<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
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 240.14a-11(c) or 240.14a-12
CVB FINANCIAL CORP.
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
CVB FINANCIAL CORP.
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1999
TO OUR SHAREHOLDERS:
The 1999 Annual Meeting of Shareholders of CVB Financial Corp. will be
held at the Double Tree Hotel, 222 North Vineyard, Ontario, California 91764 on
Wednesday, May 19, 1999 at 7:00 p.m. local time.
At our meeting, we will ask you to act on the following matters:
1. ELECTION OF DIRECTORS. Elect seven persons to the Board of Directors
to serve for a term of one year. The following seven persons are the nominees:
George A. Borba Charles M. Magistro
John A. Borba James C. Seley
Ronald O. Kruse D. Linn Wiley
John J. LoPorto
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. Ratify
the appointment of Deloitte & Touche as independent public accountants for 1999.
3. OTHER BUSINESS. Transact any other business which properly comes
before the meeting.
Our Bylaws provide for the nomination of directors in the following
manner:
"Nominations for election of members of the Board of Directors may be
made by the Board of Directors or by any shareholder of any outstanding class of
voting stock of the corporation entitled to vote for the election of directors.
Notice of intention to make any nominations, other than by the Board of
Directors, shall be made in writing and shall be received by the President of
the corporation no more than 60 days prior to any meeting of shareholders called
for the election of directors, and no more than 10 days after the date the
notice of such meeting is sent to shareholders pursuant to Section 2.2 of these
bylaws; provided, however, that if only 10 days' notice of the meeting is given
to shareholders such notice of intention to nominate shall be received by the
President of the corporation not later than the time fixed in the notice of the
meeting for the opening of the meeting. Such notification shall contain the
following information to the extent known to the notifying shareholder: (a) the
name and address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the number of shares of voting stock of the corporation
owned by each proposed nominee; (d) the name and residence address of the
notifying shareholder; and (e) the number of shares of voting stock of the
corporation owned by the notifying shareholder. Nominations not made in
accordance herewith shall be disregarded by the then chairman of the meeting,
and the inspectors of election shall then disregard all votes cast for each
nominee."
If you were a shareholder of record at the close of business on April 1,
1999, you may vote at the meeting or at any postponement or adjournment of the
meeting.
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<PAGE> 3
IT IS IMPORTANT THAT ALL SHAREHOLDERS VOTE. WE URGE YOU TO SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, REGARDLESS OF WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
By Order of the Board of Directors
DONNA MARCHESI
Corporate Secretary
Dated: April 12, 1999
2
<PAGE> 4
PROXY STATEMENT FOR
CVB FINANCIAL CORP.
701 NORTH HAVEN AVENUE, SUITE 350
ONTARIO, CALIFORNIA 91764
(909) 980-4030
This proxy statement contains information about the annual meeting of
shareholders of CVB Financial Corp. to be held on Wednesday, May 19, 1999
beginning at 7:00 p.m., local time, at the Double Tree Hotel, 222 North
Vineyard, Ontario, California, 91764, and at any postponements or adjournments
of the meeting.
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
WHY DID YOU SEND ME THIS PROXY STATEMENT?
We sent you this Proxy Statement and the enclosed proxy card because the
Board of Directors is soliciting your vote at the 1999 Annual Meeting of
Shareholders.
This Proxy Statement summarizes the information you need to know to cast
an informed vote at the meeting. However, you do not need to attend the meeting
to vote your shares. Instead, you may simply complete, sign and return the
enclosed proxy card.
We will begin sending this Proxy Statement, Notice of Annual Meeting and
the enclosed proxy card on or about April 12, 1999 to all shareholders entitled
to vote. The record date for those entitled to vote is April 1, 1999. On April
1, 1999, there were 16,560,079 shares of our common stock outstanding. The
common stock is our only class of stock outstanding. We are also sending our
Summary Annual Report for the fiscal year ended December 31, 1998 along with
this Proxy Statement. The Summary Annual Report is not to be deemed a part of
the material for the solicitation of proxies.
HOW DO I VOTE BY PROXY?
Whether you plan to attend the meeting or not, we urge you to complete,
sign and date the enclosed proxy card and to return it promptly in the envelope
provided. Returning the proxy card will not affect your right to attend the
meeting and vote.
If you properly fill in your proxy card and send it to us in time to
vote, your "proxy" (one of the individuals named on your proxy card) will vote
your shares as you have directed. If you sign the proxy card but do not make
specific choices, your proxy will vote your shares as recommended by the Board
of Directors as follows:
- "FOR" the election of all seven nominees for director, and
- "FOR" ratification of the appointment of Deloitte & Touche as
independent accountants for 1999.
If any other matter is presented, your proxy will vote in accordance
with the recommendation of the Board of Directors, or, if no recommendation is
given, in their own discretion. At the time this Proxy Statement went to press,
we knew of no matters which needed to be acted on at the meeting, other than
those discussed in this Proxy Statement.
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<PAGE> 5
HOW MANY VOTES DO I HAVE?
Each share of common stock entitles you to one vote. The proxy card
indicates the number of shares of common stock that you own. However, in the
election of directors, you are entitled to cumulate your votes if you are
present at the meeting, the nominee's(s') name(s) have properly been placed in
nomination, and you have given notice at the meeting prior to the actual voting
of your intention to vote your shares cumulatively. Cumulative voting allows you
to give one nominee as many votes as is equal to the number of directors to be
elected, multiplied by the number of shares you own, or to distribute your votes
in the same fashion between two or more nominees. The return of an executed
proxy grants the Board of Directors the discretionary authority to also cumulate
votes.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may change your vote
at any time before the proxy is exercised if you file with the Secretary of the
Company either a notice of revocation or a duly executed proxy bearing a later
date. The powers of the proxy holders will be suspended if you attend the
meeting in person and so request, although attendance at the meeting will not by
itself revoke a previously granted proxy.
HOW DO I VOTE IN PERSON?
If you plan to attend the meeting and vote in person, we will give you a
ballot form when you arrive. However, if your shares are held in the name of
your broker, bank or other nominee, you must bring a proxy card and letter from
the nominee authorizing you to vote the shares and indicating that you are the
beneficial owner of the shares on April 1, 1999, the record date for voting.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the conduct of business at the meeting. Proxies
which are marked as abstentions will be included in the calculation of the
number of shares considered to be present at the meeting.
WHAT VOTE IS REQUIRED FOR EACH PROPOSAL?
The seven nominees for director who receive the most votes will be
elected. So, if you do not vote for a particular nominee or you indicate
"withhold authority to vote" for a particular nominee on your proxy card, your
vote will not count either "for" or "against" the nominee. In order to ratify
the selection of independent accountants, the accountants must receive the
affirmative vote of a majority of the votes represented and voting at the annual
meeting which also must be at least a majority of the required quorum. So, if
you "abstain" from voting, it has the same effect as if you voted "against" this
proposal.
WHAT ARE THE COSTS OF SOLICITATION OF PROXIES?
We will bear the costs of this solicitation, including the expense of
preparing, assembling, printing and mailing this Proxy Statement and the
material used in this solicitation of proxies. The proxies will be solicited
principally through the mails, but directors, officers and regular employees of
the Company may solicit proxies personally or by telephone. Although there is no
formal agreement to do so, we may reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for their reasonable expense in forwarding
these proxy materials to their principals. In addition, we may pay for and
utilize the services of individuals or companies we do not regularly employ in
connection with the solicitation of proxies.
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<PAGE> 6
STOCK OWNERSHIP
WHO ARE THE LARGEST OWNERS OF THE COMPANY'S COMMON STOCK?
The following table shows the beneficial ownership of common stock as of
April 1, 1999 by each person we know to be the beneficial owner of more than
five percent of the outstanding shares of common stock. "Beneficial ownership"
is a technical term broadly defined by the Securities and Exchange Commission to
mean more than ownership in the usual sense. So, for example, you beneficially
own the Company's common stock not only if you hold it directly, but also if you
indirectly, through a relationship, contract or understanding, have, or share,
the power to vote the stock, to sell it or you have the right to acquire it
within 60 days of April 1, 1999:
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
------------------
NUMBER PERCENT
NAME ADDRESS OF SHARES OF CLASS
---- ------- --------- --------
<S> <C> <C> <C>
George A. Borba 701 N. Haven Avenue
Ontario, CA 91764 2,813,983(1) 16.95%
Charles M. Magistro 701 N. Haven Avenue
Ontario, CA 91764 1,174,800(1) 7.07
John Vander Schaaf 500 Wells Lane 1,085,265(1) 6.53
Ripon, CA 95366
</TABLE>
- ---------------------
(1) Includes 66,435 shares which each individual has the right to acquire by the
exercise of stock options.
HOW MUCH STOCK DO THE COMPANY'S DIRECTORS AND OFFICERS OWN?
The following table shows the beneficial ownership of the Company's
common stock as of April 1, 1999 by (i) our President and Chief Executive
Officer; (ii) our four most highly compensated executive officers in 1998; (iii)
each director and nominee for director and (iv) by all directors and executive
officers as a group.
3
<PAGE> 7
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
------------------
NUMBER PERCENT
NAME OF SHARES(1) OF CLASS(2)
- ---- ------------ -----------
<S> <C> <C>
George A. Borba(3) 2,813,983 16.95%
Chairman of the Board and Nominee
John A. Borba(3) 657,029 3.95
Director and Nominee
Ronald O. Kruse(3) 480,808 2.89
Director and Nominee
John J. LoPorto(3)(4) 409,260 2.46
Director and Nominee
Charles M. Magistro(3) 1,174,800 7.07
Director and Nominee
James C. Seley(5) 28,231 *
Director and Nominee
D. Linn Wiley, 368,066 2.21
President, Chief
Executive Officer, Director and Nominee(6)
Frank Basirico, 19,231 *
Executive Vice President(7)
Edward Biebrich, 9,350 *
Executive Vice President
and Chief Financial Officer(8)
Jay W. Coleman, 113,991 *
Executive Vice President(9)
Edwin Pomplun, 9,240 *
Executive Vice President(10)
Current Directors and Executive Officers
(13 persons)(11) 6,083,989 36.59
</TABLE>
- ------------------
* Less than 1%.
(1) Except as otherwise noted below, each person directly or indirectly has
sole or shared voting and investment power with respect to the shares
listed.
(2) The percentage for each of these persons or group is based upon the total
number of shares of the company's common stock outstanding as of the record
date plus the shares which the respective individual or group has the right
to acquire within 60 days after April 1, 1999 by the exercise of stock
options.
(Footnotes continued on next page)
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<PAGE> 8
(3) Includes 66,435 shares which each individual can acquire within 60 days
after April 1, 1999 by the exercise of stock options.
(4) Includes 1,706 shares held by Mr. Loporto as custodian for his
grandchildren.
(5) Includes 26,574 shares which Mr. Seley can acquire within 60 days after
April 1, 1999 by the exercise of stock options.
(6) Includes 115,000 shares which Mr. Wiley can acquire within 60 days after
April 1, 1999 by the exercise of stock options.
(7) Represents 19,231 shares which Mr. Basirico can acquire within 60 days
after April 1, 1999 by the exercise of stock options.
(8) Includes 6,600 shares which Mr. Biebrich can acquire within 60 days after
April 1, 1999 by the exercise of stock options.
(9) Includes 59,391 shares which Mr. Coleman can acquire within 60 days after
April 1, 1999 by the exercise of stock options.
(10) Includes 7,590 shares which Mr. Pomplun can acquire within 60 days after
April 1, 1999 by the exercise of stock options.
(11) Includes 566,561 shares which members of the group can acquire within 60
days after April 1, 1999 by the exercise of stock options.
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD
PROPOSAL 1: ELECTION OF DIRECTORS
We have nominated seven directors for election at the annual meeting,
which is the number of slots fixed for the election of directors.
We will nominate the persons named below, all of whom are present
members of the Board of Directors of the Company, for election to serve until
the 2000 Annual Meeting of Shareholders. Each of these persons is also a member
of the Board of Directors of our principal subsidiary, Citizens Business Bank.
The Board will cast its votes to effect the election of these nominees. If any
nominee is unable to serve, your proxy may vote for another nominee proposed by
the Board.
5
<PAGE> 9
THE NOMINEES
The directors standing for reelection are:
<TABLE>
<CAPTION>
Year First Elected
Principal Occupation or Appointed
Name and Position For Past Five Years Age a Director
- ----------------- ------------------- --- ----------
<S> <C> <C> <C>
George A. Borba(1) Dairy Farmer, George Borba & 66 1981
Chairman of the Board Son Dairy
John A. Borba(1) Dairy Farmer, John Borba & Sons 71 1981
Director
Ronald O. Kruse Chairman, Kruse Investment Co., 60 1981
Vice Chairman of the Board and Inc. and Feed Commodities,
Director LLC(2)
John J. LoPorto Investor 66 1981
Director
Charles M. Magistro Physical Therapy Consultant 74 1981
Vice Chairman of the Board and
Director
James C. Seley Trustee, Seley Family Trust 57 1996
Director
D. Linn Wiley President and Chief Executive 60 1991
President, Chief Executive Officer Officer, CVB Financial Corp. and
and Director Citizens Business Bank
</TABLE>
- -------------------------
(1) George A. Borba and John A. Borba are brothers.
(2) Prior to joining Kruse Investment Co., Inc., Mr. Kruse was Chairman of O.H.
Kruse Grain & Milling from 1974 through August 31, 1995.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors oversees our business and affairs. The Board also
has ten standing committees including an Audit Committee, a Personnel Committee
and a Stock Option Committee all of which, except for the Stock Option
Committee, are also committees of the Bank. The Board does not have a nominating
committee. The procedures for nominating directors, other than by the Board of
Directors itself, are set forth in the bylaws and in the Notice of Annual
Meeting of Shareholders.
THE AUDIT COMMITTEE
In 1998 John Borba chaired the Audit Committee, which held twelve
meetings in 1998. Messrs. R. Kruse, J. LoPorto, and J. Seley are also members of
this committee. The purpose of the Audit Committee is to direct the activities
of the external auditors of the Bank to fulfill the legal and technical
requirements necessary to adequately protect the directors, shareholders and
employees. The Audit Committee also recommends to the Board of Directors the
appointment of independent accountants and makes certain that the external
auditors have the necessary freedom and independence to freely examine all the
Bank records.
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<PAGE> 10
THE PERSONNEL COMMITTEE
In 1998, Mr. Charles Magistro chaired the Personnel Committee, which
held three meetings during 1998. Messrs. G. Borba, J. Borba, R. Kruse, J. Seley
and D.L. Wiley are also members of this committee. This committee approves
issues related to the compensation of the officers and employees of the Bank.
THE STOCK OPTION COMMITTEE
In 1998 Mr. George Borba chaired the Stock Option Committee of the
Company, which held five meetings during 1998. Messrs. J. Borba, R. Kruse, J.
LoPorto, C. Magistro, and J. Seley also served on this committee in 1998. The
Stock Option Committee administers our stock option plan, including making
decisions regarding the grant of options.
THE NUMBER OF MEETINGS ATTENDED
During 1998, the Board of Directors held twelve meetings, and the Board
of Directors of the Bank held twelve meetings. All of the directors of the
Company and the Bank during 1998 attended at least 75% of the aggregate of (i)
the total number of such Company and Bank Board meetings and (ii) the total
number of meetings held by all committees of the Board of Directors of the
Company or Bank on which he served during 1998.
EXECUTIVE COMPENSATION
HOW DO WE COMPENSATE DIRECTORS?
We compensate directors of the Company and the Bank with a fee for
attendance at Board and committee meetings. Each director received $3,221 per
month for Board and Committee meetings, except for the Chairman of the Board
(Mr. George Borba) who received $9,201 per month for attendance at such
meetings. Mr. Wiley does not receive any fees for serving as a director of the
Company or the Bank. The Company paid a total of $296,454 in 1998 as directors'
fees. Pursuant to the Company's option plan, each of the Company's non-employee
directors, except for Mr. Seley, has received options to purchase a total of
66,435 shares of the Company's common stock (as adjusted for stock dividends and
stock splits). These options were granted over a five-year period after each
non-employee director completed a year of service with the Company. Mr. Seley is
entitled to the same benefit under the Company's option plan as he completes his
first five years of service with the Company. In addition, the Company pays a
health insurance premium for each of the Company's non-employee directors. In
1998, the premium averaged approximately $4,955 for each non-employee director.
HOW DO WE COMPENSATE EXECUTIVE OFFICERS?
Summary of Cash and Certain Other Compensation
The tables on pages 8-11 show salaries and bonuses paid during the last
three years, options granted in fiscal 1998 and 1998 fiscal year-end option
values for our Chief Executive Officer and our next four most highly compensated
executive officers (collectively, the "Named Executives").
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<PAGE> 11
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual Compensation Awards
---------------------------------------- ---------
Other Annual All Other
Name and Principal Position Year Salary($) Bonus($) Compensation($)(1) Options(2) Compensation($)(3)
- ----------------------------------- ---- --------- -------- ------------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
D. LINN WILEY 1998 380,000 303,240 -- 27,500 12,800
President and Chief 1997 751,522(4) 224,475 -- - 12,000
Executive Officer 1996 628,179(4) 204,750 -- - 12,000
FRANK BASIRICO 1998 145,000 54,375 -- -- 12,800
Executive Vice President and Senior 1997 135,000 40,500 -- -- 7,769
Loan Officer of the Bank 1996 125,000 7,500 -- 36,300 6,651
JAY W. COLEMAN 1998 162,500 59,719 -- 5,500 12,800
Executive Vice President of Sales 1997 153,500 46,050 -- - 12,000
and Service Division of the Bank 1996 147,500 33,188 -- - 12,000
EDWIN POMPLUN 1998 120,000 45,000 -- 2,200 12,053
Executive Vice President and Trust 1997 115,000 31,913 -- 10,725 -
Division Manager of the Bank 1996 110,000 20,350 -- 9,075 -
EDWARD BIEBRICH 1998 160,000 66,000 -- 33,000 -
Chief Financial Officer of the 1997 -- -- -- - -
Company and Executive Vice 1996 -- -- -- - --
President/Chief Financial
Officer of the Bank
</TABLE>
- ---------------------
(1) The amount of the aggregate of the other annual compensation did not exceed
the lesser of $50,000 or 10% of the total of annual salary and bonus for the
particular executive officer.
(2) Represents stock options we granted, retroactively adjusted, as appropriate,
for the 10% stock dividends distributed in January 1999 and January 1997,
and for our three for two stock split paid in January 1998.
(3) Represents amounts the Bank contributed to the Profit Sharing Plan and
allocated to the Named Executives' vested or unvested account under such
plan.
(4) Includes $386,522 for 1997 and $278,179 for 1996, that represented the
dollar value of shares of common stock we granted to Mr. Wiley pursuant to
his employment agreement.
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<PAGE> 12
Stock Options
The following table provides information with respect to the Named
Executives concerning the grant of options during 1998. We have retroactively
updated the share numbers in this table to take into account the 10% stock
dividend we distributed on January 25, 1999.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Appreciation
Individual Grants for Option Term(2)
----------------- ------------------
(a) (b) (c) (d) (e) (f) (g)
Percent of Total
Number of Securities Options Granted Exercise
Underlying Options to Employees or Base Price Expiration
Name Granted (#)(1) in 1998 ($/Sh)(1) Date 5%($) 10%($)
---- -------------- ------- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Edward Biebrich 33,000 33.01% $22.95 2/21/08 $476,923 1,207,020
Jay W. Coleman 5,500 5.50 21.36 7/15/08 73,882 187,232
Edwin Pomplun 2,200 2.20 21.36 7/15/08 29,553 74,893
D. Linn Wiley 27,500 27.51 21.36 7/15/08 369,412 936,164
</TABLE>
- ---------------------
(1) Retroactively adjusted for the ten percent stock dividend we distributed in
January, 1999.
(2) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent our estimate or projection of future prices of our common stock.
The actual value realized may be greater or less than the potential
realizable values set forth in the table.
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<PAGE> 13
Option Exercises and Holdings
The following table provides information with respect to the Named
Executives concerning their exercise of options during the 1998 fiscal year and
their year-end option holdings. We have retroactively updated the share numbers
in this table to take into account the 10% stock dividend we distributed on
January 25, 1999.
AGGREGATED OPTION(1) EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised In-the-
Number of Unexercised Money Options at 12/31/98
Options at 12/31/98(#)(2) ($))(3)
Shares Acquired ----------------------------- ----------------------------
on Exercise
Name (#) Value Realized($) Exercisable Unexercisable Exercisable Unexercisable
- --------------- --------------- ----------------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
D. Linn Wiley 20,000 $ 359,000 115,000 30,256 $2,213,735 $ 74,040
Frank Basirico -- -- 19,231 23,458 267,511 318,018
Jay W. Coleman 50,000 $1,059,916 59,391 10,899 1,151,591 89,901
Edwin Pomplun -- -- 5,775 16,225 69,963 151,318
Edward Biebrich -- -- 0 33,000 -- --
</TABLE>
- ---------------------------
(1) We have no plans pursuant to which stock appreciation rights may be granted.
(2) Retroactively adjusted for the ten percent stock dividend we distributed on
January 25, 1999.
(3) Value of unexercised "in-the-money" options is the difference between the
fair market value of the securities underlying the options and the exercise
or base price of the options as of December 31, 1998.
EMPLOYMENT AGREEMENT WITH OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER
On August 8, 1991, we entered into an employment agreement with Mr.
Wiley which sets forth his compensation as President and Chief Executive Officer
of the Company and the Bank. The agreement provides for an annual base salary of
at least $300,000. This base salary is reviewed and adjusted on an annual basis
at the discretion of the Board of Directors. The agreement further provides for
Mr. Wiley to receive an annual bonus of $200,000 for each year after 1991,
although Mr. Wiley's actual bonus may be more or less than $200,000 depending on
the attainment of certain performance goals. In addition, as compensation for
each full year of service, the agreement provides that Mr. Wiley will receive an
unrestricted, fully vested and non-forfeitable Common Stock grant, together with
certain additional cash compensation, on August 21 of each year commencing with
August 21, 1992. The number of shares which the Employment Agreement provided
for granting each year is as follows (without adjustment for any stock splits or
stock dividends): 10,000 shares in 1992, 20,000 shares in 1993, 20,000 shares in
1994, 10,000 shares in 1995, 10,000 shares in 1996 and 10,000 shares in 1997. In
the event there is a change in control of the Company, or Mr. Wiley is
terminated for any reason, other than for cause, he is entitled to receive a sum
equal to one year's base salary at the rate being paid to him at the time he is
terminated, unless he accepts employment with the acquiring company.
Additionally, the agreement provides for certain other benefits, including an
option grant, which was made in 1991, the use of an automobile, a country club
membership, participation in the Bank's Profit Sharing Plan and medical and life
insurance benefits.
In addition, pursuant to the terms of the Company's 1991 Stock Option
Plan, upon a reorganization, merger, or consolidation of the Company with one or
more corporations as a result of which the Company will not be
10
<PAGE> 14
the surviving or resulting corporation, or a sale of substantially all the
assets of the Company to another person, or a reverse merger in which the
Company is the surviving corporation but the shares of the Company's stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, all outstanding options Mr. Wiley may hold under the
Company's 1991 Stock Option Plan, whether vested or not vested, will become
immediately exercisable.
SEVERANCE COMPENSATION AGREEMENTS WITH CERTAIN OTHER EXECUTIVE OFFICERS
In September 1996, the Bank entered into severance compensation
agreements with Messrs. Basirico, Coleman and Pomplun. In 1998, the Bank entered
into a Severance Compensation Agreement with Mr. Biebrich. These agreements
provide that in the event a "Change of Control," as described below, occurs
during the executive's employment and (i) the executive's employment is
terminated by the Company or the Bank or any successor, other than for cause,
within one year of the completion of such Change of Control, or (ii) the
executive terminates or resigns employment for Good Reason, as described below,
within one year of the completion of a Change in Control, the executive shall
receive an amount equal to the executive's annual base compensation for the last
calendar year immediately preceding the Change in Control. This amount will be
paid in a lump sum within five days after the effective date of termination of
the executive's employment.
A "Change in Control" occurs if, among other things:
(i) any person or group, other than a director or officer serving since
September 1996 acquires (or has acquired during the 12 month period ending on
the date of the most recent acquisition) ownership of stock of the Company or
the Bank possessing more than 50% of the total voting power of the Company's or
the Bank's stock;
(ii) a majority of the members of the Company's or the Bank's directors
is replaced during any 12 month period by directors whose appointment or
election is not endorsed by a majority of the members of the Company's or the
Bank's board prior to the date of the appointment or election;
(iii) a merger occurs where the holders of the Bank's or the Company's
voting stock immediately prior to the effective date of such merger own less
than 50% of the voting stock of the entity surviving such merger; or
(iv) any one person or group, acquires (or has acquired during the
twelve month period ending on the date of the most recent acquisition by such
person or persons) assets from the Bank that have a total fair market value
greater than 50% of the total fair market value of all of the Bank's assets
immediately before the acquisition or acquisitions. A transfer of assets will
not be treated as a change in the ownership of such assets if the assets are
transferred to:
(A) an entity, 50% or more of the total value or voting power of
which is owned directly or indirectly by the Company or the Bank;
(B) a person, or more than one person acting as a group, that
owns, directly or indirectly, 50% or more of the total value or voting power of
all the outstanding stock of the Company or the Bank; or
(C) an entity, at least 50% of the total value or voting power is
owned, directly or indirectly by a person who owns, directly or indirectly, 50%
or more of the total value or voting power of all the outstanding stock of the
Bank.
"Good Reason" includes (i) the executive's then current level of annual
base salary or employee benefit coverage is reduced; (ii) the executive suffers
a material diminution in, among others, title, authority or responsibilities; or
(iii) the executive's principal business office is relocated by more than fifty
miles from its existing location.
In addition, pursuant to the terms of the Company's 1991 Stock Option
Plan, upon a reorganization, merger, or consolidation of the Company with one or
more corporations as a result of which the Company will not be
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<PAGE> 15
the surviving or resulting corporation, or a sale of substantially all the
assets of the Company to another person, or a reverse merger in which the
Company is the surviving corporation but the shares of the Company's stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, all outstanding options under the Company's 1991
Stock Option Plan, whether vested or not vested, become immediately exercisable.
REPORT ON EXECUTIVE COMPENSATION
The Report of the Personnel Committee and the Stock Option Committee
should not be deemed incorporated by reference into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of 1934, except to
the extent that we specifically incorporate the information contained in the
report by reference.
REPORT OF THE PERSONNEL COMMITTEE
AND THE STOCK OPTION COMMITTEE
WHAT IS OUR PHILOSOPHY ON EXECUTIVE COMPENSATION?
We have adopted a basic philosophy and practice of offering a
compensation program designed to attract and retain highly qualified employees.
Our compensation practices encourage and motivate these individuals to achieve
superior performance. This underlying philosophy pertains specifically to
executive compensation, as well as employee compensation at all other levels
throughout the organization.
There are three principal components of the executive compensation
program. They include base salary compensation, bonus compensation (performance
compensation) and long-term incentive compensation.
BASE SALARY
For 1998, we determined the base salary compensation for each of the
Company's executive officers. This includes the Named Executives, other than Mr.
Wiley. We first established a range of base salary compensation for each
executive. The salary range is based on the California Bankers Association
salary survey and other salary information and considerations. We placed the
mid-point of the base salary range at the higher end of the average base salary
range of other California financial institutions of comparable size. This
reflects our willingness to pay a higher base salary than our competitors to
attract and retain highly qualified executives and employees.
We predicate the base salary on the executive's ability, experience and
past and potential performance and contribution to the Company. Furthermore, we
establish the base salary so that we will have the ability to increase these
base salaries within the salary ranges in future years based on the executive's
performance. The full Board of Directors approved both the salary range and the
actual base salary for each executive officer.
We will evaluate and adjust the range of each executive's base salary,
if appropriate, in subsequent years, based on future salary surveys, comparable
salary information and other considerations. Base salary adjustments for each
executive will be predicated primarily on performance and the executive's
position in the base salary range. We conduct performance evaluations at least
annually. We base the evaluations on results achieved. These results are
measured against specific performance standards established at the beginning or
during the course of the year. For example, a branch manager would have
performance objectives and standards based on, among other things, deposit
growth, loan growth, fee income, expense control and net earnings.
BONUS
We base bonus compensation on the Bank's return on equity and other
specific performance criteria. The Bank must achieve a minimum return on equity
for anyone to be eligible for a bonus. This criterion provided for a minimum
return on average equity of 15% for 1998. The Bank's actual return on average
equity for 1998 was 19.29%.
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<PAGE> 16
The individual performance objectives and standards relate to specific results
where the executive has substantial influence and accountability. The full Board
of Directors approved all executive officers' bonuses for service during 1998.
WHAT KIND OF LONG-TERM INCENTIVE COMPENSATION DOES THE COMPANY OFFER?
We have two compensation plans that provide long-term incentives for our
executive officers. They include a Stock Option Plan and a Profit Sharing Plan.
The Stock Option Plan aligns the interests of key employees, including
the Named Executives, with those of our shareholders. We provide these employees
with an incentive to achieve superior performance by granting them long-term
options to purchase Company Common Stock at a fixed exercise price that equals
the fair market value of the underlying stock on the date of the grant. The
Stock Option Committee administers the Stock Option Plan. This committee has the
authority to select the key employees eligible for the stock options and the
number of options they will receive. The members of the Stock Option Committee
do not utilize any performance goals in determining the number of options to be
granted, nor do they consider the number of options previously granted to an
executive officer. Rather, the members base the award of stock options on their
own analysis of that employee's contribution to the Company, including an
assessment of the employee's responsibilities, as well as the employee's
commitment to the Company's future. In 1998, the Stock Option Committee awarded
stock options to the executive officers and in the amounts identified on page 9.
In 1997, the Company's shareholders approved an amendment to the Stock Option
Plan as a result of the enactment of Section 162(m) of the Internal Revenue Code
which limits the deductibility of compensation paid to certain executive
officers in excess of $1 million dollars per year. Stock options awarded under
the Option Plan now qualify for exclusion under Section 162(m) of the Code as
performance-based compensation.
The Profit Sharing Plan primarily provides retirement benefits to all
eligible employees, including Named Executives. It also has death and disability
features. Employees become eligible upon completing at least one year of
service. Annual contributions are made solely by the Company. These
contributions are entirely discretionary, and are approved by the Board of
Directors based on the Company's earnings. For 1998, the Company contributed
$1,046,157, or 8% of total employee base salary and bonus, to the Profit Sharing
Plan. We allocate contributions proportionately to the accounts of plan
participants based on their base salaries and bonus. Plan participants become
fully vested in these amounts upon reaching seven years of service.
HOW DO WE COMPENSATE OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER?
Mr. Wiley, the President and Chief Executive Officer of the Company and
the Bank, received compensation for his services during 1998 based primarily
upon his rights under his employment agreement with the Company and the Bank. We
discuss this contract under the heading "Employment Agreement with Our President
and Chief Executive Officer." Mr. Wiley is also eligible to receive a
discretionary annual bonus pursuant to his employment agreement. We base his
bonus on specific performance achievements as outlined above for other executive
officers. Mr. Wiley may receive a bonus of up to and including 83% of his base
salary under this plan. He received an annual bonus of $303,240, or 79.8% of
base salary, for his services in 1998. This bonus was predicated on return on
average equity, deposit growth, loan growth, net loan losses and operating
efficiency. In addition to the benefits his
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<PAGE> 17
employment agreement provides, Mr. Wiley is an eligible participant in the
Company's Profit Sharing Plan. He received a vested allocation of $12,800 for
1998. This represents his proportionate share of the aggregate employer
contribution authorized by the Board of Directors for 1998.
Dated: April 1, 1999
THE PERSONNEL COMMITTEE
GEORGE A. BORBA
JOHN A. BORBA
RONALD O. KRUSE
CHARLES M. MAGISTRO, Chairman
JAMES C. SELEY
D. LINN WILEY
THE STOCK OPTION COMMITTEE
JOHN A. BORBA
RONALD O. KRUSE
JOHN J. LoPORTO, Chairman
CHARLES M. MAGISTRO
JAMES C. SELEY
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Personnel Committee or the Stock Option
Committee during 1998 has ever been an officer or employee of the Company or any
of its subsidiaries, except for Mr. Wiley, who is the President and Chief
Executive Officer of the Company and the Bank and a member of the Personnel
Committee, and Mr. George Borba, who is the Chairman of the Board of the Company
and the Bank and served as a member of both the Personnel Committee and the
Stock Option Committee. The Personnel Committee made all decisions regarding
compensation of executive officers during 1998, other than those related to
stock options or the base salary of Mr. Wiley.
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
Company's cumulative total shareholder return (stock price appreciation plus
reinvested dividends) on Common Stock with (i) the cumulative total return of
the American Stock Exchange market index, and (ii) a published index comprised
by Media General Financial Services, Inc. of banks and bank holding companies in
the "Pacific States," which are Alaska, California, Hawaii, Oregon and
Washington (the industry group line depicted below). The graph assumes an
initial investment of $100 and reinvestment of dividends. Points on the graph
represent the performance as of the last business day of each of the years
indicated. The graph is not necessarily indicative of future price performance.
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<PAGE> 18
The graph shall not be deemed filed or incorporated by reference into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent that we specifically incorporate this graph by
reference.
Period Ended December 31, 1993 Through December 31, 1998
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
CVB Financial Corp. 100 130.98 126.09 195.45 389.55 359.85
Industry Index 100 100.61 160.77 201.43 362.71 339.70
AMEX Market Index 100 88.33 113.86 120.15 144.57 142.61
</TABLE>
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<PAGE> 19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Some of the directors and executive officers of the Company and the
companies with which they are associated were customers of, and had banking
transactions with, the Bank in the ordinary course of its business during 1998,
and the Bank expects to have such banking transactions in the future. The Bank
made all of these loans and commitments on substantially the same terms,
including interest rates, collateral and repayment terms, as those prevailing at
the time for comparable transactions with other persons of similar
creditworthiness. In our opinion, these transactions did not involve more than a
normal risk of collectibility or present other unfavorable features.
DID DIRECTORS AND OFFICERS COMPLY WITH THEIR SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE REQUIREMENTS IN 1998?
Section 16(a) of the Securities Exchange Act of 1934 requires our
executive officers and directors, and persons who own more than ten percent of
the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC") and the American
Stock Exchange. The SEC requires executive officers, directors and greater than
ten-percent shareholders to furnish to us copies of all Section 16(a) forms they
file.
Based solely on our review of these reports and of certifications
furnished to us, we believe that during the fiscal year ended December 31, 1998
all executive officers, directors and greater than ten-percent beneficial owners
complied with all applicable Section 16(a) filing requirements, except for John
Borba who filed one Form 4 late relating to one transaction.
THE BOARD RECOMMENDS A VOTE "FOR" ALL SEVEN NOMINEES FOR DIRECTOR.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have appointed Deloitte & Touche as independent public accountants
for the year ending December 31, 1999. The Audit Committee recommended the
appointment of Deloitte & Touche to the Board. Deloitte & Touche, who performed
audit services for the Company in 1998, including an examination of the
consolidated financial statements and services related to filings with the
Securities and Exchange Commission, has served as our accountants since 1986.
Deloitte & Touche performed all of its services in 1998 at customary rates and
terms. Representatives of Deloitte & Touche will be present at the meeting, will
be available to respond to your appropriate questions and will be able to make
such statements as they desire.
If you do not ratify the selection of independent accountants, the Audit
Committee and the Board will reconsider the appointment. However, even if you
ratify the selection, the Board may still appoint new independent accountants at
any time during the year if it believes that such a change would be in the best
interests of the Company and our shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE SELECTION OF
DELOITTE & TOUCHE AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR 1999.
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<PAGE> 20
ANNUAL REPORT
Together with this Proxy Statement, CVB Financial Corporation has
distributed to each of its shareholders an annual report, including the
Company's Form 10-K, for the year ended December 31, 1998. The Company's Form
10-K contains consolidated financial statements of the Company and its
subsidiaries and the report thereon of Deloitte & Touche, the Company's
independent public accountants.
UPON WRITTEN REQUEST OF ANY PERSON ENTITLED TO VOTE AT THE MEETING,
ADDRESSED TO DONNA MARCHESI, SECRETARY OF THE COMPANY, AT 701 NORTH HAVEN
AVENUE, SUITE 350, ONTARIO, CALIFORNIA 91764, WE WILL PROVIDE, WITHOUT CHARGE, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1998, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934.
PROPOSALS OF SHAREHOLDERS
If you wish to submit a proposal for consideration at the Company's 2000
Annual Meeting of Shareholders, you may do so by following the procedures
prescribed in the Securities Exchange Act of 1934. To be eligible for inclusion
in the Company's proxy statement and proxy materials, the Company's Corporate
Secretary must receive your proposals no later than December 14, 1999.
In addition, in the event a shareholder proposal is not submitted to the
Company prior to February 27, 2000, the proxy to be solicited by the Board of
Directors for the 2000 Annual Meeting of Shareholders will confer authority on
the holders of the proxy to vote the shares in accordance with their best
judgment and discretion, if the proposal is presented at the 2000 Annual Meeting
of Shareholders, without any discussion of the proposal in the proxy statement
for such meeting.
Dated: April 12, 1999 CVB FINANCIAL CORP.
By ______________________________________
D. Linn Wiley
President and Chief Executive Officer
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<PAGE> 21
PROXY
CVB FINANCIAL CORP.
REVOCABLE PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1999
THE BOARD OF DIRECTORS IS SOLICITING THIS PROXY
I/we hereby nominate, constitute and appoint John A. Borba, John L. LoPorto and
James C. Seley, and each of them, their attorneys, agents and proxies, with
full powers of substitution to each, to attend and act as proxy or proxies at
the 1999 Annual Meeting of Shareholders of CVB FINANCIAL CORP. which will be
held at the Double Tree Hotel, 222 North Vineyard, Ontario, California 91764,
on Wednesday, May 19, 1999, at 7:00 p.m., and at any and all adjournments
thereof, and to vote as I/we have indicated the number of shares which I/we, if
personally present, would be entitled to vote.
PLEASE SIGN AND DATE ON REVERSE SIDE
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<PAGE> 22
Please mark
your votes as
indicated in [X]
this example.
<TABLE>
<S> <C> <C>
FOR all nominees listed below WITHHOLD
(except as indicated to the contrary AUTHORITY
below). Discretionary authority to to vote for all
1. ELECTION OF DIRECTORS. cumulate votes is granted to the Board. nominees listed below.
Nominees: George A. Borba, John A. Borba, [ ] [ ]
Ronald O. Kruse, John J. LoPorto,
Charles M. Magistro, James C. Seley
and D. Linn Wiley.
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY to vote for any individual nominee(s)
write that nominee's(s') name in the space below.
________________________________________________________________________
2. RATIFICATION OF APPOINTMENT OF DELOITTE & FOR AGAINST ABSTAIN
TOUCHE as independent public accountants of the [ ] [ ] [ ]
Company for the year ending December 31, 1999.
3. OTHER BUSINESS. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the Meeting and at
any and all adjournments thereof. IF ANY OTHER MATTER IS PRESENTED, YOUR
PROXY WILL VOTE IN ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF
DIRECTORS, OR, IF NO RECOMMENDATION IS GIVEN, IN THEIR OWN DISCRETION. The
Board of Directors at present knows of no other business to be presented
at the Meeting.
PLEASE SIGN AND DATE BELOW
I/we hereby ratify and confirm all that said attorneys and
proxies, or any of them, or their substitutes, shall lawfully do
or cause to be done because of this proxy, and hereby revoke any
and all proxies I/we have given before to vote at the meeting.
I/we acknowledge receipt of the notice of Annual Meeting and the
Proxy Statement which accompanies the notice.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND "FOR"
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE. THE PROXY,
WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS MADE, IT WILL BE VOTED "FOR" THE ELECTION OF
DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND "FOR"
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE.
SIGNATURE(S) ___________________________________________ DATED: _________, 1999
Please date this Proxy and sign above as your name(s) appear(s) on this card.
Joint owners should each sign personally. Corporate proxies should be signed by
an authorized officer. Executors, administrators, trustees, etc., should give
their full titles.
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