<PAGE>
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, 1999
[ ] 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)
New Jersey 22-2433468
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1701 Route 70 East, Cherry Hill, NJ 08034-5400 08034-5400
- ---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 751-9000
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $1.5625 par value
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
NONE
(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
Registrant is $1,136,162,560.(1)
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of stock, as of the latest practicable date.
Common Stock, $1.5625 Par Value 30,624,092
(Title of Class) No. of Shares Outstanding
DOCUMENTS INCORPORATED BY REFERENCE
Parts II and IV incorporate certain information by reference from the
Registrant's Annual Report to Shareholders for the fiscal year ended December
31, 1999 (the "Annual Report").
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(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 Registrant's 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 May
1, 2000. 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>
EXPLANATORY NOTE
This Amendment No. 1 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1999, as filed with the Securities and Exchange
Commission on March 30, 2000 (the "1999 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 1999 10-K by reference to its Proxy Statement for the
Registrant's 2000 Annual Meeting of Shareholders. Since the Registrant will not
file its definitive Proxy Statement within 120 days after the end of the fiscal
year covered by the 1999 10-K, the information required by Items 10 through 13
of Form 10-K is accordingly set forth below.
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT.
Directors
Directors of Commerce Bancorp, Inc. ("Bancorp" or the "Company") hold
office for one year and until their respective successors have been duly
elected and qualified. The following information regarding Bancorp's directors
is based, in part, on information furnished by the directors.
<TABLE>
<CAPTION>
Name Age Positions with Bancorp and Subsidiaries
- ----------------------------------- ----- -------------------------------------------------------------
<S> <C> <C>
Vernon W. Hill, II ................ 54 Chairman and President of Bancorp; Chairman and President of
Commerce NJ; Chairman and President of Commerce PA; Chair-
man of Commerce Shore, Commerce Central, Commerce North
and Commerce Delaware
C. Edward Jordan, Jr. ............. 56 Executive Vice President and Director of Bancorp; Executive
Vice President and Director of Commerce NJ; Director of Com-
merce PA
Robert C. Beck .................... 64 Secretary and Director of Bancorp; Secretary and Director of
Commerce NJ; Director of Commerce PA
David Baird, IV ................... 63 Director of Bancorp, Commerce NJ and Commerce PA
Jack R Bershad .................... 69 Director of Bancorp, Commerce NJ and Commerce PA
Joseph E. Buckelew ................ 71 Director of Bancorp, Commerce Shore and Commerce PA; Presi-
dent of Commerce Shore; Chairman of Commerce National
Insurance Services, Inc.
Morton N. Kerr .................... 69 Director of Bancorp, Commerce NJ and Commerce PA
Steven M. Lewis ................... 50 Director of Bancorp, Commerce NJ and Commerce PA
Daniel J. Ragone .................. 72 Director of Bancorp, Commerce NJ and Commerce PA
William A. Schwartz, Jr. .......... 59 Director of Bancorp, Commerce NJ and Commerce PA
Joseph T. Tarquini, Jr. ........... 64 Director of Bancorp, Commerce NJ and Commerce PA
Frank C. Videon, Sr. .............. 77 Director of Bancorp, Commerce NJ and Commerce PA
</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 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, Chairman of Commerce Shore since January, 1989,
Chairman of Commerce North since January, 1997 and Chairman of Commerce
Delaware and Commerce Central since October, 1999 and January,1999,
respectively.
1
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Mr. Jordan, a director of Commerce NJ since 1974, Bancorp since 1982 and
Commerce PA since June, 1997, 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, Bancorp since 1982 and
Commerce PA since June, 1997, 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 and Commerce
PA since June, 1997, 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 LLP, Philadelphia, Pennsylvania and Cherry Hill, New Jersey, since
1964.
Mr. Buckelew has been a director of Bancorp and Chairman of Commerce
National Insurance Services, Inc., the wholly-owned insurance brokerage
subsidiary of Bancorp, since November, 1996 and has been a director of Commerce
Shore since 1993 and Commerce NJ and Commerce PA since June, 1997. Mr. Buckelew
was elected President of Commerce Shore in 1998. Mr. Buckelew was the President
of Morales, Potter & Buckelew, Inc. t/a Buckelew & Associates, Toms River, New
Jersey from 1959 to November 1996, when this insurance agency was acquired by
Bancorp.
Mr. Kerr, a director of Commerce NJ since 1973, Bancorp since 1982 and
Commerce PA since June, 1997, 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, Bancorp since 1982 and
Commerce PA since June, 1997, has been Chairman and President of Ragone,
Raible, Lacatena & Beppel, C.P.A., Haddonfield, New Jersey, and its predecessor
firms, since 1960.
Mr. Schwartz, a director of Commerce PA since 1984 and a director of
Bancorp and Commerce NJ since June, 1997, has been Chairman, President and
Chief Executive Officer of U.S. Vision, Glendora, New Jersey, or its
predecessor firms, since 1967.
Mr. Tarquini, a director of Commerce NJ since 1973, Bancorp since 1982 and
Commerce PA since June, 1997, 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. Videon, a director of Commerce PA since 1991 and a director of Bancorp
and Commerce NJ since June, 1997, has been the owner of Frank C. Videon Funeral
Home, Broomall, Pennsylvania, since 1982.
Director Compensation
Directors of Bancorp, Commerce NJ and Commerce PA were paid an annual fee
of $10,000 plus $1,000 for each meeting of the board of directors and committee
meeting attended in 1999 and will be paid an annual fee of $14,000 and a
meeting fee of $1,000 for each meeting of the board of directors and committee
meeting attended in 2000. When meetings of the board of directors of Bancorp,
Commerce NJ and Commerce PA occur on the same day, only one fee is paid.
Directors of Commerce Shore, Commerce Central, Commerce North and Commerce
Delaware were paid a fee of $500 for each meeting of the board of directors and
committee meeting attended in 1999 and will be paid the same meeting fee for
each meeting of the board of directors and committee meeting attended in 2000.
No fees are paid to directors who are also operating officers of Bancorp or its
banking subsidiaries. Each director of Bancorp is provided with $100,000 of
permanent life insurance.
A retirement plan for Bancorp's 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
2
<PAGE>
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 1099 Compensation (as such term is defined in the
plan) 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 1099
Compensation at the time of the director's termination of board service and the
highest 1099 Compensation 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
6. This plan became effective January 1, 1993, as amended.
1989 and 1998 Stock Option Plans 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 320,690 shares (as
adjusted for all stock splits and dividends through May 1, 2000) 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. No further options may be granted under the 1989 Plan. As of
May 1, 2000, 78,763 options (as adjusted for all stock splits and stock
dividends through May 1, 2000) were outstanding under the 1989 Plan.
Effective June 29, 1998, Bancorp adopted the 1998 Stock Option Plan for
Non-Employee Directors (the "1998 Plan") which provides for the purchase of a
total of not more than 551,250 shares (as adjusted for all stock splits and
dividends through May 1, 2000) of Bancorp common stock by members of the boards
of directors of Bancorp and its subsidiary corporations. Under the 1998 Plan,
members of the board of directors of Bancorp and its current and future
subsidiary corporations (i.e., any corporation in which Bancorp owns, directly
or indirectly, fifty percent or more of the outstanding voting power of all
classes of stock of such corporation at the time of election or reelection of
such director) who are not also employees of Bancorp or its subsidiary
corporations are entitled to receive options to purchase Bancorp common stock.
Options granted pursuant to the 1998 Plan may be exercised in whole, or from
time to time in part, 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 1998 Plan. As of May 1, 2000, 376,562 options (as adjusted
for all stock splits and stock dividends through May 1, 2000) had been granted
under the 1998 Plan and 174,688 options (as adjusted for all stock splits and
stock dividends through May 1, 2000) were available for grant. Options may
continue to be granted under the 1998 Plan through December 31, 2007.
Both the 1989 Plan and 1998 Plan are administered by the board of
directors of Bancorp, including non-employee directors. Options granted under
both the 1989 Plan and/or 1998 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 option grant. The board of directors of Bancorp, in their
sole discretion, may grant options under the 1998 Plan to non-employee
directors and determine the number of shares subject to each option, the rate
of option exercisability, and subject to certain limitations, the option price
and the duration of the options. Unless terminated earlier by the option's
terms, options granted under the 1998 Plan expire ten years after the date they
are granted.
For the year ended December 31, 1999, options to purchase the following
shares of Bancorp common stock (as adjusted to reflect the 5% stock dividend
declared on December 21, 1999) were granted to the following directors under the
1998 Plan: Messrs. Baird, 3,150; Beck, 3,150; Bershad, 3,150; Kerr, 3,150;
Lewis, 3,150; Ragone, 3,150; Schwartz, 3,150; Tarquini, 3,150; and Videon,
3,150. Such options were not exercisable in 1999.
3
<PAGE>
Executive Officers
The executive officers of Bancorp and its banking subsidiaries, as of May
1, 2000, are set forth below.
<TABLE>
<CAPTION>
Position with Bancorp, Commerce NJ, Commerce PA,
Commerce Shore and Commerce North
Name Age Principal Occupation
- ------------------------ ----- ------------------------------------------------------------
<S> <C> <C>
Vernon W. Hill, II 54 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, Commerce North since 1997, and Commerce Central
and Commerce Delaware since 1999.
C. Edward Jordan, Jr. 56 Executive Vice President and Director of Bancorp since
1982; Executive Vice President and Director of Commerce
NJ since 1974; Director of Commerce PA since 1997.
Peter M. Musumeci, Jr. 49 Executive Vice President and Senior Credit Officer of
Bancorp since 1986 and Treasurer and Assistant Secretary of
Bancorp since 1984; Executive Vice President of Commerce
NJ since 1986; Director of Commerce Shore since 1989.
Robert D. Falese, Jr. 53 Executive Vice President and Senior Loan Officer of
Commerce NJ since 1992.
Dennis M. DiFlorio 46 Executive Vice President of Commerce NJ since January,
1996; Director of Commerce North since 1997. Prior thereto
Mr. DiFlorio was Senior Vice President of Commerce NJ
since 1988.
David Wojcik 47 Senior Vice President of Bancorp since 1988.
Thomas J. Sukay 46 Senior Vice President of Bancorp since 1989.
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
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 SEC reports about their
beneficial ownership of common stock and other equity securities of Bancorp.
All such persons are required by SEC regulation to furnish Bancorp with copies
of all Section 16(a) reports they file.
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, 1999, Bancorp believes all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
10% beneficial owners were timely complied with.
4
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation Table
The following table is a summary of certain information concerning the
compensation during the last three fiscal years awarded or paid to, or earned
by, Bancorp's chief executive officer and each of Bancorp's other four most
highly compensated executive officers during Bancorp's last fiscal year.
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------------------
Other
Annual
Name/Title Year Salary Bonus Compensation (1)
- ----------------------------------------------- ------ ----------- ----------- ------------------
<S> <C> <C> <C> <C>
Vernon W. Hill, II 1999 $700,000 $200,000 $69,091
Chairman and President of Bancorp; 1998 620,000 150,000 69,006
Chairman and President of Commerce 1997 550,000 150,000 67,213
NJ and Commerce PA; Chairman of
Commerce Shore, Commerce Central,
Commerce Delaware and Commerce North
C. Edward Jordan, Jr. 1999 $262,500 $ 25,000
Executive Vice President of Bancorp; 1998 250,000 25,000
Executive Vice President of 1997 260,000 25,000
Commerce NJ
Peter M. Musumeci, Jr. 1999 $300,000 $ 60,000
Executive Vice President and Senior 1998 280,000 60,000
Credit Officer, Treasurer and Assistant 1997 265,000 60,000
Secretary of Bancorp; Executive Vice President
of Commerce NJ
Robert D. Falese, Jr. 1999 $325,000 $100,000
Executive Vice President and Senior 1998 300,000 80,000
Loan Officer of Commerce NJ 1997 275,000 80,000
Dennis M. DiFlorio 1999 $325,000 $100,000
Executive Vice President of 1998 300,000 80,000
Commerce NJ 1997 275,000 80,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Long Term
Compensation
--------------
Securities
Underlying All
Stock Option Other
Name/Title Grants (2) Compensation (3)
- ----------------------------------------------- -------------- -----------------
<S> <C> <C>
Vernon W. Hill, II 105,000 $ 33,086
Chairman and President of Bancorp; 248,058 34,568
Chairman and President of Commerce 144,698 37,004
NJ and Commerce PA; Chairman of
Commerce Shore, Commerce Central,
Commerce Delaware and Commerce North
C. Edward Jordan, Jr. 10,500 $ 24,312(3)
Executive Vice President of Bancorp; 11,160 25,950
Executive Vice President of 7,230 28,346
Commerce NJ
Peter M. Musumeci, Jr. 26,250 $ 22,077(3)
Executive Vice President and Senior 22,185 23,429
Credit Officer, Treasurer and Assistant 28,936 25,528
Secretary of Bancorp; Executive Vice President
of Commerce NJ
Robert D. Falese, Jr. 52,500 $ 17,299(3)
Executive Vice President and Senior 27,697 18,211
Loan Officer of Commerce NJ 36,174 19,997
Dennis M. DiFlorio 52,500 $ 7,645(3)
Executive Vice President of 27,697 8,632
Commerce NJ 36,174 10,413
</TABLE>
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(1) The total in this column reflects personal use of a company car (1999,
$4,517; 1998, $4,517; 1997, $4,517;), expense allowances (1999, $62,004;
1998, $62,004; 1997, $54,996) and country club dues (1999, $2,570; 1998,
$2,485; 1997, $7,700). 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.
(2) The stock option grants reflected in this column have been adjusted for the
5-for 4 stock split in the form of a 25% stock dividend declared on June
29, 1998, and the 5% stock dividends declared on December 21, 1999,
December 15, 1998, and December 16, 1997. 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 (i) premiums on life insurance (for 1999,
Mr. Hill $22,746; Mr. Jordan, $16,320; and Mr. Musumeci $13,147; 1998, Mr.
Hill, $23,375; Mr. Jordan, $16,855; and Mr. Musumeci, $13,456; and for
1997, Mr. Hill, $24,032; Mr. Jordan, $17,344; and Mr. Musumeci, $13,738;
(ii) long-term disability policies (for 1999, Mr. Hill $7,329; Mr. Jordan,
$4,981; Mr. Musumeci $5,919; Mr. Falese, $14,288 and Mr. DiFlorio $4,634;
for 1998, Mr. Hill, $7,033; Mr. Jordan, $4,935, Mr. Musumeci, $5,813; Mr.
Falese, $14,051 and Mr. DiFlorio, $4,472; and for 1997, Mr. Hill $7,094;
Mr. Jordan, $5,124; Mr. Musumeci, $5,912; Mr. Falese, $14,119; and Mr.
DiFlorio, $4,535); and (iii) contributions to Bancorp's ESOP (in 1999,
$3,011 each for all five individuals; in 1998, $4,160 each for all five
individuals; and in 1997, $5,878 each for all five individuals).
5
<PAGE>
Employment Agreements
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 Mr. Hill's employment agreement shall be
automatically renewed and extended for a new five year term unless either
Bancorp or Mr. Hill gives the other at least ninety days prior written notice
of their desire to terminate Mr. Hill's employment agreement, in which event
the term will have four years remaining.
Under the terms of Mr. Hill's employment agreement, Mr. Hill's "base
salary" shall not be less than $800,000. Mr. Hill's 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.
Mr. Hill's employment agreement requires Bancorp to compensate Mr. Hill
for the balance of the term of his employment agreement at a rate equal to
seventy percent of his annual base salary if he becomes permanently disabled
(as defined in Mr. Hill's 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.
Mr. Hill's employment agreement allows Mr. Hill to terminate his
employment with Bancorp upon a change in control of Bancorp (as defined in Mr.
Hill's 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 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. Mr. Hill's 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, Musumeci, Falese and
DiFlorio are substantially similar to that of Mr. Hill's except that: Mr.
Jordan will serve as Executive Vice President of Bancorp and Commerce NJ, Mr.
Musumeci will serve as Executive Vice President and Senior Credit Officer of
Bancorp and Commerce NJ, Mr. Falese will serve as Executive Vice President and
Senior Loan Officer of Bancorp and Commerce NJ, and Mr. DiFlorio will serve as
Executive Vice President 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
his employment agreement is $262,500, Mr. Musumeci's "base salary" under his
employment agreement is $330,000, Mr. Falese's "base salary" under his
employment agreement is $375,000 and Mr. DiFlorio's "base salary" under his
employment agreement is $375,000.
Employee Stock Option Plans
Effective April, 1984, Bancorp adopted the Commerce Bancorp, Inc.
Incentive Stock Option Plan (the "1984 Plan") which provided for the purchase
of a total of not more than 1,950,905 shares of Bancorp common stock (as
adjusted for all stock splits and stock dividends through May 1, 2000) by
officers and key employees. 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"). No further options may
be granted under the 1984 Plan. As of May 1, 2000, 348,798 options (as adjusted
for all stock splits and stock dividends through May 1, 2000) were outstanding
under the 1984 Plan.
6
<PAGE>
Effective May, 1994, Bancorp adopted the Commerce Bancorp, Inc. 1994
Employee Stock Option Plan (the "1994 Plan") which provided for the purchase of
a total of not more than 1,674,290 shares of Bancorp common stock (as adjusted
for all stock splits and stock dividends through May 1, 2000) by officers and
key employees. Pursuant to the 1994 Plan, stock options may be granted which
qualify under the Code as incentive stock options as well as stock options that
do not qualify as incentive stock options. No further options may be granted
under the 1994 Plan. As of May 1, 2000, 1,077,002 options (as adjusted for all
stock splits and stock dividends through May 1, 2000) were outstanding under
the 1994 Plan.
Effective May, 1997, Bancorp adopted the Commerce Bancorp, Inc. 1997
Employee Stock Option Plan (the "1997 Plan") which provides for the purchase of
a total of not more than 3,617,578 shares of Bancorp common stock (as adjusted
for all stock splits and stock dividends through May 1, 2000) by officers and
key employees. Pursuant to the 1997 Plan, stock options may be granted which
qualify under the 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 1997 Plan. As of May 1, 2000, 3,599,375 options (as adjusted
for all stock splits and stock dividends through May 1, 2000) had been granted
under the 1997 Plan and 18,203 options (as adjusted for all stock splits and
stock dividends through May 1, 2000) were available for grant. Options may
continue to be granted under the 1997 Plan through December 31, 2006.
The 1984 Plan, 1994 Plan and 1997 Plan are collectively referred to as the
"Employee Plans."
The purpose of the Employee Plans 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 Plans are 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 Plans. The
Committee determines, among other things, which officers and key employees
receive an option or options under the Employee Plans, 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. Under the 1997 Plan, no individual
may be granted a number of options that is more than 50% of the total number of
shares of Bancorp common stock authorized for issuance under the 1997 Plan. In
addition, incentive stock options first exercisable by an employee in any one
year under the 1997 Plan (and all other Employee 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, the option as modified or
amended continues to be an incentive stock option.
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 Employee Plans 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 1997 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 1997 Plan. The option price for
options issued under the 1997 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.
Options granted pursuant to the Employee Plans are not exercisable until
one year after the date of grant and then are exercisable pursuant to a
schedule based on years of service or option holding period. Under the 1994
Plan and 1997 Plan, but not the 1984 Plan, in the event of a "change in
control" of Bancorp, as defined in the 1994 Plan and 1997 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.
Options granted under the 1984 Plan and 1994 Plan are not transferable
other than by will or by the laws of descent and distribution. Except as
otherwise authorized by the Committee with respect to non-qualified stock
options only, options granted pursuant to the 1997 Plan are not transferable,
except by will or the laws of descent and distribution in the event of death.
7
<PAGE>
Options granted under the 1984 Plan had a term of ten years 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.
Under the 1994 Plan and 1997 Plan, unless terminated earlier by the
option's terms, both incentive stock options 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). 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, except that under the 1997 Plan, if specifically permitted
by the Committee or the board of directors, non-qualified stock options are
transferrable.
During 1999, Bancorp granted stock options to purchase an aggregate of
1,076,091 shares (as adjusted for all stock splits and stock dividends through
May 1, 2000) of Bancorp's common stock at an average price of $38.73 per share
(as adjusted for all stock splits and stock dividends through May 1, 2000)
under the 1997 Plan. During 1999, a total of 240,970 options were exercised
under the Employee Plans.
Stock Option Tables
The following table sets forth certain information regarding options
granted during 1999 to each of the executive officers named in the Summary
Compensation Table.
INDIVIDUAL OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to Black-Scholes
Options Employees in Exercise Expiration Grant Date
Name Granted (1) Fiscal Year Price (1) Date Present Value (2)
- ---------------------------- ------------- -------------- ----------- ------------------- ------------------
<S> <C> <C> <C> <C> <C>
Vernon W. Hill, II ......... 105,000 9.8% $38.57 December 21, 2009 $1,251,600
C. Edward Jordan, Jr. ...... 10,500 1.0% 38.57 December 21, 2009 125,160
Peter M. Musumeci, Jr. ..... 26,250 2.4% 38.57 December 21, 2009 312,900
Robert D. Falese, Jr. ...... 52,500 4.9% 38.57 December 21, 2009 625,800
Dennis M. DiFlorio ......... 52,500 4.9% 38.57 December 21, 2009 625,800
</TABLE>
- ------------
(1) The stock option grants and exercise price reflected in these columns have
been adjusted for the 5% stock dividend declared on December 21, 1999.
(2) In accordance with SEC 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, require a prediction about future
movement of the stock price. The assumptions used in the model were expected
volatility of .332, risk-free rates of return of 6.54%, dividend yield of
3%, and weighted average expected life of 4.75 years. The real value of the
options in this table depends upon the actual performance of Bancorp's
common stock during the applicable period.
8
<PAGE>
The following table sets forth certain information regarding individual
exercises of stock options during 1999 by each of the executive officers named
in the Summary Compensation Table.
AGGREGATED STOCK OPTION EXERCISES IN 1999 AND YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised in the
Shares Stock Options at Money Stock Options
Acquired Year-End 1999 (1) at Year-End 1999
on Value ------------------------------- ------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------- ---------- ---------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Vernon W. Hill, II ............. 8,722 $383,254 758,208 105,000 $9,897,451
C. Edward Jordan, Jr. .......... 25 853 166,771 10,500 3,937,325
Peter M. Musumeci, Jr. ......... 15,003 490,134 131,154 26,250 2,050,478
Robert D. Falese, Jr. .......... 25,273 870,344 154,189 77,931 2,608,110 $241,115
Dennis M. DiFlorio ............. 11,257 489,430 192,676 52,500 3,406,230
</TABLE>
- ------------
(1) The stock options reflected in this column have been adjusted for the 5%
stock dividend declared on December 21, 1999.
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
Cumulative Convertible 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"). During 1999, the
outstanding principal balance on the Loan was paid in full.
Effective March 1, 1998, the Trustees of the ESOP exercised their right to
convert all 417,000 ESOP Shares held by the ESOP into 849,062 shares of Bancorp
common stock. As of May 1, 2000, the ESOP Trust held of record 927,510 shares
of common stock (as adjusted for all stock splits and stock dividends through
May 1, 2000). As of May 1, 2000, all but 6,000 of the shares of common stock
held by the ESOP Trust were allocated to individual participant accounts.
9
<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 shares of common stock which are released from the pledge and
which are allocated to his account under the ESOP. The form of proxy enclosed
with the proxy statement also serves as the voting instruction card for the
trustees of the ESOP with respect to the shares of common stock 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. For the Plan
Year ended December 31, 1999, Bancorp contributed $547,000 to the ESOP.
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.
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 1999 received $334,000 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 RELATIONSHIPS AND RELATED TRANSACTIONS --
Certain Transactions."
10
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of May 1, 2000, the beneficial
ownership of Bancorp's common stock by (i) each director and nominee for
director of Bancorp, (ii) each of the executive officers of Bancorp named in
the Summary Compensation Table and (iii) all the directors, nominees for
directors, and executive officers of Bancorp as a group. No person is known by
Bancorp to own beneficially more than 5% of Bancorp's common stock. Unless
otherwise specified, all persons listed below have sole voting and investment
power with respect to their shares.
<TABLE>
<CAPTION>
Name of Number of Shares Percent of
Beneficial Owner or Beneficially Class
Identity of Group Owned(1) Beneficially Owned(1)
- ------------------------------------- -------------------- ----------------------
<S> <C> <C>
David Baird, IV ..................... 125,662(2) *
Robert C. Beck ...................... 202,952(3) *
Jack R Bershad ...................... 73,380(4) *
Joseph E. Buckelew .................. 312,708(5) 1.02%
Vernon W. Hill, II .................. 1,491,896(6) 4.76%
C. Edward Jordan, Jr. ............... 276,581(7) *
Morton N. Kerr ...................... 59,544(8) *
Steven M. Lewis ..................... 239,245(9) *
Daniel J. Ragone .................... 108,108(10) *
William A. Schwartz, Jr. ............ 35,307(11) *
Joseph T. Tarquini, Jr. ............. 291,526(12) *
Frank C. Videon, Sr. ................ 90,677(13) *
Peter M. Musumeci, Jr ............... 235,343(14) *
Robert D. Falese, Jr. ............... 195,091(15) *
Dennis M. DiFlorio .................. 254,726(16) *
Thomas J. Sukay ..................... 119,027(17) *
David Wojcik ........................ 189,492(18) *
All Directors, Nominees for Directors 12.78%
and Executive Officers of Bancorp
as a Group (17 Persons) ............ 4,154,159(19)
</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 SEC and, accordingly, may include securities owned by or for, among
others, the wife and/or minor children of the in dividual 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, 2000. Shares subject to outstanding stock options which
an individual has the right to acquire within 60 days after May 1, 2000 are
deemed to be outstanding for the purpose of computing the percentage of
outstanding securities of the class owned by such individual or any group
including such individual only. Beneficial ownership may be disclaimed as
to certain of the securities.
(2) Includes 15,354 shares of common stock issuable upon the exercise of stock
options granted under Bancorp's 1998 Stock Option Plan for Non-Employee
Directors.
11
<PAGE>
(3) Includes 554 shares of common stock held by Mr. Beck's wife and 45,854
shares of common stock issuable upon the exercise of stock options granted
under Bancorp's 1989 and 1998 Stock Option Plans for Non-Employee
Directors.
(4) Includes 23,224 shares of common stock held by Mr. Bershad's wife and
30,565 shares of common stock issuable upon the exercise of stock options
granted under Bancorp's 1989 and 1998 Stock Option Plans for Non-Employee
Directors.
(5) Includes 79,244 shares of common stock held by Mr. Buckelew's wife, 2,389
shares of common stock held by Buckelew & Lane Investments, 3,264 shares of
common stock issuable upon the exercise of stock options granted under
Bancorp's 1989 Stock Option Plan for Non-Employee Directors and 42,163
shares of common stock issuable upon the exercise of stock options granted
under Bancorp's 1997 Employee Stock Option Plan. Mr. Buckelew is a partner
of Buckelew & Lane Investments.
(6) Includes 51,840 shares of common stock held by Site Development Inc.,
26,836 shares of common stock held by Mr. Hill's wife, 72,771 shares of
common stock held by S. J. Dining, Inc., 74,335 shares of common stock held
by U.S. Restaurants, Inc., 47,209 shares of common stock held by J.V.
Properties, 17,874 shares of common stock held by InterArch, Inc., 77,453
shares held by InterArch, Inc. Profit Sharing Plan, 63,598 shares of common
stock held by the Hill Family Trust, 15,800 shares held by the Hill Family
Foundation and 16,403 shares of common stock allocated to Mr. Hill by
Bancorp'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, a trustee of the Hill Family
Foundation, and a co-trustee and beneficiary of Bancorp's ESOP Trust.
InterArch, Inc., is a company owned by Mr. Hill's wife. This amount also
includes 730,734 shares of common stock issuable upon the exercise of stock
options granted to Mr. Hill under Bancorp's Employee Stock Option Plans.
(7) Includes 166,773 shares of common stock issuable upon the exercise of stock
options granted to Mr. Jordan under Bancorp's Employee Stock Option Plans,
14,026 shares of common stock allocated to Mr. Jordan by Bancorp's ESOP, of
which Mr. Jordan is a co-trustee and beneficiary, and 3,154 shares of
common stock held in trust for Mr. Jordan's minor children.
(8) Includes 211 shares of common stock held by Mr. Kerr's wife and 22,410
shares of common stock held by the Markeim-Chalmers, Inc. Pension Plan and
36,026 shares of Common Stock issuable upon the exercise of stock options
granted to Mr. Kerr under Bancorp's 1998 Stock Option Plan for Non-Employee
Directors. Markeim-Chalmers, Inc. is a company owned by Mr. Kerr.
(9) Includes 72,771 shares of common stock held by S. J. Dining, Inc., 74,335
shares of common stock held by U.S. Restaurants, Inc. and 29,875 shares of
common stock issuable upon the exercise of stock options granted to Mr.
Lewis under Bancorp's 1989 and 1998 Stock Option Plans for Non-Employee
Directors. Mr. Lewis is President of S. J. Dining, Inc. and President of
U.S. Restaurants, Inc. This amount also includes 4,974 shares of common
stock held in trust for Mr. Lewis' minor children.
(10) Includes 25,807 shares of common stock held by Mr. Ragone's wife, 16,130
shares of common stock held jointly with Mr. Ragone's wife and 29,139
shares of common stock issuable upon the exercise of stock options granted
to Mr. Ragone under Bancorp's 1989 and 1998 Stock Option Plans for
Non-Employee Directors.
(11) Includes 3,135 shares of common stock held by Mr. Schwartz's wife, 11,301
shares of common stock held jointly with Mr. Schwartz's wife and 18,505
shares of common stock issuable upon the exercise of stock options granted
to Mr. Schwartz under Bancorp's 1989 and 1998 Stock Option Plans for
Non-Employee Directors.
(12) Includes 20,359 shares of common stock held by Mr. Tarquini's wife, 23,025
shares of common stock held by The Tarquini Organization Profit Sharing
Plan, 2,348 shares of common stock held by The Tarquini Foundation and
38,988 shares of common stock issuable upon the exercise of stock options
granted to Mr. Tarquini under Bancorp's 1989 and 1998 Stock Option Plans
for Non-Employee Directors. Mr. Tarquini is the President of The Tarquini
Organization.
12
<PAGE>
(13) Includes 26,563 shares of common stock held jointly with Mr. Videon's wife,
8,704 shares of common stock held by Mr. Videon's wife, 7,546 shares held
by Frank C. Videon, Inc., Profit Sharing Trust, 4,362 shares of common
stock held by Videon Chevrolet Profit Sharing Plan, 15,796 shares of common
stock held by the Videon Dodge, Inc. Employee Profit Sharing Trust, 8,400
shares of common stock held by the Frank C. Videon Funeral Home Profit
Sharing Plan, 7,512 shares of common stock held in Trust for Mr. Videon's
minor grandchildren and 11,794 shares of common stock issuable upon the
exercise of stock options granted to Mr. Videon under Bancorp's 1989 and
1998 Stock Option Plans for Non- Employee Directors. Mr. Videon is
president of Frank C. Videon, Inc., Vice President of Videon Chevrolet,
President of Videon Dodge, Inc., and Owner of Videon Funeral Home.
(14) Includes 88,142 shares of common stock held jointly with Mr. Musumeci's
wife, 2,310 shares held by the Peter/Linda Musumeci Foundation, 131,154
shares of common stock issuable upon the exercise of stock options granted
to Mr. Musumeci under Bancorp's Employee Stock Option Plans and 13,310
shares of common stock allocated to Mr. Musumeci under Bancorp's ESOP.
(15) Includes 179,621 shares of common stock issuable upon the exercise of stock
options granted to Mr. Falese under Bancorp's Employee Stock Option Plans
and 4,411 shares of common stock allocated to Mr. Falese under Bancorp's
ESOP, 5,468 shares of common stock held by Mr. Falese's wife, 618 shares of
common stock held jointly with Mr. Falese's wife and 3,685 shares of common
stock held by Mr. Falese's wife in trust for their minor daughter.
(16) Includes 182,028 shares of common stock issuable upon the exercise of stock
options granted to Mr. DiFlorio under Bancorp's Employee Stock Option Plans
and 7,665 shares of common stock allocated to Mr. DiFlorio under Bancorp's
ESOP.
(17) Includes 103,613 shares of common stock issuable upon the exercise of stock
options granted to Mr. Sukay under Bancorp's Employee Stock Option Plans
and 6,073 shares of common stock allocated to Mr. Sukay under Bancorp's
ESOP.
(18) Includes 138,681 shares of common stock issuable upon the exercise of stock
options granted to Mr. Wojcik under Bancorp's Employee Stock Option Plans,
21,102 shares of common stock held by Mr. Wojcik's wife, 862 shares of
common stock held in trust for Mr. Wojcik's minor children and 7,499 shares
of common stock allocated to Mr. Wojcik under Bancorp's ESOP.
(19) Includes an aggregate of 1,934,131 shares of common stock issuable upon the
exercise of stock options granted to directors and certain executive
officers of Bancorp under Bancorp's Employee Stock Option Plans.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Certain Transactions
Certain directors and executive officers of Bancorp and its subsidiaries
and 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 Bancorp's subsidiary banks. 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 1999 received $334,000 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.
13
<PAGE>
Bancorp leases the land on which it has constructed fourteen branch
offices from limited partnerships in which Mr. Hill is a partner or in which a
corporation owned by Mr. Hill is a partner under separate operating lease
agreements. The aggregate annual rental under these leases for 1999 was
approximately $723,000. These leases expire periodically through 2020 but are
renewable through 2040. Aggregate annual rentals escalate to $934,000 in 2005.
Bancorp leases land to a limited partnership partially comprised of the
directors of Bancorp including Messrs. Bershad, Hill and Lewis and a
corporation owned by Mr. Hill. The initial lease term is 25 years, with two
successive 10-year options. As of December 31, 1999, the future minimum lease
payments to be received by Bancorp amount to approximately $432,000 for the
remainder of the initial lease term. In accordance with the provision of the
land lease, the limited partnership constructed and owns the office building
located on the land. Commerce PA leases the building as a branch facility. The
initial lease term expires in 2010.
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 1999, Bancorp subsidiaries obtained interior design, facilities
management and general contractor services in the amount of $2,498,000 from a
business corporation of which Shirley Hill, wife of Vernon W. Hill, II, is a
principal shareholder and the president. Additionally, during 1999 this
business received commissions of $4,408,000 on furniture and facility purchases
made directly by Bancorp subsidiary banks. These expenditures related primarily
to the furnishing and related design services of the opening and/or
refurbishing of certain offices during the period. Management believes such
expenses were substantially equivalent to those that would have been paid to
unaffiliated companies for similar furniture and services.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange of 1934, the Registrant has duly caused this Amendment No. 1 to its
Annual Report of Form 10-K for the year ended December 31, 1999 to be signed on
its behalf by the undersigned thereunto duly authorized.
COMMERCE BANCORP, INC.
Date: May 9, 2000
By: /s/ Douglas J. Pauls
------------------------------------
Douglas J. Pauls
Senior Vice President and Controller
14
