<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
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 Section 240.14a-11(c) or Section
240.14a-12
California Bancshares, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Merrill Corporation
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
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:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
CALIFORNIA BANCSHARES, INC.
100 PARK PLACE, SUITE 140
SAN RAMON, CA 94583
(510) 743-4200
April 11, 1995
Dear Stockholder:
You are cordially invited to attend the annual meeting of California
Bancshares, Inc. ("CBI"), which will be held at the San Ramon Marriott, 2600
Bishop Drive, San Ramon, California, on Wednesday, May 17, 1995 at 5 p.m. We
look forward to your attendance.
The enclosed Notice of Meeting and Proxy Statement explain the matters to be
acted upon at the annual meeting of stockholders. Please carefully read these
materials and complete, date, sign, and return the enclosed proxy. WHETHER YOU
PLAN TO COME TO THE MEETING OR NOT, YOUR REPRESENTATION AND VOTE ARE IMPORTANT,
AND YOUR SHARES SHOULD BE VOTED.
Thank you for your continued support.
Sincerely,
DONALD J. GEHB
CHAIRMAN OF THE BOARD
<PAGE>
CALIFORNIA BANCSHARES, INC.
100 PARK PLACE, SUITE 140
SAN RAMON, CA 94583
(510) 743-4200
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
MAY 17, 1995
------------------------
Notice is hereby given that the annual meeting of stockholders of California
Bancshares, Inc. ("CBI"), will be held at the San Ramon Marriott, 2600 Bishop
Drive, San Ramon, California, on May 17, 1995, at 5:00 p.m. (local time) for the
following purposes:
1. to elect a board of twelve directors to hold office until the next
annual meeting of stockholders and until their respective successors
shall have been elected;
2. to transact such other business as may properly come before the meeting.
Only stockholders whose names appeared of record on the books of CBI at the
close of business on March 24, 1995, will be entitled to notice of and to vote
at the annual meeting on May 17, 1995, and at any adjournments thereof.
You are cordially invited to attend the annual meeting. However, in the
event you are unable to attend the annual meeting, you are urged to complete,
sign, date and return as promptly as possible the proxy submitted herewith in
the return envelope provided for your use. The giving of such proxy will not
affect your right to revoke such proxy or to vote in person should you later
decide to attend the annual meeting.
BY ORDER OF THE BOARD OF DIRECTORS
DIANE MIETZEL,
SECRETARY
Dated: April 11, 1995
San Ramon, California
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING,
PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
ENVELOPE PROVIDED.
MAILED TO STOCKHOLDERS ON OR ABOUT APRIL 11, 1995
<PAGE>
PROXY STATEMENT OF
CALIFORNIA BANCSHARES, INC.
100 PARK PLACE, SUITE 140
SAN RAMON, CALIFORNIA 94583
(510) 743-4200
This Proxy Statement is being furnished to the stockholders of California
Bancshares, Inc. ("CBI") in connection with the solicitation of proxies by the
Board of Directors of CBI to be used in voting at the annual meeting of
stockholders of CBI to be held on May 17, 1995 (the "Meeting"). This proxy
statement is first being mailed to holders of CBI Common Stock on or about April
11, 1995.
The Meeting has been called to elect directors and to consider such other
business as may be properly presented.
CBI has fixed the close of business on March 24, 1995 as the record date for
determining persons entitled to notice of and to vote at the Meeting. At the
close of business on March 24, 1995, there were outstanding and entitled to vote
9,984,120 shares of CBI Common Stock. Each share is entitled to one vote on each
matter properly brought before the meeting. Broker non-votes and abstentions
will not be counted, except for quorum purposes, and will have no effect on the
election of the directors.
Stockholders of CBI may use the enclosed proxy if they are unable to attend
the Meeting in person or wish to have their shares voted by proxy even if they
attend the Meeting. All proxies that are properly executed and returned, unless
revoked, will be voted at the Meeting in accordance with the instructions
indicated thereon or, if no direction is indicated, as recommended by the
Directors. The execution of a proxy will not affect the right to attend the
Meeting and vote in person. A person who has given a proxy may revoke it any
time before it is exercised at the Meeting by filing with the Secretary of CBI a
written notice of revocation or a proxy bearing a later date or by attendance at
the Meeting and voting in person. Attendance at such Meeting will not, by
itself, revoke a proxy.
The accompanying proxy is being solicited by the Board of Directors of CBI.
CBI will bear the entire cost of solicitation of proxies. Copies of solicitation
material will be furnished to brokerage houses, fiduciaries and custodians
holding in their names shares of CBI Common Stock beneficially owned by others
to forward to such beneficial owners.
CBI may reimburse such persons representing beneficial owners of its shares
for their expenses in forwarding solicitation material to such beneficial
owners. Solicitation of proxies by mail may be supplemented by telephone,
telegram or personal solicitation by directors, officers or other regular
employees of CBI who will not be additionally compensated therefor.
The date of this Proxy Statement is April 11, 1995.
1
<PAGE>
ELECTION OF DIRECTORS
The Bylaws of CBI provide that CBI shall have twelve directors who will be
elected each year at the annual meeting of stockholders by a vote of the
stockholders. All directors elected at the 1995 annual meeting shall hold office
until the next annual meeting of CBI and until their successors are elected and
have qualified as directors. The twelve nominees for director who receive the
greatest number of votes will be so elected.
Unless authority to vote for directors is withheld, it is intended that
shares represented by proxies in the accompanying form will be voted for the
election of the persons listed herein, or if any such persons shall unexpectedly
become unable or unwilling to accept nomination or election, for the election of
such other person, if any, as the nominating committee may recommend in his
place. Although the Board of Directors does not know whether any nominations
will be made at the Meeting other than those set forth below, if any such
nomination is made, the persons authorized to vote shares represented by
executed proxies in the enclosed form (if authority to vote for the election of
directors or for any particular nominee is not withheld) will have full
discretion and authority to vote for the nominees of the Board of Directors. If
persons other than the persons listed herein are nominated to serve on the Board
of Directors, such other nominations may only be made in accordance with Article
IV, Section 6 of the Bylaws of CBI, which requires that notification of such
nomination be made in writing and delivered or mailed to the President of CBI,
not less than 14 nor more than 50 days prior to any meeting of stockholders
called for the purpose of electing members of the Board of Directors, except
that if less than 21 days' notice of the annual meeting is given to
stockholders, such nomination may be mailed or delivered to the President of CBI
not later than the close of business on the seventh day following the day on
which notice of the meeting was mailed to stockholders. Nominees for the Board
of Directors must meet the qualifications specified in Article IV of the Bylaws
of CBI which include provisions prohibiting the election as a director of any
person who has a conflict of interest, as determined by counsel for CBI upon any
challenge to any nominee, which would prevent such person from acting in the
best interests of CBI or any person who is a director, officer or employee of
any other bank or bank holding company. The Board of Directors has no reason to
believe that any of the nominees listed herein will be unwilling to serve as
directors of CBI or will fail to meet the qualifications specified in Article IV
of the Bylaws of CBI.
CBI owns or controls ten banking subsidiaries: Alameda First National Bank,
Bank of Livermore, The Bank of Milpitas, N.A., The Bank of San Ramon Valley,
Commercial Bank of Fremont, Community First National Bank, Concord Commercial
Bank, Lamorinda National Bank, Modesto Banking Company and Westside Bank. It
also has three non-banking subsidiaries: CBI Mortgage, Island Bancorp. Leasing,
Inc. and LNB Corp. Collectively, the above companies are referred to herein as
the "Subsidiaries." All of the nominees are presently directors of CBI and of
its Subsidiaries.
2
<PAGE>
INFORMATION WITH RESPECT TO NOMINEES
Set forth below are the names and ages of the nominees, the principal
occupations at present and for the past five years of each nominee, certain
directorships held by each, and the year since which the nominee has been
continuously a director of CBI. Except as otherwise indicated below, each
nominee has been engaged in the indicated principal occupation or employment for
more than the past five years. All of the nominees have previously stood for
election by the stockholders of CBI. The information set forth in the following
table has been furnished to CBI by the respective nominees for directors.
<TABLE>
<CAPTION>
YEAR FIRST ELECTED DIRECTOR, POSITION AND
OFFICES WITH CBI AND ITS SUBSIDIARIES,
NAME AGE PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- - ----------------------------------- ---------------------------------------------------------------------------------------------
<S> <C><C>
DALE C. ADAMS 53 Director of CBI (1991-present). Attorney at law and partner in the law firm of Boatwright,
Adams and Bechelli.
HARRY A. AVILA 56 Director of CBI (1991-present). President of Essanay Property Management, a real estate
investment firm.
WAYNE W. BENNETT 46 Director of CBI (1991-present). Certified Public Accountant.
RICHARD J. CLANCY 62 Director of CBI (1991-present). Chairman and CEO of Security Pacific Real Estate.
JOSEPH P. COLMERY 41 Director, President and CEO of CBI (1991-present). President and CEO of Mission-Valley
Bancorp (1987-1991).
KEITH S. FRASER 58 Director of CBI (1988-present). Attorney at law and partner in the law firm of Varni,
Fraser, Hartwell & Rodgers.
DONALD J. GEHB 63 Director and Chairman of CBI (1991-present), and Director, President and CEO of CBI
(1971-1991).
THOMAS F. MATTHEWS 64 Director of CBI (1990-present), co-publisher of Tracy Press, newspaper.
JAMES L. McKENNA, JR. 59 Director of CBI (1984-present). Certified public accountant, and a partner in the
accounting firm of Kimbell, McKenna & von Kaschnitz.
RALPH N. MENDELSON 64 Director of CBI (1971-present). Attorney, of counsel for the law firm of Mendelson &
Brown, a partnership composed of professional corporations and individuals.
HARRY R. SHEPPARD 58 Director of CBI (1991-present). Attorney at law and partner in the law firm of Bell,
Sheppard and Faria.
A. STEVE SIMI 61 Director of CBI (1976-present). President of Cochran & Celli and Connell, automobile
dealerships.
</TABLE>
3
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 7, 1995, as to the
shares of CBI Common Stock beneficially owned by the persons named under
"INFORMATION WITH RESPECT TO NOMINEES," executive officers listed in the Summary
Executive Compensation Table and all directors and executive officers as a
group. Except as otherwise indicated, each person has sole investment and voting
power, or investment and voting power is shared with the spouse of the person,
with respect to the shares shown. Ownership information is based upon
information furnished by the respective individuals.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
---------------------------------------------
NUMBER OF SHARES OPTIONS
TITLE OF OF COMMON STOCK EXERCISABLE PERCENT
CLASS NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED WITHIN 60 DAYS TOTAL OF CLASS
- - -------- ------------------------ ------------------ -------------- ------- --------
<C> <S> <C> <C> <C> <C>
NOMINEES:
Common Dale C. Adams 20,073 10,140 30,213 *
Common Harry A. Avila 31,681 2,000 33,681 *
Common Wayne W. Bennett 18,470 10,140 28,610 *
Common Richard J. Clancy 24,508 10,140 34,648 *
Common Joseph P. Colmery 50,205 107,500 157,705 1.6
Common Keith S. Fraser 21,232 10,140 31,372 *
Common Donald J. Gehb 66,694 5,000 71,694 *
Common Thomas F. Matthews 20,942 5,489 26,431 *
Common James L. McKenna, Jr. 51,214 8,512 59,726 *
Common Ralph N. Mendelson 46,951 2,000 48,951 *
Common Harry R. Sheppard 26,806 2,872 29,678 *
Common A. Steve Simi 65,588 2,000 67,588 *
EXECUTIVE OFFICERS:
Common John W. Larsen 5,931 19,500 25,431 *
Common Vincent M. Leveroni 9,777 4,500 14,277 *
Common James A. Mayer 1,731 10,200 11,931 *
All directors and executive
officers as a group (18
individuals) 496,633 213,733 710,366 7.0
<FN>
- - ------------------------
* Less than 1% of total outstanding.
</TABLE>
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information for the last three fiscal
years regarding the compensation earned by or accrued for the account of the
chief executive officer and the other four most highly paid executive officers
of CBI during 1994.
SUMMARY EXECUTIVE COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION (2)
ANNUAL ----------------
COMPENSATION (1) SECURITIES ALL OTHER
---------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS($) OPTIONS (#) ($)(3)
- - ----------------------------------------------------------------- ---- ---------- --------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Joseph P. Colmery, 1994 $ 200,000 $ 337,730 -- $ 6,190
President and Chief Executive Officer of CBI 1993 200,000 171,410 -- 4,509
1992 150,000 127,980 -- 6,999
Donald J. Gehb, 1994 140,383 25,000 -- 8,999
Chairman of the Board of CBI 1993 190,020 57,006 20,000 7,522
1992 190,020 57,006 -- 10,950
John W. Larsen, 1994 119,166 55,000 4,500 5,518
Executive Vice President and Chief Credit Administrator of CBI 1993 114,162 30,244 4,500 4,041
1992 108,324 22,658 4,500 4,383
Vincent M. Leveroni, 1994 112,666 61,000 4,500 5,242
Executive Vice President and Chief Financial Officer of CBI 1993 105,498 35,827 4,500 3,765
1992 100,780 23,795 4,500 3,614
James A. Mayer, 1994 109,668 37,050 3,000 5,125
Executive Vice President and Bank Operations Administrator of 1993 99,580 25,999 3,000 3,879
CBI 1992 95,834 26,325 2,500 3,311
<FN>
- - ------------------------
(1) Other annual compensation, which may include the personal use of a company
car or a car allowance and payment of country club dues, is less than 10%
of the total annual salary and bonus of the individual.
(2) CBI did not have any restricted stock awards or long term incentive payouts
in the years 1992 through 1994.
(3) Includes annual contributions to CBI's profit sharing/salary deferral plan,
and the dollar value of any insurance premium paid by CBI with respect to
term life insurance for the benefit of the individual for insurance in
excess of $50,000.
</TABLE>
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding stock options
issued by CBI during 1994 to the chief executive officer and the other four most
highly paid executive officers of CBI.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------- ANNUAL RATES OF
NO. OF % OF TOTAL STOCK
SECURITIES OPTIONS PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION -----------------
(#) YEAR ($/SH) DATE 5% ($) 10% ($)
---------- ---------- -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Colmery............................................. -0- -0- -0-
Donald J. Gehb................................................ -0- -0- -0-
John W. Larsen................................................ 4,500 4.6 15.50 03/23/04 $43,965 $110,925
Vincent M. Leveroni........................................... 4,500 4.6 15.50 03/23/04 43,965 110,925
James A. Mayer................................................ 3,000 3.1 15.50 03/23/04 29,310 73,950
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTIONS
The following table sets forth certain information regarding stock options
exercised during 1994 and held at the end of 1994 by the chief executive officer
and the other four most highly paid executive officers of CBI.
<TABLE>
<CAPTION>
NO. OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)
--------------- ---------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
--------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C>
Joseph P. Colmery.............................................. -0- -0- 107,500/-0- 777,350/-0-
Donald J. Gehb................................................. -0- -0- 5,000/15,000 27,500/82,500
John W. Larsen................................................. -0- -0- 17,700/10,800 87,045/37,800
Vincent M. Leveroni............................................ -0- -0- 2,700/10,800 11,700/37,800
James A. Mayer................................................. -0- -0- 9,100/6,900 41,400/24,075
</TABLE>
PROFIT SHARING/SALARY DEFERRAL PLAN
CBI and its Subsidiaries have a profit sharing/salary deferral plan which
covers substantially all employees with one year of continuous service.
Contributions to the profit sharing portion of the plan, which cannot be in
excess of 15% of the compensation of all participants in the plan, are made at
the discretion of the Board of Directors. In the salary deferral portion of the
plan, CBI matches one-half of the employees' 401(k) plan contributions up to two
percent of their compensation. Contributions to the profit sharing portion of
the plan, when made to the plan, are allocated among the employee participants
in proportion to the ratio of that employee's compensation to the compensation
of all of the employees who are participants. In both portions of the plan,
compensation is defined as the employee's salary, wages, bonuses, commissions,
incentive compensation, and overtime, subject to an overall limit per employee
of $103,050. Amounts accrued and deferred under the plan during fiscal years
1992 through 1994 for the accounts of the individuals named in the Summary
Executive Compensation Table are reflected in "All Other Compensation."
6
<PAGE>
COMPENSATION OF DIRECTORS
CASH COMPENSATION. During 1994, each of the directors, with the exception
of Messrs. Gehb and Colmery, received a director's fee of $21,600 per year from
CBI for their service as directors. No additional fees were paid to the
directors for services or attendance at regular or special meetings of the Board
of Directors of CBI or its Subsidiaries. Each director received a fee for
attending meetings of the committees of CBI on which he serves. The fee was $200
per meeting, except with regard to the Credit Policy Committee, for which the
fee was $600 per meeting. Effective January 1, 1995, Mr. Gehb will receive
director and committee fees.
DIRECTOR RETIREMENT BENEFITS. In June 1991, CBI entered into a Directors'
Retirement Agreement with each of its retired directors and directors who then
had vested benefits under its Directors' Retirement Plan, which was terminated
at that time. The Directors' Retirement Agreement provides that the amount of
the payments to each director shall be based on the retirement benefits accrued
under the Directors' Retirement Plan at that time. The amount of the retirement
payments for Ralph N. Mendelson and A. Steve Simi, who are current directors of
CBI, will be $994.50 per month. The same amount is being paid to one retired
director of CBI and will be paid to another retired director when he becomes
eligible in May, 1995. The amount of the retirement payments for James L.
McKenna, Jr., who is also a current director of CBI, will be $696.15 per month.
The remaining directors of CBI are not vested and will not be entitled to
receive any payments under the Directors' Retirement Agreement. The agreement
also provides that in the event CBI enters into an agreement providing for (i) a
merger in which CBI will not be the surviving corporation, (ii) a transfer of
all or substantially all of the assets of CBI, or (iii) any other corporate
reorganization in which there is a change in ownership of more than 50% of the
outstanding shares of CBI Common Stock, then CBI must give each director who is
a party to the agreement notice of such impending event and each director may
elect to require that CBI purchase at its own expense and deliver to each
director (or such director's designee) an annuity contract providing for payment
when due of all future benefits owed to such director.
TRANSACTIONS WITH DIRECTORS,
EXECUTIVE OFFICERS AND OTHERS
Some of CBI's directors and executive officers, and corporations and
partnerships of which some of CBI's directors are directors, officers or
partners, have had transactions in the ordinary course of business with CBI or
its Subsidiaries, including borrowings, all of which were on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and do not involve more than
normal risk of collectibility or present other unfavorable features.
Since January 1, 1994, neither CBI nor any of its subsidiaries has entered
into any transaction or series or related transactions in which the amount
involved exceeded $60,000 and in which any director, executive officer, nominee
for director or member of the immediate family of any of the foregoing persons
had any direct or indirect material interest.
During 1994, separate employment agreements were in effect between CBI and
Donald J. Gehb, Joseph P. Colmery, John W. Larsen and Vincent M. Leveroni,
pursuant to which each was bound to serve in his current capacity at the
following annual salary, exclusive of any profit sharing plans, and any other
employee benefit programs established by the Board of Directors. The earliest
date on which the agreement will or may expire is shown in parentheses. Mr.
Gehb: $100,000 in 1995, and $60,000 in 1996 and 1997 (expires December 31,
1997); Mr. Colmery: $200,000 (expires December 31, 1996); Mr. Larsen: $120,000
(expires at either party's election June 30, 1995 or will be renewed for one
year); and Mr. Leveroni: $115,000 (expires at either party's election June 30,
1995 or will be renewed for one year). Mr. Colmery's agreement provides for
bonus of 1.5% of CBI's pretax profits if CBI's return on average assets is .75%,
and an additional .01% of CBI's pretax profits for every one hundredth of a
percentage point by which CBI's return on average assets exceeds .75%, up to a
maximum of $600,000 or 2.5% of CBI's pretax profits, whichever is lower. Each
employment agreement currently in effect provides that, if a person, firm or
corporation acquiring control of CBI seeks to vary the terms of the employment
agreement, transfers the executive to an area outside the county or counties in
which he currently works, unduly harasses him, or seeks to terminate the
benefits and
7
<PAGE>
privileges provided for him under his employment agreement, then the executive
shall be entitled to receive an amount equal to the compensation required by the
terms and conditions of the employment agreements, but in no event less than his
monthly compensation, including bonuses and contributions to benefit and pension
plans, for a period of 36 months for Messrs. Colmery and Gehb and 12 months for
Messrs. Larsen and Leveroni from the effective date of the acquisition of CBI.
In connection with involuntary terminations other than in the context of a
change in control of CBI, the salary of Mr. Colmery and Mr. Gehb will continue
until the earlier of his subsequent employment elsewhere or 12 months from the
date of termination.
In 1994, CBI and its subsidiaries paid fees for legal services to the law
firm of Mendelson & Brown. Ralph N. Mendelson, Inc. a professional corporation,
is one of the partners of this firm. Ralph N. Mendelson, a director of CBI and
certain of its subsidiaries, was an officer and sole shareholder of Ralph N.
Mendelson, Inc. Fees paid to this firm in 1994 did not exceed five percent of
such firm's gross revenues for its last full fiscal year. Ralph N. Mendelson and
Mendelson & Brown have continued to render legal services for CBI and its
subsidiaries for which its is expected that payment will be made in 1995.
COMPENSATION COMMITTEE REPORT
The Human Resources Committee hired a nationally recognized firm in
compensation planning to review CBI's compensation policies for officers. Based
upon this review, CBI set up a compensation program that features:
- Base salary ranges that reflect both competitive market levels and the
role of key jobs in CBI. Base salaries will be reviewed annually based on
the results of the individual, the results of CBI, and changes in average
salaries paid by our peers.
- Competitive annual incentive bonus amounts consistent with salary levels
and tied closely to performance of CBI, the subsidiary, and the
individual. For 1994, generally 35% of the bonus for an officer was based
on return on assets for CBI or for the subsidiary and 65% was based upon
the attainment of CBI, subsidiary and/or individual goals (e.g.,
loan/deposit growth, increase in service charge income, etc.).
- The total of base salary and incentive bonuses will be targeted at five
percent over median peer group total cash compensation levels. The range
for base salary plus incentive bonuses can extend up to the 75th
percentile of peer group total cash compensation.
- Stock option grant guidelines for annual grants consistent with peer group
practice.
Compensation for Joseph P. Colmery, President and Chief Executive Officer,
is determined by an employment agreement which became effective in 1993. Mr.
Colmery's base compensation for 1994 was $200,000 and his bonus is 1.5% of CBI's
consolidated pretax profits if CBI's return on average assets is .75% and an
additional .01% of CBI's pretax profits for every one hundredth of a percentage
point by which CBI's return on average assets exceeds .75%, up to a maximum of
$600,000 or 2.5% of CBI's pretax profits, whichever is lower. Mr. Colmery's
bonus for 1994 was $337,730.
In 1994, a new provision of the Internal Revenue Code went into effect which
denies tax deductibility of nonperformance-based compensation in excess of
$1,000,000 paid by a public company in any year to the Chief Executive Officer
or any of the other four most highly paid executive officers. CBI does not
anticipate triggering these provisions in the foreseeable future.
HUMAN RESOURCES COMMITTEE
<TABLE>
<S> <C> <C>
A. STEVE SIMI, CHAIRMAN JAMES L. MCKENNA DONALD J. GEHB
RICHARD J. CLANCY HARRY R. SHEPPARD JOSEPH P. COLMERY
</TABLE>
8
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph sets forth the cumulative total stockholders' return to
CBI's stockholders during the five-year period ended December 31, 1994, as
compared to an overall stock market performance index (Standard & Poor's 500
Index) and CBI's peer group (Montgomery Securities' California Independent Bank
Proxy) during the same period:
CALIFORNIA BANCSHARES, INC. STOCK PRICE PERFORMANCE
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
California Bancshares 100.00 60.05 45.77 47.91 74.06 86.50
California Independent Bank Proxy 100.00 87.47 83.46 82.46 98.04 103.01
S&P 500 100.00 93.44 118.02 123.29 131.99 129.96
</TABLE>
Source: Montgomery Securities WESTERN BANK MONITOR
- - ------------------------
(1) Assumes $100 invested on December 31, 1989 and assumes reinvestment of
dividends.
The above graph, which is required by the Securities and Exchange Commission
(SEC), indicates that CBI's total stockholder return has been low from 1989 -
1994 in comparison to its peer group based on starting stock prices at December
31, 1989. However, as the following graph indicates, CBI's price/book value
ratio in 1989 was considerably higher than its peer group. In 1990 CBI's
price/book value ratio moved more in line with its peers. Since 1992 CBI's stock
performance as measured by price/book value has exceeded the peer group. The
lower comparative return illustrated in the above chart results only because we
are required to use December 31, 1989 as the starting point.
CALIFORNIA BANCSHARES, INC. PRICE/BOOK VALUE
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
California Bancshares 2.49 1.31 0.93 0.90 1.29 1.44
California Independent Bank Proxy 1.78 1.22 1.15 1.02 1.13 1.15
</TABLE>
Source: Montgomery Securities WESTERN BANK MONITOR
9
<PAGE>
CERTAIN COMMITTEES OF THE BOARD OF DIRECTORS
BOARD PARTICIPATION. During 1994, the Board of Directors met 13 times for
regularly scheduled and special meetings. During 1994, each director attended 75
percent or more of the aggregate of the total number of meetings of the Board of
Directors and each committee on which the director sits.
DESCRIPTION OF COMMITTEES. The Board of Directors has an Executive
Committee, Audit Committee, Nominating Committee, Credit Policy Committee, Human
Resources Committee, Compliance Committee, and Stock Option Committee.
The Executive Committee is authorized by CBI's By-laws to exercise all of
the powers and authority of the Board of Directors, except for certain major
actions including the declaration of dividends, creation and composition of
committees, approval of agreements other than in the ordinary course of
business, amendment of charter documents and Board resolutions, and selection of
outside counsel and accountants. The members of the Executive Committee were
Wayne W. Bennett, Joseph P. Colmery, Donald J. Gehb, James L. McKenna, Harry R.
Sheppard and A. Steve Simi. During 1994, the Executive Committee met 5 times.
The Audit Committee reviews or causes to be reviewed, in accordance with
procedures approved by the Board of Directors, all reports of examination of CBI
and its Subsidiaries made by regulatory authorities, and makes or causes to be
made in accordance with procedures approved by the Board, internal examinations
and audits of the affairs of CBI and its Subsidiaries. The committee regularly
reports to the Board its findings, conclusions and recommendations, if any,
relating to the adequacy of internal audit controls and procedures as well as
the administration of the affairs of CBI and its Subsidiaries in their corporate
or fiduciary capacities, in accordance with applicable laws, regulations and
sound financial accounting principles. The members of the Audit Committee were
Harry A. Avila, Keith S. Fraser, Thomas F. Matthews and Ralph N. Mendelson.
During 1994, the Audit Committee met 4 times.
The Nominating Committee consists of the entire Board of Directors. The
Nominating Committee is authorized to nominate candidates for election to the
Board of Directors. The Nominating Committee will consider, but will not be
under any obligation to accept, recommendations for nominees from stockholders
who comply with the requirements described in "ELECTION OF DIRECTORS." The
Nominating Committee met one time in 1994.
The Board of Directors appoints the Human Resources Committee, which
administers employee compensation and incentive programs. The Human Resources
Committee engages professional consulting services in the personnel compensation
and benefit areas when needed. The members of the Human Resources Committee,
which met 6 times in 1994, were Richard J. Clancy, Joseph P. Colmery, Donald J.
Gehb, James L. McKenna, Harry R. Sheppard and A. Steve Simi. The Stock Option
Committee, a subcommittee of the Human Resources Committee consisting of Messrs.
Clancy, McKenna, Sheppard and Simi, administers the Incentive Plan and
Directors' Option Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Human
Resources Committee performs functions typically associated with a compensation
committee. Messrs. Colmery and Gehb serve on this committee and also serve as
officers of CBI. They abstain from voting on matters which concern their own
compensation.
INDEPENDENT PUBLIC AUDITORS
The Board of Directors has selected the firm of KPMG LLP, independent public
auditors, to examine and express an opinion on its consolidated financial
statements for the year ending December 31, 1995. Representatives of KPMG LLP
are expected to be present at the meeting with the opportunity to make a
statement, if they desire to do so, and they are expected to be available to
respond to appropriate questions.
10
<PAGE>
Services performed by KPMG LLP for the year ended December 31, 1994,
consisted of their examinations of the consolidated financial statements of CBI
and its subsidiaries, consultation on financial, accounting, taxation, and
reporting matters, and services related to filings with the Securities and
Exchange Commission ("SEC").
SECTION 16(A) COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and SEC
regulations, CBI's directors, certain officers and greater than 10% stockholders
are required to file reports of ownership and changes in ownership with the SEC
and to furnish CBI with copies of all such reports they file. Based solely on
its reviews of copies of such reports received or written representations from
certain reporting persons, CBI believes that during 1994 all filing requirements
applicable to its directors and officers were satisfied. To the best of its
knowledge, CBI has no stockholders who beneficially own more than 10% of CBI
Common Stock.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
meeting other than those set forth in the Notice of Annual Meeting. If any other
matters properly come before the meeting or any adjournment thereof, the persons
named in the accompanying form of proxy and acting thereunder will vote in
accordance with their best judgment with respect to such matters.
STOCKHOLDERS' PROPOSALS
To be considered for inclusion in CBI's proxy statement and form of proxy
relating to the annual meeting of stockholders to be held in 1996, a
stockholder's proposal must be received at the offices of CBI, 100 Park Place,
Suite 140, San Ramon, CA 94583, not later than December 12, 1995.
Submission of a proposal does not guarantee its inclusion in a proxy
statement or its presentation at a stockholder meeting. Stockholder proposals
are subject to regulation under federal securities laws.
By Order of the Board of Directors
Diane Mietzel
SECRETARY
11
<PAGE>
CALIFORNIA BANCSHARES, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 1995
The undersigned holder of Common Stock of California Bancshares, Inc.
("CBI") hereby appoints JAMES L. McKENNA, JR., and HARRY R. SHEPPARD, and each
of them, the proxies of the undersigned with full powers of substitution, to
represent and vote all shares of common stock of CBI held of record by the
undersigned as of the close of business on March 24, 1995, at the annual meeting
of stockholders of CBI, to be held at the San Ramon Marriott, 2600 Bishop Drive,
San Ramon, California, on Wednesday, May 17, 1995, at 5:00 p.m. (local time) and
at any adjournment or postponement of said meeting, with all the powers the
undersigned would possess if personally present, as follows:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS. FOR all nominees listed below WITHHOLD AUTHORITY to vote for all nominees
(except as marked to the contrary below) / / below / /
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Dale C. Adams, Harry A. Avila, Wayne W. Bennett, Richard J. Clancy, Joseph P.
Colmery, Keith S. Fraser, Donald J. Gehb,
Thomas F. Matthews, James L. McKenna, Jr., Ralph N. Mendelson, Harry R.
Sheppard, A. Steve Simi
2. In their discretion, the proxies are authorized to vote upon such
business as may properly come before the meeting or any adjournment thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED, OR IF
DIRECTIONS ARE NOT INDICATED, WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF
SOME OR ALL OF THE PERSONS LISTED ON THIS PROXY IN THE MANNER DESCRIBED IN THE
PROXY STATEMENT OF THE BOARD OF DIRECTORS DATED APRIL 11, 1995. IF OTHER
BUSINESS IS PRESENTED, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE BEST
JUDGMENT OF THE PROXIES.
<PAGE>
A majority of said proxies or their substitutes at said meeting or any
adjournment or postponement thereof (or if less than a majority be present, the
proxy or proxies present) shall have and may exercise all of the powers of all
of said proxies hereunder.
Receipt is acknowledged of the Notice of Annual Meeting of Stockholders and
Proxy Statement dated April 11, 1995. The undersigned hereby revokes all proxies
heretofore given by the undersigned to vote at said meeting or any adjournment
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE.
<TABLE>
<S> <C>
Dated: -----------------, 1995
-----------------------------
Signature of Stockholder
-----------------------------
Signature of Stockholder
</TABLE>
SIGNING INSTRUCTIONS (IMPORTANT): PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
HEREON. (EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS AND ATTORNEYS SHOULD
GIVE FULL TITLE. IF SIGNING ON BEHALF OF A CORPORATION, PLEASE SIGN THE FULL
CORPORATE NAME AND THE TITLE OF THE AUTHORIZED OFFICER SIGNING ON BEHALF OF THE
CORPORATION.) ALL JOINT OWNERS AND JOINT TRUSTEES SHOULD SIGN.
