SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
CENTENNIAL BANCORP
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(Name of Registrant as Specified In Its Charter)
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(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 for 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 paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
(1) Amount Previously Paid:
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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>
CENTENNIAL BANCORP
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
APRIL 26, 2000
<PAGE>
CENTENNIAL BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 2000
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of
Centennial Bancorp, an Oregon corporation (the "Company"), will be held at 3:00
p.m. on April 26, 2000, in the Colonel Lindbergh Ballroom of the Embassy Suites
Hotel, 319 SW Pine Street, Portland, Oregon, for the following purposes:
1. To consider and act upon the election of six directors of the
Company.
2. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on
March 15, 2000 are entitled to notice of, and to vote at, the meeting or any
adjournment or adjournments thereof. Further information regarding voting rights
and the business to be transacted at the annual meeting of shareholders is given
in the accompanying Proxy Statement.
Shareholders are invited to attend the meeting personally. If
you are not able to do so and want your shares to be voted, it is important that
you complete, sign, date and promptly return the accompanying proxy in the
enclosed postage-paid envelope.
We hope that you will be able to attend the meeting. It is
always a pleasure to meet and become better acquainted with shareholders of the
Company.
By order of the Board of Directors.
March 27, 2000 Cordy H. Jensen
Secretary
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR PROXY
SO YOUR VOTE CAN BE COUNTED.
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<PAGE>
CENTENNIAL BANCORP
One S.W. Columbia Blvd, Suite 900
Portland, Oregon 97258
(503) 973-5556
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Centennial Bancorp (the
"Company") to be used at the annual meeting of the Company's shareholders to be
held on April 26, 2000. The approximate date of mailing this Proxy Statement and
the accompanying form of proxy is March 27, 2000. The Company's 1999 Annual
Report to Shareholders is being mailed to shareholders of the Company with this
Proxy Statement.
PROXIES AND VOTING AT THE MEETING
Unless otherwise noted, all share and per-share information
included in this Proxy Statement has been retroactively adjusted to reflect all
stock dividends and stock splits effected by the Company prior to the date
hereof.
The only class of outstanding stock of the Company is its
Common Stock, no par value. At March 15, 2000, the record date for determining
shareholders entitled to vote at the meeting, there were 19,684,373 shares of
Common Stock outstanding. Each holder of record of Common Stock on the record
date is entitled to one vote for each share held on every matter submitted at
the meeting.
A majority of the outstanding Common Stock must be represented
at the meeting in person or by proxy in order to constitute a quorum for the
transaction of business. Brokers are permitted to vote the shares held by them
in "street name" on routine matters without receiving specific directions from
the beneficial owners of the shares, but brokers must receive specific
directions from beneficial owners before they may vote on nonroutine matters.
Thus, brokers enter a "broker nonvote" on nonroutine matters with respect to
shares where the broker has not received direction from the beneficial owner.
These broker non-votes, as well as "abstentions" and "withheld" votes, are
counted in determining whether a quorum is present, but are not counted for or
against the proposal at issue.
If a proxy in the accompanying form is executed and returned,
the shares represented thereby will be voted at the meeting in accordance with
the instructions given in the proxy. If no instructions are given, the
proxyholders will vote for management's nominees for director. They will vote in
their discretion as to any other matters that may be properly brought before the
meeting. Any proxy may be revoked prior to its exercise by giving written notice
of revocation to the Secretary of the Company or by submitting to the Secretary
a duly executed proxy bearing a later date. The attendance of a shareholder at
the meeting will not revoke a proxy. Ballots and proxies will be counted by
personnel of the Company.
1
<PAGE>
The cost of this proxy solicitation will be borne by the
Company. The Company does not expect to pay any compensation for the
solicitation of proxies but may reimburse brokers, banks and other nominees for
their expenses in sending proxy material to principals and obtaining their
proxies. The Company expects to solicit proxies primarily by mail. The Company
may also use officers and employees of the Company and Centennial Bank to
solicit proxies, either in person or by telephone or letter. Such persons will
not be specifically compensated for these activities.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock at March 15, 2000 by: (i)
each person who is known by the Company to own beneficially more than 5% of the
Common Stock; (ii) each director; (iii) the executive officers named in the
Summary Compensation Table below; and (iv) all executive officers and directors
as a group. Each named beneficial owner has sole voting and investment power
with respect to the shares listed unless otherwise indicated.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial
Name of Beneficial Owners Ownership Percent of Class
- ----------------------------------------------------- ---------------------- ----------------
<S> <C> <C>
Brian B. Obie 408,463(1) 2.1
Robert L. Newburn 342,482(2) 1.7
Cordy H. Jensen 620,928(3) 3.2
Dan Giustina 156,814(4) *
Richard C. Williams 836,080(5) 4.2
Ted R. Winnowski 117,163(6) *
David M. Gazeley 262,644(7) 1.3
Dennis M. Carlson 110,768(8) *
Dennis P. Huserik 12,918(9) *
Key Trust Company of the Northwest 1,144,924(10) 5.8
All executive officers and directors as a group
(12 persons) 2,981,712(11) 14.7
- -----------------------------------
</TABLE>
* Less than 1% of the Company's outstanding Common Stock
2
<PAGE>
(1) Includes 54,637 shares held by Mr. Obie's wife, 181,427 shares
held by Obie Industries Incorporated, of which Mr. Obie is
President and owns a controlling interest, and 36,741 shares
which could be acquired within 60 days by exercise of stock
options.
(2) Includes 259,818 shares held by The Newburn Joint Trust, of
which Mr. Newburn is a trustee, 46,956 shares held by the
Newburn Supporting Organization, of which Mr. Newburn is a
trustee, 676 shares held by Mr. Newburn's wife, 23,149 shares
held by Mr. Newburn as custodian for minors, and 11,883 shares
which could be acquired within 60 days by exercise of stock
options.
(3) Includes 249,645 shares jointly held with Mr. Jensen's wife,
167,967 shares held by the Adams Children Irrevocable Trust, of
which Mr. Jensen's wife is a trustee, 50,150 shares held by the
Adams Grandchildren's Trust, of which Mr. Jensen's wife is a
trustee, 1,083 shares held by Mr. Jensen as custodian for a
minor, 3,330 shares held jointly with CAC Investments, a
partnership of which Mr. Jensen is the Managing Partner, 62,063
shares held by Mr. Jensen as trustee for his mother, and 36,741
shares which could be acquired within 60 days by exercise of
stock options.
(4) Includes 61,109 shares which could be acquired within 60 days
by exercise of stock options.
(5) Includes 323,199 shares which could be acquired within 60 days
by exercise of stock options. Also includes 247,744 shares
which are held for Mr. Williams' account by Key Trust Company
of the Northwest ("Key Trust") as trustee of Centennial Bank's
Employee Savings and Profit Sharing Plan (the "Employee Savings
Plan"); Key Trust has sole voting power over such shares.
(6) Includes 944 shares held for Mr. Winnowski's account by Key
Trust as trustee of the Employee Savings Plan; Key Trust has
sole voting power over such shares. Also includes 98,716 shares
which could be acquired within 60 days by exercise of stock
options.
(7) Includes 3,058 shares held by Mr. Gazeley's wife, 142,092
shares held jointly by Mr. Gazeley and his wife as trustees of
the Gazeley Family Trust, 292 shares held by Mr. Gazeley as
custodian for a minor, and 117,202 shares held for Mr.
Gazeley's account by Key Trust as trustee of the Employee
Savings Plan; Key Trust has sole voting power over such shares.
(8) Includes 45,520 shares held by Mr. Carlson's wife, 952 shares
held in trust for Mr. Carlson's son, and 48,440 shares held for
Mr. Carlson's account by Key Trust as trustee of the Employee
Savings Plan; Key Trust has sole voting power over such shares.
Also includes 15,856 shares which could be acquired within 60
days by exercise of stock options.
(9) Includes 4,841 shares held jointly with Mr. Huserik's wife, and
2,291 shares held for Mr. Huserik's account by Key Trust as
trustee of the Employee Savings Plan; Key Trust has sole voting
power over such shares. Also includes 5,786 shares which could
be acquired within 60 days by exercise of stock options.
(10) Key Trust is the trustee of the Employee Savings Plan and as
such is the record holder of, and has sole voting power over,
these shares; sole investment power over these shares is held
by the respective beneficiaries of the individual accounts
maintained under such plan. Key Trust's address is 1211 S.W.
Fifth Avenue, Suite 300, Portland, Oregon 97204.
(11) Includes 626,626 shares which could be acquired within 60 days
by exercise of stock options. Also includes 484,252 shares held
for the accounts of the Company's executive officers by Key
Trust as trustee of the Employee Savings Plan; Key Trust has
sole voting power over such shares.
3
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Members of the Board of Directors are elected annually. The
current members of the Board have been nominated to continue in office until the
next annual meeting of shareholders, and until their successors have been
elected and qualified. Although the Company knows of no reason why any of the
nominees may be unable or unwilling to serve, if any nominee becomes unable or
unwilling to serve, it is the intention of the persons named in the proxy to
vote for any substitute nominee the Board of Directors of the Company may
recommend. The Board does not have a standing nomination committee nor does it
have a formal procedure to receive shareholder nominations, but it will consider
any written recommendations sent to the attention of the Board at the Company's
administrative offices at One SW Columbia Street, Suite 900, Portland, Oregon
97258.
Directors are elected by a plurality of votes cast at the
meeting, which means that the six nominees receiving the most votes at the
meeting will be elected. Accordingly, a vote withheld from a particular nominee
will not affect the outcome of an uncontested election. Shareholders are not
entitled to cumulate votes for election of officers.
NOMINEES FOR DIRECTOR
- ---------------------
The following table gives certain information about each
nominee for director, as of March 15, 2000. Three nominees (Messrs. Obie,
Newburn and Williams) have served as directors of the Company since the
Company's organization in 1981. Mr. Jensen has been a director since 1994; Mr.
Giustina has been a director since 1995; and Mr. Winnowski has been a director
since January 1998. All of the nominees (together with other people) are
directors of the Company's subsidiary, Centennial Bank (sometimes referred to
herein as the "Bank"). Mr. Williams is Chairman of the Board of Centennial
Mortgage Co. ("Centennial Mortgage"), another subsidiary of the Company. Mr.
Winnowski is a director of Centennial Mortgage.
<TABLE>
<CAPTION>
Name (Age) and Principal Occupation
Position with Company (During the last five years)
- --------------------- ----------------------------
<S> <C>
Brian B. Obie (58) Chairman, President and Chief Executive Officer of Obie Media
Chairman of the Board Corporation (transit and outdoor advertising); President and
Chief Executive Officer of Obie Industries Incorporated (real
estate development); former mayor of Eugene, Oregon
Robert L. Newburn (68) President and Chief Executive Officer of Pacific Petroleum
Vice Chairman of the Board Company (retail distribution of petroleum products); Chairman of
the Board of Centennial Bank
4
<PAGE>
Richard C. Williams (60) President and Chief Executive Officer of the Company; Vice
President, Chief Executive Officer Chairman of the Board of Directors of Centennial Bank; Director
and Director of Obie Media Corporation; Director of Elmer's Restaurants, Inc.
Ted R. Winnowski (58) President and Chief Executive Officer of Centennial Bank since
Director January 1998; Executive Vice President of KeyCorp from 1995 to
1997; Chairman, President and Chief Executive Officer of KeyBank of
Washington from 1996 to 1997; Chairman of KeyBank of Oregon from
1985 to 1997
Cordy H. Jensen (57) President and owner of Station Masters Inc. (restaurant and
Director and Secretary lounge); Managing Partner of McKenzie Brewing Co.; Managing
Partner of CAC Investments (real estate rentals); Managing
Partner of Bev's Investment Co. (real estate holdings)
Dan Giustina (50) Managing Partner of Giustina Resources (owns and manages timber
Director and timberland); member/manager of G Group LLC (owns and manages
residential and commercial real estate)
</TABLE>
The Board of Directors held 12 meetings during 1999. Each
director attended more than 75% of the meetings of the Board of Directors and
all committees of the Board on which the director served.
BOARD COMMITTEES
- ----------------
The Board of Directors has two committees. The Audit Committee
consists of all members of the Board of Directors. It reviews the scope of
internal and external audit activities and the results of the Company's annual
audit. The Audit Committee met once in 1999 to review the scope and results of
the Company's financial statement audit.
The Compensation Committee administers the Company's stock
option plans and determines management compensation. The members of the
Compensation Committee are Messrs. Obie, Newburn, Giustina and Jensen. The
Compensation Committee held four meetings in 1999.
In addition, Centennial Bank has an Audit and Personnel
Committee of its Board of Directors consisting of Mr. Giustina and three
nonemployee members of Centennial Bank's Board of Directors who are not also
members of the Company's Board of Directors. The Audit and Personnel Committee
meets monthly with management to ensure that appropriate audits of Centennial
Bank's affairs are being conducted. The Audit and Personnel Committee also
reviews the reports of examinations of Centennial Bank conducted by the Federal
Deposit Insurance
5
<PAGE>
Corporation and the Oregon Department of Consumer and Business
Services. Centennial Bank also has an Asset/Liability Committee, which has seven
members, four of whom (Messrs. Newburn, Jensen, Williams and Winnowski) are
directors of the Company. The Asset/Liability Committee meets weekly.
The Board of Directors of the Company approves the independent
auditors selected by the Company's management. The independent auditors have
direct access to the Company's Board of Directors, and the employees responsible
for conducting internal reviews have direct access to the Bank's Audit and
Personnel Committee to discuss the results of their examinations, the adequacy
of internal accounting controls and the integrity of financial reporting.
COMPENSATION OF DIRECTORS
- -------------------------
Executive officers receive no compensation for serving as
directors of the Company. All other directors of the Company receive $1,000 per
month, except that the Chairman of the Board receives an additional $500 per
quarter.
The directors of the Company also serve as directors of
Centennial Bank. Executive officers receive no compensation for serving as
directors of Centennial Bank. All other directors of Centennial Bank receive
$750 per month, except that the Chairman of the Board receives an additional
$500 per quarter.
Centennial Bank's Asset/Liability Committee meets weekly;
nonemployee directors who serve on that committee receive $75 for each meeting
attended, except that the Chairman of that Committee receives $100 per meeting
attended. The Chairman of the Audit and Personnel Committee receives $100 per
month.
Each nonemployee director of the Company or any of its
subsidiaries who is first elected to such position after December 1993 may, in
the discretion of the Compensation Committee, receive a 10-year option to
purchase up to 21,523 shares of Common Stock at the fair market value on the
date of grant. However, to date the Compensation Committee has never granted
options to purchase more than 5,000 shares of Common Stock to any new director.
In addition to these initial stock option grants, the
Company's Board of Directors adopted a stock option program in September 1996
for nonemployee directors of the Company and its subsidiaries. The program
provides for options to purchase 1,000 shares to be granted under the 1995 Stock
Incentive Plan annually to each nonemployee director, with the grants commencing
generally during the director's second year of service. Options are granted on
the first business day of each calendar year, vest over a three-year period and
have a term of 10 years. The exercise price for the options is the fair market
value of the Company's Common Stock on the date of grant. Options that vested on
the date a director ceases to serve as a director will remain exercisable for
one year from the date of termination. These options are transferable, under
specified circumstances, to members of the director's immediate family, to
family trusts and to family partnerships. Options covering 11,430 shares with an
exercise price of $14.57 per share were granted to nonemployee directors in 1999
for service in 1998. Options covering
6
<PAGE>
12,100 shares with an exercise price of $9.77 were granted to nonemployee
directors in 2000 for service in 1999.
INFORMATION REGARDING MANAGEMENT
EXECUTIVE OFFICERS
- ------------------
The following information identifies the executive officers of
the Company as of the date of this Proxy Statement. Subject to certain
obligations of the Company described below under "Employment Agreements," all
executive officers serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
Name of Individual Age Positions and Offices Held
- ------------------ --- --------------------------
<S> <C> <C>
Richard C. Williams 60 President, Chief Executive Officer and a director of the Company
since 1981; Vice Chairman of Centennial Bank since 1992; Chief
Executive Officer of Centennial Bank from 1977 to 1998; President
of Centennial Bank from 1977 to 1992; a director of Centennial
Bank since 1977; a director of Centennial Mortgage since 1987.
Ted R. Winnowski 58 President and Chief Executive Officer of Centennial Bank since
January 1998; a director of the Company since January 1998; a
director of Centennial Bank since January 1998, a director of
Centennial Mortgage since January 1999.
Dennis M. Carlson 54 President and Chief Executive Officer of Centennial Mortgage since
1988; Executive Vice President of Centennial Mortgage from 1987 to
1988; a director of Centennial Mortgage since 1987; Senior Vice
President of Centennial Bank since 1990; Vice President of
Centennial Bank from 1982 to 1990.
David A. Dahlstrom 49 Executive Vice President and Manager, Community Banking Division
of Centennial Bank since January 2000; Vice President and Manager,
Small Business Lending Center of Centennial Bank from July 1999 to
2000; private consulting from 1996 to 1999; Senior Vice President,
Business Banking Group, First Interstate Bank from 1994 to 1996.
7
<PAGE>
Dennis P. Huserik 57 Executive Vice President and Senior Credit Officer of Centennial
Bank since February 1999; Senior Vice President and Region Credit
Administrator of Centennial Bank from 1996 to February 1999.
Michael J. Nysingh 47 Chief Financial Officer of the Company since 1985; Acting Chief
Financial Officer of the Company from 1982 to 1985; Senior Vice
President of Centennial Bank since January 1995; Vice President of
Centennial Bank from 1982 through 1994; Cashier of Centennial Bank
since 1982; a director of Centennial Mortgage since 1990; Chief
Financial Officer of Centennial Mortgage since 1988.
Michael V. Paul 44 Executive Vice President and Senior Lending Officer of Centennial
Bank since July 1999; Senior Vice President and Manager, Downtown
Portland Commercial Banking Center of Centennial Bank from January
1999 to July 1999; Senior Vice President and Team Leader,
Corporate Banking and Finance Division of Key Bank, N.A., from
1994 through 1999.
</TABLE>
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<PAGE>
EXECUTIVE COMPENSATION
- ----------------------
The following table sets forth certain information regarding
compensation paid by the Company during 1999, 1998 and 1997 to Mr. Williams as
the Company's Chief Executive Officer and the four other most highly compensated
executive officers in 1999:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
Long-term
compensation
Annual compensation awards awards
-------------------------- --------------
Number of
securities
underlying All other
Name and principal Salary Bonus options compensation
position Year ($)(1) ($)(1)(2) (#) ($)(3)
- -------------------------------- ------- ----------- ---------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Richard C. Williams 1999 $325,000 $100,000 -- $ 9,412
President and Chief 1998 300,000 200,000 -- 11,047
Executive Officer of the 1997 256,090 150,000 -- 17,662
Company
Ted R. Winnowski 1999 250,000 55,000 93,381 9,412
President and Chief 1998 214,903 100,000 173,250 --
Executive Officer of
Centennial Bank
David M. Gazeley (4) 1999 111,465 17,200 2,200 7,310
Executive Vice President 1998 100,000 36,800 -- 9,804
and Manager of 1997 92,000 30,000 -- 9,227
Community Banking
Division of Centennial
Bank
Dennis M. Carlson 1999 105,000 25,000 2,475 8,733
President and Chief 1998 92,000 40,000 16,500 7,903
Executive Officer of 1997 82,000 22,500 -- 6,743
Centennial Mortgage
Dennis P. Huserik 1999 100,340 17,200 2,475 6,293
Executive Vice President 1998 88,895 18,600 -- 7,438
and Senior Credit Officer 1997 80,000 15,000 14,674 --
of Centennial Bank
- --------------------------------
(1) Includes amounts contributed by the named executive to the Deferred Compensation Plan.
(2) Includes bonuses paid or to be paid during the subsequent year but attributable to the year indicated.
(3) Consists of the Company's contributions to the Employee Savings Plan for the benefit of the named
executive officers.
(4) Mr. Gazeley retired from active employment during December 1999.
</TABLE>
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<PAGE>
The following table sets forth certain information regarding
options granted in 1999 to the executive officers named in the Summary
Compensation Table:
<TABLE>
<CAPTION>
1999 OPTION GRANTS
------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
------------------------------------------------------------------ ------------------------
% of Total
Options Per-Share Market
Granted to Exercise Price on
Options Employees in Price Grant Expiration
Name Granted 1999 Date Date 5% ($) 10% ($)
- ---- ------- ---- ---- ---- ---- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard C. Williams -- -- -- -- -- -- --
Ted R. Winnowski 93,381 (1) 47.9% $13.48 $13.48 1/20/11 $1,001,734 $2,691,613
David M. Gazeley 2,200 (2) 1.1% 9.32 9.32 12/21/09 12,892 32,672
Dennis M. Carlson 2,475 (2) 1.3% 9.32 9.32 12/21/09 14,504 36,756
Dennis P. Huserik 2,475 (2) 1.3% 9.32 9.32 12/21/09 14,504 36,756
- ----------------------- ------------
(1) These options vest ratably over the three-year period from January 20, 1999, the date of grant.
(2) These options vest ratably over the five-year period from December 21, 1999, the date of grant.
</TABLE>
The following table sets forth information regarding option
exercises during 1999 and option holdings at December 31, 1999 by each executive
officer named in the Summary Compensation Table:
<TABLE>
<CAPTION>
1999 OPTION EXERCISES AND YEAR-END OPTION VALUES
------------------------------------------------
Value of unexercised in-the-
Shares Number of unexercised money options at
acquired options at December 31, 1999(#) December 31, 1999($)(1)
on Value -------------------------------- --------------------------------
exercise realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- ------------ ------------ ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Richard C. Williams -- -- 323,199 -- $3,241,404 --
Ted R. Winnowski -- -- 66,700 226,783 -- --
David M. Gazleey 15,225 $144,948 -- 1,760 795
Dennis M. Carlson 7,405 63,994 15,856 20,454 87,667 1,182
Dennis P. Huserik -- -- 6,364 10,785 5,189 13,569
- ---------------------------------------
(1) On December 31, 1999, the closing price of the Company's Common Stock was $9.77. For purposes of the foregoing table,
stock options with an exercise price less than that amount are considered to be "in-the-money" and are considered to
have a value equal to the difference between that amount and the exercise price of the stock option multiplied by the
number of shares covered by the stock option.
</TABLE>
10
<PAGE>
EMPLOYMENT AGREEMENTS
- ---------------------
The Company has an employment agreement with Mr. Williams (as
amended, the "Williams Agreement"). Centennial Bank has an employment agreement
with Mr. Winnowski (the "Winnowski Agreement").
RICHARD C. WILLIAMS
The Williams Agreement commenced on October 1, 1995 and
terminates on December 31, 2001. It was amended on December 1, 1997 to add
certain provisions regarding salary and payments upon a change of control, as
described below. The Williams Agreement provides for a base salary of not less
than $300,000 for each 12-month period after September 30, 1998, as established
by the Compensation Committee.
In addition to the base salary for Mr. Williams described
above, the Williams Agreement provides for a cash bonus for each calendar year
if the Company and/or Mr. Williams reach certain objectives determined by the
Board of Directors before the beginning of that year. Any cash bonus is payable
20% on the 15th day of April, July and October and 40% on the 15th day of the
following January. As provided in the Williams Agreement, Mr. Williams was paid
bonuses of $150,000 and $200,000 for 1997 and 1998, respectively, after meeting
all the specified objectives for each year. Certain of the specified objectives
were met in 1999, and Mr. Williams was paid a bonus of $100,000 for 1999.
Assuming future objectives are met, his cash bonus for subsequent years will be
determined by the Compensation Committee, but may not be less than $25,000 per
calendar quarter.
The Williams Agreement also provides for disability income
benefits in the event Mr. Williams should become disabled. The Williams
Agreement provides that, commencing January 20, 1998, Mr. Williams is deemed to
have fulfilled his full-time service obligation if he devotes time equivalent to
three-fourths of a full-time schedule to his duties with the Company.
The Williams Agreement also acknowledges the grant to Mr.
Williams of an option to purchase 223,723 shares of the Company's Common Stock.
The exercise price for Mr. Williams' nonstatutory stock option is $3.12 per
share, the fair market value of the Company's Common Stock on the date the
option was granted. The option expires on November 21, 2015 and is fully vested.
The option may be transferred, under certain specified circumstances, to members
of Mr. Williams' immediate family, to family trusts and to family partnerships.
In the event of termination of employment by the Company for
"cause" or by Mr. Williams without "good reason," as such terms are defined in
the Williams Agreement, Mr. Williams is entitled to the payment of base salary,
cash bonus and benefits only through his termination date, plus vested deferred
compensation. In the event of termination of employment by the Company without
cause or by Mr. Williams for good reason, Mr. Williams is entitled to the
payment of his base salary, cash bonus, and benefits through the end of the term
of the Williams Agreement, plus all deferred compensation.
11
<PAGE>
The Williams Agreement provides for deferred compensation in
an amount equal to $2,100,000. The deferred compensation is fully vested. The
deferred compensation is payable in installments beginning at the earliest to
occur of the following: (1) December 31, 2001; (2) the date of Mr. Williams'
death; (3) the termination of his employment unless terminated by reason of
disability; or (4) the date of the last payment to be made under a disability
income insurance policy.
The Williams Agreement further provides that, in the event of
his termination upon any change in control, both the Company and Mr. Williams
have the right to terminate the Williams Agreement. If either elects to
terminate, Mr. Williams will receive a lump-sum cash payment equal to 2 1/2
times his "final compensation." Final compensation is the greater of: (a) his
base salary and cash bonus for the most recently ended fiscal year; or (b) his
base salary for the current fiscal year. If Mr. Williams continues employment
following a change in control and is subsequently terminated before December 31,
2002, the Company will pay him a lump-sum cash payment equal to 2 1/2 times his
final compensation. Change of control is defined for this purpose as (i) the
acquisition by any person, other than the Company, Centennial Bank or a trustee
holding securities under an employee benefit plan of either company, of 30% or
more of the combined voting power of the Bank's or the Company's then
outstanding securities; (ii) a merger, consolidation, share exchange or other
corporate reorganization other than (A) a transaction in which the voting
securities of the Bank or the Company before the transaction continue to
represent more than 70% of the combined voting securities immediately following
the transaction, or (B) a transaction in which no person acquires more than 30%
of the combined voting power of Centennial Bank's or the Company's then
outstanding securities; or (iii) the complete liquidation, or sale or
disposition of all or substantially all, of the Bank's or the Company's assets.
In any event, the payment made to Mr. Williams under the change-of-control
provision of the Williams Agreement will be reduced until Section 280G of the
Internal Revenue Code does not limit the deductibility by the Company of the
payment.
For a period of three years following Mr. Williams'
termination of employment, unless such termination is by the Company without
cause, or by Mr. Williams for good reason, or as a result of any change of
control of the Company or Centennial Bank, Mr. Williams cannot, without the
consent of the Board of Directors, engage in or enter into any business or
perform services for another business that is in substantial competition with
the Company.
TED WINNOWSKI
The Winnowski Agreement commenced on January 20, 1998 and
terminates on December 31, 2002. The Winnowski Agreement provides for a base
salary of at least $225,000 for each 12-month period after December 31, 1998, as
established by the Compensation Committee.
In addition to Mr. Winnowski's base salary, the Winnowski
Agreement provides for a cash bonus for each calendar year if Centennial Bank
attains certain objectives determined by the Bank's Board of Directors before
the beginning of that year. Any cash bonus is payable 20% on the 15th of April,
July and October of that year and 40% on January 15th of the
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following year. Mr. Winnowski received a cash bonus of $100,000 for 1998 after
meeting all the specified objectives for that year. Certain of the specified
objectives were met in 1999, and the Company paid Mr. Winnowski a cash bonus of
$55,000 for that year. Assuming future annual objectives are met, his cash bonus
for 2000 and subsequent years will be determined by the Compensation Committee,
but may not be less than $100,000 per year, plus an additional amount of not
less than $25,000 if 110% of the year's financial objectives are achieved.
The Winnowski Agreement also acknowledges the grant to Mr.
Winnowski of an option to purchase 200,102 shares of the Company's Common Stock
under the Restated 1995 Stock Incentive Plan at an exercise price of $11.15 per
share. One-third of the option (the incentive stock option portion) expires in
2008 and the remaining two-thirds of the option expires in 2023. The option is
exercisable as to two-thirds of the option; the remaining one-third will become
exercisable on January 20, 2001. Pursuant to the Winnowski Agreement, in January
1999, the Company granted Mr. Winnowski an option to purchase 93,381 shares of
Common Stock at an exercise price of $13.48 per share, in recognition of
achieving all the 1998 performance goals. In addition, upon achieving the
performance goals established by the Board for each subsequent year, the
Winnowski Agreement requires the Company to grant to Mr. Winnowski annually an
additional option to purchase 26,680 shares, plus another option to purchase
13,340 shares if the Bank achieves 110% of its prior year's after-tax
profitability goal. Upon satisfying certain of the performance goals for 1999,
the Company granted to Mr. Winnowski an option to purchase 26,680 shares at a
purchase price of $9.72 per share. Exercisability of options granted to Mr.
Winnowski will be accelerated if the Company is acquired by another corporation,
upon Mr. Winnowski's death or disability or upon termination of his employment
by the Bank without cause or by Mr. Winnowski with good reason, as such terms
are defined in the Winnowski Agreement. Upon termination of Mr. Winnowski's
employment with the Bank for any reason, including termination for cause by the
Bank or by Mr. Winnowski without good reason, Mr. Winnowski will have the right
to exercise his options for one year after termination but only to the extent
the options were vested at the time of termination.
Pursuant to the Winnowski Agreement, if Mr. Winnowski's
interest in the Company's Employee Savings Plan is not fully vested at the time
his employment terminates (if such termination is on or after December 31,
2002), the Company will make a cash payment to Mr. Winnowski equal to the
unvested portion of his account.
In the event of termination of employment by the Bank for
cause or by Mr. Winnowski without good reason, Mr. Winnowski is entitled to the
payment of his base salary and benefits only through his termination date. In
the event of termination of employment by the Bank without cause or by Mr.
Winnowski for good reason, Mr. Winnowski is entitled to payment of his base
salary and benefits through December 31, 2002. If the Winnowski Agreement is
terminated by either party because of Mr. Winnowski's disability, the Bank will
pay his benefits and base salary until disability insurance benefits commence;
if the agreement is terminated due to death, the Bank will continue payments for
six months.
The Winnowski Agreement further provides that, in the event of
his termination upon any change in control (defined the same as in the Williams
Agreement), both the Company
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<PAGE>
and Mr. Winnowski have the right to terminate the Winnowski Agreement. If either
elects to terminate, Mr. Winnowski will receive a lump-sum cash payment equal to
2 1/2 times his "final compensation." "Final compensation" is the greater of:
(a) his base salary and cash bonus for the most recently ended fiscal year; or
(b) his base salary for the current fiscal year. If Mr. Winnowski continues
employment following a change in control and is subsequently terminated before
December 31, 2002, the Company will pay him a lump-sum cash payment equal to 2
1/2 times his final compensation.
For a period of six months following Mr. Winnowski's
termination of employment, he has agreed that he shall not engage in or enter
into business or perform services for another business that is of the same or
similar type as the Bank.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
- --------------------------------------------------------------
With the exception of Mr. Williams, who retired as Chief
Executive Officer and President of Centennial Bank in January 1998, all of the
Company's executives also hold positions with Centennial Bank. All of the
Company's executives, including Mr. Williams, receive all of their compensation
from the Bank. The Bank has entered into intercompany agreements with the
Company and Centennial Mortgage for reimbursement of certain executive officer
compensation expenses. Although compensation is paid by Centennial Bank, the
Compensation Committee of the Company establishes the compensation to be paid to
the Company's executive officers.
The Company and its subsidiaries are engaged in a highly
competitive industry. In order to succeed, the Company must be able to attract
and maintain qualified executives. To achieve this objective, the Compensation
Committee has structured executive compensation systems which include both a
fixed, base salary component and a contingent component tied to operating
performance. The Committee believes this compensation structure enables the
Company to attract and retain key executives.
In 1995, as the Board of Directors reviewed the Company's
strategic plans for the future, the Board determined that it would be in the
best interests of the Company to renegotiate Mr. Williams' employment contract
to extend its term. Central to the Board's interests were the long-term
operation of the Company and succession of management. The Williams Agreement is
described at pages 11-12 of this Proxy Statement. The base salary and bonus paid
to Mr. Williams for 1999 were determined pursuant to the terms of the Williams
Agreement. After extensive consideration of candidates, the Board determined to
hire Mr. Winnowski pursuant to an agreement described at pages 12-14 of this
Proxy Statement. Mr. Winnowski commenced employment with the Bank on January 20,
1998.
In setting base compensation, the Compensation Committee
considers the overall performance of each executive with respect to the duties
and responsibilities assigned him or her. Further, periodic surveys are taken of
compensation levels and benefit programs offered by other community banks and
bank holding companies, which provide the Committee with information on which to
evaluate salary and compensation programs.
14
<PAGE>
The Compensation Committee maintains a philosophy that a
significant element of compensation of executive officers, including Mr.
Williams, Mr. Winnowski and the other executive officers named in the Summary
Compensation Table, must be directly and materially linked to both operating and
stock price performance. The benefit plans provided to the executive officers
are designed to accomplish that goal. In particular, cash bonuses are heavily
dependent on the Company meeting or exceeding budgeted net income. Executive
officers are eligible to earn cash bonuses in specified amounts per executive,
upon the achievement of specific performance measurements by the Company each
quarter. In 1999, the performance measurements were: return on average assets;
return on average equity; net interest margin; efficiency ratio; and growth
objectives for total loans, total deposits and total assets. If earned, cash
bonuses are payable 20% on the 15th day of April, July and October and 40% on
January 15 of the following year. Because all the specified performance goals
were met for 1997 and 1998, full bonuses were paid to all executive officers for
those years. Not all of the goals were satisfied for 1999, and each executive
officer received only a portion of his potential bonus for 1999.
The Company's stock incentive plans are an important component
of the Company's compensation program for executive officers and other
employees. The plans are intended to advance the interests of the Company and
its shareholders by encouraging and enabling executive officers and other
employees to acquire and retain a proprietary interest in the Company. Through
stock option grants, the long-range interests of management and employees are
aligned with those of shareholders as the optionees accumulate (through the
vesting of their stock options) meaningful stakes in the Company. The
Compensation Committee makes all decisions concerning the granting of stock
options, including the individuals to whom options are granted and the
respective exercise prices and vesting periods. These decisions are made on a
subjective basis and generally do not bear a specific relationship to any
particular measure of the Company's performance. In 1999, the Company adopted a
stock option program intended to increase stock ownership among a broader group
of employees. It is anticipated that all executive officers (except Mr. Williams
and Mr. Winnowski) will receive a greater number of options under the new
program than they have historically received. The program specifies a range of
option shares that are available to each employee within a given grade, as well
as providing for discretionary options beyond the specified range. The
Compensation Committee believes that the enhanced program will be a valuable
tool in recruiting, retaining and motivating employees, including executive
officers. Stock options totaling 111,558 shares were granted to six executive
officers during 1999. The value of these stock options and the other stock
options held by the executive officers is entirely dependent on the market value
of the Company's shares. See the stock option tables included in "Executive
Compensation."
The Company maintains a 401(k) retirement savings plan
applicable to all eligible employees, including executive officers. Under the
plan, the Company typically matches a portion of employee contributions (for
1999, 48% of employee contributions were matched up to a maximum of 6% of
compensation). At December 31, 1999, all employer contributions made on behalf
of executive officers were vested in accordance with the vesting schedule of the
plan, generally five years from commencement of employment, on the basis of the
officers' past service with the Company and Centennial Bank, except that
contributions made on behalf of Mr. Winnowski, Mr. Huserik and Mr. Paul are not
fully vested. In addition, the Company has a
15
<PAGE>
deferred compensation plan, which also is applicable to all eligible employees,
including executive officers. Although the Company may match a portion of the
compensation deferred by employees, no Company contributions were made under
this plan for 1999.
The Compensation Committee believes that the base salary
compensation provided to the executive officers of the Company, including those
named in the Summary Compensation Table, is appropriate and reasonable in light
of such executives' duties, performance and responsibilities and that the
contingent forms of compensation provided through bonuses and stock options
provide additional, continuing incentives to executives in appropriate
circumstances and are consistent with the benefits derived by shareholders of
the Company.
This report is submitted by the members of the Company's
Compensation Committee:
COMPENSATION COMMITTEE
----------------------
Brian B. Obie
Robert L. Newburn
Cordy H. Jensen
Dan Giustina
16
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STOCK PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the
cumulative shareholder return on the Company's Common Stock during the five
years ended December 31, 1999, with: (i) the All Nasdaq U.S. Stocks Index, as
reported by the Center for Research in Security Prices; and (ii) the Nasdaq Bank
Index, as reported by the Center for Research in Security Prices. This
comparison assumes $100 was invested on December 31, 1994, in the Company's
Common Stock and in the comparison groups, and assumes the reinvestment of all
cash dividends prior to any tax effect and retention of all shares issued
pursuant to stock dividends and stock splits.
<TABLE>
<CAPTION>
Edgar Representation of Data Points Used In Printed Graphics
------------------------------------------------------------
Period Ending
-------------------------------------------------------------------------------------
Index 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- -------------------------------- -------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Centennial Bancorp 100.00 165.35 230.66 499.30 686.81 454.81
NASDAQ - Total US 100.00 141.33 173.89 213.07 300.25 542.43
NASDAQ Bank Index 100.00 149.00 196.73 329.39 327.11 314.42
THE STOCK PERFORMANCE SHOWN ON THE GRAPH ABOVE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE COMPANY
WILL NOT MAKE NOR ENDORSE ANY PREDICTIONS AS TO FUTURE STOCK PERFORMANCE.
</TABLE>
17
<PAGE>
CERTAIN TRANSACTIONS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- -----------------------------------------------------------
The members of the Compensation Committee are Messrs. Obie,
Newburn, Jensen and Giustina. None of them is or has been an officer or employee
of the Company or any of its subsidiaries.
Mr. Williams, the Company's President and Chief Executive
Officer, serves as a director and is on the Compensation Committee of Obie Media
Corporation. Mr. Obie, the Company's Chairman of the Board and a member of the
Company's Compensation Committee, is the Chairman of the Board and an executive
officer of Obie Media Corporation.
BANKING RELATIONSHIPS
- ---------------------
Certain directors (including each member of the Compensation
Committee) and executive officers of the Company and its subsidiaries, members
of their immediate families, and certain companies with which such individuals
are associated are customers of and have banking transactions with Centennial
Bank in the ordinary course of business. The Bank expects to have such banking
transactions in the future. All credit transactions with these parties in excess
of $25,000 must be approved by Centennial Bank's Asset/Liability Committee and
ratified by its Board of Directors. All outstanding loans and commitments to
loan to those parties were made in compliance with applicable laws and on
substantially the same terms (including interest rates and collateral) as those
prevailing for Centennial Bank at the time for comparable transactions with
other persons and, in the opinion of management, did not involve more than the
normal risk of collectibility or present other unfavorable features. Loans to
directors and executive officers of the Company and of Centennial Bank must
comply with federal and state laws, which generally prohibit any preferential
terms or rates.
COMPLIANCE WITH SECTION 16 FILING REQUIREMENTS
Section 16 of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), requires that all executive officers and directors of the
Company and all persons who beneficially own more than 10% of the Company's
Common Stock file an initial report of their ownership of the Company's
securities on Form 3 and report changes in their ownership of the Company's
securities on Form 4 or Form 5. These filings must be made with the Securities
and Exchange Commission with a copy sent to the Company.
Based solely upon the Company's review of the copies of the
filings that it received with respect to the year ended December 31, 1999, and
written representations from certain reporting persons, the Company believes
that all reporting persons made all required Section 16 filings with respect to
1999 on a timely basis.
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OTHER BUSINESS
The Company's management knows of no other matters to be
brought before the meeting for a vote. However, if other matters are presented
for a vote at the meeting, the proxy holders will vote the shares represented by
properly executed proxies according to their judgment on those matters. At the
meeting, management will report on the Company's business, and shareholders will
have an opportunity to ask questions.
INFORMATION AVAILABLE TO SHAREHOLDERS
THE COMPANY'S 1999 ANNUAL REPORT IS BEING MAILED TO
SHAREHOLDERS WITH THIS PROXY STATEMENT. ADDITIONAL COPIES OF THE ANNUAL REPORT
AND THE COMPANY'S FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
MAY BE OBTAINED WITHOUT CHARGE FROM MICHAEL J. NYSINGH, CHIEF FINANCIAL OFFICER,
CENTENNIAL BANCORP, 675 OAK STREET, POST OFFICE BOX 1560, EUGENE, OREGON 97440.
The Company welcomes the views of its shareholders on its
activities and performance. Shareholders who cannot attend the annual meeting
personally may use the enclosed proxy card to ask questions or make comments.
AUDITORS
Symonds, Evans & Larson, P.C., independent auditors, were
selected by the Board of Directors to conduct an audit of the Company's
financial statements for the year ended December 31, 1999.
Representatives of Symonds, Evans & Larson, P.C. will be at
the annual meeting and will have an opportunity to make a statement if they
desire to do so and answer any appropriate questions. However, management has
been advised that the representatives of Symonds, Evans & Larson, P.C. do not
plan to make a statement.
The Company will appoint at a later date independent auditors
to audit the Company's financial statements for 2000. The Board of Directors
will review the scope of any such audit and other assignments given to the
auditors to assess whether such assignments would affect their independence.
Effective October 30, 1998, the Company dismissed its prior
independent accountant, PricewaterhouseCoopers LLP, and engaged Symonds, Evans &
Larson, P.C. as its principal accountant. The decision to change accountants was
approved by the Company's Board of Directors. For additional information about
the change of accountants, please review the discussion on page 37 of the
Company's 1999 Annual Report to Shareholders, which accompanies this Proxy
Statement. That discussion is incorporated herein by reference.
19
<PAGE>
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to present proposals for action at the
Company's 2001 annual meeting of shareholders must submit the proposals for
inclusion in the Company's proxy statement not later than November 27, 2000.
March 27, 2000.
20
<PAGE>
CENTENNIAL BANCORP
EMBASSY SUITES HOTEL, COLONEL LINDBERGH BALLROOM, 319 SW PINE STREET,
PORTLAND, OREGON 97204
ANNUAL MEETING OF SHAREHOLDERS, APRIL 26, 2000
PROXY - SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Centennial Bancorp hereby appoints Brian B.
Obie and Richard C. Williams, and each of them, as proxies with full power of
substitution, and authorizes them to represent and to vote on behalf of the
undersigned shareholder all shares of the common stock of Centennial Bancorp
that the undersigned is entitled to vote at the annual meeting of shareholders
of Centennial Bancorp to be held on April 26, 2000, and any adjournment or
adjournments thereof, with respect to the following:
1. ELECTION OF DIRECTORS:
NOMINEES: Brian B. Obie, Robert L. Newburn, Dan Giustina,
Cordy H. Jensen, Richard C. Williams and Ted R. Winnowski
_____ FOR all nominees listed (except as marked to the contrary)
_____ WITHHOLD AUTHORITY to vote for all nominees listed
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC
INSTRUCTIONS OF THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES LISTED FOR DIRECTOR. PROXIES
MAY VOTE IN THEIR DISCRETION AS TO SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
Please sign exactly as your name appears. When shares are held jointly, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
- ----------------------------------
Signature(s)
- ----------------------------------
Signature(s)
- ----------------------------------
Date
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
