SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
VALLEY NATIONAL BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
[ ] 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:
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<PAGE>
VALLEY NATIONAL BANCORP
1455 VALLEY ROAD
WAYNE, NEW JERSEY 07474
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, APRIL 9, 1998
----------
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, April 9, 1998 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 13, 1998 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, 1998
<PAGE>
VALLEY NATIONAL BANCORP
1455 VALLEY ROAD
WAYNE, NEW JERSEY 07474
----------
PROXY STATEMENT
DATED MARCH 3, 1998
----------
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 Thursday, April
9, 1998, at 3:00 p.m. local time. This Proxy Statement is first being mailed to
shareholders on approximately March 3, 1998.
OUTSTANDING SECURITIES AND VOTING RIGHTS
The record date for determining shareholders entitled to notice of and to
vote at the Annual Meeting is February 13, 1998. 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 42,275,636 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 facsmilie transmission 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 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 inthat connection.
<PAGE>
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 1999 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 THE CORPORATION PAST FIVE YEARS SINCE
- ---------------------- ---------------------------- --------
<S> <C> <C>
Andrew B. Abramson, 44 ....... President and Chief Executive Officer, The Value Group, Inc. (real estate 1994
development and property management firm)
Pamela Bronander, 41 ......... Executive Vice President, Scandia Packaging Machinery Co. (designs & builds 1993
packaging machinery)
Joseph Coccia, Jr., 68 ....... President of Cocci Development (builder and investor); Coccia Realty, Inc. 1986
(real estate brokers)
Austin C. Drukker, 64 ........ President, Press Publications, Inc. (newspaper); adjunct professor, Montclair 1973
State College; President Albert Payson Terhune Foundation, formerly
President-Publisher, The Herald-News (newspaper)
Willard L. Hedden, 70 ........ Retired, formerly Executive Vice President, Spartan Oil Co. (fuel oil company) 1995
Graham O. Jones, 53 .......... Attorney, Jones & Jones; President of Hoke, Inc., its affiliates and 1997
subsidiaries (manufacturer of precision fluid control products)
Walter H. Jones, III, 55 ..... Chairman of the Board of Hoke, Inc., its affiliates and subsidiaries 1997
(manufacturer of precision fluid control products)
Gerald Korde, 54 ............. President, Birch Lumber Company, Inc. (wholesale and retail lumber distribution 1989
company)
Gerald H. Lipkin, 57 ......... Chairman and Chief Executive Officer of the Corporation and the Bank 1986
Chairman, President and
Chief Executive Officer
Joleen Martin, 65 ............ President , C.P. Test Services, Inc. (valve and curb box manufacturing company) 1995
Robert E. McEntee, 65 ........ Management Consultant; formerly, President, Russ Berrie and Company, Inc. 1979
(marketer of gift items)
William McNear, 74 ........... President McNear Excavating Company (excavating company) 1995
Sam P. Pinyuh, 65 ............ Retired, formerly Executive Vice President of the Corporation and the Bank 1990
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND POSITION PRINCIPAL OCCUPATIONS DURING DIRECTOR
WITH THE CORPORATION PAST FIVE YEARS SINCE
- ---------------------- ---------------------------- --------
<S> <C> <C>
Robert Rachesky, 69 .......... Chairman and CEO, Fujicolor Photo Services, Inc.; Consultant, Fujicolor Photo 1982
Services, Inc. (photo developing and supply company)
Barnett Rukin, 57 ............ Chairman and Chief Executive Officer, Hudson Transit Lines, Inc. (operator of 1991
Short Line Bus Company)
Peter Southway, 63 ........... Vice Chairman of the Corporation and the Bank; formerly President and Chief 1978
Vice Chairman Operating Officer of the Corporation and the Bank
Richard F. Tice, 68 .......... Partner, Tice Farms (farming and real estate) 1982
Leonard Vorcheimer, 55 ....... Principal, L.J.V. Enterprises (investment concern) 1992
Joseph L. Vozza, 68 .......... President, Joseph L. Vozza Administrative Services, Inc. (insurance 1982
consultant/administrator); formerly President, Joseph L. Vozza Agency, Inc.
(insurance broker); and former President, Public Entity Risk Management
Administration Corp. (administrator of self insurance pools for public entities)
</TABLE>
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 1997. All
the directors of the Corporation also serve as directors of the Bank.
The Corporation has a standing Audit and Examining Committee. The Audit and
Examining 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 Audit and Examining Committee consists of the following
directors: Messrs. Rachesky (Chairman), Drukker, Korde, McEntee, Tice,
Vorcheimer andMs. Bronander. The Committee met 5 times during 1997.
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 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 1997, consists of Messrs. McEntee (Chairman),
Abramson, Drukker, G. Jones, Korde, Rachesky and Tice.
The Nominating and Governance Committee is responsible for nominating
directors to serve on the board of directors of the Corporation and the Bank.
The Nominating and Governance Committee consists of Messrs. Drukker (Chairman),
Abramson, Coccia, Korde, Lipkin, McEntee, Rachesky and Vozza. The Nominating and
Governance Committee met 3 times during 1997. The Nominating and Governance
Committee has not established specific procedures for receiving recommendations
from shareholders for nominees for election to the Board of Directors, but will
consider such recommendations brought to the attention of the committee.
During 1997 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.
3
<PAGE>
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,
1997, 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. 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 ............................................... 89,345(3) .21%
Pamela Bronander ................................................. 12,613(4) .03
Joseph Coccia, Jr. ............................................... 192,456(5) .45
Peter Crocitto ................................................... 28,643(6) .07
Austin C. Drukker ................................................ 83,071(7) .19
Willard L. Hedden ................................................ 43,944(8) .10
Graham O. Jones .................................................. 543,870 1.27
Walter H. Jones, III ............................................. 543,870 1.27
Gerald Korde ..................................................... 731,472(9) 1.71
Gerald H. Lipkin ................................................. 215,994(10) .50
Joleen Martin .................................................... 89,951(11) .21
Robert E. McEntee ................................................ 41,192(12) .10
Robert Meyer ..................................................... 163,996(13) .38
William McNear ................................................... 149,664(14) .35
Sam P. Pinyuh .................................................... 59,938(15) .14
Robert Rachesky .................................................. 188,365(16) .44
Barnett Rukin .................................................... 17,231(17) .04
Peter Southway ................................................... 164,371(18) .38
Peter John Southway .............................................. 39,585(19) .09
Richard F. Tice .................................................. 135,713(20) .32
Leonard Vorcheimer ............................................... 25,035 .06
Joseph L. Vozza .................................................. 31,691(21) .07
Directors and Executive Officers as a group (29 persons) ......... 3,699,745(22) 8.63%
</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 42,359,526 shares of common stock outstanding as
of December 31, 1997, and 533,447 shares purchasable pursuant to options
exercisable within 60 days of December 31, 1997.
(3) This total includes 2,128 shares held by Mr. Abramson's wife, 4,735 shares
held by his wife in trust for his children, and 9,312 shares held by a
family trust for which Mr. Abramson is trustee, 3,071 shares held by a
family charitable foundation and 40,684 shares held by a trust in which Mr.
Abramson is a trustee.
(4) This total includes 661 shares held in custody for children, 534 shares
held in a trust and 8,755 shares held in an estate for which Ms. Bronander
is one of three executors.
(5) This total includes 175,064 shares held by Mr. Coccia jointly with his
wife, 11,583 shares held by a family charitable foundation and 5,809 shares
held by his wife.
4
<PAGE>
(6) This total includes 56 shares held by Mr. Crocitto's wife, 688 shares held
by Mr. Crocitto as custodian for his children, 6,495 restricted shares, and
8,097 shares purchasable pursuant to stock options exercisable within 60
days, but not the 21,298 shares potentially available in the future by
exercise of his stock options not exercisable within 60 days of December
31, 1997.
(7) This total includes 1,800 shares held by Mr. Drukker's wife, 14,406 shares
held by a trust for which Mr. Drukker is a trustee and of which he is a
beneficiary, 511 shares in trust for his children and 3,538 shares held by
a family charitable foundation.
(8) This total includes 2,657 shares held by a relative for whom Mr. Hedden has
power of attorney.
(9) This total includes 111,103 shares held in the name of Mr. Korde's wife,
22,641 shares held jointly with his wife, 229,724 shares held by his wife
as custodian for his children, 105,794 shares held by a trust for which Mr.
Korde is a trustee and 70,668 shares held by a profit sharing plan which
Mr. Korde controls.
(10) This total includes 34,454 shares held in the name of Mr. Lipkin's wife,
331 shares held jointly with his wife, 3,530 shares held jointly with his
brother, 5,502 shares held by self-directed IRA plans in which Mr. Lipkin
and his wife are beneficiaries and 6,241 shares held by a family charitable
foundation. This total also includes Mr. Lipkin's 17,192 restricted shares
and 57,425 shares purchasable pursuant to options exercisable within 60
days, but not the 38,302 shares potentially available in the future by
exercise of his stock options not exercisable within 60 days of December
31, 1997.
(11) This total includes 43,636 shares held by Ms. Martin jointly with her
husband and 10,272 shares held byher husband.
(12) This total includes 400 shares held in the name of Mr. McEntee's wife,
36,305 shares held jointly with his wife and 2,188 shares held by Mr.
McEntee in a self-directed Keogh plan.
(13) This total includes Mr. Meyer's 3,000 restricted shares and 157,500 shares
purchaseable pursuant to options exercisable within 60 days but not the
10,000 shares potentially available in the future by exercise of his stock
options not exercisable within 60 days of December 31, 1997.
(14) This total includes 98,852 shares held jointly with Mr. McNear's wife.
(15) This total includes 13,007 shares held jointly with Mr. Pinyuh's wife,
3,434 shares held in a family charitable foundation, and 2,292 shares
purchasable pursuant to options exercisable within 60 days.
(16) This total includes 13,750 shares held by self-directed IRA plan, 15,243
shares held in a self-directed IRA by his wife and 159,372 shares held by
an annuity trust for which Mr. Rachesky is co-trustee.
(17) This total includes 7,324 shares held by Mr. Rukin's wife as custodian and
Mr. Rukin, as trustee, in various accounts for their children, 1,923 shares
held by a private foundation of which Mr. Rukin is an officer and 1,103
shares for a pension in which Mr. Rukin is a trustee.
(18) This total includes 8,636 shares held in the name of Mr. Southway's wife,
4,750 shares held in a family charitable foundation and 2,709 shares held
in self directed IRA plans. This total also includes Mr. Southway's 12,090
restricted shares and 40,452 shares purchasable pursuant to options
exercisable within 60 days, but not the 25,693 shares potentially available
in the future by exercise of his stock options not exercisable within 60
days of December 31, 1997.
(19) This total includes 597 shares held by Mr. Peter John Southway as custodian
for his children, 7,157 restricted shares and 22,218 shares purchasable
pursuant to stock options exercisable within 60 days, but not the 21,761
shares potentially available in the future by exercise of his stock options
not exercisable within 60 days of December 31, 1997.
(20) This total includes 42,473 shares held jointly with Mr. Tice's wife and
25,466 shares owned by a partnership of which Mr. Tice is a general
partner.
(21) This total includes 1,397 shares held by Mr. Vozza's wife and 3,372 shares
held by a family charitable foundation.
(22) This total includes 107,735 shares owned by seven executive officers who
are not directors or Named Officers, which total includes 12,383 restricted
shares and 39,367 shares purchasable pursuant to options exercisable within
60 days. The total does not include shares held by the Bank's trust
department.
5
<PAGE>
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.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------ -------------------------------
(A) (B) (C) (D) (F) (G) (I)
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
AWARDS(S) OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) (1)($) SARS(2)(6)(#) (3)($)
- --------------------------- ---- --------- -------- -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Gerald H. Lipkin, ...................... 1997 465,000 420,000 135,000 15,750 34,750
Chairman, President and 1996 435,000 350,000 123,125 15,750 29,750
CEO of the Corporation 1995 421,500 260,000 130,625 16,536 34,490
and the Bank
Peter Southway, (4) .................... 1997 250,000 200,000 94,500 10,500 9,500
Vice Chairman of the 1996 298,077 170,000 86,188 10,500 3,853
Corporation and the Bank 1995 368,600 200,000 91,438 11,023 9,240
Robert Meyer, (5) ...................... 1997 220,000 75,000 99,375 10,000 7,671
Executive Vice President of
the Corporation and the Bank
Peter John Southway, ................... 1997 210,000 75,000 99,375 10,000 9,500
Executive Vice President of 1996 175,000 50,000 77,625 7,500 4,173
the Corporation and the Bank 1995 150,000 40,000 48,000 5,250 3,519
Peter Crocitto, ........................ 1997 200,000 75,000 99,375 10,000 9,500
Executive Vice President of 1996 155,000 50,000 77,625 7,500 3,875
the Corporation and the Bank 1995 135,000 35,000 24,000 5,250 3,064
</TABLE>
- ----------
NOTES
(1) As required by the SEC rules, the dollar amounts set forth in the column
are based upon values as of the date of the grants. The dollar amounts set
forth in this footnote are based on values as of December 31, 1997. 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.
For Mr. Lipkin, the column represents awards of 5,250 shares in 1997, 5,512
shares in 1996 and 5,788 shares in 1995. As of December 31, 1997, Mr.
Lipkin held an aggregate of 17,192 shares of restricted stock with a value
of $675,861. For Mr. Peter Southway, the column represents awards of 3,675
shares in 1997, 3,859 shares in 1996,
6
<PAGE>
and 4,051 shares in 1995. As of December 31, 1997, Mr. Peter Southway held
an aggregate of 12,090 shares of restricted stock with a value of $475,288.
For Mr. Meyer, the column represents awards of 3,000 shares in 1997. As of
December 31, 1997, Mr. Meyer held an aggregate of 3,000 shares of
restricted stock with a value of $117,938. For Mr. Peter John Southway, the
column represents awards of 3,000 shares in 1997, 3,150 shares in 1996, and
2,205 shares in 1995. As of December 31, 1997, Mr. Peter John Southway held
an aggregate of 7,157 shares of restricted stock with a value of $281,360.
For Mr. Crocitto, the column represents awards of 3,000 shares in 1997,
3,150 shares in 1996, and 1,102 shares in 1995. As of December 31, 1997,
Mr. Crocitto held an aggregate of 6,495 shares of restricted stock with a
value of $255,335.
(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). All the options vest at the rate of 20% per year commencing with
the first anniversary from the date of grant, except as specified otherwise
below. Upon a "change in control" as defined in the Plan, all options
become immediately and fully exercisable for a period of 60 days. For 1997,
5,250 of the options granted to Mr. Lipkin and 3,465 of the options granted
to Mr. Peter Southway had tandem stock appreciation rights ("SARs"). For
1996, 5,512 of the options granted to Mr. Lipkin and 3,671 of the options
granted to Mr. Peter Southway had tandem SARs. For 1995, 5,788 of the
options granted to Mr. Lipkin and 3,859 granted to Mr. Peter Southway had
tandem SARs. As to those options/SARs, the executive will have the choice
of exercising the option for stock or obtaining the cash value of the
option on the exercise date.
(3) All amounts shown in this column reflect employer contributions to a 401(k)
plan on behalf of the respective Named Officer, except that $25,250 of the
amount shown for Mr. Lipkin in 1997, 1996 and 1995 represents the cost to
the Corporation of Mr. Lipkin's $1,000,000 split dollar life insurance
plan.
(4) In May, 1996, Mr. Southway at his request, elected to modify his work
schedule and his compensation was adjusted to reflect his reduction in
duties.
(5) Mr. Meyer joined Valley effective February 28, 1997, although his 1997
salary is shown for the full year.
(6) Stock options/SARS and stock awards have been restated for stock dividends.
OPTION GRANTS IN 1997
The following table shows the options granted to Named Officers in 1997,
and their potential value at the end of the option term, assuming certain levels
of appreciation of the Corporation's common stock. As noted in footnote (2) to
the preceding table, certain options have been granted in tandem with SARs.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
- ------------------------------------------------------------------------------------------------- ------------------------
(A) (B) (C) (D) (E) (F) (G)
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ------------- ------------- -------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald H. Lipkin .............. 15,750(2) 7.4% 25.71 2/18/2007 254,660 645,358
Peter Southway ................ 10,500(2) 4.9% 25.71 2/18/2007 169,773 430,239
Robert Meyer .................. 10,000(2) 4.7% 33.125 11/18/2007 208,321 527,927
Peter John Southway ........... 10,000(2) 4.7% 33.125 11/18/2007 208,321 527,927
Peter Crocitto ................ 10,000(2) 4.7% 33.125 11/18/2007 208,321 527,927
</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
7
<PAGE>
price. Based upon 42,359,526 common shares outstanding as of December 31,
1997, all shareholders as a group would receive future appreciation of
$1,047,272,352 with 5% growth, and $2,653,993,762 with 10% growth, over a
10-year period.
(2) These options become exercisable at the rate of 20% per year beginning
February 18, 1998 as to Messrs. Lipkin and Southway and November 18, 1998
as to Robert Meyer, Peter John Southway and Peter Crocitto. The options
accelerate in the event of a change in control, as defined in the Plan.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
The following table shows the options exercised by Named Officers in 1997,
the number of options/SARs remaining unexercised at year-end, and the value of
unexercised in-the-money options/SARs at year end.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
SHARES UNEXERCISED OPTIONS/SARS AT MONEY OPTIONS/SARS AT
ACQUIRED FY-END (#) FY-END ($)
ON VALUE
NAME EXERCISE(#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------------------- ----------- ----------- -------------------------------- ----------------------------
(A) (B) (C) (D) (E)
<S> <C> <C> <C> <C>
Gerald H. Lipkin ........... 9,475 178,155 43,675/52,052 855,258/844,190
Peter Southway ............. 12,326 236,426 31,285/34,860 635,998/566,032
Robert Meyer ............... 0 0 157,500/10,000 4,781,716/61,875
Peter John Southway ........ 2,197 48,215 22,218/21,761 527,944/251,990
Peter Crocitto ............. 1,400 11,120 8,097/21,298 144,537/243,690
</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 $160,000, 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.
8
<PAGE>
<TABLE>
<CAPTION>
PENSION PLAN TABLE
YEARS OF CREDITED 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 ............................... $ 7,306 $ 9,742 $12,177 $14,613 $17,048
$100,000 ............................... $15,931 $21,242 $26,552 $31,863 $37,173
$150,000 ............................... $24,556 $32,742 $40,927 $49,113 $57,298
$160,000 and higher .................... $26,281 $35,042 $43,802 $52,563 $61,323
</TABLE>
- ----------
NOTES:
1. Amounts shown reflect the $160,000 limit on compensation and the $125,000
maximum benefit payable and represent the benefits that could be paid from
the qualified trust during 1997. 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 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 and Peter Southway became participants in the
Benefit 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 1997 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 1997.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
---------------------------------------------------------------------------------------
AVERAGE FINAL COMPENSATION 15 20 25 30 35 40
- -------------------------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$150,000 ............................... $26,057 $ 34,742 $ 43,428 $ 52,114 $ 60,799 $ 69,485
$200,000 ............................... $35,432 $ 47,242 $ 59,053 $ 70,864 $ 82,674 $ 94,485
$250,000 ............................... $44,807 $ 59,742 $ 74,678 $ 89,614 $104,549 $119,485
$300,000 ............................... $54,182 $ 72,242 $ 90,303 $108,364 $126,424 $144,485
$350,000 ............................... $63,557 $ 84,742 $105,928 $127,114 $148,299 $169,485
$400,000 ............................... $72,932 $ 97,242 $121,553 $145,864 $170,174 $194,485
$450,000 ............................... $82,307 $109,742 $137,178 $164,614 $192,049 $219,485
$500,000 ............................... $91,682 $122,242 $152,803 $183,364 $213,924 $244,485
</TABLE>
Gerald Lipkin, Peter Southway, Peter John Southway and Peter Crocitto have
approximately 22, 38, 19 and 21 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, 47.1 and 45 years of credited service, respectively. (However,
the maximum currently is 40 years of credited service.) In 1997 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):
9
<PAGE>
Gerald Lipkin $465,000; Peter Southway $250,000; Peter John Southway $210,000;
and Peter Crocitto $200,000. 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. Pursuant to an agreement dated August 17,
1994, 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.
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 and Peter Southway
and as of January 1, 1998 the Corporation and Bank entered into Severence
Agreements with Robert Meyer, Peter John Southway and Peter Crocitto. 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. Mr. Lipkin and Mr. Southway also receive health and
dental benefits through age 65. Mr. Meyer, Mr. Peter John Southway and Mr.
Crocitto receive health and dental benefits for three years. 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, his Severance Agreement
provides additional payments in the event of his death or disability. As of
January 1, 1995, the Corporation and the Bank entered into change-in-control
agreements with Gerald Lipkin and Peter Southway. 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, 1998, the Corporation and the Bank entered into
change-in-control agreements with Messrs. Peter John Southway, Peter Crocitto
and Robert Meyer, which are substantially identical to those described above for
Mr. Lipkin and Mr. Peter Southway.
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 and Southway 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.
All change-in-control agreements are for a fixed term (five years with
respect to Messrs. Lipkin and Southway, three years with respect to Messrs.
Meyer, Peter John Southway, and Crocitto 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.
10
<PAGE>
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
personnel and compensation committee meeting and $500 for each other committee
meeting attended. Bank directors fees consist of: an annual retainer of $7,500,
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 Nominating and Governance Committee, the Audit
Committee, the Community Development Committee and the Insurance Committee
currently Messrs. McEntee, Drukker, Rachesky, Vozza and Ms. Bronander
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%).
SECTION 16(B) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Due to an oversite, officers who exercised options reported their exercise
only annually on their Form 5 instead of monthly on their Form 4 when exercised.
The following officers, therefore reported their holdings of shares acquired by
option on a delayed and untimely basis for the number of times set forth in the
parenthesis following each name: Messr. Lipkin (2); Southway (2); Pinyuh (2);
Crocitto (1); Eskow (1); Farrell (1); and Garber (1).
11
<PAGE>
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.
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.
12
<PAGE>
ANNUAL INCENTIVE PLAN
Consistent with the goals of continued financial strength and shareholder
value creation for 1997, annual incentive awards were based on a combination of
achieving or exceeding corporate objectives for return on average 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 non-qualified stock options), stock
appreciation rights and/or restricted stock. The purpose of these awards is
toalign executive long-term compensation opportunities with the realization of
stock price growth and dividendsfor 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 1997, Mr. Lipkin was granted a 6.9% salary increase, bringing his base
salary level to $465,000. 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 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, except for Mr.
Southway who has a modified work schedule, ranged from 20% to 29% 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 1997 base salary levels were determined in accordance with the
Corporation's policy as described in"Base Salary" above.
In 1997, 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 90% of his base salary.
13
<PAGE>
For the other named executive officers, the 1997 annual incentive awards
averaged 37% of their 1997 salaries. These awards ranged from 34% to 80% for
these individuals, reflecting differences in business unit results and
organization level.
1997 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 1997 Mr. Lipkin was awarded a
stock option for 15,750 shares at $25.71 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 $25.71 per share.
The stock options become exercisable and the restricted stock becomes vested 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 the option awards is
contingent on the growth of the Corporation's stock price over the vesting
period of the awards.
During 1997, other executive officers named in the compensation tables
received qualified incentive stock option grants totaling 40,500 shares at an
average grant price of $31.20 per share. One of these executives received a
3,465 tandem SAR. As a group, the other named executive officers received
restricted stock awards totaling 12,675 shares at an average price at grant of
$30.98 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 vesting of restricted stock noted above for Mr. Lipkin apply to
these stock awards.
The long-term incentive awards to executive officers in 1997 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 1998 salaries, annual incentive awards, stock option and
restricted stock awards, the Corporation does not expect any of its active named
executive officers to materially exceed the $1 million deductibility threshold
during the 1998 taxable year.
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
Andrew B. Abramson
Austin C. Drukker
Graham O. Jones
Gerald Korde
Robert Rachesky
Richard F. Tice
14
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on a hypothetical
$100 investment made on January 1, 1993 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
JANUARY 1, 1993--DECEMBER 31, 1997
[GRAPHICAL REPRESENTATION OF MOUNTAIN CHART]
- --------------------------------------------------------------------------------
1/93 12/93 12/94 12/95 12/96 12/97
- --------------------------------------------------------------------------------
Valley National Bancorp 100.0 103.8 135.2 136.6 152.7 252.6
- --------------------------------------------------------------------------------
KBW Eastern Region 100.0 104.3 92.6 157.2 215.6 344.9
- --------------------------------------------------------------------------------
S&P 500 Index 100.0 109.9 111.3 152.7 187.3 249.3
- --------------------------------------------------------------------------------
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), Abramson, Drukker, G. Jones, Korde, Rachesky
and Tice. All such loans were made in the ordinary course of business of the
Bank. In addition, the Bank and its predecessor, The Midland Bank and Trust
Company, paid approximately $77,000 for legal services to a law firm whose
partner is Graham O. Jones, a member of the Personnel and Compensation
Committee. 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 collectibility or present other unfavorable features. In
addition, during 1997 Valley National Bank, and its predecessor, The Midland
Bank and Trust Company, paid approximately $77,000 for legal services to a law
firm whose partner is Graham O. Jones, a director and shareholder of Midland
until its merger into the Bank and currently a director and shareholder of the
Corporation. Midland was merged into the Bank on February 28, 1997.
15
<PAGE>
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 1998 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 1999
proxy material must be received by the Secretary of the Corporation no later
than November 1, 1998.
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, 1998
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS)
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL HE FURNISHED TO ANY
SHAREHOLDER ON WRITTEN REQUEST ADDRESSED TO SHAREHOLDERS RELATION DEPARTMENT,
VALLEY NATIONAL BANCORP, 1455 VALLEY ROAD, WAYNE, NEW JERSEY 07474.
16
<PAGE>
- --------------------------------------------------------------------------------
VALLEY NATIONAL BANCORP
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 9, 1998
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
Thursday, April 9, 1998 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 on the reverse. 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)
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Please mark your
[X} votes as in this
example.
For the nominees WITHHOLD
listed at right AUTHORITY
(except as marked to the to vote for all nominees
contrary below). listed at right
1. ELECTION OF 19 DIRECTORS [ ] [ ]
FOR ALL nominees except __________________________________________________
_____________________________________________________________________________
(Instructions: To withhold authority to vote for any individual nominee(s) write
that nominee's name on the above line.)
Nominees:
Andrew B. Abramson Joleen Martin
Pamela Bronander Robert E. McEntee
Joseph Coccia, Jr. William McNeer
Austin C. Drukker Sam P. Pinyuh
Willard L. Hedden Robert Rachesky
Walter H. Jones, III Barnett Rukin
Graham O. Jones Peter Southway
Gerald Korde Richard F. Tice
Gerald H. Lipkin Leonard Vorcheimer
Joseph L. Vozza
2. In the discretion, upon such other matters as may properly come before the
meeting.
PLEASE DATE, SIGN AND RETURN PROMPTLY.
Signature _____________________ Signature_____________________ Dated______ 1998
NOTE: (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
signature. If the shares are held in joint name, all joint owners should sign.)
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