The following Items were the subject of a
Form 12b-25 and are included herein: Items 10-13
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission File Number 0-12874
COMMERCE BANCORP, INC.
(Exact name of Registrant as specified in its charter)
Commerce Atrium
New Jersey 1701 Route 70 East
(State or other jurisdiction of Cherry Hill, NJ 08034-5400
incorporation or organization) (Address of principal executive
offices including zip code)
22-2433468
(I.R.S. Employer
Identification Number)
(609) 751-9000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
(Title of class)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.5625 par value
(Title of class)
Indicate by check mark whether the registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (ii) has been subject to such filing
requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of voting stock held by non-affiliates of the
registrant is $154,656,000.1
- --------
1 The aggregate dollar amount of the voting stock set forth equals the
number of shares of the Registrant's common stock outstanding, reduced by the
amount of common stock held by officers, directors and shareholders owning in
excess of 10% of the registrant's common stock, multiplied by the last sale
price for the Registrant's common stock on March 10, 1995. The information
provided shall in no way be construed as an admission that any officer, director
or 10% shareholder in the Registrant may be deemed an affiliate of the
Registrant or that he is the beneficial owner of the shares reported as being
held by him, and any such inference is hereby disclaimed. The information
provided herein is included solely for the record-keeping purposes of the
Securities and Exchange Commission.
<PAGE>
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $1.5625 Par Value 10,570,977
Title of Class No. of Shares Outstanding
as of 3/10/95
Series C ESOP Cumulative
Convertible Preferred Stock 417,000
Title of Class No. of Shares Outstanding
as of 3/10/95
DOCUMENTS INCORPORATED BY REFERENCE
Parts II and IV incorporate certain information by reference from the
Registrants Annual Report to Shareholders for the fiscal year ended December 31,
1994 (the "Annual Report").
<PAGE>3
EXPLANATORY NOTE
This Amendment No. 1 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1994, as filed with the Securities and Exchange
Commission on March 30, 1995 (the "1994 10-K"), is being filed to provide the
disclosure required by Items 10 through 13 of Form 10-K which the Registrant had
incorporated into the 1994 10-K by reference to its proxy statement for the
Registrant's 1995 annual meeting of shareholders. Since the Registrant did not
file its definitive proxy statement within 120 days after the end of the fiscal
year covered by the 1994 10-K, the information required by Items 10 through 13
of Form 10-K is accordingly set forth below.
PART III
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT.
Directors and Executive Officers
The following table sets forth certain information with respect to the
directors and executive officers of Commerce Bancorp., Inc. (the "Company") and
the executive officers of the Company's banking subsidiaries.
<TABLE>
<CAPTION>
Name Age Positions with the Company and Subsidiaries
<S> <C> <C>
Vernon W. Hill, II 49 Chairman and President of the Company; Chairman and President
of Commerce NJ; Chairman and President of Commerce PA; Chairman
of Commerce Shore
C. Edward Jordan, Jr. 51 Executive Vice President and Director of the Company;
Executive Vice President and Director of Commerce NJ
Robert C. Beck 59 Secretary and Director of the Company; Secretary and Director
of Commerce NJ
David Baird, IV 58 Director of the Company and Commerce NJ
Jack R Bershad 64 Director of the Company, Commerce NJ and
Commerce PA
Morton N. Kerr 64 Director of the Company and Commerce NJ
Steven M. Lewis 45 Director of the Company, Commerce NJ and
Commerce PA
Daniel J. Ragone 67 Director of the Company and Commerce NJ
Joseph T. Tarquini, Jr. 59 Director of the Company and Commerce NJ
Peter M. Musumeci, Jr. 44 Executive Vice President, Senior Credit Officer, Treasurer
and Assistant Secretary of the Company; Executive Vice
President of Commerce NJ; Director of Commerce PA and
Commerce Shore.
Robert D. Falese, Jr. 48 Executive Vice President and Senior Loan Officer of Commerce NJ.
David Wojcik 42 Senior Vice President of the Company.
Dennis M. DiFlorio 41 Senior Vice President of Commerce NJ.
</TABLE>
<PAGE>4
Mr. Hill, a director of Commerce NJ since 1973 and the Company since
1982, has been Chairman and/or President of Commerce NJ since 1973 and Chairman
and President of the Company since 1982. Mr. Hill also has been Chairman of the
Board and/or President of Site Development, Inc., Cherry Hill, New Jersey, a
developer of real estate, since 1968. Mr. Hill has been Chairman of the Board of
Directors of Commerce PA from June 1984 to June 1986 and from January 1987 to
the present, a director of Commerce Bank/Harrisburg, Camp Hill, Pennsylvania
since 1985, and the Chairman of Commerce Shore since January, 1989.
Mr. Jordan, a director of Commerce NJ since 1974 and the Company since
1982, has been Executive Vice President of Commerce NJ since 1974 and Executive
Vice President of the Company since 1982.
Mr. Beck, a director of Commerce NJ since 1973 and the Company since
1982, has been Secretary of Commerce NJ since 1973 and Secretary of the Company
since 1982. Mr. Beck also has been a partner of the law firm of Parker, McCay &
Criscuolo, Marlton, New Jersey since 1987.
Mr. Baird, a director of the Company and Commerce NJ since 1988, has
been President of Haddonfield Lumber Company, Inc., Cherry Hill, New Jersey
since 1962.
Mr. Bershad, a director of Commerce PA since 1984 and the Company and
Commerce NJ since 1987, has been a partner of the law firm of Blank, Rome,
Comisky & McCauley, Philadelphia, Pennsylvania and Cherry Hill, New Jersey,
since 1964 and its Chairman since 1990.
Mr. Kerr, a director of Commerce NJ since 1973 and the Company since
1982, has been President of Markeim-Chalmers, Inc., Realtors, Cherry Hill, New
Jersey, since 1965.
Mr. Lewis, a director of Commerce PA since 1984 and a director of the
Company and Commerce NJ since 1988, has been President of U.S. Restaurants,
Inc., Blue Bell, Pennsylvania since 1985 and President of S. J. Dining, Inc.
since 1986.
Mr. Ragone, a director of Commerce NJ since 1981 and the Company since
1982, has been Chairman of the Board and President of Raible, Lacatena & Beppel,
C.P.A., Haddonfield, New Jersey, or its predecessor firms, since 1960.
Mr. Tarquini, a director of Commerce NJ since 1973 and the Company
since 1982, has been President of The Tarquini Organization, A.I.A., Camden, New
Jersey, since 1980. Prior thereto, he had been a partner in its predecessor
firms.
Mr. Musumeci has been an Executive Vice President and Senior Credit
Officer of the Company since 1986; Treasurer and Assistant Secretary of the
Company since 1984; Executive Vice President of Commerce NJ since 1986; Director
of Commerce PA since 1987 and Commerce Shore since 1989.
Mr. Falese has been Executive Vice President and Senior Loan Officer of
Commerce NJ since 1992. From 1990 to 1992, Mr. Falese was President and Chief
Executive Officer of Sterling Bank, Mount Laurel, New Jersey. Prior thereto, Mr.
Falese was an Executive Vice President and Senior Lending Officer at the
Fidelity Bank, Philadelphia, Pennsylvania for more than five years.
Mr. Wojcik has been a Senior Vice President of the Company since 1988.
Mr. DiFlorio has been a Senior Vice President of Commerce NJ since
1988.
<PAGE>5
Compliance With Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission ("SEC") initial reports of ownership and reports of changes in
ownership of Common Stock and other securities of the Company. Such persons are
required by the SEC to furnish the Company with copies of all Section 16(a)
forms that they file.
To the Company's knowledge, based solely on a review of the copies of
the Section 16(a) reports furnished to the Company and on written
representations that no other reports were required during the fiscal year ended
December 31, 1994, all of the Company's directors, officers and ten percent
stockholders have complied with Section 16(a) of the Exchange Act.
ITEM 11. EXECUTIVE COMPENSATION.
The following table is a summary of certain information concerning the
compensation awarded or paid to, or earned by, the Company's chief executive
officer and each of the Company's other four most highly compensated executive
officers (the "named executives") during each of the last three fiscal years.
<TABLE>
<CAPTION>
Long Term
Compensation
Securities
Other Underlying All
ANNUAL COMPENSATION Annual Stock Option Other
Name/Title Year Salary Bonus Compensation(1) Grants(2) Compensation
<S> <C> <C> <C> <C> <C> <C>
Vernon W. Hill, II 1994 $ 390,000 $150,000 $50,244 - 0 - $ 30,854(3)
Chairman of the Board, 1993 316,000 125,000 50,564 62,843 33,005
Chief Executive Officer and 1992 290,000 125,000 -- 11,278 18,597
President of Bancorp;
Chairman of the Board,
Chief Executive Officer and
President of Commerce NJ
C. Edward Jordan, Jr. 1994 $ 215,000 $ 75,000 -- - 0 - $ 23,069(3)
Executive Vice President of 1993 190,000 75,000 -- 48,235 22,916
Bancorp; Executive Vice 1992 170,000 75,000 -- 7,293 18,092
President of Commerce NJ
Peter M. Musumeci, Jr.
Executive Vice President, 1994 $ 200,000 $ 75,000 -- - 0 - $ 18,964(3)
Treasurer and Assistant 1993 185,000 50,000 -- 48,235 27,072
Secretary of Bancorp; 1992 170,000 35,000 -- 6,946 14,293
Executive Vice President
of Commerce NJ
Robert D. Falese, Jr.(4) 1994 $ 200,000 $ 75,000 -- - 0 - $ 8,242(3)
Executive Vice President of 1993 175,000 50,000 -- 36,659 2,083
Commerce NJ 1992 52,308 5,000 -- - 0 - 116
Dennis M. DiFlorio 1994 $ 140,000 $ 60,000 -- - 0 - $ 2,742(3)
Senior Vice President of 1993 100,000 25,000 -- 23,483 7,970
Commerce NJ 1992 85,000 15,000 -- 3,647 7,078
</TABLE>
<PAGE>6
- ------------------------
(1) The total in this column reflects personal use of a company car (1994,
$5,389; 1993, $5,449), expense allowances (1994, $36,600; 1993,
$32,600) and country club dues (1994, $8,255; 1993, $12,515). The value
of such other annual compensation did not exceed the lesser of $50,000
or 10% of salary and bonus for any individual in any year except Mr.
Hill in 1993 and 1994.
(2) The stock option grants reflected in this column have been adjusted for
the 5% stock dividends declared on December 13, 1994, January 19, 1994,
January 19, 1993 and January 22, 1992. The original grant was adjusted
based on the unexercised option shares outstanding on the date of the
stock dividend.
(3) The totals in this column reflect premiums on life insurance (Mr. Hill,
$26,116; Mr. Jordan, $19,089; Mr. Musumeci, $14,471); and long-term
disability (Mr. Hill, $4,738; Mr. Jordan, $3,980; Mr. Musumeci, $4,223;
Mr. Falese, $8,242; and Mr. DiFlorio, $2,742) policies and
contributions to the Company's ESOP. Allocations to participants'
accounts for the 1994 ESOP plan year have not yet been completed and
are therefore not included in 1994.
(4) Mr. Falese commenced employment in September 1992. The 1992 annual
compensation represents compensation for the period from his hire date
through the end of the year. Mr. Falese was not eligible for a
contribution from the Company's ESOP in 1992 or 1993.
Employment Agreements
At the recommendation of the Company's Personnel Committee, the Board
of Directors of the Company approved Employment Agreements for Messrs. Hill,
Jordan and Musumeci.
Mr. Hill's Employment Agreement provides that he will be employed by
the Company and Commerce NJ as Chairman of the Board, President and Chief
Executive Officer for a term of five years effective January 1, 1992, provided
that on each January 1 thereafter the Employment Agreement shall be
automatically renewed and extended for a new five year term unless either the
Company or Hill gives the other at least ninety days prior written notice of
their desire to terminate the Agreement, in which event the term will have four
years remaining.
Under the terms of the Employment Agreement, Mr. Hill's "base salary"
shall not be less than $440,000 per year subject to upward adjustment by the
Company's Board of Directors. The Employment Agreement provides that Mr. Hill
will participate in any benefit or compensation programs in effect which are
generally made available from time to time to executive officers of the Company
and provides for all other fringe benefits as in effect from time to time which
are generally available to the Company's salaried officers including, without
limitation, medical and hospitalization coverage, life insurance coverage and
disability coverage.
The Employment Agreement requires the Company to compensate Mr. Hill
for the balance of the term of the Employment Agreement at a rate equal to
seventy percent of his annual base salary if he becomes permanently disabled (as
defined in the Employment Agreement) during the term and to pay Mr. Hill's
designated beneficiary a lump sum death benefit if he dies during the term in an
amount equal to three times his average annual base salary in effect during the
twenty-four months immediately preceding his death.
<PAGE>7
The Employment Agreement allows Mr. Hill to terminate his employment
with the Company upon a change in control of the Company (as defined in the
Employment Agreement) and if within three years of such change in control,
without Mr. Hill's consent, among other things, the nature and scope of his
authority with the Company or a surviving or acquiring person are materially
reduced to a level below that which he enjoyed on January 1, 1992. If Mr. Hill
terminates his employment because of a change in control, he will be entitled to
a lump sum severance payment equal to four times his average annual base salary
in effect during the twenty-four month period immediately preceding such
termination (provided that such payment does not constitute a "parachute
payment" under Section 280G of the Internal Revenue Code of 1986, as amended,
and in the event such payment would constitute a "parachute payment", such lump
sum severance payment shall be reduced so as to not constitute a "parachute
payment"), and the continuation of certain benefits including medical,
hospitalization and life insurance. The Employment Agreement contains a
non-competition covenant for Mr. Hill should his employment with the Company be
terminated under certain circumstances.
The Employment Agreements for Messrs. Jordan and Musumeci are
substantially similar to that of Mr. Hill's except that: Mr. Jordan will serve
as Executive Vice President/Chief Financial Officer of the Company and Commerce
NJ, and Mr. Musumeci will serve as Executive Vice President/Senior Credit
Officer of the Company and Commerce NJ. The term of each Employment Agreement is
three years and the lump sum death benefit is each equal to two times their
respective average annual base salary in effect during the twenty-four month
period preceding death. Mr. Jordan's "base salary" under the Employment
Agreement is $225,000 and Mr. Musumeci's "base salary" under his Employment
Agreement is $225,000.
Director Compensation
Directors of the Company and Commerce NJ were paid an annual fee of
$10,000 plus $600 for each meeting of the Board of Directors attended in 1994
and will be paid an annual fee of $10,000 plus $600 for each meeting of the
Board of Directors attended in 1995. When meetings of the Board of Directors of
the Company and Commerce NJ occur on the same day, only one fee is paid.
Committee members received a fee of $600 for each meeting attended in 1994 and
will receive a fee of $600 for each meeting attended in 1995. Directors of
Commerce PA are paid a fee of $300 for each meeting of the Board of Directors
and a committee thereof attended. Directors of Commerce Shore are paid a fee of
$400 for each meeting of the Board of Directors and committee meeting attended.
No fees are paid to directors who are also operating officers of the Company,
Commerce NJ, Commerce PA or Commerce Shore. Each director of the Company is
provided with $100,000 of permanent life insurance.
A retirement plan for outside directors, i.e., directors who are not
officers or employees of the Company on the date of their service as a Company
director ends, provides that outside directors with five or more years of
service as a Company director are entitled to receive annually, for ten years or
the number of years served as a director, whichever is less, commencing upon
such director's attainment of age 65 and retirement from the Company Board or
upon such director's disability, payments equal to the highest retainer in
effect at any time during the five year period immediately preceding such
director's retirement or, if earlier, death or disability. This plan further
provides that, in the event a director dies before receiving all benefits to
which he or she is entitled, such director's surviving spouse is entitled to
receive all benefits not received by the deceased director commencing upon such
director's death. Upon a change in control of the Company, the plan provides
that each director then sitting on the Company Board, notwithstanding the length
of time served as a director, becomes entitled to receive annually, for ten
years, or twice the number of years served as a director, whichever is less,
payments equal to the higher of the director's retainer at the time of the
director's termination of Board service and the highest retainer in effect at
any time during the five year period immediately preceding the change in control
commencing on the latest to occur of the termination of the director's Board
service, attainment of age 65 or any date designated by the director at
<PAGE>8
any time and from time to time. The definition of "change in control" for
purposes of this plan parallels the definition of that term contained in the
Employment Agreements discussed on page 11 of this Proxy Statement. This plan
became effective January 1, 1993.
1989 Stock Option Plan For Non-Employee Directors
Effective April 24, 1989 (and as amended in 1994), the Company adopted
the 1989 Stock Option Plan for Non-Employee Directors (the "1989 Plan") which
provides for the purchase of a total of not more than 201,015 shares of Company
Common Stock by members of the Boards of Directors of the Company and its
subsidiary corporations. Options granted pursuant to the 1989 Plan may be
exercised beginning on the earlier to occur of (i) one year after the date of
their grant or (ii) a "change in control" of the Company, as such term is
defined in the 1989 Plan.
Each non-employee director of the Company or any Company subsidiary
corporation who on or after May 1, 1989 is elected or reelected as a director of
the Company or any subsidiary corporation at any annual or special meeting of
shareholder(s) of the Company or any Company subsidiary corporation will, as of
the date of such election or reelection, automatically be granted an option to
purchase 500 shares of the Company's Common Stock; however, no non-employee
director may receive an option or options to purchase more than 1,000 shares of
Common Stock in any one calendar year. The maximum number of shares of the
Company Common Stock as to which options may be granted to any non-employee
director under the 1989 Plan is 10,000 shares.
The 1989 Plan is administered by the Board of Directors of the Company,
including non-employee directors. Options granted under the 1989 Plan are not
"incentive stock options" as defined in Section 422 of the Internal Revenue Code
of 1986, as amended. Option prices are intended to equal 100% of the fair market
value of the Company's Common Stock on the date of the election or re-election
of the non-employee directors.
For the year ended December 31, 1994, Messrs. Baird, Beck, Bershad,
Kerr, Lewis, Ragone and Tarquini each received options under the Plan to
purchase 1,050 shares of Company Common Stock (as adjusted to reflect the 5%
stock dividend declared on December 13, 1994). Such options were not exercisable
in 1994.
1984 Incentive Stock Option Plan
Effective April 14, 1984, the Company adopted the Company Incentive
Stock Option Plan (the "1984 Plan") which provided for the purchase of a total
of not more than 1,222,868 shares of Company Common Stock (as adjusted for all
stock splits and stock dividends through May 1, 1995) by key employees. Options
may not be granted under the 1984 Plan after December 31, 1993. The purpose of
the 1984 Plan was to enable the Company to continue to compete successfully in
attracting and retaining key employees. Key executive and other employees of the
Company and its subsidiaries were eligible to receive options under the 1984
Plan. No further options may be granted under the 1984 Plan.
Options granted pursuant to the 1984 Plan were not exercisable until
one year after the date of grant and then were exercisable pursuant to a
schedule based on years of service or option holding period. Options granted
under the 1984 Plan were intended to constitute "incentive stock options" as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). Option prices were intended to equal 100% of the fair market value of
the Company's Common Stock on the date of grant. Recipients of options under the
1984 Plan were determined by the Personnel Committee.
<PAGE>9
There was no limit on the number of shares for which options may be
granted to any single employee under the 1984 Plan, except that incentive stock
options first exercisable by an employee in any one year under the 1984 Plan
(and all other Plans of the Company) may not exceed $100,000 in value
(determined at the time of grant). Payment of the option price on excise of
options under the 1984 Plan may be made in cash, shares of Company Common Stock
or a combination of both.
Options granted under the 1984 Plan are not transferable other than by
will or by the laws of descent and distribution. The Board of Directors or a
committee thereof fixed the term (which may not be more than ten years) of the
options, but the options are subject to earlier termination in the event of
termination of employment, death, or disability. The 1984 Plan provided that
during the lifetime of an optionee, his option is exercisable only by him and
only while employed by the Company or a subsidiary or within (i) three months
after his retirement, or (ii) three months after he otherwise ceases to be so
employed, to the extent the option was exercisable on the last day of
employment. For these purposes, retirement means termination of employment by an
optionee who has attained age 65. If an optionee retires due to disability, his
options may be exercised within twelve months of his retirement date. If an
optionee dies within a period during which his option could have been exercised
by him, his option may be exercised within one year of his death (unless the
option earlier terminates) by those entitled under his will or the laws of
descent and distribution, but only to the extent the option was exercisable by
him immediately prior to his death.
1994 Employee Stock Option Plan
Effective May 24, 1994, the Company adopted the Company 1994 Employee
Stock Option Plan (the "Employee Stock Option Plan" or "Plan"). Pursuant to the
Stock Option Plan, stock options may be granted which qualify under the Internal
Revenue Code as incentive stock options as well as stock options that do not
qualify as incentive stock options. All officers and key employees of the
Company or any current or future subsidiary corporation are eligible to receive
options under the Employee Stock Option Plan. As of May 1, 1995, 232,155 options
had been granted under the Plan. The Plan replaced the 1984 Plan which expired
on December 31, 1993.
The purpose of the Employee Stock Option Plan is to provide additional
incentive to employees of the Company by encouraging them to invest in the
Company's Common Stock and thereby acquire a proprietary interest in the Company
and an increased personal interest in the Company's continued success and
progress. The Employee Stock Option Plan is administered by the Personnel
Committee ("Committee") which is appointed by the Board of Directors and
consists only of Directors who are not eligible to receive options under the
Employee Stock Option Plan. The Committee determines, among other things, which
officers and key employees receive an option or options under the Employee Stock
Option Plan, the type of option (incentive stock options or non-qualified stock
options, or both) to be granted, the number of shares subject to each option,
the rate of option exercisability, and, subject to certain other provisions to
be discussed below, the option price and duration of the option. No individual
may be granted, in any calendar year, a number of options that is more than
100,000 and incentive stock options first exercisable by an employee in any one
year under the Plan (and all other plans of the Company) may not exceed $100,000
in value (determined at the time of grant). The Committee may, in its
discretion, modify or amend any of the option terms hereafter described,
provided that if an incentive option is granted under the Plan, the option as
modified or amended continues to be an incentive stock option.
The aggregate number of shares which may be issued upon the exercise of
options under the Employee Stock Option Plan is 1,050,000 shares of Common Stock
(as adjusted for all stock splits and stock dividends through May 1, 1995). In
the event of any change in the capitalization of the Company, such as by stock
dividend, stock split or what the Board of Directors deems in its sole
discretion to be similar circumstances, the aggregate number and kind of shares
which may be issued under the Plan will be
<PAGE>10
appropriately adjusted in a manner determined in the sole discretion of the
Board of Directors. Reacquired shares of the Company's Common Stock, as well as
unissued shares, may be used for the purpose of the Plan. Common Stock of the
Company subject to options which have terminated unexercised, either in whole or
in part, will be available for future options granted under the Plan. The option
price for options issued under the Employee Stock Option Plan must be at least
equal to 100% of the fair market value of the Common Stock as of the date the
option is granted.
Payment of the option price on exercise of options granted under the
Plan may be made in (a) cash, (b) Company Common Stock which will be valued by
the Secretary of the Company at its fair market value or (c) any combination of
cash and Common Stock of the Company valued as provided in clause (b).
Except as otherwise described below, none of the options granted under
the Employee Stock Option Plan may be exercised during the first year after the
date granted. Thereafter, each optionee may exercise options held more than one
year based upon years of service or option holding period, whichever is sooner,
pursuant to the following schedule:
Option Holding
Years of Service Period
Less than 3 years 25% 0-1 year 0%
More than 3 years and less
than 6 years 50% 1-2 years 25%
More than 6 years and less
than 8 years 75% 2-3 years 50%
3-4 years 75%
More than 8 years 100% More than 4 years 100%
In the event of a "change in control" of the Company, as defined in the
Employee Stock Option Plan, each optionee may exercise the total number of
shares then subject to the option. The Committee has the authority to provide
for a different rate of option exercisability for any optionee.
Unless terminated earlier by the option's terms, incentive stock
options expire ten years after the date they are granted and non-qualified stock
options expire ten years after the date they are granted. Options terminate
three months after the date on which employment is terminated (whether such
termination be voluntary or involuntary), other than by reason of death of
disability. The option terminates one year from the date of termination due to
death or disability (but not later than the scheduled termination date). Options
granted pursuant to the Plan are not transferable, except by the will or the
laws of descent and distribution in the event of death. During an optionee's
lifetime, the option is exercisable only by the optionee, including, for this
purpose, the optionee's legal guardian or custodian in the event of disability.
The Company's Board of Directors has the right at any time, and from
time to time, to modify, amend, suspend or terminate the Plan, without
shareholder approval, except to the extent that shareholder approval of the Plan
modification or amendment is required by the Code, to permit the granting of
incentive stock options under the Plan. Any such action will not affect options
previously granted. If the Board of Directors voluntarily submits a proposed
modification, amendment, suspension or termination for shareholder approval,
such submission will not require any future modifications, amendments,
suspensions or terminations
<PAGE>11
(whether or not relating to the same provision or subject matter) to be
similarly submitted for shareholder approval.
Stock Options
No grants of options to purchase the Company's Common Stock were made
to the named executives in 1994.
The following table sets forth certain information regarding individual
exercises of stock options during 1994 by each of the named executives in 1994.
AGGREGATED STOCK OPTION EXERCISES IN 1994 AND YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised in the
Acquired on Value Stock Options at Money Stock Options
Name Exercise Realized Year-End 1994 (1) at Year-End 1994
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Vernon W. Hill, II 10,057 $ 58,398 108,555 0 $ 664,392 $ 0
C. Edward Jordan, Jr. 0 0 96,795 0 640,531 0
Peter M. Musumeci, Jr. 2,290 28,808 87,684 0 541,575 0
Robert D. Falese, Jr. 1,378 12,760 9,200 26,011 44,793 125,136
Dennis M. DiFlorio 5,000 81,750 37,510 6,783 266,298 39,606
- -------------------------
<FN>
(1) The stock options reflected in this column have been adjusted for the 5%
stock dividend declared on December 13, 1994.
</FN>
</TABLE>
Employee Stock Ownership Plan
Effective January 1, 1989, the Company's Board of Directors established
the Commerce Bancorp, Inc. Employee Stock Ownership Plan ("ESOP") as a
restatement of the Company's Stock Bonus Plan. Employees of the Company and its
subsidiaries are eligible to participate in the ESOP if they are at least 21
years of age and have completed at least 1,000 hours of service to the Company
or its subsidiaries during the twelve-month period beginning on the date of hire
or during any subsequent calendar year. Participants are 100% vested in their
accounts under the ESOP upon death, total disability, a complete discontinuance
of contributions by the Company, termination of the ESOP, and a partial
termination of the ESOP where a participant is involved in that termination.
Except as provided above, generally, participants are 20% vested after 3 years
of credited service, increasing by 20% for each additional year of credited
service so that participants are 100% vested in their accounts under the ESOP
after seven years of credited service with the Company or a subsidiary.
Subject to limitations contained in the Code, contributions by the
Company to the ESOP are deductible for federal income tax purposes. Except as
described below, such contributions are determined annually by the Company's
Board of Directors at its discretion. Contributions may consist either of shares
of the Company's stock, or cash, which may be invested by the trustees of
<PAGE>12
the ESOP's trust in shares of the Company's stock or to provide funds to pay
principal or interest on any indebtedness incurred by the ESOP in purchasing
shares. Contributions by the Company are allocated as of the close of each plan
year among accounts of participants in the ESOP. Each participant's account is
credited with that portion of contributions by the Company as such participant's
compensation (as defined in the ESOP) bears to all participants' compensation.
In January 1990, the ESOP Trust purchased 417,000 shares of Series C
ESOP Preferred Stock ("ESOP Shares") from the Company for an aggregate purchase
price of $7,500,000. The ESOP Trust borrowed the purchase price for the ESOP
Shares from an unaffiliated bank which loan was refinanced with another
unaffiliated bank in 1994 (the "Loan"). The Loan is guaranteed by the Company
and its subsidiaries, and is secured by the pledge of the ESOP Shares obtained
with the proceeds of the Loan. The Company has agreed to contribute to the ESOP
amounts sufficient to permit the ESOP to make principal and interest payments on
the Loan. Pursuant to the loan agreement with the ESOP's bank lender, a portion
of the ESOP Shares pledged by the ESOP for repayment of the Loan will be
released from the pledge according to a formula based on the portion of
principal and interest which has been repaid each year. As of December 31, 1994,
the outstanding principal balance on the Loan was $5,385,000.
The co-trustees of the ESOP are Vernon W. Hill, II and C. Edward Jordan,
Jr. Each participant may direct the trustees of the ESOP's trust as to the
manner in which shares of voting stock allocated to his account are to be voted.
Each participant in the ESOP will become entitled to direct the trustees as to
the voting of the ESOP Shares which are released from the pledge and which are
allocated to his account under the ESOP. The enclosed form of Proxy also serves
as the voting instruction card for the trustees of the ESOP with respect to the
shares of Common Stock and ESOP Shares which have been allocated to the accounts
of participants under the ESOP. Shares which have not been allocated to the
account of any participant will be voted by the co-trustees in accordance with
such procedures as the Company, as the Plan Administrator, shall direct. Shares
which have been allocated to the accounts of participants but for which no
voting directions are received will be voted as the trustees direct in the
exercise of their independent judgment. See "Series C ESOP Preferred Stock."
For the plan year ended December 31, 1994, the Company contributed
$648,000 to the ESOP. Allocations to participants' accounts for such plan year
have not yet been completed.
Supplemental Executive Retirement Plan
Effective January 1, 1992, the Company established a Supplemental
Executive Retirement Plan ("SERP") for certain designated executives in order to
provide supplemental retirement income if the Company's ESOP and Social Security
retirement benefits fall below sixty percent of average annual compensation at
the time of retirement. Average annual compensation is defined as the average of
the actual annual compensation paid to the executive by the Company during the
period of three consecutive years which produces the highest such average during
the ten year period ending with termination of employment. The SERP is unfunded,
is not a qualified plan under the Code and benefits are paid directly by the
Company. Messrs. Hill, Jordan, Musumeci, Falese and DiFlorio have been
designated to participate in the SERP.
Personnel Committee Interlocks and Insider Participation
The Personnel Committee members are Morton N. Kerr, Daniel J. Ragone
and Jack R Bershad.
<PAGE>13
Mr. Kerr, a director of the Company, is the President of
Markeim-Chalmers, Inc. which in 1994 received $264,000 in fees for real estate
related services, primarily real estate appraisals.
Mr. Bershad, a director of the Company, is a member of a law firm which
the Company and its subsidiaries have retained during the Company's last fiscal
year and which the Company and its subsidiaries intend to retain during its
current fiscal year. See "Certain Transactions."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Common Stock
The following table sets forth, as of May 1, 1995, the beneficial
ownership of the Company Common Stock by each director and nominee for director
of the Company, each of the executive officers of the Company and by the
directors, nominees for directors, and executive officers of the Company as a
group. No person is known by the Company to own beneficially more than 5% of the
Company's outstanding Common Stock. Unless otherwise specified, all persons
listed below have sole voting and investment power with respect to their shares.
<TABLE>
<CAPTION>
Name of Beneficial Number of Shares
Owner or Beneficially Percent of
Identity of Group Owned(1)(2) Class(2)
<S> <C> <C>
David Baird, IV . . . . . . . . . . . . . . 71,401 (3) *%
Robert C. Beck. . . . . . . . . . . . . . . 109,224 (4) 1.03
Jack R Bershad. . . . . . . . . . . . . . . 38,251 (3)(5) *
Vernon W. Hill, II. . . . . . . . . . . . . 462,340 (6) 4.34
C. Edward Jordan, Jr. . . . . . . . . . . . 156,260 (7) 1.46
Morton N. Kerr. . . . . . . . . . . . . . . 84,742 (3)(8) *
Steven M. Lewis . . . . . . . . . . . . . . 116,716 (3)(9) 1.10
Daniel J. Ragone. . . . . . . . . . . . . . 49,680 (10) *
Joseph T. Tarquini, Jr. . . . . . . . . . . 149,899 (3)(11) 1.42
Peter M. Musumeci, Jr . . . . . . . . . . . 113,390 (12) 1.06
Robert D. Falese, Jr. . . . . . . . . . . . 12,225 (13) *
Dennis M. DiFlorio. . . . . . . . . . . . . 45,773 (14) *
David Wojcik. . . . . . . . . . . . . . . . 47,351 (15) *
All Directors, Nominees for
Directors and Executive Officers
of Bancorp as a Group (13 Persons) 1,368,493(16) 12.49%
- -----------------------------
<FN>
*less than 1%
</FN>
</TABLE>
<PAGE>14
(1) The securities "beneficially owned" are determined in accordance with
the definitions of "beneficial ownership" as set forth in the regulations of the
Securities and Exchange Commission and, accordingly, may include securities
owned by or for, among others, the wife and/or minor children of the individual
and any other relative who has the same residence as such individual as well as
other securities as to which the individual has or shares voting or investment
power or has the right to acquire under outstanding stock options within 60 days
after May 1, 1995. Beneficial ownership may be disclaimed as to certain of the
securities.
(2) The figures in these columns do not reflect the shares of Common
Stock issuable upon conversion of the Series C ESOP Preferred Stock. As of May
1, 1995, each share of Series C ESOP Preferred Stock was convertible into 1.3401
shares of Common Stock.
(3) Includes 6,093 shares of Common Stock issuable upon the exercise of
stock options granted under the Company's 1989 Stock Option Plan for
Non-Employee Directors.
(4) Includes 3,601 shares of Common Stock issuable upon the exercise of
stock options granted under the Company's 1989 Stock Option Plan for
Non-Employee Directors.
(5) Includes 16,167 shares of Common Stock held by Mr. Bershad's wife.
(6) Includes 35,329 shares held by Site Development Inc., 11,041 shares
held by the wife of Mr. Hill, 45,618 shares held by S. J. Dining, Inc., 43,141
shares held by U.S. Restaurants, Inc., 42,022 shares held by J.V. Properties,
11,206 shares held by Business Interiors, Inc., 29,646 shares held by the Hill
Family Trust and 4,029 shares allocated to Mr. Hill by the Company's ESOP. Mr.
Hill is the Chairman of the Board of Site Development, Inc., a shareholder of S.
J. Dining, Inc., a shareholder of U.S. Restaurants, Inc., a partner in J.V.
Properties, a co-trustee and beneficiary of the Hill Family Trust and a
co-trustee and beneficiary of the Company's ESOP Trust. Business Interiors, Inc.
is a company owned by Mr. Hill's wife. This amount also includes 79,692 shares
of Common Stock issuable upon the exercise of stock options granted to Mr. Hill
under the Company's 1984 and 1994 Stock Option Plans. This amount does not
include 1,759 shares of Series C ESOP Preferred Stock allocated to Mr. Hill by
the Company's ESOP nor does it include any unallocated shares of Common Stock or
Series C ESOP Preferred Stock held by the Company's ESOP.
(7) Includes 96,795 shares of Common Stock issuable upon the exercise of
stock options granted to Mr. Jordan under the Company's 1984 and 1994 Stock
Option Plans, 2,783 shares allocated to Mr. Jordan by the Company's ESOP, of
which Mr. Jordan is a co-trustee and beneficiary, 400 shares held by Mr.
Jordan's wife and 462 shares held in trust for Mr. Jordan's minor children. This
amount does not include 1,460 shares of Series C ESOP Preferred Stock allocated
to Mr. Jordan by the Company's ESOP nor does it include any unallocated shares
of Common Stock or Series C ESOP Preferred Stock held by the Company's ESOP.
(8) Includes 134 shares of Common Stock held by Mr. Kerr's wife and
77,947 shares held by the Markeim-Chalmers, Inc. Pension Plan. Markeim-Chalmers,
Inc. is a company owned by Mr. Kerr.
(9) Includes 45,618 shares held by S. J. Dining, Inc. and 43,141 shares
held by U.S. Restaurants, Inc. Mr. Lewis is President of S. J. Dining, Inc. and
President of U.S. Restaurants, Inc. This amount also includes 850 shares held in
trust for Mr. Lewis' minor children.
(10) Includes 12,859 shares held by Mr. Ragone's wife.
(11) Includes 13,858 shares held by The Tarquini Organization Profit
Sharing Plan and 2,100 shares held by The Tarquini Foundation. Mr. Tarquini is
President of The Tarquini Organization.
<PAGE>15
(12) Includes 87,684 shares of Common Stock issuable upon the exercise of
stock options granted to Mr. Musumeci under the Company's 1984 and 1994 Stock
Option Plans and 274 shares held in trust for Mr. Musumeci's minor child. This
amount also includes 2,577 shares of Common Stock allocated to Mr. Musumeci
under the Company's ESOP but does not include 1,618 shares of Series C ESOP
Preferred Stock allocated to Mr. Musumeci by the Company's ESOP.
(13) Includes 9,200 shares of Common Stock issuable upon the exercise of
stock options granted to Mr. Falese under the Company's 1984 and 1994 Stock
Option Plans and 2,312 shares held by Mr.
Falese's wife in trust for their minor daughter.
(14) Includes 37,510 shares of Common Stock issuable upon the exercise of
stock options granted to Mr. DiFlorio under the Company's 1984 and 1994 Stock
Option Plans and 513 shares of Common Stock allocated to Mr. DiFlorio under the
Company's ESOP. It does not include 798 shares of Series C ESOP Preferred Stock
allocated to Mr. DiFlorio under the Company's ESOP.
(15) Includes 37,882 shares of Common Stock issuable upon the exercise of
stock options granted to Mr. Wojcik under the Company's 1984 and 1994 Stock
Option Plans, 116 shares held in trust for Mr. Wojcik's minor children and 449
shares held by Mr. Wojcik's wife. This amount also includes 507 shares of Common
Stock allocated to Mr. Wojcik under the Company's ESOP but does not include 841
shares of Series C ESOP Preferred Stock allocated to Mr. Wojcik by the Company's
ESOP.
(16) Includes an aggregate of 382,829 shares of Common Stock issuable
upon the exercise of stock options granted to directors and certain executive
officers of the Company under the Company's Stock Option Plans.
Series C ESOP Preferred Stock
As of May 1, 1995, all of the 417,000 shares of the Series C ESOP
Preferred Stock outstanding were held of record by the Company's ESOP Trust.
Additionally, as of such date, the ESOP Trust held of record 72,699 shares of
Common Stock. As of May 1, 1995, 86,217 shares of Series C ESOP Preferred Stock,
and 61,790 shares of Common Stock held by the ESOP Trust were allocated to
individual participant accounts. See "Employee Stock Ownership Plan". If all of
the unallocated shares of Series C ESOP Preferred Stock held of record by the
ESOP Trust as of May 1, 1995, were converted into Common Stock, the unallocated
shares of Common Stock the ESOP Trust would hold of record would be 4.08% of the
Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Certain directors and executive officers of the Company, Commerce NJ,
Commerce PA and Commerce Shore, certain of their immediate family members and
certain corporations or organizations with which they are affiliated have had
and expect to continue to have loan and other banking transactions with Commerce
NJ, Commerce PA and Commerce Shore. All such loans and other banking
transactions were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions for unrelated parties, and
did not involve more than the normal risk of uncollectibility or present other
unfavorable features.
The Board of Directors of the Company approves all transactions in which
an officer or director of the Company or any of its subsidiaries has an
interest. In the case of a transaction involving a director of the Company, such
director does not vote on the transaction.
<PAGE>16
Mr. Kerr, a director of the Company, is the President of
Markeim-Chalmers, Inc. which in 1994 received $264,000 in fees for real estate
related services, primarily real estate appraisals.
Messrs. Beck and Bershad, directors of the Company, are members of law
firms which the Company and its subsidiaries have retained during the Company's
last fiscal year and which the Company and its subsidiaries intend to retain
during its current fiscal year.
Commerce NJ leases the ground for five of its branch offices from limited
partnerships in which Mr. Hill is a partner or in which a corporation owned by
Mr. Hill is a partner. Pursuant to the terms of the ground leases, Commerce NJ
has constructed its own buildings and pays annual rent from $24,000 to $60,000
per lease for the first five years increasing to $30,000 to $91,253 for the last
five years of each lease. These leases which have expiration dates of 2004 to
2010, are each renewable for four additional terms of five years each.
The Company leases land to a limited partnership partially comprised of
the directors of Commerce PA and the Company including Messrs. Bershad, Hill and
Lewis and a corporation owned by Mr. Hill. The term of the lease is 25 years.
The minimum annual lease payments to be received by the Company are $51,700 for
the first five years, $53,300 for years 6-10, $55,300 for years 11-15, $57,300
for years 16-20 and $59,300 for years 21-25. The limited partnership has
constructed an office building on the site, and Commerce PA has leased part of
the building for 15 years for a branch office, with options to renew for three
successive five-year periods. The annual rent for that portion of the building
is $91,000 for years 1-5, $100,000 for years 6-10, and $110,000 for years 11-15.
Management believes that the rental paid or received for each of the
foregoing leases is comparable to the rental which they would have to pay to or
would have received from, as the case may be, and that the option prices are
comparable to or more favorable than those that could have been obtained or
received from, non-affiliated parties in similar commercial transactions for
similar locations, assuming that such locations were available.
During 1994, Commerce NJ, Commerce PA and Commerce Shore obtained
interior design and facilities management services in the amount of $468,000
from a business corporation of which Shirley Hill, wife of Vernon W. Hill, II,
is a principal shareholder and the president. Additionally, during 1994 the
business received commissions of $962,000 on furniture and facility purchases
made directly by Commerce NJ, Commerce PA and Commerce Shore. These expenditures
related primarily to the furnishing and related design services of the opening
and/or refurbishing of certain offices during the period. In the opinion of
management, such expenses were substantially equivalent to those that would have
been paid to unaffiliated companies for similar furniture and services.
<PAGE>17
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to its
Annual Report on Form 10-K for the year ended December 31, 1994 to be signed on
its behalf by the undersigned thereunto duly authorized.
COMMERCE BANCORP, INC.
Date: May 15, 1995 By: /s/ C. Edward Jordan, Jr.
-------------------------
C. Edward Jordan, Jr.
Executive Vice President
