<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
VALLEY NATIONAL BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
VALLEY NATIONAL BANCORP
- --------------------------------------------------------------------------------
(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), or 14a-6(i)(1), or 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> 2
VALLEY NATIONAL BANCORP
1445 VALLEY ROAD
WAYNE, NEW JERSEY 07470
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MARCH 23, 1995
------------------------
Notice is hereby given that the Annual Meeting of Shareholders of Valley
National Bancorp (the "Corporation") will be held at the Radisson Hotel, 690
Route 46 East, Fairfield, New Jersey, on Thursday, March 23, 1995 at 3:00 p.m.
for the purpose of considering and voting upon the following matters:
1. The election of the 16 persons named in the accompanying Proxy
Statement to serve as directors of the Corporation for the ensuing year.
2. Such other business as shall properly come before the Meeting.
Shareholders of record at the close of business on February 17, 1995 are
entitled to notice of and to vote at the meeting. Whether or not you contemplate
attending the Meeting, it is suggested that the enclosed proxy be executed and
returned to the Corporation. You may revoke your proxy at any time prior to the
exercise of the proxy by delivering to the Corporation a later dated proxy or by
delivering a written notice of revocation to the Corporation prior to or at the
Meeting.
By Order of the Board of Directors
Gerald H. Lipkin
Chairman of the Board
March 1, 1995
<PAGE> 3
VALLEY NATIONAL BANCORP
1445 VALLEY ROAD
WAYNE, NEW JERSEY 07470
------------------------
PROXY STATEMENT
DATED MARCH 1, 1995
------------------------
GENERAL PROXY STATEMENT INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Valley National Bancorp (the "Corporation" or the
"Company") of proxies for use at the Annual Meeting of Shareholders of the
Corporation to be held at the Radisson Hotel, 690 Route 46 East, Fairfield, New
Jersey, on Thursday, March 23, 1995, at 3:00 p.m. local time. This Proxy
Statement is first being mailed to shareholders on approximately March 1, 1995.
OUTSTANDING SECURITIES AND VOTING RIGHTS
The record date for determining shareholders entitled to notice of and to
vote at the Annual Meeting is February 17, 1995. Only shareholders of record as
of that date will be entitled to notice of, and to vote at, the Annual Meeting.
On the record date 28,843,158 shares of common stock, no par value, were
outstanding and are eligible to be voted at the Annual Meeting. Each share of
stock is entitled to one vote.
All shares represented by valid proxies received pursuant to this
solicitation will be voted in favor of the election of the 16 nominees for
director who are named in this Proxy Statement, unless the shareholder specifies
a different choice by means of his proxy or revokes the proxy prior to the time
it is exercised. Should any other matters properly come before the Annual
Meeting, the persons named as proxies will vote upon such matters according to
their discretion unless the shareholder otherwise specifies in the proxy.
At the meeting, inspectors of election will tabulate both ballots cast by
shareholders present and voting in person, and votes cast by proxy. Under
applicable state law and the Corporation's certificate of incorporation and
bylaws, abstentions and broker non-votes are counted for purposes of
establishing a quorum but otherwise do not count. Generally, the approval of a
specified percentage of shares voted at a shareholder meeting is required to
approve a proposal and thus abstentions and broker non-votes have no effect on
the outcome of a vote. At the Annual Meeting, a plurality of the shares voted is
required to elect a director. Where state law or the Corporation's certificate
of incorporation or bylaws require that the matter voted upon be approved by a
specified percentage of the outstanding shares, then abstentions and broker
non-votes have the same effect as negative votes.
REVOCABILITY OF PROXIES
Any shareholder giving a proxy has the right to attend and vote at the
Annual Meeting in person. A proxy may be revoked prior to the Annual Meeting by
delivery to the Corporation prior to the Meeting of a later dated proxy or by
delivery of a written revocation to Alan D. Eskow, Secretary of the Corporation,
at the administrative headquarters of the Corporation, 1445 Valley Road, Wayne,
New Jersey 07470, if it is received prior to the Meeting. A proxy may be revoked
at the Annual Meeting by filing a later-dated proxy or a written notice of such
revocation with the Secretary of the Meeting prior to the voting of such proxy.
SOLICITATION OF PROXIES
This proxy solicitation is being made by the Board of Directors of the
Corporation and the cost of the solicitation will be borne by the Corporation.
In addition to the use of the mails, proxies may be solicited personally or by
telephone or telegraph by officers, directors and employees of the Corporation
who will not be
<PAGE> 4
specially compensated for such solicitation activities. Arrangements may be made
with brokerage houses and other custodians, nominees and fiduciaries for
forwarding solicitation materials to the beneficial owners of shares held of
record by such persons and the Corporation will reimburse such persons for their
reasonable expenses incurred in that connection.
ELECTION OF DIRECTORS
The Corporation's by-laws authorize a minimum of 5 and a maximum of 25
directors, but leave the exact number to be fixed by the Board of Directors. The
Board has fixed the number of directors at 16.
It is intended that the proxies solicited by the Board of Directors will be
voted for the election of the 16 persons named below (unless the shareholder
otherwise directs). If, for any reason, any nominee becomes unavailable for
election, the proxies solicited by the Board of Directors will be voted for such
substitute nominees as are selected by the Board of Directors unless the Board
has reduced its membership prior to the Meeting. The Board has no reason to
believe that any of the named nominees is not available or will not serve if
elected.
Each candidate for director has been nominated to serve a one year term
until the 1996 Annual Meeting of the Corporation and thereafter until his
successor shall have been duly elected and shall have qualified. The following
table sets forth the names and ages of the Board's nominees for election, the
nominees' position with the Corporation (if any), the principal occupation or
employment of each nominee for the past five years and the period during which
each nominee has served as a director of the Corporation. The nominee's prior
service as a director includes prior service as a director of Valley National
Bank (the "Bank") prior to the formation of the holding company.
<TABLE>
<CAPTION>
NAME, AGE AND POSITION PRINCIPAL OCCUPATIONS DURING DIRECTOR
WITH CORPORATION PAST FIVE YEARS SINCE
- ---------------------------------------- -------------------------------------------- --------
<S> <C> <C>
Andrew B. Abramson, 41.................. President and Chief Executive Officer, The 1994
Value Group, Inc. (real estate development
and property management firm)
Pamela Bronander, 38.................... Executive Vice President, Scandia Packaging 1993
Machinery Co. (designs & builds packaging
machinery)
Joseph Coccia, Jr., 65.................. Coccia Realty, Inc. (real estate brokers); 1986
previously, Coccia Insurance Associates,
Inc. (insurance brokers)
Austin C. Drukker, 61................... President, Press Publications, Inc. 1973
(newspaper); adjunct professor, Montclair
State College; formerly President-Publisher,
The Herald-News (newspaper)
Thomas P. Infusino, 73.................. Chairman and Chief Executive Officer, 1973
Wakefern Food Corp. (supermarket
distribution centers); also President,
Nutley Park ShopRite (supermarket)
Gerald Korde, 51........................ President, Birch Lumber Company, Inc. 1989
(wholesale and retail lumber distribution
company)
Gerald H. Lipkin, 54
Chairman and Chief Executive
Officer............................... Chairman and Chief Executive Officer of the 1986
Corporation and the Bank
Robert L. Marcalus, 74.................. Chairman and Chief Executive Officer, Marcal 1967
Paper Mills, Inc. (paper products
manufacturer and distributor)
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME, AGE AND POSITION PRINCIPAL OCCUPATIONS DURING DIRECTOR
WITH CORPORATION PAST FIVE YEARS SINCE
- ---------------------------------------- -------------------------------------------- --------
<S> <C> <C>
Robert E. McEntee, 62................... Management Consultant; formerly, President, 1979
Russ Berrie and Company, Inc. (marketer of
gift items)
Sam P. Pinyuh, 62
Executive Vice President.............. Executive Vice President of the Corporation 1990
and the Bank; formerly First Senior Vice
President of the Corporation and the Bank
Robert Rachesky, 66..................... Chairman, Fujicolor Photo Services, Inc. 1982
(photo developing and supply company);
formerly President, Union Photo Co. (photo
developing and supply company)
Barnett Rukin, 54....................... Chairman and Chief Executive Officer, Hudson 1991
Transit Lines, Inc. (operator of Short Line
Bus Company)
Peter Southway, 60
President and Chief Operating
Officer............................... President and Chief Operating Officer of the 1978
Corporation and the Bank
Richard F. Tice, 65..................... Partner, Tice Farms (farming and real 1982
estate)
Leonard Vorcheimer, 52.................. Principal, L.J.V. Enterprises (investment 1992
concern); formerly Vice President, Kings
Supermarkets, Inc.
Joseph L. Vozza, 65..................... President, Joseph L. Vozza Administrative 1982
Services, Inc. (insurance consultant/
administrator); formerly President, Joseph
L. Vozza Agency, Inc. (insurance broker);
and President, Public Entity Risk Management
Administration Corp. (administrator of self
insurance pools for public entities)
</TABLE>
Consistent with the Corporation's retirement policy, director Rubin
Rabinowitz is not standing for election in 1995. Andrew Abramson was appointed
as a director in December 1994.
Robert L. Marcalus is a director of Delaware Otsego Corp., a publicly
traded company. Except for Mr. Marcalus, no other director of the Corporation is
also a director of any company registered pursuant to Section 12 of the
Securities Exchange Act of 1934 (the "Exchange Act") or any company registered
as an investment company under the Investment Company Act of 1940.
Peter Southway is the father of Peter John Southway. Both are executive
officers of the Corporation.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Corporation held 13 meetings during 1994. All
the directors of the Corporation also serve as directors of the Bank.
The Corporation has a standing Audit and Examining Committee. The Committee
reviews significant audit and accounting principles, policies and practices,
meets with the internal auditors of the Bank, reviews the report of the annual
directors' examination of the Corporation conducted by the outside auditors, and
reviews examination reports and other reports of federal regulatory agencies.
The Committee consists of the following directors: Messrs. Rachesky (Chairman),
Drukker, Korde, McEntee, Tice and Vorcheimer. The Committee met five times
during 1994.
The Corporation also maintains standing Nominating and Personnel and
Compensation committees. The Personnel and Compensation Committee (the
"Committee") sets general compensation levels for all officers and employees of
the Corporation and the Bank and sets specific compensation for executive
officers. The
3
<PAGE> 6
Committee also administers the Long-Term Incentive Plan and makes awards
thereunder. The Committee, which met seven times in 1994, consists of Messrs.
McEntee (Chairman), Marcalus (Vice Chairman), Drukker, Korde and Rachesky.
The Nominating Committee is responsible for nominating directors to serve
on the board of directors of the Corporation and the Bank. The Nominating
Committee, which met once during 1994, consists of Messrs. Infusino (Chairman),
Coccia, Drukker, Korde, Lipkin, Marcalus, Rabinowitz and Rachesky.
During 1994 each director attended at least 75% or more of the meetings of
the Board of Directors of the Corporation and of each committee of the Board on
which such director served.
STOCK OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
The following table sets forth information concerning the beneficial
ownership of the Corporation's common stock, without par value, as of January
31, 1995, by each director, by each executive officer of the Corporation for
whom individual information is required to be set forth in this Proxy Statement
under rules of the Securities and Exchange Commission (the "Named Officers"),
and by directors and all executive officers as a group. The Corporation knows of
no person or group which beneficially owns 5% or more of the Corporation's
common stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NUMBER OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS(2)
- ------------------------------------------------------------ --------------------- -----------
<S> <C> <C>
Directors and Named Officers:
Andrew B. Abramson.......................................... 43,707(3) 0.15%
Pamela Bronander............................................ 4,543(4) 0.02
Joseph Coccia, Jr. ......................................... 164,621(5) 0.56
Austin C. Drukker........................................... 60,816(6) 0.21
Robert Farrell.............................................. 9,371(7) 0.03
Thomas P. Infusino.......................................... 135,169(8) 0.46
Gerald Korde................................................ 580,518(9) 1.96
Gerald H. Lipkin............................................ 139,393(10) 0.47
Robert L. Marcalus.......................................... 277,941(11) 0.94
Robert E. McEntee........................................... 34,505(12) 0.12
Sam P. Pinyuh............................................... 54,920(13) 0.19
Rubin Rabinowitz............................................ 153,026(14) 0.52
Robert Rachesky............................................. 166,759(15) 0.56
Barnett Rukin............................................... 10,356(16) 0.04
Peter Southway.............................................. 108,504(17) 0.37
Peter John Southway......................................... 14,750(18) 0.05
Richard F. Tice............................................. 116,784(19) 0.40
Leonard Vorcheimer.......................................... 16,158 0.06
Joseph L. Vozza............................................. 27,464(20) 0.09
Directors and Executive Officers as a group (25 persons).... 2,168,483(21) 7.33
</TABLE>
NOTES
(1) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared investment
power. It also includes shares owned (i) by a spouse, minor children or by
relatives sharing the same home, (ii) by entities owned or controlled by
the named person and (iii) by other persons if the named person has the
right to acquire such shares within 60 days by the exercise of any right or
option. Unless otherwise noted, all shares are owned of record and
beneficially by the named person.
(2) The number of shares of common stock used in calculating the percentage of
the class owned includes 28,838,798 shares of common stock outstanding as
of January 31, 1995, 567,194 shares purchasable
4
<PAGE> 7
pursuant to warrants which are immediately exercisable, and 189,514 shares
purchasable pursuant to options exercisable within 60 days of January 31,
1995.
(3) This total includes 1,645 shares held by Mr. Abramson's wife, 3,048 shares
held by his wife in trust for his children, and 14,391 shares held by two
family trusts for which Mr. Abramson is trustee.
(4) This total includes 410 shares held in custody for children and 2,227
shares held by a trust for which Ms. Bronander is co-trustee.
(5) This total includes 152,812 shares held by Mr. Coccia jointly with his
wife, 18 shares held by a corporation co-owned by Mr. Coccia, 10,007 shares
held by a family foundation and 1,784 shares purchasable pursuant to
warrants which are immediately exercisable.
(6) This total includes 12,445 shares held by a trust for which Mr. Drukker is
a trustee and of which he is a beneficiary, 440 shares in trust for his
children and 2,150 shares held by a family foundation.
(7) This total includes 748 shares held in a self-directed IRA for Mr.
Farrell's wife, 1,377 shares held in a self-directed IRA for Mr. Farrell,
275 shares held in custody for Mr. Farrell's son, 1,563 restricted shares
and 2,585 shares purchasable pursuant to stock options exercisable within
60 days, but not the 7,440 shares potentially available in the future by
exercise of his qualified stock options not exercisable within 60 days of
January 31, 1994.
(8) This total includes 15,499 shares held in the name of Mr. Infusino's wife.
(9) This total includes 88,996 shares held in the name of Mr. Korde's wife,
17,492 shares held jointly with his wife, 177,475 shares held by his wife
as custodian for his children, 86,313 shares held by a trust for which Mr.
Korde is a trustee and 54,596 shares held by a profit sharing plan which
Mr. Korde controls.
(10) This total includes 29,764 shares held in the name of Mr. Lipkin's wife,
2,378 shares held jointly with his wife, 3,355 shares held jointly with his
brother, 4,753 shares held by self-directed IRA plans in which Mr. Lipkin
and his wife are beneficiaries and 3,872 shares held by a family
foundation. This total also includes Mr. Lipkin's 15,056 restricted shares
and 26,901 shares purchasable pursuant to options exercisable within 60
days, but not the 38,713 shares potentially available in the future by
exercise of his stock options not exercisable within 60 days of January 31,
1995.
(11) This total includes 51,672 shares held in the name of Mr. Marcalus' wife
and 134,062 shares held by a corporation which Mr. Marcalus controls and to
which he is a major stockholder. Mr. Marcalus disclaims beneficial
ownership of his wife's shares.
(12) This total includes 32,930 shares held jointly with Mr. McEntee's wife and
1,575 shares held by Mr. McEntee in a self-directed Keogh plan.
(13) This total includes 12,705 shares held jointly with Mr. Pinyuh's wife,
2,000 shares held in a family foundation, 3,603 restricted shares and
21,569 shares purchasable pursuant to options exercisable within 60 days,
but not the 13,915 shares potentially available in the future by exercise
of his stock options not exercisable within 60 days of January 31, 1995.
(14) This total includes 23,047 shares held in the name of Mr. Rabinowitz's wife
and 32,560 shares held by a trust of which Mr. Rabinowitz is co-trustee
under a will. Mr. Rabinowitz disclaims beneficial ownership of his wife's
shares.
(15) This total includes 6,496 shares held by Mr. Rachesky's wife, 22,591 shares
held by self-directed IRA plans and 72,671 shares held by an annuity trust
for which Mr. Rachesky is co-trustee.
(16) This total includes 5,565 shares held by Mr. Rukin's wife as custodian for
their children and 1,661 shares held by a private foundation of which Mr.
Rukin is an officer.
(17) This total includes 7,509 shares held in the name of Mr. Southway's wife,
2,500 shares held in a family foundation and 2,343 shares held in
self-directed IRA plans. This total also includes Mr. Southway's 10,588
restricted shares and 26,083 shares purchasable pursuant to options
exercisable within 60 days, but not the 28,910 shares potentially available
in the future by exercise of his stock options not exercisable within 60
days of January 31, 1995.
(18) This total includes 308 shares held by Mr. Southway as custodian for his
child, 2,012 restricted shares and 8,661 shares purchasable pursuant to
stock options exercisable within 60 days, but not the 9,353
5
<PAGE> 8
shares potentially available in the future by exercise of his stock options
exercisable within 60 days of January 31, 1995.
(19) This total includes 36,237 shares held jointly with Mr. Tice's wife and
22,000 shares owned by a partnership of which Mr. Tice is a general
partner.
(20) This total includes 3,000 shares held by a family foundation.
(21) This total includes 49,178 shares owned by six executive officers who are
not directors or Named Officers, which total includes 8,018 shares
purchasable pursuant to options exercisable within 60 days. The total does
not include 345,681 shares held by the Bank's trust department over which
the Bank may have the right to exercise voting or investment discretion.
Since some directors serve on the Bank's trust committee or as trustees of
its pension plan, it may be argued that such directors have beneficial
ownership of such shares. However, the directors disclaim beneficial
ownership of such shares.
EXECUTIVE COMPENSATION
GENERAL
Executive compensation is described below in the tabular format mandated by
the Securities and Exchange Commission (the "SEC"). The letters in parentheses
under each column heading are the letters designated by the SEC for such
columns, and are provided to make inter-company comparisons easier. The absence
of any column designated by the SEC means that no compensation was paid or
earned which would be required to be described in such column.
SUMMARY COMPENSATION TABLE
The following table summarizes all compensation earned in the past three
years for services performed in all capacities for the Corporation and its
subsidiaries with respect to the Named Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------------------
(A) -------------------- (F) (G)
NAME AND RESTRICTED SECURITIES (I)
PRINCIPAL (B) (C) (D) STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) AWARD(S)(1)($) OPTIONS/SARS(2)(#) COMPENSATION(3)($)
- --------------------- ----- --------- -------- --------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Gerald H. Lipkin, 1994 410,000 315,000 143,110 16,500 9,240
CEO of the 1993 390,000 325,000 143,093 21,655 7,075
Corporation 1992 370,440 250,000 90,000 20,625 10,950
Peter Southway, 1994 368,000 241,000 100,177 11,000 9,240
President of the 1993 350,000 250,000 105,437 15,125 7,075
Corporation 1992 330,440 170,000 60,000 20,625 8,705
Sam P. Pinyuh, 1994 200,000 62,000 28,622 5,225 5,538
Executive Vice 1993 190,000 65,000 30,125 6,875 5,340
President of the 1992 180,396 46,000 30,000 10,312 6,970
Corporation
Peter John Southway, 1994 135,000 35,000 9,900 3,000 3,894
First Senior Vice 1993 125,000 35,000 12,750 3,300 3,750
President of the Bank 1992 110,242 30,000 14,250 2,750 4,318
Robert Farrell, First 1994 135,000 30,000 9,900 1,500 3,894
Senior Vice President 1993 125,000 25,000 12,750 3,000 3,750
of the Bank 1992 110,242 30,000 14,250 2,500 3,317
</TABLE>
6
<PAGE> 9
NOTES:
(1) All restricted stock awards lapse at the rate of 20% per year commencing
with the first anniversary from the date of grant. Dividends are credited on
restricted stock at the same time and in the same amount as dividends paid
to all other common shareholders. Credited dividends are accumulated and are
subject to the same restrictions as the underlying restricted stock. The
restricted stock awards are made pursuant to the Valley National Bancorp
Long-Term Stock Incentive Plan (the "Plan"). Upon a "change in control" as
defined in the Plan, all restrictions on shares of restricted stock will
lapse. Under the Plan, a "change in control" is defined to mean any of the
following events: (i) when the Company or a Subsidiary (as defined in the
Plan) acquires actual knowledge that any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act), other than an affiliate of
the Company or a Subsidiary or an employee benefit plan established or
maintained by the Company, a Subsidiary or any of their respective
affiliates, is or becomes the beneficial owner (as defined in Rule 13d-3 of
the Exchange Act) directly or indirectly of securities of the Company
representing more than twenty-five percent (25%) of the combined voting
power of the Company's then outstanding securities (a "Control Person"),
(ii) upon the first purchase of the Company's common stock pursuant to a
tender or exchange offer (other than a tender or exchange offer made by the
Company, a Subsidiary or an employee benefit plan established or maintained
by the Company, a Subsidiary or any of their respective affiliates), (iii)
upon the approval by the Company's stockholders of (A) a merger or
consolidation of the Company with or into another corporation (other than a
merger or consolidation which is approved by at least two-thirds of the
Continuing Directors (as hereinafter defined) or the definitive agreement
for which provides that at least two-thirds of the directors of the
surviving or resulting corporation immediately after the transaction are
Continuing Directors (in either case, a "Non-Control Transaction")), (B) a
sale or disposition of all or substantially all of the Company's assets or
(C) a plan of liquidation or dissolution of the Company, (iv) if during any
period of two (2) consecutive years, individuals who at the beginning of
such period constitute the Board (the "Continuing Directors") cease for any
reason to constitute at least two-thirds thereof or, following a Non-Control
Transaction, two-thirds of the board of directors of the surviving or
resulting corporation; provided that any individual whose election or
nomination for election as a member of the Board (or, following a
Non-Control Transaction, the board of directors of the surviving or
resulting corporation) was approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be considered a Continuing
Director, or (v) upon a sale of (A) common stock of the Bank if after such
sale any person (as such term is used in Section 13(d) and 14(d)(2) of the
Exchange Act) other than the Company, an employee benefit plan established
or maintained by the Company or a Subsidiary, or an affiliate of the Company
or a Subsidiary, owns a majority of the Bank's common stock or (B) all or
substantially all of the Bank's assets (other than in the ordinary course of
business). No person shall be considered a Control Person for purposes of
clause (i) above if (A) such person is or becomes the beneficial owner,
directly or indirectly, of more than ten percent (10%) but less than
twenty-five percent (25%) of the combined voting power of the Company's then
outstanding securities if the acquisition of all voting securities in excess
of ten percent (10%) was approved in advance by a majority of the Continuing
Directors then in office or (B) such person acquires in excess of ten
percent (10%) of the combined voting power of the Company's then outstanding
voting securities in violation of law and by order of a court of competent
jurisdiction, settlement or otherwise, disposes or is required to dispose of
all securities acquired in violation of law.
For Mr. Lipkin, this represents awards of 5,500 shares in 1994, 6,531 shares
in 1993 and 6,187 shares in 1992. As of December 31, 1994, Mr. Lipkin held
an aggregate of 15,055 shares of restricted stock with a value of $406,485.
For Mr. Peter Southway, this represents awards of 3,850 shares in 1994,
4,812 shares in 1993 and 4,125 shares in 1992. As of December 31, 1994, Mr.
Peter Southway held an aggregate of 11,825 shares of restricted stock with a
value of $319,275. For Mr. Pinyuh, this represents awards of 1,100 shares in
1994, 1,375 shares in 1993 and 2,062 shares in 1992. As of December 31,
1994, Mr. Pinyuh held an aggregate of 4,097 shares of restricted stock with
a value of $110,619. For Mr. Peter John Southway, this represents awards of
400 shares in 1994, 550 shares in 1993 and 687 shares in 1992. As of
December 31, 1994, Mr. Peter John Southway held an aggregate of 2,449 shares
of restricted stock with a value of $66,123. For Mr. Farrell, this
represents awards of 400 shares in 1994, 550 shares in 1993 and
7
<PAGE> 10
687 shares in 1992. As of December 31, 1994, Mr. Farrell held an aggregate
of 2,119 shares of restricted stock with a value of $57,213. All values in
this footnote are calculated using the stock price on December 31, 1994.
(2) While the Plan permits the awarding of stock appreciation rights ("SARs"),
no SARs have been granted since 1989. The amounts listed represent options
granted to the Named Officers in the form of qualified incentive stock
options or nonqualified stock options (but in either event granted at the
fair market value on the date of grant). Upon a "change in control" as
defined in the Plan (see footnote 1 above), all options become immediately
and fully exercisable for a period of 60 days.
(3) All amounts shown in this column reflect employer contributions to a profit
sharing plan and 401(k) plan on behalf of the Named Officer. The profit
sharing plan was converted to a 401(k) plan in 1992.
OPTION GRANTS IN 1994
The following table shows the options granted to Named Officers in 1994,
and their potential value at the end of the option term, assuming certain levels
of appreciation of the Corporation's common stock. While the Plan permits the
Corporation to award stock appreciation rights ("SARs") and the SEC-mandated
column headings refer to SARs, the Corporation has not awarded any SARs since
1989.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF STOCK
- --------------------------------------------------------------------------------------- PRICE
(B) (C) APPRECIATION FOR
NUMBER OF PERCENT OF (D) OPTION TERM(1)
SECURITIES TOTAL OPTIONS/ EXERCISE -----------------
UNDERLYING SARS GRANTED OR BASE (E)
(A) OPTIONS/SARS TO EMPLOYEES PRICE EXPIRATION (F) (G)
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------------ ------------- -------------- -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Gerald H. Lipkin.............. 16,500(2) 19.3% 26.02 2/15/2004 270,003 684,241
Peter Southway................ 11,000(2) 12.8% 26.02 2/15/2004 180,002 456,161
Sam P. Pinyuh................. 5,225(2) 6.1% 26.02 2/15/2004 85,501 216,676
Peter John Southway........... 3,000(2) 3.5% 24.75 11/08/2004 46,695 118,335
Robert Farrell................ 1,500(2) 1.8% 24.75 11/08/2004 23,348 59,168
</TABLE>
NOTE:
(1) The dollar amounts under these columns are the result of calculations at the
5% and the 10% rates set by the SEC and therefore are not intended to
forecast possible future appreciation, if any, of the Corporation's stock
price. Based upon 28,828,404 common shares outstanding as of December 31,
1994, all shareholders as a group would receive future appreciation of
$498,510,766 with 5% growth, and $1,240,516,391 with 10% growth, over a
10-year period.
(2) These options become exercisable at the rate of 20% per year beginning
February 15, 1995 as to Messrs. Lipkin, Southway and Pinyuh and November 8,
1995 as to Peter John Southway and Robert Farrell.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN 1994 AND YEAR-END OPTION VALUES
The following table shows the options exercised by Named Officers in 1994,
the number of options remaining unexercised at year-end, and the value of
unexercised in-the-money options at year end.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
SHARES ACQUIRED VALUE OPTIONS/SARS AT FY-END(#) SARS AT FY-END($)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------ --------------- ----------- ---------------------------- -------------------------
(A) (B) (C) (D) (E)
<S> <C> <C> <C> <C>
Gerald H. Lipkin........ 7,333 118,084 17,685/50,469 199,479/342,665
Peter Southway.......... 8,404 126,339 18,235/38,260 220,004/281,385
Sam P. Pinyuh........... 2,685 44,778 17,086/18,398 222,976/139,455
Peter John Southway..... 110 2,582 12,373/9,353 177,867/59,666
Robert Farrell.......... 825 12,787 2,585/7,440 21,586/48,142
</TABLE>
PENSION PLANS
BANK PENSION PLAN. The Bank maintains a non-contributory, defined benefit
pension plan (the "Pension Plan") for all eligible employees. The annual
retirement benefit under the Pension Plan is (i) 0.85 of 1% of the employee's
average final compensation up to the employee's average social security wage
base plus (ii) 1.15% of the employee's average final compensation in excess of
the employee's average social security wage base, (iii) multiplied by the years
of credited service (to a maximum of 35 years). Employees who were participants
in the Pension Plan on December 31, 1988, are entitled to the higher of the
foregoing or their accrued benefit as of December 31, 1988 under the terms of
the plan then in effect. An employee's "average final compensation" is the
employee's highest 5 year average of the employee's annual salary (excluding
bonuses, overtime pay and other special pay), i.e., the amount listed as
"Salary" in the Summary Compensation Table, subject to an annual compensation
limit of $150,000 received during the last 10 years of employment.
The following table shows the estimated annual retirement benefits from the
pension plan, assuming retirement at age 65 and a straight life annuity benefit,
for the compensation levels and years of credited service shown. Amounts shown
reflect the $150,000 limit on compensation and the $118,800 maximum benefit
payable and represent the benefits that could be paid from the qualified trust
during 1994. These limits are subject to annual cost of living increases but a
recent amendment to the tax law reduced the limit on compensation to $150,000
per year for plan years beginning after 1993. An employee may receive benefits
greater than those shown in the table below if (a) his accrued benefit as of
December 31, 1988 under the terms of the pre-1989 Plan is higher, (b) his
accrued benefit as of December 31, 1993 (based on the compensation limits in
effect before 1994) is higher or (c) he is a participant in the Benefit
Equalization Plan described below.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------
REMUNERATION 15 20 25 30 35
- -------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 25,000 $ 3,218 $ 4,291 $ 5,364 $ 6,437 $ 7,510
$ 50,000 $ 7,531 $10,041 $12,552 $15,062 $17,572
$100,000 $16,156 $21,541 $26,927 $32,312 $37,697
$150,000 and higher $24,781 $33,041 $41,302 $49,562 $57,822
</TABLE>
BENEFIT EQUALIZATION PLAN. Effective January 1, 1989, the Bank adopted a
Benefit Equalization Plan which provides retirement benefits in excess of the
amounts payable from the Pension Plan for certain highly
9
<PAGE> 12
compensated officers. The benefits are calculated under the Pension Plan formula
as it existed on December 31, 1988 (which excludes bonus) but without regard to
the compensation caps and other related limits imposed on the Pension Plan. In
general, officers of the Corporation who are members of the Pension Plan and who
receive annual compensation in excess of the limit on compensation under Section
401(a)(17) of the Internal Revenue Code (which is currently $150,000) and who
have completed ten years of continuous service with the Corporation are eligible
to participate in the Benefit Equalization Plan. The Personnel and Compensation
Committee of the Board of Directors has the authority to determine, in its
discretion, which eligible officers will participate in the Benefit Equalization
Plan. Effective January 1, 1989, Gerald Lipkin, Peter Southway and Sam Pinyuh
became participants in the Benefit Equalization Plan. No other officers
presently participate.
The following table shows the estimated annual retirement benefits from the
Benefit Equalization Plan and qualified Pension Plans combined, assuming
retirement at age 65 in 1994 and a straight life annuity benefit, for the
compensation levels (excluding bonuses and any other forms of additional
compensation) and years of credited service shown. The chart is calculated using
the average social security wage base and social security benefits in effect
during 1994.
<TABLE>
<CAPTION>
AVERAGE YEARS OF CREDITED SERVICE
FINAL ------------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40
- ------------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$150,000 $26,421 $ 35,228 $ 44,036 $ 52,843 $ 61,650 $ 70,456
$200,000 $35,796 $ 47,728 $ 59,661 $ 71,593 $ 83,525 $ 95,456
$250,000 $45,171 $ 60,228 $ 75,286 $ 90,343 $105,400 $120,456
$300,000 $54,546 $ 72,728 $ 90,911 $109,093 $127,275 $145,456
$350,000 $63,921 $ 85,228 $106,536 $127,843 $149,150 $170,456
$400,000 $73,296 $ 97,728 $122,161 $146,593 $171,025 $195,456
$450,000 $82,671 $110,228 $137,786 $165,343 $192,900 $220,456
$500,000 $92,046 $122,728 $153,411 $184,093 $214,775 $245,456
</TABLE>
Gerald Lipkin, Peter Southway, Sam Pinyuh, Peter John Southway and Robert
Farrell have approximately 19, 35, 26, 16 and 4 years of credited service,
respectively, under the Pension Plan (and with respect to the Benefit
Equalization Plan for those officers who participate in it) as of January 1,
1995, and, at age 65, would have 29.1, 40.3, 28.4, 46.1 and 20.5 years of
credited service, respectively. (However, the maximum currently is 40 years of
credited service.) In 1994 the following persons received the compensation shown
below for purposes of determining their retirement benefits under the Pension
Plan (and with respect to the Benefit Equalization Plan for those officers who
participate in it): Gerald Lipkin $410,000; Peter Southway $368,000; Sam Pinyuh
$200,000; Peter John Southway $135,000; and Robert Farrell $135,000. Except as
contained in the description of the plan formulas above, the benefits listed in
the tables are not subject to any deduction for social security or other offset
amounts.
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
On August 17, 1994, the Corporation and the Bank entered into severance
agreements (the "Severance Agreements"), with Gerald Lipkin, Peter Southway and
Sam Pinyuh. The Severance Agreements provide that in the event the Executive is
terminated without cause, he will be entitled to a lump sum payment equal to 12
months of his annual salary at the time of termination, plus a fraction of the
bonus paid to the Executive in the previous year, where such fraction is the
number of months of the current year during which the Executive served before
being terminated, divided by 12. With respect to Mr. Lipkin, who is younger than
the other two executives, his Severance Agreement provides additional payments
in the event of his death or disability. In the event of Mr. Lipkin's death, his
wife or his estate would be entitled to any bonus accrued in the 60 days prior
to his death and 12 months of annual salary, reduced by any pension benefit
payable under the Company's defined benefit plan and benefit equalization plan.
In the event of a disability, the Company agrees to pay Mr. Lipkin a minimum
compensation of $50,000 per year until age 57. Commencing at age 57, the Company
agrees to provide a minimum retirement benefit of $150,000 per year to Mr.
Lipkin in the form
10
<PAGE> 13
of a joint and two-thirds survivor annuity, which would pay Mr. Lipkin $150,000
per year and Mrs. Lipkin $100,000 per year in the event of Mr. Lipkin's death.
Mr. Southway and Mr. Pinyuh do not receive any additional benefits in the event
of disability or death. All three executives also receive health and dental
benefits through age 65. Under the Severance Agreements, the Executive agrees
not to compete with the Corporation and the Bank in New Jersey for a period of
two years following termination of employment. The Agreements are for a three
year term, but are automatically renewed annually unless the Board of Directors
otherwise decides. No severance benefits are payable under the Agreements beyond
age 65. These Severance Agreements replaced substantially similar severance
agreements dated December 11, 1991.
As of January 1, 1995, the Corporation and the Bank entered into
change-in-control agreements with Gerald Lipkin, Peter Southway and Sam Pinyuh.
The change-in-control agreements provide that the covered Executives will be
continued in their employment for a three year period following any
change-of-control (as defined in the Agreement) or until the Executive dies or
reaches age 65, except with respect to Mr. Southway, for whom the age is 67.
During such period, the Executive is to receive a base salary, bonus and fringe
benefits at least equal to those received prior to the change-in-control. After
a change-in-control, the Corporation may terminate the Executive without further
compensation only for cause or due to death or permanent disability. If the
Executive is terminated without cause, or if he resigns for good reason
(generally defined as an adverse change in such Executive's duties or
compensation), the Corporation must pay the Executive a lump sum equal to 2.99
times the highest annual compensation, including salary and bonus, paid to the
Executive during any calendar year in the three calendar years immediately
preceding the change-in-control. The Corporation is also required to continue
during the remainder of the three year period the Executive's health,
hospitalization and medical insurance as they were provided at the time of
termination of employment at the Company's cost. However, in no event may the
change-in-control payments and benefits to the Executive exceed the limitations
imposed upon parachute payments under the Internal Revenue Code. Under those
provisions, the Executive may not, without incurring a penalty, receive
parachute payments which equal or exceed three times the Executive's average
taxable wage compensation in the five years prior to a change-in-control. These
agreements replaced earlier change-in-control agreements for these executives.
As of January 1, 1995, the Corporation and the Bank also entered into
change-in-control agreements with all First Senior Vice Presidents and Senior
Vice Presidents who have at least three years of continuous service with the
Bank. These agreements are substantially identical to the change-in-control
agreements entered into with Messrs. Lipkin, Southway and Pinyuh, except with
respect to the lump sum payments. Generally, First Senior Vice Presidents with
six years or more of service are entitled to a lump sum payment equal to two
years salary plus a pro rata bonus and continuation of medical, dental and life
insurance benefits. The lump sum is reduced to one year of base salary and a pro
rata bonus for officers with between three years and six years of service.
Similarly, Senior Vice Presidents with six years or more of service are entitled
to one year of base salary and a pro rata bonus, and the lump sum is six months
and a pro rata bonus for Senior Vice Presidents with between three and six years
of service. Pursuant to this policy, as of January 1, 1995, the Corporation and
the Bank entered into change-in-control agreements with Peter John Southway and
Robert Farrell, each of which provide for a lump sum severance payment in the
event of a termination of employment without cause or a resignation for good
reason in the three-year period after a change-in-control equal to two years of
salary, plus pro rata bonus and the continuation of medical, dental and life
insurance benefits.
All change-in-control agreements are for a fixed term of three years, but
provide for automatic annual extensions unless the Corporation takes specific
action to halt the renewal.
The Corporation's Long Term Stock Incentive Plan (the "Plan") provides that
upon a "change in control" (as defined in the Plan) all restrictions on shares
of restricted stock granted under the Plan will lapse and all outstanding
options under the Plan will, for a period of 60 days, become immediately and
fully exercisable. With respect to all options which have been outstanding for
at least six months, the optionee may, during the 60-day period following the
change in control, surrender any option (or portion thereof) for a cash payment
in respect of each share covered by the option or portion thereof surrendered
equal to the excess over the option price of (i) in the case of an incentive
stock option, the fair market value of the common stock on
11
<PAGE> 14
the date of surrender or (ii) in the case of a nonqualified option, the highest
price at which the common stock traded during the 60-day period preceding the
date of the Change in Control.
Except as indicated above, neither the Corporation nor the Bank has any
employment contracts with any of the Named Officers.
DIRECTOR COMPENSATION ARRANGEMENTS
The Corporation pays its directors a $5,000 annual retainer, plus fees of
$250 per board meeting attended, $1,000 for each audit committee meeting and
$500 for each other committee meeting attended. Bank directors fees consist of:
an annual retainer of $5,000, plus $500 for each meeting of the Board attended,
$750 for each executive committee meeting attended and $500 for each other
committee meeting attended. Directors of the Corporation and the Bank who are
salaried officers do not receive directors fees or retainers. The Chairmen of
the Personnel and Compensation Committee, the Audit Committee and the Compliance
Committee, currently Messrs. McEntee, Rachesky and Drukker, respectively, each
receive an additional retainer of $5,000 per year. Mr. Marcalus, as Vice
Chairman of the Personnel and Compensation Committee, receives an additional
retainer of $2,500 per year.
In November 1992, the Corporation instituted a retirement plan for eligible
non-employee directors of the Corporation and/or the Bank with a minimum of 10
years of service. The plan provides for benefits which commence after the
non-employee director has retired from the Board and reached the age of 65. The
benefits terminate in 10 years or earlier upon death of the non-employee
director. The annual benefit is a percentage of the annual Bank and Corporation
retainer paid to the director at the time of retirement, as follows: 10-14 years
of service (50%); 15-19 years of service (75%); 20 or more years of service
(100%).
PERSONNEL AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The following report was prepared by the Personnel and Compensation
Committee of the Corporation regarding executive compensation policy and its
relation to the Corporation's performance.
COMPENSATION REVIEW PROCESS
The Personnel and Compensation Committee of the Board of Directors (the
"Committee"), consisting entirely of independent outside directors, is
responsible for establishing and overseeing policies governing annual and
long-term compensation programs for the Named Officers and the other executive
officers of the Corporation.
The Committee uses an independent compensation consulting firm to assist in
its deliberations. The Committee has sought the consultant's guidance in
maintaining levels of executive compensation that are consistent with banks that
are similarly situated in terms of business and labor market competition (the
"Peer Group").
With this outside, independent assistance, the Committee evaluates
salaries, annual performance goals, awards under annual incentive plans and
administers the Long-Term Stock Incentive Plan.
When the Committee's actions relate to officers who also are directors, the
Board of Directors (exclusive of the officer-directors) reviews the
recommendations of the Committee and approves final compensation arrangements.
COMPENSATION STRATEGY
The objective of the Corporation's executive compensation program is to
align compensation with business strategy and, in so doing, to enhance
shareholder value through stock price growth and dividends.
The Committee uses a total compensation approach. Total compensation
consists of annual base salary and annual and long-term incentive award
opportunities, including bonuses, stock options and restricted stock.
12
<PAGE> 15
Each year the Committee establishes target levels of total compensation for each
executive officer, which levels may be attained (and in some cases exceeded) by
the executive officer based on various personal and Corporation performance
measures. A significant amount of each executive's total compensation is based
on pay-for-performance targets.
Targets for executive total compensation and for each component of that
compensation are determined by the Committee based on numerous factors. In
general, the following methodology is used by the Committee:
First, the independent compensation consulting firm provides the Committee
with a statistical analysis of the "expected" compensation of the Corporation's
chief executive officer, based on a model of Peer Group compensation relative to
asset size and performance. The Peer Group modeling process provides an
objective basis to identify those performance measures best related to
compensation in the Peer Group companies. These performance measures can vary
from year to year based on the statistical results and may include earnings
growth, return on assets, return on equity, and/or total return to shareholders
(stock price appreciation plus reinvested dividends). The Peer Group is
determined jointly by the consulting firm and the Committee based on labor
market competition and business competition, and may differ from the group of
banking organizations included in the industry group used in the Performance
Graph of stock growth and dividend reinvestments shown below. The Corporation's
size and annual performance results are factored into the Peer Group model to
identify the "expected" compensation for the Corporation's chief executive
officer, i.e., the compensation which an objective third party would predict
that the Corporation's chief executive officer would receive based solely on the
model and statistical analysis.
Next, the consulting firm reviews published surveys of compensation levels
for chief executive officers of organizations in the banking industry. The
consulting firm then recommends a range of appropriate compensation for the
Chief Executive Officer, using as a midpoint the average of the compensation
levels in the surveys and the "expected" compensation levels from the Peer Group
analysis for the Chief Executive Officer. The range for total compensation and
for each component of compensation is between 80% and 120% of the midpoint. A
similar process is undertaken with respect to the other executive officers.
Finally, the Committee uses the recommended ranges as guidance in setting
total compensation and each component of compensation for each executive.
Subjective criteria are used by the Committee in determining whether, and by how
much, total compensation and its components will differ from the recommended
ranges. In 1994, the Committee stayed within the ranges in setting compensation
for the Corporation's Chief Executive Officer, Mr. Lipkin. Subjective factors
resulted in certain other executive officers' compensation falling outside the
recommended ranges.
Specific compensation program components are discussed below.
BASE SALARY
Base salary levels are determined each year, in part, by considering the
labor market levels of compensation paid to executives of comparable banking
organizations. Labor market values are established by the Peer Group modeling
process described above and supplemented by the average results of an analysis
of published compensation surveys of similar size organizations in the banking
industry to reflect broader industry trends.
The labor market values are used to create salary ranges. Individual
executive salaries are determined relative to the ranges on the basis of a
subjective assessment of each executive's contribution to the Corporation's
success as well as the level of knowledge and experience each executive brings
to the job.
ANNUAL INCENTIVE PLAN
Consistent with the goals of continued financial strength and shareholder
value creation for 1994, annual incentive awards were based on a combination of
achieving or exceeding corporate objectives for net income growth and return on
average equity, and individual performance of participating officers.
13
<PAGE> 16
The annual incentive plan has minimum performance requirements, below which
no bonuses may be awarded. Targets for return on average equity and net income
growth before extraordinary items are determined by the Board each year at the
beginning of the annual incentive plan year and reevaluated regularly during the
year.
Actual annual incentive awards are determined through a performance
measurement process relative to the Corporation's goals and individual
performance objectives. Corporate performance accounts for between 50% and 75%
of each participant's target award. Individual performance achievement measures
are both objective (e.g., pre-determined goals) and subjective (e.g., Board
assessment of the executive's leadership and management of resources).
Using the methodology described above, the Committee sets target
opportunities for the executives. Target opportunities can range up to 60% of
base salary. Maximum annual incentive awards (which generally exceed target
levels) can range up to 92% of base salary, with Committee discretion to adjust
individual awards by plus or minus 20% of the award amount. Thus, actual awards
can range from 0% to 115% of an executive's base salary, taking into account
Corporation and individual performance and Committee discretion.
LONG-TERM INCENTIVE PLAN
Long-term incentive awards may be granted in the form of stock options
(qualified incentive stock options or non-qualified stock options), stock
appreciation rights and/or restricted stock. The purpose of these awards is to
align executive long-term compensation opportunities with the realization of
stock price growth and dividends for shareholders.
Using the methodology described above, the Committee determines the number
of stock options and restricted stock awards on an annual basis by establishing
a range of long-term incentive award opportunities, and a target within that
range. The actual size of each executive's award, and the mix between stock
options and restricted stock awards, is determined by the Committee with
consideration given to the Corporation's performance, competitive practices, and
individual performance. Previous stock option and restricted stock awards also
may be considered by the Committee in determining the number of stock option and
restricted shares to be granted.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER AND OTHER NAMED OFFICERS
In 1994, Mr. Lipkin was granted a 5.1% salary increase, bringing his base
salary level to $410,000. This salary level, which is between the midpoint and
the maximum of the salary range recommended by the compensation consulting firm
to the Committee, takes into account Mr. Lipkin's contribution to the
Corporation's success, the level of knowledge and experience he brings to the
job of Chairman and Chief Executive Officer, and the labor market levels of
compensation paid to Chief Executive Officers of comparable banking
organizations.
Salary increases for the other Named Officers ranged from 5.0% to 8.0% of
their base salaries and reflected their contributions and experience as well as
the movement of salaries in competitive labor markets.
The 1994 base salary levels were determined in accordance with the
Corporation's policy as described in "Base Salary" above.
In 1994, the Corporation's performance exceeded targeted levels and
approved goals. Mr. Lipkin contributed to this success by developing the
Corporation management team, improving the Corporation's financial strength, and
expanding market share. As a result of these contributions, Mr. Lipkin's annual
incentive award was 77% of his base salary.
14
<PAGE> 17
For the other Named Officers, the 1994 annual incentive awards averaged 36%
of their 1994 salaries. Awards ranged from 22% to 65% of individual other named
executive salaries, reflecting differences in business unit results and
organization level.
1994 annual incentive awards were determined in accordance with the
Corporation's policy as described in "Annual Incentive Plan" above.
As part of the total compensation program, in 1994 Mr. Lipkin was awarded a
qualified incentive stock option for 16,500 shares at $26.02 per share and a
restricted stock award of 5,500 shares of the Corporation's common stock at
$26.02 per share. All of these shares were granted at the market value on the
date of grant. The stock options become exercisable and the restricted stock can
be earned at the rate of 20% per year starting with the first anniversary from
the date of grant. Mr. Lipkin's opportunity to receive value from these awards
is contingent on the growth of the Corporation's stock price and the payment of
dividends over the vesting period of the awards.
During 1994, other Named Officers received qualified incentive stock option
grants totaling 20,725 shares at a weighted average grant price of $25.74 per
share, and restricted stock awards totaled 5,750 shares at a weighted average
price at grant of $25.84 per share. All of these shares were granted at the
market value on the date of grant. All of the factors relating to exercise of
options and earn-out of restricted stock noted above for Mr. Lipkin apply to
these stock awards.
The long-term incentive awards to executive officers in 1994 were made in
accordance with the approach described under "Long-Term Incentive Plan" above.
In addition, previous stock options and restricted stock awards were considered
in making these awards.
DEDUCTIBILITY OF COMPENSATION
As part of the 1993 Omnibus Budget Reconciliation Act ("OBRA '93") under
Section 162(m) of the Internal Revenue Code effective for taxable years
beginning on or after January 1, 1994, companies are subject to limits on the
deductibility of executive compensation. OBRA '93 limits deductible compensation
for the active named executive officers to $1 million per year. Certain forms of
compensation are exempt from this deductibility limit, primarily
performance-based compensation which has been approved by shareholders.
While the Corporation's annual incentive plan described above consists of
performance-based awards, shareholders have not been asked to approve the stated
performance goals. Thus, the 1994 annual incentive awards do not meet the
requirements for exemption from the deductibility limit.
The Corporation's stock option awards meet the exemption requirements for
performance-based compensation, including the limit on the number of shares that
can be awarded to an individual executive in a plan year, and have been approved
by shareholders. The Corporation's 1994 restricted stock awards do not meet the
requirements for performance-based awards. Awards of stock options and
restricted stock made on or prior to February 17, 1993 by the Corporation are
under written agreements with executives and are grandfathered as meeting the
exemption requirements under IRS transition rules, as long as these awards are
not modified.
Based on its 1994 salaries, annual incentive awards, stock option and
restricted stock awards, the Corporation does not expect any of its active named
executive officers to exceed the $1 million deductibility threshold during the
1995 taxable year.
Detailed information related to the compensation of the five executive
officers is shown in the compensation tables above.
Personnel and Compensation Committee Members:
Robert E. McEntee, Chairman
Robert L. Marcalus, Vice Chairman
Austin C. Drukker
Gerald Korde
Robert Rachesky
15
<PAGE> 18
PERFORMANCE GRAPH
The following graph compares the cumulative total return on a hypothetical
$100 investment made on January 1, 1990 in: (a) the Corporation's common stock;
(b) the Standard and Poor's ("S&P") 500 Stock Index; and (c) Keefe, Bruyette &
Woods (KBW) Eastern Region Index of nine banking organizations, including all
money-center and most regional banks. The graph is calculated assuming that all
dividends are reinvested during the relevant periods. The graph shows how a $100
investment would increase or decrease in value over time, based on dividends
(stock or cash) and increases or decreases in the market price of the stock and
each of the indexes.
INDEX OF TOTAL RETURNS: VALLEY NATIONAL, S&P 500, KBW EASTERN
JANUARY 1, 1990 -- DECEMBER 31, 1994
<TABLE>
<CAPTION>
VALLEY
MEASUREMENT PERIOD NATIONAL KBW EASTERN S&P 500
(FISCAL YEAR COVERED) BANCORP REGION INDEX
<S> <C> <C> <C>
1/90 100.00 100.00 100.00
12/90 97.16 57.08 103.82
12/91 144.59 109.37 134.92
12/92 265.54 155.55 144.96
12/93 275.02 162.73 159.13
12/94 358.32 143.13 160.68
</TABLE>
PERSONNEL AND COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
All five members of the Personnel and Compensation Committee have engaged
in loan transactions with the Bank. Committee members include Messrs. McEntee
(Chairman), Marcalus (Vice Chairman), Drukker, Korde and Rachesky. All such
loans were made in the ordinary course of business of the Bank. No other
relationships required to be reported under the rules promulgated by the SEC
exist with respect to members of the Corporation's Personnel and Compensation
Committee.
CERTAIN TRANSACTIONS WITH MANAGEMENT
The Bank has made and, assuming continued compliance with generally
applicable credit standards, expects to continue to make loans to its directors
and executive officers and their associates. All of such loans (i) were made in
the ordinary course of business, (ii) were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and (iii) did not involve more than
the normal risk of collectability or present other unfavorable features.
RECOMMENDATION AND VOTE REQUIRED ON PROPOSAL 1
Directors will be elected by a plurality of the votes cast at the Annual
Meeting, whether in person or by proxy. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE NOMINATED SLATE OF DIRECTORS INCLUDED IN PROPOSAL 1.
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<PAGE> 19
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP ("Peat Marwick"), independent public accountants,
have audited the books and records of the Corporation since 1986. Selection of
the Corporation's independent public accountants for the 1995 fiscal year will
be made by the Board subsequent to the Annual Meeting.
Peat Marwick has advised the Corporation that one or more of its
representatives will be present at the Annual Meeting of shareholders to make a
statement if they so desire and to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of shareholders which are eligible under the rules of the
Securities and Exchange Commission to be included in the Corporation's 1996
proxy material must be received by the Secretary of the Corporation no later
than November 1, 1995.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come
before the annual meeting. However, in the event such other matters come before
the meeting, it is the intention of the persons named in the proxy to vote on
any such matters in accordance with the recommendation of the Board of
Directors.
Shareholders are urged to sign the enclosed proxy, which is solicited on
behalf of the Board of Directors, and return it in the enclosed envelope.
By Order of the Board of Directors
Gerald H. Lipkin
Chairman and Chief Executive Officer
Wayne, New Jersey
March 1, 1995
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K (EXCEPT EXHIBITS)
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED TO ANY
SHAREHOLDER ON WRITTEN REQUEST ADDRESSED TO ALAN ESKOW, SENIOR VICE PRESIDENT,
VALLEY NATIONAL BANCORP, 1445 VALLEY ROAD, WAYNE, NEW JERSEY 07470.
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<PAGE> 20
APPENDIX
VALLEY NATIONAL BANCORP
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, MARCH 23, 1995
The undersigned hereby appoints THOMAS P. INFUSINO, ROBERT E. McENTEE and
RICHARD F. TICE and each of them, as Proxy, each with full power of
substitution, to vote all of the stock of VALLEY NATIONAL BANCORP standing in
the undersigned's name at the Annual Meeting of Shareholders of VALLEY NATIONAL
BANCORP, to be held at the Radisson Hotel, 690 Route 46 East, Fairfield, NJ, on
Thursday, March 23, 1995 at 3:00 p.m., and at any adjournment thereof. The
undersigned hereby revokes any and all proxies heretofore given with respect to
such meeting.
This proxy will be voted as specified below. IF NO CHOICE IS SPECIFIED, THE
PROXY WILL BE VOTED FOR THE ELECTION OF THE 16 NOMINEES FOR DIRECTOR LISTED IN
THE PROXY STATEMENT.
Shares, if any, held for your account by the trustee for the dividend
reinvestment plan will be voted in the same manner as you vote the shares in
your name individually.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
SEE REVERSE
SIDE
<PAGE> 21
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR the nominees WITHHOLD
listed (except AUTHORITY to vote
as marked to the for all nominees
contrary below) listed
1. Election of 16 / / / /
Directors
NOMINEES: Andrew B. Abramson, Pamela Bronander, Joseph Coccia, Jr., Austin C.
Drukker, Thomas P. Infusino, Gerald Korde, Gerald H. Lipkin, Robert L. Marcalus,
Robert E. McEntee, Sam P. Pinyuh, Robert Rachesky, Barnett Rukin, Peter
Southway, Richard F. Tice, Leonard Vorcheimer, Joseph L. Vozza.
FOR ALL nominees except:
-------------------------------------------------------
(Instructions: To withhold authority to vote for any individual nominee(s)
write that nominee's name on the above line.)
2. In their discretion, upon such other matters as may properly come before the
meeting.
PLEASE DATE, SIGN AND RETURN PROMPTLY.
SIGNATURE(S)____________________________________________ DATE: March______, 1995
(Please sign exactly as your name appears. When signing as an executor,
administrator, guardian, trustee or attorney, please give your title as such.
If signer is a corporation, please sign the full corporate name and then an
authorized officer should sign his name and print his name and title below his
signature. If the shares are held in joint name, all joint owners should sign.)
