THE SAN FRANCISCO COMPANY
550 Montgomery Street, 10th Floor
San Francisco, California 94111
April 30, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders (the "Annual Meeting") of The San Francisco Company (the
"Company"), to be held on May 19, 1999, at 10:00 a.m. local time, in the
Board room of the Company at 550 Montgomery Street, 11th Floor, San
Francisco, California, 94111. Enclosed are the Notice of the Annual
Meeting, a Proxy Statement describing the business to be transacted at
the Annual Meeting, and proxy cards for use in voting at the Annual
Meeting. Separate proxy cards are provided for the holders of the
Company's Class A Common Stock, $0.01 par value (the "Common Stock"),
and of the Company's 8% Series B Convertible Preferred Stock, $0.01 par
value (the "Series B Preferred Stock"). A copy of the Company's Annual
Report on Form 10-K for the twelve months ended December 31, 1998 (the
"1998 Annual Report") accompany the Proxy Statement.
At the Annual Meeting, stockholders will be asked:
(i) to elect nine (9) of the nine (9) authorized directors of the
Company, three (3) to serve for one-year terms, three (3) to serve for
two-year terms, and three (3) to serve for three-year terms;
(ii) to ratify the Board of Directors' selection of KPMG LLP,
independent public accountants, as the independent accounting firm for
the Company during the fiscal years ending December 31, 1998 and 1999;
and
We hope that you will be able to attend the Annual Meeting. In any
event, please complete, date, sign, and promptly return the appropriate
enclosed proxy for the Common Stock and/or the Series B Preferred Stock.
Sincerely yours,
JAMES E. GILLERAN
Chairman of the Board and,
Chief Executive Officer
You are urged to complete, date, sign, and promptly return your
proxy card(s) in the enclosed envelope whether or not you plan to attend
the Annual Meeting.
PAGE
THE SAN FRANCISCO COMPANY
550 Montgomery Street, 10th Floor
San Francisco, California 94111
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 19, 1999
To the holders of the Class A Common Stock, par value $.01 per
share (the "Common Stock"), and the 8% Series B Convertible Preferred
Stock, par value $.01 per share (the "Series B Preferred Stock"), of the
San Francisco Company (the "Company"):
The 1999 annual meeting of the stockholders of the Company will be
held on May 19, 1999 at 10:00 a.m. local time, in the Board room of the
Company, 550 Montgomery Street, 11th Floor, San Francisco, California
94111 (the "Annual Meeting") for the following purposes:
1. To elect nine (9) of the nine (9) authorized directors of the
Company, three (3) to serve for one-year terms, three (3) to
serve for two-year terms, and three (3) to serve for
three-year terms;
2. To ratify the Board of Directors' selection of KPMG LLP,
independent public accountants, as the independent accounting
firm for the Company during the fiscal years ending December
31, 1998 and 1999; and
These matters are more fully discussed in the enclosed Proxy
Statement.
If the Company's principal stockholder of record votes all of his
shares of the Common Stock in favor of any or all of these proposals,
then approval of such proposals would be assured. While the principal
stockholder has not entered into any agreements as to the manner in
which he will vote his shares, he has expressed his intent to vote in
favor of all of the above proposals.
Holders of the Common Stock and Series B Preferred Stock of the
Company of record at the close of business on March 31, 1999 are
entitled to vote at the Annual Meeting to the extent and in the manner
set forth in the Proxy Statement.
The Board of Directors has nominated: (1) Mr. Gordon Swanson, Mr.
James E. Gilleran and Mr. Peter Foo to serve as Class I directors for
terms until the Company's 2001 Annual Meeting of Stockholders or until
their successors are elected, (2) Mr. Kent D. Price, Mr. John McGrath
and Mr. Nicholas Unkovic to serve as Class II directors for terms until
the Company's 2002 Annual Meeting of Stockholders or until their
successors are elected, and (3) Mr. Willard D. Sharpe, Mr. Gary Williams
and Mr. Paul Erickson to serve as Class III directors for terms until
the Company's 2000 Annual Meeting of Stockholders or until their
successors are elected. Any stockholder entitled to vote for directors
may nominate candidates for election as directors of the Company;
provided, however, that nominations for director of the Company by any
person other than the Board of Directors may be made only by a record
stockholder who has delivered a written notice to the Secretary of the
Company no later than the close of business sixty (60) days in advance
of the Annual Meeting or ten (10) days after the date on which notice of
the Annual Meeting is first given to stockholders, whichever is later.
Such stockholder's notice shall set forth (a) as to each person, if any,
whom the stockholder proposes to nominate for election or re-election as
a director: (i) the name, age, business address and residence address
of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the Company which are
beneficially owned by such person, and (iv) any other information
relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (including without
limitation such person's written consent to being named in the proxy
statement, if any, as a nominee and to serving as a director if
elected); and (b) as to the stockholder giving the notice: (i) the name
and address of such stockholder, as they appear on the Company's books,
and (ii) the class and number of shares of the Company which are
beneficially owned by such stockholder.
PAGE 1
At the request of the Board of Directors, any person nominated by
the Board for election as a director shall furnish to the Assistant
Secretary of the Company that information required to be set forth in
the stockholder's notice of nomination which pertains to the nominee.
No person shall be eligible for election as a director of the Company
unless nominated in accordance with the procedures set forth herein.
The Chairman of the Annual Meeting, if the facts warrant, shall
determine and declare at the Annual Meeting that a nomination was not
made in accordance with the procedures prescribed herein, and if he
should so determine, he shall so declare at the Annual Meeting and the
defective nomination shall be disregarded.
Any person giving a proxy has the power to revoke or suspend it
before its exercise. A proxy is revocable before the Annual Meeting by
sending written notice or a duly executed proxy bearing a later date to
Keary L. Colwell, Chief Financial Officer of the Company, at the
principal executive offices of the Company. In addition, a stockholder
giving a proxy may revoke it by attending the Annual Meeting and
electing to vote in person, before any vote is taken. Unless otherwise
instructed, each valid proxy returned that is not revoked will be voted
FOR the election as directors of the person or persons specified on such
proxy card; FOR each of the proposals listed above; and at the proxy
holder's discretion, on such other matters, if any, as may come before
the Annual Meeting (including any proposal to adjourn the Annual
Meeting).
Please sign and date the appropriate enclosed proxy card or cards
and return them promptly in the envelope provided whether or not you
plan to attend the Annual Meeting. The Board of Directors unanimously
recommends a vote FOR the election as directors of the persons named on
the proxy card enclosed herein, and FOR the other proposal. The
directors of the Company intend to vote all of their shares FOR the
approval of the proposals described above.
By Order of the Board of Directors,
Keary L. Colwell, Chief Financial Officer
April 30, 1999 (approximate mailing date of proxy material)
PAGE 2
THE SAN FRANCISCO COMPANY
550 Montgomery Street, 10th Floor
San Francisco, California 94111
(415) 781-7810
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the
solicitation of the enclosed proxy by, and on behalf of, the Board of
Directors of The San Francisco Company (the "the Company"), a Delaware
corporation and bank holding company for Bank of San Francisco (the
"Bank"). The enclosed proxy is for use at the 1999 Annual Meeting of
Stockholders of the Company to be held on May 19, 1999, at 10:00 a.m.
local time, in the Board room of the Company, 550 Montgomery Street,
11th Floor, San Francisco, California, 94111 and at all postponements or
adjournments thereof (the "Annual Meeting").
Purpose of the Annual Meeting
At the Annual Meeting, holders of the Company's Class A Common
Stock, par value $.01 per share (the "Common Stock") and 8% Series B
Convertible Preferred Stock, par value $.01 per share (the "Series B
Preferred Stock") will be asked to act on the following proposals:
1. To elect nine (9) of the nine (9) authorized directors of the
Company, three (3) to serve for one-year terms, three (3) to
serve for two-year terms, and three (3) to serve for
three-year terms;
2. To ratify the Board of Directors' selection of KPMG LLP
independent public accountants, as the independent accounting
firm for the Company during the fiscal years ending December
31, 1998 and 1999; and
If the Company's principal stockholder of record votes all of his
shares of the Common Stock in favor of any or all of these proposals,
then approval of such proposals would be assured. While the principal
stockholder has not entered into any agreements as to the manner in
which he will vote his shares, he has expressed his intent to vote in
favor of all of the above proposals.
Voting Securities
Only stockholders of record on March 31, 1999 (the "Record Date")
are entitled to notice of and to vote at the Annual Meeting. At the
close of business on that Record Date, the Company had outstanding
thirty-one million, seven hundred and twenty-eight thousand, seven
hundred and eighty-two (31,728,782) shares of its Common Stock, and
fifteen thousand, eight hundred and sixty-nine (15,869) shares of its
Series B Preferred Stock.
Each holder of the Common Stock and the Series B Preferred Stock is
entitled, with respect to each matter as to which such holder is
entitled to vote, to one (1) vote, in person or by proxy, for each share
of the Common Stock or Series B Preferred Stock outstanding in his or
her name on the transfer books of the Company as of the Record Date.
Revocability of Proxies
Any person giving a proxy has the power to revoke or suspend it
before its exercise. A proxy is revocable before the Annual Meeting by
sending written notice or a duly executed proxy bearing a later date to
Keary L. Colwell, Chief Financial Officer of the Company, at the
principal executive offices of the Company. In addition, a stockholder
giving a proxy in any of the forms accompanying this Proxy Statement may
revoke it by attending the Annual Meeting and electing to vote in
person, before any vote is taken.
PAGE 1
Votes Required
Holders of the Common Stock and Series B Preferred Stock are
entitled to vote on each of the proposals to be presented at the Annual
Meeting. The following paragraphs explain, for each proposal, the vote
required for adoption. In each case, a quorum must be present for the
vote to be valid.
PROPOSAL ONE: ELECTION OF DIRECTORS, as to the Class I directors,
the validly-nominated nominees for election as directors, who rank
first, second and third in number of votes received from holders of the
Common Stock and the Series B Preferred Stock represented and voting
together as a single class will be elected as directors; as to the Class
II directors, the validly-nominated nominees for election as directors,
who rank first, second and third in number of votes received from
holders of the Common Stock and the Series B Preferred Stock voting
together as a single class, will be elected as directors; and as to the
Class III directors, the validly-nominated nominees for election as
directors, who rank first, second, and third in number of votes received
from holders of the Common Stock and the Series B Preferred Stock
represented and voting together as a single class, will be elected as
directors, in each case even if some or all of such nominees receive
less than a majority of the total votes.
PROPOSAL TWO: RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTING
FIRM FOR 1998 AND 1999 requires an affirmative vote of the holders of a
majority of the shares of the Common Stock and the Series B Preferred
Stock represented and voting together as a single class.
Such other matters, if any, as may properly come before the Annual
Meeting will generally require the affirmative vote of the holders of a
majority of the shares of the Common Stock and the Series B Preferred
Stock represented and voting together as a single class.
With regard to the election of directors, votes may be cast in
favor or withheld; votes that are withheld will be excluded from the
vote and will have no effect. Abstentions may be specified on all
proposals (other than the election of directors) and will be counted as
shares that are present or represented at the Annual Meeting for
purposes of determining a quorum on the proposal on which the abstention
is specified. However, because such shares will be counted as
represented at the Annual Meeting, and because the success of the
proposals (other than the election of directors) is measured based on
the number of affirmative votes out of the number of shares represented
at the Annual Meeting, abstentions will have the effect of a negative
vote.
Under applicable Delaware law, broker non-votes are counted for the
purpose of determining the presence or absence of a quorum for the
transaction of business but are not otherwise counted. Therefore,
broker non-votes will have no effect on the outcome of the election of
directors but will have the same effect as a vote against the other
proposals.
Unless otherwise instructed, each valid proxy returned which is not
revoked will be voted FOR the election as directors of the persons
specified on such proxy card, FOR each of the other proposals, and at
the proxy holders' discretion, on such other matters, if any, that may
come before the Annual Meeting (including any proposal to adjourn the
Annual Meeting).
Solicitation of Proxies
The Company will bear the entire cost of preparing, assembling,
printing and mailing proxy materials furnished by the Board of Directors
to stockholders. Copies of proxy materials also will be furnished to
brokerage houses, fiduciaries and custodians to be forwarded to the
beneficial owners of the Common Stock and the Series B Preferred Stock.
In addition to the solicitation of proxies by use of the mail, some of
the officers, directors and regular employees of the Company and the
Bank may (without additional compensation) solicit proxies by telephone
or personal interview, the costs of which the Company will bear.
In the event that any of the nominees for election as director
become unavailable, which the Company does not expect, it is intended
that, pursuant to the accompanying proxy, votes will be cast for such
substitute nominee or nominees as may be designated by the Board of
Directors, unless the Board of Directors reduces the number of
directors.
PAGE 2
Annual Report
A copy of the Company's Annual Report on Form 10-K for the twelve
months ended December 31, 1998 (the "1998 Annual Report") accompanies
this Proxy Statement. Additional copies of the 1998 Annual Report, and
Quarterly Reports on Form 10-Q are available without cost upon request
by writing to Keary L. Colwell, Chief Financial Officer, The San
Francisco Company, 550 Montgomery Street, 10th Floor, San Francisco,
California 94111.
Security Ownership of Certain Beneficial Owners and Management
Common Stock
On December 4, 1998, the Federal Reserve Board announced that on
November 30, 1998, Mr. Putra Masagung and PT Gunung Agung, the
beneficial owners of a majority of the Company's Common Stock entered
into a Voting Trust Agreement (the "Agreement") which was filed with the
Securities and Exchange Commission (the "SEC") on Form 8-K in December
1998. Mr. Masagung and PT Gunung Agung retained their individual
beneficial interest but transferred voting control of all of their
shares of Common Stock, which as of March 31, 1999 represented 97.8% of
the Company's Common Stock, to a Trustee, Mr. Robb Evans, under the
terms of the Agreement, effective January 4, 1999. The beneficiaries of
the voting trust are Mr. Putra Masagung and PT Gunung Agung.
The following sets forth information regarding the beneficial
ownership of the holders of five percent (5%) or more of the Common
Stock as of March 31, 1999. The address of PT Gunung Agung is 55 MH
Thamrin, Jakarta, Indonesia, and Mr. Masagung's address for the purpose
of his beneficial ownership is the principal executive office of the
Company.
Other than as set forth below based upon filings made with the SEC,
the Company is not aware of any person who is the beneficial owner of
five percent (5%) or more of the Common Stock as of March 31, 1999.
Number of
Shares of
Common Stock
Beneficially Percent
Name of Beneficial Owner Owned of Class
Pt Gunung Agung 16,600,845 52.3%
Mr. Putra Masagung 14,426,457 45.5
PAGE 3
The following table shows the beneficial ownership of directors,
Named Executive Officers, and directors and Named Executive Officers as
a group as of March 31, 1999:
Right to Acquire
Number of shares Number of Shares
of Common Stock Percent of Common Stock Percent
Name of Beneficial Beneficially Owned of Class Within Sixty Days of Class
Owner
James E. Gilleran-
Director of the Company
and the Bank (1) 1,586,439 4.6% 1,586,439 4.6%
John McGrath-
Director of the Company
and the Bank (1)(2) 350,464 1.0% 350,464 1.0%
Kent D. Price-
Director of the Company (1) 360,422 1.1% 360,422 1.1%
Peter Foo-
Director of the Company
and Bank (3)(4) 19,829 0.1% 19,829 0.1%
Nicholas Unkovic-
Director of the Company
and Bank (3)(4) 25,112 0.1% 25,112 0.1%
Willard D. Sharpe-
Director of the Company
and Bank (3)(4) 30,438 0.1% 30,188 0.1%
Gordon B. Swanson-
Director of the
Company (3)(4) 32,876 0.1% 30,188 0.1%
Paul Erickson-
Director of the Company
and Bank (4)(5) 13,220 0.1% 13,220 0.1%
Gary G. Williams-
Director of the Company
and Bank (3)(4) 19,829 0.1% 19,829 0.1%
Keary Colwell-
Chief Financial Officer
of the Company and the Bank (6) 90,000 0.3% 90,000 0.3%
Joanne Haakinson-
Chief Administrative
Officer of the Bank and
Secretary of
the Company (7) 67,500 0.2% 67,500 0.2%
Directors and Named
Executive Officers as a
Group (eleven persons) 2,596,128 7.6% 2,593,190 7.6%
_____________________
(1) The stock options have anti-dilution provisions.
(2) Mr. McGrath was granted options to acquire 59,653 shares of the
Common Stock at a price of $0.45 effective November 18, 1998.
These options vest ratably over three years, with one-third vesting
on each anniversary of the grant. None of these were vested as of
March 31, 1999.
(3) Each outside director not covered by an existing contract was
granted options to acquire 26,438 shares of the Common Stock at a
price of $0.34 effective October 1, 1996. These options will vest
over three years based on seniority with Messrs. Swanson, Sharpe,
and Unkovic being fully vested, and Messrs. Foo and Williams 75%
vested.
(4) Each outside director not covered by an existing contract was
granted options to acquire 30,000 shares of the Common Stock at a
price of $0.45 effective November 18, 1998. These options vest
ratably over three years, with one-third vesting on each
anniversary of the grant. None of these were vested as of December
31, 1998.
(5) Mr. Erickson has been granted options to acquire 26,438 of the
Common Stock at a price of $0.45 effective November 21, 1997. The
options vest rateably over three years with 25% vested immediately.
As of December 31, 1998, 50% were vested.
(6) Ms. Colwell has been granted options to acquire 90,000 of the
Common Stock at a price of $0.34 effective October 1, 1996 which
are fully vested, and 29,000 of the Common Stock with a price of
$0.45 effective November 18, 1998 with one-third vest on each
anniversary of the grant.
(7) Ms. Haakinson has been granted options to acquire 90,000 of the
Common Stock at a price of $0.34 effective October 1, 1996 of which
67,500 have vested and 22,500 will vest on October 1, 1999, and
29,000 of the Common Stock which a price of $0.45 effective
November 18, 1998 with one-third vesting on the anniversary of the
grant.
PAGE 4
Series B Preferred Stock
The following sets forth information regarding the beneficial
ownership of the Series B Preferred Stock as of March 31, 1999.
Number of
Shares
Beneficially Percent
Name of Beneficial Owner Owned of Class
Gordon Swanson 7,200 45.4%
All directors and
Named Executive
Officers as a group 7,200 45.4
The address of Mr. Swanson for the purpose of his ownership of the
Series B Preferred Stock is the principal executive office of the
Company. No other directors or officers have beneficial interest in the
Series B Preferred Stock.
Committees of the Boards of Directors
The Company's Board of Directors held ten (10) meetings during
1998. All members of the Board attended at least 75% of all board
meetings and meetings of the committees on which they served in 1998.
The Company's Board of Directors presently does not have a standing
nominating committee. The Board of Directors is responsible for
considering the qualifications of individuals to serve as directors and
recommending a slate of directors for election at the annual meeting.
The Company's Personnel/Compensation Committee presently includes
directors Messrs Unkovic, Erickson, Williams, Sharpe, Gilleran and
McGrath. This Committee has responsibility for all personnel and
compensation policy matters pertaining to Bank employees, officers and
directors. It also monitors the Company's compliance with laws and
regulations applicable uniquely to the protection of employees and
officers. The Named Executive members are non-voting with regard to
compensation for the Named Executives. This Committee met seven (7)
times in the 1998 fiscal year.
The Bank's Personnel Committee presently includes directors Messrs
Erickson, Unkovic, Sharpe, McGrath, Williams, Gilleran and McGrath.
This Committee is responsible for the oversight of the management and
administration of the benefit plans, monitoring employment practices of
the Bank's employees and officers, and senior officer, including Named
Executives, compensation review and approval. The Named Executive
members are non-voting with regard to compensation for the Named
Executives. This Committee met twenty-one (21) times in the 1998 fiscal
year.
The Company's Audit Committee presently includes outside directors
Messrs Sharpe, Foo, Erickson and Unkovic. Mr. Gilleran serves as an
advisor to the Committee. This Committee evaluates Company performance,
regulatory examination reports from the Federal Reserve Bank and
appoints the Company's outside auditors. It also initiates suitable
audit examinations of the Company's internal controls to preserve the
Company's assets, and reviews periodic reports from outside auditors.
This Committee met seven (7) times in the 1998 fiscal year.
The Bank's Regulatory Committee presently includes outside
directors Messrs Foo, Sharpe, Unkovic, and Erickson. This Committee is
responsible for monitoring compliance with regulations, and monitoring
the Bank's relationship with its primary regulators, the FDIC and
Department of Financial Institutions. This Committee met ten (10) times
in the 1998 fiscal year.
The Bank's Loan, Investment and Special Assets Committee presently
includes directors Messrs Gilleran, McGrath, Unkovic, Sharpe, and Foo,
with directors Messrs Erickson and Williams as alternate Committee
members. The Committee examines and approves loans above a specified
size and monitors regular reviews of the entire loan portfolio. This
Committee is responsible for lending, credit, investment and
asset/liability management policies and monitors compliance with such
policies. This Committee met thirty-three (33) times in the 1998 fiscal
year.
PAGE 5
Board of Directors' Compensation
The Company and the Bank pay director fees to each non-
employee Director for attendance at Board meetings and Committee
meetings which are held monthly. The combined fee for attendance at a
Board meeting of the Company and the Bank is $750 per meeting. At
December 31, 1998, the Chairman of each committee receives $400 and each
member receives $300 for each committee meeting attended. The Company's
committees are the Personnel and Compensation Committee, and the Audit
Committee. The Bank's committees are the Loan, Investment, and Special
Assets Committee, the Audit and Regulatory Committee, and the Personnel
and Compensation Committee. The Company awarded a bonus to certain
directors payable in 1999 as recognition of their contribution over the
past four years to the improved financial condition of the Company. The
total bonus award of $150,000 was paid to Messrs Foo, Erickson, Sharpe,
Swanson, Unkovic and Williams in amounts ranging from $15,000 to $35,000
as determined, among other things, by giving weight to each directors'
tenure on the board.
Executive Officers and Other Significant Officers (the "Named
Executives")
Each executive officer is selected annually by the Board of
Directors pursuant to provisions of the bylaws of the Company and the
Bank. In addition, the Company and the Bank periodically enter into
employment agreements with certain executive officers. See "Employment
Agreements" below. The following are all of the executive officers of
the Company and/or the Bank (the "Named Executives"), their occupations
for the previous five years, ages and the lengths of service as an
officer.
JAMES E. GILLERAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(See position description of Mr. Gilleran's position with the
Company and the Bank, and his background under the heading
"Directors").
JOHN McGRATH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(See position description of Mr. McGrath's position with the
Company and the Bank, and his background under the heading
"Directors").
JOANNE HAAKINSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ms. Haakinson has served as Executive Vice President and Chief
Administrative Officer of the Bank, and Secretary of the Bank and
the Company since March 1996. She served as Executive Vice
President and Chief Financial Officer of Sacramento First National
Bank from 1982 to 1995. At December 31, 1998, Ms. Haakinson was 57
years of age.
KEARY COLWELL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ms. Colwell has served as Executive Vice President and Chief
Financial Officer of the Bank since April 1996 and of the Company
since January 1997. Ms. Colwell had held other senior positions
with the Company and the Bank since 1992. Prior to joining the
Company and the Bank, she served as Vice President at First
Nationwide Bank from 1988 to 1992. At December 31, 1998, Ms.
Colwell was 39 years of age.
Executive Compensation
Decisions on the compensation of the Company's and the Bank's
executives are generally made by the Bank's Personnel Committee and/or
the Company's Personnel Compensation Committee. The voting members with
regard to named executive compensation are outside directors of the
Board of Directors of the Company and the Bank. All decisions by these
Committees relating to the compensation of the Company's and the Bank's
executive officers are reviewed by the Company's and the Bank's full
Boards of Directors. Set forth below is a report of the
Personnel/Compensation Committee addressing the Company's compensation
policies for 1998 as they affected the Named Executives of the Company
and the Bank serving at the end of 1998, whose compensation in 1998 is
shown in the "Executive Compensation Tables" below.
PAGE 6
Compensation Committee Interlocks and Insider Participation
The voting members of the Company's Personnel/Compensation
Committee, which during 1998 consisted of Mr. Erickson, Mr. Unkovic, Mr.
Williams, and Mr. Sharpe, make decisions with respect to the
compensation of the Named Executives. There are no director interlocks.
Directors Messrs Gilleran and McGrath are on the Company's Personnel
Compensation Committee and the Bank's Personnel Committee, but do not
participate in voting on compensation matters related to Named
Executives.
Personnel and Compensation Committee's Report on Executive Compensation
The Company's compensation philosophy is to pay for
performance as an important way to encourage the actions necessary to
achieve the Company's strategic objectives of increasing profitability
and maximizing shareholder value.
The Company's compensation philosophy is implemented through
its compensation program which is structured to:
. promote the Company's annual operating objectives,
. promote the Company's long-term strategic plans,
. ensure continuity of management,
. recognize the level of management expertise,
. be competitive within the industry and community, and
. provide internal equity.
The Company's compensation program includes base salary,
annual bonus, a stock option plan, a severance and retention plan, and
other benefits. The Company and the Bank have entered into contracts
with the Named Executives on the terms described below.
Base Salary
Generally, the Company targets base salary at median to high
competitive levels. The competitive levels are based on comparable
positions in other banks. In addition, the Company takes other factors
into consideration including an individual's specialized expertise,
level of experience, broad range of expertise allowing the executive to
assume multiple responsibilities, historical performance and salary
requirements, leadership in the Company and the community, and contract
terms.
Annual Bonus
The purpose of the annual bonus is to provide incentive for
achieving defined target performance levels based on the Company's
annual business and profit plan. The annual goals typically include
objectives regarding earnings, loan and deposit growth, asset quality,
operating efficiency, and regulatory examinations. The CEO and
President are eligible to earn up to 100% of annual base salary. The
other Named Executives are eligible to earn up to 50% of annual base
salary. Annual bonus awards are determined based on the Company's
performance and the performance of the individual executive.
Based on the Company's extraordinary performance in 1998 and
1997, annual bonuses totaling $531,000 and $360,000 were awarded to the
Named Executives. The 1998 annual bonus averaged 75% of base salary and
ranged between 45% and 90% of annual base salary. The 1997 annual bonus
awards averaged 51% of annual base salary and ranged between 33% and 67%
of annual base salary.
PAGE 7
Stock Option Plan
The purpose of the stock option plan is to serve as a long-
term incentive program by directly tying rewards to the long-term
success of the Company and increases in stockholder value. Many of the
options granted to the executive officers were granted as an inducement
to attract and retain executives with the required talent and experience
to manage the Company through its prior financial difficulties. All
stock option grants are approved by the full board of directors.
Severance and Retention Plan
The purpose of the severance and retention plan is to promote
continuity of management and provide for a retention incentive with
regard to a potential change-in-control. Each executive is eligible for
severance equal to one year of annual base salary and a retention
payment equal to a maximum of one year annual base salary. The
retention provision provides for the payment upon a change-in-control or
the expiration of the employment agreements on April 22, 2001, which
ever occurs first.
Other Benefits
The executive officers are entitled to participate in all
employee benefit plans including the Company's vacation, 401K, and
welfare and benefit plans. Each executive is entitled to four weeks of
annual vacation. The welfare and benefits plans include workers'
compensation benefits, medical and dental, life insurance, and long-term
disability. The life insurance plans for the CEO and President provide
for coverage of four (4) times the executives salary. In addition, Mr.
McGrath has been granted reimbursement of certain living expenses.
The Personnel/Compensation Committee believes that the base
compensation of the Named Executives is competitive with companies of
similar size and with comparable operating history in the commercial
banking industry.
CEO's Compensation
The base salary of the Company's CEO was determined primarily
on the terms of his employment agreement as more fully discussed below.
The agreement set Mr. Gilleran's base salary at $300,000 and provides
for a discretionary annual bonus up to a maximum of 100% of base salary
based upon many factors including asset quality, loan and deposit
growth, pre-tax earnings, and oversight of the management of the Company
and the Bank. In addition, pursuant to his contract in place at that
time, a one-time incentive payment of $150,000 was paid in 1997 to the
CEO in accordance with his contract based on a determination by the
Board of Directors that the condition of the Company and the Bank were
satisfactory. Based on the foregoing, in 1998 Mr. Gilleran received a
base salary of $300,000, a one-time incentive payment of $150,000, as
described above, and was awarded a bonus of $270,000 based on specific
objectives for 1998 which was paid in 1999.
Dated: April 21, 1999 Outside Director
Committee Members
Gary Williams, Chairman
Paul Erickson
Willard Sharpe
Nicholas Unkovic
PAGE 8
Executive Compensation Tables
Summary of 1996-1998 Compensation. The following table sets
forth the annual compensation, long-term compensation and other
compensation paid to each of the Named Executives. Compensation is
listed as of December 31, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
Annual compensation Long-term
compensation(3)
Awards
Other All
annual Restricted Securities other
compen- stock underlying compen-
Name and Salary Bonus sation award(s) Options/ sation
principal Year ($) ($) ($)(1) ($) SARs(#)(2) ($)(4)
position
(a) (b) (c) (d) (e) (f) (g) (i)
Chairman/ 1998 300,000 420,000 0 0 32,289 19,330
CEO-James 1997 279,170 200,000 0 0 179,185 0
E. Gilleran 1996 235,425 40,000 0 0 1,276,637 0
President/ 1998 170,000 153,000 0 0 66,110 25,858
COO/CCO-Bank 1997 170,000 80,000 0 0 35,837 0
John McGrath 1996 169,209 30,000 14,756 0 318,055 0
EVP/CAO 1998 120,000 54,000 0 0 39,000 1,710
Joanne 1997 120,000 40,000 0 0 90,000 0
Haakinson 1996 90,000 20,000 29,078 0 0 0
EVP/CFO 1998 120,000 54,000 0 0 39,000 251
Keary 1997 120,000 40,000 0 0 90,000 0
Colwell 1996 115,000 20,000 0 0 0 0
(1) "Other annual compensation" consists solely of consulting
fees paid for consulting services prior to formal
appointment into designated positions.
(2) Generally, these options were granted pursuant to the
employment agreements described below. The options have an
exercise price range of between $0.34 and $5.68, the fair
market value of the underlying stock at the time of grant.
(3) The Company has no long-term incentive plan.
(4) All other compensation includes premiums paid by the Bank
for life insurance. Mr. McGrath's other compensation also
includes reimbursement for living expenses.
Employment Agreements
Employment Agreement of Mr. Gilleran. The Company and the Bank
entered into an employment agreement with Mr. Gilleran dated April 22,
1998 replacing the previous employment agreement. The 1998 employment
agreement provides, among other things, for Mr. Gilleran to receive an
annual salary of at least $300,000 per year, payable in accordance with
the Bank's usual payment practices. In addition, the employment
agreement provides for an annual cash performance bonus of between 0%
and 100% of base salary. The term of the employment contract is three
(3) years.
PAGE 9
The contract has a severance provision that provides for a
payment equal to one year's annual base salary upon termination. The
contract also has a retention provision that provides for a payment
equal to one year's annual base salary upon a change-in-control or at
the end of three years from the date of the contract which ever occurs
first.
The agreement provides that the Board of Directors shall grant
Mr. Gilleran options under the Amended and Restated 1993 Stock Option
Plan (formerly the 1993 Executive Stock Option Plan) to acquire shares
of the Company's Class A Common Stock (the "Common Stock") equal to 5%
of the fully-diluted shares of the Common Stock, with additional anti-
dilution options to be granted in the future as necessary to maintain
the 5% interest until after the next public offering of the Company's
Common Stock. The exercise price of subsequent anti-dilution options is
at the then-current fair market value per share of the Common Stock or
the price per share for the Common Stock issued to others in a public
offering of the Company's Common Stock.
As of December 31, 1998, Mr. Gilleran holds options to purchase
313,639 shares of the Common Stock with an exercise price of $5.68 per
share, options to purchase 184 shares of the Common Stock with an
exercise price of $4.50 per share, options to purchase 32,289 shares of
the Common Stock with an exercise price of $0.45, and options to
purchase 1,455,638 shares of the Common Stock with an exercise price of
$0.34 per share. Except for certain anti-dilution options, the options
granted to Mr. Gilleran, are fully vested.
Under a separate indemnification agreement, Mr. Gilleran is
indemnified by the Company and the Bank from any liability or expense
arising as a result of actions taken by the Company or the Bank, or
events relating to the business of the Company or the Bank, occurring
prior to the execution of the employment agreement. Subject to certain
limitations, Mr. Gilleran is also indemnified by the Company and the
Bank from any liability or expense arising as a result of actions taken
by the Company or the Bank, or events relating to the business of the
Company or the Bank, occurring after the execution of the employment
agreement, unless such liability or expense is due to his bad faith or
gross negligence.
Employment Agreement of Mr. McGrath. The Bank entered into an
employment agreement with Mr. McGrath dated April 22, 1998 replacing the
previous employment agreement. The 1998 employment agreement provides,
among other things, for Mr. McGrath to receive an annual salary of at
least $170,000 per year, payable in accordance with the Bank's usual
payment practices. In addition, the employment agreement provides for
an annual cash performance bonus of between 0% and 100% of base salary.
The term of the employment contract is three years.
The contract has a severance provision that provides for a
payment equal to one year's annual base salary upon termination. The
contract also as a retention provision that provides for a payment equal
to one year's annual base salary upon a change-in-control or at the end
of three years from the date of the contract which ever occurs first.
The agreement provides that the Board of Directors shall grant
Mr. McGrath options under the Amended and Restated 1993 Stock Option
Plan (formerly the 1993 Executive Stock Option Plan) to acquire shares
of the Company's Common Stock equal to 1% of the fully-diluted shares of
the Common Stock, with additional anti-dilution options to be granted in
the future as necessary to maintain the 1% interest until after the next
public offering of the Company's Common Stock. The exercise price of
subsequent anti-dilution options would be at then-current fair market
value per share of the Common Stock or the price per share of the Common
Stock issued to others in a public offering of the Company's Common
Stock.
As of December 31, 1998, Mr. McGrath holds options to purchase
63,683 shares of the Common Stock with an exercise price of $0.45 per
share, and options to purchase 353,892 shares of the Common Stock with
an exercise price of $0.34 per share. Except for certain anti-dilution
options, the options granted to Mr. McGrath, are fully vested.
Under a separate indemnification agreement, Mr. McGrath is
indemnified by the Bank from any liability or expense arising as a
result of actions taken by the Bank or the Company, or events relating
to the business of the Bank or the Company, occurring prior to the
execution of the employment agreement. Subject to certain limitations,
Mr. McGrath is also indemnified by the Bank from any liability or
expense arising as a result of actions taken by the Bank or the Company,
or events relating to the business of the Bank or the Company, occurring
after the execution of the employment agreement, unless such liability
or expense is due to the his bad faith or gross negligence.
PAGE 10
Employment Agreements of Ms. Colwell and Ms. Haakinson. The Bank
entered into employment agreements with Ms. Colwell and Ms. Haakinson
dated April 22, 1998 which provide, among other things, for Ms. Colwell
and Ms. Haakinson to receive an annual salary of at least $120,000 per
year, payable in accordance with the Bank's usual payment practices. In
addition, the employment agreement provides for an annual cash
performance bonus of between 0% and 50% of base salary. The term of
each employment contract is three years.
The contracts have severance provisions that provide for a
payment equal to one year's annual base salary upon termination. The
contracts also have a retention provision that provides for payments
equal to one year's annual base salary upon a change-in-control or at
the end of three years from the date of the contract which ever occurs
first.
Under separate indemnification agreements, Ms. Colwell and Ms.
Haakinson are indemnified by the Bank from any liability or expense
arising as a result of actions taken by the Bank or the Company, or
events relating to the business of the Bank or the Company, occurring
prior to the execution of the employment agreement. Subject to certain
limitations, they are also indemnified by the Bank from any liability or
expense arising as a result of actions taken by the Bank or the Company,
or events relating to the business of the Bank or the Company, occurring
after the execution of the employment agreement, unless such liability
or expense is due to the his bad faith or gross negligence.
Other Employee Benefit Plans
401(k) Profit Sharing Plan. In 1986, the Company established a
401(k) Profit Sharing Plan (the "Plan") which is intended to qualify
under Sections 401(a) and 401(k) of the Internal Revenue Code. The Plan
permits each participating employee with six months of service to
contribute to the Plan through payroll deductions (the "salary deferral
contributions") of from 2% to 16% of the participant's eligible
compensation from the Company and its subsidiaries, thereby deferring
taxes on all or a portion of these amounts. Under the Plan, the Company
currently will match a participant's tax deferred contributions by an
amount equal to 100% of such contribution for each year subject to a
limitation of 2% of the participant's eligible compensation for that
year.
The Company may also make additional contributions to the Plan
in such amounts as may be determined by the Company's Board of
Directors. Any such additional contributions are allocated among Plan
participants based upon their compensation levels. The Company's
contribution vests 100% after a participant has completed five years of
participation in the Plan, with vesting of 20% per year for each of
years one through five. In addition, the Company's contribution vests
upon a participant's retirement at age 65 or upon a participant's death
or permanent disability. Participants are entitled to receive their
salary deferral contributions and vested benefits under the Plan upon
termination of employment, retirement, death or disability.
Participants have the right to allocate their salary deferral
contributions among ten (10) different investment funds.
Amended and Restated 1993 Stock Option Plan. Awards under the
Amended and Restated 1993 Stock Option Plan are made to both directors
and officers. The awards for officers are discretionary and based on
the performance of the Company, the officer's job performance, the
importance of his or her position, and his or her contribution to the
organization's goals for the award period. In 1998, 1997 and 1996,
grants totaling 645,771, 668,971 and 2,522,689 were made, respectively.
As of December 31, 1998, the maximum number of options available for
grant have been granted.
Pension Plan and Long-term Incentive Plan. The Company does not
have pension or long-term incentive plans.
PAGE 11
The following table sets forth the options granted to the Named
Executives during 1998:
Options/SAR Grants in Last Fiscal Year
Numbers of % of Total
Securities Options/SARs Grant
Underlying Granted to Exercise or Date
Name and Prin- Options/SARs Employees in Base Price Expiration Present
cipal position Granted(#) Fiscal Year ($/Share) Date Value($)(1)
(a) (b) (c) (d) (e) (f)
Chairman/CEO
James E.
Gilleran 32,289 5.0 0.45 11/17/2008 2,260
President/COO
/CCO John
McGrath 66,110 10.2 0.45 11/17/2008 4,628
EVP/CAO
Joanne
Haakinson 39,000 6.0 0.45 11/17/2008 2,730
EVP/CFO
Keary Colwell 39,000 6.0 0.45 11/17/2008 2,730
(1) The Company used the Black-Scholes option pricing model assuming a
risk free interest rate of 4.54%, an expected life of approximately
thirty months (2.5 years), no expected dividend yield and a volatility
factor of less than one.
(2) Options totaling 6,457 granted to Mr. McGrath and all of the options
granted to Mr. Gilleran in accordance with the anti-dilution provisions
of their employment contracts. Accordingly, they are immediately vested
but are not exercisable until the underlying options (which resulted in
the issuance of the anti-dilution options) are exercised.
(3) Options totaling 59,653 granted to Mr. McGrath and all of the
options granted to Ms. Haakinson and Ms. Colwell vest equally on each
anniversary over a three year period or in full upon a change in
control.
page 12
The following table sets forth the unexercised options held as
of December 31, 1998 and options exercised during 1998 by the Named
Executives:
Aggregated Options/SAR Exercises in the Last Fiscal Year
and Fiscal Year-end Options/SAR Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Fiscal Year end Fiscal Year end($)
Name and Prin- Acquired on Value (Exercisable/Un- (Exercisable/Un-
cipal position Exercise(#) Realized ($)exercisable)(#) exercisable)($)(1)
(a) (b) (c) (d) (e)
Chairman/CEO
James E. -- -- 1,586,439/ $337,516/
Gilleran 215,673 45,847
President/COO
/CCO -- -- 234,269/ $91,121/
John McGrath 183,306 10,819
EVP/CAO
Joanne -- -- 67,500/ $17,550/
Haakinson 61,500 11,700
EVP/CFO -- -- 90,000/ $23,400/
Keary Colwell 39,000 5,850
(1) Fair market value is calculated based on a bid price of $0.60 per
share less the underlying exercise price per share of in-the-money
options.
PAGE 13
Common Stock Performance Graph
The following Common Stock Performance chart compares the annual
percentage change, on a dividend reinvested basis, in the cumulative
total stockholder return on the Common Stock with the cumulative total
return of the Standards & Poor's 500 Stock Index (the "S&P") and for the
five year period commencing January 1, 1993, and an index on the
Company's peers selected in good faith. The peer group index selected
is the Dow Jones Banks - Western U.S.
The comparison assumes $100 was invested on December 31, 1993 in
the Company's Common Stock in each of the foregoing indices and the
reinvestment of dividends. The stock price performance depicted in the
Performance Graph is not necessarily indicative of future price
performance.
[GRAPH NOT INCLUDED]
Index 1993 1994 1995 1996 1997 1998
The San Francisco Company $100 $29 $1 $2 $3 $2
S&P 500 Total Return Index 100 101 139 171 229 294
Dow Jones Western Bank Index 100 106 183 241 350 416
In 1994, the Company's Common Stock was suspended from trading
on the American Stock Exchange and in 1995 the Company's Common Stock
was delisted. Since 1996, First Security Van Kasper has been making a
market in the Company's Common Stock. The Company's Common Stock is
thinly traded with less than 2.2% held by minority Stockholders.
PAGE 14
Certain Relationships and Related Transactions
The Bank has had and expects to continue to have banking
transactions with many of the directors and executive officers of the
Company and the Bank (and their associates). Loans by the Bank to any
director or executive officer of the Company or any of its subsidiaries
(or any associate of such persons) have been made in the ordinary course
of business on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable
transactions with other persons, and were judged not to involve more
than the normal risk of collection or present other unfavorable
features. Loans by the Bank to any director, executive officer or
principal stockholder of the Company or any of its subsidiaries (as such
persons are defined by regulation) are subject to limitations under
California and federal law. Among other things, a loan by the Bank to
a director, executive officer, or principal stockholder of the Company
or any of its subsidiaries must be on non-preferential terms and, if all
loans to a given person exceed $25,000, such loans must be approved in
advance by the Bank's Board of Directors. The Bank had no such loans
outstanding as of December 31, 1998.
The Company and the Bank entered into indemnification agreements
with each of the Named Executive Officers and each Director dated March
18, 1998. The indemnification agreements provide for indemnification
from and against any and all liabilities or expenses arising with
respect to any action or inaction taken in the course of their duties as
a Named Executive Officer or as a director of the Company and/or the
Bank.
The Company and the Bank have engaged the law firm of Graham &
James LLP to perform the function of General Counsel. Mr. Unkovic, a
director of the Company and the Bank, is a partner with Graham & James
LLP. The Company entered into an indemnification agreement with Graham
& James LLP dated December 16, 1994. The indemnification agreement
provides that Graham & James LLP is indemnified against any and all
liabilities and expenses against Graham & James LLP arising by reason of
Mr. Unkovic serving as a director of the Company. The indemnification
does not include legal services Mr. Unkovic or Graham & James LLP may
render to the Company or its subsidiaries, affiliates, directors,
officers or stockholders.
PROPOSAL ONE: ELECTION OF DIRECTORS
Directors and Nominees
The bylaws of the Company provide a procedure for nomination for
election of members of the Board of Directors, which procedure is
printed in full in the Notice of Annual Meeting of Stockholders
accompanying this Proxy Statement. If nomination is not made in
accordance with the procedures set forth in the Notice of Annual Meeting
of Stockholders, the Chairman of the Annual Meeting may, if the facts
warrant, determine and declare at the Annual Meeting that a nomination
was not made in accordance with the procedures set forth in the bylaws
and direct that the defective nomination be disregarded.
The bylaws of the Company presently provide that the number of
directors of the Company is subject to adjustment by resolution of the
Board of Directors, and the Board of Directors have adopted a resolution
setting the number of directors at nine (9). Pursuant to the
reincorporation of the Company in Delaware in 1988, the Board of
Directors is divided into three classes (Class I, Class II, and Class
III). The bylaws prescribe that the three classes shall be as nearly
equal in number as possible. Accordingly, Classes I, II and III are
each comprised of three (3) directors. Each director serves for a term
ending on the date of the third annual meeting of the stockholders
following the annual meeting at which the director was elected. The
Class I, II and III directors are presently serving until the Annual
Meeting. Notwithstanding the above, each director serves pursuant to
the bylaws until his successor is duly elected and qualified or until
his death, resignation or removal.
Except as stated below, no director of the Company is a director
of any company with a class of securities registered pursuant to section
12 of the Exchange Act, or subject to the requirements of section 15(d)
of the Exchange Act or of any company registered as an investment
company under the Investment the Company Act of 1940, as amended.
Except for the Bank and Peninsula Holdings, none of the corporations or
organizations discussed below is an affiliate of the Company. Mr.
Masagung owns a controlling interest in Peninsula Holdings and Mr. Peter
Foo is the President of Peninsula Holdings. No director, nominee for
director or executive officer of the Company or the Bank has any family
relationship with any other director or executive officer of the Company
or director or executive officer of the Bank.
PAGE 15
No vacancy on the Board of Directors will exist after the
election of directors pursuant to this PROPOSAL ONE.
Class I Directors. Three (3) Class I directors are to be elected
at the Annual Meeting, each to hold office until the Company's 2001
annual meeting of stockholders and until his respective successor is
duly elected and qualified, or until his death, resignation or removal.
The nominees for election as a Class I Director are Messrs. James
E.Gilleran, Gordon B. Swanson, and Peter Foo. Each is presently serving
as a director. The following sets forth as to each nominee for election
as a Class I director of the Company, such person's age, principal
occupation during at least the last five years, and the period during
which each person has served as a director of the Company.
JAMES E. GILLERAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Gilleran has served as the Chairman and Chief Executive
Officer of the Company and the Bank since October 1994. He
served as Superintendent of Banks for the State of California
from 1989 to 1994. At December 31, 1998, Mr. Gilleran was 65
years of age and he has served as a director of the Company and
the Bank since 1994.
GORDON B. SWANSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Swanson has been Chief Executive Officer of Cran Chile since
October 1997. Cran Chile is a major grower and processor of
cranberries located in southern Chile. Mr. Swanson served as
Vice President of Global Real Estate with Levi Strauss & Co.
from 1993 to 1997. At December 31, 1998, Mr. Swanson was 54
years of age and he has served as a director of the Company and
the Bank since 1985.
PETER FOO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Foo has been the President of Peninsula Holdings Inc. since
1993. He was the co-owner of Ampac Trading (USA) Co. from 1980
to 1993. At December 31, 1998, Mr. Foo was 51 years of age. He
has served as a director of the Company and the Bank since 1996.
Class II Directors. Three (3) Class II directors are to be
elected at the Annual Meeting, each to hold office until the Company's
2002 annual meeting of stockholders and until his respective successor
is duly elected and qualified, or until his death, resignation or
removal. The nominees for election as a Class II Director are Messrs.
John McGrath, Kent D. Price, and Nicholas Unkovic. Each is presently
serving as a director. The following sets forth as to each nominee for
election as a Class II director of the Company, such person's age,
principal occupation during at least the last five years, and the period
during which each person has served as a director of the Company.
JOHN MCGRATH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. McGrath has served as President, Chief Operating Officer and
Chief Credit Officer of the Bank since 1995 and as President of
the Company since 1997. He served as President and Chief
Executive Officer of Sacramento First National Bank from 1982 to
1995. At December 31, 1998, Mr. McGrath was 56 years of age and
he has served as a director of the Bank since 1995 and as a
director of the Company since 1997.
KENT D. PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Price is the President of Robert Kent Company. In 1998, he
retired from IBM where he served as General Manager from 1994 to
1998. Mr. Price was the Chairman and Chief Executive Officer of
the Company and the Bank from September 1993 to August 1994. He
served as Executive Vice President, Private Banking and
Corporate Development of Bank of America from 1991 to 1993. At
December 31, 1998, Mr. Price was 55 years of age and he has
served as a director of the Company since 1993 and was a
director of the Bank from 1993 to 1994.
PAGE 16
NICHOLAS UNKOVIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Unkovic is and has been a partner for the law firm of Graham
& James LLP for more than five years. At December 31, 1998, Mr.
Unkovic was 47 years of age and he has served as a director of
the Company since 1994 and as director of the Bank since 1996.
Class III Directors. Three (3) Class III directors are to be
elected at the Annual Meeting, each to hold office until the Company's
2000 annual meeting of stockholders and until his respective successor
is duly elected and qualified, or until his death, resignation or
removal. The nominees for election as a Class III Director are Messrs.
Paul Erickson, Willard D. Sharpe, and Gary Williams. Each is presently
serving as a director. The following sets forth as to each nominee for
election as a Class III director of the Company, such person's age,
principal occupation during at least the last five years, and the period
during which each person has served as a director of the Company.
PAUL ERICKSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Erickson has been the managing principal of Erickson
Strategic Consulting Services since 1989. He advises owners and
CEOs of medium size business on strategic financial, marketing
and organizational issues. At December 31, 1998, Mr. Erickson
was 63 years of age and he has served as a director of the
Company and the Bank since 1997.
WILLARD D. SHARPE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Sharpe is a retired economist who, at the time of his
retirement in 1987, served as a Vice President of Chase
Manhattan Bank and as the Bank's chief economist for Asia. In
addition, since 1993, Mr. Sharpe has been a Vice President of
two privately held companies involved in efforts to explore
prospects for investment in Vietnam. At December 31, 1998, Mr.
Sharpe was 76 years of age and he has served as a director of
the Company and the Bank since 1993.
GARY WILLIAMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Williams has served as the Dean of the McLaren School of
Business School at the University of San Francisco since 1986.
At December 31, 1998, Mr. Williams was 66 years of age and he
has served as a director of the Company and the Bank since 1996.
If the Company's principal stockholder of record were to vote all
of the shares of the Common Stock that are subject to the Agreement in
favor of PROPOSAL ONE approval would be assured.
PROPOSAL TWO: RATIFICATION OF SELECTION
OF INDEPENDENT ACCOUNTING FIRM FOR 1998 AND 1999
The firm of KPMG LLP independent public accountants, was
appointed in 1998 and 1999 to audit the books and records of the Company
and the Bank for 1998 and 1999, respectively.
The selection of an independent accounting firm to provide audit
services for the Company has been approved annually by the Company's
Board of Directors. The Board engaged KPMG LLP to perform auditing
services for 1998 prior to ratification by the stockholders. The Board
desires to have KPMG LLP continue as the independent accounting firm for
the Company for the current fiscal year. Accordingly, stockholders are
being asked to act upon a proposal to ratify the Board of Directors'
selection of KPMG LLP for 1998 and 1999.
KPMG LLP has advised the Company that one or more of its
representatives will be present at the Annual Meeting to make a
statement if they so desire and to respond to appropriate questions.
If the Company's principal stockholder of record were to vote all
of the shares of the Common Stock that are subject to the Agreement in
favor of PROPOSAL TWO approval would be assured.
PAGE 17
The Board of Directors recommends a vote FOR
PROPOSAL TWO: RATIFICATION OF SELECTION
OF INDEPENDENT ACCOUNTING FIRM FOR 1998 AND 1999
STOCKHOLDER PROPOSALS
The deadline for stockholders to submit proposals to be
considered for inclusion in the Company's proxy statement and form of
proxy for the 2000 Annual Meeting of stockholders is March 15, 2000.
OTHER PROPOSED ACTION
The Board of Directors is not aware of other business which will
come before the Annual Meeting, but if any such matters are properly
presented, proxies solicited hereby will be voted, at the proxy holder's
discretion, upon the direction of management. All shares represented by
duly executed proxies will be voted at the Annual Meeting.
The SAN FRANCISCO COMPANY
KEARY L. COLWELL
Chief Financial Officer
San Francisco, California
April 30, 1999
PAGE
THE SAN FRANCISCO COMPANY
Proxy Solicited by the Board of Directors
Annual Meeting of Stockholders
May 19, 1999
James E. Gilleran or Keary L. Colwell, or either of them, each with the power
of substitution, is hereby authorized to represent and to vote the Class A
Common Stock (the "Common Stock") of the undersigned at the Annual Meeting
of Stockholders of THE SAN FRANCISCO COMPANY (the "Company"), to be held on
May 19, 1999, at 10:00 a.m. local time, in the Boardroom of the Company at
550 Montgomery Street, 11th Floor, San Francisco, California 94111, or any
adjournment thereof, as follows:
1. PROPOSAL ONE: to elect nine (9) of the nine (9) authorized directors of
the Company, three (3) to serve for two-year terms (Class I), three (3) to
serve for three-year terms (Class II), and three (3) to serve for one-year
terms (Class III). FOR all nominees listed below (except as listed to the
contrary) or WITHHOLD AUTHORITY to vote for all nominees listed below.
Class I Directors: Gordon B. Swanson, James E. Gilleran, and Peter Foo.
Class II Directors: Kent D. Price, John McGrath, and Nicholas Unkovic.
Class III Directors: Paul Erickson, Willard D. Sharpe, and Gary Williams.
FOR ALL___________ WITHHELD FOR ALL ___________ FOR ALL EXCEPT _____________
_____________
_____________
2. PROPOSAL TWO: to ratify the Board of Directors' selection of KPMG
LLP, independent public accountants, as the independent accounting firm
for the Company during the fiscal years ending December 31, 1998 and 1999.
FOR _________ AGAINST _________ ABSTAIN _________
This proxy will be voted as specified, or if no choice is specified, will
be voted FOR Proposals One and Two.
Dated:___________________________, 1999
_______________________________________
(Signature)
_______________________________________
(Signature if held jointly)
(Please sign EXACTLY as your name appears on your stock certificate and
this proxy. Executors, administrators, trustees, guardians, attorneys etc.
should give their full title. If signer is a corporation, please give full
corporate name and signature by a duly authorized officer, stating the
officer's title. If a partnership, please sign in partnership name by an
authorized person.)
PAGE
THE SAN FRANCISCO COMPANY
Proxy Solicited by the Board of Directors
Annual Meeting of Stockholders
May 19, 1999
James E. Gilleran or Keary L. Colwell, or either of them, each with the power
of substitution, is hereby authorized to represent and to vote the 8% Series
B Convertible Preferred Stock of the undersigned at the Annual Meeting of
Stockholders of THE SAN FRANCISCO COMPANY (the "Company"), to be held on
May 19, 1999, at 10:00 a.m. local time, in the Boardroom of the Company at
550 Montgomery Street, 11th Floor, San Francisco, California 94111, or any
adjournment thereof, as follows:
1. PROPOSAL ONE: to elect nine (9) of the nine (9) authorized directors of
the Company, three (3) to serve for one-year terms (Class III), three (3)
to serve for two-yer terms (Class I), and three (3) to serve for three-year
terms (Class II). FOR all nominees listed below (except as listed to the
contrary) or WITHHOLD AUTHORITY to vote for all nominees listed below.
Class I Directors: Gordon B. Swanson, James E. Gilleran, and Peter Foo.
Class II Directors: Kent D. Price, John McGrath, and Nicholas Unkovic.
Class III Directors: Paul Erickson, Willard D. Sharpe, and Gary Williams.
FOR ALL __________ WITHHELD FOR ALL ___________ FOR ALL EXCEPT _____________
_____________
_____________
2. PROPOSAL TWO: to ratify the Board of Directors' selection of KPMG LLP,
independent public accountants, as the independent accounting firm for the
Company during the fiscal years ending December 31, 1998, and 1999.
FOR ___________ AGAINST ____________ ABSTAIN ____________
This proxy will be voted as specified, or if no choice is specified, will
be voted FOR Proposals One and Two.
Dated: ____________________________, 1999
_________________________________________
(Signature)
_________________________________________
(Signature if held jointly)
(Please sign EXACTLY as your name appears on your stock certificate and
this proxy. Executors, administrators, trustees, guardians, attorneys etc,
should give their full title. If signer is a corporation, please give full
corporate name and signature by a duly authorized officer, stating the
officer's title. If a partnership, please sign in partnership name by an
authorized person.)
