<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
COMMERCE BANCORP, INC.
-----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
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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:___________________________________________________________
----------------------------------------------------------------------
*Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
Commerce
LOGO Bancorp, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Commerce
Bancorp, Inc. ("Bancorp") will be held at the Commerce University, 17000
Horizon Way at Springdale Road, Mount Laurel, New Jersey, on Tuesday, June
18, 1996, at 5:30 P.M., local time, and at any adjournment or postponement
thereof, to consider and act upon the following matters as more fully
described in the annexed Proxy Statement:
1. The election of Directors;
2. Such other matters as may properly come before the Annual Meeting or
any adjournment or postponement thereof.
You are cordially invited to attend the Annual Meeting in person. Whether
or not you expect to attend the Annual Meeting in person, you are urged to
sign and date the enclosed Proxy and return it promptly in the envelope
provided for that purpose.
The Board of Directors has fixed May 1, 1996 as the record date for
determination of shareholders entitled to vote at the Annual Meeting. Only
shareholders of record at the close of business on that date will be entitled
to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
ROBERT C. BECK,
Secretary
May 17, 1996
<PAGE>
COMMERCE BANCORP, INC.
COMMERCE ATRIUM
1701 ROUTE 70 EAST
CHERRY HILL, NEW JERSEY
PROXY STATEMENT
This Proxy Statement is being furnished to shareholders of Commerce
Bancorp, Inc. ("Bancorp") in conjunction with the solicitation of proxies by
the Board of Directors of Bancorp for use at Bancorp's Annual Meeting of
Shareholders to be held on Tuesday, June 18, 1996, at the Commerce
University, 17000 Horizon Way at Springdale Road, Mount Laurel, New Jersey
(the "Annual Meeting"), and at any adjournment or postponement thereof. The
approximate date upon which this Proxy Statement and the accompanying form of
Proxy will be first sent, given or otherwise made available to Bancorp's
shareholders is May 17, 1996.
The expense of the proxy solicitation will be borne by Bancorp. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone by directors, officers or employees of Bancorp and its subsidiaries
without additional compensation. Bancorp is required to pay the reasonable
expenses incurred by recordholders of Bancorp Common Stock who are brokers,
dealers, banks or voting trustees, or their nominees, for mailing proxy
material and annual shareholder reports to any beneficial owners of Bancorp
Common Stock they hold of record, upon request of such recordholders.
The Board of Directors of Bancorp has fixed the close of business on May
1, 1996, as the date for determining holders of record of Bancorp Common
Stock, par value $1.5625 per share (the "Common Stock"), and Bancorp Series C
ESOP Cumulative Convertible Preferred Stock, no par value per share ("Series
C ESOP Preferred Stock"), entitled to notice of, and to vote at, the Annual
Meeting. On that date, there were 11,344,354 shares of Common Stock
outstanding and 417,000 shares of Series C ESOP Preferred Stock outstanding.
Each holder of Common Stock and Series C ESOP Preferred Stock, voting
together and not as separate classes, is entitled to cast one vote for each
share held of record on that date. All Series C ESOP Preferred Stock is held
of record by Bancorp's Employee Stock Ownership Plan Trust ("ESOP Trust").
See "Series C ESOP Preferred Stock" and "Employee Stock Ownership Plan." The
holders of a majority of the aggregate outstanding shares of Bancorp Common
Stock and Series C ESOP Preferred Stock, present either in person or by
proxy, will constitute a quorum for the transaction of business at the Annual
Meeting.
If the enclosed form of Proxy is appropriately marked, signed, and
returned in time to be voted at the Annual Meeting, the shares represented by
the Proxy will be voted in accordance with the instructions marked thereon.
Signed Proxies not marked to the contrary will be voted "FOR" the election of
all nominees for director.
The enclosed Proxy confers discretionary authority to vote with respect to
any and all of the following matters that may come before the Annual Meeting:
(i) matters which Bancorp does not know, a reasonable time before the proxy
solicitation, are to be presented at the Annual Meeting; (ii) approval of the
minutes of a prior meeting of shareholders if such approval does not amount
to ratification of the action taken at that meeting; (iii) the election of
any person to any office for which a bona fide nominee is named in this Proxy
Statement and such nominee is unable to serve or for good cause will not
serve; (iv) any proposal omitted from this Proxy Statement and Proxy pursuant
to Rule 14a-8 or Rule 14a-9 promulgated under the Securities Exchange Act of
1934; and (v) matters incident to the conduct of the Annual Meeting. In
connection with such matters, the persons named in the enclosed Proxy will
vote in accordance with their best judgment.
Bancorp is not currently aware of any matters which will be brought before
the Annual Meeting (other than procedural matters) which are not referred to
in the enclosed Notice of Annual Meeting.
Any Bancorp shareholder giving a Proxy may revoke it at any time before it
is exercised by giving written notice of such revocation, signed in the same
manner as the Proxy, to Bancorp's Secretary or by executing a new Proxy and
returning it to the Secretary of Bancorp prior to the voting of the first
Proxy at the Annual Meeting. Bancorp shareholders attending the Annual
Meeting may also revoke their Proxies by giving written notice of revocation
to Bancorp's Secretary prior to the voting of the Proxy or by voting by
written ballot at the Annual Meeting.
1
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of May 1, 1996, 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 named
in the Summary Compensation table 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>
COMMON STOCK
----------------------------------
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 .............................................. 69,752(3) *
Robert C. Beck ............................................... 113,445(4) 1.00%
Jack R Bershad ............................................... 42,814(5) *
Vernon W. Hill, II ........................................... 513,905(6) 4.48
C. Edward Jordan, Jr. ........................................ 165,036(7) 1.44
Morton N. Kerr ............................................... 85,729(8) *
Steven M. Lewis .............................................. 125,148(9) 1.10
Daniel J. Ragone ............................................. 54,379(10) *
Joseph T. Tarquini, Jr. ...................................... 163,190(11) 1.44
Peter M. Musumeci, Jr. ....................................... 133,481(12) 1.17
Robert D. Falese, Jr. ........................................ 33,828(13) *
Dennis M. DiFlorio ........................................... 81,201(14) *
All Directors, Nominees for Directors and Executive Officers of
the Company as a Group (13 Persons) ......................... 1,558,401(15) 13.14%
</TABLE>
- ------
* less than 1%
(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,
1996. 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, 1996, each share of Series C ESOP cumulative convertible Preferred
Stock was convertible into 1.4071 shares of Common Stock.
(3) Includes 5,801 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 5,933 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 17,226 shares of Common Stock held by Mr. Bershad's wife and
8,547 shares of Common Stock issuable upon the exercise of stock options
granted to Mr. Bershad under the Company's 1989 Stock Option Plan for
Non-Employee Directors.
2
<PAGE>
(6) Includes 37,094 shares held by Site Development Inc., 10,543 shares held
by the wife of Mr. Hill, 47,897 shares held by S. J. Dining, Inc.,
45,298 shares held by U.S. Restaurants, Inc., 48,739 shares held by J.V.
Properties, 11,766 shares held by Business Interiors, Inc., 31,128
shares held by the Hill Family Trust and 4,363 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 116,843
shares of Common Stock issuable upon the exercise of stock options
granted to Mr. Hill under the Company's 1984 and 1994 Employee Stock
Option Plans. This amount does not include 2,737 shares of Series C ESOP
Cumulative Convertible 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 103,379 shares of Common Stock issuable upon the exercise of
stock options granted to Mr. Jordan under the Company's 1984 and 1994
Employee Stock Option Plans, 3,172 shares allocated to Mr. Jordan by the
Company's ESOP, of which Mr. Jordan is a co-trustee and beneficiary, and
484 shares held in trust for Mr. Jordan's minor children. This amount
does not include 2,586 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 140 shares of Common Stock held by Mr. Kerr's wife, 83,944
shares held by the Markeim-Chalmers, Inc. Pension Plan and 1,050 shares
of Common Stock issuable upon the exercise of stock options granted to
Mr. Kerr under the Company's 1989 Stock Option Plan for Non-Employee
Directors. Markeim-Chalmers, Inc. is a company owned by Mr. Kerr.
(9) Includes 47,897 shares held by S. J. Dining, Inc., 45,298 shares held by
U.S. Restaurants, Inc. and 8,547 shares of Common Stock issuable upon
the exercise of stock options granted to Mr. Lewis under the Company's
1989 Stock Option Plan for Non-Employee Directors. Mr. Lewis is
President of S. J. Dining, Inc. and President of U.S. Restaurants, Inc.
This amount also includes 1,342 shares held in trust for Mr. Lewis'
minor children.
(10) Includes 13,883 shares held by Mr. Ragone's wife and 2,152 shares of
Common Stock issuable upon the exercise of stock options granted to Mr.
Ragone under the Company's 1989 Stock Option Plan for Non-Employee
Directors.
(11) Includes 14,907 shares held by The Tarquini Organization Profit Sharing
Plan, 2,205 shares held by The Tarquini Foundation and 8,547 shares of
Common Stock issuable upon the exercise of stock options granted to Mr.
Tarquini under the Company's 1989 Stock Option Plan for Non-Employee
Directors. Mr. Tarquini is the President of The Tarquini Organization.
(12) Includes 99,922 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, 2,747 shares of Common Stock allocated to Mr.
Musumeci under the Company's ESOP but does not include 2,586 shares of
Series C ESOP Cumulative Convertible Preferred Stock allocated to Mr.
Musumeci by the Company's ESOP.
(13) Includes 30,306 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 104 shares of Common Stock allocated to Mr.
Falese under the Company's ESOP. This amount also includes 69 shares
held by Mr. Falese's wife and 2,427 shares held by her in trust for
their minor daughter. It does not include 835 shares of Series C ESOP
Cumulative Convertible Preferred Stock allocated to Mr. Falese under the
Company's ESOP.
(14) Includes 68,555 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 746 shares of Common Stock allocated to Mr.
DiFlorio under the Company's ESOP. It does not include 1,718 shares of
Series C ESOP Cumulative Convertible Preferred Stock allocated to Mr.
DiFlorio under the Company's ESOP.
(15) Includes an aggregate of 519,030 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.
3
<PAGE>
SERIES C ESOP PREFERRED STOCK
As of May 1, 1996, 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 69,637 shares of
Common Stock. As of May 1, 1996, 174,834 shares of Series C ESOP Preferred
Stock, and all 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, 1996, were converted into Common Stock, the
unallocated shares of Common Stock the ESOP Trust would hold of record would
be 2.86% of the Common Stock.
THE BOARD OF DIRECTORS
During 1995, there were 12 meetings of the Board of Directors of Bancorp.
The Board of Directors of Bancorp has established an Audit and Compliance
Committee and a Personnel Committee but does not have a standing Nominating
Committee. In addition, each of Bancorp's three subsidiary banks, Commerce
Bank, N.A., Cherry Hill, New Jersey ("Commerce NJ"), Commerce
Bank/Pennsylvania, N.A., Philadelphia, Pennsylvania ("Commerce PA") and
Commerce Bank/Shore, N.A. ("Commerce Shore") has various committees of their
respective boards.
Information with respect to the committees of the Board of Directors of
Bancorp is set forth below.
AUDIT AND COMPLIANCE COMMITTEE
The Audit and Compliance Committee reviews Bancorp's and its wholly-owned
subsidiary banks' financial statements, accounting procedures and methods
employed in connection with audit programs. It serves as the principal
liaison between the Board of Directors and Bancorp's independent certified
public accountants. In addition, this committee makes recommendations to the
Board of Directors concerning the selection of Bancorp's independent
certified public accountants. Robert C. Beck, Daniel J. Ragone, Joseph T.
Tarquini, Jr., Thomas J. Maher (a director of Commerce PA) and Daniel M.
Monroe (a director of Commerce Shore) are the current members of the Audit
and Compliance Committee. During 1995, there were five meetings of the Audit
and Compliance Committee.
PERSONNEL COMMITTEE
The Personnel Committee reviews and recommends the levels of compensation
of Commerce NJ's, Commerce PA's and Commerce Shore's executive officers and
administers Bancorp's 1984 and 1994 Stock Option Plans. Morton N. Kerr,
Daniel J. Ragone and Jack R Bershad are the current members of the Personnel
Committee. During 1995, there was one meeting of the Personnel Committee. The
report of the Personnel Committee with respect to 1995 compensation is set
forth on page 9 of this Proxy Statement.
ATTENDANCE
In 1995, each of Bancorp's directors and nominees for directors attended
more than 75% of the aggregate of the total number of meetings of the Board
of Directors and all committees of which they were members of Bancorp,
Commerce NJ, Commerce PA and Commerce Shore, as the case may be.
ELECTION OF DIRECTORS
The Bylaws of Bancorp provide that Bancorp's business shall be managed by
a Board of not less than five nor more than twenty-five directors and that
within these limits the number of directors shall be as established by
resolution of a majority of the full Board of Directors. The Board of
Directors by resolution has set the number of persons to be elected to the
Board of Directors at the Annual Meeting at nine. The election of directors
will be determined by a plurality vote and the nine nominees receiving the
most "FOR" votes will be elected.
The Board of Directors has designated the persons listed below to be
nominees for election as directors. All of the nominees are currently members
of the Board, and each of them has consented to serve if elected. Bancorp has
no reason to believe that any of the nominees will be unavailable for
election; however, if any nominee becomes unavailable for any reason, the
4
<PAGE>
Board of Directors may designate a substitute nominee, or the number of
directors to be elected at the Annual Meeting will be reduced accordingly.
Directors of Bancorp hold office for one year and until their successors have
been duly elected.
The following information regarding Bancorp's nominees is based, in part,
on information furnished by these individuals.
<TABLE>
<CAPTION>
Name Age Positions with Bancorp and Subsidiaries
------ --- ----------------------------------------
<S> <C> <C>
Vernon W. Hill, II .... 50 Chairman and President of Bancorp; Chairman and President
of Commerce NJ; Chairman and President of Commerce PA; Chairman
of Commerce Shore
C. Edward Jordan, Jr. .. 52 Executive Vice President and Director of Bancorp; Executive
Vice President and Director of Commerce NJ
Robert C. Beck ........ 60 Secretary and Director of Bancorp; Secretary and Director
of Commerce NJ
David Baird, IV ....... 59 Director of Bancorp and Commerce NJ
Jack R Bershad ........ 65 Director of Bancorp, Commerce NJ and Commerce PA
Morton N. Kerr ........ 65 Director of Bancorp and Commerce NJ
Steven M. Lewis ....... 46 Director of Bancorp, Commerce NJ and Commerce PA
Daniel J. Ragone ...... 68 Director of Bancorp and Commerce NJ
Joseph T. Tarquini, Jr. . 60 Director of Bancorp and Commerce NJ
</TABLE>
Mr. Hill, a director of Commerce NJ since 1973 and Bancorp since 1982, has
been Chairman and/or President of Commerce NJ since 1973 and Chairman and
President of Bancorp since 1982. Mr. Hill 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, President of Commerce PA since June 1994, 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 Bancorp since 1982,
has been Executive Vice President of Commerce NJ since 1974 and Executive
Vice President of Bancorp since 1982.
Mr. Beck, a director of Commerce NJ since 1973 and Bancorp since 1982, has
been Secretary of Commerce NJ since 1973 and Secretary of Bancorp since 1982.
Mr. Beck has been a partner of the law firm of Parker, McCay & Criscuolo,
Marlton, New Jersey since 1987.
Mr. Baird, a director of Bancorp 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 Bancorp 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 Bancorp 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 Bancorp
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 Bancorp 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 Bancorp 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.
5
<PAGE>
EXECUTIVE OFFICERS
The executive officers of Bancorp and its banking subsidiaries, as of May
1, 1996, are set forth below.
<TABLE>
<CAPTION>
Position with Bancorp, Commerce NJ,
Commerce PA, and Commerce Shore;
Name Age Principal Occupation
------ ----- ------------------------------------
<S> <C> <C>
Vernon W. Hill, II .... 50 Chairman and President of Bancorp since 1982; Chairman and/or President
of Commerce NJ since 1973; Chairman of Commerce PA from June 1984 to June
1986 and from January 1987 to present; President of Commerce PA from June
1994 to present; Chairman of Commerce Shore since 1989.
C. Edward Jordan, Jr. . 52 Executive Vice President and Director of Bancorp since 1982; Executive
Vice President and Director of Commerce NJ since 1974.
Peter M. Musumeci, Jr. . 45 Executive Vice President and Senior Credit Officer since 1986 and Treasurer
and Assistant Secretary since 1984 of Bancorp; Executive Vice President
of Commerce NJ since 1986; Director of Commerce PA since 1987 and Commerce
Shore since 1989.
Robert D. Falese, Jr. . 49 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.
Dennis M. DiFlorio .... 42 Executive Vice President of Commerce NJ since January, 1996. Prior thereto
Mr. DiFlorio was Senior Vice President of Commerce NJ since 1988.
David Wojcik .......... 43 Senior Vice President of Bancorp since 1988.
</TABLE>
6
<PAGE>
EXECUTIVE COMPENSATION
The following table is a summary of certain information concerning the
compensation awarded or paid to, or earned by, Bancorp's chief executive
officer and each of Bancorp's other four most highly compensated executive
officers (the "named executives") during each of the last three fiscal years.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------------------------------- --------------
Securities
Other Underlying All
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 1995 $441,000 $125,000 $50,779 33,075 $37,925(3)
Chairman of the Board, 1994 390,000 150,000 50,244 -0- 36,653
Chief Executive Officer and 1993 316,000 125,000 50,564 65,985 33,005
President of Bancorp;
Chairman of the Board,
Chief Executive Officer and
President of Commerce NJ
C. Edward Jordan, Jr. 1995 $225,000 $60,000 -- 22,050 $30,269(3)
Executive Vice President of 1994 215,000 75,000 -- -0- 28,868
Bancorp; Executive Vice 1993 190,000 75,000 -- 50,647 22,916
President of Commerce NJ
Peter M. Musumeci, Jr. 1995 $225,000 $60,000 -- 22,050 $26,757(3)
Executive Vice President, 1994 200,000 75,000 -- -0- 24,763
Treasurer and Assistant 1993 185,000 50,000 -- 50,647 27,072
Secretary of Bancorp;
Executive Vice President
of Commerce NJ
Robert D. Falese, Jr. 1995 $225,000 $75,000 -- 22,050 $15,319(3)
Executive Vice President of 1994 200,000 75,000 -- -0- 14,041
Commerce NJ 1993 175,000 50,000 -- 38,492 2,083
Dennis M. DiFlorio 1995 $175,000 $75,000 -- 22,050 $10,760(3)
Executive Vice President of 1994 140,000 60,000 -- -0- 8,368
Commerce NJ 1993 100,000 25,000 -- 24,657 7,970
</TABLE>
- ------
(1) The total in this column reflects personal use of a company car (1995,
$5,389; 1994, $5,389; 1993, $5,449), expense allowances (1995, $36,600;
1994, $36,600; 1993, $32,600) and country club dues (1995, $8,790; 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, 1994 and 1995.
(2) The stock option grants reflected in this column have been adjusted for
the 5% stock dividends declared on January 2, 1996, December 13, 1994,
January 19, 1994 and January 19, 1993. 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 (for 1995,
Mr. Hill, $25,613; Mr. Jordan, $18,685; and Mr. Musumeci, $14,516); and
long-term disability policies (for 1995, Mr. Hill, $4,738; Mr. Jordan,
$4,010; Mr. Musumeci, $4,667; Mr. Falese, $7,745; and Mr. DiFlorio,
$3,186) and contributions to the Company's ESOP (in 1995, $7,574 each for
all five individuals).
7
<PAGE>
EMPLOYMENT AGREEMENTS
At the recommendation of Bancorp's Personnel Committee, the Board of
Directors of Bancorp approved Employment Agreements for Messrs. Hill, Jordan
and Musumeci.
Mr. Hill's Employment Agreement provides that he will be employed by
Bancorp 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
Bancorp 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 $480,000 per year subject to upward adjustment by
Bancorp'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 Bancorp
and provides for all other fringe benefits as in effect from time to time
which are generally available to Bancorp's salaried officers including,
without limitation, medical and hospitalization coverage, life insurance
coverage and disability coverage.
The Employment Agreement requires Bancorp 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.
The Employment Agreement allows Mr. Hill to terminate his employment with
Bancorp upon a change in control of Bancorp (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 Bancorp or a surviving or acquiring person are materially reduced to a
level below that which he enjoyed on the date of the most recent annual
extension of the Employment Agreement. 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 Bancorp 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 Bancorp and
Commerce NJ, and Mr. Musumeci will serve as Executive Vice President/Senior
Credit Officer of Bancorp 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 $240,000 and Mr. Musumeci's "base salary" under
his Employment Agreement is $240,000.
DIRECTOR COMPENSATION
Directors of Bancorp and Commerce NJ were paid an annual fee of $10,000
plus $600 for each meeting of the Board of Directors attended in 1995 and
will be paid an annual fee of $10,000 plus $750 for each meeting of the Board
of Directors attended in 1996. When meetings of the Board of Directors of
Bancorp 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 1995
and will receive a fee of $750 for each meeting attended in 1996. Directors
of Commerce PA are paid a fee of $300 for each meeting of the Board of
Directors and committee meeting 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 Bancorp, Commerce NJ, Commerce PA or Commerce Shore. Each
director of Bancorp is provided with $100,000 of permanent life insurance.
8
<PAGE>
A retirement plan for outside directors, i.e., directors who are not
officers or employees of Bancorp on the date their service as a Bancorp
director ends, provides that outside directors with five or more years of
service as a Bancorp 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 Bancorp
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 Bancorp, the plan provides that each director then sitting on the
Bancorp 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 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 8 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), Bancorp 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 211,066 shares of
Bancorp Common Stock by members of the Boards of Directors of Bancorp 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 Bancorp, as such term is defined
in the 1989 Plan.
Each non-employee director of Bancorp or any Bancorp subsidiary
corporation who on or after May 1, 1989 is elected or reelected as a director
of Bancorp or any subsidiary corporation at any annual or special meeting of
shareholder(s) of Bancorp or any Bancorp subsidiary corporation will, as of
the date of such election or reelection, automatically be granted an option
to purchase 500 shares of Bancorp'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
Bancorp 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 Bancorp,
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 Bancorp's Common Stock on the date of the election or
re-election of the non-employee directors.
For the year ended December 31, 1995, Messrs. Baird, Beck, Bershad, Kerr,
Lewis, Ragone and Tarquini each received options under the Plan to purchase
1,050 shares of Bancorp Common Stock (as adjusted to reflect the 5% stock
dividend declared on January 2, 1996). Such options were not exercisable in
1995.
REPORT OF THE PERSONNEL COMMITTEE
The Personnel Committee of the Board of Directors of Bancorp is composed
of outside non-employee directors. Bancorp's compensation package for its
executive officers consists of base salary, annual performance bonus, annual
stock option grants and various broad based employee benefits including
contributions under Bancorp's ESOP. Management recommendations of base salary
levels, annual performance bonuses and stock option grants are reviewed by
the Personnel Committee and submitted to the full Board of Directors for
approval.
The objective of Bancorp's executive compensation is to enhance Bancorp's
long-term profitability by providing compensation that will attract and
retain superior talent, reward performance and align the interests of the
executive officers with the long term interests of the shareholders of
Bancorp.
The Company has employment agreements with Messrs. Hill, Jordan and
Musumeci which were effective January 1, 1992. See, "EXECUTIVE COMPENSATION -
Employment Agreements."
9
<PAGE>
Base salary levels for Bancorp's executive officers are competitively set
relative to companies in peer businesses. In reviewing base salaries, the
Committee also takes into account individual experience and performance.
Bancorp's annual performance bonuses are intended to provide a direct cash
incentive to executive officers and other key employees to maximize Bancorp's
profitability. Financial performance is compared against budgets as well as
peer businesses.
Stock options are intended to encourage officers and other key employees
to remain employed by Bancorp by providing them with a long term interest in
Bancorp's overall performance as reflected by the performance of the market
of Bancorp's Common Stock. In granting stock options, the Personnel Committee
takes into account prior stock option grants and considers the executive's
level of compensation and past contributions to Bancorp.
Vernon W. Hill, II was Bancorp's Chairman, President and Chief Executive
Officer for 1995. Mr. Hill's base salary is set competitively relative to
other chief executive officers in financial service companies in Bancorp's
market area. In determining Mr. Hill's base salary as well as annual
performance bonus, the Committee reviewed independent compensation data and
Bancorp's performance as compared against budgets and peer businesses. As
with Bancorp's other executive officers, Mr. Hill's total compensation
involves certain subjective judgments and is not based solely upon any
specific objective criteria or weighting.
The Personnel Committee and Bancorp are considering the future impact on
executive compensation, and whether certain changes should be made as a
result, of Section 162(m) of the Internal Revenue Code of 1986, as amended,
which became effective January 1, 1994. This provision generally denies a
deduction for Federal income tax purposes for compensation in excess of $1
million for persons named in the Proxy Statement, except for compensation
that is performance-based and for compensation that is paid pursuant to
certain contracts entered into prior to February, 1993. Bancorp believes that
the limitation will have no effect on it in 1996.
PERSONNEL COMMITTEE
MORTON N. KERR
DANIEL J. RAGONE
JACK R BERSHAD
PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Personnel Committee members are Morton N. Kerr, Daniel J. Ragone and
Jack R Bershad.
Mr. Kerr, a director and nominee for director of Bancorp, is the President
of Markeim-Chalmers, Inc. which in 1995 received $222,500 in fees for real
estate related services, primarily real estate appraisals.
Mr. Bershad, a director and nominee for director of Bancorp, is a member
of a law firm which Bancorp and its subsidiaries have retained during
Bancorp's last fiscal year and which Bancorp and its subsidiaries intend to
retain during its current fiscal year. See "Certain Transactions."
10
<PAGE>
FINANCIAL PERFORMANCE
The graph below summarizes cumulative return experienced by Bancorp's
shareholders over the years 1991 through 1995, compared to the Nasdaq Bank
Index and Nasdaq Composite Index assuming an investment in each of $100 at
December 31, 1990 and the reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
COMMERCE BANCORP, NASDAQ BANK INDEX, NASDAQ COMPOSITE
YEAR-END 1990 TO YEAR-END 1995
Total Return
Index Values
- -------------------------------------------------------------------------------
Nasdaq Nasdaq
Commerce Bank Stock
Bancorp Stocks Market
1990 100.0 100.0 100.0
1991 164.7 164.0 160.6
1992 295.3 239.2 186.9
1993 335.3 277.0 214.5
1994 457.0 277.4 209.7
1995 545.7 415.0 296.3
1984 INCENTIVE STOCK OPTION PLAN
Effective April 14, 1984, Bancorp adopted the Bancorp Incentive Stock
Option Plan (the "1984 Plan") which provided for the purchase of a total of
not more than 1,284,011 shares of Bancorp Common Stock (as adjusted for all
stock splits and stock dividends through May 1, 1996) 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 Bancorp to continue to compete
successfully in attracting and retaining key employees. Key executive and
other employees of Bancorp 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
Bancorp's Common Stock on the date of grant. Recipients of options under the
1984 Plan were determined by the Personnel Committee.
11
<PAGE>
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 Bancorp) may not exceed $100,000 in value
(determined at the time of grant). Payment of the option price on exercise of
options under the 1984 Plan may be made in cash, shares of Bancorp 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 Bancorp 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, Bancorp adopted the Bancorp 1994 Employee Stock
Option Plan (the "Employee Stock Option Plan" or "Plan"). Pursuant to the
Employee 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 Bancorp or any current or future subsidiary corporation are
eligible to receive options under the Employee Stock Option Plan. As of May
1, 1996, 531,881 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 Bancorp by encouraging them to invest in Bancorp's
Common Stock and thereby acquire a proprietary interest in Bancorp and an
increased personal interest in Bancorp'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 Bancorp) 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 1,102,500 shares of Common
Stock (as adjusted for all stock splits and stock dividends through May 1,
1996). In the event of any change in the capitalization of Bancorp, 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 appropriately adjusted in a
manner determined in the sole discretion of the Board of Directors.
Reacquired shares of Bancorp's Common Stock, as well as unissued shares, may
be used for the purpose of the Plan. Common Stock of Bancorp 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) Bancorp Common Stock, which will be valued by
the Secretary of Bancorp at its fair market value or (c) any combination of
cash and Common Stock of Bancorp valued as provided in clause (b).
12
<PAGE>
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 Bancorp, 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 or
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.
Bancorp'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 (whether or not relating to the same
provision or subject matter) to be similarly submitted for shareholder
approval.
STOCK OPTIONS
The following table sets forth certain information regarding options
granted to the named executive officers in 1995.
OPTION GRANTS IN FISCAL 1995
<TABLE>
<CAPTION>
Number of % of Total
Securities Options Grant
Underlying Granted Date
Options to Employees Exercise Expiration Present
Name Granted(1) in Last Fiscal Year Price(1) Date Value(2)
----- ------------ ------------------- -------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Vernon W. Hill, II .... 33,075 12.7% 17.86 January 1, 2005 $184,228
C. Edward Jordan, Jr. . 22,050 8.5 17.86 January 1, 2005 122,819
Peter M. Musumeci, Jr. . 22,050 8.5 17.86 January 1, 2005 122,819
Robert D. Falese, Jr. . 22,050 8.5 17.86 January 1, 2005 122,819
Dennis M. DiFlorio .... 22,050 8.5 17.86 January 1, 2005 122,819
</TABLE>
- ------
(1) The stock option grants and exercise price reflected in these columns
have been adjusted for the 5% stock dividends declared on December 13,
1994 and January 2, 1996.
13
<PAGE>
(2) In accordance with Securities and Exchange Commission rules, the
Black-Scholes option pricing model was chosen to estimate the grant date
present value of the options set forth in this table. Bancorp's use of
this model should not be construed as an endorsement of its accuracy at
valuing options. All stock option valuation models, including the
Black-Scholes model, required a prediction about future movement of the
stock price. The assumptions used in the model were expected volatility
of .31, risk- free rate of return of 7.04%, dividend yield of 3.92%, and
time to exercise of 10 years. The real value of the options in this table
depends upon the actual performance of Bancorp's Common Stock during the
applicable period.
The following table sets forth certain information regarding individual
exercises of stock options during 1995 by each of the named executives.
AGGREGATED STOCK OPTION EXERCISES IN 1995 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 1995 (1) at Year-End 1995
----- ------------ --------- ------------------------------- --------------------------------
Exercisable Unexercisable Exercisable Unexercisable
------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Vernon W. Hill, II .... 28,772 $124,757 83,768 33,075 $ 737,255 $ 106,534
C. Edward Jordan, Jr. .. 19,336 244,896 81,329 22,050 739,872 71,023
Peter M. Musumeci, Jr. . 4,654 79,076 77,872 22,050 692,045 71,023
Robert D. Falese, Jr. . -- -- 19,281 39,741 151,470 208,591
Dennis M. DiFlorio .... -- -- 46,505 22,050 455,819 71,023
</TABLE>
- ------
(1) The stock options reflected in this column have been adjusted for the 5%
stock dividend declared on January 2, 1996.
EMPLOYEE STOCK OWNERSHIP PLAN
Effective January 1, 1989, Bancorp's Board of Directors established the
Commerce Bancorp, Inc. Employee Stock Ownership Plan ("ESOP") as a
restatement of Bancorp's Stock Bonus Plan. Employees of Bancorp 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 Bancorp 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 Bancorp, 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 Bancorp or a
subsidiary.
Subject to limitations contained in the Code, contributions by Bancorp to
the ESOP are deductible for federal income tax purposes. Except as described
below, such contributions are determined annually by Bancorp's Board of
Directors at its discretion. Contributions may consist either of shares of
Bancorp's stock, or cash, which may be invested by the trustees of the ESOP's
trust in shares of Bancorp's stock or to provide funds to pay principal or
interest on any indebtedness incurred by the ESOP in purchasing shares.
Contributions by Bancorp 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 Bancorp 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 Bancorp 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 Bancorp and
its subsidiaries, and is secured by the pledge of the ESOP Shares obtained
with the proceeds of the Loan. Bancorp has agreed to contribute to the ESOP
amounts sufficient to permit the ESOP to make principal and interest payments
on the Loan. For the plan year ended December 31, 1995, Bancorp contributed
$934,000 to the ESOP. 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, 1995, the outstanding principal balance on the Loan was
$4,359,000.
14
<PAGE>
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 Bancorp, 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."
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Effective January 1, 1992, Bancorp established a Supplemental Executive
Retirement Plan ("SERP") for certain designated executives in order to
provide supplemental retirement income if Bancorp'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 Bancorp
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 Bancorp. Messrs. Hill, Jordan, Musumeci, Falese and DiFlorio
have been designated to participate in the SERP.
CERTAIN TRANSACTIONS
Certain directors and executive officers of Bancorp, 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 Bancorp approves all transactions in which an
officer or director of Bancorp or any of its subsidiaries has an interest. In
the case of a transaction involving a director of Bancorp, such director does
not vote on the transaction.
Mr. Kerr, a director and nominee for director of Bancorp, is the President
of Markeim-Chalmers, Inc. which in 1995 received $222,500 in fees for real
estate related services, primarily real estate appraisals.
Messrs. Beck and Bershad, directors and nominees for directors of Bancorp,
are members of law firms which Bancorp and its subsidiaries have retained
during Bancorp's last fiscal year and which Bancorp 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.
Bancorp leases land to a limited partnership partially comprised of the
directors of Commerce PA and Bancorp 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 Bancorp 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.
15
<PAGE>
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 1995, Commerce NJ, Commerce PA and Commerce Shore obtained interior
design, facilities management and general contractor services in the amount
of $496,000 from a business corporation of which Shirley Hill, wife of Vernon
W. Hill, II, is a principal shareholder and the President. Additionally,
during 1995 the business received commissions of $931,000 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.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires Bancorp's directors and
executive officers, and persons who own more than 10% of a registered class
of Bancorp's equity securities, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of Bancorp. Officers, directors
and greater than 10% shareholders are required by SEC regulation to furnish
Bancorp with copies of all Section 16(a) forms they file.
To Bancorp's knowledge, based solely on review of the copies of such
reports furnished to Bancorp and written representations that no other
reports were required during the fiscal year ended December 31, 1995, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were complied with.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANT
Bancorp's independent public accountants during the most recent year were
Ernst & Young, 2001 Market Street, Philadelphia, PA 19103. Based upon the
recommendation of the Audit Committee, the Board of Directors has selected
Ernst & Young to be Bancorp's independent public accountants for 1996. The
selection of Bancorp's independent public accountants is not being submitted
to shareholders because there is no legal requirement to do so. A
representative of Ernst & Young is expected to be present at the Annual
Meeting and to have the opportunity to make a statement, if he desires to do
so, and to be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Proposals from shareholders intended to be presented at the 1997 Annual
Meeting must be received by Bancorp for inclusion in Bancorp's proxy
statement by January 15, 1997. In the event the 1997 annual meeting occurs on
a date 30 days or more prior to one year from this year's annual meeting,
shareholder proposals must be received within 120 days of the anticipated
mailing date of the 1997 proxy statement.
A COPY OF BANCORP'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995 WILL BE
FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST TO C. EDWARD
JORDAN, JR., EXECUTIVE VICE PRESIDENT, COMMERCE BANCORP, INC., COMMERCE
ATRIUM, 1701 ROUTE 70 EAST, CHERRY HILL, NEW JERSEY, 08034-5400.
By Order of the Board of Directors
ROBERT C. BECK
Secretary
16
<PAGE>
PROXY
This Proxy is solicited on behalf of the Board of Directors
COMMERCE BANCORP, INC.
The undersigned hereby appoints Morton N. Kerr and Daniel J. Ragone and
each of them, as proxies of the undersigned, each with power to act without
the other and with power of substitution, and hereby authorizes each of them to
represent and vote, as designated on the other side, all the shares of stock of
Commerce Bancorp, Inc. (the "Company") which the undersigned is entitled to
vote, standing in the name of the undersigned with all powers which the
undersigned would possess if present, at the Annual Meeting of Shareholders of
the Company to be held on June 18, 1996 or any postponement or adjournment
thereof. The undersigned hereby directs the Proxy to be voted as indicated on
the reverse side.
(Continued, and to be marked, dated and signed, on the other side)
^FOLD AND DETACH HERE^
<PAGE>
Please
mark X
your votes
as indicated
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES LISTED
BELOW. DISCRETIONARY AUTHORITY IS CONFERRED HEREBY AS TO CERTAIN MATTERS
DESCRIBED IN THE COMPANY'S PROXY STATEMENT.
1. FOR the election of the following nominees to the Board of Directors for
the ensuing year: Vernon W. Hill, II, David Baird, IV, Robert C. Beck, Jack
R Bershad, C. Edward Jordan, Jr., Morton N. Kerr, Steven M. Lewis, Daniel
J. Ragone and Joseph T. Tarquini, Jr.
<TABLE>
<CAPTION>
<S> <C> <C>
FOR all nominees WITHHOLD (INSTRUCTION: To withhold authority to vote for any individual nominee,
listed above AUTHORITY write that nominee's name in the space provided below.)
(except as marked to vote for all
to the contrary) nominees listed above ________________________________________________________________________
</TABLE>
2. In their discretion, upon such other matters as may properly come before
the meeting or any postponements or adjournments thereof.
A majority of such attorneys and proxies, or their substitutes at the meeting,
or any postponements or adjournments thereof, may exercise all of the powers
hereby given. Any proxy to vote any of the shares, with respect to which the
undersigned is or would be entitled to vote, heretofore given to any person or
persons other than the persons named above, is revoked.
IN WITNESS WHEREOF, the undersigned has signed and sealed this proxy and hereby
acknowledges receipt of the Company's Annual Report to Shareholders and a copy
of the notice of such meeting and proxy statement in reference thereto both
dated in May, 1996.
Dated:____________________________________________________________________, 1996
________________________________________________________________________________
(Shareholder(s) Signature)
________________________________________________________________________________
(L.S.)
Printed Name of Shareholder
________________________________________________________________________________
(L.S.)
Printed Name of Shareholder
NOTE: Signature should correspond with name appearing on stock certificate(s).
When signing in a fiduciary or representative capacity, sign full title as such.
Where more than one owner, each should sign.
Please sign, date and return this proxy card promptly using the enclosed
envelope.
^ FOLD AND DETACH HERE ^
COMMERCE BANCORP, INC.
ANNUAL SHAREHOLDERS' MEETING
Tuesday, June 18, 1996
5:30 P.M.
Commerce University
17000 Horizon Way
Mount Laurel, New Jersey 08054
