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 ss.240.14a-11(c) or ss.240.14a-12
CENTER BANCORP, INC.
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(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):
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<PAGE>
CENTER BANCORP, INC.
Corporate Headquarters
2455 Morris Avenue
Union, New Jersey 07083
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 14, 1998
To Our Shareholders:
The Annual Meeting of Shareholders of Center Bancorp, Inc. (the
"Corporation") will be held at the Suburban Golf Club, 1730 Morris Avenue,
Union, New Jersey on April 14, 1998 at 7:00 p.m., for the following purposes:
1. To elect four Class 1 directors, whose three year terms will expire
in 2001.
2. To transact such other business as may properly come before the
Annual Meeting.
Only shareholders of record of the Corporation at the close of business
on February 27, 1998 shall be entitled to notice of and to vote at the Annual
Meeting. Each share of the Corporation's Common Stock is entitled to one vote.
Please complete, sign, date and return the accompanying proxy in the
enclosed postage paid envelope at your earliest convenience.
You are cordially invited to attend the Meeting.
By Order of the Board of Directors
John J. Davis
President and
Chief Executive Officer
Dated: March 13, 1998
<PAGE>
CENTER BANCORP, INC.
2455 Morris Avenue, Union, New Jersey 07083
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Center Bancorp, Inc. (the "Corporation") of proxies to
be used at the annual meeting of the shareholders of the Corporation to be held
at the Suburban Golf Club, 1730 Morris Avenue, Union, New Jersey at 7:00 p.m. on
April 14, 1998, and any adjournments thereof (the "Annual Meeting"). Copies of
this Proxy Statement and the enclosed form of proxy are first being sent to
shareholders on or about March 13, 1998.
Only shareholders of record at the close of business on February 27, 1998
(the "Record Date") will be entitled to receive notice of and to vote at the
Annual Meeting. Each share is entitled to one vote on each matter to be voted on
at the Annual Meeting.
On the Record Date, there were 2,362,870 shares of common stock, no par
value (the "Common Stock"), outstanding. An additional 312,081 shares are held
by the Corporation as treasury stock.
Any shareholder who executes the proxy referred to in this Proxy Statement
may revoke such proxy at any time before it is exercised, but revocation is not
effective unless a later dated signed proxy is submitted to the Corporation
prior to the Annual Meeting, written notice of revocation is filed with the
Secretary of the Corporation either prior to the Annual Meeting or while the
Annual Meeting is in progress but prior to the voting of such proxy or the
shares subject to such proxy are voted by written ballot at the Annual Meeting.
All proxies properly executed and not revoked will be voted as specified.
If a proxy is signed but no specification is given, the proxy will be voted in
favor of the Board's nominees.
The cost of soliciting proxies shall be borne by the Corporation. In
addition to the solicitation of proxies by use of the mails, officers and
employees of the Corporation and/or its subsidiary may solicit proxies by
telephone, telegraph or personal interview, with nominal expense to the
Corporation. The Corporation will also pay the standard charges and expenses of
brokerage houses or other nominees or fiduciaries for forwarding proxy
soliciting material to the beneficial owners of shares.
The presence in person or by proxy of holders of a majority of the
outstanding shares of Common Stock will constitute a quorum for the transaction
of business at the Annual Meeting. The election of directors will require the
affirmative vote of a plurality of the Common Stock represented and entitled to
vote at the Annual Meeting. All other matters submitted to shareholders at the
Annual Meeting will require the affirmative vote of a majority of the votes cast
at the Annual Meeting by shareholders represented and entitled to vote at the
Annual Meeting. For purposes of determining the votes cast with respect to any
matter presented for consideration at the Annual Meeting, only those votes cast
"for" or "against" will be counted. Abstentions and
<PAGE>
broker non-votes will be counted only for the purpose of determining whether a
quorum is present at the Annual Meeting.
Election of Directors
The By-Laws provide that the Board of Directors shall consist of not less
than five nor more than twenty-five members, the exact number to be fixed and
determined from time to time by resolution of the full Board of Directors or by
resolution of the shareholders at any annual or special meeting. The Board of
Directors has set the number of Directors to be eleven. The Corporation's
Certificate of Incorporation provides that the Directors shall be divided into
three classes, as nearly equal in number as possible, with each class elected on
a staggered term basis, normally for a period of three years. Shorter terms are
permitted when necessary in order to equalize the size of the classes. At the
upcoming Annual Meeting, four directors in Class 1 will be elected for a three
year term. The terms of the remaining directors in Class 2 and Class 3 will
continue until 2000 and 1999, respectively.
It is intended that the proxies solicited hereunder will be voted FOR
(unless otherwise directed) the election of directors John J. Davis, Brenda
Curtis, Donald G. Kein and Charles P. Woodward for three year terms. The
Corporation does not contemplate that any nominee will be unable to serve as a
director for any reason. Each nominee has agreed to serve if elected. However,
in the event that one or more of the nominees should be unable to stand for
election, discretionary authority is reserved to cast votes for the election of
a substitute or substitutes selected by the Board of Directors and all proxies
eligible to be voted for the Board's nominees will be voted for such other
person or persons. Each of the nominees are currently members of the Board of
Directors of the Corporation and its subsidiary, Union Center National Bank (the
"Bank").
Each of the members of the Board of Directors of the Corporation
(collectively, the "Directors") has served in their current occupations for at
least the past five years. The Directors, as of February 1, 1998, according to
information supplied by them, owned beneficially, directly or indirectly, the
number of shares of Common Stock set forth opposite their respective names
below. The Directors have served continuously as such since the dates when they
first became Directors as set forth herein. The date appearing in parentheses
opposite each director's name in the "Director Since" column below represents
the year in which such Director became a director of the Bank. Each such
Director presently serves as a Director of the Bank.
<PAGE>
CLASS- 1 The following table sets forth certain information with respect to
each Director in Class 1 (each of whom has been nominated for a three-
year term)
<TABLE>
<CAPTION>
Number of
Shares of
Common Stock
Held
Beneficially Percent of
Director Directly and Outstanding Other
Name Occupation Age Since Indirectly Shares Directorships
---- ---------- --- ----- ---------- ------ -------------
<S> <C> <C> <C> <C> <C>
John J. Davis President and Chief 55 1982 29,332(a) 1.24 - -
Executive Officer (1982)
of the Corporation
and the Bank
Brenda Curtis Executive Director, 56 1995 4,883(b) .21 - -
American Cancer (1995)
Society, Union
County Unit
Donald G. Kein Partner, Kein, 60 1982 83,591(c) 3.54 - -
Pollatschek & (1970)
Greenstein
(Attorneys)
Charles P. Chairman of the 74 1982 23,315(d) .99 - -
Woodward Board of the (1970)
Corporation and
the Bank
</TABLE>
- ----------------
(a) Direct----------- 29,104
Indirect------------ 228 (jointly with wife and children)
(b) Direct------------ 4,883
(c) Direct----------- 45,898
Indirect--------- 2,000 (wife and children)
Indirect--------- 35,693 (trustee)
(d) Direct----------- 23,315
<PAGE>
CLASS - 2 The following table sets forth certain information with respect
to each Director in Class 2.
Each member of Class 2 has a term that will continue until 2000.
<TABLE>
<CAPTION>
Number of
Shares of
Common Stock
Held
Beneficially Percent of
Director Directly and Outstanding Other
Name Occupation Age Since Indirectly Shares Directorships
---- ---------- --- ----- ---------- ------ -------------
<S> <C> <C> <C> <C> <C>
Hugo Barth, III Partner, Haeberle & 55 1982 23,103(a) .98 - -
Barth (Funeral (1977)
Director)
Alexander A. Bol Owner, Alexander- 50 1994 10,233(b) .43 - -
A. Bol A.I.A. (1994)
(Architectural Firm)
Stanley R. Sommer Retired; formerly 76 1982 18,766(c) .79 - -
President, Sommer, (1972)
Inc. (Retail
Clothing)
William A. Thompson Vice President, 40 1994 9,439(d) .40 - -
Thompson & (1994)
Company (Autoparts
Distributor)
</TABLE>
- --------------------
(a) Direct-----------18,041
Indirect----------5,062 (jointly with wife)
(b) Direct-----------10,233
(c) Direct-----------18,432
Indirect------------334 (wife)
(d) Direct------------8,364
Indirect----------1,075 (wife)
<PAGE>
CLASS3 - The following table sets forth certain information with respect to the
Directors in Class 3. Each member of Class 3 has a term which will
continue until 1999.
<TABLE>
<CAPTION>
Number of
Shares of
Common Stock
Held
Beneficially Percent of
Director Directly and Outstanding Other
Name Occupation Age Since Indirectly Shares Directorships
---- ---------- --- ----- ---------- ------ -------------
<S> <C> <C> <C> <C> <C>
Robert L. Bischoff President 58 1992 15,379(a) .65 --
Beer Import Co. (1992)
Paul Lomakin, Jr. President 71 1982 58,885(b) 2.49 --
Winthrop Dev. (1977)
(Builder)
Herbert Schiller President 62 1990 18,191(c) .77 --
Foremost Mfg. Co. (1990)
(Manufacturer)
</TABLE>
- ---------------------
(a) Direct-----------14,884
Indirect------------495 (wife)
(b) Direct-----------32,486
Indirect---------26,399 (wife and children)
(d) Direct-----------18,191
The shares set forth in the table above include the following number of
shares subject to options exercisable by April 1, 1998: Mr. Barth, 9,923 shares;
Mr. Bischoff, 9,923 shares; Mr. Bol, 6,615 shares; Ms. Curtis, 3,308 shares; Mr.
Davis, 6,512 shares; Mr. Kein, 9,923 shares; Mr. Lomakin, 9,923 shares; Mr.
Schiller, 9,923 shares; Mr. Sommer, 9,923 shares; Mr. Thompson, 6,078 shares;
and Mr. Woodward, 9,923 shares.
Anthony C. Weagley, the Company's Chief Financial Officer, beneficially
owned 6,868 shares of Common Stock as of February 1, 1998, including 2,646
shares subject to options exercisable by April 1, 1998. As of February 1, 1998,
the total number of shares directly and beneficially owned by all Directors and
executive officers of the Corporation (13 persons) amounted to 303,360 shares or
12.8% of the common shares outstanding. In addition, as of
<PAGE>
February 1, 1998, the total number of shares directly and beneficially owned by
officers of the Bank (and not the Corporation) amounted to 811 shares or .03% of
the common shares outstanding.
There are no fees paid to any Director of the Corporation for any meeting
of the Board of Directors or its committees or committee meetings of the Bank's
Board of Directors. All directors of the Bank who are not officers of the Bank
receive a $6,500 annual retainer and $300 for each meeting of the Board of
Directors of the Bank attended. Pursuant to the Corporation's 1993 Outside
Director Stock Option Plan, each non-employee director has received a stock
option covering 9,923 shares of Common Stock. These options are exercisable in
three installments, commencing one year after the date of grant, at a per share
exercise price equal to the fair market value of one share of Common Stock on
the date of grant.
There is no family relationship, by blood, marriage or adoption, between
any of the foregoing Directors and any other officer, director or employee of
the Corporation or the Bank.
The Corporation has no standing nominating committee or compensation
committee of the Board of Directors. Matters within the jurisdiction of these
committees are considered by the entire Board of Directors of the Corporation.
The Board's Audit Committee consists of Mr. Bischoff, (Chairman), Ms. Curtis and
Messrs. Barth, Sommer, Thompson and Woodward. The Audit Committee has
responsibility for monitoring the Corporation's financial reporting systems,
reviewing the Corporation's financial statements and supervising the
relationship between the Corporation and its independent accountants. During
1997, the Audit Committee met four times and the Board of Directors met ten
times. Director Herbert Schiller attended less than 75% of the Board meetings
that he was required to attend.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth, for the years ended December 31, 1995, 1996
and 1997, the annual and long-term compensation of the Corporation's Chief
Executive Officer and its Chief Financial Officer. No other executive officer of
the Corporation had annual compensation (salary plus bonus) of $100,000 or more
during the past three years.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Common Shares All
Name and Compensation Subject to Other
Principal Position Year Salary Bonus(A) Other(B)(C) Options Granted Compensation (D)
- ----------------------------
<S> <C> <C> <C> <C> <C>
John J. Davis 1997 $222,116 $50,445 $20,023 - $7,250
President and Chief 1996 209,071 47,600 19,221 - 5,450
Executive Officer 1995 189,783 - 16,982 - 4,500
of the Corporation
and the Bank
Anthony C. Weagley 1997 $98,880 10,625 $9,373 - $2,775
Vice President and 1996 89,640 11,452 6,741 - 2,250
Treasurer of the 1995 101,179 - 46,789 - 2,290
Corporation and
Sr. Vice President and
Cashier of the Bank
</TABLE>
- -----------------
(A) The Corporation adopted the Achievement Incentive Plan (the "AIP"),
effective as of January 1, 1995. Incentive compensation was not payable
under the AIP with respect to performance during 1997. Incentive
compensation payable under the AIP with respect to performance during 1996
was determined after last year's proxy statement was mailed to
shareholders and, accordingly, is included within the "Bonus" column for
1997. Similarly, such incentive compensation for 1995 is included in the
"Bonus" column for 1996.
(B) For Mr. Davis, represents the cost to the Corporation of supplying an
automobile to Mr. Davis ($20,023 in 1997, $15,921 in 1996 and $13,535 in
1995) and payments made on Mr. Davis' behalf with respect to his personal
use of a country club membership.
(C) For Mr. Weagley, represents the cost to the Corporation of supplying an
automobile to Mr. Weagley ($ 9,373 in 1997, $6,741 in 1996 and $6,486 in
1995) and payments made on Mr. Weagley's behalf with respect to relocation
expense in 1995.
(D) Represents contributions made to the Corporation's 401(k) plan on behalf of
Messrs. Davis and Weagley, representing 50% of their contributions up to 6%
of gross compensation.
<PAGE>
Stock Options
No stock options were granted to Mr. Davis or Mr. Weagley (the "Named
Officers") during 1997 and the Named Officers did not exercise any stock options
during 1997. The following table provides data regarding the number of shares
covered by both exercisable and non-exercisable stock options held by the Named
Officers at December 31, 1997. Also reported are the values for "in-the-money"
options, which represent the positive spread between the exercise price of the
Named Officers' options and $23.50, the average of the high bid price and low
asked price for the Common Stock on December 31, 1997.
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
Value of Unexercised
Number of In-the-Money Options
Unexercised Options at Year-End(#) at Year-End($)
------------------------------------------- --------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
John J. Davis 7,940 1,983 38,985 9,737
Anthony C. Weagley 2,647 661 12,997 3,246
</TABLE>
Pension Plan
The Bank maintains a defined benefit pension plan (the "Pension Plan")
for the benefit of its eligible employees. Monthly normal retirement benefits
are computed at the rate of 44% of final average earnings, reduced
proportionately for the participant's credited benefit years less than 25.
"Final average earnings" is the average monthly W-2 compensation which is paid
to participants by the Bank during the last 60 calendar months of their credited
benefit service (essentially equivalent to "Salary" in the Summary Compensation
Table set forth above). The benefits shown are not subject to deduction for
Social Security or other offset amounts.
The following table sets forth the annual benefits which an eligible
employee would receive under the Pension Plan upon retirement at age 65 based on
the indicated assumptions as to average annual earnings and years of service.
The table also reflects benefits under the Corporation's Supplemental Executive
Retirement Plans, which became effective on January 1, 1995. The amounts shown
reflect a 10 year certain and life annuity benefit rather than the joint and 50%
survivor annuity benefit required by the Employee Retirement Income Security Act
of 1974 as the normal form of benefit for a married employee. The number of
benefit years for Mr. Davis is 20 and the number of benefit years for Mr.
Weagley is 11.
<PAGE>
<TABLE>
<CAPTION>
Average Annual
Earnings for
60 Consecutive 10 15 20 25*
Months Prior Benefit Benefit Benefit Benefit
to Retirement Years Years Years Years
<S> <C> <C> <C> <C> <C>
$ 40,000 7,040 10,560 $14,080 $17,600
60,000 10,560 15,840 21,120 26,400
80,000 14,080 21,120 28,160 35,200
100,000 17,600 26,400 35,200 44,000
120,000 21,120 31,680 42,240 52,800
140,000 24,640 36,690 49,280 61,600
150,000* 26,400 39,600 52,800 66,000
</TABLE>
* Maximum
Other Benefit Plans
During 1994, the Corporation implemented certain new employee benefit
plans, effective as of January 1, 1995, including two Supplemental Executive
Retirement Plans ("SERPS"). These new plans, as well as a trust arrangement
entered into during 1997, are described below under the caption "Board Report on
Executive Compensation."
Employment Agreements
John J. Davis entered into an employment agreement with the Corporation and
the Bank, dated as of August 1, 1992. Effective September 1, 1995, the
employment agreement was amended and restated in its entirety. As amended, the
employment agreement provides for Mr. Davis' employment as President and Chief
Executive Officer of the Corporation and the Bank for a term that expires in
2000, subject to renewal provisions that, in effect, assure Mr. Davis of at
least three years' notice of termination in the absence of a "Change in Control
Event" (as defined) and five years' notice of termination in connection with a
Change in Control Event. Mr. Davis' salary rate currently is $210,000 per annum.
In subsequent years, Mr. Davis is to receive his salary for the immediately
preceding 12 month period plus such salary increment as shall be determined by
the Executive Compensation Committee of the Bank's Board of Directors, with
reference to the Bank's salary guide. The employment agreement also provides
that Mr. Davis will receive benefits and perquisites appropriate to his
position.
Mr. Davis has the right under the employment agreement to resign with "Good
Reason," which is defined in the agreement to include certain Change in Control
Events which, in turn, are defined as the acquisition by a third party of a
majority of the voting stock or substantially all of the assets of the
Corporation or the Bank or a change in the composition of the Board of Directors
such that a majority of the members of the Board as of the date of the agreement
<PAGE>
no longer serve on the Board. Upon termination for Good Reason, the employment
agreement provides that Mr. Davis will be entitled to receive a severance
allowance equal to his regular compensation for the duration of the term of the
agreement, an amount equal to the largest bonus received by Mr. Davis under the
AIP, multiplied by the number of years remaining in the term of his employment
agreement, benefits comparable to the benefits that Mr. Davis would have
received under certain benefit plans maintained by the Corporation and the Bank
and acceleration of all unvested stock options. Mr. Davis would be entitled to
comparable benefits if the Bank and the Corporation were to terminate his
employment without cause.
Anthony C. Weagley entered into an employment agreement with the
Corporation and the Bank, dated as of January 1, 1996. The employment agreement
provides for Mr. Weagley's employment as Senior Vice President and Cashier of
the Bank and Vice President and Treasurer of the Corporation for a term that
expires on December 31, 1998, subject to renewal provisions that, in effect,
assure Mr. Weagley of at least two years' notice of termination in the absence
of a Change in Control Event and three years' notice of termination in
connection with a Change in Control Event. Mr. Weagley's salary rate currently
is $97,100 per annum. In subsequent years, Mr. Weagley is to receive his salary
for the immediately preceding 12 month period plus such salary increment as
shall be determined by the Executive Compensation Committee of the Bank's Board
of Directors, with reference to the Bank's salary guide. The employment
agreement also provides that Mr. Weagley will receive certain benefits and
perquisites appropriate to his position.
Mr. Weagley has the right under the employment agreement to resign with
"Good Reason", which is defined in a manner similar to the definition in Mr.
Davis' contract. Upon termination for Good Reason, the employment agreement
provides that Mr. Weagley will be entitled to receive a severance allowance
equal to his regular compensation for the duration of the term of the agreement,
an amount equal to the largest bonus received by Mr. Weagley under the AIP,
multiplied by the number of years remaining in the term of his employment
agreement, benefits comparable to the benefits that Mr. Weagley would have
received under certain benefit plans maintained by the Corporation and the Bank
and acceleration of all unvested stock options. Mr. Weagley would be entitled to
comparable benefits if the Bank and the Corporation were to terminate his
employment without cause.
Mr. Davis' employment agreement and Mr. Weagley's employment contain "gross
up" provisions which provide for additional compensation in the event that any
benefits payable to them pursuant to their employment agreements are subject to
certain excise taxes imposed by the Internal Revenue Code.
Compensation Committee Interlocks and Insider Participation
The Board of Directors does not maintain a Compensation Committee.
Accordingly, compensation decisions are made by the entire Board of Directors.
During 1997, the following individuals served on the Board for all or a portion
of the year: Alexander A. Bol, Hugo Barth III, Robert L. Bischoff, Brenda
Curtis, John J. Davis, Donald G. Kein, Paul Lomakin, Jr., Herbert Schiller,
Stanley R. Sommer, William A. Thompson and Charles P. Woodward. Of the persons
named, only
<PAGE>
Mr. Davis has served as an officer and/or employee of the Corporation or the
Bank. Mr. Davis participates in Board determinations regarding compensation of
all employees other than himself.
Directors Hugo Barth III, Robert L. Bischoff, Alexander A. Bol, Brenda
Curtis, John J. Davis, Donald G. Kein, Paul Lomakin, Jr., Herbert Schiller,
Stanley R. Sommer, William A. Thompson and Charles P. Woodward and certain of
the Corporation's officers and their associates are and have been customers of
the Bank and have had transactions with the Bank in the ordinary course of
business during 1997. All such transactions with these directors and officers of
the Corporation and their associates were made in the ordinary course of
business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time of such transactions for other
persons and did not involve more than a normal risk of collectibility or present
other unfavorable features.
During 1997, a partnership of which Director Donald G. Kein was a partner
rendered legal services to the Corporation and/or the Bank in the normal course
of business. The aggregate fees amounted to approximately $140,860. Such firm
has rendered and will continue to render legal services to the Corporation
and/or the Bank in 1998. The cost of such services was reasonable and comparable
to the cost of obtaining similar services elsewhere in the market place.
For information regarding a trust arrangement entered into with respect to
Mr. Davis, see the "Board Report on Executive Compensation" below.
Board Report on Executive Compensation
Pursuant to rules adopted by the SEC to enhance disclosure of corporate
policies regarding executive compensation, the Corporation has set forth below a
report of its Board regarding compensation policies as they affect Mr. Davis and
the other executive officers of the Corporation.
Overview
The Board of Directors views compensation of executive officers as having
three distinct parts, a current compensation program, a set of standard benefits
and a long-term benefit. The current compensation element focuses upon the
executive officer's salary and is designed to provide appropriate reimbursement
for services rendered. Historically, the Corporation's standard benefit package
was limited to the Pension Plan and health insurance. In 1995, the Board
provided for these benefits to be supplemented in certain circumstances. The
long-term benefit element is primarily reflected in the grants of stock options
to specific executive officers.
The employment agreement entered into with John J. Davis has enabled the
Board to tie annual compensation to Mr. Davis' and the Corporation's
performance. Initially, the agreement provided for a base salary of $130,000 per
annum. Base salary in subsequent years has been left to the discretion of the
Board of Directors, subject to the restriction that base salary may not be
reduced during the term of the agreement. In subsequent years, Mr. Davis' salary
has been increased to $210,000 per year. Subject to Mr. Weagley's contractual
right to a salary of at least
<PAGE>
$97,100, per year, the salary levels of the other executive officers are set
annually by the Board of Directors, with a recommendation by Mr. Davis.
The Board has concluded that it is important to provide Mr. Davis and Mr.
Weagley with certain employment protections. Mr. Davis' employment agreement
contains an "evergreen" clause which, in effect, assures him that he will
receive three years notice of any decision to terminate his agreement. Mr.
Weagley's agreement assures Mr. Weagley that he will receive two years notice of
any decision to terminate their agreement.
Specific Elements of Compensation
The Board has sought to structure executive compensation as a
"pay-for-performance" compensation policy. The elements of that policy are as
follows:
(a) Salary. While consolidation within the banking industry has
created a substantial supply of qualified executives, the Board believes that it
is important for the Bank to retain a competitive salary structure. In late
1994, the Board approved new salary guidelines for the Bank's officers. In
accordance with those guidelines, Mr. Davis' current salary of $210,000 was
increased to that level in January 1998.
(b) Incentive Compensation. The AIP is designed to correlate
compensation to performance in a manner designed to provide meaningful
incentives for Bank officers in general. Under the terms of the AIP, Bank
officers were eligible to receive incentive pay for performance in 1997 if the
Corporation's return on average assets was 1.00% or more. The 1997 return on
average assets amounted to .96%. For Mr. Davis, performance goals relate solely
to the performance of the Corporation. For all other participants, goals relate
both to individual performance and the Corporation's performance.
(c) Benefit Plans. In addition to benefits provided under the Pension
Plan and under standard medical insurance plans, the Corporation furnishes the
following plan benefits to executive officers:
(i) 401(k). The Corporation has implemented a company-wide 401(k)
plan designed to provide an overall benefit to all full-time employees who are
at least 21 years old and have at least one year of service. Under this Plan,
the Corporation matches 50% of employee contributions up to 6% of gross
compensation. The match for Mr. Davis during 1997 was $7,250.
(ii) SERPs. The Corporation has established two Supplemental
Executive Retirement Plans ("SERPs") designed to provide benefits lost to senior
management as a result of federal legislation reducing and/or limiting
retirement benefits available from the Corporation's Pension Plan and 401(k)
plan. Costs to the Corporation for the replacement benefits are similar to the
reduction in qualified retirement plan costs which otherwise would be provided
by those plans but for the federal legislation. To date, Mr. Davis is the only
employee designated for participation in the SERPs. To set aside funds to help
meet its obligations under the
<PAGE>
SERPs, the Bank established a trust as of July 1, 1997 (the "Trust"). The Bank
expects to contribute funds to the Trust from time to time. The Trust funds,
which are subject to the claims of the Bank's creditors in certain
circumstances, will be held in the Trust until paid to plan participants and
their beneficiaries in accordance with the terms of the SERPs.
(iii) Split Dollar Life Insurance. The Board has implemented a
split dollar life insurance program for Mr. Davis and other senior bank officers
under the age of 60. This plan is designed to reduce the costs to the
Corporation of providing death benefit coverage to such officers, while
providing enhanced benefits at retirement (projected to be 3.5 times salary less
$50,000 remaining in a group term plan, subject to a maximum of $500,000 per
employee) and reduced income tax to the participants on the coverage provided.
(d) Stock Options. From time to time, the Board has granted stock
options to Mr. Davis and other executive officers. Such options have been
granted at an exercise price equal to the then current market price of the
Common Stock. The value of such options thus correlates directly with the market
performance of the Common Stock. Information regarding Mr. Davis' and Mr.
Weagley's options is presented elsewhere herein.
The Board believes that an appropriate compensation program can help in
achieving shareholder performance goals if its program reflects an appropriate
balance between providing rewards to key employees while at the same time
effectively controlling cash compensation costs. The Board believes that its
compensation program is consistent with, and should help to achieve, those
objectives.
By: The Board of Directors
Hugo Barth III Paul Lomakin, Jr.
Robert L. Bischoff Herbert Schiller
Alexander A. Bol Stanley R. Sommer
Brenda Curtis William A. Thompson
John J. Davis Charles P. Woodward
Donald G. Kein
<PAGE>
Stockholder Return Comparison
Set forth below is a line graph presentation comparing the cumulative
stockholder return on the Corporation's Common Stock, on a dividend reinvested
basis, against the cumulative total returns of the Standard & Poor's 500 Stock
Index and the Media General Industry Group Index-Middle-Atlantic Banks for the
period from January 1, 1993 through December 31, 1997.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG CENTER BANCORP, INC.,
THE S&P 500 INDEX AND THE MEDIA GENERAL INDUSTRY GROUP INDEX
Measurement Period (Fiscal Year Ending)
1993 1994 1995 1996 1997
Center Bancorp, Inc. 208.64 184.63 192.88 203.20 249.26
Media General Industry
Group Index - Middle
Atlantic Banks 124.23 117.94 179.10 253.66 375.28
S&P 500 Index 110.08 111.54 153.45 188.69 251.64
INDEPENDENT PUBLIC ACCOUNTANTS
The Corporation and the Bank have appointed KPMG Peat Marwick their
independent auditors to perform the function of independent public auditors for
fiscal year 1998.
Representatives of KPMG Peat Marwick are expected to attend the Annual
Meeting and will be available to respond to appropriate questions of
shareholders. Such representatives will have an opportunity to make a statement
at the Annual Meeting if they so desire.
SHAREHOLDER PROPOSALS
SEC regulations permit shareholders to submit proposals for consideration
at annual meetings of shareholders. Any such proposals for the Corporation's
Annual Meeting of Shareholders to be held in 1999 must be submitted to the
Corporation on or before November 13, 1998 and must comply with applicable
regulations of the SEC in order to be included in proxy materials relating to
that meeting.
<PAGE>
OTHER MATTERS
The Board of Directors of the Corporation is not aware that any other
matters are to be presented for action, but if any other matters properly come
before the Annual Meeting, or any adjournments thereof, the holder of any proxy
is authorized to vote thereon at his or her discretion.
A copy of the Annual Report of the Corporation and the Bank for the
year ended December 31, 1997 is being mailed to shareholders with this proxy
statement. The Annual Report is not to be regarded as proxy soliciting material
or as a communication by means of which any solicitation is to be made.
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1997 (EXCLUDING EXHIBITS) WILL BE FURNISHED, WHEN AVAILABLE,
WITHOUT CHARGE TO ANY SHAREHOLDER MAKING A WRITTEN REQUEST FOR THE SAME TO
ANTHONY C. WEAGLEY, VICE PRESIDENT AND TREASURER, CENTER BANCORP, INC., 2455
MORRIS AVENUE, UNION, NEW JERSEY 07083.
By Order of the Board of Directors
John J. Davis
President and Chief Executive Officer
Dated: March 13, 1998
