[CONFIDENTIAL]
[FOR DISCUSSION PURPOSES ONLY]
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Sectio 14(a) of the Securities Exchange Act of 1934
(Amendment No.__)
Filed by Registrant [x]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted) by Rule
14a-6(e) (2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COMMERCIAL BANKSHARES, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (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 which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
$0
(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 it filing.
(1) Amount previously paid:
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(4) Date Filed:
COMMERCIAL BANKSHARES, INC.
1550 S.W. 57th Avenue
Miami, Florida 33144
_________________________________________________________________
Notice of Annual Meeting of Shareholders
to Be Held on April 20, 2000
_________________________________________________________________
Dear Shareholders:
The Annual Meeting of Shareholders of Commercial Bankshares, Inc. (the
"Company"), will be held in Miami, Florida, at the executive offices of the
Company located at 1550 S.W. 57th Avenue, at 10:00 a.m., local time, on
Thursday, April 20, 2000, for the following purposes:
* To elect directors.
* To transact such other business as may properly come before the Annual
Meeting.
Only Shareholders of record at the close of business on March 10,
2000 are entitled to notice of and to vote at the Annual Meeting and all
adjournments thereof.
All Shareholders are cordially invited to attend the meeting in person.
Those Shareholders who plan to attend are requested to so indicate by marking
the appropriate space on the enclosed proxy card. Any Shareholder attending
the Annual Meeting may vote in person even though he or she has previously
returned a proxy.
Please complete, date, sign, and return the enclosed proxy card promptly
so that your shares can be voted, regardless of whether you expect to attend
the meeting.
A copy of the Company's 1999 Annual Report to shareholders is also
enclosed.
By order of the Board of Directors,
JACK J. PARTAGAS
President and Chief Operating Officer
March 16, 2000
TABLE OF CONTENTS
SUMMARY
General......................................................... 1
Record Date and Outstanding Shares.............................. 1
Voting and Solicitation......................................... 1
PROPOSAL I ELECTION OF DIRECTORS................................. 2
Nominees........................................................ 3
The Board of Directors and Committees........................... 3
Executive Officers of the Company............................... 3
Certain Relationships and Related Transactions.................. 3
Section 16(a) Beneficial Ownership Reporting Compliance......... 4
Security Ownership of Certain Beneficial Owners and Management.. 4
Executive Compensation.......................................... 6
Employment Agreements........................................... 8
Director Compensation........................................... 9
Board Compensation Committee Report on Executive Compensation... 9
OTHER BUSINESS................................................... 12
SHAREHOLDER PROPOSALS............................................ 12
NOTICE OF APPOINTMENT OF INDEPENDENT AUDITORS.................... 12
COMMERCIAL BANKSHARES, INC.
Annual Meeting of Shareholders
to be held on April 20, 2000
_________________________________________________________________
PROXY STATEMENT
_________________________________________________________________
General
The Board of Directors of Commercial Bankshares, Inc. (the "Company")
is soliciting proxies to be used at the Annual Meeting of Shareholders to be
held on Thursday, April 20, 2000, and all adjournments thereof. This proxy
statement and the accompanying proxy card are first being sent to shareholders
on or about March 16, 2000.
The shares represented by all properly executed proxies received by the
Company will be voted as specified by the shareholders. If no specifications
are given (including broker non-votes), the shares represented by the proxy
will be voted for the election of the listed nominees as directors. A
Shareholder who has given a proxy may revoke it at any time before it is voted
at the meeting by filing with the Secretary of the Company a written notice of
revocation, by submitting a proxy bearing a later date, or by attending the
meeting and voting in person.
Record Date and Outstanding Shares
On March 10, 2000, there were 3,730,702 shares of the Company's Common
Stock, $.08 par value, outstanding. Each share of Common Stock of record on
the books of the Company at the close of business on March 10, 2000, entitles
its owner to one vote, either in person or by proxy, upon each matter to come
before the meeting.
Voting and Solicitation
A majority of the shares entitled to vote, represented in person or by
proxy, shall constitute a quorum. Votes cast in person or by proxy will be
tabulated by the inspectors of election appointed by the Board of Directors.
The current Florida Business Corporation Act (the "Act") provides that directors
are elected by a plurality of the votes cast if a quorum is present at the
meeting, and all other matters are approved if the votes cast in favor of the
action exceed the votes cast against the action (unless the matter is one for
which the Act or the Articles of Incorporation require a greater vote).
Therefore, under the Act, abstentions have no legal effect unless the matter is
one for which the Act or the Articles of Incorporation require a greater vote.
The expense of soliciting proxies will be borne by the Company. Proxies
will be solicited principally by mail, but directors, officers, and regular
employees of the Company or its subsidiaries may solicit proxies personally or
by telephone. The Company will reimburse custodians, nominees, or other persons
for their out-of-pocket expenses in sending proxy material to beneficial owners.
Regardless of the number of shares you own, it is important that they be
represented at the Annual Meeting. You are respectfully requested to sign,
date, and return the accompanying proxy at your earliest convenience.
PROPOSAL I
ELECTION OF DIRECTORS
Unless you specify otherwise on the accompanying proxy, it will be voted
for the election of the listed nominees to serve as directors until the next
Annual Meeting of Shareholders or until their successors are elected and
qualified. If a quorum is present at the Meeting, the plurality of the votes
cast by the shares entitled to vote in the election of Directors at the Meeting
is required to elect each nominee.
Nominees
Joseph W. Armaly, age 63, is Chairman of the Board of Directors and Chief
Executive Officer of the Company and of Commercial Bank of Florida ("Bank"),
the Company's wholly owned subsidiary. Mr.Armaly served as President of
Merchants Bank of Miami ("Merchants") from 1965 through 1988 and also served
as Chairman of Merchants' Board of Directors from 1980 through 1988. Mr.
Armaly was also President and Chairman of the Board of Florida Commercial
Banks, Inc. ("Florida Commercial") from 1980 through 1988. Mr.Armaly has
been Chairman of the Board of the Company and the Bank since its formation
in 1988.
Jack J. Partagas, age 62, is a Director and the President, Chief Operating
Officer, and Secretary of the Company and the Bank. Prior to joining the
Company and the Bank in 1988, Mr.Partagas was Vice President of Florida
Commercial between 1971 and 1988. Mr.Partagas has been a Director of the
Company and the Bank since 1988, Executive Vice President of the Company
and the Bank from 1988 through 1992, and President of the Company and the
Bank since 1992.
Cromwell A. Anderson, age 74, is a Director of the Company and the Bank.
Mr.Anderson has been in the private practice of law since 1954. During 1999,
Mr.Anderson retired from the law firm of Fowler, White, Burnett, Hurley,
Banick & Strickroot, P.A. Mr.Anderson has been a Director of the Company
and the Bank since 1988.
Robert Namoff, age 47, is a Director of the Company and the Bank. Mr.Namoff
is the chief executive officer of Allied Universal Corporation, a chemical
manufacturing company. Mr.Namoff has been a Director of the Company and the
Bank since 1990.
Julius J. Shepard, age 87, is a Director of the Company and the Bank. Mr.
Shepard is a private real estate investor and was a director of Florida
Commercial and one of its subsidiary banks prior to 1988. Mr.Shepard has
been a Director of the Company and the Bank since 1988.
Sherman Simon, age 81, is a Director of the Company and the Bank. Mr.Simon
has been a private real estate investor for over 29 years. Mr.Simon has
been a Director of the Company and the Bank since 1988.
Michael W. Sontag, age 54, is a Director of the Company and the Bank. Mr.
Sontag is an Architectural Engineer and a licensed general contractor. Mr.
Sontag is a founding shareholder and was elected as a Director of the
Company and the Bank in 1997.
Martin Yelen, age 72, is a Director of the Company and the Bank and was
formerly a director of Florida Commercial. Mr.Yelen is a retired attorney
who engaged in private practice for 45 years with the firm of Yelen & Yelen,
P.A. Mr.Yelen currently serves on the Miami-Dade and Monroe County chapters
of the National Safety Council and was a councilman and Mayor of the City of
West Miami. Mr.Yelen has been a Director of the Company and the Bank since
1988.
Richard J. Bischoff, age 55, is a Director of the Company and the Bank. Mr.
Bischoff is a praticing attorney and the sole shareholder of the firm of
Bischoff & Associates, P.A. Prior to 1999, Mr. Bischoff was a shareholder
in the Miami office of the law firm Gunster, Yoakley, Valdes-Fauli & Stewart
P.A. Mr. Bischoff has been a director of the Company and the Bank since
September, 1998.
The Board of Directors recommends a vote "FOR" the election of all nominees.
The Board of Directors and Committees
The Board of Directors of the Company consists of the same persons as the
Board of Directors of the Bank. The Company conducts its operations through
the Bank which is its wholly owned subsidiary. Both the Company and the Bank
held twelve meetings of the Board of Directors during 1999. Each director,
attended at least 75% of the board meetings that were held while he was serving
as a director during the year, as well as attending at least 75% of the
committee meetings of those committees of which the respective director was a
member. During 1999, the Company's Board of Directors had a standing
Compensation Committee, and the Bank's Board of Directors had a standing Audit
Committee.
(a) Audit Committee. The Bank's Audit Committee consists of Messrs.
Namoff, Simon and Yelen. These persons were all independent, non-employee
directors of the Bank and the Company and constitute three of the seven
non-employee directors of the Board. The Audit Committee held four meetings
during 1999. The Audit Committee has functional supervision over the internal
audit staff, reviews the system of internal controls and the adequacy of the
internal audit system, and receives reports on activities of the internal
auditing department. It recommends the independent public accountants to the
Bank's and the Company's Boards of Directors and reviews the scope of the
audits and the actual audits performed by both the independent public
accountants and the internal auditors. It is responsible for ensuring that
the audit findings are adequately addressed.
(b) Compensation Committee. The Company's Compensation Committee consists
of Messrs. Anderson, Shepard, Simon and Yelen. These persons are all
independent, non-employee directors of the Company and constitute four of the
seven non-employee directors of the Board. The Compensation Committee held two
meetings during 1999. The Compensation Committee was delegated the duties of
establishing and administering an executive compensation program. Its
activities include reviewing and approving the design of the program, setting
performance goals, assessing executive performance, and making grants of salary,
bonuses, and incentive compensation. The Compensation Committee also
administers the 1994 Performance Stock Option Plan.
(c) Nominating Committee. The Company has no formal nominating committee
but rather the entire Board of Directors acts as the nominating committee.
Executive Officers of the Company
The executive officers of the Company are elected to their offices for
one-year terms at the meeting of the Board of Directors in April of each year.
The terms of any executive officers elected after such date expire at the same
time as the terms of the executive officers elected at such date.
Joseph W. Armaly, age 63, is Chairman of the Board of Directors and Chief
Executive Officer of the Company and the Bank. Mr.Armaly served as President
of Merchants from 1965 through 1988 and also served as Chairman of Merchants'
Board of Directors from 1980 through 1988. Mr.Armaly was also President and
Chairman of the Board of Florida Commercial from 1980 through 1988. Mr.
Armaly has been Chairman of the Board of the Company and the Bank since its
formation in 1988.
Jack J. Partagas, age 62, is a Director and the President, Chief Operating
Officer, and Secretary of the Company and the Bank. Prior to joining the
Company and the Bank in 1988, Mr.Partagas was Vice President of Florida
Commercial between 1971 and 1988. Mr.Partagas has been a Director of the
Company and the Bank since 1988, Executive Vice President of the Company
and the Bank from 1988 through 1992, and President of the Company and the
Bank since 1992.
Barbara E. Reed, age 36, was elected Senior Vice President and Chief
Financial Officer of the Company and the Bank in June of 1995. Ms. Reed
previously served the Bank as Vice President and Controller and as Auditor.
Prior to 1991, Ms. Reed was employed by Coopers & Lybrand LLP.
Certain Relationships and Related Transactions
The Bank has had and expects to have in the future various loan and other
banking transactions in the ordinary course of business with directors,
executive officers, and principal shareholders of the Bank and the Company (or
associates of such persons). In the opinion of management, all such
transactions: (i) have been and will be made in the ordinary course of business;
(ii) have been and will be made on substantially the same terms, including
interest rates and collateral on loans, as those generally prevailing at the
time for comparable transactions with unrelated persons; and (iii) do not
involve more than the normal risk of collectibility or present other unfavorable
features. The total amount of extensions of credit to directors, executive
officers, those stockholders named in the table in "Security Ownership of
Certain Beneficial Owners and Management" (set forth below), and any of their
associates was $8.5 million as of February 29, 2000, which represented
approximately 22% of total shareholders equity.
The firm of Fowler, White, Burnett, Hurley, Banick & Strickroot, P.A.,
occasionally provides legal services to the Company and the Bank. Cromwell A.
Anderson, a director of the Company and the Bank, was a partner in that firm
during 1999. The fees paid in 1999 and 1998 were not material to the Company
or the law firm.
The firm of Bischoff and Associates, P.A. acts as corporate counsel to the
Company and the Bank. Richard J. Bischoff, a director of the Company and the
Bank, is the sole shareholder in that firm. The fees paid in 1999 and 1998
were not material to the Company but might be considered material to that the
law firm organized in September, 1999.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers (as defined in Rule 16a-1(f)), directors, and persons owning more than
ten percent of a registered class of the Company's equity securities to file
reports of ownership and changes of ownership with the Securities and Exchange
Commission ("SEC"). Such persons are required by SEC regulations to furnish
the Company with all Section 16(a) forms they file. Based solely upon a review
of the copies of forms furnished to the Company, the Company believes that
during the 1999 fiscal year, all filing requirements applicable to its officers
and directors and 10% shareholders were met.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of March 1, 2000,
regarding the beneficial ownership of the Company's outstanding Common Stock
by one person known to the Company to be the beneficial owner of more than 5%
of the Company's Common Stock.
<TABLE>
<CAPTION>
Current Beneficial Ownership
----------------------------
Number of Percent of
Name and Address of Beneficial Owner Shares (1) Class*
- ------------------------------------ ----------- -----------
<S> <C> <C>
John Hancock Advisors, Inc. (2) 272,575 6.68%
101 Huntington Avenue, Boston, MA 02199
</TABLE>
The following table sets forth certain information regarding the beneficial
ownership of the Company's outstanding Common Stock as of March 1, 2000, by (i)
each director and executive officer of the Company, and (ii) the directors
and the executive officers of the Company as a group. Except as otherwise
indicated, the persons named in the table have sole voting and investment power
with respect to all shares of Common Stock owned by them.
<TABLE>
<CAPTION>
Current Beneficial Ownership
----------------------------
Number of Percent of
Name and Address of Beneficial Owner Shares (1)(11) Class*
- ------------------------------------ --------- ----- ----------
<S> <C> <C>
Cromwell A. Anderson 89,865 (4)(10) 2.20%
1029 Hardee Road
Coral Gables, Florida 33146
Joseph W. Armaly 175,392 (3)(10) 4.30%
7141 S.W. 136th Street
Miami, Florida 33156
Richard J. Bischoff 15,229 (5) **
6500 Riviera Drive
Coral Gables, Florida
Robert Namoff 77,740 (4) 1.90%
13611 S.W. 105th Avenue
Miami, Florida 33176
Jack J. Partagas 43,696 (6) 1.07%
7540 S.W. 158th Terrace
Miami, Florida 33157
Barbara E. Reed 20,695 (8) **
13355 S.W. 74th Avenue
Miami, Florida 33156
Julius J. Shepard 157,844 (7) 3.87%
2321 Fisher Island
Miami, Florida 33109
Sherman Simon 135,751 (4) 3.33%
9999 Collins Avenue, #20K
Bal Harbour, Florida 33154
Michael W. Sontag 25,622 (9) **
14535 S.W. 63rd Court
Miami, Florida 33158
Martin Yelen 55,895 (4) 1.37%
1925 Brickell Avenue, #1001
Miami, Florida 33129
All directors and the executive officers
as a group (10 persons) (10) 797,729 19.54%
<FN>
_______________________
* Both the number of shares beneficially owned and, for purposes of calculating
the percentage of class, the total number of shares of the class, include
shares of common stock underlying 351,886 outstanding and exercisable options
under the Company's 1994 Performance Stock OptionPlan and the Company's 1994
Outside Director Stock Option Plan.
** Less than 1%.
(1) In accordance with Rule 13d-3 promulgated pursuant to the Securities
Exchange Act of 1934, a person is deemed to be the beneficial owner of a
security for purposes of the rule if he or she has or shares voting power or
investment power with respect to such security or has the right to acquire
such ownership within 60 days. As used herein, "voting power" is the power
to vote or direct the voting of shares, and "investment power" is the power
to dispose or direct the disposition of shares, irrespective of any economic
interest therein.
(2) Through their parent-subsidiary relationship to John Hancock Advisors, Inc.,
John Hancock Mutual Life Insurance Company, John Hancock Subsidiaries, Inc.,
John Hancock Asset Management, and The Berkeley Financial Group have
indirect beneficial ownership of these same shares.
(3) Includes Options granted June 1, 1994 to purchase 5,740 shares of Common
Stock at $8.70 per share, Options granted August 16, 1995 to purchase 7,293
shares of Common Stock at $12.03 per share, Options granted June 1, 1996 to
purchase 8,813 shares of Common Stock at $11.31 per share, Options granted
June 1, 1997 to purchase 6,657 shares of Common Stock at $14.47 per share,
Options granted June 1, 1998 to purchase 4,410 shares of Common Stock at
$22.45 per share, and Options granted June 1, 1999 to purchase 4,825 shares
of Common Stock at $20.71 per share.
(4) Includes Options granted June 1, 1994 to purchase 4,863 shares of Common
Stock at $8.70 per share, Options granted June 1, 1995 to purchase 4,863
shares of Common Stock at $11.72 per share, Options granted June 1, 1996
to purchase 4,863 shares of Common Stock at $11.31 per share, Options
granted June 1, 1997 to purchase 4,631 shares of Common Stock at $14.47
per share, Options granted June 1, 1998, to purchase 4,410 shares of Common
Stock at $22.45 per share and Options granted June 1, 1999 to purchase
5,250 shares of common stock at $20.71 per share.
(5) Includes Options granted June 1, 1999 to purchase 5,250 shares of Common
Stock at $20.71 per share.
(6) Includes Options granted June 1,1994 to purchase 10,940 shares of Common
Stock at $8.70 per share, Options granted August 16, 1995 to purchase 7,293
shares of Common Stock at $12.03 per share, Options granted June 1, 1996 to
purchase 8,813 shares of Common Stock at $11.31 per share, Options granted
June 1, 1997 to purchase 6,657 shares of Common Stock at $14.47 per share,
Options granted June 1, 1998 to purchase 4,410 shares of Common Stock at
$22.45 per share and Options granted June 1, 1999 to purchase 4,825 shares
of Common Stock at $20.71 per share.
(7) Includes Options granted June 1, 1994 to purchase 2,431 shares of Common
Stock at $8.70 per share, Options granted June 1, 1995 to purchase 2,431
shares of Common Stock at $11.72 per share, Options granted June 1, 1996
to purchase 2,431 shares of Common Stock at $11.31 per share, Options
granted June 1, 1997 to purchase 2,315 shares of Common Stock at $14.47
per share, and Options granted June 1, 1998 to purchase 2,200 shares of
Common Stock at $22.45 per share and Options granted June 1, 1999 to
purchase 4,825 shares of Common Stock at $20.71 per share.
(8) Includes Options granted August 16, 1995, to purchase 6,078 shares of Common
Stock at $12.03 per share, Options granted June 1, 1996 to purchase 6,078
shares of Common Stock at $11.31 per share, Options granted June 1, 1997 to
purchase 2,894 shares of Common Stock at $14.47 per share, Options granted
June 1, 1998 to purchase 2,205 shares of Common Stock at $22.45 per share
and Options granted June 1, 1999 to purchase 2,100 shares of Common Stock
at $20.71 per share.
(9) Includes Options granted June 1, 1998 to purchase 2,205 shares of Common
Stock at $22.45 per share, and Options granted June 1, 1999 to purchase
3,150 shares of Common Stock at $20.71 per share.
(10)Does not include 28,927 shares held of record by Mr.Armaly's wife, and
42,052 shares held of record by Mr.Anderson's wife. Messrs. Armaly and
Anderson respectively disclaim beneficial ownership of all such shares.
Inclusion of such shares would result in Mr.Armaly owning 204,319 shares or
5.00%, Mr.Anderson owning 131,917 shares or 3.23% and all directors and the
executive officers owning as a group 868,708 shares or 21.28% of the total
issued and outstanding shares of Common Stock.
(11)The number of shares underlying the stock options described in this table
and the foregoing footnotes, and the exercise prices for such shares, give
effect to the dilutive adjustments which were made with respect to such
options as a result of the 5% stock dividends which were declared by the
Company in each of December, 1996, December, 1997, December, 1998, and
December, 1999.
</TABLE>
Executive Compensation
The following table sets forth as of December 31, 1999, all compensation
paid during the Company's and Bank's latest fiscal year to the Company's and
the Bank's chief executive officer and to those executive officers of the
Company whose total annual compensation exceeded $100,000 in any of the last
three completed fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
--------------------- --------------
Stock
Name and Principal Options All Other
Position(1) Year Salary Bonuses Granted(2) Compensation(3)
- -------------------- ---- -------- ------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Joseph W. Armaly 1999 $275,000 $50,000 4,825 $4,745
Chairman and Chief 1998 $265,000 $40,000 4,410 $6,377
Executive Officer 1997 $250,000 $35,000 6,657 $5,807
of the Company and
the Bank
Jack J. Partagas 1999 $205,000 $45,000 4,825 $6,609
President and Chief 1998 $195,000 $35,000 4,410 $8,793
Operating Officer 1997 $180,000 $27,000 6,657 $8,070
of the Company and
the Bank
Barbara E. Reed 1999 $99,000 $12,000 2,100 $4,950
Senior Vice President 1998 $95,000 $10,000 2,205 $4,807
and Chief Financial 1997 - - - -
Officer of the Company
and the Bank
<FN>
________________
(1) All compensation or remuneration paid to employees is paid by the Bank.
At the present time, there are no separate employees of the Company and
there is no compensation paid by the Company.
(2) Gives effect to the dilutive adjustments which were made with respect to
such options as a result of the 5% stock dividends which were declared by
the Company in each of December, 1996, December, 1997, December, 1998 and
December, 1999.
(3) The Bank has adopted a plan pursuant to the provisions of Section 401(k)
of the Internal Revenue Code in which after one year of employment, all
employees of the Bank are eligible to participate. The Bank, in its
discretion, may match any amounts deferred by employees. The amount of
contribution made by the Bank with respect to all employees was
approximately, $134,000 in 1999, $132,000 in 1998, and $106,000 in 1997.
</TABLE>
<TABLE>
TABLE OF
OPTION GRANT IN LAST FISCAL YEAR
<CAPTION>
Potential
Realizable Value at
Number of % of Total Assumed Annual
Securities Options Exercise Rates of Stock Price
Underlying Granted To or Appreciation for
Options Employees in Base Expiration Option Term
Name Granted Fiscal Year Price(1) Date(2) 5% 10%
- ---------------- ------- ------------ -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Armaly 4,825 15.6% $20.71 June 1, 2009 $62,843 $159,256
Jack J. Partagas 4,825 15.6% $20.71 June 1, 2009 $62,843 $159,256
Barbara E. Reed 2,100 6.8% $20.71 June 1, 2009 $27,351 $ 69,313
<FN>
(1) The number of shares underlying the stock options described in this table
and the exercise prices for such shares are adjusted to give effect to the
dilutive adjustments which were made with respect to such options as a
result of the 5% stock dividend which was declared by the Company in
December, 1999.
(2) The Company's form of option agreement provides for early termination in
the event the option holder's employment is terminated, the option holder
dies, or the option holder becomes permanently or totally disabled. The
Options may not be exercised until at least one year from the date of
grant, which was June 1, 1999.
</TABLE>
<TABLE>
FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options at
Options at FY-END($)
FY-END
Exercisable/ Exercisable and
Name Unexecisable(1) Unexercisable
- ------------------- ---------------- ---------------
<S> <C> <C>
Joseph W. Armaly 32,913/4,825 $246,244
Jack J. Partagas 38,113/4,825 $308,361
Barbara E. Reed 17,255/2,100 $122,624
<FN>
_________________
(1) The number of shares underlying the stock options described in this table
gives effect to the dilutive adjustments which were made with respect to
such options as a result of the 5% stock dividends which were declared by
the Company in each of December, 1997, December, 1998, and December, 1999.
</TABLE>
Employment Agreements
As of March 18, 1994, the Company and the Bank entered into employment
agreements with Messrs. Armaly and Partagas, and Ms. Reed. These agreements
are intended to assure the Company and the Bank of the continued services of
key officers.
With respect to Messrs. Armaly and Partagas, the agreements provide that
each officer shall be employed by the Company and the Bank in his current
position for a period of three (3) years. On March 31, 1995 the term was
extended automatically for one additional year and on each subsequent March 31
the term is automatically extended for one additional year such that after each
March 31 extension the term of the agreement is a full three years.
Compensation and benefits are to be determined by the Board of Directors of
the Company, provided that the officer's participation in employee benefit
plans and arrangements shall provide benefits at least equal to those provided
to all other employees of the Company. In the event that the officer's
employment is terminated (except for death, disability, or cause) or if the
officer terminates his employment because of a reduction in position,
responsibility, salary, or for any other good reason, as defined in the
agreement, and including a change in control of the Company, the officer is
entitled to severance benefits equal to three year's salary and cash incentive
compensation plus the option to continue to receive fringe benefits for an
additional three years or an additional sixty (60%) percent of annual salary
and cash incentive compensation in lieu of fringe benefits. In the event the
officer terminates his employment other than for good reason, as defined in the
agreement, the officer is entitled to severance benefits equal to one year's
salary and cash incentive compensation, plus an additional twenty (20%)
percent in lieu of fringe benefits. Such severance benefits will be based
upon the executive's then current salary and the aggregate cash incentive
compensation last paid to or earned by the officer in the immediately preceding
twelve months prior to termination. In the event that any of such payments
constitute "parachute payments" under Section 280G of the Internal Revenue
Code and therefore are subject to the excise tax on "excess parachute payments"
under Section 4999 of the Internal Revenue Code, the agreements provide that the
Company will pay an additional cash amount, as determined by a formula set forth
in the agreements, sufficient to pay both the excise tax and any additional
amounts which become due as the result of the payment of the excise tax, to put
the officer in the same position as though no excise tax had been imposed.
With respect to Ms. Reed, the agreement provides that she shall be employed
by the Company and the Bank in her current position for a period of one year.
On December 14, 1997 the term was extended automatically for one additional year
and on each subsequent December 14 the term is automatically extended for one
additional year. Compensation and benefits are to be determined by the Board of
Directors of the Company, provided that the officer's participation in employee
benefit plans and arrangements shall provide benefits at least equal to those
provided to all other employees of the Company. In the event that the officer's
employment is terminated (except for death, disability, or cause) or if the
officer terminates her employment because of a reduction in position,
responsibility, salary, or for any other good reason, as defined in the
agreement, Ms. Reed is entitled to severance benefits equal to her base salary
and cash incentive compensation through and including the scheduled termination
date of this agreement, as extended. If the agreement is terminated by Ms. Reed
pursuant to a change in control of the Company, Ms. Reed is entitled to
severance benefits equal to twelve times her then current monthly salary. In
the event that Ms. Reed terminates her employment other than for good reason,
as defined in the agreement, the officer is entitled to severance benefits equal
to her base salary and cash incentive compensation through and including the
date of termination Such severance benefits will be based upon Ms. Reed's then
current salary and the aggregate cash incentive compensation last paid to or
earned by the officer in the immediately preceding twelve months prior to
termination.
Director Compensation
Directors of the Company who are salaried employees of the Bank do not
receive any additional compensation for serving as a director or committee
member. Non-employee directors of the Bank receive a retainer of $1,000 per
calendar quarter.
In addition, each non-employee director in office in June, 1999 received
3,000 (as later adjusted for stock dividends declared in December, 1999) stock
options in 1999 for serving on the Board, and each non-employee director who
was a member of the Bank's Loan or Executive Committees in June, 1999 received
2,000 (as later adjusted for stock dividends declared in December, 1999)
additional stock options in 1999.
Board Compensation Committee Report on Executive Compensation
1. Performance and Policies.
The Compensation Committee of the Board of Directors of the Company oversees
and administers the Company's executive compensation programs. All members of
the Compensation Committee are outside directors who are not eligible to
participate in any of the compensation programs that the Committee oversees.
The Compensation Committee recommends and the Board of Directors determines,
based on such recommendations, compensation for the Chairman. Compensation
levels for the other executive officers of the Company are determined by the
Compensation Committee, based on the recommendations of the Chairman.
The Company's executive compensation program is designed to attract, retain,
motivate, and appropriately reward individuals who are responsible for the
Company's short- and long-term profitability, growth, and return to
shareholders. It is also designed to align the interests of high level
employees with those of the Shareholders. Compensation for Company executive
officers consists of base compensation, annual cash incentive awards, and
long-term incentive awards in the form of stock options. Executive officers
also participate in a savings incentive plan and a medical plan available to
employees generally.
The determination of base compensation increases, annual cash incentive
awards, and long-term incentive awards is based upon the performance of the
Company and the contribution of each individual to that performance. Individual
contribution is assessed based upon factors such as level of responsibility, job
complexity, and the importance of the position in the structure of the Company
and the Bank. Individual contribution is also judged more subjectively based
upon the Compensation Committee's overall evaluation of the officer's
professionalism and professional growth, judgment, business acumen and ability,
and effort. The Compensation Committee also compares, on a random and
subjective basis, the salaries of the executive officers with the salaries of
executive officers of other bank holding companies of comparable size.
Finally the Compensation Committee considers whether compensation increases
are fair and equitable based upon individual performance and a comparison with
peers. Although the components of compensation (base compensation, annual cash
incentive awards, and long-term incentive awards) are reviewed separately,
compensation decisions are made based on a review of total compensation.
(a) Base Compensation. Pay levels for each executive are set annually at
the beginning of the fiscal year and are based primarily on the performance
of the Company during the prior fiscal year. The Compensation Committee
considers factors such as earnings per share, pre-tax earnings, net profits
and return on equity. Secondarily, the Compensation Committee considers
individual performance in light of each executive's job responsibilities.
In determining the base salaries for 1999, the Compensation Committee
specifically took into account the Company's performance during 1998.
Specifically, net income increased 8% during 1998; return on average assets
and equity were 1.16% and 11.14%, respectively, as compared to 1.20% and
11.54%, respectively, in 1997; credit performance remained excellent;
diluted earnings per share increased from $1.14 in 1997, to $1.21 in 1998
and loan growth exceeded expectations with 23% growth in 1998.
(b) Annual Cash Incentive Awards. Annual cash incentive awards to the
Company's executive officers are granted at the discretion of the
Compensation Committee and are determined at the end of the fiscal year.
The determination of the amount of such awards is made by the Compensation
Committee based upon the performance of the Company and on a subjective
basis as indicated above. For purposes of determining the level of the
annual cash incentive awards to be paid to senior executives for 1999, it
was the Compensation Committee's view that the Company's 1999 results
represented a strong performance. The Compensation Committee noted the
following factors in support of its findings: net income increased 12%
during 1999; return on average assets and equity were 1.20% and 12.35% in
1999, respectively, as compared to 1.16% and 11.14% in 1998; credit
performance remained excellent; diluted earnings per common share increased
from $1.14 in 1997 and $1.21 in 1998, to $1.37 in 1999; the senior executive
officers were successful in implementing the loan growth strategy of the
Bank, as average loans increased by 23% from 1998 to 1999; average total
deposits increased 9% from 1998 to 1999; and cash dividends declared during
1999 increased 28% over 1998.
(c) Stock Option Awards. The Compensation Committee also uses stock options
to reward management and to link them to the long-term results and
stockholder interests of the Company. Option grants are usually determined
in the Spring of each fiscal year. The levels of option grants are
determined at the discretion of the Compensation Committee on a subjective
basis. Previous grants of stock options are reviewed but are not considered
the most important factor in determining the size of any executive's stock
option award in a particular year. In determining the levels of option
grants for 1999, the Compensation Committee considered the performance of
the Company for fiscal 1998, the performance of the Company for the
beginning of 1999, and efforts and initiatives by the executive officers to
implement and support the strategic objectives of the Bank.
2. CEO Compensation.
Joseph Armaly is eligible to participate in the same executive compensation
program available to the other executive officers within the Company. His 1999
base salary was set at $275,000, as compared to $265,000 in 1998. Mr.Armaly's
base salary was based primarily on the Company's performance during 1998;
specifically, net income increased 8% during 1998; return on average assets and
equity were 1.16% and 11.14% respectively, as compared to 1.20% and 11.54%,
respectively, in 1997; credit performance remained excellent; diluted earnings
per share increased from $1.14 in 1997 to $1.21 in 1998, and loan growth
exceeded expectations with 23% growth in 1998.
The stock option grants made to Mr.Armaly in 1999 were based on the analysis
discussed above for fiscal year 1998, together with performance of the Company
for the first half of 1999. In addition, the Compensation Committee considered
certain initiatives undertaken in 1999, including an effort made by the Bank to
increase loans, while maintaining the Bank's stringent underwriting policy. In
June 1999, Mr.Armaly was awarded ten-year options covering 4,595 shares, which
were adjusted to 4,825 shares as a result of the 5% stock dividend declared by
the Company in December 1999. The terms and conditions of this grant were
consistent with the grants to all other executive officers.
In December, 1999, Mr.Armaly received an annual cash incentive award of
$50,000. This annual cash incentive award was based upon the Company's
performance during the 1999 fiscal year and the individual performance of the
executive. In determining this award, the Compensation Committee considered
the increase in the Company's earnings during 1999. Specifically, the
Compensation Committee considered the following factors: net income increased
12% during 1999; return on average assets and equity for 1999 were 1.20% and
12.35%, as compared to 1.16% and 11.14% in 1998; diluted earnings per common
share increased from $1.14 in 1997 and $1.21 in 1998 to $1.37 in 1999; the Bank
was successful in implementing its loan growth strategy, as average loans
increased by 23% from 1998 to 1999; average total deposits increased 9% from
1998 to 1999; and cash dividends declared during 1999 increased 28% over 1998.
CROMWELL A. ANDERSON, CHAIRMAN JULIUS J. SHEPARD
SHERMAN SIMON MARTIN YELEN
PERFORMANCE TABLE
The following table compares comulative five-year shareholder returns
(including reinvestment of dividends) on an indexed basis with the Center for
Research in Security Prices ("CRSP") Index for the NASDAQ Stock Market (U.S.
Companies) and the CRSP Indes for NASDAQ Bank Stocks (SIC codes 602 and 671).
These indices are included for comparative purposes only, and do not necessarily
reflect management's opinion that such indices are an appropriate measure of the
relative performance of the stock involved and are not intended to forecast or
be indicative of possible future performance of the Common Stock. The table
assumes that the value of an investment in the Common Stock and in each index
was $100 on December 31, 1995, and that all dividends were invested.
<TABLE>
<CAPTION>
Comparison of Five-Year Cumulative Return
Commercial Bankshares, Inc., Common Stock
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Commercial Bankshares, Inc. 245 241 217 118 100
NASDAQ Stock Market Bank Stocks 210 218 220 131 100
NASDAQ Stock Marke Index 384 212 151 123 100
(U.S. Companies)
</TABLE>
Plan Benefits
The table below indicates options granted to date under the Outside
Director Plan and the Performance Plan.
<TABLE>
<CAPTION>
Number of
Name and Position Options Granted
- ----------------- ---------------
<S> <C>
Executive Officer Group 100,031
Non-Executive Director Group 141,088
Non-Executive Officer Employee Group 110,767
-------
Total 351,886
=======
Executive Officers
- ------------------
Joseph W. Armaly 37,738
Chairman and CEO
Jack J. Partagas 42,938
President and COO
Barbara E. Reed 19,355
Senior Vice President and CFO
Nominees for Director
- ---------------------
Joseph W. Armaly 37,738
Jack J. Partagas 42,938
Cromwell A. Anderson 28,880
Richard J. Bischoff 5,250
Robert Namoff 28,880
Julius J. Shepard 14,963
Sherman Simon 28,880
Michael W. Sontag 5,355
Martin Yelen 28,880
</TABLE>
OTHER BUSINESS
The Board of Directors does not know of any other business to be presented
at the meeting and does not intend to bring before the meeting any matter other
than the proposals described herein. However, if any other business should
come before the meeting or any adjournments thereof, the persons named in the
accompanying proxy will have discretionary authority to vote all proxies.
SHAREHOLDER PROPOSALS
Proposals on matters appropriate for shareholder consideration consistent
with the regulations of the Securities and Exchange Commission submitted by
shareholders for inclusion in the proxy statement and form of proxy for the
2001 Annual Meeting of Shareholders must be received at the Company's principal
executive offices on or before November 24, 2000. Such shareholder proposals
may be mailed to Barbara E. Reed, Senior Vice President and Chief Financial
Officer, Commercial Bankshares, Inc., 1550 Southwest 57th Avenue, Miami, Florida
33144.
NOTICE OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP, Certified
Public Accountants, to audit the accounts of the Company and the Bank for the
fiscal year ending December 31, 2000, and to perform such other services as
may be required of them. Representatives of PricewaterhouseCoopers LLP will
be present at the 2000 Annual Meeting and will have an opportunity to make a
statement if they desire to do so and to respond to appropriate questions
raised at the meeting.
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1999, is being provided to each shareholder simultaneously
with delivery of this proxy statement. Additional copies of the Annual Report
to Shareholders or copies of the Company's Annual Report on Form 10-K, filed
with the Securities and Exchange Commission, may be obtained by writing Ms.
Barbara E. Reed, Commercial Bankshares, Inc., 1550 Southwest 57th Avenue, Miami,
Florida 33144.
