================================================================================
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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 the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
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HUDSON UNITED BANCORP, INC.
(Name of Registrant as Specified in its Charter
and
Name of Person Filing Proxy Statement)
================================================================================
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction
applies:
______________________________________________________
2) Aggregate number of securities to which transaction applies:
______________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
______________________________________________________
4) Proposed maximum aggregate value of transaction:
______________________________________________________
5) Total fee paid:
______________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing with 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.
Amount Previously Paid: _____________________________________
Form, Schedule or Registration Statement No.: _________________
Filing Party: ________________________________________________
Date Filed: __________________________________________________
================================================================================
<PAGE>
Hudson United Bancorp
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 23, 2000
TIME............................ 9:00 a.m. local time on Wednesday,
August 23, 2000
PLACE........................... The Yankee Silversmith Inn
1033 North Colony Road
Route Five
Wallingford, Connecticut 06492
ITEMS OF BUSINESS............... (1) The election of the four
persons named in the
accompanying Proxy Statement to
serve as directors of Hudson
United Bancorp for the terms
specified in the Proxy
Statement.
(2) Such other business, including
the shareholder proposal on
page 12, as may properly come
before the meeting.
RECORD DATE................ Shareholders of record at the close of
business on June 30, 2000 are
entitled to notice of and to vote at
the meeting.
ANNUAL REPORT............ The Corporation's 1999 Annual Report,
which is not part of the proxy
soliciting material, is enclosed.
PROXY VOTING............... You may vote by mail, by telephone, on
the Internet or in person at the
Annual Meeting. You may revoke your
proxy at any time prior to its exercise
by delivering to Hudson United Bancorp
a later-dated proxy or written
notice of revocation.
July 20, 2000
IMPORTANT - PLEASE RETURN YOUR PROXY PROMPTLY
<PAGE>
Hudson United Bancorp
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
-------------------------
PROXY STATEMENT
Dated July 20, 2000
GENERAL PROXY STATEMENT INFORMATION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Hudson United Bancorp ("Hudson United Bancorp" or
the "Corporation") of proxies for use at the Annual Meeting of Shareholders of
the Corporation (the "Annual Meeting") to be held at The Yankee Silversmith Inn,
1033 North Colony Road, Route Five, Wallingford, Connecticut 06492 on August 23,
2000 at 9:00 a.m. local time. The business expected to be voted upon at the
Annual Meeting is the election of four persons named in this proxy statement to
serve as directors for the terms specified herein and a shareholder proposal.
This proxy statement is first being mailed to shareholders on approximately July
20, 2000.
Proxies
Your vote is important.
Because many shareholders cannot attend the Annual Meeting in person,
it is necessary that a large number be represented by proxy. Any shareholder of
record giving a proxy has the right to attend and to vote at the Annual Meeting
in person.
Who Can Vote
The record date for determining shareholders entitled to notice of, and
to vote at, the Annual Meeting is June 30, 2000. Only shareholders of record as
of that date will be entitled to notice of, and to vote at, the Annual Meeting.
On the record date, 50,403,991 shares of common stock, without par value, were
outstanding and eligible to be voted at the Annual Meeting. Each share of common
stock is entitled to one vote per share.
How to Vote Your Shares.
Your vote is important and you are encouraged to vote your shares
promptly.
Each proxy submitted will be voted as directed. However, if a proxy
solicited by the Board of Directors does not specify how it is to be voted, it
will be voted as the Board recommends. If any other matters are properly
presented at the meeting for consideration that are not described in this proxy
statement, the proxies will use their own judgement to determine how to vote
your shares. At the date this proxy statement went to print, we did not
anticipate that any other matters would be raised at the meeting.
We are offering you three alternative ways to vote your shares this
year.
To Vote By Mail
---------------
As in previous years you can vote your proxy by mail. If you wish to
use this method to vote, please date, sign, and mail your proxy card in the
envelope provided as soon as possible.
To Vote By Telephone (Touch-Tone Phone Only)
--------------------------------------------
For the first time we are offering telephonic voting. You will notice
a control number printed on your proxy card. If you wish to vote by telephone,
you must call toll-free 1-800-PROXIES and follow the instructions. You will be
given the option to vote on the proposals individually or vote for all of the
Board of Directors' recommendations. If you vote by telephone, you must have
your control number and the proxy card available when you call.
To Vote By Internet
-------------------
For the first time we are offering voting by the Internet. If you wish
to vote using the Internet, you can access the web page at "www.voteproxy.com"
and follow the on-screen instructions. If you vote by Internet, you must have
your control number and the proxy card available when you access the web page.
If you are a participant in our dividend reinvestment plan, the shares
held in your dividend reinvestment account will be voted in the same manner as
your other shares, whether you vote by mail, by telephone, or by Internet.
Regardless of the method that you use to vote, you will be able to
vote in person or revoke your proxy if you follow the instructions provided
below in the section entitled "To Revoke Your Proxy Instructions."
If you hold your shares through a bank, broker or other nominee, they
will give you separate instructions for voting your shares.
To Revoke Your Proxy Instructions
The method by which you vote will not limit your right to vote at the
meeting if you later decide to attend in person. If your shares are held in the
name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record, to be able to vote at the
meeting. If you submit a proxy and then wish to change your vote or vote in
person at the meeting, you will need to revoke the proxy that you have
submitted. You can revoke your proxy at any time before it is exercised by
delivery of a properly executed, later-dated proxy or a written revocation of
your proxy. A later dated proxy or written revocation must be received before
the meeting by the Secretary of the Corporation, D. Lynn Van Borkulo-Nuzzo, at
1000 MacArthur Boulevard, Mahwah, New Jersey 07430, or it must be delivered to
the Secretary of the Annual Meeting before proxies are voted. You may also
revoke your proxy by submitting a new proxy via telephone or the Internet. You
will be able to change your vote as many times as you wish and the last vote
received chronologically will supercede any prior votes. Please note that if you
vote by the Internet, the maximum number of times you can access the website
using any one control number is limited to five times per day.
Required Vote
Directors will be elected by a plurality of the votes cast at the
Annual Meeting. At the Annual Meeting, an inspector of election will tabulate
ballots cast by shareholders present and voting in person, votes cast by
telephone or on the Internet and votes cast by proxy. Under applicable state law
and Hudson United Bancorp's Certificate of Incorporation and By-laws,
abstentions and broker non-votes are counted for purposes of establishing a
quorum but otherwise do not count. Generally, the approval of a specified
percentage of shares voted at a shareholder meeting is required to approve a
proposal and thus abstentions and broker non-votes have no effect on the outcome
of a vote.
All shares represented by valid proxies received pursuant to this
solicitation will be voted in favor of the four nominees named in this Proxy
Statement and against the shareholder proposal unless the shareholder specifies
a different choice by means of his proxy or revokes the proxy prior to the time
it is exercised. Should any other matters properly come before the Annual
Meeting, the persons named as proxies will vote upon such matters in their
discretion.
Solicitation of Proxies
This proxy solicitation is being made by the Board of Directors of the
Corporation and the cost of the solicitation will be paid by the Corporation. In
addition to the use of the mails, proxies may be solicited personally or by
telephone or facsimile transmission by officers, directors and employees of the
Corporation and Hudson United Bank ("HUB"), the Corporation's wholly owned
subsidiary bank, who will not be paid for solicitation activities. Arrangements
may be made with brokerage houses and other custodians, nominees and fiduciaries
for forwarding solicitation material to the beneficial owners of shares held of
record by such persons, and the Corporation will reimburse them for their
reasonable expenses incurred in forwarding the materials.
Shareholder Proposals
New Jersey corporation law requires that the notice of shareholders'
meeting (for either a regular or special meeting) specify the purpose or
purposes of such meeting. Thus, shareholder proposals must be referred to in the
Corporation's notice of shareholders' meeting for such proposal to be properly
considered at a meeting of shareholders.
Any Hudson United Bancorp shareholder that wishes to have a proposal
included in the Corporation's notice of shareholders' meeting, proxy statement
and proxy card for its 2001 Annual Meeting must submit the proposal to the
Corporation by the deadline. Under rules of the Securities and Exchange
Commission (the "SEC"), if Hudson United Bancorp's 2001 annual meeting is held
before July 24, 2001 (30 days before this year's meeting date), the deadline for
submitting a shareholder proposal will be a reasonable time prior to printing
next year's proxy statement. Hudson United Bancorp currently expects to hold its
2001 Annual Meeting prior to July 24, 2001 and to print next year's proxy
statement during the first week in February 2001, and Hudson United Bancorp
would consider a proposal submitted by December 15, 2000 to be reasonably
timely.
GOVERNANCE OF THE CORPORATION
Pursuant to New Jersey corporation law and the Corporation's
Certificate of Incorporation and By-laws, the business and affairs of the
Corporation are managed under the direction of the Board of Directors. Members
of the Board are kept informed of the Corporation's business through discussions
with the Chairman and officers, by reviewing materials provided to them and by
participating in meetings of the Board and its committees. Some members of the
Board also served as directors of the Corporation's subsidiary bank.
During 1999, the Board held 14 meetings and Board committees held a
total of 14 meetings. The average attendance in the aggregate of the total
number of Board and committee meetings was 93%. During 1999, no director
attended fewer than 83% of the total meetings of the Board and the committees on
which the director served except for Director Strauber who was recovering from
surgery and attended 68% of the meetings.
Committees of the Board of Directors
Hudson United Bancorp has a standing Audit Committee of the Board of
Directors. This committee recommends the firm to be appointed as independent
accountants to audit the Corporation's financial statements and to perform
services related to the audit; reviews the scope and result of the audit with
the independent accountants; reviews with management and the independent
accountants the Corporation's interim and year-end operating results; considers
the adequacy of the internal accounting and auditing procedures of the
Corporation; considers the accountants' independence; and reviews examination
reports by bank regulatory agencies and audit reports to management prepared by
the internal auditing department, and the response of management to those
reports. The audit committee reports to the full Board concerning pertinent
matters coming before it. The Audit Committee met four times during 1999. During
1999, Sr. Grace Frances Strauber served as Chairperson of the Audit Committee.
The other Hudson United Bancorp members of the Audit Committee are Donald P.
Calcagnini, Noel deCordova, Jr., Thomas R. Farley, Bryant D. Malcolm, James E.
Schierloh and John H. Tatigian.
Hudson United Bancorp has a standing Nominating Committee consisting of
Robert J. Burke, Chairman, Donald P. Calcagnini, W. Peter McBride, Charles F.X.
Poggi and Kenneth T. Neilson. The committee reviews qualifications of and
recommends to the Corporation's Board candidates for election as directors. The
committee considers recommendations from shareholders received sufficiently in
advance of the mailing of the proxy statement for the annual meeting. During
1999, the committee met three times.
Hudson United Bancorp has a standing Compensation Committee consisting
of Charles F.X. Poggi, Chairman, Robert J. Burke, Joan David, W. Peter McBride,
John H. Tatigian, Jr. The committee sets the salary and bonuses of executive
officers. During 1999, the committee met three times.
Compensation of Directors
The Corporation's Board has established directors' retainers and fees effective
December 8, 1998 as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
o Annual Hudson United Bancorp Director's Retainer $ 24,000
o Hudson United Bancorp Board Meetings $ 1,000
o Annual HUB Director's Retainer $ 6,000
o HUB Board Meetings $ 250
o HUB Committee Meetings $ 250
o Committee Retainers:
-------------------
Chairman, Audit Committee $ 7,000
Chairman, Compensation Committee $ 7,000
Chairman, Executive Committee $ 7,000
Chairman, Nominating Committee $ 7,000
Chairman, Long Range Planning Committee $ 7,000
Chairman, Trust Committee $ 7,000
Member, Audit Committee $ 5,000
Member, Compensation Committee $ 5,000
Member, Executive Committee $ 5,000
Member, Nominating Committee $ 5,000
Member, Long Range Planning Committee $ 5,000
Member, Trust Committee $ 5,000
</TABLE>
Deferred Compensation. The Corporation's Board has a nonqualified
Deferred Compensation Plan for directors covering retainer and committee fees.
Participation is optional. Interest is paid on deferred fees at the highest rate
paid by HUB on passbook savings, which is currently 5%. The provisions of the
Deferred Compensation Plan are designed to comply with certain rulings of the
Internal Revenue Service under which the deferred amounts are not taxed until
received. Under the Deferred Compensation Plan, the directors who elect to defer
their fees will receive the fees over time after they retire.
Compensation Committee Interlocks and Insider Participation
As noted under the caption "Board Compensation Committee Report on
Executive Compensation," various aspects of the compensation of the Hudson
United Bancorp executive officers are determined by the Compensation Committee.
Charles F. X. Poggi who is the Chairman of the Compensation Committee
and is involved in setting executive compensation is President of Poggi Press, a
general printing company. During 1999, Poggi Press was paid $677,000 for
printing work for Hudson United Bancorp. Management believes the terms and
conditions of the transactions with Poggi Press to be equivalent to terms
available from an independent third party.
W. Peter McBride, who is on the Compensation Committee and is involved
in setting executive compensation, is affiliated with McBride Corporate Real
Estate. McBride Corporate Real Estate was retained to assist in the sale and/or
leasing of various Hudson United Bancorp properties and in doing so earned
commissions of approximately $584,000. Management believes the terms and
conditions of the transactions with McBride Corporate Real Estate to be
equivalent to terms available from an independent third party.
Certain Transactions with Management
HUB has made in the past and, assuming continued satisfaction of
generally applicable credit standards, expects to continue to make, loans to
directors, executive officers and their associates (i.e., corporations or
organizations for which they serve as officers or directors or in which they
have beneficial ownership interests of 10% or more). These loans have all been
made in the ordinary course of the banking business on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and do not involve more than the
normal risk of collectibility or other unfavorable features. Directors,
executive officers and their associates did not during 1999 or during 2000
through the date of this proxy statement borrow from HUB an amount in excess of
10% of the bank's equity capital for any one director or executive officer
(together with their associates) or an amount in excess of 20% of the bank's
equity capital for all directors and executive officers and their associates as
a group.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers to file reports relating to their
ownership and changes in ownership of the Corporation's common stock with the
Securities and Exchange Commission and New York Stock Exchange. Based on
information provided by the Corporation's directors and executive officers and a
review of such reports, the Corporation believes that all required reports were
filed on a timely basis during 1999.
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information concerning the beneficial
ownership of Hudson United Bancorp Common Stock as of April 30, 2000, by each
executive officer of Hudson United Bancorp for whom individual information is
required to be set forth in this Proxy Statement pursuant to the rules of the
SEC (the "Named Officers"), by each director and by all directors and executive
officers as a group. Hudson United Bancorp does not know of any person who
beneficially owns more than 5% of its outstanding common stock.
<TABLE>
<CAPTION>
Beneficial Ownership of Hudson United Bancorp Common Stock
Number of Common Shares Beneficially
Name of Beneficial Owner Owned (1) Percent of Class
------------------------ --------- ----------------
<S> <C> <C>
Robert J. Burke 89,448 (2) *
Donald P. Calcagnini 126,367 (3) *
Joan David 167,403 (4) *
Noel deCordova, Jr. 25,673 (5) *
Thomas R. Farley 131,550 (6) *
Bryant Malcolm 22,017 (7) *
W. Peter McBride 80,794 (8) *
John F. McIlwain 47,483 (9) *
Kenneth T. Neilson 395,322 (10) *
Charles F.X. Poggi 234,927 *
David A. Rosow 679,472 (11) 1.35%
James E. Schierloh 90,668 (12) *
Thomas J. Shara, Jr. 140,656 (13) *
Susan Staudmyer 30,677 (14) *
Sister Grace Frances Strauber 1,262 *
John H. Tatigian, Jr. 36,105 (15) *
D. Lynn Van Borkulo-Nuzzo 108,640 (16) *
Directors and Executive Officers of
Hudson United Bancorp as a group (20 persons) 2,508,764 (17) 4.98%
</TABLE>
NOTES:
* Less than 1.00%.
(1) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared
investment power. Beneficially owned shares also include shares owned
(i) by a spouse, minor children or by relatives sharing the same home,
(ii) by entities owned or controlled by the named person, and (iii) by
other persons if the named person has the right to acquire such shares
within 60 days by the exercise of any right or option. Unless otherwise
noted, all shares are owned of record and beneficially by the named
person, either directly or through the Hudson United Bancorp dividend
reinvestment plan.
(2) Of this total, 14,072 shares are held by Mr. Burke's wife, and 30,322
are held by Union Dry Dock & Repair Co. Mr. Burke disclaims beneficial
ownership of the shares held by his wife.
(3) Of this total, 74 shares are held by Mr. Calcagnini as trustee for his
aunt.
(4) Of this total, 11,036 are held in an IRA and 30,100 are held by Mrs.
David and Mr. Lawrence David as trustees for the David Foundation.
(5) Of this total, 4,561 shares are held by Mr. deCordova's wife. Mr.
deCordova disclaims beneficial ownership of the shares owned by his
wife.
(6) Of this total, 72,901 shares are held in a trust created under the Will
of Edward Hinkley, for which Mr. Farley serves as co-trustee and 1,277
shares are held by Mr. Farley's wife. Mr. Farley disclaims beneficial
ownership of the shares owned by his wife.
(7) Of this total, 1,119 shares are held by Mr. Malcolm's wife and 2,442
are held by a corporation over which Mr. Malcolm exercises a
controlling interest. Mr. Malcolm disclaims beneficial ownership of the
shares held by his wife.
(8) Of this total, 1,116 shares are held by Mr. McBride's wife and 75,283
shares are held by Mr. McBride as trustee for limited partnerships
affiliated with Mr. McBride. Mr. McBride disclaims beneficial ownership
of the shares held by his wife.
(9) Of this total, 5,982 shares are held in Mr. McIlwain's account in the
Corporation's 401(k) plan, which he directs, 20,150 shares are held in
the Corporation's restricted stock program and 1,939 shares in Dividend
Reinvestment.
(10) Of this total, 27,293 shares are held in Mr. Neilson's account in the
Corporation's 401(k) plan, which he directs, 60,000 shares are held for
Mr. Neilson under the Corporation's Restricted Stock Plan, 4,308 shares
are held in an IRA, 2,868 shares are held by Mr. Neilson's wife, 35,300
shares are held for his children, and 174,463 shares represent vested
options. Mr. Neilson disclaims beneficial ownership of the shares owned
by his wife.
(11) This total includes 10,927 shares held in the Rosow Family Foundation
Charitable Trust and 501,220 held by Mr. Rosow's wife. Mr. Rosow
disclaims beneficial ownership of the shares owned by his wife.
(12) Of this total 5,663 shares are held by Mr. Schierloh's wife. Mr.
Schierloh disclaims beneficial ownership of the shares owned by his
wife.
(13) Of this total, 17,817 shares are held in Mr. Shara's account in Hudson
United Bancorp's 401(k) Plan which he directs , 15,000 shares are held
for Mr. Shara under the Corporations Restricted Stock Plan and 69,695
shares represent vested options.
(14) Of this total 377 shares are held in Ms. Staudmyer's 401(k) plan which
she directs and 30,300 shares are held under the Corporation's
Restricted Stock Plan.
(15) Of this total, 22,558 shares are held in an IRA directed by Mr.
Tatigian.
(16) Of this total, 11,676 shares are held in Ms. Van Borkulo-Nuzzo's
account in the Corporation's 401(k) plan, which she directs, 20,000
shares are held under the Corporation's Restricted Stock Plan, and
67,043 shares represent vested options.
(17) Of this total, 78,213 shares are held in Hudson United Bancorp's 401(k)
plans for specified individuals, 181,759 shares are held for executive
officers under Hudson United Bancorp's restricted stock plan, and
344,956 shares represent vested options. Excluded from the shares
reported in the Table are 43,013 shares held by HUB's Trust Department
as trustee for Hudson United Bancorp's pension plan. These additional
shares held by HUB's Trust Department are not reported as beneficially
owned by Hudson United Bancorp's directors or executive officers,
although by virtue of the officers' and directors' service on HUB's
Trust Committee, it may be asserted that the directors and officers
have beneficial ownership of such shares. The directors and executive
officers disclaim beneficial ownership of such shares.
PROPOSAL 1 - ELECTION OF DIRECTORS
Hudson United Bancorp's Certificate of Incorporation and By-laws
authorize a minimum of 5 and a maximum of 25 directors, but leaves the exact
number to be fixed by resolution of the Corporation's Board of Directors. The
Corporation's Board has fixed the number of directors at 13, effective August
23, 2000.
Pursuant to the Hudson United Bancorp Certificate of Incorporation, the
directors of the Corporation are divided into three classes. Directors are
generally elected for three-year terms on a staggered basis.
Donald P. Calcagnini and David A. Rosow are each being nominated for a
three-year term extending to the 2003 Annual Meeting, Charles F.X. Poggi is
being nominated for a two-year term extending to the 2002 Annual Meeting and
Robert J. Burke is being nominated for a one-year term extending to the 2001
Annual Meeting . If, for any reason, any of the nominees become unavailable for
election, the proxy solicited by the Board of Directors will be voted for a
substitute nominee selected by the Board. The Board has no reason to believe
that any of the named nominees is not available or will not serve if elected.
The names of the nominees for election, the directors whose terms
extend beyond the Annual Meeting and certain information about each of them are
set forth in the tables below. Years of service on the Board includes prior
service on the Board of Directors of HUB prior to the formation of the holding
company.
<PAGE>
<TABLE>
<CAPTION>
Nominees for 2000 Annual Meeting
Name, Age & Position with the Principal Occupation Director Term
Corporation During Past Five Years Since Expiring
----------- ---------------------- ----- --------
<S> <C> <C> <C> <C>
Robert J. Burke, 67 o President and Chief Operating 1979 2001
Officer, Union Dry Dock and Repair Co.
Donald P. Calcagnini, 64 o Retired; 1996 2003
o Chairman of the Board of Directors
of Lafayette American Bank from 1993 to
1999;
o Chief Executive Officer of
Lafayette American Bank from March 1993
to April 1994; Chairman of the Board of
Directors of Lafayette American Bancorp
from March 1992 to February 1994; and
Chief Executive Officer of Lafayette
American Bancorp from 1986 to February
1994.
Charles F.X. Poggi, 69 o President and Chief Operating 1973 2002
Officer, The Poggi Press (general
printing business).
David A. Rosow, 58 o Chairman and CEO of Rosow & 1996 2003
Company, Inc. (a private investment
company);
o Chairman of International Golf
Group, Inc.;
o Director of the former Westport
Bancorp and its subsidiary The
Westport Bank and Trust Company
from 1990 to 1996 and Chairman of
the Board of both from 1991 to
1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Directors Whose Terms Expire in 2001
Name, Age & Position with the Principal Occupation Director Term
Corporation During Past Five Years Since Expiring
----------- ---------------------- ----- --------
<S> <C> <C> <C> <C>
Joan David, 61 o Substitute Teacher, Board of 1994 2001
Cooperative Educational Services of
Rockland County.
Thomas R. Farley, 73 o Retired February 1995; 1994 2001
o Formerly a partner in the law firm
of Farley & Isles from 1980 to 1995.
Kenneth T. Neilson, 52 o Chairman, President and CEO of 1989 2001
Hudson United Bancorp and HUB.
Sister Grace Frances Strauber, o Franciscan Health System Member from 1979 2001
73 1991 to 1999;
o Chairperson, Audit Committee
Franciscan Health Partnership from 1996
to 1999;
o Member, Board of Stewards Franciscan
Health Partnership, Inc. from 1998 to
1999.
James E. Schierloh, 70 o Chairman, Emeritus 1996 to present; 1972 2001
o Chairman of the Board of Hudson
United Bancorp and HUB from 1990
to 1996;
o Formerly self-employed Public
Accountant.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Directors whose Terms will expire in 2002
Name, Age & Position with the Principal Occupation Director Term
Corporation During Past Five Years Since Expiring
----------- ---------------------- ----- --------
<S> <C> <C> <C> <C>
W. Peter McBride, 54 o President of McBride Enterprises, 1995 2002
Inc.;
o President McBride Agency
(real-estate development and
investment company).
Bryant Malcolm, 65 o 1997 to present: President, 1995 2002
Malcolm-Brooker Company, Inc. (a
consulting firm); Consultant;
o Founder & President, The B.D.
Malcolm Company, Inc. (general
contractors) from 1961 to 1997.
John H. Tatigian, Jr., 63 o Retired; 1996 2002
o Senior Vice President of Peter
Paul-Hershey (confection company).
Noel deCordova, Jr., 71 o Retired; 1998 2002
o Director of Poughkeepsie Savings
Bank, FSB 1970 to 1998;
o Director of The Hammond Company
from 1982 to 1995;
o Of Counsel to law firm of Van
DeWater and Van DeWater since
1990.
</TABLE>
No director of Hudson United Bancorp is also a director of any other
company registered pursuant to Section 12 of the Exchange Act or subject to the
requirements of Section 15(d) of the Exchange Act or any company registered as
an investment company under the Investment Company Act of 1940.
Recommendation and Vote Required on Proposal 1
THE HUDSON UNITED BANCORP BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
NOMINATED SLATE OF DIRECTORS INCLUDED IN PROPOSAL 1.
Directors will be elected by a plurality of the votes cast at the
Hudson United Bancorp Meeting, whether in person or by proxy.
<PAGE>
Shareholder Proposal
Hudson United Bancorp receives suggestions from shareholders from time
to time, some as formal shareholder proposals.
The proponent of the shareholder proposal below has not affirmed that
he will be present at the Annual Meeting to present the following proposal.
Information on the shareholdings of the proponent is available by writing to: D.
Lynn Van Borkulo-Nuzzo, Corporate Secretary, Hudson United Bancorp, 1000
MacArthur Boulevard, Mahwah, New Jersey 07430. The proposal and supporting
statements are quoted below. The Board has concluded it cannot support this
proposal for the reasons given.
Robert D. Morse, 212 Highland Avenue, Moorestown, NJ 08057, has
submitted the following proposal:
"That the Officers and Directors consider the
discontinuance of all bonuses immediately, and options, rights,
SARs, etc., after termination of any existing programs for top
management. I must also include discontinuance request of
"Severance Contracts", which overpay a person no longer
satisfactory to the Company, just to leave!
"This does not include any programs for employees.
"REASONS:
"Management and Directors are compensated enough to buy on
open market, just as You and I, if they are so motivated.
"Management is already well paid with base pay, life
insurance, retirement plans, paid vacations, free use of vehicles
and other perks.
"Options, rights, SAR's, are available elsewhere, and a
higher offer would induce transfers, not necessarily "attain and
hold" qualified persons.
"Who writes the objections to my proposal? Is it not the
same persons who nominate and pay the directors who in turn will
provide Management these exorbitant extras above a good base
salary? Shareowners should start reading and realizing that these
persons are not providing them entertainment on an individual
choice basis, as do athletes, movie stars, and similar able
performers.
"Align management with shareowners" is a repeated ploy or
"line" to lull us as to continually increasing their take of our
assets. Do we get any options to purchase at previous [presumed]
lower rates, expecting prices to increase?
"After taxes, present base salaries are way above the
$200,000.00 our President receives plus free lodging, and
Management only looks after a Company, not the USA and some of the
world problems. If they filled out a daily work or production
sheet, what would it show?
"Please vote "YES" for this proposal."
----------------------------
YOUR DIRECTORS RECOMMEND A VOTE AGAINST THE ABOVE PROPOSAL.
This proposal would discontinue some of the most significant components
of compensation and render Hudson United Bancorp non-competitive in the
employment market. Hudson United Bancorp's compensation decisions are designed
to attract, motivate, and retain high-caliber employees at all levels of the
Corporation. The Corporation's overall executive compensation levels are
designed to be competitive with the relevant group of organizations. This is
essential in the current economic environment with intense competition for
executives' talent. The Corporation's overall compensation plans have three
basic components: (1) an annual base salary component; (2) a short-term
incentive component, consisting of an annual bonus; and (3) a long-term
incentive component, which may include such features as stock options and
restricted stock. Through this integrated compensation program, the Corporation
has recruited new executives and retained executives key to the execution of its
strategy.
The Board and the Compensation Committees have and will continue to
perform an analysis of compensation relative to the Corporation's performance
and industry-wide trends. Because other companies provide their executives with
significant incentives, including bonuses and stock-based incentives to remain
employed, Hudson United Bancorp must be able to offer its executives comparable
employment and incentive packages. This is essential for recruitment plus
retention. Therefore, your Directors recommend that shareholders vote AGAINST
this proposal.
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on a
hypothetical $100 investment made at the close of business on December 31, 1994
in: (a) Hudson United Bancorp Common Stock; (b) the Standard & Poor's ("S&P")
500 Index; and (c) the Keefe, Bruyette & Woods 50 ("KBW 50") Index. The graph is
calculated assuming that all dividends are reinvested during the relevant
periods. The graph shows how a $100 investment would increase or decrease in
value over time, based on dividends (stock or cash) and increases or decreases
in the market price of the stock.
The KBW 50 is an index composed of fifty money center and regional
banks. Hudson United Bancorp believes the KBW 50 Index provides a consistent
means for comparing the performance of Hudson United Bancorp's Common Stock
against other financial institutions generally.
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Hudson United Bancorp 155.03 182.62 308.42 251.92 227.24
S&P 500 Index 137.58 169.17 225.60 290.08 351.12
KBW 50 Index 160.16 228.66 331.21 358.63 346.18
</TABLE>
EXECUTIVE COMPENSATION
Board Compensation Committee Report on Executive Compensation
This report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act, or under the Exchange Act, except to the extent
that Hudson United Bancorp specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
Executive Compensation Policy
Hudson United Bancorp's policy is to compensate its executives fairly
and adequately for the responsibility assumed, for the success and direction of
Hudson United Bancorp, for the effort expended in discharging that
responsibility, and for the results achieved directly or indirectly from each
executive's performance. "Fair and adequate compensation" is established after
careful review of:
o Hudson United Bancorp's earnings;
o Hudson United Bancorp's performance as compared to other companies of
similar size and market area; and
o Comparison of what the market demands for compensation of similarly
situated experienced executives.
Total compensation takes into consideration a mix of base salary,
bonus, restricted stock awards and stock options. The particular mix is
established in order to competitively attract competent professionals, retain
those professionals, and reward extraordinary achievement.
The Compensation Committee also considers net income and earnings per
share of Hudson United Bancorp Common Stock before finalizing officer increases
for the coming year.
Based upon its current levels of compensation, Hudson United Bancorp is
not affected substantially by the provisions of Section 162(m) of the Internal
Revenue Code which limits the deductibility of compensation above $1,000,000 for
each of the five highest paid officers. Certain forms of compensation are exempt
from this deductibility limit, primarily performance based compensation that has
been approved by shareholders. Compensation under the stock option plans (but
not the restricted stock plans) will be exempt.
In certain instances, compensation decisions take into account
contractual commitments assumed by or agreed to by Hudson United Bancorp as a
result of an acquisition.
1. Base Salary
Salary is minimum compensation for any particular position and is not
tied to any performance formula or standard. However, that is not to say that
poor performance will not result in termination. Superior performance is
expected of all executive officers.
To establish salary, the following criteria are used:
o Position description.
o Direct responsibility assumed.
o Comparative studies of peer group compensation. Special weight is given
to local factors.
o Earnings performance of Hudson United Bancorp.
o Competitive level of salary to attract and retain qualified and
experienced executives.
2. Annual Bonuses
For 1999, the parameters for the award of bonuses involved Hudson
United Bancorp's performance specifically related to earnings per share
(excluding non-recurring items), return on equity and minimum loan loss reserve
levels.
Under the bonus program the bonus pool may not exceed 10% of after tax
profits of Hudson United Bancorp and the creation of the bonus pool may not
cause the year-end results to fall below the targeted return on equity or the
loan loss reserve to fall below the targeted loan loss reserve percentage. If
the targeted results are not achieved, no bonuses will be paid under the
program. Even if the targeted level is achieved, each department must meet its
budget in order to be eligible for a bonus and employees must achieve key
established goals in order to be personally eligible.
3. Restricted Stock
The responsibility for establishing restricted stock awards is
delegated to the Stock Committee, which is a subsidiary-committee of the
Compensation Committee.
The Stock Committee meets two times each year to evaluate management's
recommendations concerning meritorious performance of officers and employees for
consideration to receive restricted stock awards.
The Stock Committee makes awards based upon the following criteria:
o Performance of the officer or employee in Hudson United Bancorp and HUB
o The benefit which Hudson United Bancorp or HUB has derived as a result
of the efforts of the award candidate under consideration.
o Hudson United Bancorp's desire to encourage long-term employment of the
award candidate.
4. Stock Options
The 1995 Stock Option Plan was approved by the Corporation's
shareholders at the 1995 Annual Meeting; the 1999 Stock Option Plan was approved
by the Corporation's shareholders at the 1999 Annual meeting.
The responsibility for awards of stock options rests with the Stock
Committee.
The Stock Committee makes recommendations for awards based upon the
following criteria:
o Performance of the officer or employee in Hudson United Bancorp or HUB
o The benefit which Hudson United Bancorp or HUB receive from the
services of the officer or employee.
o Hudson United Bancorp's desire to encourage long-term employment of the
officer or employee.
5. Perquisites
Perks, such as company automobiles and their related expenses, country
club memberships, auxiliary insurance benefits and other perks which the
Corporation's Board may approve from time to time are determined and awarded
pursuant to evaluation under the same criteria used to establish the base salary
or, in certain circumstances, pursuant to contractual commitments assumed by or
agreed to by the Corporation's as a result of an acquisition.
* * * * *
Hudson United Bancorp has long believed that a strong, explicit link
should exist between executive compensation and the value delivered to
shareholders. The bonus program, restricted stock awards and stock option awards
all provide competitive compensation that can increase based on Hudson United
Bancorp's performance. Since each bonus is based on a direct, explicit link to
Hudson United Bancorp's performance, it is directly and explicitly linked to the
value received by shareholders. Hudson United Bancorp's profitability inures to
the benefit of shareholders, and is a direct result of the direction established
by management. The general compensation philosophy is that senior executives
should be superior performers whose total compensation (including base salary,
bonus, restricted stock and options) should place compensation above the
seventy-fifth percentile in line with Hudson United Bancorp's performance.
In 1999, the Compensation Committee utilized two salary surveys to
establish executive compensation. The first survey, conducted by SNL Securities
entitled "SNL Executive Compensation Review", was prepared for the nationwide
commercial banking industry. The second report, "Financial Institutions
Compensation Survey", prepared by Watson, Wyatt & Co., identified compensation
in institutions in the $4 to $7.9 billion category in the Northeast.
Mr. Neilson, the Chairman, President and CEO of Hudson United Bancorp,
had a base salary of $450,000 in 1999. He received a base salary increase to
$750,000 effective for 2000. This action was taken while the merger of equals
with Dime Bancorp was pending and the size of the institution and Mr. Neilson's
attendant responsibilities were expected to increase substantially. On May 1,
2000, Mr. Neilson's base salary was adjusted to $525,000 in recognition of the
termination of the proposed merger with Dime and also the increased size of
Hudson United Bancorp during 1999. Mr. Neilson is eligible for bonuses equal to
100% of his base salary. The stock-based incentive package for Mr. Neilson in
1999 (consisting of 20,000 shares of restricted stock and no stock options) was
intended by the Compensation Committee to provide a level of stock-based
compensation with an overall value competitive with that granted to chief
executive officers of similarly-situated institutions in the New York
metropolitan area. The Compensation Committee believes that Mr. Neilson's
overall compensation package represents fair compensation in view of Hudson
United Bancorp's 1999 performance and peer group comparisons.
THE COMPENSATION COMMITTEE OF HUDSON UNITED BANCORP
Robert J. Burke
Joan David
W. Peter McBride
Charles F.X. Poggi
John H. Tatigian, Jr.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes all compensation earned in the past
three years for services performed in all capacities for Hudson United Bancorp
and its subsidiaries with respect to the Named Officers.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards
------------------- ------
Securities
Restricted Underlying All Other
Name and Principal Stock Options/ Compensation
Position Year Salary ($) Bonus ($) Award (s)(1) $ SARs(#) (2) ($)
-------- ---- ---------- --------- -------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Kenneth T. Neilson, 1999 450,000 450,000 521,250 -0- 18,542
Chairman, President & 1998 390,000 390,000 537,500 -0- 10,171
CEO, the Corporation & 1997 365,000 365,000 236,688 46,000 19,643
HUB
D. Lynn Van 1999 210,000 105,000 260,625 -0- 14,509
Borkulo-Nuzzo, EVP & 1998 200,000 100,000 268,750 -0- 13,578
Corporate Secretary, the 1997 185,000 92,500 67,625 12,500 15,237
Corporation & HUB
Thomas J. Shara, Jr. EVP 1999 210,000 105,000 260,625 -0- 11,973
& Senior Loan Officer of 1998 190,000 95,000 268,750 -0- 8,371
the Corporation & HUB 1997 170,000 32,500 -0- 10,000 12,678
John McIlwain, EVP 1999 185,000 92,500 260,625 -0- 16,575
& Chief Credit Officer, 1998 155,803 85,000 134,375 5,000 10,799
the Corporation & HUB 1997 169,615 85,000 -0- -0- 7,924
Susan M. Staudmyer, 1999 210,000 105,000 260,625 -0- 16,130
EVP, Retail Banking , 1998 142,326 108,100 268,750 16,105 7,931
the Corporation & HUB (3) 1997 5,769 -0- -0- -0- -0-
</TABLE>
-----------------------
Notes:
(1) The dollar amounts listed represent the number of shares of restricted
stock granted, multiplied by the fair market value of each share of
stock on the date of the grant. Cash dividends are paid directly to the
officer holding the restricted stock but stock dividends are added to
the restricted stock and are subject to the same restrictions. The
number of shares reflected have been adjusted for the 3% stock dividend
effected December 1, 1997, the 3% stock dividend effected September 1,
1998 and the 3% stock dividend effected December 1, 1999. As of
December 31, 1999, Mr. Neilson, Ms. Van Borkulo-Nuzzo, Mr. Shara, Mr.
McIlwain, and Ms. Staudmyer held 20,000, 10,000, 10,000, 15,150 and
20,300 shares of restricted stock, respectively, with aggregate values
of $521,200, $260,000, $260,000, $398,884, and $529,018, respectively.
(2) All amounts in this column represent employer contributions to 401(k)
plans on behalf of the Corporation Named Officers, premiums for life
insurance in excess of $50,000 and income attributable to use of a
company provided vehicle.
(3) Ms. Staudmyer first worked for the Corporation from December 31, 1996
to February 11, 1997. She rejoined the organization on April 13, 1998.
Information with respect to Ms. Staudmyer's compensation in 1997 and
1998 represents (non-annualized) amounts actually paid.
Option Grants in 1999
No stock options were granted to the Named Officers in 1999.
Option Exercises
The following table is intended to show options exercised during the
last fiscal year and the value of unexercised options held at year-end 1999 by
the Named Officers. Hudson United Bancorp does not utilize stock appreciation
rights ("SARs") in its compensation package, although the SEC rules require that
SARs be reflected in Table headings.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)(1)
------------- ----------------
Shares
Acquired on Exercise Value Exercisable/ Exercisable/
Name (#) Realized ($) Unexercisable Unexercisable
--------------------------- ---------------------- ----------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
Kenneth T. Neilson -0- -0- 174,463/103 $1,777,085/-0-
D. Lynn Van Borkulo-Nuzzo -0- -0- 67,043/103 $758,448/-0-
Thomas J. Shara -0- -0- 69,695/103 $833,245/-0-
John F. McIlwain 13,111 256,594 0/10,712 -0-/-0-
Susan M. Staudmyer -0- -0- 0/16,015 -0-/-0-
</TABLE>
-----------------------
NOTES:
(1) Options are "in the money" if the fair market value of the underlying
security exceeds the exercise price of the option at year-end.
Employment Contracts, Termination of Employment and Change in Control
Arrangements
Under Hudson United Bancorp's Restricted Stock Plan, each share of
stock awarded is subject to a "Restricted Period" of from two to ten years, as
determined by the committee administering the plan when it awards the shares.
Effective upon the date of grant, the officer or employee is entitled to all the
rights of a shareholder with respect to the shares, including dividend and
voting rights. However, if a share recipient leaves the employment of Hudson
United Bancorp or its subsidiaries during the Restricted Period for any reason,
his or her shares may be forfeited to Hudson United Bancorp. Upon the occurrence
of a change in control of Hudson United Bancorp, every Restricted Period then in
existence with a remaining term of five years or less will automatically expire.
Prior to termination of the merger agreement between Hudson United
Bancorp and Dime Bancorp, Inc., the Compensation Committee adopted the Hudson
United Bancorp and Subsidiaries Key Employee Retention Program. The program was
designed to encourage designated key employees of Hudson United Bancorp and its
subsidiaries (collectively, the "Company") to remain with the Company in
connection the then pending merger and subsequent transition in light of the
uncertainty then surrounding the consummation of the merger. Eligible employees
received awards under the program that totaled, in the aggregate, 186,000 shares
of restricted stock and $90,000 in cash awards. Restricted stock awards and cash
awards under the program become 100% vested ten years from the date of the
award. Restricted stock and cash awards will also become fully and immediately
vested if, within two years after termination of the Hudson-Dime merger
agreement, (1) the Company receives payment of $25 million or more in
satisfaction of its rights under the terms of the September 16, 1999 Stock
Option Agreement between Hudson and Dime; or (2) there occurs a Change in
Control, as defined in the Restricted Stock Plan. If neither event described in
the preceding sentence occurs within two years after the date of termination of
the merger agreement, however, the restricted stock and cash awards will expire.
The Stock Committee may, in its sole discretion, extend or modify this
expiration provision for up to the balance of the ten year Restricted Period.
The Compensation Committee retains the right to amend, modify, or terminate the
program in its sole discretion, including the right to increase the $25 million
minimum required payment to $50 million or more.
Under the Hudson United Bancorp 1999 Stock Option Plan, options are
granted with a term not to exceed ten years from the grant date. Each option is
granted with a vesting schedule as determined by the Stock Committee. In the
event of a change in control, as defined in the Plan, any option that has not
vested, as of the date of the change in control, becomes fully vested.
As of January 1, 1997, the Corporation entered into change in control
agreements with Mr. Neilson, Ms. Van Borkulo-Nuzzo, Mr. Shara and Mr. McIlwain.
As of August 16, 1999, the Corporation entered into a change in control
agreement with Ms. Staudmyer. The Agreements generally provide that in the event
of a Change in Control, the executive would be entitled to be employed for a
period of three years and each would be entitled to substantially the same
title, same salary and same benefits as existed prior to the change in control
or the executive would be entitled to certain severance payments and benefits.
These agreements do not become effective unless there is a change in control and
then remain effective three years after a change in control (two years in the
case of Mr. McIlwain and Ms. Staudmyer). Prior to a change in control, unless
the Corporation stops their automatic renewal, the agreements are for two year
"evergreen" terms (one year in the case of Mr. McIlwain and Ms. Staudmyer).
Each agreement defines "change in control" to mean any of the
following: (i) the acquisition of beneficial ownership by any person or group of
25% or more of the Corporation's voting securities or all or substantially all
of its assets; (ii) the merger consolidation or combination (a "merger") with an
unaffiliated entity unless following the merger the Corporation's directors
constitute 50% or more of the directors of the combined entity and the
Corporation's CEO is the CEO of the surviving entity; or (iii) during any two
consecutive calendar years individuals who were directors of the Corporation at
the start of the period cease to constitute two-thirds of the directors unless
the election of the directors was approved by the vote of two-thirds of the
directors then in office; or (iv) the transfer of all or substantially all of
the Corporation's assets.
With respect to Ms. Van Borkulo-Nuzzo's contract and Mr. Shara's
contract, if either officer is terminated without cause, resigns for good reason
following a change in control, dies or is disabled, the officer (or the
officer's estate) is entitled to a lump sum payment equal to three times the sum
of their annual salary and highest annual bonus in the last three years, as well
as a continuation of family health coverage for a period of three years. In the
event that the severance payments and benefits under the agreement, together
with any other parachute payments, would constitute an excess parachute payment
under Section 280G of the Internal Revenue Code of 1986 (the "Code"), the
payments to Ms. Van Borkulo-Nuzzo and Mr. Shara would be increased in an amount
sufficient to pay the excise taxes and other income and payroll taxes necessary
to allow Ms. Van Borkulo-Nuzzo and Mr. Shara to retain the same net amount,
after such taxes as they were otherwise entitled to receive (a "Make Whole Tax
Provision").
With respect to Mr. McIlwain's contract and Ms. Staudmyer's contract,
if either officer is terminated without cause, resigns for good reason following
a change in control, dies or is disabled, the officer (or the officer's estate)
is entitled to a lump sum payment equal to three times of the sum of their
annual salary and the highest bonus paid or to be paid to the officer, as well
as a continuation of their family's health coverage for the same number of years
as the salary entitlement. However, under these contracts, in the event that the
severance payments and benefits under the agreements, together with any other
parachute payments, would constitute excess parachute payments under Section
280G of the Code, the payments and benefits under the agreements will be reduced
(but not below zero) to the extent necessary to avoid excess parachute payments.
With respect to Mr. Neilson's contract, if he is terminated without
cause, resigns for good reason (as defined in the contract) within the first 90
days following a change in control, resigns for any reason after that 90 day
period following a change in control, dies or is disabled, he (or his estate) is
entitled to a lump sum payment equal to three times the sum of his annual salary
and his highest bonus in the last three years, as well as a continuation of his
family's health coverage for a period of three years. Mr. Neilson's contract
contains a Make Whole Tax Provision.
Pension Plans
The monthly retirement benefit for executives under the Employees
Retirement Plan of Hudson United Bancorp (the "Plan") will generally be equal to
the product of (a) 1% of the employee's base average annual monthly earnings
(based on the highest five years of service) plus 1/2% of the employee's base
average monthly earnings (based on the highest 5 years of service) in excess of
the average Social Security taxable wage base, multiplied by (b) the years of
credited service. Retirement benefits normally commence when an employee reaches
age 65, but early retirement without reduction in benefit may be taken when an
employee's age plus years of service equals 85.
In the Plan, compensation in the form of a bonus is excluded from
benefit calculations. Thus, for each Named Officer, only the amounts that are
shown each year under the heading "Salary" in the Summary Compensation Table in
this Proxy Statement are covered. The Plan also provides for disability pension
benefits.
As of January 1, 1996, Hudson United Bancorp adopted a Supplemental
Employee Retirement Plan ("SERP"). The SERP provides a pension benefit which, in
large part, makes up the amount of the benefits that cannot be provided under
the Plan as a result of the limit on the amount of compensation that can be
taken into account under Section 401(a)(17) of the Code ($160,000 in 1998 and
indexed for inflation in subsequent years) and the amount of benefits payable
under Section 415 of the Code. Unlike the Plan, the SERP covers salary and
one-third of incentive compensation. The benefit is payable as a single life
annuity and 100% survivor benefits are paid for the life of the designated
beneficiary. Kenneth Neilson is the only person who has been designated as a
participant under the SERP. Hudson United Bancorp has purchased life insurance
to fund the benefit.
The following table shows an employee's estimated annual retirement
benefit from the Plan and the SERP combined, assuming retirement at age 65 for
an individual reaching such age before January 1, 1999 and assuming a straight
life annuity benefit, for the specified compensation levels and years of
service. Except for Mr. Neilson, the amounts in the table below are limited
under Section 401(a)(17) of the Code, as described in the preceding paragraph.
The benefits listed in the table are not subject to any deduction for social
security or other offset amounts. Mr. Neilson has approximately 16 years of
credited service under the pension plan as of January 1, 2000 and, at age 65,
would have 32 years of credited service. Ms. Van Borkulo-Nuzzo has approximately
33 years of credited service under the pension plan as of January 1, 2000, and,
at age 65, would have approximately 48 years of credited service. Mr. Shara has
approximately 19 years of credited service as of January 1, 2000 and, at age 65,
would have 43 years of credited service. Mr. McIlwain has 7 years of credited
service as of January 1, 2000 and, at age 65, would have approximately 10 years
of credited service. Ms. Staudmyer has approximately 1 year of credited service
as of January 1, 2000 and at age 65, would have approximately 24 years of
credited service.
<PAGE>
<TABLE>
<CAPTION>
Pension Plan Table
Salary Years of Service
15 20 25 30 35
-- -- -- -- --
<S> <C> <C> <C> <C> <C>
$125,000 $25,645 $34,193 $42,742 $51,290 $59,838
$150,000 $31,270 $41,693 $52,117 $62,540 $72,963
$200,000 $42,520 $56,693 $70,867 $85,040 $99,213
$250,000 $53,770 $71,693 $89,617 $107,540 $125,463
$300,000 $65,020 $86,693 $108,367 $130,040 $151,713
$350,000 $76,270 $101,693 $127,117 $152,540 $177,963
$400,000 $87,520 $116,693 $145,867 $175,040 $204,213
$450,000 $98,770 $131,693 $164,617 $197,540 $230,463
$500,000 $110,020 $146,693 $183,367 $220,040 $256,713
$550,000 $121,270 $161,693 $202,117 $242,540 $282,963
$600,000 $132,520 $176,693 $220,867 $265,040 $309,213
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Anderson LLP, independent public accountants, have audited the
books and records of Hudson United Bancorp since 1991. Selection of Hudson
United Bancorp's independent public accountants for the 2000 fiscal year will be
made by the Board of Directors subsequent to the Annual Meeting.
Arthur Anderson LLP has advised Hudson United Bancorp that one or more
of its representatives will be present at the Annual Meeting of shareholders to
make a statement if they so desire and to respond to appropriate questions.
OTHER MATTERS
The Board of Directors is not aware of any other matters that may come
before the Annual Meeting. However, in the event such other matters come before
that meeting, it is the intention of the persons named in the proxy to vote on
any such matters in accordance with the recommendation of the Board of
Directors.
Shareholders are urged to sign the enclosed proxy, which is solicited
on behalf of the Board of Directors, and return it to the Corporation in the
enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
Kenneth T. Neilson
Chairman, President and
Chief Executive Officer
Mahwah, New Jersey
July 20, 2000
