharing Plan allocable to the Named
Executive Officer, including any matching contribution to the
Section 401(k) deferred compensation feature of that Plan.
(4) For Mr. Bram Goldsmith, also includes $60,000 for the premium paid in 1999
on a life insurance policy originally purchased under his employment
agreement in 1980 which policy is owned by a trust of which Mr. Russell
Goldsmith is one of the beneficiaries. See "--Employment Contracts, Change
of Control Agreements and Termination Arrangements--Bram Goldsmith
Agreement."
9
<PAGE>
EMPLOYMENT CONTRACTS, CHANGE OF CONTROL AGREEMENTS AND TERMINATION ARRANGEMENTS
RUSSELL GOLDSMITH AGREEMENT. Effective July 15, 1998, the Corporation and
the Bank entered into an Employment Agreement (the "Russell Goldsmith
Agreement") with Mr. Russell Goldsmith pursuant to which he has served and will
continue to serve as Chairman of the Board and Chief Executive Officer of the
Bank and Vice Chairman and Chief Executive Officer of the Corporation. The
Russell Goldsmith Agreement will remain in effect until July 15, 2002. The
Russell Goldsmith Agreement provided for an annual salary of $675,000 for the
first year thereof, increasing for each successive year by the lesser of
(i) five percent (5%) plus a cost of living index and (ii) 10%. Mr. Russell
Goldsmith is also entitled to an annual bonus equal to 35% of his base
compensation, contingent upon the Corporation achieving 85% of its annual plan
goals, scaled up, ratably, to 200% of his base compensation, contingent upon the
Corporation achieving 130% of its annual plan goals.
The Russell Goldsmith Agreement provides that in the event the Corporation
or the Bank terminates Mr. Russell Goldsmith's employment without good cause,
Mr. Russell Goldsmith will be entitled to receive an amount equal to (i) the
base compensation and bonus he would have received during the three years
following the date of termination (assuming for purposes of the calculation that
the term of the Russell Goldsmith Agreement had extended for a period of three
years from the date of termination) and (ii) the cost of all other employee
benefits Mr. Russell Goldsmith would have received had he remained employed for
three years following the date of termination. In addition, the stock option
granted pursuant to the Russell Goldsmith Agreement, if not then exercisable in
full, will become fully exercisable. For purposes of the Russell Goldsmith
Agreement, "good cause" is defined as (i) conviction of a crime directly related
to Mr. Russell Goldsmith's employment, (ii) conviction of a felony involving
moral turpitude, (iii) willful and gross mismanagement of the Corporation's or
the Bank's business and affairs or (iv) breach of a material provision of the
Russell Goldsmith Agreement.
If Mr. Russell Goldsmith's employment is terminated because of injury or
physical or mental illness or due to Mr. Russell Goldsmith's death, Mr. Russell
Goldsmith (or, in the event of his death, his beneficiary or estate) will be
entitled to receive the same amounts and benefits as if his employment had been
terminated without good cause.
At the request of Mr. Russell Goldsmith, the Corporation or the Bank, any
dispute relating to the Russell Goldsmith Agreement will be resolved through
binding arbitration. See "--Change of Control Agreements" below, for information
relating to change of control arrangements for Mr. Russell Goldsmith.
BRAM GOLDSMITH AGREEMENT. In March 1998, the Corporation and the Bank
entered into an Employment Agreement (the "Bram Goldsmith Agreement") with
Mr. Bram Goldsmith pursuant to which he has served and will continue to serve as
Chairman of the Board of the Corporation and an officer of the Bank from
May 15, 1998 to May 14, 2001. The Bram Goldsmith Agreement provides for an
annual salary of $540,000, as well as an annual incentive bonus, which bonus
shall be no less a percentage of Mr. Bram Goldsmith's annual salary than the
mean between the high and low percentage of annual salary paid as a bonus to any
other member of the Corporation's or the Bank's Strategy and Planning Committee
(both of which currently consist of Messrs. Russell Goldsmith, Bram Goldsmith,
Benter and Pekny). In March 1999, Mr. Bram Goldsmith and the Corporation agreed
that in no event would the total employee remuneration, as that term is defined
in Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), paid to Mr. Bram Goldsmith with regard to any one tax
year of the Corporation total more than $925,000.
Since 1980, Mr. Bram Goldsmith's employment arrangements have provided for
various policies of life insurance. Since 1990, and continuing under the Bram
Goldsmith Agreement, an insurance policy on the joint lives of Bram and Elaine
Goldsmith in the amount of $7,000,000 has been provided by the Bank. Between
1990 and 1998, all premiums on the policy were paid out of the policy's cash
surrender value. The cash surrender value has been substantially depleted, and
the Bank is now obligated to pay
10
<PAGE>
an annual premium equal to the greater of $60,000 or the amount necessary to
maintain a $7,000,000 death benefit. The Bank will receive, from the death
benefit of the policy, before any payments to the beneficiaries, a sum equal to
the aggregate amount of premiums, without interest prior to Mr. Bram Goldsmith's
death, paid on the policy since its inception. The total premiums paid between
1980 and 1999 on the existing policy and its predecessor policy total
approximately $660,842. There is no arrangement or understanding, formal or
informal, that Mr. Bram Goldsmith has or will receive or be allocated an
interest in the cash surrender value of the insurance policy.
The Bram Goldsmith Agreement provides that in the event the Corporation
terminates Mr. Bram Goldsmith's employment without good cause, Mr. Bram
Goldsmith will be entitled to receive all compensation payable for the balance
of the term as if it had not been terminated. For this purpose, "good cause" is
defined as (i) conviction of a crime directly related to Mr. Bram Goldsmith's
employment, (ii) conviction of a felony involving moral turpitude,
(iii) willful and gross mismanagement of the Corporation's or the Bank's
business and affairs, or (iv) breach of any material provision of the Bram
Goldsmith Agreement. If Mr. Bram Goldsmith's employment is terminated because of
injury or physical or mental illness, the Corporation will be obligated to
continue paying Mr. Bram Goldsmith's salary and bonus as if Mr. Bram Goldsmith
continued to be employed by the Corporation, less any amount paid in lieu of
salary under any private or governmental insurance program. If Mr. Bram
Goldsmith's employment is terminated due to his death, his annual salary will be
paid to his wife, if she is living, or his Revocable Living Trust, if she is
not, for the remaining term of the Bram Goldsmith Agreement.
At the request of either Mr. Bram Goldsmith or the Corporation, any dispute
relating to the Bram Goldsmith Agreement will be resolved through binding
arbitration. See "--Change of Control Agreements" below for information relating
to change of control arrangements for Mr. Goldsmith.
CHANGE OF CONTROL AGREEMENTS. Each officer who is a member of the Bank's
Executive Committee, including each of the five Named Executive Officers, has
entered into a Change of Control Agreement (the "Change of Control Agreement").
The Change of Control Agreement provides that each officer shall be employed for
a period of two years (three years for Messrs. Russell Goldsmith, Bram
Goldsmith, Benter and Pekny) from the date of a change of control. The
compensation, benefits, title, duties and other attributes of the officer's
employment generally will be at least equal to that which was provided prior to
the change of control.
If, after a change of control, the officer's employment is terminated other
than for "cause" or the officer resigns for "good reason," the officer will be
paid an amount equal to two times (three times for Messrs. Russell Goldsmith,
Bram Goldsmith, Benter and Pekny) such officer's base salary and annual bonus
plus the value of certain other benefits and payments foregone due to the
termination and will continue to receive all employee benefits for two years
(three years for Messrs. Russell Goldsmith, Bram Goldsmith, Benter and Pekny)
after the date of termination. For purposes of the Change of Control Agreements,
"cause" is defined to mean (i) a willful and continued failure to perform the
officer's duties or (ii) willfully engaging in illegal conduct or gross
misconduct materially and demonstrably injurious to the Corporation, and "good
reason" is defined to include (i) an action which diminishes the officer's
position, authority, duties or responsibilities or (ii) a failure by the
Corporation to comply with the compensation provisions of the agreement. In
addition, any resignation by the officer during the 30 day period immediately
following the first anniversary of a change of control is deemed to be for "good
reason."
If it is determined that any payments made to an officer pursuant to the
Change of Control Agreement would subject such officer to an excise tax pursuant
to Section 4999 of the Internal Revenue Code, under certain circumstances such
officer will also be paid an additional amount sufficient to put such officer in
the same tax position as he or she would have been in had no excise tax been
imposed on such payment.
11
<PAGE>
SEPARATION PAY PLAN. The Bank has a Separation Pay Plan with respect to all
employees, including the Named Executive Officers, who are regularly scheduled
to work at least 30 hours per week and have completed at least three months of
continuous service at the time they are laid off. The Separation Pay Plan
provides continuing pay based on the employee's wage or salary rate in the event
of layoff, provided the employee is not offered a position with the Bank at a
comparable salary or a position with an employer that acquires from the Bank the
line of business in which the employee worked. The basic period during which the
employee is entitled to receive separation pay is determined by position, and
ranges up to six weeks for Vice Presidents or above. However, if the employee
executes a General Release and Separation Agreement, the separation pay period
is extended, based on position and years of service, up to a maximum of 26 weeks
of salary (including the six week basic period) for Vice Presidents or above
with 13 or more years of service.
STOCK OPTION PLANS. The 1985 Stock Option Plan, under which no more options
may be granted but under which there are still options outstanding, the 1995
Omnibus Plan and the 1999 Omnibus Plan each contain provisions that take effect
upon a change of control (as defined in each of the plans) of the Corporation.
If a change of control occurs, all options held by employees vest in full unless
the Board of Directors (in the case of the 1985 Stock Option Plan) or the
Compensation and Directors Nominating Committee (in the case of the 1995 Omnibus
Plan and the 1999 Omnibus Plan) determines otherwise, in which event the Board
of Directors or the Compensation and Directors Nominating Committee, as
applicable, will make provision for continuation and assumption of the plans and
outstanding awards or for the substitution of new awards.
EXECUTIVE DEFERRED COMPENSATION PLAN. The Bank's Executive Deferred
Compensation Plan allows officers who are senior vice presidents or above to
elect each year to defer up to 50% of their salary and 100% of their annual
bonus. Each officer's deferral account is credited with an amount equal to the
net investment return of one or more equity or bond funds selected by the
officer. The amounts deferred may also be used to purchase split-dollar life
insurance policies issued by an insurance company not affiliated with the
Corporation or the Bank. Upon the death of an officer who elected to purchase
split-dollar life insurance under the Executive Deferred Compensation Plan, the
officer's beneficiary will receive the greatest of (i) the death benefit under
the policy, (ii) 50% of the officer's base salary at the time of death, up to
$100,000 or (iii) two times (one and one-half times, if age 60 or older) the
amount credited to the officer's deferral account.
12
<PAGE>
STOCK OPTION PLANS
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options granted
to the Named Executive Officers during 1999. Messrs. Russell Goldsmith and Bram
Goldsmith were not granted options during 1999. See "Report on Executive
Compensation by the Compensation and Directors Nominating Committee--Chief
Executive Officer--Stock Option Grant." No stock appreciation rights were
granted during 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------
PERCENT OF MARKET
NUMBER OF TOTAL PRICE ON
SECURITIES OPTIONS EXERCISE GRANT GRANT DATE
UNDERLYING GRANTED PRICE DATE PRESENT
OPTIONS TO (PER SHARE) (PER SHARE) EXPIRATION VALUE
NAME GRANTED EMPLOYEES (1) (1) DATE (2)
- ---- ---------- ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
George H. Benter, Jr.................. 57,500 6.015% $36.6875 $36.6875 4/20/2009 $838,925
Frank P. Pekny........................ 57,500 6.015% $36.6875 $36.6875 4/20/2009 $838,925
Robert A. Moore....................... 10,000 1.046% $36.6875 $36.6875 4/20/2009 $145,900
</TABLE>
- ------------------------
(1) Closing price on the grant date as reported on the New York Stock Exchange.
(2) Present values were calculated using the Black-Scholes option valuation
model with the following assumptions:
<TABLE>
<S> <C>
Expected life............................................. 7.5 years
Volatility................................................ 37.1%
Dividend yield............................................ 2.0%
Risk-free investment rate................................. 5.2%
</TABLE>
The expected life is based upon the pattern of exercises of options granted
by the Corporation in the past. Volatility, a measure of the variability in
the Corporation's stock price, is based on changes in the price of the
Corporation's common stock during the past ten years, measured monthly. The
dividend yield is an assumed rate. Actual dividend payments will depend upon
a number of factors, including future financial results, and may differ
substantially from the assumption. The risk-free investment rate is based on
the yield on ten year U.S. Treasury Notes on the grant date.
The actual value, if any, which a Named Executive Officer may realize will
depend upon the difference between the option exercise price and the market
price of the Corporation's common stock on the date of exercise.
Options which expire on April 20, 2009 were granted on April 21, 1999. The
options become exercisable 25% on each anniversary date of the grant until fully
exercisable. The options may become exercisable in full upon a change of control
of the Corporation. See "Compensation of Executive Officers and
Directors--Employment Contracts, Change of Control Agreements and Termination
Arrangements--Stock Option Plans."
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information regarding exercises of stock
options by the Named Executive Officers during 1999 and the value of all
unexercised in-the-money stock options held by the Named Executive Officers as
of December 31, 1999. Mr. Bram Goldsmith did not exercise any stock options
during 1999 and held no unexercised stock options at December 31, 1999. There
were no
13
<PAGE>
exercises of stock appreciation rights during 1999 or any unexercised stock
appreciation rights at December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
SHARES UNDERLYING IN-THE-MONEY OPTIONS
ACQUIRED UNEXERCISED OPTIONS AT YEAR-END (1)
UPON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Russell Goldsmith................. 324 $ 10,733 652,709 234,791 $7,241,563 $394,688
George H. Benter, Jr.............. 22,227 $584,082 211,756 138,125 $4,202,772 $450,781
Frank P. Pekny.................... 49,561 $781,557 108,158 138,125 $1,849,494 $450,781
Robert A. Moore................... 14,800 $340,129 69,878 28,750 $1,521,936 $115,820
</TABLE>
- ------------------------
(1) Based on the $32.9375 closing price of the Corporation's common stock on
December 31, 1999, as reported on the New York Stock Exchange. The actual
amount which a Named Executive Officer may realize will depend upon the
market price of the Corporation's common stock at the time shares obtained
upon exercise of such options are sold.
COMPENSATION OF DIRECTORS
The Corporation does not pay cash fees to its directors for attendance at
meetings of the Board of Directors. However, the Bank, whose Board of Directors
consists of the same individuals as the Corporation's Board of Directors and
generally meets jointly with the Corporation's Board of Directors, pays a fee of
$1,500 to each non-employee director for attendance at each meeting of its Board
of Directors. Non-employee directors serving on committees appointed by the
Board of Directors receive a fee of $1,000 for each committee meeting attended.
The chair of each committee appointed by the Board of Directors receives an
annual fee of $3,000.
During 1999, Mr. Richard Bloch, a director of the Corporation and the Bank,
served on the Bank's San Diego Advisory Board for which he was paid an advisory
board fee of $500.
The Corporation's 1999 Omnibus Plan provides for the automatic annual grant
of 500 discounted stock options to each non-employee director on the date of the
annual meeting of stockholders ("Director Stock Options"). The exercise price of
Director Stock Options is $1.00 per share, payable in cash, by surrender of
Corporation common stock held by the director or a combination of the two.
Director Stock Options vest six months after the date of grant or upon the
earlier termination without cause of the option holder's directorship and expire
ten years after the date of grant.
The Corporation's Director Deferred Compensation Plan allows non-employee
directors to elect each year to defer up to 100% of their director fees. The
Corporation credits each director's deferral account with an amount equal to the
net investment return of one or more equity or bond funds selected by the
director. Amounts in a director's deferral account represent an unsecured claim
against the Corporation's assets and are paid in a lump-sum or, at the
director's election, in annual installments over a 10-year period upon the
termination of service as a director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Directors Nominating Committee during 1999 consisted of
Messrs. Barry M. Meyer (Chairman), Charles E. Rickershauser, Jr. and Edward
Sanders. None of the members of the Compensation and Directors Nominating
Committee has ever been an officer or employee of the Corporation or any
subsidiary of the Corporation.
All three members of the Compensation and Directors Nominating Committee
were customers of the Bank, including one member who was a borrower, in the
ordinary course of business during 1999. Similar transactions are expected to
occur in the future. In the opinion of management, all such transactions were
effected on substantially the same terms as those prevailing at the time for
comparable transactions with other persons, including, as to any loans, interest
rates, fees and
14
<PAGE>
collateral, and any loans did not involve more than normal risk of
collectibility or present other unfavorable features.
REPORT ON EXECUTIVE COMPENSATION
BY THE COMPENSATION AND DIRECTORS NOMINATING COMMITTEE
Decisions regarding compensation of the Corporation's executive officers,
all of whom are employees of the Bank, are made by the Compensation and
Directors Nominating Committees of the Corporation and the Bank, which meet
jointly (collectively the "Compensation Committee"). The executive officers of
the Corporation are compensated by the Bank and receive benefits under various
Bank employee benefit plans. The Corporation does not pay any direct
compensation to its executive officers, except pursuant to the Corporation's
Profit Sharing Plan, 1995 Omnibus Plan and 1999 Omnibus Plan. The Compensation
Committee administers the 1995 Omnibus Plan and the 1999 Omnibus Plan and grants
options and other stock-based awards thereunder. The Compensation Committee also
administers outstanding options issued under the 1985 Stock Option Plan, which
expired in 1995. References in the following report to the Corporation shall be
deemed to include the Bank, unless otherwise noted.
The Compensation Committee presents the following report.
OVERALL PHILOSOPHY
The Corporation's compensation and benefit programs provide systematic ways
of rewarding employee-colleagues both as individuals and as members of a team
for achieving or contributing meaningfully to the Corporation's strategic goals.
Rewards are determined in accordance with the Corporation's "pay for
performance" philosophy and are based on an evaluation process that periodically
assesses performance against established goals. The compensation and benefit
programs are reassessed annually for suitability with corporate growth
strategies and competitiveness within the marketplace. Consistent with the
Corporation's mission statement, these programs are designed to build, train,
retain, reward and support the best team of professionals in the financial
industry. They are designed to:
- Reward achievement of corporate and individual goals in a fair, objective
and consistent way;
- Effectively motivate continued achievement of increasingly higher goals;
- Attract and retain the best team of professionals;
- Balance short and long-term objectives for both the Corporation and
employee-colleagues;
- Recognize behaviors that are consistent with the Corporation's values and
culture;
- Properly value and blend teamwork and individual effort; and
- Provide appropriate levels of rewards using one or more of the following
program components: base pay, bonus, stock options, benefit and retirement
programs and training programs.
Key elements of the compensation program for executive officers are base
salary, annual cash bonus, stock option grants and benefits typically offered to
executive officers by comparable financial institutions. Although the exact
identity of the institutions surveyed to establish comparability varies from
time to time, based on the availability of compensation data from third-party
surveys, these generally include banks of a size comparable to, or larger than,
the Bank, both within and outside of Southern California. In addition, the
Corporation uses custom survey data from a group of banks identified as
financial/investment peer companies. These banks are similar to the Bank in
asset size and product mix and are consolidated in a relatively small geographic
location with a low number of branches. Some, but not all, of the banks for
which compensation survey information is considered are included within the SNL
$5~10 Billion Bank Index utilized in the "Stockholder Return Graph," below.
15
<PAGE>
CHIEF EXECUTIVE OFFICER
BASE SALARY. Mr. Russell Goldsmith's base salary for 1999 was set by the
terms of the Russell Goldsmith Agreement. In determining the level of base
salary provided for by the Russell Goldsmith Agreement, the Compensation
Committee took into account Mr. Russell Goldsmith's qualifications and past
experience, the performance of the Corporation since he became the Chief
Executive Officer and the substantial increase in the size and diversification
of the Corporation, as well as data regarding base salary levels of Chief
Executive Officers of other comparable financial institutions provided by
independent consultants.
ANNUAL CASH BONUS. All officers of the Corporation and its subsidiaries may
be selected by the Compensation Committee to participate in the 1999 Variable
Bonus Plan. For 1999, Mr. Russell Goldsmith was the only officer selected to
participate. Under the 1999 Variable Bonus Plan, the Compensation Committee
establishes an objective compensation formula (expressed as a percentage of base
salary) based on the achievements of performance goals which may include net
income, earnings per share, return on assets, return on equity, total
stockholder return and other criteria. Based upon the formula established by the
Compensation Committee for 1999, which reflected the Corporation's net income
goal, and the Bank's performance for 1999, Mr. Russell Goldsmith received a
bonus of $906,188 in March 2000.
STOCK OPTION GRANT. Mr. Russell Goldsmith was not awarded any stock options
in 1999, pursuant to an agreement between the Corporation and Mr. Russell
Goldsmith.
OTHER EXECUTIVE OFFICERS
BASE SALARY. The Compensation Committee considers and approves senior
management recommendations concerning base salaries for executive officers. Base
salary adjustments are usually effective beginning March 1. Executive officer
base salaries for 1999 were primarily based on the performance of the
Corporation, the individual and the individual's department or division and the
base salary levels at comparable financial institutions.
ANNUAL CASH BONUSES. The executive officers of the Corporation are also
members of the Bank's Executive Committee and as such are eligible to
participate in the Bank's Executive Management Bonus Plan. The Executive
Management Bonus Plan governs annual cash bonuses payable to members of the
Bank's Executive Committee (other than officers subject to other bonus
arrangements). The Bank's Strategy and Planning Committee (each of the members
of which is also a member of the Executive Committee) each year establishes a
net income goal for the Corporation which is subject to the approval of the
Board of Directors. Under the Plan, the aggregate amount of bonuses paid depends
upon the degree to which the Corporation's performance falls below or exceeds
the net income goal. Senior management recommends to the Compensation Committee
for its review and adoption the upper limit for bonuses, expressed as a
percentage of annual base salary, based primarily on bonus levels for similar
positions at comparable financial institutions. If the Corporation does not
achieve at least 85% of its net income goal ("bonus threshold"), no cash bonuses
are paid. If the Corporation achieves or exceeds the bonus threshold, bonuses
may, but are not required to, be paid in the sole discretion of the Compensation
Committee. Determination of which executive officers will receive bonuses and in
what amounts is made by the Compensation Committee following discussion of the
recommendations of senior management, based on a discretionary evaluation of
each officer's individual and department or division contribution to the
accomplishment of the Corporation's net income goal. Not all eligible officers
will necessarily receive a bonus and not all eligible officers will necessarily
receive the same bonus.
16
<PAGE>
Additional amounts may be paid as bonuses to members of the Executive
Committee who are deemed by the Compensation Committee to have achieved superior
performance during the rating period. The Corporation exceeded the 1999 bonus
threshold, and bonuses were paid in March 2000.
STOCK OPTION GRANTS. Recommendations of senior management for the grant of
stock options to executive officers under the Corporation's 1995 Omnibus Plan
and 1999 Omnibus Plan are generally submitted to the Compensation Committee
after the end of each fiscal year. In determining whether to recommend the grant
of an option and the size of the grant to be awarded, senior management
considers executive officers' salary levels, their expected contribution toward
the growth and profitability of the Corporation and option grant levels at
comparable financial institutions. Past financial performance of the Bank and
the Corporation is given less weight in the decision, because the value of the
option is dependent upon future appreciation in the stock price. After full
discussion of the recommendations presented, the Compensation Committee decides
whether to award stock options.
The 1995 Omnibus Plan and the 1999 Omnibus Plan are designed to align the
interests of the executive officers with the long-term interest of the
Corporation's stockholders in increasing the market value of the Corporation's
stock. The option exercise price is the fair market value of the Corporation's
common stock on the date of the grant. The options generally have a vesting
schedule of 25% per year beginning one year after the grant date which is
intended to assist in the retention of executive officers and the creation of
stockholder value over the long-term, because the option holder receives the
full benefit of the option only after four years.
STATEMENT REGARDING DEDUCTIBILITY
Under Internal Revenue Code Section 162(m), the Corporation's tax deduction
may be limited to the extent total compensation paid to the Corporation's chief
executive officer and the four other highest-paid executive officers exceeds
$1 million in any one tax year. The deduction limit does not apply to payments
which qualify as "performance based" provided certain requirements are met,
including receipt of stockholder approval. It is the intent of the Compensation
Committee to structure the Corporation's compensation programs so that all
compensation payments are tax deductible. However, the Compensation Committee
reserves the discretion to make payments which are not tax deductible in the
future. In determining whether to do so, the Compensation Committee may consider
a number of factors including, but not limited to, the tax position of the
Corporation, the materiality of amounts likely to be involved, the performance
levels of individuals who may receive such payments and the potential
ramifications of the loss of flexibility to respond to unforeseeable changes in
circumstances. Regulations under Section 162(m) permit stock options to be
excluded from compensation if certain conditions are met. The Compensation
Committee believes that all options granted under the 1995 Omnibus Plan and the
1999 Omnibus Plan meet these conditions.
BARRY M. MEYER, CHAIRMAN
CHARLES E. RICKERSHAUSER, JR.
EDWARD SANDERS
The report of the Compensation Committee shall not be deemed incorporated by
reference into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Corporation specifically
incorporates it by reference, and shall not otherwise be deemed to be filed
under such Acts.
17
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STOCKHOLDER RETURN GRAPH
<S> <C> <C> <C> <C>
City National Corporation S&P 500 Western Bank Monitor SNL $5~10 Billion Bank Index
12/31/94 100.00 100.00 100.00 100.00
12/31/95 134.66 137.58 142.80 153.34
12/31/96 212.97 169.03 177.12 205.40
12/31/97 370.09 225.44 324.96 336.92
12/31/98 423.74 289.79 341.20 325.93
12/31/99 341.53 350.50 341.82 298.70
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31,
---------------------------------------------------------------
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
City National Corporation.......................... 100.00 134.66 212.97 370.09 423.74 341.53
Standard & Poor's 500 Index........................ 100.00 137.58 169.03 225.44 289.79 350.50
Western Bank Monitor Index......................... 100.00 142.80 177.12 324.96 341.20 341.82
SNL $5~10 Billion Bank Index....................... 100.00 153.34 205.40 336.92 325.93 298.70
</TABLE>
The above stockholder return graph compares the total cumulative stockholder
return on the Corporation's common stock to the total cumulative returns of the
Standard & Poor's 500 Index, the Western Bank Monitor Index of selected bank
stocks and the SNL $5~10 Billion Bank Index.
Each line on the stockholder return graph assumes that $100 was invested in
the Corporation's common stock and the respective indices on December 31, 1994,
and assumes quarterly reinvestment of all dividends. The total cumulative
returns shown on the stockholder return graph reflect historical results only
and are not necessarily indicative of future results.
The Western Bank Monitor Index is no longer being maintained and therefore
is not being updated to reflect acquisitions by or sales of banks in the index.
As a result, this index has diminishing comparative value as a peer group of the
Corporation. It is the Corporation's intent to discontinue using this index as a
peer group.
The stockholder return graph shall not be deemed incorporated by reference
into any filing under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent that the Corporation specifically incorporates it
by reference, and shall not otherwise be deemed to be filed under such Acts.
18
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CERTAIN TRANSACTIONS
Since 1967, the Bank's Pershing Square Banking Office and a number of Bank
departments have occupied leased space in the office building located at 606
South Olive Street in downtown Los Angeles (the "606 Building"). The 606
Building is owned by Citinational-Buckeye Building Co., a limited partnership of
which Citinational Bancorporation and Olive-Sixth Buckeye Co. are the only
general partners, each with a 29% partnership interest. Citinational
Bancorporation, which is a wholly owned subsidiary of the Bank, has an
additional 3% interest as a limited partner of Citinational-Buckeye Building Co.
Olive-Sixth Buckeye Co. is a limited partnership of which Mr. Bram Goldsmith,
Chairman of the Board of the Corporation, is a 49% general partner. Therefore,
Mr. Bram Goldsmith has an indirect 14% ownership interest in
Citinational-Buckeye Building Co. The other partners of Citinational-Buckeye
Building Co. and Olive-Sixth Buckeye Co. are not affiliated with the Corporation
or the Bank.
The Bank currently occupies space in the 606 Building under leases signed on
March 6, 1997 (effective as of September 30, 1996), May 1, 1998 and
November 13, 1998, all of which expire in 2006. Rental rates and other lease
terms were negotiated at arms' length and are comparable to, or better than,
rentals and lease terms for unaffiliated tenants in the 606 Building. In 1999,
the Bank paid Citinational-Buckeye Building Co. a total of $1,016,895 for rent
under all leases in the 606 Building and $135,233 for operating expense
pass-throughs.
The Bank had a loan to Citinational-Buckeye Building Co. which was paid in
full on or about November 1, 1999 with the proceeds of a loan from a lender
unaffiliated with the Bank (the "Refinance Loan"). The Bank's loan was secured
by the 606 Building and was non-recourse to the general partners of the
borrower. The Bank's loan bore interest at the Bank's prime rate plus 1/2%, with
a maximum of 12.5% and a minimum of 8.5% and the largest amount outstanding at
any time since January 1, 1999 was $15,491,182. The Bank's loan originally
matured on December 31, 1998, but the maturity was extended to December 31,
1999.
In 1997, Citinational Bancorporation made advances to Citinational-Buckeye
Building Co. in the form of both loans and capital contributions. Citinational
Bancorporation waived payment of interest during 1999. A portion of the proceeds
of the Refinance Loan was used to repay advances in the amount of $1,750,000.
After such repayment, the remaining principal amount of advances was $4,375,000.
Interest continues to accrue on the advances at the rate of 10% per annum.
Principal and interest are payable, subject to the terms of the Refinance Loan,
to the extent of the net cash flow generated by the 606 Building.
Certain directors, officers and stockholders of the Corporation, and their
associates, were depositors, borrowers or customers of the Bank in the ordinary
course of business during 1999. Similar transactions are expected to occur in
the future. In the opinion of management, all such transactions were effected on
substantially the same terms as those prevailing at the time for comparable
transactions with other persons, including, as to any loans, interest rates,
fees and collateral, and any loans did not involve more than normal risk of
collectibility or present other unfavorable features.
Mr. Buchalter, a director of the Corporation, is Of Counsel to the law firm
of Buchalter, Nemer, Fields & Younger which provided legal services to the
Corporation or the Bank during 1999 and may do so in the future. Mr. Ziffren, a
director of the Corporation, is a Senior Partner with the law firm of Ziffren,
Brittenham, Branca & Fischer which may provide legal services to the Corporation
or the Bank in the future. For information relating to directors who are members
of the Compensation and Directors Nominating Committee, see "Compensation
Committee Interlocks and Insider Participation."
19
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires directors and
executive officers of the Corporation and persons who own more than ten percent
of the Corporation's common stock to file reports of initial ownership of the
Corporation's common stock and subsequent changes in ownership with the
Securities and Exchange Commission and any national securities exchange on which
the Corporation's common stock is registered. Directors, officers and beneficial
owners of more than ten percent of the Corporation's common stock are required
by regulations of the Securities and Exchange Commission to furnish the
Corporation with copies of all Section 16(a) reports they file.
Based solely upon the Corporation's review of the copies of such reports
furnished to the Corporation and written representations that no other reports
were required to be filed, during 1999, all Section 16(a) reporting requirements
applicable to directors, officers and beneficial owners of more than ten percent
of the Corporation's common stock were met in a timely manner.
INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board of Directors of the Corporation selected
KMPG LLP to serve as the independent accountants of the Corporation for its
fiscal year ended December 31, 1999. In accordance with its normal procedures,
the Audit Committee has not yet selected independent accountants for the current
fiscal year ending December 31, 2000, but will do so later in 2000.
KPMG LLP performs both audit and non-audit professional services for and on
behalf of the Corporation and its subsidiaries. During 1999, the audit services
included examination of the consolidated financial statements of the
Corporation, examination of the financial statements of the Corporation's
subsidiaries and a review of certain filings with the Securities and Exchange
Commission and other regulatory agencies.
Representatives of KPMG LLP are expected to be present at the annual
meeting, will have the opportunity to make a statement should they desire to do
so and are expected to be available to respond to appropriate questions which
may be asked by stockholders.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Corporation's proxy statement for the
2001 Annual Meeting of Stockholders, a stockholder proposal must be submitted in
writing to the Corporation's Secretary on or before November 21, 2000 and must
satisfy the other requirements of Rule 14a-8 under the Securities Exchange Act
of 1934.
The proxy card for the 2001 Annual Meeting of Stockholders will give the
designated proxy holder authority to vote at his or her discretion on any matter
which is not brought to the Corporation's attention on or before February 7,
2001.
20
<PAGE>
CITY NATIONAL CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS--APRIL 26, 2000
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE CORPORATION
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
and Proxy Statement, each dated March 21, 2000, and hereby appoints Barbara S.
Polsky, with power of substitution, as proxy of the undersigned to attend the
Annual Meeting of Stockholders of CITY NATIONAL CORPORATION on April 26, 2000,
at 4:30 p.m., and any adjournments or postponements thereof, and to vote the
number of shares the undersigned would be entitled to vote if personally present
on the following:
(1) ELECTION OF DIRECTORS
/ / FOR all the nominees listed below to serve as Class I directors for a
term of three years (EXCEPT AS MARKED TO THE CONTRARY BELOW)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
George H. Benter, Jr., Stuart D. Buchalter, Ezunial Burts,
Andrea L. Van de Kamp
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.
______________________________________
(2) In her discretion, upon all other matters as may properly be brought before
the annual meeting or any adjournments thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED AS SPECIFIED
ABOVE. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE NOMINEES
FOR ELECTION AS DIRECTORS NAMED ABOVE.
(CONTINUED, AND TO BE SIGNED, ON THE OTHER SIDE)
<PAGE>
Please complete, sign and mail this Proxy promptly in the enclosed addressed
envelope which requires no postage if mailed in the United States.
Dated _____________, 2000
_________________________
Signature of
Stockholder(s)
(Please sign your name
exactly as it appears
hereon. In the case of
stock held in joint
tenancy, all joint
tenants must sign.
Fiduciaries should
indicate title and
authority.)
