SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
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
Broad National Bancorporation
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
---------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other
than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-
6(i)(2) or Item 22(a)(2) of
Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount 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 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[LOGO]
BROAD NATIONAL BANCORPORATION
March 26, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of Broad National Bancorporation, to be held at the
principal executive offices of the Company, located at 905 Broad
Street, Newark, New Jersey, on Thursday, April 18, 1996, commencing
at 9:00 a.m., local time. The business to be conducted at the
meeting is described in the attached Notice of Annual Meeting and
Proxy Statement. In addition, there will be an opportunity to meet
with members of senior management and review the business and
operations of the Company and its subsidiary, Broad National Bank.
Your Board of Directors joins with me in urging you to attend
the meeting. Whether or not you plan to attend the meeting,
however, please sign, date and return the enclosed proxy card
promptly. A prepaid return envelope is provided for this purpose.
You may revoke your proxy at any time before it is exercised; and if
you file written notice of revocation with the Secretary of the
Company before the proxy is exercised, it will not be used if you
attend the meeting and prefer to vote in person.
Sincerely yours,
Donald M. Karp
Chairman of the Board and
Chief Executive Officer
<PAGE>
BROAD NATIONAL BANCORPORATION
905 Broad Street
Newark, New Jersey 07102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 18, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
of Broad National Bancorporation, a New Jersey corporation
("Bancorporation" or the "Company"), will be held at the principal
executive offices of Bancorporation located at 905 Broad Street,
Newark, New Jersey, on Thursday, April 18, 1996, commencing at 9:00
a.m., local time, and thereafter as it may from time to time be
adjourned, for the following purposes:
1. To elect thirteen directors to hold office for a term
expiring at the 1997 Annual Meeting of Shareholders of
Bancorporation and until their respective successors are
duly elected and qualified or until their respective
earlier resignation or removal;
2. To consider and act upon ratification and approval of the
selection of the accounting firm of KPMG Peat Marwick LLP
as the Company's independent auditors for the year ending
December 31, 1996; and
3. To transact such other business as properly may come
before the meeting and any adjournment or adjournments
thereof.
The Board of Directors of Bancorporation has fixed the close of
business on March 8, 1996 as the record date for determination of
the shareholders entitled to notice of, and to vote at, the Annual
Meeting and any adjournment or adjournments thereof.
All shareholders are cordially invited to attend the meeting.
Whether or not you intend to be present at the meeting, the Board of
Directors of Bancorporation solicits you to sign, date, and return
the enclosed proxy card promptly. A prepaid return envelope is
provided for this purpose. You may revoke your proxy at any time
before it is exercised; and if you file written notice of revocation
with the Secretary of the Company before the proxy is exercised, it
will not be used if you attend the meeting and prefer to vote in
person. Your vote is important and all shareholders are urged to be
present in person or by proxy.
By Order of the Board of
Directors
Donald M. Karp
Chairman of the Board and
Chief Executive Officer
March 26, 1996
Newark, New Jersey
<PAGE>
BROAD NATIONAL BANCORPORATION
905 Broad Street
Newark, New Jersey 07102
-----------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 18, 1996
-------------------------------
INTRODUCTION
This Proxy Statement is being furnished to the shareholders of
Broad National Bancorporation, a New Jersey corporation
("Bancorporation" or the "Company"), in connection with the
solicitation of proxies by the Board of Directors of Bancorporation
for use at the Annual Meeting of Shareholders to be held on
Thursday, April 18, 1996, and at any adjournment or adjournments
thereof (the "Annual Meeting"). The Annual Meeting will commence at
9:00 a.m., local time, and will be held at the principal executive
offices of the Company, located at 905 Broad Street, Newark, New
Jersey 07102. Bancorporation's business activities are limited to
ownership of the outstanding capital stock of Broad National Bank, a
national banking association (the "Bank") and to performing certain
services for the Bank.
This Proxy Statement and the enclosed form of proxy are being
first mailed to the Company's shareholders on or about March 26,
1996.
PROXIES
You are requested to complete, date and sign the enclosed form
of proxy and return it promptly to the Company in the enclosed
postage prepaid envelope. Shares represented by properly executed
proxies will, unless such proxies previously have been revoked, be
voted in accordance with the shareholders' instructions indicated in
the proxies. If no instructions are indicated, such shares will be
voted in favor of the election of the nominees for director named in
this Proxy Statement, in favor of ratifying the selection of the
accounting firm of KPMG Peat Marwick LLP as Bancorporation's
independent auditors for the current year, and, as to any other
matter that properly may be brought before the Annual Meeting, in
accordance with the discretion and judgment of the appointed
proxies. Unless otherwise indicated by the shareholder on the
proxy, the appointed proxies may cumulate proxy votes as to nominees
for director named in this Proxy Statement with respect to all
shares of Common Stock that they are authorized to vote, and, in
accordance with their discretionary authority, allocate such votes
in the manner that they determine will result in the election of the
greatest number of such nominees as directors of the Company. A
shareholder who has given a proxy may revoke it at any time before
it is exercised at the Annual Meeting by filing written notice of
revocation with the Secretary of the Company, or by executing and
delivering to the Secretary of the Company a proxy bearing a later
date. A shareholder who has given a proxy may appear at the Annual
Meeting and vote in person if the shareholder has filed written
notice of revocation with the Secretary of the Company at any time
before the proxy is exercised or the shareholder votes by written
ballot.
VOTING AT THE MEETING
For purposes of voting on the proposals described herein, the
presence in person or by proxy of shareholders holding a majority of
the total outstanding shares of the Company's Common Stock, $1.00
par value, shall constitute a quorum at the Annual Meeting. Only
holders of record of shares of the Company's Common Stock as of the
close of business on March 8, 1996 (the "Record Date"), are entitled
to notice of, and to vote at, the Annual Meeting or any adjournment
or adjournments thereof. As of the Record Date, 4,115,754 shares of
the Company's Common Stock were outstanding and entitled to be voted
at the Annual Meeting. Each share of Common Stock is entitled to
one vote on each matter properly to come before the Annual Meeting,
except that cumulative voting rights may be exercised with respect
to the election of
1
<PAGE>
directors. Each shareholder voting in the election of directors
shall have the right to cumulate such shareholder's votes and cast
as many votes in the aggregate as shall equal the number of shares
of Common Stock held by such shareholder multiplied by the number
of directors to be elected. Each such shareholder may cast the
whole number of votes for one candidate or may divide the votes
in any manner the shareholder may determine among as many
candidates as the shareholder may select. There are no conditions
precedent to the exercise of such cumulative voting rights.
Discretionary authority to cumulate the votes represented by the
proxies in the election of directors is solicited.
Directors are elected by a plurality (a number greater than
those cast for any other candidates) of the votes cast, in person or
by proxy, by the shareholders entitled to vote at the Annual Meeting
for that purpose. The affirmative vote of the holders of a majority
of the shares of the Company's Common Stock, represented in person
or by proxy and entitled to vote at the Annual Meeting, is required
for (i) the ratification and approval of the selection of KPMG Peat
Marwick LLP as the Company's independent auditors, and (ii) the
approval of such other matters as properly may come before the
Annual Meeting or any adjournment thereof.
A shareholder entitled to vote in the election of directors can
withhold authority to vote for all nominees for directors or can
withhold authority to vote for certain nominees for directors.
Abstentions from the proposal to approve the ratification of the
selection of the Company's independent auditors are treated as votes
against the proposal. Broker non-votes on the election of directors
or the Company's independent auditors are treated as shares of
Bancorporation capital stock as to which voting power has been
withheld by the respective beneficial holders and, therefore, as
shares not entitled to vote on the proposal as to which there is the
broker non-vote.
SOLICITATION OF PROXIES
This solicitation of proxies for the Annual Meeting is being
made by the Company's Board of Directors. The Company will bear all
costs of such solicitation, including the cost of preparing and
mailing this Proxy Statement and the enclosed form of proxy. After
the initial mailing of this Proxy Statement, proxies may be
solicited by mail, telephone, telegram, facsimile transmission or
personally by directors, officers, employees or agents of the
Company. Brokerage houses and other custodians, nominees and
fiduciaries will be requested to forward soliciting materials to
beneficial owners of shares held of record by them; and their
reasonable out-of-pocket expenses, together with those of
Bancorporation's transfer agent, will be paid by Bancorporation.
In accordance with the Company's bylaws, a list of shareholders
entitled to vote at the Annual Meeting will be available for
examination at least ten days prior to the date of the Annual
Meeting during normal business hours at the principal executive
offices of Bancorporation located at 905 Broad Street, Newark, New
Jersey. The list also will be available at the Annual Meeting.
ITEM 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of thirteen
directors. One of the purposes of this Annual Meeting is to elect
thirteen directors to serve for a one-year term expiring at the
Annual Meeting of Shareholders in 1997 and until their respective
successors are duly elected and qualified or until their respective
earlier resignation or removal. The Board of Directors has
designated Licinio Cruz, John A. Dorman, Arthur Fischman, John J.
Iannuzzi, Donald M. Karp, James J. Lazarus, Edward J. Lenihan,
Stanley J. Lesnik, Catherine McFarland, Louis J. Owen, A. Harold
Schwartz, Peter D. Sudler and Hubert Williams as the thirteen
nominees proposed for election at the Annual Meeting. Unless
authority to vote for the nominees or a particular nominee is
withheld, it is intended that the shares of Common Stock represented
by properly executed proxies in the form enclosed will be voted for
the election as directors of all thirteen nominees. In the event
that one or more of the nominees should become unavailable for
election, it is intended that the shares represented by the proxies
will be voted for the election of such substitute nominee or
nominees as may be designated by the Board of Directors, unless the
authority to vote for all nominees or for the particular nominee or
nominees who have ceased to be candidates has been withheld. Each
of the nominees has indicated his or her willingness to serve as a
director if elected, and
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the Board of Directors has no reason to believe that any nominee
will be unavailable for election. The Board of Directors does not
know if, and has no reason to believe that, anyone will nominate
another candidate for director at this Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF LICINIO CRUZ, JOHN A. DORMAN, ARTHUR FISCHMAN, JOHN J.
IANNUZZI, DONALD M. KARP, JAMES J. LAZARUS, EDWARD J. LENIHAN,
STANLEY J. LESNIK, CATHERINE MCFARLAND, LOUIS J. OWEN, A. HAROLD
SCHWARTZ, PETER D. SUDLER AND HUBERT WILLIAMS AS DIRECTORS OF THE
COMPANY.
NOMINEES
The following table sets forth certain information with respect
to each person nominated by the Board of Directors for election as
directors of the Company at the Annual Meeting.
<TABLE>
<CAPTION>
POSITION WITH
BANCORPORATION
AND THE BANK PRINCIPAL
NAME AGE (YEAR FIRST ELECTED) OCCUPATION (1)
<S> <C><C> <C>
Licinio Cruz 53 Director (1977) Vice President and
Treasurer, Cruz
Construction Co., Inc.
(general construction)
John A. Dorman 56 President of Bancorporation Position with
(1992) and the Bank (1992) Bancorporation and the
Director (1992) Bank (2)
Arthur Fischman 70 Director (1978) Consultant
John J. Iannuzzi 58 Director (1988) President, 187 Corporation
T/A Gateway
East (real estate
management)
Donald M. Karp 59 Chairman of the Board of Position with
Bancorporation (1985) and Bancorporation and
the Bank (1985); Chief the Bank (3)
Executive Officer of
Bancorporation (1991)
and the Bank (1991);
Vice Chairman of the
Board of Bancorporation
(1981-1985) and the
Bank (1978-1985);
Director (1972)
James J. Lazarus 58 Director (1980) President, L&R
Manufacturing Company
(manufacturer of
ultrasonic cleaning
equipment and chemicals)
Edward J. Lenihan 79 Director (1977) Consultant (4)
Stanley J. Lesnik 77 Director (1970); Chairman Consultant (3)
of the Board (1974-1985);
Chairman of Executive
Committee (1985-1995);
Chairman Emeritus of the
Executive Committee (1996)
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<PAGE>
Catherine
McFarland 55 Director (1993) Executive Officer and
Secretary, Victoria
Foundation, Inc.
(private charitable
foundation) (5)
Louis J. Owen 72 Director (1976); Chairman Consultant
of Executive Committee
(1996)
A. Harold
Schwartz 71 Director (1980) President, New Jersey
Tanning Co. Inc.
(tanning bovine
leathers)
Peter D. Sudler 48 Director (1987) Principal and General
Counsel, The Sudler
Companies (real estate
development)
Hubert Williams 56 Director (1988) President, Police
Foundation (private not-
for-profit organization)
- -----------------
(1) Unless otherwise indicated, each of the persons listed has been employed in
the indicated principal occupation during the last five years.
(2) Prior to joining Bancorporation and the Bank, Mr. Dorman was an executive
vice president of Chemical Bank New Jersey where he managed the Statewide
Commercial Lending division. For the two years prior to the merger in 1989
of Horizon Bank Corp. and Chemical Bank, Mr. Dorman served as President and
Chief Executive Officer of Chemical New Jersey Corporation, Chemical
Banking Corporation's loan production office in New Jersey.
(3) Mrs. Donald M. Karp is the niece of Stanley J. Lesnik and the daughter of
Harriet M. Alpert, a principal shareholder of Bancorporation.
(4) Mr. Lenihan presently is a consultant to planning and economic and
development groups.
(5) Ms. McFarland has served as executive officer and secretary of Victoria
Foundation, Inc. since 1989, and as its program officer and assistant
secretary from 1971 to 1989.
</TABLE>
There is no arrangement or understanding between any director
and any other person pursuant to which such director was selected as
a director.
COMPENSATION OF DIRECTORS
No compensation is paid to members of the Board of Directors of
Bancorporation for service to the Company as such. All directors of
Bancorporation also are directors of the Bank, however, and in that
capacity receive compensation from the Bank as described below.
During 1995, Messrs. Iannuzzi, Lazarus, Lenihan, Schwartz,
Sudler and Williams and Ms. McFarland received $500 for each meeting
of the Bank's Board of Directors that they attended or for any
meeting of a committee of that Board that they attended, if such
meeting was not held on the same day as a regularly scheduled Board
of Directors meeting. For 1996, this fee per meeting is being
increased to $550. During 1995, all Bank directors (excluding
Messrs. Karp and Dorman) also were paid $300 per month. For 1996,
this monthly payment to all Bank directors (excluding Messrs. Karp
and Dorman) will remain $300 per month.
During 1995, the rotating member of the Executive Committee of
the Bank's Board of Directors received a fee of $500 per meeting
attended. For 1996, this fee per meeting is being increased to
$550.
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Certain Bank directors are paid annual compensation in lieu of
the fee per meeting and monthly fee described above. Pursuant to
this arrangement, Messrs. Cruz, Fischman and Owen each received
$18,000 and Mr. Lesnik received $23,500 during 1995. For 1996,
Messrs. Cruz and Fischman each will receive $19,000 and Mr. Lesnik
and Mr. Owen each will receive $23,500.
MEETINGS OF THE BOARD AND COMMITTEES
During 1995, the Boards of Directors of Bancorporation and the
Bank held seven meetings and twelve meetings, respectively. All
directors attended at least 75% of the meetings of such Boards of
Directors and the committees of such Boards of Directors on which
they served that were held during 1995, with the exception of Mr.
Lazarus, who attended 57% of such meetings of Bancorporation and 73%
of such meetings of the Bank; Mr. Lesnik, who attended 66% of such
meetings of the Bank, including 92% of the meetings of the Bank s
Board of Directors but only 54% of the meetings of the Bank s
Executive Committee; Mr. Owen, who attended 73% of such meetings of
the Bank, including 84% of the meetings of the Bank s Board of
Directors, Audit Committee and Compensation Committee, but only 65%
of the meetings of the Bank s Executive Committee; Mr. Schwartz, who
attended 71% of such meetings of Bancorporation; Mr. Sudler, who
attended 57% of such meetings of Bancorporation and 58% of such
meetings of the Bank; and Mr. Williams who attended 71% of such
meetings of Bancorporation and 67% of such meetings of the Bank. It
should be noted that the Company's directors discharge their
responsibilities throughout the year, not only at such Board of
Directors and committee meetings, but through personal meetings and
other communications with members of management and others regarding
matters of interest and concern to the Company.
The only standing committee of Bancorporation's Board of
Directors is the Audit Committee. There currently are no
compensation, executive or nominating committees of Bancorporation's
Board of Directors, or committees performing similar functions of
the Board. The committees of the Bank's Board of Directors consist
of the Executive Committee, Compensation Committee and Audit
Committee as described below.
Bancorporation and the Bank each has an Audit Committee which
assists the Board of Directors in fulfilling its responsibilities
with respect to accounting and financial reporting practices and the
scope and expense of audit and related services provided by external
auditors, among others. The Audit Committee is responsible for
apprising the Board of management's compliance with Board mandated
policies, internal procedures and applicable laws and regulations.
This committee works with the internal and external auditors and
examiners and supervises the internal audit function directly,
reviews and approves the hiring of audit personnel, reviews and
provides input regarding audit department compensation and evaluates
the performance of the internal audit department and the external
auditors. The members of both Bancorporation's and the Bank's Audit
Committee currently are Mr. Fischman, the Chairman of both Audit
Committees, Mr. Cruz, Mr. Iannuzzi and Mr. Owen. Bancorporation's
and the Bank's Audit Committees each met four times during 1995.
The Bank's Executive Committee is authorized, subject to
certain limitations imposed by law and in the bylaws of the Bank, to
exercise all of the powers of the Board of Directors between
meetings of the Board. The committee currently is comprised of
seven members; six permanent members and one rotating member of the
Bank's Board of Directors. The members of the Executive Committee
currently are Mr. Lesnik, Mr. Cruz, Mr. Dorman, Mr. Fischman, Mr.
Karp and Mr. Owen, plus a rotating member. Mr. Lesnik served as the
Chairman of the Executive Committee during 1995, and has been
appointed Chairman Emeritus of the Executive Committee during 1996.
Mr. Owen has been appointed Chairman of the Executive Committee to
replace Mr. Lesnik for 1996. The Executive Committee met twenty-six
times during 1995.
The Bank's Compensation Committee is responsible for
recommending changes in compensation for the Bank's Chairman of the
Board and Chief Executive Officer and the President and Chief
Operating Officer to the entire Board for their approval. The
members of the Compensation Committee currently are Mr. Owen, the
Chairman, Mr. Cruz, Mr. Lazarus, and Mr. Schwartz. The Compensation
Committee met three times during 1995.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION COMMITTEE AND BOARD OF DIRECTORS REPORT ON EXECUTIVE
COMPENSATION
This report has been prepared by the Compensation Committee of
the Bank's Board of Directors (the "Committee") and by the Board of
Directors of the Bank, which together have general responsibility
for the establishment, direction and administration of all aspects
of the compensation policies and programs for Bancorporation's and
the Bank's executive officers. Under an agreement between
Bancorporation and the Bank, all employees of Bancorporation and of
the Bank, including persons who are employees of both Bancorporation
and the Bank, are compensated as such by the Bank. Bancorporation's
executive compensation program is therefore synonymous with that of
the Bank. The Bank's executive compensation program, insofar as it
pertains to the Chairman of the Board and Chief Executive Officer
(the "Chief Executive Officer") and the President and Chief
Operating Officer (the "President"), is administered by the
Committee. During 1995, the Committee was composed of four
independent outside directors, none of whom is an officer or
employee of Bancorporation or the Bank. All decisions by the
Committee relating to the compensation of the Chief Executive
Officer and President are reviewed by, and subject to the approval
of, the full Board of Directors of the Bank. The Bank's executive
compensation program, insofar as it pertains to executive officers
other than the Chief Executive Officer and the President, is
administered by the Chief Executive Officer and the President. All
decisions by the Chief Executive Officer and the President relating
to the compensation of the Bank's executive officers are reviewed
by, and subject to the approval of, the full Board of Directors of
the Bank. Mr. Karp, the Chief Executive Officer, and certain other
executive officers of the Bancorporation and the Bank, may attend
meetings of the Committee and of the Bank's Board of Directors, but
are not present during discussions or deliberations regarding their
own compensation.
COMPENSATION POLICY. The Bank's executive compensation policy
is premised upon three basic goals: (1) to attract and retain
qualified individuals who provide the skills and leadership
necessary to enable the Bank to achieve its earnings growth, capital
compliance and return on investment objectives, while maintaining
its commitment to Equal Employment Opportunity and Affirmative
Action guidelines and practices; (2) to create incentives to achieve
Bank and individual performance objectives through the use of
performance-based compensation programs; and (3) to create a
mutuality of interest between executive officers and shareholders
through compensation structures that create a direct link between
executive compensation and shareholder return.
In determining the structure and levels of each of the
components of executive compensation needed to achieve these goals,
all elements of the compensation package are considered in total,
rather than any one component in isolation. As more fully described
below, the determination of such levels of executive compensation is
a subjective process in which many factors are considered, including
the Bank's performance (as measured by earnings growth, capital
compliance and return on investment, among other factors) and the
individual executive's specific responsibilities, historical and
anticipated personal contribution to the Bank's business, and length
of service with the Bank.
COMPENSATION COMPONENTS. The Committee, as well as the Chief
Executive Officer and the President, reviews the Bank's compensation
program annually to ensure that compensation levels and incentive
opportunities are competitive and reflect the performance of the
Bank and the individual executive officer. Recommendations are then
submitted to the Bank's Board of Directors for approval. The
particular elements of the compensation program for executive
officers are base salary, annual incentive bonuses and periodic
stock option grants. The Committee believes that these compensation
components together advance both the short- and long-term interests
of shareholders. In this regard, the Committee believes that the
long-term interests of shareholders are advanced by designing a
significant portion of executive compensation to be at risk: the
annual incentive bonus (which permits individual performance to be
recognized on an annual basis based, in part, on an evaluation of
the executive's contribution to the Bank's performance) and the
grant of stock options (which directly ties a portion of the
executive's long-term remuneration to stock price appreciation
realized by shareholders). Each of the components of the
compensation program is addressed separately below.
Base Salary. The base salary for each executive officer is
reviewed from the previous year. In determining whether to adjust
base salary levels, management's recommendations and subjective
assessments of each executive's growth and effectiveness in the
performance of his or her duties are taken into account. In
addition, the performance of the Bank is considered. The increases
in the base salaries of the Bank's executives for 1995 were based
primarily upon a subjective
6
<PAGE>
analysis of the Bank's performance
during the period since the last salary increase and the individual
executive's role in generating that performance. In this regard,
the analysis of the Bank's performance included a review of the
Bank's earnings, capital ratios, asset quality and return on
investment for the prior year. An analysis of the role played by
each individual executive in generating the Bank's performance
included a consideration of the executive's specific
responsibilities, contributions to the Bank's business, and length
of service. The determination in December 1995 to increase Mr.
Karp's base salary from $200,000 to $209,000 was based on the same
type of subjective analysis and took into account the amount of time
he spends on activities directly and indirectly benefitting
Bancorporation and the Bank. In addition, the Committee considered
the improvement in the Company's earnings performance and capital
ratios. The factors impacting base salary levels are not
independently assigned specific weights. Rather, all of these
factors are reviewed, and specific base pay recommendations are made
which reflect an analysis of the aggregate impact of these factors.
The Committee and the Chief Executive Officer and the President
believe that base pay levels for the executive officers are
maintained within a range that is considered to be appropriate and
necessary.
Annual Incentive Bonus. The Bank's executive officers and
certain other employees are eligible to receive annual incentive
bonus awards. Incentive bonus awards are made in an aggregate
amount equal to 8% of the Bank's annual after tax net income,
excluding gains from securities transactions.
Each of the participants in the incentive bonus program are
assigned to one of three bonus tiers, which assignments are made
primarily according to job category. For 1995, 34%, 35% and 31% of
the total amount available for the payment of bonuses was allocated
to tiers one, two and three, respectively. The Committee is
responsible for allocating bonus payments among the tier one
participants, and in so doing, allocated 56% of the bonus payments
to be made to tier one participants to Mr. Karp, the Chief Executive
Officer. The Chief Executive Officer and the President together are
responsible for allocating bonus payments among the tier two and
tier three participants. In allocating the bonus among the
participants of the three bonus program tiers, the Committee and the
Chief Executive Officer and the President exercise their discretion
and judgment after considering the individual participant's
performance, responsibilities and contributions to the Bank, among
other considerations. In making this determination with respect to
the Bank's Chief Executive Officer, the Committee considered Mr.
Karp's role in enabling the Bank to achieve its performance goals;
his lead in the development of strategic and long-range objectives
for the Bank; and Mr. Karp's effective leadership of the Bank's
management team, among other considerations. The award of a bonus
to a bonus program participant, including the Chief Executive
Officer, is made after considering the individual participant's
performance, responsibilities and contributions to the Bank and
subjectively analyzing the basis of their aggregate impact on the
success of the Bank for the preceding year. The size of the bonus
pools, the persons who are eligible to receive bonuses and the
amount of bonus payments can vary from year to year and are subject
to the discretion of the Committee and the Chief Executive Officer
and the President.
Stock Options. The Committee believes that in order to enhance
long-term shareholder value it must provide incentives that provide
motivation beyond short-term results. The objective of stock option
grants is to advance the longer term interests of the Company and
its shareholders and complement incentives tied to annual
performance by rewarding executives upon the creation of incremental
shareholder value. Stock options only produce value to executives
if the price of Bancorporation's Common Stock appreciates, thereby
directly linking the interests of executives with those of
shareholders. Therefore, in order to provide long-term incentives
to executive officers and other employees related to long-term
growth in the value of the Bancorporation's Common Stock, stock
options are granted to such persons under Bancorporation's stock
option plans. The selection of the persons eligible to receive
stock options and the designation of the number of stock options to
be granted to such persons are made by the Committee in its
discretion, insofar as they relate to the Chief Executive Officer
and the President, and by the full Board insofar as they relate to
other executive officers, and are made after taking into account
management's assessment of each person's relative level of authority
and responsibility with the Bank, years of service and base salary,
among other factors. As disclosed elsewhere in this proxy
statement, for 1995 Mr. Karp was granted options exercisable with
respect to 500 shares of Common Stock at an exercise price of $7.75
per share, and 15,000 shares of Common Stock at an exercise price of
$10.45 per share. The award of these stock options was made based
on a subjective assessment of Mr. Karp's specific responsibilities,
effectiveness in the performance of his duties, historical and
anticipated personal contribution to the Bank's business, and length
of service with the Bank, which assessment is comparable to that
described above under "Base Salary".
7
<PAGE>
<TABLE>
<CAPTION>
Compensation Committee
of the Board of Directors Board of Directors
<S> <C> <C>
Louis J. Owen Licinio Cruz Stanley J. Lesnik
Licinio Cruz John A. Dorman Catherine McFarland
James J. Lazarus Arthur Fischman Louis J. Owen
A. Harold Schwartz John Iannuzzi A. Harold Schwartz
Donald M. Karp Peter D. Sudler
James J. Lazarus Hubert Williams
Edward J. Lenihan
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, the members of the Bank's Compensation Committee
were Mr. Owen, the Chairman, Mr. Cruz, Mr. Lazarus and Mr. Schwartz.
As discussed above under "Compensation Committee and Board of
Directors Report on Executive Compensation", Mr. Karp, the Chief
Executive Officer, and Mr. Dorman, the President, administer the
executive compensation program insofar as it pertains to executive
officers other than the Chief Executive Officer and the President.
All decisions relating to the compensation of executive officers are
reviewed by, and subject to the approval of, the full Board of
Directors of the Bank. Among the members of the Bank's Board of
Directors, Messrs. Karp and Dorman are officers and employees of the
Company and the Bank, and Mr. Lesnik formerly served as Chairman of
the Board of the Company.
None of the members of the Bank's Compensation Committee were
an officer or employee of the Company or any of its subsidiaries
during 1995, and none were formerly an officer of the Company or any
of its subsidiaries. Messrs. Owen, Cruz, Lazarus and Schwartz, and
certain corporations and firms in which such persons have interests,
have obtained loans from the Bank. Each of such loans are believed
to have been made to such persons, corporations or firms in the
ordinary course of business, on substantially the same terms,
including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and did not
involve more than the normal risk of collectibility or present other
unfavorable features.
EXECUTIVE COMPENSATION
The following table sets forth for the years ended December 31,
1993, 1994 and 1995, respectively, the compensation of the Company's
chief executive officer and of each of the Company's four other most
highly compensated executive officers for 1995 for services to the
Company and its subsidiaries in all capacities:
8
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Other Securities
Annual Restricted Underlying All Other
Name and Compen- Stock Options LTIP Compen-
Principal Position Year Salary Bonus (1) sation (2) Award(s) SARs Payouts sation (3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Donald M. Karp
Chairman of the Board, 1995 $200,000 $72,900 $67,202 $-- 15,500 $-- $14,790
Chief Executive Officer 1994 186,000 70,000 0 -- 15,000 -- 14,505
and Director of 1993 150,000 33,600 0 -- 39,249 -- 14,460
Bancorporation and the
Bank
John A. Dorman 1995 $157,500 $50,000 $19,804 $-- 10,500 $-- $15,870
President, Chief Operation 1994 150,000 50,000 0 -- 10,500 -- 15,585
Officer and Direcotr of 1993 142,000 22,400 0 -- 15,000 -- 15,442
Bancorporaiton and the
Bank
Fred Perry, Jr. (4) 1995 $94,500 $20,000 $0 $-- 5,000 $-- $10,683
Senior Vice President of 1994 90,000 20,000 0 -- 5,000 -- 10,270
the Bank 1993 85,000 8,000 0 -- 6,000 -- 10,069
Peter Kenney (4) 1995 $92,000 $20,000 $0 $-- 5,000 $-- $7,112
Senior Vice President of 1994 88,000 20,000 0 -- 5,000 -- 6,685
the Bank 1993 84,500 7,000 0 -- 4,000 -- 6,527
Fred S. Camp 1995 $86,200 $20,000 $0 $-- 5,000 $-- $5,713
Secretary of 1994 82,000 20,000 0 -- 4,000 -- 5,296
Bancorporation and 1993 79,000 6,000 0 -- 3,000 -- 4,173
the Bank, Senior
Vice President of the
Bank
- -----------------------
(1) Reflects bonus earned for 1995, 1994 and 1993, respectively.
(2) Excludes perquisites and other benefits, unless the aggregate amount of such compensation is the lesser of either $50,000
or 10% of the total of annual salary and bonus reported for the named executive officer. Amounts reflected for Messrs.
Karp and Dorman for 1995 represent supplemental contributions of employee pension retirement benefits contributed through
the Bank's Non-Qualified Deferred Compensation Plan.
(3) All Other Compensation includes matching contributions made by the Company for the accounts of Messrs. Karp, Dorman, Perry,
Jr., Kenny and Campo, respectively, under the Company's 401(k) Plan, and the premiums on life insurance policies for such
persons. Matching contributions made by the Company under the Company's 401(k) Plan for 1995, 1994 and 1993 were $2,175,
$1,890 and $1,845, respectively, for Mr. Karp; $2,175, $1,890 and $1,747, respectively, for Mr. Dorman; $1,660, $1,247 and
$1,046, respectively, for Mr. Perry, Jr.; $1,624, $1,197 and $1,039, respectively, for Mr. Kenny; and $1,540, $1,124 and
$0,respectively, for Mr. Campo. The premiums on life insurance policies paid by the Company for 1995, 1994 and 1993 were
$12,615, $12,615 and $12,615, respectively, for Mr. Karp; $13,695, $13,695 and $13,695, respectively, for Mr. Dorman;
$9,023, $9,023 and $9,023, respectively, for Mr. Perry Jr.; $5,488, $5,488 and $5,488, respectively, for Mr. Kenny; and
$4,173, $4,173 and $4,173, respectively, for Mr. Campo.
(4) Messrs. Perry, Jr. and Kenny are not officers of Bancorporation, but are included among the five most highly paid executive
officers because each is a key policy making member of management of the Bank.
</TABLE>
OPTION/SAR GRANTS
The following table sets forth information with respect to each
officer named in the Summary Compensation Table under "Executive
Compensation" concerning grants of stock options and stock
appreciation rights ("SARs") during 1995.
9
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
Individual Grants Grant Date
Value
Number of % of Total
Securities Options/SARs
Underlying Granted to Grant
Options/ Employees in Exercise or Date
SARs Fiscal Base Price Expiration Present
Name Granted (#) Year ($/Share) Date(2) Value ($)
<S> <C> <C> <C> <C> <C>
Donald M. Karp (3) 15,000 21.4% $10.45 December 21, 2000 $61,050 (4)
500 0.7% $7.75 April 20, 2005 $2,230 (5)
John A. Dorman (3) 10,000 14.3% $9.50 December 21, 2005 $52,600 (4)
500 0.7% $7.75 April 20, 2005 $2,230 (5)
Fred Perry, Jr. (3) 5,000 7.1% $9.50 December 21, 2005 $26,300 (4)
Peter Kenny (3) 5,000 7.1% $9.50 December 21, 2005 $26,300 (4)
Fred S. Campo (3) 5,000 7.1% $9.50 December 21, 2005 $26,300 (4)
- -------------------
(1) No stock appreciation rights were granted by the Company during 1995.
The grants of stock options in the following table were made on
April 20, 1995 and December 21, 1995.
(2) The stock options are subject to early termination if the person to
whom they are granted dies, ceases to be employed by the Company or
any of its subsidiaries, or is unable to perform his duties for six
months as the result of such person's physical or mental incapacity.
(3) The time at which the option may be exercised is prescribed at the time
such option is granted, and may be accelerated if the Company is not
the surviving corporation of any merger, consolidation, reorganization
or acquisition by another corporation or if a "change of control" occurs
with respect to the Company.
(4) The dollar value of the stock options has been determined as of
December 21, 1995 using the Black-Scholes option pricing model, based
on the assumptions that (a) the options were granted on that date, (b)
the closing price for the shares of Common Stock underlying the options
on the grant date was $9.50 per share, (c) the period during which the
options are exercisable is ten years from the grant date (five years
in the case of options for 15,000 shares granted to Mr. Karp), (d) the
option exercise price is $9.50 ($10.45 in the case of options for
15,000 shares granted to Mr. Karp), (e) the dividend yield for 1995 is
2.11%, (f) the "risk free" interest rate on U.S. Treasury Strips is a
5.91% yield in ten years from the grant date (December 2005) (5.52%
yield in five years from the grant date (December 2000)), and (g)
the price volatility for the shares of Common Stock underlying the
options is 54.2% (based on the fluctuation in weekly closing stock
prices from December 25, 1992 to December 15, 1995).
(5) The dollar value of the stock options has been determined as of
April 20, 1995 using the Black-Scholes option pricing model, based
on the assumptions that (a) the options were granted on that date,
(b) the closing price for the shares of Common Stock underlying the
options on the grant date was $7.75 per share, (c) the period during
which the options are exercisable is ten years from the grant date,
(d) the option exercise price is $7.75, (e) the dividend yield for
1995 is 2.11%, (f) the "risk free" interest rate on U.S. Treasury
Strips is a 7.20% yield in ten years from the grant date (April 20,
2005), and (g) the price volatility for the shares of Common Stock
underlying the options is 55% (based on the fluctuation in weekly
closing stock prices from December 25, 1992 to April 20, 1995).
</TABLE>
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to each
officer named in the Summary Compensation Table under "Executive
Compensation" concerning the exercise of options and stock
appreciation rights ("SARs") during 1995 and unexercised options and
SARs held as of December 31, 1995.
10
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
DECEMBER 31, 1995 OPTION/SAR VALUES(1)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Acquired Value December 31, 1995(#)/(2)/ December 31, 1995($)/(3)/
Name on Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Donald M. Karp -- -- 35,417 36,319 $88,964 $46,600
John A. Dorman -- -- 12,458 24,317 37,546 39,816
Fred Perry, Jr. -- -- 8,609 12,780 22,571 22,485
Peter Kenny -- -- 2,680 11,520 7,878 18,616
Fred S. Campo -- -- 7,149 10,090 18,159 14,506
</TABLE>
- ---------------
(1) No stock appreciation rights were granted by the Company
during 1995.
(2) The shares of the Company's Common Stock underlying
unexercised options at December 31, 1995 includes shares
issuable upon the exercise of options granted on December
16, 1993, September 19, 1994, December 15, 1994, April 20,
1995 and December 21, 1995.
(3) As of December 31, 1995, the last reported sale price of
the Company's Common Stock, which was reported on the
NASDAQ National Market System on December 29, 1995, was
$9.50 per share. Value is calculated by determining the
difference between the option exercise price and $9.50,
multiplied by the number of shares of Common Stock
underlying the options.
EMPLOYMENT AGREEMENTS
Donald M. Karp. On October 16, 1995, Bancorporation entered
into an employment agreement with Donald M. Karp. The agreement has
an initial five-year term which expires on October 1, 2000, subject
to automatic extensions of one additional month beginning with the
25th month of the agreement and continuing each month thereafter
until Mr. Karp is 62 years old (thereby resulting in the agreement
having a minimum term of 36 months at all times until Mr. Karp
attains the age of 62). If there is a "change in control" (as
defined below) and Mr. Karp does not choose to terminate the
agreement, the term automatically will be extended to five years,
provided that such term shall not be extended past Mr. Karp s 65th
birthday (and Mr. Karp s base salary shall be increased by an amount
equal to his average bonus paid during the then two most recent
years). The agreement provides for an annualized base salary of
$209,000, which base salary was increased from the previous $200,000
level, effective January 1, 1996, by action of the Board of
Directors as contemplated by the agreement. In addition to base
salary, the agreement also provides Mr. Karp with the use of a motor
vehicle and such bonuses, fringe benefits and insurance benefits as
are established for executive officers of the Bank.
Mr. Karp's employment with Bancorporation is subject to early
termination in the event of Mr. Karp s death or physical or mental
disability. If Mr. Karp s employment is terminated because of his
physical or mental disability, he will
11
<PAGE>
be entitled to receive one year's base salary, less amounts paid to
him under any other disability program or policy maintained by
Bancorporation, payable in twelve monthly installments. In addition,
Bancorporation will maintain life and health insurance benefits for
Mr. Karp at least equivalent to those he had at the date of termination.
If Mr. Karp's employment is terminated because of his death, Mr. Karp's
beneficiaries, or his estate, will receive a payment equal to one
year's base salary.
Bancorporation may terminate Mr. Karp s employment at any time
with or without cause, with "cause" being defined as the failure by
Mr. Karp to perform his duties under the agreement, willful
misconduct by Mr. Karp which causes material injury to
Bancorporation, or conviction of a crime, habitual drunkenness, drug
abuse, or excessive absenteeism. If Mr. Karp s employment is
terminated by Bancorporation for reasons other than for cause, Mr.
Karp will be entitled to receive a severance payment equal to the
aggregate amount of future base salary and bonus payments he would
have received (calculated at the highest rates payable within the
then immediately preceding two year period) had he continued in the
employ of Bancorporation for the remainder of the then existing term
of the agreement. In addition, Bancorporation will maintain life
and health insurance benefits for Mr. Karp at least equivalent to
those he had at the date of termination, and Mr. Karp's retirement
benefits will be supplemented to provide him with a total benefit
approximating the benefits he would have received under all
qualified retirement plans in which he participates if he had
continued in the employ of Bancorporation for the remaining term of
this agreement (or until his retirement) and been fully vested. Mr.
Karp would also be given the use (or corresponding value) of a motor
vehicle for 24 months following the date of termination. Mr. Karp
will have no right to receive further compensation or other benefits
if his employment is terminated for cause.
Mr. Karp may terminate his employment with Bancorporation and
remain entitled to receive specified benefits (i) in the event of
default or breach by Bancorporation, (ii) for good reason (as
defined), or (iii) after a "change in control". A "change in
control" generally is defined to take place when (a) a person or
group (other than Bancorporation or Mr. Karp) acquires more than 20%
of the combined voting power (whether through stock ownership,
proxies or otherwise) of Bancorporation's voting securities or the
ability to control the election of a majority of the Board of
Directors, (b) the Karp/Lesnik family sells or disposes of 50% or
more of Bancorporation voting securities owned by such family to
nonfamily members, or (c) a merger involving Bancorporation or the
Bank or sale of substantially all of Bancorporation occurs following
which a majority of the voting securities of the surviving or
acquiring corporation is held by persons other than those who held a
majority of the voting securities of Bancorporation. If Mr. Karp
terminates the agreement for any of the above reasons, he will be
entitled to receive a severance payment equal to 2.99 times the
highest annual cash compensation, consisting solely of salary and
bonus, paid to Mr. Karp within the then immediately preceding three
year period. In addition, Bancorporation will maintain life and
health insurance benefits for Mr. Karp at least equivalent to those
he had at the date of termination, and Mr. Karp's retirement
benefits will be supplemented to provide him with a total benefit
approximating the benefits he would have received under all
qualified retirement plans in which he participates if he had
continued in the employ of Bancorporation for the remaining term of
this agreement (or until his retirement) and been fully vested. Mr.
Karp would also be given the use (or corresponding value) of a motor
vehicle for 24 months following the date of termination. Mr. Karp
will have no right to receive further compensation or other benefits
if Mr. Karp voluntarily resigns his employment for reasons other
than those outlined above.
John A. Dorman. On October 1, 1995, Bancorporation entered
into an employment agreement with John A. Dorman. The agreement has
an initial 15-month term which expires on December 31, 1996. If
there is a "change in control" (as defined below) and Mr. Dorman
does not choose to terminate the agreement, the term automatically
will be extended for an additional 24 months. The agreement
provides for an annualized base salary of $162,500, which base
salary was increased from the previous $157,500 level, effective
January 1, 1996, by action of the Board of Directors as contemplated
by the agreement. In addition to base salary, the agreement also
provides Mr. Dorman with the use of a motor vehicle and such
bonuses, fringe benefits and insurance benefits as are established
for executive officers of the Bank.
Mr. Dorman s employment with Bancorporation is subject to early
termination in the event of Mr. Dorman s death or physical or mental
disability. If Mr. Dorman s employment is terminated because of his
physical or mental disability, he will be entitled to receive one
year's base salary, less amounts paid to him under any other
disability program or policy maintained by Bancorporation, payable
in twelve monthly installments. In addition, Bancorporation will
maintain life and health insurance benefits for Mr. Dorman at least
equivalent to those he had at the date of termination. If Mr.
Dorman s employment is terminated because of his death, Mr. Dorman's
beneficiaries, or his estate, will receive a payment equal to three
month's base salary.
12
<PAGE>
Bancorporation may terminate Mr. Dorman s employment at any
time with or without cause, with "cause" being defined as the
failure by Mr. Dorman to perform his duties under the agreement,
willful misconduct by Mr. Dorman which causes material injury to
Bancorporation, or conviction of a crime, habitual drunkenness, drug
abuse, or excessive absenteeism. If Mr. Dorman s employment is
terminated by Bancorporation for reasons other than for cause, Mr.
Dorman will be entitled to receive a severance payment equal to the
aggregate amount of future base salary and bonus payments he would
have received (calculated at the highest rates payable within the
then immediately preceding two year period) had he continued in the
employ of Bancorporation for the remainder of the then existing term
of the agreement plus 24 months. In addition, Bancorporation will
maintain life and health insurance benefits for Mr. Dorman at least
equivalent to those he had at the date of termination, and Mr.
Dorman's retirement benefits will be supplemented to provide him
with a total benefit approximating the benefits he would have
received under all qualified retirement plans in which he
participates if he had continued in the employ of Bancorporation for
the remaining term of this agreement (or until his retirement) and
been fully vested. Mr. Dorman would also be given the use (or
corresponding value) of a motor vehicle for 24 months following the
date of termination. Mr. Dorman will have no right to receive
further compensation or other benefits if his employment is
terminated for cause.
Mr. Dorman may terminate his employment with Bancorporation and
remain entitled to receive specified benefits (i) in the event of
default or breach by Bancorporation, (ii) for good reason (as
defined), or (iii) after a "change in control". A "change in
control" generally is defined to take place when (a) a person or
group (other than Bancorporation or Mr. Karp) acquires more than 20%
of the combined voting power (whether through stock ownership,
proxies or otherwise) of Bancorporation's voting securities or the
ability to control the election of a majority of the Board of
Directors, (b) the Karp/Lesnik family sells or disposes to nonfamily
members 50% or more of Bancorporation voting securities owned by
such family as of the date Mr. Dorman first became employed by
Bancorporation, (c) a merger involving Bancorporation or the Bank
occurs following which a majority of the voting securities of the
surviving corporation is held by persons who were not previously
shareholders of Bancorporation, or (d) a sale or transfer of all or
substantially all of the assets of Bancorporation or the Bank
occurs. If Mr. Dorman terminates the agreement for any of the above
reasons, he will be entitled to receive a severance payment equal to
the aggregate amount of future base salary and bonus payments he
would have received (calculated at the highest rates payable within
the then immediately preceding two year period) had he continued in
the employ of Bancorporation for the remainder of the then existing
term of the agreement plus 24 months. In addition, Bancorporation
will maintain life and health insurance benefits for Mr. Dorman at
least equivalent to those he had at the date of termination, and Mr.
Dorman's retirement benefits will be supplemented to provide him
with a total benefit approximating the benefits he would have
received under all qualified retirement plans in which he
participates if he had continued in the employ of Bancorporation for
at least 60 months in the absence of early retirement (or until his
retirement) and been fully vested. Mr. Dorman would also be given
the use (or corresponding value) of a motor vehicle for 24 months
following the date of termination. Mr. Dorman will have no right to
receive further compensation or other benefits if Mr. Dorman
voluntarily resigns his employment for reasons other than those
outlined above.
Stanley J. Lesnik. On November 16, 1995, Bancorporation
entered into a consultant agreement with Stanley J. Lesnik. The
agreement has an initial three-year term which expires on December
31, 1998. If there is a "change in control", the term automatically
will be extended to a date ending three years from the effective
date of such change of control. A "change in control" generally is
defined to take place when a merger involving Bancorporation or sale
of substantially all of Bancorporation occurs following which a
majority of the voting securities of the surviving or acquiring
corporation is held by persons other than those who held a majority
of the voting securities of Bancorporation. The agreement provides
that Mr. Lesnik is to be compensated for his services at the rate of
$86,000 a year.
Mr. Lesnik s agreement with Bancorporation is subject to early
termination in the event of Mr. Lesnik s death or physical or mental
disability. If the agreement is terminated because of his physical
or mental disability, or if Mr. Lesnik shall retire from his
position as a consultant, he will be entitled to receive 50% of the
compensation that would otherwise be payable to him for the
remainder of the term of the agreement, less amounts paid to him
under any other disability program or policy maintained by
Bancorporation. In addition, Bancorporation will maintain life and
health insurance benefits for Mr. Lesnik and his wife at least
equivalent to those in effect at the date of termination. If Mr.
Lesnik retires or becomes disabled following a change in control, in
lieu of the 50% of compensation that would otherwise be payable
during the remaining term of the agreement, Mr. Lesnik will be
entitled to receive 85% of such compensation. If Mr. Lesnik's
13
<PAGE>
employment is terminated because of his death, Mr. Lesnik's widow,
or his legal representative, will receive the compensation that
would otherwise be payable to Mr. Lesnik for a period of 90 days
after his death.
If Mr. Lesnik should fail on a continuing basis to perform
consulting services in accordance with the agreement, the Board of
Directors may place Mr. Lesnik in retirement and thereafter he shall
receive only the compensation that would be payable under the
agreement upon his retirement. If Mr. Lesnik engages in competition
against the Bank, then Bancorporation will not be required to make
any further payments under the agreement.
COMPENSATION PURSUANT TO PLANS
RETIREMENT PLAN. All regular full-time employees and part-time
employees of Bancorporation and the Bank who have attained the age
of 20 years and six months and who have worked at least 1,000 hours
during a 12-month period are eligible for membership in the Bank's
pension plan on the January 1st following the completion of six
months' service. The pension plan provides for a specified annual
pension payable upon retirement.
The basis of calculation of benefits under the Plan is the
average of the total compensation paid or accrued during the highest
ten consecutive calendar years of service prior to the Normal
Retirement Date (as defined below). The amount of annual pension
pursuant to the plan will be 65% of compensation up to the Covered
Compensation (as defined in the plan) plus 87.5% of the excess,
prorated for less than 35 years of credited service.
Normal Retirement Date is the date of the participant's 65th
birthday. Early retirement may be taken after the participant
reaches 50 years of age provided the participant has five years of
vested service.
The following table illustrates estimated annual benefits
payable to a participant upon reaching normal retirement age in 1996
for specified final average compensation and years of benefit
service classifications. These plan benefits are in addition to
Social Security benefits.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFIT FOR REPRESENTATIVE
FINAL AVERAGE YEARS OF BENEFIT SERVICE
COMPENSATION 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$ 25,000 $ 6,964 $ 9,286 $11,607 $ 13,929 $ 16,250
50,000 16,091 21,455 26,818 32,182 37,545
75,000 25,466 33,955 42,443 50,932 59,420
100,000 34,841 46,455 58,068 69,682 81,295
125,000 44,216 58,955 73,693 88,432 103,170
150,000 53,591 71,455 89,318 107,182 120,000
</TABLE>
Regulations of the Internal Revenue Service provide that the
maximum benefit permitted to be paid under a defined benefit plan in
1996 is $120,000 to participants with ten or more years of
participation. The minimum annual pension for a participant shall
be the accrued retirement pension under the retirement plan as of
December 31, 1988. Benefits under the pension plan are payable in a
variety of ways, and in each case benefits are computed by the
actuarial method.
As of January 1, 1996, the estimated credited years of service
under the retirement plan for each of the individuals named in the
summary compensation table is as follows: Mr. Karp, 13 years; Mr.
Dorman, 3 years; Mr. Perry, 21 years; Mr. Kenny, 3 years; and Mr.
Campo, 16 years.
BONUS PLAN. The Bank currently has a three-tier bonus program
for designated officers and employees that is reviewed annually by
the Compensation Committee of the Board of Directors. The total
amount to be paid for bonuses is equal to 8% of the Bank's annual
after-tax net income, excluding gains from securities transactions.
The allocation of the bonus among the three tiers is made by the
Compensation Committee. The first tier is composed of the Bank's
Chairman of the Board and President, who, in 1995, were allocated in
the aggregate, 34% (compared to 38% for 1994) of the total amount
available for the payment of bonuses, allocated 56% and 44%,
respectively (compared to 58% and 42%,
14
<PAGE>
respectively, for 1994). The five Senior Vice Presidents of the Bank
and one First Vice President comprise the second tier of the bonus
program. These officers were allocated, in the aggregate, 35% (compared
to 31% for 1994) of the total amount available for the payment of bonuses.
The third tier is comprised of approximately 80 individuals, whose titles
range from branch managers to heads of departments. This group was
allocated, in the aggregate, 31% (compared to 31% for 1994) of the
total bonus pool. The Chairman of the Board and the President have
the power to include or exclude bank officers from a particular tier
as they in their discretion may decide. Distribution of the bonuses
among the second and third tier members is determined jointly by the
Chairman of the Board and the President after considering the
individual participant's performance, responsibilities and
contributions to the Bank and subjectively analyzing the basis of
their aggregate impact on the success of the Bank for the preceding
year.
The bonus program does not provide for a maximum limit on
either the total amount of bonuses or the amount of a bonus to be
awarded to a specific individual.
For 1995, $113,000 was paid to the Bank's Chairman of the Board
and President. Approximately $220,000 was paid by the Bank to
officers and employees in the second and third tier of the Plan.
Bonuses paid to executive officers for 1995 are detailed in the
Summary Compensation Table under the heading "Executive
Compensation" above.
STOCK OPTION PLANS. Bancorporation currently has four stock
option plans: (1) the Incentive Stock Option Plan (the "1987 ISO
Plan"); (2) the Non-Statutory Stock Option Plan; (3) the 1993 Broad
National Incentive Stock Option Plan (the "1993 ISO Plan"); and (4)
the 1993 Broad National Directors Non-Statutory Stock Option Plan
(the "1993 Directors Plan). At the 1987 Annual Meeting of
Shareholders, the shareholders approved, and Bancorporation
subsequently implemented, the 1987 ISO Plan and the Non-Statutory
Stock Option Plan. The 1993 ISO Plan and the 1993 Directors Plan
were approved by the shareholders at the 1994 Annual Meeting of
Shareholders, and subsequently implemented by Bancorporation.
Under the 1987 ISO Plan, options may be granted for a maximum
of 50,765 shares (subject to adjustment for any change in the
capital structure of Bancorporation) of Common Stock to employees of
Bancorporation or its subsidiaries. Grants of options under the
1987 ISO Plan may be made only to employees who possess no more than
10% of the combined voting power of all classes of stock of
Bancorporation, unless the option exercise price is at least 110% of
the stock's market value and the option expires five years from the
date of grant. Under the Non-Statutory Stock Option Plan, options
may be granted for a maximum of 12,993 shares (subject to adjustment
for any change in the capital structure of Bancorporation) of the
Common Stock to Bancorporation's directors.
The 1987 ISO Plan and the Non-Statutory Stock Option Plan each
are administered by Bancorporation's Board of Directors. The Board
may appoint a stock option committee composed of non-employee
directors to advise the Board in matters such as selection of the
individuals to whom options shall be granted, determination of the
number of shares and share price under each option, and other
similar questions of plan administration. Under each of these
plans, options may be granted to those participants who, in the sole
discretion of the Board of Directors, have made material
contributions in the past, or are expected to make material
contributions in the future, to the success of Bancorporation and
its subsidiaries. The exercise price for purchase of shares under
an option granted under these plans is determined by the Board of
Directors, but cannot be less than 100% of the fair market value of
the shares on the date the option is granted.
The aggregate fair market value of shares of Common Stock for
which any employee may be granted options under the 1987 ISO Plan in
any calendar year may not exceed the sum of $100,000 and any unused
limit carryover, as that term is defined in the Internal Revenue
Code. The aggregate fair market value of shares of Common Stock for
which any individual may be granted options under the Non-Statutory
Stock Option Plan in any calendar year may not exceed $100,000.
Option exercise periods for options granted under either plan are
established by the Board of Directors, and such period must expire
no later than ten years from the date the option is granted. An
option may be exercised under either plan upon payment in full of
the option exercise price in cash or other shares of Bancorporation
Common Stock.
No options were granted under either the 1987 ISO Plan or the
Non-Statutory Stock Option Plan in 1995. During 1995, 3,248 options
were exercised under the 1987 ISO Plan. No options were exercised
under the Non-Statutory Stock Option Plan in 1995.
15
<PAGE>
Under the 1993 ISO Plan, options may be granted for a maximum
of 210,000 shares (subject to adjustment for any change in the
capital structure of Bancorporation) of Common Stock to employees of
Bancorporation or its subsidiaries. Grants of options under the
1993 ISO Plan may be made only to employees who possess no more than
10% of the combined voting power of all classes of stock of
Bancorporation, unless the option exercise price is at least 110% of
the stock's market value and the option expires five years from the
date of grant. The aggregate fair market value of shares of Common
Stock for which an employee may be granted options under the 1993
ISO Plan in any calendar year has no limit. However, the aggregate
fair market value (determined at the time the options are granted)
of shares of Common Stock with respect to which options are
exercisable for the first time by such individual during any
calendar year under the ISO Plan (and under any other plan of the
employer corporation, its parent or its subsidiaries) cannot exceed
$100,000. To the extent such fair market value exceeds $100,000
during any calendar year, amounts in excess of $100,000 are treated
as nonqualified stock options.
The 1993 ISO Plan is administered by a committee of
Bancorporation's Board of Directors composed of non-employee
directors who advise the Board in matters such as selection of the
individuals to whom options shall be granted, determination of the
number of shares and share price under each option, and other
similar questions of plan administration. Options are granted to
those participants who, in the sole discretion of the committee,
have made material contributions in the past, or are expected to
make material contributions in the future, to the success of
Bancorporation and its subsidiaries. The option exercise period for
options granted under the 1993 ISO Plan is established by the
committee, and the maximum period during which an option is
exercisable is ten years from the date that it is granted. An
option may be exercised upon payment in full of the option exercise
price in cash or in other shares of Common Stock. The exercise
price for purchase of shares under an option granted under the 1993
ISO Plan is determined by the committee, but cannot be less than
100% of the fair market value of the shares on the date the option
is granted.
At the December 21, 1995 meeting of the Board of Directors, the
Board approved the grant of options under the 1993 ISO Plan to
individuals named in the summary compensation table as follows:
Mr. Karp, 15,000 options; Mr. Dorman, 10,000 options; Mr. Perry,
5,000 options; Mr. Kenny, 5,000 options; and Mr. Campo, 5,000
options. No options were exercised under the 1993 ISO Plan in 1995.
Under the 1993 Directors Plan, options may be granted for a
maximum of 78,750 shares (subject to adjustment for any change in
the capital structure of Bancorporation) of Common Stock to
directors of Bancorporation. The 1993 Directors Plan provides for
the automatic grants of options to purchase shares of Common Stock
to directors of Bancorporation serving as such on the date the 1993
Directors Plan was adopted by the Board of Directors and for
directors of Bancorporation serving as such on the date of each
annual meeting of the Board held following the annual meeting of
shareholders. The number of options granted to each director of
Bancorporation serving as such on the date the 1993 Directors Plan
was adopted by the Board of Directors was determined on the basis of
the respective director's length of service on Bancorporation's
Board of Directors in accordance with a schedule provided in the
1993 Directors Plan. In addition, the 1993 Directors Plan provides
for the grant of options to purchase 500 shares of Common Stock to
each person serving as a director of Bancorporation on the date of
each annual meeting of the Board of Directors held following the
annual meeting of Bancorporation's shareholders (regardless of
whether such person was also serving as a director of Bancorporation
on the date the 1993 Directors Plan was adopted). Neither
Bancorporation's Board of Directors nor any committee thereof had or
will have any discretion under the 1993 Directors Plan to determine
the selection of the directors to whom options were granted, the
frequency of option grants, the number of shares of Common Stock
subject to an option, or the terms and conditions of the options.
Each option granted under the 1993 Directors Plan will become
exercisable upon the later of (i) the expiration of two years from
the date on which such option was granted or (ii) the date on which
Bancorporation shall have paid a cash dividend with respect to its
Common Stock in each of two consecutive calendar years during the
term of such option.
Subject to the conditions and limitations of the 1993 Directors
Plan, the period during which each option granted under the 1993
Directors Plan may be exercised is ten years from the date on which
such option was granted.
The exercise price at which shares of Common Stock may be
purchased under an option granted pursuant to the 1993 Directors
Plan cannot be less than 100% of the fair market value of such
shares on the date that the option was granted.
16
<PAGE>
The fair market value of shares of Common Stock for purposes of the
1993 Directors Plan is determined by a fixed formula established by
the Plan.
Pursuant to the 1993 Directors Plan, Mr. Karp and Mr. Dorman
each received 500 options on April 20, 1995. No options were
exercised under the 1993 Directors Plan in 1995.
401(K) PLAN. During 1989 the Bank implemented a 401(k) Plan
providing several tax-deferred investment opportunities to salaried
employees of the Bank. Employees are eligible to enter the plan on
the January 1 following the date that they have attained age 20 1/2
years and have completed six months of service. Employees may
contribute from 2% to 15% of their salary, subject to the Internal
Revenue Code of 1986, as amended, limits on maximum annual
contributions. The Bank will make a "matching" contribution equal
to 50% of the employee's 401(k) contribution, subject to a maximum
"match" of 2% of the employee's annual pay. Matching contributions
are made only for participants who are still employed on
December 31st and who completed 1,000 hours of service during the
plan year. The employee's contribution is 100% vested and is
distributable at death, retirement, or termination of employment.
In addition, the plan also provides for early hardship withdrawals
and loans. The Bank's matching contribution is 20% vested after one
vesting year (a calendar year during which the employee completes
1,000 hours of service), plus 20% for each additional vesting year,
and is 100% vested after five vesting years. Employees are
automatically 100% vested if they have attained age 65. Employer
matching contributions for all participants for 1995 totaled
$65,140.92. Employer matching contributions for 1995 for each of
the individuals named in the Summary Compensation Table under
"Executive Compensation" are as follows: Mr. Karp, $2,175;
Mr. Dorman, $2,175; Mr. Perry, $1,660; Mr. Kenny, $1,624; and
Mr. Campo, $1,540.
COMPANY PERFORMANCE
The following performance graph shows a comparison of
cumulative total returns for the Company, the NASDAQ Stock Market
(U.S. Companies) and the NASDAQ Bank Stocks for the period from
December 31, 1990, through December 29, 1995. The cumulative total
return on investment for each of the periods for the Company, the
NASDAQ Stock Market (U.S. Companies) and the NASDAQ Bank Stocks is
based on the stock price or index at December 31, 1990. The
performance graph assumes that the value of an investment in the
Company's Common Stock and each index was $100 at December 31, 1990
and that all dividends were reinvested. The information presented
in the performance graph is historical in nature and is not intended
to represent or guarantee future returns.
17
<PAGE>
[The performance graph required by Item 402(l) of Regulation S-K is
omitted pursuant to Rule 304 of Regulation S-T. The tabular
representation of the omitted performance graph is set forth in the
table below.]
COMPARISON OF CUMULATIVE TOTAL RETURNS
The comparison of cumulative total returns presented in the
above graph was plotted using the following index values and Common
Stock price values:
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95
<S> <C> <C> <C> <C> <C> <C>
Broad National
Bancorporation $100.00 $ 43.24 $ 62.16 $ 75.68 $ 72.88 $112.46
NASDAQ Stock
Market $100.00 $160.56 $186.87 $214.51 $209.69 $296.30
(U.S. Companies)
NASDAQ Bank
Stocks $100.00 $164.09 $238.85 $272.40 $271.41 $404.35
</TABLE>
18
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During 1995, the Bank made loans to certain officers and
directors of Bancorporation and the Bank and to certain firms and
corporations in which various directors have interests. Each of
such loans are believed to have been made to such directors or
officers or to such firms or corporations in the ordinary course of
business, on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable
transactions with other persons, and did not involve more than the
normal risk of collectibility or present other unfavorable features.
Effective September 14, 1994, Mr. Henry D. Hayman elected to
take early retirement from his position as Senior Vice President
with the Bank. In recognition of his years of service to the Bank,
Mr. Hayman was granted $70,154, representing 48 weeks of salary at
his existing salary rate, payable biweekly until August 11, 1995.
Additionally, the Bank has agreed to continue Mr. Hayman's
medical/dental coverage through 1997, subject to Mr. Hayman making
his premium contribution. The Bank also will continue to pay the
annual premium in the amount of $9,010 for Mr. Hayman's split-dollar
life insurance policy until it is paid in full. Finally, the Bank
provided Mr. Hayman with the use of a company car through
December 31, 1994, at which time Mr. Hayman purchased the car at a
price equal to the value of the car on the Bank's books.
OWNERSHIP OF BANCORPORATION CAPITAL STOCK
The following table sets forth certain information, as of
February 1, 1996, relating to the beneficial ownership of
Bancorporation's Common Stock and 8 1/2% Cumulative Convertible
Preferred Stock 1992 Class ("1992 Preferred Stock") by each person
known to the Board of Directors to own beneficially 5% or more of
Bancorporation's stock, by each director of Bancorporation, by each
officer named in the Summary Compensation Table under "Executive
Compensation and Other Information -- Executive Compensation" and by
all directors and officers of Bancorporation as a group. The 1992
Preferred Stock has no voting rights other than as may be required
by law and other than as described below. If dividends are ever in
arrears for six or more full quarterly dividend periods, the number
of directors of Bancorporation shall be increased by two and holders
of the 1992 Preferred Stock, voting separately as a class with any
other holders of preferred stock having similar rights, will be
entitled to elect two directors to fill the vacancies created
thereby until such dividend arrearage is eliminated. The 1992
Preferred Stock is convertible into Common Stock, upon giving 45
days notice to Bancorporation, at the rate of 1.909 shares of Common
Stock for each share of 1992 Preferred Stock converted. As a class,
the 1992 Preferred Stock is convertible into an aggregate of 663,808
shares of Common Stock. All information with respect to beneficial
ownership has been furnished by the respective directors, officers
or 5% or more shareholders, as the case may be. Except as otherwise
indicated, each beneficial owner listed has sole voting and
investment power with respect to the shares of Common Stock and 1992
Preferred Stock reported.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNERSHIP(1) SHARES OUTSTANDING(1)
1992 1992
Name Common Preferred Common Preferred
<S> <C> <C> <C> <C>
Harriet M. Alpert (2) 580,806 -- 16.2% --
360 East 72nd Street
New York, New York
Fred S. Campo (3) 9,006 -- * --
Licinio Cruz (4) (5) 38,278 -- 1.1 --
John A. Dorman (4) (6) 44,239 16,100 1.2 4.6
Arthur Fischman (4) (7) 20,717 -- * --
John J. Iannuzzi (4) (8) 12,309 2,500 * *
19
<PAGE>
Donald M. Karp (4) (9) 992,908 6,800 27.4 2.0
18 Shawnee Road
Short Hills, New Jersey
Peter Kenny (10) 5,775 1,100 * *
James J.
Lazarus (4) (11) 21,588 2,000 * *
Edward J.
Lenihan (4) (12) 23,079 -- * --
Stanley J.
Lesnik (4) (13) 31,980 -- * --
Catherine
McFarland (4) (14) 2,100 -- * --
Louis J. Owen (4) (15) 13,723 -- * --
Fred Perry, Jr. (16) 11,611 -- * --
A. Harold
Schwartz (4) (17) 48,549 -- 1.4 --
Clair Sudler (18) 204,583 -- 5.7 --
596 Longview Road
South Orange, NJ
Peter D.
Sudler (4) (19) 20,482 -- * --
Hubert
Williams (4) (20) 20,292 3,500 * 1.0
All directors and officers
as a group
(18 persons) (21) 1,322,322 32,000 35.1 9.2
</TABLE>
- ----------------------
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of
the Securities and Exchange Commission which generally attribute
beneficial ownership of securities to persons who possess sole or
shared voting power and/or investment power with respect to those
securities. Unless otherwise indicated, the persons or entities
identified in this table have sole voting and investment power with
respect to all shares shown as beneficially owned by them.
Percentage ownership calculations are based on 3,579,164 shares of
Common Stock outstanding, and 347,726 shares of 1992 Preferred Stock
outstanding.
(2) Includes 576,880 shares of Common Stock as to which Ms. Alpert has
shared voting and investment power with Donald M. Karp; and 3,926
shares of Common Stock beneficially owned by Ms. Alpert's husband
and as to which Ms. Alpert disclaims beneficial ownership.
(3) Secretary of Bancorporation and the Bank and Senior Vice President
of the Bank. Shares beneficially owned by Mr. Campo include 7,149
shares of Common Stock subject to immediately exercisable options
and 1,857 shares of Common Stock held by Mr. Campo as custodian for
his minor children.
(4) Director of Bancorporation and of Bank.
20
<PAGE>
(5) Includes 6,549 shares of Common Stock subject to an immediately
exercisable option; 2,948 shares of Common Stock held by Mr. Cruz
individually; 9,692 shares of Common Stock held by him as custodian
for his minor children; 12,408 shares of Common Stock held for the
benefit of Mr. Cruz by the Cruz Construction Co., Inc. and 6,681
shares of Common Stock held for the benefit of Mr. Cruz by the Cruz
Construction Co., Inc. Profit Sharing Plan.
(6) Includes 12,458 shares of Common Stock subject to an immediately
exercisable option, 27,492 shares of Common Stock (including 26,442
shares of Common Stock convertible from the 13,852 shares of 1992
Preferred Stock) and 13,852 shares of 1992 Preferred Stock held by
Mr. Dorman jointly with his wife and as to which he has shared voting
and investment power; 1,940 shares of Common Stock (convertible from the
1,017 shares of 1992 Preferred Stock) and 1,017 shares of 1992 Preferred
Stock held by Mr. Dorman individually and 2,349 shares of Common Stock
(convertible from the 1,231 shares of 1992 Preferred Stock) and 1,231
shares of 1992 Preferred Stock owned by Mr. Dorman's wife.
(7) Includes 6,549 shares of Common Stock subject to an immediately
exercisable option; 12,040 shares of Common Stock held by Mr. Fischman
individually; and 2,128 shares of Common Stock beneficially owned by
Mr. Fischman's wife and as to which Mr. Fischman disclaims beneficial
ownership.
(8) Includes 3,150 shares of Common Stock subject to an immediately
exercisable option; 4,035 shares of Common Stock (including 954
shares of Common Stock convertible from the 500 shares of 1992
Preferred Stock), and 500 shares of 1992 Preferred Stock held by
Mr. Iannuzzi jointly with his wife and as to which Mr. Iannuzzi
has shared voting and investment power; 3,064 shares of Common Stock
(including 1,909 shares of Common Stock convertible from the 1,000
shares of 1992 Preferred Stock) and 1,000 shares of 1992 Preferred
Stock held by Mr. Iannuzzi individually; 151 shares of Common Stock
held by him as trustee of a trust for the benefit of his grandsons;
and 1,909 shares of Common Stock (convertible from the 1,000 shares
of 1992 Preferred Stock) and 1,000 shares of 1992 Preferred Stock
held by Mr. Iannuzzi's wife.
(9) Includes 35,417 shares of Common Stock subject to immediately
exercisable options. Also includes 230,876 shares of Common Stock
(including 12,788 shares of Common Stock convertible from the 6,700
shares of 1992 Preferred Stock), and 6,700 shares of 1992 Preferred
Stock held by Mr. Karp individually; 43,662 shares of Common Stock
held by Mr. Karp for the benefit of his children; and 2,605 shares
of Common Stock held by Mr. Karp as agent for Harriet M. Alpert.
The number of shares reported for Mr. Karp also includes 576,880
shares of Common Stock held by Ms. Alpert, as to which Mr. Karp
shares voting and investment power. Mr. Karp also has shared voting
and investment powers with respect to 3,005 shares of Common Stock
(including 190 shares of Common Stock convertible from 100 shares of
1992 Preferred Stock), and 100 shares of 1992 Preferred Stock, which
shares are held by Mr. Karp as co-trustee of various other trusts.
The number of shares reported for Mr. Karp includes 100,463 shares of
Common Stock owned by Mr. Karp's wife, as to which Mr. Karp disclaims
beneficial ownership.
(10) Senior Vice President of the Bank. Includes 2,680 shares of Common
Stock subject to an immediately exercisable option, 1,846 shares of
Common Stock (including 954 shares of Common Stock convertible from
the 500 shares of 1992 Preferred Stock) and 500 shares of 1992
Preferred Stock held by Mr. Kenny individually; and 105 shares of
Common Stock held by Mr. Kenny jointly with his minor son and as to
which he has shared voting and investment power. Also includes 954
shares of Common Stock (convertible from the 500 shares of 1992
Preferred Stock) and 500 shares of 1992 Preferred Stock held Mr.
Kenny's wife and 190 shares of Common Stock (convertible from the 100
shares of 1992 Preferred Stock) and 100 shares of 1992 Preferred
Stock held by Mr. Kenny's wife jointly with his two minor children,
as to which 1,144 shares of Common Stock and 600 shares of 1992
Preferred Stock Mr. Kenny disclaims beneficial ownership.
(11) Includes 5,499 shares of Common Stock subject to an immediately
exercisable option, 16,089 shares of Common Stock (including 3,818
shares of Common Stock convertible from the 2,000 shares of 1992
Preferred Stock) and 2,000 shares of 1992 Preferred Stock.
21
<PAGE>
(12) Includes 6,549 shares of Common Stock subject to an immediately
exercisable option.
(13) Includes 6,300 shares of Common Stock subject to an immediately
exercisable option; 20,714 shares of Common Stock held individually
by Mr. Lesnik; and 4,966 shares of Common Stock beneficially owned by
Mr. Lesnik's wife, as to which Mr. Lesnik disclaims beneficial
ownership.
(14) Includes 1,050 shares of Common Stock subject to an immediately
exercisable option.
(15) Includes 6,549 shares of Common Stock subject to an immediately
exercisable option. Mr. Owen has sole voting and investment power
with respect to 2,520 shares of Common Stock held by him individually
and shared voting and investment power with respect to 4,654 shares
of Common Stock held jointly with his wife.
(16) Senior Vice President of the Bank. Shares beneficially owned by Mr.
Perry, Jr. include 8,609 shares of Common Stock subject to an
immediately exercisable option; and 3,002 shares of Common Stock held
by Mr. Perry, Jr. jointly with his wife and as to which he has shared
voting and investment power.
(17) Includes 5,499 shares of Common Stock subject to an immediately
exercisable option.
(18) Includes 20,274 shares of Common Stock beneficially owned by the
estate of Mrs. Sudler's husband, Samuel Sudler, as to which Mrs.
Sudler disclaims beneficial ownership.
(19) Includes 3,150 shares of Common Stock subject to an immediately
exercisable option and 17,332 shares of Common Stock held by Mr.
Sudler jointly with his wife and as to which he has shared voting and
investment power.
(20) Includes 3,150 shares of Common Stock subject to an immediately
exercisable option; 5,670 shares of Common Stock (including 3,245
shares of Common Stock convertible from the 1,700 shares of 1992
Preferred Stock) and 1,700 shares of 1992 Preferred Stock held by Mr.
Williams individually; 572 shares of Common Stock (convertible from
the 300 shares of 1992 Preferred Stock) and 300 shares of 1992
Preferred Stock held by him jointly with his wife and as to which he
has shared voting and investment power; 1,244 shares of Common Stock
held by him as trustee for the benefit of his son; and 6,793 shares
of Common Stock held by Mr. Williams jointly with his brother and as
to which he has shared voting and investment power. Also includes
2,863 shares of Common Stock (convertible from the 1,500 shares of
1992 Preferred Stock) and 1,500 shares of 1992 Preferred Stock held
by Mr. Williams' wife individually.
(21) Includes 124,627 shares of Common Stock subject to immediately
exercisable options and 61,083 shares of Common Stock convertible
from the 32,000 shares of 1992 Preferred Stock.
ITEM 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Board's Audit
Committee, has selected the independent certified public accounting
firm of KPMG Peat Marwick LLP as Bancorporation's independent auditors
to audit the books, records and accounts of the Company for the year
ending December 31, 1996. Shareholders will have an opportunity to
vote at the Annual Meeting on whether to ratify the Board's decision
in this regard.
A representative of KPMG Peat Marwick LLP is expected to be present
at the Annual Meeting. Such representative will have an opportunity to
make a statement if he or she desires to do so and will be available
to respond to appropriate questions.
22
<PAGE>
Submission of the selection of the independent auditors to the
shareholders for ratification will not limit the authority of the Board
of Directors to appoint another independent certified public accounting
firm to serve as independent auditors if the present auditors resign or
their engagement otherwise is terminated. If the shareholders do not ratify
the selection of KPMG Peat Marwick LLP at the Annual Meeting, the Company
intends to call a special meeting of shareholders to be held as soon as
practicable after the Annual Meeting to ratify the selection of another
independent certified public accounting firm as independent auditors for
the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
SELECTION OF KPMG PEAT MARWICK LLP
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires Bancorporation's directors and executive officers, and persons who own
more than 10% of a class of Bancorporation's equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership in Bancorporation common stock and other equity
securities. In addition, under Section 16(a), trusts in which a director,
executive officer or 10% shareholder is a trustee, and that individual or a
member of his or her immediate family is a beneficiary, have a separate filing
obligation, even where the individual reports in his or her own filings the
trust's transactions and holdings in Bancorporation Common Stock. Securities
and Exchange Commission regulations require directors, executive officers,
greater than 10% shareholders and reporting trusts to furnish Bancorporation
with copies of all Section 16(a) reports they file.
To Bancorporation's knowledge, based solely on review of the copies of
such reports furnished to Bancorporation and written representations that no
other reports were required, during the year ended December 31, 1995, all
Section 16(a) filing requirements applicable to its directors, executive
officers, greater than 10% shareholders and reporting trusts were complied
with, except that Messrs. Cruz, Dorman, Fischman, Iannuzzi, Karp, Lazarus,
Lenihan, Lesnik, Owen, Schwartz, Sudler, and Williams, Ms. McFarland, Messrs.
Boyle, Campo, Kenny and Perry and Ms. Rogoff each failed to timely file a
statement of changes in beneficial ownership on Form 4 with respect to one
transaction in which stock options were granted.
OTHER BUSINESS OF THE MEETING
The Board of Directors is not aware of, and does not intend to present,
any matter for action at the Annual Meeting other than those referred to in
this Proxy Statement. If, however, any other matter properly comes before
the Annual Meeting or any adjournment, it is intended that the holders of
the proxies solicited by the Board of Directors will vote on such matters
in their discretion in accordance with their best judgment.
ANNUAL REPORT
Bancorporation's Annual Report to Shareholders, containing financial
statements for the year ended December 31, 1995, is being mailed with this
Proxy Statement to all shareholders entitled to vote at the Annual Meeting.
Such Annual Report is not to be regarded as proxy solicitation material.
A COPY OF BANCORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1995 (THE "FORM 10-K"), EXCLUDING EXHIBITS, WILL BE
FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER OF RECORD AS OF MARCH 8, 1996
AS SOON AS IT IS AVAILABLE, UPON WRITTEN REQUEST TO JAMES BOYLE, BROAD
NATIONAL BANCORPORATION, 905 BROAD STREET, NEWARK, NEW JERSEY 07102.
Bancorporation will provide a copy of any exhibit to the Form 10-K to
any such person upon written request and the payment of Bancorporation's
reasonable expenses in furnishing such exhibits.
23
<PAGE>
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
It is presently anticipated that the 1997 Annual Meeting of Shareholders
will be held on April 17, 1997. Shareholder proposals intended for inclusion
in the proxy statement for the 1997 Annual Meeting of Shareholders must be
received at the Company's offices, located at 905 Broad Street, Newark,
New Jersey 07102, within a reasonable time before the solicitation with
respect to the meeting is made, but in no event later than November 26, 1996.
Such proposals must also comply with the other requirements of the proxy
solicitation rules of the Securities and Exchange Commission. Shareholder
proposals should be addressed to the attention of the Secretary of
Bancorporation.
By Order of the Board of Directors
Donald M. Karp
Chairman of the Board and
Chief Executive Officer
March 26, 1996
Newark, New Jersey
24
<PAGE>
PROXY
BROAD NATIONAL BANCORPORATION
905 Broad Street, Newark, New Jersey 07102
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Peter Kenny, James Boyle and
Richard Saitta, and each of them, jointly and severally, as proxies of the
undersigned, with full power of substitution, to vote all of the shares of
Common Stock of Broad National Bancorporation (the "Corporation") standing
in the name of the undersigned as of the close of business on March 8, 1996
and which the undersigned is entitled to vote, and hereby grants discretionary
authority to cumulate the undersigned's votes in the election by the holders
of common stock of directors for any nominee other than a nominee as to which
the undersigned has withheld authority to vote (the authorization to cumulate
votes may be withheld by lining through or otherwise striking out the words
following the preceding comma), at the annual meeting of the shareholders of
the Corporation to be held April 18, 1996 and at any adjournment or
adjournments thereof, as fully and with the same effect as the undersigned
might or could do if present in person, with respect to the following matters,
all as set forth in the Notice of Annual Meeting of Shareholders and Proxy
Statement, dated March 26, 1996:
(1) Election of Directors [ ] FOR all nominees listed below and any
substituted nominee (except as marked
to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all
nominees listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME BELOW:
NOMINEES: Licinio Cruz, John A. Dorman, Arthur Fischman, John J. Iannuzzi,
Donald M. Karp, James J. Lazarus, Edward J. Lenihan, Stanley J. Lesnik,
Catherine McFarland, Louis J. Owen, A. Harold Schwartz, Peter D. Sudler,
Hubert Williams.
(2) Ratification of the selection of the accounting firm of KPMG Peat
Marwick LLP as the Corporation's independent auditors for the year
ending December 31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THE SHARES
REPRESENTED HEREBY SHALL BE VOTED FOR THE PROPOSALS SPECIFICALLY SET FORTH
ABOVE. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY
BE REVOKED PRIOR TO ITS EXERCISE.
Please sign exactly as your name appears on stock certificate(s). Where stock
is issued in two or more names, all should sign. If signing as attorney,
executor, administrator, trustee or guardian, give full title as such. A
corporation should sign by an authorized officer and affix seal. A partnership
should sign in partnership name by authorized person.
Dated: , 1996
Signature:
Signature:
(If held jointly)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED POSTAGE PREPAID
ENVELOPE.
[ ] STOP ANNUAL REPORT MAILINGS TO THIS
SHAREHOLDER SINCE DUPLICATE COPIES NOW
COME TO THIS ADDRESS.
