<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
VALLEY NATIONAL BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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
1455 VALLEY ROAD
WAYNE, NEW JERSEY 07474
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 2, 1997
------------------------
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 Wednesday, April 2, 1997 at 3:00 p.m.
for the purpose of considering and voting upon the following matters:
1. The election of the 19 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 14, 1997 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, President and
Chief Executive Officer
March 3, 1997
<PAGE> 3
VALLEY NATIONAL BANCORP
1455 VALLEY ROAD
WAYNE, NEW JERSEY 07474
------------------------
PROXY STATEMENT
DATED MARCH 3, 1997
------------------------
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") 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 Wednesday,
April 2, 1997, at 3:00 p.m. local time. This Proxy Statement is first being
mailed to shareholders on approximately March 3, 1997.
OUTSTANDING SECURITIES AND VOTING RIGHTS
The record date for determining shareholders entitled to notice of and to
vote at the Annual Meeting is February 14, 1997. 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 36,408,394 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 19 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, 1455 Valley Road, Wayne,
New Jersey 07474, if it is received prior to the Annual 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 specially compensated for such solicitation activities.
Arrangements may be made with brokerage houses and
<PAGE> 4
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.
PROPOSAL 1 -- ELECTION OF DIRECTORS
DIRECTOR INFORMATION
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 19.
It is intended that the proxies solicited by the Board of Directors will be
voted for the election of the 19 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 1998 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 WITH THE PRINCIPAL OCCUPATIONS DURING DIRECTOR
CORPORATION PAST FIVE YEARS SINCE
- -------------------------------------- ------------------------------------------------ --------
<S> <C> <C>
Andrew B. Abramson, 43................ President and Chief Executive Officer, The Value 1994
Group, Inc. (real estate development and
property management firm)
Pamela Bronander, 40.................. Executive Vice President, Scandia Packaging 1993
Machinery Co. (designs & builds packaging
machinery)
Joseph Coccia, Jr., 67................ President of Cocci Development (builder and 1986
investor); Coccia Realty, Inc. (real estate
brokers)
Austin C. Drukker, 63................. President, Press Publications, Inc. (newspaper); 1973
adjunct professor, Montclair State College;
formerly President-Publisher, The Herald-News
(newspaper)
Willard L. Hedden, 69................. Retired, formerly Executive Vice President, 1995
Spartan Oil Co. (fuel oil company)
Graham O. Jones, 52................... Attorney, Jones & Jones; President of Hoke, 1997
Inc., its affiliates and subsidiaries
(manufacturer of precision fluid control
products)
Walter H. Jones, III, 54.............. Chairman of the Board of Hoke, Inc., its 1997
affiliates and subsidiaries (manufacturer of
precision fluid control products)
Gerald Korde, 53...................... President, Birch Lumber Company, Inc. (wholesale 1989
and retail lumber distribution company)
Gerald H. Lipkin, 56.................. Chairman and Chief Executive Officer of the 1986
Chairman, President and Corporation and the Bank
Chief Executive Officer
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH THE PRINCIPAL OCCUPATIONS DURING DIRECTOR
CORPORATION PAST FIVE YEARS SINCE
- -------------------------------------- ------------------------------------------------ --------
<S> <C> <C>
Joleen Martin, 64..................... President and Sole Stockholder, C.P. Test 1995
Services, Inc. (valve and curb box manufacturing
company)
Robert E. McEntee, 64................. Management Consultant; formerly, President, Russ 1979
Berrie and Company, Inc. (marketer of gift
items)
William McNear, 73.................... President and sole owner McNear Excavating 1995
Company (excavating company)
Sam P. Pinyuh, 64..................... Executive Vice President of the Corporation and 1990
Executive Vice President the Bank.
Robert Rachesky, 68................... Consultant, Fujicolor Photo Services, Inc. 1982
(photo developing and supply company); formerly
Chairman, Fujicolor Photo Services, Inc.;
formerly President, Union Photo Co. (photo
developing and supply company)
Barnett Rukin, 56..................... Chairman and Chief Executive Officer, Hudson 1991
Transit Lines, Inc. (operator of Short Line Bus
Company)
Peter Southway, 62.................... Vice Chairman of the Corporation and the Bank; 1978
Vice Chairman formerly President and Chief Operating Officer
of the Corporation and the Bank
Richard F. Tice, 67................... Partner, Tice Farms (farming and real estate) 1982
Leonard Vorcheimer, 54................ Principal, L.J.V. Enterprises (investment 1992
concern); formerly Vice President, Kings
Supermarkets, Inc.
Joseph L. Vozza, 67................... 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 Thomas P.
Infusino is not standing for election in 1997. On February 12, 1997, Michael
Francis resigned as a director due to conflicting commitments with his personal
business. Messrs. Graham O. Jones and Walter H. Jones, III, who are brothers,
were appointed as directors on February 28, 1997 in connection with the
Corporation's acquisition of Midland Bancorporation, Inc. ("Midland").
Peter Southway is the father of Peter John Southway. Both are executive
officers of the Corporation and the Bank.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Corporation held 13 meetings during 1996. 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
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 5 times during
1996.
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
3
<PAGE> 6
and employees and sets specific compensation for executive officers. The
Committee also administers the Long-Term Incentive Plan and makes awards
thereunder. The Committee, which met 5 times in 1996, consists of Messrs.
McEntee (Chairman), Drukker, Korde, Rachesky and Tice.
The Nominating Committee is responsible for nominating directors to serve
on the board of directors of the Corporation and the Bank. The Committee
consists of Messrs. Infusino (Chairman), Abramson, Coccia, Drukker, Korde,
Lipkin and Rachesky. The Committee met 1 time during 1996.
During 1996 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 he or she served.
4
<PAGE> 7
STOCK OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
The following table sets forth information concerning the beneficial
ownership of the Corporation's common stock, no par value, as of December 31,
1996 (as of March 1, 1997 for Messrs. Graham O. Jones and Walter H. Jones, III),
by each director, by each executive officer of the Corporation for whom
individual information is required to be set forth in this Proxy Statement (the
"Named Officers") under rules of the Securities and Exchange Commission (the
"SEC"), and by directors and all executive officers as a group. Other than as
set forth below, 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 OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) CLASS(2)
--------------------------------------------------------- --------------------- ----------
<S> <C> <C>
Directors and Named Officers:
Andrew B. Abramson....................................... 83,619(3) .23%
Pamela Bronander......................................... 11,427(4) .03
Joseph Coccia, Jr........................................ 188,012(5) .52
Peter Crocitto........................................... 19,607(6) .05
Austin C. Drukker........................................ 77,448(7) .21
Willard L. Hedden........................................ 41,758(8) .11
Thomas P. Infusino....................................... 149,020(9) .41
Graham O. Jones.......................................... 2,068,740(10)* 5.10*
Walter H. Jones, III..................................... 2,068,740(11)* 5.10*
Gerald Korde............................................. 679,607(12) 1.87
Gerald H. Lipkin......................................... 186,918(13) .51
Joleen Martin............................................ 84,066(14) .23
Robert E. McEntee........................................ 38,493(15) .11
William McNear........................................... 142,536(16) .39
Sam P. Pinyuh............................................ 59,850(17) .16
Robert Rachesky.......................................... 178,630(18) .49
Barnett Rukin............................................ 16,409(19) .05
Peter Southway........................................... 142,075(20) .39
Peter John Southway...................................... 30,959(21) .09
Richard F. Tice.......................................... 129,250(22) .35
Leonard Vorcheimer....................................... 22,223 .06
Joseph L. Vozza.......................................... 30,278(23) .08
Directors and Executive Officers as a group (29
persons)............................................... 4,465,007(24) 11.01%
</TABLE>
- ---------------
NOTES:
* Includes 2,067,690 shares held by Norwood Associates II which are shown for
both Messrs. Graham O. Jones and Walter H. Jones, III but are counted only
once in calculating the total shares held by Directors and Executive
Officers as a group. See footnotes (10) and (11).
(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) Except for Graham O. Jones, Walter H. Jones, III and Directors and
Executive Officers as a group, the number of shares of common stock used in
calculating the percentage of the class owned includes 36,403,098 shares of
common stock outstanding as of December 31, 1996, and 111,687 shares
5
<PAGE> 8
purchasable pursuant to options exercisable within 60 days of December 31,
1996. With respect to Graham O. Jones, Walter H. Jones, III and Directors
and Executive Officers as a group, the number of shares of common stock
used in calculating the percentage of the class owned includes an
additional 3,833,820 shares of common stock issued on February 28, 1997 and
229,500 shares purchasable pursuant to options exercisable within 60 days
of February 28, 1997 as a result of the Corporation's acquisition of
Midland.
(3) This total includes 1,953 shares held by Mr. Abramson's wife, 4,369 shares
held by his wife in trust for his children, and 8,467 shares held by a
family trust for which Mr. Abramson is trustee, 2,925 shares held by a
family foundation and 38,747 shares held by a trust in which Mr. Abramson
is a trustee.
(4) This total includes 607 shares held in custody for children and 8,310
shares held by trusts for which Ms. Bronander is co-trustee.
(5) This total includes 170,963 shares held by Mr. Coccia jointly with his
wife, 11,032 shares held by a family foundation and 5,490 shares held by
his wife.
(6) This total includes 51 shares held by Mr. Crocitto's wife, 769 shares held
by Mr. Crocitto as custodian for his children, 4,499 restricted shares, and
4,719 shares purchasable pursuant to stock options exercisable within 60
days, but not the 15,086 shares potentially available in the future by
exercise of his stock options not exercisable within 60 days of December
31, 1996.
(7) This total includes 1,000 shares held by Mr. Drukker's wife, 13,720 shares
held by a trust for which Mr. Drukker is a trustee and of which he is a
beneficiary, 486 shares in trust for his children and 3,369 shares held by
a family foundation.
(8) This total includes 2,531 shares held by a relative for whom Mr. Hedden has
power of attorney.
(9) This total includes 17,086 shares held in the name of Mr. Infusino's wife.
(10) This total represents, as of March 1, 1997, 1,050 shares held directly by
Mr. Graham O. Jones and 2,067,690 shares held by Norwood Associates II, a
New Jersey partnership in which Mr. Graham O. Jones holds a 25% interest
and Mr. Walter H. Jones, III holds a 25% interest. The shares held by
Norwood Associates II are shown in the table for both Messrs. Graham and
Walter Jones, but are counted only once in calculating the total shares
held by Directors and Executive Officers as a group.
(11) This total represents, as of March 1, 1997, 1,050 shares held directly by
Mr. Walter H. Jones, III and 2,067,690 shares held by Norwood Associates
II, a New Jersey partnership in which Mr. Graham O. Jones holds a 25%
interest and Mr. Walter H. Jones, III holds a 25% interest. The shares held
by Norwood Associates II are shown in the table for both Messrs. Graham and
Walter Jones, but are counted only once in calculating the total shares
held by Directors and Executive Officers as a group.
(12) This total includes 103,845 shares held in the name of Mr. Korde's wife,
20,788 shares held jointly with his wife, 210,923 shares held by his wife
as custodian for his children, 98,854 shares held by a trust for which Mr.
Korde is a trustee and 64,885 shares held by a profit sharing plan which
Mr. Korde controls.
(13) This total includes 32,814 shares held in the name of Mr. Lipkin's wife,
316 shares held jointly with his wife, 3,362 shares held jointly with his
brother, 5,240 shares held by self-directed IRA plans in which Mr. Lipkin
and his wife are beneficiaries and 6,135 shares held by a family
foundation. This total also includes Mr. Lipkin's 17,543 restricted shares
and 43,894 shares purchasable pursuant to options exercisable within 60
days, but not the 41,297 shares potentially available in the future by
exercise of his stock options not exercisable within 60 days of December
31, 1996.
(14) This total includes 41,558 shares held by Ms. Martin jointly with her
husband and 9,782 shares held by her husband.
(15) This total includes 36,305 shares held jointly with Mr. McEntee's wife and
2,188 shares held by Mr. McEntee in a self-directed Keogh plan.
(16) This total includes 98,852 shares held jointly with Mr. McNear's wife.
6
<PAGE> 9
(17) This total includes 13,007 shares held jointly with Mr. Pinyuh's wife,
2,890 shares held in a family foundation, 1,787 restricted shares and
11,254 shares purchasable pursuant to options exercisable within 60 days,
but not the 15,118 shares potentially available in the future by exercise
of his stock options not exercisable within 60 days of December 31, 1996.
(18) This total includes 12,856 shares held by self-directed IRA plan, 13,992
shares held in a self-directed IRA by his wife and 81,270 shares held by an
annuity trust for which Mr. Rachesky is co-trustee.
(19) This total includes 6,975 shares held by Mr. Rukin's wife as custodian and
Mr. Rukin, as trustee, in various accounts for their children, 1,831 shares
held by a private foundation of which Mr. Rukin is an officer and 1,050
shares for a pension in which Mr. Rukin is a trustee.
(20) This total includes 8,225 shares held in the name of Mr. Southway's wife,
3,500 shares held in a family foundation and 3,316 shares held in self
directed IRA plans. This total also includes Mr. Southway's 12,341
restricted shares and 33,653 shares purchasable pursuant to options
exercisable within 60 days, but not the 31,082 shares potentially available
in the future by exercise of his stock options not exercisable within 60
days of December 31, 1996.
(21) This total includes 497 shares held by Mr. Southway as custodian for his
children, 5,339 restricted shares and 18,707 shares purchasable pursuant to
stock options exercisable within 60 days, but not the 15,748 shares
potentially available in the future by exercise of his stock options not
exercisable within 60 days of December 31, 1996.
(22) This total includes 39,948 shares held jointly with Mr. Tice's wife and
24,253 shares owned by a partnership of which Mr. Tice is a general
partner.
(23) This total includes 1,330 shares held by Mr. Vozza's wife and 3,307 shares
held by a family foundation.
(24) This total includes 84,082 shares owned by seven executive officers who are
not directors or Named Officers, which total includes 10,024 restricted
shares and 26,800 shares purchasable pursuant to options exercisable within
60 days. The total does not include 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. See also notes (10) and (11)
above with respect to shares beneficially owned by Messrs. Graham and
Walter Jones.
7
<PAGE> 10
EXECUTIVE COMPENSATION
GENERAL
Executive compensation is described below in the tabular format mandated by
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. All share amounts have been re-stated to give effect to stock
dividends.
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 (F) (G)
---------------------- RESTRICTED SECURITIES (I)
STOCK UNDERLYING ALL OTHER
(A) (B) (C) (D) AWARDS(S) OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) (1)($) SARS(2)(#) (3)($)
- --------------------------- ----- --------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gerald H. Lipkin........... 1996 435,000 350,000 134,531 15,749 29,750
Chairman, President and 1995 421,500 260,000 130,620 16,536 34,490
CEO of the Corporation 1994 410,000 315,000 143,110 18,191 9,240
and the Bank
Peter Southway............. 1996 298,077 170,000 94,171 10,500 3,853
Vice Chairman of the 1995 368,600 200,000 91,434 11,023 9,240
Corporation and the Bank 1994 368,000 241,000 100,177 12,127 9,240
Sam P. Pinyuh.............. 1996 215,000 45,000 -- 5,249 3,055
Executive Vice President 1995 205,000 40,000 -- 5,511 4,500
of the Corporation and 1994 200,000 62,000 28,622 5,760 5,538
the Bank
Peter John Southway........ 1996 175,000 50,000 76,875 7,500 4,173
Executive Vice President 1995 150,000 40,000 48,000 5,250 3,519
of the Corporation and 1994 135,000 35,000 9,900 3,307 3,894
the Bank
Peter Crocitto............. 1996 155,000 50,000 76,875 7,500 3,875
Executive Vice President 1995 135,000 35,000 24,000 5,250 3,064
of the Corporation and 1994 125,000 30,000 9,900 2,205 3,462
the Bank
</TABLE>
- ---------------
NOTES:
(1) All restrictions on 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 Corporation 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
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other
than an affiliate of the Corporation or a Subsidiary or an employee benefit
plan established or maintained by the Corporation, a Subsidiary or any of
their respective affiliates, is or becomes the
8
<PAGE> 11
beneficial owner (as defined in Rule 13d-3 of the Exchange Act) directly or
indirectly of securities of the Corporation representing more than
twenty-five percent (25%) of the combined voting power of the Corporation's
then outstanding securities (a "Control Person"), (ii) upon the first
purchase of the Corporation's common stock pursuant to a tender or exchange
offer (other than a tender or exchange offer made by the Corporation, a
Subsidiary or an employee benefit plan established or maintained by the
Corporation, a Subsidiary or any of their respective affiliates), (iii) upon
the approval by the Corporation's stockholders of (A) a merger or
consolidation of the Corporation 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 Corporation's assets
or (C) a plan of liquidation or dissolution of the Corporation, (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 Corporation, an employee benefit plan
established or maintained by the Corporation or a Subsidiary, or an
affiliate of the Corporation 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 Corporation'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
Corporation'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 5,250 shares in 1996, 5,512 shares
in 1995 and 6,063 shares in 1994. As of December 31, 1996, Mr. Lipkin held
an aggregate of 17,543 shares of restricted stock with a value of $449,539.
For Mr. Peter Southway, this represents awards of 3,675 shares in 1996,
3,858 shares in 1995 and 4,244 shares in 1994. As of December 31, 1996, Mr.
Peter Southway held an aggregate of 12,341 shares of restricted stock with a
value of $316,238. For Mr. Pinyuh, this represents awards of 1,212 shares in
1994. As of December 31, 1996, Mr. Pinyuh held an aggregate of 1,787 shares
of restricted stock with a value of $45,791. For Mr. Peter John Southway,
this represents awards of 3,000 shares in 1996, 2,100 shares in 1995 and 441
shares in 1994. As of December 31, 1996, Mr. Peter John Southway held an
aggregate of 5,339 shares of restricted stock with a value of $136,811. For
Mr. Crocitto, this represents awards of 3,000 shares in 1996, 1,050 shares
in 1995 and 441 shares in 1994. As of December 31, 1996, Mr. Crocitto held
an aggregate of 4,499 shares of restricted stock with a value of $115,286.
All values in this footnote are calculated using the stock price on December
31, 1996.
(2) 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.
For 1996, 5,250 of the options granted to Mr. Lipkin, 3,496 of the options
granted to Mr. Peter Southway and 1,747 of the options granted to Mr. Pinyuh
had tandem stock appreciation rights ("SARs"). For 1995, 5,512 of the
options granted to Mr. Lipkin, 3,675 of the options granted to Mr. Peter
Southway, and 1,837 of the options granted to Mr. Pinyuh had tandem SARs. As
to those options/SARs, the executive will have the choice of
9
<PAGE> 12
exercising the option for stock or obtaining the cash value of the option on
the exercise date. No other SARs have been granted by the Corporation since
1989.
(3) All amounts shown in this column for 1996 reflect employer contributions to
a 401(k) plan on behalf of the Named Officer, except that $25,250 of the
amount shown for Mr. Lipkin in 1996 and 1995 represents the cost to the
Corporation of Mr. Lipkin's $1,000,000 split dollar life insurance plan.
OPTION GRANTS IN 1996
The following table shows the options granted to Named Officers in 1996,
and their potential value at the end of the option term, assuming certain levels
of appreciation of the Corporation's common stock. As noted in footnote (2) to
the preceding table, certain options have been granted in tandem with SARs.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
- ---------------------------------------------------------------------------------- ASSUMED ANNUAL
(C) RATES OF STOCK
(B) PERCENT OF PRICE APPRECIATION
NUMBER OF TOTAL (D) FOR OPTION TERM (1)
SECURITIES OPTIONS/SARS EXERCISE --------------------
UNDERLYING GRANTED TO OR BASE (E)
(A) OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION (F) (G)
NAME GRANTED (#) FISCAL YEAR (#/SH) DATE 5%($) 10%($)
- ----------------------------- ------------ ------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Gerald H. Lipkin............. 15,749(2) 12.2% 23.45 2/20/2006 232,260 588,591
Peter Southway............... 10,500(2) 8.1% 23.45 2/20/2006 154,850 392,419
Sam P. Pinyuh................ 5,249(2) 4.1% 23.45 2/20/2006 77,410 196,172
Peter John Southway.......... 7,500(2) 5.8% 25.88 11/07/2006 122,068 309,345
Peter Crocitto............... 7,500(2) 5.8% 25.88 11/07/2006 122,068 309,345
</TABLE>
- ---------------
NOTES:
(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 common
stock price. Based upon 36,403,098 common shares outstanding as of December
31, 1996, all shareholders as a group would receive future appreciation of
$586,651,389 with 5% growth, and $1,486,689,801 with 10% growth, over a
10-year period.
(2) These options become exercisable at the rate of 20% per year beginning
February 20, 1997 as to Messrs. Lipkin, Southway and Pinyuh and November 7,
1997 as to Peter John Southway and Peter Crocitto.
10
<PAGE> 13
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
The following table shows the options exercised by Named Officers in 1996,
the number of options/SARs remaining unexercised at year-end, and the value of
unexercised in-the-money options/SARs at year end.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NAME
- ------------------------
(A) SHARES VALUE NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
ACQUIRED REALIZED($) UNEXERCISED OPTIONS/SARS AT MONEY OPTIONS/SARS UT FY-END
ON ----------- FY-END(#) ($)
EXERCISE(#)
----------- (C) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERISABLE
(B) ------------------------------- ----------------------------
(D) (E)
<S> <C> <C> <C> <C>
Gerald H. Lipkin........ 5,597 81,026 31,201/53,990 181,837/193,337
Peter Southway.......... 9,797 156,468 26,922/37,813 199,077/149,487
Sam P. Pinyuh........... 2,273 31,674 7,951/18,421 32,947/44,353
Peter John Southway..... 1,454 25,022 18,707/15,748 210,221/28,763
Peter Crocitto.......... 910 12,649 4,719/15,086 19,881/26,659
</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 $120,000 maximum benefit
payable and represent the benefits that could be paid from the qualified trust
during 1996. These limits are subject to annual cost of living increases. 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.
11
<PAGE> 14
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITIED SERVICE
-----------------------------------------------
AVERAGE FINAL COMPENSATION 15 20 25 30 35
- ------------------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$25,000.......................................... $ 3,188 $ 4,250 $ 5,313 $ 6,375 $ 7,438
$50,000.......................................... $ 7,384 $ 9,845 $12,307 $14,768 $17,230
$100,000......................................... $16,009 $21,345 $26,682 $32,018 $37,355
$150,000 and higher.............................. $24,634 $32,845 $41,057 $49,268 $57,480
</TABLE>
- ---------------
NOTES:
1. Amounts shown reflect the $150,000 limit on compensation and the $120,000
maximum benefit payable and represent the benefits that could be paid from
the qualified trust during 1996. These limits are subject to annual cost of
living increases.
2. An employee may receive benefits greater than those shown in the table 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, an unfunded arrangement which
provides benefits to a select group of highly compensated officers, and which
is described below.
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 compensated officers.
Benefits are determined as (a) minus (b) as follows: (a) the benefit calculated
under the Pension Plan formula in effect prior to January 1, 1989 and without
regard to the limits on recognized compensation and maximum benefits payable
from a qualified deferred benefit plan, minus (b) the individual's Pension Plan
benefit. In general, officers of the Corporation who are members of the Pension
Plan and who receive annual compensation in excess of $145,000 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 Benefits Equalization Plan. Effective January 1,
1996, Peter John Southway and Peter Crocitto 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 Plan combined, assuming
retirement at age 65 in 1996 and a straight life annuity benefit, for the
compensation levels and years of credited service shown. The chart is calculated
using the average social security wage base and social security benefits in
effect during 1996.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
--------------------------------------------------------------
AVERAGE FINAL COMPENSATION 15 20 25 30 35 40
- ------------------------------------ ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$150,000............................ $26,181 $ 34,908 $ 43,635 $ 52,362 $ 61,089 $ 69,816
$200,000............................ $35,556 $ 47,408 $ 59,260 $ 71,112 $ 82,964 $ 94,816
$250,000............................ $44,931 $ 59,908 $ 74,885 $ 89,862 $104,839 $119,816
$300,000............................ $54,306 $ 72,408 $ 90,510 $108,612 $126,714 $144,816
$350,000............................ $63,381 $ 84,908 $106,135 $127,362 $148,589 $169,816
$400,000............................ $73,056 $ 97,408 $121,760 $146,112 $170,464 $194,816
$450,000............................ $82,431 $109,908 $137,385 $164,862 $192,339 $219,816
$500,000............................ $91,806 $122,408 $153,010 $183,612 $214,214 $244,816
</TABLE>
Gerald Lipkin, Peter Southway, Sam Pinyuh, Peter John Southway and Peter
Crocitto have approximately 21, 37, 28, 18 and 20 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,
1997, and, at age 65, would have 30.1, 41.3, 29.4, 47.1 and 45 years of credited
service, respectively. (However, the maximum
12
<PAGE> 15
currently is 40 years of credited service.) In 1996 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
$435,000; Peter Southway $298,077; Sam Pinyuh $215,000; Peter John Southway
$175,000; and Peter Crocitto $155,000. Pursuant to an agreement, effective May
8, 1996, the Corporation and the Bank guaranteed Peter Southway a minimum
pension, expressed as a joint and survivor annuity of $164, 036 if he retired
after age 65. 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. All three executives also receive health and
dental benefits through age 65. Pursuant to the agreement effective May 8, 1996,
the Corporation amended both Mr. Southway's Severance Agreement and his
Change-in-Control Agreement, described below, to use $375,000 as the applicable
annual base salary regardless of the base salary actually paid to him. 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. Commencing at age 57, a minimum retirement benefit of $150,000 per
year is provided to Mr. Lipkin in the form of a joint and two-thirds survivor
annuity which would pay Mr. Lipkin $150,000 per year and Ms. Lipkin $100,000 per
year in the event of Mr. Lipkin's death.
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 generally provide employment protection to the
covered Executives for a three year period following any change-of-control (as
defined in the Agreement). If the Executive is terminated without cause, or if
he resigns for good reason (as defined) the Executive receives a lump sum equal
to 2.99 times the highest annual compensation paid to the Executive during any
calendar year in the three calendar years immediately preceding the
change-in-control, plus continuation of the Executive's health, hospitalization
and medical insurance during the remainder of the three year period. The
change-in-control payments and benefits to the Executive may not exceed the
limitations imposed upon parachute payments under the Internal Revenue Code,
which limit all payments contingent on a change in control to an amount not to
exceed three times the Executive's average taxable wage compensation in the five
years prior to a change-in-control. These "tax cut back" provisions generally
will cause the benefits to the Executive to be substantially reduced from those
set forth above.
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 a change-in-control agreement with Peter John Southway and
Peter Crocitto, which provides 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.
13
<PAGE> 16
All change-in-control agreements are for a fixed term (five years with
respect to the top three officers and two years with respect to other officers),
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. The value of such accelerated vesting will be considered a
parachute payment.
As of July 7, 1995, the Corporation and Mr. Lipkin entered into a split
dollar life insurance arrangement. Under the arrangement, the Corporation agreed
to pay the annual premiums necessary to fund a $1,000,000 second-to-die life
insurance policy on the lives of Mr. Lipkin and his wife. When the policy is
fully paid, or from the death benefits thereunder, the Corporation will be
repaid all of its premium payments made by it (without interest). In return, in
an agreement as of that date, Mr. Lipkin waived all rights he has to group term
policies under the Corporation's benefit policies or otherwise. The split dollar
policy is anticipated to require annual premium payments by the Corporation of
$25,250 for 11 years, although the amount and duration of the premiums depends
on the dividends paid by the insurance company. The Corporation has also agreed
that it will pay the premiums, regardless of whether Mr. Lipkin continues to be
employed by the Corporation.
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 $7,500 annual retainer, plus fees of
$350 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.
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%).
14
<PAGE> 17
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 officers named in the compensation tables
shown above and 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
compensation peer group).
With this outside, independent assistance, the Committee evaluates
salaries, annual performance goals and 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 the continued enhancement of
shareholder value through stock price growth and dividends.
A total compensation approach to determining appropriate compensation
levels for executive officers has been adopted by the Committee. Target total
compensation levels (consisting of annual base salary, and annual and long-term
incentive award opportunities, including stock options and restricted stock) are
established at the beginning of each year. These targets take into consideration
the Corporation's performance relative to its compensation peer group and total
compensation opportunities for the peer group. Under this total compensation
approach, an increasing amount of the executive total compensation mix is based
on pay-for-performance targets and performance compared to peers.
The organizations used for the purpose of developing compensation targets
are based on labor market competition as well as business competition. These
organizations may differ from the banking organizations included in the industry
group used in the Performance Graph of stock growth and dividend reinvestments
shown below.
Target total compensation is determined through a statistical process that
builds 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
companies. These performance measures can vary from year to year based on the
statistical results and may include earnings growth, return on assets and return
on equity.
The Corporation's size and performance results are factored into the peer
group model to identify appropriate target total compensation opportunities for
the Corporation's executives. As a result, when performance objectives are
exceeded, executives have an opportunity to realize compensation above their
target total compensation levels. When performance objectives are not met, the
total compensation paid is lower than target.
Specific compensation program components are discussed below.
15
<PAGE> 18
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 banking
organization 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 bank'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 1996, annual incentive awards were based on a combination of
achieving or exceeding corporate objectives for return on assets and return on
average equity, and individual performance of participating officers.
The annual incentive plan has minimum performance requirements, below which
no bonuses may be awarded. Targets for minimum return on average equity and
return on average assets before extraordinary items are determined each year at
the beginning of the annual incentive plan year.
Each year target annual incentive opportunities for executives are
established using the data from the peer group, again, supplemented by the
combined results of the analysis of published surveys of compensation in the
banking industry and internal relationships. The Committee adopted a policy of
setting target opportunities near the average of those available in the
competitive market place. Target awards range up to 60% or more of base salary.
Actual annual incentive awards are determined through a performance
measurement process relative to achievement of the Corporation goals and
individual performance objectives. Corporate performance can account for up to
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). In
addition, the Committee can, at its discretion, adjust individual awards by plus
or minus 20%. As a result, actual awards can range from 0% to 115% of an
executive's base salary depending on Corporation and individual performance.
LONG-TERM INCENTIVE PLAN
Long-term incentive awards may be granted in the form of stock options
(qualified incentive stock options or nonqualified 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.
The number of stock options and restricted stock awards are determined on
an annual basis using the target long-term incentive award opportunity as a
guide. This is initially the difference between the target total compensation
opportunity and the sum of the executive's base salary and target annual
incentive award opportunity. A combination of restricted stock and stock options
are then awarded up to the target long-term incentive award opportunity on a
subjective basis, taking into account the Corporation's performance, competitive
practices, and individual performance. Previous stock option and restricted
stock awards also may be considered by the Committee and the Board, at its
discretion, in determining the number of stock option and restricted shares to
be granted.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER AND OTHER NAMED EXECUTIVE OFFICERS
In 1996, Mr. Lipkin was granted a 3.2% salary increase, bringing his base
salary level to $435,000. This salary increase recognizes 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
16
<PAGE> 19
compensation paid to Chief Executive Officers of comparable banking
organizations. Additionally, Mr. Lipkin led the Corporation in achieving annual
objectives.
Salary adjustment for the other named executive officers ranged from -19 to
17% of their base salaries and reflected certain realignment of duties and
responsibilities as well as individual officer contributions to the growth of
the Bank, experience and skill levels and the movement of salaries in
competitive labor markets.
The 1996 base salary levels were determined in accordance with the
Corporation's policy as described in "Base Salary" above.
In 1996, the Corporation's performance met targeted levels and approved
goals. Mr. Lipkin contributed to this success by developing the Corporation
management team, improving the Corporation's financial strength, broadening the
product line and expanding market share. As a result of these contributions, Mr.
Lipkin's annual incentive award was therefore approximately 80% of his base
salary.
For the other named executive officers, the 1996 annual incentive awards
averaged 37% of their 1996 salaries. These awards ranged from 21% to 57% for
these individuals, reflecting differences in business unit results and
organization level.
1996 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 1996 Mr. Lipkin was awarded a
stock option for 15,749 shares at $23.45 per share, the market value on the date
of grant. 5,250 shares of this option grant were awarded with tandem Stock
Appreciation Rights ("SARs") under which Mr. Lipkin has the choice of exercising
the option shares for stock or exercising the SAR for cash, subject to approval
of the Compensation Committee at the time of exercise. Mr. Lipkin also was
awarded 5,250 shares of restricted Corporation common stock at $23.45 per share.
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 those 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 1996, other executive officers named in the compensation tables
received qualified incentive stock option grants totaling 27,299 shares at an
average grant price of $24.79 per share. Two of these executives received a
combined total of 4,195 tandem SARs. As a group, the other named executive
officers received restricted stock awards totaling 9,675 shares at an average
price at grant of $24.95 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 tandem SARs and the earn-out of restricted stock noted above for Mr.
Lipkin apply to these stock awards.
The long-term incentive awards to executive officers in 1996 were made in
accordance with the total target compensation 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.
Based on its 1997 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
1997 taxable year.
17
<PAGE> 20
Detailed information related to the compensation of the five executive
officers is shown in the compensation tables within this Proxy Statement.
Personnel and Compensation Committee Members:
Robert E. McEntee, Chairman
Austin C. Drukker
Gerald Korde
Robert Rachesky
Richard F. Tice
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<PAGE> 21
PERFORMANCE GRAPH
The following graph compares the cumulative total return on a hypothetical
$100 investment made on January 1, 1992 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 banking organizations. 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
<TABLE>
<CAPTION>
JANUARY 1, 1992 - DECEMBER 31, 1996
MEASUREMENT PERIOD VALLEY NA- KBW EASTERN
(FISCAL YEAR COVERED) TIONAL BANCORP REGION S&P 500 INDEX
<S> <C> <C> <C>
JAN-92 100.0 100.0 100.0
DEC-92 183.7 138.1 107.6
DEC-93 190.2 144.0 118.4
DEC-94 247.8 127.8 120.0
DEC-95 250.8 217.0 164.9
DEC-96 280.4 297.7 202.7
</TABLE>
PERSONNEL AND COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
All members of the Personnel and Compensation Committee have engaged in
loan transactions with the Bank, except for Mr. Rachesky. Committee members
include Messrs. McEntee (Chairman), Drukker, Korde, Rachesky and Tice. 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
19
<PAGE> 22
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 collectibility or present other unfavorable features. In addition,
during 1996 The Midland Bank and Trust Company paid approximately $169,625.51
for legal services to a law firm whose partner is Graham O. Jones, then a
director and shareholder of Midland and currently a director and shareholder of
the Corporation. Midland has since been merged into the Bank.
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.
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 1997 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 1998
proxy material must be received by the Secretary of the Corporation no later
than November 1, 1997.
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, President and
Chief Executive Officer
Wayne, New Jersey
March 3, 1997
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K (EXCEPT EXHIBITS)
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL HE FURNISHED TO ANY
SHAREHOLDER ON WRITTEN REQUEST ADDRESSED TO ALAN ESKOW, SENIOR VICE PRESIDENT,
VALLEY NATIONAL BANCORP, 1455 VALLEY ROAD, WAYNE, NEW JERSEY 07474.
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<PAGE> 23
VALLEY NATIONAL BANCORP
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 2, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT RACHESKY, 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
Wednesday, April 2, 1997 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 19 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.
(see reverse side)
<PAGE> 24
1. ELECTION OF 19 DIRECTORS
/ / FOR the nominees listed below (except as marked to the contrary below):
/ / FOR ALL nominees except: ________________________________________________
(Instructions: To withhold authority to vote for any individual
nominee(s) write that nominee's name on the above line.)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
Andrew B. Abramson, Pamela Bronander, Joseph Coccia, Jr., Austin C. Drukker,
Willard L. Hedden, Walter H. Jones, III, Graham O. Jones, Gerald Korde,
Gerald H. Lipkin, Joleen Martin, Robert E. McEntee, William McNear, Sam P.
Pinyuh, Robert Rachesky, Barnett Rukin, Peter Southway, Richard F. Tice,
Leonard Vorcheimer, Joseph L. Vozza
2. In their discretion, upon such other matters as may properly come before the
meeting.
Dated:________________, 1997
__________________________________
Signature
__________________________________
Signature
(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.)
PLEASE DATE, SIGN AND RETURN PROMPTLY
